Buhler Industries, manufacturer of the Versatile and Farm King brands of ag equipment, has reported earnings for its third quarter 2020 fiscal period.
Revenue for the quarter was C$76.6 million, up C$12.5 million from the prior year third quarter. Revenue for the first nine months of 2020 was C$185.7 million, up C$6.1 million from 2019. The Company has seen a strong return to the U.S. market, with a 37% increase in sales over the first nine months of the prior year. Sales to Canada and Eastern Europe remain below historical levels, while the overseas market has seen an improvement over the prior year.
For the third quarter of 2020, gross profit was C$8.1 million, unchanged from the prior year. As a percentage of sales gross profit was 10.6%, down from 12.6% in the third quarter of 2019. For the nine months ended June 30, 2020, gross profit was C$13.6 million, down from $17.9 in the same period last year. The Company has focused considerable efforts on making margin improvements, however competitive pressures have led to decreased margins.
Income from operations came in at C$3.2 million, compared to the C$2.5 million seen in the prior year’s third quarter, primarily due to reductions in selling and administration expenses. For the nine months ended, loss from operations was C$3.1 million, compared to C$0.5 million in 2019. Selling and administration expenses for the quarter was C$5 million, down C$0.6 million from the third quarter of 2019. For the year to date, selling and administrative expenses were C$16.7 million, down C$1.7 million from the prior year’s C$18.4 million. As a percentage of sales, selling and administration for the quarter was 6.5%, compared to the prior year percentage of 8.7%.
The net income for the third quarter was C$0.5 million, compared to net loss of C$1.2 million for the same period in 2019. The improvement in the quarter from the prior year is due to reduced selling and administration, interest and research and development expenses. For the year to date, the net loss was C$13.5 million, compared to earnings of C$1.4 million in the prior year. The decline in income from operations due to the decreased margin, gain on disposal of assets and increased loss on foreign exchange, which were offset by decreased interest expense and research and development costs.
Looking Forward Analysis
During the quarter, the Company announced that after due consideration and analysis of trends in agriculture and manufacturing, it will be optimizing production in the United States by increasing production at the facility in Willmar, Minn. This is the result of unpredictability in the agriculture commodities market and fluctuations in the exchange rate, as dealers in Canada market several U.S. based Farm King-branded products. The resulting streamlining will increase efficiency and reduce overhead costs at the Willmar factory, which currently manufactures products under the Farm King brand, and will enable the Company to remain competitive without compromising quality. Product lines currently manufactured at the manufacturing facility in Fargo, N.D. will be relocated to the Willmar factory during the summer months and production in Fargo will cease on Sept. 30, 2020.
The continued presence of COVID-19 will continue to have an impact on the Company as farmers, dealers, and governments work through the next stages of the pandemic. As a result, management is unable to provide guidance on the impact to the Company. The Company continues to manufacture and distribute product to support its customer base with product and parts.