PORTLAND, Ore., Jan. 14, 2021 /PRNewswire/ -- Schmitt Industries,
Inc. (NASDAQ: SMIT) (the "Company" or "Schmitt") today announced
its operating results for the fiscal quarter ended November 30, 2020. The operating results for the
six months ended November 30, 2020
include first quarter financial results from Schmitt's July 9, 2020 acquisition of Ample Hills Creamery
("Ample Hills").
Highlights of the three months and six months ended
November 30, 2020
- Consolidated revenues increased $996,610, or 96.5%, to $2,029,712 for the three months ended
November 30, 2020, as compared to
$1,033,102 for the three months ended
November 30, 2019. For the six months
ended November 30, 2020, consolidated
revenues increased $1,409,318, or
66.2%, to $3,537,197, as compared to
$2,127,879 for the six months ended
November 30, 2019.
- The company's newly formed Ice Cream Segment's first full
quarter of operations generated revenues of $1,158,989 for the three months ended
November 30, 2020. From the date of
the Company's acquisition of Ample Hills on July 9, 2020 through November 30, 2020, the ice cream segment
generated revenue of $1,660,409.
- Measurement Segment revenue decreased $162,379, or 15.7%, to $870,723 for the three months ended November 30, 2020, as compared to $1,033,102 for the three months ended
November 30, 2019. Measurement
Segment revenue decreased $251,092,
or 11.8%, to $1,876,788 for the six
months ended November 30, 2020, as
compared to $2,127,880 for the six
months ended November 30, 2020. The
decreases are primarily due to a $33,202, or 9.0%, decline in sales of the
Company's Acuity products for the three months ended and
$112,747, or 13.8%, for the six
months ended November 30, 2020.
Recurring revenue from the Company's Xact products monitoring
services continued to grow, increasing $39,158, or 10.3%, to $420,133 for the three months ended November 30, 2020 and $59,754, or 8.0%, increase to $808,570 for the six months ended November 30, 2020, as compared to the three and
six month periods ended November 30,
2019. The increase in Xact product monitoring services was
offset by a decrease in Xact product sales of $122,917, or 56.6%, to $94,413 for the three months ended and
$120,968, or 28.2%, decrease to
$307,406 for the six months ended
November 30, 2020.
- Gross margin increased to 47.4% for the three months ended
November 30, 2020, as compared to
37.7% for the three months ended November
30,2020. Gross margin increased to 44.4% for the six months
ended November 30, 2020 as compared
to 40.7% for the six months ended November
30, 2019. The increase in gross margin is due to the
start-up of the Ample Hill's factory and the decline in lower
margin Acuity sales.
- Operating expenses increased $2,110,785, or 211.4%, to $3,109,392 for the three months ended
November 30, 2020, as compared to
$998,607 for the three months ended
November 30, 2019. The increase was
primarily due to the inclusion of the Ample Hills business along
with increased stock compensation, professional fees, and
investments in information technology.
- Net loss from continuing operations was $2,366,469, or ($0.63) per share, for the three months ended
November 30, 2020, as compared to a
net loss of ($599,058), or
($0.15) per share, for the three
months ended November 30, 2019. Net
loss from the continuing operations was $2,215,810, or ($0.59) per share, for the six months ended
November 30, 2020, as compared to a
net loss of ($821,185), or
($0.20) per share for the six months
ended November 30, 2019. Excluding
the $1,189,512 bargain purchase gain
realized as a result of the acquisition of Ample Hills, stock-based
compensation, transaction fees and re-organization expenses, and
income from discontinued product lines, non-GAAP earnings per share
from continuing operations for the three months was $(0.59) and $(0.82)
for the six months ended November 30,
2020.
- Adjusted EBITDA decreased $2,120,611, to ($2,132,309), for the three months ended
November 30, 2020, as compared to
($11,698) for the three months ended
November 30, 2019. For the six months
ended November 30, 2020, Adjusted
EBITDA decreased $3,199,214 to
$3,301,839, as compared to
($102,625).
The Company finished the quarter ended November 30, 2020 with $7,337,469 in cash, as compared to $10,566,531 for the year ended May 31, 2020.
Michael Zapata, Schmitt's
Chairman and Chief Executive Officer, commented, "The second
quarter of fiscal year 2021 continued our focus on stabilization
and building a strong foundation for our businesses. At Ample Hills
Creamery, we are investing in both our assets and our people. We
approved a capital project to upgrade our equipment and improve
production efficiencies at our iconic Red
Hook factory, while also focusing on cost reduction in our
purchasing practices. At our 10 retail locations, we've implemented
new ice cream and cabinet management training while supporting and
protecting our Amployees. As we move forward, we will continue to
focus on building our brand, expanding our wholesale and e-commerce
presence, and identifying strong co-pack partners for our
Red Hook factory.
"In our SMS Measurement segment, we redesigned our Acuity
website and Xact portal for an improved customer service experience
while continuing to build our sales pipeline and implementing
production process improvements. Despite uncertain economic
conditions, our teams have maintained discipline in execution and
will continue to do so as we enter the new year."
Shareholder Rights Plan
As previously disclosed, the Schmitt Board of Directors
("Board") believes the Section 382 Rights Agreement ("Agreement")
that was implemented in 2019 has served its purpose of preserving
the Net Operating Losses ("NOLs") so they could be used to offset
cash taxes for shareholders. Effective January 14, 2021, the Board has approved for the
removal of the Agreement, which it believes is in the best interest
of shareholders and appropriate corporate governance.
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.
Summary data for the three and six months ended November 30, 2020:
|
|
|
Three months ended
November 30,
|
|
Change
|
|
|
|
|
2020
|
|
|
2019
|
|
|
$
|
|
|
%
|
Total net
revenue
|
|
|
$
|
2,029,712
|
|
$
|
1,033,102
|
|
$
|
996,610
|
|
|
96.5%
|
Gross
margin
|
|
|
|
47.4%
|
|
|
37.7%
|
|
|
|
|
|
|
Operating
expenses
|
|
|
|
3,109,393
|
|
|
998,607
|
|
|
2,110,786
|
|
|
211.4%
|
Net loss from
continued operations
|
|
|
|
(2,366,469)
|
|
|
(599,058)
|
|
|
(1,767,411)
|
|
|
295.0%
|
Net loss per common
share
from continued operations, diluted
|
|
|
$
|
(0.63)
|
|
$
|
(0.15)
|
|
$
|
(0.48)
|
|
|
320.0%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six months ended
November 30,
|
|
Change
|
|
|
|
|
2020
|
|
|
2019
|
|
|
$
|
|
|
%
|
Total net
revenue
|
|
|
$
|
3,537,197
|
|
$
|
2,127,879
|
|
$
|
1,409,318
|
|
|
66.2%
|
Gross
margin
|
|
|
|
44.4%
|
|
|
40.7%
|
|
|
|
|
|
|
Operating
expenses
|
|
|
|
5,338,729
|
|
|
1,705,845
|
|
|
3,632,884
|
|
|
213.0%
|
Net loss from
continued operations
|
|
|
|
(2,215,810)
|
|
|
(821,185)
|
|
|
(1,394,625)
|
|
|
169.8%
|
Net loss per common
share
from continued operations, diluted
|
|
|
$
|
(0.59)
|
|
$
|
(0.20)
|
|
$
|
(0.39)
|
|
|
195.0%
|
Reconciliation of Adjusted EBITDA:
|
|
|
Three months ended
November 30,
|
|
|
|
|
2020
|
|
|
2019
|
Loss before income
taxes from continuing operations
|
|
$
|
(2,364,832)
|
|
$
|
(603,497)
|
Depreciation and
amortization
|
|
|
|
100,724
|
|
|
41,249
|
EBITDA from
continuing operations
|
|
|
$
|
(2,264,108)
|
|
$
|
(562,248)
|
|
|
|
|
|
|
|
|
Adjusted
for:
|
|
|
|
|
|
|
|
Bargain purchase
gain
|
|
|
|
82,103
|
|
|
-
|
Income from
discontinued product line
|
|
|
|
(18,852)
|
|
|
(64,270)
|
Transaction fees and
re-organization expenses
|
|
|
|
-
|
|
|
466,707
|
Stock-based
compensation
|
|
|
|
68,549
|
|
|
72,014
|
Unrecoverable
Inventory Costs
|
|
|
|
-
|
|
|
76,099
|
Adjusted EBITDA from
continuing operations
|
|
|
$
|
(2,132,308)
|
|
$
|
(11,698)
|
|
|
|
|
|
|
|
|
|
|
|
Six months ended
November 30,
|
|
|
|
|
2020
|
|
|
2019
|
Loss before income
taxes from continuing operations
|
|
$
|
(2,618,840)
|
|
$
|
(829,014)
|
Depreciation and
amortization
|
|
|
|
187,114
|
|
|
83,277
|
EBITDA from
continuing operations
|
|
|
$
|
(2,431,726)
|
|
$
|
(745,737)
|
|
|
|
|
|
|
|
|
Adjusted
for:
|
|
|
|
|
|
|
|
Bargain purchase
gain
|
|
|
|
(1,189,512)
|
|
|
-
|
Income from
discontinued product line
|
|
|
|
(57,139)
|
|
|
(134,270)
|
Transaction fees and
re-organization expenses
|
|
|
|
125,167
|
|
|
508,681
|
Stock-based
compensation
|
|
|
|
251,371
|
|
|
192,602
|
Unrecoverable
Inventory Costs
|
|
|
|
-
|
|
|
76,099
|
Adjusted EBITDA from
continuing operations
|
|
|
$
|
(3,301,839)
|
|
$
|
(102,625)
|
Reconciliation of Adjusted Net Loss and Non-GAAP EPS:
|
|
|
Three months ended
November 30,
|
|
|
|
|
2020
|
|
|
2019
|
Net loss from
continuing operations
|
|
|
$
|
(2,366,469)
|
|
$
|
(599,058)
|
Adjusted
for:
|
|
|
|
|
|
|
|
Bargain purchase
gain
|
|
|
|
82,103
|
|
|
-
|
Income from
discontinued product line
|
|
|
|
(18,852)
|
|
|
(64,270)
|
Transaction fees and
re-organization expenses
|
|
|
|
-
|
|
|
466,707
|
Stock-based
compensation
|
|
|
|
68,549
|
|
|
72,014
|
Unrecoverable
Inventory Costs
|
|
|
|
-
|
|
|
76,099
|
Adjusted net loss
from continuing operations (Non-GAAP)
|
|
$
|
(2,234,669)
|
|
$
|
(48,508)
|
Non-GAAP loss per
fully diluted share
|
|
|
$
|
(0.59)
|
|
$
|
(0.01)
|
|
|
|
|
|
|
|
|
|
|
|
Six months ended
November 30,
|
|
|
|
|
2020
|
|
|
2019
|
Net loss from
continuing operations
|
|
|
$
|
(2,215,810)
|
|
$
|
(821,185)
|
Adjusted
for:
|
|
|
|
|
|
|
|
Bargain purchase
gain
|
|
|
|
(1,189,512)
|
|
|
-
|
Income from
discontinued product line
|
|
|
|
(57,139)
|
|
|
(134,270)
|
Transaction fees and
re-organization expenses
|
|
|
|
125,167
|
|
|
508,681
|
Stock-based
compensation
|
|
|
|
251,371
|
|
|
192,602
|
Unrecoverable
Inventory Costs
|
|
|
|
-
|
|
|
76,099
|
Adjusted net loss
from continuing operations (Non-GAAP)
|
|
$
|
(3,085,923)
|
|
$
|
(178,073)
|
Non-GAAP loss per
fully diluted share
|
|
|
$
|
(0.82)
|
|
$
|
(0.04)
|
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.
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.