Smith-Midland Corporation SMID reported robust financial results for the second quarter of 2024, highlighted by record-breaking revenues and a significant turnaround in profitability.
Total revenues jumped 34% year over year, the highest quarterly figure in the company's history, driven by strong demand across multiple product lines and ongoing infrastructure projects. The results reflect Smith-Midland's successful execution of growth strategies and operational efficiencies, positioning the company for continued momentum in the latter half of the year.
Q2 Earnings
Smith-Midland reported second-quarter 2024 earnings per share of 37 cents, turning around from a loss of 15 cents in the year-ago quarter.
Total quarterly revenues were $19.6 million, a 34% increase from $14.7 million in the prior-year quarter. This marked the highest quarterly revenues in the company's history.
The strong quarterly results were primarily due to increased production and higher sales volumes across multiple product lines, particularly utility vaults and soundwalls, supported by ongoing infrastructure projects funded by the Infrastructure Investment and Jobs Act.
Revenues by Segments
Growth in Smith-Midland's financials was broad-based, with product sales increasing 23% year over year to $13.1 million.
Service revenues, which include barrier rentals, royalty income, and shipping and installation, saw a 63% year-over-year jump to $6.5 million.
The company's focus on enhancing production capacity and optimizing operational efficiency yielded significant results. The increase in the gross margin was largely due to the increased production volume, which allowed for better absorption of fixed costs and a favorable product mix.
Key Business Metrics
The gross profit for the quarter rose sharply to $5.1 million from $1.8 million in second-quarter 2023. This margin expansion was attributed to higher production volumes, better absorption of fixed costs and the absence of one-time expenses related to defective steel used in the initial products in the prior-year quarter.
Net income for second-quarter 2024 reached $2 million, a significant turnaround from a net loss of $782,000 in second-quarter 2023. This improvement was mainly driven by increased revenues and cost efficiencies.
The company also demonstrated strong operational efficiency, with an operating income of $2.7 million against an operating loss of $981,000 in the prior-year quarter.
Expenses
Operating expenses were well-managed, decreasing to $2.5 million from $2.8 million in second-quarter 2023 despite the higher revenue base. This efficiency in controlling costs contributed to the substantial improvement in operating income.
Cash, Debt & Capex
As of Jun 30, 2024, Smith-Midland held $7.3 million in cash, down from $9.2 million in cash and investments at the end of 2023. Accounts receivable stood at $18.1 million, whereas total debt amounted to $5.4 million. Capital expenditure for the second quarter of 2024 was $1.7 million.
Management Guidance
The company expects year-over-year growth in sales volumes for 2024, driven by increased bidding activity for its patented, proprietary and custom products due to ongoing infrastructure projects across the United States. Despite ongoing inflationary pressures, particularly in labor and material costs, the company is effectively managing these expenses, while focusing on attracting and retaining skilled workers. As of August 2024, the backlog stands at $59.2 million, slightly down from $60.9 million a year earlier. Most of this backlog is expected to be completed within 12 months, although some projects will extend over multiple years. The company remains committed to long-term strategic growth initiatives aimed at enhancing shareholder value.
Other Developments
In second-quarter 2024, Smith-Midland was awarded a $7.5-million contract from the Georgia Department of Transportation, further bolstering its order book. Additionally, the company was added to the Russell 2000 and 3000 stock indexes, reflecting its growing prominence in the market.
Overall, SMID's second-quarter 2024 results underscore its successful execution of growth strategies, backed by strong demand in key markets and operational improvements.
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