ARMSTRONG, IOWA — Art’s Way Manufacturing Co., Inc. (NASDAQ: ARTW), a diversified, international manufacturer and distributor of equipment serving agricultural, research and steel cutting needs, today announced its financial results for 2016.
|For the Twelve Months Ended (Continuing Operations, Consolidated)|
|November 30, 2016||November 30, 2015|
|$ 21,558,000||$ 26,326,000|
|Operating Income (Loss)||$ (431,000)||$ (77,000)|
|Net Income (Loss)||$ (426,000)||$ (310,000)|
|EPS (Basic)||$ (0.10)||$ (0.08)|
|EPS (Diluted)||$ (0.10)||$ (0.08)|
|Weighted Average Shares Outstanding|
Sales: Our consolidated net sales for continuing operations totaled $21,558,000 for the fiscal year ended Nov. 30, 2016, which represents an 18.1% decrease from our consolidated net sales from continuing operations of $26,326,000 in 2015. The decrease in revenue is primarily due to decreased sales of our Agricultural Products segment.
As expected, in fiscal year 2016 we experienced decreased demand across the board in Agricultural Products. Our consolidated gross profit decreased as a percentage of net sales to 24.7% in 2016 from 26.3% of net sales in 2015. Measures taken during the year to control our costs helped preserve gross profit but did not completely offset the impact of declining revenues as compared to relatively stable fixed costs.
Our consolidated operating expenses decreased by 17.7%, from $6,989,000 in 2015 to $5,751,000 in 2016. Selective investment was made in new product development during the year, and the results of such efforts are anticipated to contribute to results in 2017. In addition to our work to reduce expenses, we also had a $618,729 non-cash expense recognized in August 2015 for the impairment of goodwill associated with the 2012 acquisition of Universal Harvester.
Loss from Continuing Operations: Consolidated net loss for the 2016 fiscal year was $(426,000) for continuing operations, compared to net loss of $(310,000) in the 2015 fiscal year for continuing operations, an increase of $116,000. This increased loss is primarily a result of soft demand that resulted in lower net sales, but our analysis of the realizability of our Canadian net operating loss tax benefits also contributed to our increased loss. Loss from operations at our discontinued Pressurized Vessels segment was $(598,000) in the 2016 fiscal year compared to $(327,000) in the 2015 fiscal year.
Management Comments: Chairman of the Art’s Way Board of Directors, Marc H. McConnell, reports, “As evidenced by disappointing revenue and profitability results, we continued to face significant headwinds in the industries we serve in the fourth quarter of fiscal 2016 and full fiscal year. Low demand in the fall resulted in very low shipments for October and November, particularly, that could not be overcome by adjustments to our cost structure.
“While our fourth quarter and full fiscal year brought great challenges, we are pleased to report that we have seen an improvement in demand since fiscal year end in all business segments, resulting in a significantly increased backlog that we anticipate will drive improving performance in fiscal 2017.
“We believe this to be driven more by new product introductions, improvements in our customer service strategy, and new customer relationships than an indication of a rebound in the markets we serve. Beet-related equipment demand is increasing and trending well above last year. We are pleased with this progress and feel that we are continually improving our position to benefit from improving markets when that time comes.
“We enter fiscal 2017 with equal measures of cautiousness and optimism and are hopeful that the efforts we’ve made to improve our business during these slow times will be rewarded in the new year.”