ARMSTRONG, Iowa, Oct. 9, 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 third
quarter and year to date fiscal 2019.
|
For the Three
Months Ended
|
(Continuing
Operations, Consolidated)
|
|
August 31,
2019
|
August 31,
2018
|
Sales
|
$
|
5,504,000
|
$
|
5,280,000
|
Operating
(Loss)
|
$
|
(305,000)
|
$
|
(559,000)
|
Net (Loss)
|
$
|
(289,000)
|
$
|
(767,000)
|
EPS
(Basic)
|
$
|
(0.07)
|
$
|
(0.18)
|
EPS
(Diluted)
|
$
|
(0.07)
|
$
|
(0.18)
|
|
|
|
|
|
Weighted Average
Shares Outstanding:
|
|
|
|
|
Basic
|
|
4,309,587
|
|
4,209,445
|
Diluted
|
|
4,309,587
|
|
4,209,445
|
|
For the Nine
Months Ended
|
(Continuing
Operations, Consolidated)
|
|
August 31,
2019
|
August 31,
2018
|
Sales
|
$
|
15,375,000
|
$
|
15,940,000
|
Operating
(Loss)
|
$
|
(1,397,000)
|
$
|
(1,326,000)
|
Net (Loss)
|
$
|
(1,251,000)
|
$
|
(1,948,000)
|
EPS
(Basic)
|
$
|
(0.29)
|
$
|
(0.47)
|
EPS
(Diluted)
|
$
|
(0.29)
|
$
|
(0.47)
|
|
|
|
|
|
Weighted Average
Shares Outstanding:
|
|
|
|
|
Basic
|
|
4,285,335
|
|
4,198,250
|
Diluted
|
|
4,285,335
|
|
4,198,250
|
Sales: Our consolidated corporate sales for continuing
operations for the three- and nine-month periods ended August 31, 2019 were $5,504,000 and $15,375,000, respectively, compared to
$5,280,000 and $15,940,000 during the same respective periods in
fiscal 2018, a $224,000, or 4.2%,
increase for the three months and a $565,000, or 3.5%, decrease for the nine months.
Our three-month increase in revenue is largely attributable to an
$8.5 million project in our modular
buildings segment that began in the spring of 2019 and increased
lease revenue from modular building rentals. The $8.5 million project is approximately 31%
complete and is expected to carry over into the spring of 2020. Our
agricultural products and tools segments both saw decreases in
revenues in the third quarter of fiscal 2019. The three-month
decrease in agricultural products revenue is due to crop
uncertainty driven by spring flooding across the United States. Many farmers planted on
historically late dates during the 2019 planting season, which
drove a decrease in demand for our portable feed equipment.
Our nine-month decrease in consolidated sales is primarily due
to decreased revenue in the agricultural products and tools
segments. The year-to-date agricultural products decrease is due to
decreased demand for portable feed equipment, forage and receiver
boxes, and UHC reels. 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 nine months ended
August 31, 2019 in land maintenance
equipment, plows, beet equipment, bale processors and dump boxes
compared to the same period in fiscal 2018. Our tools segment saw a
decrease over the nine months due to the loss of a large volume
customer at the end of the first quarter of fiscal 2018. Our
modular buildings segment showed increased revenue year to date
from the progress on an $8.5 million
project and from increased modular buildings rental income.
Consolidated gross margin for the three-month period ended
August 31, 2019 was 18.3% compared to
22.3% for the same period in fiscal 2018. Consolidated gross margin
for the nine-month period ended August 31,
2019 was 16.7% compared to 21.6% for the same period in
fiscal 2018. Our agricultural products segment contributed to a
decrease in gross margin in fiscal 2019 due to lower revenues with
less variable margin to absorb fixed costs coupled with labor
inefficiencies in our plant. With the absence of steady demand for
portable feed equipment, our most efficient equipment to build, we
have struggled to gain operational efficiencies gained by continued
production of a single product. Our efficiency has also been
affected by the diversion of direct labor for operational changes
that will have long-term benefits. We have partially completed
warehouse reorganization, which we expect will improve inventory
accuracy and decrease travel time for material handlers and machine
operators. We have also implemented a material review board to
decrease scrap and eliminate production errors. We believe our
continued operational improvement projects will put us in a
position to meet increased demand in an improved agriculture
economy. Our tools segment also showed decreased gross margin for
the nine months, largely due to lower revenues with less variable
margin to absorb fixed costs. Our modular buildings segment
improved our gross margin from a year ago due to increased revenue
from leasing and modular construction providing more variable
margin to cover fixed costs.
(Loss) from Continuing Operations: Consolidated net
(loss) from continuing operations before income taxes was
$(370,000) for the three-month period
and $(1,610,000) for the nine-month
period ended August 31, 2019 compared
to net (loss) from continuing operations before income taxes of
$(949,000) and $(2,034,000) for the same respective periods in
fiscal 2018. The decrease in our net (loss) for the quarter and
year-to-date is primarily related to the success of our modular
buildings segment on an $8.5 million
project and elimination of indirect positions at our agricultural
products segment. In the third quarter of fiscal 2018, we also
incurred costs of $520,000 related to
the impairment and mold remediation of our West Union Facility,
which were not repeated in 2019. We are committed to continuing our
cost reductions and operational improvements to prepare for
improving market conditions in the future.
(Loss) per Share from Continuing Operations: (Loss) per
basic and diluted share from continuing operations for the third
quarter of fiscal 2019 was $(0.07),
compared to (loss) per basic and diluted share from continuing
operations of $(0.18) for the same
period in fiscal 2018. (Loss) per basic and diluted share from
continuing operations for the nine months ended August 31, 2019 was $(0.29), compared to (loss) per basic and diluted
share from continuing operations of $(0.47) for the same period in fiscal 2018.
Chairman of the Art's Way Board of Directors, Marc H. McConnell reports, "While it is clear
that unfavorable market conditions and uncertainty continue to
impact our business, we are pleased to see top line growth for the
third quarter, driven by our Art's Way Scientific business. We
continue to see strong backlog and ongoing demand in this business
and have experienced the benefits of diversification helping the
company overall. While consolidated profitability remained elusive
in the third quarter of fiscal 2019, we continued to make
operational improvements and investments that we expect to benefit
us long-term. With regard to farm equipment demand, we are seeing
some signs of improving demand driven by gains in commodity prices
that are favorable for our customers, but we remain cautious in our
optimism due to the overall uncertainty and headwinds that have
been plaguing the industry for several years now. As we move into
the fourth quarter, we remain committed to the fundamentals that
will prepare us for improving market conditions and provide for
long-term sustainability, growth, and performance in all of our
businesses going 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; 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.