16 Nov 2019, 00:01 GMT+10
Oilfield Services Company Reports Revenues of $2.06 million for the Third Quarter ended September 30, 2019 a 101% Increase from the Third Quarter 2018
Third Quarter Highlights:
HOUSTON, TX / ACCESSWIRE / November 15, 2019 / SMG Industries, Inc. (the 'Company') (OTCQB:SMGI), a growth-oriented oilfield services company operating in the Southwest United States and headquartered in Houston, Texas announced today their financial results for the third quarter ended September 30, 2019.
As stated in the Company's Quarterly Report on Form 10-Q filed November 14, 2019 with the Securities and Exchange Commission, the Company's sales for the three months ended September 30, 2019 were $2,064,516, an increase of 101%, from $1,026,949 for the three months ended September 30, 2018. The increase in revenue for the three months ended September 30, 2019 was primarily attributable to additional revenues contributed by the Trinity Services' operations acquired in June 2019, as well as organic growth of MG Cleaners from an expanded customer base and its rental equipment in the Permian Basin.
During the three months ended September 30, 2019, cost of sales increased as a percentage of sales to 78.5% of revenues, or $1,621,841, compared to 56.8% of revenues or $582,922, for the comparable 2018 period. The increase in cost of sales as a percentage of revenues is primarily the result of the net margin mix impacted by the Trinity Services acquisition not present in the year ago period and higher costs in MG Cleaners' parts business. The Company believes going forward it will improve cost of sales as a percentage of sales through increasing sales of its higher margin branded products, developing more profitable frac water work and driving higher utilizations and efficiencies from cross-selling with our recently acquired customers.
For the three months ended September 30, 2019, selling, general and administrative expenses were $815,871, or 39.5% of sales, compared to $667,277 or 64.9% of sales for the three months ended September 30, 2018. This decrease in selling, general and administrative expenses as a percentage of sales in the third quarter of 2019 compared to the third quarter of 2018 was primarily due to higher sales covering more fixed costs within S,G&A partially offset by higher sales costs and wages.
Other expenses, net was $232,979, an increase of $176,535 for the three months ended September 30, 2019 compared to the third quarter in 2018. The increase in other expenses during the three months ended September 30, 2019 resulted from higher interest expense with our revolving line of credit, funding agreements and notes payable, partially offset by a gain on settlement of liabilities compared to the three months ended September 30, 2018.
During the three months ended September 30, 2019, the Company incurred a net loss of $606,175, or $0.04 per basic and diluted earnings per share. For the three months ended September 30, 2018, the Company incurred a net loss of $279,694 or $0.03 per basic and diluted earnings per share. The Company's total outstanding shares of common stock were 14,881,372 as of November 14, 2019.
As of September 30, 2019, our total assets were $7,464,347. This is an increase in total assets of $3,937,900 over the total assets at December 31, 2018 of $3,526,447.
Matt Flemming, Chief Executive Officer of SMG Industries stated, 'The June 2019 acquisition of Trinity Services has contributed materially to the increase in the Company's consolidated revenue. Trinity enjoys a great reputation in the East Texas and Louisiana market for construction and building of multi-well pad locations as well as production related well site workover activities in the Haynesville Shale and Cotton Valley plays. Due to this acquisition, we have been able to increase our master service agreements (MSAs) with customers which may also be serviced by our other subsidiaries.' Mr. Flemming continued, 'We are currently aggressively pursuing additional strategic acquisitions to expand our service offering to customers.'
Stephen Christian, SMG's EVP of Operations stated, 'We have continued to focus on the Permian Basin in West Texas and the Haynesville shale of East Texas where our existing customers remained fairly active. Increasing strategic sales staff in the Permian Basin at the start of the quarter helped mitigate market activity reductions driven by lower rig counts. Additionally, the Company's cost cutting efforts focused on vendors programs to lower the direct cost of goods. Trinity has been awarded construction bids that will take us into Q1, 2020 where we anticipate customer's new drilling programs will begin to kick off. We are very excited about the expansion possibilities with Trinity and what it offers our other subsidiaries.'
Third Quarter 2019 Financial Tables
SMG INDUSTRIES, INC.
CONSOLIDATED BALANCE SHEETS
|September 30,||December 31,|
Cash and cash equivalents
Accounts receivable, net of allowance for doubtful accounts of $147,015 and $25,000
Assets held for sale
Prepaid expenses and other current assets
Total current assets
Property and equipment, net of accumulated depreciation of $609,753 and $306,155
Right of use assets - operating lease
Intangible assets, net of accumulated amortization $32,092 and $10,344
LIABILITIES AND STOCKHOLDERS' DEFICIT
Accounts payable - related party
Accrued expenses and other liabilities
Right of use liabilities - operating leases short term
Right of use liabilities - finance leases short term
Secured line of credit
Current portion of note payable - related party
Current portion of unsecured notes payable
Current portion of secured notes payable, net
Current portion of capital lease liability
Total current liabilities
Long term liabilities:
Convertible note payable, net
Note payable - related party, net of current portion
Notes payable - secured, net of current portion
Right of use liabilities - operating leases, net of current portion
Right of use liabilities - finance leases, net of current portion
Capital lease liability, net of current portion
Commitments and contingencies
Preferred stock - $0.001 par value; authorized 1,000,000 shares as of September 30, 2019 and
December 31, 2018; issued and outstanding 2,000 and none at September 30, 2019 and December 31, 2018
Common stock - $0.001 par value; authorized 25,000,000 shares as of September 30, 2019 and December 31, 2018;
issued and outstanding 14,451,372 and 11,910,690 at September 30, 2019 and December 31, 2018
Additional paid in capital
Total stockholders' deficit
Total liabilities and stockholders' deficit
The accompanying notes are an integral part of these consolidated unaudited financial statements
SMG INDUSTRIES INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
For the three and nine months ended September 30, 2019 and 2018
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