Smith-Midland Corp (SMID) Reports Significant Revenue and Net Income Growth in Q3 2023
Revenue soared by 31% to $15.7 million in Q3 2023 compared to the same period last year.
Net income witnessed a substantial increase to $1.3 million from $5,000 in Q3 2022.
Gross margin improved significantly to 22.9%, reflecting a 550 basis point increase year-over-year.
Backlog remains robust at over $60 million, indicating a strong future revenue stream.
On November 9, 2023, Smith-Midland Corp (NASDAQ:SMID) released its financial results for the third quarter ended September 30, 2023, showcasing a remarkable year-over-year growth in revenue and net income, along with a solid increase in gross margin. The company's financial achievements are a testament to its operational efficiency and the heightened demand for its specialized precast concrete products and systems.
Financial Highlights and Performance
Smith-Midland Corp (NASDAQ:SMID) reported a 31% increase in revenue, reaching $15.7 million for the third quarter of 2023, up from $12.0 million in the same quarter of the previous year. The company's product sales surged by 54% to $10.9 million, driven by higher production volumes and larger projects. The gross margin for the quarter stood at 22.9%, a significant improvement from 17.4% in the prior year's quarter, primarily due to the sale of higher-margin proprietary products.
Operating income for the quarter was $1.5 million compared to a mere $4,000 in the prior year quarter. Net income for Q3 2023 was $1.3 million, or $0.24 per diluted share, a substantial increase from the net income of $5,000, or $0.00 per diluted share, in Q3 2022. This performance underscores the company's ability to translate increased bidding activity and industry tailwinds into profitable growth.
Product and Service Revenue Breakdown
Product sales were led by Soundwall and SlenderWall, with sales reaching $2.4 million and $2.3 million respectively, marking significant increases from the previous year. Barrier sales also contributed with $1.4 million, primarily due to increased production across manufacturing facilities. Service revenue, which includes barrier rentals, royalty income, and shipping and installation, totaled $4.8 million, slightly down from $4.9 million in the third quarter of 2022.
Balance Sheet and Liquidity
As of September 30, 2023, Smith-Midland Corp (NASDAQ:SMID) had cash reserves of $5.8 million, with accounts receivable totaling $16.8 million. The company's debt stood at $5.9 million, and capital spending for the quarter was reported at $1.1 million.
Macro Environment and Outlook
Smith-Midland Corp (NASDAQ:SMID) anticipates increased sales volume for the full year of 2023 compared to 2022, supported by infrastructure initiatives across the United States. Despite facing inflationary pressures, particularly in labor and materials costs, the company is effectively managing these challenges. The backlog as of November 1, 2023, was approximately $60.2 million, with the majority expected to be fulfilled within the next 12 months.
Chairman and CEO Ashley Smith expressed optimism about the company's future, stating,
Our strong third quarter results reflect the underlying strength of our business coupled with the favorable tailwinds within the industry from increased public and private infrastructure and construction spending. This quarter represents our fourth consecutive quarter of double-digit, year-over-year revenue growth, and our highest quarterly net income since the third quarter of 2021,
and further emphasized the company's position to
generate further top and bottom-line growth, and ultimately deliver long-term value to our shareholders.
For more detailed information on Smith-Midland Corp (NASDAQ:SMID)'s financial performance, readers are encouraged to visit www.smithmidland.com.
Explore the complete 8-K earnings release (here) from Smith-Midland Corp for further details.
This article first appeared on GuruFocus.
