Smith-Midland (SMID) 10-Q 14 Aug 15 2015 Q2 Quarterly report Financial data

Document Entity Information

Document Entity Information - shares	6 Months Ended
	Jun. 30, 2015	Aug. 05, 2015
Document and Entity Information [Abstract]
Entity Registrant Name	SMITH MIDLAND CORP
Entity Central Index Key	924,719
Current Fiscal Year End Date	--12-31
Entity Filer Category	Smaller Reporting Company
Document Type	10-Q
Document Period End Date	Jun. 30, 2015
Document Fiscal Year Focus	2,015
Document Fiscal Period Focus	Q2
Amendment Flag	false
Entity Common Stock, Shares Outstanding		4,852,628

Condensed Consolidated Balance

Condensed Consolidated Balance Sheets (Unaudited) - USD ($)	Jun. 30, 2015	Dec. 31, 2014
Current assets
Cash and cash equivalents	$ 1,941,740	$ 3,572,405
Investment securities, available-for-sale, at fair value	1,011,853	1,013,417
Accounts receivable, net
Trade - billed (less allowance for doubtful accounts of $295,246 and $267,985)	6,394,261	4,092,924
Trade - unbilled	95,896	240,635
Inventories
Raw materials	738,119	353,089
Finished goods	1,144,443	1,373,455
Prepaid expenses and other assets	212,797	126,047
Refundable income taxes	754,753	722,948
Deferred taxes	576,000	441,000
Total current assets	12,869,862	11,935,920
Property and equipment, net	4,283,280	4,106,611
Other assets	261,040	255,385
Total assets	17,414,182	16,297,916
Current liabilities
Accounts payable - trade	1,833,230	1,152,506
Accrued expenses and other liabilities	732,854	539,549
Accrued compensation	589,555	442,651
Income taxes payable	361,514	363,821
Customer deposits	1,012,509	432,274
Total current liabilities	4,529,662	2,930,801
Notes payable - less current maturities	2,048,692	2,230,364
Deferred tax liability	640,000	663,000
Total liabilities	7,218,354	5,824,165
Commitments and contingencies	0	0
Stockholders’ equity
Preferred stock, $.01 par value; authorized 1,000,000 shares, none outstanding	0	0
Common stock, $.01 par value; authorized 8,000,000 shares; 4,893,548 and 4,881,548 issued and outstanding	48,935	48,815
Additional paid-in capital	5,062,418	5,041,438
Accumulated other comprehensive loss, net	(26,139)	(6,629)
Retained earnings	5,212,914	5,492,427
Stockholders' Equity before Treasury Stock	10,298,128	10,576,051
Treasury stock, at cost, 40,920 shares	(102,300)	(102,300)
Total stockholders’ equity	10,195,828	10,473,751
Total liabilities and stockholders' equity	$ 17,414,182	$ 16,297,916

Condensed Consolidated Balance3

Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical) - USD ($)	Jun. 30, 2015	Dec. 31, 2014
Current Assets:
Allowance for doubtful accounts	$ 295,246	$ 267,985
Stockholders' equity
Common stock, par value (usd per share)	$ 0.01	$ 0.01
Common stock, shares authorized	8,000,000	8,000,000
Common stock, shares issued	4,893,548	4,881,548
Common stock, shares outstanding	4,893,548	4,881,548
Treasury stock, at cost	40,920	40,920
Preferred stock, par value (usd per share)	$ 0.01	$ 0.01
Preferred stock, shares authorized	1,000,000	1,000,000
Preferred stock, shares outstanding	0	0

Condensed Consolidated Statemen

Condensed Consolidated Statements of Operations (Unaudited) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014
Revenue
Products sales and leasing	$ 5,600,996	$ 4,666,367	$ 8,869,733	$ 8,736,705
Shipping and installation revenue	813,894	1,393,336	1,413,147	2,508,240
Royalties	482,675	368,613	814,810	820,779
Total revenue	6,897,565	6,428,316	11,097,690	12,065,724
Cost of goods sold	5,229,992	5,022,910	8,900,125	9,930,312
Gross profit	1,667,573	1,405,406	2,197,565	2,135,412
Operating expenses
General and administrative expenses	746,357	806,931	1,621,064	1,576,002
Selling expenses	514,760	546,889	1,018,774	1,086,369
Total operating expenses	1,261,117	1,353,820	2,639,838	2,662,371
Gain on sale of assets	6,373	22,102	11,627	34,079
Other income	3,949	22,596	14,556	52,673
Operating income (loss)	416,778	96,284	(416,090)	(440,207)
Interest income (expense)
Interest expense	(23,737)	(29,847)	(50,730)	(58,604)
Interest income	816	1,544	1,308	7,256
Total other expense	(22,921)	(28,303)	(49,422)	(51,348)
Income before income tax expense	393,857	67,981	(465,512)	(491,555)
Income tax expense (benefit)	149,000	38,000	(186,000)	(193,000)
Net income (loss)	$ 244,857	$ 29,981	$ (279,512)	$ (298,555)
Basic earnings (loss) per share (in dollars per share)	$ 0.05	$ 0.01	$ (0.06)	$ (0.06)
Diluted earnings (loss) per share (in dollars per share)	$ 0.05	$ 0.01	$ (0.06)	$ (0.06)
Weighted average number of common shares outstanding:
Basic	4,892,686	4,881,548	4,892,686	4,881,548
Diluted	4,938,234	4,928,652	4,892,686	4,881,548

Condensed Consolidated Stateme5

Condensed Consolidated Statement of Comprehensive Income (Loss) (Unaudited) Statement - USD ($)	3 Months Ended			6 Months Ended
	Jun. 30, 2015		Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014
Statement of Comprehensive Income [Abstract]
Net income	$ 244,857		$ 29,981	$ (279,512)	$ (298,555)
Other comprehensive gain (loss), net of tax:
Net unrealized holding gain (loss)	(10,438)	[1]	11,631	(16,206)	28,513	[2]
Comprehensive income	$ 234,419		$ 41,612	$ (295,718)	$ (270,042)
[1]	Unrealized gains (losses) on available for sale securities are shown net of income tax benefit of $6,000 for June 30, 2015 and an income tax expense of $8,000 for June 30, 2014.
[2]	Unrealized gains (losses) on available for sale securities are shown net of income tax benefit of $10,000 for June 30, 2015 and an income tax expense of $19,000 for June 30, 2014.

Condensed Consolidated Stateme6

Condensed Consolidated Statement of Comprehensive Income (Loss) (Unaudited) (Parenthetical) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014
Statement of Comprehensive Income [Abstract]
Unrealized gain (loss) on securities arising during period, tax	$ 6	$ 8	$ 10	$ 19

Condensed Consolidated Stateme7

Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($)	6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014
Reconciliation of net loss to cash provided (absorbed) by operating activities
Net loss	$ (279,512)	$ (298,555)
Adjustments to reconcile net loss to net cash provided (absorbed) by operating activities:
Depreciation and amortization	333,931	312,066
Gain on disposal of fixed assets	(11,627)	(34,079)
Deferred taxes	(165,505)	(47,000)
(Increase) decrease in:
Accounts receivable - billed	(2,301,337)	748,418
Accounts receivable - unbilled	144,739	(164,166)
Inventories	(156,018)	410,994
Prepaid expenses and other assets	(92,405)	(276,288)
Prepaid income taxes	(31,805)	89,303
Increase (decrease) in:
Accounts payable - trade	680,725	(116,661)
Accrued expenses and other	193,304	(54,650)
Accrued compensation	146,904	0
Accrued income taxes payable	0	(302,263)
Customer deposits	580,235	(203,881)
Net cash provided (absorbed) by operating activities	(958,371)	63,238
Cash flows from investing activities:
Purchases of investment securities available-for-sale	(17,943)	(36,217)
Purchases of property and equipment	(506,893)	(217,599)
Proceeds from sale of fixed assets	15,421	35,619
Net cash absorbed by investing activities	(509,415)	(218,197)
Cash flows from financing activities:
Proceeds from long-term borrowings	0	55,160
Repayments of long-term borrowings	(183,979)	(187,700)
Proceeds from options exercised	21,100	0
Net cash absorbed by financing activities	(162,879)	(132,540)
Net decrease in cash and cash equivalents	(1,630,665)	(287,499)
Cash and cash equivalents
Beginning of period	3,572,405	3,136,063
End of period	$ 1,941,740	$ 2,848,564

Interim Financial Reporting

Interim Financial Reporting	6 Months Ended
	Jun. 30, 2015
INTERIM FINANCIAL REPORTING [Abstract]
Interim Financial Reporting	INTERIM FINANCIAL REPORTING Basis of Presentation The accompanying condensed consolidated financial statements were prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information, and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, we have condensed or omitted certain information and footnote disclosures that are included in our annual financial statements. These condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and the related notes included in our Annual Report on Form 10-K for the year ended December 31, 2014 . The December 31, 2014 balance sheet was derived from audited financial statements included in the Form 10-K. In the opinion of management, these condensed consolidated financial statements reflect all adjustments (which consist of normal, recurring adjustments) necessary for a fair presentation of the financial position and results of operations and cash flows for the periods presented.The results disclosed in the condensed consolidated statements of operations are not necessarily indicative of the results to be expected in any future periods. Reclassifications Certain minor reclassifications have been made in prior year amounts to conform to the current year presentation. Use of Estimates The preparation of consolidated financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Revenue Recognition Smith-Midland Corporation (the "Company") primarily recognizes revenue on the sale of its standard precast concrete products at shipment date, including revenue derived from any projects to be completed under short-term contracts. Installation of the Company’s standard products is typically performed by the customer; however, in some circumstances, the Company will install certain products which are accomplished at the time of delivery. The installation activities of smaller buildings are usually performed at the Company's site and shipped completed to the customers site. In larger utility building sales, the buildings are erected on the customers site within one or two days, depending on style and size. Leasing fees are paid at the beginning of the lease agreement and recorded to a deferred revenue account. As the revenue is earned each month during the contract, the amount earned is recorded as lease income and an equivalent amount is debited to deferred revenue. Royalties are recognized as a percent of sales of the licensed product sold by the licensee on a monthly basis. The Company licenses certain other precast companies to produce its licensed products to our engineering specifications under licensing agreements. The agreements are typically for five year terms and require royalty payments from 4% to 6% which are paid on a monthly basis. With respect to certain sales of Soundwall panels, architectural precast panels and Slenderwall™ precast panels, revenue is recognized using the percentage-of-completion method for recording revenues on long term contracts pursuant to ASC 605-35-25. The contracts are executed by both parties and clearly stipulate the requirements for progress payments and a schedule of delivery dates. Provisions for estimated losses on contracts are made in the period in which such losses are determined. Shipping revenues are recognized in the period the shipping services are provided to the customer. Smith-Midland products are typically sold pursuant to an implicit warranty as to merchantability only. Warranty claims are reviewed and resolved on a case by case method. Although the Company does incur costs for these types of expense, historically the amount of expense is immaterial. Cash and Cash Equivalents Cash and cash equivalents includes money market accounts. Investments Investments in marketable securities are classified as available-for-sale and are stated at market value with unrealized holding gains and losses excluded from earnings and reported as a separate component of stockholders' equity until realized.

Net Income Per Common Share

Net Income Per Common Share	6 Months Ended
	Jun. 30, 2015
Earnings Per Share [Abstract]
Net Income Per Common Share	NET INCOME (LOSS) PER COMMON SHARE Basic earnings per common share exclude all dilutive stock options and are computed using the weighted average number of common shares outstanding during the period. The diluted earnings per common share calculation reflect the potential dilutive effect of securities that could share in earnings of an entity. Outstanding options were excluded from the diluted earnings per share calculation because they would have an anti-dilutive effect were 81,166 for the three months ended June 30, 2015 and 254,166 for the three months ended June 30, 2014. Three Months Ended June 30, 2015 2014 Basic income per share Income available to common shareholders $ 244,857 $ 29,981 Weighted average shares outstanding 4,892,686 4,881,548 Basic income per share $ 0.05 $ 0.01 Diluted income per share Income available to common shareholders $ 244,857 $ 29,981 Weighted average shares outstanding 4,892,686 4,881,548 Dilutive effect of stock options 45,548 47,104 Total weighted average shares outstanding 4,938,234 4,928,652 Diluted income per share $ 0.05 $ 0.01 Six Months Ended June 30, 2015 2014 Basic loss per share Loss available to common shareholders $ (279,512 ) $ (298,555 ) Weighted average shares outstanding 4,892,686 4,881,548 Basic loss per share $ (0.06 ) $ (0.06 ) Diluted loss per share Loss available to common shareholders $ (279,512 ) $ (298,555 ) Weighted average shares outstanding 4,892,686 4,881,548 Dilutive effect of stock options — — Total weighted average shares outstanding 4,892,686 4,881,548 Diluted loss per share $ (0.06 ) $ (0.06 )

Stock Options

Stock Options	6 Months Ended
	Jun. 30, 2015
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]
Stock Options	STOCK OPTIONS In accordance with ASC 718, the Company had no stock option expense for the three and six months ended June 30, 2015 and June 30, 2014 . The Company uses the Black-Scholes option-pricing model to measure the fair value of stock options granted to employees. The Company did not not issue any stock options for the three and six months ended June 30, 2015 or for the three and six months ended June 30, 2014. The following table summarized options outstanding at June 30, 2015 Number of Shares Weighted Average Exercise Price Balance, December 31, 2014 305,099 $ 1.97 Granted — — Forfeited — — Exercised (12,000 ) 1.76 Outstanding options at June 30, 2015 293,099 $ 1.98 Outstanding exercisable options at June 30, 2015 293,099 $ 1.98 The intrinsic value of outstanding and exercisable options at June 30, 2015 was approximately $ 100,000 .

Subsequent Events

Subsequent Events	6 Months Ended
	Jun. 30, 2015
Subsequent Events [Abstract]
Subsequent Events	SUBSEQUENT EVENTS Through the date of the filing of this Form 10-Q, the Company has evaluated events and transactions occurring subsequent to June 30, 2015 and has determined that there have been no significant events or transactions that provide additional evidence about conditions of the Company that existed as of the balance sheet date.

Interim Financial Reporting (Po

Interim Financial Reporting (Policies)	6 Months Ended
	Jun. 30, 2015
INTERIM FINANCIAL REPORTING [Abstract]
Basis of Presentation	The accompanying condensed consolidated financial statements were prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information, and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, we have condensed or omitted certain information and footnote disclosures that are included in our annual financial statements. These condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and the related notes included in our Annual Report on Form 10-K for the year ended December 31, 2014 . The December 31, 2014 balance sheet was derived from audited financial statements included in the Form 10-K. In the opinion of management, these condensed consolidated financial statements reflect all adjustments (which consist of normal, recurring adjustments) necessary for a fair presentation of the financial position and results of operations and cash flows for the periods presented.The results disclosed in the condensed consolidated statements of operations are not necessarily indicative of the results to be expected in any future periods.
Reclassification	Reclassifications Certain minor reclassifications have been made in prior year amounts to conform to the current year presentation.
Use of Estimates	Use of Estimates The preparation of consolidated financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Revenue Recognition	Revenue Recognition Smith-Midland Corporation (the "Company") primarily recognizes revenue on the sale of its standard precast concrete products at shipment date, including revenue derived from any projects to be completed under short-term contracts. Installation of the Company’s standard products is typically performed by the customer; however, in some circumstances, the Company will install certain products which are accomplished at the time of delivery. The installation activities of smaller buildings are usually performed at the Company's site and shipped completed to the customers site. In larger utility building sales, the buildings are erected on the customers site within one or two days, depending on style and size. Leasing fees are paid at the beginning of the lease agreement and recorded to a deferred revenue account. As the revenue is earned each month during the contract, the amount earned is recorded as lease income and an equivalent amount is debited to deferred revenue. Royalties are recognized as a percent of sales of the licensed product sold by the licensee on a monthly basis. The Company licenses certain other precast companies to produce its licensed products to our engineering specifications under licensing agreements. The agreements are typically for five year terms and require royalty payments from 4% to 6% which are paid on a monthly basis. With respect to certain sales of Soundwall panels, architectural precast panels and Slenderwall™ precast panels, revenue is recognized using the percentage-of-completion method for recording revenues on long term contracts pursuant to ASC 605-35-25. The contracts are executed by both parties and clearly stipulate the requirements for progress payments and a schedule of delivery dates. Provisions for estimated losses on contracts are made in the period in which such losses are determined. Shipping revenues are recognized in the period the shipping services are provided to the customer. Smith-Midland products are typically sold pursuant to an implicit warranty as to merchantability only. Warranty claims are reviewed and resolved on a case by case method. Although the Company does incur costs for these types of expense, historically the amount of expense is immaterial.
Cash and Cash Equivalents	Cash and Cash Equivalents Cash and cash equivalents includes money market accounts.
Investments	Investments Investments in marketable securities are classified as available-for-sale and are stated at market value with unrealized holding gains and losses excluded from earnings and reported as a separate component of stockholders' equity until realized.

Net Income Per Common Share (Ta

Net Income Per Common Share (Tables)	6 Months Ended
	Jun. 30, 2015
Earnings Per Share [Abstract]
Schedule of Earnings Per Share, Basic and Diluted	Three Months Ended June 30, 2015 2014 Basic income per share Income available to common shareholders $ 244,857 $ 29,981 Weighted average shares outstanding 4,892,686 4,881,548 Basic income per share $ 0.05 $ 0.01 Diluted income per share Income available to common shareholders $ 244,857 $ 29,981 Weighted average shares outstanding 4,892,686 4,881,548 Dilutive effect of stock options 45,548 47,104 Total weighted average shares outstanding 4,938,234 4,928,652 Diluted income per share $ 0.05 $ 0.01 Six Months Ended June 30, 2015 2014 Basic loss per share Loss available to common shareholders $ (279,512 ) $ (298,555 ) Weighted average shares outstanding 4,892,686 4,881,548 Basic loss per share $ (0.06 ) $ (0.06 ) Diluted loss per share Loss available to common shareholders $ (279,512 ) $ (298,555 ) Weighted average shares outstanding 4,892,686 4,881,548 Dilutive effect of stock options — — Total weighted average shares outstanding 4,892,686 4,881,548 Diluted loss per share $ (0.06 ) $ (0.06 )

Stock Options (Tables)

Stock Options (Tables)	6 Months Ended
	Jun. 30, 2015
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]
Schedule of stock option activity	The following table summarized options outstanding at June 30, 2015 Number of Shares Weighted Average Exercise Price Balance, December 31, 2014 305,099 $ 1.97 Granted — — Forfeited — — Exercised (12,000 ) 1.76 Outstanding options at June 30, 2015 293,099 $ 1.98 Outstanding exercisable options at June 30, 2015 293,099 $ 1.98

Interim Financial Reporting (De

Interim Financial Reporting (Details) - Jun. 30, 2015	Total
Deferred Revenue Arrangement [Line Items]
Licensing contract term	5 years
Minimum [Member]
Deferred Revenue Arrangement [Line Items]
Royalty percent earned on licensing agreement	4.00%
Maximum [Member]
Deferred Revenue Arrangement [Line Items]
Royalty percent earned on licensing agreement	6.00%

Net Income Per Common Share (De

Net Income Per Common Share (Details) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014
Earnings Per Share [Abstract]
Number of options were excluded from diluted EPS calculation due to anti-dilutive effect	81,166	254,166
Basic income per share
Income available to common shareholders	$ 244,857	$ 29,981	$ (279,512)	$ (298,555)
Weighted average shares outstanding (shares)	4,892,686	4,881,548	4,892,686	4,881,548
Basic earnings (loss) per share (in dollars per share)	$ 0.05	$ 0.01	$ (0.06)	$ (0.06)
Diluted income per share
Income available to common shareholders	$ 244,857	$ 29,981	$ (279,512)	$ (298,555)
Weighted average shares outstanding (shares)	4,892,686	4,881,548	4,892,686	4,881,548
Dilutive effect of stock options (shares)	45,548	47,104	0	0
Total weighted average shares outstanding (shares)	4,938,234	4,928,652	4,892,686	4,881,548
Diluted earnings (loss) per share (in dollars per share)	$ 0.05	$ 0.01	$ (0.06)	$ (0.06)

Stock Options (Details)

Stock Options (Details) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014
Number of Shares
Balance, Beginning of period (shares)			305,099
Granted (shares)			0
Forfeited (shares)			0
Exercised (shares)			(12,000)
Balance, End of period (shares)	293,099		293,099
Outstanding exercisable options at end of quarter (shares)	293,099
Weighted Average Exercise Price (in dollars per share)
Beginning balance (usd per share)	$ 1.98		$ 1.97
Granted (usd per share)			0
Forfeited (usd per share)			0
ShareBasedCompensationArrangementsByShareBasedPaymentAwardOptionsExercisesInPeriodWeightedAverageExercisePrice			1.76
Ending balance (usd per share)			$ 1.97
Outstanding exercisable options at end of quarter (usd per share)	$ 1.98
Intrinsic value of outstanding options	$ 100,000
Intrinsic value of exercisable options	100,000
Employee Stock Option [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]
Stock option expense	$ 0	$ 0	$ 0	$ 0