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Art’s-Way(ARTW) - 2025 Q1 - Quarterly Report
ARTWArt’s-Way(ARTW)2025-04-10 15:12

Financial Performance - Total sales for the three months ended February 28, 2025, were 5,140,955,adecreaseof10.25,140,955, a decrease of 10.2% compared to 5,723,394 for the same period in 2024[11] - Gross profit for the same period was 1,496,509,representingaslightincreaseof1.81,496,509, representing a slight increase of 1.8% from 1,473,524 in the prior year[11] - The company reported a net loss of 55,757forthethreemonthsendedFebruary28,2025,comparedtoanetlossof55,757 for the three months ended February 28, 2025, compared to a net loss of 465,040 for the same period in 2024, indicating a significant improvement[11] - Consolidated corporate sales for the three-month period ended February 28, 2025, were 5,141,000,adecreaseof5,141,000, a decrease of 582,000, or 10.2%, compared to 5,723,000inthesameperiodoffiscal2024[74]−Consolidatednetlossfromcontinuingoperationsimprovedto5,723,000 in the same period of fiscal 2024[74] - Consolidated net loss from continuing operations improved to 56,000 in Q1 fiscal 2025 from a net loss of 424,000inQ1fiscal2024[80]AssetsandLiabilities−Currentassetstotaled424,000 in Q1 fiscal 2024[80] Assets and Liabilities - Current assets totaled 13,000,700 as of February 28, 2025, slightly down from 13,124,309asofNovember30,2024[9]−Totalliabilitiesdecreasedto13,124,309 as of November 30, 2024[9] - Total liabilities decreased to 8,923,851 as of February 28, 2025, from 9,146,861asofNovember30,2024[9]−Thetotalstockholders′equityasofFebruary28,2025,was9,146,861 as of November 30, 2024[9] - The total stockholders' equity as of February 28, 2025, was 12,080,743, a slight decrease from 12,093,823asofNovember30,2024[9]−TotalassetsasofFebruary28,2025,were12,093,823 as of November 30, 2024[9] - Total assets as of February 28, 2025, were 21,005,000, down from 23,216,000asofFebruary29,2024[69]CashandReceivables−Cashattheendoftheperiodincreasedto23,216,000 as of February 29, 2024[69] Cash and Receivables - Cash at the end of the period increased to 4,133 from 2,485attheendofthesameperiodin2024[17]−Thecompanyexperiencedadecreaseinaccountsreceivable,net,to2,485 at the end of the same period in 2024[17] - The company experienced a decrease in accounts receivable, net, to 1,407,411 from 2,372,876year−over−year[9]−TheCompanyhadapproximately2,372,876 year-over-year[9] - The Company had approximately 1,407,000 in receivables as of February 28, 2025, down from 2,373,000onNovember30,2024,indicatingadecreaseofabout40.72,373,000 on November 30, 2024, indicating a decrease of about 40.7%[38] - Expected credit losses for accounts receivable decreased to 106,236 as of February 28, 2025, from 32,528asofFebruary29,2024[36]InventoryandExpenses−Totalgrossinventoryincreasedto32,528 as of February 29, 2024[36] Inventory and Expenses - Total gross inventory increased to 12,552,629 as of February 28, 2025, from 11,984,915asofNovember30,2024,reflectingariseofapproximately4.7511,984,915 as of November 30, 2024, reflecting a rise of approximately 4.75%[41] - The Company’s net inventory increased to 10,881,082 as of February 28, 2025, compared to 10,327,913asofNovember30,2024,reflectinganincreaseofapproximately5.310,327,913 as of November 30, 2024, reflecting an increase of approximately 5.3%[41] - Engineering expenses decreased to 85,230 from 160,353,areductionof46.8160,353, a reduction of 46.8% compared to the same period last year[11] - Consolidated selling expenses decreased to 350,000 in Q1 fiscal 2025 from 463,000inQ1fiscal2024,representing6.8463,000 in Q1 fiscal 2024, representing 6.8% of sales compared to 8.1%[77] - Administrative expenses decreased to 1,059,000 in Q1 fiscal 2025 from 1,230,000inQ1fiscal2024,representing20.61,230,000 in Q1 fiscal 2024, representing 20.6% of sales compared to 21.5%[79] Credit and Loans - The Company has a 5,500,000 revolving line of credit with Bank Midwest, with a balance of 2,199,437and2,199,437 and 3,300,563 available as of February 28, 2025[47] - The interest rate on the Line of Credit was 8.25% per annum as of February 28, 2025, with a floor set at 6.00%[47] - The Company entered into a new 4,000,000revolvinglineofcreditonMarch27,2025,withaninterestrateof7.54,000,000 revolving line of credit on March 27, 2025, with an interest rate of 7.5% per annum[48] - The Company has a 2,600,000 term loan with Bank Midwest, accruing interest at 7.00%, with monthly payments of 19,648required[49]−TotaltermdebtasofFebruary28,2025,is19,648 required[49] - Total term debt as of February 28, 2025, is 2,066,284, down from 2,094,966onNovember30,2024[56]SegmentPerformance−RevenuefromexternalcustomersfortheModularBuildingssegmentwas2,094,966 on November 30, 2024[56] Segment Performance - Revenue from external customers for the Modular Buildings segment was 2,119,000 for the three months ended February 28, 2025, compared to 1,392,000forthesameperiodin2024,representingagrowthofapproximately52.41,392,000 for the same period in 2024, representing a growth of approximately 52.4%[34] - Agricultural Products segment sales decreased by 1,288,000, or 30.4%, to 2,948,000inQ12025from2,948,000 in Q1 2025 from 4,236,000 in Q1 2024, attributed to rising interest rates and declining commodity prices[75] - Modular Buildings segment sales for Q1 fiscal 2025 were 2,193,000,a47.52,193,000, a 47.5% increase from 1,487,000 in Q1 fiscal 2024[76] - Gross margin for the three months ended February 28, 2025, was 29.1%, an increase from 25.7% in the same period of fiscal 2024[74] - Gross margin for the Agricultural Products segment was 26.7% for Q1 2025, compared to 26.9% in Q1 2024, despite a significant decrease in sales[75] Future Outlook - The company expects destocking in the agricultural market to continue in fiscal 2025, which may increase demand for its products moving forward[75] - The company plans to release product-specific programs in fiscal 2025 to manage inventory levels and unlock cash[75] - The company anticipates two interest rate cuts for fiscal 2025, which may stimulate economic growth[75] - The company expects 1.2millioninnetEmployerRetentionCreditrefunds,althoughthetimingisuncertain[82]OtherFinancialInformation−TheCompanyrecognizedapproximately1.2 million in net Employer Retention Credit refunds, although the timing is uncertain[82] Other Financial Information - The Company recognized approximately 197,000 in revenue from contract liabilities for the first three months of fiscal 2025, down from 560,000inthesameperiodoffiscal2024,adeclineofabout64.8560,000 in the same period of fiscal 2024, a decline of about 64.8%[38] - The Company’s accrued expenses decreased to 856,888 as of February 28, 2025, from 1,303,718asofNovember30,2024,areductionofabout34.31,303,718 as of November 30, 2024, a reduction of about 34.3%[42] - The accrued warranty balance decreased from 295,113 on February 29, 2024, to 225,186onFebruary28,2025[45]−Financeleaseliabilitiestotaled225,186 on February 28, 2025[45] - Finance lease liabilities totaled 701,376 as of February 28, 2025, down from 755,344onNovember30,2024[60]−Operatingleaseright−of−useassetsdecreasedfrom755,344 on November 30, 2024[60] - Operating lease right-of-use assets decreased from 13,774 on November 30, 2024, to 11,546onFebruary28,2025[60]−Thefairvalueoffinancialinstrumentsapproximatestheircarryingamountsduetotheshortmaturityoftheseinstruments[64]−TheCompanyadoptedASU2023−07inQ1offiscal2025,whichdidnothaveasignificantimpactonsegmentdisclosures[30]−Relatedpartytransactionsresultedinanexpenseof11,546 on February 28, 2025[60] - The fair value of financial instruments approximates their carrying amounts due to the short maturity of these instruments[64] - The Company adopted ASU 2023-07 in Q1 of fiscal 2025, which did not have a significant impact on segment disclosures[30] - Related party transactions resulted in an expense of 3,355 for the three months ended February 28, 2025, compared to 3,931forthesameperiodin2024[59]−CapitalexpendituresforthethreemonthsendedFebruary28,2025,were3,931 for the same period in 2024[59] - Capital expenditures for the three months ended February 28, 2025, were 83,000, compared to $281,000 for the same period in fiscal 2024[69]