Art's Way Announces Fiscal 2024 Results, Led By Strong Year From Modular Building Segment And Improved Liquidity Despite Difficult AG Conditions

Rhea-AI Summary

Art's-Way Manufacturing (NASDAQ:ARTW) has reported mixed financial results for fiscal 2024. The Agricultural Products segment saw a 34.7% decrease in net sales to $14.66M, driven by below-average commodity prices and decreased demand. However, the Modular Buildings segment showed strong performance with a 25.9% increase in net sales to $9.84M, particularly in research markets.

The company reported consolidated operating income from continuing operations of $461,000, down from $1.53M in 2023. The Agricultural Products segment posted an operating loss of $1.51M, while Modular Buildings achieved operating income of $1.97M. Overall consolidated net income was $307,000, slightly up from $267,000 in 2023.

Current backlog stands at $3.49M for Agricultural Products and $2.39M for Modular Buildings as of February 4, 2025. The company completed the sale of its discontinued Tools segment real estate for $1.8M in October 2024. Management expects improved profitability in 2025, citing positive indicators in dairy and livestock markets and sustained momentum in the Modular Buildings segment.

Positive

• Modular Buildings segment net sales increased 25.9% to $9.84M
• Modular Buildings gross profit margin improved to 32.1% from 25.6%
• Consolidated net income increased to $307,000 from $267,000
• Sale of Tools segment real estate completed for $1.8M
• Company achieved historical low debt levels

Negative

• Agricultural Products segment net sales decreased 34.7% to $14.66M
• Operating income declined to $461,000 from $1.53M
• Agricultural Products segment posted $1.51M operating loss
• Loss per share of $(0.02) compared to income of $0.15 in 2023
• Agricultural Products backlog decreased to $3.49M from $4.36M

Insights

Financial Analyst

Art's Way's fiscal 2024 performance demonstrates the strategic value of its diversification strategy amid challenging agricultural market conditions. The Agricultural Products segment saw revenue decline 34.7% to $14.66 million, with gross margins slightly contracting to 28.3%. However, the Modular Buildings segment delivered exceptional results with 25.9% revenue growth to $9.84 million and improved gross margins of 32.1%, driven by a remarkable 124% increase in research sales.

The company's focus on debt reduction has yielded significant results, reaching historical low debt levels. This strategic achievement positions Art's Way favorably in the current high-interest-rate environment, potentially reducing interest expenses and improving future cash flows. The successful divestiture of the Tools segment, generating $1.8 million from real estate sale and contributing $402,000 in net income, has streamlined operations and strengthened the balance sheet.

Looking ahead, several indicators suggest potential improvement in fiscal 2025:

• Early signs of recovery in dairy and livestock markets could drive demand for agricultural products
• Strong project pipeline in the Modular Buildings segment, despite lower backlog figures
• Operational efficiency improvements and cost reduction initiatives in the Agricultural Products segment
• Reduced interest expense from lower debt levels should positively impact bottom-line performance

While current backlog figures show some weakness ($3.49 million in Agricultural Products, down from $4.36 million), the company's improved cost structure and strong performance in the Modular Buildings segment provide a buffer against continued agricultural market challenges. The focus on innovation and customer experience, combined with reduced overhead expenses and improved liquidity, positions Art's Way for potentially stronger performance in fiscal 2025.

ARMSTRONG, IA / ACCESS Newswire / February 11, 2025 / Art's-Way Manufacturing Co., Inc. (Nasdaq:ARTW) (the "Company"), a diversified, international manufacturer and distributor of equipment serving agricultural and research needs, announces its financial results for fiscal 2024.

Agricultural Products: Our Agricultural Products segment's net sales for the 2024 fiscal year were $14,663,000 compared to $22,467,000 during the 2023 fiscal year, a decrease of $7,804,000, or 34.7%. Commodity prices in the agricultural market dropped below five-year averages in fiscal 2024, which lead to a meaningful decrease in demand for our agricultural products. This demand decrease was not isolated to our company, instigating mass layoffs and major production cuts in fiscal 2024 for many in our industry. Another factor in the sales decrease we experienced was the amount of inventory on dealer lots at the end of fiscal 2023. Many dealers were oversaturated with inventory related to excess demand in 2023 from high commodity prices and supply chains' inability to keep up. This turned drastically in the first quarter of fiscal 2024, as increasing interest rates and declining commodity prices decreased expected net farm income. Gross profit percentage in the Agricultural Products segment for the 2024 fiscal year was 28.3% compared to 29.3% for the 2023 fiscal year. We continued to see inflationary pressure in fiscal 2024. Steel prices rose through the summer of fiscal 2024 but leveled off and dropped near the end of the year. We continued to see price increases from insurance groups and other manufacturing expense companies, which led to an increase in our overhead costs. These factors and the overall sales decrease contributed to the drop in gross profit percentage. We put a focus on cost reductions on two of our highest volume products in fiscal 2024, which we expect to bear fruit in fiscal 2025.

Modular Buildings: Our Modular Buildings segment's net sales for the 2024 fiscal year were $9,836,000 compared to $7,814,000 for the 2023 fiscal year, an increase of $2,022,000, or 25.9%. While our agricultural products building sales suffered under the same adverse market conditions of our Agricultural Products segment, we saw increased demand in the research markets for our modular products, which led to a 124% increase in research sales. Our Modular Building segment's gross profit percentage for the 2024 fiscal year was 32.1% compared to 25.6% during the 2023 fiscal year. Our project performance in fiscal 2024 exceeded expectations as our workforce was consistently under budget on production disciplines. We are also historically more efficient when our shop is busy and perform better on research projects as we often have more contingency built in than traditional ag modulars. Our project management team continued to build on fiscal 2023 strides to increase profitability on projects and to provide better service to our customers. This focus translated to some of the best results we have seen in this operating segment, and we believe our sales funnel leading into fiscal 2025 can deliver similar performance.

Discontinued Operations: On June 7, 2023 we announced we would be discontinuing our Tools segment with the last day of normal operations occurring on July 14, 2023. Just over a year later, on October 21, 2024, we completed the sale of the remaining real estate associated with our Tools segment for $1,800,000. The Company's assets and liabilities from this segment were gone prior to November 30, 2024 and will no longer report discontinued operations in our current year financials moving forward. Our discontinued operations generated approximately $1,271,000 from operating, investing and financing activities mainly related to closing activities and the sale of the real estate. Our Tools segment reported net income of $402,000 for the twelve months ending November 30, 2024 compared to net loss of $496,000 in the same period of fiscal 2023.

Operating income (continuing operations): Our consolidated operating income from continuing operations for the 2024 fiscal year was $461,000 compared to operating income of $1,531,000 for the 2023 fiscal year. Our Agricultural Products segment had an operating loss of $1,510,000, and our Modular Buildings segment had operating income of $1,971,000.

Net income (loss) per share (continuing operations): Loss per basic and diluted share from continuing operations for the 2024 fiscal year was $(0.02), compared to net income of $0.15 per share for the 2023 fiscal year.

Consolidated net income (continuing and discontinued operations): Consolidated net income for the 2024 fiscal year was $307,000 compared to net income of $267,000 in the 2023 fiscal year.

Backlog: The Company's backlog of orders varies on a daily basis. The Company's Agricultural Products segment had a net backlog of approximately $3,486,000 as of February 4, 2025 compared to $4,364,000 on February 4, 2024. The overall agriculture economy remained stagnant for our fall early order program after three years of increased demand. High interest rates and low commodity prices are still affecting demand as we roll into fiscal 2025, however, we have seen better than expected demand for our grinder mixers. The Company's Modular Buildings segment had approximately $2,393,000 backlog as of February 4, 2025, compared to $6,170,000 on that date in 2024. The Modular Buildings segment has strong leads in the engineering phase that we expect to reach contract phase, which could bring us to similar revenue results as were achieved during fiscal 2024. The Company expects that its order backlogs will continue to fluctuate as orders are received, filled, or canceled, and, due to dealer discount arrangements it may enter into from time to time. Accordingly, these figures are not necessarily indicative of future revenue.

Marc McConnell, Chairman, President and CEO of Art's Way states, "Fiscal 2024 was a year of considerable challenges and transition at Art's Way, yet one that demonstrated the benefits of our diversification strategy. Amid a significant down cycle in the farm equipment industry, we experienced a reduction in demand along with our industry peers. Meanwhile we benefited greatly from the tremendous growth and operational performance in our Modular Buildings segment. We responded to challenges in our Agricultural Products segment by focusing closely on cost reductions, reducing debt, and improving cashflow while maintaining our emphasis on quality, innovation, and customer experience. We are confident these measures position the company for improving markets in the future and are pleased to report that our current debt level represents a historical low.

Going forward we have meaningful reason for optimism in both business segments for 2025 and beyond. There are positive indications in the dairy and livestock markets that could drive demand for our products serving those markets. We also carry positive momentum into the new year in our Modular Buildings segment that we believe we can sustain. On a consolidated basis we anticipate that solid demand, reduced overhead expenses, improved liquidity and reduced interest expense from debt reduction will result in improved profitability and cashflow in fiscal 2025."

Art's-Way Manufacturing Co., Inc.

Art's Way Manufacturing is a small, publicly traded company that specializes in equipment manufacturing. For over 65 years, it has been committed to designing and building high-quality machinery for all operations. It has approximately 130 employees across two branch locations: Art's Way Manufacturing in Armstrong, Iowa and Art's Way Scientific in Monona, Iowa. Art's Way manure spreaders, forage boxes, high dump carts, bale processors, graders, land planes, sugar beet harvesters and grinder mixers are designed to optimize production, increase efficiency and meet the growing demands of customers. Art's Way Manufacturing has two reporting segments: Agricultural Products and Modular Buildings.

For more information, contact: Marc McConnell, Chairman, President and Chief Executive Officer.

712-208-8467
investorrelations@artsway-mfg.com
Or visit our website at www.artsway.com/

Cautionary Note Regarding Forward-Looking Statements

This release includes "forward-looking statements" within the meaning of the federal securities laws. Statements made in this release that are not strictly statements of historical facts are forwarding-looking statements. In some cases, forward-looking statements may be identified by the use of words such as "may," "should," "anticipate," "believe," "expect," "plan," "future," "intend," "could," "estimate," "predict," "hope," "potential," "continue," "foresee," or the negative of these terms or other similar expressions. Forward-looking statements in this release generally relate to our expectations regarding: (i) the Company's business position; (ii) potential growth in the Company's business segments and sales, including positive momentum in its Modular Buildings segment; (iii) future results, including but not limited to, expectations regarding demand, the impact of higher interest rates, inventory requirements, revenue and margins; (iv) the Company's beliefs about indications in the dairy and livestock markets and how such indications may affect future demand for the Company's products; (v) the Company's expectations regarding how cost reduction efforts may benefit future performance; (vi) the Company's beliefs regarding backlog, contracting projects, and completion of projects, including revenues resulting therefrom; and (vii) the benefits of the Company's business model and strategy. Statements of anticipated future results are based on current expectations and are subject to a number of risks and uncertainties, including, but not limited to: customer demand for the Company's products; credit-worthiness of its customers; its ability to operate at lower expense levels; its ability to complete projects in a timely and efficient manner in accordance with customer specifications; its ability to renew or obtain financing on reasonable terms; its ability to repay current debt, continue to meet debt obligations and comply with financial covenants; inflation and its effect on our supply chain and demand for its products, domestic and international economic conditions; its ability to attract and maintain an adequate workforce in a competitive labor market; factors affecting the strength of the agricultural sector; the cost of raw materials; unexpected changes to performance by its operating segments; obstacles related to liquidation of product lines and controlling costs; and other factors detailed from time to time in the Company's Securities and Exchange Commission filings. Actual results may differ markedly from management's expectations. The Company cautions readers not to place undue reliance upon any such forward-looking statements. The Company does not intend to update forward-looking statements other than as required by law.

SOURCE: Art's-Way Manufacturing Co.

View the original press release on ACCESS Newswire

FAQ

What caused ARTW's Agricultural Products segment sales to decline in 2024?

ARTW's Agricultural Products sales declined due to below-average commodity prices, decreased demand, dealer inventory oversaturation, and higher interest rates affecting farm income.

How much did ARTW's Modular Buildings segment grow in fiscal 2024?

ARTW's Modular Buildings segment grew 25.9%, with net sales increasing to $9.836M from $7.814M in fiscal 2023, driven by strong research market demand.

What was ARTW's consolidated net income for fiscal 2024?

ARTW reported consolidated net income of $307,000 for fiscal 2024, compared to $267,000 in fiscal 2023.

How much did ARTW receive from the sale of its Tools segment real estate?

ARTW completed the sale of its Tools segment real estate for $1,800,000 on October 21, 2024.

What is ARTW's current backlog as of February 2025?

As of February 4, 2025, ARTW's backlog was $3,486,000 for Agricultural Products and $2,393,000 for Modular Buildings.