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): January 10, 2019

 

 

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 2.02 Results of Operations and Financial Condition.

On January 10, 2019, Schmitt Industries, Inc. issued a press release entitled “Schmitt Industries Announces Second Quarter Fiscal 2019 Operating Results.” A copy of the press release is furnished as Exhibit 99.1 to this report.

The information contained in this Current Report shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or incorporated by reference in any filing under the Exchange Act or the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such a filing.

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits

 

99.1    Press release entitled “Schmitt Industries Announces Second Quarter Fiscal 2019 Operating Results.”

Forward Looking Statements

This document may contain forward-looking statements made pursuant to the Private Securities Litigation Reform Act of 1995. 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, the ability to develop new products to satisfy changes in consumer demands, the intensity of competition, increased pricing pressure from both competitors and customers, 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, fluctuations in quarterly and annual operating results, risks associated with operating a global business including risks from international sales, reduction in demand or loss of significant customers, changes in foreign import tariffs and currency fluctuations including the United Kingdom’s likely exit from the European Union, ability to reduce operating costs if sales decline, attracting and retaining key management and qualified technical and sales personnel, impact resulting from the actions of activist shareholders, changes in effective tax rates, protection of intellectual property rights and the increased costs due to changes in securities laws and regulations.

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.

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.
January 10, 2019     By:   /s/ Ann M Ferguson
      Name: Ann M Ferguson
      Title: Chief Financial Officer and Treasurer

Exhibit 99.1

 

LOGO

IMMEDIATE NEWS RELEASE

Schmitt Industries Announces Second Quarter Fiscal 2019 Operating Results

 

January 10, 2019    NASDAQ: SMIT

Portland, Oregon – Schmitt Industries, Inc. (NASDAQ: SMIT) today announced its operating results for the second quarter of Fiscal 2019.

Highlights of the three and six months ended November 30, 2018:

 

  •  

Balancer segment sales increased $114,634, or 5.1%, to $2,345,480 for the three months ended November 30, 2018 as compared to $2,230,846 for the three months ended November 30, 2017. Balancer segment sales increased $238,569, or 5.5%, to $4,539,812 for the six months ended November 30, 2018 as compared to $4,301,243 for the six months ended November 30, 2017.

 

  •  

Measurement segment sales decreased $382,036, or 24.8%, to $1,157,998 for the three months ended November 30, 2018 as compared to $1,540,034 for the three months ended November 30, 2017. Measurement segment sales decreased $149,166, or 5.8%, to $2,404,119 for the six months ended November 30, 2018 from $2,553,285 for the six months ended November 30, 2017.

 

  •  

Within the Measurement segment, Xact monitoring revenues continued to grow, increasing 19.0% for the three months ended November 30, 2018 compared to the three months ended November 30, 2017. Xact monitoring revenues increased 17.0% for the six months ended November 30, 2018 as compared to the same period in the prior year.

 

  •  

Operating expenses decreased $37,784, or 2.3%, to $1,587,419 for the three months November 30, 2018 from $1,625,203 for the three months ended November 30, 2017, and decreased $128,985, or 4.1%, to $3,041,019 for the six months ended November 30, 2018 compared to $3,170,004 for the six months ended November 30, 2017. These results include non-recurring 2018 proxy and reorganization expenses of $125,280 and $257,330 incurred during the three-month and six-month periods ended November 30, 2018, respectively, that were not incurred during the same periods in the prior year.

Summary data for the three months ended November 30, 2018 and 2017:

 

     Three Months Ended November 30,               
     2018     2017     Change ($)      Change (%)  

Total net sales

   $ 3,503,478     $ 3,770,880     $ (267,402 )       (7.1 %) 

Balancer segment

     2,345,480       2,230,846       114,634        5.1 % 

Measurement segment

     1,157,998       1,540,034       (382,036 )       (24.8 %) 

Gross margin

     38.9 %      45.8 %      

Operating expenses

   $ 1,587,419     $ 1,625,203       (37,784 )       (2.3 %) 

Net income (loss)

   $ (255,270 )    $ 103,248       (358,518 )    

Net income (loss) per fully diluted share

   $ (0.06 )    $ 0.03       

 

C ORPORATE O FFICE : 2765 NW N ICOLAI ST . • P ORTLAND , O REGON 97210 • 503/227-7908 • F AX 503/223-1258

LOGO

 

Summary data for the six months ended November 30, 2018 and 2017:

 

     Six Months Ended November 30,               
     2018     2017     Change ($)      Change (%)  

Total net sales

   $ 6,943,931     $ 6,854,528     $ 89,403        1.3 % 

Balancer segment

     4,539,812       4,301,243       238,569        5.5 % 

Measurement segment

     2,404,119       2,553,285       (149,166 )       (5.8 %) 

Gross margin

     38.9 %      45.6 %      

Operating expenses

   $ 3,041,019     $ 3,170,004       (128,985 )       (4.1 %) 

Net income (loss)

   $ (467,089 )    $ (30,850 )      (436,239 )    

Net income (loss) per fully diluted share

   $ (0.12 )    $ (0.01 )      

“Although the Company had a challenging quarter in the Measurement segment due to a customer timing shift in the Xact product line and a tough year-over-year comparison in the Acuity line, the core Balancer segment remained strong. Since taking over on December 1, 2018, the newly appointed management team and Schmitt employees have begun to identify processes and practices with a sole focus on increasing the profitability of the Company” commented Michael R. Zapata, Executive Chairman and President of Schmitt Industries. “In furtherance of our announced re-organization, we look forward to communicating expected actions in the coming months,” Zapata added.

About Schmitt Industries

Schmitt Industries, Inc. (the Company) designs, manufactures and sells high precision test and measurement products for two main business segments: the Balancer Segment and the Measurement Segment. For the Balancer Segment, the Company designs, manufactures and sells computer-controlled vibration detection, balancing and process control systems for the worldwide machine tool industry, particularly for grinding machines. The Company also provides sales and service for Europe and Asia through its wholly owned subsidiary, Schmitt Europe Limited (SEL), located in Coventry, England and through its sales representative office located in Shanghai, China. For the Measurement Segment, the Company has two core product lines: the Acuity ® product line, which consists of sales of laser and white light sensor distance measurement and dimensional sizing products; and the Xact ® product line, which consists of sales of remote tank monitoring products that measure the fill levels of tanks holding propane, diesel and other tank-based liquids and revenues from the related monitoring services associated with the transmission of data from the tanks to a secure web site.

FORWARD-LOOKING STATEMENTS

This document may contain forward-looking statements made pursuant to the Private Securities Litigation Reform Act of 1995. 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, the ability to develop new products to satisfy changes in consumer demands, the intensity of competition, increased pricing pressure from both competitors and customers, 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, fluctuations in quarterly and annual operating results, risks associated with operating a global business including risks from international sales, reduction in demand or loss of significant customers, changes in foreign import tariffs and currency fluctuations including the United Kingdom’s likely exit from the European Union, ability to reduce operating costs if sales decline, attracting and retaining key management and qualified technical and sales personnel, impact resulting from the actions of activist shareholders, changes in effective tax rates, protection of intellectual property rights and the increased costs due to changes in securities laws and regulations.

 

C ORPORATE O FFICE : 2765 NW N ICOLAI ST . • P ORTLAND , O REGON 97210 • 503/227-7908 • F AX 503/223-1258

LOGO

 

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

The forward-looking statements in this release speak only as of the date on which they were made, and the Company does not undertake any obligation to update any forward-looking statement to reflect events or circumstances after the date of this release, or for changes to this document made by wire services or internet service providers.

 

For more information contact:           

Ann M. Ferguson, CFO and Treasurer

(503) 227-7908 or visit our web site at www.schmitt-ind.com

 

C ORPORATE O FFICE : 2765 NW N ICOLAI ST . • P ORTLAND , O REGON 97210 • 503/227-7908 • F AX 503/223-1258

SCHMITT INDUSTRIES, INC.

CONSOLIDATED BALANCE SHEETS

(UNAUDITED)

 

     November 30, 2018     May 31, 2018  

ASSETS

    

Current assets

    

Cash and cash equivalents

   $ 1,299,886     $ 2,053,181  

Restricted cash

     56,583       58,352  

Accounts receivable, net

     2,184,906       2,047,032  

Inventories

     6,077,054       5,710,888  

Prepaid expenses

     136,004       148,924  

Income taxes receivable

     4,435       0  
  

 

 

   

 

 

 

Total current assets

     9,758,868       10,018,377  
  

 

 

   

 

 

 

Property and equipment, net

     734,687       770,915  
  

 

 

   

 

 

 

Other assets

    

Intangible assets, net

     444,476       496,768  
  

 

 

   

 

 

 

TOTAL ASSETS

   $ 10,938,031     $ 11,286,060  
  

 

 

   

 

 

 

LIABILITIES & STOCKHOLDERS’ EQUITY

    

Current liabilities

    

Accounts payable

   $ 1,159,569     $ 1,024,256  

Accrued commissions

     191,281       194,797  

Accrued payroll liabilities

     186,488       188,568  

Other accrued liabilities

     269,402       358,790  

Income taxes payable

     0       3,993  
  

 

 

   

 

 

 

Total current liabilities

     1,806,740       1,770,404  
  

 

 

   

 

 

 

Stockholders’ equity

    

Common stock, no par value, 20,000,000 shares authorized, 3,994,545 shares issued and outstanding at May 31, 2018 and November 30, 2018

     13,094,639       13,085,652  

Accumulated other comprehensive loss

     (462,570 )      (536,307 ) 

Accumulated deficit

     (3,500,778 )      (3,033,689 ) 
  

 

 

   

 

 

 

Total stockholders’ equity

     9,131,291       9,515,656  
  

 

 

   

 

 

 

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY

   $ 10,938,031     $ 11,286,060  
  

 

 

   

 

 

 

SCHMITT INDUSTRIES, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

FOR THE THREE AND SIX MONTHS ENDED NOVEMBER 30, 2018 AND 2017

(UNAUDITED)

 

     Three Months Ended November 30,      Six Months Ended November 30,  
     2018     2017      2018     2017  

Net sales

   $ 3,503,478     $ 3,770,880      $ 6,943,931     $ 6,854,528  

Cost of sales

     2,140,371       2,044,898        4,241,026       3,729,027  
  

 

 

   

 

 

    

 

 

   

 

 

 

Gross profit

     1,363,107       1,725,982        2,702,905       3,125,501  
  

 

 

   

 

 

    

 

 

   

 

 

 

Operating expenses:

         

General, administration and sales

     1,539,495       1,524,443        2,944,858       2,992,787  

Research and development

     47,924       100,760        96,161       177,217  
  

 

 

   

 

 

    

 

 

   

 

 

 

Total operating expenses

     1,587,419       1,625,203        3,041,019       3,170,004  
  

 

 

   

 

 

    

 

 

   

 

 

 

Operating income (loss)

     (224,312 )      100,779        (338,114 )      (44,503 ) 

Other income (expense), net

     (24,596 )      9,078        (116,247 )      26,621  
  

 

 

   

 

 

    

 

 

   

 

 

 

Income (loss) before income taxes

     (248,908 )      109,857        (454,361 )      (17,882 ) 

Provision for income taxes

     6,362       6,609        12,728       12,968  
  

 

 

   

 

 

    

 

 

   

 

 

 

Net income (loss)

   $ (255,270 )    $ 103,248      $ (467,089 )    $ (30,850 ) 
  

 

 

   

 

 

    

 

 

   

 

 

 

Net loss per common share, basic

   $ (0.06 )    $ 0.03      $ (0.12 )    $ (0.01 ) 
  

 

 

   

 

 

    

 

 

   

 

 

 

Weighted average number of common shares, basic

     3,994,545       2,995,910        3,994,545       2,995,910  
  

 

 

   

 

 

    

 

 

   

 

 

 

Net loss per common share, diluted

   $ (0.06 )    $ 0.03      $ (0.12 )    $ (0.01 ) 
  

 

 

   

 

 

    

 

 

   

 

 

 

Weighted average number of common shares, diluted

     3,994,545       3,024,099        3,994,545       2,995,910