SMID 10-K & 10-Q changes, risk factors and insider trading

The Company generates revenues primarily from the sale, leasing, licensing, shipping and installation of precast concrete products and systems for the construction, utility and farming industries. The Company'sCompany’s operating strategy has involved producing and marketing innovative and proprietary products, including SlenderWall™, a patent pending,proprietary, lightweight, energy efficient concrete and steel exterior wall panel for use in building construction; J-J Hooks® Barrier, a patentedproprietary, positive-connected highway safety barrier; Sierra Wall™, a patented sound barrier primarily for roadside use; transportable concrete buildings; and SoftSound™, a highway sound attenuation system. In addition, the Company produces utility vaults; farm products such as cattleguards; and custom order precast concrete products with various architectural surfaces.

Overall, the Company’s financial bottom line performance was significantly greater in 20242025 when compared to 2023.2024. The Company had net income for 20242025 of $7,675$12,506 compared to net income of $795$7,675 for 2023.2024. Total revenue increased by $18,928$14,937 to $93,445 in 2025 from $78,508 in 2024 from $59,580 in 2023.2024. The increase in sales is mainly from barrier rentals,rentals (including special barrier projects in the first and second quarters), shipping and installation, and utilitySoundwall, SlenderWall® and Easi-Set building product sales. Fourth quarter 20242025 revenues were $18,528$23,110 compared to $16,389$18,528 in the fourth quarter 2023.2024. The increase in revenue for the fourth quarter 20242025 as compared to the fourth quarter 20232024 was primarily due to an increase in soundwall sales, architectural sales, utility sales, miscellaneous sales, Easi-Set building sales, and shipping and installation revenue.

Cost of sales as a percentage of revenue, not including royalties, decreased to 78%76% in 20242025 compared to 86%78% in 2023.2024. Cost of sales as a percentage of revenue, not including royalties, decreased slightly to 79% for the fourth quarter 2025 as compared to 80% for the fourth quarter 2024 as compared to 85% for the fourth quarter 2023.2024.

Operating income was $9,899$16,994 for 2024,2025, as compared to $1,118$9,899 for 2023.2024. Operating expenses for 20242025 was $10,111$9,044 compared to $9,534$10,111 in 2023.2024. The increasedecrease is due to a minor increasedecrease in general and administrative expenses. Total operating expense was $2,037 for the fourth quarter 2025 and $2,519 for the fourth quarter 2024 and $2,580 for the fourth quarter 2023.2024.

Income tax expense for 20242025 was $4,520 or an effective tax rate of 26.5%, as compared to $2,143, or an effective tax rate of 21.7%, as compared to $528, or an effective tax rate of 40.0%21.7% for 2023, adversely affecting net income in 2023.2024. The greater percentage in 20232025 was mainly due to an increase in state tax liability for a true-up of state tax expense.taxes.

As of March 3, 2025,2026, the Company’s sales backlog was approximately $59.5$53.1 million, as compared to approximately $60.8$59.5 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 greatersimilar sales volumes throughout 2026 compared to 2025 for product sales, although no assurance can be provided. Barrier rentals, exclusive of special barrier projects, is expected to be higher in 2026 than in 2025, although no assurance can be provided.given; given the high level of special barrier projects in 2025, it is likely for there to be a decrease in 2026 from this revenue source. The Company also anticipates funding related to the Infrastructure Investment and Jobs Act to continue coming through the state and local governments in 2025 and beyond2026 to further promote growth in the revenue backlog related to the highway and transportation markets, although no assurance can be provided. State and local programs that support infrastructure spending, including gas tax increases, special tax districts, new funding mechanisms are increasing in number and size as these entities increase their role in infrastructure investment. The Company continues to increase marketing and sales efforts towards SlenderWall® sales and barrier rentals, in line with long-term strategic objectives. In view of theeconomic policiesconditions ofthat the new Administration and DOGE, including without limitation with respect toinclude government spending cutbacks and tariffs, there can be no assurance of anticipated levels of infrastructure spending.

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 panel sales increased by 54%24% in 20242025 compared to 2023.2024. 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. The Company expects soundwall panel sales to be similar in 20252026 as compared to 2024,2025, although no assurance can be provided.

Architectural Sales – Architectural panel sales increaseddecreased by 272%21% in 20242025 compared to 2023.2024. The increasedecrease is related to production of two architectural projects in 2024 that starteddid productionnot atrecur thein end of the first quarter of 2024.2025. Architectural sales are expected to be similar in 2025,2026, as compared to 2024,2025, although no assurance can be provided.

SlenderWall® Sales – SlenderWall® panel sales decreasedwere by$3.6 100%million in 20242025 compared to 2023.no A SlenderWall project wasproduction in production2024. duringSlenderWall® theprojects firstwere halfproduced ofin 2023,2025 and the Company did not have a SlenderWall project in production during 2024.2023. The Company continues to focus sales initiatives on SlenderWall,SlenderWall® , but no assurance can be given as to the success of this endeavor. SlenderWall® sales are expected to increasebe similar in 20252026 compared to 2024,2025, asalthough severalno SlenderWallassurance projectscan arebe anticipated to start in the first half of 2025.provided.

Miscellaneous Wall Sales – Miscellaneous wall sales are highly customized precast concrete products or retaining and lagging panels that do not fit other product categories. Miscellaneous wall sales decreased by 20%26% in 20242025 when compared to 20232024 due lower production volumes inthroughout the second2025 andcalendar thirdyear quarterbased 2024.on the timing of contract awards. Miscellaneous sales are expected to be similar in 2025,2026 as compared to 2024,2025, although no assurance can be provided.

Barrier Sales – Barrier sales decreasedincreased by 50%12% in 20242025 when compared to 2023.2024. The decreaseincrease is due to thean completionincrease of largein barrier projectscustomers in the North Carolina and South Carolina duringregion 2023.in The decrease is consistent with the Company’s focus to shift from barrier sales to barrier rentals.2025. Barrier sales are expected to trend lower in 20252026 than previous years as the Company continues to shift from barrier sales to barrier rentals.

Utility Sales – Utility products are mainly comprised of underground utility vaults used in infrastructure construction. Utility productproducts sales increaseddecreased by 171%45% in 20242025 compared to 2023.2024. The increaseprior isyear relatedsales reflected elevated demand in the Northern Virginia market driven by accelerated data center development. Sales are expected to the increase in the2026 marketrelative to 2025 due to continued data center expansion and related demand for dry utility vaults to support the growth in data centers. Utility sales are expected to be similar during 2025 as compared to 2024,vaults, 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, blocks or small add-on items. For 2024,2025, miscellaneous product sales increaseddecreased by 120%55% when compared to 2023.2024. The increasedecrease is mainly from the Virginia plant thatwhich started production onhad one large project in 2024 for the production of precast beams and platforms.platforms and no similar project in 2025. Miscellaneous product sales are expected to trendincrease lowerin during2026 2025based on pipeline opportunities reflecting increased demand in the overall market as compared to 2024,2025, although no assurance can be provided.given.

Barrier Rentals – Barrier rentals increased by 90%64% in 20242025 as compared to 2023. Revenue from the Company’s core rental barrier fleet increased by 52% in 2024 as compared to 2023.2024. 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 barrier. Barrier rental revenue also increased due to multiple special barrier projects occurring and completed during the third quarter 2024.barriers. As indicated above, the Company is continuing to shift its focus to barrier rentals compared to barrier sales with the significant increase in the rental fleet that occurred during prior years.fleet. Barrier rental revenue, excluding revenue from special barrier projects, is expected to trend higher in 20252026 as compared to barrier rental revenue, excluding revenue from special barrier projects, in 2024,2025, as funding is expected to increasecontinue related to the Infrastructure Investment and Jobs Act, although no assurance can be given. While the Company is unable to predict the volume of special barrier projects in 2026, in view of substantial projects in the first half of 2025, it is anticipated that there will be a decrease in revenue in 2026 from this revenue source.

Royalty Income – Royalties increased by 24%28% in 20242025 as compared to 2023.2024. The increase in royalties is mainly due to the increase in barrier royalties from existing licensees during 20242025 compared to 2023.2024. As anticipated funding increasescontinues related to the Infrastructure Investment and Jobs Act,Act as anticipated,well as adoption by state Department of Transportation (DOT) agencies of MASH approved barrier systems, the Company expects 20252026 royalties to continue to increase compared to 2024,2025, although no assurance can be given.

Shipping and Installation – Shipping revenue results from shipping our products to the customers'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® building at a customers'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 by 48%21% forin 20242025 whenas compared to 2023.2024. The increase is mainly attributed to the increase in barrier rental from the special barrier projects, and shipping and installation of SlenderWall® and architecturalsoundwalls. panels. This increase in shippingShipping and installation revenue correlatesare withexpected theto increasedbe productionsimilar ofin SlenderWall2026 panelsas thatcompared occurred,to and2025, foralthough whichno revenueassurance wascan previouslybe recognized, throughout 2023.provided.

Cost of Sales – Total cost of sales for the year ended December 31, 20242025 was $58,498,$67,408, an increase of $9,570,$8,909, or 20%,15%, from $48,928$58,498 for the year ended December 31, 2023.2024. Total cost of sales as a percentage of total revenue, not including royalties, decreased to 76% for the year ended December 31, 2025 from 78% for the year ended December 31, 2024 from 86% for the year ended December 31, 2023.2024. The decrease in cost of sales as a percentage of revenue, not including royalties, is mainlyprimarily 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, and higher revenue levels in 20242025 than in 20232024 having a favorable effect on margins reflecting the absorption of fixed overhead costs. In addition, the decrease in cost of sales as a percentage of revenue, not including royalties, was due to production throughout 2024 related to contracts that factored in the rising inflationary costs experienced throughout 2022 and 2023, and a one-time expense related to panels the Company chose to remake for one specific customer related to defective steel from a supplier used in the initial product in 2023.

General and Administrative Expenses – For the year ended December 31, 2024,2025, the Company'sCompany’s general and administrative expenses increaseddecreased by $564,$886, or 9%,14%, to $6,554$5,668 from $5,990$6,554 during the same period in 2023. General and administrative expenses for the year ended December 31, 2023 increased over the prior year due higher salary and wage rates, and an increase in the allowance for credit losses.2024. General and administrative expenses were 8%6% and 10%8% of revenues for the years ended December 31, 20242025 and 2023,2024, 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 in 2026 compared to 2025 as additional administrative staff are hired.

Selling Expenses – Selling expenses for the year ended December 31, 20242025 increaseddecreased by $13,$181, or 0%,5%, to $3,557$3,376 from $3,544$3,557 for the year ended December 31, 2023.2024 due to lower staffing levels. 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 year ended December 31, 20242025 of $9,899$16,994 compared to operating income of $1,118$9,899 for the year ended December 31, 2023,2024, an increase of $8,781,$7,095, or 785%.72%. The increase in operating income was mainly due to the increase in revenues, decrease in cost of sales as a percentage of revenue, and a relativelydecrease flatin operating expenses as a percent of revenue.

Income Tax Expense – The Company had income tax expense of $4,520 for the year ended December 31, 2025 compared to income tax expense of $2,143 for the year ended December 31, 2024 compared to income tax expense of $528 for the year ended December 31, 2023.2024. The Company had an effective rate of 21.7%26.5% for the year ended December 31, 20242025 compared to an effective rate of 40.0%21.7% for the same period in 2023.2024. The decreaseincrease in the effective tax rate is attributed to the increase in the Company’s state tax liability for acontinued true-up of state tax expense during 2023.2025.

Net Income – The Company had net income of $12,506 for the year ended December 31, 2025, compared to net income of $7,675 for the year ended December 31, 2024, compared to net income of $795 for the same period in 2023.2024. The basic and diluted earnings per share was $1.45$2.36 for 20242025 compared to basic and diluted earnings per share of $0.15$1.45 for the year ended December 31, 2023.2024. There were 5,305 basic and diluted weighted average shares outstanding in 2025, and 5,289 basic and diluted weighted average shares outstanding in 2024, and 5,258 basic and 5,292 diluted weighted average shares outstanding in 2023.2024.

The Company financed its capital expenditures for 20242025 with cash balances on hand. The Company had $5,094$4,447 of debt obligations at December 31, 2024,2025, of which $658$648 is scheduled to mature within twelve months. DuringFor the twelve monthsyear ended December 31, 2024,2025, the Company made repayments of outstanding debt in the amount $635.$647.

The Company additionally hashad one smaller installment loan with an annual interest rate of 2.90%, maturing in 2025, with a nominal balance totalingat $13.December 31, 2025.

In addition to the notes payable discussed above, the Company has a $5,000 line of credit with the Bank with no balance outstanding as of December 31, 2024.2025. 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, 20252026 and matures January 1, 2026.2027. The loan is collateralized by a first lien position on the Company'sCompany’s accounts receivable and inventory and a second lien position on all other business assets. Key provisions of the line of credit required 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. On October 1, 2023, the Company received a Commitment Letter from the Bank to provide a guidance line of credit specifically to purchase business equipment in an amount up to $1,500. The commitment provided for the purchase of equipment for which a note payable will be executed with a term not to exceed five years with an interest rate at the Wall Street Journal prime rate plus 0.50% with a floor of 3.50% per annum. The loan is collateralized by a first lien position on all equipment purchased under the line. The commitment for the guidance line of credit matured on October 1, 2024.2025 Asand, as of Octoberthat 31, 2024,date, the Company had not purchased any equipment pursuant to the $1,500 commitment.

At December 31, 2024,2025, the Company had cash totaling $7,548$11,884 compared to cash totaling $9,175$7,548 at December 31, 2023.2024. Cash provided by operations was $5,584.$14,204. Cash disbursements from investing activity was $6,576.$9,202. Cash repayments on borrowings was $635.$647. The decreaseincrease in cash is primarily the result of higher net income and cash usedprovided forby capitaloperating expenditures, specifically the expansion of the manufacturing facility in North Carolina.activities.

The Company'sCompany’s notes payable are financed at fixed rates of interest. This leaves the Company almost imperviouslargely toinsulated from fluctuating interest rates. Increases in such rates will only affect the interest paid by the Company if new debt is obtained, or an available line of credit is drawn upon, with a variable interest rate.

Over-Time Revenue Recognition-The Company recognizes revenue on the sale of its standard precast concrete products, and the associated shipping and installation revenue, at shipment date, including revenue derived from any projects to be completed under short-term contracts. Leasing and royalties are recognized as revenue over time. Certain sales of soundwall, SlenderWall,SlenderWall® , and other architectural concrete products are recognized over time because as the Company'sCompany’s performance creates or enhances customer-controlled assets or creates or enhances an asset with no alternative use, and the Company has an enforceable right to receive compensation. Over time product contracts are estimated based on the number of units produced (output method) during the period multiplied by the unit rate stated in the contract. 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 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.

Management believes that the Company'sCompany’s operations were affected by inflation in 20242025 and 2023,2024, particularly in the purchases of labor costs willand increaseraw inmaterials, 2025, althoughand no assurance can be given regarding future pricing or costs.

As of March 3, 2025,2026, the Company'sCompany’s sales backlog was approximately $59.5$53.1 million as compared to approximately $60.8$59.5 million at approximately the same time in 2024.2025. It is estimated that most of the projects in the sales backlog will be produced within 12 months, but a few will be produced over multiple years. The backlog remainedwas consistent$6.4 withmillion lower than the prior year levelprimarily due to continuedthe salescompletion effortsof forsome productslarge toprojects during the year and the timing of new contract awards. Backlog levels may fluctuate based on the timing of infrastructure project awards. Management expects, but there can be producedno at all three manufacturing facilities, as well as consistent sales efforts in barrier rentals. The Company expects theassurance, backlog to increase within continued2026 as bidding onactivity largeassociated with infrastructure initiatives and SlenderWall/architecturalproducts projects, although no assurance can be given.continues.

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 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® and Easi-Span transportable concrete buildings. 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.

Overall, the Company’s financial top and bottom line performance was lower for the first quartersix months of 2026 decreasedwhen compared to the first quartersix months of 2025. The Company reportedhad net income for the three and six months ended June 30, 2026 of $1,381 and $2,720 compared to net income of $1,339$4,171 and $7,498 for the three and six month periods ended June 30, 2025, respectively. Total revenue decreased by $2,823 to $23,363 for the three months ended MarchJune 31,30, 2026,2026 comparedfrom to net income of $3,327$26,186 for the three months ended MarchJune 31,30, 2025. Total revenue decreased by $1,126$3,949 to $21,572$44,935 for the threesix months ended MarchJune 31,30, 20262025 from $22,698$48,884 for the threesix months ended MarchJune 31,30, 2025. The decrease in revenue was primarily attributable to lower barrier rentaltotal revenue resultingis mainly from the absence of a large special barrier project sales that positivelyoccurred impactedin the first quarterand second quarters of 2025.2025 Thisthat decreasedid wasnot partiallyrecur offsetin the first and second quarters of 2026. Product sales for the six months ended June 30, 2026 increased by $440 to $22,988 from $22,548 for the six months ended June 30, 2025 due to increases in productarchitectural panel sales, Easi-Set building sales, barrier sales and shippingutility sales. Shipping and installation revenue.revenue increased by $4,867 to $14,782 for the six months ended June 30, 2026 from $9,915 for the six months ended June 30, 2025.

Cost of sales as a percentage of revenue, excludingnot including royalties, increased to 83%80% for the three months ended MarchJune 31,30, 2026 compared to 72%74% for the three months ended MarchJune 31,30, 2025. Cost of sales as a percentage of revenue, not including royalties, increased to 82% for the six months ended June 30, 2026 compared to 73% for the six months ended June 30, 2025. The increase wasis primarily due to the significant reductiondecrease in revenue from the special project barrier rentalprojects revenuethat duringwere performed in the quarter.first Specialand barriersecond rentalquarters projectsof generally2025, carryand did not recur in the first and second quarters of 2026, which have a higher marginsmargin and lower cost of sales percentageswhen compared to product margin and product cost of sales.

Income tax expense for the three month period ended MarchJune 31,30, 2026 was $422,$434, or an effective tax rate of 24%, as compared to $1,020,an income tax expense of $1,311, or an effective tax rate of 24% for the three month period ended MarchJune 31,30, 2025. Income tax expense for the six month period ended June 30, 2026 was $856, or an effective tax rate of 24%, as compared to an income tax expense of $2,331, or an effective tax rate of 24% for the six month period ended June 30, 2025.

As of MayAugust 11,1, 2026, the Company’s sales backlog was approximately $48.1$57.4 million, as compared to approximately $52.4$54 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 2026 and beyond to supportfurther promote growth opportunitiesin inthe revenue related to the highway, transportation, and infrastructure markets in 2026 and beyond,markets, although no assurance can be provided. The Company continues to focusincrease marketing and sales efforts towardtowards SlenderWall® products andsales, barrier rentals and utility products, in line with the Company’s long-term strategic objectives.

Three and six months ended MarchJune 31,30, 2026, compared to the three and six months ended MarchJune 31,30, 2025

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® and Easi-Span buildings, utility products, and miscellaneous precast products. The following table summarizes the sales by product type and comparison for the three and six month periods ended MarchJune 31,30, 2026 and 2025.

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 decreasedwere lower for the three and six month periodperiods ended MarchJune 31,30, 20262026, compared to the threesame monthperiods period ended March 31,in 2025. The decrease was primarily due to timing of project production schedules and shipment activity. The Company continues to maintain a soundwall backlog and expects production activity to increase throughout the remainder of 2026, although no assurance can be given.

Architectural Panel Sales – There were no Architectural panel sales increased for the three monthand periodsix months ended MarchJune 31,30, 20262025. comparedArchitectural topanel sales in the three and six month periodperiods ended MarchJune 31,30, 20252026 were due to the commencement of architectural panel production activity during the quarter.activity. The Company expects architectural panel activity to continue throughout 2026 and trend higher than 2025the first half of 2026 production levels, although no assurance can be given.

SlenderWall Sales – The Company had no- SlenderWall® sales inwere the three month period ended March 31, 2025 to compare to the production levelslower for the three monthand periodsix months ended MarchJune 31,30, 2026.2026, as compared to the same periods in 2025. Due to the commencement of production on certain SlenderWall® projects and sales expectations in 2026, the Company expects sales for the remainder of the year in this category to be consistenthigher withthan the quarterfirst endedhalf March 31,of 2026. The Company continues to focus sales and marketing initiatives on SlenderWall®, although no assurance can be provided regarding future project awards or production timing.

Miscellaneous Wall Sales –- Miscellaneous wall sales are highly customized precast concrete products or retaining and lagging panels that do not fit other product categories. Miscellaneous wall sales decreasedincreased for the three month and decreased in the six month period ended MarchJune 31,30, 2026 compared to the three and six month periodperiods ended MarchJune 31,30, 2025 primarily due to normal fluctuations in project timing and product mix. Based on the Company’s backlog for these products, miscellaneous wall sales are expected to trend lowereven through the remainder of 2026 as compared to 2025..2025.

Barrier Sales - Barrier sales increased significantly for the three and six month periodperiods ended MarchJune 31,30, 20262026, compared to the threesame monthperiods periodin ended2025. MarchThe 31,increase 2025is duebased on higher market demand as the MASH barrier standard is adopted in the markets we serve, which is expected to increased customer demand. Salesresult in thisthe categoryreplacement of older barriers with regulation conforming barrier. The Company has developed barriers that conform to the MASH barrier standard and has passed barrier testing or is seeking to pass barrier testing in relevant states. Barrier sales are expected to trend lower throughoutfor the remainder of 2026 as compared to 2025.the first half of 2026 as several large orders have been completed. The Company continues to focus strategically on barrier rental opportunities in certain geographic regions while maintaining selective barrier sales activity.

Utility Sales –- Utility sales increased for the three and six month periodperiods ended MarchJune 31,30, 2026 compared to the three and six month period ended MarchJune 31,30, 2025, reflecting increased demand in utility and infrastructure-related markets, including continued data center development activity in Northern Virginia. The Company expects utility sales activity to continue through the remainder of 2026 and trend higher than 2025 production levels, although no assurance can be given.

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 six month periodperiods ended MarchJune 31,30, 2026, compared to the threesame monthperiods period ended March 31,in 2025. Miscellaneous product sales are expected to trend lower through the remainder of 2026 as compared to 2025, although no assurance can be provided.

Royalty Income – – Royalty income decreased slightly for the three and six month periodperiods ended MarchJune 31,30, 2026 compared to the three and six month periodperiods ended MarchJune 31,30, 2025 due a large project which generated higher royalties from one licensee in the first quarterhalf of 2025 that did not recur in the first quarterhalf of 2026. The Company continues to expect long-term royalty opportunities associated with infrastructure spendingspending, andthe state-level adoption of the MASH barrier standard prompting continued utilization of the J-J Hooks® barrier system. The Company expects royalties for 2026 to trend higher for the full year 2026, 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 revenue increased by 42% and 49% for the three and six month periodperiods ended MarchJune 31,30, 20262026, respectively, compared to the same period in 20252025, primarily due to increasedseveral productlarge sales,multi-year includingjobs building,concluding utility,their delivery cycles in the 2026 period, the most significant of which includes an architectural panel large project in Maryland that commenced in 2023, a miscellaneous wall panel large project in Tennessee that commenced in 2024 and barriera products.Slenderwall and architectural panel large project located in Virginia that commenced at the beginning of 2025.

General and Administrative Expenses - For the three months ended MarchJune 31,30, 2026, the Company’sCompany's general and administrative expenses increased by $169 to $1,753$2,483 from $1,584$1,514 during the three monthsame period ended March 31,in 2025. TheFor increasethe wassix primarilymonths attributableended June 30, 2026, the Company's general and administrative expenses increased to increased$4,236 personnel-relatedfrom costs,$3,098 professionalduring fees,the andsame costsperiod associatedin with internal control and financial reporting remediation activities.2025. General and administrative expense as a percentage of total revenue was 8%11% and 7%6% for the three month periods ended MarchJune 31,30, 2026 and 2025, respectively. General and administrative expense as a percentage of total revenue was 9% and 6% for the six month periods ended June 30, 2026 and 2025, respectively. Such expenses increased due to an increase in filling administrative and managerial staffing roles in 2026 that were vacant in 2025.

Selling Expenses - Selling expenses for the three months ended MarchJune 31,30, 2026 decreasedincreased to $822$951 from $1,004$754 for the threesame period in 2025. Selling expenses for the six months ended June 30, 2026 increased slightly to $1,773 from $1,758 in the same six month period ended March 31,in 2025. The decreaseincrease was primarily attributable to lower commission expense associated with reduced barrier rental revenues. As a percentage of sales, selling expense was 4% and 5% forin the three and six month periods endedcompared Marchto 31,the 2026same periods in 2025 is due to an increase in sales associate positions and 2025,selling respectively.expenses in 2026. The Company continues to expectexpects selling expenses to increase forin thefuture remainderperiods of 2026 as compared to 2025 based onwith the plan for additional sales associates and increased advertising spending aligning with the strategy to increase SlenderWall® and utility product sales and barrier rentals.

Operating Income - The Company had operating income for the three month period ended MarchJune 31,30, 2026 of $1,728$1,985 compared to $4,387$5,518 for the threesame period in 2025. The Company had operating income for the six month period ended MarchJune 31,30, 2026 of $3,713 compared to $9,905 for the same period in 2025. The 61% decrease wasis primarilymainly attributabledue to lower revenues from the absence of a significant special barrier project,projects whichthat occurred in the firstthree quarterand ofsix month periods ending June 30, 2025 andthat did not occurrecur in the firstsame quarterperiods of 2026, and the resulting increase in cost of sales as a percentage of revenue.2026.

Interest Expense - Interest expense was $47$66 and $55$62 for the three month periods ended MarchJune 31,30, 2026 and 2025, respectively. TheInterest decreaseexpense was primarily$113 attributableand to$117 lowerfor outstandingthe indebtednesssix balancesmonth duringperiods 2026.ended June 30, 2026 and 2025, respectively. The Company expects interest expense for the full year of 2026 to be lower compared to the full year of 2025 due to the decrease in level of indebtedness on all notes which are fixed interest rates.indebtedness.

Income Tax Expense - The Company had an income tax expense of $422,$434, or an effective tax rate of 24%, for the three months ended MarchJune 31,30, 2026, compared to income tax expense of $1,020,$1,311, or an effective tax rate of 24%, for the three monthmonths ended June 30, 2025. The Company had an income tax expense of $856, or an effective tax rate of 24%, for the six months ended June 30, 2026, compared to income tax expense of $2,331, or an effective tax rate of 24% for the same period ended March 31,in 2025.

Net Income - The Company had net income of $1,339$1,381 and $2,720 for the three and six months ended MarchJune 31,30, 2026, respectively, compared to net$4,171 incomeand of $3,327$7,498 for the three monthand periodsix months ended MarchJune 31,30, 2025.2025, Basicrespectively. The basic and diluted earnings per share werewas both $0.25 for the three months ended March 31, 2026, compared to $0.63$0.26 and $0.62,$.51 respectively, for the three monthand periodsix months ended MarchJune 31,30, 2025.2026, and the basic and diluted earnings per share was $0.79 and $1.41, respectively, for the three and six months ended June 30, 2025, respectively.

The Company has a mortgage note payable to Burke & Herbert Bank & Trust Company, formerly Summit Community Bank,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,annually per the Promissory Note Rate Conversion Agreement, with monthly payments of approximately $22, and is secured by all of the assets of Smith-CarolinaSmith-Carolina, a subsidiary of the Company, and a guarantee by the Company. The balance of the note payable at MarchJune 31,30, 2026 and December 31, 2025 was $884$826 and $942,$942 respectively.

The Company also has a note payable to the Bank in the amount of $1,211$1,141 and $1,279 as of MarchJune 31,30, 2026 and December 31, 2025,2025 respectively. The loan is collateralized by a first lien position on the Midland, VirginiaVA 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 approximately $27. The loan matures on March 27, 2030.

On February 10, 2022, the Company completed the financing related tofor its acquisition of certain real property in Midland, VirginiaVA from the fourth quarter of 2021, totaling approximately 29.8 acres.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 in the amount of approximatelyfor $21. The loan matures on February 10, 2037. The balance of the note payable on MarchJune 31,30, 2026 and December 31, 2025 was $2,186$2,146 and $2,226,$2,226 respectively.

Under the loan covenants with the Bank, the Company must maintain tangible net worth of $25,000. The previous covenant in which the Company was limited to annual capital expenditures of $5,000 has been discontinued effective January 1, 2026. The Company is in compliance with all covenants pursuant to the loan agreements as of MarchJune 31,30, 2026.

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 MarchJune 31,30, 2026 and December 31, 2025. 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, 2026 and matures May 1, 2027. The line of credit renewal excluded the previous limitation on annual capital expenditures. 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 to maintain a (i) Minimum Debt Service Coverage Ratio of 1.25x, tested annually,(ii) Minimum tangible net worth of $25 million and (iii) Debt-to-tangible net worth not greater than 3 to 1 tested annually. The line of credit is collateralized by a first lien position on the Company's accounts receivable, inventory, and equipment. The Company is in compliance with all covenants as of March 31, 2026.

The Company’sCompany's outstanding notes payable are financed at fixed rates of interest. Accordingly,This leaves the Company’sCompany exposureprotected tofrom fluctuating interest rates. Increases in such rates will only affect the interest paid by the Company if new debt is limitedobtained, primarily to any future borrowings underor the variable rateavailable line of credit oris additionaldrawn futureupon, indebtedness.with a variable interest rate.

On MarchJune 31,30, 2026, the Company had cash totaling $13,217$10,663 compared to cash totaling $11,884 on December 31, 2025. The increasedecrease in cash wasis primarily the result of cashinvesting providedin byinventory operatinggrowth, payment of estimated federal and state income taxes and investing activities totalingthrough approximatelycapital $3.1spending millionas during the quarter. Operating cash flow benefited from profitability, increased accounts payable balances, and deferred revenue activity, partially offset by increasesdescribed in accountsfurther receivabledetail and inventory balances.below.

The Company’s accounts receivable balances, net of allowance, at MarchJune 31,30, 2026 werewas $28,052$22,785, compared to $27,228 at December 31, 2025. TheThis increasedecrease wasis due primarily attributable to timingincreased collections efforts focused on past due accounts in the second quarter of project billings, increased product sales activity, and growth in unbilled receivables associated with over-time revenue recognition.2026.

Capital spending for the threesix months ended MarchJune 31,30, 2026 totaled approximately$3,555 $1,630as compared to $595$2,515 for the three monthsame period ended March 31,in 2025. The 2025 expenditures were primarily for a ramp up in barrier production to expand the barrier rental fleet, attenuators and plant expansion. The 2026 expenditures were primarily related to investments in manufacturing equipment, production capacity expansion, and infrastructure improvements at the Company’s facilities.facilities and continued expansion of the barrier rental fleet including barrier production and attenuator procurement. The Company, which expects product sales to be higher in 2026 as compared to 2025, intends to invest overup $12,000to $9,000 in 2026 for long-term strategic growth 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 exclude possible acquisitions.

The Company’s cash flow from operations is affected by production schedules establishedset by contractors, which generally provide for payment 30 to 90 days after the products are produced.produced, Certainand with some architectural andcontracts, infrastructure projectsretainage may alsobe include retainage provisions that delay collectionheld until the entire project completion.is Thesecompleted. factorsThis canpayment createschedule may result in liquidity demandschallenges becausefor the Company because it must fundbear a portion of the cost of production costs before receivingit receives payment from its customers. The Company’s average days sales outstanding, excluding the effect of unbilled revenue, was 105 days for the six months ended June 30, 2026, compared to 96 days for the six months ended June 30, 2025.

The Company’s inventory totaled $7,217$8,534 at MarchJune 31,30, 2026 compared to $6,928 at December 31, 2025. The increase was primarily attributable to increased finished goods inventory and inventory maintained to support backlog production and anticipated barrier rental activity. Inventory turnover was 7.6,7.4, annualized for the threesix months ended MarchJune 31,30, 2026, compared to 7.5,10.8, annualized for the threesix month period ended MarchJune 31,30, 2025.

Raw material costs used in production have slightly increased for the first threesix months of 2026. The Company anticipates raw material prices to slightly increase for the remainder of 2026, although no assurance can be given regarding future pricing.

As of MayAugust 11,1, 2026, the Company’s sales backlog was approximately $48.1$57.4 million, as compared to approximately $52.4$54 million at the same time in 2025.2025 and $48 million for the previous measurement period in the first quarter of 2026. 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.