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Smith-Midland Announces Third Quarter 2020 Results

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Smith-Midland Corporation (OTCQX:SMID) reported its Q3 2020 results, demonstrating significant financial improvements. The company achieved a 1,100 basis point increase in gross margin year-over-year, with earnings per share soaring 173% to $0.30. Barrier rental revenue surged 407%, driven by higher-margin rentals. Despite a 5% decrease in quarterly revenues to $12.5 million, net income rose 168% to $1.5 million. The firm emphasized improved liquidity, with cash and investments of $8.7 million, exceeding long-term debt of $7.8 million, showcasing resilience in a challenging environment.

Positive
  • Gross margin improved by 1,100 basis points to 31%.
  • Earnings per share increased 173% to $0.30.
  • Barrier rental revenue surged 407% compared to last year.
  • Net income rose 168% to $1.5 million for Q3.
  • Cash and investments totaled $8.7 million, surpassing long-term debt.
Negative
  • Quarterly revenues decreased by 5% year-over-year.
  • Nine-month revenues declined by 4% compared to the prior year.

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
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FAQ

What were Smith-Midland's Q3 2020 revenue results?

Smith-Midland reported Q3 2020 revenues of $12,515,000, a 5% decrease from the prior year.

How much did earnings per share increase for Smith-Midland in Q3 2020?

Earnings per share rose 173% to $0.30 in Q3 2020 compared to the previous year.

What is the net income for Smith-Midland in Q3 2020?

Net income for Q3 2020 was $1,549,000, a 168% increase from $579,000 in Q3 2019.

What is the financial health of Smith-Midland Corporation as of September 2020?

As of September 30, 2020, Smith-Midland had cash and investments of $8.7 million, exceeding its long-term debt of $7.8 million.

What was the barrier rental revenue growth for Smith-Midland in Q3 2020?

Smith-Midland reported a 407% increase in barrier rental revenue compared to Q3 2019.

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Smith-Midland Corporation

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Building Materials
Concrete Products, Except Block & Brick
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MIDLAND