After good year, Smith-Midland pays out $175,000 in dividends
Tuesday, Jan. 27
Brothers Roderick Smith and Ashley Smith watch concrete pour.
Fauquier Times Staff Photo/Randy Litzinger
While much of the construction industry recovers with a wary look over its shoulder, Smith-Midland boasts its strongest health in recent years.
The precast concrete corporation in Midland just paid a dividend to its stockholders for the third year in a row. The company had an excess of $175,000 in cash that was divvied out at three and a half cents a share to more than 400 shareholders.
“Because we are more diversified than other companies, we were able to ride out the recession,” said Rodney Smith, the chairman and CEO of the company. “We actually had on average five of our best years ever during the recession.”
Smith-Midland began paying dividends in 2012, at the request of their board of directors.
G.E. “Nick” Borst is an independent voting member of the company’s board. He suggested that the company start paying excess funds back to stockholders.
“It’s a show of the confidence that we all have in company,” he said. “I wanted to have dividend payments reflect that confidence.”
Borst said that other stockholders have expressed how much they appreciate the dividend payment.
Rodney Smith said that some investors will only put their money into companies that pay dividends, which opens up Smith-Midland to a whole new group of potential investors.
“It makes the stock attractive to certain stock holders,” said Ashley Smith, the president and COO of Smith-Midland. “Stock holders want to see the value of the stock grow, but in addition if there is a dividend payment, that also makes it attractive as an investment.”
The company's president velieves believes its stock is still undervalued in the market. By press time Smith-Midland’s stock was valued at $2.21 a share.
The fact that the stock price has remained steady through the recession is also a testament to the corporation’s strength, Ashley Smith said.
Smith-Midland offers special stock options to its middle and upper management associates. The company employs about 145 people, and some received a dividend.
The path to success
The Smiths credit the company’s success on a few strategies.
The corporation manufactures hundreds of products in an array of industries. They develop, manufacture, license, rent and sell precast concrete products for construction, transportation and utilities industries.
Ashley Smith explained that when one industry suffers in the market, Smith-Midland still makes money from products in another industry.
Smith-Midland also owns several diversified companies. They own Easi-Set Industries, a licensing division that makes products developed by the Smith-Midland available to other manufacturers around the world. Smith-Midland collects royalties every time another company makes their licensed products.
According to Rodney Smith, Smith-Midland products are manufactured by other companies is 40 states in the US and in nine countries all over the globe.
“No body else does what we do to that scale,” he said. “The products that have been developed here are so superior to what’s on the market.”
During the recession, other companies looked to diversify their products and paid to use more Smith-Midland designs, said Ashley Smith. This brought in even more profit for the corporation.
Smith-Midland also has a division focused on highway barrier rental systems for security projects. Ashley Smith said that this division did very well in recent years.
There is an in-house advertising company and an additional manufacturing company in North Carolina that also pull in cash for Smith-Midland.
Another source of financial success for Smith-Midland is its adoption of the “lean manufacturing” model created by Henry Ford in the 1930s. The method is also used by Toyota, who has great success with the practice.
“With lean manufacturing you free up a lot of your capacity and resources,” said Ashley Smith. “It’s actually a growth strategy. You take the resources that you free up and invest them in new opportunities.”
Ashley Smith said that the company has plans to expand further in the near future.
“We have a property down the street [from our headquarters] that we’ve owned for a long time. Now we’re trying to develop it,” he said. “If everything goes as planned, we will have new concrete factory up the road.”
The new factory will potentially allow Smith-Midland to start making brand new products and hire more employees.
“We will concentrate on bringing out new products that people need,” said Rodney Smith.
Ashley Smith said that the company wants to continue to pay dividends as it grows.
“We want the company to be a dynamic growing company,” he said. “We want investors to continue to want to put their hard-earned money here.”
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