[10-Q] SMITH MIDLAND CORP Quarterly Earnings Report

Rhea-AI Filing Summary

Smith-Midland Corporation (SMID) reported Q3 2025 results. Revenue was $21,451,000 versus $23,582,000 a year ago, and net income was $2,877,000 versus $3,150,000. Operating income held essentially flat at $3,854,000. Year to date, revenue rose to $70,335,000 from $59,977,000, driving net income of $10,375,000 versus $6,278,000, with EPS of $1.96.

Service revenue benefited from higher shipping/installation and royalties, while product sales were led by soundwall and Easi‑Set buildings. Barrier rentals decreased in the quarter due to a prior‑year special project but increased for the nine‑month period. Gross profit for the quarter was $5,759,000 as cost of sales ratio ticked up, while year‑to‑date margins improved.

Cash increased to $13,376,000 from $7,548,000 at year‑end, supported by $11,714,000 net cash from operating activities. Backlog was approximately $54.8 million as of November 1, 2025. Management disclosed that previously identified material weaknesses in internal control over financial reporting remain not remediated and outlined ongoing remediation actions.

Insights

Equity analyst

Solid YTD growth, stable Q3, ongoing control remediation.

Smith-Midland delivered stronger year-to-date performance: revenue of $70.335M and net income of $10.375M, reflecting higher soundwall, SlenderWall, and Easi‑Set activity plus barrier projects earlier in the year. Q3 revenue of $21.451M and net income of $2.877M were lower year over year due to a prior‑year special barrier project.

Operating income remained steady in Q3 at $3.854M; quarterly cost of sales (ex‑royalties) rose to 77% of revenue, while the nine‑month ratio improved to 74%. Cash rose to $13.376M with $11.714M operating cash inflow. Backlog was about $54.8M as of Nov 1, 2025, indicating continued production visibility.

Management reports material weaknesses in internal control over financial reporting remain unresolved; remediation steps are underway. Actual impact depends on execution of projects and control remediation; subsequent filings may detail progress.

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 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 September 30, 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 November 1, 2025: 5,304,606 shares, net of treasury shares

SMITH-MIDLAND CORPORATION 

Form 10-Q Index  

		Page
PART I.  FINANCIAL INFORMATION
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		16
Item 3. Quantitative and Qualitative Disclosures About Market Risk		25
Item 4. Controls and Procedures		25
PART II. OTHER INFORMATION
Item 1. Legal Proceedings		27
Item 1A. Risk Factors		27
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		27
Item 3. Defaults Upon Senior Securities		27
Item 4. Mine Safety Disclosures		27
Item 5. Other Information		27
Item 6. Exhibits		28
Signatures		29

2

Table of Contents

PART I — FINANCIAL INFORMATION

ITEM 1. Financial Statements

Smith-Midland Corporation

and Subsidiaries

Condensed Consolidated Balance Sheets

(Unaudited)

(in thousands, except share and per share data)

ASSETS		September 30, 2025				December 31,2024
Current assets
Cash		$	13,376			$	7,548
Accounts receivable, net
Trade - billed (less allowances of approximately $1,166 and $1,130, respectively), including contract retentions			25,460				19,420
Trade - unbilled			1,396				1,327
Inventories, net
Raw materials			2,498				2,078
Finished goods			5,392				4,599
Prepaid expenses			1,684				877
Total current assets			49,806				35,849
Property and equipment, net			35,126				31,704
Other assets			505				438
Total assets		$	85,437			$	67,991

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

3

Table of Contents

Smith-Midland Corporation

and Subsidiaries

Condensed Consolidated Balance Sheets

(Unaudited)

(in thousands, except share and per share data)

(continued)

LIABILITIES AND STOCKHOLDERS' EQUITY		September 30, 2025				December 31, 2024
Current liabilities
Accounts payable - trade		$	5,740			$	4,741
Accrued expenses and other liabilities			466				429
Deferred revenue			3,688				4,313
Accrued compensation			2,110				1,770
Accrued income taxes			2,658				1,539
Operating lease liabilities			20				21
Current maturities of notes payable			657				658
Customer deposits			2,689				1,539
Total current liabilities			18,028				15,010
Deferred revenue			10,785				6,222
Operating lease liabilities			80				90
Notes payable - less current maturities			3,933				4,436
Deferred tax liability			484				494
Total liabilities			33,310				26,252
Stockholders’ equity
Preferred stock, $.01 par value; authorized 1,000,000 shares, none issued and outstanding			—				—
Common stock, $.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			7,730				7,717
Treasury stock, at cost, 40,920 shares			(102	)			(102	)
Retained earnings			44,445				34,070
Total stockholders' equity			52,127				41,739
Total liabilities and stockholders' equity		$	85,437			$	67,991

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

4

Table of Contents

Smith-Midland Corporation

and Subsidiaries

Condensed Consolidated Statements of Income

(Unaudited)

(in thousands, except per share data)

		Three Months Ended September 30,								Nine Months Ended September 30,
		2025				2024				2025				2024
Revenue
Product sales		$	11,911			$	10,753			$	34,459			$	34,621
Barrier rentals			3,269				7,053				17,474				9,303
Royalty income			1,083				958				3,299				2,403
Shipping and installation revenue			5,188				4,818				15,103				13,650
Total revenue			21,451				23,582				70,335				59,977
Cost of sales			15,692				17,004				49,815				44,353
Gross profit			5,759				6,578				20,520				15,624
Operating expenses
General and administrative expenses			1,100				1,720				4,198				4,938
Selling expenses			805				1,010				2,563				2,655
Total operating expenses			1,905				2,730				6,761				7,593
Operating income			3,854				3,848				13,759				8,031
Other income (expense)
Interest expense			(44	)			(56	)			(161	)			(175	)
Interest income			72				22				85				36
Gain on sale of assets			—				16				—				19
Other income (expense), net			(11	)			14				17				50
Total other income (expense)			17				(4	)			(59	)			(70	)
Income before income tax expense			3,871				3,844				13,700				7,961
Income tax expense			994				694				3,325				1,683
Net income		$	2,877			$	3,150			$	10,375			$	6,278
Basic and diluted earnings per common share		$	0.54			$	0.59			$	1.96			$	1.18
Weighted average number of common shares outstanding:
Basic			5,305				5,304				5,305				5,283
Diluted			5,305				5,304				5,304				5,283

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

5

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
Vesting of restricted stock			—				—				—				—				4				—				4
Net income			—				—				—				—				—				4,171				4,171
Balance, June 30, 2025			5,346,526			$	54				(40,920	)		$	(102	)		$	7,725			$	41,568			$	49,245
Vesting of restricted stock			—				—				—				—				5				—				5
Net income			—				—				—				—				—				2,877				2,877
Balance, September 30, 2025			5,346,526			$	54				(40,920	)		$	(102	)		$	7,730			$	44,445			$	52,127
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
Vesting of restricted stock			—				—				—				—				5				—				5
Settlement of restricted stock			(3,840	)			—				—				—				(117	)			—				(117	)
Net income			—				—				—				—				—				1,981				1,981
Balance, June 30, 2024			5,345,759			$	54				(40,920	)		$	(102	)		$	7,707			$	29,523			$	37,182
Stock granted			767				—				—				—				—				—				—
Vesting of restricted stock			—				—				—				—				5				—				5
Net income			—				—				—				—				—				3,150				3,150
Balance, September 30, 2024			5,346,526			$	54				(40,920	)		$	(102	)		$	7,712			$	32,673			$	40,337

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

6

Table of Contents

Smith-Midland Corporation

and Subsidiaries

Condensed Consolidated Statements of Cash Flows

(Unaudited)

(in thousands)

		Nine Months Ended September 30,
		2025				2024
Cash flows from operating activities:
Net income		$	10,375			$	6,278
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation and amortization			1,915				1,996
(Gain) on sale of property and equipment			—				(19	)
Allowance for credit losses			36				271
Stock compensation			13				40
Settlement of restricted stock			—				(142	)
Deferred taxes			(10	)			(1	)
(Increase) decrease in
Accounts receivable - billed			(6,076	)			(884	)
Accounts receivable - unbilled			(69	)			(389	)
Inventories			(1,213	)			(1,092	)
Prepaid expenses and other assets			(874	)			186
Refundable income taxes			—				(23	)
Increase (decrease) in
Accounts payable - trade			1,044				(1,909	)
Accrued expenses and other liabilities			26				21
Deferred revenue			3,938				3,052
Accrued compensation			340				178
Accrued income taxes			1,119				(473	)
Customer deposits			1,150				(1,287	)
Net cash provided by (used in) operating activities			11,714				5,803
Cash flows from investing activities:
Purchases of property and equipment			(5,382	)			(5,543	)
Proceeds from the sale of property and equipment			-				25
Net cash provided by (used in) investing activities			(5,382	)			(5,518	)
Cash flows from financing activities:
Repayments of long-term borrowings			(504	)			(447	)
Net cash provided by (used in) financing activities			(504	)			(447	)
Net increase (decrease) in cash			5,828				(162	)
Cash
Beginning of period			7,548				9,175
End of period		$	13,376			$	9,013
Supplemental Cash Flow Information:
Cash payments for interest		$	161			$	175
Cash payments for income taxes		$	2,216			$	1,558
Non-Cash Investing Activities
Capital expenditures in accounts payable		$	381			$	478

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

7

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.

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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 $ 20,589 and $16,695 as of September 30, 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:

		Three Months Ended September 30,								Nine Months Ended September 30,
		2025				2024				2025				2024
Accounts receivable trade – unbilled, beginning of the period		$	1,240			$	927			$	1,327			$	525
Accounts receivable trade – unbilled, end of the period			1,396				914				1,396				914
Amounts invoiced in the period from amounts included at the beginning of the period			549				830				1,189				428

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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:

		Three Months Ended September 30,								Nine Months Ended September 30,
		2025				2024				2025				2024
Customer deposits, beginning of the period		$	2,637			$	2,581			$	1,539			$	2,779
Customer deposits, end of the period			2,689				1,492				2,689				1,492
Revenue recognized in the period from amounts included at the beginning of the period			855				2,483				423				2,684

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

		Three Months Ended September 30,								Nine Months Ended September 30,
		2025				2024				2025				2024
Deferred revenue, beginning of the period		$	6,175				3,499			$	4,453			$	2,685
Deferred revenue, end of the period			6,529				4,189				6,529				4,189
Revenue recognized in the period from amounts included at the beginning of the period			796				68				3,331				604

Any uncollected billed amounts for our performance obligations recognized over time, including contract retentions, are recorded within accounts receivable trade - billed. At September 30, 2025 and December 31, 2024 accounts receivable included contract retentions of approximately $1,130 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. During the quarter ended September 30, 2025, we recognized a bad debt recovery of $245, primarily related to collections of previously reserved receivables. At September 30, 2025 and December 31, 2024, total allowances for credit losses were $1,166 and $1,130, respectively.

The roll forward of our allowance for credit losses for the quarter ended September 30, 2025, was as follows:

Balance at December 31, 2024		$	1,130
Provision for Expected Credit Losses			281
Bad Debt Recovery			(245	)
Balance at September 30, 2025		$	1,166

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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. These amounted to $7,944 and $6,082 as of September 30, 2025 and December 31, 2024 respectively. 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.

Disaggregation of Revenue

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

Revenue by Type		Three Months Ended September 30,								Nine Months Ended September 30,
		2025				2024				2025				2024
Soundwall Sales		$	2,846			$	1,873			$	11,832			$	7,043
Architectural Panel Sales			1,033				1,601				1,033				3,893
SlenderWall Sales			1,146				—				2,634				—
Miscellaneous Wall Sales			1,273				811				2,737				4,634
Barrier Sales			764				546				3,299				3,418
Easi-Set Building Sales			2,657				1,801				7,642				4,341
Utility Sales			1,166				2,383				3,051				6,112
Miscellaneous Sales			1,026				1,738				2,231				5,180
Total Product Sales			11,911				10,753				34,459				34,621
Barrier Rentals			3,269				7,053				17,474				9,303
Royalty Income			1,083				958				3,299			2,403
Shipping and Installation Revenue			5,188				4,818				15,103				13,650
Total Service Revenue			9,540				12,829				35,876				25,356
Total Revenue		$	21,451			$	23,582			$	70,335			$	59,977

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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 three months ended September 30, 2025, no customer made up greater than 10% of the revenue for the Company. For the nine months ended September 30, 2025, the Company derived 18% of its revenue from one customer. For the three months ended September 30, 2024, the Company derived 17% of its revenue from one customer. For the nine months ended September 30, 2024 no customer made up greater than 10% of the revenue for the Company. As of September 30, 2025, one customer’s outstanding receivable balance equaled 16% of the total outstanding receivable balance. As of September 30, 2024, one customer’s outstanding receivable balance equaled 15% 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, or decision-making group, in deciding how to allocate resources and assess performance. The Company currently operates in one operating and reportable business segment for financial reporting purposes.

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2. EARNINGS PER SHARE

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

		Three Months Ended September 30,								Nine Months Ended September 30,
		2025				2024				2025				2024
Basic earnings per common share
Net income		$	2,877			$	3,150			$	10,375			$	6,278
Weighted average shares outstanding			5,305				5,304				5,305				5,283
Basic earnings per common share		$	0.54			$	0.59			$	1.96			$	1.18
Diluted earnings per common share
Net income		$	2,877			$	3,150			$	10,375			$	6,278
Weighted average shares outstanding			5,305				5,304				5,305				5,283
Dilutive effect of restricted stock			—				—				(1	)			—
Total weighted average shares outstanding			5,305				5,304				5,304				5,283
Diluted earnings per common share		$	0.54			$	0.59			$	1.96			$	1.18

There was no restricted stock excluded from the diluted earnings per share calculation for the three and nine month periods ended September 30, 2025 and September 30, 2024.

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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 September 30, 2025 and December 31, 2024 was $980 and $1,166 respectively. The loan matures on October 10, 2029.

The Company also has a note payable to the Bank in the amount of $1,342 and $1,536 as of September 30, 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 September 30, 2025 and December 31, 2024 was $2,264 and $2,379 respectively.

The Company additionally has one smaller installment loan with an annual interest rate of 2.90% maturing in 2025, with a balance at September 30, 2025 and December 31, 2024 totaling $4 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 September 30, 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 September 30, 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.

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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 nine months ended September 30, 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				1,000			$	19.15
Granted			—				—				—				—
Vested (Settled)			—				(1,000	)			(1,000	)		$	19.15
Forfeited			—				—				—				—
Non-vested, September 30, 2025			—				—				—				—

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 and nine month periods ended September 30, 2025 was approximately $5 and $14, respectively, based upon the value at the date of grant. During the nine months ended September 30, 2025, 1,000 shares of service-based restricted stock vested and were settled through the issuance of common stock. No new restricted stock awards were granted, and no awards were forfeited during the period. As of September 30, 2025, there were no non-vested restricted stock awards outstanding, and no unrecognized compensation cost related to restricted stock awards.

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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 three and nine month periods ended September 30, 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 and the barrier rental fleet, there is no assurance that we will achieve significantly greater revenues,
	·	while we have special barrier projects that can occur at any time that may have a significant positive effect on revenues and operating income, including the significant special barrier projects that occurred in both the first quarter and the second quarter of 2025 and third quarter of 2024, there can be no assurance of these projects recurring in any future periods,
	·	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 third quarter of 2025 from December 31, 2024, reflecting the higher cashflows from operating activities, there can be no assurance that the Company’s cash will continue to increase or not be reduced in the future,
	·	we have a significant amount of accounts receivables which has increased during the third quarter of 2025 as compared to the ending balance as of December 2024, and our ability to fully collect these balances cannot be assured,

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	·	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 taking remedial actions with respect to these weaknesses,
	·	there are uncertainties arising from the policies of the United States Government, 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,
	·	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 continues to be 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; in this respect, during the third quarter of 2025, we received an arbitration settlement of $458 related to a SlenderWall sale that occurred in 2015. The settlement included the recovery of previously reserved receivables and is recognized in the third quarter of 2025. There can be no assurance we will achieve favorable outcomes in any future litigation, arbitration, or similar proceedings,
	·	potential decreases in our contract backlog; in this respect, the Company’s backlog at November 1, 2025 was approximately $54.8 million as compared to $62.8 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.

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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. 

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

Overall, the Company’s financial bottom line performance was higher for the first nine months of 2025 when compared to the first nine months of 2024. The Company had net income for the three and nine months ended September 30, 2025 of $2,877 and $10,375, respectively, compared to a net income of $3,150 and $6,278 for the three and nine months ended September 30, 2024, respectively. Total revenue of $21,451 was $2,131 lower for the three months ended September 30, 2025 from $23,582 for the three months ended September 30, 2024. The lower revenue in the third quarter of 2025 when compared to the third quarter of 2024 was due primarily to a special barrier project that occurred in the third quarter of 2024 that did not recur in the third quarter of 2024. Total revenue increased by $10,358 to $70,335 for the nine months ended September 30, 2025 from $59,977 for the nine months ended September 30, 2024. The increase in revenue for the nine month period is mainly from special barrier project sales that occurred in the first and second quarters of 2025, an increase in soundwall sales, SlenderWall sales, Easi-Set building sales, royalty income, and shipping and installation revenue.

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Cost of sales as a percentage of revenue, not including royalties, increased to 77% for the three months ended September 30, 2025 compared to 75% for the three months ended September 30, 2024. The increase for the third quarter of 2025 as compared to the same quarter in 2024 is primarily due to the increase in revenue from a special barrier project that was performed in the third quarter of 2024 which have a higher margin and lower cost of sales when compared to product margin and product cost of sales.  Cost of sales as a percentage of revenue, not including royalties, decreased to 74% for the nine months ended September 30, 2025 compared to 77% for the nine months ended September 30, 2024. The decrease for the nine month period is primarily due to the increase in revenue from the special barrier projects that were performed in the first and second quarters of 2025 which have a higher margin and lower cost of sales when compared to product margin and product cost of sales.

Operating income was $3,854 for the three month period ended September 30, 2025, as compared to an operating income of $3,848 for the three month period ended September 30, 2024. Operating income was $13,759 for the nine month period ended September 30, 2025, as compared to $8,031 for the nine month period ended September 30, 2024. Operating expenses for the third quarter of 2025 were $1,905 compared to $2,730 for the third quarter of 2024. Operating expenses for the first nine months of 2025 were $6,761 compared to $7,593 for the first nine months of 2024.

Income tax expense for the three month period ended September 30, 2025 was $994, or an effective tax rate of 26%, as compared to an income tax expense of $694, or an effective tax rate of 18% for the three month period ended September 30, 2024. Income tax expense for the nine month period ended September 30, 2025 was $3,325, or an effective tax rate of 24%, as compared to an income tax expense of $1,683 or an effective tax rate of 21% for the nine month period ended September 30, 2024.

As of November 1, 2025, the Company’s sales backlog was approximately $54.8 million, as compared to approximately $62.8 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 continue coming through the state and local governments in the latter half of 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.

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Three and nine months ended September 30, 2025, compared to the three and nine months ended September 30, 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 and nine month periods ended September 30, 2025 and 2024.

Revenue by Type		Three Months Ended  September 30,								Nine Months Ended September 30,
		2025				2024				2025				2024
Soundwall Sales		$	2,846			$	1,873			$	11,832			$	7,043
Architectural Panel Sales			1,033				1,601				1,033				3,893
SlenderWall Sales			1,146				—				2,634				—
Miscellaneous Wall Sales			1,273				811				2,737				4,634
Barrier Sales			764				546				3,299				3,418
Easi-Set Building Sales			2,657				1,801				7,642				4,341
Utility Sales			1,166				2,383				3,051				6,112
Miscellaneous Sales			1,026				1,738				2,231				5,180
Total Product Sales			11,911				10,753				34,459				34,621
Barrier Rentals			3,269				7,053				17,474				9,303
Royalty Income			1,083				958				3,299				2,403
Shipping and Installation Revenue			5,188				4,818				15,103				13,650
Total Service Revenue			9,540				12,829				35,876				25,356
Total Revenue		$	21,451			$	23,582			$	70,335			$	59,977

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.

Soundwall Sales - Soundwall sales were significantly higher for the three and nine month periods ended September 30, 2025, compared to the same periods in 2024. 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 of 2025 as compared to the first nine months of 2025, although no assurance can be given.

Architectural Panel Sales – Architectural panel sales commenced in the third quarter of 2025 as  compared to no architectural panel sales in the first two quarters of 2025. In 2024 there was 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 the remainder of 2025 as compared to the first nine months of 2025, although no assurance can be given.

SlenderWall Sales - SlenderWall sales increased for the three and nine months ended September 30, 2025, as compared to the same periods in 2024. The Company produced SlenderWall projects in the nine month period ended September 30, 2025 and the Company did not have a SlenderWall project in production during the first nine months of 2024. The Company continues to focus sales initiatives on SlenderWall, but no assurance can be given as to the success of this endeavor.

Miscellaneous Wall Sales - Miscellaneous wall sales increased for the three month period and decreased for the nine month period ended September 30, 2025 compared to the same periods in 2024. For the nine month period, miscellaneous wall sales were down due to lower production volumes as compared to 2024. Miscellaneous wall sales are expected to trend similarly through the remainder of 2025 as the first nine months of 2025, although no assurance can be provided.

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Barrier Sales - Barrier sales increased slightly for the three month period and decreased slightly for the nine month period ended September 30, 2025, compared to the same periods in 2024. The decrease over the nine month period is consistent with the Company’s continuing shift in marketing efforts from barrier sales to higher margin barrier rentals in the Delaware to Virginia region. Barrier sales are expected to trend similarly throughout the remainder of 2025 as compared to the first nine months of 2025, although no assurance can be given.

Easi-Set® and Easi-Span Building Sales - Building and restroom sales increased for the three and nine month periods ended September 30, 2025, compared to the same periods 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 nine months of 2025.

Utility Sales - Utility sales decreased significantly for the three and nine month periods ended September 30, 2025, compared to the same periods in 2024. During 2024, 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 higher for the remainder of 2025 as compared to the first nine months 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 and nine month periods ended September 30, 2025, compared to the same periods in 2024. The decrease is mainly from the Virginia plant which had one large project in the first nine months of 2024 for the production of precast beams and platforms and no similar project in the first nine months of 2025. Miscellaneous product sales are expected to trend similarly throughout the remainder of 2025 as compared to the first nine months of 2025, although no assurance can be given.

Barrier Rentals – Barrier rentals decreased for the three month period and increased for the nine month period ended September 30, 2025 compared to the same periods in 2024. For the third quarter, the decrease is mainly attributed to a special barrier project performed by the Company in the third quarter of 2024 that did not recur in the third quarter of 2025.  For the nine month period, this increase is mainly attributed to two special barrier projects, one in each of the first and second quarters of 2025 as well as an overall increase in utilization of rental barriers. Barrier rental revenue, excluding revenue from special barrier projects, is expected to trend higher throughout the remainder of  2025 as compared to barrier rental revenue, excluding revenue from special barrier projects, in the first nine months of 2025, although no assurance can be given.

Royalty Income – Royalties increased for the three and nine month periods ended September 30, 2025, compared to the same periods in 2024. The increase is related to higher barrier production volumes experienced by the Company’s licensees. It is expected that continued 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 increased for the three and nine month periods ended September 30, 2025 compared to the same periods in 2024. The increase is mainly attributed to the increase in barrier rental from the special barrier projects, and shipping and installation of SlenderWall and soundwalls.

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Cost of Sales - Cost of sales as a percentage of revenue, not including royalties, increased to 77% for the three months ended September 30, 2025 compared to 75% for the three months ended September 30, 2024. The increase for the third quarter of 2025 as compared to the same quarter in 2024 is primarily due to the increase in revenue from a special barrier project that was performed in the third quarter of 2024 which has a higher margin and lower cost of sales when compared to product margin and product cost of sales.  Cost of sales as a percentage of revenue, not including royalties, decreased to 74% for the nine months ended September 30, 2025 compared to 77% for the nine months ended September 30, 2024. The decrease for the nine month period is primarily due to the increase in revenue from the special barrier projects that were performed in the first and second quarters of 2025 which have a higher margin and lower cost of sales when compared to product margin and product cost of sales.

General and Administrative Expenses - For the three months ended September 30, 2025, the Company's general and administrative expenses decreased to $1,100 from $1,720 during the same period in 2024. For the nine months ended September 30, 2025, the Company's general and administrative expenses decreased to $4,198 from $4,938 during the same period in 2024. General and administrative expense as a percentage of total revenue was 5% and 7% for the three month periods ended September 30, 2025 and 2024, respectively. General and administrative expense as a percentage of total revenue was 6% and 8% for the nine month periods ended September 30, 2025 and 2024, respectively. Such expenses decreased due to lower staffing levels impacting salaries and wages and an arbitration settlement that included the recovery of $458 in previously reserved receivables which offset general and administrative expenses in the third quarter of 2025.  Salaries and wages are expected to increase for the remainder of 2025 as compared to the first nine months of 2025 as additional administrative staff are hired.

Selling Expenses - Selling expenses for the three months ended September 30, 2025 decreased to $805 from $1,010 for the same period in 2024. The slight decrease is due to a reduction in staffing levels impacting salaries and wages. Selling expenses for the nine months ended September 30, 2025 decreased by $92 to $2,563 from $2,655 in the same nine month period in 2024. Similarly to the third quarter, the slight decrease for the nine month period is due to a reduction in staffing levels impacting salaries and wages. 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  - The Company had operating income for the three month period ended September 30, 2025 of $3,854 compared to $3,848 for the same period in 2024. The Company had operating income for the nine month period ended September 30, 2025 of $13,759 compared to $8,031 for the same period in 2024.  For the nine month period, 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 $44 and $56 for the three month periods ended September 30, 2025 and 2024, respectively. Interest expense was $161 and $175 for the nine month periods ended September 30, 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.

Income Tax Expense - The Company had an income tax expense of $994, or an effective tax rate of 26%, for the three months ended September 30, 2025, compared to income tax expense of $694, or an effective tax rate of 18% for the same period in 2024. The Company had an income tax expense of $3,325, or an effective tax rate of 24%, for the nine months ended September 30, 2025, compared to income tax expense of $1,683, or an effective tax rate of 21% for the same period in 2024. The rate was lower for the prior nine month period due in part to the tax impact of vested stock compensation in 2024.

Net Income  - The Company had net income of $2,877 and $10,375 for the three and nine months ended September 30, 2025, respectively, compared to $3,150 and $6,278 for the three and nine months ended September 30, 2024, respectively. The basic and diluted earnings per share was $0.54 and $1.96, respectively, for the three and nine months ended September 30, 2025, and the basic and diluted earnings per share was $0.59 and $1.18, respectively, for the three and nine months ended September 30, 2024, respectively.

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Liquidity and Capital Resources (dollar amounts in thousands)

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 September 30, 2025 and December 31, 2024 was $980 and $1,166 respectively. The loan matures on October 10, 2029.

The Company also has a note payable to the Bank in the amount of $1,342 and $1,536 as of September 30, 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 September 30, 2025 and December 31, 2024 was $2,264 and $2,379 respectively.

The Company additionally has one smaller installment loan with an annual interest rate of 2.90% maturing in 2025, with a balance at September 30, 2025 and December 31, 2024 totaling $4 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 September 30, 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 September 30, 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.

On September 30, 2025, the Company had cash totaling $13,376 compared to cash totaling $7,548 on December 31, 2024. The increase in cash is primarily the result of cash provided by operating income net of cash used by the increase in accounts receivable and 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.

The Company’s accounts receivable balances, net of allowance, at September 30, 2025 was $25,460, compared to $19,420 at December 31, 2024. This increase is due primarily to higher billings in the second and third quarters of 2025.

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Capital spending for the nine months ended September 30, 2025 totaled $5,382 as compared to $5,543 for the same period in 2024. The 2025 expenditures were primarily for a ramp up in barrier production to expand the rental fleet, attenuators and plant expansion.  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 over $6,000, for the full year 2025, which includes continued barrier production, 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. 

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, excluding the effect of unbilled revenue, was 91 days for the nine months ended September 30, 2025, compared to 85 days for the nine months ended September 30, 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 $7,890 on September 30, 2025, and $6,677 on December 31, 2024, or an increase of $1,213. The increase in inventory is mainly due to the increase of finished goods inventory compared to the prior year. The increase is primarily related to inventory needed on-hand for the anticipated delivery schedules including barrier production for the MASH TL3 compliance. The increased inventory in MASH TL3 compliant barriers is consistent with the Company’s continuing shift in marketing efforts from barrier sales to higher margin barrier rentals in the Delaware to Virginia region. Inventory turnover was 10.2, annualized for the nine months ended September 30, 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 nine 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 November 1, 2025, the Company’s sales backlog was approximately $54.8 million, as compared to approximately $62.8 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.

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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 the period covered by this Quarterly Report on 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 September 30, 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 (“U.S. GAAP”).

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 and our Quarterly Reports on Form 10-Q for the quarters ended March 31, 2025 and June 30, 2025, 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 September 30, 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.

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:

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·	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 and 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 and is:

·	Actively pursuing 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 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 September 30, 2025 that materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

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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.

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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)

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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: November 14, 2025	By:	/s/ Ashley B. Smith
		Ashley B. Smith, Chief Executive Officer
		(Principal Executive and Financial Officer)
Date: November 14, 2025	By:	/s/ Dominic L. Hunter
		Dominic L. Hunter, Chief Financial Officer
		(Principal Financial Officer)

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FAQ

What were Smith-Midland (SMID) Q3 2025 revenue and net income?

Q3 revenue was $21,451,000 and net income was $2,877,000.

How did SMID perform year to date in 2025?

Year-to-date revenue was $70,335,000 with net income of $10,375,000 and EPS of $1.96.

What drove SMID’s year-to-date growth?

Higher soundwall, SlenderWall, and Easi‑Set sales, stronger royalties, shipping/installation, and special barrier projects in Q1–Q2.

What is SMID’s cash position?

Cash was $13,376,000 at September 30, 2025, up from $7,548,000 at December 31, 2024.

What is SMID’s current backlog?

Backlog was approximately $54.8 million as of November 1, 2025.

Are there any internal control issues disclosed?

Yes. Material weaknesses in internal control over financial reporting remain; management detailed ongoing remediation actions.

How did margins trend?

Q3 cost of sales (ex‑royalties) was 77% of revenue; for the nine months it improved to 74%.