Weird but Effective Stock: Arts-Way Manufacturing Co. Inc. (NASDAQ: ARTW)

On Tuesday, Arts-Way Manufacturing Co. Inc. (NASDAQ: ARTW) started its trading session with the price $2.11 and closed at price of $2.16 by scoring -0.92%. Day range of the stock was $2.1 – $2.22. ARTW stock traded with total volume of 52,464 shares while the average trading capacity remained 223443 shares.  Earnings per share was $-0.39. ARTW has total market capitalization of $9.55M.

Art’s Way Manufacturing Co., Inc. (ARTW) research and steel cutting needs, announces its financial results for the second quarter and year to date fiscal 2020.

Sales:  Our consolidated corporate sales for continuing operations for the three- and six-month periods ended May 31, 2020 were $5,446,000 and $10,472,000, respectively, contrast 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 three months and a $601,000, or 6.1%, increase for the six months. The three-month decrease in revenue isBecause of reduced revenue from our agricultural products section and poor market conditions. We showed increased sales in our modular buildings and tools sections for the three and six months ended May 31, 2020 contrast to same periods of fiscal 2019.

Our second quarter sales in our agricultural products section were $3,071,000 contrast 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 contrast 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 section 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 reduced 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 reduced our orders. We did show about $1,400,000 in increased sales for the six months ended May 31, 2020 contrast to the same period in fiscal 2019 for dump boxes, manure spreaders and service parts, but our largest sales decrease for the six months ended May 31, 2020 contrast to the same period of fiscal 2019 was for UHC reels. The decrease was about $500,000 and was the result of a planned decision to focus on products that offer this section a higher standard gross profit margin. Additionally, our sales of grinders are down about $414,000 for the six months ended May 31, 2020 contrast to the same period of fiscal 2019 as the shift from small farms to larger commercial operations continues to transition.

Net Loss: Consolidated net loss was $(802,000) for the three-month period ended May 31, 2020 contrast to net loss of $(356,000) for the same period in fiscal 2019. Our consolidated net loss for the six months ended May 31, 2020 was $(1,239,000) contrast to $(962,000). Despite the increased net loss for the three and six 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 sections. Our consolidated gross profit was up 3.8% and 3.0% for the three and six months ended May 31, 2020, respectively. 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 sections operate as essential businesses. Without these additional administrative expenses, we would have shown important bottom line improvement for the six months ended May 31, 2020 contrast to 2019.

Loss per Share: Loss per basic and diluted share from continuing operations for the second quarter of fiscal 2020 was $(0.18), contrast to loss per basic and diluted share from continuing operations of $(0.08) for the same period in fiscal 2019.  Loss per basic and diluted share from continuing operations for the six months ended May 31, 2020 was $(0.28), contrast to loss per basic and diluted share from continuing operations of $(0.23) for the same period in fiscal 2019.

Chairman of the Art’s Way Board of Directors, Marc H. McConnell reports, “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 important.  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 influenced 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.”

Its earnings per share (EPS) expected to touch remained 54.10% for this year ARTW has a gross margin of 18.10% and an operating margin of -7.90% while its profit margin remained -7.10% for the last 12 months.

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