PORTLAND, Ore., July 14, 2017 (GLOBE NEWSWIRE) -- 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 | |||||||||||||||