To Our Smith-Midland Shareholders, Customers, Associates, and Business Partners:
Results of operations for 2019
2019 proved to be another strong financial year for the Company. The Company had record-setting revenues of $46.7 million, strong growth in EPS of 15%, and five consecutive years of positive earnings. The increase in sales is mainly attributed to the significant increase in shipping and installation revenue, which in return unfavorably impacted gross margins. Also, as the sales volume increased, we made adjustments to reduce general and administrative expenses by 14%. We continued to reinvest back in the Company during 2019 with $4.5 million in capital expenditures. The backlog of $30.9 million as of March 2020 positions the Company well for 2020.
Precast Concrete Manufacturing Operations:
Revenues for precast concrete products increased 10% in 2019, with an increase in Easi-Set building sales mainly from a large governmental project which was produced out of multiple plants. The Company also had record shipping and installation revenues in 2019 associated with its precast concrete products. The Company continues its lean journey in both production and administrative areas. The long-term business philosophy is aimed to increase quality to the customer, eliminate defects in all processes, and increase capacity.
As the new North Carolina manufacturing facility became fully operational in the fourth quarter of 2019, we continue to push and drive current backlog at the facility to move toward full production capacity by the end of 2020. The ability to double revenues at the location allows total production capacity to increase by 15% for the Company as a whole.
Easi-Set Worldwide Precast Concrete Licensing
January 1, 2020 marked the Federal Highway Administration’s deadline that requires new precast concrete barrier to be MASH (Manual for Assessing Highway Safety devices) crash tested and approved. Over the next 7-10 years, all existing precast concrete barrier will be phased out and replaced with MASH approved barrier. We continue to be an industry leader in precast concrete barrier development and strive to gain market share through licensing and production, as we currently have MASH approval in 32 states and over 40 licensed producers ready to start production immediately.
SlenderWall™, the light-weight panel system, continues to gain even more market acceptance and was used this past year in two of the largest projects in company history. We are seeing project inquiries from across North America and are currently working with potential new licensed producers in those markets. Additional value-added offerings associated with SlenderWall™, such as pre-installed windows and spray foam insulation, are also gaining traction in the commercial end market with trends moving to offsite, modular construction.
Concrete Safety Systems Barrier Rentals
The Company increased its barrier rental fleet during the year by 43% to 250,000 linear feet of barrier. We also added over 75 crash cushion attenuators, expanding our rental opportunities. This high margin division of our business is anticipated to be a major contributor to increasing margins in the future. The Company expects the rental fleet to exceed 500,000 linear feet within the next three years.
While we remain extremely excited about our long-term future, the main goal during this time of uncertainty is creating a safe and secure environment for our associates, customers, and communities. There is limited forward-looking visibility, and our expectations are tempered by the fact that we do not know what will happen, or the future impact to our business, from COVID-19. As the pandemic is quite profound and impactful, we hope it proves to be temporary with minimal disruption to the Company’s operations. We are committed to doing everything within our control to protect the best interests of our associates, customers, supply chain, and shareholders as we work our way through this pandemic.
Ashley B. Smith