Smith-Midland Reports Third Quarter 2022 Financial Results
Record Backlog of $51.4 Million, 80 Percent Year-Over-Year Increase
MIDLAND, VA – November 3, 2022 – Smith-Midland Corporation (NASDAQ: SMID), a provider of innovative, high-quality proprietary and patented precast concrete products and systems today announced its results for the third quarter ended September 30, 2022.
Third Quarter 2022 Summary (Compared to Prior-Year Quarter)
·
Backlog increased 80 percent to $51.4 million, a record for the Company
·
Royalty revenue increased 23% to $833,000
·
Easi-Set building revenue increased 168% to $1,523,000
·
Total revenue of $12.0 million, compared to $13.1 million
·
Product sales of $7.1 million, compared to $7.2 million
Additional Items Subsequent to the Quarter
·
Awarded $8.6 million contract (included in reported backlog) to produce precast concrete soundwall, columns, and J-J Hooks concrete barrier for a project with the North Carolina Department of Transportation (NCDOT)
·
Completed successful crash test for low-profile barriers for use in the Texas and Florida markets
"Our third quarter results reflect the continued resilience of our team, the value of our proprietary products, and the favorable ongoing macroeconomic trends across our industry. Regulatory drivers and greater infrastructure spending following the passage of last year’s infrastructure bill should continue to expand our pool of long-term opportunities for all of our products," said Ashley B. Smith, President and Chief Executive Officer. “We anticipate higher production volumes for the fourth quarter and into the first quarter of 2023 as we expect the drawing delays experienced throughout this year to be resolved in the near future. Additionally, a new project for our SlenderWall product, that started production at the end of the third quarter, will continue during fourth quarter.”
“We continue to make strategic investments in our business, including the 325,000 linear feet of barrier we announced last May, which more than doubles our rental fleet. This investment remains on schedule, and we expect the purchase to be completed by the end of year. We are also investing in new potential recurring revenue streams such as the low-profile barrier. We recently completed a successful crash test of our low-profile barriers to be deployed in the Texas and Florida markets. Lastly, we recently signed the largest contract in the history of our North Carolina facility. Through investments, new products, and expanded markets, the Company continues to be a leader within the industry.”
“The 80 percent increase in our year-over-year backlog of $51.4 million reflects the efforts of our sales team and recession-resilient nature of our business, which will benefit from the upcoming infusion of spending from last year’s infrastructure bill. Overall, we remain excited about the opportunities available to us and our ability to deliver long-term value to our shareholders,” Mr. Smith concluded.
1
Third Quarter 2022 Results
The Company reported 2022 third quarter revenues of $12.0 million compared to $13.1 million in the third quarter of 2021. Operating income for the third quarter of 2022 was $4,000 compared to $1.3 million in the third quarter of 2021. Net income for the quarter was $5,000, or breakeven on a diluted share basis, compared to net income of $3.7 million, or $0.71 per diluted share in the third quarter of 2021. The prior-year’s results include a $2.7 million gain, or $0.52 per diluted share, related to the forgiveness of the Company’s Paycheck Protection Program (PPP) loan by the Federal government.
Product Sales
Total product sales for the third quarter of 2022 were $7.1 million compared to $7.2 million in the prior-year quarter. Sales related to the Company’s soundwalls were impacted by temporary delays related to customer drawing approvals and timing of new projects within the quarter. Sales for Easi-Set buildings more than doubled compared to the prior-year quarter. SlenderWall sales are expected to trend higher for the fourth quarter of 2022 due to a new project started at the end of the third quarter.
Service Revenue
Service revenue, which is comprised of royalty income, barrier rental revenue, and shipping and installation, totaled $4.9 million for the third quarter of 2022 compared to $5.9 million in the year-ago quarter. Barrier rental revenue decreased compared to the prior-year quarter due to short-term special projects that occurred in the third quarter of 2021 that did not reoccur in the current year.
Balance Sheet and Liquidity
As of September 30, 2022, Smith-Midland's cash totaled $10.8 million compared to $13.5 million as of December 31, 2021. Account receivables were approximately $13.2 million and debt totaled $6.6 million. Capital spending for the quarter was $1.8 million compared to $0.3 million in the third quarter of 2021.
Macro Environment and Outlook
Smith-Midland and all of its competitors continue to face many macroeconomic challenges including labor shortages, inflationary and raw material cost increase, and supply chain disruptions. Demand for barrier rentals remains strong, and the fleet will more than double by the end of the year at the originally announced cost of approximately $5.0 million. The Company continues to secure meaningful contracts, including the recently announced $8.6 million contract with the NCDOT. Management believes the Company’s business is more resilient through recessionary pressures thanks to spending related to the Infrastructure Investment and Jobs Act that will begin to take effect over the coming months, its diverse end markets, growing licensee network and innovative patented, proprietary, and customized products. Backlog was approximately $51.4 million recorded as of October, 2022, compared to approximately $28.5 million a year ago and 35% higher than the previous record backlog in the first quarter of 2018. Management will continue to execute against the Company’s long-term growth strategy focusing on continuously enhancing shareholder value.
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About Smith-Midland
Smith-Midland develops, manufactures, licenses, rents, and sells a broad array of precast concrete products for use primarily in the construction, transportation, and utilities industries.
Smith-Midland Corporation has three manufacturing facilities located in Midland, VA, Reidsville, NC, and Columbia, SC, and operates Concrete Safety Systems, the Company’s J-J Hooks Safety Barrier rental division. Easi-Set Worldwide, a wholly owned subsidiary of Smith-Midland Corporation, licenses the production and sale of Easi-Set products, including J-J Hooks and SlenderWall, and provides diversification opportunities to the precast industry worldwide. For more information, please call (540) 439-3266 or visit www.smithmidland.com.
Forward-Looking Statements
This announcement contains forward-looking statements, which involve risks and uncertainties. The Company's actual results may differ significantly from the results discussed in the forward-looking statements. Factors which might cause such a difference include, but are not limited to, the risk that the coronavirus outbreak may adversely affect future operations, product demand, the impact of competitive products and pricing, capacity and supply constraints or difficulties, delays in approvals of customer drawings, general business and economic conditions, including recessions, out debt exposure, the effect of the Company's accounting policies and other risks detailed in the Company's Annual Report on Form 10-K and other filings with the Securities and Exchange Commission.
Company Contact:
AJ Krick, CFO
540-439-3266
investors@smithmidland.com
Investor Relations:
Steven Hooser or John Beisler
Three Part Advisors, LLC
214-872-2710
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SMITH-MIDLAND CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)
ASSETS
September 30,
2022
(Unaudited)
December 31,
2021
Current assets
Cash
$
10,808
$
13,492
Accounts receivable, net
Trade - billed (less allowance for doubtful accounts of approximately $438 and $437, respectively), including contract retentions
13,175
10,013
Trade - unbilled
278
439
Inventories, net
Raw materials
2,097
1,143
Finished goods
1,887
1,702
Prepaid expenses
622
551
Refundable income taxes
176
411
Total current assets
29,043
27,751
Property and equipment, net
24,165
21,926
Deferred buy-back lease asset, net
825
3,390
Other assets
244
258
Total assets
$
54,277
$
53,325
4
SMITH-MIDLAND CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)
(continued)
LIABILITIES AND STOCKHOLDERS' EQUITY
September 30,
2022
(Unaudited)
December 31,
2021
Current liabilities
Accounts payable - trade
$
4,577
$
2,071
Accrued expenses and other liabilities
427
657
Deferred revenue
2,006
2,454
Accrued compensation
592
1,036
Accrued income taxes
115
2,033
Deferred buy-back lease obligation
925
3,776
Operating lease liabilities
89
89
Current maturities of notes payable
619
468
Customer deposits
1,508
1,325
Total current liabilities
10,858
13,909
Deferred revenue
2,539
1,865
Operating lease liabilities
55
122
Notes payable - less current maturities
5,948
3,724
Deferred tax liability
1,953
1,955
Total liabilities
21,353
21,575
Stockholders’ equity
Preferred stock, $.01 par value; authorized 1,000,000 shares, none issued and outstanding
—
—
Common stock, $.01 par value; authorized 8,000,000 shares; 5,353,095 and 5,353,095 issued and 5,230,658 and 5,229,658 outstanding, respectively
53
53
Additional paid-in capital
7,313
6,935
Treasury stock, at cost, 40,920 shares
(102
)
(102
)
Retained earnings
25,660
24,864
Total stockholders' equity
32,924
31,750
Total liabilities and stockholders' equity
$
54,277
$
53,325
5
SMITH-MIDLAND CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (LOSS)
(Unaudited)
(in thousands, except per share data)
Three Months Ended
September 30,
NineMonths Ended
September 30,
2022
2021
2022
2021
Revenue
Product sales
$
7,076
$
7,205
$
19,714
$
21,868
Barrier rentals
1,369
1,708
4,816
8,667
Royalty income
833
676
2,031
1,788
Shipping and installation revenue
2,678
3,511
9,083
8,302
Total revenue
11,956
13,100
35,644
40,625
Cost of goods sold
9,874
9,898
28,683
28,388
Gross profit
2,082
3,202
6,961
12,237
Operating expenses
General and administrative expenses
1,229
1,215
3,797
3,880
Selling expenses
849
719
2,236
2,010
Total operating expenses
2,078
1,934
6,033
5,890
Operating income (loss)
4
1,268
928
6,347
Other income (expense)
Interest expense
(69
)
(47
)
(187
)
(145
)
Interest income
3
10
9
29
Gain on sale of assets
29
205
94
293
Gain on forgiveness of PPP loan
—
2,692
—
2,692
Other income
26
8
208
41
Total other income (expense)
(11
)
2,868
124
2,910
Income (loss) before income tax expense (benefit)
(7
)
4,136
1,052
9,257
Income tax expense (benefit)
(12
)
442
256
1,711
Net income (loss)
$
5
$
3,694
$
796
$
7,546
Basic and diluted earnings (loss) per common share
$
0.00
$
0.71
$
0.15
$
1.45
Weighted average number of common shares outstanding:
Basic
5,231
5,202
5,230
5,202
Diluted
5,286
5,220
5,281
5,217
6
SMITH-MIDLAND CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(in thousands)
Nine Months Ended
September 30,
2022
2021
Cash flows from operating activities:
Net income (loss)
$
796
$
7,546
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation and amortization
2,127
1,976
Gain on forgiveness of PPP loan
—
(2,692
)
(Gain) loss on sale of property and equipment
(94
)
(293
)
Unrealized (gain) loss on investment securities available for sale
—
5
Allowance for doubtful accounts
—
25
Stock compensation
379
258
Deferred taxes
(5
)
(3
)
(Increase) decrease in
Accounts receivable - billed
(3,163
)
(2,799
)
Accounts receivable - unbilled
161
259
Inventories
(1,139
)
(1,002
)
Prepaid expenses and other assets
(104
)
10
Refundable income taxes
235
—
Increase (decrease) in
Accounts payable - trade
2,506
1,300
Accrued expenses and other liabilities
(230
)
(86
)
Deferred revenue
227
1,959
Accrued compensation
(444
)
(68
)
Accrued income taxes
(1,918
)
1,016
Deferred buy-back lease obligation
(2,851
)
(903
)
Customer deposits
184
1,054
Net cash provided by (used in) operating activities
(3,333
)
7,562
Cash flows from investing activities:
Purchases of investment securities available-for-sale
—
(20
)
Purchases of property and equipment
(3,739
)
(1,210
)
Deferred buy-back asset
1,909
—
Proceeds from the sale of property and equipment
103
466
Net cash provided by (used in) investing activities
(1,727
)
(764
)
Cash flows from financing activities:
Proceeds from long-term borrowings
2,805
50
Repayments of long-term borrowings
(429
)
(617
)
Net cash provided by (used in) financing activities
2,376
(567
)
Net increase (decrease) in cash
(2,684
)
6,231
Cash
Beginning of period
13,492
8,764
End of period
$
10,808
$
14,995
Supplemental Cash Flow Information:
Cash payments for interest
$
187
$
145
Cash payments for income taxes
$
2,179
$
713
Non-cash transaction – Gain on forgiveness of PPP loan
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