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December 2, 2020

Smith-Midland making moves to build stock value

Photo/Lawrenc Emerson
Smith-Midland Board of Directors after a recent meeting at the Warrenton-Fauquier Airport, from left (front row): CEO Ashley B. Smith, Chairman Rodney I. Smith and Roderick Smith, (back row) CFO A.J. Krick, Wesley A. Taylor, James Russell Bruner, Ed Broenniman, Arthur X. Miles, Richard Gerhardt and VP Matthew I. Smith.
Contributed Photo
Smith-Midland’s SlenderWall panels clad the exterior of this building in Tysons.
File Photo/Lawrence Emerson
Smith-Midland CFO A.J. Krick, Quality Control Manager Vaughcarl Gardner and CEO Ashley Smith have toured Japanese factories to learn more about “lean manufacturing.”
Contributed Photo
The company has a “fleet” of J-J Hooks barriers that it sells and leases for highway construction zones and major events security.
It seems like the industry structure and their competitive position . . . could lead to good earnings growth. I also like to invest in companies that are not followed by Wall Street and, boy, is this one.
— John Barr, Needham Funds portfolio manager
By .(JavaScript must be enabled to view this email address)
Over six decades, the Midland-based concrete products manufacturer has earned a reputation for innovation, developing well-regarded products, primarily for the construction, transportation and utility industries.

But, Smith-Midland in recent years also has increased its focus on improving the bottom line and attracting investors. The company’s stock last month returned to the Nasdaq exchange after an absence of 21 years, during which its shares traded over the counter.

“I think we’re finally at the place where we can do it,” Chief Financial Officer A.J. Krick said in a recent interview. “It gives us more exposure, more potential investors and better liquidity for shareholders . . . .

“If we need to raise capital, we have the ability to do it,” Mr. Krick said of the Nov. 16 “uplisting.”

CEO Ashley B. Smith called it “the next natural step. I think the time is right now . . . .

“What we’re doing is building on what Dad and Grandad put in place. My motto is, ‘Leave things better than I found it’,” Mr. Smith added. “It’s all based, more or less, on what Dad and others started in the ’70s,” when company aggressively began diversifying its products.

Midland farmer David G. Smith in 1960 founded Smith Cattleguard, making a simple precast device that allows vehicles but not livestock to pass on farm roads, then adding other agricultural products. Rodney I. Smith six months later joined his father and led the company’s expansion.

New products included underground utility vaults, transformer pads and highway barriers. The company licensed its patented inventions to other manufacturers and branched from Midland with a second plant in North Carolina.

Rebranded as Smith-Midland, the company has since expanded into architectural components, including the patented SlenderWall system, often used in large structures, built a new North Carolina plant and purchased one in South Carolina.

The company last year reported record total revenue of $46.7 million, up 16 percent from 2018, and a $2-million profit. That marked the fifth consecutive year of profitability, after Smith-Midland reported an operating loss of $804,000 in 2014.

“Our team has been through some really, really tough times,” Ashley Smith admitted.

The company’s stock first appeared on the Nasdaq exchange in 1995. But, following a warning from the exchange, Smith-Midland in 1999 voluntarily delisted its stock after net assets dropped below $2 million and the shares traded at less than $1 — failing to meet the Nasdaq’s minimum requirements.

Over the last two decades, however, Smith-Midland has built a much stronger financial position. After the 9/11 terrorist attacks, it emerged as a major player in the security business, renting and installing concrete barriers for political conventions, presidential inaugurations and other events.

Contractors use its custom-cast architectural panels to clad high-rise buildings, corporate headquarters and college dorms. Smith-Midland wall systems that look like stone or brick extend for miles along highways and entrances to high-profile venues. Its patented JJ-Hooks barriers line highway construction zones in addition to their security applications.

The new plants have extended the company’s ability to compete for large contracts throughout the Southeast.

Ashley Smith, a company executive since 1990 and board member since 1994, succeeded his father, who remains chairman, as CEO in May 2018. The younger Smith has studied Japanese industrial discipline, including “lean manufacturing,” to make the company more efficient.

“We’re planning very aggressive growth,” Mr. Smith added.

He and Mr. Krick have met with potential investors in Los Angeles and San Francisco.

“We’ve just been getting out and telling the story to more people in more places,” the CEO said. “I think that’s one of the biggest things.”

> Investor presentation at bottom of story

In March of last year, they had a fortuitous meeting at the Marriot Marquis on Times Square in New York. Smith-Midland paid the $5,000 fee to make a presentation at the Sidoti & Company Spring Investor Conference.

“A friend actually pulled me into their presentation, and I was fascinated,” said John Barr, a portfolio manager with Needham Funds in New York.

“We generally take a good bit of time to get to know a company before investing,” said Mr. Barr. So, he came down, stayed at the Chilton House in Warrenton and visited the Smith-Midland plant in Southern Fauquier.

As of Sept. 30, the Needham Aggressive Growth Fund that Mr. Needham manages had 137,500 shares of the company stock. That fund’s investments in 62 companies also included 56,000 shares of Apple, 20,000 shares of CarMax and 77,000 shares of Vicor Corp. (electrical equipment).

What about Smith-Midland attracted the fund manager?

“Our mission is to create wealth for long-term investors,” Mr. Barr said in a phone interview. “I look for companies founded by families and long-tenured CEOs, because they tend to think long-term.”

He also deemed Smith-Midland’s historical profitability to be depressed because of the investments it has made. Its licensing of products to more than 40 other manufacturers around the globe, new crash barriers that meet transportation safety requirements in 35 states, large “fleet” of rental barricades and manufacturing capacity bode well for the future, Mr. Barr suggested.

“It seems like the industry structure and their competitive position . . . could lead to good earnings growth.

“I also like to invest in companies that are not followed by Wall Street and, boy, is this one,” he said. “Nobody knows them . . . . I love small, obscure companies.”

Expectations have increased at the Southern Fauquier-based company, with 232 employees in three states.

Trading under the “SMID” symbol, the company’s stock has traded around $8.40 a share since rejoining Nasdaq last month. It has a market capitalization of more than $40 million and total assets of $45 million.

“People like that we’re not hired guns,” said Ashley Smith, acknowledging the allure for some investors. “The whole thing now is to build . . . to get the value up. Our goal is to get the stock to the right value . . . .

“Now, the pressure is on Matthew (Smith) in sales and marketing; he’s the man,” the CEO said of a younger brother, who serves as a company vice president.

All four of Rodney Smith’s sons have key roles in the company he built.

Jeremy Smith works as building products manager of Easi-Set Worldwide, which manufactures precast buildings.

Roderick Smith serves as general manager of Smith-Carolina.

Over the years, Rodney Smith recruited board members with a range of expertise. That practice has continued with directors experienced in global manufacturing and transportation.

“I would say they ask the right questions,” Mr. Krick said. “They’re making us better.”

Contact Editor “Lou” Emerson at .(JavaScript must be enabled to view this email address) or 540-270-1845.

SMID Investor Presentation ... by Fauquier Now

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Nathanjames77 · December 19, 2020 at 5:04 am
According to this report smith midland moves to build new stock values and their graph according to business trend. Smith serves as manager with his expertise. Keep sharing such inspiring stuff.
llfarm88 · December 3, 2020 at 6:02 pm
Congratulations are highly in order for Rodney and his sons Ashley, Matthew, Jeremy, Roderick and the entire company for representing what can be accomplished in Fauquier County, I am proud to have known and worked with them in the past.
This is a FIRST CLASS organization that share the most important value in life "Common Sense". So very glad I purchased your stock many years back! Thank You and Continued Success. L and L Farm, Midland
Savefauquiercounty2019 · December 3, 2020 at 5:03 am
Prior to putting your hard earned money into any company, or purchasing their products check their hiring practices.
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