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, announces its financial results for the third quarter and year to date of fiscal 2017.
Our consolidated sales for continuing operations for the 3 and 9 month periods ended Aug. 31, 2017 were $6,550,000 and $15,660,000 compared to $6,431,000 and $17,442,000 during the same respective periods in 2016, a $119,000 or 1.8%, increase for the third fiscal quarter and a $1,782,000 or 10.2% decrease for the 9 months. The increases in revenue are primarily due to a slight uptick in the agriculture economy and increased sales in our tools segment. Consolidated gross margin for the 3 month period ended Aug. 31, 2017 was 22.1% compared to 19.3% in the same period in fiscal 2016. Consolidated gross margin for the 9 month period ended Aug. 31, 2017 was 21.5% compared to 25% for the same period in fiscal 2016. The decreased gross margin for the year is largely attributable to new products in the agriculture segment.
Income (Loss) from Continuing Operations
Consolidated net income from continuing operations was $42,000 for the 3 months and $(721,000) of net loss for the 9 months ended Aug. 31, 2017 compared to net loss of $(150,000) and net income of $1,000 for the same respective periods in 2016. The increased income from continuing operations for the third quarter was largely due to the increased gross margins and administrative cost cutting measures. The decreased revenues and depressed gross margins were the major factors in the decreased income for the 9 months ended Aug. 31, 2017 compared to the same period in fiscal 2016.
Earnings (Loss) per Share from Continuing Operations
Earnings per basic and diluted share from continuing operations for the third quarter of fiscal 2017 was $0.01, compared to loss per share from continuing operations of $(0.04) for the same period in fiscal 2016. Loss per basic and diluted share from continuing operations for the 9 month period ended Aug. 31, 2017 was ($0.17), compared to earnings per share from continuing operations of $0.00 for the same period in fiscal 2016.
Chairman of the Art's Way Board of Directors, Marc H. McConnell reports "We are pleased to report meaningful improvement in our operational performance and profitability for the third quarter. Coming off a very challenging first half of the year, we benefitted in the third quarter from many of the strategic investments made in recent quarters. While the agricultural market at large remains depressed we were able to make more of an impact in the markets we serve while maintaining tight cost control and continuing pursuit of our strategic initiatives.
“We remain very focused on simplifying the business, strengthening the balance sheet, and putting resources toward customer service, product quality, and product development. Along these lines we have reduced inventory by $1 million since the end of Q2, announced the closure of our Canadian production facility, reduced overhead expense, and maintained progress on new products under development.
“Quite significantly, we also recently refinanced our debt with Bank Midwest, a lender who understands our business and we are confident will prove to be the right partner for the company going forward. In doing so we were able to greatly improve our liquidity position, reduce our annual debt service by over 60% and establish more favorable covenants.
“These measures and others driven by the same priorities are key to improving our business through this down cycle and providing for strong positioning in preparation for improving conditions in the future.
“Market conditions will continue to remain challenging until circumstances improve for our dealers and end-users whose incomes are largely driven by commodities. That said, our business is stronger than it was at this time last year and we have reason to expect better performance in the fourth quarter than we experienced a year ago. Our backlog is higher, our incoming order activity is up, and the feedback from our sales force is increasingly positive. We will remain both cautious and optimistic as we go forward."