0000924719false--12-31Q120250.01100000000000.01800000040920falsefalsefalsefalseP5Y500000000009247192025-01-012025-03-310000924719smid:SettlementOfRestrictedStockMember2025-03-310000924719smid:SettlementOfRestrictedStockMember2025-01-012025-03-310000924719smid:SettlementOfRestrictedStockMember2024-12-310000924719smid:ServiceBasedMember2025-03-310000924719smid:ServiceBasedMember2025-01-012025-03-310000924719smid:WeightedAverageGrantDateFairValueMember2024-12-310000924719smid:ServiceBasedMember2024-12-310000924719smid:PerformanceBasedMember2025-03-310000924719smid:PerformanceBasedMember2025-01-012025-03-310000924719smid:PerformanceBasedMember2024-12-310000924719smid:WeightedAverageGrantDateFairValueMember2025-03-310000924719smid:WeightedAverageGrantDateFairValueMember2025-01-012025-03-3100009247192022-02-100000924719smid:SummitCommunityBankMember2025-01-012025-03-310000924719smid:SummitCommunityBankMember2024-12-3100009247192022-02-012022-02-100000924719smid:SummitCommunityBankMember2025-03-310000924719smid:TwoCustomerMember2024-12-3100009247192024-01-012024-12-310000924719smid:TwoCustomerMember2025-03-310000924719smid:TopsMember2025-01-012025-03-310000924719smid:OneCustomerMember2025-01-012025-03-310000924719smid:BottomsMember2025-01-012025-03-310000924719smid:OneCustomerMember2024-01-012024-03-310000924719smid:ServiceRevenueMember2024-01-012024-03-310000924719smid:ServiceRevenueMember2025-01-012025-03-310000924719smid:ServiceRevenueMembersmid:ShippingAndInstallationRevenueMember2024-01-012024-03-310000924719smid:ServiceRevenueMembersmid:ShippingAndInstallationRevenueMember2025-01-012025-03-310000924719smid:ServiceRevenueMembersmid:RoyaltiesIncomeMember2024-01-012024-03-310000924719smid:ServiceRevenueMembersmid:RoyaltiesIncomeMember2025-01-012025-03-310000924719smid:ServiceRevenueMembersmid:BarrierRentalMember2024-01-012024-03-310000924719smid:ServiceRevenueMembersmid:BarrierRentalMember2025-01-012025-03-310000924719smid:ProductSalesMember2024-01-012024-03-310000924719smid:ProductSalesMember2025-01-012025-03-310000924719smid:ProductSalesMembersmid:MiscellaneousProductSalesMember2024-01-012024-03-310000924719smid:ProductSalesMembersmid:MiscellaneousProductSalesMember2025-01-012025-03-310000924719smid:ProductSalesMembersmid:UtilityAndFarmProductSalesMember2024-01-012024-03-310000924719smid:ProductSalesMembersmid:UtilityAndFarmProductSalesMember2025-01-012025-03-310000924719smid:ProductSalesMembersmid:EasiSetAndEasiSpanBuildingSalesMember2024-01-012024-03-310000924719smid:ProductSalesMembersmid:EasiSetAndEasiSpanBuildingSalesMember2025-01-012025-03-310000924719smid:ProductSalesMembersmid:BarrierSalesMember2024-01-012024-03-310000924719smid:ProductSalesMembersmid:BarrierSalesMember2025-01-012025-03-310000924719smid:ProductSalesMembersmid:MiscellaneousSalesMember2024-01-012024-03-310000924719smid:ProductSalesMembersmid:MiscellaneousSalesMember2025-01-012025-03-310000924719smid:ProductSalesMembersmid:SlenderwallSalesMember2024-01-012024-03-310000924719smid:ProductSalesMembersmid:SlenderwallSalesMember2025-01-012025-03-310000924719smid:ProductSalesMembersmid:ArchitecturalSalesMember2024-01-012024-03-310000924719smid:ProductSalesMembersmid:ArchitecturalSalesMember2025-01-012025-03-310000924719smid:ProductSalesMembersmid:SoundwallSalesMember2024-01-012024-03-310000924719smid:ProductSalesMembersmid:SoundwallSalesMember2025-01-012025-03-310000924719us-gaap:RetainedEarningsMember2025-03-310000924719us-gaap:AdditionalPaidInCapitalMember2025-03-310000924719smid:TreasuryStockCommonSharesMember2025-03-310000924719us-gaap:CommonStockMember2025-03-310000924719us-gaap:RetainedEarningsMember2025-01-012025-03-310000924719us-gaap:AdditionalPaidInCapitalMember2025-01-012025-03-310000924719smid:TreasuryStockCommonSharesMember2025-01-012025-03-310000924719us-gaap:CommonStockMember2025-01-012025-03-310000924719us-gaap:RetainedEarningsMember2024-12-310000924719us-gaap:AdditionalPaidInCapitalMember2024-12-310000924719smid:TreasuryStockCommonSharesMember2024-12-310000924719us-gaap:CommonStockMember2024-12-3100009247192024-03-310000924719us-gaap:RetainedEarningsMember2024-03-310000924719us-gaap:AdditionalPaidInCapitalMember2024-03-310000924719smid:TreasuryStockCommonSharesMember2024-03-310000924719us-gaap:CommonStockMember2024-03-310000924719us-gaap:RetainedEarningsMember2024-01-012024-03-310000924719us-gaap:AdditionalPaidInCapitalMember2024-01-012024-03-310000924719smid:TreasuryStockCommonSharesMember2024-01-012024-03-310000924719us-gaap:CommonStockMember2024-01-012024-03-3100009247192023-12-310000924719us-gaap:RetainedEarningsMember2023-12-310000924719us-gaap:AdditionalPaidInCapitalMember2023-12-310000924719smid:TreasuryStockCommonSharesMember2023-12-310000924719us-gaap:CommonStockMember2023-12-3100009247192024-01-012024-03-3100009247192024-12-3100009247192025-03-3100009247192025-06-30iso4217:USDxbrli:sharesiso4217:USDxbrli:sharesxbrli:pureutr:acre

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2025

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ________ to ________

Commission File Number 1-13752

Smith-Midland Corporation

(Exact name of Registrant as specified in its charter)

Delaware		54-1727060
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

5119 Catlett Road, P.O. Box 300

Midland, VA 22728

(Address, zip code of principal executive offices)

(540) 439-3266

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class		Trading Symbol		Name of each exchange on which registered
Common Stock, $0.01 par value per share		SMID		NASDAQ

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☐

Accelerated filer

☐

Non-accelerated filer

☒

Smaller reporting company

☒

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. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

Common Stock, $0.01 par value per share, outstanding as of June 30, 2025: 5,304,606 shares, net of treasury shares

SMITH-MIDLAND CORPORATION

Form 10-Q Index

PART I. FINANCIAL INFORMATION		Page

Item 1.	Financial Statements (Unaudited)	3

	Condensed Consolidated Balance Sheets	3

	Condensed Consolidated Statements of Income	5

	Condensed Consolidated Statements of Stockholders' Equity	6

	Condensed Consolidated Statements of Cash Flows	7

	Notes to Condensed Consolidated Financial Statements	8

Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	14

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	22

Item 4.	Controls and Procedures	22

PART II. OTHER INFORMATION

Item 1.	Legal Proceedings	24

Item 1A.	Risk Factors	24

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	24

Item 3.	Defaults Upon Senior Securities	24

Item 4.	Mine Safety Disclosures	24

Item 5.	Other Information	24

Item 6.	Exhibits	25

	Signatures	26

Table of Contents

PART I — FINANCIAL INFORMATION

ITEM 1. Financial Statements

Smith-Midland Corporation

and Subsidiaries

(unaudited)

Condensed Consolidated Balance Sheets

(in thousands, except share and per share data)

ASSETS	March 31, 2025		December 31, 2024
Current assets
Cash	$	9,006	$	7,548
Accounts receivable, net
Trade - billed (less allowances of approximately $1,222 and $1,130, respectively), including contract retentions		22,879		19,420
Trade - unbilled		952		1,327
Inventories, net
Raw materials		2,275		2,078
Finished goods		5,210		4,599
Prepaid expenses		1,248		877

Total current assets		41,570		35,849

Property and equipment, net		32,655		31,704

Other assets		432		438

Total assets	$	74,657	$	67,991

The accompanying notes are an integral part of the condensed consolidated financial statements.

Table of Contents

Smith-Midland Corporation

and Subsidiaries

(unaudited)

Condensed Consolidated Balance Sheets

(in thousands, except share and per share data)

(continued)

LIABILITIES AND STOCKHOLDERS' EQUITY	March 31, 2025			December 31, 2024
Current liabilities
Accounts payable - trade	$	5,811		$	4,741
Accrued expenses and other liabilities		397			429
Deferred revenue		4,466			4,313
Accrued compensation		1,183			1,770
Accrued income taxes		2,556			1,539
Operating lease liabilities		19			21
Current maturities of notes payable		661			658
Customer deposits		2,160			1,539

Total current liabilities		17,253			15,010

Deferred revenue		7,496			6,222
Operating lease liabilities		85			90
Notes payable - less current maturities		4,269			4,436
Deferred tax liability		484			494

Total liabilities		29,587			26,252

Stockholders’ equity
Preferred stock, $0.01 par value; authorized 1,000,000 shares, none issued and outstanding		—			—
Common stock, $0.01 par value; authorized 8,000,000 shares; 5,346,526 and 5,346,526 issued and 5,304,606 and 5,304,606 outstanding, respectively		54			54
Additional paid-in capital		7,721			7,717
Treasury stock, at cost, 40,920 shares		(102	)		(102	)
Retained earnings		37,397			34,070

Total stockholders' equity		45,070			41,739

Total liabilities and stockholders' equity	$	74,657		$	67,991

The accompanying notes are an integral part of the condensed consolidated financial statements.

Table of Contents

Smith-Midland Corporation

and Subsidiaries

Condensed Consolidated Statements of Income

(unaudited)

(in thousands, except per share data)

	Three Months Ended March 31,
	2025			2024
Revenue
Product sales	$	9,112		$	10,752
Barrier rentals		8,425			893
Royalty income		890			575
Shipping and installation revenue		4,271			4,536

Total revenue		22,698			16,756

Cost of sales		15,723			12,845

Gross profit		6,975			3,911

Operating expenses
General and administrative expenses		1,584			1,549
Selling expenses		1,004			853

Total operating expenses		2,588			2,402

Operating income		4,387			1,509

Other income (expense)
Interest expense		(55	)		(60	)
Interest income		7			8
Gain on sale of assets		—			3
Other income		8			44

Total other income (expense)		(40	)		(5	)

Income before income tax expense (benefit)		4,348			1,504

Income tax expense (benefit)		1,020			357

Net income	$	3,327		$	1,147

Basic earnings per common share	$	0.63		$	0.22
Diluted earnings per common share	$	0.62		$	0.21

Weighted average number of common shares outstanding:
Basic		5,304			5,309
Diluted		5,305			5,350

The accompanying notes are an integral part of the condensed consolidated financial statements.

Table of Contents

Smith-Midland Corporation

and Subsidiaries

Condensed Consolidated Statements of Stockholders’ Equity

(unaudited)

(in thousands, except share data)

	Common Stock				Treasury Stock						Additional Paid-in		Retained
	Shares		Amount		Shares			Amount			Capital		Earnings		Total
Balance, December 31, 2024		5,346,526	$	54		(40,920	)	$	(102	)	$	7,717	$	34,070	$	41,739

Vesting of restricted stock		—		—		—			—			4		—		4

Net income		—		—		—			—			—		3,327		3,327

Balance, March 31, 2025		5,346,526	$	54		(40,920	)	$	(102	)	$	7,721	$	37,397	$	45,070
Balance, December 31, 2023		5,349,599	$	54		(40,920	)	$	(102	)	$	7,814	$	26,395	$	34,161

Vesting of restricted stock		—		—		—			—			5		—		5

Net income		—		—		—			—			—		1,147		1,147

Balance, March 31, 2024		5,349,599	$	54		(40,920	)	$	(102	)	$	7,819	$	27,542	$	35,313

The accompanying notes are an integral part of the condensed consolidated financial statements.

Table of Contents

Smith-Midland Corporation

and Subsidiaries

Condensed Consolidated Statements of Cash Flows

(Unaudited)

(in thousands)

	Three Months Ended March 31,
	2025			2024
Cash flows from operating activities:
Net income (loss)	$	3,327		$	1,147
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation and amortization		671			641
(Gain) loss on sale of property and equipment		—			(352	)
Allowance for credit losses		92			147
Stock compensation		4			5
Deferred taxes		(10	)		(1	)
(Increase) decrease in
Accounts receivable - billed		(3,552	)		(2,993	)
Accounts receivable - unbilled		375			(112	)
Inventories		(807	)		(1,801	)
Prepaid expenses		(365	)		20
Increase (decrease) in
Accounts payable - trade		37			(392	)
Accrued expenses and other liabilities		(33	)		1,069
Deferred revenue		1,426			1,648
Accrued compensation		(586	)		(332	)
Accrued income taxes		1,017			358
Customer deposits		621			171
Net cash provided by (used in) operating activities		2,217			(777	)
Cash flows from investing activities:
Purchases of property and equipment		(595	)		(1,795	)
Proceeds from the sale of property and equipment		—			355
Net cash provided by (used in) investing activities		(595	)		(1,440	)
Cash flows from financing activities:
Repayments of long-term borrowings		(164	)		(157	)
Net cash provided by (used in) financing activities		(164	)		(157	)
Net increase (decrease) in cash		1,458			(2,374	)
Cash
Beginning of period		7,548			9,175
End of period	$	9,006		$	6,801

Supplemental Cash Flow Information:
Cash payments for interest	$	55		$	60
Cash payments for income taxes	$	—		$	—

Non-Cash Investing Activity:
Capital expenditures in accounts payable	$	1,034		$	2,099

The accompanying notes are an integral part of the condensed consolidated financial statements.

Table of Contents

Smith-Midland Corporation

and Subsidiaries

Notes to Condensed Consolidated Financial Statements

(Unaudited)

1. INTERIM FINANCIAL REPORTING

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements were prepared in accordance with accounting principles generally accepted in the United States of America (GAAP) for interim financial information, and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, we have condensed or omitted certain information and footnote disclosures that are included in our annual consolidated financial statements. These condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and the related notes included in our Annual Report on Form 10-K for the year ended December 31, 2024. The condensed consolidated December 31, 2024 balance sheet was derived from the audited financial statements included in the Form 10-K. Dollar amounts in the footnotes are stated in thousands, except for per share data.

In the opinion of management, these condensed consolidated financial statements reflect all adjustments (which consist of normal, recurring adjustments) necessary for a fair presentation of the financial position and results of operations and cash flows for the periods presented. The results disclosed in the condensed consolidated statements of income are not necessarily indicative of the results to be expected in any future periods.

Recently Accounting Pronouncements

In December 2023, the Financial Accounting Standards Board (FASB) issued ASU 2023-09, Improvements to Income Tax Disclosures. The guidance is intended to improve income tax disclosure requirements by requiring (i) consistent categories and greater disaggregation of information in the rate reconciliation and (ii) the disaggregation of income taxes paid by jurisdiction. The guidance makes several other changes to the income tax disclosure requirements. This guidance is effective for annual periods beginning after December 15, 2024, with early adoption permitted, and is required to be applied prospectively with the option of retrospective application. The Company is evaluating the impact of the standard on its financial statements and related disclosures.

In November 2024, the FASB issued ASU 2024-03, Disaggregation of Income Statement Expenses, requiring additional disclosures about specified categories of expenses included in certain expense captions presented on the face of the income statement. This standard will be effective for the Company for annual reporting periods beginning after December 15, 2026 and interim reporting periods beginning after December 15, 2027, and may be applied either prospectively to financial statements issued for reporting periods after the effective date of this ASU or retrospectively to all prior periods presented in the financial statements. The Company is currently evaluating the impact of adopting this guidance on the Company’s consolidated financial statements.

Table of Contents

Revenue Recognition

Product Sales - Over Time

The Company recognizes revenue to depict the transfer of goods or services to customers in an amount that reflects the consideration the Company expects to be entitled to in exchange for goods or services provided. Revenue associated with contracts with customers for customized products is recognized over time as the Company's performance creates or enhances customer-controlled assets or creates or enhances an asset with no alternative use, which the Company has an enforceable right to receive compensation as defined under the contract for performance completed. To determine the amount of revenue to recognize over time, the Company recognizes revenue over the contract terms based on the output method. The Company applied the "as invoiced" practical expedient as the amount of consideration the Company has the right to invoice corresponds directly with the value of the Company's performance to date.

As the output method is driven by units produced, the Company recognizes revenues based on the value transferred to the customer relative to the remaining value to be transferred. The Company also matches the costs associated with the units produced. If a contract is projected to result in a loss, the entire contract loss is recognized in the period when the loss was first determined and the amount of the loss is updated in subsequent reporting periods. Revenue recognition also includes an amount related to a contract asset or contract liability. If the recognized revenue is greater than the amount billed to the customer, a contract asset is recorded in accounts receivable trade - unbilled. Conversely, if the amount billed to the customer is greater than the recognized revenue, a contract liability is recorded in customer deposits. Changes in the job performance, job conditions, and final contract settlements are factors that influence management’s assessment of total contract value and therefore, profit and revenue recognition.

A portion of the work the Company performs requires financial assurances in the form of performance and payment bonds at the time of execution of the contract. Some contracts include retention provisions of up to 10%, which are generally withheld from each progress payment as retainage until the contract work has been completed and approved.

Product Sales - Point in Time

For certain product sales, that do not meet the over time criteria, the Company recognizes revenue when the product has been shipped to the destination in accordance with the terms outlined in the contract where a present obligation to pay exists and the customers have gained control of the product.

Accounts Receivable and Contract Balances

The timing of when the Company bills the customers is generally dependent upon advance billing terms, milestone billings based on the completion of certain phases of the work, or when services are provided or products are shipped. The Company’s Accounts receivable trade – billed, arising from Topic 606 is $18,901 and $16,695 as of March 31, 2025 and December 31, 2024, respectively.

Projects with performance obligations recognized over time that have costs and estimated earnings recognized to date in excess of cumulative billings are reported on our Consolidated Balance Sheets as "Accounts receivable trade - unbilled" (contract assets). The Company’s Accounts receivable trade – unbilled (i.e. contract assets) balances are as follows:

	Quarter Ended March 31,
	2025		2024
Accounts receivable trade – unbilled, beginning of the period	$	1,327	$	525
Accounts receivable trade – unbilled, end of the period		952		637
Amounts invoiced in the period from amounts included at the beginning of the period		1,060		27

Projects with performance obligations recognized over time that have cumulative billings in excess of costs and estimate earnings recognized to date, are reported on our Consolidated Balance Sheets as "Customer deposits" (contract liabilities). The Company’s Customer deposits (i.e. contract liabilities) balances are as follows:

	Quarter Ended March 31,
	2025		2024
Customer deposits, beginning of the period	$	1,539	$	2,779
Customer deposits, end of the period		2,160		2,950
Revenue recognized in the period from amounts included at the beginning of the period		1,452		705

The Company’s deferred revenue balances (in thousands) related to Topic 606 are as follows:

	Quarter Ended March 31
	2025		2024
Deferred revenue, beginning of the period	$	4,453	$	2,685
Deferred revenue, end of the period		5,174		3,472
Revenue recognized in the period from amounts included at the beginning of the period		34		24

Table of Contents

Any uncollected billed amounts for our performance obligations recognized over time, including contract retentions, are recorded within accounts receivable trade - billed. At March 31, 2025 and December 31, 2024 accounts receivable included contract retentions of approximately $1,487 and $1,523, respectively, which are considered contract assets.

Our billed and unbilled revenue may be exposed to potential credit risk if our customers should encounter financial difficulties, and we maintain an allowance for estimated expected credit losses. A considerable amount of judgment is required when determining expected credit losses. Estimates of such expected losses are recorded based on historical losses experienced by the Company, current macro- and micro-economic conditions, and expected macro- and micro-economic conditions. Additional reserves are accumulated when we believe a specific customer may not be able to meet its financial obligations due to deterioration in financial condition or credit rating. Factors relevant to our assessment include our prior collection history with our customers, the related aging of past due balances, projections of credit losses based on historical trends or past events, and forecasts of future economic conditions. At March 31, 2025 and December 31, 2024, total allowances for credit losses were $1,222 and $1,130, respectively.

The rollforward of our allowance for credit losses for the quarter ended March 31, 2025, was as follows:

Balance at December 31, 2024	$	1,130
Provision for Expected Credit Losses		92
Balance at March 31, 2025	$	1,222

Barrier Rentals - Lease Income

Leasing fees are paid by customers at the beginning of the lease agreement. We record amounts billed to customers in excess of recognizable revenue, as deferred revenue on the balance sheet. Revenue is recognized on a straight-line basis each month as lease income for the duration of the lease, in accordance with Topic 842, Leases.

Royalty Income

The Company licenses certain products to other precast companies to produce the Company's products to engineering specifications under the licensing agreements. The agreements are typically for five-year terms and require royalty payments from 4% to 6% of total sales of licensed products, which are paid every month. The revenues from licensing agreements are recognized in the month earned.

Shipping and Installation

Shipping and installation revenues are recognized as a distinct performance obligation in the period the shipping and installation services are provided to the customer, in accordance with Topic 606.

Table of Contents

Disaggregation of Revenue

In the following table, revenue is disaggregated by primary sources of revenue:

Revenue by Type	Three Months Ended March 31,
	2025		2024
Soundwall Sales	$	3,779	$	2,980
Architectural Panel Sales		—		321
SlenderWall Sales		—		—
Miscellaneous Wall Sales		601		1,751
Barrier Sales		1,305		1,734
Easi-Set and Easi-Span Building Sales		2,060		1,039
Utility Sales		1,014		1,679
Miscellaneous Product Sales		353		1,248
Total Product Sales		9,112		10,752
Barrier Rentals		8,425		893
Royalty Income		890		575
Shipping and Installation Revenue		4,271		4,536
Total Service Revenue		13,586		6,004

Total Revenue	$	22,698	$	16,756

The revenue items: soundwall sales, architectural panel sales, SlenderWall sales, miscellaneous wall sales, miscellaneous sales, barrier rentals, and royalty income are recognized as revenue over time. The revenue items: barrier sales, Easi-Set and Easi-Span building sales, utility sales, and shipping and installation revenue are recognized as revenue at a point in time.

Warranties

Smith-Midland products are typically sold pursuant to an implicit warranty of merchantability only. Warranty claims are reviewed and resolved on a case-by-case method. Although the Company does incur costs for warranty claims, historically such amounts are minimal.

Use of Estimates

The preparation of the condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Concentration of Risk

Historically, various customers have comprised greater than 10% of revenue during a given quarter or year. These customers are typically not the same quarter to quarter or year to year. The Company views revenue details by jobs, and not by customers. In the event a customer were to go out of business during a project, it is likely that the owner of the project would assign a new contractor to the job, and the Company would complete its scope of work. Therefore, the Company believes that it does not have a short-term vulnerability of severe impact to operations. In cases where customers are less than 10% of revenue, the Company assesses if there is a near term severe impact. The Company has determined that no customer, if lost, would result in a near term severe impact to the Company’s operations.

For the quarter ended March 31, 2025, the Company derived 33% of its revenue from one customer. For the quarter ended March 31, 2024, the Company derived 10% of its revenue from one customer. As of March 31, 2025, two customer’s outstanding receivable balance exceeded 10% of the total outstanding receivable balance. For the year ended December 31, 2024, no customer represented more than 10% of the Company’s revenue and as of December 31, 2024, two customer’s outstanding receivable balance exceeded 10% of the total outstanding receivable balance.

Segment Reporting

Operating segments are defined as components of an enterprise for which separate financial information is available and evaluated regularly by the Chief Operating Decision Maker (“CODM”) in deciding how to allocate resources and assess performance. The Company currently operates in one operating and reportable business segment for financial reporting purposes (the “Precast Concrete Segment”. The Company’s CODM is the Chief Executive Officer (“CEO”) and President.

The precast concrete segment derives revenues from customers by providing products and services to customers. The accounting policies of the precast concrete segment are the same as those described in the summary of significant accounting policies within the footnotes to the consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2024. The CODM assesses performance for the precast concrete segment based on consolidated net income as reported on the consolidated statement of income and measures segment assets as total consolidated assets as reported on the consolidated balance sheet. The CODM uses consolidated net income and consolidated assets to decide how to allocate resources and whether to reinvest profits into the precast concrete segment or into other parts of the entity, such as to pay dividends. Significant segment expenses provided to the CODM are based on the expense breakout shown on the consolidate statements of income. The precast concrete segments results are the same as reported on the consolidated income statement and there are no adjustments or reconciling items.

Table of Contents

2. EARNINGS (LOSS) PER SHARE

Earnings (loss) per share are calculated as follows (in thousands, except earnings per share):

	Three Months Ended March 31,
	2025		2024
Basic earnings per common share

Net income	$	3,327	$	1,147

Weighted average shares outstanding		5,304		5,309

Basic earnings per common share	$	0.63	$	0.22

Diluted earnings per common share

Net income	$	3,327	$	1,147

Weighted average shares outstanding		5,304		5,309
Dilutive effect of restricted stock		1		41

Total weighted average shares outstanding		5,305		5,350

Diluted earnings per common share	$	0.62	$	0.21

There was no restricted stock excluded from the diluted earnings per share calculation for the three month periods ended March 31, 2024 and March 31, 2023.

Table of Contents

3. NOTES PAYABLE

The Company has a mortgage note payable to Burke & Herbert Bank & Trust Company, formerly 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, 2025 and December 31, 2024 was $1,122 and $1,166 respectively.

The Company also has a note payable to the Bank in the amount of $1,489 and $1,536 as of March 31, 2025 and December 31, 2024 respectively. 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.

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. 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, 2025 and December 31, 2024 was $2,361 and $2,379 respectively.

The Company additionally has one smaller installment loan with an annual interest rates of 2.90% maturing in 2025, with a balance at March 31, 2025 and December 31, 2024 totaling $10 and $13 respectively.

Under the loan covenants with the Bank, the Company is limited to annual capital expenditures of $5,000 and must maintain tangible net worth of $25,000. The Company is in compliance with the tangible net worth loan covenant and has received waivers from the Bank for the capital expenditure loan covenant as of March 31, 2025 and December 31, 2024.

In addition to the notes payable discussed above, the Company has a revolving line of credit evidenced by promissory note with the Bank, with the available amount of $5,000 with no balance outstanding as of Marh 31, 2025 and December 31, 2024. The line of credit is evidenced by a commercial revolving promissory note, which carries a variable interest rate of prime, with a floor of 4.99%. The line of credit was renewed on January 1, 2025 and matures January 1, 2026. The amount available is based on the lower of the maximum $5,000 or 50% of eligible cash, inventory, and accounts receivable balances at the financial statement date. Key provisions of the line of credit require the Company (i) to obtain bank approval for capital expenditures in excess of $5,000 during the term of the loan and (ii) to obtain bank approval prior to its funding of any acquisition. The line of credit is collateralized by a first lien position on the Company's accounts receivable, inventory, and equipment.

4. STOCK COMPENSATION

The fair value of restricted stock awards is estimated to be the market price of the Company's common stock at the close of the date of grant. Restricted stock activity during the three months ended March 31, 2025, is as follows:

Performance-

Based

Service-

Based

Number of

Shares

Weighted

Average Grant

Date Fair Value

per Share

Non-vested, December 31, 2024

—

1,000

19.15

Granted

—

Vested

—

Forfeited

—

Non-vested, March 31, 2025

—

1,000

19.15

In 2021, the Compensation Committee and Board of Directors approved a Long-Term Incentive Plan with respect to the grant of stock pursuant to the 2016 Equity Incentive Plan. The final equity amount earned was based on continued service through the three-year performance period ending on December 31, 2023, Board discretion, and performance results. The actual number of performance-based shares of common stock of the Company, if any, earned by the award recipients was determined based on measures that include Earnings Before Interest Taxes Depreciation and Amortization (“EBITDA”) margin, revenue growth, and free cash flow. The EBITDA margin and revenue growth performance targets were set for each of the Minimum, Target, and Maximum levels.

Awards are being amortized to expense ratably, based upon the vesting schedule. Stock compensation for the three month period ended March 31, 2025 was approximately $4, based upon the value at the date of grant. Stock compensation for the three month period ended March 31, 2024 was approximately $5, based upon the value at the date of grant. There was $10 of unrecognized compensation cost related to the non-vested restricted stock as of March 31, 2025.

Table of Contents

ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Forward-Looking Statements

This Quarterly Report and related documents include “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act 1934. Forward-looking statements involve known and unknown risks, uncertainties and other factors which could cause the Company’s actual results, performance (financial or operating), or achievements expressed or implied by such forward looking statements not to occur or be realized. Such forward looking statements generally are based upon the Company’s best estimates of future results, performance or achievement, based upon current conditions and the most recent results of operations. Forward-looking statements may be identified by the use of forward-looking terminology such as “may,” “will,” “expect,” “believe,” “estimate,” “anticipate,” “continue,” or similar terms, variations of those terms or the negative of those terms. Potential risks and uncertainties include, among other things, such factors as:

	·	while the Company had net income for the quarter ended March 31, 2025 and the years ended December 31, 2024 and 2023 there are no assurances that the Company can remain profitable in future periods; in line with this risk, the Company incurred a loss from operations for the quarter ended June 30, 2023,

	·	while we have expended significant funds in recent years to increase manufacturing capacity and the barrier rental fleet, and plan to continue to increase manufacturing capacity, there is no assurance that we will achieve significantly greater revenues,

	·	we have a substantial amount of debt and our ability to satisfy and meet our debt obligations cannot be assured,

	·	while our cash increased during the first quarter of 2025 from December 31, 2024 reflecting the increase in cash collections from higher operating revenues in the quarter, there can be no assurance that the Company’s cash will not be reduced in the future,

	·	we have a significant amount of accounts receivables which has increased during the first quarter of 2025 as compared to the ending balance as of 2024, and our ability to fully collect these balances cannot be assured,

	·	we identified material weaknesses in internal controls over financial reports related to (i) design and maintenance of effective controls over the financial reporting process; and (ii) certain business processes and the information control environment. The Company is currently studying and taking remedial actions with respect to these weaknesses,

	·	there are uncertainties arising from the policies of the new Administration and DOGE, including without limitation, government spending cuts and tariffs, and there can be no assurance that infrastructure spending will not be adversely affected or that the Company will not otherwise be adversely affected,

	·	the Company had a gap in hiring a Chief Financial Officer from July 17, 2024 to April 16, 2025 and is otherwise in need of additional accounting personnel,

	·	our future revenue growth depends in part on future government spending on infrastructure, and there can be no assurance that such spending will occur or be in significant amounts,

	·	the continued availability of financing in the amounts, at the times, and on the terms required, to support our future business and capital projects,

Table of Contents

	·	cybersecurity incidents could disrupt business operations, result in the loss of critical and confidential information and adversely impact our reputation and results of operations; in this respect, we experienced a ransomware incident in the first quarter of 2025 which was successfully addressed with network security changes and for which no ransomware payment was made,

	·	the extent to which we are successful in developing, acquiring, licensing, or securing patents for proprietary products,

	·	changes in economic conditions specific to any one or more of our markets (including tariffs, the availability of public funds and grants for construction),

	·	the Company’s operations in 2025 and 2024 were adversely impacted by inflation in the purchase of raw materials such as cement and aggregates, steel, and also with labor costs,

	·	changes in general economic conditions in our primary service areas,

	·	adverse weather, which inhibits the demand for our products, or the installation or completion of projects,

	·	our compliance with governmental regulations,

	·	the outcome of future litigation, if any,

	·	potential decreases in our contract backlog; in this respect, the Company’s backlog at May 7, 2025 was approximately $52.4 million as opposed to $64.6 million at around the same time a year ago.

	·	our ability to produce and install product on material construction projects that conforms to contract specifications and in a time frame that meets the contract requirements,

	·	the cyclical nature of the construction industry,

	·	our exposure to increased interest expense payments should interest rates change, and

	·	the other factors and information disclosed and discussed in other sections of this report, in our Annual Report on Form 10-K, and other filings with the Securities and Exchange Commission.

Investors and shareholders should carefully consider such risks, uncertainties and other information, disclosures and discussions that contain cautionary statements identifying important factors that could cause actual results to differ materially from those provided in the forward-looking statements. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

Table of Contents

Overview

The Company invents, develops, manufactures, markets, leases, licenses, sells, and installs a broad array of precast concrete products and systems for use primarily in the construction, highway, utilities, and farming industries. The Company's customers are primarily general contractors and federal, state, and local transportation authorities located in the Mid-Atlantic and Northeastern regions and in parts of the Midwestern and Southeastern regions of the United States. The Company's operating strategy has involved producing innovative and proprietary products, including SlenderWall™, a patented, lightweight, energy-efficient concrete and steel exterior insulated wall panel for use in building construction; J-J Hooks® Highway Safety Barrier, a positive-connected highway safety barrier; and Easi-Set^® transportable concrete buildings, also patented. In addition, the Company produces custom order precast concrete products with various architectural surfaces, as well as generic highway sound barriers, utility vaults, and farm products such as cattleguards.

The Company was incorporated in Delaware on August 2, 1994. Prior to a corporate reorganization completed in October 1994, the Company conducted its business primarily through Smith-Midland Virginia, which was incorporated in 1960 as Smith Cattleguard Company, a Virginia corporation, and subsequently changed its name to Smith-Midland Corporation in 1985. The Company’s principal offices are located at 5119 Catlett Road, Midland, Virginia 22728 and its telephone number is (540) 439-3266. As used in this report, unless the context otherwise requires, the term the “Company” refers to Smith-Midland Corporation and its subsidiaries.

As a part of the construction industry, the Company's sales and net income may vary greatly from quarter to quarter over a given year. Because of the cyclical nature of the construction industry, many factors not under our control, such as weather and project delays, affect the Company's production schedule, possibly causing momentary slowdowns in sales and net income. In addition, revenues are affected by the number, size, and timing of significant projects to which the Company is contracted. As a result of these factors, the Company is not always able to earn a profit for each period, therefore, please read Management's Discussion and Analysis of Financial Condition and Results of Operations and the accompanying financial statements with these factors in mind.

Table of Contents

Results of Operations (dollar amounts in thousands, except per share data)

Overall, the Company’s financial bottom line performance was higher for the first quarter of 2025 when compared to the first quarter of 2024. The Company had net income for the three months ended March 31, 2025 of $3,327 compared to net income of $1,147 for the three months ended March 31, 2024. Total revenue increased by $5,942 to $22,698 for the three months ended March 31, 2025 from $16,756 for the three months ended March 31, 2024. The increase in revenue is mainly from an increase in barrier rental, soundwall sales and Easi-Set and Easi-Span building sales. The significant increase in barrier rental was due to a special project undertaken and performed in the first quarter of 2025.

Cost of sales as a percentage of revenue, not including royalties, decreased to 72% for the three months ended March 31, 2025 compared to 79% for the three months ended March 31, 2024. The decrease is mainly due to the increase in special project barrier rental revenue in the quarter, which have a higher margin and lower cost of sales as a percent of revenue when compared to product margins and product cost of sales as a percent of revenue.

Operating income was $4,387 for the three month period ended March 31, 2025, as compared to $1,509 for the three month period ended March 31, 2024. Operating expenses for the first quarter of 2025 were $2,588 compared to $2,402 for the first quarter of 2024. The increase is due to increased selling expenses as it relates to additional sales staff costs and commissions.

Income tax expense for the three month period ended March 31, 2025 was $1,020, or an effective tax rate of 24%, as compared to $357, or an effective tax rate of 24% for the three month period ended March 31, 2024.

As of May 7, 2025, the Company’s sales backlog was approximately $52.4 million, as compared to approximately $64.6 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 come through the state and local governments in 2025 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.

Three months ended March 31, 2025, compared to the three months ended March 31, 2024

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, 2025 and 2024.

Revenue by Type	Three Months Ended March 31,
	2025		2024		Change			% Change
Soundwall Sales	$	3,779	$	2,980	$	799			27	%
Architectural Panel Sales		—		321		(321	)		(100	)%
SlenderWall Sales		—		—		—			—
Miscellaneous Wall Sales		601		1,751		(1,150	)		(66	)%
Barrier Sales		1,305		1,734		(429	)		(25	)%
Easi-Set and Easi-Span Building Sales		2,060		1,039		1,021			98	%
Utility Sales		1,014		1,679		(665	)		(40	)%
Miscellaneous Product Sales		353		1,248		(895	)		(72	)%
Total Product Sales		9,112		10,752		(1,640	)		(15	)%
Barrier Rentals		8,425		893		7,532			843	%
Royalty Income		890		575		315			55	%
Shipping and Installation Revenue		4,271		4,536		(265	)		(6	)%
Total Service Revenue		13,586		6,004		7,582			126	%

Total Revenue	$	22,698	$	16,756	$	5,942			35	%

Soundwall Sales - Soundwall sales were higher for the three month period ended March 31, 2025, compared to the same period in 2024. 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 Soundwall backlog. Soundwall sales are expected to trend similarly throughout the remainder 2025 as compared to the first quarter of 2025, although no assurance can be given.

Architectural Panel Sales – The Company did not have Architectural panel projects during the first quarter of 2025. Architectural sales are expected to occur throughout 2025 as compared to the first quarter of 2025, although no assurance can be given.

SlenderWall Sales – The Company did not have SlenderWall projects in production during the first quarters of 2025 and 2024. The Company continues to focus sales initiatives on SlenderWall, but no assurance can be given as to the success of this endeavor. SlenderWall sales are expected to increase in 2025 compared to 2024, as several SlenderWall projects are anticipated to start production in the second half of 2025.

Table of Contents

Miscellaneous Wall Sales - Miscellaneous wall sales decreased for the three month period ended March 31, 2025, compared to the same period in 2024. Based on the Company’s backlog for these products, miscellaneous wall sales are expected to trend higher throughout 2025 as compared to the first quarter of 2025, although no assurance can be provided.

Barrier Sales - Barrier sales decreased for the three month period ended March 31, 2025, compared to the same period in 2024. Barrier sales are expected to trend similarly throughout 2025 as compared to the first quarter of 2025, 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.

Easi-Set^® and Easi-Span Building Sales - Building and restroom sales increased significantly for the three month period ended March 31, 2025, compared to the same period in 2024, due to increased building sales at all manufacturing plants. Building and restroom sales are expected to continue to trend similarly throughout the remainder of 2025 compared to the first quarter of 2025 due to increased demand from sales and marketing, although no assurances can be given.

Utility Sales - Utility sales decreased for the three month period ended March 31, 2025, compared to the same period in 2024, reflecting general product sales fluctuations. The Company has seen a surge in demand for utility vaults in the Northern Virginia market to support data center growth. Utility sales are expected to trend higher for the remainder of 2025 as compared to the first quarter of 2025, although no assurance can be provided.

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 decreased for the three month period ended March 31, 2025, compared to the same period in 2024. The decrease is mainly from the Virginia plant that started production on one large project for the production of precast beams and platforms in the first quarter of 2024 which was not a factor in the first quarter of 2025. Miscellaneous product sales are expected to trend higher throughout 2025 as compared to the first quarter of 2025, although no assurance can be provided.

Barrier Rentals – Barrier rentals increased significantly for the three month period ended March 31, 2025 compared to the same period in 2024. This increase is mainly attributed to a large special barrier project undertaken and performed in the first quarter of 2025. Barrier rental revenue, excluding revenue from special barrier projects, is expected to trend higher throughout 2025 as compared to barrier rental revenue, excluding revenue from special barrier projects, in the first quarter of 2025, although no assurance can be given. Subsequent to the first quarter of 2025, the company has undertaken and performed a large special project in the second quarter of 2025.

Royalty Income – Royalties increased for the three month period ended March 31, 2025, compared to the same period in 2024. 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 2025 to exceed royalty income for the full year 2024, although no assurance can be given.

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 slightly decreased for the three month period ended March 31, 2025 compared to the same period in 2024. The decrease is mainly attributed to the decrease in shipping and installation of SlenderWall, architectural panels and other products which are expected to trend higher in 2025, which are directly correlated to shipping and installation revenue.

Table of Contents

Cost of Sales - Total cost of sales as a percent of revenue, excluding royalties, for the three months ended March 31, 2025, was 72%, as compared to 79% for the three months ended March 31, 2024. The decrease in cost of sales as a percentage of revenue, not including royalties, for the three months ended March 31, 2025, compared to the three months ended March 31, 2024, is primarily due to the increase in special project barrier rentals, which have a higher margin and lower cost of sales as a percent of revenue when compared to product margins and product cost of sales as a percent of revenue.

General and Administrative Expenses - For the three months ended March 31, 2025, the Company's general and administrative expenses increased by $35 to $1,584 from $1,549 during the same period in 2024. This represents a nominal increase of 2% and is attributable to inflationary factors across multiple general and administrative expense categories. General and administrative expense as a percentage of total revenue was 7% and 9% for the three month periods ended March 31, 2025 and 2024, respectively.

Selling Expenses - Selling expenses for the three months ended March 31, 2025 increased to $1,003 from $853 for the same period in 2024. The increase in selling expenses for the three month period ended March 31, 2025, compared to the same period in 2024, is due to increased general selling cost and 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.

Operating Income (Loss) - The Company had operating income for the three month period ended March 31, 2025 of $4,387 compared to $1,509 for the same period in 2024. The increase is mainly due to the increase in revenue and decrease in cost of sales as a percent of revenue.

Interest Expense - Interest expense was $55 and $60 for the three month periods ended March 31, 2025 and 2024, respectively. The Company expects interest expense for the full year of 2025 to be lower compared to the full year of 2024 due to the decrease in level of indebtedness on all notes which are fixed interest rates.

Income Tax Expense (Benefit) - The Company had an income tax expense of $1,020, or an effective tax rate of 24%, for the three months ended March 31, 2025, compared to income tax expense of $357, or an effective tax rate of 24% for the same period in 2024.

Net Income (Loss) - The Company had net income of $3,327 for the three months ended March 31, 2025, compared to net income of $1,147 for the same period in 2024. The basic and diluted earnings per share was $0.63 and $0.62, respectively for the three months ended March 31, 2025, and the basic and diluted earnings per share was $0.22 and $0.21 for the three months ended March 31, 2024.

Table of Contents

Liquidity and Capital Resources (dollar amounts in thousands)

Under the loan covenants with the Bank, the Company is limited to annual capital expenditures of $5,000 and must maintain tangible net worth of $25,000. The Company has received waivers from the Bank pursuant to the loan agreements as of March 31, 2025 and December 31, 2024.

inventory, and equipment.

The Company's outstanding notes payable are financed at fixed rates of interest. This leaves the Company protected from fluctuating interest rates. Increases in such rates will only affect the interest paid by the Company if new debt is obtained, or the available line of credit is drawn upon, with a variable interest rate.

On March 31, 2025, the Company had cash totaling $9,006 compared to cash totaling $7,548 on December 31, 2024. The increase in cash is primarily the result of cash provided by operating activities including special project barrier income. The Company expects its cash position to be favorably affected to the extent that it is successful in collecting outstanding accounts receivable balances.

The Company’s accounts receivable balances, net of allowance, at March 31, 2025 was $22,879, compared to $19,420 at December 31, 2024. The increase is primarily the result of increased sales volumes.

Capital spending for the three months ended March 31, 2025 totaled $595 as compared to $1,795 for the same period in 2024. The 2025 expenditures were primarily for investment in the ramp up in barrier production. The 2024 expenditures were primarily related to expenditures for the expansion of the North Carolina production facility and new manufacturing equipment. The Company intends to invest approximately $5,000, for the full year 2025, which includes expansion of the Virginia and North Carolina manufacturing facilities, soundwall forms for increased production capacity, and miscellaneous manufacturing equipment. Anticipated capital expenditures excludes possible acquisitions.

Table of Contents

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 87 days for the three months ended March 31, 2025, compared to 109 days for the three months ended March 31, 2024.

If actual results regarding the Company's production, sales, and subsequent collections on customer receivables are materially inconsistent with management's expectations, the Company may in the future encounter cash flow and liquidity issues. If the Company's operational performance deteriorates significantly, it may be unable to comply with existing financial covenants and could cause defaults and acceleration under its loan agreements and lose access to the credit facility. Although no assurances can be given, the Company believes that its current cash resources, anticipated cash flow from operations, and the availability under the line of credit will be sufficient to finance the Company’s operations for at least the next 12 months.

The Company’s inventory was $5,210 on March 31, 2025, and $4,599 on December 31, 2024, or an increase of $610. 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 backlog production and anticipated barrier rentals. Inventory turnover was 7.5, annualized for the three months ended March 31, 2025, compared to 9.7, annualized for the same period in 2024.

Critical Accounting Policies and Estimates

The Company’s critical accounting policies are more fully described in its Summary of Accounting Policies to the Company’s consolidated financial statements on Form 10-K for the year ended December 31, 2024.

Seasonality

The Company services the construction industry primarily in areas of the United States where construction activity may be inhibited by adverse weather during the winter. As a result, the Company may experience reduced revenues from December through February and realize a more significant part of its revenues during the other months of the year. The Company may experience lower profits, or losses, during the winter months, and as such, must have sufficient working capital to fund its operations at a reduced level until the spring construction season. The failure to generate or obtain sufficient working capital during the winter may have a material adverse effect on the Company.

Inflation

Raw material costs used in production have slightly increased for the first three months of 2025. The Company anticipates raw material prices to slightly increase for the remainder of 2025, although no assurance can be given regarding future pricing.

Sales Backlog

As of May 7, 2025, the Company’s sales backlog was approximately $52.4 million, as compared to approximately $64.6 million at the same time in 2024. 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.

Table of Contents

ITEM 3. Quantitative and Qualitative Disclosures About Market Risk

Not Applicable

ITEM 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Our management, including our principal executive officer and principal financial and accounting officer, conducted an evaluation of the effectiveness of our internal controls over financial reporting, and disclosure controls and procedures, as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended, as of the end of this Quarterly Report covered by this Form 10-Q. Based on that evaluation, our principal executive officer and principal financial and accounting officer concluded that, due to the material weaknesses described below, our disclosure controls and procedures were not effective at the reasonable assurance level as of March 31, 2025. Notwithstanding the existence of these material weaknesses, management believes that the consolidated financial statements in this Form 10-Q present, in all material respects, the Company’s financial condition, results of operations, and cash flows for the periods disclosed in conformity with U.S. Generally Accepted Accounting Principles.

Previously Reported Material Weaknesses in Internal Control Over Financial Reporting

As previously reported in our Annual Report on Form 10-K for the year ended December 31, 2024, management identified material weaknesses in our internal control over financial reporting. A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis. Management has determined that the following material weaknesses in the Company’s internal control over financial reporting have not been remediated as of March 31, 2025:

Control Environment, Risk Assessment and Monitoring

Management has determined that the Company did not maintain appropriately designed entity-level controls impacting the (1) control environment, (2) risk assessment procedures, (3) control activities, (4) information and communication, and (5) monitoring activities to prevent or detect material misstatements to the financial statements and assess whether the components of internal control were present and functioning properly. These deficiencies were primarily attributed to (i) turnover of the Chief Financial Officer, (ii) lack of structure and responsibility, insufficient number of qualified resources, and inadequate oversight and accountability over the performance of controls, (iii) ineffective identification and assessment of risks impacting internal control over financial reporting, and (iv) ineffective evaluation and determination as to whether the components of internal control were present and functioning.

Table of Contents

Control Activities and Information and Communication

These material weaknesses contributed to the following additional material weaknesses within certain business processes and the information technology environment:

·	Management did not design, implement, and retain appropriate documentation of formal accounting policies, procedures, and controls across substantially all of the Company’s business processes over: (i) the financial reporting process, including management review controls over key disclosures and financial statement support schedules, (ii) the monthly financial close process, including journal entries and account reconciliations and (iii) the completeness and accuracy of information used by control owners in the operation of certain controls, to achieve timely, complete, accurate financial accounting, reporting.

·	The Company did not design and maintain effective processes and controls to ensure all journal entries are properly reviewed and approved prior to posting to the general ledger.

·	Management did not design and maintain appropriate information technology general controls in the areas of user access, vendor management controls, and segregation of duties related to certain information technology systems that support the Company’s financial reporting process.

However, after giving full consideration to these material weaknesses, and the additional analyses and other procedures that we performed to ensure that our consolidated financial statements included in this Quarterly Report on Form 10-Q were prepared in accordance with U.S. GAAP, our management has concluded that our consolidated financial statements present fairly, in all material respects, our financial position, results of operations and cash flows for the periods disclosed in conformity with U.S. GAAP.

Remediation Efforts

Management, with oversight from the Audit Committee and Board of Directors, is committed to the remediation of the material weaknesses described above. The Company has continued to implement measures to improve the internal control structure. Specifically, the Company has:

·	Hired a Chief Financial Officer with knowledge and experience in key financial reporting and internal control areas;

·	Actively pursuing hiring the hiring of additional finance and accounting personnel with adequate knowledge and experience in key financial reporting and internal control areas;

·	Designing and implementing new entity-level controls (“ELCs”) with greater alignment to the COSO 2013 Internal Controls Framework;

·	Developing a training program and educating control owners concerning the principles of the Internal Control – Integrated Framework (2013) issued by COSO;

·	Implementing a risk assessment process by which management identifies risks of misstatement related to all account balances;

·	Developing internal controls documentation, including comprehensive accounting policies and procedures over financial processes and related disclosures;

·	Enhancing policies and procedures to retain adequate documentary evidence for certain management review controls over certain business processes including precision of review and evidence of review procedures performed to demonstrate effective operation of such controls;

·	Engaging outside resources for complex accounting matters and drafting and retaining position papers for all complex, non-recurring transactions;

·	Developing monitoring activities and protocols that will allow us to timely assess the design and the operating effectiveness of controls over financial reporting and make necessary changes to the design of controls, if any

·	Segregating key functions within our financial and information technology processes supporting our internal controls over financial reporting;

·	Reassessing and formalizing the design of certain accounting and information technology policies relating to security and change management controls, including user access reviews, including assessing the need for implementing a more robust information technology system; and

·	Continuing to enhance and formalize our accounting, business operations, and information technology policies, procedures, and controls to achieve complete, accurate, and timely financial accounting, reporting and disclosures.

Changes in Internal Control over Financial Reporting

Other than as described above, there were no other changes in the Company’s internal control over financial reporting identified in management’s evaluation pursuant to Rules 13a-15(f) and 15d-15(f) of the Exchange Act during the quarter ended March 31, 2025 that materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

Table of Contents

PART II — OTHER INFORMATION

ITEM 1. Legal Proceedings

The Company is not presently involved in any litigation of a material nature.

ITEM 1A. Risk Factors

Not required

ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds

None

ITEM 3. Defaults Upon Senior Securities

None

ITEM 4. Mine Safety Disclosures

Not applicable

ITEM 5. Other Information

None.

Table of Contents

ITEM 6. Exhibits

Exhibit No.		Exhibit Description
31.1		Certification of the Chief Executive Officer pursuant to Rule 13a-14(a) or 15d-14(a) under the Securities Exchange Act of 1934.
31.2		Certification of the Principal Financial Officer pursuant to Rule 13a-14(a) or 15d-14(a) under the Securities Exchange Act of 1934.
32.1		Certification pursuant 18 U.S.C. Section 1350 as adapted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS		XBRL Instance Document.
101.SCH		XBRL Taxonomy Extension Schema Document.
101.CAL		XBRL Taxonomy Extension Calculation Linkbase Document.
101.DEF		XBRL Taxonomy Extension Definition Linkbase Document.
101.LAB		XBRL Taxonomy Extension Label Linkbase Document.
101.PRE		XBRL Taxonomy Extension Presentation Linkbase Document.
104		Cover Page Interactive Data File (embedded within the Inline XBRL and contained in Exhibit 101)

Table of Contents

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 thereunto duly authorized.

	SMITH-MIDLAND CORPORATION (Registrant)

Date: July 10, 2025	By:	/s/ Ashley B. Smith
		Ashley B. Smith, Chief Executive Officer
		(Principal Executive Officer)

Date: July 10, 2025	By:	/s/ Dominic L. Hunter
		Dominic L. Hunter, Chief Financial Officer
		(Principal Financial Officer)

SMITH MIDLAND CORP 10-Q