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SMG Industries, Inc. Announces Second Quarter 2018 Financial Results

Houston, TX - (NewMediaWire) - August 13, 2018 - SMG Industries, Inc. (OTCQB: SMGI) an oilfield services company headquartered in Houston, Texas announced their financial results today for the second quarter ended June 30, 2018.

Second Quarter 2018 Highlights:

  • Revenue increased 87% to $1,167,305 for the quarter ended June 30, 2018, from $625,897 during the same period a year ago.
  • Gross profit increased over 100% to $517,911 for the quarter ended June 30, 2018, from $228,248 the same period a year ago.
  • Gross margin was 44.4% of revenues for second quarter 2018 and 46.5% of revenues for the first half 2018, compared to an average gross margin of 41.4% of revenues for fiscal year 2017.
  • Net loss for the second quarter ended June 30, 2018 was $148,115 which included one-time expenses associated with opening South Texas Operations and debt refinance costs, compared to a net loss of $66,585 for the second quarter ended June 30, 2017.
  • The Company continues to aggressively move forward with its previously announced acquisition strategy. 

As stated in the Company’s Quarterly Report on Form 10-Q filed August 13, 2018 with the Securities and Exchange Commission, revenues for the three months ended June 30, 2018 were $1,167,305, an increase of $541,408, or 87%, from $625,897 for the comparable three months ended June 30, 2017.  Sequentially, revenues were up 17% from the previous first quarter 2018. These revenues included product sales of our proprietary degreasers, detergents and surfactants, service revenues from drilling rig wash crews, mechanical repair services, equipment and parts sales and equipment rental revenues. The second quarter revenue growth was driven by increased activity from existing customers resulting from a growing number of active drilling rigs operating within our markets, along with adding several new customers including pipeline and E&P companies.

During the three months ended June 30, 2018, gross margins increased to 44.4% of sales, or $517,911, compared to $228,248, or 36.5% of revenues for the comparable 2017 period. For the six months ended June 30, 2018, gross margins increased to 46.5% of revenues, or $1,005,974 compared to $462,940, or 39.2% of revenues for the comparable 2017 period. The improvement in gross margins for the quarter and six-month period ended June 30, 2018 is primarily the result of operational efficiencies from higher sales volumes, a more favorable sales mix driven by higher margin product sales, parts sales, equipment rentals and service revenues.

For the three months ended June 30, 2018, selling, general and administrative expenses increased to $593,140, an increase of $341,790, from $251,350 for the three months ended June 30, 2017. The increase in selling, general and administrative expenses in 2018 was primarily due to higher costs associated with being a public reporting company including accounting and legal fees, higher wages from added managerial and service crew personnel in West Texas and increased insurance expense. Additionally, amortization of deferred financing costs was $56,129 during the second quarter 2018.  No public reporting costs or related professional fees were present in the second quarter of 2017. 

During the three months ended June 30, 2018, we realized a net loss of $148,115, or $0.01 per basic and diluted earnings per share.  For the three months ended June 30, 2017 we realized a net loss of $66,585 or $0.05 per basic and diluted earnings per share. The net loss for the quarter ended June 30, 2018 resulted from higher revenues generating higher gross margin and operating leverage offset by higher selling, general and administrative expenses associated with becoming a publicly-traded entity, higher professional fees, increased insurance expenses and wage increases from the West Texas expansion present during the second quarter 2018 not present in the second quarter 2017. 

As of August 13, 2018, the Company had 10,309,190 shares outstanding, no convertible debt or preferred securities and approximately 595,000 options outstanding with an average exercise price of $0.50 per share.

Matthew Flemming, Chief Executive Officer of SMGI, stated, “East Texas operations remained positive during the quarter while production bottlenecks widely reported in recent news, did not materially affect our West Texas customer base. We are excited about the Eagle Ford Shale opportunity and have commenced operations in South Texas given the increased oilfield activity. The Company obtained five new MSAs and customers during the quarter, most of which were oil companies diversifying our sales channels. Although we met and exceeded our sales goals, Q2 SG&A expenses along with the one-time expenses associated with opening our South Texas facilities had a meaningful negative effect on net income. We continue to actively pursue plans for acquisitions with an accretive profile and prospects for future growth with our team.”   

Mr. Stephen Christian, President of MG Cleaners LLC and EVP of SMG, stated, “Miracle Blue® and other proprietary degreasers, surfactants and detergents sales were up in the second quarter 2018, compared to the year ago period, as geographic distribution expanded in West Texas and New Mexico. However, we are most pleased with our service crews’ expansion utilized by customers for drilling rig wash and onsite service repairs which is an additional growth driver. We anticipate further growth in the third quarter of 2018 from our investment and expansion into South Texas operations targeting Eagle Ford Shale activity.”  


About SMG Industries, Inc.:

SMGI is an oilfield services company that operates throughout Texas and the adjacent states of New Mexico and Louisiana.  The Company, through its wholly-owned subsidiary MG Cleaners LLC, is focused on selling proprietary branded products including detergents, surfactants and degreasers (such as Miracle Blue®) to oilfield drilling rig contractors, E&P operators, pipeline and oilfield companies.  In addition to the Company's proprietary products, SMGI sells equipment and parts and has service crews that perform on-site repairs, maintenance and drilling rig wash services for customers such as Nabors Industries, Patterson-UTI, Helmrich & Payne, Cactus Drilling, and others.  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

Investor Relations:
FieldView Capital Markets, LLC.
Scott Biddick
Phone: 619.786.1023
Email: scott@fvcapitalmarkets.com