Schmitt Industries, Inc. (Schmitt) has reported net sales of $2.99 million for the second quarter of fiscal 2009 results, compared with the net sales of $3.11 million in the year-ago quarter. It has also reported a net loss of $113,667, or $0.04 loss per share, for the second quarter of fiscal 2009, compared with the net income of $264,739, or $0.10 per share, in the year-ago quarter.
Sales for the six months ended November 30, 2008 increased $733,000, or 13.4%, to $6,182,666, compared to $5,449,926 for the six months ended November 30, 2007. In the second quarter, the sales in the SBS Balancer segment decreased $52,000 and sales in the SMS Measurement segment decreased $69,000 as compared to the year-ago period. These decreases were due to lower unit sales volumes. For the six months ended November 30, 2008, sales in the SBS Balancer segment increased $420,000, or 10.1%, while sales in the SMS Measurement segment increased $313,000, or 24.2%. Sales in the SBS Balancer segment for the six month period increased primarily due to higher unit sales volumes in Asia and Europe offset by slightly lower sales volumes in North America. In the SMS Measurement segment, sales of the company’s Acuity line of laser-based dimensional measurement products increased due to higher unit sales volumes, primarily in North America.
The gross margins for the second quarter of Fiscal 2009 were 46.9% as compared to 54.3% during the same period last year. Gross margins for the six months ended November 30, 2008 were 49.5% as compared to 53.7% in the six months ended November 30, 2007. These decreases were due to changes in product sales mix shifting towards lower margin products. Operating expenses raised $258,000, or 18.3%, to $1,671,245 for the three months ended November 30, 2008 as compared to $1,412,857 for the three months ended November 30, 2007. Operating expenses raised $806,000, or 33.1%, to $3,241,382 for the six months ended November 30, 2008 as compared to $2,434,985 for the six months ended November 30, 2007. Research and development expenses increased due to costs associated with the Xact product development incorporating the technology acquired from Xtero Datacom, Inc. in February 2008 and to new product development associated with existing product lines. General, administrative and selling costs raised due to higher professional fees associated with compliance costs for Section 404 of the Sarbanes-Oxley Act, higher personnel costs including additions to management, higher stock-based compensation and higher amortization expenses.
For the six months ended November 30, 2008, net loss was $80,120, or $.03 per fully diluted share, as compared to net income of $449,254, or $.16 per fully diluted share, for the six months ended November 30, 2007.
“Given the nature of our technology products, we would expect that recent downturns in the global economy will have an impact on our businesses going forward. Needless to say, we are watching all of our global markets very carefully. We are continuing to make investments in the future, including the development of new products and enhancements to existing products in addition to strengthening our management team. Although these investments have not yet had a positive impact on operating income, we expect that we will see the benefits of these investments on a going forward basis. We intend to launch new products in the second half of the year including the Xact™ product line,” commented Wayne Case, chairman, president and chief executive officer of Schmitt Industries.