Smith Midland Corp 10-Q for FY2020 Q3

Smith Midland Corp (SMID)

10-Q 2020-11-10 For: 2020-09-30

Added on April 10, 2026

About this 10-Q

Smith Midland Corp filed this 10-Q on November 10, 2020, covering the quarter ended September 30, 2020 (FY2020 Q3).

Headline figures

Quarter ended September 30, 2020, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $12.52M; down 5.3% from $13.21M a year earlier
Net income: $1.55M; up 167.5% from net income of $579K a year earlier
Diluted EPS: $0.30; up 172.7% from $0.11 a year earlier

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Delaware	54-1727060
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

Title of each class	Trading Symbol	Name of each exchange on which registered
Common Stock, $0.01 par value per share	SMID	OTCQX

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☑
Emerging growth company	☐

PART I. FINANCIAL INFORMATION	Page

Item 1. Financial Statements	3

Condensed Consolidated Balance Sheets	3

Condensed Consolidated Statements of Operations (Unaudited)	5

Condensed Consolidated Statements of Stockholders' Equity (Unaudited)	6

Condensed Consolidated Statements of Cash Flows (Unaudited)	7

Notes to Condensed Consolidated Financial Statements (Unaudited)	8

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations	14

Item 3. Quantitative and Qualitative Disclosures About Market Risk	21

Item 4. Controls and Procedures	21

PART II. OTHER INFORMATION

Item 1. Legal Proceedings	22

Item 1A. Risk Factors	22

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	22

Item 3. Defaults Upon Senior Securities	22

Item 4. Mine Safety Disclosures	23

Item 5. Other Information	23

Item 6. Exhibits	23

Signatures	24

ASSETS	September 30, 2020 (Unaudited)	December 31, 2019
Current assets
Cash	$7,449	$1,364
Investment securities, available-for-sale, at fair value	1,208	1,176
Accounts receivable, net
Trade - billed (less allowance for doubtful accounts of $388 and $333), including contract retentions	9,753	12,723
Trade - unbilled	703	310
Inventories, net
Raw materials	640	488
Finished goods	1,524	1,754
Prepaid expenses and other assets	838	784
Refundable income taxes	123	432

Total current assets	22,238	19,031

Property and equipment, net	18,923	17,735

Deferred buy-back lease asset, net	4,446	5,042

Other assets	326	307

Total assets	$45,933	$42,115

LIABILITIES AND STOCKHOLDERS' EQUITY	September 30, 2020 (Unaudited)	December 31, 2019
Current liabilities
Accounts payable - trade	$2,499	$3,180
Accrued expenses and other liabilities	1,016	125
Deferred revenue	1,611	1,891
Accrued compensation	1,342	1,075
Accrued income taxes	305	—
Dividend payable	—	282
Deferred buy-back lease obligation	1,203	966
Operating lease liabilities	83	81
Current maturities of notes payable	819	925
Customer deposits	594	1,077

Total current liabilities	9,472	9,602

Deferred revenue	523	241
Deferred buy-back lease obligation	4,091	5,183
Operating lease liabilities	232	296
Notes payable - less current maturities	6,961	4,086
Deferred tax liability	1,881	1,886

Total liabilities	23,160	21,294

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; 5,224,911 and 5,224,911 issued and 5,183,991 and 5,164,324 outstanding, respectively	52	52
Additional paid-in capital	6,242	6,242
Treasury stock, at cost, 40,920 shares	(102)	(102)
Retained earnings	16,581	14,629

Total stockholders' equity	22,773	20,821

Total liabilities and stockholders' equity	$45,933	$42,115

	Three Months Ended September 30,		Nine Months Ended September 30,
	2020	2019	2020	2019
Revenue
Product sales	$6,485	$8,589	$20,036	$23,420
Barrier rentals	3,171	625	4,820	1,787
Royalty income	484	427	1,165	1,162
Shipping and installation revenue	2,375	3,568	6,768	7,880

Total revenue	12,515	13,209	32,789	34,249

Cost of goods sold	8,674	10,616	24,971	27,278

Gross profit	3,841	2,593	7,818	6,971

Operating expenses
General and administrative expenses	1,271	1,123	3,553	3,474
Selling expenses	521	717	1,684	1,924

Total operating expenses	1,792	1,840	5,237	5,398

Operating income (loss)	2,049	753	2,581	1,573

Other income (expense)
Interest expense	(53)	(43)	(166)	(127)
Interest income	8	9	26	31
Gain (loss) on sale of assets	(8)	19	58	30
Other income	22	20	41	64

Total other income (expense)	(31)	5	(41)	(2)

Income (loss) before income tax expense (benefit)	2,018	758	2,540	1,571

Income tax expense (benefit)	469	179	588	364

Net income (loss)	$1,549	$579	$1,952	$1,207

Basic and diluted earnings (loss) per common share	$0.30	$0.11	$0.38	$0.24

Weighted average number of common shares outstanding:
Basic	5,184	5,134	5,184	5,134
Diluted	5,184	5,138	5,184	5,138

	Common Stock	Additional Paid-in Capital	Treasury Stock	Retained Earnings	Total
Balance at December 31, 2019	$52	$6,242	$(102)	$14,629	$20,821
Vesting of restricted stock	—	—	—	—	—
Net income (loss)	—	—	—	(38)	(38)
Balance at March 31, 2020	52	6,242	(102)	14,591	20,783
Vesting of restricted stock	—	—	—	—	—
Net income (loss)	—	—	—	441	441
Balance at June 30, 2020	52	6,242	(102)	15,032	21,224
Vesting of restricted stock	—	—	—	—	—
Net income (loss)	—	—	—	1,549	1,549
Balance at September 30, 2020	52	6,242	(102)	16,581	22,773

Revenue by Type	Three Months Ended September 30				Nine Months Ended September 30
	2020	2019	Change	% Change	2020	2019	Change	% Change
Soundwall Sales	$1,736	$1,736	$—	—%	$5,824	$5,790	$34	1%
Architectural Panel Sales	696	593	103	17%	2,229	1,018	1,211	119%
SlenderWall Sales	26	816	(790)	(97)%	949	3,551	(2,602)	(73)%
Miscellaneous Wall Sales	963	474	489	103%	2,994	1,243	1,751	141%
Barrier Sales	1,679	1,921	(242)	(13)%	3,949	5,329	(1,380)	(26)%
Easi-Set and Easi-Span Building Sales	643	2,468	(1,825)	(74)%	1,971	4,837	(2,866)	(59)%
Utility Sales	254	471	(217)	(46)%	1,043	1,228	(185)	(15)%
Miscellaneous Sales	488	110	378	344%	1,077	424	653	154%
Total Product Sales	6,485	8,589	(2,104)	(24)%	20,036	23,420	(3,384)	(14)%
Barrier Rentals	3,171	625	2,546	407%	4,820	1,787	3,033	170%
Royalty Income	484	427	57	13%	1,165	1,162	3	1%
Shipping and Installation Revenue	2,375	3,568	(1,193)	(33)%	6,768	7,880	(1,112)	(14)%
Total Service Revenue	6,030	4,620	1,410	31%	12,753	10,829	1,924	(18)%

Total Revenue	$12,515	$13,209	$(694)	(5)%	$32,789	$34,249	$(1,460)	(4)%

	Number of Shares	Weighted Average Grant Date Fair Value per Share
Balance, December 31, 2019	19,667	$5.45
Granted	—	—
Vested	19,667	5.45
Forfeited	—	—

Non-vested, end of period	—	$—

Exhibit No.		Exhibit Description
10.1		Change in Terms Agreement, dated September 23, 2020, for the payment schedule modification to the PPP loan with Summit Community Bank
10.2		Comercial Line of Credit Renewal Agreement and Note, dated October 1, 2020, for the renewal of the line of credit in the amount of $4,000,000 with Summit Community Bank
10.3		Commitment Letter, dated October 21, 2020, for the renewal of the equipment line of credit in the amount of $1,500,000 with Summit Community Bank
31.1		Certification of the Chief Executive Officer pursuant to Rule 13a-14(a) or 15d-14(a) under the Securities Exchange Act of 1934.
31.2		Certification of the Principal Financial Officer pursuant to Rule 13a-14(a) or 15d-14(a) under the Securities Exchange Act of 1934.
32.1		Certification pursuant 18 U.S.C. Section 1350 as adapted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS		XBRL Instance Document.
101.SCH		XBRL Taxonomy Extension Schema Document.
101.CAL		XBRL Taxonomy Extension Calculation Linkbase Document.
101.DEF		XBRL Taxonomy Extension Definition Linkbase Document.
101.LAB		XBRL Taxonomy Extension Label Linkbase Document.
101.PRE		XBRL Taxonomy Extension Presentation Linkbase Document.



		SMITH-MIDLAND CORPORATION (Registrant)

Date:	November 10, 2020	By:	/s/ Ashley B. Smith
			Ashley B. Smith, Chief Executive Officer
			(Principal Executive Officer)


Date:	November 10, 2020	By:	/s/ Adam J. Krick
			Adam J. Krick, Chief Financial Officer
			(Principal Financial Officer)


1.	I have reviewed this quarterly report on Form 10-Q of Smith-Midland Corporation;


2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;


3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

	Nine Months Ended September 30,
	2020	2019
Cash flows from operating activities:
Net income (loss)	$1,952	$1,207
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation and amortization	1,791	1,321
Gain on sale of assets	(58)	(30)
Unrealized (gain) loss	(16)	(29)
Allowance for doubtful accounts	55	115
Stock compensation	—	223
Deferred taxes	(5)	1
(Increase) decrease in
Accounts receivable - billed	2,915	99
Accounts receivable - unbilled	(393)	775
Inventories	78	993
Prepaid expenses and other assets	(96)	(25)
Refundable income taxes	309	783
Increase (decrease) in
Accounts payable - trade	(681)	(973)
Accrued expenses and other liabilities	891	(562)
Deferred revenue	2	358
Accrued compensation	267	(557)
Accrued income taxes	305	—
Deferred buy-back lease obligation	(855)	(201)
Customer deposits	(483)	(508)
Net cash provided by (used in) operating activities	5,978	2,990
Cash flows from investing activities:
Purchases of investment securities available-for-sale	(22)	(24)
Purchases of property and equipment	(2,501)	(3,392)
Deferred buy-back lease asset	—	(358)
Proceeds from sale of fixed assets	144	145
Net cash provided by (used in) investing activities	(2,379)	(3,629)
Cash flows from financing activities:
Proceeds from the line-of-credit construction draw	—	500
Proceeds from long-term borrowings	5,426	49
Repayments of long-term borrowings	(2,658)	(556)
Dividends paid on common stock	(282)	(281)
Net cash provided by (used in) financing activities	2,486	(288)
Net increase (decrease) in cash	6,085	(927)
Cash


4.	The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:


(a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;


(b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;


(c)	Evaluated the effectiveness of registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and


(d)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and


(a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and


(b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.



	By: /s/ Ashley B. Smith
	Ashley B. Smith
	Chief Executive Officer and President
	(principal executive officer)


	By: /s/ Adam J. Krick
	Adam J. Krick
	Chief Financial Officer
	(principal financial officer)

	Dated:	November 10, 2020