Smith-Midland Reports Fourth Quarter and Year End 2023 Financial Results
Smith-Midland (NASDAQ: SMID) reported its highest ever quarterly and annual revenue for the fourth quarter and full year ending December 31, 2023. Q4 2023 revenue rose 13% to $16.4 million with product sales up 10% and service revenue up 17%. The company achieved an operating income of $542,000 and a net income of $230,000, or $0.04 per diluted share. For the full year, revenue increased 19% to $59.6 million. Operating income was up 31% to $1.1 million, while net income remained flat at $795,000, or $0.15 per diluted share, impacted by a significant state liability. Key highlights include a $3.8 million contract for J-J Hooks barriers and the addition of five new licensees in the U.S.
- Q4 revenue increased 13% to $16.4 million.
- Product sales rose 10% to $8.9 million in Q4.
- Service revenue grew 17% to $7.5 million in Q4.
- Q4 operating income of $542,000 compared to an operating loss of $72,000 last year.
- Q4 net income of $230,000, or $0.04 per diluted share.
- Full-year revenue increased 19% to $59.6 million.
- Operating income for the year rose 31% to $1.1 million.
- Gross profit for Q4 increased to $3.1 million from $2.5 million.
- Gross margin for Q4 improved to 19.1% from 17.3%.
- Awarded a $3.8 million contract for J-J Hooks barrier rental.
- Added five new licensees in the U.S., reaching a total of 75 worldwide.
- Strong cash position of $9.2 million as of December 31, 2023.
- Net income for the full year remained flat at $795,000, or $0.15 per diluted share.
- Service revenue for the full year decreased to $20.8 million from $22.3 million.
- Full-year gross margin decreased to 17.9% from 18.9%.
- Increased material and labor costs affected margins.
- Income tax expense for 2023 was $528,000, up from $145,000 in 2022.
- Architectural panel sales dropped to $1.1 million from $4.1 million in 2022.
- Form 12b-25 filed for late submission of Q1 2024 results.
Insights
The financial results reported by Smith-Midland Corporation for both the fourth quarter and the full year 2023 indicate significant growth in revenue and operating performance compared to the previous year. Revenue increased by
Operating income for the quarter improved to
However, the net income for the full year remained almost flat at
Key growth drivers such as the increased demand for utility vaults, driven by AI technology needs and the potential rise in infrastructure spending due to the Infrastructure and Jobs Act, present promising avenues for growth in 2024. However, investors should be mindful of ongoing inflationary pressures and their potential impact on margins.
The reported results highlight that Smith-Midland is well-positioned to benefit from upcoming infrastructure initiatives. The growth in backlog to
The company's strategic moves, including expanding its barrier rental fleet and investing in production capacity, align well with market needs. The anticipated increase in state funding from the Infrastructure and Jobs Act could further boost demand for their products, particularly the JJ-Hooks highway barrier system that meets MASH-TL3 standards.
The balance between product sales and service revenue also shows a diversified revenue stream, reducing dependency on a single business line. However, the slight decrease in service revenue highlights the need for continuous improvement and adaptation to market conditions.
Investors should note the company's proactive approach to managing costs and growing its product portfolio. The strategic expansion and addition of new licensees reflect a business model that leverages both direct sales and licensing revenue, providing a multi-channel revenue strategy.
Highest Quarterly and Annual Revenue in Company History
MIDLAND, VA / ACCESSWIRE / May 23, 2024 / Smith-Midland Corporation (NASDAQ:SMID), a provider of innovative, high-quality proprietary and patented precast concrete products and systems, today announced its fourth quarter and year-end results for the period ended December 31, 2023.
Fourth Quarter 2023 Summary (compared to prior-year quarter)
- Revenue increased 13 percent to
$16.4 million - Product sales increased 10 percent to
$8.9 million - Service revenue increased 17 percent to
$7.5 million - Operating income of
$542,000 compared to operating loss of$72,000 - Net income of
$230,000 , or$0.04 per diluted share, compared to$5,000 and$0.00 - Awarded
$3.8 million contract for J-J Hooks barrier rental in Virginia
Full Year 2023 Summary
- Revenue increased 19 percent to
$59.6 million - Operating income increased 31 percent to
$1.1 million - Net income was approximately equal to the prior year; the 2023 period adversely affected by a significant state liability
- Added five licensees in the United States to a total of 75 total licensees worldwide
"Our fourth quarter results closed out a very successful 2023, as we reported our highest quarterly and full-year revenue in company history," said Ashley Smith, Chairman and Chief Executive Officer of Smith-Midland. "Fourth quarter revenue increased 13 percent from the prior-year quarter, thanks to increased soundwall, miscellaneous and utility product sales, and barrier rental revenue more than doubled compared to the prior-year quarter."
"We believe the outlook for 2024 is very favorable and expect funding from the Infrastructure and Jobs Act to reach state and local governments in the latter half of the year. We are experiencing strong demand for our utility vaults and expect additional orders due to the continued need for data centers to support AI technology. The replacement cycle of barriers that meet the MASH-TL3 standard continues to be an opportunity for our patented JJ-Hooks highway barrier system. Our larger barrier rental fleet increases the size and scale of projects and jobs we can bid. In the coming year, we will continue to invest in our business, including the plant expansion in North Carolina and new soundwall forms for anticipated increased production capacity. Overall, we continue to be well-positioned to meet the anticipated increased demand across the sectors we serve and deliver long-term value to our shareholders," concluded Smith.
Fourth Quarter 2023 Results
The Company reported 2023 fourth quarter revenues of
Gross profit increased to
Operating income for the quarter was
Full-Year 2023 Results
Revenues for the year totaled
Gross profit was
Operating income for the year was
Product Sales
Total product sales for the full year 2023 were
Service Revenue
Service revenue which is comprised of royalty income, barrier rental revenue, and shipping and installation totaled
Balance Sheet and Liquidity
As of December 31, 2023, Smith-Midland's cash totaled
Macro Environment and Outlook
The Company anticipates increased sales volume for the full year of 2024 compared to 2023. Infrastructure initiatives across the United States continue to drive greater bidding activity and a subsequent increase in backlog for its portfolio of patented, proprietary, and custom products. Inflationary pressures still remain, particularly across labor and materials costs, and the Company continues to manage these input costs while attracting and retaining skilled labor. Backlog was approximately
Preliminary First Quarter 2024 Results
The Company anticipates first quarter 2024 revenue to be at least
On May 15, 2024, the Company filed a Form 12b-25 with the Securities and Exchange Commission to provide notice of the late filing of its Quarterly Report on Form 10-Q ("Form 10-Q") for the period ended March 31, 2024. The Company anticipates it will report its first quarter results in the near future.
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 utility industries.
Smith-Midland Corporation has three manufacturing facilities 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, our material weaknesses in internal controls, 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
and Subsidiaries
Consolidated Balance Sheets
(in thousands, except share and per share data)
| December 31, | ||||||||
| 2023 | 2022 | |||||||
ASSETS | ||||||||
Current assets | ||||||||
Cash | $ | 9,175 | $ | 6,726 | ||||
Accounts receivable, net | ||||||||
Trade - billed (less allowances of | 17,209 | 16,223 | ||||||
Trade - unbilled | 525 | 990 | ||||||
Inventories, net | ||||||||
Raw materials | 2,329 | 1,776 | ||||||
Finished goods | 2,821 | 2,042 | ||||||
Prepaid expenses | 1,266 | 706 | ||||||
Refundable income taxes | - | 477 | ||||||
Total current assets | 33,325 | 28,940 | ||||||
Property and equipment, net | 27,680 | 25,124 | ||||||
Other assets | 343 | 249 | ||||||
Total assets | $ | 61,348 | $ | 54,313 | ||||
Smith-Midland Corporation
and Subsidiaries
Consolidated Balance Sheets
(in thousands, except share and per share data)
(continued)
| December 31, | ||||||||
| 2023 | 2022 | |||||||
LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||
Current liabilities | ||||||||
Accounts payable - trade | $ | 7,336 | $ | 5,816 | ||||
Accrued expenses and other liabilities | 831 | 799 | ||||||
Deferred revenue | 2,717 | 2,243 | ||||||
Accrued compensation | 1,203 | 788 | ||||||
Accrued income tax | 473 | 146 | ||||||
Operating lease liabilities | 43 | 77 | ||||||
Current maturities of notes payable | 636 | 618 | ||||||
Customer deposits | 2,779 | 737 | ||||||
Total current liabilities | 16,018 | 11,224 | ||||||
Deferred revenue | 4,424 | 2,174 | ||||||
Operating lease liabilities | 2 | 45 | ||||||
Notes payable - less current maturities | 5,092 | 5,730 | ||||||
Deferred tax liability | 1,651 | 2,085 | ||||||
Total liabilities | 27,187 | 21, 258 | ||||||
Commitments and contingencies (Note 9) | ||||||||
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; 5,349,599 and 5,345,189 issued and 5,308,679 and 5,304,269 outstanding, respectively | 54 | 53 | ||||||
Additional paid-in capital | 7,814 | 7,440 | ||||||
Treasury stock, at cost, 40,920 shares | (102 | ) | (102 | ) | ||||
Retained earnings | 26,395 | 25,664 | ||||||
Total stockholders' equity | 34,161 | 33,055 | ||||||
Total liabilities and stockholders' equity | $ | 61,348 | $ | 54,313 | ||||
Smith-Midland Corporation
and Subsidiaries
Consolidated Statements of Income
(in thousands, except per share data)
| Year Ended December 31, | ||||||||
| 2023 | 2022 | |||||||
Revenue | ||||||||
Product sales | $ | 38,748 | $ | 27,821 | ||||
Barrier rentals | 6,330 | 6,545 | ||||||
Royalty income | 2,633 | 2,498 | ||||||
Shipping and installation revenue | 11,869 | 13,267 | ||||||
Total revenue | 59,580 | 50,131 | ||||||
Cost of sales | 48,928 | 40,662 | ||||||
Gross profit | 10,652 | 9,469 | ||||||
General and administrative expenses | 5,990 | 5,551 | ||||||
Selling expenses | 3,544 | 3,064 | ||||||
Total operating expenses | 9,534 | 8,615 | ||||||
Operating income | 1,118 | 854 | ||||||
Other income (expense) | ||||||||
Interest expense | (255 | ) | (260 | ) | ||||
Interest income | 24 | 14 | ||||||
Gain on sale of assets | 346 | 109 | ||||||
Other income, net | 90 | 228 | ||||||
Total other income (expense), net | 205 | 91 | ||||||
Income before income tax expense | 1,323 | 945 | ||||||
Income tax expense | 528 | 145 | ||||||
Net income | $ | 795 | $ | 800 | ||||
Basic and diluted earnings per share | $ | 0.15 | $ | 0.15 | ||||
Smith-Midland Corporation
and Subsidiaries
Consolidated Statements of Stockholders' Equity
(in thousands, except share data)
Common Stock | Treasury Stock | Additional Paid-in Capital | ||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Retained Earnings | Total | |||||||||||||||||||||||
Balance, December 31, 2021 | 5,353,095 | $ | 53 | (40,920 | ) | $ | (102 | ) | $ | 6,935 | $ | 24,864 | $ | 31,750 | ||||||||||||||
Vesting of restricted stock | - | - | - | - | 505 | - | 505 | |||||||||||||||||||||
Forfeiture of restricted stock | (7,906 | ) | - | - | - | - | - | - | ||||||||||||||||||||
Net income | - | - | - | - | - | 800 | 800 | |||||||||||||||||||||
Balance, December 31, 2022 | 5,345,189 | $ | 53 | (40,920 | ) | $ | (102 | ) | $ | 7,440 | $ | 25,664 | $ | 33,055 | ||||||||||||||
Adjustment for Adoption of ASU 2016-13 | - | - | - | - | - | (64 | ) | (64 | ||||||||||||||||||||
Vesting of restricted stock | - | 1 | - | - | 374 | - | 375 | |||||||||||||||||||||
Issuance of restricted stock | 4,410 | - | - | - | - | - | - | |||||||||||||||||||||
Net income | - | - | - | - | - | 795 | 795 | |||||||||||||||||||||
Balance, December 31, 2023 | 5,349,599 | $ | 54 | (40,920 | ) | $ | (102 | ) | $ | 7,814 | $ | 26,395 | $ | 34,161 | ||||||||||||||
Smith-Midland Corporation
and Subsidiaries
Consolidated Statements of Cash Flows
(in thousands)
Year Ended December 31, | ||||||||
| 2023 | 2022 | |||||||
Reconciliation of net income to net cash provided by (used in) operating activities | ||||||||
Net income (loss) | $ | 795 | $ | 800 | ||||
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities | ||||||||
Depreciation and amortization | 2,399 | 2,881 | ||||||
(Gain) loss on sale of fixed assets | (346 | ) | (109 | ) | ||||
Allowance for credit losses and doubtful accounts | (39 | ) | 344 | |||||
Stock compensation | 375 | 505 | ||||||
Inventory Reserve | 19 | 14 | ||||||
Deferred taxes | (434 | ) | 130 | |||||
(Increase) decrease in | ||||||||
Accounts receivable - billed | (1,010 | ) | (6,554 | ) | ||||
Accounts receivable - unbilled | 464 | (551 | ) | |||||
Inventories | (1,351 | ) | (987 | ) | ||||
Prepaid expenses and other assets | (678 | ) | (227 | ) | ||||
Refundable income taxes | 478 | (66 | ) | |||||
Increase (decrease) in | ||||||||
Accounts payable - trade | 1,520 | 3,745 | ||||||
Accrued expenses and other liabilities | 32 | 142 | ||||||
Deferred revenue | 2,724 | 98 | ||||||
Accrued compensation | 415 | (248 | ) | |||||
Accrued income taxes | 327 | (1,887 | ) | |||||
Deferred buy-back lease obligation, net | - | (3,776 | ) | |||||
Customer deposits | 2,042 | (588 | ) | |||||
Net cash provided by (used in) operating activities | $ | 7,732 | $ | (6,334 | ) | |||
Cash flows from investing activities | ||||||||
Purchases of property and equipment | (5,010 | ) | (2,749 | ) | ||||
Proceeds from sale of fixed assets | 346 | 118 | ||||||
Net cash provided by (used in) investing activities | (4,664 | ) | (2,631 | ) | ||||
Cash flows from financing activities | ||||||||
Proceeds from long-term borrowings | - | 2,805 | ||||||
Repayments of long-term borrowings | (619 | ) | (581 | ) | ||||
Capitalized Loan Costs | - | (25 | ) | |||||
Net cash provided by (used in) financing activities | (619 | ) | 2,199 | |||||
Net increase (decrease) in cash | 2,449 | (6,766 | ) | |||||
Cash, beginning of year | 6,726 | 13,492 | ||||||
Cash, end of year | $ | 9,175 | $ | 6,726 | ||||
Supplemental cash flow information: | ||||||||
Cash payments for interest | $ | 255 | $ | 260 | ||||
Cash payments for income taxes | $ | 189 | $ | 2,260 | ||||
Capital expenditures in accounts payable | $ | 2,049 | $ | 2,014 | ||||
SOURCE: Smith-Midland Corporation
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