Smith-Midland Reports Second Quarter 2023 Financial Results
October 11, 2023 | Investor Relations / Financials
Revenue Increased 11% from Prior Year to $14.7 Million; Record Backlog of $60.9 Million
Announces Preliminary Third Quarter Year-over-Year Revenue Growth in Excess of 20%
MIDLAND, VA / October 11, 2023 / Smith-Midland Corporation (NASDAQ:SMID) a provider of innovative, high-quality proprietary and patented precast concrete products and systems announced its second quarter results for the period ended June 30, 2023.
Second Quarter 2023 Summary Compared to Second Quarter 2022
- Revenue increased 11 percent from the prior year quarter to $14.7 million
- Product sales increased 58 percent from the prior year quarter to $10.7 million
- Net loss of $782,000, or loss per share of $0.15, primarily related to a pair of items isolated to the quarter
- Selected to produce SlenderWall architectural precast panels for $4.5 million hospital project
- Awarded $2.1 million contract for architectural panels for BMW’s campus in South Carolina
The Company’s second quarter 10-Q filing was delayed due to the transition to a new independent registered accounting firm. The Company expects to file its third quarter results on or prior to the November 14th deadline as required by the Securities and Exchange Commission and does not anticipate additional delays in its future filings.
“Revenue for the second quarter of 2023 represents the third consecutive quarter of double-digit, year-over-year revenue growth, reflecting the underlying strength of our business,” said Ashley Smith, Chairman and Chief Executive Officer of Smith-Midland. “We continue to secure new contracts thanks to increased demand for our innovative product offerings and increased spending from the public and private sectors. Our backlog of $60.9 million as of August 1, 2023 is a record for the company, and it does not include the recently announced project to produce $6.8 million in architectural precast panels for the Baltimore Harbor Tunnel.”
“Our bottom line was negatively impacted by the overall cost inflation that persists across our business as well as by a pair of items that were isolated to the quarter. We incurred approximately $400,000 in costs related to the remaking of architectural panels for one specific project because of product from a material supplier that did not meet project specifications. Secondly, we had a cybersecurity issue related to a payment to one of our vendors for approximately $342,000. We have been able to recover $67,000 to date from insurance and believe there is an opportunity to offset most of the remaining amount through additional insurance proceeds,” Mr. Smith continued.
“We expect third quarter revenue growth to be in excess of 20 percent compared to the third quarter of the prior year as we execute on the production of our historic backlog. Overall, the multiple tailwinds across our business should continue the trend of strong top-line growth, positioning us to create long-term shareholder value,” Mr. Smith concluded.
Second Quarter 2023 Results
The Company reported revenues of $14.7 million for the second quarter of 2023 compared to revenues of $13.3 million in the second quarter of 2022. Product sales for the quarter were $10.7 million, a 58 percent increase from the prior-year quarter. Service revenue, which includes barrier rentals, royalty income and shipping and installation, was $4.0 million compared to $6.5 million in the second quarter of 2022.
Gross profit was $1.8 million compared to $3.2 million in the prior year quarter. Gross margin for the current year quarter was 12.2% compared to 24.4% in the previous year’s quarter. This year’s gross profit and margin results include additional costs, of approximately $400,000 related to panels remade for one specific project and lower barrier rental revenue, which generate higher margins than product sales.
Operating loss for the quarter was $981,000 compared to operating income of $1.1 million in the prior-year quarter. The decrease is mainly due to the reduction in gross profit and due to a one-time wire fraud incident that occurred in the second quarter of 2023 resulting in additional general and administrative expenses of $342,000. Net loss for the second quarter was $782,000, or loss per share of $0.15, compared to net income of $910,000, or $0.17 per diluted share in the second quarter of 2022.
Total product sales for the second quarter of 2023 were $10.7 million compared to $6.8 in the prior-year quarter. Soundwall sales were $1.7 million compared to $0.4 million in the second quarter of 2022 due to higher production volumes. Architectural panel sales were $0.3 million, compared to $1.3 million, reflecting the completion of two architectural projects in the second quarter of 2022. SlenderWall sales were $1.5 million, compared to $0.1 million in the second quarter of 2022, due to two projects being produced consecutively in the first half of 2023 compared to a single project in the first half of 2022. Miscellaneous wall sales increased to $2.9 million from $0.6 million in the prior-year quarter due to the increased amount of retaining wall projects in production. Barrier sales were $1.8 million compared to $2.3 million in the second quarter of 2022, due primarily to a large barrier project that began in the prior-year quarter and completed by the end of 2022. Easi-Set and Easi-Span Building Sales increased 52 percent from the prior-year quarter to $1.4 million.
Service revenue which is comprised of royalty income, barrier rental revenue, and shipping and installation totaled $4.0 million, compared to $6.5 million in the second quarter of 2022. Shipping and installation revenue was $2.7 million compared to $3.7 million in the prior year quarter. Royalty income decreased to $0.6 million from $0.8 million in the second quarter of 2022, due to the project delays experienced by licensees. Barrier rental revenue for the second quarter of 2023 was $0.7 million compared to $2.0 million in the prior-year quarter due to a temporary slowdown in barrier rental projects.
Balance Sheet and Liquidity
As of June 30, 2023, cash totaled $4.7 million compared to cash totaling $6.7 million for the year ended December 31, 2022. Account receivables totaled $16.6 million and debt totaled $6.0 million as of June 30, 2023. Capital spending totaled $1.8 million for the second quarter of 2023.
Macro Environment and Outlook
With the growing backlog and continued strength in bidding activity, Smith-Midland anticipates increased sales volumes for the remainder of 2023 and continuing into 2024. The immediate outlook of continued infrastructure initiatives across the United States are anticipated to yield positive tail winds across our portfolio of patented, proprietary, and custom products. While we see a continually dynamic macro environment including increases in labor and material costs, we are working hard to mitigate these effects and to attract and retain quality labor as well as manage input costs. Backlog was approximately $60.9 million recorded as of August 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 Corporation
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.
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.
Stephanie Poe, CFO
Steven Hooser or John Beisler
Three Part Advisors, LLC