Schmitt Industries Announces Second Quarter Fiscal 2017 Operating Results

Schmitt Industries, Inc. (NASDAQ:SMIT) today announced its operating results for the three and six months ended November 30, 2016.  For the three months ended November 30, 2016, total sales decreased $418,208, or 13.6%, to $2,655,561 from $3,073,769 in the three months ended November 30, 2015. Net loss was $382,470, or $(0.13) per fully diluted share, for the three months ended November 30, 2016 as compared to net loss of $403,787, or $(0.13) per fully diluted share, for the three months ended November 30, 2015. 

For the six months ended November 30, 2016, total sales decreased $630,060, or 10.2%, to $5,548,093 from $6,178,153 in the six months ended November 30, 2015.  For the six months ended November 30, 2016, net loss was $508,099, or $(0.17) per fully diluted share, as compared to net loss of $598,849, or $(0.20) per fully diluted share for the six months ended November 30, 2015.

Balancer segment sales focus throughout the world on end-users, rebuilders and original equipment manufacturers of grinding machines with the target geographic markets in North America, Asia and Europe. Balancer segment sales decreased $483,063, or 25.7%, to $1,397,666 for the three months ended November 30, 2016 compared to $1,880,729 for the three months ended November 30, 2015.  The decrease is primarily attributed to weaker sales across our three significant markets – North America, Europe, and Asia.

Balancer segment sales decreased $849,682, or 22.3%, to $2,958,542 for the six months ended November 30, 2016 compared to $3,808,224 for the six months ended November 30, 2015, primarily due to weaker sales in North America and Asia.

The Measurement segment product line consists of laser-based light-scatter, distance measurement and dimensional sizing products and ultrasonic-based remote tank monitoring products for propane and diesel tanks. Total Measurement segment sales increased $64,855, or 5.4%, to $1,257,895 for the three months ended November 30, 2016 compared to $1,193,040 for the three months ended November 30, 2015, primarily due to increases in sales of our Xact remote tank monitoring products and related revenues from monitoring services offset by decreases in sales associated with the other product lines in the Measurement segment.

Total Measurement segment sales increased $219,622, or 9.3%, to $2,589,551 for the six months ended November 30, 2016 compared to $2,369,929 for the six months ended November 30, 2015, primarily due to increases in sales of our Xact remote tank monitoring products and related revenues from monitoring services offset by decreases in sales associated with the other product lines in the Measurement segment.

Gross margin for the three months ended November 30, 2016 decreased to 38.9% as compared to 41.5% for the three months ended November 30, 2015.  Gross margin for the six months ended November 30, 2016 decreased to 43.4% as compared to 44.0% for the six months ended November 30, 2015.  The fluctuations in gross margin in the three and six month periods ended November 30, 2016 as compared to the same three and six month periods in the prior fiscal year are primarily influenced by shifts in the product sales mix from our five product lines.

Operating expenses decreased $269,183, or 16.3%, to $1,384,952 for the three months ended November 30, 2016 as compared to $1,654,135 for the three months ended November 30, 2015. General, administrative and selling expenses decreased $256,960, or 16.2%, for the three months ended November 30, 2016 as compared to the same period in the prior year.  These decreases are primarily due to a reduction in sales commissions, travel and entertainment expense and personnel expenses.

Operating expenses decreased $402,461, or 12.3%, to $2,876,468 for the six months ended November 30, 2016 as compared to $3,278,929 for the six months ended November 30, 2015. General, administrative and selling expenses decreased $382,173, or 12.3%, for the six months ended November 30, 2016 as compared to the same period in the prior year.  These decreases are primarily due to a reduction in sales commissions, travel and entertainment expense and personnel expenses.

"In the first six months of FY2017, we have been shifting our focus and resources towards our three largest product lines – SBS, Acuity and Xact," commented David M. Hudson, President and CEO of Schmitt Industries. "This focus coincides with a general winding down of our smaller product lines.  With this approach, we have reduced our operating expenses, reallocated our engineering resources, and increased our time efficiencies which has allowed us to more effectively utilize our sales and marketing resources," Hudson concluded.