Smith-Midland Corp (SMID, Financial) released its 8-K filing on June 12, 2024, announcing impressive financial results for the first quarter ended March 31, 2024. The company, known for its innovative precast concrete products, reported a significant increase in revenue and net income, driven by heightened demand across its product lines.
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 features Slenderwall, JJhooks, Softsound, Sierra Wall, and Easi set. A substantial portion of the company's business is derived from local, state, and federal building projects.
First Quarter 2024 Financial Highlights
Smith-Midland Corp reported a 30% increase in revenue to $16.8 million, marking the highest quarterly revenue in the company's history. This growth was driven by a 30% rise in product sales to $10.8 million and a 31% increase in service revenue to $6.0 million. The company's operating income surged to $1.5 million from $54,000 in the prior-year quarter, while net income rose to $1.1 million, or $0.22 per basic share, compared to $80,000, or $0.02 per basic share, in Q1 2023.
Performance and Challenges
The company's robust performance was primarily attributed to increased production of soundwall and utility products, as well as higher shipping and installation activities. The demand for utility vaults, driven by the growth of data centers, also contributed significantly. However, the company faces challenges such as managing increased production volumes and navigating the complexities of infrastructure funding inflows expected later in the year.
Financial Achievements
Smith-Midland's gross profit increased to $3.9 million from $2.2 million in the prior-year quarter, with a gross margin improvement of 480 basis points to 23%. This was primarily due to higher production volumes and better fixed cost absorption. The company's backlog stood at $64.6 million as of May 2024, up from $51.4 million a year earlier, indicating strong future revenue potential.
Income Statement and Balance Sheet Highlights
| Metric | Q1 2024 | Q1 2023 |
|---|---|---|
| Revenue | $16.8 million | $12.8 million |
| Product Sales | $10.8 million | $8.2 million |
| Service Revenue | $6.0 million | $4.6 million |
| Operating Income | $1.5 million | $54,000 |
| Net Income | $1.1 million | $80,000 |
As of March 31, 2024, Smith-Midland's cash totaled $6.8 million, down from $9.2 million at the end of 2023. Accounts receivable increased to $20.1 million, while debt stood at $5.6 million. Capital spending for the quarter was $1.8 million.
Macro Environment and Outlook
The company anticipates increased sales volume for the full year of 2024, driven by infrastructure initiatives across the United States. This is expected to lead to greater bidding activity and an increase in backlog for its proprietary and custom products. The majority of the backlog is anticipated to be fulfilled within 12 months, although some projects will have a multi-year timeline.
“We are off to a strong start in 2024, posting a 30 percent increase in revenue from the prior-year quarter and our highest quarterly revenue,” said Ashley Smith, Chairman and Chief Executive Officer of Smith-Midland. “The increase was primarily driven by increased production of our soundwall and utility products and increased shipping and installation. We are experiencing a strong demand for our utility vaults in response to the continued growth of data centers. Our prospects for the remainder of the year remain very favorable, thanks to the inflow of infrastructure funding expected in the latter half of 2024 at the state and local level, as well as our backlog. We remain well-positioned to deliver strong growth and create long-term value for our shareholders.”
Smith-Midland Corp's strategic growth initiatives and robust backlog position the company well for continued success in the precast concrete industry. For more detailed financial information, visit the 8-K filing.
Explore the complete 8-K earnings release (here) from Smith-Midland Corp for further details.
