Art’s Way Manufacturing Co., Inc. (Nasdaq: ARTW), a diversified, international manufacturer and distributor of equipment serving agricultural, research and steel cutting needs, declares its financial results for the 1st quarter of fiscal 2k19.
Sales: Our combined corporate sales for ongoing operations for the three-month period ended February 28, 2k19 were $4,124,000 difference to $5,366,000 throughout the similar period in fiscal 2k18, a decline of $1,242,000, or 23.1 percent.
The decline in profits is because of reduced demand across our grinder, manure spreader and OEM blower product lines and the liquidation of our Canadian partner from our agricultural products segment.
Some of the reduced demand is because of financial factors such as commodity prices and price raises that we implemented to our customers because of raised material costs, mainly steel. Also, in 2k18 we sold off aged manure spreader inventory at reduced margins, which led to reduced sales of manure spreaders in 2k19. We introduced new manure spreader models to our product line at the end of fiscal 2k18 and have seen some early success with demand for this product in 2k19.
Our OEM blower sales are down as our OEM blower customer elected not to purchase any blowers from us in 2k19 because of slow-moving inventory on their dealer lots related to poor agricultural market conditions.
Our sales in the modular buildings section were up 38.3 percent because of additional lease income from leased modular buildings that were put into service in fiscal 2k18. Our modular building backlog is strong and includes an $8.4M project that is planned to be accomplished entirely in 2k19.
We are continuing to quote an unprecedented amount of modular buildings for our business after the restructuring of our sales and administration teams in 2k18 and are excited for the potential of this segment in the years to come.
Our sales in the tools segment are down 29.4 percent from the 1st quarter of fiscal 2k18 because of the loss of a large volume customer at the end of the 1st quarter of fiscal 2k18.
Merged gross margin for the three-month period ended February 28, 2k19 was 14.7 percent difference to 20.9 percent for the similar period in fiscal 2k18. Our reduced gross margin is attributable to less revenue available to cover fixed overhead from our agricultural products and tools segments.
The modular buildings section is contributing to reduced gross margin through raised direct labor to handle large forthcoming projects and a boost in depreciation on leased modular buildings.
Income (Loss) from Continuing Operations: Merged net (loss) from continuing operations before income taxes was $(781,000) for the three-month period ended February 28, 2k19 difference to a net (loss) from continuing operations before income taxes of $(306,000) for the similar period in fiscal 2k18.
The raised net (loss) from continuing operations is mostly because of less revenue available to covered fixed costs in our agricultural products and tools segments. We have taken steps to reduce costs 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 1st quarter of fiscal 2k19 was $(0.14), a difference to (loss) per basic and diluted share from continuing operations of $(0.13) for the similar period in fiscal 2k18.
Chairman of the Art’s Way Board of Directors, Marc H. McConnell reports, “Results for our fiscal 1st quarter reflected the ongoing headwinds facing the agricultural equipment industry because of various remarkable factors talked about 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 programs, 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.