Company > CEO's Message

To Our Smith-Midland Shareholders, Customers, Associates, and Business Partners:

Rodney I. Smith
Chairman of the Board

A Profitable Year During the Most Troubling of Times the major topic of discussion for the construction industry in 2008 was the tumultuous slide of the US and world economies. Many companies were ill equipped to handle this economic downturn, fortunately for Smith-Midland Corporation (DE), our commitment to product diversification and our carefully managed business model allowed us to remain profitable in 2008.

Smith-Midland reported a modest net profit in 2008 of $420,993 or $.09 per share as compared to a net profit of $1,252,360 or $.26 per share in 2007. Total revenues for 2008 were $29.9 million compared to revenues of $31.5 million for 2007. Additionally, there was a one time charge to earnings in 2008 of $418,000 (net of applicable income taxes) in the settlement of a contract dispute. We were able to remain profitable even while prices of our basic raw materials such as steel, cement and diesel fuel rose to record highs during 2008.

We continue to monitor our costs and expenses very closely; and in addition, we have executed new pricing arrangements with many of our largest suppliers to insure a continuous supply of raw materials at the lowest possible prices. During 2008 we employed a Director of Lean Manufacturing in an effort to remain competitive in a sluggish economy, and we have begun to see positive results from our lean manufacturing efforts.

Product Revenues

Our total product revenues were down slightly in 2008, to $23.8 million compared to $24.1 million for the same period in 2007, a decrease of 1%. Highway soundwall (SoftSound) panel revenues increased to $8.5 million in 2008, for an increase of 46% over 2007, while our Easi-Set building revenues had a modest decrease of 9% in 2008, to $5.9 million. Our utility product revenues had a significant decrease of 67% in 2008, to $1.8 million due primarily to decreased spending at the local government level. Our highway safety barrier revenues increased to $5.7 million in 2008, or an increase of 5%. Royalty and rental revenues increased during 2008 by 12% to $2.2 million while our service revenue, which includes shipping and installations revenues, decreased by 22% to $4.1 million.

1st Quarter 2009 Results

The first quarter of 2009 started very strong with revenues of $9.1 million and net income of $940,028 or $.20 per share, however, we do not expect this trend to continue throughout the remainder of 2009 because of the significant positive effect the 2009 presidential inauguration highway barrier rental contract had on our net income during this quarter.

Financing Operations

Because of our diversity and market share, we have remained strong during the current downturn and ended the year with cash of $863,284 net of borrowings on our line of credit. Subsequent to the year end, we executed a financing arrangement with Summit Community Bank for a line of credit in the amount of $1,500,000 and an equipment line of credit in the amount of $700,000. In addition, subsequent to the year end, we repaid all borrowings under the previous and new lines of credit as well a small installment note payable leaving us in a financially stable position.

Conclusion

While management believes that current economic conditions will continue for the remainder of 2009 and into 2010, there are some positives to take note of, such as a strong supply of raw material at lower prices, lower energy prices and a stable workforce. We will continue to work hard on your behalf to make Smith-Midland a company that all of us can be proud to participate with, now and in the future. Our directors, officers, managers and associates will redouble their efforts to insure that we remain strong during these trying economic times, and emerge as the leading supplier of precast products throughout our geographical markets.

Sincerely,

Rodney I. Smith
Chairman of the Board & Chief Executive Officer