SMTC Corporation Annual report pursuant to Section 13 and 15(d)

Annual report pursuant to Section 13 and 15(d)

Note 12 - Segmented Information

Note 12 - Segmented Information

12 Months Ended

Dec. 30, 2018

Notes to Financial Statements

Segment Reporting Disclosure [Text Block]

Segmented information

General description

The Company is operated and managed by geographic production facility, which are located in the United States, Mexico and China. The Company utilizes each reportable segment’s site contribution (site revenue minus operating expenses, excluding unrealized foreign exchange gain (loss) on unsettled forward foreign exchange contracts, corporate allocations and restructuring expenses) to monitor reportable segment performance. Site contribution is utilized by the chief operating decision-maker (defined as the Chief Executive Officer) as the indicator of reportable segment performance, as it reflects costs which our operating site management is directly responsible for. Intersegment adjustments reflect intersegment sales that are generally recorded at prices that approximate arm’s-length transactions.

In assessing the performance of the reportable segments, management attributes site revenue to the reportable segment that ships the product to the customer, irrespective of the product’s destination. Information about the reportable segments is as follows:

	Year ended December 30, 2018			Year ended December 31, 2017			Year ended January 1, 2017
Revenue
US	$	42,994		$	21,269		$	21,703
Mexico		155,261			99,577			102,546
China		29,257			27,349			52,745
Total	$	227,512		$	148,195		$	176,994
Intersegment revenue
US	$	(1,213	)	$	(255	)	$	(442	)
Mexico		(2,459	)		(13	)		(530	)
China		(7,709	)		(8,696	)		(8,154	)
Total	$	(11,381	)	$	(8,964	)	$	(9,126	)
Net external revenue
US	$	41,781		$	21,014		$	21,261
Mexico		152,802			99,564			102,016
China		21,548			18,653			44,591
Total segment revenue (which also equals consolidated revenue)	$	216,131		$	139,231		$	167,868

Site Contribution
US	$	1,434		$	(1,794	)	$	(1,327	)
Mexico		13,851			7,515			8,380
China		1,792			(1,115	)		4,196
Total	$	17,077		$	4,606		$	11,249



Corporate expenses		13,912			10,174			11,061
Unrealized foreign exchange gain on unsettled forward exchange contracts		(353	)		(918	)		(831	)
Restructuring charges		172			1,732			176
Interest expense		3,117			903			788
Earnings (loss) before income taxes	$	229		$	(7,285	)	$	55

Year ended December 30, 2018 (in thousands)	Mexico		US		China		Total
Market Sector:
Test and Measurement	$	23,068	$	22,752	$	-	$	45,820
Retail and Payment Systems		40,987		584		5		41,576
Telecom, Networking and Communications		13,467		5,180		18,730		37,377
Medical		25,977		4,126		1,278		31,381
Industrial, Power and Clean Technology		22,690		4,089		1,535		28,314
Semiconductor		26,613		9		-		26,529
Aerospace and Defense		-		5,041		-		5,134
Segment Revenue		152,802		41,781		21,548		216,131

Year ended December 31, 2017 (in thousands)	Mexico		US		China		Total
Market Sector:
Test and Measurement	$	12,095	$	14,250	$	-	$	26,345
Retail and Payment Systems		33,637		-		-		33,637
Telecom, Networking and Communications		11,031		4,873		9,309		25,213
Medical		15,673		615		2,557		18,845
Industrial, Power and Clean Technology		5,671		1,276		6,787		13,734
Semiconductor		21,457		-		-		21,457
Aerospace and Defense		-		-		-		-
Segment Revenue		99,564		21,014		18,653		139,231

Year ended January 1, 2017 (in thousands)	Mexico		US		China		Total
Market Sector:
Test and Measurement	$	12,119		13,520	$	-	$	25,639
Retail and Payment Systems		40,531		-		-		40,531
Telecom, Networking and Communications		16,937		3,219		26,992		47,148
Medical		14,565		862		8,352		23,779
Industrial, Power and Clean Technology		208		3,660		9,247		13,115
Semiconductor		17,656		-		-		17,656
Aerospace and Defense		-		-		-		-
Segment Revenue		102,016		21,261		44,591		167,868

Capital expenditures:

The following table contains additions including those acquired through capital leases, to property, plant and equipment for

2018,

2017

and

2016:

	Year ended December 30, 2018		Year ended December 31, 2017		Year ended January 1, 2017
US	$	1,049	$	499	$	550
Mexico		4,328		480		771
China		208		145		694
Segment total		5,585		1,124		2,015
Corporate and other		118		123		185
Total	$	5,703	$	1,247	$	2,200

Segment assets:

	December 30, 2018		December 31, 2017
Property, plant and equipment (a)
US	$	15,013	$	1,188
Mexico		11,851		7,518
China		1,153		1,380
Segment total		28,017		10,086
Corporate and other		143		183
Total	$	28,160	$	10,269

Total segment assets
US	$	117,322	$	12,748
Mexico		89,274		47,835
China		13,723		8,011
Segment total		220,319		68,594
Corporate and other		707		1,262
Total	$	221,226	$	69,856

(a)	Property, plant and equipment information is based on the principal location of the asset.

Geographic revenue:

The following table contains geographic revenue based on our customer invoicing location:

	Year ended December 30, 2018		Year ended December 31, 2017		Year ended January 1, 2017
U.S.	$	175,402	$	108,783	$	114,850
Canada		27,053		19,986		37,845
Europe		—		—		1,833
China		13,676		4,961		6,832
Africa		—		5,501		6,508
Total	$	216,131	$	139,231	$	167,868

Significant customers and concentration of credit risk

Sales of the Company’s products are concentrated among specific customers in the same industry. The Company requires collateral only from new customers with insufficient credit until such time as credit insurance can be obtained. The Company is subject to concentrations of credit risk in trade receivables and mitigates this risk through ongoing credit evaluation of customers and maintaining credit insurance. The Company considers concentrations of credit risk in establishing the allowance for doubtful accounts and believes the recorded allowances are adequate.

The Company expects to continue to depend upon a relatively small number of customers for a significant percentage of its revenue. In addition to having a limited number of customers, the Company manufactures a limited number of products for each customer. If the Company loses any of its largest customers or any product line manufactured for

one

of its largest customers, it could experience a significant reduction in revenue. Also, the insolvency of

one

or more of its largest customers or the inability of

one

or more of its largest customers to pay for its orders could decrease future revenue. As many costs and operating expenses are relatively fixed, a reduction in net revenue can decrease profit margins and adversely affect business, financial condition and results of operations.

During the year ended

December 30, 2018,

one

customer comprised

11%

of revenue from across all geographic segments. At

December 30, 2018,

two

customers comprised

21%

(

11%

and

10%,

respectively) of the Company’s trade accounts receivable.

other customers individually represented more than

10%

of trade accounts receivable.

During the year ended

December 31, 2017,

two

customers each comprised

12%

of revenue from across all geographic segments. At

December 31, 2017,

three

customers comprised

40%

(

14%,

14%

and

12%,

respectively) of the Company’s trade accounts receivable.

other customers individually represented more than

10%

of trade accounts receivable.

During the year ended

January 1, 2017,

two

customers comprised

16%

and

12%,

respectively of revenue from across all geographic segments. At

January 1, 2017,

one

customer represented

12%

of the Company’s trade accounts receivable.

other customers individually represented more than

10%

of trade accounts receivable.