Executive Summary

Q2 FY2022 delivered strong YoY revenue growth to $2.96M (+45.9%) and a swing to GAAP net income of $2.19M ($0.57 diluted EPS), primarily driven by a $4.60M gain on the sale of a Portland property rather than core operating performance .
Gross margin expanded to 54.2% (vs. 47.4% YoY), supported by higher factory utilization and efficiencies in the Ice Cream segment and product mix shift in Measurement; however, Adjusted EBITDA remained negative at $(2.22)M reflecting underlying losses after non-GAAP adjustments .
Segment mix: Ice Cream revenue rose 70.8% YoY to $1.98M and Measurement increased 12.8% YoY to $0.98M; management highlighted new product launches (Acuity and Xact) and retail/wholesale expansion for Ample Hills (D’Agostino’s, Gristedes, Central Market) .
No formal financial guidance was issued; strategic actions included a completed $5.1M building sale (net proceeds $4.7M) in Q2 and exploration of a Nicolai Street sale-leaseback. Subsequent Q3 announcement outlined an intention to focus the company around Ample Hills .
Wall Street consensus (S&P Global) for Q2 FY2022 EPS and revenue was unavailable for SMIT; estimate comparisons are not possible (values would be from S&P Global if available).

What Went Well and What Went Wrong

What Went Well

Ice Cream segment momentum: revenue up 70.8% YoY to $1.98M; management emphasized “higher factory utilization and production efficiencies” driving margin improvement and signed a lease for an iconic Upper West Side location (opening planned Spring 2022) .
Measurement segment uptick: revenue rose 12.8% YoY to $0.98M, aided by Acuity (+$119K) and Xact product (+$26K); management cited “new product launches by Acuity and Xact combined with a stronger customer environment” .
Strategic capital action: company closed a $5.1M sale of the 28th Street building (net proceeds $4.72M), recording a $4.60M gain that bolstered GAAP results and increased financial flexibility .

What Went Wrong

Core profitability still negative: Adjusted EBITDA was $(2.22)M despite GAAP net income, underscoring reliance on one-time gains versus recurring earnings .
Operating expenses elevated: OpEx rose 34.0% YoY to $4.17M (three months) with ~$350K in non-recurring financial/IT systems costs; this pressured underlying earnings power .
Q1 seasonality and constraints persisted: preceding quarter (Q1 FY2022) showed Measurement decline and a $(1.05)M net loss amid a “constrained environment… more difficult than anticipated,” highlighting volatility and execution risk heading into Q2 .

Financial Results

Metric	Q2 FY2021 (three months ended Nov 30, 2020)	Q1 FY2022 (three months ended Aug 31, 2021)	Q2 FY2022 (three months ended Nov 30, 2021)	Consensus (S&P Global)
Net Sales ($)	$2,029,712	$3,759,175	$2,961,965	Unavailable (S&P Global)
Gross Margin (%)	47.4%	64.1%	54.2%	Unavailable (S&P Global)
Operating Expenses ($)	$3,109,393	$4,139,951	$4,167,470	Unavailable (S&P Global)
Net Income ($)	$(2,366,469)	$(1,045,039)	$2,187,912	Unavailable (S&P Global)
Diluted EPS ($)	$(0.63)	$(0.28)	$0.57	Unavailable (S&P Global)

Segment revenue breakdown

Segment	Q2 FY2021	Q1 FY2022	Q2 FY2022
Ice Cream	$1,158,989	$2,955,755	$1,979,616
Measurement	$870,723	$803,420	$982,349

Key KPIs and Non-GAAP

KPI	Q1 FY2022	Q2 FY2022
Adjusted EBITDA ($)	$(865,059)	$(2,219,848)
Non-GAAP Loss per Diluted Share ($)	$(0.27)	$(0.92)
Cash Balance ($)	$2,725,643 (as of Aug 31, 2021)	$4,572,774 (as of Nov 30, 2021)

Notes: The Q2 GAAP net income reflects a $4,598,095 gain on sale of property; Adjusted EBITDA and Non-GAAP EPS exclude this item and other adjustments as detailed in the reconciliations .

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Formal Revenue/EPS Guidance	FY2022/Q2	None provided	None provided	Maintained (no formal guidance)
Retail Expansion (Ample Hills)	Spring 2022	N/A	Upper West Side NYC store opening targeted for Spring 2022	New operational milestone
Wholesale Distribution	FY2022	N/A	Added D’Agostino’s, Gristedes (NY) and Central Market (TX)	Expanded channels
Real Estate Strategy	FY2022	N/A	Completed sale of 28th Street building; exploring Nicolai Street sale/leaseback	Strategic actions
Corporate Focus (subsequent)	FY2022 Q3	N/A	Intention to focus Schmitt around Ample Hills as core business	Strategic pivot announced in Q3

Earnings Call Themes & Trends

No Q2 FY2022 earnings call transcript was available; themes are synthesized from press releases.

Topic	Previous Mentions (Q-2 and Q-1)	Current Period (Q2 FY2022)	Trend
Retail footprint expansion (Ample Hills)	Q1: New Prospect Park West store became highest performing location ; Q-2 (YoY): Acquisition integration and store opened May 28, 2021	Signed lease for Upper West Side NYC; continued same-store growth	Positive momentum, continued expansion
Wholesale channel growth	Q1: Operating improvements and co-packer volume support	Added D’Agostino’s, Gristedes (NY) and Central Market (TX)	Broadening distribution
Measurement product roadmap	Q1: Planning for new product launches; constrained environment challenging	New product launches by Acuity and Xact; stronger customer environment	Improving demand backdrop
Supply chain/macro constraints	Q1: “Constrained environment… more difficult than anticipated” ; COVID overhang	Noted improved performance; mix shift aiding margins	Gradual improvement vs Q1 constraints
Capital allocation/real estate	Q1: Progress on 28th Ave property sale	Completed $5.1M sale; exploring Nicolai sale/leaseback	Deleveraging/ liquidity enhancement
Corporate strategy focus	Prior: Multi-segment holding company	Subsequent Q3: Intention to focus on Ample Hills and review SMS	Strategic simplification (post-Q2)

Management Commentary

“We continue to make progress… with increased revenue growth and the launching of new products for both Acuity and Xact. For Ample Hills… we expect continued expansion for our retail and wholesale segment… Upper West Side… opening in Spring 2022.” — Michael R. Zapata, Chairman & CEO .
“From a cash management perspective, we had roughly $350k in one-time costs this quarter… For funding future growth, we were pleased to complete the $5.1m sale of the 28th Street building… exploring the sale/leaseback for our Nicolai Street building.” — Michael R. Zapata .
Q1 context: “This summer has provided a glimpse into the operating ability… margins and profitability improvements… Prospect Park West becoming our highest performing location.” — Michael R. Zapata .
Q3 context: “We believe a strategic focus on the Ample Hills business will allow us to accelerate growth… pursuing a strategic review of both the Xact and Acuity business lines.” — Michael R. Zapata .

Q&A Highlights

No Q2 FY2022 earnings call transcript was available for SMIT; therefore, Q&A highlights, guidance clarifications, and tone changes cannot be extracted for this period (company press releases did not include a Q&A component).

Estimates Context

Wall Street consensus (S&P Global) for Q2 FY2022 revenue and EPS was unavailable for SMIT due to missing mapping; as a result, we cannot quantify beats/misses versus estimates. If available, all consensus comparisons would default to S&P Global data.
Given the $4.60M gain on sale, GAAP EPS materially exceeds underlying performance; non-GAAP metrics (Adjusted EBITDA, Non-GAAP EPS) better reflect core trajectory .

Key Takeaways for Investors

Q2 headline GAAP profitability was a one-time event driven by a $4.60M asset sale; core operations remained loss-making on a non-GAAP basis (Adjusted EBITDA $(2.22)M). Near-term trading should discount the one-off gain and focus on non-GAAP trends .
Ice Cream (Ample Hills) is the growth engine; same-store performance and footprint/wholesale expansion support revenue and margin trajectory into spring/summer seasonality .
Measurement shows early signs of improvement with product launches (Acuity/Xact) and mix shift; execution against the roadmap and customer environment normalization are catalysts .
Elevated OpEx (including ~$350K one-time systems investments) weighed on profitability; watch for OpEx discipline and potential normalization in coming quarters .
Strategic capital actions improved liquidity (building sale, potential sale-leaseback); subsequent decision to focus on Ample Hills could simplify the story and sharpen capital allocation .
Absence of formal guidance and unavailable Street consensus reduce near-term visibility; investors should monitor upcoming store openings, wholesale adds, and segment margin evolution for directional cues .
Seasonal dynamics matter: spring/summer should favor Ample Hills, while Measurement improvements can add balance; the narrative that will move the stock is sustained non-GAAP margin improvement and evidence that growth investments translate into operating leverage .

SCHMITT INDUSTRIES INC (SMIT)·Q2 2022 Earnings Summary