Schmitt Industries Announces First Quarter Fiscal 2013 Operating Results

PORTLAND, Ore., Oct. 5, 2012 (GLOBE NEWSWIRE) -- Schmitt Industries, Inc. (Nasdaq:SMIT) today announced its operating results for the first quarter ended August 31, 2012. Sales for the three months ended August 31, 2012 increased $209,180, or 6.0%, to $3,680,665 compared to $3,471,485 for the same period last year. Net income for the first quarter ended August 31, 2012 was $120,148, or $.04 per diluted share, compared to net income of $137,028, or $.05 per diluted share, for the same period last year. 

For the first quarter ended August 31, 2012, sales in the SBS Balancer segment decreased $257,516, or 10.2%, to $2,263,023 from $2,520,539 in the first quarter of Fiscal 2012. Sales in the Measurement segment increased $466,696, or 49.1%, to $1,417,642 in the first quarter of Fiscal 2013 from $950,946 in the first quarter of the prior year. Measurement segment sales increased from the prior period due primarily to higher volumes of shipments of laser-based distance measurement and dimensional sizing products and remote tank monitoring products. Sales of the Company's balancer products decreased primarily due to lower volumes of shipments in Asia and North America.

Gross margin for the first quarter increased to 50.9% as compared to 49.2% in the first quarter of the prior year primarily due to a shift in the sales mix towards higher margin products and as a result of the Company's efforts to reduce the material or component costs from certain key suppliers. Operating expenses increased $174,383, or 11.1%, to $1,748,124 for the three months ended August 31, 2012 as compared to $1,573,741 for the three months ended August 31, 2011 primarily due to higher commissions related to the increased sales, higher sales and marketing expenses and higher research and development expenses.

"We are pleased with the increase in revenues this quarter, particularly from our Acuity® laser sensor and our Xact® tank measurement system product lines," commented Wayne A. Case, CEO of Schmitt Industries. "Going forward, we continue to expect Xact® to make an increasingly significant contribution to our revenue growth," Case concluded.

Jim Fitzhenry, President of Schmitt Industries, added, "As our financial results indicate, we are seeing continuous improvement in our top line which is translating to more consistent profitability. We are realizing the positive results of the investments we have made in new product development and in sales and marketing. We are continuing to focus on these areas in addition to ramping up production while also monitoring developments in the global economy as it relates to manufacturing," Fitzhenry concluded.

About Schmitt Industries

Schmitt Industries, Inc. designs, manufactures and markets computer-controlled vibration detection and balancing equipment (the Balancer segment) primarily to the machine tool industry. Through its wholly owned subsidiary, Schmitt Measurement Systems, Inc., the Company designs, manufactures and markets precision laser-based surface measurement products for a wide variety of commercial applications in addition to the disk drive, silicon wafer and optics industries; laser-based distance measurement products for a wide variety of industrial applications; and ultrasonic measurement products that accurately measure the fill levels of liquefied propane tanks and transmit that data via satellite to a secure web site (the Measurement segment). The Company also sells and markets its products in Europe through its wholly owned subsidiary, Schmitt Europe Ltd. located in the United Kingdom.                                    

FORWARD-LOOKING STATEMENTS

Certain statements in this release, including but not limited to remarks by Wayne Case and Jim Fitzhenry, are "forward-looking statements." These statements are based upon current expectations, estimates and projections about the Company's business that are based, in part, on assumptions made by management. These statements are not guarantees of future performance and involve risks and uncertainties that are difficult to predict. Actual outcomes and results may differ materially from what is expressed or forecasted in such forward-looking statements due to numerous factors, including, but not limited to, general economic conditions, global financial concerns, the volatility of the Company's primary markets, the Xact® tank monitoring system's commercial viability and our ability to satisfy expected demand, the ability to meet production requirements for new products, the ability to develop new products to satisfy changes in consumer demands, protection of intellectual property rights, the intensity of competition, the effect on production time and overall costs of products if any of our primary suppliers are lost or if a primary supplier increases the prices of raw materials or components, the ability to ramp up manufacturing to satisfy increasing demand, fluctuations in quarterly and annual operating results, the ability to reduce operating costs if sales decline, maintenance of a significant investment in inventories in anticipation of future sales, attracting and retaining key management and qualified technical and sales personnel, changes in effective tax rates, increased costs due to changes in securities laws and regulations, and risks from international sales and currency fluctuations.

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.
     
SCHMITT INDUSTRIES, INC.    
CONSOLIDATED BALANCE SHEETS    
(UNAUDITED)    
  August 31, 2012 May 31, 2012
ASSETS    
Current assets    
Cash and cash equivalents  $3,068,779  $2,776,817
Accounts receivable, net of allowance of $26,985 and $26,720 at August 31, 2012 and May 31, 2012, respectively  2,410,959  2,493,889
Inventories  3,952,438  3,975,600
Prepaid expenses  170,928  186,489
Income taxes receivable  6,521  7,780
   9,609,625  9,440,575
Property and equipment    
Land  299,000  299,000
Buildings and improvements  1,723,273  1,723,273
Furniture, fixtures and equipment  1,274,881  1,247,720
Vehicles  121,835  121,835
   3,418,989  3,391,828
Less accumulated depreciation and amortization  (2,044,654)  (2,019,692)
   1,374,335  1,372,136
Other assets     
Intangible assets, net  1,179,254  1,213,204
TOTAL ASSETS  $12,163,214  $12,025,915
     
     
LIABILITIES & STOCKHOLDERS' EQUITY    
Current liabilities    
Accounts payable  $718,903  $770,586
Accrued commissions  403,967  335,104
Accrued payroll liabilities  166,235  142,665
Other accrued liabilities  228,706  286,319
Total current liabilities   1,517,811  1,534,674
Long-term liabilities  7,500  7,500
Stockholders' equity    
Common stock, no par value, 20,000,000 shares authorized,    
2,990,910 shares issued and outstanding at both August 31, 2012 and May 31, 2012  10,302,277  10,279,636
Accumulated other comprehensive loss  (301,922)  (313,295)
Retained earnings  637,548  517,400
Total stockholders' equity  10,637,903  10,483,741
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY  $12,163,214  $12,025,915
   
   
SCHMITT INDUSTRIES, INC.  
CONSOLIDATED STATEMENTS OF OPERATIONS  
FOR THE THREE MONTHS ENDED AUGUST 31, 2012 AND 2011  
(UNAUDITED)  
   
  Three Months Ended August 31,
   2012 2011
     
Net sales  $3,680,665  $3,471,485
Cost of sales  1,806,717  1,763,581
 Gross profit  1,873,948  1,707,904
     
Operating expenses:    
General, administration and sales  1,632,815  1,512,190
Research and development  115,309  61,551
Total operating expenses  1,748,124  1,573,741
     
Operating income  125,824  134,163
     
Other income  512  9,438
     
Income before income taxes  126,336  143,601
     
Provision for income taxes  6,188  6,573
     
Net income  $120,148  $137,028
     
Net earnings per common share:    
     
 Basic  $0.04  $0.05
     
Weighted average number of common shares, basic  2,990,910  2,895,635
     
 Diluted $ 0.04 $ 0.05
     
Weighted average number of common shares, diluted  3,005,291  2,967,264
CONTACT: Jeffrey T Siegal, CFO and Treasurer         (503) 227-7908         or visit our web site at www.schmitt-ind.com

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