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Press Release

Schmitt Industries Announces Second Quarter Fiscal 2019 Operating Results

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Jan 10, 2019

PORTLAND, Oregon, Jan. 10, 2019 (GLOBE NEWSWIRE) -- 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:

                       
    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            
                         
                         

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 )          
                         

“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)
           
           
    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           
    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  
             
  Stockholders’ equity          
    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  
             


SCHMITT INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE AND SIX MONTHS ENDED NOVEMBER 30, 2018 AND 2017
(UNAUDITED)
                             
                             
        Three Months Ended November 30,   Six Months Ended November 30,
        2018     2017   2018     2017  
                             
  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  
                             
  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 )
                             
    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  
                             
    Net loss per common share, diluted $   (0.06 )   $   0.03   $   (0.12 )   $   (0.01 )
                             
    Weighted average number of common shares, diluted     3,994,545         3,024,099       3,994,545         2,995,910  

Schmitt Industries, Inc.

Source: Schmitt Industries, Inc.