Highest Quarterly and Annual Revenue in Company History
MIDLAND, VA / ACCESSWIRE / 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 operating loss of $72,000
- Net income of $230,000, or $0.04 per diluted share, compared to $5,000 and $0.00
- Awarded $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 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
Smith-Midland Corporation
and Subsidiaries
Consolidated Balance Sheets
(in thousands, except share and per share data)
| December 31, | ||||||||
| 2023 | 2022 | |||||||
ASSETS | ||||||||
Current assets | ||||||||
Cash | $ | 9,175 | $ | 6,726 | ||||
Accounts receivable, net | ||||||||
Trade - billed (less allowances of $806 and $781), including contract retentions | 17,209 | 16,223 | ||||||
Trade - unbilled | 525 | 990 | ||||||
Inventories, net | ||||||||
Raw materials | 2,329 | 1,776 | ||||||
Finished goods | 2,821 | 2,042 | ||||||
Prepaid expenses | 1,266 | 706 | ||||||
Refundable income taxes | - | 477 | ||||||
Total current assets | 33,325 | 28,940 | ||||||
Property and equipment, net | 27,680 | 25,124 | ||||||
Other assets | 343 | 249 | ||||||
Total assets | $ | 61,348 | $ | 54,313 | ||||
Smith-Midland Corporation
and Subsidiaries
Consolidated Balance Sheets
(in thousands, except share and per share data)
(continued)
| December 31, | ||||||||
| 2023 | 2022 | |||||||
LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||
Current liabilities | ||||||||
Accounts payable - trade | $ | 7,336 | $ | 5,816 | ||||
Accrued expenses and other liabilities | 831 | 799 | ||||||
Deferred revenue | 2,717 | 2,243 | ||||||
Accrued compensation | 1,203 | 788 | ||||||
Accrued income tax | 473 | 146 | ||||||
Operating lease liabilities | 43 | 77 | ||||||
Current maturities of notes payable | 636 | 618 | ||||||
Customer deposits | 2,779 | 737 | ||||||
Total current liabilities | 16,018 | 11,224 | ||||||
Deferred revenue | 4,424 | 2,174 | ||||||
Operating lease liabilities | 2 | 45 | ||||||
Notes payable - less current maturities | 5,092 | 5,730 | ||||||
Deferred tax liability | 1,651 | 2,085 | ||||||
Total liabilities | 27,187 | 21, 258 | ||||||
Commitments and contingencies (Note 9) | ||||||||
Stockholders' equity | ||||||||
Preferred stock, $.01 par value; authorized 1,000,000 shares, none issued and outstanding | - | - | ||||||
Common stock, $.01 par value; authorized 8,000,000 shares; 5,349,599 and 5,345,189 issued and 5,308,679 and 5,304,269 outstanding, respectively | 54 | 53 | ||||||
Additional paid-in capital | 7,814 | 7,440 | ||||||
Treasury stock, at cost, 40,920 shares | (102 | ) | (102 | ) | ||||
Retained earnings | 26,395 | 25,664 | ||||||
Total stockholders' equity | 34,161 | 33,055 | ||||||
Total liabilities and stockholders' equity | $ | 61,348 | $ | 54,313 | ||||
Smith-Midland Corporation
and Subsidiaries
Consolidated Statements of Income
(in thousands, except per share data)
| Year Ended December 31, | ||||||||
| 2023 | 2022 | |||||||
Revenue | ||||||||
Product sales | $ | 38,748 | $ | 27,821 | ||||
Barrier rentals | 6,330 | 6,545 | ||||||
Royalty income | 2,633 | 2,498 | ||||||
Shipping and installation revenue | 11,869 | 13,267 | ||||||
Total revenue | 59,580 | 50,131 | ||||||
Cost of sales | 48,928 | 40,662 | ||||||
Gross profit | 10,652 | 9,469 | ||||||
General and administrative expenses | 5,990 | 5,551 | ||||||
Selling expenses | 3,544 | 3,064 | ||||||
Total operating expenses | 9,534 | 8,615 | ||||||
Operating income | 1,118 | 854 | ||||||
Other income (expense) | ||||||||
Interest expense | (255 | ) | (260 | ) | ||||
Interest income | 24 | 14 | ||||||
Gain on sale of assets | 346 | 109 | ||||||
Other income, net | 90 | 228 | ||||||
Total other income (expense), net | 205 | 91 | ||||||
Income before income tax expense | 1,323 | 945 | ||||||
Income tax expense | 528 | 145 | ||||||
Net income | $ | 795 | $ | 800 | ||||
Basic and diluted earnings per share | $ | 0.15 | $ | 0.15 | ||||
Smith-Midland Corporation
and Subsidiaries
Consolidated Statements of Stockholders' Equity
(in thousands, except share data)
Common Stock | Treasury Stock | Additional Paid-in Capital | ||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Retained Earnings | Total | |||||||||||||||||||||||
Balance, December 31, 2021 | 5,353,095 | $ | 53 | (40,920 | ) | $ | (102 | ) | $ | 6,935 | $ | 24,864 | $ | 31,750 | ||||||||||||||
Vesting of restricted stock | - | - | - | - | 505 | - | 505 | |||||||||||||||||||||
Forfeiture of restricted stock | (7,906 | ) | - | - | - | - | - | - | ||||||||||||||||||||
Net income | - | - | - | - | - | 800 | 800 | |||||||||||||||||||||
Balance, December 31, 2022 | 5,345,189 | $ | 53 | (40,920 | ) | $ | (102 | ) | $ | 7,440 | $ | 25,664 | $ | 33,055 | ||||||||||||||
Adjustment for Adoption of ASU 2016-13 | - | - | - | - | - | (64 | ) | (64 | ||||||||||||||||||||
Vesting of restricted stock | - | 1 | - | - | 374 | - | 375 | |||||||||||||||||||||
Issuance of restricted stock | 4,410 | - | - | - | - | - | - | |||||||||||||||||||||
Net income | - | - | - | - | - | 795 | 795 | |||||||||||||||||||||
Balance, December 31, 2023 | 5,349,599 | $ | 54 | (40,920 | ) | $ | (102 | ) | $ | 7,814 | $ | 26,395 | $ | 34,161 | ||||||||||||||
Smith-Midland Corporation
and Subsidiaries
Consolidated Statements of Cash Flows
(in thousands)
Year Ended December 31, | ||||||||
| 2023 | 2022 | |||||||
Reconciliation of net income to net cash provided by (used in) operating activities | ||||||||
Net income (loss) | $ | 795 | $ | 800 | ||||
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities | ||||||||
Depreciation and amortization | 2,399 | 2,881 | ||||||
(Gain) loss on sale of fixed assets | (346 | ) | (109 | ) | ||||
Allowance for credit losses and doubtful accounts | (39 | ) | 344 | |||||
Stock compensation | 375 | 505 | ||||||
Inventory Reserve | 19 | 14 | ||||||
Deferred taxes | (434 | ) | 130 | |||||
(Increase) decrease in | ||||||||
Accounts receivable - billed | (1,010 | ) | (6,554 | ) | ||||
Accounts receivable - unbilled | 464 | (551 | ) | |||||
Inventories | (1,351 | ) | (987 | ) | ||||
Prepaid expenses and other assets | (678 | ) | (227 | ) | ||||
Refundable income taxes | 478 | (66 | ) | |||||
Increase (decrease) in | ||||||||
Accounts payable - trade | 1,520 | 3,745 | ||||||
Accrued expenses and other liabilities | 32 | 142 | ||||||
Deferred revenue | 2,724 | 98 | ||||||
Accrued compensation | 415 | (248 | ) | |||||
Accrued income taxes | 327 | (1,887 | ) | |||||
Deferred buy-back lease obligation, net | - | (3,776 | ) | |||||
Customer deposits | 2,042 | (588 | ) | |||||
Net cash provided by (used in) operating activities | $ | 7,732 | $ | (6,334 | ) | |||
Cash flows from investing activities | ||||||||
Purchases of property and equipment | (5,010 | ) | (2,749 | ) | ||||
Proceeds from sale of fixed assets | 346 | 118 | ||||||
Net cash provided by (used in) investing activities | (4,664 | ) | (2,631 | ) | ||||
Cash flows from financing activities | ||||||||
Proceeds from long-term borrowings | - | 2,805 | ||||||
Repayments of long-term borrowings | (619 | ) | (581 | ) | ||||
Capitalized Loan Costs | - | (25 | ) | |||||
Net cash provided by (used in) financing activities | (619 | ) | 2,199 | |||||
Net increase (decrease) in cash | 2,449 | (6,766 | ) | |||||
Cash, beginning of year | 6,726 | 13,492 | ||||||
Cash, end of year | $ | 9,175 | $ | 6,726 | ||||
Supplemental cash flow information: | ||||||||
Cash payments for interest | $ | 255 | $ | 260 | ||||
Cash payments for income taxes | $ | 189 | $ | 2,260 | ||||
Capital expenditures in accounts payable | $ | 2,049 | $ | 2,014 | ||||
SOURCE: Smith-Midland Corporation
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