Smith-Midland(SMID) - 2024 Q3 - Quarterly Report

Financial Performance - The Company reported net income of $3,150 for Q3 2024, up from $1,266 in Q3 2023, and $6,278 for the first nine months of 2024, compared to $565 for the same period in 2023[49]. - Total revenue increased to $23,582 for Q3 2024, up from $15,651 in Q3 2023, and $59,977 for the first nine months of 2024, compared to $43,191 in the same period of 2023[49]. - Operating income for Q3 2024 was $3,848, compared to $1,502 in Q3 2023, and $8,031 for the first nine months of 2024, compared to $576 in the same period of 2023[51]. - Operating income for the three month period ended September 30, 2024, was $3,848, compared to $1,502 for the same period in 2023, and for the nine month period, it was $8,031 compared to $576 for the same period in 2023[72]. - Net income for the three and nine months ended September 30, 2024, was $3,150 and $6,278, respectively, compared to $1,266 and $565 for the same periods in 2023[75]. Sales and Revenue Growth - The Company's sales backlog was approximately $62.8 million as of November 1, 2024, compared to $60.2 million at the same time last year[53]. - Barrier rentals revenue increased significantly to $7,053 in Q3 2024 from $784 in Q3 2023, and $9,303 for the first nine months of 2024, compared to $2,604 in the same period of 2023[57]. - Architectural panel sales increased to $1,601 in Q3 2024 from $315 in Q3 2023, and $3,893 for the first nine months of 2024, compared to $1,044 in the same period of 2023[59]. - Utility sales rose to $2,383 in Q3 2024 from $891 in Q3 2023, and $6,112 for the first nine months of 2024, compared to $1,787 in the same period of 2023[57]. - Building and restroom sales increased slightly for the three and nine month periods ended September 30, 2024, compared to the same periods in 2023, due to increased building sales at all manufacturing plants[63]. - Utility sales increased significantly for the three and nine month periods ended September 30, 2024, compared to the same periods in 2023, driven by a surge in demand for utility vaults in the Northern Virginia market[64]. - Miscellaneous product sales increased for the three and nine month periods ended September 30, 2024, compared to the same periods in 2023, primarily from the Virginia plant's large project for precast beams and platforms[65]. - Barrier rentals increased significantly for the three and nine month periods ended September 30, 2024, attributed to higher utilization and multiple special barrier projects[66]. - Royalties increased for the three and nine month periods ended September 30, 2024, compared to the same periods in 2023, due to higher barrier production volumes by licensees[67]. - Shipping and installation revenues increased for the three and nine month periods ended September 30, 2024, compared to the same periods in 2023, mainly due to increased shipping and installation of SlenderWall and architectural panels[68]. Cost Management - Cost of sales as a percentage of revenue decreased to 75% for Q3 2024 from 81% in Q3 2023, and to 77% for the first nine months of 2024 from 86% in the same period of 2023[50]. - The Company anticipates raw material prices to slightly increase for the remainder of 2024[92]. Internal Controls and Compliance - Management identified material weaknesses in internal controls over financial reporting, specifically in the allowance for credit losses and journal entries[93]. - The Company has designed and implemented enhanced control activities to address the material weakness related to the allowance for credit losses[97]. - Management is exploring potential functionalities in the general ledger system to improve the review and posting of journal entries[98]. - The material weaknesses will not be considered remediated until controls operate effectively for a sufficient period of time[97]. - Management concluded that disclosure controls and procedures were not effective as of September 30, 2024[93]. - The Company did not maintain proper segregation of duties within its general ledger system related to journal entries[95]. - Management is committed to the remediation of the identified material weaknesses[96]. - There were no other changes in the Company's internal control over financial reporting that materially affected the controls during the quarter ended September 30, 2024[99]. Future Outlook - Future revenue growth is anticipated to be supported by funding from the Infrastructure Investment and Jobs Act, although no assurance can be provided[53]. - The Company expects capital expenditures of approximately $6,000 for the full year 2024, which includes expansion of the North Carolina manufacturing facility and other equipment[85]. - The Company's average days sales outstanding (DSO) decreased to 85 days for the nine months ended September 30, 2024, compared to 116 days for the same period in 2023[86].