Revenue Increased 11% from Prior Year to $14.7 Million; Record Backlog of $60.9 Million
Announces Preliminary Third Quarter Year-over-Year Revenue Growth in Excess of 20%
MIDLAND, VA / ACCESSWIRE / October 11, 2023 / Smith-Midland Corporation (NASDAQ:SMID) a provider of innovative, high-quality proprietary and patented precast concrete products and systems announced its second quarter results for the period ended June 30, 2023.
Second Quarter 2023 Summary Compared to Second Quarter 2022
-
Revenue increased 11 percent from the prior year quarter to $14.7 million
-
Product sales increased 58 percent from the prior year quarter to $10.7 million
-
Net loss of $782,000, or loss per share of $0.15, primarily related to a pair of items isolated to the quarter
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Selected to produce SlenderWall architectural precast panels for $4.5 million hospital project
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Awarded $2.1 million contract for architectural panels for BMW's campus in South Carolina
The Company's second quarter 10-Q filing was delayed due to the transition to a new independent registered accounting firm. The Company expects to file its third quarter results on or prior to the November 14th deadline as required by the Securities and Exchange Commission and does not anticipate additional delays in its future filings.
"Revenue for the second quarter of 2023 represents the third consecutive quarter of double-digit, year-over-year revenue growth, reflecting the underlying strength of our business," said Ashley Smith, Chairman and Chief Executive Officer of Smith-Midland. "We continue to secure new contracts thanks to increased demand for our innovative product offerings and increased spending from the public and private sectors. Our backlog of $60.9 million as of August 1, 2023 is a record for the company, and it does not include the recently announced project to produce $6.8 million in architectural precast panels for the Baltimore Harbor Tunnel."
"Our bottom line was negatively impacted by the overall cost inflation that persists across our business as well as by a pair of items that were isolated to the quarter. We incurred approximately $400,000 in costs related to the remaking of architectural panels for one specific project because of product from a material supplier that did not meet project specifications. Secondly, we had a cybersecurity issue related to a payment to one of our vendors for approximately $342,000. We have been able to recover $67,000 to date from insurance and believe there is an opportunity to offset most of the remaining amount through additional insurance proceeds," Mr. Smith continued.
"We expect third quarter revenue growth to be in excess of 20 percent compared to the third quarter of the prior year as we execute on the production of our historic backlog. Overall, the multiple tailwinds across our business should continue the trend of strong top-line growth, positioning us to create long-term shareholder value," Mr. Smith concluded.
Second Quarter 2023 Results
The Company reported revenues of $14.7 million for the second quarter of 2023 compared to revenues of $13.3 million in the second quarter of 2022. Product sales for the quarter were $10.7 million, a 58 percent increase from the prior-year quarter. Service revenue, which includes barrier rentals, royalty income and shipping and installation, was $4.0 million compared to $6.5 million in the second quarter of 2022.
Gross profit was $1.8 million compared to $3.2 million in the prior year quarter. Gross margin for the current year quarter was 12.2% compared to 24.4% in the previous year's quarter. This year's gross profit and margin results include additional costs, of approximately $400,000 related to panels remade for one specific project and lower barrier rental revenue, which generate higher margins than product sales.
Operating loss for the quarter was $981,000 compared to operating income of $1.1 million in the prior-year quarter. The decrease is mainly due to the reduction in gross profit and due to a one-time wire fraud incident that occurred in the second quarter of 2023 resulting in additional general and administrative expenses of $342,000. Net loss for the second quarter was $782,000, or loss per share of $0.15, compared to net income of $910,000, or $0.17 per diluted share in the second quarter of 2022.
Product Sales
Total product sales for the second quarter of 2023 were $10.7 million compared to $6.8 in the prior-year quarter. Soundwall sales were $1.7 million compared to $0.4 million in the second quarter of 2022 due to higher production volumes. Architectural panel sales were $0.3 million, compared to $1.3 million, reflecting the completion of two architectural projects in the second quarter of 2022. SlenderWall sales were $1.5 million, compared to $0.1 million in the second quarter of 2022, due to two projects being produced consecutively in the first half of 2023 compared to a single project in the first half of 2022. Miscellaneous wall sales increased to $2.9 million from $0.6 million in the prior-year quarter due to the increased amount of retaining wall projects in production. Barrier sales were $1.8 million compared to $2.3 million in the second quarter of 2022, due primarily to a large barrier project that began in the prior-year quarter and completed by the end of 2022. Easi-Set and Easi-Span Building Sales increased 52 percent from the prior-year quarter to $1.4 million.
Service Revenue
Service revenue which is comprised of royalty income, barrier rental revenue, and shipping and installation totaled $4.0 million, compared to $6.5 million in the second quarter of 2022. Shipping and installation revenue was $2.7 million compared to $3.7 million in the prior year quarter. Royalty income decreased to $0.6 million from $0.8 million in the second quarter of 2022, due to the project delays experienced by licensees. Barrier rental revenue for the second quarter of 2023 was $0.7 million compared to $2.0 million in the prior-year quarter due to a temporary slowdown in barrier rental projects.
Balance Sheet and Liquidity
As of June 30, 2023, cash totaled $4.7 million compared to cash totaling $6.7 million for the year ended December 31, 2022. Account receivables totaled $16.6 million and debt totaled $6.0 million as of June 30, 2023. Capital spending totaled $1.8 million for the second quarter of 2023.
Macro Environment and Outlook
With the growing backlog and continued strength in bidding activity, Smith-Midland anticipates increased sales volumes for the remainder of 2023 and continuing into 2024. The immediate outlook of continued infrastructure initiatives across the United States are anticipated to yield positive tail winds across our portfolio of patented, proprietary, and custom products. While we see a continually dynamic macro environment including increases in labor and material costs, we are working hard to mitigate these effects and to attract and retain quality labor as well as manage input costs. Backlog was approximately $60.9 million recorded as of August 1, 2023. The majority of the backlog is anticipated to be fulfilled within 12 months; however, some projects will have a multi-year timeline. The Company remains focused on long-term strategic growth initiatives to drive shareholder value.
About Smith-Midland Corporation
Smith-Midland develops, manufactures, licenses, rents, and sells a broad array of precast concrete products and systems for use primarily in the construction, transportation, and utility industries.
Smith-Midland Corporation has three manufacturing facilities located in Midland, VA, Reidsville, NC, and Columbia, SC, and a J-J Hooks® Safety Barrier rental firm, Concrete Safety Systems. Easi-Set Worldwide, a wholly owned subsidiary of Smith-Midland Corporation, licenses the production and sale of Easi-Set products, including J-J Hooks and SlenderWall®, and provides diversification opportunities to the precast industry worldwide. For more information, please call (540) 439-3266 or visit www.smithmidland.com.
Forward-Looking Statements
This announcement contains forward-looking statements, which involve risks and uncertainties. The Company's actual results may differ significantly from the results discussed in the forward-looking statements. Factors which might cause such a difference include, but are not limited to, product demand, the impact of competitive products and pricing, capacity and supply constraints or difficulties, inflationary factors including potential recession, general business and economic conditions, our debt exposure, our high level of accounts receivables, the effect of the Company's accounting policies and other risks detailed in the Company's Annual Report on Form 10-K and other filings with the Securities and Exchange Commission.
Company Contact:
Stephanie Poe, CFO
540-439-3266
investors@smithmidland.com
Investor Relations:
Steven Hooser or John Beisler
Three Part Advisors, LLC
214-872-2710
SMITH-MIDLAND CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)
| ASSETS | June 30, 2023 (Unaudited) | | December 31, 2022 |
| Current assets |
| |
|
| Cash | $ | 4,727 | | $ | 6,726 |
| Accounts receivable, net | | | | | |
| Trade - billed (less allowance for credit losses of approximately $912 and $781, respectively), including contract retentions | | 16,554 | | | 16,223 |
| Trade - unbilled | | 653 | | | 990 |
| Inventories, net | | | | | |
| Raw materials | | 2,396 | | | 1,776 |
| Finished goods | | 2,356 | | | 2,042 |
| Prepaid expenses | | 1,212 | | | 706 |
| Refundable income taxes | | 577 | | | 477 |
| | | | | | |
| Total current assets | | 28,475 | | | 28,940 |
| | | | | | |
| Property and equipment, net | | 26,886 | | | 25,124 |
| | | | | | |
| Other assets | | 356 | | | 249 |
| | | | | | |
| Total assets | $ | 55,717 | | $ | 54,313 |
SMITH-MIDLAND CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)
(continued)
| LIABILITIES AND STOCKHOLDERS' EQUITY | June 30, 2023 (Unaudited) | | December 31, 2022 |
| Current liabilities |
| |
|
| Accounts payable - trade | $ | 5,684 | | $ | 5,816 |
| Accrued expenses and other liabilities | | 874 | | | 799 |
| Deferred revenue | | 1,991 | | | 2,243 |
| Accrued compensation | | 792 | | | 788 |
| Accrued income taxes | | - | | | 146 |
| Operating lease liabilities | | 51 | | | 77 |
| Current maturities of notes payable | | 629 | | | 618 |
| Customer deposits | | 2,985 | | | 737 |
| | | | | | |
| Total current liabilities | | 13,006 | | | 11,224 |
| | | | | | |
| Deferred revenue | | 2,633 | | | 2,174 |
| Operating lease liabilities | | 24 | | | 45 |
| Notes payable - less current maturities | | 5,412 | | | 5,730 |
| Deferred tax liability | | 2,181 | | | 2,085 |
| | | | | | |
| Total liabilities | | 23,256 | | | 21,258 |
| | | | | | |
| Stockholders' equity | | | | | |
| Preferred stock, $.01 par value; authorized 1,000,000 shares, none issued and outstanding | | - | | | - |
| Common stock, $.01 par value; authorized 8,000,000 shares; 5,345,189 and 5,345,189 issued and 5,256,413 and 5,256,413 outstanding, respectively | | 53 | | | 53 |
| Additional paid-in capital | | 7,611 | | | 7,440 |
| Treasury stock, at cost, 40,920 shares | | (102) | | | (102) |
| Retained earnings | | 24,899 | | | 25,664 |
| | | | | | |
| Total stockholders' equity | | 32,461 | | | 33,055 |
| | | | | | |
| Total liabilities and stockholders' equity | $ | 55,717 | | $ | 54,313 |
SMITH-MIDLAND CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (LOSS)
(Unaudited)
(in thousands, except per share data)
| | Three Months Ended June 30, | | Six Months Ended June 30, |
| | 2023 | | 2022 | | 2023 | | 2022 |
| Revenue | | | | | | | |
| Product sales | $ | 10,702 | | $ | 6,788 | | $ | 18,944 | | $ | 12,638 |
| Barrier rentals | | 700 | | | 1,962 | | | 1,819 | | | 3,447 |
| Royalty income | | 594 | | | 771 | | | 1,005 | | | 1,198 |
| Shipping and installation revenue | | 2,702 | | | 3,732 | | | 5,772 | | | 6,405 |
| | | | | | | | | | | | |
| Total revenue | | 14,698 | | | 13,253 | | | 27,540 | | | 23,688 |
| | | | | | | | | | | | |
| Cost of goods sold | | 12,912 | | | 10,023 | | | 23,588 | | | 18,810 |
| | | | | | | | | | | | |
| Gross profit | | 1,786 | | | 3,230 | | | 3,952 | | | 4,878 |
| | | | | | | | | | | | |
| Operating expenses | | | | | | | | | | | |
| General and administrative expenses | | 1,884 | | | 1,409 | | | 3,233 | | | 2,568 |
| Selling expenses | | 883 | | | 725 | | | 1,645 | | | 1,388 |
| | | | | | | | | | | | |
| Total operating expenses | | 2,767 | | | 2,134 | | | 4,878 | | | 3,956 |
| | | | | | | | | | | | |
| Operating income (loss) | | (981) | | | 1,096 | | | (926) | | | 922 |
| | | | | | | | | | | | |
| Other income (expense) | | | | | | | | | | | |
| Interest expense | | (64) | | | (71) | | | (128) | | | (118) |
| Interest income | | 5 | | | 3 | | | 10 | | | 6 |
| Gain on sale of assets | | 116 | | | 27 | | | 199 | | | 65 |
| Other income | | 32 | | | 162 | | | 57 | | | 183 |
| | | | | | | | | | | | |
| Total other income (expense) | | 89 | | 121 | | | 138 | | | 136 |
| | | | | | | | | | | | |
| Income (loss) before income tax expense (benefit) | | (892) | | | 1,217 | | | (788) | | | 1,058 |
| | | | | | | | | | | | |
| Income tax expense (benefit) | | (110) | | | 307 | | | (87) | | | 267 |
| | | | | | | | | | | | |
| Net income (loss) | $ | (782) | | $ | 910 | | $ | (701) | | $ | 791 |
| | | | | | | | | | | | |
| Basic and diluted earnings (loss) per common share | $ | (0.15) | | $ | 0.17 | | $ | (0.13) | | $ | 0.15 |
| | | | | | | | | | | | |
| Weighted average number of common shares outstanding: | | | | | | | | | | | |
| Basic | | 5,256 | | | 5,230 | | | 5,256 | | | 5,230 |
| Diluted | | 5,256 | | | 5,266 | | | 5,256 | | | 5,262 |
SMITH-MIDLAND CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(Unaudited)
(in thousands, except share data)
| | | Common
Stock | | Treasury
Stock | | Additional
Paid-in
Capital | | Retained
Earnings | | | Total | |
| | | Shares | | | Amount | | Shares | | Amount | | | | | |
| Balance, December 31, 2022 | | 5,345,189 | | | 53 | | (40,920 | ) | | | (102 | ) | | | 7,440 | | | 25,664 | | | | 33,055 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
| Stock-Based Compensation Expense | | - | | | - | | - | | | | - | | | | 85 | | | - | | | | 85 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
| Adoption of ASU 2016-13 | | - | | | - | | - | | | | - | | | | - | | | (63 | ) | | | (63 | ) |
|
| | | | | | | | | | | | | | | | | | | | | | | |
| Net income (loss) | | - | | | - | | - | | | | - | | | | - | | | 80 | | | | 80 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
| Balance, March 31, 2023 | | 5,345,189 | | $ | 53 | | (40,920 | ) | | $ | (102 | ) | | $ | 7,525 | | $ | 25,681 | | | $ | 33,157 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
| Stock-Based Compensation Expense | | - | | | - | | - | | | | - | | | | 86 | | | - | | | | 86 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
| Net income (loss) | | - | | | - | | - | | | | - | | | | - | | | (782 | ) | | | (782 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | |
| Balance, June 30, 2023 | | 5,345,189 | | $ | 53 | | (40,920 | ) | | $ | (102 | ) | | $ | 7,611 | | $ | 24,899 | | | $ | 32,461 | |
|
| | | | | | | | | | | | | | | | | | | | | | | |
|
| | | | | | | | | | | | | | | | | | | | | | | |
| Balance, December 31, 2021 | | 5,353,095 | | $ | 53 | | (40,920 | ) | | $ | (102 | ) | | $ | 6,935 | | $ | 24,864 | | | $ | 31,750 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
| Stock-Based Compensation Expense | | - | | | - | | - | | | | - | | | | 126 | | | - | | | | 126 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
| Net income (loss) | | - | | | - | | - | | | | - | | | | - | | | (119 | ) | | | (119 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | |
| Balance, March 31, 2022 | | 5,353,095 | | $ | 53 | | (40,920 | ) | | $ | (102 | ) | | $ | 7,061 | | $ | 24,745 | | | $ | 31,757 | |
|
| | | | | | | | | | | | | | | | | | | | | | | |
| Stock-Based Compensation Expense | | - | | | - | | - | | | | - | | | | 126 | | | - | | | | 126 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
| Net income (loss) | | - | | | - | | - | | | | - | | | | - | | | 910 | | | | 910 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
| Balance, June 30, 2022 | | 5,353,095 | | $ | 53 | | (40,920 | ) | | $ | (102 | ) | | $ | 7,187 | | $ | 25,655 | | | $ | 32,793 | |
|
| | | | | | | | | | | | | | | | | | | | | | | |
SMITH-MIDLAND CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(in thousands)
| | Six Months Ended
June 30, |
| | 2023 | | 2022 |
| Cash flows from operating activities: | | | |
| Net income (loss) | $ | (701) | | $ | 791 |
| Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: | | | | |
| Depreciation and amortization | | 1,176 | | | 1,400 |
| (Gain) loss on sale of assets | (199) | | (65) |
| Allowance for credit losses | | 67 | | | 45 |
| Stock-based compensation expense | | 171 | | | 253 |
| Deferred taxes | | 96 | | | - |
| (Increase) decrease in | | | | | |
| Accounts receivable - billed | (462) | | (2,700) |
| Accounts receivable - unbilled | | 337 | | (121) |
| Inventories, net | (934) | | (686) |
| Prepaid expenses and other assets | (625) | | | 61 |
| Refundable income taxes | (100) | | | 177 |
| Increase (decrease) in | | | | | |
| Accounts payable - trade | (132) | | | 1,661 |
| Accrued expenses and other liabilities | | 75 | | | 364 |
| Deferred revenue | | 207 | | (55) |
| Accrued compensation | | 4 | | (265) |
| Accrued income taxes | (146) | | (1,912) |
| Deferred buy-back lease obligation | | - | | (1,617) |
| Customer deposits | | 2,248 | | (16) |
| Net cash provided by (used in) operating activities | | 1,082 | | (2,685) |
| Cash flows from investing activities: | | | | | |
| Purchases of property and equipment | (2,974) | | (1,962) |
| Deferred buy-back asset | | - | | | 988 |
| Proceeds from the sale of property and equipment | | 199 | | | 65 |
| Net cash provided by (used in) investing activities | (2,775) | | (909) |
| Cash flows from financing activities: | | | | | |
| Proceeds from long-term borrowings | | - | | | 2,805 |
| Repayments of long-term borrowings | (306) | | (278) |
| Net cash provided by (used in) financing activities | (306) | | | 2,527 |
| Net increase (decrease) in cash | (1,999) | | (1,067) |
| Cash | | | | | |
| Beginning of period | | 6,726 | | | 13,492 |
| End of period | $ | 4,727 | | $ | 12,425 |
| | | | | | |
| Supplemental Cash Flow Information: | | | | | |
| Cash payments for interest | $ | 128 | | $ | 118 |
| Cash payments for income taxes | $ | 65 | | $ | 2,179 |
| Capital expenditures included in accounts payable | $ | 2,244 | | $ | 2,014 |
SOURCE: Smith-Midland Corporation
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