Schmitt Industries, Inc. (NASDAQ:SMIT) today announced its
operating results for the three and six months ended November 30,
2016. For the three months ended November 30, 2016, total
sales decreased $418,208, or 13.6%, to $2,655,561 from $3,073,769
in the three months ended November 30, 2015. Net loss was $382,470,
or $(0.13) per fully diluted share, for the three months ended
November 30, 2016 as compared to net loss of $403,787, or $(0.13)
per fully diluted share, for the three months ended November 30,
2015.
For the six months ended November 30, 2016,
total sales decreased $630,060, or 10.2%, to $5,548,093 from
$6,178,153 in the six months ended November 30, 2015. For the
six months ended November 30, 2016, net loss was $508,099, or
$(0.17) per fully diluted share, as compared to net loss of
$598,849, or $(0.20) per fully diluted share for the six months
ended November 30, 2015.
Balancer segment sales focus throughout the
world on end-users, rebuilders and original equipment manufacturers
of grinding machines with the target geographic markets in North
America, Asia and Europe. Balancer segment sales decreased
$483,063, or 25.7%, to $1,397,666 for the three months ended
November 30, 2016 compared to $1,880,729 for the three months ended
November 30, 2015. The decrease is primarily attributed to
weaker sales across our three significant markets – North America,
Europe, and Asia.
Balancer segment sales decreased $849,682, or
22.3%, to $2,958,542 for the six months ended November 30, 2016
compared to $3,808,224 for the six months ended November 30, 2015,
primarily due to weaker sales in North America and Asia.
The Measurement segment product line consists of
laser-based light-scatter, distance measurement and dimensional
sizing products and ultrasonic-based remote tank monitoring
products for propane and diesel tanks. Total Measurement segment
sales increased $64,855, or 5.4%, to $1,257,895 for the three
months ended November 30, 2016 compared to $1,193,040 for the three
months ended November 30, 2015, primarily due to increases in sales
of our Xact remote tank monitoring products and related revenues
from monitoring services offset by decreases in sales associated
with the other product lines in the Measurement segment.
Total Measurement segment sales increased
$219,622, or 9.3%, to $2,589,551 for the six months ended November
30, 2016 compared to $2,369,929 for the six months ended November
30, 2015, primarily due to increases in sales of our Xact remote
tank monitoring products and related revenues from monitoring
services offset by decreases in sales associated with the other
product lines in the Measurement segment.
Gross margin for the three months ended November
30, 2016 decreased to 38.9% as compared to 41.5% for the three
months ended November 30, 2015. Gross margin for the six
months ended November 30, 2016 decreased to 43.4% as compared to
44.0% for the six months ended November 30, 2015. The
fluctuations in gross margin in the three and six month periods
ended November 30, 2016 as compared to the same three and six month
periods in the prior fiscal year are primarily influenced by shifts
in the product sales mix from our five product lines.
Operating expenses decreased $269,183, or 16.3%,
to $1,384,952 for the three months ended November 30, 2016 as
compared to $1,654,135 for the three months ended November 30,
2015. General, administrative and selling expenses decreased
$256,960, or 16.2%, for the three months ended November 30, 2016 as
compared to the same period in the prior year. These
decreases are primarily due to a reduction in sales commissions,
travel and entertainment expense and personnel expenses.
Operating expenses decreased $402,461, or 12.3%,
to $2,876,468 for the six months ended November 30, 2016 as
compared to $3,278,929 for the six months ended November 30, 2015.
General, administrative and selling expenses decreased $382,173, or
12.3%, for the six months ended November 30, 2016 as compared to
the same period in the prior year. These decreases are
primarily due to a reduction in sales commissions, travel and
entertainment expense and personnel expenses.
“In the first six months of FY2017, we have been
shifting our focus and resources towards our three largest product
lines – SBS, Acuity and Xact,” commented David M. Hudson, President
and CEO of Schmitt Industries. “This focus coincides with a general
winding down of our smaller product lines. With this
approach, we have reduced our operating expenses, reallocated our
engineering resources, and increased our time efficiencies which
has allowed us to more effectively utilize our sales and marketing
resources,” 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. |
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CONSOLIDATED BALANCE SHEETS |
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(UNAUDITED) |
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November 30, 2016 |
|
May 31, 2016 |
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ASSETS |
|
Current assets |
|
|
|
|
|
|
Cash and cash equivalents |
$ |
543,207 |
|
|
$ |
988,686 |
|
|
Accounts
receivable, net |
|
1,825,101 |
|
|
|
2,099,082 |
|
|
Inventories |
|
4,465,801 |
|
|
|
4,727,977 |
|
|
Prepaid expenses |
|
146,350 |
|
|
|
132,230 |
|
|
Income taxes receivable |
|
1,879 |
|
|
|
8,432 |
|
|
|
|
6,982,338 |
|
|
|
7,956,407 |
|
|
|
|
|
|
|
|
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Property and equipment, net |
|
952,182 |
|
|
|
965,452 |
|
|
Other assets |
|
|
|
|
|
|
Intangible assets, net |
|
657,116 |
|
|
|
712,881 |
|
|
TOTAL ASSETS |
$ |
8,591,636 |
|
|
$ |
9,634,740 |
|
|
|
|
LIABILITIES & STOCKHOLDERS’
EQUITY |
|
Current liabilities |
|
|
|
|
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Accounts payable |
$ |
486,963 |
|
|
$ |
877,167 |
|
|
Accrued commissions |
|
253,666 |
|
|
|
273,147 |
|
|
Accrued payroll liabilities |
|
96,585 |
|
|
|
148,823 |
|
|
Other accrued liabilities |
|
306,715 |
|
|
|
331,563 |
|
|
Total current
liabilities |
|
1,143,929 |
|
|
|
1,630,700 |
|
|
|
|
|
|
|
|
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Stockholders’ equity |
|
|
|
|
|
|
Common stock, no par value, 20,000,000 shares
authorized, |
|
|
|
|
|
|
2,995,910 shares issued and outstanding at November 30,
2016 |
|
|
|
|
|
|
and May 31, 2016 |
|
10,584,990 |
|
|
|
10,569,522 |
|
|
Accumulated other comprehensive loss |
|
(458,220 |
) |
|
|
(394,518 |
) |
|
Accumulated deficit |
|
(2,679,063 |
) |
|
|
(2,170,964 |
) |
|
Total stockholders’ equity |
|
7,447,707 |
|
|
|
8,004,040 |
|
|
|
|
|
|
|
|
|
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY |
$ |
8,591,636 |
|
|
$ |
9,634,740 |
|
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SCHMITT INDUSTRIES, INC. |
CONSOLIDATED STATEMENTS OF
OPERATIONS |
FOR THE THREE AND SIX MONTHS ENDED NOVEMBER
30, 2016 AND 2015 |
(UNAUDITED) |
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Three Months Ended November 30, |
|
Six Months Ended November 30, |
|
|
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|
2016 |
|
|
2015 |
|
|
2016 |
|
|
2015 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
sales |
$ |
2,655,561 |
|
|
$ |
3,073,769 |
|
|
$ |
5,548,093 |
|
|
$ |
6,178,153 |
|
|
|
Cost of
sales |
|
1,623,151 |
|
|
|
1,797,359 |
|
|
|
3,139,934 |
|
|
|
3,459,251 |
|
|
|
|
Gross profit |
|
1,032,410 |
|
|
|
1,276,410 |
|
|
|
2,408,159 |
|
|
|
2,718,902 |
|
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|
|
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Operating
expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
General,
administration and sales |
|
1,324,675 |
|
|
|
1,581,635 |
|
|
|
2,737,344 |
|
|
|
3,119,517 |
|
|
|
|
Research
and development |
|
60,277 |
|
|
|
72,500 |
|
|
|
139,124 |
|
|
|
159,412 |
|
|
|
|
|
Total operating
expenses |
|
1,384,952 |
|
|
|
1,654,135 |
|
|
|
2,876,468 |
|
|
|
3,278,929 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating loss |
|
(352,542 |
) |
|
|
(377,725 |
) |
|
|
(468,309 |
) |
|
|
(560,027 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other expense, net |
|
(23,578 |
) |
|
|
(19,091 |
) |
|
|
(25,411 |
) |
|
|
(25,011 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss before income taxes |
|
(376,120 |
) |
|
|
(396,816 |
) |
|
|
(493,720 |
) |
|
|
(585,038 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision for income taxes |
|
6,350 |
|
|
|
6,971 |
|
|
|
14,379 |
|
|
|
13,811 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss |
$ |
(382,470 |
) |
|
$ |
(403,787 |
) |
|
$ |
(508,099 |
) |
|
$ |
(598,849 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss per common share, basic |
$ |
(0.13 |
) |
|
$ |
(0.13 |
) |
|
$ |
(0.17 |
) |
|
$ |
(0.20 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted
average number of common shares, basic |
|
2,995,910 |
|
|
|
2,995,910 |
|
|
|
2,995,910 |
|
|
|
2,995,910 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss per common share, diluted |
$ |
(0.13 |
) |
|
$ |
(0.13 |
) |
|
$ |
(0.17 |
) |
|
$ |
(0.20 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted
average number of common shares, diluted |
|
2,995,910 |
|
|
|
2,995,910 |
|
|
|
2,995,910 |
|
|
|
2,995,910 |
|
|
|
|
|
|
|
|
|
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|
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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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