ARMSTRONG, Iowa — Art’s Way Mfg. Co., a diversified, international manufacturer and distributor of equipment serving agricultural, research and steel cutting needs, announced its financial results for the third quarter and year-to-date of fiscal 2018.
Our consolidated corporate sales for continuing operations for the 3 and 9 month periods ended Aug. 31, 2018 were $5,280,000 and $15,940,000, respectively, compared to $6,550,000 and $15,660,000 for the same respective periods in fiscal 2017, a $1,270,000 or 19.4%, decrease for the 3 months and a $280,000, or 1.8%, increase for the 9 months. The decrease for the 3 months is primarily due to decreased sales in our agricultural products and tools segments. More specifically, our agricultural products segment had approximately $720,000 of passthrough revenue from self-propelled beet harvester equipment in 2017, which was not replicated in 2018.
We also note that we experienced a $572,000 reduction in year-over-year revenue attributable to activity from our now-closed Art’s-Way International subsidiary. Despite this, our consolidated corporate sales for the 9 months have increased. Adjusted for these items, our consolidated corporate sales for the 9 months are up almost $1.6 million in 2018, as we shift our focus to Art’s-Way produced products.
Our tools segment’s decrease in sales year-over-year was the result of losing a major customer. We have, however, been able to achieve higher gross profit margins with new tools customers. Consolidated gross margin for the 3 month period ended Aug. 31, 2018, was 22.3% compared to 22.1% for the same period in fiscal 2017.
Consolidated gross margin for the 9 month period ended Aug. 31, 2018 was 21.6% compared to 21.5% for the same period in fiscal 2017. These increased gross margins are largely attributable to increased labor efficiency in our agricultural products segment, as margins have decreased in our modular buildings and tools segments. While our gross margins are up in the agricultural products segment, gross margins have also received downward pressure from the liquidation of non-strategic inventory, including our snow blower line from our Canadian subsidiary, which was sold off at cost. The decrease in gross margins for our modular buildings segment is due to increased depreciation expense from utilizing leased assets in our operations. The decrease in gross margins for our tools segment is due to lower revenues with less variable margin to absorb fixed costs.
Income (Loss) from Continuing Operations
Consolidated net (loss) from continuing operations was $(767,000) for the 3-month period and $(1,948,000) for the 9-month period ended Aug. 31, 2018 compared to net income (loss) of $42,000 and $(721,000) for the same respective periods in fiscal 2017. The increased net loss for the 3 months ended Aug. 31, 2018 was due to the discovery of mold in our West Union facility. We estimated approximately $252,000 of expense for mold remediation and $67,000 in damaged inventory and we recognized an impairment of approximately $199,000 of the asset held for lease.
The West Union facility is currently unoccupied and is listed for lease. Our net (loss) from continuing operations includes carrying costs of this facility. The increased net (loss) from continuing operations for the 9-months was largely due to the revaluing of our deferred tax asset at the new income tax rates for the 2018 tax year, which resulted in a loss of approximately $300,000. We also recognized a loss of approximately $253,000 from the liquidation of our Canadian subsidiary related to the cumulative translation adjustment in the second quarter of fiscal 2018. These expenses were non-cash expenses and one-time adjustments.
Despite the continued losses, we have reduced our total bank debt by approximately $532,000 since year end. Our margins are generally depressed from historic levels because low volumes caused by market conditions continue to impact our ability to cover our fixed costs. Margins are also impacted as we continue to right-size our inventories to focus on products we feel our customers will want to purchase in the future.