ARMSTRONG, Iowa, Feb. 4, 2019 /PRNewswire/ -- Art's Way
Manufacturing Co., Inc. (Nasdaq: ARTW), a diversified,
international manufacturer and distributor of equipment serving
agricultural, research and steel cutting needs, announces its
financial results for fiscal 2018.
|
For the Twelve
Months Ended
|
(Continuing
Operations Consolidated)
|
|
November 30,
2018
|
November 30,
2017
|
Sales
|
$
|
19,726,793
|
$
|
20,715,080
|
Operating
(Loss)
|
$
|
(3,095,270)
|
$
|
(1,722,042)
|
Net (Loss)
|
$
|
(3,336,049)
|
$
|
(1,369,359)
|
EPS
(Basic)
|
$
|
(0.80)
|
$
|
(0.33)
|
EPS
(Diluted)
|
$
|
(0.80)
|
$
|
(0.33)
|
|
|
|
|
|
Weighted Average
Shares Outstanding:
|
|
|
|
|
Basic
|
|
4,202,836
|
|
4,151,406
|
Diluted
|
|
4,202,836
|
|
4,151,406
|
Sales: Our consolidated net sales for continuing
operations totaled $19,727,000 for
the 2018 fiscal year, which represents a 4.8% decrease from our
consolidated net sales of $20,715,000
for the 2017 fiscal year. The decrease in revenue is due to
decreased sales in our Agricultural Products and Tools
segments. We experienced fairly steady demand in the 2018
fiscal year in our Agricultural Products segment and attribute the
sales decrease to our decision to terminate a relationship to sell
passthrough beet equipment and to liquidate our Canadian
operations. The decrease in our Tools segment is due to the
loss of a high-volume customer. Our consolidated gross profit
decreased as a percentage of net sales to 17.8% in the 2018 fiscal
year from 19.7% of net sales in the 2017 fiscal year. Our
gross profit was down in all three segments for the 2018 fiscal
year, mainly due to increased material costs. The increased
material costs drove price increases at the end of the 2018 fiscal
year to help mitigate this concern for the 2019 fiscal year.
In our Modular Buildings segment, we put new assets held for lease
into service in the 2018 fiscal year. Depreciation of these
buildings had a large negative effect on our gross profit.
Our consolidated operating expenses increased by 13.8%, from
$5,804,000 in the 2017 fiscal year to
$6,607,000 in the 2018 fiscal
year. This was due largely to one-time non-cash expenses in
our Agricultural Products segment further described below.
Because the majority of our corporate general and administrative
expenses are borne by our Agricultural Products segment, that
segment represented $4,959,000 of our
total consolidated operating expenses, while our Modular Buildings
segment represented $939,000 and our
Tools segment represented $709,000.
Loss from Continuing Operations: Consolidated net
loss for the 2018 fiscal year was $(3,336,000) for continuing operations compared
to net loss of $(1,369,000) in the
2017 fiscal year for continuing operations, an increase in loss of
$1,967,000. This increased loss is
due to several factors. In the first quarter of the 2018
fiscal year we recognized a loss of approximately $298,000 from the revaluation of our deferred tax
asset at the new income tax rates. We also recognized a loss
of approximately $253,000 from the
liquidation of our Canadian subsidiary related to the cumulative
translation adjustment in the second quarter of the 2018 fiscal
year. We recognized an impairment of approximately
$216,000 on our West Union facility during the third and
fourth quarters of the 2018 fiscal year which was equal to the
selling price less commissions. This facility required mold
remediation of $235,000 and scrapping
of $67,000 of inventory, which was
captured in the third quarter of the 2018 fiscal year. We
also impaired our goodwill on our Miller
Pro product line in the amount of $375,000 in the fourth quarter of the 2018 fiscal
year. Another factor contributing to the increased loss was
management's decision to place increased reserves on inventory
resulting in expense of approximately $543,000 in the fourth quarter of the 2018 fiscal
year. The revaluation of our deferred tax asset, release of
our current translation adjustment, impairment of assets and
inventory reserve revaluation were all one-time non-cash expenses
that greatly impacted our increased net loss in the 2018 fiscal
year.
Loss per Share from Continuing Operations: Loss per basic
and diluted share from continuing operations for fiscal 2018 was
$(0.80), compared to loss per share
from continuing operations of $(0.33)
for the same period in fiscal 2017.
Chairman of the Art's Way Board of Directors, Marc H. McConnell reports "Fiscal 2018 at Art's
Way was quite a challenge, and the fourth quarter was certainly no
exception. During the quarter we experienced weak demand as
persistent low commodity prices combined with unprecedented
uncertainty associated with interruption in international trade,
tariffs, the much-delayed Farm Bill, and an election year.
Together, these elements created an atmosphere that gave customers
serious economic challenges and little confidence to invest in
their operations. The sales volume that we did have during
the year was highly impacted by increased material prices,
compressing margins for much of the year before price increases
could be implemented. In nearly every respect, headwinds
persisted in our industries for yet another year, and we have thus
made significant overhead reductions, placed increasing emphasis on
continuous improvement, and replaced personnel in key operations
and production functions as we move forward into fiscal 2019.
"On a positive note, during the year we made significant
progress cleaning up our balance sheet and simplifying our business
to prepare for better times ahead. We were pleased to
successfully sell our Dubuque
facility, formerly home to our discontinued Vessels segment, and
liquidate our Art's Way International operation during the fiscal
year and have since sold our West
Union facility. We made further progress on inventory
reduction, product line rationalization, and debt reduction.
As can be seen by the numerous large, non-recurring charges during
the year, we have sustained quite a negative impact to earnings,
but have managed to generate positive cashflow and further improve
the positioning of the company and the brand as we bring a
compelling and fresh product offering to market through a growing
sales network.
"We enter the new year with a marketplace that remains
unsettled, but we feel that the major steps we have taken to
improve our business have lowered our breakeven point and will
allow for better results under similar conditions and substantially
increased opportunity for profitability in an improving
market."
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, as well as modular animal confinement buildings and
laboratories, and specialty tools and inserts. After-market service
parts are also an important part of the Company's business. The
Company has three reporting segments: agricultural products;
modular buildings; and tools.
For more information, including an archived
version of the conference call, contact: Carrie Gunnerson, Chief Executive 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) the impact of cost-cutting measures; (iii) future results;
(iv) the timing of increased performance; (v) market conditions;
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; factors
affecting the strength of the agricultural sector; the cost of raw
materials; unexpected changes to performance by our operating
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. The Company
cautions 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.