Smith-Midland Reports Second Quarter 2022 Financial Results
August 12, 2022 | Investor Relations / Financials
Reports 37 Percent Year-Over-Year Increase in Backlog to $35.7 Million
MIDLAND, VA – August 11, 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 second quarter ended June 30, 2022.
Second Quarter 2022 Summary (Compared to Prior-Year Quarter)
- Revenue of $13.3 million, an 8 percent increase
- Barrier sales more than doubled to $2.3 million
- Barrier rentals of $2.0 million compared to $1.2 million
- Earnings of $0.17 per diluted share, compared to $0.19
- Backlog at August 1, 2022 increased 37 percent to $35.7 million
Additional Contracts Awarded Subsequent to the Quarter
- $3.4 million for Soundwall panels and posts as part of the reconstruction and widening of I-20 at the Broad River Road and I-26 interchange outside Columbia, SC
- Design of precast platform girders and more than 200 deck planks for the Regional Transportation Center in Claymont, DE
- 114,000 square feet of precast retaining wall used as part of the Hampton Roads Bridge Tunnel (HRBT) expansion in Virginia
“Our second quarter results reflect the hard work of our team, the value of our proprietary products, and the favorable 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,” said Ashley B. Smith, President and Chief Executive Officer. “Heading into the second half of the year, we believe the positive market outlook, our growing backlog, and the recent expansion of our barrier rental fleet position us very well to gain market share and successfully execute on our long-term strategy.”
“During the quarter, we expanded our agreement to repurchase an additional 115,000 linear feet of barrier, increasing the total purchase to 325,000 linear feet and more than doubling our rental fleet inventory when completed. We signed a $6.6 million contract for a North Carolina Department of Transportation project – the largest in the history of our Reidsville, NC facility. Recently, we signed our third contract on a Virginia Department of Transportation job related to the Hampton Roads Bridge-Tunnel (HRBT) project. Our design capabilities and broad array of precast products continues to be a competitive advantage for the Company.”
“Although the supply chain continues to provide challenges in obtaining materials and logistical disruptions, our team continues to step up and deliver for our customers. Overall, our prospects remain strong, and we remain excited about the opportunities available to us to deliver long-term value to our shareholders,” Mr. Smith concluded.
Second Quarter 2022 Results
The Company reported 2022 second quarter revenues of $13.3 million compared to $12.3 million in the second quarter of 2021. Operating income for the second quarter of 2022 was $1.1 million compared to $1.3 million in the same quarter of the prior year. Net income for the quarter was $0.9 million, or $0.17 per diluted share, compared to net income of $1.0 million, or $0.19 per diluted share in the second quarter of 2021. The increase in revenue is related to higher barrier sales and rentals, while the decrease in operating and net income for the quarter is related to higher material and labor costs and lower fixed cost absorption due to reduced production volumes.
Total product sales for the second quarter of 2022 decreased 6 percent to $6.8 million compared to $7.2 million in the prior-year quarter. The decrease is primarily due to lower soundwall sales related to delays in approvals at the Virginia plant, which more than offset an increase in barrier sales related to a specific job at Smith-Midland’s North Carolina plant. Utility sales increased 42 percent from the second quarter of 2021.
Service revenue, which is comprised of royalty income, barrier rental revenue, and shipping and installation, totaled $6.5 million for the second quarter of 2022 compared to $5.1 million in the year-ago quarter. The increase is primarily due to a 66 percent increase in barrier rental revenue and a 17 percent increase in shipping and installation activity associated with SlenderWall and Architectural panels.
Balance Sheet and Liquidity
As of June 30, 2022, Smith-Midland’s cash totaled $12.4 million compared to $13.5 million as of December 31, 2021. Account receivables were approximately $13.2 million and debt totaled $6.7 million. Capital spending for the first six months of 2022 was $2.0 million compared to $0.9 million in the first half of 2021.
Macro Environment and Outlook
Smith-Midland and its competitors continue to face many macro challenges including labor shortages, inflationary and raw material cost increase, and supply chain shortages. Smith-Midland’s proactive stance on raw material inventories continues to provide stability for customers despite these global disruptions. The barrier rental business remains strong, as demonstrated by a 29 percent increase in revenue for the Company’s core rental barrier fleet for the six month period ended June 30, 2022 compared to the same period in 2021. Further, the fleet will more than double by the end of the year and the addition of a salesperson dedicated to the barrier rental division. Sales initiatives are gaining traction as evidenced by the recent announcement of $8.9 million in contracts awarded to the Company. Spending related to the Infrastructure Investment and Jobs Act is expected to begin to take effect over the coming months, including for highways and bridges. Smith-Midland serves diverse end markets with innovative patented, proprietary, and customized products. The Company’s growing licensee network generates healthy royalties and extends the geographic reach of the patented products. Regulatory tailwinds and macro off-site modular construction trends favor Smith-Midland’s portfolio of products over the long-term. Backlog was approximately $35.7 million recorded as of August 1, 2022, compared to approximately $26 million a year ago. Management will continue to execute against the Company’s long-term growth strategy focusing on continuously enhancing shareholder value.
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.
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, inflation related to material and labor costs, general business and economic conditions, 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.
AJ Krick, CFO
Steven Hooser or John Beisler
Three Part Advisors, LLC