Smith Midland logo

Smith-Midland Reports Third Quarter 2023 Financial Results

November 9, 2023 | Investor Relations / Financials

Revenue Increased 31% to $15.7 Million; Backlog Remains Strong Over $60 Million

MIDLAND, VA – November 9, 2023 – Smith-Midland Corporation (NASDAQ: SMID) a provider of innovative, high-quality, proprietary and patented precast concrete products and systems announced its third quarter results for the period ended September 30, 2023.

Third Quarter 2023 Summary

  • Revenue increased 31 percent from the prior year quarter to $15.7 million
  • Product sales increased 54 percent from the third quarter of 2022 to $10.9 million
  • Gross margin of 22.9%, a 550 basis point increase from the prior year quarter
  • Net income of $1.3 million compared to $5,000 in the third quarter of 2022
  • Selected by Maryland Transportation Authority for $6.8 million architectural panel project for the Baltimore Harbor Tunnel
  • Awarded $1.6 million contract for rental of J-J Hook barrier for I-64 Hampton Roads Express Lanes project

“Our strong third quarter results reflect the underlying strength of our business coupled with the favorable tailwinds within the industry from increased public and private infrastructure and construction spending. This quarter represents our fourth consecutive quarter of double-digit, year-over-year revenue growth, and our highest quarterly net income since the third quarter of 2021,” said Ashley Smith, Chairman and Chief Executive Officer of Smith-Midland. “Demand for our specialized, innovative product offerings remains high, and our success in converting the increased levels of bidding activity into secured contracts has expanded and continues to drive our strong backlog of $60.2 million.”

“We are highly optimistic about our prospects for next year thanks to our internal initiatives to increase our sales funnel and the multiple tailwinds across our industry. Overall, we are well-positioned to generate further top and bottom-line growth, and ultimately deliver long-term value to our shareholders.”

Third Quarter 2023 Results
The Company reported 2023 third quarter revenues of $15.7 million compared to revenues of $12.0 million in the third quarter of 2022. Product sales for the current quarter were $10.9 million, a 54 percent increase from the prior year quarter. Service revenue, which includes barrier rentals, royalty income and shipping and installation, was $4.8 million compared to $4.9 million in the third quarter of 2022.

Gross profit was $3.6 million compared to $2.1 million in the prior year quarter. Gross margin for the quarter increased to 22.9% compared to 17.4% in the previous year’s quarter, due primarily to greater proprietary product sales which carry higher margins than non-proprietary products.

Operating income for the quarter was $1.5 million compared to $4,000 in the prior year quarter. Net income for the third quarter was $1.3 million, or $0.24 per diluted share, compared to net income of $5,000, or $0.00 on a diluted share basis in the third quarter of 2022.

Product Sales
Total product sales for the third quarter of 2023 were $10.9 million compared to $7.1 million in the prior year quarter. Soundwall sales were $2.4 million compared to $0.8 million in the third quarter of 2022 due to higher production volumes at the North Carolina and South Carolina plants related to larger soundwall projects than in the prior periods. SlenderWall sales were $2.3 million, compared to $11,000 in the third quarter of 2022, due to two projects being produced this year compared to the completion of a single project in 2022. Miscellaneous wall sales were $1.4 million, essentially unchanged from the prior year quarter. Barrier sales were $1.4 million compared to $0.8 million in the second quarter of 2022, due primarily to increased production at all three manufacturing facilities related to large barrier projects. Easi-Set and Easi-Span Building Sales were $1.2 million compared to $1.5 million in the prior year quarter.

Service Revenue
Service revenue which is comprised of royalty income, barrier rental revenue, and shipping and installation totaled $4.8 million, compared to $4.9 million in the third quarter of 2022. Shipping and installation revenue was $3.1 million compared to $2.7 million in the prior year’s third quarter. The increase is mainly attributable to higher shipping and installation activity for barrier rental projects. Royalty income was $0.8 million for both the third quarter of 2023 and the third quarter of 2022. Barrier rental revenue for the third quarter of 2023 was $0.8 million compared to $1.4 million in the prior year quarter, although the Company experienced increase project activity towards the end of the quarter.

Balance Sheet and Liquidity
As of September 30, 2023, cash totaled $5.8 million compared to cash totaling $6.7 million for the year ended December 31, 2022. Account receivables totaled $16.8 million and debt totaled $5.9 million as of September 30, 2023. Capital spending totaled $1.1 million for the third quarter of 2023.

Macro Environment and Outlook
The Company anticipates increased sales volume for the full year of 2023 compared to 2022. Infrastructure initiatives across the United States continue to drive greater bidding activity and a subsequent increase in backlog for its portfolio of patented, proprietary, and custom products. Inflationary pressures still remain, particularly across labor and materials costs, and the Company continues to manage these input costs while attracting and retaining skilled labor. Backlog was approximately $60.2 million as of November 1, 2023. The majority of the backlog is anticipated to be fulfilled within 12 months; however, some projects will have a multi-year timeline. The Company remains focused on long-term strategic growth initiatives to drive shareholder value.

About Smith-Midland
Smith-Midland develops, manufactures, licenses, rents, and sells a broad array of precast concrete products and systems for use primarily in the construction, transportation, and utility industries.

Smith-Midland Corporation has three manufacturing facilities located in Midland, VA, Reidsville, NC, and Columbia, SC, and a J-J Hooks® Safety Barrier rental firm, Concrete Safety Systems. Easi-Set Worldwide, a wholly owned subsidiary of Smith-Midland Corporation, licenses the production and sale of Easi-Set products, including J-J Hooks and SlenderWall®, and provides diversification opportunities to the precast industry worldwide. For more information, please call (540) 439-3266 or visit www.smithmidland.com.

Forward-Looking Statements
This announcement contains forward-looking statements, which involve risks and uncertainties. The Company’s actual results may differ significantly from the results discussed in the forward-looking statements. Factors which might cause such a difference include, but are not limited to, product demand, the impact of competitive products and pricing, capacity and supply constraints or difficulties, inflationary factors including potential recession, general business and economic conditions, our debt exposure, our high level of accounts receivables, the effect of the Company’s accounting policies and other risks detailed in the Company’s Annual Report on Form 10-K and other filings with the Securities and Exchange Commission.

Company Contact:
Stephanie Poe, CFO
540-439-3266
investors@smithmidland.com

Investor Relations:
Steven Hooser or John Beisler
Three Part Advisors, LLC
214-872-2710