Schmitt Industries, Inc. (NASDAQ:SMIT) today announced its
operating results for the quarter ended August 31, 2016. For
the three months ended August 31, 2016, total sales decreased
$211,852, or 6.8%, to $2,892,532 from $3,104,384 for the three
months ended August 31, 2015. Net loss was $125,629, or
$(0.04) per fully diluted share, for the three months ended August
31, 2016 as compared to net loss of $195,062, or $(0.07) per fully
diluted share, for the three months ended August 31, 2015.
Balancer segment sales focus throughout the
world on end-users, rebuilders and original equipment manufacturers
of grinding machines with the target geographic markets of North
America, Asia, Europe and South America. Balancer segment
sales decreased $366,619, or 19.0%, to $1,560,876 for the three
months ended August 31, 2016 compared to $1,927,495 for the three
months ended August 31, 2015, primarily due to weaker sales in
North America, China and other parts of Asia.
The Measurement segment product line consists of
Acuity® laser-based distance measurement and dimensional sizing
laser sensors, Xact® ultrasonic-based remote tank monitoring
products, and SMS® and Lasercheck® laser-based surface
microroughness measurement systems. Total Measurement segment sales
increased $154,767, or 13.2%, to $1,331,656 for the three months
ended August 31, 2016 compared to $1,176,889 for the three months
ended August 31, 2015. This increase is primarily due to increases
in sales of our Xact remote tank monitoring products and related
revenues from monitoring services along with increases in sales of
our SMS products offset by decreases in sales associated with the
two other product lines in the Measurement segment.
Gross margin for the three months ended August
31, 2016 increased to 47.6% as compared to 46.5% for the three
months ended August 31, 2015. The fluctuations in gross
margin in the three months period ended August 31, 2016 compared to
the same three month period in the prior fiscal year is primarily
influenced by shifts in the product sales mix involving our five
product lines.
Operating expenses decreased $133,278, or 8.2%,
to $1,491,516 for the three months ended August 31, 2016 as
compared to $1,624,794 for the three months ended August 31, 2015.
General, administrative and selling expenses decreased $125,213, or
8.1%, for the three months ended August 31, 2016 as compared to the
same period in the prior year primarily due to a reduction in
travel and entertainment expense and decreases in personnel
expense.
“Although our total net sales were lower in the
first quarter of Fiscal 2017 as compared to the same period in the
prior year, we were able to improve company-wide margin through our
product sales mix and reduction of operating expenses to limit the
impact to our overall net loss. While both SBS sales in North
America and Asia were lower in comparison with prior quarters, we
continue to experience modest growth in sales of our SBS products
in Europe, our Xact product line posted a significant increase in
sales and Acuity continues to be a strong contributor to our
overall business,” commented David M. Hudson, President and CEO of
Schmitt Industries. “Our SBS sales group had great response from
our customers and partners at the IMTS 2016 show in Chicago in
early September, and we look forward to translating that success
into strengthening of sales in our global markets through the
remainder of Fiscal 2017,” Hudson concluded.
About Schmitt Industries
Schmitt Industries, Inc. (the Company) designs,
manufactures and sells high precision test and measurement products
for two main business segments: the Balancer Segment and the
Measurement Segment. For the Balancer Segment, the Company
designs, manufactures and sells computer-controlled vibration
detection, balancing and process control systems for the worldwide
machine tool industry, particularly for grinding machines.
For the Measurement Segment, the Company designs, manufactures and
sells laser and white light sensors for distance, dimensional and
area measurement for a wide variety of commercial applications,
laser-based microroughness measurement products for the
semiconductor wafer and hard disk drive industries and for other
industrial applications, laser-based surface analysis and
measurement products for a variety of scientific applications, and
ultrasonic measurement products that accurately measure the liquid
levels of propane, diesel and other tank-based liquids, and
transmit that data via satellite to a secure web site for
display. The Company also provides sales and service for
Europe and Asia through its wholly owned subsidiary, Schmitt Europe
Limited (SEL), located in Coventry, England and through its sales
representative office located in Shanghai, China.
FORWARD-LOOKING STATEMENTS
Certain statements in this release, including
but not limited to remarks by David M. Hudson, are “forward-looking
statements.” These statements are based upon current expectations,
estimates and projections about the Company’s business that are
based, in part, on assumptions made by management. These
statements are not guarantees of future performance and involve
risks and uncertainties that are difficult to predict. Actual
outcomes and results may differ materially from what is expressed
or forecasted in such forward-looking statements due to numerous
factors, including, but not limited to, general economic conditions
and global financial concerns, the volatility of the Company’s
primary markets, efforts to continue to accelerate growth in sales
of the Xact® tank monitoring system, the ability to develop new
products to satisfy changes in consumer demands, the intensity of
competition, increased pricing pressure from both competitors and
customers, the effect on production time and overall costs of
products if any of our primary suppliers are lost or if a primary
supplier increases the prices of raw materials or components, the
ability to ramp up manufacturing to satisfy increasing demand,
maintenance of a significant investment in inventories in
anticipation of future sales, existing cash levels which may not be
sufficient to fund future growth, the ability to obtain financing
if needed to fund operations or growth through commercial loans or
capital fund raising at terms acceptable to the Company and its
shareholders, fluctuations in quarterly and annual operating
results, risks associated with operating a global business
including risks from international sales and currency fluctuations,
ability to reduce operating costs if sales decline, attracting and
retaining key management and qualified technical and sales
personnel, changes in effective tax rates, the increased costs due
to changes in securities laws and regulations, and protection of
intellectual property rights.
For further information regarding risks and
uncertainties associated with the Company’s business, please refer
to Schmitt’s SEC filings, including, but not limited to, its Forms
10-K, 10-Q and 8-K.
The forward-looking statements in this release
speak only as of the date on which they were made, and the Company
does not undertake any obligation to update any forward-looking
statement to reflect events or circumstances after the date of this
release, or for changes to this document made by wire services or
internet service providers.
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SCHMITT INDUSTRIES, INC. |
|
CONSOLIDATED BALANCE SHEETS |
|
(UNAUDITED) |
|
|
|
|
August 31, 2016 |
|
May 31, 2016 |
|
ASSETS |
|
Current assets |
|
|
|
|
|
|
Cash
and cash equivalents |
$ |
|
1,002,158 |
|
|
$ |
|
988,686 |
|
|
Accounts receivable, net |
|
|
1,916,893 |
|
|
|
|
2,099,082 |
|
|
Inventories |
|
|
4,625,843 |
|
|
|
|
4,727,977 |
|
|
Prepaid expenses |
|
|
110,726 |
|
|
|
|
132,230 |
|
|
Income taxes receivable |
|
|
6,106 |
|
|
|
|
8,432 |
|
|
|
|
|
7,661,726 |
|
|
|
|
7,956,407 |
|
|
|
|
|
|
|
|
|
Property and equipment, net |
|
|
981,199 |
|
|
|
|
965,452 |
|
|
Other assets |
|
|
|
|
|
|
Intangible assets, net |
|
|
684,998 |
|
|
|
|
712,881 |
|
|
TOTAL ASSETS |
$ |
|
9,327,923 |
|
|
$ |
|
9,634,740 |
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES & STOCKHOLDERS’ EQUITY |
|
Current liabilities |
|
|
|
|
|
|
Accounts payable |
$ |
|
710,320 |
|
|
$ |
|
877,167 |
|
|
Accrued commissions |
|
|
328,521 |
|
|
|
|
273,147 |
|
|
Accrued payroll liabilities |
|
|
138,651 |
|
|
|
|
148,823 |
|
|
Other accrued liabilities |
|
|
307,099 |
|
|
|
|
331,563 |
|
|
Total current
liabilities |
|
|
1,484,591 |
|
|
|
|
1,630,700 |
|
|
|
|
|
|
|
|
|
Stockholders’ equity |
|
|
|
|
|
|
Common stock, no par value, 20,000,000 shares authorized, |
|
|
|
|
|
|
2,995,910 shares issued and outstanding at August 31, 2016 |
|
|
|
|
|
|
and
May 31, 2016 |
|
|
10,578,960 |
|
|
|
|
10,569,522 |
|
|
Accumulated other comprehensive loss |
|
|
(439,035 |
) |
|
|
|
(394,518 |
) |
|
Accumulated deficit |
|
|
(2,296,593 |
) |
|
|
|
(2,170,964 |
) |
|
Total stockholders’ equity |
|
|
7,843,332 |
|
|
|
|
8,004,040 |
|
|
|
|
|
|
|
|
|
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY |
$ |
|
9,327,923 |
|
|
$ |
|
9,634,740 |
|
|
|
|
|
|
|
|
SCHMITT INDUSTRIES, INC. |
|
|
CONSOLIDATED STATEMENTS OF
OPERATIONS |
|
|
FOR THE THREE MONTHS ENDED AUGUST 31, 2016 AND
2015 |
|
|
(UNAUDITED) |
|
|
|
|
|
|
|
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Three Months Ended August 31, |
|
|
|
|
|
|
2016 |
|
2015 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
sales |
$ |
|
2,892,532 |
|
|
$ |
|
3,104,384 |
|
|
|
|
Cost of
sales |
|
|
1,516,783 |
|
|
|
|
1,661,892 |
|
|
|
|
|
Gross profit |
|
|
1,375,749 |
|
|
|
|
1,442,492 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
expenses: |
|
|
|
|
|
|
|
|
|
General, administration and sales |
|
|
1,412,669 |
|
|
|
|
1,537,882 |
|
|
|
|
|
Research and development |
|
|
78,847 |
|
|
|
|
86,912 |
|
|
|
|
|
|
Total
operating expenses |
|
|
1,491,516 |
|
|
|
|
1,624,794 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating loss |
|
|
(115,767 |
) |
|
|
|
(182,302 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other expense, net |
|
|
(1,833 |
) |
|
|
|
(5,920 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss before income taxes |
|
|
(117,600 |
) |
|
|
|
(188,222 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision for income taxes |
|
|
8,029 |
|
|
|
|
6,840 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss |
$ |
|
(125,629 |
) |
|
$ |
|
(195,062 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss per common share, basic |
$ |
|
(0.04 |
) |
|
$ |
|
(0.07 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of common shares, basic |
|
|
2,995,910 |
|
|
|
|
2,995,910 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss per common share, diluted |
$ |
|
(0.04 |
) |
|
$ |
|
(0.07 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of common shares, diluted |
|
|
2,995,910 |
|
|
|
|
2,995,910 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For more information contact:
Ann M. Ferguson, CFO and Treasurer
(503) 227-7908
or visit our web site at www.schmitt-ind.com
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