ART'S WAY'S AG EQUIPMENT SALES DECLINE 15.6% IN 2Q20
Jul. 20, 2020
Farm Equipment reports:
On July 9, Art's Way Mfg. reported consolidated sales for the 3 months and 6 months ended May 31, 2020 were $5,446,000 and $10,472,000, respectively, compared to $5,747,000 and $9,871,000 during the same respective periods in fiscal 2019, a $301,000, or 5.2%, decrease for the 3 months and a $601,000, or 6.1%, increase for the 6 months.
The company said the 3 month decrease in revenue was due to decreased revenue from its agricultural products segment and poor market conditions. "We showed increased sales in our modular buildings and tools segments for the 3 and 6 months ended May 31, 2020 compared to same periods of fiscal 2019," the company said.
"Our second quarter sales in our agricultural products segment were $3,071,000 compared to $3,637,000 during the same period of fiscal 2019, a decrease of $566,000, or 15.6%. Our year-to-date agricultural product sales were $6,023,000 compared to $6,247,000 during the same period in fiscal 2019, a decrease of $224,000, or 3.6%. While sales in our agricultural products segment were up 13.1% at the end of our first quarter in fiscal 2020, our second quarter included new challenges, most of which were driven by the COVID-19 pandemic.
"We saw decreased orders through the second quarter as restaurants across the nation were forced to close their doors in response to the pandemic. The restaurant closings reduced demand for agricultural products, which in turn decreased our orders. We did show approximately $1,400,000 in increased sales for the six months ended May 31, 2020 compared to the same period in fiscal 2019 for dump boxes, manure spreaders and service parts, but our largest sales decrease for the 6 months compared to the same period of fiscal 2019 was for UHC reels.
"The decrease was approximately $500,000 and was the result of a strategic decision to focus on products that offer this segment a higher standard gross profit margin. Additionally, our sales of grinders are down approximately $414,000 for the 6 months compared to the same period of fiscal 2019 as the shift from small farms to larger commercial operations continues to transition," the company said.
Art's Way's consolidated net loss was $802,000 for the 3 month period ended May 31, 2020 compared to net loss of $356,000 for the same period in fiscal 2019. The company reported its consolidated net loss for the 6 months ended May 31, 2020 was $1,239,000 compared to $962,000.
"Despite the increased net loss for the 3 and 6 months we did show substantial operational improvement. Our sales were up for the three and six months ended May 31, 2020 in two out of three segments. Our consolidated gross profit was up 3.8% and 3% for the 3 and 6 months ended May 31, 2020, respectively," the company said. "We were heavy on administrative expenses related to finding and training new management staff, implementing an OEM product line and properly rewarding our employees for their continued service during the pandemic as our segments operate as essential businesses. Without these additional administrative expenses, we would have shown significant bottom line improvement for the 6 months compared to 2019."
Chairman of the Art's Way Board of Directors, Marc H. McConnell reported that "The second quarter brought challenges that none of us could have foreseen. The disruptions to labor availability and incoming order activity brought on by COVID-19 were significant. Despite this we managed to continue making meaningful operational improvements during the quarter and feel that we are weathering the storm well under these circumstances.
"Our bottom line for the quarter was negatively impacted by non-recurring administrative expenses, thus obscuring some of the improvements we have made. Going forward we are monitoring market conditions closely and will make any adjustments needed as we navigate through these uncertain times while focusing on the fundamentals that will make enhance our market position in the long term."