ARMSTRONG, Iowa — Art's Way Manufacturing Co., Inc. (NASDAQ: ARTW), a diversified, international manufacturer and distributor of equipment serving agricultural, research, water treatment and steel cutting needs, announces its financial results for the three and nine months ended Aug. 31, 2015.
For the Three Months Ended
|Aug. 31, 2015||Aug.31, 2014||Change|
|Operating Income (Loss)||$||(1,004,000)||$||908,000|
|Net Income (Loss)||$||(796,000)||$||558,000|
|Weighted Average Shares Outstanding:|
For the Nine Months Ended
|Aug. 31, 2015||Aug. 31, 2014||Change|
|Operating Income (Loss)||$||(260,000)||$||1,057,000|
|Net Income (Loss)||$||(396,000)||$||553,000|
|Weighted Average Shares Outstanding:|
Sales: Our consolidated corporate sales for the three- and nine-month periods ended Aug. 31, 2015 were $6,886,000 and $21,979,000, respectively, compared to $11,585,000 and $27,291,000 during the same respective periods in 2014, a $4,699,000, or 40.6%, decrease for the quarter and a $5,312,000 or 19.5% decrease year-to-date. The decreases in revenue are primarily due to decreased sales of our agricultural products segments. We are experiencing decreased demand for nearly all agricultural products, but our Universal Harvester reel sales were down nearly 70% during the year-to-date as compared to the prior year. Consolidated gross margin for the three- and nine-month periods ended August 31, 2015 was 18.4% and 25.1%, respectively, compared to 23.3% and 23.4% for the same respective periods in fiscal 2014. The decreased revenue amounts coupled with relatively static fixed costs has put negative pressure on our gross margins both quarterly and year-to-date.
Income: Consolidated net income (loss) was $(796,000) for the three-month period ended Aug. 31, 2015, compared to net income of $558,000 for the same period in 2014. The decrease was primarily due to the decreases in revenue described above and a noncash charge for impairment of the goodwill from our UHC subsidiary, part of the Agricultural Products segment. During the third quarter of fiscal 2015, we evaluated our goodwill for impairment based on economic factors related to that particular product line. As a result of our evaluation, we incurred a noncash impairment charge for the full amount of goodwill associated with our acquisition of the UHC product line of $618,729. The remaining portion of the decreased net income is directly attributable to our decreased sales volume. Consolidated net income (loss) for the nine-month period ended Aug. 31, 2015 was $(396,000) compared to a net income of $553,000 in the same period of 2014. This decrease in income reflects the noncash impairment charge along with decreased operating income across all our segments.
Earnings per Share: Earnings per basic and diluted share for the third quarter ended Aug. 31, 2015 were ($0.20), down from $0.14 from the third quarter of 2014. Earnings per basic and diluted share for the nine months ended Aug. 31, 2015 were ($0.10), compared to $0.14 from the same period in 2014.
Chairman of the Art's Way board of directors, Marc H. McConnell commented, "Our third fiscal quarter of 2015 was challenging to say the least. Several of our business units are experiencing poor market conditions, but most notably in our agricultural products segment. We have implemented various cost cutting measures aimed at scaling our operational size to match the current market conditions. We will continue being proactive in managing through this difficult time. Fortunately, our capital position remains very strong, and we are in the process of adjusting our cost structure in such a way that we will be able to weather the broader agricultural economy's down cycle without significant degradation of capital until the market improves, however long that may take.
“In the meantime, we continue to seek opportunities in the various markets we serve, and have a lot of reason for optimism about projects that may come forth in the months ahead."
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, crop shredding equipment, round hay balers, plows, hay and forage equipment, manure spreaders, reels for combines and swathers, and top and bottom drive augers, as well as pressurized tanks and vessels, 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 four reporting segments: agricultural products; pressurized tanks and vessels; modular buildings; and tools.