Art's Way Manufacturing announced its financial results for fiscal 2023.
Agricultural Products: The Agricultural Products segment's net sales for the 2023 fiscal year were $22,467,000 compared to $20,912,000 during the 2022 fiscal year, an increase of $1,555,000, or 7.4%. Commodity prices in the agricultural market remained strong for the majority of fiscal 2023, and production execution on pent-up backlog led to the increase in sales in fiscal 2023. Incoming orders began to slow near the end of fiscal 2023 as supply chains in the industry began to catch up to demand. Gross profit percentage for the 2023 fiscal year was 29.3% compared to 30.8% for the 2022 fiscal year. Component prices and manufacturing overhead continued to increase from inflationary forces in fiscal 2023, and this, coupled with increased sales of its manure spreader line was the primary driver for the decrease in gross profit percentage. Art’s Way continued to take steps to drive production efficiency in fiscal 2023, most notably with the creation of new fixturing to weld a higher volume of parts in its robotic weld cells. It identified additional ways to improve profit margin through automation and plans to continue to make that a focus in fiscal 2024.
Modular Buildings: The Modular Buildings segment's net sales for the 2023 fiscal year were $7,814,000 compared to $4,734,000 for the 2022 fiscal year, an increase of $3,080,000, or 65.1%. Art’s Way saw an increase in agricultural sales in fiscal 2023 from the continued strength of the agricultural market and also landed a large research project that drove up sales. Gross profit for the 2023 fiscal year was 25.6% compared to 10.5% during the 2022 fiscal year. Sales volume played a key factor in increasing gross profit for fiscal 2023. Art’s Way increased billing rates to combat rising labor and overhead costs from fiscal 2022, which improved margins in fiscal 2023. It also took steps in fiscal 2023 to improve its project management team to drive up profitability on projects and to provide better service to customers. Art’s Way believes its brand and sales lead funnel is providing increased upside sales potential in fiscal 2024.
Discontinued Operations: On June 7, 2023, it announced it would be discontinuing the Tools segment with the last day of normal operations on July 14, 2023. One employee remained employed by the Tools segment through October 2, 2023 to oversee the liquidation process, mainly the sale of remaining inventory and auctioning off machinery and equipment. The discontinued operations generated approximately $661,000 from operating activities for the 12 months ended November 30, 2023, which includes the liquidation of inventory and receivables and approximately $76,000 from investing activities from the sale of equipment. Art’s Way real estate is listed for sale at market value in the Canton, Ohio area. It expects approximately $2,000,000 in net proceeds if this real estate sells. The Tools segment had sales of $2,031,000 for the 12 months ended November 30, 2023 and $2,753,000 for the 12 months ended November 30, 2022. Management believes the liquidation of the Tools segment will allow for investment in technological advances that improve efficiency and margins in the Agricultural Products and Modular Buildings segments, which have historically been more profitable and are believed to present greater long-term stockholder returns.
Net Income: Income from continuing operations for the 2023 fiscal year was $763,000 compared to income from operations of $374,000 in the 2022 fiscal year. Loss from discontinued operations for the 2023 fiscal year was $496,000 compared to $276,000 in the 2022 fiscal year. Consolidated net income was $267,000 and $98,000 for the 2023 and 2022 fiscal years, respectively.
Net income per share: Income per basic and diluted share from continuing operations for the 2023 fiscal year was $0.15, compared to $0.08 for the 2022 fiscal year. Loss per basic and diluted share from discontinued operations for the 2023 fiscal year was $0.10, compared to a loss of $0.06 for the 2022 fiscal year. Consolidated income per basic and diluted share for the 2023 fiscal year was $0.05, compared to $0.02 for the 2022 fiscal year.
Backlog: Art’s Way’s backlog of orders vary on a daily basis. Its Agricultural Products segment had a net backlog of approximately $4,364,000 as of February 1, 2024 compared to $9,366,000 on February 1, 2023. It saw a decline in orders on its fall early order program for the first time in three years and believes high interest rates are affecting how much risk the dealers are willing to take on stock inventory. While Art’s Way believes farmers are still going to be creating strong demand in 2024, it believes it is going to have to be more speculative with its products and have more inventory on hand. The Modular Buildings segment had approximately $6,170,00 of backlog as of February 1, 2024, compared to $4,985,000 on that date in 2023. This segment contracted a $5,300,000 research project in December 2023, which is expected to be mostly completed in fiscal 2024. Art’s Way also has 2 other large research projects with a combined contract price over $6,000,000 that it is expected to land in fiscal 2024. It 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.
