MIDLAND, VA / ACCESSWIRE / November 10, 2020 / Smith-Midland Corporation (the Company) (OTCQX:SMID), which develops, 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

  • Company reports 1,100 basis point improvement in Gross Margin compared to the prior year third quarter
  • Earnings Per Share increases 173 percent compared to the prior year third quarter
  • Barrier Rental Revenue increases 407 percent over the prior year third quarter

"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,     Nine Months 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, CFO
540-439-3266
investors@smithmidland.com

Sales Inquiries:
info@smithmidland.com

Investor Relations Inquires:
Three Part Advisors
Steven Hooser, Partner
214-872-2710
shooser@threepa.com

SOURCE: Smith-Midland Corporation



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