UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

 

FORM 8-K

 

 

CURRENT REPORT

Pursuant to Section 13 or 15(d)

of the Securities Exchange Act of 1934

Date of Report (Date of Earliest Event Reported): September 14, 2018

 

 

SCHMITT INDUSTRIES, INC.

(Exact name of registrant as specified in its charter)

 

 

 

Oregon   000-23996   93-1151989

(State or other jurisdiction

of incorporation or organization)

 

(Commission

File Number)

 

(I.R.S. Employer

Identification Number)

2765 N.W. Nicolai Street

Portland, Oregon

  97210-1818
(Address of principal executive offices)   (Zip Code)

Registrant’s telephone number, including area code: (503) 227-7908

Not Applicable

Former name or former address, if changed since last report

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

☐

Written communications pursuant to Rule 425 under the Securities Act (17 CFR §230.425)

 

☐

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR §240.14a-12)

 

☐

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR §240.14d-2(b))

 

☐

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR §240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2).

Emerging growth company  ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐

 

 

 

Item 8.01 Other Events.

On September 14, 2018, David W. Case, the President and Chief Executive Officer of Schmitt Industries, Inc. (the “Registrant”), issued a letter to the shareholders of the Registrant.

A copy of the letter is furnished as Exhibit 99.1 to this report.

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits

 

99.1    President’s letter to the Shareholders of Schmitt Industries, Inc.

Forward Looking Statements

Certain statements in the letter provided in the Exhibit, including but not limited to remarks by David W. Case, 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 and global financial concerns, the volatility of the Company’s primary markets, efforts to accelerate growth in sales of the Xact ® tank monitoring systems and the ability to satisfy expected demand, the ability to develop new products to satisfy changes in consumer demands, 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, maintenance of a significant investment in inventories in anticipation of future sales, existing cash levels which may not be sufficient to fund future growth, the ability to obtain financing if needed to fund operations or growth through commercial loans or capital fund raising at terms acceptable to the Company and its shareholders, fluctuations in quarterly and annual operating results, attracting and retaining key management and qualified technical and sales personnel, changes in effective tax rates, the ability to reduce operating costs if sales decline, increased costs due to changes in securities laws and regulations, protection of intellectual property rights, and risks from international sales and currency fluctuations.

For further information regarding risks and uncertainties associated with the Company’s business, please refer to the Company’s SEC filings, including, but not limited to, its Forms 10-K, 10-Q and 8-K.

The forward-looking statements in the letter provided in the Exhibit 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.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

    SCHMITT INDUSTRIES, INC.
September 14, 2018     By:  

/s/ Ann M Ferguson

      Name: Ann M Ferguson
      Title: Chief Financial Officer and Treasurer

Exhibit 99.1

 

LOGO

September 2018

Dear Fellow Shareholders:

Since becoming CEO of Schmitt Industries in January of this year, your Board and I have worked hard to further the Company’s strategic goals. The result of our efforts is apparent in the most recent quarterly earnings – which was the best in the last 10 years. Your Board and Management team are committed to building on and continuing the recent success. We have an effective and strategic plan in place that will enhance shareholder value for all our investors.

During Fiscal 2017 the Company embarked on a multi-phase strategy designed to focus our attention and resources on key product lines, stabilize financial results, and then build on that foundation by leveraging the great products and the very talented people at Schmitt. Over this period, we accomplished the following:

 

  •  

Recorded Balancer segment sales above $2 million for five consecutive quarters.

 

  •  

Reached record recurring monitoring revenues in Xact product line.

 

  •  

Reduced the number of separate product lines from six to the current three— SBS Balancing, XACT Tank Monitoring, and Acuity Laser sensors.

 

  •  

Refocused the Company on its core product lines, sold off unproductive assets, and eliminated investments in unproductive businesses.

 

  •  

Strengthened the management team through selective hiring in key positions, while eliminating less productive functions and personnel throughout key operational roles.

 

  •  

Reduced general, administration, and sales expenses both in absolute terms and as a percent of sales.

This phase was successfully achieved by mid-Fiscal 2018, resulting in three consecutive quarters of profitable operations, and the first profitable fiscal year for the Company since FY2012. Here is a summary of previously reported results:

 

Highlights:    FY2018      FY2017     

Net Income

     $210,639      ($1,073,364)

Fully Diluted EPS

     $0.06      ($0.36)

Gross margin

     43.7%      39.4%

These actions removed complexity and enhanced the human resources that are critical to our ability to compete as a small company in global markets. We must also be cognizant that the industries we serve are subject to economic cycles and global trade policies. Each of the actions above helps create a more resilient organization capable of dealing with challenges regardless of their origin.

Our work is far from done. The second phase of the plan focuses on optimizing the value of each of our three product lines. Strategic analysis of each is currently in progress, including review of the product offering, distribution, and cost structures. As we refine these plans, we are also evaluating how the Company is organized and areas where our management team and key positions need to be augmented to execute more effectively and

 

LOGO

with less risk. In our pursuit of these objectives, it is always important that we continue to balance the Company’s short-term financial results with the strategic initiatives that we believe will maximize shareholder value.

As we move forward we see opportunities to leverage the Company’s dedicated workforce, customers, and partners to create measured value to our shareholders. The markets that we participate in are evolving, and opportunities exist to apply our products and expertise to solve important customer problems. Our mission of delivering Productivity through Precision has never been more relevant as businesses compete globally based on cost and quality. A good example of this is our recent success selling balancing products to grinding machine manufacturers in the European machine tool market. This sophisticated market has come to recognize SBS as a leader in Balancing and Process Control, and we have significant commitment and growing interest from many large customers. These opportunities could not have been realized without Schmitt’s unique expertise and unwavering customer focus.

The steps we have taken create a solid foundation for Schmitt Industries and set the stage for further success over the upcoming year. We are optimistic about continued revenue growth in our core SBS business. In addition, our Xact and Acuity product lines each present opportunity for improved performance and contribution to our overall results. Our focus will continue to be on strategies that optimize the value of each of these business assets in the context of creating and maintaining shareholder value.

This is a very exciting time at Schmitt and I look forward to communicating our progress with you in the upcoming year. It is my objective to expand our shareholder communications and transparency to the market.

I thank all of you for your support.

 

LOGO

David W. Case

President and Chief Executive Officer

Schmitt Industries, Inc.