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Smith-Midland Q2 Earnings Double Y/Y on Record Revenues, Stock Rises
ZACKS· 2025-08-19 16:36
Core Insights - Smith-Midland Corporation (SMID) reported a strong second quarter for 2025, with revenues reaching $26.2 million, a 33% increase from $19.6 million in the same quarter of the previous year [2] - Net income more than doubled to $4.2 million, or 79 cents per diluted share, compared to $2 million, or 37 cents per share, in Q2 2024 [2] - The company’s stock has outperformed the S&P 500 index, rising 16.3% in the past month compared to the S&P 500's 2.5% growth [1] Revenue Breakdown - Product sales totaled $13.4 million, slightly above last year's $13.1 million, with soundwall sales more than doubling to $5.2 million [3] - Service revenues increased significantly to $12.8 million from $6.5 million, driven by barrier rentals growing to $5.8 million [4] - Royalty income rose 53% year over year to $1.3 million, supported by higher licensee production volumes [4] Management Commentary - CEO Ashley Smith described the quarter as a "new quarterly revenue record," highlighting increased demand across product lines and support from infrastructure spending initiatives [5] - Management expressed optimism regarding both near and long-term prospects, emphasizing confidence in delivering shareholder value [5] Factors Influencing Performance - The surge in revenues and earnings was attributed to special barrier projects, which carry higher margins [6] - The company’s focus on expanding its barrier rental fleet has shifted its revenue mix toward higher-margin recurring rental income [6] - Cost of sales as a percentage of revenues decreased to 72% from 77% a year earlier [6] Future Guidance - The company cautioned that two special barrier rental projects completed in the first half of 2025 are not expected to recur in the second half [8] - Smith-Midland is expanding its barrier rental inventory through 2025 and 2026 to meet anticipated demand, with a backlog of $54 million as of August 2025 [8] Financial Position - The company ended the quarter with $7.1 million in cash, down from $7.5 million at the end of 2024 [9] - Accounts receivable rose to $31.5 million, reflecting a higher volume of billed projects [9] - Total debt stood at $4.8 million, indicating a relatively conservative balance sheet [9]