Royalty Income Strongest Quarter in Company History

MIDLAND, VA / ACCESSWIRE / August 10, 2021 / Smith-Midland Corporation (NASDAQ:SMID) provider of innovative, high-quality proprietary and patented precast concrete products and systems today announced second quarter results for 2021.

Second Quarter 2021 Highlights

  • 68 percent increase in royalty income, the strongest quarter in Company history
  • 30 percent increase in core fleet barrier rental revenues
  • Rental barrier fleet expansion to 300,000 linear fleet by year end 2021
  • Received Platinum Safety Award from Associated Builders and Contractors (ABC)

"I am pleased to announce another great quarter and first half of 2021 as we execute against our long-term growth plans. As stated last quarter, we had a tremendous number of one-time special projects during Q1 which drove stronger than typical results. Moving into Q2, the strength in the rental business remains robust. As we continue driving a higher mix of barrier rental business by increasing our core rental fleet and proactively shifting our customers to barrier rentals versus sales, we will continue to drive higher margins. Our second quarter 2021 royalty income posted historic gains; a notable 68 percent increase compared to last year. We expect to see additional royalty income growth in future quarters related to the approval of our patented JJ-Hooks interlocking highway barrier system in the California market that we announced in February of this year," said Ashley Smith, Chief Executive Officer. Our focus on sales for our lightweight proprietary SlenderWall cladding system is yielding results and we are happy to see those efforts gaining traction. I also wanted to mention how proud I am of our team's receipt of the Platinum Safety Award from Associated Builders and Contractors. Disciplined execution and emphasizing our lean manufacturing methodologies as we grow is key. Management and the Board remain closely aligned with our shareholders and look to continuously drive long term shareholder value," concluded Smith.

Second Quarter 2021 Results

The Company reported 2021 second quarter revenues of $12.3 million compared to $10.5 million for second quarter 2020. Operating income for second quarter 2021 increased to approximately $1.3 million compared to $573,000 in second quarter 2020. Net income increased from $441,000 for the second quarter 2020 compared to $985,000 for the second quarter 2021. Earnings per share increased from $0.09 in second quarter 2020 to $0.19 second quarter 2021.

Six Month 2021 Results

The Company reported $27.5 million in revenue for the six-months ended June 30, 2021 compared to $20.3 million during the same period in 2020. Operating income for the first half of 2021 increased to $5.1 million from $532,000, reflecting an increase of approximately 855 percent over the same period of last year. Net income for the first half of 2021 totaled $3.9 million compared to $403,000 in the first half of 2020, an 856 percent improvement. Earnings per share increased 825 percent to $0.74 for the six months ended June 30, 2021 compared to $0.08 in the same period of 2020.

Product Sales

Smith-Midland reports revenue in two categories: products sales and service revenue. Product sales for second quarter 2021 totaled $7.2 million compared to $6.7 million second quarter 2020. The Company's architectural panel sales for the second quarter 2021 posted an increase of 63 percent year-over-year. Soundwall revenue increased 9 percent from $2.2 million to $2.4 million. Building sales and utility sales saw a 10 percent and 21 percent increase, respectively.

Service Revenue

Barrier rentals posted a solid increase of 30 percent during the second quarter of 2021. The Company is prepared to meet barrier rental demand by increasing the rental fleet to 300,000 linear feet by the end of 2021. Smith-Midland will manufacture the barrier and expects the $1.0 million investment to pay off quickly. Royalty income improved an impressive 68 percent compared to second quarter 2020. The royalty increase is primarily attributed to increases in licensee production of the Company's proprietary, interlocking JJ-Hooks highway barriers. Smith-Midland's licensee expansion into California with the Company's patented and proprietary product offerings is expected to further elevate royalty income moving forward. Service revenues totaled $5.1 million for second quarter 2021 compared to $3.8 million in the prior year reflecting a 35 percent increase overall.

Balance Sheet and Liquidity

As of June 30, 2021, Smith-Midland's cash and investments totaled $14.4 million compared to $5.6 million in the second quarter 2020. Accounts receivable equaled $11.8 million while debt at the end of the second quarter 2021 totaled $4.5 million. Smith-Midland's PPP loan of approximately $2.7 million was forgiven in full subsequent to the end of the second quarter 2021. Capital spending declined year-over-year to $926,000 compared to $2.3 million in 2020.

Macro Environment and Outlook

Smith-Midland is currently experiencing many favorable tailwinds with the transition to MASH TL3 barrier, and certainly the U.S. Infrastructure bill would be impactful for our business; however, the Company is not immune from macro challenges. Many U.S. businesses are being impacted by logistical and supply chain disruption. Overall, Smith-Midland is well positioned and has been proactive by increasing raw material inventories to ensure the Company is able to meet customer demand. The Company's barrier rental business remains very strong, and Smith-Midland is accelerating sales for the light weight, proprietary SlenderWall cladding system. Backlog was approximately $26.0 million recorded as of August 2, 2021, compared to $25.6 million at the same time in 2020. Smith-Midland's innovative, patented proprietary products are well positioned to drive the Company into the future. Smith-Midland will continuously leverage lean manufacturing methodologies to optimize operations.

About Smith-Midland

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 utilities industries. Management and the board own approximately 20 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 coronavirus outbreak may adversely affect future operations, product demand, the impact of competitive products and pricing, capacity and supply constraints or difficulties, general business and economic conditions, out 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.


Media Inquiries:
AJ Krick, CFO

Investor Relations:
Steven Hooser or Deidra Roy
Three Part Advisors, LLC

(in thousands, except share and per share data)

June 30,
December 31,


Current assets
 $13,194  $8,764   
Investment securities, available-for-sale, at fair value
  1,243   1,228   
Accounts receivable, net
Trade - billed (less allowance for doubtful accounts of approximately $400), including contract retentions
  11,826   9,798   
Trade - unbilled
  636   742   
Inventories, net
Raw materials
  1,295   643   
Finished goods
  1,448   1,551   
Prepaid expenses and other assets
  558   615   

Total current assets
  30,200   23,341   

Property and equipment, net
  18,612   18,602   

Deferred buy-back lease asset, net
  3,818   4,237   

Other assets
  287   319   

Total assets
 $52,917  $46,499   

(in thousands, except share and per share data)

June 30,
December 31,

Current liabilities
Accounts payable - trade
 2,944  1,866   
Accrued expenses and other liabilities
  577   875   
Deferred revenue
  2,617   1,774   
Accrued compensation
  1,496   1,318   
Accrued income taxes
  1,045   470   
Deferred buy-back lease obligation
  1,195   1,203   
Operating lease liabilities
  87   85   
Current portion of PPP loan
  2,692   -   
Current maturities of notes payable
  556   740   
Customer deposits
  833   569   

Total current liabilities
  14,042   8,900   

Deferred revenue
  1,423   600   
Deferred buy-back lease obligation
  3,196   3,790   
Operating lease liabilities
  167   211   
Notes payable - less current maturities
  3,959   4,196   
PPP loan - less current portion
  -   2,692   
Deferred tax liability
  2,457   2,461   

Total liabilities
  25,244   22,850   

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; 5,326,595 and 5,279,411 issued and 5,202,158 and 5,202,158 outstanding, respectively
  53   52   
Additional paid-in capital
  6,576   6,405   
Treasury stock, at cost, 40,920 shares
  (102)  (102)  
Retained earnings
  21,146   17,294   

Total stockholders' equity
  27,673   23,649   

Total liabilities and stockholders' equity
 52,917  46,499   


(in thousands, except per share data)

 Three Months Ended June 30,  Six Months Ended June 30, 

 2021  2020  2021  2020 
Product sales
 7,243  6,699  14,662  13,550 
Barrier rentals
  1,182   907   6,958   1,650 
Royalty income
  692   413   1,112   681 
Shipping and installation revenue
  3,190   2,431   4,791   4,394 

Total revenue
  12,307   10,450   27,523   20,275 

Cost of goods sold
  8,993   8,073   18,488   16,297 

Gross profit
  3,314   2,377   9,035   3,978 

Operating expenses
General and administrative expenses
  1,340   1,230   2,665   2,282 
Selling expenses
  696   574   1,291   1,164 

Total operating expenses
  2,036   1,804   3,956   3,446 

Operating income (loss)
  1,278   573   5,079   532 

Other income (expense)
Interest expense
  (56)  (57)  (98)  (113)
Interest income
  10   9   19   17 
Gain on sale of assets
  42   30   88   66 
Other income
  39   16   33   20 

Total other income (expense)
  35   (2)  42   (10)

Income (loss) before income tax expense (benefit)
  1,313   571   5,121   522 

Income tax expense (benefit)
  328   130   1,269   119 

Net income (loss)
 985  441  3,852  403 

Basic and diluted earnings (loss) per common share
 0.19  0.09  0.74  0.08 

Weighted average number of common shares outstanding:
  5,202   5,184   5,202   5,184 
  5,218   5,184   5,214   5,184 


(in thousands)

 Six Months Ended June 30, 

 2021  2020 
Cash flows from operating activities:
Net income (loss)
 3,852  403 
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation and amortization
  1,318   1,180 
Gain (loss) on sale of assets
  (88)  (66)
Unrealized (gain) loss on investment securities available for sale
  (11)  (3)
Allowance for doubtful accounts
  15   68 
Stock compensation
  172   - 
Deferred taxes
  (4)  3 
(Increase) decrease in
Accounts receivable - billed
  (2,043)  1,898 
Accounts receivable - unbilled
  106   (192)
  (549)  134 
Prepaid expenses and other assets
  73   (101)
Refundable income taxes
  -   136 
Increase (decrease) in
Accounts payable - trade
  1,078   (62)
Accrued expenses and other liabilities
  (298)  186 
Deferred revenue
  1,666   (6)
Accrued compensation
  178   (190)
Accrued income taxes
  575   - 
Deferred buy-back lease obligation
  (602)  (555)
Customer deposits
  264   (251)
Net cash provided by (used in) operating activities
  5,702   2,582 
Cash flows from investing activities:
Purchases of investment securities available-for-sale
  (13)  (15)
Purchases of property and equipment
  (926)  (2,326)
Proceeds from sale of fixed assets
  88   71 
Net cash provided by (used in) investing activities
  (851)  (2,270)
Cash flows from financing activities:
Proceeds from long-term borrowings
  -   5,426 
Repayments of long-term borrowings
  (421)  (2,416)
Dividends paid on common stock
  -   (282)
Net cash provided by (used in) financing activities
  (421)  2,728 
Net increase (decrease) in cash
  4,430   3,040 
Beginning of period
  8,764   1,364 
End of period
 13,194  4,404 

Supplemental Cash Flow information:
Cash payments for interest
 98  113 
Cash payments for income taxes
 713  1 

SOURCE: Smith-Midland Corporation

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