PORTLAND, Ore., Jan. 11, 2011 (GLOBE NEWSWIRE) -- Schmitt Industries, Inc. (Nasdaq:SMIT) today announced its operating results for the second quarter and the first half of Fiscal 2011. Sales for the three months ended November 30, 2010 increased 51.6% to $2,914,447 compared to $1,921,861 for the same period last year. Net income for the second quarter ended November 30, 2010 was $40,892, or $.01 per fully diluted share, compared to net loss of $223,646, or $.08 per fully diluted share, for the same period last year. For the first six months of Fiscal 2011 ended November 30, 2010, sales increased 69.1% to $5,318,914 from $3,145,095 for the six months ended November 30, 2009. The net loss decreased $726,910 to a net loss of $71,733 for the six months ended November 30, 2010 from a net loss of $798,643 for the six months ended November 30, 2009.
Sales in the SBS Balancer segment increased 42.8% to $1,972,050 in the second quarter of Fiscal 2011 compared to $1,380,693 in the second quarter of Fiscal 2010. Sales in the SMS Measurement segment also increased 74.1% to $942,397 for the three months ended November 30, 2010 compared to $541,168 for the same period last year. For the six months ended November 30, 2010, sales in the SBS Balancer segment increased 54.7% to $3,499,467 from $2,262,815 for the same period in the prior year. Sales in the SMS Measurement segment increased 106.2% to $1,819,447 for the six months ended November 30, 2010 from $882,280 for the six months ended November 30, 2009. Sales of the Company's balancer and laser-based measurement products increased from prior periods due to higher volumes of shipments resulting from improvements in the worldwide manufacturing, industrial and commercial markets for our products.
Gross margins for the second quarter of Fiscal 2011 remained relatively flat at 49.0% as compared to 49.1% for the same period last year. Gross margins for the six months ended November 30, 2010 increased slightly to 47.5% from 47.4% for the six months ended November 30, 2009. This increase is primarily due to changes in the product sales mix shifting towards higher margin products and higher production volumes resulting in improved absorption of labor and overhead. Operating expenses increased 19.8% to $1,389,528 during the three months ended November 30, 2010 as compared to $1,159,777 for the same period in the prior year. Operating expenses increased 13.6% to $2,605,676 for the six months ended November 30, 2010 from $2,293,528 for the six months ended November 30, 2009. This increase is primarily due to higher commissions related to the increase in sales and higher expenses associated with an international trade show that occurs every two years.
"We are pleased with the increase in sales we are seeing across both business segments and the return to profitability. This is also the third consecutive quarter in which we have experienced sales increases in both our SBS Balancer and SMS Measurement segments on a quarter over quarter as well as a sequential basis," commented Wayne A. Case, CEO of Schmitt Industries.
"As our financial results indicate, we are seeing a gradual recovery in our markets after a long period of decline. During this time period, we have been careful with our expenditures, focusing our resources on new product development and enhancing our sales organization and distribution channel. We believe that we are starting to see the positive results of those investments coupled with the improvement in general market conditions," commented James A. Fitzhenry, President of Schmitt Industries. "We have worked hard to return the Company to profitability and we will continue to strive to increase profitability in the near term while positioning the Company for long-term growth," Fitzhenry concluded.
About Schmitt Industries
Schmitt Industries, Inc. designs, manufactures and markets computer-controlled vibration detection and balancing equipment (the Balancer segment) primarily to the machine tool industry. Through its wholly owned subsidiary, Schmitt Measurement Systems, Inc., the Company designs, manufactures and markets precision laser-based surface measurement products for a wide variety of commercial applications in addition to the disk drive, silicon wafer and optics industries; laser-based distance measurement products for a wide variety of industrial applications; and ultrasonic measurement products that accurately measure the fill levels of large liquefied propane tanks and transmit that data via satellite to a secure web site (the Measurement segment). The Company also sells and markets its products in Europe through its wholly owned subsidiary, Schmitt Europe Ltd. located in the United Kingdom.
FORWARD-LOOKING STATEMENTS
Certain statements in this release, including but not limited to remarks by Wayne Case and Jim Fitzhenry, are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such 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. Therefore, 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 the uncertainties of the Company's new product introductions, the risks of increased competition and technological change in the Company's industry and other factors detailed in the Company's SEC filings. In addition, such statements could be affected by general industry and market conditions and growth rates, and general domestic and international economic conditions. Such forward-looking statements 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) | ||
| November 30, 2010 | May 31, 2010 | |
| ASSETS | ||
| Current assets | ||
| Cash and cash equivalents | $ 3,207,848 | $ 3,545,986 |
|
Accounts receivable, net of allowance of $21,381 and $23,387 at November 30, 2010 and May 31, 2010, respectively |
1,559,384 | 1,144,420 |
| Inventories | 3,770,308 | 3,645,303 |
| Prepaid expenses | 193,502 | 192,167 |
| Income taxes receivable | 22,920 | 21,570 |
| 8,753,962 | 8,549,446 | |
| Property and equipment | ||
| Land | 299,000 | 299,000 |
| Buildings and improvements | 1,571,868 | 1,564,880 |
| Furniture, fixtures and equipment | 1,084,689 | 1,059,496 |
| Vehicles | 90,452 | 90,452 |
| 3,046,009 | 3,013,828 | |
| Less accumulated depreciation and amortization | (1,814,033) | (1,720,880) |
| 1,231,976 | 1,292,948 | |
| Other assets | ||
| Intangible assets | 1,425,457 | 1,509,711 |
| TOTAL ASSETS | $ 11,411,395 | $ 11,352,105 |
| LIABILITIES & STOCKHOLDERS' EQUITY | ||
| Current liabilities | ||
| Accounts payable | $ 735,927 | $ 665,044 |
| Accrued commissions | 254,907 | 170,614 |
| Accrued payroll liabilities | 154,439 | 231,390 |
| Other accrued liabilities | 182,274 | 160,717 |
| Total current liabilities | 1,327,547 | 1,227,765 |
| Long-term liabilities | -- | 3,591 |
| Stockholders' equity | ||
|
Common stock, no par value, 20,000,000 shares authorized, 2,894,802 shares issued and outstanding at both November 30, 2010 and May 31, 2010 |
9,758,569 | 9,739,391 |
| Accumulated other comprehensive loss | (248,350) | (264,004) |
| Retained earnings | 573,629 | 645,362 |
| Total stockholders' equity | 10,083,848 | 10,120,749 |
| TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $ 11,411,395 | $ 11,352,105 |
| SCHMITT INDUSTRIES, INC. | ||||
| CONSOLIDATED STATEMENTS OF OPERATIONS | ||||
| FOR THE THREE AND SIX MONTHS ENDED NOVEMBER 30, 2010 AND 2009 | ||||
| (UNAUDITED) | ||||
| Three Months Ended November 30, | Six Months Ended November 30, | |||
| 2010 | 2009 | 2010 | 2009 | |
| Net sales | $ 2,914,447 | $ 1,921,861 | $ 5,318,914 | $ 3,145,095 |
| Cost of sales | 1,485,596 | 978,914 | 2,790,317 | 1,653,059 |
| Gross profit | 1,428,851 | 942,947 | 2,528,597 | 1,492,036 |
| Operating expenses: | ||||
| General, administration and sales | 1,276,286 | 1,032,282 | 2,383,736 | 1,992,989 |
| Research and development | 113,242 | 127,495 | 221,940 | 300,539 |
| Total operating expenses | 1,389,528 | 1,159,777 | 2,605,676 | 2,293,528 |
| Operating income (loss) | 39,323 | (216,830) | (77,079) | (801,492) |
| Other income (expense) | 5,156 | 5,468 | (166) | 15,133 |
| Income (loss) before income taxes | 44,479 | (211,362) | (77,245) | (786,359) |
| Provision (benefit) for income taxes | 3,587 | 12,284 | (5,512) | 12,284 |
| Net income (loss) | $ 40,892 | $ (223,646) | $ (71,733) | $ (798,643) |
| Earnings (loss) per common share: | ||||
| Basic | $ 0.01 | $ (0.08) | $ (0.02) | $ (0.28) |
| Weighted average number of common shares, basic | 2,894,802 | 2,886,949 | 2,894,802 | 2,878,509 |
| Diluted | $ 0.01 | $ (0.08) | $ (0.02) | $ (0.28) |
| Weighted average number of common shares, diluted | 2,948,102 | 2,886,949 | 2,894,802 | 2,878,509 |