Art's Way announces fiscal 2017 financial results

Company experiencing softer demand for nearly all of its agricultural products.

Art's Way Manufacturing Co. Inc., a manufacturer and distributor of equipment serving agricultural, research and steel cutting needs, announced its financial results for fiscal 2017.

Consolidated net sales for continuing operations totaled $20.715 million for the 2017 fiscal year -- a 3.9% decrease from consolidated net sales of $21.558 million in fiscal 2016 due to decreased sales in the Modular Buildings and Agricultural Products segments. The company said it is experiencing decreased demand for nearly all of its agricultural products, including modular buildings geared toward agricultural production.

Consolidated gross profit decreased as a percentage of net sales to 19.7% in 2017 from 24.7% in 2016. Measures taken during the year to control costs did not completely offset the impact of declining revenues compared to relatively stable fixed costs. Art's Way said it also experienced decreased efficiencies in production processes due to the introduction of several new products.

Consolidated operating expenses increased 0.9% -- from $5.751 million in 2016 to $5.804 million in 2017. Because the majority of the corporate general and administrative expenses are borne by the Agricultural Products segment, that segment represented $4.173 million of the total consolidated operating expenses, while the Modular Buildings segment represented $806,000 and the Tools segment represented $825,000.

Consolidated net loss for fiscal 2017 was $1.369 million for continuing operations, compared to consolidated net loss of $426,000 in 2016. This increased loss primarily resulted from inefficiencies in the production of new products in the Agricultural Products segment, coupled with soft demand that resulted in lower net sales in the Agricultural Products and Modular Buildings segments.

Loss per basic and diluted share from continuing operations for fiscal 2017 was 33 cents, compared to a loss per share of 10 cents for fiscal 2016.

 

Fiscal 2017

Fiscal 2016

 

-Million $-

Sales

20.715

21.558

Operating income (loss)

(1.722)

(0.431)

Net income (loss)

(1.369)

(0.426)

Earnings per share, basic ($)

(0.33)

(0.10)

Earnings per share, diluted ($) 

(0.33)

(0.10)

Art's Way board chairman Marc H. McConnell reported, "This past year proved to be very challenging for Art's Way and the agricultural sector in general, with low commodity prices driving weak demand for farm equipment and other related products. We continued to battle through that circumstance as well as all of the difficulties that come with it and, despite losses, managed to end the year a healthier company than we were a year ago.

He noted that, during 2017, the company maintained its accelerated pace of product development by launching a new forage box, bale processor and sugar beet harvester, among other products.

"During the year, we also successfully refinanced our debt, reduced borrowings to the lowest level in many years and reduced inventory by over $1.5 million," McConnell added. "We are pleased to report that since the fiscal year-end, we have made progress toward further simplifying the business and reducing debt. In December, we successfully closed on the sale of our snow blower business in Canada, allowing us to focus resources and funds on other key parts of our business. Additionally, we are pleased to have recently entered a contract to sell the former Art's Way Vessels facility in Dubuque, Iowa, scheduled to close in our second fiscal quarter."

He expressed confidence that Art's Way is entering 2018 "on firm footing for an improved year" in a market that is starting to show "modest signs of improvement" from the downturn.

Art's Way manufactures and distributes farm machinery niche products, such as animal feed processing 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. It has three reporting segments: agricultural products, modular buildings and tools.

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