Smith-Midland Corp (SMID, Financial) released its 8-K filing on May 23, 2024, announcing its financial results for the fourth quarter and full year ended December 31, 2023. The company, known for its innovative precast concrete products, achieved the highest quarterly and annual revenue in its history.
Company Overview
Smith-Midland Corp, through its subsidiaries, invents, develops, manufactures, markets, sells, and installs precast concrete products primarily for the construction, highway, utilities, and farming industries. The firm's customers include general contractors and federal, state, and local transportation authorities. Its product portfolio includes Slenderwall, JJ-Hooks, Softsound, Sierra Wall, and Easi-Set. A significant portion of the company's business is derived from local, state, and federal building projects.
Fourth Quarter 2023 Financial Highlights
For the fourth quarter of 2023, Smith-Midland Corp reported:
- Revenue increased by 13% to $16.4 million compared to the prior-year quarter.
- Product sales rose by 10% to $8.9 million.
- Service revenue, including barrier rentals, increased by 17% to $7.5 million.
- Operating income was $542,000, a significant improvement from an operating loss of $72,000 in the prior-year quarter.
- Net income was $230,000, or $0.04 per diluted share, compared to $5,000, or breakeven per diluted share, in the prior-year quarter.
Full Year 2023 Financial Highlights
For the full year 2023, Smith-Midland Corp reported:
- Revenue increased by 19% to $59.6 million.
- Operating income increased by 31% to $1.1 million.
- Net income remained stable at approximately $795,000, or $0.15 per diluted share, despite a significant state liability affecting the 2023 period.
- Added five new licensees in the United States, bringing the total to 75 worldwide.
Detailed Financial Analysis
Smith-Midland Corp's gross profit for the fourth quarter increased to $3.1 million from $2.5 million in the prior-year quarter, driven by higher revenue. The gross margin improved to 19.1% from 17.3%. For the full year, gross profit was $10.7 million, up from $9.5 million, though the gross margin slightly decreased to 17.9% from 18.9% due to additional costs incurred for specific projects and increased material and labor costs.
Operating income for the year was $1.1 million, up from $854,000 in the prior year. The effective tax rate increased to 40.0% from 15.4%, primarily due to a state tax liability true-up, which 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, in 2022.
Balance Sheet and Liquidity
As of December 31, 2023, Smith-Midland Corp's cash totaled $9.2 million, up from $6.7 million at the end of 2022. Accounts receivable were $17.7 million, and total debt was $5.7 million. Capital spending for the year was $5.0 million, slightly down from $5.3 million in 2022.
Macro Environment and Outlook
The company anticipates increased sales volume for 2024, driven by infrastructure initiatives across the United States. Inflationary pressures remain a challenge, particularly in labor and material costs. However, Smith-Midland Corp continues to manage these costs while attracting and retaining skilled labor. The backlog as of March 2024 was approximately $60.8 million, up from $52.4 million a year earlier, with most projects expected to be fulfilled within 12 months.
Preliminary First Quarter 2024 Results
Smith-Midland Corp anticipates first quarter 2024 revenue to be at least 20% higher than the first quarter of 2023, with improved gross margin and net income. The company filed a Form 12b-25 with the SEC on May 15, 2024, to provide notice of the late filing of its Quarterly Report on Form 10-Q for the period ended March 31, 2024, and expects to report its first quarter results soon.
Smith-Midland Corp's strong performance in 2023, marked by record revenue and strategic growth initiatives, positions the company well for continued success in 2024 and beyond. For more detailed financial information, please refer to the full 8-K filing.
Explore the complete 8-K earnings release (here) from Smith-Midland Corp for further details.
