Schmitt Industries, Inc. (Nasdaq:SMIT) today announced its
operating results for the third quarter and the first nine months
of Fiscal 2010, which ends May 31, 2010. Sales for the three months
ended February 28, 2010 were $1,542,312 compared to $1,761,747 for
the same period last year. This represents a decrease of $219,435,
or 12.5%. Net loss for the third quarter ended February 28, 2010
was $443,252, or $.15 per fully diluted share, compared to a net
loss of $260,874, or $.09 per fully diluted share, for the same
period last year. For the first nine months of Fiscal 2010
ended February 28, 2010, sales were $4,687,407 compared to
$7,944,413 for the same period in the prior year. Net loss was
$1,241,894 for the nine months ended February 28, 2010 compared to
a net loss of $340,994 for the first nine months of Fiscal 2009.
In the third quarter ended February 28, 2010, sales in the SBS
Balancer segment decreased 24.7% while sales in the SMS Measurement
segment increased 18.6% compared to the same period last
year. For the nine months ended February 28, 2010, sales in
the SBS Balancer segment decreased 45.0% and sales in the SMS
Measurement segment decreased 30.0% compared to the same period in
the prior year. Sales of the Company's balancer and
laser-based measurement products declined from prior periods
due to a sharp drop in demand that began in the second half of
Fiscal 2009 as a result of rapidly deteriorating market conditions
in the U.S. auto industry, a downturn in global manufacturing and
the weakening of the U.S. and global economy generally.
Gross margins for the quarter increased to 51.5% for the three
months ended February 28, 2010 compared to 45.8% for the same
period in the prior year primarily due to changes in the product
sales mix. Operating expenses decreased to $1,239,577 during
the three months ended February 28, 2010 compared to $1,424,624 for
the same period in the prior year. These decreases were
primarily due to cost reduction initiatives enacted by the Company
in the latter half of Fiscal 2009 which have continued into Fiscal
2010.
"While we were pleased with the reduction in our operating
expenses and the slight increase in our gross margins, we are
obviously disappointed with our overall financial results during
our fiscal third quarter ended February 28th, which did not follow
the trend of narrowing losses that we saw in the second quarter,"
commented Wayne A. Case, CEO of Schmitt Industries. "Sales in
our SMS business segment, including our Acuity brand of dimensional
and distance measurement lasers and our laser-based surface
measurement systems, increased from the same quarter last year, but
sales in our Balancer segment, our largest segment, particularly in
North America and Europe, continued to show significant
weakness."
"Our SBS balancing systems are sold to grinding machine tool
manufacturers and end users throughout the world and our sales
levels appear to be reflective of the state of recovery of the
global manufacturing sector," Case continued. "For example,
the Asia-Pacific region, particularly China, is recovering more
quickly while Europe and North America are experiencing a much
slower and more inconsistent pattern of recovery."
"We will continue to carefully manage our operating expenses and
closely monitor the health of our markets. At the same time
we will also continue to make the investments in product
development, sales and marketing necessary to increase sales.
For example, we have recently transitioned our new SB-5500
controller for the Balancing market to manufacturing and are now
taking orders for our Xact remote tank-monitoring systems. We
are seeing interest from customers for both of these new products.
We are also pleased with our progress related to both sales
and integration of our Lasercheck products which we acquired last
quarter from Optical Dimensions. We believe that these
developments, and many others we are working on, will ultimately
result in increased sales. Our goal continues to be to return
the Company to profitability as soon as possible," commented Jim
Fitzhenry, President of Schmitt Industries.
About Schmitt Industries
Schmitt Industries, Inc. designs, manufactures and markets
computer-controlled balancing equipment (the Balancer segment)
primarily to the machine tool industry. Through its wholly
owned subsidiary, Schmitt Measurement Systems, Inc., the Company
designs, manufactures and markets precision laser measurement
systems used in surface measurement applications and dimensional
measurement applications and ultrasonic measurement products for
remote monitoring of chemical storage tanks (the Measurement
segment). The Company also sells and markets its products in
Europe through its wholly owned subsidiary, Schmitt Europe Ltd.
located in the United Kingdom.
FORWARD-LOOKING STATEMENTS
The statements in this release, including remarks by Wayne Case
and Jim Fitzhenry regarding the impact of the global economy on the
Company's sales and the level of the Company's future sales, are
forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995. Such 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. Therefore, 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 the uncertainties of the Company's new product
introductions, the risks of increased competition and technological
change in the Company's industry and other factors detailed in the
Company's SEC filings. In addition, such statements could be
affected by general industry and market conditions and growth
rates, and general domestic and international economic
conditions. Such forward-looking statements 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.
SCHMITT INDUSTRIES, INC.
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
February 28, 2010
May 31, 2009
ASSETS
Current assets
Cash and cash equivalents
$2,890,114
$4,174,335
Short-term investments
500,000
--
Accounts receivable, net of allowance of $68,039 and $38,233 at
February 28, 2010 and May 31, 2009, respectively
1,147,328
1,110,850
Inventories
3,659,770
3,866,971
Prepaid expenses
218,359
171,178
Income taxes receivable
289,014
330,134
Total current assets
8,704,585
9,653,468
Property and equipment
Land
299,000
299,000
Buildings and improvements
1,564,880
1,564,880
Furniture, fixtures and equipment
1,047,571
1,037,346
Vehicles
90,452
90,452
3,001,903
2,991,678
Less accumulated depreciation and amortization
(1,673,029)
(1,563,840)
1,328,874
1,427,838
Other assets
Intangible assets
1,550,294
1,542,694
TOTAL ASSETS
$11,583,753
$12,624,000
LIABILITIES & STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable
$444,701
$335,609
Accrued commissions
148,719
172,755
Accrued payroll liabilities
191,790
228,887
Other accrued liabilities
187,299
168,325
Total current liabilities
972,509
905,576
Long-term liabilities
2,951
--
Stockholders' equity
Common stock, no par value, 20,000,000 shares authorized,
2,894,802 and 2,870,160 shares issued and outstanding
at February 28, 2010 and May 31, 2009, respectively
9,717,698
9,545,678
Accumulated other comprehensive loss
(223,886)
(183,629)
Retained earnings
1,114,481
2,356,375
Total stockholders' equity
10,608,293
11,718,424
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
$11,583,753
$12,624,000
SCHMITT INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE AND NINE MONTHS ENDED FEBRUARY 28, 2010 AND
2009
(UNAUDITED)
Three Months Ended February 28,
Nine Months Ended February 28,
2010
2009
2010
2009
Net sales
$1,542,312
$1,761,747
$4,687,407
$7,944,413
Cost of sales
747,577
954,175
2,400,636
4,076,782
Gross profit
794,735
807,572
2,286,771
3,867,631
Operating expenses:
General, administration and sales
1,068,203
1,150,973
3,061,191
3,894,242
Research and development
171,374
273,651
471,913
771,764
Total operating expenses
1,239,577
1,424,624
3,533,104
4,666,006
Operating loss
(444,842)
(617,052)
(1,246,333)
(798,375)
Other income
3,108
17,198
18,241
35,215
Loss before income taxes
(441,734)
(599,854)
(1,228,092)
(763,160)
Provision (benefit) for income taxes
1,518
(338,980)
13,802
(422,166)
Net loss
$(443,252)
$(260,874)
$ (1,241,894)
$(340,994)
Net loss per common share:
Basic
$(0.15)
$(0.09)
$(0.43)
$(0.12)
Weighted average number of common shares, basic
2,894,802
2,870,160
2,883,880
2,870,160
Diluted
$(0.15)
$(0.09)
$(0.43)
$(0.12)
Weighted average number of common shares, diluted
2,894,802
2,870,160
2,883,880
2,870,160
CONTACT: Schmitt Industries, Inc.
Investor Relations
Linda M. Case
(503) 227-7908
www.schmitt-ind.com
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