Document Entity Information
Document Entity Information - USD ($) | 12 Months Ended | ||
Dec. 31, 2018 | Mar. 05, 2019 | Jun. 30, 2018 | |
Document Entity Information | |||
Document Type | 10-K | ||
Amendment Flag | false | ||
Document Period End Date | Dec. 31, 2018 | ||
Document Fiscal Year Focus | 2018 | ||
Document Fiscal Period Focus | FY | ||
Entity Registrant Name | SMITH MIDLAND CORP | ||
Entity Central Index Key | 0000924719 | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Filer Category | Non-accelerated Filer | ||
Entity Emerging Growth Company | false | ||
Entity Small Business | true | ||
Entity Shell Company | false | ||
Is Entity a Well-known Seasoned Issuer? | No | ||
Is Entity a Voluntary Filer? | No | ||
Is Entity's Reporting Status Current? | Yes | ||
Entity Common Stock, Shares Outstanding | 5,134,492 | ||
Entity Public Float | $ 22,936,322 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Thousands | Dec. 31, 2018 | Dec. 31, 2017 |
Current assets | ||
Cash | $ 1,946 | $ 3,390 |
Investment securities, available-for-sale, at fair value | 1,107 | 1,098 |
Accounts receivable, net | ||
Trade - billed (less allowance for doubtful accounts of $214 and $208) | 12,281 | 8,967 |
Trade - unbilled | 1,313 | 251 |
Inventories, net | ||
Raw materials | 1,005 | 819 |
Finished goods | 2,555 | 2,696 |
Prepaid expenses and other assets | 480 | 452 |
Refundable income taxes | 909 | 1,359 |
Total current assets | 21,596 | 19,032 |
Property and equipment, net | 14,102 | 9,867 |
Deferred buy-back lease asset, net | 5,304 | 0 |
Other assets | 367 | 326 |
Total assets | 41,369 | 29,225 |
Current liabilities | ||
Accounts payable - trade | 4,212 | 3,059 |
Accrued expenses and other liabilities | 610 | 588 |
Deferred revenue | 1,683 | 1,144 |
Accrued compensation | 1,556 | 1,231 |
Dividend payable | 281 | 256 |
Line-of-credit construction draw | 1,000 | 0 |
Current maturities of notes payable | 711 | 637 |
Customer deposits | 1,658 | 919 |
Total current liabilities | 11,711 | 7,834 |
Deferred buy-back lease | 6,592 | 0 |
Notes payable - less current maturities | 2,792 | 2,896 |
Deferred tax liability | 1,427 | 1,290 |
Total liabilities | 22,522 | 12,020 |
Commitments and contingencies | ||
Stockholders' equity | ||
Preferred stock, $.01 par value; authorized 1,000,000 shares, none issued and outstanding | 0 | 0 |
Common stock, $.01 par value; authorized 8,000,000 shares; 5,223,245 and 5,214,148 issued and 5,112,825 and 5,047,895 outstanding, respectively | 51 | 51 |
Additional paid-in capital | 5,973 | 5,719 |
Treasury stock, at cost, 40,920 shares | (102) | (102) |
Accumulated other comprehensive loss | (37) | (19) |
Retained earnings | 12,962 | 11,556 |
Total stockholders' equity | 18,847 | 17,205 |
Total liabilities and stockholders' equity | $ 41,369 | $ 29,225 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands | Dec. 31, 2018 | Dec. 31, 2017 |
Current assets | ||
Allowance for doubtful accounts | $ 214 | $ 208 |
Stockholders' equity | ||
Preferred stock, par value | $ 0.01 | $ 0.01 |
Preferred stock, shares authorized | 1,000,000 | 1,000,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Common stock, par value | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 8,000,000 | 8,000,000 |
Common stock, shares issued | 5,223,245 | 5,214,148 |
Common stock, shares outstanding | 5,112,825 | 5,047,895 |
Treasury shares | 40,920 | 40,920 |
Consolidated Statements of Inco
Consolidated Statements of Income - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Revenue | ||
Total revenue | $ 40,220 | $ 41,717 |
Cost of goods sold | 29,730 | 30,253 |
Gross profit | 10,490 | 11,464 |
General and administrative expenses | 5,675 | 5,253 |
Selling expenses | 2,599 | 2,496 |
Total operating expenses | 8,274 | 7,749 |
Operating income | 2,216 | 3,715 |
Other income (expense) | ||
Interest expense | (176) | (184) |
Interest income | 42 | 37 |
Gain on sale of assets | 126 | 51 |
Other income | 51 | 122 |
Total other income (expense) | 43 | 26 |
Income before income tax expense | 2,259 | 3,741 |
Income tax expense | 572 | 1,057 |
Net income | $ 1,687 | $ 2,684 |
Basic earnings per share | $ 0.33 | $ 0.53 |
Diluted earnings per share | $ 0.33 | $ 0.53 |
Product sales | ||
Revenue | ||
Total revenue | $ 29,159 | $ 29,055 |
Barrier rentals | ||
Revenue | ||
Total revenue | 1,729 | 4,267 |
Royalties | ||
Revenue | ||
Total revenue | 1,675 | 1,885 |
Shipping and installation | ||
Revenue | ||
Total revenue | $ 7,657 | $ 6,510 |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | ||
Statement of Comprehensive Income [Abstract] | |||
Net income | $ 1,687 | $ 2,684 | |
Other comprehensive income (loss), net of tax: | |||
Net unrealized holding income (loss) | [1] | (18) | 6 |
Comprehensive income | $ 1,669 | $ 2,690 | |
[1] | Net unrealized income (loss) on available for sale securities are shown net of income tax (benefit) expense of ($6) and $10 for the years ended December 31, 2018 and 2017, respectively. |
Consolidated Statements of Co_2
Consolidated Statements of Comprehensive Income (Parenthetical) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Statement of Comprehensive Income [Abstract] | ||
Unrealized income (loss) on securities arising during period, tax | $ (6) | $ 10 |
Consolidated Statements of Stoc
Consolidated Statements of Stockholders' Equity - USD ($) $ in Thousands | Common Stock | Additional Paid-in Capital | Treasury Stock | Accumulated Other Comprehensive Loss | Retained Earnings | Total |
Balance, beginning of period at Dec. 31, 2016 | $ 50 | $ 5,192 | $ (102) | $ (25) | $ 9,128 | $ 14,243 |
Accrued dividends payable | (256) | (256) | ||||
Net unrealized holding gain (loss) | 6 | 6 | ||||
Proceeds from options exercised | 1 | 116 | 117 | |||
Vesting of restricted stock | 411 | 411 | ||||
Net income | 2,684 | 2,684 | ||||
Balance, end of period at Dec. 31, 2017 | 51 | 5,719 | (102) | (19) | 11,556 | 17,205 |
Accrued dividends payable | (281) | (281) | ||||
Net unrealized holding gain (loss) | (18) | (18) | ||||
Proceeds from options exercised | 12 | 12 | ||||
Vesting of restricted stock | 242 | 242 | ||||
Net income | 1,687 | 1,687 | ||||
Balance, end of period at Dec. 31, 2018 | $ 51 | $ 5,973 | $ (102) | $ (37) | $ 12,962 | $ 18,847 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Reconciliation of net income to net cash provided by operating activities | ||
Net income | $ 1,687 | $ 2,684 |
Adjustments to reconcile net income to net cash provided by operating activities | ||
Depreciation and amortization | 1,247 | 926 |
Allowance for doubtful accounts | 6 | (139) |
Gain on sale of fixed assets | (126) | (51) |
Stock compensation | 243 | 411 |
Deferred taxes | 137 | 526 |
(Increase) decrease in | ||
Accounts receivable - billed | (3,320) | (1,640) |
Accounts receivable - unbilled | (1,063) | 20 |
Inventories | (45) | (937) |
Refundable income taxes | 450 | (1,107) |
Prepaid expenses and other assets | (114) | (285) |
Increase (decrease) in | ||
Accounts payable - trade | 1,153 | 969 |
Accrued expenses and other liabilities | 22 | 294 |
Deferred revenue | 539 | 420 |
Accrued compensation | 326 | 347 |
Deferred buy-back lease obligation | 6,592 | 0 |
Customer deposits | 738 | 488 |
Net cash provided by operating activities | 8,472 | 2,926 |
Cash Flows From Investing Activities | ||
Purchases of investment securities available-for-sale | (33) | (32) |
Purchases of property and equipment | (5,234) | (2,741) |
Deferred buy-back lease asset | (5,507) | 0 |
Proceeds from sale of fixed assets | 132 | 46 |
Net cash absorbed by investing activities | (10,642) | (2,727) |
Cash Flows From Financing Activities | ||
Proceeds from the line-of-credit construction draw | 1,000 | 0 |
Proceeds from long-term borrowings | 630 | 184 |
Repayments of long-term borrowings | (660) | (584) |
Dividends paid on common stock | (256) | (49) |
Proceeds from options exercised | 12 | 117 |
Net cash provided by or (absorbed by) financing activities | 726 | (332) |
Net decrease in cash | (1,444) | (133) |
Cash, beginning of year | 3,390 | 3,523 |
Cash, end of year | 1,946 | 3,390 |
Cash payments for interest | 176 | 184 |
Cash payments for income taxes | $ 0 | $ 1,292 |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2018 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | Nature of Business Smith-Midland Corporation and its wholly-owned subsidiaries (the “Company”) develop, manufacture, license, sell and install precast concrete products for the construction, transportation and utilities industries in the Mid-Atlantic, Northeastern, Midwestern and Southeastern regions of the United States. Principles of Consolidation The accompanying consolidated financial statements include the accounts of Smith-Midland Corporation and its wholly-owned subsidiaries. The Company’s wholly-owned subsidiaries consist of Smith-Midland Corporation, a Virginia corporation, Smith-Carolina Corporation, a North Carolina corporation, Smith-Columbia Corporation, a South Carolina corporation, Easi-Set Industries, Inc., a Virginia corporation, Concrete Safety Systems, Inc., a Virginia corporation, and Midland Advertising and Design, Inc., doing business as Midland Advertising + Design, a Virginia corporation. All material intercompany accounts and transactions have been eliminated in consolidation. Cash The Company considers all unrestricted cash and money market accounts purchased with an original or remaining maturities of three months or less as cash. Investments Investments in marketable securities are classified as available-for-sale and are stated at market value with unrealized holding gains and losses excluded from earnings and reported as a separate component of stockholders' equity until realized. Inventories Inventories are stated at the lower of cost, using the first-in, first-out (FIFO) method, or net realizable value. Inventory reserves (in thousands) were approximately $65 and $39 at December 31, 2018 and 2017, respectively. Property and Equipment Property and equipment is stated at cost. Expenditures for ordinary maintenance and repairs are charged to income as incurred. Costs of betterments, renewals, and major replacements are capitalized. At the time properties are retired or otherwise disposed of, the related cost and allowance for depreciation are eliminated from the accounts and any gain or loss on disposition is reflected in income. Depreciation is computed using the straight-line method over the following estimated useful lives: Years Buildings 10-40 Trucks and automotive equipment 3-10 Shop machinery and equipment 3-10 Land improvements 10-15 Rental equipment 5-10 Office equipment 3-10 Income Taxes Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. As of December 31, 2018, the Company has not identified any uncertain tax positions. The Company files tax returns in the U.S. Federal and various state jurisdictions. The Company recognizes, when applicable, interest and penalties related to income taxes in other income (expense) in its consolidated statement of income. The Company is no longer subject to U.S. or state tax examinations for the years prior to 2015. The Company does not believe there will be any material changes in unrecognized tax positions over the next twelve months. Stock Compensation On October 13, 2016, the Board of Directors of the Company adopted the 2016 Equity Incentive Plan which allows the Company to grant up to 400,000 shares of common stock of the Company to employees, officers, directors and consultants. The grants may be in the form of restricted or performance shares of common stock of the Company. The fair value of each restricted stock grant is estimated to be the sales price of the common stock at the close of business on the day of the grant. Revenue Recognition Product Sales - Over Time Under Topic 606, the Company recognizes revenue to depict the transfer of goods or services to customers in an amount that reflects the consideration the Company expects to be entitled to in exchange for goods or services provided. Revenue associated with contracts with customers is recognized over time as the Company's performance creates or enhances customer controlled assets or creates or enhances an asset with no alternative use, which the Company has an enforceable right to receive compensation as defined under the contract for performance completed. To determine the amount of revenue to recognize over time, the Company recognizes revenue over the contract terms based on the output method. The Company applied the "as invoiced" practical expedient as the amount of consideration the Company has the right to invoice corresponds directly with the value of the Company's performance to date. As the output method is driven by units produced, the Company recognizes revenues based on the value transferred to the customer relative to the remaining value to be transferred. The Company also matches the costs associated with the units produced. If a contract is projected to result in a loss, the entire contract loss is recognized in the period when the loss was first determined and the amount of the loss updated in subsequent reporting periods. Revenue recognition also includes an amount related to a contract asset or contract liability. If the recognized revenue is greater than the amount billed to the customer, a contract asset is recorded in accounts receivable - unbilled. Conversely, if the amount billed to the customer is greater than the recognized revenue, a contract liability is recorded in customer deposits on uncompleted contracts. Changes in the job performance, job conditions and final contract settlements are factors that influence management’s assessment of total contract value and therefore, profit and revenue recognition. A portion of the work the Company performs requires financial assurances in the form of performance and payment bonds or letters of credit at the time of execution of the contract. Some contracts include retention provisions of up to 10% which are generally withheld from each progress payment as retainage until the contract work has been completed and approved. Product Sales - Point in Time For certain product sales that do not meet the over time criteria, under Topic 606 the Company recognizes revenue when the product has been shipped to the destination in accordance with the terms outlined in the contract where a present obligation to pay exists as the customers have gained physical possession of the product. Accounts Receivable and Contract Balances The timing of when we bill our customers is generally dependent upon advance billing terms, milestone billings based on the completion of certain phases of the work, or when services are provided or products are shipped. Projects with performance obligations recognized over time that have costs and estimated earnings recognized to date in excess of cumulative billings, are reported on our Condensed Consolidated Balance Sheets as "Accounts receivable trade - unbilled" (i.e. contract assets). Projects with performance obligations recognized over time that have cumulative billings in excess of costs and estimate earnings recognized to date, are reported on our Condensed Consolidated Balance Sheets as "Customer deposits" (i.e. contract liabilities). Any uncollected billed amounts for our performance obligations recognized over time, including contract retentions, are recorded within accounts receivable trade - billed. At December 31, 2018 and December 31, 2017, accounts receivable included contract retentions (in thousands) of approximately $1,704 and $1,065, respectively. Our billed and unbilled revenue may be exposed to potential credit risk if our customers should encounter financial difficulties, and we maintain reserves for specifically-identified potential uncollectible receivables. At December 31, 2018 and December 31, 2017, our allowances for doubtful accounts (in thousands) were $214 and $208, respectively. Effect of Adopting ASC Topic 606 No adjustment to beginning 2018 retained earnings was recorded as a result of our adoption of Topic 606 due to no changes in the methods and/or timing of our revenue recognition for our uncompleted contracts. Further, the difference in our results for 2018 between application of the new standard on our contracts and what results would have been if such contracts had been reported using the accounting standards previously in effect, for such contracts, did not change. Sale to Customer with a Buy-Back Guarantee The Company entered into a buy-back agreement with one specific customer. Under this agreement, the Company guaranteed to buy-back product at a predetermined price at the end of the long-term project, subject to the condition of the product. Although the Company receives payment in full as the product is produced, we are required to account for these transactions as operating leases. The amount of sale proceeds equal to the buy-back obligation, included in "Deferred buy-back lease obligation" in the liabilities section of the consolidated balance sheet, is deferred until the buy-back is exercised or expired. The remaining sale proceeds are deferred in the same account and recognized on a straight-line basis over the usage period, such usage period commencing on delivery to the job-site and ending at the time the buy-back is exercised or expired. The Company capitalizes the cost of the product on the consolidated balance sheet shown in "Deferred buy-back lease asset, net", and depreciates the value, less residual value, to cost of leasing revenue in "Cost of goods sold" over the estimated useful life of the asset. In the case the customer does not exercise the buy-back option and retains ownership of the product at the end of the usage period, the guarantee buy-back liability and any deferred revenue balances related to the product are settled to revenue, and the net book value of the asset is expensed to cost of leasing revenue. If the customer exercises the buy-back guarantee option, the Company purchases the product back in the amount equal to the buy-back guarantee, we settle any remaining deferred balances, in excess of the buy-back payment, to leasing revenue, and we reclassify the net book value of the product on the consolidated balance sheet to "Inventories" or "Property and equipment, net" depending on the intended use at the time. The revenue is being recognized in accordance with Topic 840, Leases Barrier Rentals - Leasing Fees Leasing fees are paid by customers at the beginning of the lease agreement and are recorded as deferred revenue. The deferred revenue is then recognized each month as lease income for the duration of the lease, in accordance with Topic 840, Leases. Royalty Income The Company licenses certain products to other precast companies to produce the Company's products to engineering specifications under the licensing agreements. The agreements are typically for five year terms and require royalty payments from 4% to 6% of total sales of licensed products, which are paid on a monthly basis. The revenues from licensing agreements are recognized in the month earned, in accordance with Topic 606-10-55-65. Shipping and Installation Shipping and installation revenues are recognized as a distinct performance obligation in the period the shipping and installation services are provided to the customer, in accordance with Topic 606. Disaggregation of Revenue In the following table, revenue is disaggregated by primary sources of revenue (in thousands): Revenue by Type 2018 2017 Change % of Change Product Sales: Soundwall Sales $ 9,867 $ 7,571 $ 2,296 30.3 % Architectural Sales 876 829 47 5.7 % Slenderwall Sales 5,572 2,048 3,524 172.1 % Miscellaneous Sales 1,760 2,793 (1,033 ) (37.0 )% Barrier Sales 7,264 11,276 (4,012 ) (35.6 )% Easi-Set and Easi-Span Building Sales 2,114 2,484 (370 ) (14.9 )% Utility and Farm Product Sales 1,232 1,492 (260 ) (17.4 )% Miscellaneous Product Sales 474 562 (88 ) (15.7 )% Total Product Sales 29,159 29,055 104 0.4 % Barrier Rentals 1,729 4,267 (2,538 ) (59.5 )% Royalty Income 1,675 1,885 (210 ) (11.1 )% Shipping and Installation 7,657 6,510 1,147 17.6 % Total Service Revenue 11,061 12,662 (1,601 ) (12.6 )% Total Revenue $ 40,220 $ 41,717 $ (1,497 ) (3.6 )% Warranties Smith-Midland products are typically sold pursuant to an implicit warranty as to merchantability only. Warranty claims are reviewed and resolved on a case by case method. Although the Company does incur costs for these types of expense, historically the amount of expense is minimal. Sales and Use Taxes Use taxes on construction materials are reported gross in cost of goods sold. Segment Reporting Operating segments are defined as components of an enterprise for which separate financial information is available and evaluated regularly by the chief operating decision maker, or decision making group, in deciding how to allocate resources and assess performance. The Company currently operates in one operating and reportable business segment for financial reporting purposes. Reclassifications of Certain Items Included within Comparable Prior Year Periods Certain minor reclassifications have been made to prior year amounts to conform to current year presentation. Use tax was reclassified to Cost of goods sold from General and administrative expenses on the Condensed Consolidated Statements of Operations for the year ending December 31, 2017 of $117. There was no impact to net income for the period. Risks and Uncertainties The Company sells products to highway contractors operating under government funded highway programs and other customers and extends credit based on an evaluation of the customer’s financial condition, generally without requiring collateral. Exposure to losses on receivables is principally dependent on each customer’s financial condition. The Company monitors its exposure to credit losses and maintains allowances for anticipated losses. Management reviews accounts receivable on a weekly basis to determine the probability of collection. In performing this evaluation, the Company analyzes the payment history and its significant past due accounts, subsequent cash collections on these accounts and comparative accounts receivable aging statistics. Based on this information, along with other related factors, the Company develops what it considers to be a reasonable estimate of the uncollectible amounts included in accounts receivable. Management believes the allowance for doubtful accounts at December 31, 2018 is adequate. However, actual write-offs may exceed the recorded allowance. Due to inclement weather, the Company may experience reduced revenue from December through February and may realize the substantial part of its revenue during the other months of the year. Fair Value of Financial Instruments The carrying value for each of the Company’s financial instruments (consisting of cash and cash equivalents, accounts receivable, accounts payable and short-term line of credit) approximates fair value because of the short-term nature of those instruments. The estimated fair value of the long-term debt approximates carrying value based on current rates offered to the Company for debt of the similar maturities. Estimates The preparation of financial statements in conformity with U.S. generally accepted accounting (U.S. GAAP) principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. Advertising Costs The Company expenses all advertising costs as incurred. Advertising expense (in thousands) was approximately $384 and $404 in 2018 and 2017, respectively. Earnings Per Share Earnings per share are based on the weighted average number of shares of common stock and dilutive common stock equivalents outstanding. Basic earnings per share is computed by dividing income available to common shareholders by the weighted average number of common shares outstanding for the period. Diluted earnings per share reflect the potential dilution of securities that could share in earnings of the Company. Long-Lived Assets The Company reviews the carrying values of its long-lived and identifiable intangible assets for possible impairment whenever events or changes in circumstances indicate that the carrying amount of assets may not be recoverable based on undiscounted estimated future operating cash flows. When any such impairment exists, the related assets will be written down to fair value. No impairment losses have been recorded through December 31, 2018. Recent Accounting Pronouncement Leases. In 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2016-02, “Leases (Topic 842).” Topic 842 establishes a new lease accounting model for leases. The most significant changes include the clarification of the definition of a lease, the requirement for lessees to recognize for all leases a right-of-use asset and a lease liability in the consolidated balance sheet, and additional quantitative and qualitative disclosures which are designed to give financial statement users information on the amount, timing, and uncertainty of cash flows arising from leases. Expenses are recognized in the consolidated statement of income in a manner similar to current accounting guidance. Lessor accounting under the new standard is substantially unchanged. We adopted this standard, and all related amendments thereto, effective January 1, 2019, using a prospective transition approach, which applies the provisions of the new guidance at the effective date without adjusting the comparative periods presented. We have elected the package of practical expedients permitted under the transition guidance within the new standard, which among other things, allows us to carry forward the historical accounting relating to lease identification and classification for existing leases upon adoption. We are finalizing our evaluation of the impacts that the adoption of this accounting guidance will have on the consolidated financial statements and estimate approximately $400 of right-of-use assets and liabilities will be recognized in our consolidated balance sheet upon adoption. |
Property and Equipment
Property and Equipment | 12 Months Ended |
Dec. 31, 2018 | |
Property, Plant and Equipment [Abstract] | |
Property and Equipment | Property and equipment consists of the following (in thousands): December 31, 2018 2017 Land and land improvements $ 2,452 $ 1,538 Buildings 6,949 5,394 Machinery and equipment 12,709 10,913 Rental equipment 3,659 2,763 25,769 20,608 Less: accumulated depreciation and amortization (11,667 ) (10,741 ) $ 14,102 $ 9,867 Depreciation expense and amortization (in thousands) was approximately $1,247 and $926 for the years ended December 31, 2018 and 2017, respectively. |
Notes Payable
Notes Payable | 12 Months Ended |
Dec. 31, 2018 | |
Notes Payable [Abstract] | |
Notes Payable | Notes payable consist of the following (in thousands): December 31, 2018 2017 Note payable to a Bank, maturing September 2021; with monthly payments of approximately $26 of principal and interest fixed at 3.99%; collateralized by principally all assets of the Company. $ 799 $ 1,071 Note payable to a Bank, maturing July 2031; with monthly payments of approximately $11 of principal and interest fixed at 5.29%; collateralized by principally all assets of Smith-Columbia Corporation and guaranteed by Smith-Midland Corporation. 1,169 1,234 Note payable to a Bank, maturing April 2021; with monthly payments of approximately $6.2 of principal and interest at prime at variable rate (5.29% at December 31, 2018 and 2017); collateralized by certain property of the Company. 163 227 Construction loan draw on-line-of-credit for the North Carolina Expansion, which is part of the $4,000 line-of-credit listed below 1,000 — Installment notes, collateralized by certain machinery and equipment maturing at various dates, primarily through 2021; with monthly payments varying from $0.3 to $4.1 with weighted average interest at 4.7% and 4.2% at December 31, 2018 and 2017, respectively. 1,372 1,001 A revolving line-of-credit evidenced by a note payable to a Bank, with the maximum amount of $4,000, maturing October 1, 2019, with interest only payments and an initial rate of 5.00% adjustable monthly (5.50% at December 31, 2018). The line-of-credit is collateralized by a first lien position on the Company's accounts receivable and inventory and a second lien position on all other business assets. — — 4,503 3,533 Less current maturities 1,711 637 $ 2,792 $ 2,896 The Company’s note payable, which matures in September 2021, with a balance (in thousands) of $799 at December 31, 2018, is secured by all of the assets of the Company. The commitment letter provided by the bank dated September 18, 2018 includes certain restrictive covenants, which require the Company to maintain minimum levels of tangible net worth, places limits on annual capital expenditures and the payment of cash dividends. At December 31, 2018, the Company was in compliance with all covenants pursuant to the loan agreement, with the increase in the annual capital expenditures limit from $1,500 to $3,500, excluding acquisitions and plant expansions, during the year ended December 31, 2017 and for subsequent years. The aggregate amounts of notes payable maturing in each of the next five years and thereafter are as follows (in thousands): Year Ending December 31, 2019 $ 1,711 2020 737 2021 577 2022 271 2023 216 Thereafter 991 $ 4,503 The construction loan draw on the line-of-credit is expected to be refinanced to long term debt. Financing is expected to be secured in the second quarter of 2019, and at that time the $1,000 will be converted to a long-term note payable. |
Related Party Transactions
Related Party Transactions | 12 Months Ended |
Dec. 31, 2018 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | The Company currently leases a portion of its Midland, Virginia property from its Chairman of the Board, on a month-to-month basis, as additional storage space for the Company's finished work product. The lease agreement calls for an annual rent of $24,000. The Company has an employment agreement with its former CEO and current Chairman of the Board. The agreement provides for an annual base salary of $99,000 and an annual royalty fee of $99,000 payable as consideration for his assignment to the Company of all of his rights, title and interest in certain patents. Payment of the royalty continues for as long as the Company is using the inventions underlying the patents. In the event the employment by the Company ceases as a result of the (i) death, his estate shall be entitled to a lump sum payment of one times the combined Base Salary and bonus, and certain other accrued and unpaid amounts, or (ii) disability, he shall be entitled to Base Salary and bonus for a period of one year commencing with the date of termination, and all other unpaid accrued amounts. Due to health issues and the former CEO's relinquishment of his executive officer position, and his continued employment on a part-time basis, the Company has determined to compensate the former CEO in the manner provided for in the case of disability until September 2019. |
Income Taxes
Income Taxes | 12 Months Ended |
Dec. 31, 2018 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income tax expense is comprised of the following (in thousands): December 31, 2018 2017 Federal: Current $ 230 $ 455 Deferred 223 421 453 876 State: Current 58 76 Deferred 61 105 119 181 $ 572 $ 1,057 The provision for income taxes differs from the amount determined by applying the federal statutory tax rate to pre-tax income as a result of the following (in thousands): December 31, 2018 2017 Income taxes at statutory rate $ 474 21.0 % $ 1,269 34.0 % Increase (decrease) in taxes resulting from: State income taxes, net of federal benefit 89 4.0 % 136 3.6 % Deferred true-ups 58 2.6 % 161 4.3 % Provision-to-return (19 ) (0.8 )% 152 4.1 % Rate reduction — — % (664 ) (17.8 )% Other (30 ) (1.5 )% 3 0.1 % $ 572 25.3 % $ 1,057 28.3 % Deferred tax assets (liabilities) are as follows (in thousands): December 31, 2018 2017 Depreciation $ (1,667 ) $ (1,185 ) Unrealized losses on investments available for sale (9 ) 5 Retainage (425 ) (264 ) Allowance for doubtful accounts 53 52 Prepaid expenses (78 ) (98 ) Vacation accrued 78 67 Deferred income 321 — State NOL carryforward 26 48 UNICAP 105 — Other 169 85 Net deferred tax liability $ (1,427 ) $ (1,290 ) |
Employee Benefit Plans
Employee Benefit Plans | 12 Months Ended |
Dec. 31, 2018 | |
Defined Benefit Plan [Abstract] | |
Employee Benefit Plans | The Company has a savings plan that qualifies under Section 401(k) of the Internal Revenue Code ("IRC"). Participating employees may elect to contribute a percentage of their salary, subject to certain limitations. The Company contributes 50% of the participant's contribution, up to 4% of the participant's compensation, as a matching contribution. Total match contributions (in thousands) by the Company for the years ended December 31, 2018 and 2017 were approximately $148 and $140, respectively. |
Stock Compensation
Stock Compensation | 12 Months Ended |
Dec. 31, 2018 | |
Compensation Related Costs [Abstract] | |
Stock Compensation | On September 19, 2008, the Board of Directors and Stockholders of the Company adopted the 2008 Stock Option Plan (the "2008 Plan") in addition to the 2004 Stock Option Plan, which allowed the Company to grant up to 500,000 options to employees, officers, directors and consultants to purchase shares of the Company's Common Stock. Options granted under the 2008 Plan could have been either Incentive Stock Options or Non-Qualified Stock Options. There have not been any grants under the 2008 Stock Option Plan since its inception. The Board of Directors replaced the 2008 Stock Option Plan with the 2016 Equity Incentive Plan described below. Options granted under granted under the 2004 Stock Option Plan, generally vested over a three year period. The Company recognizes stock option expense over the vesting period. The Company did not record any stock option expense for the years 2018 and 2017 as all of the options were fully vested. There were 10,333 options exercised for the year ending December 31, 2018 and there were 56,800 options exercised in 2017. There were no options outstanding and exercisable at December 31, 2018. The following tables summarize activity under the 2004 Stock Option Plan of the Company and the stock options outstanding at December 31, 2018: Weighted Average Exercise Price Options Outstanding Vested and Exercisable Balance, December 31, 2016 $ 1.96 68,133 68,133 Granted — — — Forfeited (2.21 ) (1,000 ) (1,000 ) Exercised (1.89 ) (56,800 ) (56,800 ) Balance, December 31, 2017 1.21 10,333 10,333 Granted — — — Forfeited — — — Exercised (1.21 ) (10,333 ) (10,333 ) Balance, December 31, 2018 $ — — — On October 13, 2016, the Board of Directors of the Company adopted the 2016 Equity Incentive Plan, which allows the Company to grant up to 400,000 shares of restricted common stock of the Company to employees, officers, directors and consultants. The grants may be in the form of restricted or performance shares of common stock of the Company. There were 2,500 and 72,000 shares of restricted stock issued during the years ended December 31, 2018 and December 31, 2017, respectively. The shares have a three year vesting period which vests ratably, on an annual basis, over a three year period. The total intrinsic value (in thousands) of the outstanding shares of restricted stock is $361. The fair value of restricted stock awards is estimated to be the market price of the Company's common stock at the close of date of grant. Restricted stock activity during the years ended December 31, 2017 and 2018 is as follows: Number of Shares Weighted Average Grant Date Fair Value per Share Non-vested, December 31, 2016 103,000 $ 4.95 Granted 72,000 5.45 Vested 49,667 5.10 Forfeited — — Non-vested, December 31, 2017 125,333 5.19 Granted 2,500 7.00 Vested 54,333 5.27 Forfeited 4,000 4.95 Non-vested, December 31, 2018 69,500 $ 5.19 Awards are being amortized to expense ratably, on an annual basis, over a three year vesting term, except one grant that vested immediately. Stock compensation (in thousands) for the year ended December 31, 2018 was approximately $242, based upon the value at the date of grant. Stock compensation for the year ended December 31, 2017 was approximately $411, based upon the value at the date of grant. The total unrecognized compensation cost related to the non-vested restricted stock is approximately $361 as of December 31, 2018. |
Fair Value Measurements
Fair Value Measurements | 12 Months Ended |
Dec. 31, 2018 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | The Company applies the guidance that is codified under ASC 820-10 related to assets and liabilities recognized or disclosed in the financial statements at fair value on a recurring basis. ASC 820-10 defines fair value, establishes a framework for measuring fair value and expands disclosures about fair value measurements. The provisions of ASC 820-10 only apply to the Company’s investment securities, which are carried at fair value. ASC 820-10 clarifies that fair value is an exit price, representing the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants based on the highest and best use of the asset or liability. As such, fair value is a market-based measurement that is determined based on assumptions that market participants would use in pricing an asset or liability. ASC 820-10 requires valuation techniques to measure fair value that maximize the use of observable inputs and minimize the use of unobservable inputs. These inputs are prioritized as follows: Fair Value Hierarchy Inputs to Fair Value Methodology Level 1 Quoted prices in active markets for identical assets or liabilities Level 2 Quoted prices for similar assets or liabilities; quoted markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the financial instrument; inputs other than quoted prices that are observable for the asset or liability; or inputs that are derived principally from, or corroborated by, observable market information Level 3 Pricing models, discounted cash flow methodologies or similar techniques and at least one significant model assumption is unobservable or when the estimation of fair value requires significant management judgment The Company categorizes a financial instrument in the fair value hierarchy based on the lowest level of input that is significant to its fair value measurement. As of December 31, 2018 Quoted Market Prices in Active Markets (Level 1) Internal Models with Significant Observable Market Parameters (Level 2) Internal Models with Significant Unobservable Market Parameters (Level 3) Total Fair Value Reported in Financial Statements Mutual Funds $ 1,107 $ — $ — $ 1,107 As of December 31, 2017 Quoted Market Prices in Active Markets (Level 1) Internal Models with Significant Observable Market Parameters (Level 2) Internal Models with Significant Unobservable Market Parameters (Level 3) Total Fair Value Reported in Financial Statements Mutual Funds $ 1,098 $ — $ — $ 1,098 |
Commitments and Contingencies
Commitments and Contingencies | 12 Months Ended |
Dec. 31, 2018 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | The Company has an employment agreement with its former CEO and current Chairman of the Board. The agreement provides for an annual base salary of $99,000 and an annual royalty fee of $99,000 payable as consideration for his assignment to the Company of all of his rights, title and interest in certain patents. Payment of the royalty continues only for as long as the Company is using the inventions underlying the patents. In the event the employment by the Company ceases as a result of the (i) death, his estate shall be entitled to a lump sum payment of one times the combined Base Salary and bonus, and certain other accrued and unpaid amounts, or (ii) disability, he shall be entitled to Base Salary and bonus for a period of one year commencing with the date of termination, and all other unpaid accrued amounts. Due to health issues and the former CEO's relinquishment of his executive officer position, and his continued employment on a part-time basis, the Company has determined to compensate the former CEO in the manner provided for in the case of disability until September 2019. The Company is party to legal proceedings and disputes which may arise in the ordinary course of business. In the opinion of the Company, it is unlikely that liabilities, if any, arising from legal disputes will have a material adverse effect on the consolidated financial position of the Company. |
Earnings Per Share
Earnings Per Share | 12 Months Ended |
Dec. 31, 2018 | |
Earnings Per Share [Abstract] | |
Earnings Per Share | Earnings per share are calculated as follows (in thousands, except earnings per share): December 31, 2018 2017 Basic earnings per share Income available to common shareholder $ 1,687 $ 2,684 Weighted average shares outstanding 5,080 5,042 Basic earnings per share $ 0.33 $ 0.53 Diluted earnings per share Income available to common shareholder $ 1,687 $ 2,684 Weighted average shares outstanding 5,080 5,042 Dilutive effect of stock options and restricted stock 16 37 Total weighted average shares outstanding 5,096 5,079 Diluted earnings per share $ 0.33 $ 0.53 There were no options or restricted stock excluded from the diluted earnings per share calculation for the years ended December 31, 2018 and December 31, 2017. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2018 | |
Accounting Policies [Abstract] | |
Nature of Business | Smith-Midland Corporation and its wholly-owned subsidiaries (the “Company”) develop, manufacture, license, sell and install precast concrete products for the construction, transportation and utilities industries in the Mid-Atlantic, Northeastern, Midwestern and Southeastern regions of the United States. |
Principles of Consolidation | The accompanying consolidated financial statements include the accounts of Smith-Midland Corporation and its wholly-owned subsidiaries. The Company’s wholly-owned subsidiaries consist of Smith-Midland Corporation, a Virginia corporation, Smith-Carolina Corporation, a North Carolina corporation, Smith-Columbia Corporation, a South Carolina corporation, Easi-Set Industries, Inc., a Virginia corporation, Concrete Safety Systems, Inc., a Virginia corporation, and Midland Advertising and Design, Inc., doing business as Midland Advertising + Design, a Virginia corporation. All material intercompany accounts and transactions have been eliminated in consolidation. |
Cash | The Company considers all unrestricted cash and money market accounts purchased with an original or remaining maturities of three months or less as cash. |
Investments | Investments in marketable securities are classified as available-for-sale and are stated at market value with unrealized holding gains and losses excluded from earnings and reported as a separate component of stockholders' equity until realized. |
Inventories | Inventories are stated at the lower of cost, using the first-in, first-out (FIFO) method, or net realizable value. Inventory reserves (in thousands) were approximately $65 and $39 at December 31, 2018 and 2017, respectively. |
Property and Equipment | Property and equipment is stated at cost. Expenditures for ordinary maintenance and repairs are charged to income as incurred. Costs of betterments, renewals, and major replacements are capitalized. At the time properties are retired or otherwise disposed of, the related cost and allowance for depreciation are eliminated from the accounts and any gain or loss on disposition is reflected in income. Depreciation is computed using the straight-line method over the following estimated useful lives: Years Buildings 10-40 Trucks and automotive equipment 3-10 Shop machinery and equipment 3-10 Land improvements 10-15 Rental equipment 5-10 Office equipment 3-10 |
Income Taxes | Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. As of December 31, 2018, the Company has not identified any uncertain tax positions. The Company files tax returns in the U.S. Federal and various state jurisdictions. The Company recognizes, when applicable, interest and penalties related to income taxes in other income (expense) in its consolidated statement of income. The Company is no longer subject to U.S. or state tax examinations for the years prior to 2015. The Company does not believe there will be any material changes in unrecognized tax positions over the next twelve months. |
Stock Compensation | On October 13, 2016, the Board of Directors of the Company adopted the 2016 Equity Incentive Plan which allows the Company to grant up to 400,000 shares of common stock of the Company to employees, officers, directors and consultants. The grants may be in the form of restricted or performance shares of common stock of the Company. The fair value of each restricted stock grant is estimated to be the sales price of the common stock at the close of business on the day of the grant. |
Revenue Recognition | Product Sales - Over Time Under Topic 606, the Company recognizes revenue to depict the transfer of goods or services to customers in an amount that reflects the consideration the Company expects to be entitled to in exchange for goods or services provided. Revenue associated with contracts with customers is recognized over time as the Company's performance creates or enhances customer controlled assets or creates or enhances an asset with no alternative use, which the Company has an enforceable right to receive compensation as defined under the contract for performance completed. To determine the amount of revenue to recognize over time, the Company recognizes revenue over the contract terms based on the output method. The Company applied the "as invoiced" practical expedient as the amount of consideration the Company has the right to invoice corresponds directly with the value of the Company's performance to date. As the output method is driven by units produced, the Company recognizes revenues based on the value transferred to the customer relative to the remaining value to be transferred. The Company also matches the costs associated with the units produced. If a contract is projected to result in a loss, the entire contract loss is recognized in the period when the loss was first determined and the amount of the loss updated in subsequent reporting periods. Revenue recognition also includes an amount related to a contract asset or contract liability. If the recognized revenue is greater than the amount billed to the customer, a contract asset is recorded in accounts receivable - unbilled. Conversely, if the amount billed to the customer is greater than the recognized revenue, a contract liability is recorded in customer deposits on uncompleted contracts. Changes in the job performance, job conditions and final contract settlements are factors that influence management’s assessment of total contract value and therefore, profit and revenue recognition. A portion of the work the Company performs requires financial assurances in the form of performance and payment bonds or letters of credit at the time of execution of the contract. Some contracts include retention provisions of up to 10% which are generally withheld from each progress payment as retainage until the contract work has been completed and approved. Product Sales - Point in Time For certain product sales that do not meet the over time criteria, under Topic 606 the Company recognizes revenue when the product has been shipped to the destination in accordance with the terms outlined in the contract where a present obligation to pay exists as the customers have gained physical possession of the product. Accounts Receivable and Contract Balances The timing of when we bill our customers is generally dependent upon advance billing terms, milestone billings based on the completion of certain phases of the work, or when services are provided or products are shipped. Projects with performance obligations recognized over time that have costs and estimated earnings recognized to date in excess of cumulative billings, are reported on our Condensed Consolidated Balance Sheets as "Accounts receivable trade - unbilled" (i.e. contract assets). Projects with performance obligations recognized over time that have cumulative billings in excess of costs and estimate earnings recognized to date, are reported on our Condensed Consolidated Balance Sheets as "Customer deposits" (i.e. contract liabilities). Any uncollected billed amounts for our performance obligations recognized over time, including contract retentions, are recorded within accounts receivable trade - billed. At December 31, 2018 and December 31, 2017, accounts receivable included contract retentions (in thousands) of approximately $1,704 and $1,065, respectively. Our billed and unbilled revenue may be exposed to potential credit risk if our customers should encounter financial difficulties, and we maintain reserves for specifically-identified potential uncollectible receivables. At December 31, 2018 and December 31, 2017, our allowances for doubtful accounts (in thousands) were $214 and $208, respectively. Effect of Adopting ASC Topic 606 No adjustment to beginning 2018 retained earnings was recorded as a result of our adoption of Topic 606 due to no changes in the methods and/or timing of our revenue recognition for our uncompleted contracts. Further, the difference in our results for 2018 between application of the new standard on our contracts and what results would have been if such contracts had been reported using the accounting standards previously in effect, for such contracts, did not change. Sale to Customer with a Buy-Back Guarantee The Company entered into a buy-back agreement with one specific customer. Under this agreement, the Company guaranteed to buy-back product at a predetermined price at the end of the long-term project, subject to the condition of the product. Although the Company receives payment in full as the product is produced, we are required to account for these transactions as operating leases. The amount of sale proceeds equal to the buy-back obligation, included in "Deferred buy-back lease obligation" in the liabilities section of the consolidated balance sheet, is deferred until the buy-back is exercised or expired. The remaining sale proceeds are deferred in the same account and recognized on a straight-line basis over the usage period, such usage period commencing on delivery to the job-site and ending at the time the buy-back is exercised or expired. The Company capitalizes the cost of the product on the consolidated balance sheet shown in "Deferred buy-back lease asset, net", and depreciates the value, less residual value, to cost of leasing revenue in "Cost of goods sold" over the estimated useful life of the asset. In the case the customer does not exercise the buy-back option and retains ownership of the product at the end of the usage period, the guarantee buy-back liability and any deferred revenue balances related to the product are settled to revenue, and the net book value of the asset is expensed to cost of leasing revenue. If the customer exercises the buy-back guarantee option, the Company purchases the product back in the amount equal to the buy-back guarantee, we settle any remaining deferred balances, in excess of the buy-back payment, to leasing revenue, and we reclassify the net book value of the product on the consolidated balance sheet to "Inventories" or "Property and equipment, net" depending on the intended use at the time. The revenue is being recognized in accordance with Topic 840, Leases Barrier Rentals - Leasing Fees Leasing fees are paid by customers at the beginning of the lease agreement and are recorded as deferred revenue. The deferred revenue is then recognized each month as lease income for the duration of the lease, in accordance with Topic 840, Leases. Royalty Income The Company licenses certain products to other precast companies to produce the Company's products to engineering specifications under the licensing agreements. The agreements are typically for five year terms and require royalty payments from 4% to 6% of total sales of licensed products, which are paid on a monthly basis. The revenues from licensing agreements are recognized in the month earned, in accordance with Topic 606-10-55-65. Shipping and Installation Shipping and installation revenues are recognized as a distinct performance obligation in the period the shipping and installation services are provided to the customer, in accordance with Topic 606. Disaggregation of Revenue In the following table, revenue is disaggregated by primary sources of revenue (in thousands): Revenue by Type 2018 2017 Change % of Change Product Sales: Soundwall Sales $ 9,867 $ 7,571 $ 2,296 30.3 % Architectural Sales 876 829 47 5.7 % Slenderwall Sales 5,572 2,048 3,524 172.1 % Miscellaneous Sales 1,760 2,793 (1,033 ) (37.0 )% Barrier Sales 7,264 11,276 (4,012 ) (35.6 )% Easi-Set and Easi-Span Building Sales 2,114 2,484 (370 ) (14.9 )% Utility and Farm Product Sales 1,232 1,492 (260 ) (17.4 )% Miscellaneous Product Sales 474 562 (88 ) (15.7 )% Total Product Sales 29,159 29,055 104 0.4 % Barrier Rentals 1,729 4,267 (2,538 ) (59.5 )% Royalty Income 1,675 1,885 (210 ) (11.1 )% Shipping and Installation 7,657 6,510 1,147 17.6 % Total Service Revenue 11,061 12,662 (1,601 ) (12.6 )% Total Revenue $ 40,220 $ 41,717 $ (1,497 ) (3.6 )% |
Warranties | Smith-Midland products are typically sold pursuant to an implicit warranty as to merchantability only. Warranty claims are reviewed and resolved on a case by case method. Although the Company does incur costs for these types of expense, historically the amount of expense is minimal. |
Sales and Use Taxes | Use taxes on construction materials are reported gross in cost of goods sold. |
Segment Reporting | Operating segments are defined as components of an enterprise for which separate financial information is available and evaluated regularly by the chief operating decision maker, or decision making group, in deciding how to allocate resources and assess performance. The Company currently operates in one operating and reportable business segment for financial reporting purposes. |
Reclassifications of Certain Items Included within Comparable Prior Year Periods | Certain minor reclassifications have been made to prior year amounts to conform to current year presentation. Use tax was reclassified to Cost of goods sold from General and administrative expenses on the Condensed Consolidated Statements of Operations for the year ending December 31, 2017 of $117. There was no impact to net income for the period. |
Risks and Uncertainties | The Company sells products to highway contractors operating under government funded highway programs and other customers and extends credit based on an evaluation of the customer’s financial condition, generally without requiring collateral. Exposure to losses on receivables is principally dependent on each customer’s financial condition. The Company monitors its exposure to credit losses and maintains allowances for anticipated losses. Management reviews accounts receivable on a weekly basis to determine the probability of collection. In performing this evaluation, the Company analyzes the payment history and its significant past due accounts, subsequent cash collections on these accounts and comparative accounts receivable aging statistics. Based on this information, along with other related factors, the Company develops what it considers to be a reasonable estimate of the uncollectible amounts included in accounts receivable. Management believes the allowance for doubtful accounts at December 31, 2018 is adequate. However, actual write-offs may exceed the recorded allowance. Due to inclement weather, the Company may experience reduced revenue from December through February and may realize the substantial part of its revenue during the other months of the year. |
Fair Value of Financial Instruments | The carrying value for each of the Company’s financial instruments (consisting of cash and cash equivalents, accounts receivable, accounts payable and short-term line of credit) approximates fair value because of the short-term nature of those instruments. The estimated fair value of the long-term debt approximates carrying value based on current rates offered to the Company for debt of the similar maturities. |
Estimates | The preparation of financial statements in conformity with U.S. generally accepted accounting (U.S. GAAP) principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. |
Advertising Costs | The Company expenses all advertising costs as incurred. Advertising expense (in thousands) was approximately $384 and $404 in 2018 and 2017, respectively. |
Earnings Per Share | Earnings per share are based on the weighted average number of shares of common stock and dilutive common stock equivalents outstanding. Basic earnings per share is computed by dividing income available to common shareholders by the weighted average number of common shares outstanding for the period. Diluted earnings per share reflect the potential dilution of securities that could share in earnings of the Company. |
Long-Lived Assets | The Company reviews the carrying values of its long-lived and identifiable intangible assets for possible impairment whenever events or changes in circumstances indicate that the carrying amount of assets may not be recoverable based on undiscounted estimated future operating cash flows. When any such impairment exists, the related assets will be written down to fair value. No impairment losses have been recorded through December 31, 2018. |
Recent Accounting Pronouncements | Leases. In 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2016-02, “Leases (Topic 842).” Topic 842 establishes a new lease accounting model for leases. The most significant changes include the clarification of the definition of a lease, the requirement for lessees to recognize for all leases a right-of-use asset and a lease liability in the consolidated balance sheet, and additional quantitative and qualitative disclosures which are designed to give financial statement users information on the amount, timing, and uncertainty of cash flows arising from leases. Expenses are recognized in the consolidated statement of income in a manner similar to current accounting guidance. Lessor accounting under the new standard is substantially unchanged. We adopted this standard, and all related amendments thereto, effective January 1, 2019, using a prospective transition approach, which applies the provisions of the new guidance at the effective date without adjusting the comparative periods presented. We have elected the package of practical expedients permitted under the transition guidance within the new standard, which among other things, allows us to carry forward the historical accounting relating to lease identification and classification for existing leases upon adoption. We are finalizing our evaluation of the impacts that the adoption of this accounting guidance will have on the consolidated financial statements and estimate approximately $400 of right-of-use assets and liabilities will be recognized in our consolidated balance sheet upon adoption. |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Accounting Policies [Abstract] | |
Property and equipment estimated useful lives | Years Buildings 10-40 Trucks and automotive equipment 3-10 Shop machinery and equipment 3-10 Land improvements 10-15 Rental equipment 5-10 Office equipment 3-10 |
Disaggregation of revenue | Revenue by Type 2018 2017 Change % of Change Product Sales: Soundwall Sales $ 9,867 $ 7,571 $ 2,296 30.3 % Architectural Sales 876 829 47 5.7 % Slenderwall Sales 5,572 2,048 3,524 172.1 % Miscellaneous Sales 1,760 2,793 (1,033 ) (37.0 )% Barrier Sales 7,264 11,276 (4,012 ) (35.6 )% Easi-Set and Easi-Span Building Sales 2,114 2,484 (370 ) (14.9 )% Utility and Farm Product Sales 1,232 1,492 (260 ) (17.4 )% Miscellaneous Product Sales 474 562 (88 ) (15.7 )% Total Product Sales 29,159 29,055 104 0.4 % Barrier Rentals 1,729 4,267 (2,538 ) (59.5 )% Royalty Income 1,675 1,885 (210 ) (11.1 )% Shipping and Installation 7,657 6,510 1,147 17.6 % Total Service Revenue 11,061 12,662 (1,601 ) (12.6 )% Total Revenue $ 40,220 $ 41,717 $ (1,497 ) (3.6 )% |
Property and Equipment (Tables)
Property and Equipment (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Property, Plant and Equipment [Abstract] | |
Schedule of property and equipment | December 31, 2018 2017 Land and land improvements $ 2,452 $ 1,538 Buildings 6,949 5,394 Machinery and equipment 12,709 10,913 Rental equipment 3,659 2,763 25,769 20,608 Less: accumulated depreciation and amortization (11,667 ) (10,741 ) $ 14,102 $ 9,867 |
Notes Payable (Tables)
Notes Payable (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Notes Payable [Abstract] | |
Schedule of notes payable | December 31, 2018 2017 Note payable to a Bank, maturing September 2021; with monthly payments of approximately $26 of principal and interest fixed at 3.99%; collateralized by principally all assets of the Company. $ 799 $ 1,071 Note payable to a Bank, maturing July 2031; with monthly payments of approximately $11 of principal and interest fixed at 5.29%; collateralized by principally all assets of Smith-Columbia Corporation and guaranteed by Smith-Midland Corporation. 1,169 1,234 Note payable to a Bank, maturing April 2021; with monthly payments of approximately $6.2 of principal and interest at prime at variable rate (5.29% at December 31, 2018 and 2017); collateralized by certain property of the Company. 163 227 Construction loan draw on-line-of-credit for the North Carolina Expansion, which is part of the $4,000 line-of-credit listed below 1,000 — Installment notes, collateralized by certain machinery and equipment maturing at various dates, primarily through 2021; with monthly payments varying from $0.3 to $4.1 with weighted average interest at 4.7% and 4.2% at December 31, 2018 and 2017, respectively. 1,372 1,001 A revolving line-of-credit evidenced by a note payable to a Bank, with the maximum amount of $4,000, maturing October 1, 2019, with interest only payments and an initial rate of 5.00% adjustable monthly (5.50% at December 31, 2018). The line-of-credit is collateralized by a first lien position on the Company's accounts receivable and inventory and a second lien position on all other business assets. — — 4,503 3,533 Less current maturities 1,711 637 $ 2,792 $ 2,896 |
Schedule of maturities of notes payable | Year Ending December 31, 2019 $ 1,711 2020 737 2021 577 2022 271 2023 216 Thereafter 991 $ 4,503 |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Income Tax Disclosure [Abstract] | |
Schedule of components of income tax expense (benefit) | December 31, 2018 2017 Federal: Current $ 230 $ 455 Deferred 223 421 453 876 State: Current 58 76 Deferred 61 105 119 181 $ 572 $ 1,057 |
Schedule of effective income tax rate reconciliation | December 31, 2018 2017 Income taxes at statutory rate $ 474 21.0 % $ 1,269 34.0 % Increase (decrease) in taxes resulting from: State income taxes, net of federal benefit 89 4.0 % 136 3.6 % Deferred true-ups 58 2.6 % 161 4.3 % Provision-to-return (19 ) (0.8 )% 152 4.1 % Rate reduction — — % (664 ) (17.8 )% Other (30 ) (1.5 )% 3 0.1 % $ 572 25.3 % $ 1,057 28.3 % |
Schedule of deferred tax assets (liabilities) | December 31, 2018 2017 Depreciation $ (1,667 ) $ (1,185 ) Unrealized losses on investments available for sale (9 ) 5 Retainage (425 ) (264 ) Allowance for doubtful accounts 53 52 Prepaid expenses (78 ) (98 ) Vacation accrued 78 67 Deferred income 321 — State NOL carryforward 26 48 UNICAP 105 — Other 169 85 Net deferred tax liability $ (1,427 ) $ (1,290 ) |
Stock Compensation (Tables)
Stock Compensation (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Compensation Related Costs [Abstract] | |
Schedule of stock option activity | Weighted Average Exercise Price Options Outstanding Vested and Exercisable Balance, December 31, 2016 $ 1.96 68,133 68,133 Granted — — — Forfeited (2.21 ) (1,000 ) (1,000 ) Exercised (1.89 ) (56,800 ) (56,800 ) Balance, December 31, 2017 1.21 10,333 10,333 Granted — — — Forfeited — — — Exercised (1.21 ) (10,333 ) (10,333 ) Balance, December 31, 2018 $ — — — |
Schedule of restricted stock award activity | Number of Shares Weighted Average Grant Date Fair Value per Share Non-vested, December 31, 2016 103,000 $ 4.95 Granted 72,000 5.45 Vested 49,667 5.10 Forfeited — — Non-vested, December 31, 2017 125,333 5.19 Granted 2,500 7.00 Vested 54,333 5.27 Forfeited 4,000 4.95 Non-vested, December 31, 2018 69,500 $ 5.19 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Fair Value Disclosures [Abstract] | |
Schedule of fair value measurements | As of December 31, 2018 Quoted Market Prices in Active Markets (Level 1) Internal Models with Significant Observable Market Parameters (Level 2) Internal Models with Significant Unobservable Market Parameters (Level 3) Total Fair Value Reported in Financial Statements Mutual Funds $ 1,107 $ — $ — $ 1,107 As of December 31, 2017 Quoted Market Prices in Active Markets (Level 1) Internal Models with Significant Observable Market Parameters (Level 2) Internal Models with Significant Unobservable Market Parameters (Level 3) Total Fair Value Reported in Financial Statements Mutual Funds $ 1,098 $ — $ — $ 1,098 |
Earnings Per Share (Tables)
Earnings Per Share (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Earnings Per Share [Abstract] | |
Schedule of earnings per share | December 31, 2018 2017 Basic earnings per share Income available to common shareholder $ 1,687 $ 2,684 Weighted average shares outstanding 5,080 5,042 Basic earnings per share $ 0.33 $ 0.53 Diluted earnings per share Income available to common shareholder $ 1,687 $ 2,684 Weighted average shares outstanding 5,080 5,042 Dilutive effect of stock options and restricted stock 16 37 Total weighted average shares outstanding 5,096 5,079 Diluted earnings per share $ 0.33 $ 0.53 |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies (Details) | 12 Months Ended |
Dec. 31, 2018 | |
Building | Minimum | |
Useful life | 10 years |
Building | Maximum | |
Useful life | 40 years |
Trucks and Automotive Equipment | Minimum | |
Useful life | 3 years |
Trucks and Automotive Equipment | Maximum | |
Useful life | 10 years |
Shop Machinery and Equipment | Minimum | |
Useful life | 3 years |
Shop Machinery and Equipment | Maximum | |
Useful life | 10 years |
Land Improvements | Minimum | |
Useful life | 10 years |
Land Improvements | Maximum | |
Useful life | 15 years |
Rental Equipment | Minimum | |
Useful life | 5 years |
Rental Equipment | Maximum | |
Useful life | 10 years |
Office Equipment | Minimum | |
Useful life | 3 years |
Office Equipment | Maximum | |
Useful life | 10 years |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies (Details 1) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Total revenues | $ 40,220 | $ 41,717 |
Change | $ (1,497) | |
Percent of change | (36.00%) | |
Product sales | ||
Total revenues | $ 29,159 | 29,055 |
Change | $ 104 | |
Percent of change | 0.40% | |
Product sales | Soundwall sales | ||
Total revenues | $ 9,867 | 7,571 |
Change | $ 2,296 | |
Percent of change | 30.30% | |
Product sales | Architectural sales | ||
Total revenues | $ 876 | 829 |
Change | $ 47 | |
Percent of change | 5.70% | |
Product sales | Slenderwall sales | ||
Total revenues | $ 5,572 | 2,048 |
Change | $ 3,524 | |
Percent of change | 172.10% | |
Product sales | Miscellaneous sales | ||
Total revenues | $ 1,760 | 2,793 |
Change | $ (1,033) | |
Percent of change | (37.00%) | |
Product sales | Barrier sales | ||
Total revenues | $ 7,264 | 11,276 |
Change | $ (4,012) | |
Percent of change | (35.60%) | |
Product sales | Easi-Set and Easi-Span Building sales | ||
Total revenues | $ 2,114 | 2,484 |
Change | $ (370) | |
Percent of change | (14.90%) | |
Product sales | Utility and farm product sales | ||
Total revenues | $ 1,232 | 1,492 |
Change | $ (260) | |
Percent of change | (17.40%) | |
Product sales | Miscellaneous product sales | ||
Total revenues | $ 474 | 562 |
Change | $ (88) | |
Percent of change | (15.70%) | |
Service revenue | ||
Total revenues | $ 11,061 | 12,662 |
Change | $ (1,601) | |
Percent of change | (12.60%) | |
Service revenue | Barrier rentals | ||
Total revenues | $ 1,729 | 4,267 |
Change | $ (2,538) | |
Percent of change | (59.50%) | |
Service revenue | Royalties | ||
Total revenues | $ 1,675 | 1,885 |
Change | $ (210) | |
Percent of change | (11.10%) | |
Service revenue | Shipping and installation | ||
Total revenues | $ 7,657 | $ 6,510 |
Change | $ 1,147 | |
Percent of change | 17.60% |
Summary of Significant Accoun_6
Summary of Significant Accounting Policies (Details Narrative) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Accounting Policies [Abstract] | ||
Inventory reserve | $ 65 | $ 39 |
Contract retentions | 1,704 | 1,065 |
Allowances for doubtful accounts | 214 | 208 |
Advertising costs | $ 384 | $ 404 |
Property and Equipment (Details
Property and Equipment (Details) - USD ($) $ in Thousands | Dec. 31, 2018 | Dec. 31, 2017 |
Property and equipment, gross | $ 25,769 | $ 20,608 |
Less: accumulated depreciation and amortization | (11,667) | (10,741) |
Property and equipment, net | 14,102 | 9,867 |
Land and Land Improvements | ||
Property and equipment, gross | 2,452 | 1,538 |
Building | ||
Property and equipment, gross | 6,949 | 10,913 |
Machinery and Equipment | ||
Property and equipment, gross | 12,709 | 5,394 |
Rental Equipment | ||
Property and equipment, gross | $ 3,659 | $ 2,763 |
Property and Equipment (Detai_2
Property and Equipment (Details Narrative) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Property, Plant and Equipment [Abstract] | ||
Depreciation and amortization | $ 1,247 | $ 926 |
Notes Payable (Details)
Notes Payable (Details) - USD ($) $ in Thousands | Dec. 31, 2018 | Dec. 31, 2017 |
Notes payable | $ 4,503 | $ 3,533 |
Less: current maturities | 711 | 637 |
Noncurrent notes payable | 2,792 | 2,896 |
Note Payable 1 | ||
Notes payable | 799 | 1,071 |
Note Payable 2 | ||
Notes payable | 1,169 | 1,234 |
Note Payable 3 | ||
Notes payable | 163 | 227 |
Note Payable 4 | ||
Notes payable | 1,000 | 0 |
Note Payable 5 | ||
Notes payable | 1,372 | 1,001 |
Note Payable 6 | ||
Notes payable | $ 0 | $ 0 |
Notes Payable (Details 1)
Notes Payable (Details 1) - USD ($) $ in Thousands | Dec. 31, 2018 | Dec. 31, 2017 |
Notes Payable [Abstract] | ||
2018 | $ 1,711 | |
2019 | 737 | |
2020 | 577 | |
2021 | 271 | |
2022 | 216 | |
Thereafter | 991 | |
Notes payable | $ 4,503 | $ 3,533 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Federal: | ||
Current | $ 230 | $ 455 |
Deferred | 223 | 421 |
Federal income taxes | 453 | 876 |
State: | ||
Current | 58 | 76 |
Deferred | 61 | 105 |
State income taxes | 119 | 181 |
Income tax expense | $ 572 | $ 1,057 |
Income Taxes (Details 1)
Income Taxes (Details 1) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Income Tax Disclosure [Abstract] | ||
Income taxes at statutory rate | $ 474 | $ 1,269 |
State income taxes, net of federal benefit | 89 | 136 |
Deferred true-ups | 58 | 161 |
Provision to return | (19) | 152 |
Rate reduction | 0 | (664) |
Other | (30) | 3 |
Income tax expense | $ 572 | $ 1,057 |
Income taxes at statutory rate | 21.00% | 34.00% |
State income taxes, net of federal benefit | 4.00% | 3.60% |
Deferred true-ups | 2.60% | 4.30% |
Provision to return | (0.80%) | 4.10% |
Rate reduction | 0.00% | (17.80%) |
Other | (1.50%) | 0.10% |
Effective income tax rate | 25.30% | 28.30% |
Income Taxes (Details 2)
Income Taxes (Details 2) - USD ($) $ in Thousands | Dec. 31, 2018 | Dec. 31, 2017 |
Income Tax Disclosure [Abstract] | ||
Depreciation | $ (1,667) | $ (1,185) |
Unrealized losses on investments available for sale | (9) | 5 |
Retainage | (425) | (264) |
Allowance for doubtful accounts | 53 | 52 |
Prepaid expenses | (78) | (98) |
Vacation accrued | 78 | 67 |
Deferred income | 321 | 0 |
State NOL carryforward | 26 | 48 |
UNICAP | 105 | 0 |
Other | 169 | 85 |
Net deferred tax liability | $ (1,427) | $ (1,290) |
Employee Benefit Plans (Details
Employee Benefit Plans (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Defined Benefit Plan [Abstract] | ||
Employer matching contribution, percent of match | 50.00% | |
Employer matching contribution, percent of employees' gross pay | 4.00% | |
Match contributions | $ 148 | $ 140 |
Stock Compensation (Details)
Stock Compensation (Details) - $ / shares | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Weighted Average Exercise Price | ||
Beginning balance | $ 1.21 | $ 1.96 |
Granted | .00 | .00 |
Forfeited | (.00) | (2.21) |
Exercised | (1.21) | (1.89) |
Ending balance | $ .00 | $ 1.21 |
Options Outstanding | ||
Beginning balance | 10,333 | 68,133 |
Granted | 0 | 0 |
Forfeited | 0 | (1,000) |
Exercised | (10,333) | (56,800) |
Ending balance | 0 | 10,333 |
Vested and Exercisable | ||
Beginning balance | 10,333 | 68,133 |
Granted | 0 | 0 |
Forfeited | 0 | (1,000) |
Exercised | (10,333) | (56,800) |
Ending balance | 0 | 10,333 |
Stock Compensation (Details 1)
Stock Compensation (Details 1) - $ / shares | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Non-vested, Number of Shares | ||
Granted | 2,500 | 72,000 |
Non-vested, Weighted Average Grant Date Fair Value | ||
Granted | $ .00 | $ .00 |
Restricted Stock Awards | ||
Non-vested, Number of Shares | ||
Non-vested, beginning of period | 125,333 | 103,000 |
Vested | 54,333 | 49,667 |
Forfeited | 4,000 | 0 |
Non-vested, end of period | 69,500 | 125,333 |
Non-vested, Weighted Average Grant Date Fair Value | ||
Non-vested, beginning of period | $ 5.19 | $ 4.95 |
Granted | 7 | 5.45 |
Vested | 5.27 | 5.10 |
Forfeited | 4.95 | .00 |
Non-vested, ending of period | $ 5.19 | $ 5.19 |
Stock Compensation (Details Nar
Stock Compensation (Details Narrative) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Compensation Related Costs [Abstract] | ||
Stock options exercised | 10,333 | 56,800 |
Restricted stock issued | 2,500 | 72,000 |
Intrinsic value of restricted stock outstanding | $ 361 | |
Stock compensation | 243 | $ 411 |
Unrecognized compensation cost related to non-vested restricted stock | $ 361 |
Fair Value Measurements (Detail
Fair Value Measurements (Details) - USD ($) $ in Thousands | Dec. 31, 2018 | Dec. 31, 2017 |
Mutual funds | $ 1,107 | $ 1,098 |
Level 1 | ||
Mutual funds | 1,107 | 1,098 |
Level 2 | ||
Mutual funds | 0 | 0 |
Level 3 | ||
Mutual funds | $ 0 | $ 0 |
Earnings Per Share (Details)
Earnings Per Share (Details) - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Basic earnings per share | ||
Income available to common shareholder | $ 1,687 | $ 2,684 |
Weighted average shares outstanding (in thousands) | 5,080 | 5,042 |
Basic earnings per share | $ 0.33 | $ 0.53 |
Diluted earnings per share | ||
Income available to common shareholder | $ 1,687 | $ 2,684 |
Weighted average shares outstanding (in thousands) | 5,080 | 5,042 |
Dilutive effect of stock options and restricted stock (in thousands) | 16 | 37 |
Total weighted average shares outstanding (in thousands) | 5,096 | 5,079 |
Diluted earnings per share | $ 0.33 | $ 0.53 |