ARMSTRONG, Iowa, July 10, 2019 /PRNewswire/ -- Art's Way
Manufacturing Co., Inc. (NASDAQ: ARTW), a diversified manufacturer
and distributor of equipment serving agricultural, research and
steel cutting needs, announces its financial results for the second
quarter and year to date fiscal 2019.
|
For the Three
Months Ended
|
(Continuing
Operations, Consolidated)
|
|
May 31,
2019
|
May 31,
2018
|
Sales
|
$
|
5,747,000
|
$
|
5,294,000
|
Operating
(Loss)
|
$
|
(370,000)
|
$
|
(458,000)
|
Net (Loss)
|
$
|
(356,000)
|
$
|
(654,000)
|
EPS
(Basic)
|
$
|
(0.08)
|
$
|
(0.16)
|
EPS
(Diluted)
|
$
|
(0.08)
|
$
|
(0.16)
|
|
|
|
|
|
Weighted Average
Shares Outstanding:
|
|
|
|
|
Basic
|
|
4,299,289
|
|
4,213,893
|
Diluted
|
|
4,299,289
|
|
4,213,893
|
|
For the Six Months
Ended
|
(Continuing
Operations, Consolidated)
|
|
May 31,
2019
|
May 31,
2018
|
Sales
|
$
|
9,871,000
|
$
|
10,660,000
|
Operating
(Loss)
|
$
|
(1,092,000)
|
$
|
(767,000)
|
Net (Loss)
|
$
|
(962,000)
|
$
|
(1,181,000)
|
EPS
(Basic)
|
$
|
(0.23)
|
$
|
(0.28)
|
EPS
(Diluted)
|
$
|
(0.23)
|
$
|
(0.28)
|
|
|
|
|
|
Weighted Average
Shares Outstanding:
|
|
|
|
|
Basic
|
|
4,272,532
|
|
4,192,592
|
Diluted
|
|
4,272,532
|
|
4,192,592
|
Sales: Our consolidated corporate sales for
continuing operations for the three- and six-month periods ended
May 31, 2019 were $5,747,000 and $9,871,000, respectively, compared to
$5,294,000 and $10,660,000 during the same respective periods in
fiscal 2018, a $453,000, or 8.6%,
increase for the three months and a $789,000, or 7.4%, decrease for the six months.
The three-month increase in revenue is due largely to an
$8.4 million project at our modular
buildings segment that began in the second quarter of fiscal
2019. We expect this project to be substantially completed by
the end of September 2019. Our tools
segment also saw increased demand during the three months ended
May 31, 2019 compared to the same
period in fiscal 2018. The six-month consolidated decrease in
revenue was driven by a difficult sales climate in our agricultural
products segment due to spring flooding across the United States, with many farmers planting
on historically late dates and some concern that the crops may not
be planted at all. Due to the uncertainty of 2019 crops, we
saw decreased revenue on portable feed equipment and forage and
receiver boxes. Additionally, the liquidation of our Canadian
subsidiary accounted for a decrease of approximately $420,000 in sales in fiscal 2019. Moreover,
our year-to-date fiscal 2018 revenue reflects liquidation of an old
model of manure spreader, which was sold at a decreased margin, and
OEM blower revenue of approximately $262,000 that was not repeated in fiscal 2019 as
our OEM blower customer elected not to purchase any blowers from us
in 2019 due to slow-moving inventory on their dealer lots relating
to poor agricultural market conditions. Despite the overall
sales decrease, we did see increased sales for the six months ended
May 31, 2019 in land maintenance
equipment, plows, beet equipment, reels and dump boxes compared to
the same period in fiscal 2018.
Consolidated gross margin for the three-month period ended
May 31, 2019 was 16.7% compared to
20.9% for the same period in fiscal 2018. Consolidated gross
margin for the six-month period ended May
31, 2019 was 15.8% compared to 21.2% for the same period in
fiscal 2018. This overall decreased gross margin is
attributable to decreased gross margin in both our agricultural
products and modular buildings segments. The agricultural
products segment gross margin decrease reflects pressure from lower
revenue available to cover our fixed overhead and decreased plant
efficiency from a year ago due to new operations leadership
diverting resources to implement changes that we believe will have
long-term benefits. The modular buildings segment had a
slight decrease in gross margin due to increased costs associated
with new production staff hired to fill large project needs,
coupled with an increase in depreciation on leased buildings put
into service in fiscal 2018.
(Loss) from Continuing Operations: Consolidated net
(loss) from continuing operations before income taxes was
$(459,000) for the three-month period
and $(1,240,000) for the six-month
period ended May 31, 2019 compared to
net (loss) from continuing operations before income taxes of
$(780,000) and $(1,085,000) for the same respective periods in
fiscal 2018. The decreased net (loss) from continuing
operations before income taxes for the three months ended
May 31, 2019 is due to increased
revenue in our modular buildings segment related to our
$8.4 million project, cuts made to
our selling expenses and reduction of indirect labor in fiscal
2019. The increase in our net (loss) year-to-date is
primarily related to a decrease in revenue from our agricultural
products segment due to continued difficult agricultural market
conditions. Looking forward, corn prices are starting to rise
as uncertainty looms about crop yields in 2019 due to wet field
conditions, and we are optimistic this will have a positive impact
on the second half of fiscal 2019. We expect to continue to
cut costs and solidify our processes in order to maximize our
stockholder value during this time of rough agricultural
outlook.
Earnings (Loss) per Share from Continuing Operations:
(Loss) per basic and diluted share from continuing operations for
the second quarter of fiscal 2019 was $(0.08), compared to (loss) per basic and diluted
share from continuing operations of $(0.16) for the same period in fiscal 2018.
(Loss) per basic and diluted share from continuing operations for
the six months ended May 31, 2019 was
$(0.23), compared to (loss) per basic
and diluted share from continuing operations of $(0.28) for the same period in fiscal
2018.
Chairman of the Art's Way Board of Directors, Marc H. McConnell reports, "Our results for the
second quarter reflect the challenges that continue to plague the
farm equipment industry. While consolidated revenue increased
in the quarter due to improving circumstances at our Art's Way
Scientific and Ohio Metal subsidiaries, corporate profitability
remained elusive as acute and persistent uncertainty in the farm
equipment industry drove weak demand and an unfavorable product
mix.
"In response to these conditions we have reduced SG&A
expenses significantly, 12% for the quarter and 15% year-to-date.
We have also continued to invest in our manufacturing operations to
drive efficiencies yet to be realized and have provided
infrastructure to support the growth we are seeing this year at
Art's Way Scientific in particular. We have good
opportunities in front of us and anticipate more contribution to
the bottom line from our subsidiaries moving forward."
About Art's Way Manufacturing Co., Inc.
Art's Way manufactures and distributes farm machinery niche
products including animal feed processing equipment, sugar beet
defoliators and harvesters, land maintenance equipment, plows, hay
and forage equipment, manure spreaders, reels for combines and
swathers, and top and bottom drive augers, as well as modular
animal confinement buildings and laboratories, and specialty tools
and inserts. After-market service parts are also an important part
of Art's Way's business. Art's Way has three reporting segments:
agricultural products; modular buildings; and tools.
For more information contact: Carrie Gunnerson, President, Chief Executive
Officer and Interim Chief Financial Officer
712-864-3131
investorrelations@artsway-mfg.com
Or visit the Company's website at
www.artsway-mfg.com/
Cautionary Statements
This news release includes "forward-looking statements" within
the meaning of the federal securities laws. Statements made in this
release that are not strictly statements of historical facts,
including our expectations regarding: (i) our business position;
(ii) future results; (iii) future operational changes; (iv) future
costs of materials; (v) the timing of increased performance; and
(vi) the benefits of our business model and strategy, are
forward-looking statements. Statements of anticipated future
results are based on current expectations and are subject to a
number of risks and uncertainties, including, but not limited to:
customer demand for our products; credit-worthiness of our
customers; our ability to operate at lower expense levels; our
ability to complete projects in a timely and efficient manner in
accordance with customer specifications; our ability to renew or
obtain financing on reasonable terms; our ability to repay current
debt, continue to meet debt obligations and comply with financial
covenants; domestic and international economic conditions,
including the impact of tariffs; factors affecting the strength of
the agricultural sector; the cost of raw materials; unexpected
changes to performance by our operating segments; obstacles related
to liquidation of product lines and segments; and other factors
detailed from time to time in our Securities and Exchange
Commission filings. Actual results may differ markedly from
management's expectations. We caution readers not to place undue
reliance upon any such forward-looking statements. We do not
intend to update forward-looking statements other than as required
by law.
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SOURCE Art's Way Manufacturing Co., Inc.