SMITH MIDLAND CORP

Previous wording

Overall, the Company’s financial bottom line performance was higher for the first quarter of 2024 when compared to the first quarter of 2023. The Company had net income for the three months ended March 31, 2024 of $1,147 compared to net income of $80 for the three months ended March 31, 2023. Total revenue increased by $3,914 to $16,756 for the three months ended March 31, 2024 from $12,842 for the three months ended March 31, 2023. The increase in revenue is mainly from an increase in soundwall sales, utility sales, miscellaneous product sales, and shipping and installation revenue.

Current wording

Overall, the Company’s financial bottom line performance was higher for the first six months of 2024 when compared to the first six months of 2023. The Company had net income for the three and six months ended June 30, 2024 of $1,981 and $3,129, respectively, compared to a net loss of $782 and $701 for the three and six months ended June 30, 2023, respectively. Total revenue increased by $4,941 to $19,639 for the three months ended June 30, 2024 from $14,698 for the three months ended June 30, 2023. Total revenue increased by $8,845 to $36,394 for the six months ended June 30, 2024 from $27,540 for the six months ended June 30, 2023. The increase in revenue is mainly from an increase in soundwall sales, utility sales, miscellaneous product sales, and shipping and installation revenue.

Previous wording

Cost of sales as a percentage of revenue, not including royalties, decreased to 79% for the three months ended March 31, 2024 compared to 86% for the three months ended March 31, 2023. The decrease is primarily due to the increased production volumes which increased the absorption of overhead costs.

Current wording

Cost of sales as a percentage of revenue, not including royalties, decreased to 77% for the three months ended June 30, 2024 compared to 92% for the three months ended June 30, 2023. Cost of sales as a percentage of revenue, not including royalties, decreased to 78% for the six months ended June 30, 2024 compared to 89% for the three months ended June 30, 2023. The decrease is primarily due to the increased production volumes which increased the absorption of overhead costs.

Previous wording

Income tax expense for the three month period ended March 31, 2024 was $357, or an effective tax rate of 24%, as compared to $23, or an effective tax rate of 22% for the three month period ended March 31, 2023.

Current wording

Income tax expense for the three month period ended June 30, 2024 was $632, or an effective tax rate of 24%, as compared to an income tax benefit of $110, or an effective tax rate of 12% for the three month period ended June 30, 2023. Income tax expense for the six month period ended June 30, 2024 was $988, or an effective tax rate of 24%, as compared to an income tax benefit of $87, or an effective tax rate of 11% for the six month period ended June 30, 2023.

Previous wording

As of May 7, 2024, the Company’s sales backlog was approximately $64.6 million, as compared to approximately $51.4 million around the same time in the prior year. It is estimated that most of the projects in the current sales backlog will be produced within 12 months, but a few will be produced over multiple years. The Company anticipates funding related to the Infrastructure Investment and Jobs Act to begin coming through the state and local governments in the latter half of 2024 and beyond to further promote growth in the revenue related to the highway, transportation, and infrastructure markets, although no assurance can be provided. The Company continues to increase marketing and sales efforts towards SlenderWall sales and barrier rentals, in line with long-term strategic objectives.

Current wording

As of August 2, 2024, the Company’s sales backlog was approximately $59.2 million, as compared to approximately $60.9 million around the same time in the prior year. It is estimated that most of the projects in the current sales backlog will be produced within 12 months, but a few will be produced over multiple years. The Company anticipates funding related to the Infrastructure Investment and Jobs Act to begin coming through the state and local governments in the latter half of 2024 and beyond to further promote growth in the revenue related to the highway, transportation, and infrastructure markets, although no assurance can be provided. The Company continues to increase marketing and sales efforts towards SlenderWall sales and barrier rentals, in line with long-term strategic objectives.

Previous wording

Three months ended March 31, 2024, compared to the three months ended March 31, 2023 ** **

Current wording

Three and six months ended June 30, 2024, compared to the three and six months ended June 30, 2023 ** **

Previous wording

Revenue includes product sales, barrier rentals, royalty income, and shipping and installation revenues. Product sales are further divided into soundwall, architectural and SlenderWall™ panels, miscellaneous wall panels, highway barrier, Easi-Set® buildings, utility products, and miscellaneous precast products. The following table summarizes the sales by product type and comparison for the three month period ended March 31, 2024 and 2023.

Current wording

Revenue includes product sales, barrier rentals, royalty income, and shipping and installation revenues. Product sales are further divided into soundwall, architectural and SlenderWall™ panels, miscellaneous wall panels, highway barrier, Easi-Set® buildings, utility products, and miscellaneous precast products. The following table summarizes the sales by product type and comparison for the three and six month periods ended June 30, 2024 and 2023.

Previous wording

Soundwall Sales - Soundwall sales were significantly higher for the three month period ended March 31, 2024, compared to the same period in 2023. The increase is due to higher production volumes at all three plants, as the Company begins increasing production output to execute and deliver on the Company’s increased backlog. Soundwall sales are expected to trend similarly throughout the remainder 2024 as compared to the first quarter of 2024, although no assurance can be given.

Current wording

Soundwall Sales - Soundwall sales were significantly higher for the three and six month periods ended June 30, 2024, compared to the same periods in 2023. The increase is due to higher production volumes at all three plants, as the Company increased production output to execute and deliver on the Company’s increased backlog. Soundwall sales are expected to trend similarly throughout the remainder 2024 as compared to the first half of 2024, although no assurance can be given.

Previous wording

Architectural Panel Sales - Architectural panel sales decreased for the three months ended March 31, 2024, compared to the same period in 2023. The decrease is related to production for an architectural project that did not begin production until the end of the first quarter of 2024. Architectural sales are expected to trend higher throughout 2024 as compared to the first quarter of 2024, although no assurance can be given.

Current wording

Architectural Panel Sales - Architectural panel sales increased for the three and six months ended June 30, 2024, compared to the same period in 2023. The increase is related to production of two architectural projects that started production at the end of the first quarter of 2024. Architectural sales are expected to trend higher throughout 2024 as compared to the first half of 2024, although no assurance can be given.

Previous wording

SlenderWall Sales - SlenderWall sales decreased for the three months ended March 31, 2024, as compared to the same period in 2023. A SlenderWall project was in production during the first quarter of 2023 and the Company did not have a SlenderWall project in production during the first quarter of 2024. The Company continues to focus sales initiatives on SlenderWall, but no assurance can be given as to the success of this endeavor.

Current wording

SlenderWall Sales - SlenderWall sales decreased for the three and six months ended June 30, 2024, as compared to the same periods in 2023. A SlenderWall project was in production during the first half of 2023 and the Company did not have a SlenderWall project in production during the first half of 2024. The Company continues to focus sales initiatives on SlenderWall, but no assurance can be given as to the success of this endeavor.

Previous wording

Miscellaneous Wall Sales - Miscellaneous wall sales increased for the three month period ended March 31, 2024, compared to the same period in 2023 due to the increased production volumes at the Virginia and South Carolina plants. The increase is related to increased production volumes to execute and deliver on the Company’s increased backlog. Miscellaneous wall sales are expected to trend similarly throughout 2024 as the first quarter of 2024, although no assurance can be provided.

Current wording

Miscellaneous Wall Sales - Miscellaneous wall sales decreased for the three and six month periods ended June 30, 2024 compared to the same periods in 2023. Miscellaneous wall sales were slightly down due to lower production volumes in the second quarter of 2024 as compared to 2023. Miscellaneous wall sales are expected to trend similarly throughout 2024 as the first half of 2024, although no assurance can be provided.

Previous wording

Barrier Sales - Barrier sales decreased for the three month period ended March 31, 2024, compared to the same period in 2023. The decrease is due to the completion of large barrier projects in North Carolina and South Carolina during 2023. Barrier sales are expected to trend similarly throughout 2024 as compared to the first quarter of 2024, although no assurance can be given. The Company continues to shift marketing efforts from barrier sales to barrier rentals in the Delaware to Virginia region.

Current wording

Barrier Sales - Barrier sales decreased for the three and six month periods ended June 30, 2024, compared to the same periods in 2023. The decrease is due to the completion of large barrier projects in North Carolina and South Carolina during 2023. Barrier sales are expected to trend similarly throughout 2024 as compared to the first half of 2024, although no assurance can be given. The Company continues to shift marketing efforts from barrier sales to barrier rentals in the Delaware to Virginia region.

Previous wording

Easi-Set® and Easi-Span Building Sales - Building and restroom sales increased slightly for the three month period ended March 31, 2024, compared to the same period in 2023, due to increased building sales at all manufacturing plants. Building and restroom sales are expected to continue to trend similarly throughout the remainder of 2024 compared to the first quarter of 2024.

Current wording

Easi-Set® and Easi-Span Building Sales - Building and restroom sales increased slightly for the three and six month periods ended June 30, 2024, compared to the same periods in 2023, due to increased building sales at all manufacturing plants. Building and restroom sales are expected to continue to trend similarly throughout the remainder of 2024 compared to the first half of 2024.

Previous wording

Utility Sales - Utility sales increased significantly for the three month period ended March 31, 2024, compared to the same period in 2023. The Company has seen a surge in demand for utility vaults in the Northern Virginia market to support the data center growth. Utility sales are expected to trend similarly for the remainder of 2024 as compared to the first quarter of 2024, although no assurance can be provided.

Current wording

Utility Sales - Utility sales increased significantly for the three and six month periods ended June 30, 2024, compared to the same periods in 2023. The Company has seen a surge in demand for utility vaults in the Northern Virginia market to support the data center growth. Utility sales are expected to trend similarly for the remainder of 2024 as compared to the first half of 2024, although no assurance can be provided.

Previous wording

Miscellaneous Product Sales - Miscellaneous products are products that are produced or sold that do not meet the criteria defined for other revenue categories. Examples would include precast concrete slabs, concrete blocks, or small add-on items. Miscellaneous product sales increased for the three month period ended March 31, 2024, compared to the same period in 2023. The increase is mainly from the Virginia plant that started production on one large project for the production of precast beams and platforms. Miscellaneous product sales are expected to trend similarly throughout 2024 as compared to the first quarter of 2024, although no assurance can be given.

Current wording

Miscellaneous Product Sales - Miscellaneous products are products that are produced or sold that do not meet the criteria defined for other revenue categories. Examples would include precast concrete slabs, concrete blocks, or small add-on items. Miscellaneous product sales increased for the three and six month periods ended June 30, 2024, compared to the same periods in 2023. The increase is mainly from the Virginia plant that started production on one large project for the production of precast beams and platforms. Miscellaneous product sales are expected to trend lower throughout 2024 as compared to the first half of 2024, although no assurance can be given.

Previous wording

Barrier Rentals – Barrier rentals decreased for the three month period ended March 31, 2024 compared to the same period in 2023. This decrease is mainly attributed to a shift to long-term rental projects, which carries a lower price per linear foot, from short-term rental projects. Barrier rental revenue, excluding revenue from special barrier projects, is expected to trend higher throughout 2024 as compared to barrier rental revenue, excluding revenue from special barrier projects, in the first quarter of 2024, although no assurance can be given.

Current wording

Barrier Rentals – Barrier rentals increased for the three and six month periods ended June 30, 2024 compared to the same periods in 2023. This increase is mainly attributed to an increase in utilization of rental barrier and the close-out of the buy-back agreement. Barrier rental revenue, excluding revenue from special barrier projects, is expected to trend higher throughout 2024 as compared to barrier rental revenue, excluding revenue from special barrier projects, in the first half of 2024, although no assurance can be given. In addition, barrier rental revenue is expected to increase from special barrier projects to be performed in the third quarter of 2024.

Previous wording

Royalty Income – Royalties increased for the three month period ended March 31, 2024, compared to the same period in 2023. The increase is related to higher barrier production volumes experienced by the Company’s licensees. It is expected that infrastructure spending and the start of production by licensees of a new, low profile barrier that utilizes the J-J Hook system, will continue to drive royalties. The Company expects royalties for 2024 to exceed royalty income for the full year 2023, although no assurance can be given.

Current wording

Royalty Income – Royalties increased for the three and six month periods ended June 30, 2024, compared to the same periods in 2023. The increase is related to higher barrier production volumes experienced by the Company’s licensees. It is expected that infrastructure spending and the start of production by licensees of a new, low profile barrier that utilizes the J-J Hook system, will continue to drive royalties. The Company expects royalties for 2024 to exceed royalty income for the full year 2023, although no assurance can be given.

Previous wording

Shipping and Installation – Shipping revenue results from shipping our products to the customers' final destination and is recognized when the shipping services take place. Installation activities include installation of our products at the customers’ construction site. Installation revenue results when attaching architectural wall panels to a building, installing an Easi-Set® or Easi-Span building at a customers' site, setting highway barrier, or setting any of our other precast products at a site specific to the requirements of the owner. Shipping and installation revenues increased for the three month period ended March 31, 2024 compared to the same period in 2023. The increase is mainly attributed to the increase in shipping and installation of SlenderWall and architectural panels. This increase in shipping and installation revenue correlates with the increased production of SlenderWall panels that occurred, and for which revenue was previously recognized, throughout 2023.

Current wording

Shipping and Installation – Shipping revenue results from shipping our products to the customers' final destination and is recognized when the shipping services take place. Installation activities include installation of our products at the customers’ construction site. Installation revenue results when attaching architectural wall panels to a building, installing an Easi-Set® or Easi-Span building at a customers' site, setting highway barrier, or setting any of our other precast products at a site specific to the requirements of the owner. Shipping and installation revenues increased for the three and six month periods ended June 30, 2024 compared to the same periods in 2023. The increase is mainly attributed to the increase in shipping and installation of SlenderWall and architectural panels. This increase in shipping and installation revenue correlates with the increased production of SlenderWall panels that occurred, and for which revenue was previously recognized, throughout 2023.

Previous wording

Cost of Sales - Total cost of sales as a percent of revenue, excluding royalties, for the three months ended March 31, 2024, was 79%, as compared to 86% for the three months ended March 31, 2023. The decrease in cost of sales as a percentage of revenue, not including royalties, for the three months ended March 31, 2024, compared to the three months ended March 31, 2023, is due to the increase in overall production volumes, which increased the absorption of overhead costs. Finally, the decrease in cost of sales as a percentage of revenue, not including royalties, decreased due to production throughout the first quarter of 2024 related to contracts that factored in the rising inflationary costs experienced throughout 2022 and 2023.

Current wording

Cost of Sales - Total cost of sales as a percent of revenue, excluding royalties, for the three months ended June 30, 2024, was 77%, as compared to 92% for the three months ended June 30, 2023. Total cost of sales as a percent of revenue, excluding royalties, for the six months ended June 30, 2024, was 78%, as compared to 89% for the six months ended June 30, 2023. The decrease in cost of sales as a percentage of revenue, not including royalties, for the three and six months ended June 30, 2024, compared to the three and six months ended June 30, 2023, is due to the increase in overall production volumes, which increased the absorption of overhead costs. In addition, the decrease in cost of sales as a percentage of revenue, not including royalties, decreased due to production throughout the first half of 2024 related to contracts that factored in the rising inflationary costs experienced throughout 2022 and 2023, and a one-time expense related to panels the Company chose to remake for one specific customer related to defective steel from a supplier used in the initial product in 2023.

Previous wording

General and Administrative Expenses - For the three months ended March 31, 2024, the Company's general and administrative expenses increased by $199 to $1,549 from $1,350 during the same period in 2023. The increase is mainly attributed to an increase in expense related to the allowance for credit losses. General and administrative expense as a percentage of total revenue was 9% and 11% for the three month periods ended March 31, 2024 and 2023, respectively.

Current wording

General and Administrative Expenses - For the three months ended June 30, 2024, the Company's general and administrative expenses decreased to $1,669 from $1,884 during the same period in 2023. For the six months ended June 30, 2024, the Company's general and administrative expenses decreased to $3,218 from $3,233 during the same period in 2023. General and administrative expense as a percentage of total revenue was 9% and 13% for the three month periods ended June 30, 2024 and 2023, respectively. General and administrative expense as a percentage of total revenue was 9% and 12% for the six month periods ended June 30, 2024 and 2023, respectively. Such expenses decreased due to lower salaries and wages. The salaries and wages are expected to slightly increase for the second half of 2024 as compared to the first six months of 2024.

Previous wording

Selling Expenses* -* Selling expenses for the three months ended March 31, 2024 increased to $853 from $762 for the same period in 2023. The increase in selling expenses for the three month period ended March 31, 2024, compared to the same period in 2023, is due to the hiring of additional salespeople and increased commissions. The Company expects selling expenses to increase in future periods with the plan for additional sales associates and increased advertising spending aligning with the strategy to increase SlenderWall sales and barrier rentals.

Current wording

Selling Expenses* -* Selling expenses for the three months ended June 30, 2024 decreased to $791 from $883 for the same period in 2023. The slight decrease is due to a reduction in salaries and wages. Selling expenses for the six months ended June 30, 2024 and 2023 were both $1,645. The Company expects selling expenses to increase in future periods with the plan for additional sales associates and increased advertising spending aligning with the strategy to increase SlenderWall sales and barrier rentals.

Previous wording

Operating Income (Loss) - The Company had operating income for the three month period ended March 31, 2024 of $1,509 compared to $54 for the same period in 2023. The increase is mainly due to the increase in revenue and decrease in cost of sales as a percent of revenue.

Current wording

Operating Income (Loss) - The Company had operating income for the three month period ended June 30, 2024 of $2,673 compared to an operating loss of $981 for the same period in 2023. The Company had operating income for the six month period ended June 30, 2024 of $4,182 compared to an operating loss of $926 for the same period in 2023. The increase is mainly due to the increase in revenue and decrease in cost of sales as a percent of revenue.

Previous wording

Interest Expense - Interest expense was $60 and $64 for the three month periods ended March 31, 2024 and 2023, respectively. The Company expects interest expense for the full year of 2024 to be lower compared to the full year of 2023 due to the decrease in level of indebtedness.

Current wording

Interest Expense - Interest expense was $59 and $64 for the three month periods ended June 30, 2024 and 2023, respectively. Interest expense was $119 and $128 for the six month periods ended June 30, 2024 and 2023, respectively. The Company expects interest expense for the full year of 2024 to be lower compared to the full year of 2023 due to the decrease in level of indebtedness.

Previous wording

Income Tax Expense (Benefit) - The Company had an income tax expense of $357, or an effective tax rate of 24%, for the three months ended March 31, 2024, compared to income tax expense of $23, or an effective tax rate of 22% for the same period in 2023.

Current wording

Income Tax Expense (Benefit) - The Company had an income tax expense of $632, or an effective tax rate of 24%, for the three months ended June 30, 2024, compared to income tax benefit of $110, or an effective tax rate of 12% for the same period in 2023. The Company had an income tax expense of $988, or an effective tax rate of 24%, for the six months ended June 30, 2024, compared to income tax benefit of $87, or an effective tax rate of 11% for the same period in 2023.

Previous wording

Net Income (Loss) - The Company had net income of $1,147 for the three months ended March 31, 2024, compared to net income of $80 for the same period in 2023. The basic and diluted earnings per share was $0.22 and $0.21, respectively for the three months ended March 31, 2024, and the basic and diluted earnings per share was $0.02 for the three months ended March 31, 2023.

Current wording

Net Income (Loss) - The Company had net income of $1,981 and $3,129 for the three and six months ended June 30, 2024, respectively, compared to a net loss of $782 and $701 for the same periods in 2023, respectively. The basic and diluted earnings per share was $0.37 and $0.59, respectively, for the three and six months ended June 30, 2024, and the basic and diluted loss per share was $0.15 and $0.13 for the three and six months ended June 30, 2023, respectively.

Previous wording

The Company has a mortgage note payable to Summit Community Bank (the “Bank”) for the construction of its North Carolina facility. The note carries a ten-year term at a fixed interest rate of 3.64% annually per the Promissory Note Rate Conversion Agreement, with monthly payments of $22, and is secured by all of the assets of Smith-Carolina and a guarantee by the Company. The balance of the note payable at March 31, 2024 was $1,344.

Current wording

The Company has a mortgage note payable to Summit Community Bank (the “Bank”) for the construction of the North Carolina facility. The note carries a ten-year term at a fixed interest rate of 3.64% annually per the Promissory Note Rate Conversion Agreement, with monthly payments of $22, and is secured by all of the assets of Smith-Carolina and a guarantee by the Company. The balance of the note payable at June 30, 2024 was $1,275.

Previous wording

The Company also has a note payable to the Bank in the amount of $1,751 as of March 31, 2024. The loan is collateralized by a first lien position on the Midland, VA plant, building, and assets. The interest rate per the Promissory Note is fixed at 3.99% per annum, with principal and interest payments payable monthly in the amount of $27. The loan matures on March 27, 2030.

Current wording

The Company also has a note payable to the Bank in the amount of $1,666 as of June 30, 2024. The loan is collateralized by a first lien position on the Midland, VA plant, building, and assets. The interest rate per the Promissory Note is fixed at 3.99% per annum, with principal and interest payments payable monthly over 120 months in the amount of $27. The loan matures on March 27, 2030.

Previous wording

On February 10, 2022, the Company completed the financing for its acquisition of certain real property in Midland, VA from the fourth quarter of 2021, totaling approximately 29.8 acres, with a note payable to the Bank with the original principal amount of $2,805. The loan is collateralized by a first lien position on the related real property. The interest rate is fixed at 4.09% per annum, with principal and interest payments payable monthly over 180 months for $21. The loan matures on February 10, 2037. The balance of the note payable on March 31, 2024 was $2,510.

Current wording

On February 10, 2022, the Company completed the financing for its acquisition of certain real property in Midland, VA from the fourth quarter of 2021, totaling approximately 29.8 acres, with a note payable to the Bank in the original principal amount of $2,805. The loan is collateralized by a first lien position on the related real property. The interest rate is fixed at 4.09% per annum, with principal and interest payments payable monthly over 180 months for $21. The loan matures on February 10, 2037. The balance of the note payable on June 30, 2024 was $2,453.

Previous wording

The Company additionally has two smaller installment loans with annual interest rates of 2.90% and 3.99%, maturing in 2025, with balances at March 31, 2024 totaling $24.

Current wording

The Company additionally has one smaller installment loan with an annual interest rate of 2.90%, maturing in 2025, with a balance of $18 as of June 30, 2024.

Previous wording

On March 31, 2024, the Company had cash totaling $6,801 compared to cash totaling $9,175 on December 31, 2023. The decrease in cash is primarily the result of cash absorbed by investing activities through capital spending as described in further detail below. Additionally, the cash balance decreased as a result of the increase in the Company’s accounts receivable position. The Company expects its cash position to be favorably affected to the extent that it is successful in collecting outstanding accounts receivable balances.

Current wording

On June 30, 2024, the Company had cash totaling $7,288 compared to cash totaling $9,175 on December 31, 2023. The decrease in cash is primarily the result of cash absorbed by investing activities through capital spending as described in further detail below. The Company expects its cash position to be favorably affected to the extent that it is successful in collecting outstanding accounts receivable balances.

Previous wording

The Company’s accounts receivable balances, net of allowance, at March 31, 2024 was $20,055, compared to $17,209 at December 31, 2023. The increase is primarily the result of increased sales volumes.

Current wording

The Company’s accounts receivable balances, net of allowance, at June 30, 2024 was $17,178, compared to $17,209 at December 31, 2023.

Previous wording

Capital spending for the three months ended March 31, 2024 totaled $1,795 as compared to $1,164 for the same period in 2023. The 2024 expenditures were primarily for a new batch plant system for the South Carolina manufacturing facility, utility vault forms for increased production capacity, and crash cushions to expand the Company’s rental product offering. The Company intends to invest approximately $5,000, for the full year 2024, which includes expansion of the North Carolina manufacturing facility, soundwall forms for increased production capacity, and miscellaneous manufacturing equipment. Anticipated capital expenditures excludes possible acquisitions.

Current wording

Capital spending for the six months ended June 30, 2024 totaled $3,504 as compared to $2,974 for the same period in 2023. The 2024 expenditures were primarily for a new batch plant system for the South Carolina manufacturing facility, utility vault forms for increased production capacity, and crash cushions to expand the Company’s rental product offering. The Company intends to invest approximately $5,000, for the full year 2024, which includes expansion of the North Carolina manufacturing facility, soundwall forms for increased production capacity, and miscellaneous manufacturing equipment. Anticipated capital expenditures excludes possible acquisitions.

Previous wording

The Company’s cash flow from operations is affected by production schedules set by contractors, which generally provide for payment 30 to 90 days after the products are produced, and with some architectural contracts, retainage may be held until the entire project is completed. This payment schedule may result in liquidity challenges for the Company because it must bear a portion of the cost of production before it receives payment from its customers. The Company’s average days sales outstanding (DSO), excluding the effect of unbilled revenue, was 109 days for the three months ended March 31, 2024, compared to 122 days for the three months ended March 31, 2023.

Current wording

The Company’s cash flow from operations is affected by production schedules set by contractors, which generally provide for payment 30 to 90 days after the products are produced, and with some architectural contracts, retainage may be held until the entire project is completed. This payment schedule may result in liquidity challenges for the Company because it must bear a portion of the cost of production before it receives payment from its customers. The Company’s average days sales outstanding (DSO), excluding the effect of unbilled revenue, was 97 days for the six months ended June 30, 2024, compared to 131 days for the six months ended June 30, 2023.

Previous wording

The Company’s inventory was $6,951 on March 31, 2024, and $5,150 on December 31, 2023, or an increase of $1,801. The increase in inventory is mainly due to the increase of finished goods inventory compared to the prior year. The increase is related to inventory needed on-hand for the anticipated delivery schedules as it relates to utility vaults in 2024. Inventory turnover was 9.7, annualized for the three months ended March 31, 2024, compared to 13.4, annualized for the same period in 2023.

Current wording

The Company’s inventory was $6,667 on June 30, 2024, and $5,150 on December 31, 2023, or an increase of $1,517. The increase in inventory is mainly due to the increase of finished goods inventory compared to the prior year. The increase is related to inventory needed on-hand for the anticipated delivery schedules as it relates to utility vaults in 2024. Inventory turnover was 9.4, annualized for the six months ended June 30, 2024, compared to 15.1, annualized for the same period in 2023.

Previous wording

Raw material costs used in production have slightly increased for the first three months of 2024. The Company anticipates raw material prices to slightly increase for the remainder of 2024, although no assurance can be given regarding future pricing.

Current wording

Raw material costs used in production have slightly increased for the first six months of 2024. The Company anticipates raw material prices to slightly increase for the remainder of 2024, although no assurance can be given regarding future pricing.

Previous wording

As of May 7, 2024, the Company’s sales backlog was approximately $64.6 million, as compared to approximately $51.4 million at the same time in 2023. It is estimated that the majority of the projects in the sales backlog will be produced within 12 months, with a portion extending several years.

Current wording

As of August 2, 2024, the Company’s sales backlog was approximately $59.2 million, as compared to approximately $60.9 million at the same time in 2023. It is estimated that the majority of the projects in the sales backlog will be produced within 12 months, with a portion extending several years.