Document Entity Information
Document Entity Information - USD ($) | 12 Months Ended | ||
Dec. 31, 2016 | Mar. 08, 2017 | Jun. 30, 2016 | |
Entity Information [Line Items] | |||
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-K | ||
Document Period End Date | Dec. 31, 2016 | ||
Document Fiscal Year Focus | 2,016 | ||
Document Fiscal Period Focus | FY | ||
Amendment Flag | false | ||
Entity Common Stock, Shares Outstanding | 4,989,228 | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Public Float | $ 9,456,395 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) | Dec. 31, 2016 | Dec. 31, 2015 |
Current assets | ||
Cash and cash equivalents | $ 3,522,620 | $ 1,735,621 |
Investment securities, available-for-sale, at fair value | 1,050,220 | 1,041,790 |
Accounts receivable, net | ||
Trade - billed, (less allowance for doubtful accounts of $347,087 and $375,919) | 7,187,630 | 6,795,215 |
Trade - unbilled | 270,622 | 197,363 |
Inventories, net | ||
Raw materials | 642,467 | 724,143 |
Finished goods | 1,936,350 | 1,770,141 |
Prepaid expenses and other assets | 370,597 | 194,429 |
Refundable income taxes | 251,115 | 383,820 |
Deferred taxes | 640,000 | 665,000 |
Total current assets | 15,871,621 | 13,507,522 |
Property and equipment, net | 8,007,518 | 5,073,867 |
Other assets | 173,086 | 268,721 |
Total assets | 24,052,225 | 18,850,110 |
Current liabilities | ||
Accounts payable - trade | 2,139,760 | 1,743,945 |
Accrued expenses and other liabilities | 1,018,083 | 974,785 |
Accrued compensation | 882,749 | 449,723 |
Current maturities of notes payable | 587,523 | 435,717 |
Customer deposits | 431,480 | 923,943 |
Total current liabilities | 5,059,595 | 4,528,113 |
Notes payable - less current maturities | 3,345,511 | 2,076,675 |
Deferred tax liability | 1,404,000 | 855,000 |
Total liabilities | 9,809,106 | 7,459,788 |
Commitments and contingencies | 0 | 0 |
Stockholders’ equity | ||
Preferred stock, $.01 par value; authorized 1,000,000 shares, none issued and outstanding | 0 | 0 |
Common stock, $.01 par value; authorized 8,000,000 shares; 5,085,348 and 4,919,548 issued and 4,941,428 and 4,881,548 outstanding, respectively | 49,823 | 49,195 |
Additional paid-in capital | 5,192,339 | 5,110,398 |
Treasury stock, at cost, 40,920 shares | (102,300) | (102,300) |
Accumulated other comprehensive loss | (24,913) | (9,357) |
Retained earnings | 9,128,170 | 6,342,386 |
Total stockholders’ equity | 14,243,119 | 11,390,322 |
Total liabilities and stockholders' equity | $ 24,052,225 | $ 18,850,110 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) | Dec. 31, 2016 | Dec. 31, 2015 |
Current Assets: | ||
Allowance for doubtful accounts | $ 347,087 | $ 375,919 |
Stockholders' equity | ||
Preferred stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Preferred stock, shares authorized (in shares) | 1,000,000 | 1,000,000 |
Preferred stock, shares outstanding (in shares) | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized (in shares) | 8,000,000 | 8,000,000 |
Common stock, shares issued (in shares) | 5,085,348 | 4,919,548 |
Common stock, shares outstanding (in shares) | 4,941,428 | 4,881,548 |
Treasury shares (in shares) | 40,920 | 40,920 |
Consolidated Statements of Inco
Consolidated Statements of Income - USD ($) | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Revenue | ||
Products sales and leasing | $ 30,983,368 | $ 23,855,724 |
Shipping and installation revenue | 7,272,797 | 3,606,205 |
Royalties | 1,793,881 | 1,742,310 |
Total revenue | 40,050,046 | 29,204,239 |
Cost of goods sold | 29,701,150 | 22,093,834 |
Gross profit | 10,348,896 | 7,110,405 |
General and administrative expenses | 3,891,472 | 3,365,513 |
Selling expenses | 2,120,978 | 2,168,013 |
Total operating expenses | 6,012,450 | 5,533,526 |
Operating income | 4,336,446 | 1,576,879 |
Other income (expense) | ||
Interest expense | (162,529) | (103,086) |
Interest income | 36,684 | 35,720 |
Gain on sale of assets | 32,140 | 17,381 |
Other income | 54,459 | 74,410 |
Total other income (expense) | (39,246) | 24,425 |
Income before income tax expense | 4,297,200 | 1,601,304 |
Income tax expense | 1,462,000 | 557,000 |
Net income | $ 2,835,200 | $ 1,044,304 |
Basic earnings per share (in dollars per share) | $ 0.57 | $ 0.21 |
Diluted earnings per share (in dollars per share) | $ 0.56 | $ 0.21 |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive Income - USD ($) | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | ||
Statement of Comprehensive Income [Abstract] | |||
Net income | $ 2,835,200 | $ 1,044,304 | |
Other comprehensive loss, net of tax: (1) | |||
Net unrealized holding loss | [1] | (15,556) | (2,728) |
Comprehensive income | 2,819,644 | 1,041,576 | |
Net unrealized holding loss, tax benefit | $ (9,000) | $ 2,000 | |
[1] | Net unrealized loss on available for sale securities are shown net of income tax benefit of $9,000 and $2,000 for the years ended December 31, 2016 and 2015, respectively. |
Consolidated Statements of Stoc
Consolidated Statements of Stockholders' Equity - USD ($) | Total | Common Stock | Additional Paid-in Capital | Accumulated Other Comprehensive Loss | Retained Earnings |
Balance, beginning of period at Dec. 31, 2014 | $ 10,473,751 | $ 48,815 | $ 5,041,438 | $ (6,629) | $ 5,492,427 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Accrued dividends payable | (194,345) | (194,345) | |||
Net unrealized holding loss | (2,728) | (2,728) | |||
Proceeds from options exercised | 69,340 | 380 | 68,960 | ||
Net income | 1,044,304 | 1,044,304 | |||
Balance, end of period at Dec. 31, 2015 | 11,390,322 | 49,195 | 5,110,398 | (9,357) | 6,342,386 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Accrued dividends payable | (49,416) | (49,416) | |||
Net unrealized holding loss | (15,556) | (15,556) | |||
Proceeds from options exercised | 82,569 | 628 | 81,941 | ||
Net income | 2,835,200 | ||||
Balance, end of period at Dec. 31, 2016 | $ 14,243,119 | $ 49,823 | $ 5,192,339 | $ (24,913) | $ 9,128,170 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Reconciliation of net income to net cash provided by operating activities | |||
Net income | $ 2,835,200 | $ 1,044,304 | |
Adjustments to reconcile net income to net cash provided by operating activities | |||
Depreciation and amortization | 821,042 | 667,900 | |
Gain on sale of fixed assets | (32,140) | (17,381) | |
Deferred taxes | 574,000 | (32,000) | |
(Increase) decrease in | |||
Accounts receivable - billed | (363,583) | (2,594,357) | |
Accounts receivable - unbilled | (73,259) | 43,272 | |
Allowance for doubtful accounts | (28,832) | (107,934) | |
Inventories | (84,533) | (767,740) | |
Refundable income taxes | 132,705 | 339,128 | |
Prepaid expenses and other assets | (116,369) | (81,718) | |
Increase (decrease) in | |||
Accounts payable - trade | 395,815 | 591,439 | |
Accrued expenses and other liabilities | (6,115) | 435,236 | |
Accrued compensation | 433,026 | 7,072 | |
Customer deposits | (492,463) | 491,669 | |
Net cash provided by operating activities | 3,994,494 | 18,890 | |
Cash Flows From Investing Activities | |||
Purchases of investment securities available-for-sale | (23,987) | (31,575) | |
Purchases of property and equipment | (3,744,520) | (1,635,317) | |
Proceeds from sale of fixed assets | 57,802 | 18,015 | |
Net cash absorbed by investing activities | (3,710,705) | (1,648,877) | |
Cash Flows From Financing Activities | |||
Proceeds from the line-of-credit | 1,450,000 | 352,022 | |
Repayments on the line-of-credit | (1,802,022) | 0 | |
Proceeds from long-term borrowings | 2,233,481 | 97,005 | |
Repayments of long-term borrowings | (460,818) | (530,820) | |
Dividends paid on common stock | 0 | (194,345) | |
Proceeds from options exercised | 82,569 | 69,341 | |
Net cash provided by or (absorbed) by financing activities | 1,503,210 | (206,797) | |
Net increase (decrease) in cash and cash equivalents | 1,786,999 | (1,836,784) | |
Cash and cash equivalents | |||
Cash and cash equivalents, beginning of year | 1,735,621 | 3,572,405 | |
Cash and cash equivalents, end of year | $ 3,522,620 | 1,735,621 | $ 3,572,405 |
Supplemental schedule of non-cash investing activities | |||
Cash payments for interest | 162,529 | 103,086 | |
Cash payments for income taxes | $ 769,983 | $ 679,427 |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2016 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | Summary of Significant Accounting Policies Nature of Business Smith-Midland Corporation and its wholly-owned subsidiaries (the “Company”) develop, manufacture, license, sell and install precast concrete products for the construction, transportation and utilities industries in the Mid-Atlantic, Northeastern, Midwestern and Southeastern regions of the United States. Principles of Consolidation The accompanying consolidated financial statements include the accounts of Smith-Midland Corporation and its wholly-owned subsidiaries. The Company’s wholly-owned subsidiaries consist of Smith-Midland Corporation, a Virginia corporation, Smith-Carolina Corporation, a North Carolina corporation, Smith-Columbia Corporation, a South Carolina corporation, Easi-Set Industries, Inc., a Virginia corporation, Concrete Safety Systems, Inc., a Virginia corporation, and Midland Advertising and Design, Inc., doing business as Midland Advertising + Design, a Virginia corporation. All material intercompany accounts and transactions have been eliminated in consolidation. Cash and Cash Equivalents The Company considers all unrestricted cash and money market accounts purchased with an original or remaining maturities of three months or less as cash and cash equivalents. 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. Inventories Inventories are stated at the lower of cost, using the first-in, first-out (FIFO) method, or market. Inventory reserves were approximately $67,000 at December 31, 2016 and 2015 . Property and Equipment Property and equipment is stated at cost. Expenditures for ordinary maintenance and repairs are charged to income as incurred. Costs of betterments, renewals, and major replacements are capitalized. At the time properties are retired or otherwise disposed of, the related cost and allowance for depreciation are eliminated from the accounts and any gain or loss on disposition is reflected in income. Depreciation is computed using the straight-line method over the following estimated useful lives: Years Buildings 10-33 Trucks and automotive equipment 3-10 Shop machinery and equipment 3-10 Land improvements 10-15 Office equipment 3-10 Income Taxes Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. As of December 31, 2016 , the Company has not identified any unrecognized tax positions. The Company files tax returns in the U.S. Federal and various state jurisdictions. The Company recognizes, when applicable, interest and penalties related to income taxes in other income (expense) in its consolidated statement of income. The Company is no longer subject to U.S. or state tax examinations for the years prior to 2013. The Company does not believe there will be any material changes in unrecognized tax positions over the next twelve months. Stock Compensation Stock Options – Stock based compensation is measured based on the fair value of the award on the date of grant and the corresponding expense is recognized over the period during which an employee is required to provide services in exchange for the award. The fair value of each stock option is estimated using a Black-Scholes option pricing model based on certain assumptions including expected term, risk-free interest rate, stock price volatility and dividend yield. The assumption for expected term is based on evaluations of historical and expected future employee exercise behavior. The risk-free interest rate is based on the U.S. Treasury rates at the date of grant with maturity dates approximately equal to the expected term at the grant date. The historical volatility of the Company’s stock is used as the basis for the volatility assumption. See Note 6 of Notes to the Consolidated Financial Statements for additional information related to stock based compensation. There have been no option grants since 2008. Substantially all options become vested and exercisable ratably, on an annual basis, over a three -year period. Restricted Stock – On October 13, 2016, the Board of Directors of the Company adopted the 2016 Equity Incentive Plan which allows the Company to grant up to 400,000 shares of common stock of the Company to employees, officers, directors and consultants. The grants may be in the form of restricted or performance shares of common stock of the Company. The fair value of each restricted stock grant is estimated to be the sales price of the common stock at the close of business on the day of the grant. There were 103,000 shares of restricted stock grants issued during the year ended December 31, 2016 which vest ratably, on an annual basis, over a three year period. Revenue Recognition 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 at the time of delivery and will recognize the installation revenue at that time. The installation activities are usually completed the day of delivery or the following day. In utility building sales, the majority of the buildings are erected on the Company’s site and delivered completely installed. Leasing fees are paid at the beginning of the lease agreement and are recorded as deferred revenue. The deferred revenue is then recognized each month as lease income for the duration of the lease. Royalties are recognized as revenue as they are earned. The Company licenses certain products to other precast companies to produce the Company's products to our engineering specifications under the 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. The revenue from licensing agreements are recognized in the month earned. Certain sales of Soundwall, architectural precast panels and Slenderwall™ concrete products revenue is recognized using the percentage-of-completion method for recording revenues on long term contracts under ASC 605-35. Percent-of-completion contracts are estimated based on the number of units produced during the period multiplied by the unit rate stated in the contract. 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 minimal. Shipping and Handling Amounts billed to customers are recorded in sales and the costs associated with the shipping and handling are recorded as cost of goods sold. Sales and Use Taxes Use taxes on construction materials are reported gross in general and administrative expense. Risks and Uncertainties The Company sells products to highway contractors operating under government funded highway programs and other customers and extends credit based on an evaluation of the customer’s financial condition, generally without requiring collateral. Exposure to losses on receivables is principally dependent on each customer’s financial condition. The Company monitors its exposure to credit losses and maintains allowances for anticipated losses. Management reviews accounts receivable on a weekly basis to determine the probability of collection. Any accounts receivable that are deemed to be uncollectible along with a general reserve, which is calculated based upon the aging category of the receivable, is included in the overall allowance for doubtful accounts. Management believes the allowance for doubtful accounts at December 31, 2016 is adequate. However, actual write-offs may exceed the recorded allowance. Due to inclement weather, the Company may experience reduced revenue from December through February and may realize the substantial part of its revenue during the other months of the year. Fair Value of Financial Instruments The carrying value for each of the Company’s financial instruments (consisting of cash and cash equivalents, accounts receivable, accounts payable and short-term line of credit) approximates fair value because of the short-term nature of those instruments. The estimated fair value of the long-term debt approximates carrying value based on current rates offered to the Company for debt of the similar maturities. Estimates The preparation of financial statements in conformity with U.S. generally accepted accounting (U.S. GAAP) 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 revenue and expenses during the reporting period. Actual results could differ from those estimates. Advertising Costs The Company expenses all advertising costs as incurred. Advertising expense was approximately $401,000 and $399,000 in 2016 and 2015 , respectively. Earnings Per Share Earnings per share are based on the weighted average number of shares of common stock and dilutive common stock equivalents outstanding. Basic earnings per share is computed by dividing income available to common shareholders by the weighted average number of common shares outstanding for the period. Diluted earnings per share reflect the potential dilution of securities that could share in earnings of the Company. Long-Lived Assets The Company reviews the carrying values of its long-lived and identifiable intangible assets for possible impairment whenever events or changes in circumstances indicate that the carrying amount of assets may not be recoverable based on undiscounted estimated future operating cash flows. When any such impairment exists, the related assets will be written down to fair value. No impairment losses have been recorded through December 31, 2016 . Recent Accounting Pronouncement On May 28, 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606). Adoption of this ASU requires that an entity recognize net sales at an amount that reflects the consideration to which the entity expects to be entitled in exchange for transferring goods or services. When applying the 78 principles of the ASU, entities will use a five-step model to 1) identify the contract(s) with a customer, 2) identify the performance obligations in the contract, 3) determine the transaction price, 4) allocate the transaction price to the performance obligations in the contract and 5) recognize revenue when (or as) the entity satisfies a performance obligation. On July 9, 2015, the FASB deferred the effective date by one year to December 15, 2017 for interim and annual reporting periods beginning after that date and permitted early adoption of the standard but not before the original effective date of December 15, 2016. The Company is currently evaluating the impact of adoption on the Company’s financial position, results of operations and cash flows. On February 25, 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842). Adoption of this ASU requires lessees to recognize assets and liabilities for most leases. For public business entities the guidance is effective for financial statements issued for annual periods beginning after December 15, 2018, and interim periods within those annual periods and early adoption is permitted. The Company is currently evaluating the impact of adoption on the Company’s financial position, results of operations and cash flows. On August 26, 2016, the FASB issued ASU No. 2016-15, Statement of Cash Flows (Topic 230), Classification of Cash Receipts and Cash Payments , which is intended to reduce diversity in practice as it relates to how certain transactions are classified in the statement of cash flows, as previous guidance was either omitted or unclear. The new standard is effective for annual periods, and interim periods within those annual periods, beginning after December 15, 2017. We are in the process of evaluating the impact of adopting this new guidance on our consolidated financial statements. On March 30, 2016, the FASB issued ASU No. 2016-09, Improvements to Employee Share-Based Payment Accounting , which simplifies several aspects of the accounting for employee share-based payment transactions for both public and nonpublic entities, including the accounting for income taxes, forfeitures, and statutory tax withholding requirements, as well as classification in the statement of cash flows. The guidance is effective for annual and interim reporting periods beginning after December 15, 2016, with early adoption permitted. We are in the process of evaluating the impact of adopting this new guidance on our consolidated financial statements. On June 19, 2014, the FASB issued ASU No. 2014-12, Accounting for Share-Based Payments When the Terms of an Award Provide That a Performance Target Could Be Achieved after the Requisite Service Period . The amendments in the ASU clarify the proper method of accounting for share-based payments when the terms of an award provide that a performance target could be achieved after the requisite service period. ASU 2014-12 is effective for all entities for annual periods beginning after December 15, 2015 and interim periods within those annual periods and early adoption is permitted. The adoption of this pronouncement did not have a material impact on the Company’s consolidated financial statements. In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2014-09, “Revenue from Contracts with Customers,” which requires an entity to recognize revenues when promised goods or services are transferred to customers in an amount that reflects the consideration to which an entity expects to be entitled for those goods or services. In July 2015, the FASB finalized the delay of the effective date by one year, making the new standard effective for interim periods and annual period beginning after December 15, 2017. In April 2016, the FASB issued ASU No. 2016-10, “Revenue from Contracts with Customers (Topic 606) - Identifying Performance Obligations and Licensing,” which further clarifies the implementation guidance relating to identifying performance obligations and the licensing implementation guidance. These standards can be applied retrospectively to each prior reporting period presented or retrospectively with the cumulative effect of the change recognized at the date of the initial application. While our preliminary assessment of these updates does not currently lead us to believe that the impact of the adoption of these updates is likely to result in material changes to our revenues, we are in the initial stages of this assessment and continue to evaluate the available transition method. In January 2016, the FASB issued ASU No. 2016-01, "Recognition and Measurement of Financial Assets and Financial Liabilities." This update addresses certain aspects of recognition, measurement, presentation, and disclosure of financial instruments. This guidance is effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. The Company is currently assessing the impact that adopting this new accounting guidance will have on the Company's consolidated financial statements. |
Property and Equipment
Property and Equipment | 12 Months Ended |
Dec. 31, 2016 | |
Property, Plant and Equipment [Abstract] | |
PROPERTY AND EQUIPMENT | PROPERTY AND EQUIPMENT Property and equipment consists of the following: December 31, 2016 2015 Land and land improvements $ 1,335,341 $ 677,113 Buildings 5,265,134 4,178,158 Machinery and equipment 9,362,431 7,946,039 Rental equipment 1,972,278 1,505,590 17,935,184 14,306,900 Less: accumulated depreciation and amortization (9,927,666 ) (9,233,033 ) $ 8,007,518 $ 5,073,867 Depreciation expense and amortization was approximately $821,000 and $668,000 for the years ended December 31, 2016 and 2015 , respectively. |
Notes Payable
Notes Payable | 12 Months Ended |
Dec. 31, 2016 | |
Notes Payable [Abstract] | |
NOTES PAYABLE | NOTES PAYABLE Notes payable consist of the following: December 31, 2016 2015 Note payable to a Bank, maturing June 2021; with monthly payments of approximately $25,000 of principal and interest fixed at 3.99%; collateralized by principally all assets of the Company. $ 1,328,549 $ 1,575,951 Note payable to a Bank, maturing July 2031; with monthly payments of approximately $11,000 of principal and interest fixed at 5.29%; collateralized by principally all assets of Smith-Columbia Corporation and guaranteed by Smith-Midland Corporation. 1,293,542 — Note payable to a Bank, maturing April 2021; with monthly payments of approximately $6,200 of principal and interest at prime at variable rate (5.29% at December 31, 2016); collateralized by certain property of the Company. 287,773 344,717 Installment notes, collateralized by certain machinery and equipment maturing at various dates, primarily through 2021, with weighted average interest at 4.2%. 1,023,170 239,702 A revolving line-of-credit evidenced by a note payable to a Bank, with the maximum amount of $2,000,000, maturing September 12, 2017, with interest only payments and an initial rate of 4.49% adjustable monthly (3.99% at December 31, 2016). The line-of-credit is collateralized by a first lien position on the Company's accounts receivable and inventory and a second lien position on all other business assets. — 352,022 3,933,034 2,512,392 Less current maturities 587,523 435,717 $ 3,345,511 $ 2,076,675 The Company’s note payable, which matures in June 2021, with a balance of $1,328,549 at December 31, 2016 , is secured by all of the assets of the Company. The commitment letter provided by the bank dated September 8, 2015 includes certain restrictive covenants, which require the Company to maintain minimum levels of tangible net worth, places limits on annual capital expenditures and the payment of cash dividends. As of July 2016 the payment of cash dividends was removed from the covenants and the limit on annual purchases of capital expenditures was raised to $1.5 million . At December 31, 2016 , the Company was in compliance with all covenants pursuant to the loan agreement as amended except for the limit of $1,500,000 for the purchase of capital expenditures, for which the Company received a waiver for the excess capital expenditures in 2016. The aggregate amounts of notes payable maturing in each of the next five years and thereafter are as follows: Year Ending December 31, 2017 $ 587,523 2018 603,299 2019 584,703 2020 604,010 2021 437,460 Thereafter 1,116,039 $ 3,933,034 |
Related Party Transactions
Related Party Transactions | 12 Months Ended |
Dec. 31, 2016 | |
Related Party Transactions [Abstract] | |
RELATED PARTY TRANSACTIONS | RELATED PARTY TRANSACTIONS The Company currently leases a portion of its Midland, Virginia property from its CEO, on a month-to-month basis, as additional storage space for the Company's finished work product. The lease agreement calls for an annual rent of $24,000 . The Company believes the rent to be at or below market terms. The Company has an employment agreement with its current CEO which automatically renews on an annual basis for an additional year, unless earlier terminated or not renewed as provided for therein. The agreement provides for an annual base salary of $99,000 and an annual royalty fee of $99,000 payable as consideration for the CEO’s assignment to the Company of all of his rights, title and interest in certain patents. Payment of the royalty continues only for as long as the Company is using the inventions underlying the patents. Additionally, if the CEO (i) voluntarily leaves the employ of the Company within six months of his becoming aware of a Change of Control (as defined in the agreement) of the Company, then he shall be entitled to receive a lump sum amount equal to three times the five -year average of his combined total annual compensation, which includes the Base Salary and bonus, less one dollar ( $1.00 ), and certain other unpaid accrued amounts as of the date of his termination, or (ii) is terminated by the Company without Cause (as defined in the agreement) or leaves the Company with Good Reason (as defined in the agreement), the CEO shall be entitled to a lump sum payment equal to three times the combined Base Salary and bonus paid during the immediately preceding calendar year, and such other unpaid accrued amounts. In any of such cases, the Company will provide the CEO with certain Company fringe benefits for two years , subject to certain conditions as provided for in the agreement, and all of the CEO’s unvested options, if any, to purchase Company stock shall become fully vested and exercisable on the date of termination and all restricted stock, if any, shall be fully vested on the date of termination. The CEO will be entitled to exercise all such options for three years from the date of termination. In the event the CEO’s employment by the Company ceases as a result of the CEO’s (i) death, his estate shall be entitled to a lump sum payment of one times the combined Base Salary and bonus, and certain other accrued and unpaid amounts, or (ii) disability, the CEO shall be entitled to Base Salary and bonus for a period of one year commencing with the date of termination, and all other unpaid accrued amounts. |
Income Taxes
Income Taxes | 12 Months Ended |
Dec. 31, 2016 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | INCOME TAXES Income tax expense (benefit) is comprised of the following: December 31, 2016 2015 Federal: Current $ 777,000 $ 394,000 Deferred 514,000 14,000 1,291,000 408,000 State: Current 108,000 147,000 Deferred 63,000 2,000 171,000 149,000 $ 1,462,000 $ 557,000 The provision for income taxes differs from the amount determined by applying the federal statutory tax rate to pre-tax income as a result of the following: December 31, 2016 2015 Income taxes at statutory rate $ 1,461,000 34.0 % $ 543,000 34.0 % Increase (decrease) in taxes resulting from: State income taxes, net of federal benefit 134,000 2.7 % 41,000 2.6 % Domestic production activities deduction (77,000 ) (1.6 )% — — % Stock compensation deferred tax asset write-off 25,000 0.5 % — — % Other (81,000 ) (1.6 )% (27,000 ) (1.7 )% $ 1,462,000 34.0 % $ 557,000 34.9 % Deferred tax assets (liabilities) are as follows: December 31, 2016 2015 Depreciation $ (1,404,000 ) $ (855,000 ) Unrealized losses on investments available for sale 15,000 6,000 Allowance for doubtful accounts 128,000 147,000 Vacation accrued 106,000 105,000 Deferred income 281,000 302,000 State NOL carryforward 75,000 43,000 Other 35,000 62,000 Net deferred tax liability (764,000 ) (190,000 ) Current portion, net 640,000 665,000 Long-term portion, net (1,404,000 ) (855,000 ) $ (764,000 ) $ (190,000 ) |
Employee Benefit Plans
Employee Benefit Plans | 12 Months Ended |
Dec. 31, 2016 | |
Defined Benefit Pension Plans and Defined Benefit Postretirement Plans Disclosure [Abstract] | |
EMPLOYEE BENEFIT PLANS | EMPLOYEE BENEFIT PLANS The Company has a 401(k) retirement plan (the "Plan") covering substantially all employees. Participants may contribute up to 10% of their compensation to the Plan. The Company contributes 50% of the participant's contribution, up to 4% of the participant's compensation, as a matching contribution. Total contributions by the Company for the years ended December 31, 2016 and 2015 were approximately $124,000 and $115,000 , respectively. |
Stock Compensation
Stock Compensation | 12 Months Ended |
Dec. 31, 2016 | |
Compensation Related Costs [Abstract] | |
STOCK COMPENSATION | STOCK COMPENSATION On September 19, 2008, the Board of Directors and Stockholders of the Company adopted the 2008 Stock Option Plan (the "2008 Plan"), which allows the Company to grant up to 500,000 options to employees, officers, directors and consultants to purchase shares of the Company's Common Stock. Options granted under the plan may be either Incentive Stock Options or Non-Qualified Stock Options. Of the 68,133 stock options remaining un-exercised, 20,000 options are Non-Qualified options belonging to Rodney I. Smith. As a 10% shareholder, Mr. Rodney Smith can only receive Non-Qualified stock options. Incentive Stock Options may be granted only to employees of the Company, while Non-qualified options may be issued to non-employee directors, consultants, and others, as well as to employees of the Company. There were no grants of options during the years ended December 31, 2016 or 2015 . There have not been any grants under the 2008 Stock Option Plan since its inception. The Board of Directors replaced the 2008 Stock Option Plan with the 2016 Equity Incentive Plan described below. Options generally vest over a three year period. The Company recognizes stock option expense over the vesting period. The Company did not record any stock option expense for the years 2016 and 2015 as all of the options were fully vested. There were 62,800 options exercised for the year ending December 31, 2016 and there were 38,000 options exercised in 2015 . The intrinsic value of outstanding and exercisable options at December 31, 2016 was approximately $45,000 . The following tables summarize activity under the 2004 Stock Option Plan of the Company and the stock options outstanding at December 31, 2016 : Weighted Average Exercise Price Options Outstanding Vested and Exercisable Balance, December 31, 2014 $ 1.96 315,233 315,233 Granted — — — Forfeited (2.52 ) (86,300 ) (86,300 ) Exercised (1.85 ) (38,000 ) (38,000 ) Vested — — — Balance, December 31, 2015 1.96 190,933 190,933 Granted — — — Forfeited (2.21 ) (60,000 ) (60,000 ) Exercised (1.31 ) (62,800 ) (62,800 ) Vested — — — Balance, December 31, 2016 $ 1.79 68,133 68,133 On October 13, 2016, the Board of Directors of the Company adopted the 2016 Equity Incentive Plan, which allows the Company to grant up to 400,000 shares of restricted common stock of the Company to employees, officers, directors and consultants. The grants may be in the form of restricted or performance shares of common stock of the Company. There were 103,000 shares of restricted stock issued during the year ended December 31, 2016. The shares have a three year vesting period which vests ratably, on an annual basis, over a three year period. The total intrinsic value of the outstanding shares of restricted stock is $1,588,950. The fair value of restricted stock awards is estimated to be the market price of the Company's common stock at the close of date of grant. Restricted stock activity during the years ended December 31, 2016 and 2015, respectively, are as follows: December 31, 2016 Number of Shares Weighted Average Grant Date Fair Value per Share Non-vested, beginning of period — — Granted 103,000 4.95 Vested — — Forfeited — — Non-vested, end of period 103,000 4.95 Awards are being amortized to expense ratably, on an annual basis, over a three year vesting term. There was no expense for the year ended December 31, 2016, as the grants were made in December 2016. The total unrecognized compensation cost related to the non-vested restricted stock is $509,850 as of December 31, 2016. |
Fair Value Measurements (Notes)
Fair Value Measurements (Notes) | 12 Months Ended |
Dec. 31, 2016 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | Fair Value Measurements The Company applies the guidance that is codified under ASC 820-10 related to assets and liabilities recognized or disclosed in the financial statements at fair value on a recurring basis. ASC 820-10 defines fair value, establishes a framework for measuring fair value and expands disclosures about fair value measurements. The provisions of ASC 820-10 only apply to the Company’s investment securities, which are carried at fair value. ASC 820-10 clarifies that fair value is an exit price, representing the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants based on the highest and best use of the asset or liability. As such, fair value is a market-based measurement that is determined based on assumptions that market participants would use in pricing an asset or liability. ASC 820-10 requires valuation techniques to measure fair value that maximize the use of observable inputs and minimize the use of unobservable inputs. These inputs are prioritized as follows: Fair Value Hierarchy Inputs to Fair Value Methodology Level 1 Quoted prices in active markets for identical assets or liabilities Level 2 Quoted prices for similar assets or liabilities; quoted markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the financial instrument; inputs other than quoted prices that are observable for the asset or liability; or inputs that are derived principally from, or corroborated by, observable market information Level 3 Pricing models, discounted cash flow methodologies or similar techniques and at least one significant model assumption is unobservable or when the estimation of fair value requires significant management judgment The Company categorizes a financial instrument in the fair value hierarchy based on the lowest level of input that is significant to its fair value measurement. Smith-Midland Corporation and Subsidiaries Notes to Consolidated Financial Statements (continued) As of December 31, 2016 Quoted Market Prices in Active Markets Internal Models with Significant Observable Internal Models Total Fair Value Mutual Funds $ 1,050,220 $ — $ — $ 1,050,220 As of December 31, 2015 Quoted Market Prices in Active Markets (Level 1) Internal Models with Significant Observable (Level 2) Internal Models (Level 3) Total Fair Value Reported in Financial Statements Mutual Funds $ 1,041,790 $ — $ — $ 1,041,790 |
Commitments and Contingencies
Commitments and Contingencies | 12 Months Ended |
Dec. 31, 2016 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | COMMITMENTS AND CONTINGENCIES The Company has an employment agreement with its current CEO which automatically renews on an annual basis for an additional year, unless earlier terminated or not renewed as provided for therein. The agreement provides for an annual base salary of $99,000 and an annual royalty fee of $99,000 payable as consideration for the CEO’s assignment to the Company of all of his rights, title and interest in certain patents. Payment of the royalty continues only for as long as the Company is using the inventions underlying the patents. Additionally, if the CEO (i) voluntarily leaves the employ of the Company within six months of his becoming aware of a Change of Control (as defined in the agreement) of the Company, then he shall be entitled to receive a lump sum amount equal to three times the five -year average of his combined total annual compensation, which includes the Base Salary and bonus, less one dollar ( $1.00 ), and certain other unpaid accrued amounts as of the date of his termination, or (ii) is terminated by the Company without Cause (as defined in the agreement) or leaves the Company with Good Reason (as defined in the agreement), the CEO shall be entitled to a lump sum payment equal to three times the combined Base Salary and bonus paid during the immediately preceding calendar year, and such other unpaid accrued amounts. In any of such cases, the Company will provide the CEO with certain Company fringe benefits for two years , subject to certain conditions as provided for in the agreement, and all of the CEO’s unvested options, if any, to purchase Company stock shall become fully vested and exercisable on the date of termination. The CEO will be entitled to exercise all such options for three years from the date of termination. In the event the CEO’s employment by the Company ceases as a result of the CEO’s (i) death, his estate shall be entitled to a lump sum payment of one times the combined Base Salary and bonus, and certain other accrued and unpaid amounts, or (ii) disability, the CEO shall be entitled to Base Salary and bonus for a period of one year commencing with the date of termination, and all other unpaid accrued amounts. The Company is party to legal proceedings and disputes which may arise in the ordinary course of business. In the opinion of the Company, it is unlikely that liabilities, if any, arising from legal disputes will have a material adverse effect on the consolidated financial position of the Company. |
Earnings Per Share
Earnings Per Share | 12 Months Ended |
Dec. 31, 2016 | |
Earnings Per Share [Abstract] | |
EARNINGS PER SHARE | EARNINGS PER SHARE Earnings per share are calculated as follows: December 31, 2016 2015 Basic earnings per share Income available to common shareholder $ 2,835,200 $ 1,044,304 Weighted average shares outstanding 4,934,431 4,895,367 Basic earnings per share $ 0.57 $ 0.21 Diluted earnings per share Income available to common shareholder $ 2,835,200 $ 1,044,304 Weighted average shares outstanding 4,934,431 4,895,367 Dilutive effect of stock options and restricted stock 132,283 51,008 Total weighted average shares outstanding 5,066,714 4,946,375 Diluted earnings per share $ 0.56 $ 0.21 Outstanding options excluded from the diluted earnings per share calculation because they would have an anti-dilutive effect, there were none for the year ended December 31, 2016 and December 31, 2015 . |
Summary of Significant Accoun18
Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2016 | |
Accounting Policies [Abstract] | |
Principles of Consolidation | Principles of Consolidation The accompanying consolidated financial statements include the accounts of Smith-Midland Corporation and its wholly-owned subsidiaries. The Company’s wholly-owned subsidiaries consist of Smith-Midland Corporation, a Virginia corporation, Smith-Carolina Corporation, a North Carolina corporation, Smith-Columbia Corporation, a South Carolina corporation, Easi-Set Industries, Inc., a Virginia corporation, Concrete Safety Systems, Inc., a Virginia corporation, and Midland Advertising and Design, Inc., doing business as Midland Advertising + Design, a Virginia corporation. All material intercompany accounts and transactions have been eliminated in consolidation. |
Cash and Cash Equivalents | Cash and Cash Equivalents The Company considers all unrestricted cash and money market accounts purchased with an original or remaining maturities of three months or less as cash and cash equivalents. |
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. |
Inventories | Inventories Inventories are stated at the lower of cost, using the first-in, first-out (FIFO) method, or market. |
Property and Equipment | Property and Equipment Property and equipment is stated at cost. Expenditures for ordinary maintenance and repairs are charged to income as incurred. Costs of betterments, renewals, and major replacements are capitalized. At the time properties are retired or otherwise disposed of, the related cost and allowance for depreciation are eliminated from the accounts and any gain or loss on disposition is reflected in income. Depreciation is computed using the straight-line method over the following estimated useful lives: Years Buildings 10-33 Trucks and automotive equipment 3-10 Shop machinery and equipment 3-10 Land improvements 10-15 Office equipment 3-10 |
Income Taxes | Income Taxes Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. As of December 31, 2016 , the Company has not identified any unrecognized tax positions. The Company files tax returns in the U.S. Federal and various state jurisdictions. The Company recognizes, when applicable, interest and penalties related to income taxes in other income (expense) in its consolidated statement of income. The Company is no longer subject to U.S. or state tax examinations for the years prior to 2013. The Company does not believe there will be any material changes in unrecognized tax positions over the next twelve months. |
Stock Options | Stock Compensation Stock Options – Stock based compensation is measured based on the fair value of the award on the date of grant and the corresponding expense is recognized over the period during which an employee is required to provide services in exchange for the award. The fair value of each stock option is estimated using a Black-Scholes option pricing model based on certain assumptions including expected term, risk-free interest rate, stock price volatility and dividend yield. The assumption for expected term is based on evaluations of historical and expected future employee exercise behavior. The risk-free interest rate is based on the U.S. Treasury rates at the date of grant with maturity dates approximately equal to the expected term at the grant date. The historical volatility of the Company’s stock is used as the basis for the volatility assumption. See Note 6 of Notes to the Consolidated Financial Statements for additional information related to stock based compensation. There have been no option grants since 2008. Substantially all options become vested and exercisable ratably, on an annual basis, over a three -year period. Restricted Stock – On October 13, 2016, the Board of Directors of the Company adopted the 2016 Equity Incentive Plan which allows the Company to grant up to 400,000 shares of common stock of the Company to employees, officers, directors and consultants. The grants may be in the form of restricted or performance shares of common stock of the Company. The fair value of each restricted stock grant is estimated to be the sales price of the common stock at the close of business on the day of the grant. There were 103,000 shares of restricted stock grants issued during the year ended December 31, 2016 which vest ratably, on an annual basis, over a three year period. |
Revenue Recognition | Revenue Recognition 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 at the time of delivery and will recognize the installation revenue at that time. The installation activities are usually completed the day of delivery or the following day. In utility building sales, the majority of the buildings are erected on the Company’s site and delivered completely installed. Leasing fees are paid at the beginning of the lease agreement and are recorded as deferred revenue. The deferred revenue is then recognized each month as lease income for the duration of the lease. Royalties are recognized as revenue as they are earned. The Company licenses certain products to other precast companies to produce the Company's products to our engineering specifications under the 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. The revenue from licensing agreements are recognized in the month earned. Certain sales of Soundwall, architectural precast panels and Slenderwall™ concrete products revenue is recognized using the percentage-of-completion method for recording revenues on long term contracts under ASC 605-35. Percent-of-completion contracts are estimated based on the number of units produced during the period multiplied by the unit rate stated in the contract. 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 minimal. |
Shipping and Handling | Shipping and Handling Amounts billed to customers are recorded in sales and the costs associated with the shipping and handling are recorded as cost of goods sold. |
Sales and Use Taxes | Sales and Use Taxes Use taxes on construction materials are reported gross in general and administrative expense. |
Risks and Uncertainties | Risks and Uncertainties The Company sells products to highway contractors operating under government funded highway programs and other customers and extends credit based on an evaluation of the customer’s financial condition, generally without requiring collateral. Exposure to losses on receivables is principally dependent on each customer’s financial condition. The Company monitors its exposure to credit losses and maintains allowances for anticipated losses. Management reviews accounts receivable on a weekly basis to determine the probability of collection. Any accounts receivable that are deemed to be uncollectible along with a general reserve, which is calculated based upon the aging category of the receivable, is included in the overall allowance for doubtful accounts. Management believes the allowance for doubtful accounts at December 31, 2016 is adequate. However, actual write-offs may exceed the recorded allowance. Due to inclement weather, the Company may experience reduced revenue from December through February and may realize the substantial part of its revenue during the other months of the year. |
Fair Value of Financial Instruments | Fair Value of Financial Instruments The carrying value for each of the Company’s financial instruments (consisting of cash and cash equivalents, accounts receivable, accounts payable and short-term line of credit) approximates fair value because of the short-term nature of those instruments. The estimated fair value of the long-term debt approximates carrying value based on current rates offered to the Company for debt of the similar maturities. |
Estimates | Estimates The preparation of financial statements in conformity with U.S. generally accepted accounting (U.S. GAAP) 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 revenue and expenses during the reporting period. Actual results could differ from those estimates. |
Advertising Costs | Advertising Costs The Company expenses all advertising costs as incurred. |
Earnings Per Share | Earnings Per Share Earnings per share are based on the weighted average number of shares of common stock and dilutive common stock equivalents outstanding. Basic earnings per share is computed by dividing income available to common shareholders by the weighted average number of common shares outstanding for the period. Diluted earnings per share reflect the potential dilution of securities that could share in earnings of the Company. |
Long-Lived Assets | Long-Lived Assets The Company reviews the carrying values of its long-lived and identifiable intangible assets for possible impairment whenever events or changes in circumstances indicate that the carrying amount of assets may not be recoverable based on undiscounted estimated future operating cash flows. When any such impairment exists, the related assets will be written down to fair value. No impairment losses have been recorded through December 31, 2016 . |
Recent Accounting Pronouncements | On May 28, 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606). Adoption of this ASU requires that an entity recognize net sales at an amount that reflects the consideration to which the entity expects to be entitled in exchange for transferring goods or services. When applying the 78 principles of the ASU, entities will use a five-step model to 1) identify the contract(s) with a customer, 2) identify the performance obligations in the contract, 3) determine the transaction price, 4) allocate the transaction price to the performance obligations in the contract and 5) recognize revenue when (or as) the entity satisfies a performance obligation. On July 9, 2015, the FASB deferred the effective date by one year to December 15, 2017 for interim and annual reporting periods beginning after that date and permitted early adoption of the standard but not before the original effective date of December 15, 2016. The Company is currently evaluating the impact of adoption on the Company’s financial position, results of operations and cash flows. On February 25, 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842). Adoption of this ASU requires lessees to recognize assets and liabilities for most leases. For public business entities the guidance is effective for financial statements issued for annual periods beginning after December 15, 2018, and interim periods within those annual periods and early adoption is permitted. The Company is currently evaluating the impact of adoption on the Company’s financial position, results of operations and cash flows. On August 26, 2016, the FASB issued ASU No. 2016-15, Statement of Cash Flows (Topic 230), Classification of Cash Receipts and Cash Payments , which is intended to reduce diversity in practice as it relates to how certain transactions are classified in the statement of cash flows, as previous guidance was either omitted or unclear. The new standard is effective for annual periods, and interim periods within those annual periods, beginning after December 15, 2017. We are in the process of evaluating the impact of adopting this new guidance on our consolidated financial statements. On March 30, 2016, the FASB issued ASU No. 2016-09, Improvements to Employee Share-Based Payment Accounting , which simplifies several aspects of the accounting for employee share-based payment transactions for both public and nonpublic entities, including the accounting for income taxes, forfeitures, and statutory tax withholding requirements, as well as classification in the statement of cash flows. The guidance is effective for annual and interim reporting periods beginning after December 15, 2016, with early adoption permitted. We are in the process of evaluating the impact of adopting this new guidance on our consolidated financial statements. On June 19, 2014, the FASB issued ASU No. 2014-12, Accounting for Share-Based Payments When the Terms of an Award Provide That a Performance Target Could Be Achieved after the Requisite Service Period . The amendments in the ASU clarify the proper method of accounting for share-based payments when the terms of an award provide that a performance target could be achieved after the requisite service period. ASU 2014-12 is effective for all entities for annual periods beginning after December 15, 2015 and interim periods within those annual periods and early adoption is permitted. The adoption of this pronouncement did not have a material impact on the Company’s consolidated financial statements. In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2014-09, “Revenue from Contracts with Customers,” which requires an entity to recognize revenues when promised goods or services are transferred to customers in an amount that reflects the consideration to which an entity expects to be entitled for those goods or services. In July 2015, the FASB finalized the delay of the effective date by one year, making the new standard effective for interim periods and annual period beginning after December 15, 2017. In April 2016, the FASB issued ASU No. 2016-10, “Revenue from Contracts with Customers (Topic 606) - Identifying Performance Obligations and Licensing,” which further clarifies the implementation guidance relating to identifying performance obligations and the licensing implementation guidance. These standards can be applied retrospectively to each prior reporting period presented or retrospectively with the cumulative effect of the change recognized at the date of the initial application. While our preliminary assessment of these updates does not currently lead us to believe that the impact of the adoption of these updates is likely to result in material changes to our revenues, we are in the initial stages of this assessment and continue to evaluate the available transition method. In January 2016, the FASB issued ASU No. 2016-01, "Recognition and Measurement of Financial Assets and Financial Liabilities." This update addresses certain aspects of recognition, measurement, presentation, and disclosure of financial instruments. This guidance is effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. The Company is currently assessing the impact that adopting this new accounting guidance will have on the Company's consolidated financial statements. |
Summary of Significant Accoun19
Summary of Significant Accounting Policies (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Accounting Policies [Abstract] | |
Schedule of Property and Equipment | Depreciation is computed using the straight-line method over the following estimated useful lives: Years Buildings 10-33 Trucks and automotive equipment 3-10 Shop machinery and equipment 3-10 Land improvements 10-15 Office equipment 3-10 Property and equipment consists of the following: December 31, 2016 2015 Land and land improvements $ 1,335,341 $ 677,113 Buildings 5,265,134 4,178,158 Machinery and equipment 9,362,431 7,946,039 Rental equipment 1,972,278 1,505,590 17,935,184 14,306,900 Less: accumulated depreciation and amortization (9,927,666 ) (9,233,033 ) $ 8,007,518 $ 5,073,867 |
Property and Equipment (Tables)
Property and Equipment (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Property, Plant and Equipment [Abstract] | |
Schedule of Property and Equipment | Depreciation is computed using the straight-line method over the following estimated useful lives: Years Buildings 10-33 Trucks and automotive equipment 3-10 Shop machinery and equipment 3-10 Land improvements 10-15 Office equipment 3-10 Property and equipment consists of the following: December 31, 2016 2015 Land and land improvements $ 1,335,341 $ 677,113 Buildings 5,265,134 4,178,158 Machinery and equipment 9,362,431 7,946,039 Rental equipment 1,972,278 1,505,590 17,935,184 14,306,900 Less: accumulated depreciation and amortization (9,927,666 ) (9,233,033 ) $ 8,007,518 $ 5,073,867 |
Notes Payable (Tables)
Notes Payable (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Notes Payable [Abstract] | |
Schedule of notes payable | Notes payable consist of the following: December 31, 2016 2015 Note payable to a Bank, maturing June 2021; with monthly payments of approximately $25,000 of principal and interest fixed at 3.99%; collateralized by principally all assets of the Company. $ 1,328,549 $ 1,575,951 Note payable to a Bank, maturing July 2031; with monthly payments of approximately $11,000 of principal and interest fixed at 5.29%; collateralized by principally all assets of Smith-Columbia Corporation and guaranteed by Smith-Midland Corporation. 1,293,542 — Note payable to a Bank, maturing April 2021; with monthly payments of approximately $6,200 of principal and interest at prime at variable rate (5.29% at December 31, 2016); collateralized by certain property of the Company. 287,773 344,717 Installment notes, collateralized by certain machinery and equipment maturing at various dates, primarily through 2021, with weighted average interest at 4.2%. 1,023,170 239,702 A revolving line-of-credit evidenced by a note payable to a Bank, with the maximum amount of $2,000,000, maturing September 12, 2017, with interest only payments and an initial rate of 4.49% adjustable monthly (3.99% at December 31, 2016). The line-of-credit is collateralized by a first lien position on the Company's accounts receivable and inventory and a second lien position on all other business assets. — 352,022 3,933,034 2,512,392 Less current maturities 587,523 435,717 $ 3,345,511 $ 2,076,675 |
Schedule of maturities of notes payable and capital leases | The aggregate amounts of notes payable maturing in each of the next five years and thereafter are as follows: Year Ending December 31, 2017 $ 587,523 2018 603,299 2019 584,703 2020 604,010 2021 437,460 Thereafter 1,116,039 $ 3,933,034 |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Income Tax Disclosure [Abstract] | |
Schedule of components of income tax expense (benefit) | Income tax expense (benefit) is comprised of the following: December 31, 2016 2015 Federal: Current $ 777,000 $ 394,000 Deferred 514,000 14,000 1,291,000 408,000 State: Current 108,000 147,000 Deferred 63,000 2,000 171,000 149,000 $ 1,462,000 $ 557,000 |
Schedule of effective income tax rate reconciliation | The provision for income taxes differs from the amount determined by applying the federal statutory tax rate to pre-tax income as a result of the following: December 31, 2016 2015 Income taxes at statutory rate $ 1,461,000 34.0 % $ 543,000 34.0 % Increase (decrease) in taxes resulting from: State income taxes, net of federal benefit 134,000 2.7 % 41,000 2.6 % Domestic production activities deduction (77,000 ) (1.6 )% — — % Stock compensation deferred tax asset write-off 25,000 0.5 % — — % Other (81,000 ) (1.6 )% (27,000 ) (1.7 )% $ 1,462,000 34.0 % $ 557,000 34.9 % |
Schedule of deferred tax assets (liabilities) | Deferred tax assets (liabilities) are as follows: December 31, 2016 2015 Depreciation $ (1,404,000 ) $ (855,000 ) Unrealized losses on investments available for sale 15,000 6,000 Allowance for doubtful accounts 128,000 147,000 Vacation accrued 106,000 105,000 Deferred income 281,000 302,000 State NOL carryforward 75,000 43,000 Other 35,000 62,000 Net deferred tax liability (764,000 ) (190,000 ) Current portion, net 640,000 665,000 Long-term portion, net (1,404,000 ) (855,000 ) $ (764,000 ) $ (190,000 ) |
Stock Compensation (Tables)
Stock Compensation (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Compensation Related Costs [Abstract] | |
Schedule of stock options activity | he fair value of restricted stock awards is estimated to be the market price of the Company's common stock at the close of date of grant. Restricted stock activity during the years ended December 31, 2016 and 2015, respectively, are as follows: December 31, 2016 Number of Shares Weighted Average Grant Date Fair Value per Share Non-vested, beginning of period — — Granted 103,000 4.95 Vested — — Forfeited — — Non-vested, end of period 103,000 4.95 The following tables summarize activity under the 2004 Stock Option Plan of the Company and the stock options outstanding at December 31, 2016 : Weighted Average Exercise Price Options Outstanding Vested and Exercisable Balance, December 31, 2014 $ 1.96 315,233 315,233 Granted — — — Forfeited (2.52 ) (86,300 ) (86,300 ) Exercised (1.85 ) (38,000 ) (38,000 ) Vested — — — Balance, December 31, 2015 1.96 190,933 190,933 Granted — — — Forfeited (2.21 ) (60,000 ) (60,000 ) Exercised (1.31 ) (62,800 ) (62,800 ) Vested — — — Balance, December 31, 2016 $ 1.79 68,133 68,133 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Fair Value Disclosures [Abstract] | |
Schedule of Fair Value Measurements | The Company categorizes a financial instrument in the fair value hierarchy based on the lowest level of input that is significant to its fair value measurement. Smith-Midland Corporation and Subsidiaries Notes to Consolidated Financial Statements (continued) As of December 31, 2016 Quoted Market Prices in Active Markets Internal Models with Significant Observable Internal Models Total Fair Value Mutual Funds $ 1,050,220 $ — $ — $ 1,050,220 As of December 31, 2015 Quoted Market Prices in Active Markets (Level 1) Internal Models with Significant Observable (Level 2) Internal Models (Level 3) Total Fair Value Reported in Financial Statements Mutual Funds $ 1,041,790 $ — $ — $ 1,041,790 |
Earnings Per Share (Tables)
Earnings Per Share (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Earnings Per Share [Abstract] | |
Schedule of earnings per share | Earnings per share are calculated as follows: December 31, 2016 2015 Basic earnings per share Income available to common shareholder $ 2,835,200 $ 1,044,304 Weighted average shares outstanding 4,934,431 4,895,367 Basic earnings per share $ 0.57 $ 0.21 Diluted earnings per share Income available to common shareholder $ 2,835,200 $ 1,044,304 Weighted average shares outstanding 4,934,431 4,895,367 Dilutive effect of stock options and restricted stock 132,283 51,008 Total weighted average shares outstanding 5,066,714 4,946,375 Diluted earnings per share $ 0.56 $ 0.21 |
Summary of Significant Accoun26
Summary of Significant Accounting Policies (Details) - USD ($) | 3 Months Ended | 12 Months Ended | |||
Sep. 30, 2015 | Dec. 31, 2016 | Dec. 31, 2015 | Oct. 13, 2016 | Sep. 19, 2008 | |
Deferred Revenue Arrangement [Line Items] | |||||
Inventory reserve | $ 67,000 | $ 67,000 | |||
Revenue recognition, licensing contract term (years) | 5 years | ||||
Advertising expense | $ 401,000 | $ 399,000 | |||
Adjustments | Revenues | |||||
Deferred Revenue Arrangement [Line Items] | |||||
Adjustment to balances | $ 240,000 | ||||
Minimum | |||||
Deferred Revenue Arrangement [Line Items] | |||||
Revenue recognition, royalty earned on licensing agreement (percent) | 4.00% | ||||
Maximum | |||||
Deferred Revenue Arrangement [Line Items] | |||||
Revenue recognition, royalty earned on licensing agreement (percent) | 6.00% | ||||
Buildings | Minimum | |||||
Deferred Revenue Arrangement [Line Items] | |||||
Useful life | 10 years | ||||
Buildings | Maximum | |||||
Deferred Revenue Arrangement [Line Items] | |||||
Useful life | 33 years | ||||
Trucks and automotive equipment | Minimum | |||||
Deferred Revenue Arrangement [Line Items] | |||||
Useful life | 3 years | ||||
Trucks and automotive equipment | Maximum | |||||
Deferred Revenue Arrangement [Line Items] | |||||
Useful life | 10 years | ||||
Shop machinery and equipment | Minimum | |||||
Deferred Revenue Arrangement [Line Items] | |||||
Useful life | 3 years | ||||
Shop machinery and equipment | Maximum | |||||
Deferred Revenue Arrangement [Line Items] | |||||
Useful life | 10 years | ||||
Land improvements | Minimum | |||||
Deferred Revenue Arrangement [Line Items] | |||||
Useful life | 10 years | ||||
Land improvements | Maximum | |||||
Deferred Revenue Arrangement [Line Items] | |||||
Useful life | 15 years | ||||
Office equipment | Minimum | |||||
Deferred Revenue Arrangement [Line Items] | |||||
Useful life | 3 years | ||||
Office equipment | Maximum | |||||
Deferred Revenue Arrangement [Line Items] | |||||
Useful life | 10 years | ||||
Stock options | |||||
Deferred Revenue Arrangement [Line Items] | |||||
Vesting period | 3 years | ||||
Available shares for grant (up to) (in shares) | 400,000 | 500,000 | |||
Restricted Stock Units | |||||
Deferred Revenue Arrangement [Line Items] | |||||
Vesting period | 3 years | ||||
Granted (in shares) | 103,000 |
Property and Equipment (Details
Property and Equipment (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | $ 17,935,184 | $ 14,306,900 |
Less: accumulated depreciation and amortization | (9,927,666) | (9,233,033) |
Property and equipment, net | 8,007,518 | 5,073,867 |
Depreciation expense | 821,000 | 668,000 |
Land and land improvements | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | 1,335,341 | 677,113 |
Buildings | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | 5,265,134 | 4,178,158 |
Machinery and equipment | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | 9,362,431 | 7,946,039 |
Rental equipment | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | $ 1,972,278 | $ 1,505,590 |
Notes Payable (Details)
Notes Payable (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Debt Instrument [Line Items] | ||
Notes Payable | $ 3,933,034 | $ 2,512,392 |
Less current maturities | 587,523 | 435,717 |
Notes payable - less current maturities | 3,345,511 | 2,076,675 |
Note payable to a Bank | Note payable due June 2021 | ||
Debt Instrument [Line Items] | ||
Monthly payments | $ 25,000 | |
Interest rate | 3.99% | |
Note payable to a Bank | $ 1,328,549 | 1,575,951 |
Note payable to a Bank | Note Payable Due July 2031 | ||
Debt Instrument [Line Items] | ||
Monthly payments | $ 11,000 | |
Interest rate | 5.29% | |
Note payable to a Bank | $ 1,293,542 | 0 |
Note payable to a Bank | Note payable due April 2021 | ||
Debt Instrument [Line Items] | ||
Monthly payments | $ 6,200 | |
Interest rate | 5.29% | |
Note payable to a Bank | $ 287,773 | 344,717 |
Capital lease obligation | ||
Debt Instrument [Line Items] | ||
Interest rate | 7.00% | |
Installment notes | ||
Debt Instrument [Line Items] | ||
Interest rate | 4.20% | |
Installment notes, collateralized by certain machinery and equipment maturing at various dates, primarily through 2016, with interest at 1.0% through 6.7%. | $ 1,023,170 | 239,702 |
Limit on annual capital expenditures | 1,500,000 | |
Revolving Credit Facility | Line of Credit | ||
Debt Instrument [Line Items] | ||
Interest rate | 4.49% | |
Notes Payable | $ 0 | $ 352,022 |
Line of credit facility, maximum borrowing capacity | $ 2,000,000 |
Notes Payable and Capital Lease
Notes Payable and Capital Lease Maturities (Details) - USD ($) | Dec. 31, 2016 | Dec. 31, 2015 |
Debt Disclosure [Abstract] | ||
2,017 | $ 587,523 | |
2,018 | 603,299 | |
2,019 | 584,703 | |
2,020 | 604,010 | |
2,021 | 437,460 | |
Thereafter | 1,116,039 | |
Notes Payable | $ 3,933,034 | $ 2,512,392 |
Related Party Transactions (Det
Related Party Transactions (Details) $ in Thousands | 12 Months Ended |
Dec. 31, 2016USD ($) | |
CEO | |
Related Party Transaction [Line Items] | |
Annual rent | $ 24 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Federal: | ||
Current | $ 777,000 | $ 394,000 |
Deferred | 514,000 | 14,000 |
Federal Income Taxes | 1,291,000 | 408,000 |
State: | ||
Current | 108,000 | 147,000 |
Deferred | 63,000 | 2,000 |
Total State | 171,000 | 149,000 |
Income Tax Expense (Benefit), Continuing Operations, Income Tax Reconciliation [Abstract] | ||
Income taxes at statutory rate | 1,461,000 | 543,000 |
State income taxes, net of federal benefit | 134,000 | 41,000 |
Domestic production activities deduction | (77,000) | 0 |
Stock compensation deferred tax asset write-off | 25,000 | 0 |
Other | (81,000) | (27,000) |
Income tax expense | $ 1,462,000 | $ 557,000 |
Effective Income Tax Rate, Continuing Operations, Tax Rate Reconciliation [Abstract] | ||
Income taxes at statutory rate (percent) | 34.00% | 34.00% |
State income taxes, net of federal benefit (percent) | 2.70% | 2.60% |
Domestic production activities deduction (percent) | (1.60%) | (0.00%) |
Stock compensation deferred tax asset write-off (percent) | 0.50% | 0.00% |
Other (percent) | (1.60%) | (1.70%) |
Effective income tax rate (percent) | 34.00% | 34.90% |
Components of Deferred Tax Assets and Liabilities [Abstract] | ||
Unrealized losses on investments available for sale | $ (1,404,000) | $ (855,000) |
Unrealized losses on investments available for sale | 15,000 | 6,000 |
Allowance for doubtful accounts | 128,000 | 147,000 |
Vacation accrued | 106,000 | 105,000 |
Deferred income | 281,000 | 302,000 |
State NOL carryforward | 75,000 | 43,000 |
Other | 35,000 | 62,000 |
Net deferred tax liability | (764,000) | (190,000) |
Current portion, net | 640,000 | 665,000 |
Long-term portion, net | $ 1,404,000 | $ 855,000 |
Employee Benefit Plans (Details
Employee Benefit Plans (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Defined Benefit Pension Plans and Defined Benefit Postretirement Plans Disclosure [Abstract] | ||
Maximum annual contributions per employee, percent | 10.00% | |
Employer matching contribution, percent of match | 50.00% | |
Employer matching contribution, percent of employees' gross pay | 4.00% | |
Cost recognized | $ 124,000 | $ 115,000 |
Stock Compensation (Details)
Stock Compensation (Details) - USD ($) | 12 Months Ended | ||||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2016 | Oct. 13, 2016 | Sep. 19, 2008 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Intrinsic value of options outstanding (in dollars) | $ 45,000 | ||||
Weighted Average Exercise Price | |||||
Beginning balance (in dollars per share) | $ 1.96 | $ 1.96 | |||
Granted (in dollars per share) | 0 | 0 | |||
Forfeited (in dollars per share) | (2.21) | (2.52) | |||
Exercised (in dollars per share) | (1.31) | (1.85) | |||
Vested (in dollars per share) | 0 | $ 0 | |||
Ending balance (in dollars per share) | $ 1.77 | $ 1.96 | |||
Options Outstanding | |||||
Beginning balance | 190,933 | 315,233 | |||
Granted | 0 | 0 | |||
Forfeited | (60,000) | (86,300) | |||
Exercised | (62,800) | (38,000) | |||
Vested | 0 | 0 | |||
Ending balance | 68,133 | 190,933 | |||
Vested and Exercisable | |||||
Beginning balance | 190,933 | 315,233 | |||
Granted | 0 | 0 | |||
Forfeited | (60,000) | (86,300) | |||
Exercised | (62,800) | (38,000) | |||
Vested | 0 | 0 | |||
Ending balance | 68,133 | 190,933 | |||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Nonvested, Weighted Average Grant Date Fair Value [Abstract] | |||||
Granted (in dollars per share) | $ 0 | $ 0 | |||
Stock options | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Number of options authorized | 400,000 | 500,000 | |||
Vesting period | 3 years | ||||
Restricted Stock Units | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Vesting period | 3 years | ||||
Weighted Average Exercise Price | |||||
Granted (in dollars per share) | $ 4.95 | ||||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Nonvested, Number of Shares [Roll Forward] | |||||
Non-vested, beginning of period (shares) | 0 | ||||
Granted (in shares) | 103,000 | ||||
Vested (shares) | 0 | ||||
Forfeited (shares) | 0 | ||||
Non-vested, end of period (shares) | 0 | 0 | 103,000 | ||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Nonvested, Weighted Average Grant Date Fair Value [Abstract] | |||||
Non-vested, beginning of period (usd per share) | $ 0 | ||||
Granted (in dollars per share) | 4.95 | ||||
Vested (in dollars per share) | 0 | ||||
Forfeited (in dollars per share) | 0 | ||||
Non-vested, ending of period (usd per share) | $ 4.95 | $ 0 |
Fair Value Measurements (Detail
Fair Value Measurements (Details) - Mutual Funds [Member] - USD ($) | Dec. 31, 2016 | Dec. 31, 2015 |
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Investments, Fair Value Disclosure | $ 1,050,220 | $ 1,041,790 |
Level 1 [Member] | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Investments, Fair Value Disclosure | 1,050,220 | 1,041,790 |
Level 2 [Member] | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Investments, Fair Value Disclosure | 0 | 0 |
Level 3 [Member] | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Investments, Fair Value Disclosure | $ 0 | $ 0 |
Commitments and Contingencies (
Commitments and Contingencies (Details) - CEO | 12 Months Ended |
Dec. 31, 2016USD ($) | |
Loss Contingencies [Line Items] | |
Annual base salary | $ 99,000 |
Annual royalty fee | $ 99,000 |
Voluntary termination period | 6 months |
Compensation multiplier due to Company upon voluntary termination within defined period | 3 |
Time period used to determine cancellation penalties | 5 years |
Amount subtracted from cancellation penalties | $ 1 |
Compensation multiplier due to employee upon voluntary termination with good reason | 3 |
Period following termination of continued fringe benefits | 2 years |
Period following termination options are exercisable | 3 years |
Compensation multiplier due to employee's estate upon death | 1 |
Period following termination due to disability of continued compensation | 1 year |
Earnings Per Share (Details)
Earnings Per Share (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Earnings Per Share [Abstract] | ||
Net income | $ 2,835,200 | $ 1,044,304 |
Basic earnings (loss) per share | ||
Weighted average shares outstanding | 4,934,431 | 4,895,367 |
Basic earnings per share (in dollars per share) | $ 0.57 | $ 0.21 |
Diluted earnings (loss) per share | ||
Weighted average shares outstanding | 4,934,431 | 4,895,367 |
Dilutive effect of stock options | 132,283 | 51,008 |
Total weighted average shares outstanding | 5,066,714 | 4,946,375 |
Diluted earnings per share (in dollars per share) | $ 0.56 | $ 0.21 |