Smith-Midland Reports Fourth Quarter and Year End 2023 Financials

May 23, 2024 | Investor Relations / Financials, Smith-Midland Corporation

Highest Quarterly and Annual Revenue in Company History

MIDLAND, VA / May 23, 2024 / Smith-Midland Corporation (NASDAQ: SMID), a provider of innovative, high-quality proprietary and patented precast concrete products and systems, today announced its fourth quarter and year-end results for the period ended December 31, 2023.

Fourth Quarter 2023 Summary (compared to prior-year quarter)

Revenue increased 13 percent to $16.4 million
Product sales increased 10 percent to $8.9 million
Service revenue increased 17 percent to $7.5 million
Operating income of $542,000 compared to an operating loss of $72,000
Net income of $230,000, or $0.04 per diluted share, compared to $5,000 and $0.00
Awarded a $3.8 million contract for J-J Hooks barrier rental in Virginia

Full Year 2023 Summary

Revenue increased 19 percent to $59.6 million
Operating income increased 31 percent to $1.1 million
Net income was approximately equal to the prior year; the 2023 period was adversely affected by a significant state liability
Added five licensees in the United States to a total of 75 total licensees worldwide

“Our fourth quarter results closed out a very successful 2023, as we reported our highest quarterly and full-year revenue in company history,” said Ashley Smith, Chairman and Chief Executive Officer of Smith-Midland. “Fourth quarter revenue increased 13 percent from the prior-year quarter, thanks to increased soundwall, miscellaneous and utility product sales, and barrier rental revenue more than doubled compared to the prior-year quarter.”

“We believe the outlook for 2024 is very favorable and expect funding from the Infrastructure and Jobs Act to reach state and local governments in the latter half of the year. We are experiencing strong demand for our utility vaults and expect additional orders due to the continued need for data centers to support AI technology. The replacement cycle of barriers that meet the MASH-TL3 standard continues to be an opportunity for our patented JJ-Hooks highway barrier system. Our larger barrier rental fleet increases the size and scale of projects and jobs we can bid. In the coming year, we will continue to invest in our business, including the plant expansion in North Carolina and new soundwall forms for anticipated increased production capacity. Overall, we continue to be well-positioned to meet the anticipated increased demand across the sectors we serve and deliver long-term value to our shareholders,” concluded Smith.

Fourth Quarter 2023 Results

The Company reported 2023 fourth-quarter revenues of $16.4 million compared to $14.5 million in the fourth quarter of 2022. Product sales for the quarter were $8.9 million, a 10 percent increase from the prior-year quarter. Service revenue, which includes barrier rentals, royalty income, and shipping and installation, increased to $7.5 million compared to $6.4 million for the fourth quarter of 2022.

Gross profit increased to $3.1 million compared to $2.5 million in the prior year quarter due to the higher revenue base. Gross margin for the quarter was 19.1%, compared to 17.3% in the fourth quarter of 2022.

Operating income for the quarter was $542,000 compared to an operating loss of $72,000 in the prior-year quarter. The improvement was primarily due to the higher revenue base and flat operating expenses. Net income for the fourth quarter was $230,000, or $0.04 per diluted share, compared to net income of $5,000, or breakeven on a diluted share basis in the fourth quarter of 2022.

Full-Year 2023 Results

Revenues for the year totaled $59.6 million compared to $50.1 million in 2022. Product sales for the full year were $38.7 million compared to $27.8 million in the previous year. Higher soundwall, SlenderWall and miscellaneous wall sales more than offset a decrease in architectural panel sales. Service revenue decreased to $20.8 million compared to $22.3 million, primarily due to lower shipping and installation revenues.

Gross profit was $10.7 million compared to $9.5 million in the prior year. Gross margin for the full year was 17.9%, compared to 18.9% in the year-ago quarter. The year-over-year decrease is primarily attributable to additional costs incurred for the production of panels remade for one specific project and to a lesser extent margins were affected by increased material and labor costs.

Operating income for the year was $1.1 million, compared to $854,000 in the prior year. Income tax expense for 2023 was $528,000, an effective tax rate of 40.0%, as compared to $145,000 for 2022, or an effective tax rate of 15.4%. The increase is mainly due to a state tax liability true-up and adversely affected net income. Net income for 2023 was $795,000, or $0.15 per diluted share, compared to $800,000, or $0.15 per diluted share for 2022.

Product Sales

Total product sales for the full year 2023 were $38.7 million compared to $27.8 million in the prior year. Soundwall sales were $7.7 million compared to $4.1 million in fiscal 2022. The increase is primarily associated with larger projects at the North Carolina and South Carolina facilities. SlenderWall sales were $5.3 million in 2023 compared to $1.5 million in the prior year, related to the consecutive production of two projects throughout the year compared to one project that was completed in the first quarter of 2022. Miscellaneous wall sales increased by 85 percent from the prior year to $6.4 million due to higher production for wall panel and retaining wall projects. Barrier sales increased 17 percent to $7.8 million, due primarily to higher production at all three of the company’s facilities. Easi-Set and Easi-Span Building Sales increased to $4.7 million compared to $4.1 million in 2022. Architectural panel sales decreased to $1.1 million in 2023 from $4.1 million in 2022, reflecting the completion of two architectural projects in the third quarter of 2022.

Service Revenue

Service revenue which is comprised of royalty income, barrier rental revenue, and shipping and installation totaled $20.8 million for the full year 2023 compared to $22.3 million for full year 2022. Shipping and installation revenue was $11.9 million compared to $13.3 million in the prior year. The decrease is mainly attributable to lower production in the second half of 2022 which would be installed in 2023. Royalty income increased 5 percent year over year to $2.6 million. Barrier rental revenue for 2023 was $6.3 million compared to $6.5 million in the prior year.

Balance Sheet and Liquidity

As of December 31, 2023, Smith-Midland’s cash totaled $9.2 million compared to $6.7 million as of December 31, 2022. Account receivables totaled $17.7 million; and debt totaled $5.7 million as of December 31, 2023. Capital spending totaled $5.0 million compared to $5.3 million in 2022.

Macro Environment and Outlook

The Company anticipates increased sales volume for the full year of 2024 compared to 2023. 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 $60.8 million recorded as of March 2024 compared to $52.4 million in backlog one year prior. 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.

Preliminary First Quarter 2024 Results

The Company anticipates first quarter 2024 revenue to be at least 20% greater than in the first quarter of 2023. Gross margin and net income are both expected to be greater than the prior-year quarter. The foregoing is based on preliminary results.

On May 15, 2024, the Company filed a Form 12b-25 with the Securities and Exchange Commission to provide notice of the late filing of its Quarterly Report on Form 10-Q (“Form 10-Q”) for the period ended March 31, 2024. The Company anticipates it will report its first quarter results in the near future.

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 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, our material weaknesses in internal controls, 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