Good morning. Our next company presenting is Smith-Midland. Ticker symbol is SMID, trading on the Nasdaq. The company has had some very good performance here over the past few quarters, as you'll see in the charts here that Ashley's gonna show you in a minute. More importantly, the company was added to the Russell 2000 this past June. So here to tell you all the good news is Ashley Smith, the CEO. Ashley?
All right, thanks, John. Good morning, everybody. How's everybody doing? Good. I just wanted to say thanks to Three Part Advisors for putting the conference together for all the hard work, and then also for the AV people for setting things up. My name is Ashley Smith. I'm CEO of Smith- Midland Corporation. We're gonna talk about the company story, and then open it up to questions later. So one thing, if you leave here today with only one thing, you only remember one thing about the company, what I'd like for you to remember that every piece of concrete safety barrier on the side of the highway across all of the United States is gonna be replaced between now and twenty thirty. The year twenty thirty. So let me just repeat that.
Every piece of concrete barrier on the road today is gonna be replaced between now and 2030, and I'm gonna have a test at the end to see if anybody can remember that. Just kidding. And so, as we go through the presentation, I'll talk about what that means to the company. That's one of the drivers, one of the many drivers, that we're looking at to continue to grow the company over the next few years. So, I'm glad you're here. Thank you for taking time to come in and listen to the presentation today. And, so the first slide, safe harbor statement. So the company was started in 1960 by my grandfather on the farm in Midland, Virginia, where we are located today.
I'm the third generation family member to run run the company. So my grandfather, then my father. I've been CEO for about five years now. So, the company is made up of a manufacturing business. We manufacture precast concrete products. That means that the products are made in a factory and then stored on our storage areas at the factory, and then delivered by a tractor trailer to a construction site or a highway project where it's put into place. So big, heavy pieces of concrete. We also have a licensing division. So since the early part of the company, we've always had very innovative products, products that were so good that other precast producers around the country and overseas wanted to make our products. So from the late sixties, we were actually licensing our technology, our products.
People were paying us to make our, so they can make our products. So today we have over 75 licensees across North America as well as overseas. And then we also have a barrier rental business, mainly focused in Delaware, Maryland, West Virginia, Virginia, and that business. We'll talk about that a little bit more. That business is renting the highway barrier, so a contractor doesn't have to own it and move it. We've been renting concrete barriers since the late seventies. My first job, way back in high school summer, was to patch the barrier. When it comes back off a construction site, it's chipped up, and so my first job was to patch it back in nineteen seventy-six and make it look good and send it back out.
Since then, and we'll talk a little bit about that, growth of that business over the past, especially the past two or three years, where it's exploded. Market cap, it's around $190 million . Share price, thirty-five eighty-one. We, like John said, we've had some very very strong quarters, and the second quarter we had the highest revenue we've ever had. So that's because of strong production, some of the highest production volumes we've ever had, and we've still been able to keep the backlog at a high level. So we've been able to backfill additional sales, even though we're very very high output. So these four products are four of the products that we manufacture. They're proprietary.
These four products are the number one branded products in their market. So the J-J Hooks highway barrier is the number one barrier connection. So that's simply, J-J Hook is a steel hook that extends out of the end of the barrier that hooks to the next piece of barrier. And, that connection is by far the number one barrier connection across North America. The SlenderWall cladding system. SlenderWall is designed, it's a lightweight system, traditional precast concrete, like you see on some of the buildings here in Chicago. Typically, would be six or eight inches thick, very heavy. SlenderWall is two inches of precast with a light-gauge steel stud frame. The panel's pre-insulated. So very high-end projects, multifamily, office, it could be many, many different hotels, hospitals. So very high-end finished product.
The Easi- Set buildings, they're small, transportable storage buildings. They're the number one branded product. If you ask anybody in our industry who makes or what's the number one small, transportable, precast concrete building in the market, they'll say Easi- Set, and SoftSound is a sound-absorptive material. It's a wood aggregate that we put on the front of a heavy precast panel, and it absorbs about 80% of the sound along the highway, so that makes that sound wall much more efficient and effective, so we talked a little bit about the precast products that we make at our three factories, and we'll talk a little more about this in the barrier segment.
We've had barrier rentals since the late 1970s, but just over the past three or four years, that we've focused a lot of capital, energy into growing that part of the business. Also, we're finally starting to see, money that's coming in from the, Congressional Infrastructure Bill that's finally starting to hit, this year and next year. We talked about the, 75, licensees, and then the strong backlog as well. The nice thing about, precast concrete, it's flowable. So if you think of, plaster of Paris when you're a kid, you can build a, some kind of a mold and fill it with plaster. Essentially, that's what we're doing with precast concrete, but it's, engineered, very technical. It has obviously, reinforced, steel inside, but the...
There's a lot of flexibility with the product. And as you may or may not know, concrete, ready-mix and precast, is the number one construction product in the whole world. So just some of the end markets, you may recognize the building there in the middle. Before we put the white barrier there, about ten years before that, we had put concrete safety barrier around the White House. And at the time, the president, who was living there, looked out and said, "Well, we don't want that Jersey barrier in front of the White House." So we developed this very attractive high-security barrier and put it in place. These are our three manufacturing locations: Virginia, North Carolina, and South Carolina.
From these factories, we can reach probably the number one construction market in the United States, which is the Mid-Atlantic. So we're New York, all the way down to Georgia and into Florida from these three manufacturing plants. So just the middle picture, North Carolina, you can see a new plant addition. So the original plant on the right side of the picture is about four years old, and obviously, we didn't make the plant big enough when we built it. So four years on, we're doubling the size of the plant. So last year, that plant did around $10 million in revenue, so obviously we'll be able to do about $20 million in revenue at that plant. Another we started this in March of this year.
In July, a precast company in West Virginia went out of business, and so we bought $2 million worth of forming equipment that we're gonna move to the plant in North Carolina. We bought it for about 25 cents on the dollar, and it's a bridge beam that's made for North Carolina, and there was only two companies making it. There was one company in South Carolina. There was the company in West Virginia that went out of business. So we expect those forms, and we'll produce those outside. So in addition to doubling the capacity of that second plant, we'll put these new forms outside, and we expect that to give us anywhere between $8 million- $12 million a year, additional revenue.
Some good strategic investments that we believe are gonna pay off very well. South Carolina, we just have invested this past year in a new batch plant and mixer, which mixes the concrete, and we've also invested in new forming systems. So those investments are gonna give us about 50% more capacity at the South Carolina plant. We also have plans right now right in with the local county to add about 10 or 12 additional acres of storage. We were recently awarded a project for Georgia Department of Transportation, 7,000 panels, sound wall panels, that we're gonna be making in a new forming system that's gonna be delivered in about a month. So we need somewhere to put those, so we're gonna need that extra storage space.
At the Virginia plant, three years ago, we bought an additional 30 acres, which is kind of to the right of that picture, the top picture. We've, we have plans in right now with the county. We need to add another 10 acres of storage, just because plants are getting busier, and we need that extra storage for product until it's ready to go to the job site, so we're glad we're in the market we're in. Again, probably one of the best construction markets in the U.S. The state of South Carolina and North Carolina are in. They're both in the top 10 as far as fastest growing states, and in Virginia, being close to DC, Maryland, there's a lot of construction activity, so just to talk a little bit about the rental division.
So for years, we had about 50,000 feet, about 10 miles of rental barrier, and that's all we could financially afford, and we were probably a little too conservative. So for years, we made all of the contractors, all of the highway contractors around us, buy a barrier. If they had a large project, we didn't have enough barrier to service it. And we've seen over the years, a company up in Pennsylvania and a company down in South Carolina that got into the rental market, the barrier rental market, in a big way. We've been, again, renting barriers since the 1970s, which was very unusual. But what we started to do, we had more capital, and we became a lot more aggressive in renting barrier and growing our rental fleet.
So it went from about 10 mi of barrier to 50 mi of barrier. We had 50 mi in our rental fleet, and over the past two years, we've doubled that from 50 mi of rental barrier in a rental fleet up to 100 mi. And a big portion of that, we just... In 2018, we had produced a panel or a barrier for one of the largest project ever in the company history for barrier. And when we signed the contract, we also put a clause in there that we'll buy the barrier back at the end of the job for a pre-agreed-upon price. So at the end of the job, which was in 2022, at the end of 2022, we started bringing that barrier back.
So we were able to go from the 50 miles of barrier up to the 100 miles of barrier in our rental fleet. We have also added 120 crash cushions, which are the steel cushions that go on the end of a section of barrier that absorb. If somebody hits it, it absorbs the energy. Traditionally, we've had about 80%-85% capacity of our barrier used and put out into place. So right now, we're at around 50%-60% of that 100 miles deployed.
Over the next year or so, we expect that to get back up to the 80%-85%, because we have some very large projects that we're bidding, projects we already have signed contracts for, but we haven't started shipping the barrier out and setting it on the job site yet. So that'll happen at the end of this year into next year. So we expect that our market is gonna need more than the 100 miles of barrier in our fleet, so we're gonna continue to invest. And the nice thing about barrier, we just make it for ourself. We don't have to pay somebody else to make it. So we're gonna continue to add to that rental fleet by making it ourselves until the market we feel has the barrier it needs.
So we like, obviously, when we sell the barrier, that's a one-time sale, very profitable. What we like about the barrier rental model is that it's recurring revenue. The other thing that we like about it is we get all of the cash up front. So we get all of the cash for when we ship it, set it, the whole rental period, whether that's one year, two years, three years, picking it back up, shipping it back, to the plant. We get all of that cash up front. So we like that model. And then the higher margins, and then again, recurring revenue. So that we're more aggressive than we used to be. We have the cash to invest, and bring this up to a bigger part of our company.
So, as you know or can imagine, precast concrete is very heavy, and that's good and bad. The good thing is, I don't have to worry about the Chinese putting precast concrete products on a ship and bringing them over to the U.S. The challenge is, it-- since it is heavy, it's very, shipping, trucking intense. So early on, again, our products were so good, there were precasters around the country that saw our products being delivered from Virginia to New York, from Virginia to Georgia, and so they called, my father and said, "Hey, why don't you let me make your..." And we started out with farm products. "Why don't you let me make your farm products in Georgia?
You don't have to run up and down the road, and I'll pay you a royalty." So that's how we got into the royalty business, and then over the years, we've continued just to grow that business with new products. And talking a little bit about the barrier at this point. So the first thing that we talked about, all the barrier across the country is gonna be replaced. That started, that requirement is because Federal Highway Administration about every 10-15 years changes the crash requirements for vehicles crashing into roadside safety features. So whether it's a highway sign, a light post, concrete barrier, or metal guardrail, the cars change on the road. So as a result, Federal Highway changes and requires us to retest everything. So starting January first of 2020, all new products had to be MASH.
So we're now in the phase of MASH, M-A-S-H, and that's just an acronym that the highway people use. So right now we're probably, I would say maybe 10% of the barrier that's gonna be replaced has been replaced so far. And the closer we get to the grandfather or the sunset date of 2030, the more urgent and the more barrier is gonna be made to refill all the stock, stockpiles. So as an example, some states will let you grandfather in the old barrier. So for example, in Virginia, you can use the old barrier. Any new barrier has to be MASH.
But what they've also said, if you have a highway project that's gonna go past 2030, you have, today, if you have like a four-year, five-year project, you have to have MASH barriers. So we're already starting to see that trend change. So what we expect, we've already seen increased royalties, mainly from this conversion on the barrier, but still our other products are strong as well. But the bigger driver is the switch over the barrier. And we believe the closer we get to that 2030, our revenues are gonna increase. We have 45 of the 75 producers, 45 of those licensed producers make the barrier. So the growth we have, still have states, still have pockets of the country where we need producers.
We just got some good news, a couple about two or three weeks ago. The State of California has moved their transition date from twenty thirty to twenty twenty-six. So by the end of twenty twenty-six, all the old barrier cannot be used. So we've had a licensee in California for a few years, giving us a little bit of royalty, but the closer we get to twenty twenty-six in California, the floodgates are gonna open. So it's kind of you can tell state-by-state situation. We also a good piece of news, we just received a provisional patent and Federal Highway Administration approval for a new barrier design. It's called a low-profile design, and that's used in Texas and in Florida.
But in the state of Texas, there's almost as much of the low-profile barrier as there is of the regular barrier. And our barrier, low profile, is so good, so efficient to set and to move compared to the, the existing connection, Texas connection. We expect to get 90%-95% market share. We went down as we were developing the low profile, we went down to Texas, and we watched some of the Texas standard connections barrier being installed, low profile. It took nine people on a crew, and we usually have two or three.
And the Texas connection, you put the barrier together end to end, you have two bolts that go from one to the other, and the bolts weren't lining up, and there was guys up standing on top of the barrier with sledgehammers, driving the bolts through from one to the other. The contractor had used our J-J Hooks on the taller barrier, and he said: "If you get J-J Hooks approved, I'm never buying that old style again." And then we just found out yesterday that the state of Texas, they update their state standards every few years, and they called us and they said: "Please send us your information. We're gonna put J-J Hooks right into the state standards as an alternate." So, you can't get much better than that down in Texas.
So again, just one small piece of the story, but we have a lot of those pieces all over the place. So we've talked a little bit about this, the new standard. And I talked a little bit about why this happens, and it happens every so often because the cars on the road change. So we go to all of the meetings where the folks that are setting these standards are at. So we're right in the room. So everybody knows what they're thinking about for the next crash test, what's happening with the vehicles on the road, and the changes on the vehicles right now. EVs.
EVs. We're gonna be able to—Once we get all this barrier remade, in ten years, we'll be able to do it all again because they're gonna have to crash test again for EVs. They're heavier vehicles, lower center of gravity. We've already seen some tests where EVs just blow through some of the barricades. I don't know if I'll be around for that ten or twenty years from now, but. We talked about low profile and then public-private partnerships. They're big in several states, Virginia, Texas. In the state of Virginia, a public-private partnership was responsible for a $3 billion project to widen Interstate 66 up in Northern Virginia a couple years ago. That was not even on the books for the Virginia Department of Transportation.
So this is money that came in, $3 billion dollars that got put on top of the regular funding. And in exchange, Virginia gave a 50-year concession on tolls on 66. But public-private partnerships are spreading across the country, and that's been a big way for additional investment to come into our market. Also, the trend for our architectural panels, there's a problem in construction in the U.S. The average construction worker, they're getting older. There's not a lot of young people moving into construction. So the problem is, there's not enough workers to build all of the buildings and houses that are needed in the United States.
So you probably already heard that some of the home builders their revenues have been clipped because they couldn't find enough labor to get their houses built. So in the commercial construction field, what's happening is that the architects, owners, contractors, developers are looking at off-site, modular, and prefabricated construction to help speed up and help just get their projects built. So obviously, precast concrete, we've been that way from the beginning. We make it off-site, put it on a truck, deliver it, and install it. So finally, after fifty, sixty years in the business, the market's catching up to us, but it's a real problem out there. So this is another tailwind that's helping grow production at all three of our facilities. So you can see revenue the last few years has been strong.
Again, that's from all of the sectors we talked about. It's more manufacturing, it's higher and more barrier rental, and also higher royalties. We like the royalties because it's very profitable. It's 100% gross margin. We have some, you know, personnel costs, some research and development costs, but very lucrative and recurring revenue. So, as long as the licensee, as long as the producer is out there selling, we get a nice royalty each month from them. And then again, the backlog is continued to stay strong, even with this very strong production backlog or production revenue. So there you can see the earnings per share, EBITDA. So in our-- what we're seeing, what we're focused on, is growing the backlog.
So the goal is to get it from around $60 million- $100 million dollars, and we believe that we can. We have that $60 million dollar backlog. Most of that will be made over the next 12 to 18 months. We're always bringing in new products that get made this year, but we still like to have in that cushion of a larger backlog. Another thing that has helped our plant in Virginia is the data center work. It's exploded. Northern Virginia is probably the top location in the U.S. for data center construction, and the product that we make is an underground electrical box. It's a concrete box that goes underground, that's needed to bring the electricity onto the site to feed the data centers.
That part of our market in the Virginia plant has doubled over the past two years. Just a lot of tailwinds. It's amazing. You know, I've been in the business full-time since 1985, and I tell people, we've been building these things for years. We've been licensing for a long time. We've been renting barrier. But I believe that we're in the strongest position that we've ever been in to take advantage of all these things that we've developed over the past forty, fifty years. Today, with all the tailwinds and just all these things coming together, it's exciting, it's challenging, you know, it's nothing worthwhile is easy. This doesn't happen by itself.
It's a lot of hard work by a lot of people that I'm blessed to work with. Again, we're in the best position we've ever been, in my opinion, in history, just with all the tailwinds coming together. It's nice to see some of the progress that we've made the past few months. We expect no reason to expect the immediate future not to be just as good with all the infrastructure money. The data center market is going to be strong, a new product line and expansion in North Carolina, our expansion in South Carolina, our investment over the past few years in our sales and marketing team is starting to pay off.
We're very blessed, but also the harder we work, the more blessed we are. This is a second quarter summary. Revenue increased 34% to $19.6 million, highest quarterly revenue in our history. Product sales increased 23%. Operating income $2.7 million. Net income of $2 million. Very strong quarter. And if you do any research on the company, you'll see that part of the business on the rental side is for special security projects, and so being close to DC, we get called in whenever there's an important, high-profile dignitary that comes into town. The results of last quarter didn't include any big security events, and they kind of come and go.
They're nice when they happen, but we're building the business just based on all the things we've been talking about today. We look at the security events are very important, because they do, they're risky, but they're, you know, they help the bottom line. So that's just kind of icing on the cake. So this is a building that we built, Slugger. It's at a ballpark in the outfield down in Greensboro, North Carolina. So that's one of our SlenderWall panels. So at this point, I'll take questions, and thanks for your time today again.
What % of the barrier market is currently owned versus rented?
Okay, the question is, what percent of the barrier market is owned versus rented? So that depends on which state you're in. So as an example, in California, it's probably 95% owned. The state of Virginia, five or 10 years ago, I would say it's 80%. I would say going forward, our goal is to get that from 80% down to 20%. So the difference is, if there's a barrier rental company in that market, so for instance, in South Carolina, where a friend of mine is down there, he's been running barrier down there probably 15 years. I would say he has probably 80% of the market is rental in South Carolina and North Carolina.
[Inaudible]
Yeah. So, a lot of the rental companies own J-J Hooks. Right now is a perfect time if somebody wanted to do an investment because the rental market across the United States is very fragmented, and it's mostly mom-and-pop, smaller companies, and over the past 10 years, they've invested $10 million, $15 million, $20 million in barrier that's gonna be obsolete in a few years. So all those companies have to decide, am I gonna throw the old barrier away and then invest another $10 million or $20 million in the new style, or is there somebody out there that wants to come in and make an offer? So-
[Inaudible]
No. No, I don't know of any, other than the guy in South Carolina, and it's only been recently that he started making his own. 90% of them buy a barrier from a producer.
Yeah, you kinda answered the question. Yeah, the barrier, but what do you do with it? You own the phone.
Right, we do. So our rental fleet, what we do with them is we've been, I mean, since we knew this was coming, we've been selling them to some highway contractors that know they're not gonna be useful. But then there's a lot of places where somebody needs barrier that's not on a highway, and it doesn't have to be the new style. And then also for the security events that we do, so we did one in Milwaukee that had forty-six thousand feet of barrier in one event, and they're only gonna get bigger, because we saw what happened in Chicago. There was a breach in the security fence, where some of the protesters actually pulled the fence apart.
But what's gonna happen is most of that is gonna get sold to a secondary place, or it'll just simply get crushed and used for roadbed. So you can recycle the steel and the concrete.
What about wall barriers are kind of...
That, that's at our three plants, that's a big, big part of the business. I would say it depends year, what year, maybe 15% to, you know, 20%-25%.
Is that it? Okay. All right. Thank you very much.