ARMSTRONG, Iowa — Art's Way Mfg. Co. Inc., a diversified, international manufacturer and distributor of equipment serving agricultural, research and steel cutting needs, announces its financial results for the second quarter and year to date of fiscal 2018.
Consolidated corporate sales for continuing operations for the 3- and 6-month periods ended May 31, 2018 were $5,294,000 and $10,660,000 compared to $4,689,000 and $9,111,000 during the same respective periods in fiscal 2017, a $605,000, or 12.9%, increase for the 3 months and a $1,549,000, or 17.0%, increase for the 6 months.
The increases in revenue are primarily due to the increased demand for Art’s Way’s agricultural products and modular buildings. Consolidated gross margin for the 3-month period ended May 31, 2018 was 20.9% compared to 17.3% for the same period in fiscal 2017. Consolidated gross margin for the 6-month period ended May 31, 2018 was 21.2% compared to 21.1% for the same period in fiscal 2017.
These increased gross margins are largely attributable to the agricultural products segment as margins have decreased in the modular building and tools segments.
Income (Loss) from Continuing Operations
Consolidated net (loss) from continuing operations was $(654,000) for the 3-month period and $(1,181,000) for the 6-month period ended May 31, 2018 compared to net (loss) of $(509,000) and $(763,000) for the same respective periods in fiscal 2017.
The increased loss from continuing operations was largely due to the revaluing of Art’s Way’s deferred tax asset at the new income tax rates for the 2018 tax year, which was a loss of approximately $(300,000), along with the liquidation of its Canadian subsidiary.
The company recognized a loss of approximately $(253,000) from the liquidation of the Canadian subsidiary related to the cumulative translation adjustment in the second quarter of fiscal 2018. These expenses were non-cash expenses and one-time adjustments.
Earnings (Loss) per Share from Continuing Operations
(Loss) per basic and diluted share from continuing operations for the second quarter of fiscal 2018 was $(0.16), compared to (loss) per basic and diluted share from continuing operations of $(0.12) for the same period in fiscal 2017.
(Loss) per basic and diluted share from continuing operations for the 6 months ended May 31, 2018 was $(0.28), compared to (loss) per basic and diluted share from continuing operations of $(0.18) for the same period in fiscal 2017.
Chairman of the Art's Way Board of Directors, Marc H. McConnell reports:
"As we have reported over the last few quarters, we are beginning to see some positive signs in the marketplace. We are pleased to report stronger second quarter revenues than a year ago and greater success selling non-strategic inventory than we've had at any point during this agricultural market downturn. We observe that dealers have been more willing to stock wholegoods and feel that is a fair indicator for the direction things are starting to go.
"Amid these improving conditions, we did incur significant charges and expenses that negatively impacted our profitability for the quarter, most significantly an accumulated loss on currency translation of $253,000, prompted by the closure of our Art's Way International entity. We have been very active in reducing our non-strategic inventory by building out material purchased years ago into wholegoods, liquidating wholegoods at the expense of margins, and scrapping material where necessary. These expenses, charges and low-margin sales are the short-term pain of making the proper long-term decisions to simplify our business and position it for success going forward.
"As we look at the second half of the fiscal year, we find ourselves in an ever-improving position but do have more uncertainty than at any point in recent memory. Concerns over tariffs have driven up material costs while simultaneously rattling commodity markets that drive much of our business. Such circumstances make future outcomes hard to predict, but we know that staying focused on quality, customer service, product development, continuous improvement and reducing our borrowings will serve our company best in the long-term. We are making meaningful strides in all of these areas and are building the foundation of what we believe will be a sustainably profitable business in the years ahead."