To Our Smith-Midland Shareholders, Customers, Associates, and Business Partners:
What to Expect for the Years Ending December 31, 2015 and Beyond - The Great Recession is over for Smith-Midland. As we have consistently projected, for the quarter ending June 30, 2015, the company will show a profit. Second quarter net revenues are projected to be approximately $6.5 million for the three month period. As discussed in earlier press releases and the latest Forms 10-Q and 10-K, with our level of production backlog, we have enough orders to be profitable through February 2016 and beyond; and we continue to be awarded new jobs every week. This level of production has necessitated the introduction of a second production shift.
Our Job, as a Management Team, is to Add Value to Smith-Midland Going Forward - In Senior Management strategic planning meetings we have developed a list of projects that are underway companywide which we believe will add value to the company. The following are updates on these projects:
Our “Lean Journey” - We continue to analyze our procedures and processes using the Toyota production model to eliminate waste wherever it is found. Ashley Smith, our President and COO and Mark Loscudo, our VP of Operations and an award winning Lean leader, are persistent in their resolve to make manufacturing operations safe for our employees, efficient, and cost effective for our customers. We continue with this effort in 2015 and believe that our shareholders will see the results of Ashley and Mark’s leadership in an increased percentage of profit on sales for the remainder of 2015.
Expanded Sales and Marketing Plans Combined with Research and Development - During the past six years, the downturn in the construction industry has required the company to be more aggressive in its sales and marketing strategies in order to maximize its market share to secure our future in the precast concrete industry. We are adding value to the company by increasing our customer base, our geographical sales area and broadening our product lines. Over the past several years we have accelerated our R&D efforts to speed the development of new products and improving our existing products.
Acquisitions - While acquisition prices have been reasonable over the past several years, management has been cautious in its approach to potential acquisitions as the construction industry has not completely recovered from the downturn. Management believes the most strategic location for an acquisition is in the central or southeastern South Carolina region. This would create a contiguous 300-mile wide by 800-mile swath of central east coast market area for the Smith-Midland precast companies. We are continuing to search for the right seller in the right location; however, in the meantime we are reviewing all of our options as we move forward with expansion in our current locations.
Cash - The Company’s $2,700,000 cash on-hand at the end of the recession is allowing us to take advantage of the ramp-up of the construction industry. The precast concrete industry in the U.S. over the last five years lost 25%+ of its capacity during the recession due to bankruptcies, consolidations and precast plant closings. Smith-Midland is in a unique position to capitalize on our position of strength with cash in the bank and a $2,000,000 untapped line of credit at Summit Bank, as well as an additional commitment from our bank for capital asset purchases.
Diversification - The Company continues to be committed to diversification in our precast product lines, as well as in our business units. These include Easi-Set Worldwide, our precast concrete product licensing business and Concrete Safety Systems, our highway safety barrier rental business. These two Companies have proven to be “recession proof” and actually improved their profitability during the Great Recession. As the Smith-Midland and Smith-Carolina precast concrete businesses recover, Easi-Set Worldwide and Concrete Safety Systems profits will be added to our bottom line, after helping carry the precast Companies through the recession.
I thank you, our shareholders, our dedicated associates and our Board of Directors for your support and confidence in our leadership team and its strategic mission.
Rodney I. Smith
Chairman of the Board & Chief Executive Officer