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 2016.

Sales

Our consolidated corporate sales of continuing operations for the 3 and 9 month period ended Aug. 31, 2016 were $6,431,000 and $17,442,000 compared to $6,514,000 and $20,605,000 during the same respective periods in 2015, a $83,000 or 1.3% decrease for the third fiscal quarter, and a $3,163,000 or 15.4% decrease year-to-date.

The year-to-date decrease in revenue was primarily due to the decreased demand for agricultural products that we have been experiencing for the last year, but was offset by a 43.5% increase in revenue in our modular buildings segment. Quarterly revenue increased modestly at Manufacturing and Metals and was down by approximately 17.5% at Scientific. Consolidated gross margin for the three and nine-month periods ended August 31, 2016 was 19.3% and 25.0% compared to 19.4% and 26.3% for the same respective period in fiscal 2015. 

We recognize the market conditions that negatively impact both our year-to-date results for Manufacturing and Metals, and as a result are focusing on gaining market share and improving our cash flow in the near term by reducing costs, inventories, and debt. In addition, we are actively repositioning our product suite to prepare us for future demand, as well as pursuing initiatives to position Art's Way as an industry leader in customer responsiveness. We believe that the measures we are taking will lead to improved performance even at lower than normal market conditions.  

Income from Continuing Operations

Consolidated net (loss) was $(150,000) for the three-month period ended August 31, 2016, compared to $(716,000) for the same period in 2015.  Consolidated net income (loss) for the nine-month period ended August 31, 2016 was $1,000 compared to $(262,000) for the same period in 2015. The decreased loss in the three- and nine-month periods was largely due to the impairment of goodwill of $618,000 in the third quarter of fiscal 2015, offset by the reduction in revenues for the nine-month period.

Chairman of the Art's Way Board of Directors, Marc H. McConnell reports, "While the headwinds we face in the agricultural equipment industry clearly persist we are seeing signs that the market is stabilizing, as demonstrated by our Manufacturing results for the third quarter.  Achieving profitability remains challenging under these circumstances but, while we remain very cost-focused, we maintain our long-term positive view and make decisions accordingly. 

During the quarter, we announced our intention to discontinue the operations of our Vessels business, a necessary step in positioning our business for the long-term stability and profitability we are pursuing.  We see positive opportunities at both Art's Way Scientific and Ohio Metal that we anticipate will be fruitful in future quarters and we believe that exiting the Vessels business helps us put further resources into growth opportunities in those businesses as well as the agricultural equipment business.

Going forward, we acknowledge that a rebound in the agricultural equipment business will take some time but are doing everything we can to position ourselves for future success by focusing on improving our balance sheet while making quality, customer service, and new product development top priorities for the company."