Schmitt Industries Announces Second Quarter Fiscal 2019 Operating Results
January 10 2019 - 08:30AM
Schmitt Industries, Inc. (NASDAQ: SMIT) today announced its
operating results for the second quarter of Fiscal 2019.
Highlights of the three and six months ended
November 30, 2018:
- Balancer segment sales increased
$114,634, or 5.1%, to $2,345,480 for the three months ended
November 30, 2018 as compared to $2,230,846 for the three months
ended November 30, 2017. Balancer segment sales increased $238,569,
or 5.5%, to $4,539,812 for the six months ended November 30, 2018
as compared to $4,301,243 for the six months ended November 30,
2017.
- Measurement segment sales decreased
$382,036, or 24.8%, to $1,157,998 for the three months ended
November 30, 2018 as compared to $1,540,034 for the three months
ended November 30, 2017. Measurement segment sales decreased
$149,166, or 5.8%, to $2,404,119 for the six months ended November
30, 2018 from $2,553,285 for the six months ended November 30,
2017.
- Within the Measurement segment,
Xact monitoring revenues continued to grow, increasing 19.0% for
the three months ended November 30, 2018 compared to the three
months ended November 30, 2017. Xact monitoring revenues
increased 17.0% for the six months ended November 30, 2018 as
compared to the same period in the prior year.
- Operating expenses decreased
$37,784, or 2.3%, to $1,587,419 for the three months November 30,
2018 from $1,625,203 for the three months ended November 30, 2017,
and decreased $128,985, or 4.1%, to $3,041,019 for the six months
ended November 30, 2018 compared to $3,170,004 for the six months
ended November 30, 2017. These results include non-recurring
2018 proxy and reorganization expenses of $125,280 and $257,330
incurred during the three-month and six-month periods ended
November 30, 2018, respectively, that were not incurred during the
same periods in the prior year.
Summary data for the three months ended November
30, 2018 and 2017:
|
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|
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|
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|
Three Months Ended November 30, |
|
|
|
|
|
|
|
2018 |
|
|
2017 |
|
|
Change ($) |
|
Change (%) |
|
Total net
sales |
$ |
3,503,478 |
|
|
$ |
3,770,880 |
|
$ |
(267,402 |
) |
|
(7.1 |
%) |
|
Balancer segment |
|
2,345,480 |
|
|
|
2,230,846 |
|
|
114,634 |
|
|
5.1 |
% |
|
Measurement
segment |
|
1,157,998 |
|
|
|
1,540,034 |
|
|
(382,036 |
) |
|
(24.8 |
%) |
|
|
|
|
|
|
|
|
|
|
|
|
Gross
margin |
|
38.9 |
% |
|
|
45.8 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
expenses |
$ |
1,587,419 |
|
|
$ |
1,625,203 |
|
|
(37,784 |
) |
|
(2.3 |
%) |
|
|
|
|
|
|
|
|
|
|
|
|
Net income
(loss) |
$ |
(255,270 |
) |
|
$ |
103,248 |
|
|
(358,518 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) per fully diluted share |
$ |
(0.06 |
) |
|
$ |
0.03 |
|
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Summary data for the six months ended November
30, 2018 and 2017:
|
|
Six Months Ended November 30, |
|
|
|
|
|
|
|
2018 |
|
|
2017 |
|
|
Change ($) |
|
Change (%) |
|
Total net
sales |
$ |
6,943,931 |
|
|
$ |
6,854,528 |
|
$ |
89,403 |
|
|
1.3 |
% |
|
Balancer segment |
|
4,539,812 |
|
|
|
4,301,243 |
|
|
238,569 |
|
|
5.5 |
% |
|
Measurement
segment |
|
2,404,119 |
|
|
|
2,553,285 |
|
|
(149,166 |
) |
|
(5.8 |
%) |
|
|
|
|
|
|
|
|
|
|
|
|
Gross
margin |
|
38.9 |
% |
|
|
45.6 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
expenses |
$ |
3,041,019 |
|
|
$ |
3,170,004 |
|
|
(128,985 |
) |
|
(4.1 |
%) |
|
|
|
|
|
|
|
|
|
|
|
|
Net income
(loss) |
$ |
(467,089 |
) |
|
$ |
(30,850 |
) |
|
(436,239 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) per fully diluted share |
$ |
(0.12 |
) |
|
$ |
(0.01 |
) |
|
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|
“Although the Company had a challenging quarter
in the Measurement segment due to a customer timing shift in the
Xact product line and a tough year-over-year comparison in the
Acuity line, the core Balancer segment remained strong. Since
taking over on December 1, 2018, the newly appointed management
team and Schmitt employees have begun to identify processes and
practices with a sole focus on increasing the profitability of the
Company,” commented Michael R. Zapata, Executive Chairman and
President of Schmitt Industries. “In furtherance of our announced
re-organization, we look forward to communicating expected actions
in the coming months,” Zapata added.
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. 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. For the Measurement Segment, the
Company has two core product lines: the Acuity® product line, which
consists of sales of laser and white light sensor distance
measurement and dimensional sizing products; and the Xact® product
line, which consists of sales of remote tank monitoring products
that measure the fill levels of tanks holding propane, diesel and
other tank-based liquids and revenues from the related monitoring
services associated with the transmission of data from the tanks to
a secure web site.
FORWARD-LOOKING STATEMENTS
This document may contain forward-looking
statements made pursuant to the Private Securities Litigation
Reform Act of 1995. 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, 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, fluctuations in quarterly and
annual operating results, risks associated with operating a global
business including risks from international sales, reduction in
demand or loss of significant customers, changes in foreign import
tariffs and currency fluctuations including the United Kingdom’s
likely exit from the European Union, ability to reduce operating
costs if sales decline, attracting and retaining key management and
qualified technical and sales personnel, impact resulting from the
actions of activist shareholders, changes in effective tax rates,
protection of intellectual property rights and the increased costs
due to changes in securities laws and regulations.
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.
For more information contact: |
Ann
M. Ferguson, CFO and Treasurer(503) 227-7908 or visit our web site
at www.schmitt-ind.com |
SCHMITT INDUSTRIES, INC. |
CONSOLIDATED BALANCE SHEETS |
(UNAUDITED) |
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November 30, 2018 |
|
May 31, 2018 |
|
ASSETS |
|
Current assets |
|
|
|
|
|
|
Cash and cash equivalents |
$ |
1,299,886 |
|
|
$ |
2,053,181 |
|
|
Restricted cash |
|
56,583 |
|
|
|
58,352 |
|
|
Accounts
receivable, net |
|
2,184,906 |
|
|
|
2,047,032 |
|
|
Inventories |
|
6,077,054 |
|
|
|
5,710,888 |
|
|
Prepaid expenses |
|
136,004 |
|
|
|
148,924 |
|
|
Income taxes receivable |
|
4,435 |
|
|
|
0 |
|
|
Total current assets |
|
9,758,868 |
|
|
|
10,018,377 |
|
|
|
|
|
|
|
|
|
Property and equipment, net |
|
734,687 |
|
|
|
770,915 |
|
|
Other assets |
|
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|
|
|
Intangible assets, net |
|
444,476 |
|
|
|
496,768 |
|
|
TOTAL ASSETS |
$ |
10,938,031 |
|
|
$ |
11,286,060 |
|
|
|
|
LIABILITIES & STOCKHOLDERS’
EQUITY |
|
Current liabilities |
|
|
|
|
|
|
Accounts payable |
$ |
1,159,569 |
|
|
$ |
1,024,256 |
|
|
Accrued commissions |
|
191,281 |
|
|
|
194,797 |
|
|
Accrued payroll liabilities |
|
186,488 |
|
|
|
188,568 |
|
|
Other accrued liabilities |
|
269,402 |
|
|
|
358,790 |
|
|
Income taxes payable |
|
0 |
|
|
|
3,993 |
|
|
Total current
liabilities |
|
1,806,740 |
|
|
|
1,770,404 |
|
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Stockholders’ equity |
|
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|
|
|
Common stock, no par value, 20,000,000 shares
authorized, |
|
|
|
|
|
|
3,994,545 shares issued and outstanding at May 31,
2018 and |
|
|
|
|
|
|
November 30, 2018 |
|
13,094,639 |
|
|
|
13,085,652 |
|
|
Accumulated other comprehensive loss |
|
(462,570 |
) |
|
|
(536,307 |
) |
|
Accumulated deficit |
|
(3,500,778 |
) |
|
|
(3,033,689 |
) |
|
Total stockholders’ equity |
|
9,131,291 |
|
|
|
9,515,656 |
|
|
|
|
|
|
|
|
|
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY |
$ |
10,938,031 |
|
|
$ |
11,286,060 |
|
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|
|
|
|
|
|
SCHMITT INDUSTRIES, INC. |
CONSOLIDATED STATEMENTS OF
OPERATIONS |
FOR THE THREE AND SIX MONTHS ENDED NOVEMBER
30, 2018 AND 2017 |
(UNAUDITED) |
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Three Months Ended November 30, |
|
Six Months Ended November 30, |
|
|
|
|
2018 |
|
|
2017 |
|
2018 |
|
|
2017 |
|
|
|
|
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|
|
|
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|
|
|
|
|
|
|
|
Net
sales |
$ |
3,503,478 |
|
|
$ |
3,770,880 |
|
$ |
6,943,931 |
|
|
|
6,854,528 |
|
|
Cost of
sales |
|
2,140,371 |
|
|
|
2,044,898 |
|
|
4,241,026 |
|
|
|
3,729,027 |
|
|
|
Gross profit |
|
1,363,107 |
|
|
|
1,725,982 |
|
|
2,702,905 |
|
|
|
3,125,501 |
|
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|
|
|
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Operating
expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
General,
administration and sales |
|
1,539,495 |
|
|
|
1,524,443 |
|
|
2,944,858 |
|
|
|
2,992,787 |
|
|
|
Research
and development |
|
47,924 |
|
|
|
100,760 |
|
|
96,161 |
|
|
|
177,217 |
|
|
|
|
Total operating
expenses |
|
1,587,419 |
|
|
|
1,625,203 |
|
|
3,041,019 |
|
|
|
3,170,004 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income (loss) |
|
(224,312 |
) |
|
|
100,779 |
|
|
(338,114 |
) |
|
|
(44,503 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income (expense), net |
|
(24,596 |
) |
|
|
9,078 |
|
|
(116,247 |
) |
|
|
26,621 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) before income taxes |
|
(248,908 |
) |
|
|
109,857 |
|
|
(454,361 |
) |
|
|
(17,882 |
) |
|
|
|
|
|
|
|
|
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|
|
|
|
|
|
|
|
Provision for income taxes |
|
6,362 |
|
|
|
6,609 |
|
|
12,728 |
|
|
|
12,968 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) |
$ |
(255,270 |
) |
|
$ |
103,248 |
|
$ |
(467,089 |
) |
|
$ |
(30,850 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss per common share, basic |
$ |
(0.06 |
) |
|
$ |
0.03 |
|
$ |
(0.12 |
) |
|
$ |
(0.01 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted
average number of common shares, basic |
|
3,994,545 |
|
|
|
2,995,910 |
|
|
3,994,545 |
|
|
|
2,995,910 |
|
|
|
|
|
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|
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|
|
Net loss per common share, diluted |
$ |
(0.06 |
) |
|
$ |
0.03 |
|
$ |
(0.12 |
) |
|
$ |
(0.01 |
) |
|
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|
|
Weighted
average number of common shares, diluted |
|
3,994,545 |
|
|
|
3,024,099 |
|
|
3,994,545 |
|
|
|
2,995,910 |
|
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