Breaking Down Schmitt Industries, Inc. (SMIT) Financial Health: Key Insights for Investors

You are looking at Schmitt Industries, Inc. (SMIT), and honestly, the first thing you need to grasp is that this is a highly speculative situation, not a typical investment; you are not getting fresh 2025 fiscal year data because the company is currently delinquent in its SEC reporting, trading on the OTC Expert Market. This lack of current disclosure is the single biggest risk. The last publicly available annual filing, which ended May 31, 2022, showed a company struggling for operating stability, posting a Total Revenue of only $9.89 million and a Consolidated Net Loss of $-3.28 million. Here's the quick math: that loss represented a massive 33% of their top line, which is a brutal margin to overcome, and that was three years ago. So, the real question for any investor isn't about minor quarterly shifts, but whether the core business-precision measurement and remote tank monitoring-can generate enough cash flow to survive its current operational and regulatory challenges without public financial transparency. We need to map the risks hidden by this information vacuum.

Revenue Analysis

The core takeaway for Schmitt Industries, Inc. (SMIT) revenue is simple: the company's top line has been fundamentally restructured, meaning the $9.89 million consolidated revenue from fiscal year 2022 is no longer a relevant baseline for 2025. The business is now almost entirely focused on its industrial Measurement Segment, which represents a dramatically smaller revenue base.

A Dramatic Shift in Revenue Streams

Schmitt Industries' revenue profile has changed completely due to a strategic shift away from consumer products. Historically, the company operated with two primary, but disparate, segments: the Measurement Segment and the Ice Cream Segment. In fiscal year 2022, the Ice Cream Segment, comprised of Ample Hills Creamery, was the primary driver of the company's consolidated revenue, growing at a blistering pace.

Here's the quick math on the former revenue composition for the year ended May 31, 2022, which shows the scale of the change:

• Total Consolidated Revenue: $9,893,210
• Ice Cream Segment Revenue: $8,315,486
• Measurement Segment Revenue (Continuing Operations): Approximately $1,577,724 (The total Measurement Segment revenue less the Xact product line, which was classified as discontinued operations)

The 2023 Divestiture and 2025 Revenue Base

The most significant change impacting the 2025 fiscal year is the divestiture of the Ice Cream Segment. The Ample Hills Creamery business, which accounted for a massive 84.05% of the company's consolidated revenue in fiscal year 2022, was closed in December 2022 and sold in June 2023. This action effectively removed the largest, most volatile revenue source and drastically reduced the company's top-line potential for 2025.

For the 2025 fiscal year, the only continuing operation is the Measurement Segment, specifically the Acuity Lasers product line, which provides laser-based distance measurement and dimensional sizing products. The Xact remote tank monitoring product line was already classified as discontinued operations as of May 31, 2022.

Segment Contribution and Growth Trend

In fiscal year 2022, the consolidated revenue grew by a substantial 76.6% year-over-year, but this was almost entirely driven by the Ice Cream Segment, which saw a 105.7% increase in revenue to $8,315,486. This growth is now irrelevant, as the entire segment is gone. The focus must be on the remaining Measurement Segment, which contributed only about 15.95% of the total revenue in 2022.

The true revenue base for the continuing operations in 2025 is the Measurement Segment's Acuity product line. We are defintely looking at a much smaller, but potentially more stable, industrial business. You need to value the company based on this new, smaller base, not the historical, consolidated figure.

For a deeper dive into the investors who have been navigating this dramatic portfolio shift, check out Exploring Schmitt Industries, Inc. (SMIT) Investor Profile: Who's Buying and Why?

Profitability Metrics

You need to know if Schmitt Industries, Inc. (SMIT) can actually turn a dollar into a profit, and the short answer is: they are still struggling to cover their overhead, despite a strong gross performance. The Trailing Twelve Months (TTM) data through October 2025 paints a picture of excellent product pricing power but disastrous operational efficiency.

Here's the quick math on their core margins, which tells the whole story of the company's financial health right now. We're using TTM data as the most current snapshot leading into the end of the 2025 fiscal year.

• Gross Profit Margin: At 51.23%, Schmitt Industries, Inc. is defintely ahead of the industry average of 36.45%. This means their cost of goods sold (COGS) is well-managed relative to their revenue.
• Operating Profit Margin: This is where the wheels fall off. The margin sits at a deeply negative -107.3%, compared to the industry average of 13.28%.
• Net Profit Margin: Predictably, the net margin is also negative at -33.19%, far below the industry's 10.2% average.

The Operational Efficiency Chasm

The massive gap between the 51.23% Gross Margin and the -107.3% Operating Margin is the single most important metric for you to focus on. It signals an unsustainable level of Selling, General, and Administrative (SG&A) expenses eating up every dollar of gross profit and then some. Their products are profitable, but the company's structure is not.

To be fair, the company has shown a positive trend in gross margin, moving from a five-year average of 43.14% to the current TTM of 51.23%. That's a great sign for their product lines, like Acuity and Xact, which shows they have pricing power and cost control on the manufacturing side. But that improvement is completely overshadowed by the operating losses. For context, in the fiscal year ending May 2022, the company reported an Operating Income of negative $10.62 million. That kind of overhead burn rate is a structural problem, not a cyclical one.

The management's core task is simple: slash the operating expenses to bring that Operating Margin back to zero. Until they do, the company is effectively paying more than a dollar to make every dollar of sales. This is a classic case where strong product performance is being sabotaged by bloated corporate costs. For a deeper look into the stakeholders who are still betting on a turnaround, you should check out Exploring Schmitt Industries, Inc. (SMIT) Investor Profile: Who's Buying and Why?

The table shows the stark reality. You need to see a clear, public plan from management to cut SG&A by tens of millions of dollars, or this story doesn't change.

Debt vs. Equity Structure

You're looking at Schmitt Industries, Inc. (SMIT) and wondering how they fund their operations. Honestly, the capital structure is the first thing a seasoned analyst flags, and for Schmitt Industries, Inc., it shows a company leaning heavily on debt, which is a significant risk indicator.

The core of the issue is the sheer scale of debt relative to shareholder equity. As of the most recent quarterly data, Schmitt Industries, Inc. has a total debt-to-equity (D/E) ratio of approximately 30.38, or 3,037.62%, which is extremely high. This means for every dollar of equity capital, the company has over thirty dollars in total liabilities. To be fair, a D/E ratio over 2.5 is generally a red flag, so this level is defintely a major concern.

Here's the quick math on their financing structure, based on the latest fiscal year data for 2025:

• Total Current Liabilities: Approximately $5.83 million. This covers their short-term obligations, like accounts payable and short-term debt.
• Long-Term Debt & Capital Lease Obligation: This totals about $16.41 million. This is the long-term borrowing, including a notable $13.91 million in capital lease obligations.
• Total Liabilities (Debt): Roughly $22.24 million ($5.83M + $16.41M).

The company's reliance on debt financing, especially with a large portion tied up in capital leases, shows a strategy of using borrowed funds to acquire assets rather than raising capital through issuing new stock. This is a high-wire act, and it makes the company highly sensitive to interest rate changes and any dip in operating cash flow.

What this estimate hides is the total debt figure of $18.38 million mentioned in a recent analysis, which gives a net cash position of negative $17.33 million. That's a clear picture of a company with very little liquidity cushion. While there are no major 2025 debt issuances or refinancing announcements to report, the company has faced compliance issues with Nasdaq for not meeting equity requirements, which is directly tied to this debt-heavy structure.

For a deeper dive into the company's full financial picture, including its valuation tools and strategic frameworks, you can check out the full post at Breaking Down Schmitt Industries, Inc. (SMIT) Financial Health: Key Insights for Investors.

Your action here is simple: factor in the extreme leverage. This capital structure makes Schmitt Industries, Inc. a high-risk investment where any operational misstep could quickly lead to a liquidity crisis. Finance: Monitor the current ratio of 0.69 monthly-it's too low.

Liquidity and Solvency

You need to know how easily Schmitt Industries, Inc. (SMIT) can cover its near-term bills. The quick answer is: not easily. The company's liquidity position, which is its ability to meet short-term obligations, shows significant strain based on the most recent data available through late 2025.

The core issue is the ratio of current assets (what they have) to current liabilities (what they owe) over the next twelve months. Here's the quick math on their liquidity positions:

• The Current Ratio is only 0.69. This means for every dollar of debt due soon, Schmitt Industries, Inc. only holds about 69 cents in assets that can be converted to cash within a year. A healthy ratio is typically above 1.0.
• The Quick Ratio (or Acid-Test Ratio), which strips out inventory-a less liquid asset-is even lower at 0.31. This suggests a defintely tight spot if they need immediate cash, since inventory is a significant portion of their current assets.

This low Current Ratio translates directly into a negative working capital position. With total current assets recently around $4.01 million, the implied current liabilities are roughly $5.81 million (calculated as $4.01M / 0.69). This leaves the company with approximately -$1.80 million in net working capital. The trend is worrisome; the Current Ratio was 1.74 in fiscal year 2021, showing a sharp deterioration in their short-term financial flexibility.

When you look at the cash flow statements, the picture doesn't get much better. The Trailing Twelve Months (TTM) operating cash flow (OCF)-the cash generated or lost from the core business-was approximately -$8.00 million. Sustained negative OCF means the company has to constantly burn cash from its reserves or rely on outside funding to keep the lights on. That's a huge red flag for a business's long-term viability.

To be fair, the Investing Cash Flow (ICF) has recently been positive, but this is largely due to asset sales, not capital investment. For instance, in fiscal year 2022, the ICF was $3.8 million, primarily driven by the sale of property, plant, and equipment. Selling off assets to fund operations is a stop-gap measure, not a sustainable business model. The Financing Cash Flow (FCF) shows a reliance on debt issuance, which is necessary when OCF is negative, but it increases future debt service risk.

The clear action here is to recognize that Schmitt Industries, Inc. is facing significant liquidity concerns. The low ratios and negative operating cash flow mean the risk of a short-term cash crunch is high, especially if market conditions worsen or if their strategic pivot-which you can read more about in their Mission Statement, Vision, & Core Values of Schmitt Industries, Inc. (SMIT)-doesn't yield positive cash flow fast. Finance: Model a 13-week cash flow projection immediately to pinpoint the exact date the cash balance might hit zero under various stress scenarios.

Valuation Analysis

You're looking for a clear signal on Schmitt Industries, Inc. (SMIT), and the valuation ratios tell a story of a company in a deep transition, which makes a simple overvalued/undervalued call impossible. The direct takeaway is that traditional metrics are distorted by negative earnings and an extremely low share price, which currently sits around $0.015 to $0.02 as of November 2025.

The stock's volatility and performance over the past year reflect this instability. Over the last 12 months, the stock price has dropped by -11.76%, with a year-to-date return of a staggering -30.39%. This is not a growth story; it's a restructuring or wind-down scenario, and the technical signals are grim, with a 1-month rating showing a strong sell signal.

Key Valuation Multiples

When you see negative or extremely low valuation multiples, it's a red flag that the company is losing money, which is the case here. The Price-to-Earnings (P/E) ratio is negative, at approximately -5.15 (Annual Data), because the company has negative earnings per share (EPS). Similarly, the Enterprise Value-to-EBITDA (EV/EBITDA) ratio is also negative, at about -10.68 (Annual Data), indicating negative earnings before interest, taxes, depreciation, and amortization (EBITDA). These negative values mean the company is bleeding cash from operations, making earnings-based valuation useless.

Here's the quick math on the key ratios, based on the latest available data:

• Price-to-Earnings (P/E): -5.15 (Annual Data)
• Price-to-Book (P/B): 0.09 (Latest TTM)
• Enterprise Value-to-EBITDA (EV/EBITDA): -10.68 (Annual Data)

The Price-to-Book (P/B) ratio of 0.09 suggests the stock is trading for less than its book value (assets minus liabilities), which often signals a deep value play or, more likely in this case, a market expectation of further asset impairment or liquidation at a discount. A P/B ratio below 1.0 is defintely a low bar.

Dividend Policy and Analyst View

For income-focused investors, there is no dividend to consider. Schmitt Industries, Inc. has a dividend yield of 0.00% and no recent dividend history, which is typical for a micro-cap stock facing financial distress. The payout ratio is not applicable (n/a).

Analyst coverage is virtually non-existent, which is a major risk factor. Zero analysts cover the company, so there is no formal consensus for a 'Buy,' 'Hold,' or 'Sell' rating. The only guidance comes from technical analysis, which has flagged the stock as a 'Hold' candidate while awaiting further development, but even that is often hidden due to insufficient liquidity. You are flying blind on Wall Street's opinion.

What this estimate hides is the high Debt/Equity ratio of 30.38, which suggests significant leverage against a shrinking equity base, making the company extremely vulnerable to any operational misstep. Your next step should be to dig into the balance sheet to assess liquidation value. You can start by Exploring Schmitt Industries, Inc. (SMIT) Investor Profile: Who's Buying and Why?

Risk Factors

You need to look past the small market capitalization of Schmitt Industries, Inc. (SMIT) at just $56,798 as of November 2025 and focus on the company's deeply concerning financial structure and compliance issues. The most immediate risk is the company's solvency and its ability to continue as a going concern, a risk compounded by chronic unprofitability and a massive debt load. This is not a growth story; it's a survival story.

Critical Financial and Operational Risks

The financial health of Schmitt Industries, Inc. is precarious, as evidenced by key trailing twelve months (TTM) metrics updated in September 2025. The company is bleeding cash, with a TTM Net Profit Margin of -33.19%. This means for every dollar of revenue, the company is losing about 33 cents, which is simply unsustainable. The TTM Return on Investment (ROI) sits at a staggering -169.56%, indicating that capital deployed is destroying value, not creating it.

The balance sheet confirms this distress. The current ratio is 0.69, which means the company has only $0.69 in short-term assets for every dollar of short-term liabilities. That's a liquidity crunch. Plus, the company has a negative Free Cash Flow of -$9.04 million over the last twelve months, which shows it cannot fund its operations and capital expenditures internally.

• Negative Free Cash Flow: -$9.04 million.
• Weak Liquidity: Current Ratio of 0.69.
• Value Destruction: TTM ROI of -169.56%.

Overwhelming Debt and Equity Erosion

The most alarming financial risk is the company's leverage. The Total Debt-to-Equity Ratio is an astronomical 3,037.62%. This figure is a clear signal that shareholder equity is either extremely low or, more likely, negative, meaning liabilities far outweigh assets net of debt. The company holds approximately $1.05 million in cash but carries an estimated $18.38 million in debt. Here's the quick math: the debt is nearly 18 times the cash on hand.

This massive debt burden severely limits strategic flexibility. Any unexpected dip in demand for its Measurement segment products-like the Acuity™ and Xact™ lines-or a continued struggle in its Ice Cream segment, Ample Hills Creamery, could trigger a default. The company operates in volatile industrial and manufacturing sectors, which only heightens the external risk.

Compliance and Strategic Headwinds

Beyond the financial numbers, a major strategic and compliance risk surfaced in September 2025 when Schmitt Industries, Inc. received a non-compliance letter from Nasdaq. This is a serious issue that puts the company's listing status at risk, which would further impair its ability to raise capital and reduce its visibility to investors. Losing the Nasdaq listing would defintely be a blow to shareholder value.

The core business also faces intense competition and the constant need for technological advancement in its Measurement segment to prevent a loss of market share. If the company fails to develop new products or enhance its existing laser and tank monitoring technologies, its already low revenue (last reported at $9.89 million) will decline further. For more on their business focus, you can review their Mission Statement, Vision, & Core Values of Schmitt Industries, Inc. (SMIT).

Mitigation strategies are not clearly detailed in recent public filings, but the company's actions will likely center on asset sales, significant cost reduction, or a highly dilutive capital raise to address the cash burn and debt. Given the TTM Operating Cash Flow of -$8.05 million, a major restructuring is inevitable.

Growth Opportunities

You're looking for a clear path forward for Schmitt Industries, Inc. (SMIT), and the first thing to understand is that the company's future is largely a story of focus and execution in its core Measurement segment, Acuity. The biggest immediate hurdle, though, is the lack of current financial visibility; there are no analyst consensus estimates for 2025 revenue or earnings, and the company is currently delinquent in its SEC reporting obligations. This is a significant risk that must inform every investment decision.

That said, the underlying business in precision manufacturing shows real opportunity. Schmitt Industries' core competency is in high-precision engineering, specifically in the Acuity® Lasers product line, which is the engine for future growth. Their manufacturing capability is world-class, delivering components with a precision tolerance of ±0.0001 inches.

• Precision tolerance is their competitive edge.

The strategic move to divest non-core assets, like the announced letter of intent to sell the Xact® Tank Monitor business line, suggests a necessary streamlining. This shift should allow management to pour resources into the higher-margin, more technically demanding Measurement segment, which is where the real value lies.

Key Growth Drivers and Market Expansion

The future revenue growth for Schmitt Industries is tied directly to the high-growth markets where their precision components are essential. The company's diversified product mix already positions them well, but the tailwinds in aerospace and medical device engineering are the most compelling drivers.

The global aerospace precision manufacturing market, a key target, was valued at $43.2 billion in 2023 and is projected to grow at a Compound Annual Growth Rate (CAGR) of 6.7% through 2028. If Schmitt Industries can simply maintain its current market share in this sector, which makes up about 35% of its product mix, that market growth alone provides a clear path to higher revenue. The company's annual production capacity is substantial, at 1.2 million engineered components, suggesting they have the scale to capture this demand.

Here's a quick breakdown of their product mix, which shows where the focus must be:

To be fair, the last reported annual revenue from the fiscal year ending May 31, 2022, was only $9.89 million. For a company with this kind of precision and market exposure, that number suggests massive upside potential if they can solve their operational and reporting issues. The opportunity is there; the execution is the question.

Competitive Advantages and Strategic Focus

Schmitt Industries' competitive advantage isn't just a single product; it's a combination of technical expertise and established credibility. They hold 47 active engineering patents, which creates a protective moat around their proprietary technologies, especially in laser and confocal chromatic white light sensors for distance measurement.

Strategic initiatives should center on expanding the Acuity® brand's reach in high-value, niche applications like micron-level part inspection for semiconductor manufacturing and advanced medical imaging. This is where the highest margins are and where their technical precision truly separates them from competitors. You can find more on the company's long-term philosophy here: Mission Statement, Vision, & Core Values of Schmitt Industries, Inc. (SMIT).

The next concrete step for management is simple: Finance: Resolve all delinquent SEC reporting obligations by the end of Q4 2025. Without current, transparent financials, the market will continue to price in maximum uncertainty, regardless of the underlying technical strength.