HOUSTON, Nov. 09, 2018 (GLOBE NEWSWIRE) -- via NEWMEDIAWIRE – SMG Industries, Inc. (OTCQB: SMGI), a growth-oriented oilfield services company operating in the Southwest United States, announced their financial results today for the third quarter ended September 30, 2018.
Third Quarter 2018 Highlights:
- Revenue increased 65% to $1,026,949 for the third quarter ended September 30, 2018, from $620,084 during the same period in 2017,
- Gross profit increased over 15% to $444,027 for the third quarter ended September 30, 2018, from $385,710 during the same period in 2017,
- Gross margin was 43.5% of revenue for the third quarter ended September 30, 2018 compared to 62.2% of revenue for the third quarter 2017,
- Net loss for the third quarter ended September 30, 2018 was $279,694, or $0.03 per diluted share, which included non-cash expenses of $196,273 associated with depreciation, amortization and share payments, and one-time expenses of $15,790,
- Net loss for the third quarter ended September 30, 2017 was $412,626, or $0.04 per diluted share,
- Revenue increased 77% to $3,192,432 for the nine months ended September 30, 2018, compared to $1,802,486 during the same period in 2017, and,
- The Company continues to aggressively move forward with its previously announced accretive acquisition strategy.
As stated in the Company’s Quarterly Report on Form 10-Q filed November 9, 2018 with the Securities and Exchange Commission, revenues for the three months ended September 30, 2018 were $1,026,949, an increase of $406,865, or 65%, from $620,084 for the comparable three months ended September 30, 2017. The increase was attributed to an increase in customer activity driven by an increase in drilling rig count in geographic areas SMG Industries serves, additional services the Company has added including rental fleets of equipment, our rig supply services as well as additional new customers.
During the three months ended September 30, 2018, cost of sales increased as a percentage of sales to 56.7% of revenues, or $582,922, compared to 37.8% of revenues, or $234,374, for the comparable 2017 period. The increase in cost of sales as a percentage of revenues is primarily the result of higher direct costs including further expansion in West Texas with service crews and related equipment in addition to the new facility in South Texas not present in the year ago period.
For the three months ended September 30, 2018, selling, general and administrative expenses decreased to $667,277, a decrease of $107,089, from $774,366 for the three months ended September 30, 2017. The decrease in selling, general and administrative expenses in 2018 was primarily due to lowering costs associated with truck rental and lodging expense for service crews compared to certain one-time costs from the September 2017 merger with MG Cleaners.
During the three months ended September 30, 2018, the Company realized a net loss of $279,694, or $0.03 per basic and diluted earnings per share. For the three months ended September 30, 2017 the Company realized a net loss of $412,626 or $0.19 per basic and diluted earnings per share. The net loss for the quarter ended September 30, 2018 resulted from increased revenues, lower selling, general and administrative expenses and the absence of one-time acquisition charges related to the MG Cleaners acquisition in the year ago comparable period.
Mr. Matthew Flemming, Chief Executive Officer of SMGI, stated, “East Texas operations remained positive during the quarter with continued customer activity in the Haynesville and new service revenues from Rig Wash services. In West Texas, take away capacity and production issues in the Permian Basin did not slow down drilling activities in our view as much as fracing and completions activities reported by other service companies. While Rig Wash services were down sequentially in the third quarter due to inclement weather, the Company exited the quarter with near full utilization of its service crews. We are excited about the progress in South Texas’ Eagle Ford area. The Company has several new customers in the Eagle Ford Shale many of whom are well-capitalized active independent producers. Currently, we view South Texas as an attractive growth area for our company as the oil produced is closer to market, there is relatively less competition with peer service companies and employees can be less difficult to source. The Company continues to actively pursue plans for acquisitions with an accretive profile.”
Mr. Stephen Christian, President of MG Cleaners LLC and EVP of SMG, stated, “During this quarter, we implemented programs in each location to raise efficiencies with our service crews and reduce expenses such as revising our fleet program and providing service crew housing in Odessa thereby eliminating most mobile crews’ hotel expenses. By initiating our rig supply division, known as MG Supply, we have increased our repeat customer contact and further driven our MG proprietary products such as Miracle Blue®. During the quarter, the Company received several new MSAs reflecting customers' confidence with our continued focus on safety, in-field services and our branded products. During this quarter, we also acquired approximately 850 bottom hole assembly (BHA) oil tools which includes stabilizers, crossovers, drilling jars, roller reamers and bit subs both non-mag and steel units. We are in the process of setting up rental customer channels for directional drillers who require these units.”
As of November 9, 2018, the Company had 11,346,690 shares outstanding.
Third Quarter 2018 Financial Tables
| SMG INDUSTRIES INC. | ||||||||||
| (FORMERLY: SMG INDIUM RESOURCES LTD.) | ||||||||||
| CONSOLIDATED BALANCE SHEETS | ||||||||||
| (unaudited) | ||||||||||
| September 30, | December 31, | |||||||||
| 2018 | 2017 | |||||||||
| ASSETS | ||||||||||
| Current assets: | ||||||||||
| Cash and cash equivalents | $ | 251,208 | $ | 85,570 | ||||||
| Accounts receivable, net of allowance for doubtful accounts of $12,500 and $10,695 | 645,540 | 441,359 | ||||||||
| Inventory | 148,495 | 142,053 | ||||||||
| Assets held for sale | 42,300 | 42,300 | ||||||||
| Prepaid expenses and other current assets | 74,779 | 25,352 | ||||||||
| Total current assets | 1,162,322 | 736,634 | ||||||||
| Property, equipment and rental assets, net of accumulated depreciation of $ 272,484 and $300,155 | 1,026,575 | 118,779 | ||||||||
| Other assets | 32,541 | - | ||||||||
| Intangible assets, net of accumulated amortization $6,275 | 143,725 | - | ||||||||
| Total assets | $ | 2,365,163 | $ | 855,413 | ||||||
| LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) | ||||||||||
| Current liabilities: | ||||||||||
| Accounts payable | $ | 577,860 | $ | 395,423 | ||||||
| Accounts payable - related party | 21,000 | 95,585 | ||||||||
| Accrued expenses and other liabilities | 148,272 | 69,578 | ||||||||
| Secured line of credit | 488,912 | 353,975 | ||||||||
| Current portion of note payable - related party | 69,694 | - | ||||||||
| Current portion of unsecured notes payable | 96,851 | - | ||||||||
| Current portion of secured notes payable, net | 256,182 | 264,615 | ||||||||
| Current portion of capital lease liability | 56,441 | - | ||||||||
| Total current liabilities | 1,715,212 | 1,179,176 | ||||||||
| Long term liabilities: | ||||||||||
| Convertible note payable, net | 150,417 | - | ||||||||
| Note payable - related party, net of current portion | 63,936 | - | ||||||||
| Notes payable - secured, net of current portion | 231,105 | 258,361 | ||||||||
| Capital lease liability, net of current portion | 51,002 | - | ||||||||
| Total liabilities | 2,211,672 | 1,437,537 | ||||||||
| Commitments and contingencies | ||||||||||
| Stockholders' equity (deficit) | ||||||||||
| Preferred stock - $0.001 par value; authorized 1,000,000 shares as of September 30, 2018 and | ||||||||||
| December 31, 2017; issued and outstanding none at September 30, 2018 and December 31, 2017 | - | - | ||||||||
| Common stock - $0.001 par value; authorized 25,000,000 shares as of September 30, 2018 and | ||||||||||
| December 31, 2017; issued and outstanding 11,316,690 and 8,865,190 at September 30, 2018 and December 31, 2017 | 11,317 | 8,865 | ||||||||
| Additional paid in capital | 1,084,289 | (56,940 | ) | |||||||
| Accumulated deficit | (942,115 | ) | (534,049 | ) | ||||||
| Total stockholders' equity (deficit) | 153,491 | (582,124 | ) | |||||||
| Total liabilities and stockholders' equity (deficit) | $ | 2,365,163 | $ | 855,413 | ||||||
| The accompanying notes are an integral part of these consolidated unaudited financial statements | ||||||||||
| - | ||||||||||
| SMG INDUSTRIES INC. | |||||||||||||||||||||||
| (FORMERLY: SMG INDIUM RESOURCES LTD.) | |||||||||||||||||||||||
| CONSOLIDATED STATEMENTS OF OPERATIONS | |||||||||||||||||||||||
| For the three and nine months ended September 30, 2018 and 2017 | |||||||||||||||||||||||
| (unaudited) | |||||||||||||||||||||||
| Three Months Ended | Three Months Ended | Nine Months Ended | Nine Months Ended | ||||||||||||||||||||
| September 30, 2018 | September 30, 2017 | September 30, 2018 | September 30, 2017 | ||||||||||||||||||||
| REVENUES | $ | 1,026,949 | $ | 620,084 | $ | 3,192,432 | $ | 1,802,486 | |||||||||||||||
| COST OF REVENUES | 582,922 | 234,374 | 1,742,431 | 953,836 | |||||||||||||||||||
| GROSS PROFIT | 444,027 | 385,710 | 1,450,001 | 848,650 | |||||||||||||||||||
| OPERATING EXPENSES: | |||||||||||||||||||||||
| Selling, general and administrative | 667,277 | 774,366 | 1,682,259 | 1,113,934 | |||||||||||||||||||
| Total operating expenses | 667,277 | 774,366 | 1,682,259 | 1,113,934 | |||||||||||||||||||
| LOSS FROM OPERATIONS | (223,250 | ) | (388,656 | ) | (232,258 | ) | (265,284 | ) | |||||||||||||||
| OTHER INCOME (EXPENSE) | |||||||||||||||||||||||
| Gain (loss) on settlement of liabilities | (2,549 | ) | - | 9,291 | - | ||||||||||||||||||
| Gain (loss) on sale of assets | 14,000 | - | 14,000 | - | |||||||||||||||||||
| Interest expense, net | (67,895 | ) | (23,970 | ) | (199,099 | ) | (77,132 | ) | |||||||||||||||
| NET LOSS | $ | (279,694 | ) | $ | (412,626 | ) | $ | (408,066 | ) | $ | (342,416 | ) | |||||||||||
| Net Income Per Share | |||||||||||||||||||||||
| Basic | $ | (0.03 | ) | $ | (0.19 | ) | $ | (0.04 | ) | $ | (0.21 | ) | |||||||||||
| Diluted | $ | (0.03 | ) | $ | (0.19 | ) | $ | (0.04 | ) | $ | (0.21 | ) | |||||||||||
| Weighted average shares outstanding | |||||||||||||||||||||||
| Basic | 10,336,470 | 2,176,200 | 9,986,415 | 1,665,192 | |||||||||||||||||||
| Diluted | 10,336,470 | 2,176,200 | 9,986,415 | 1,665,192 | |||||||||||||||||||
| The accompanying notes are an integral part of these consolidated unaudited financial statements | |||||||||||||||||||||||
About SMG Industries Inc.: SMGI is a rapidly-growing oilfield services company that operates throughout the Southwest United States. The Company provides products and services to the onshore drilling and completion segments of the market. Our subsidiaries are: MG Cleaners LLC, who sells branded products including detergents, surfactants and degreasers (such as Miracle Blue™), drilling rig wash and onsite repair services to oilfield drilling rig contractors, E&P operators, pipeline and oilfield companies. Its recently acquired oil tools division rents stabilizers and other BHA tools to directional drillers. SMGI’s customers include Nabors Industries, Patterson-UTI, Helmrich & Payne, Cactus Drilling along with oil and gas operators and mid-stream pipeline companies. SMGI’s corporate office is in Houston, with facilities in Odessa, Carthage, and Alice, Texas. Read more at www.SMGIndustries.com and www.mgcleanersllc.com.
Forward-Looking Statements:
This news release contains information that is “forward-looking” in that it describes events and conditions SMGI reasonably expects to occur in the future. Expectations for the future performance of SMGI are dependent upon a number of factors and there can be no assurance that SMGI will achieve the results as contemplated herein. Certain statements contained in this release using the terms “may”, “expects to”, “anticipated” and other terms denoting future possibilities, are forward-looking statements. The accuracy of these statements cannot be guaranteed as they are subject to a variety of risks, which are beyond SMGI’s ability to predict, or control and which may cause actual results to differ materially from the projections or estimates contained herein. Forward-looking statements in this news release that are subject to risk include the ability to achieve and continue revenue, net income and adjusted EBITDA improvements. It is important that each person reviewing this release understand the significant risks attendant to the operation of SMGI. SMGI disclaims any obligation to update any forward-looking statement made herein.
SMG Industries, Inc.
Phone: 713.821.3153
Email: info@smgindustries.com