Shares of Smith-Midland Corporation (SMID Quick QuoteSMID - Free Report) have fallen 12.7% since the company released its latest quarterly results, underperforming the S&P 500 Index’s 3.2% decline over the same period. Over the past month, the stock has retreated 11.4%, lagging the S&P 500’s 1.2% decrease. This weaker-than-market performance reflects a reset in investor expectations following softer service-revenue comparisons and a pullback in barrier rental activity versus last year’s unusually strong period.

Earnings & Revenue Performance of SMID

Smith-Midland posted third-quarter 2025 revenues of $21.5 million, down from $23.6 million a year earlier, primarily due to the non-recurrence of large special barrier rental projects that drove service revenues in the prior-year quarter. However, product sales rose 11% to $11.9 million, supported by stronger soundwall, Easi-Set building and SlenderWall shipments. Net income came in at $2.9 million, or 54 cents per diluted share, compared with $3.2 million, or 59 cents, a year ago, reflecting the lower revenue base and a slightly reduced gross margin of 26.8%, versus 27.9% in the prior-year period.

Smith-Midland Corp. Price, Consensus and EPS Surprise

Smith-Midland Corp. price-consensus-eps-surprise-chart | Smith-Midland Corp. Quote

SMID: Business Drivers and Product-Mix Trends

Smith-Midland’s quarterly performance was shaped by a stark divergence between growing core product sales and reduced service activity. Product segments benefiting from higher production included soundwalls, which rose to $2.8 million from $1.9 million, and Easi-Set/Easi-Span buildings, which increased to $2.7 million from $1.8 million. SlenderWall, which had no sales in the prior-year quarter, contributed $1.1 million, reflecting resumed project activity across multiple facilities.

In contrast, utility sales fell sharply to $1.2 million from $2.4 million due to prior-year demand from the Northern Virginia data-center market that did not recur. Architectural panel sales also softened, declining to $1 million from $1.6 million, reflecting the completion of two major 2024 projects. Miscellaneous wall and product sales were similarly lower compared with last year’s elevated outputs.

Service-revenue categories saw more pronounced year-over-year declines. Barrier rental revenues dropped to $3.3 million from $7.1 million, entirely due to the non-recurrence of 2024’s special barrier rental projects. Shipping and installation revenues rose modestly to $5.2 million from $4.8 million, supported by stronger activity in soundwalls and SlenderWall. Royalty income increased 13% to $1.1 million, aided by higher licensee barrier production volumes.

SMID: Management Commentary

Management emphasized that third-quarter results demonstrate continued strength in the company’s core product business despite difficult comparisons in service revenues. CEO Ashley Smith noted that the company is experiencing solid demand for new and upgraded highways and public infrastructure projects, while data-center-related spending continues to influence certain product categories. He also highlighted the ongoing expansion of the barrier rental fleet to support rising MASH-TL3 safety-standards compliance, as well as the possibility that lower interest rates could stimulate new demand for the SlenderWall product line.

Overall, management maintained a constructive outlook, citing multiple structural tailwinds, including state and federal infrastructure commitments. These dynamics, the company believes, will support growth over both the near and long term.

Factors Influencing SMID’s Quarterly Results

A key factor affecting the quarter’s revenue and margin profile was the absence of special barrier rental projects, which had significantly boosted the prior-year period. These high-margin projects typically generate elevated service revenues and richer gross margins compared with most product categories. Their absence this year contributed both to lower total revenues and a reduced gross margin percentage.

The revenue mix also shifted meaningfully toward product categories with widely varying margin profiles. Sales gains in soundwalls, buildings and SlenderWall helped stabilize gross profit, but declines in utility and architectural panels limited total product-mix contribution.

Operationally, the company benefited from lower general and administrative and selling expenses, consistent with reduced staffing levels and an arbitration settlement that offset part of the third-quarter overhead. The operating income of $3.6 million was essentially unchanged year over year.

SMID’s Guidance and Outlook

While Smith-Midland did not issue formal numerical guidance, management provided several directional indicators for the remainder of 2025. Product sales are expected to increase compared to 2024, supported by new and ongoing SlenderWall projects and healthy order activity in soundwalls and Easi-Set buildings. Shipping and installation revenues, along with royalty income, are expected to remain higher than year-ago levels.

Conversely, the company does not anticipate additional special barrier rental projects in the final quarter of the year, suggesting barrier rental revenues will moderate relative to earlier 2025 periods. Inflation remains a factor, particularly in raw materials and labor, though the company continues to manage these pressures actively.

Backlog as of Nov. 1, 2025 was $54.8 million, down from $62.8 million a year earlier. Most projects are expected to be fulfilled within 12 months, though some extend across multiple years.

Other Developments at SMID

During the quarter, Smith-Midland reported an arbitration settlement related to a 2015 SlenderWall sale. The settlement resulted in the recovery of previously reserved receivables totaling $458, which reduced general and administrative expenses for the quarter. Beyond this item, the company disclosed no acquisitions, divestitures or other restructuring actions in the period.