Schmitt Announces Fiscal 2021 Operating Results
PORTLAND, Ore., Aug. 31, 2021 /PRNewswire/ -- Schmitt Industries, Inc. (NASDAQ: SMIT) (the "Company" or "Schmitt") today announced its operating results for the fiscal year ended May 31, 2021.
For the year ended May 31, 2021 ("Fiscal 2021"), the Company reported revenue from continuing operations of $7,864,350, an increase of 87.7% from $4,189,924 in Fiscal 2020. The increase in revenue was driven by the Company's new Ice Cream Segment. No revenues for the Ice Cream Segment are included in Fiscal 2020 due to the acquisition occurring subsequent to Fiscal 2020 year end.
Gross margins decreased to 41.6% for Fiscal 2021 from 46.6% in Fiscal 2020. The decrease primarily due to lower gross margins in the newly acquired Ice Cream Segment and increased material costs for the Measurement Segment due to market effects of the COVID-19 pandemic.
Operating expenses for Fiscal 2021 increased to $13,156,893, as compared to $4,130,470 for Fiscal 2020. This increase was primarily due to the inclusion of the Ice Cream Segment, which accounted for 71.5% of total operating expenses. Operating expenses also included the impairment of indefinite-lived assets of $903,422 and an increase of professional fees totaling $279,673, or 19.5%, to $1,714,708 in Fiscal 2021 as compared to $1,435,035 in Fiscal 2020.
Net loss from continuing operations was ($8,089,672), or ($2.15) per fully diluted share, for Fiscal 2021 as compared to a net loss of ($1,842,304), or ($0.47) per fully diluted share, for 2020.
The Company finished the year ended May 31, 2021 with $4,032,690 in cash, as compared to $10,146,531 for Fiscal 2020.
Michael Zapata, Chairman and CEO, commented, "Fiscal year 2021 was a year of investments for Schmitt. Through our Ample Hills purchase and subsequent investments in the foundation of the business, to our SMS team focusing on business development and expanding our IoT offerings, our teams have been concentrating on short and long-term objectives we can influence."
"For Ample Hills, the operating loss was in line with our expectations when we purchased the company in July of 2021. We anticipated the cost that would be required to both carry the company through a restrained retail environment while investing in the foundation of the business. We invested $3.1 million in non-recurring cash outflows for Fiscal 2021, including the acquisition of Ample Hills, capital improvements for the Ice Cream segment, ERP implementation costs and stock repurchases. Although we anticipate some continued overhang from the global pandemic, we are pleased with the progress and excited for the continuing growth from the team's efforts."
"For our Measurement Segment, our Portland based team continues to expand our offering bases and invest in our customer's while focusing on business development. While some of our legacy customers have been more impacted through constrained CAPEX, we are seeing some growth in new customers."
"As we look ahead, we are focusing on our cash positions to continue to further invest in our businesses."
Real Estate Update
Schmitt listed the 28th Street building for sale on December 18, 2020. There is no certainty or timing of the sale of this property.
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Schmitt Industries, Inc. |
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Consolidated Balance Sheets |
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Fiscal Year Ended May 31, |
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2021 |
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2020 |
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ASSETS |
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Current assets |
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Cash and cash equivalents |
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$ |
4,032,690 |
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$ |
10,146,531 |
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Restricted cash |
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— |
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|
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420,000 |
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Accounts receivable, net |
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1,154,645 |
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|
574,926 |
|
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Inventories |
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|
1,553,310 |
|
|
|
1,059,357 |
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Prepaid expenses |
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198,345 |
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|
|
60,674 |
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Income taxes receivable |
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18,057 |
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|
— |
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Total current assets |
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6,957,047 |
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12,261,488 |
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Leasehold assets |
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10,448,486 |
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— |
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Property and equipment, net |
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2,824,017 |
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652,136 |
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Property and equipment held for sale, net |
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174,847 |
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— |
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Leasehold, utilities, and ERP deposits |
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431,808 |
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— |
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Other assets |
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Intangible assets, net |
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337,725 |
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287,602 |
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TOTAL ASSETS |
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$ |
21,173,930 |
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$ |
13,201,226 |
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LIABILITIES & STOCKHOLDERS' EQUITY |
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Current liabilities |
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Accounts payable |
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$ |
583,750 |
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$ |
267,660 |
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Accrued commissions |
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60,614 |
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41,450 |
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Accrued payroll liabilities |
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527,608 |
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86,372 |
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Accrued liabilities |
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465,146 |
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|
265,349 |
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Customer deposits and prepayments |
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93,364 |
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|
12,239 |
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Other accrued liabilities |
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694,590 |
|
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|
587,492 |
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Income taxes payable |
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— |
|
|
|
47,462 |
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Current portion of long-term lease liabilities |
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1,042,331 |
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— |
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Current portion of long-term debt |
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541,691 |
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— |
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Total current liabilities |
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4,009,094 |
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1,308,024 |
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Long-term debt |
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3,253,389 |
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— |
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Long-term leasehold liabilities |
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10,141,864 |
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— |
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Total liabilities |
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17,404,347 |
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|
1,308,024 |
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Stockholders' equity |
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Common stock, no par value, 20,000,000 shares authorized, 4,204,553 and |
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12,223,359 |
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|
12,257,306 |
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Accumulated deficit |
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(8,453,776) |
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(364,104) |
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Total stockholders' equity |
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3,769,583 |
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|
11,893,202 |
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TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY |
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$ |
21,173,930 |
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$ |
13,201,226 |
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The accompanying notes are an integral part of these consolidated financial statements. |
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Schmitt Industries, Inc. |
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Consolidated Statements of Operations and Comprehensive (Loss) Income |
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Fiscal Year Ended May 31, |
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2021 |
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2020 |
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Net sales |
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$ |
7,864,350 |
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$ |
4,189,924 |
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Cost of revenue |
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4,593,588 |
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2,239,376 |
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Gross profit |
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3,270,762 |
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1,950,548 |
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Operating expenses: |
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General, administrative and sales |
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12,045,174 |
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4,061,621 |
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Impairment of intangible assets |
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903,422 |
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— |
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Transaction costs |
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125,167 |
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— |
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Research and development |
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83,130 |
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68,849 |
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Total operating expenses |
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13,156,893 |
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4,130,470 |
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Operating loss |
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(9,886,131) |
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(2,179,922) |
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Bargain purchase gain |
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1,138,808 |
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— |
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Interest expense |
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(19,038) |
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— |
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Other income, net |
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273,023 |
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|
322,980 |
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Loss before income taxes |
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(8,493,338) |
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(1,856,942) |
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Income tax benefit from continuing operations |
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(403,666) |
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(14,638) |
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Net loss from continuing operations |
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(8,089,672) |
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(1,842,304) |
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Income from discontinued operations, including gain on sale, net of tax |
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— |
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5,722,879 |
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Net (loss) income |
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$ |
(8,089,672) |
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$ |
3,880,575 |
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Net loss per common share from continuing operations: |
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Basic |
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$ |
(2.15) |
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$ |
(0.47) |
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Weighted-average number of common shares, basic |
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3,765,783 |
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3,939,833 |
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Diluted |
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$ |
(2.15) |
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$ |
(0.47) |
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Weighted-average number of common shares, diluted |
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3,765,783 |
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3,939,833 |
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Net income per common share from discontinued operations: |
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Basic |
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$ |
— |
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$ |
1.45 |
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Weighted-average number of common shares, basic |
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|
3,765,783 |
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|
3,939,833 |
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Diluted |
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$ |
— |
|
|
$ |
1.45 |
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Weighted-average number of common shares, diluted |
|
|
3,765,783 |
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3,939,833 |
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Net (loss) income per common share: |
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Basic |
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$ |
(2.15) |
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$ |
0.98 |
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Weighted-average number of common shares, basic |
|
|
3,765,783 |
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|
3,939,833 |
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Diluted |
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$ |
(2.15) |
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$ |
0.98 |
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Weighted-average number of common shares, diluted |
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|
3,765,783 |
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|
3,939,833 |
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Comprehensive (loss) income |
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Net (loss) income |
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$ |
(8,089,672) |
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$ |
3,880,575 |
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Total comprehensive (loss) income |
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$ |
(8,089,672) |
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$ |
3,880,575 |
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The accompanying notes are an integral part of these consolidated financial statements. |
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Consolidated Summary Data for the Three Months and Fiscal Year Ended May 31, 2021 and May 31, 2020
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Three Months Ended, May 31, |
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Change |
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2021 |
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2020 |
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$ |
|
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% |
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Revenue, net |
$ |
2,658,709 |
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$ |
967,708 |
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$ |
1,691,001 |
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174.7% |
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Gross margin |
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32.7% |
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49.7% |
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Operating expenses |
$ |
4,482,514 |
|
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$ |
1,312,283 |
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$ |
3,151,154 |
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236.7% |
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Net loss from continuing operations |
$ |
(3,454,065) |
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|
$ |
(703,823) |
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|
$ |
(2,737,671) |
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|
389.0% |
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Net loss per common shares from continued operations, |
$ |
(0.92) |
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|
$ |
(0.18) |
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$ |
(0.73) |
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(405.5%) |
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Fiscal Year Ended, May 31, |
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Change |
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2021 |
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2020 |
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|
|
$ |
|
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% |
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Revenue, net |
$ |
7,864,350 |
|
|
$ |
4,189,924 |
|
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$ |
3,674,426 |
|
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87.7% |
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Gross margin |
|
41.6% |
|
|
|
46.6 |
|
|
|
|
|
|
|
||||
|
Operating expenses |
$ |
13,156,893 |
|
|
$ |
4,130,470 |
|
|
$ |
9,026,423 |
|
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218.5% |
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Net loss from continuing operations |
$ |
(8,089,672) |
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|
$ |
(1,842,304) |
|
|
$ |
(6,253,812) |
|
|
(339.5%) |
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Net loss per common shares from continued operations, |
$ |
(2.15) |
|
|
$ |
(0.47) |
|
|
$ |
(1.68) |
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|
(357.4%) |
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Segment Summary Data for the Three Months and Fiscal Year Ended May 31, 2021 and May 31, 2020
Measurement Segment
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Three Months Ended, May 31, |
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Change |
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2021 |
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2020 |
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|
$ |
|
|
% |
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Revenue, net |
$ |
897,412 |
|
|
$ |
967,078 |
|
|
$ |
(69,666) |
|
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(7.2%) |
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Gross margin |
|
24.9% |
|
|
|
49.6% |
|
|
|
|
|
|
|
|||
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Operating expenses |
$ |
917,493 |
|
|
$ |
1,312,283 |
|
|
$ |
34,718 |
|
|
2.61% |
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Net loss from continuing operations |
$ |
(465,203) |
|
|
$ |
(703,823) |
|
|
$ |
238,527 |
|
|
33.9% |
|||
|
Net loss per common shares from continued operations, |
$ |
(0.12) |
|
|
$ |
(0.18) |
|
|
$ |
0.06 |
|
|
33.3% |
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|||
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|
Fiscal Year Ended, May 31, |
|
|
Change |
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|
|
2021 |
|
|
2020 |
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|
$ |
|
|
% |
||||
|
Revenue, net |
$ |
3,820,914 |
|
|
$ |
4,189,924 |
|
|
$ |
(369,010) |
|
|
8.8% |
|
|
Gross margin |
$ |
44.0% |
|
|
|
46.6% |
|
|
|
2.6% |
|
|
|
|
|
Operating expenses |
$ |
3,745,446 |
|
|
|
4,130,470 |
|
|
$ |
385,024 |
|
|
9.3% |
|
|
Net loss from continuing operations |
$ |
(1,789,814) |
|
|
$ |
(1,842,304) |
|
|
$ |
52,492 |
|
|
2.11% |
|
|
Net loss per common shares from continued operations, |
$ |
(0.48) |
|
|
$ |
(0.47) |
|
|
$ |
- |
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ice Cream Segment
|
|
Three Months Ended, May 31, |
|
Change |
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|
|
|
2021 |
|
|
2020 |
|
|
$ |
|
|
% |
||
|
Revenue, net |
$ |
1,761,297 |
|
|
$ |
- |
|
$ |
1,761,297 |
|
|
100.0% |
|
|
Gross margin |
|
36.7% |
|
|
|
- |
|
|
36.1% |
|
|
|
|
|
Operating expenses |
$ |
3,565,021 |
|
|
$ |
- |
|
$ |
3,174,236 |
|
|
100.0% |
|
|
Net loss from continuing operations |
$ |
(2,988,862) |
|
|
$ |
- |
|
$ |
(2,996,384) |
|
|
100.0% |
|
|
Net loss per common shares from continued operations, |
$ |
(0.79) |
|
|
$ |
- |
|
$ |
(0.79) |
|
|
100.0% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal Year Ended, May 31, |
|
Change |
|||||||||||||
|
|
|
2021 |
|
|
2020 |
|
|
$ |
|
|
% |
|||||
|
Revenue, net |
$ |
4,043,436 |
|
|
$ |
- |
|
$ |
4,043,436 |
|
|
100.0% |
||||
|
Gross margin |
|
39.4% |
|
|
|
- |
|
|
39.4% |
|
|
|
||||
|
Operating expenses |
$ |
9,411,447 |
|
|
$ |
- |
|
$ |
9,411,447 |
|
|
100.0% |
||||
|
Net loss from continuing operations |
$ |
(6,299,858) |
|
|
$ |
- |
|
$ |
(6,299,858) |
|
|
100.0% |
||||
|
Net loss per common shares from continued operations, |
$ |
(1.67) |
|
|
$ |
- |
|
$ |
(1.67) |
|
|
100.0% |
||||
Consolidated Reconciliation of Adjusted EBITDA for the Three Months and Fiscal Year Ended May 31, 2021 and May 31, 2020
|
|
|
Three Months Ended May 31, |
|||||
|
|
|
2021 |
|
|
2020 |
||
|
|
|
|
|
|
|
|
|
|
Loss before income taxes from continuing operations |
|
$ |
3,453,064 |
|
|
$ |
(706,426) |
|
Depreciation and amortization |
|
|
241,491 |
|
|
|
40,057 |
|
EBITDA from continuing operations |
|
$ |
(3,211,573) |
|
|
$ |
(666,369) |
|
Adjusted for: |
|
|
|
|
|
|
|
|
Bargain purchase gain |
|
|
48,427 |
|
|
|
- |
|
Impairment of intangible assets |
|
|
903,422 |
|
|
|
- |
|
Stock-based compensation |
|
|
103,052 |
|
|
|
27,324 |
|
Income from discontinued product line |
|
|
10,206 |
|
|
|
(33,210) |
|
Reorganization, legal, and transaction fees |
|
|
- |
|
|
|
240,233 |
|
Unrecoverable inventory costs |
|
|
- |
|
|
|
- |
|
Software write-downs and recoveries |
|
|
- |
|
|
|
(40,469) |
|
Adjusted EBITDA from continuing operations |
|
$ |
(2,146,466) |
|
|
$ |
(472,491) |
|
|
|
Fiscal Year Ended May 31, |
|||||
|
|
|
2021 |
|
2020 |
|||
|
|
|
|
|
|
|
|
|
|
Loss before income taxes from continuing operations |
|
$ |
(8,493,338) |
|
|
$ |
(1,856,942) |
|
Depreciation and amortization |
|
|
549,223 |
|
|
|
161,137 |
|
EBITDA from continuing operations |
|
$ |
(7,944,115) |
|
|
$ |
(1,695,805) |
|
Adjusted for: |
|
|
|
|
|
|
|
|
Bargain purchase gain |
|
|
(1,138,808) |
|
|
|
- |
|
Impairment of intangible assets |
|
|
903,422 |
|
|
|
- |
|
Stock-based compensation |
|
|
266,545 |
|
|
|
354,048 |
|
Income from discontinued product line |
|
|
(46,934) |
|
|
|
(167,479) |
|
Reorganization, legal, and transaction fees |
|
|
125,167 |
|
|
|
842,162 |
|
Unrecoverable inventory costs |
|
|
- |
|
|
|
76,099 |
|
Software write-downs and recoveries |
|
|
- |
|
|
|
17,473 |
|
Adjusted EBITDA from continuing operations |
|
$ |
(7,834,723) |
|
|
$ |
(573,502) |
Use of Non-GAAP Financial Measures by Schmitt Industries
This release presents the non-GAAP financial measures "Adjusted EBITDA from continuing operations", "Adjusted net loss from continuing operations (Non-GAAP)", and "Non-GAAP loss per fully diluted share." The most directly comparable measure for these non-GAAP financial measures are net income and basic and diluted net income per share. The Company presents adjusted EBITDA after excluding the bargain purchase gain related to the Ample Hills acquisition, related transaction and re-organization expenses, and stock-based compensation.
A discussion of the reasons why management believes that the presentation of non-GAAP financial measures provides useful information to investors regarding Schmitt's financial condition and results of operations is included as Exhibit 10.5 to Schmitt's report on Form 8-K filed with the Securities and Exchange Commission on January 15, 2021.
About Schmitt Industries
Schmitt Industries, Inc., founded in 1987, designs, manufactures and sells high precision test and measurement products, solutions and services through its Acuity® and Xact® product lines. Acuity provides laser and white light sensor distance measurement and dimensional sizing products, and our Xact line provides ultrasonic-based remote tank monitoring products and related monitoring revenues for markets in the Internet of Things environment. The Company also owns and operates Ample Hills Creamery, a beloved ice cream manufacturer and retailer based in Brooklyn, NY.
FORWARD-LOOKING STATEMENTS
This document may contain forward-looking statements made pursuant to the Private Securities Litigation Reform Act of 1995. 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. A complete discussion of the risks and uncertainties that may affect Schmitt's business, including the business of its subsidiary, is included in "Risk Factors" in the Company's most recent Annual Report on Form 10-K as filed by the Company with the Securities and Exchange Commission.
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.
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For more information contact: |
Michael R. Zapata, President and CEO Philip Bosco, CFO and Treasurer (503) 227-7908 or visit our website at www.schmitt-ind.com |
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SOURCE Schmitt Industries, Inc.
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