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MIDLAND, VA / ACCESSWIRE / November 10, 2020 / Smith-MidlandCorporation (the Company) (OTCQX:SMID), whichdevelops, manufactures, licenses, rents, and sells a broad array of precast concrete products, services, and systems for use primarily in the construction, transportation, and utilities industries, today announced results for the quarter ended September 30, 2020.
Third Quarter Highlights
"We had a solid third quarter, and I am pleased to see the significant increase in our EPS to $0.38 for the year, a 58 percent increase compared to the prior year," said Ashley Smith, President and Chief Executive Officer. "We continue to grow barrier rentals, which yield higher margins and drove the bottom-line earnings growth, despite product sales being down for the year. The outlook over the next 2-3 years still looks strong with infrastructure spending continuing to increase in our geographic region. The long-term strategy of transitioning to increased barrier rentals compared to barrier sales has proven effective so far in 2020. Our core rental fleet revenue is up 74 percent this year over 2019, with barrier rental revenue also being favorably impacted by short-term special projects in the quarter. The short-term special projects are not part of the primary operating strategy, however due to the high-risk and complexity they carry slightly higher margins.
"During the third quarter we designed, engineered, and produced a test panel for the next generation of the SlenderWall system for a major construction company in our region. Listening to customer needs and working as a partner, we successfully created the first long-span SlenderWall design to meet much larger building specifications in the future. The new design is a part of the sales strategy to expand the product offering and capabilities to reach new markets.
"We are focused on reinforcing our balance sheet as we continue to navigate a dynamic macro environment. Increased efforts on accounts receivable have improved our cash and investment position to $8.7 million, which exceeds total long-term debt of $7.8 million. The financial health of the Company is extremely important during this time of uncertainty, and we have positioned the business for long-term success and sustainability through any economic condition."
Third Quarter 2020 Results
The Company reported third quarter revenues of $12,515,000, a 5 percent decrease from the prior-year quarter. Gross margin for the quarter was 31 percent, an increase of 1,100 basis points from the third quarter of 2019. Pre-tax income for the third quarter of 2020 was $2,018,000 compared to pre-tax income of $758,000 in 2019, an increase of $1,260,000. Net income for the third quarter increased 168 percent to $1,549,000, as compared to net income of $579,000 in same quarter a year ago. Diluted earnings per share for the quarter were $0.30, compared to $0.11 in the third quarter of 2019.
Nine Months 2020 Results
The Company reported nine-month revenues of $32,789,000 for 2020, a 4 percent decrease from the same period in the prior year. Pre-tax income for the nine months of 2020 was $2,540,000 compared to pre-tax income of $1,571,000 in same period of 2019, an increase of $969,000. Net income for the nine months of 2020 was $1,952,000, compared to net income of $1,207,000 in the first nine months of 2019. Diluted earnings per share were $0.38 for the first nine months of 2020, compared to $0.24 for the first nine months of 2019.
Balance Sheet and Liquidity
As of September 30, 2020, the Company had cash and investments totaling $8.7 million, with accounts receivable of $9.8 million. Outstanding debt on notes payable totaled $7.8 million at the end of the third quarter 2020, with the Company receiving a loan under the Paycheck Protection Plan in the amount of $2.7 million during the second quarter of 2020.
About Smith-Midland
Smith-Midland develops, manufactures, licenses, rents, and sells a broad array of precast concrete products for use primarily in the construction, transportation and utilities industries. Management and the board own approximately 17.5 percent of SMID stock, aligning with shareholder values.
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, the risk that the COVID-19 outbreak may significantly adversely affect future operations, product demand, the impact of competitive products and pricing, capacity and supply constraints or difficulties, general business and economic conditions, our debt exposure, 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.
Condensed Consolidated Statements of Operations(in thousands, except per share data)
| Three Months Ended September 30, | NineMonths Ended September 30, | |||||||||||||||
| 2020 | 2019 | 2020 | 2019 | |||||||||||||
| Revenue | ||||||||||||||||
| Product sales | $ | 6,485 | $ | 8,589 | $ | 20,036 | $ | 23,420 | ||||||||
| Barrier rentals | 3,171 | 625 | 4,820 | 1,787 | ||||||||||||
| Royalty income | 484 | 427 | 1,165 | 1,162 | ||||||||||||
| Shipping and installation revenue | 2,375 | 3,568 | 6,768 | 7,880 | ||||||||||||
| Total revenue | 12,515 | 13,209 | 32,789 | 34,249 | ||||||||||||
| Cost of goods sold | 8,674 | 10,616 | 24,971 | 27,278 | ||||||||||||
| Gross profit | 3,841 | 2,593 | 7,818 | 6,971 | ||||||||||||
| Operating expenses | ||||||||||||||||
| General and administrative expenses | 1,271 | 1,123 | 3,553 | 3,474 | ||||||||||||
| Selling expenses | 521 | 717 | 1,684 | 1,924 | ||||||||||||
| Total operating expenses | 1,792 | 1,840 | 5,237 | 5,398 | ||||||||||||
| Operating income (loss) | 2,049 | 753 | 2,581 | 1,573 | ||||||||||||
| Other income (expense) | ||||||||||||||||
| Interest expense | (53 | ) | (43 | ) | (166 | ) | (127 | ) | ||||||||
| Interest income | 8 | 9 | 26 | 31 | ||||||||||||
| Gain (loss) on sale of assets | (8 | ) | 19 | 58 | 30 | |||||||||||
| Other income | 22 | 20 | 41 | 64 | ||||||||||||
| Total other income (expense) | (31) | 5 | (41) | (2) | ||||||||||||
| Income (loss) before income tax expense (benefit) | 2,018 | 758 | 2,540 | 1,571 | ||||||||||||
| Income tax expense (benefit) | 469 | 179 | 588 | 364 | ||||||||||||
| Net income (loss) | $ | 1,549 | $ | 579 | $ | 1,952 | $ | 1,207 | ||||||||
| Basic and diluted earnings (loss) per common share | $ | 0.30 | $ | 0.11 | $ | 0.38 | $ | 0.24 | ||||||||
| Weighted average number of common shares outstanding: | ||||||||||||||||
| Basic | 5,184 | 5,134 | 5,184 | 5,134 | ||||||||||||
| Diluted | 5,184 | 5,138 | 5,184 | 5,138 | ||||||||||||
Condensed Consolidated Balance Sheets(in thousands)
| ASSETS | September 30,2020(Unaudited) | December 31,2019 | ||||||
| Current assets | ||||||||
| Cash | $ | 7,449 | $ | 1,364 | ||||
| Investment securities, available-for-sale, at fair value | 1,208 | 1,176 | ||||||
| Accounts receivable, net | ||||||||
| Trade - billed (less allowance for doubtful accounts of $388 and $333), including contract retentions | 9,753 | 12,723 | ||||||
| Trade - unbilled | 703 | 310 | ||||||
| Inventories, net | ||||||||
| Raw materials | 640 | 488 | ||||||
| Finished goods | 1,524 | 1,754 | ||||||
| Prepaid expenses and other assets | 838 | 784 | ||||||
| Refundable income taxes | 123 | 432 | ||||||
| Total current assets | 22,238 | 19,031 | ||||||
| Property and equipment, net | 18,923 | 17,735 | ||||||
| Deferred buy-back lease asset, net | 4,446 | 5,042 | ||||||
| Other assets | 326 | 307 | ||||||
| Total assets | $ | 45,933 | $ | 42,115 | ||||
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||
| Current liabilities | ||||||||
| Accounts payable - trade | $ | 2,499 | $ | 3,180 | ||||
| Accrued expenses and other liabilities | 1,016 | 125 | ||||||
| Deferred revenue | 1,611 | 1,891 | ||||||
| Accrued compensation | 1,342 | 1,075 | ||||||
| Accrued income taxes | 305 | - | ||||||
| Dividend payable | - | 282 | ||||||
| Deferred buy-back lease obligation | 1,203 | 966 | ||||||
| Operating lease liabilities | 83 | 81 | ||||||
| Current maturities of notes payable | 819 | 925 | ||||||
| Customer deposits | 594 | 1,077 | ||||||
| Total current liabilities | 9,472 | 9,602 | ||||||
| Deferred revenue | 523 | 241 | ||||||
| Deferred buy-back lease obligation | 4,091 | 5,183 | ||||||
| Operating lease liabilities | 232 | 296 | ||||||
| Notes payable - less current maturities | 6,961 | 4,086 | ||||||
| Deferred tax liability | 1,881 | 1,886 | ||||||
| Total liabilities | 23,160 | 21,294 | ||||||
| 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; 5,224,911 and 5,224,911 issued and 5,183,991 and 5,164,324 outstanding, respectively | 52 | 52 | ||||||
| Additional paid-in capital | 6,242 | 6,242 | ||||||
| Treasury stock, at cost, 40,920 shares | (102 | ) | (102 | ) | ||||
| Retained earnings | 16,581 | 14,629 | ||||||
| Total stockholders' equity | 22,773 | 20,821 | ||||||
| Total liabilities and stockholders' equity | $ | 45,933 | $ | 42,115 | ||||
Condensed Consolidated Statements of Cash Flows(in thousands)
| Nine Months Ended September 30, | ||||||||
| 2020 | 2019 | |||||||
| Cash flows from operating activities: | ||||||||
| Net income (loss) | $ | 1,952 | $ | 1,207 | ||||
| Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: | ||||||||
| Depreciation and amortization | 1,791 | 1,321 | ||||||
| Gain on sale of assets | (58 | ) | (30 | ) | ||||
| Unrealized (gain) loss | (16 | ) | (29 | ) | ||||
| Allowance for doubtful accounts | 55 | 115 | ||||||
| Stock compensation | - | 223 | ||||||
| Deferred taxes | (5 | ) | 1 | |||||
| (Increase) decrease in | ||||||||
| Accounts receivable - billed | 2,915 | 99 | ||||||
| Accounts receivable - unbilled | (393 | ) | 775 | |||||
| Inventories | 78 | 993 | ||||||
| Prepaid expenses and other assets | (96 | ) | (25 | ) | ||||
| Refundable income taxes | 309 | 783 | ||||||
| Increase (decrease) in | ||||||||
| Accounts payable - trade | (681 | ) | (973 | ) | ||||
| Accrued expenses and other liabilities | 891 | (562 | ) | |||||
| Deferred revenue | 2 | 358 | ||||||
| Accrued compensation | 267 | (557 | ) | |||||
| Accrued income taxes | 305 | - | ||||||
| Deferred buy-back lease obligation | (855 | ) | (201 | ) | ||||
| Customer deposits | (483 | ) | (508 | ) | ||||
| Net cash provided by (used in) operating activities | 5,978 | 2,990 | ||||||
| Cash flows from investing activities: | ||||||||
| Purchases of investment securities available-for-sale | (22 | ) | (24 | ) | ||||
| Purchases of property and equipment | (2,501 | ) | (3,392 | ) | ||||
| Deferred buy-back lease asset | - | (358 | ) | |||||
| Proceeds from sale of fixed assets | 144 | 145 | ||||||
| Net cash provided by (used in) investing activities | (2,379 | ) | (3,629 | ) | ||||
| Cash flows from financing activities: | ||||||||
| Proceeds from the line-of-credit construction draw | - | 500 | ||||||
| Proceeds from long-term borrowings | 5,426 | 49 | ||||||
| Repayments of long-term borrowings | (2,658 | ) | (556 | ) | ||||
| Dividends paid on common stock | (282 | ) | (281 | ) | ||||
| Net cash provided by (used in) financing activities | 2,486 | (288 | ) | |||||
| Net increase (decrease) in cash | 6,085 | (927 | ) | |||||
| Cash | ||||||||
| Beginning of period | 1,364 | 1,946 | ||||||
| End of period | $ | 7,449 | $ | 1,019 | ||||
| Supplemental Cash Flow information: | ||||||||
| Non-cash transaction - right of use asset and lease liability upon lease standard adoption | $ | - | $ | 414 | ||||
| Cash payments for interest | $ | 166 | $ | 127 | ||||
| Cash payments for income taxes | $ | 1 | $ | 41 | ||||
For more complete information on Smith-Midland Corporation, visit the Company's website at SMITHMIDLAND.com. The "Investor Relations" area will include the Company's Form 10-K.
Media Inquiries:AJ Krick, CFO540-439-3266investors@smithmidland.com
Sales Inquiries:info@smithmidland.com
Investor Relations Inquires:Three Part AdvisorsSteven Hooser, Partner214-872-2710shooser@threepa.com
SOURCE: Smith-Midland Corporation
View source version on accesswire.com: https://www.accesswire.com/615666/Smith-Midland-Announces-Third-Quarter-2020-Results
