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ART’S WAY MANUFACTURING ANNOUNCES TRANSITION PLAN IN ANTICIPATION OF RETIREMENT BY CEO CARRIE GUNNERSON

FOR IMMEDIATE RELEASE
March 11, 2020

ART’S WAY MANUFACTURING ANNOUNCES TRANSITION PLAN IN ANTICIPATION OF RETIREMENT BY CEO CARRIE GUNNERSON

 

ARMSTRONG, IOWA, March 11, 2020 – Art’s Way Manufacturing Co., Inc. (Nasdaq: ARTW) (the “Company”), a diversified manufacturer and distributor of equipment serving agricultural, research and steel cutting needs, announces today an anticipated Chief Executive Officer transition from Carrie Gunnerson to David King, to occur in the third quarter of 2020.

Carrie Gunnerson, the Company’s Chief Executive Officer since 2007, has expressed her desire to transition out of her role as Chief Executive Officer of the Company by mid-2020, pending the Company’s identification of a qualified successor.  Following an extensive search by the Board of Directors, on March 5, 2020, the Company entered into an offer letter (the “Offer Letter”) with David King, pursuant to which Mr. King is expected to assume the role of Chief Executive Officer upon the anticipated resignation of Ms. Gunnerson in the third quarter of fiscal year 2020. Mr. King’s anticipated start date is March 23, 2020 and he will serve in an interim role prior to assuming the role of Chief Executive Officer. The Company intends to enter into a formal employment agreement with Mr. King prior to his start date.

 

Mr. King has a proven executive management track record with over 25 years in the agricultural industry. He is currently the Executive Vice President of Sales and Marketing at VES Environmental Solutions, LLC, a designer and manufacturer of energy-efficient agricultural ventilation and lighting systems, a position he has held since November 2019. He was previously Vice President of Sales and Marketing at Salford Group from June 2013 to November 2019, and he held roles in operations, marketing and international business development at Ag Leader Technology from 1996 to June 2013. Mr. King holds a B.S. in Business Administration from Iowa State University and an M.B.A. from Drake University.

 

Chairman of the Art’s Way Board of Directors, Marc H. McConnell reports, “We would like to express our most sincere gratitude and appreciation for Carrie and her dedication and loyalty to Art’s Way since joining the team in 2004.  She worked her way from senior accountant to CFO and eventually to CEO where she led the company through times of growth, acquisitions, and development as an organization. Through the difficult times in the ag economy and the more robust times, she led Art’s Way with a steady hand and was the ultimate stabilizing force that guided us to where we are today.  The example that she set for others of work ethic, professionalism, and dedication has been second to none. During her time Carrie transformed our company in many ways and enhanced the culture of quality, customer service, innovation, and continuous improvement that are the hallmarks of a strong, enduring brand in the farm equipment industry.  We cannot thank Carrie enough for what she brought to Art’s Way and the times that she put the needs of the company ahead of her own to ensure that the company would be a long term success.

 

We wish Carrie the very best in the next chapter of her life and career and also appreciate her role in allowing for us to conduct a thorough process in choosing her successor and a transition plan that will best serve the company.  We are pleased to announce that David King will be assuming the role of Chief Executive Officer upon Carrie’s resignation in the third quarter of 2020.  David brings an extensive skill set and wealth of leadership experience in our industry that we anticipate will provide for growth and long-term success for Art’s Way.  We welcome David and are excited to work with him as we enter a new chapter at Art’s Way.”

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 and Chief Executive Officer

712-864-3131

investorrelations@artsway-mfg.com

Or visit the Company’s 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 the timing of our Chief Executive Officer transition, 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 those 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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ART’S WAY MANUFACTURING ANNOUNCES 16% GROWTH IN REVENUE FOR FISCAL 2019, WITH STRENGTHENING REVENUE IN THE 4TH QUARTER

FOR IMMEDIATE RELEASE
February 4, 2020

ART’S WAY MANUFACTURING ANNOUNCES 16% GROWTH IN REVENUE FOR FISCAL 2019, WITH STRENGTHENING REVENUE IN THE 4TH QUARTER

 

ARMSTRONG, IOWA, February 4, 2020 – 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 fourth quarter and fiscal 2019.

  For the Three Months Ended
(Continuing Operations Consolidated)
  November 30, 2019 November 30, 2018
Sales $ 7,514,000 $ 3,787,000
Operating (Loss) $               (100,000) $               (1,769,000)
Net (Loss) $               (168,000) $               (1,388,000)
EPS (Basic) $                        (0.04) $                        (0.33)
EPS (Diluted) $                        (0.04) $                        (0.33)
         
Weighted Average Shares Outstanding:        
Basic   4,298,012   4,216,640
Diluted   4,298,012   4,216,640

 

  For the Twelve Months Ended
(Continuing Operations Consolidated)
  November 30, 2019 November 30, 2018
Sales $ 22,889,000 $ 19,727,000
Operating (Loss) $               (1,497,000) $               (3,095,000)
Net (Loss) $               (1,420,000) $               (3,336,000)
EPS (Basic) $                        (0.33) $                        (0.80)
EPS (Diluted) $                        (0.33) $                        (0.80)
         
Weighted Average Shares Outstanding:        
Basic   4,227,375   4,202,836
Diluted   4,227,375   4,202,836

 

Sales:  Our consolidated net sales for continuing operations totaled $22,889,000 for the 2019 fiscal year, which represents a 16.0% increase from our consolidated net sales of $19,727,000 for the 2018 fiscal year. Our Agricultural Products segment’s sales revenue for the 2019 fiscal year was $13,508,000 compared to $14,344,000 during the 2018 fiscal year, a decrease of $836,000, or 5.8%.  We saw decreased demand for our portable feed equipment in the 2019 fiscal year.  Continued struggles in the dairy market, coupled with market shifts to large cattle operations from the traditional small cattle farmer also contributed to this decrease.  Additionally, we also saw a decrease in sales of UHC reels year over year due to a loss of our primary reel customer after a strategic decision to not offer such customer discounted prices at unfavorable margins to us.  Moreover, OEM blower revenue in the 2018 fiscal year was not repeated in the 2019 fiscal year 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.  While we saw decreased demand in the above product lines, we saw increased demand in dump boxes, land maintenance equipment, bale processors and beet equipment.

 

Despite these challenges, the 2019 fiscal year ended with our strongest fourth quarter since the 2014 fiscal year.  At the end of our third quarter of the 2019 fiscal year our year to date sales in our Agricultural Products segment were down 18.4% year over year, but we ended the 2018 fiscal year with only a 5.8% decrease year over year.  Our Agricultural Products segment’s sales for the fourth quarter of the 2019 fiscal year were up 59% over the  fourth quarter of the 2018 fiscal year.

 

Our Modular Buildings segment’s net sales for the 2019 fiscal year were $7,260,000 compared to $3,109,000 for the 2018 fiscal year, an increase of $4,151,000, or 133.5%.  The increase in sales was attributable to increased operating lease activity in 2019 and progress on a $8.5 million project. Additionally, our Modular Buildings segment’s sales for the fourth quarter of the 2019 fiscal year were up 59% over the fourth quarter of the 2018 fiscal year.

 

Our Tools segment’s net sales for the 2019 fiscal year were $2,121,000 compared to $2,274,000 for the 2018 fiscal year, a decrease of $153,000, or 6.7%.  The decrease is primarily due to the loss of a large volume customer near the end of the first quarter of the 2018 fiscal year.  This segment began integration of an OEM product line at the end of the fourth quarter of the 2019 fiscal year that is expected to more than make up for the loss of this customer. Our Tools segment’s sales for the fourth quarter of the 2019 fiscal year were up 24% over the fourth quarter of the 2018 fiscal year.

 

Loss from Continuing Operations:  Consolidated net loss for the 2019 fiscal year was $(1,420,000) for continuing operations compared to net loss of $(3,336,000) in the 2018 fiscal year for continuing operations, a decrease in loss of $1,916,000. The decreased 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 expected loss on the sale of the property.  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.  Moreover, in the fourth quarter of the 2018 fiscal year, management decided to place increased reserves on inventory resulting in expense of approximately $543,000.  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 bottom line in the 2018 fiscal year.  In the fourth quarter of 2019, we placed additional reserves of approximately $240,000 on our Universal Harvester Company inventory due to the loss of a major customer on that product line.  This additional noncash expense wiped out what would have been a profitable consolidated fourth quarter for us.

Loss per Share from Continuing Operations: Loss per basic and diluted share from continuing operations for the 2019 fiscal year was ($0.33), compared to loss per basic and diluted share from continuing operations of $(0.80) for the same period in the 2018 fiscal year.

Chairman of the Art’s Way Board of Directors, Marc H. McConnell reports “After a year that has been quite challenging we are quite encouraged to see significant improvement in the fourth quarter in revenue, profitability, and backlog.   These outcomes are most attributable to a large ongoing project at Art’s Way Scientific as well as meaningful improvement in demand for farm equipment. This improvement in demand is driven by favorable commodity prices coupled with new products being well-received by the market.

 

Despite continued difficulty achieving profitability for the full year we are pleased to have reduced bank borrowings by 20%, reduced aged inventory significantly, added key members to our management team, built a recurring revenue stream via our lease business at Art’s Way Scientific, introduced multiple new products, added potentially-impactful new customers, made significant operational improvements via an embrace of lean principles, enhanced customer service functions, and improved product quality, among other achievements.

 

For several years we have kept our focus on quality, customer service, innovation, and continuous improvement in our operations and are now beginning to feel the benefit of these efforts undertaken during the difficult times those in our industry have experienced. I am confident that this proactivity is helping to drive gains we are making in the business.  We have continued to take a long-term approach and have made decisions to best position the business to benefit from more favorable conditions in the future.

 

As we look ahead to 2020 we are pleased to have a strong backlog of work in front of us  in all segments and expect that this strong demand will continue as international trade deals are finalized, commodity prices continue to rebound, and a degree of certainty and stability returns to the agricultural industry at large.”

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 Art’s-Way’s business. Art’s-Way 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 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; and (iv) the timing of increased performance; 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; 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.

ART’S WAY MANUFACTURING ANNOUNCES THIRD QUARTER AND YEAR TO DATE FISCAL 2019 FINANCIAL RESULTS

FOR IMMEDIATE RELEASE
October 9, 2019

ART’S WAY MANUFACTURING ANNOUNCES THIRD QUARTER AND YEAR TO DATE FISCAL 2019 FINANCIAL RESULTS

 

ARMSTRONG, IOWA, October 9, 2019 – 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.

-END-

ART’S WAY MANUFACTURING ANNOUNCES SECOND QUARTER AND YEAR TO DATE FISCAL 2019 FINANCIAL RESULTS

FOR IMMEDIATE RELEASE
July 10, 2019

ART’S WAY MANUFACTURING ANNOUNCES SECOND QUARTER AND YEAR TO DATE FISCAL 2019 FINANCIAL RESULTS

 

ARMSTRONG, IOWA, July 10, 2019 – 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.

-END-

ART’S WAY MFG WELCOMES TERRITORY DEVELOPMENT MANAGER AND DIRECTOR OF MANUFACTURING

FOR IMMEDIATE RELEASE

August 1, 2019

                                               

ART’S WAY MANUFACTURING WELCOMES TERRITORY DEVELOPMENT MANAGER AND DIRECTOR OF MANUFACTURING

ARMSTRONG, IOWA, August 1, 2019 – Art’s Way Manufacturing Co., Inc. (NASDAQ: ARTW), a diversified, manufacturer and distributor of equipment serving agricultural, research and steel cutting needs, welcomes Paul Link as its Territory Development Manager and Brian Wrightsman as its Director of Manufacturing.

Paul is a graduate of North Dakota State College of Science with Bachelor of Science degrees in Graphic Communications and Marketing.  Paul has over 24 years of experience in sales with most of this time in a management role.  Most recently, Paul was the US National Sales Manager at Buhler Industries located in Winnipeg, MB.  Paul will report to the CEO Carrie Gunnerson and will be responsible for the development of independent reps, improvement of Art’s Way’s dealer relationships, and for driving sales goals within Art’s-Way.

Paul will serve as a strong complement to Art’s Way’s Director of Manufacturing, Brian Wrightsman, who joined Art’s Way in October of 2018.  Brian studied Mechanical Engineering at South Dakota State University and came to Art’s Way with 25 years of manufacturing and engineering experience.  Brian’s efforts have been focused on improving plant efficiency through his knowledge of lean manufacturing.  Continuous Improvement projects with a goal of $1 million of savings for the fiscal year 2019 are underway under Brian’s direction.  Art’s Way continues to invest in talent and operational efficiency to be prepared for improved economic conditions.

Chairman of the Art’s Way Board of Directors, Marc H. McConnell reports, “We are pleased to welcome both Paul and Brian to our management team. Each brings significant experience and expertise that will enhance our ability to serve our customers and shareholders alike in the years ahead.”

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.

-END-

ART’S WAY MANUFACTURING ANNOUNCES FIRST ANNUAL DEALER DAY

Art’s Way Manufacturing’s

First Annual Dealer Day

Navigating the path through tough times in the agriculture industry, Art’s Way has been working very hard at trying to downsize the amount of debt the company has. As the interaction with end users is swiftly changing, the Art’s Way Board of Directors recently decided to change the outreach of our business. Instead of attending the large national farm shows, we will be expanding our presence through smaller shows. On March 11th-12th, 2019, we hosted our First Annual Dealer Day. With hundreds of dealers around the United States and even across the world, we limited our invitation to the dealers who account for about half of our business generated from selling whole goods. To begin our event, we welcomed new dealers as well as ones who have conducted business with us for decades.

The Big News: We introduced four new products over our Dealer Day event. Now featuring: 8215 Grinder Mixer, 7240 Forage Box, X Series Manure Spreaders, & The Hammer Blower!

Our new 8215 Grinder Mixer features the largest capacity on the market! This machine features a 215 bushel tank and the ability to mix ingredients without the mill.

The demand from customer harvesters for forage units lead us to building the 7240 Forage Box. This rugged 40 foot forage box is a semi-mounted trailer than unloads in under one minute.

Our New X Series Manure Spreaders feature more than double the capacity of our previous models! These manure spreaders feature a guillotine style slop gate that allows control of material through the beaters. This gives us the superior spread pattern to our competition.

Our last newly released product is the Hammer Blower. The Hammer Blower is a multifunctional unit that works perfectly for silo feeding and bagging.

During our “Dealer Day” event, the engineers for the four new pieces of equipment each gave a presentation to educate the dealers about our new product lines. Along with the engineers speaking, we were fortunate enough to have a dealer who specialized in each product speak about it as well. It was important for us to have long-time dealers educate the newer dealers to spread the knowledge they gained over the years.

New Dealer Portal: To meet the needs of our dealers and their customers, we have created a new online dealer portal system. This new portal allows dealers to search through inventory, check manuals, obtain pricing, and place orders online.  The movement to having all resources readily available online lead us to developing this system for the convenience of our dealers. This new online system also allows for the dealers to check on the status of their order so they can keep track of their customer’s items. Along with the new online ordering system, we have updated our warranty registration and process. Registration and claims can both be filed online as well as tracking a claim once it has been placed.

Internal Investments: With the importance of being completely digital at an all time high, we recently invested about $250,000 into improving the IT department in our facility. Customers now have the option to sign up for automatic invoicing, receive bi-monthly account balance updates, and any open invoices will be available to view.

Advertising: To keep up with the competition, we highly recommend that our dealers create advertisements and run them so customers can learn about what products we have to offer. Co-Op Advertising is a program that we stress dealers use as a resource for these advertisements. Dealers advertising budgets vary as it bases off one percent of their whole goods sales from the previous year. We have two different employees who work on advertisements that are available for the dealers’ utilization whenever they need it.

Concluding Our Successful Event: Our First Annual Dealer Day exceeded our expectations and we cannot wait to host this event again in the future. We believe that connecting with our dealers and getting new product information to them first hand will ultimately bring in more end users and lead to higher revenues for the company overall.

ART’S WAY MANUFACTURING ANNOUNCES FIRST QUARTER FISCAL 2019 FINANCIAL RESULTS

FOR IMMEDIATE RELEASE

April 8, 2019

ART’S WAY MANUFACTURING ANNOUNCES FIRST QUARTER FISCAL 2019 FINANCIAL RESULTS

ARMSTRONG, IOWA, April 8, 2019 – 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 first quarter of fiscal 2019.

For the Three Months Ended
(Continuing Operations, Consolidated)
February 28, 2019February 28, 2018
Sales$4,124,000$5,366,000
Operating (Loss)$(723,000)$(309,000)
Net (loss)$ (606,000)$(527,000)
EPS (Basic)$(0.14)$(0.13)
EPS (Diluted)$(0.14)$(0.13)
Weighted Average Shares Outstanding:
Basic4,243,7074,170,818
Diluted4,243,7074,170,818

Sales: Our consolidated corporate sales for continuing operations for the three-month period ended February 28, 2019 were $4,124,000 compared to $5,366,000 during the same period in fiscal 2018, a decrease of $1,242,000, or 23.1%.  The decrease in revenue is due to decreased demand across our grinder, manure spreader and OEM blower product lines and the liquidation of our Canadian subsidiary from our agricultural products segment.  Some of the decreased demand is due to economic factors such as commodity prices and price increases that we implemented to our customers due to increased material costs, mainly steel.  Also, in 2018 we sold off aged manure spreader inventory at decreased margins, which led to decreased sales of manure spreaders in 2019.  We introduced new manure spreader models to our product line at the end of fiscal 2018 and have seen some early success with demand for this product in 2019.  Our OEM blower sales are down as our OEM blower customer elected not to purchase any blowers from us in 2019 due to slow-moving inventory on their dealer lots related to poor agricultural market conditions.  Our sales in the modular buildings segment were up 38.3% due to additional lease income from leased modular buildings that were put into service in fiscal 2018.  Our modular building backlog is strong and includes a $8.4 million project that is scheduled to be completed entirely in 2019.  We are continuing to quote an unprecedented amount of modular buildings for our business after the restructuring of our sales and management teams in 2018 and are excited for the potential of this segment in the years to come.  Our sales in the tools segment are down 29.4% from the first quarter of fiscal 2018 due to the loss of a large volume customer at the end of the first quarter of fiscal 2018.  Consolidated gross margin for the three-month period ended February 28, 2019 was 14.7% compared to 20.9% for the same period in fiscal 2018.  Our decreased gross margin is attributable to less revenue available to cover fixed overhead from our agricultural products and tools segments.  The modular buildings segment is contributing to decreased gross margin through increased direct labor to handle large upcoming projects and an increase in depreciation on leased modular buildings. 

Income (Loss) from Continuing Operations:  Consolidated net (loss) from continuing operations before income taxes was $(781,000) for the three-month period ended February 28, 2019 compared to net (loss) from continuing operations before income taxes of $(306,000) for the same period in fiscal 2018.  The increased net (loss) from continuing operations is primarily due to less revenue available to covered fixed costs in our agricultural products and tools segments.  We have taken steps to reduce expenses as a result of the soft market conditions for our agricultural products segment, while continuing to invest in product development and improvements to support our customers for the long term. 

Operations: (Loss) per basic and diluted share from continuing operations for the first quarter of fiscal 2019 was $(0.14), compared to (loss) per basic and diluted share from continuing operations of $(0.13) for the same period in fiscal 2018. 

Chairman of the Art’s Way Board of Directors, Marc H. McConnell reports, “Results for our fiscal first quarter reflected the ongoing headwinds facing the agricultural equipment industry due to a variety of significant factors discussed over many preceding quarters.  Low commodity prices, trade concerns, severe uncertainty, elevated steel prices, and other factors have created an environment not conducive to robust equipment sales activity for our company and peers alike.  We have continued to position the company to withstand these conditions going forward by continuing to reduce inventory, reduce borrowings, simplify operations, support lean initiatives, and develop compelling new product offerings. We will continue to focus on these fundamentals and feel that we are improving our business as a result of our efforts, even if present day circumstances don’t yet allow that to translate to the bottom line.

“We are enthused to have significant backlog in front of us at our Art’s Way Scientific business that will impact future quarters, as well as other positive opportunities we are pursuing in our Tools business that may also impact our performance during the fiscal year. On all fronts we remain committed to improving our operations every day and continuing to position ourselves for the long-term, sustainable profitability that has proven elusive during these difficult few years.”

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.

-END-

ART’S WAY MANUFACTURING ANNOUNCES AWARD OF $8.4 MILLION PROJECT

FOR IMMEDIATE RELEASE

February 19, 2019

                                               

ART’S-WAY MANUFACTURING ANNOUNCES AWARD OF $8.4 MILLION PROJECT

ARMSTRONG, IOWA, February 19, 2019 – 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 modular buildings segment has entered into a contract worth $8.4 million for the completion of a biomedical facility in Frederick, Maryland.  The project consists of five modular units that make up a 5,430 square foot facility.

President of Art’s Way Scientific, Dan Palmer, reports “We are very pleased to have the opportunity to complete this project.

“This will be our third significant modular laboratory project for this client.  We are delighted to be able to bring back together the same team of construction managers, architectural, structural, and mechanical engineers and subcontractors that have supported our manufacturing plant in successfully completing the previous high value, high quality and on time solutions to support this client’s important research requirements.  We are expecting completion of this project by the end of our 2019 fiscal year.”

About Art’s Way Scientific, Inc. –Buildings For Science –  

Art’s Way Scientific, Inc. is a wholly owned subsidiary of Art’s-Way Manufacturing Co., Inc. and is the recognized leading supplier of modular laboratories for biocontainment, animal husbandry science, public health and security requirements. Art’s Way Scientific custom designs, manufactures, delivers, and installs laboratories and research facilities to meet customers’ critical requirements. For more information, visit our website at www.buildingsforscience.com.

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 our 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 the timing of project completion, 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, our ability to complete projects in a timely and efficient manner in accordance with customer specifications, 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.

-END-

ART’S WAY MANUFACTURING ANNOUNCES FISCAL 2018 FINANCIAL RESULTS

FOR IMMEDIATE RELEASE

February 4, 2019                                            

ART’S WAY MANUFACTURING ANNOUNCES FISCAL 2018 FINANCIAL RESULTS

ARMSTRONG, IOWA, February 4, 2019 – 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.

ART’S WAY MANUFACTURING ANNOUNCES THIRD QUARTER AND YEAR TO DATE FISCAL 2018 FINANCIAL RESULTS

FOR IMMEDIATE RELEASE

October 8, 2018

                                               

ART’S WAY MANUFACTURING ANNOUNCES THIRD QUARTER AND YEAR TO DATE FISCAL 2018 FINANCIAL RESULTS

ARMSTRONG, IOWA, October 8, 2018 – 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 of fiscal 2018.

 

For the Three Months Ended
(Continuing Operations, Consolidated)
August 31, 2018 August 31, 2017
Sales $ 5,280,000 $ 6,550,000
Operating Income (Loss) $ (559,000) $ 109,000
Net Income (Loss) $ (767,000) $ 42,000
EPS (Basic) $ (0.18) $ 0.01
EPS (Diluted) $ (0.18) $ 0.01
Weighted Average Shares Outstanding:
Basic 4,209,445 4,161,421
Diluted 4,209,445 4,161,421

 

For the Nine Months Ended
(Continuing Operations, Consolidated)
August 31, 2018 August 31, 2017
Sales $ 15,940,000 $ 15,660,000
Operating (Loss) $ (1,326,000) $ (965,000)
Net (Loss) $ (1,948,000) $ (721,000)
EPS (Basic) $ (0.46) $ (0.17)
EPS (Diluted) $ (0.46) $ (0.17)
Weighted Average Shares Outstanding:
Basic 4,198,250 4,148,6966
Diluted 4,198,250 4,148,966

 

Sales: Our consolidated corporate sales for continuing operations for the three- and nine-month periods ended August 31, 2018 were $5,280,000 and $15,940,000, respectively, compared to $6,550,000 and $15,660,000 for the same respective periods in fiscal 2017, a $1,270,000 or 19.4%, decrease for the three months and a $280,000, or 1.8%, increase for the nine months. The decrease for the three months is primarily due to decreased sales in our agricultural products and tools segments.  More specifically, our agricultural products segment had approximately $720,000 of passthrough revenue from self-propelled beet harvester equipment in 2017, which was not replicated in 2018.  We also note that we experienced a $572,000 reduction in year-over-year revenue attributable to activity from our now-closed Art’s-Way International subsidiary.  Despite this, our consolidated corporate sales for the nine-months have increased.  Adjusted for these items, our consolidated corporate sales for the nine-months are up almost $1,600,000 in 2018, as we shift our focus to Art’s-Way produced products.  Our tools segment’s decrease in sales year over year was the result of losing a major customer.  We have, however, been able to achieve higher gross profit margins with new tools customers.  Consolidated gross margin for the three-month period ended August 31, 2018 was 22.3% compared to 22.1% for the same period in fiscal 2017.  Consolidated gross margin for the nine-month period ended August 31, 2018 was 21.6% compared to 21.5% for the same period in fiscal 2017.  These increased gross margins are largely attributable to increased labor efficiency in our agricultural products segment, as margins have decreased in our modular buildings and tools segments.  While our gross margins are up in the agricultural products segment, gross margins have also received downward pressure from the liquidation of non-strategic inventory, including our snow blower line from our Canadian subsidiary, which was sold off at cost.  The decrease in gross margins for our modular buildings segment is due to increased deprecation expense from utilizing leased assets in our operations.  The decrease in gross margins for our tools segment is due to lower revenues with less variable margin to absorb fixed costs.

 

Income (Loss) from Continuing Operations:  Consolidated net (loss) from continuing operations was $(767,000) for the three-month period and $(1,948,000) for the nine-month period ended August 31, 2018 compared to net income (loss) of $42,000 and $(721,000) for the same respective periods in fiscal 2017.  The increased net loss for the three months ended August 31, 2018 was due to the discovery of mold in our West Union facility.  We estimated approximately $252,000 of expense for mold remediation and $67,000 in damaged inventory, and we recognized an impairment of approximately $199,000 of the asset held for lease.  The West Union facility is currently unoccupied and is listed for lease.  Our net (loss) from continuing operations includes carrying costs of this facility.  The increased net (loss) from continuing operations for the nine-months was largely due to the revaluing of our deferred tax asset at the new income tax rates for the 2018 tax year, which resulted in a loss of approximately $300,000.  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 fiscal 2018.  These expenses were non-cash expenses and one-time adjustments.  Despite the continued losses, we have reduced our total bank debt by approximately $532,000 since year end.  Our margins are generally depressed from historic levels because low volumes caused by market conditions continue to impact our ability to cover our fixed costs.  Margins are also impacted as we continue to right-size our inventories to focus on products we feel our customers will want to purchase in the future.

Earnings (Loss) per Share from Continuing Operations: (Loss) per basic and diluted share from continuing operations for the third quarter of fiscal 2018 was $(0.18), compared to income per basic and diluted share from continuing operations of $0.01 for the same period in fiscal 2017.  (Loss) per basic and diluted share from continuing operations for the nine months ended August 31, 2018 was $(0.46), compared to (loss) per basic and diluted share from continuing operations of $(0.17) for the same period in fiscal 2017.

Chairman of the Art’s Way Board of Directors, Marc H. McConnell reports, “Despite expecting profitable results for this quarter earlier in the year, we are disappointed to report that our business has been impacted significantly by multiple factors that ultimately drove negative results.

 

“As discussed in previous earnings calls, we have been significantly affected by the announcement of tariffs aimed at correcting trade imbalances.  We have been absorbing significant increases in material costs that we were not able to immediately recapture by re-pricing our products.  We also experienced extended lead times and disruption to the flow of purchased material and components needed to produce our whole goods.   This disruption along with other operational inefficiencies, including difficulty hiring qualified labor, led to substandard output despite incurring overtime and other costs associated with trying to overcome productivity issues.

 

“In addition to these difficulties, we also experienced unforeseen expenses associated with mold discovered at our previously closed facility in West Union which we have been trying to sell for quite some time. This same event also led to us writing off affected inventory at the facility as well as taking an impairment on the book value of the building itself.

 

“Despite the many challenges of the quarter and year, we remain committed to continuing to simplify our business, improving our balance sheet health, and reducing our borrowings while also executing on the key strategic and competitive priorities of quality, customer service, product development, and continuous improvement.  We made progress during the quarter on these fronts and will continue to make the proper long-term decisions that will help us position the company well for future improvement in market conditions.

 

“The agricultural equipment industry remains in upheaval due to tremendous uncertainty in the commodity marketplace and we are consequently seeing a conservative approach by our dealers to ordering and stocking inventory.  While this is giving us very little visibility of forward demand, we do expect margin expansion due to significant price realization, less liquidation activity, and improved efficiencies.

 

“In our modular buildings segment, we are pleased to report backlog growth and have invested in building our management team and production capacity accordingly.  We are seeing improving efficiency and margins on our products as well as a growing lease fleet that is providing the recurring revenue stream we have been seeking to build.  We expect the business to continue to build momentum and contribute going forward.  In our tools segment, we are experiencing soft demand but improving margins, ultimately resulting in positive earnings that has been steady if not overwhelming.

 

“Going forward we remain focused on continuing to work on strategic objectives despite market conditions.   We have operational improvements to make and are in the midst of recruiting key personnel to enhance our production and operations expertise.  We know that we ultimately must increase production capacity to achieve the performance levels we expect from the business. Until that capacity is met with different market conditions it will remain difficult for us to achieve consistent profitability. From here forward we will discontinue the quarterly investor calls so that we may put the energy and resources that have gone into preparing for and conducting the call into improving the operational performance of the business. Concurrent with this change we intend to enhance our earnings releases to be more descriptive than they have been previously.”

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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