Schmitt Industries, Inc. (Nasdaq:SMIT) today announced its
operating results for the three and six months ended November 30,
2012. Sales for the three months ended November 30, 2012 decreased
$773,966, or 22.3%, to $2,702,259 compared to $3,476,225 for the
same period last year. Sales for the six months ended November 30,
2012 decreased $564,786, or 8.1%, to $6,382,924 compared to
$6,947,710 for the same period last year. Net loss for the second
quarter ended November 30, 2012 was $104,604, or $.03 per diluted
share, compared to net loss of $78,176, or $.03 per diluted share,
for the same period last year. Net income for the six months ended
November 30, 2012 was $15,544, or $.01 per diluted share, compared
to net income of $58,852, or $.02 per diluted share, for the same
period in the prior year.
For the second quarter ended November 30, 2012, sales in the SBS
Balancer segment decreased $501,624, or 21.2%, to $1,861,661 from
$2,363,285 in the second quarter of Fiscal 2012. For the six months
ended November 30, 2012, sales in the SBS Balancer segment
decreased $759,140, or 15.5%, to $4,124,684 from $4,883,824 in the
same period of Fiscal 2012. Sales of the Company's balancer
products decreased due to lower volumes of shipments primarily into
Asia and also to a lesser extent into North America.
Sales in the Measurement segment decreased $272,342, or 24.5%,
to $840,598 in the second quarter of Fiscal 2013 from $1,112,940 in
the second quarter of the prior year. Measurement segment sales
decreased from the prior period due primarily to lower volumes of
shipments of laser-based distance measurement and dimensional
sizing products and light-scatter laser-based surface measurement
products offset by higher volumes of remote tank monitoring
products. Sales in the Measurement segment increased $194,354, or
9.4%, to $2,258,240 in the first six months of Fiscal 2013 from
$2,063,886 in the same period of the prior year. Measurement
segment sales increased from the prior period due primarily to
higher volumes of shipments of remote tank monitoring products and
laser-based distance measurement and dimensional sizing products
offset by lower volumes of light-scatter laser-based surface
measurement products.
Gross margin for the second quarter increased to 57.1% as
compared to 42.2% in the second quarter of the prior year. Gross
margin for the six months ended November 30, 2012 increased to
53.5% as compared to 45.7% for the three months ended November 30,
2011. These increases are primarily due to a shift in the product
sales mix towards higher margin products, lower sales volumes
through the Asian distribution channels, which typically have
higher discounts and lower margins, and the Company's efforts to
reduce the material costs from certain key suppliers. Operating
expenses increased $90,450, or 5.8%, to $1,655,283 for the three
months ended November 30 2012 as compared to $1,564,833for the
three months ended November 30, 2011. Operating expenses increased
$264,833, or 8.4%, to $3,403,407 for the six months ended November
30, 2012 as compared to $3,138,574 for the six months ended
November 30, 2011. The increases are primarily due to higher sales
and marketing expenses and higher research and development
expenses.
"Our results this quarter reflect a decrease in sales for our
SBS products, particularly in China as a result of a slowdown in
the manufacturing sector of their economy, and a decline in sales
of our laser-based measurement sensors in North America as compared
to the prior year. While we are disappointed with the decrease in
revenues this quarter, we remain committed to making the
investments in product and sales channel development that are
necessary to increase revenue and profitability," commented Jim
Fitzhenry, President and CEO of Schmitt Industries. "We will remain
focused on these priorities while also monitoring developments in
the global economy as they relate to manufacturing," Fitzhenry
concluded.
About Schmitt Industries
Schmitt Industries, Inc. designs, manufactures and markets
computer-controlled vibration detection and 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-based surface measurement products for a
wide variety of commercial applications in addition to the disk
drive, silicon wafer and optics industries; laser-based distance
measurement products for a wide variety of industrial applications;
and ultrasonic measurement products that accurately measure the
fill levels of liquefied propane tanks and transmit that data via
satellite to a secure web site (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
Certain statements in this release, including but not limited to
remarks by Jim Fitzhenry, 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, global financial concerns, the volatility of the
Company's primary markets, the Xact® tank monitoring system's
commercial viability and our ability to satisfy expected demand,
the ability to meet production requirements for new products, the
ability to develop new products to satisfy changes in consumer
demands, protection of intellectual property rights, the intensity
of competition, 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, fluctuations in quarterly and annual operating
results, the ability to reduce operating costs if sales decline,
maintenance of a significant investment in inventories in
anticipation of future sales, attracting and retaining key
management and qualified technical and sales personnel, changes in
effective tax rates, increased costs due to changes in securities
laws and regulations, and risks from international sales and
currency fluctuations.
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) |
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November 30, 2012 |
May 31, 2012 |
ASSETS |
Current assets |
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Cash and cash equivalents |
$ 2,662,321 |
$ 2,776,817 |
Accounts receivable, net of allowance of
$27,080 and $26,720 at November 30, 2012 and May 31, 2012,
respectively |
2,107,730 |
2,493,889 |
Inventories |
4,422,475 |
3,975,600 |
Prepaid expenses |
138,196 |
186,489 |
Income taxes receivable |
23,482 |
7,780 |
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9,354,204 |
9,440,575 |
Property and equipment |
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Land |
299,000 |
299,000 |
Buildings and improvements |
1,805,951 |
1,723,273 |
Furniture, fixtures and equipment |
1,279,829 |
1,247,720 |
Vehicles |
121,835 |
121,835 |
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3,506,615 |
3,391,828 |
Less accumulated depreciation and
amortization |
(2,098,186) |
(2,019,692) |
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1,408,429 |
1,372,136 |
Other assets |
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Intangible assets, net |
1,145,595 |
1,213,204 |
TOTAL ASSETS |
$ 11,908,228 |
$ 12,025,915 |
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LIABILITIES &
STOCKHOLDERS' EQUITY |
Current liabilities |
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Accounts payable |
$ 591,773 |
$ 770,586 |
Accrued commissions |
310,199 |
335,104 |
Accrued payroll liabilities |
220,873 |
142,665 |
Other accrued liabilities |
224,053 |
286,319 |
Total current
liabilities |
1,346,898 |
1,534,674 |
Long-term liabilities |
7,500 |
7,500 |
Stockholders' equity |
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Common stock, no par value, 20,000,000
shares authorized, 2,990,910 shares issued and outstanding at both
November 30, 2012 and May 31, 2012 |
10,324,738 |
10,279,636 |
Accumulated other comprehensive loss |
(303,852) |
(313,295) |
Retained earnings |
532,944 |
517,400 |
Total stockholders'
equity |
10,553,830 |
10,483,741 |
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY |
$ 11,908,228 |
$ 12,025,915 |
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SCHMITT INDUSTRIES,
INC. CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE THREE AND SIX
MONTHS ENDED NOVEMBER 30, 2012 AND 2011 (UNAUDITED) |
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Three Months Ended
November 30, |
Six Months Ended November
30, |
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2012 |
2011 |
2012 |
2011 |
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Net sales |
$ 2,702,259 |
$ 3,476,225 |
$ 6,382,924 |
$ 6,947,710 |
Cost of sales |
1,160,031 |
2,009,687 |
2,966,748 |
3,773,268 |
Gross profit |
1,542,228 |
1,466,538 |
3,416,176 |
3,174,442 |
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Operating expenses: |
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General, administration and sales |
1,523,918 |
1,520,528 |
3,156,733 |
3,032,718 |
Research and development |
131,365 |
44,305 |
246,674 |
105,856 |
Total operating expenses |
1,655,283 |
1,564,833 |
3,403,407 |
3,138,574 |
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Operating income (loss) |
(113,055) |
(98,295) |
12,769 |
35,868 |
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Other income |
7,915 |
16,692 |
8,427 |
26,130 |
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Income (loss) before income taxes |
(105,140) |
(81,603) |
21,196 |
61,998 |
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Provision (benefit) for income taxes |
(536) |
(3,427) |
5,652 |
3,146 |
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Net income (loss) |
$ (104,604) |
$ (78,176) |
$ 15,544 |
$ 58,852 |
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Net earnings (loss) per
common share: |
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Basic |
$ (0.03) |
$ (0.03) |
$ 0.01 |
$ 0.02 |
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Weighted average number of common shares,
basic |
2,990,910 |
2,896,448 |
2,990,910 |
2,896,039 |
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Diluted |
$ (0.03) |
$ (0.03) |
$ 0.01 |
$ 0.02 |
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Weighted average number of common shares,
diluted |
2,990,910 |
2,896,448 |
3,003,828 |
2,945,594 |
CONTACT: Jeffrey T Siegal
CFO and Treasurer
(503) 227-7908
or visit our web site at www.schmitt-ind.com
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