ARMSTRONG, Iowa, Oct. 8, 2020 /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 the third quarter and year to date fiscal
2020.
|
For the Three
Months Ended
|
(Consolidated)
|
|
August 31,
2020
|
August 31,
2019
|
Sales
|
$
|
6,465,000
|
$
|
5,504,000
|
Operating
(Loss)
|
$
|
(513,000)
|
$
|
(305,000)
|
Net (Loss)
|
$
|
(424,000)
|
$
|
(289,000)
|
EPS
(Basic)
|
$
|
(0.10)
|
$
|
(0.07)
|
EPS
(Diluted)
|
$
|
(0.10)
|
$
|
(0.07)
|
|
|
|
|
|
Weighted Average
Shares Outstanding:
|
|
|
|
|
Basic
|
|
4,426,850
|
|
4,309,587
|
Diluted
|
|
4,426,850
|
|
4,309,587
|
|
For the Nine
Months Ended
|
(Consolidated)
|
|
August 31,
2020
|
August 31,
2019
|
Sales
|
$
|
16,937,000
|
$
|
15,375,000
|
Operating
(Loss)
|
$
|
(1,908,000)
|
$
|
(1,397,000)
|
Net (Loss)
|
$
|
(1,663,000)
|
$
|
(1,251,000)
|
EPS
(Basic)
|
$
|
(0.38)
|
$
|
(0.29)
|
EPS
(Diluted)
|
$
|
(0.38)
|
$
|
(0.29)
|
|
|
|
|
|
Weighted Average
Shares Outstanding:
|
|
|
|
|
Basic
|
|
4,381,686
|
|
4,285,335
|
Diluted
|
|
4,381,686
|
|
4,285,335
|
Sales: Our consolidated corporate sales for the
three- and nine-month periods ended August
31, 2020 were $6,465,000 and
$16,937,000, respectively, compared
to $5,504,000 and $15,375,000 during the same respective periods in
fiscal 2019, a $961,000, or a 17.5%,
increase for the three months and a $1,562,000, or 10.2%, increase for the nine
months. The three month increase in sales is due to increased sales
from our agricultural products and modular building segments while
our tools segment showed a decrease in sales for this period. All
three segments showed increased sales for the nine months ended
August 31, 2020.
Our third quarter sales in our agricultural products segment
were $3,671,000 compared to
$3,194,000 during the same period in
fiscal 2019, an increase of $477,000,
or 14.9%. Our year-to-date agricultural product sales were
$9,695,000 compared to $9,441,000 during the same period in fiscal 2019,
an increase of $254,000, or 2.7%. At
the end of our first quarter of fiscal 2020, our sales were up
13.1% in the agricultural products segment from the prior year. We
were on track for a strong year and then the COVID-19 pandemic hit,
which decreased our sales 15.6% in the second quarter of fiscal
2020 compared to the second quarter of fiscal 2019. Our third
quarter provided another strong sales showing with an increase of
14.9% over the third quarter of fiscal 2019. We attribute the
increased sales success to gained market share for our dump box
product line and improved design of our manure spreader line. The
addition of key employees to our sales and marketing team over the
past year has also contributed to our recent sales success. Gross
margin for our agricultural products segment for the nine-month
period ended August 31, 2020 was
21.3% compared to 15.7% for the same period in fiscal 2019. Our
increased gross margin in fiscal 2020 reflects continuous
improvement initiatives enacted in fiscal 2019 that have increased
our workforce efficiency. Another contributing factor was our
ability to increase our standard gross profit margin by 5% through
price increases, strategic product offerings and product
eliminations.
Our third quarter sales in our modular buildings segment were
$2,319,000 compared to $1,802,000 for the same period in fiscal 2019, an
increase of $517,000, or 28.7%.
Our year-to-date sales in our modular buildings segment were
$5,575,000 compared to $4,382,000 for the same period in fiscal 2019, an
increase of $1,193,000, or 27.2%. The
increase for the quarter and the year-to-date is largely due to
progress on a sizeable research laboratory contract. Gross margin
for the three- and nine- month periods ended August 31, 2020 was 2.4% and 8.6%, respectively,
compared to 20.0% and 14.7% for the same respective periods in
fiscal 2019. The decreased gross margin was in part expected
due to a lower initial profit margin on the sizeable research
laboratory job but has also been amplified with unexpected costs to
finish the project on site.
Our tools segment had sales of $475,000 and $1,667,000 during the three- and nine-month
periods ended August 31, 2020,
respectively, compared to $508,000
and $1,552,000 for the same
respective periods in fiscal 2019, a 6.5% decrease and a 7.4%
increase, respectively. The decrease for the quarter is due a
slowdown of our oil and gas industry and pipe tool business related
to the COVID-19 pandemic. We have not seen signs of recovery yet in
these industries. The increase year-to-date is due to the addition
of a large volume OEM customer that was added to our product
offering in the third quarter of fiscal 2019. This customer has
offered us stability to counteract the unpredictability of oil and
gas industry demands. Gross margin was 17.1% and 21.1% for the
three- and nine-month periods ended August
31, 2020, respectively, compared to 28.0% and 28.4% for the
same respective periods in fiscal 2019. Our decreased gross margin
is due to the addition of labor and overhead as we continue to
fully integrate our OEM customer's product line into our
manufacturing facility.
Net Loss: Consolidated net loss was $(424,000) for the three-month period ended
August 31, 2020 compared to net loss
of $(289,000) for the same period in
fiscal 2019. Our consolidated net loss for the nine months ended
August 31, 2020 was $(1,663,000) compared to $(1,251,000). Despite the increased net loss for
the three and nine months we did show substantial operational
improvement. Our sales were up for the three and nine months ended
August 31, 2020 in all three of our
segments. Our gross profit as a percentage of sales was up 5.8% and
5.6% for the three and nine months ended August 31, 2020, respectively, in our largest
segment, agricultural products. While we did report an increased
net loss for the year, we did incur large, mostly non-recurring
administrative expenses including approximately $133,000 of recruitment expense for management
recruitment, dual management salaries of approximately $68,000 as we transitioned our Chief Executive
Officer and director of materials positions, approximately
$54,000 for the implementation of our
OEM customer's product line in the tools segment, and additional
expense of $280,000 that includes
stock granted to new management staff, payout of employment
agreements and bonus accruals for incentives offered by the
Compensation Committee of the Board for fiscal 2020 targets. We
also had $197,000 of pandemic-related
expense related to employment rewards for keeping our operations
running safely during the COVID-19 pandemic. The additional
COVID-19 expenses were offset with the award of a Paycheck
Protection Program loan of approximately $1.2 million that we believe will be fully
forgiven. We are pleased with the strides we have made
operationally and don't believe the bottom line accurately reflects
the Company's achievements over the past few years. Without the
additional non-recurring administrative expenses, we would have
shown significant bottom line improvement for the nine months ended
August 31, 2020 compared to the same
period in fiscal 2019.
Loss per Share: Loss per basic and diluted share for the
third quarter of fiscal 2020 was $(0.10), compared to loss per basic and diluted
share of $(0.07) for the same period
in fiscal 2019. Loss per basic and diluted share for the nine
months ended August 31, 2020 was
$(0.38), compared to loss per basic
and diluted share of $(0.29) for the
same period in fiscal 2019.
Chairman of the Art's Way Board of Directors, Marc H. McConnell reports, "In a year with much
disruption and many challenges we were encouraged to see several
significant positive trends in the third quarter. Meaningful
top-line growth, margin expansion, and improvements in operational
efficiency are key gains that we seek to continue to realize in the
quarters ahead. While several non-recurring expenses have
surely impacted bottom-line results, we trust that these
investments will help us move the business forward and build
shareholder value long-term.
Our outlook remains cautious and we remain focused on building
the business while managing our balance sheet and expenses in a way
that will help us navigate the uncertain landscape moving
forward."
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 Art's-Way's business. Art's-Way
has three reporting segments: agricultural products; modular
buildings; and tools.
For more information, contact: David King, Chief Executive Officer
712-864-3131
investorrelations@artsway-mfg.com
Or visit our website at www.artsway-mfg.com/
Cautionary Statements
This 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,
including the timing of increased performance; (iv) the impact of
the COVID-19 pandemic; and (v) 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; the
ongoing COVID-19 pandemic; 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.