PORTLAND, Ore., Oct. 20, 2021
/PRNewswire/ -- Schmitt Industries, Inc. (NASDAQ: SMIT) (the
"Company" or "Schmitt") today announced its operating results for
the fiscal quarter ended August 31,
2021. The operating results for the three months ended
August 31, 2021 and August 30, 2020 include financial results from
Schmitt's July 9, 2020 acquisition of
Ample Hills Creamery ("Ample Hills").
Highlights of the three months ended August 31, 2021
- Consolidated revenues increased $2,251,690, or 149.4%, to $3,759,175, for the three months ended
August 31, 2021, as compared to
$1,507,485 for the three months ended
August 31, 2020.
- Ice Cream Segment revenue increased $2,454,335, or 489.5%, to $2,955,755 for the three months ended
August 31, 2021, as compared to
$501,420 for the three months ended
August 31, 2020. The increase was
primarily due to the inclusion of a partial quarter for the three
months ended August 31, 2020, as the
acquisition occurred on July 9, 2020.
In addition, the Company opened an additional retail location on
May 28, 2021.
- Measurement Segment revenue decreased $202,644, or 20.1%, to $803,420 for the three months ended August 31, 2021 as compared to $1,006,065 for the three months ended
August 31, 2020. The decrease is
primarily driven by a decrease in Acuity and Xact product revenue
of $110,223 and $123,076, respectively. The decline was offset by
an increase in Xact monitoring revenue of $12,253, or 3.2%.
- Gross margin increased to 64.1% for the three months ended
August 31, 2021, as compared to the
three months ended August 31, 2020 of
40.3%. The Company's margin was driven by improved performance in
the Ice Cream Segment due to higher factory utilization and
production efficiencies, as well as a product mix shift in the
Measurement Segment.
- Operating expenses increased $1,910,615, or 85.7%, to $4,139,951 for the three months ended
August 31, 2021, as compared to
$2,229,336 for the three months ended
August 31, 2020. The increase was
primarily due to the inclusion of the Ample Hills business,
acquired in July 2020.
- Net loss was ($1,045,039), or
($0.28), per fully diluted share, for
the three months ended August 31,
2021, compared to net income of $150,659 or $0.04
per fully diluted share, for the three months ended August 31, 2020. The Company's net loss for
the three months ended August 31,
2021 included the forgiveness of a portion of the Company's
Paycheck Protection Program Loan in the amount of $588,534. The Company's net income for the three
months ended August 31, 2020 was
impacted by the acquisition of Ample Hills, including the initial
bargain purchase gain of $1,271, 615,
recorded as a component of other income, and the income tax benefit
of $253,238 on the consolidated
statement of operations.
- The Company finished the quarter ended August 31, 2021 with $2,725,643 in cash, as compared to $4,032,690 for the year ended May 31, 2021.
"This quarter marks Schmitt's first summer season with Ample
Hills Creamery. Although there is still a COVID environment and
some persistent overhangs, the Company has performed well and most
importantly remained safe. This summer has provided a glimpse into
the operating ability of the Company as margins and profitability
improvements are seen in the retail and factory divisions. The
factory equipment upgrades and co-packer volume have further
supported the progress. On the retail side, the stores continue to
perform well with our newest location, Prospect Park West, becoming
our highest performing location. We look to continue this growth
with selective future locations where we can continue to spread joy
to our neighborhoods and further expand our unit economics."
"Our SMS Measurement segment has taken the past months to plan
and prepare for new product launches that we expect to drive
increased product sales. The constrained environment is proving to
be more difficult than anticipated and the team is working multiple
angles to grow our top line while maintaining our costs. We look
forward to sharing more on the progress of our business units at
the annual meeting later this year."
"From a cash management perspective, we had roughly $500k in one-time costs this quarter, spending
aimed specifically at stabilizing our financial and IT system
support structures. Further, we are moving forward on several
fronts to ensure our growth plans remain on track, with our real
estate as a main asset to be monetarized that provides the
foundation for that growth. Although timing is uncertain, we
continue to make progress on the sale of the 28th Avenue
property."
Summary data for the three months August 31, 2021 and August
31, 2020
|
|
Three Months
Ended
|
|
|
|
|
|
|
|
August
31,
|
|
Change
|
|
|
2021
|
|
2020
|
|
$
|
|
%
|
Net sales
|
|
$
|
3,759,175
|
|
|
100.0%
|
|
|
|
$
|
1,507,485
|
|
|
|
100.0%
|
|
|
$
|
2,251,690
|
|
16.7%
|
Gross
margin
|
|
|
64.1%
|
|
|
|
|
|
|
|
40.3%
|
|
|
|
|
|
|
|
|
|
|
Operating
expenses
|
|
$
|
4,139,951
|
|
|
110.1%
|
|
|
|
$
|
2,229,336
|
|
|
|
147.9%
|
|
|
$
|
1,910,615
|
|
85.7%
|
Net (loss)
income
|
|
$
|
(1,045,039)
|
|
|
(27.8%)
|
|
|
|
$
|
150,659
|
|
|
|
10.0%
|
|
|
$
|
1,195,698
|
|
793.4%
|
Net (loss) income per
common share,
diluted
|
|
$
|
(0.28)
|
|
|
|
|
|
|
$
|
0.04
|
|
|
|
|
|
|
$
|
(0.32)
|
|
800.0%
|
Reconciliation of Adjusted EBITDA
|
Three Months Ended
August 31,
|
|
|
|
2021
|
|
|
|
2020
|
|
(Loss) income
before income taxes
|
$
|
(1,041,464)
|
|
|
$
|
(254,008)
|
|
Depreciation
and amortization
|
|
149,478
|
|
|
|
245,481
|
|
EBITDA
|
$
|
(891,986)
|
|
|
$
|
(8,527)
|
|
|
|
|
|
|
|
|
|
Adjusted
for:
|
|
|
|
|
|
|
|
Bargain
purchase gain
|
|
-
|
|
|
|
(1,271,615)
|
|
Stock-based compensation
|
|
26,927
|
|
|
|
182,822
|
|
Income
from discontinued product line
|
|
-
|
|
|
|
(38,287)
|
|
Transaction fees and reorganization expenses
|
|
-
|
|
|
|
125,167
|
|
Adjusted
EBITDA
|
$
|
(865,059)
|
|
|
$
|
(1,010,440)
|
|
Reconciliation of Adjusted Net (Loss) and Non-GAAP
EPS:
|
Three Months Ended
August 31,
|
|
|
|
2021
|
|
|
|
2020
|
|
Net (loss)
income
|
$
|
(1,045,039)
|
|
|
$
|
150,659
|
|
Adjusted
for:
|
|
|
|
|
|
|
|
Bargain purchase
gain
|
|
-
|
|
|
|
(1,271,615)
|
|
Transaction fees and
re-organization expenses
|
|
-
|
|
|
|
125,167
|
|
Stock-based
compensation
|
|
26.927
|
|
|
|
182,254
|
|
Income from discontinued
product line
|
|
-
|
|
|
|
(38,287)
|
|
Tax effect of
adjustments
|
|
6,732
|
|
|
$
|
(250,478)
|
|
Adjusted (loss)
(Non-GAAP)
|
$
|
(1,011,380)
|
|
|
|
(1,101,732)
|
|
Non-GAAP (loss) per
fully diluted share
|
$
|
(0.27)
|
|
|
$
|
(0.29)
|
|
Use of Non-GAAP Financial Measures by Schmitt
Industries
This release presents the non-GAAP financial measures "Adjusted
EBITDA", "Adjusted net loss (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 is a holding company owning subsidiaries engaged in
diverse business activities. The Company was originally
incorporated under the laws of British
Columbia, Canada, in 1984 and was reincorporated under the
laws of the State of Oregon in
1995. Schmitt's operating businesses include propane tank
monitoring solutions, precision measurement solutions and ice cream
production and distribution. The Company operates as two reportable
segments: the Measurement Segment ("SMS") and the Ice Cream
Segment, which is comprised of 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.