Art's Way Manufacturing, an international manufacturer and distributor of equipment serving agricultural, research and steel cutting needs, has announced its financial results for fiscal 2020.
Consolidated net sales totaled $22,409,000 for the 2020 fiscal year, which represents a 2.1% decrease from consolidated net sales of $22,889,000 for the 2019 fiscal year. The decrease in revenue is due to decreases in sales in the Modular Building and Agricultural Products segments. The Tools segment reported a 9.9% increase in sales compared to the 2019 fiscal year.
The Agricultural Products segment's net sales for the 2020 fiscal year were $13,085,000 compared to $13,508,000 during the 2019 fiscal year, a decrease of $423,000, or 3.1%. The decrease in sales can be primarily attributed to the loss of low-margin OEM business. The company also saw decreased demand for beet equipment and forage and receiver boxes in the 2020 fiscal year compared to the 2019 fiscal year. It expects increased demand for these lines in fiscal 2021 as backlog indicates the company will have improved sales of beet equipment and will be launching a new Art's Way forage box. Sales of manure spreaders, dump boxes and grinders improved in fiscal 2020 over fiscal 2019. The improved success of these lines provides optimism for the future as the company believes these are the core products it can market towards future growth. Additionally, the Agriculture Products segment had approximately $996,000 of non-cash expense related to the scrap and increased reserve placed on aging product lines in fiscal 2020.
The Modular Buildings segment's net sales for the 2020 fiscal year were $6,993,000 compared to $7,260,000 for the 2019 fiscal year, a decrease of $267,000, or 3.7%. The decrease in sales was attributable to decreased operating lease activity in fiscal 2020 and a large construction project nearing completion.
The Tools segment's net sales for the 2020 fiscal year were $2,330,000 compared to $2,121,000 for the 2019 fiscal year, an increase of $209,000, or 9.9%. The increase is primarily due to the addition of a large OEM customer in the fourth quarter of fiscal 2019. The company had projected larger revenue increases; however, the COVID-19 pandemic had a negative effect on the existing customer base, mainly the oil and gas industry.
Consolidated net loss for the 2020 fiscal year was $(2,103,000) compared to net loss of $(1,420,000) in the 2019 fiscal year, an increase in loss of $683,000. The increased loss is due to additional salaries of approximately $115,000 for the hiring of a new territory development manager and inside salesperson in order to increase sales and strengthen the dealer network in the Agricultural Products segment. The company also incurred $116,000 of additional recruitment expense in fiscal 2020 when compared to fiscal 2019 related to hiring key employees to improve operations including a new CEO, supply chain manager and product manager in the Agricultural Products segment.
President and CEO of Art's Way, David King, says, "While 2020 brought unforeseen challenges, we were pleased to see an increase in efficiency gains through continuous improvement projects and implementation of lean principles. We made further progress on inventory reduction thus lowering our carrying costs and lowering inventory to more manageable levels. We continued our product line rationalization by discontinuing low volume and low margin products while releasing new products including two new models of manure spreaders, a larger high-dump cart and a new forage box.
"Our focus in 2021 will be on rebranding the manufacturing division to appeal to a broader customer base while continuing to strengthen and expand our dealer network. We have added an experienced product manager to develop and execute strategies to bring new features and products to market to drive profitable growth. Both the Tools and Modular Buildings segments are actively working to diversify their customer base to mitigate the effects of the pandemic this past year.
"We are cautiously optimistic as we enter fiscal year 2021 as higher commodity prices and farm income have driven our strongest backlog for manufactured products since 2015. At the same time, Art's Way Scientific is experiencing increased demand for leased buildings and quotes for new research facilities. Our operational gains and expanded backlog will allow for an increased opportunity in profitability moving forward."
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