Schmitt Industries Announces Second Quarter Fiscal 2019 Operating Results January 10, 2019 NASDAQ: SMIT

The following excerpt is from the company's SEC filing.

Portland, Oregon – 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,

Change ($)

Change (%)

Total net sales

3,503,478

3,770,880

(267,402

(382,036

Gross margin

(37,784

Net income (loss)

(255,270

103,248

(358,518

Net income (loss) per fully diluted share

ORPORATE

: 2765 NW N

ICOLAI

ORTLAND

97210 • 503/227-7908 • F

503/223-1258

Summary data for the six months ended November 30, 2018 and 2017:

Six Months Ended November 30,

Change ($)

6,943,931

6,854,528

89,403

(149,166

(128,985

(467,089

(30,850

(436,239

“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

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)

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

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

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

CONSOLIDATED STATEMENTS OF OPERATIONS

FOR THE THREE AND SIX MONTHS ENDED NOVEMBER 30, 2018 AND 2017

Net sales

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

Operating income (loss)

(224,312

100,779

(338,114

(44,503

Other income (expense), net

(24,596

(116,247

26,621

Income (loss) before income taxes

(248,908

109,857

(454,361

(17,882

Provision for income taxes

12,728

12,968

103,248

Net loss per common share, basic

Weighted average number of common shares, basic

2,995,910

Net loss per common share, diluted

Weighted average number of common shares, diluted

3,024,099

The above information was disclosed in a filing to the SEC. To see the filing, click here.

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Other recent filings from the company include the following:

Tender offer statement by Issuer - June 11, 2020
Other Events - June 11, 2020

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