SMID Stock Falls After Reporting Weak Q3 Earnings and Softer Rentals

Core Insights - Smith-Midland Corporation (SMID) shares have declined 12.7% since the latest quarterly results, underperforming the S&P 500 Index's 3.2% decline during the same period [1] - The company's third-quarter 2025 revenues were $21.5 million, down from $23.6 million a year earlier, primarily due to the absence of large special barrier rental projects [2] - Net income for the quarter was $2.9 million, or 54 cents per diluted share, compared to $3.2 million, or 59 cents, in the prior year [2] Earnings & Revenue Performance - Revenues decreased due to the non-recurrence of large special barrier rental projects, while product sales increased by 11% to $11.9 million [2] - The gross margin slightly reduced to 26.8% from 27.9% in the prior-year period [2] Business Drivers and Product-Mix Trends - Core product sales showed growth, particularly in soundwalls ($2.8 million from $1.9 million) and Easi-Set/Easi-Span buildings ($2.7 million from $1.8 million) [3] - SlenderWall contributed $1.1 million in sales, reflecting resumed project activity [3] - Utility sales fell sharply to $1.2 million from $2.4 million, and architectural panel sales declined to $1 million from $1.6 million [4] Service Revenue Trends - Barrier rental revenues dropped to $3.3 million from $7.1 million due to the absence of special projects [5] - Shipping and installation revenues rose to $5.2 million from $4.8 million, supported by stronger activity in soundwalls and SlenderWall [5] - Royalty income increased by 13% to $1.1 million, aided by higher licensee barrier production volumes [5] Management Commentary - Management highlighted continued strength in core product business despite declines in service revenues [6] - CEO noted solid demand for new and upgraded highways and public infrastructure projects [6] - The company is expanding its barrier rental fleet to meet rising safety standards [6] Outlook and Guidance - Management provided directional indicators for the remainder of 2025, expecting product sales to increase compared to 2024 [11] - Shipping and installation revenues, along with royalty income, are expected to remain higher than year-ago levels [11] - The company does not anticipate additional special barrier rental projects in the final quarter of the year [12] Backlog and Other Developments - Backlog as of Nov. 1, 2025, was $54.8 million, down from $62.8 million a year earlier [13] - An arbitration settlement related to a 2015 SlenderWall sale resulted in the recovery of $458 in previously reserved receivables [14]