Schmitt Industries, Inc. (NASDAQ:SMIT) today announced its
operating results for the fourth quarter and fiscal year ended May
31, 2017. Total sales increased $671,693, or 22.5%, to
$3,650,428 for the three months ended May 31, 2017 as compared to
$2,978,735 for the three months ended May 31, 2016. Net loss
was $433,932, or $(0.14) per fully diluted share, for the three
months ended May 31, 2017 as compared to net loss of $465,434, or
$(0.16) per fully diluted share, for the three months ended May 31,
2016.
For the fiscal year ended May 31, 2017, total sales
increased $712,290, or 6.1%, to $12,397,643 as compared to total
sales of $11,685,353 for the fiscal year ended May 31, 2016.
Net loss was $1,073,364, or $(0.36) per fully diluted share, for
fiscal year 2017 as compared to net loss of $1,515,189, or $(0.51)
per fully diluted share, for fiscal year 2016.
Balancer segment sales focus throughout the world
on end-users, rebuilders and original equipment manufacturers of
grinding machines with the target geographic markets in North
America, Asia and Europe. Balancer segment sales increased
$400,227, or 21.4%, to $2,274,277 for the three months ended May
31, 2017 as compared to $1,874,050 for the three months ended May
31, 2016. The increase is primarily due to stronger sales in
North America and Asia.
Balancer segment sales increased $119,728, or 1.7%,
to $7,082,474 for the fiscal year ended May 31, 2017 compared to
$6,962,746 for the fiscal year ended May 31, 2016. The
increase is attributed to increased sales into Asia and other parts
of the world, offset by lower sales levels in North America which
primarily occurred in the first half of the fiscal year.
The Measurement segment product line consists of
laser-based distance measurement and dimensional-sizing products
and ultrasonic-based remote tank monitoring products for propane
and other tank-based liquids. Total Measurement segment sales
increased $271,466, or 24.6%, to $1,376,151 for the three months
ended May 31, 2017 as compared to $1,104,685 for the three months
ended May 31, 2016. This increase is primarily attributed to
stronger sales in our Acuity laser-based distance measurement and
dimensional-sizing products, increases in sales of our Xact remote
tank monitoring products and increased revenues from the Xact
monitoring services.
Total Measurement segment sales increased $592,562,
or 12.5%, to $5,315,169 for the fiscal year ended May 31, 2017
compared to $4,722,607 for the fiscal year ended May 31,
2016. This increase is primarily attributed to increases in
sales of our Xact remote tank monitoring products and increased
revenues from the Xact monitoring services, along with stronger
sales in our Acuity laser-based distance measurement and
dimensional-sizing products,
Gross margin for the three months ended May 31,
2017 decreased to 34.6% as compared to 36.4% for the three months
ended May 31, 2016. Gross margin for fiscal year 2017
decreased to 39.4% as compared to 41.7% for fiscal year 2016.
The overall decreases in gross margin in the periods ended May 31,
2017 compared to the periods ended May 31, 2016 is primarily
influenced by shifts in product sales mix.
Operating expenses increased $133,598, or 8.6%, to
$1,684,783 for the three months ended May 31, 2017 as compared to
$1,551,185 for the three months ended May 31, 2016. General,
administrative and sales expenses increased $126,506, or 8.5%, to
$1,617,454 for the three months ended May 31, 2017 as compared to
$1,490,948 for the same period in the prior year. These
increases are attributed to increases in sales commissions,
administrative related payroll and professional expenses, which
were partially offset by reductions in sales related payroll and
certain general administrative expenses including insurance and
general office and utility costs.
Operating expenses decreased $429,278, or 6.8%, to
$5,874,491 for fiscal year 2017 as compared to $6,303,769 for
fiscal year 2016. General, administrative and sales expenses
decreased $397,330, or 6.6%, to $5,618,327 for fiscal year 2017 as
compared to $6,016,097 for fiscal year 2016. These decreases
were primarily attributed to reductions in sales related payroll
expense and reductions in specific sales-related travel and
marketing where sales were not being generated commensurate with
the costs being incurred. In addition, the overall decrease was
impacted by reductions in administrative related payroll and other
administrative expenses, offset in part by increases in
professional expenses.
“Our mission for fiscal year 2017 has been to focus
efforts on our three major product lines – SBS, Acuity and Xact –
and to wind down or eliminate smaller product lines. This focus has
lead to far more efficient use of the Company’s resources.
Working to streamline our operations and expend more resources on
sales and marketing initiatives should have the highest potential
to bolster revenue growth,” commented David M. Hudson, President
and CEO of Schmitt Industries. “We are encouraged by the sales
results in both the third and fourth quarters of fiscal year 2017,
and we are focused on continuing that trend into fiscal year
2018. In the meantime, we continue to pursue alternatives to
right size our real estate holdings and manage closely our
operating overhead,” Hudson concluded.
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.
For the Measurement Segment, the Company designs, manufactures and
sells laser and white light sensors for distance, dimensional and
area measurement for a wide variety of commercial applications and
ultrasonic measurement products that accurately measure the liquid
levels of propane, diesel and other tank-based liquids, and
transmit that data via satellite to a secure web site for
display. 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.
FORWARD-LOOKING STATEMENTS
Certain statements in this release, including but
not limited to remarks by David M. Hudson, 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
and global financial concerns, the volatility of the Company’s
primary markets, efforts to continue to accelerate growth in sales
of the Xact® tank monitoring system, 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, the ability to obtain financing
if needed to fund operations or growth through commercial loans or
capital fund raising at terms acceptable to the Company and its
shareholders, fluctuations in quarterly and annual operating
results, risks associated with operating a global business
including risks from international sales and currency fluctuations,
ability to reduce operating costs if sales decline, attracting and
retaining key management and qualified technical and sales
personnel, changes in effective tax rates, the increased costs due
to changes in securities laws and regulations, and protection of
intellectual property rights.
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.
SCHMITT INDUSTRIES, INC. |
CONSOLIDATED BALANCE SHEETS |
(UNAUDITED) |
|
|
|
May 31, 2017 |
|
May 31, 2016 |
|
ASSETS |
|
Current assets |
|
|
|
|
|
|
Cash and cash equivalents |
$ |
867,607 |
|
|
$ |
988,686 |
|
|
Accounts
receivable, net |
|
2,344,373 |
|
|
|
2,099,082 |
|
|
Inventories |
|
4,204,723 |
|
|
|
4,727,977 |
|
|
Prepaid expenses |
|
115,756 |
|
|
|
132,230 |
|
|
Income taxes receivable |
|
7,310 |
|
|
|
8,432 |
|
|
|
|
7,539,769 |
|
|
|
7,956,407 |
|
|
|
|
|
|
|
|
|
Property and equipment, net |
|
865,224 |
|
|
|
965,452 |
|
|
Other assets |
|
|
|
|
|
|
Intangible assets, net |
|
601,351 |
|
|
|
712,881 |
|
|
TOTAL ASSETS |
$ |
9,006,344 |
|
|
$ |
9,634,740 |
|
|
|
|
LIABILITIES & STOCKHOLDERS’
EQUITY |
|
Current liabilities |
|
|
|
|
|
|
Accounts payable |
$ |
1,101,066 |
|
|
$ |
877,167 |
|
|
Accrued commissions |
|
300,234 |
|
|
|
273,147 |
|
|
Accrued payroll liabilities |
|
360,239 |
|
|
|
148,823 |
|
|
Other accrued liabilities |
|
267,418 |
|
|
|
331,563 |
|
|
Total current
liabilities |
|
2,028,957 |
|
|
|
1,630,700 |
|
|
|
|
|
|
|
|
|
Stockholders’ equity |
|
|
|
|
|
|
Common stock, no par value, 20,000,000 shares authorized, |
|
|
|
|
|
|
2,995,910
shares issued and outstanding at May 31, 2017 |
|
|
|
|
|
|
and
2016 |
|
10,649,287 |
|
|
|
10,569,522 |
|
|
Accumulated other comprehensive loss |
|
(427,572 |
) |
|
|
(394,518 |
) |
|
Accumulated deficit |
|
(3,244,328 |
) |
|
|
(2,170,964 |
) |
|
Total stockholders’ equity |
|
6,977,387 |
|
|
|
8,004,040 |
|
|
|
|
|
|
|
|
|
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY |
$ |
9,006,344 |
|
|
$ |
9,634,740 |
|
|
|
|
|
|
|
|
SCHMITT INDUSTRIES, INC. |
CONSOLIDATED STATEMENTS OF
OPERATIONS |
FOR THE THREE MONTHS AND FISCAL YEARS ENDED
MAY 31, 2017 AND 2016 |
(UNAUDITED) |
|
|
|
|
|
Three Months Ended |
|
Fiscal Years Ended |
|
|
|
|
|
May 31, 2017 |
|
May 31, 2016 |
|
May 31, 2017 |
|
May 31, 2016 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
sales |
$ |
3,650,428 |
|
|
$ |
2,978,735 |
|
|
$ |
12,397,643 |
|
|
$ |
11,685,353 |
|
|
|
Cost of
sales |
|
2,387,322 |
|
|
|
1,893,703 |
|
|
|
7,511,836 |
|
|
|
6,818,058 |
|
|
|
|
Gross
profit |
|
1,263,106 |
|
|
|
1,085,032 |
|
|
|
4,885,807 |
|
|
|
4,867,295 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
General,
administration and sales |
|
1,617,454 |
|
|
|
1,490,948 |
|
|
|
5,618,327 |
|
|
|
6,016,097 |
|
|
|
|
Research
and development |
|
67,329 |
|
|
|
60,237 |
|
|
|
256,164 |
|
|
|
287,672 |
|
|
|
|
|
Total operating
expenses |
|
1,684,783 |
|
|
|
1,551,185 |
|
|
|
5,874,491 |
|
|
|
6,303,769 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating loss |
|
(421,677 |
) |
|
|
(466,153 |
) |
|
|
(988,684 |
) |
|
|
(1,436,474 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other expense, net |
|
(5,618 |
) |
|
|
415 |
|
|
|
(56,671 |
) |
|
|
(58,713 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss before income taxes |
|
(427,295 |
) |
|
|
(465,738 |
) |
|
|
(1,045,355 |
) |
|
|
(1,495,187 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision for income taxes |
|
6,637 |
|
|
|
(304 |
) |
|
|
28,009 |
|
|
|
20,002 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss |
$ |
(433,932 |
) |
|
$ |
(465,434 |
) |
|
$ |
(1,073,364 |
) |
|
$ |
(1,515,189 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss per common share, basic |
$ |
(0.14 |
) |
|
$ |
(0.16 |
) |
|
$ |
(0.36 |
) |
|
$ |
(0.51 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted
average number of common shares, basic |
|
2,995,910 |
|
|
|
2,995,910 |
|
|
|
2,995,910 |
|
|
|
2,995,910 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss per common share, diluted |
$ |
(0.14 |
) |
|
$ |
(0.16 |
) |
|
$ |
(0.36 |
) |
|
$ |
(0.51 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted
average number of common shares, diluted |
|
2,995,910 |
|
|
|
2,995,910 |
|
|
|
2,995,910 |
|
|
|
2,995,910 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For more information contact:
Ann M. Ferguson, CFO and Treasurer
(503) 227-7908 or visit our web site at www.schmitt-ind.com
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