TORONTO -- SMTC is looking for acquisitions in the military and medical sectors, the company's top executive said on a conference call this week.
"I have spent a significant amount of my time ... analyzing the market for what's available, what would be we be interested in," Eddie Smith, president and CEO, told analysts. "Clearly we don't play today because of our corporate structure in the ITAR, mil, aero, defense and medical space. With an acquisition, we'd like to change that so we can play in the ITAR business, the mil/aero/defense (and) highly regulated markets.
"Last quarter we added a couple medical customers on, we got our FDA certification and registration both, normally that takes about a year. Rich and his team were able to do that in a speed that I never thought was possible in about six weeks or so. So we're looking for accretive acquisitions that have some reasonable scale that play in the medical and military market because those customers are normally more profitable, and they're a little more sticky going forward, a little more long-term. And there are possibilities out there."
The company would look a merger or acquisition in China over green-fielding there, Smith said. "Many of our customers are actually bringing things back from China to our Mexico plant. I don't I foresee us opening another plant in China greenfield, the only way that will happen is through M&A."
Smith said the company is working toward better capacity utilization, having shuttered sites in San Jose and China. "We gained a little profitability (EBIDTA) in Q4 and we expect that trend over the next year to continue to get better, and our scale will help that," he said. "Now we're starting to make an EBITDA profit, then we're starting to be more efficient in how we operate in terms of other financial metrics."