ARMSTRONG, IowaArt's Way Mfg. Co. Inc. (NASDAQ: ARTW), a diversified, international manufacturer and distributor of equipment serving agricultural, research and steel cutting needs, reported that its consolidated net sales were $20.7 million during its fiscal year 2017. This represents a 3.9% decrease from $21.6 million reported for fiscal year 2016.

The company said the decrease in revenue is due to decreased sales in its Modular Buildings and Agricultural Products segments. “We are experiencing decreased demand of nearly all our agricultural products, including modular buildings geared toward agricultural production. Our consolidated gross profit decreased as a percentage of net sales to 19.7% in 2017 from 24.7% in 2016. 

“Measures taken during the year to control our costs did not completely offset the impact of declining revenues as compared to relatively stable fixed costs. We also experienced decreased efficiencies in our production process due to the introduction of several new products. Our consolidated operating expenses increased by 0.9%, from $5,751,000 in 2016 to $5,804,000 in 2017. Because the majority of our corporate general and administrative expenses are borne by our Agricultural Products segment, that segment represented $4,173,000 of our total consolidated operating expenses, while our Modular Buildings segment represented $806,000 and our Tools segment represented $825,000.”

Consolidated net loss for the 2017 fiscal year was $(1,369,000) for continuing operations compared to consolidated net loss of $(426,000) in the 2016 fiscal year for continuing operations, an increase in loss of $943,000. According to the company, this increased loss is primarily a result of inefficiencies in the production of new products in our Agricultural Products segment, coupled with soft demand that resulted in lower net sales in our Agricultural Products and Modular Buildings segments.

Chairman of the Art's Way Board of Directors, Marc H. McConnell reports, "This past year proved to be very challenging for Art's Way and the agricultural sector in general with low commodity prices driving weak demand for farm equipment and other related products. We continued to battle through that circumstance as well as all of the difficulties that come with it and, despite losses, managed to end the year a healthier company than we were a year ago.

"During 2017 we maintained focus on building the foundation of what we expect to be a sustainably successful company in the years ahead.  We continued building a culture that emphasizes quality, customer service, and continuous improvement. We maintained an accelerated pace of product development with the launch of a new commercial forage box, a new skidsteer-mounted bale processor, and a new sugar beet harvester, among others. We continued building the team and made decisions at every opportunity with an eye toward building the brand and our position in the industries we serve. Consequently, we added more new dealers than in any year in recent memory while strengthening our relationship with existing dealers.

"During the year we also successfully refinanced our debt, reduced borrowings to the lowest level in many years, and reduced inventory by over $1.5 million. We are pleased to report that since the fiscal year end we have made progress toward further simplifying the business and reducing debt. In December we successfully closed on the sale of our snow blower business in Canada, allowing us to focus resources and funds on other key parts of our business.  Additionally, we are pleased to have recently entered a contract to sell the former Art's Way Vessels facility in Dubuque, IA, scheduled to close in our second fiscal quarter.

"While the new year will still require a lot of work to further reduce debt, sell unneeded assets, reduce inventory, improve operations, and address other legacy challenges, we enter 2018 with confidence that we have put ourselves on firm footing for an improved year. We have a higher backlog for manufactured products than a year ago, new products yet to be introduced, a broader dealer network, and a focus on the customer that we believe will serve us well going forward.  Our company and management team alike have weathered quite a storm, but we feel that we are gaining momentum in a market that is showing modest signs of improvement and are poised to start to feel the impact of the strategic decisions we've made to keep building our foundation during the downturn in order to position ourselves for the future."