Exhibit 99.1
NASDAQ:ARTW CONTACT: Carrie Majeski (712) 864-3131
ART'S-WAY SECOND QUARTER AND 6 MONTH RESULTS
ARMSTRONG, IOWA - Art's-Way Manufacturing Co., Inc., today (July 17, 2006)
released the following results for the second fiscal quarter and six months
ended May 31, 2006.
Highlights:
" Year to date sales were 14% ahead of the same period in 2005.
" As of May 31, 2006 order backlog increased to $5,790,000 compared
to $3,042,000 a year ago, Art's-Way Vessels, Inc. attributed $2,691,000
of the overall increase
(all figures in thousands of dollars except per share amounts)
Quarter Ended
May 31, 2006 May 31, 2005
Net Sales . . . . . . . . . . . . . $ 4,112 $ 3,800
Gross Profit . . . . . . . . . . . . 1,289 1,023
Income from Operations . . . . . . . 310 322
Interest and Other Expense. . . . . 75 74
Income before Income Taxes . . . . . 235 249
Income Tax Expense (Benefit). . . . . 82 99
Net Income . . . . . . . . . . . . . 153 150
Basic Income Per Share (a). . . . . . $ .08 $ .08
Diluted Income Per Share (b) . . . .08 .08
Six Months Ended
May 31, 2006 May 31, 2005
Net Sales . . . . . . . . . . . . . $ 8,414 $ 7,392
Gross Profit . . . . . . . . . . . . 2,665 2,278
Income from Operations . . . . . . . 801 853
Interest and Other Expense . . . . . 141 85
Income before Income Taxes . . . . . 660 768
Income Tax Expense (Benefit) . . . . 235 275
Net Income . . . . . . . . . . . . . 425 493
Basic Income Per Share (a) . . . . . $ .22 $ .25
Diluted Income Per Share (b) . . . . .21 .25
(a) Basic income per share based on the weighted average number of shares
outstanding 1,972,796 and 1,944,385 for the quarter; and 1,968,451 and
1,941,280 for the six months ended May 2006 and 2005, respectively.
(b) Diluted income per share based on the weighted average number of shares
outstanding 1,979,570 and 1,966,405 for the quarter; and 1,977,619 and
1,965,566 for the six months ended May 2006 and 2005, respectively.
Fiscal year 2006, second quarter and year to date net sales were 8% and 14%,
respectively, higher than for the comparable periods one-year ago. A majority
of this increase was due to the inclusion of Art's-Way Vessels, Inc., net sales
of $1,484,511, for the six month period. Art's-Way Vessels, Inc., was acquired
October 4, 2005 and therefore was not included in last year's six months.
Art's-Way Manufacturing had revenues totaling $6,929,306 for the first six
months, compared to $7,391,716 for the same period in 2005.
Art's-Way Manufacturing's consolidated gross profit of 32% year to date has
remained stable compared to the 31% for the same period one year ago. Art's-Way
Manufacturing's gross profit is down from 31% to 29% year to date. This slight
decline is due to a reduction in sales of grinder mixers which have a slightly
higher margin than some of our other product offerings. Art's-Way Vessels had
a gross profit of 45% year to date. At the time we acquired Art's-Way Vessels
orders that were already booked were at a much lower profit margin than we are
currently charging. This fact coupled with the additional expenses of getting
shop supplies and repairs and maintenance drove our gross margin down in the
first quarter of 2006.
From 2005 to 2006 operating expenses increased from $1,424,460 to $1,863,939
year to date. The addition of Art's-Way Vessels relates directly to $450,949
of the increase.
Engineering expenses are down $79,389 for the six months of 2006 as compared
to 2005. In 2005 we hired an outside engineering firm to aid in the
development of an exportable beet harvester. In the first half of 2006 our
overall engineering costs savings was offset by an engineering consultant
brought in to bring the export harvester to production. This work is expected
to be completed by the end of July.
Selling expenses were up for the first six months of 2006 by $50,134 over the
same period one year ago. This is mainly due to an increase in advertising and
show expenses. Advertising expense is up by approximately $10,000 as we try to
reach new customers. Show expense is also up by approximately $25,000 due to
machine enhancement for show purposes.
Income from operations has decreased year to date from $853,459 in 2005 to
$800,821 in 2006. Art's-Way Manufacturing's income from operations was
$584,237, representing a $269,222 decrease year to date compared to 2005,
which is due to the decrease in sales of 6% year to date compared to 2005
and the slight decline in our gross profit margin. Art's-Way started fiscal
year 2005 with a backlog over a million dollars, for our new model 5165
grinder mixers. Once we manufactured our first run of the new model our sales
increased significantly to fulfill the build up of orders. While sales have
decreased from 2005 to 2006 the cause is due to the extraordinary year we had
in fiscal year 2005. Art's-Way Vessel's income from operations was $216,584
year to date.
We experienced an increase in interest expense of $52,017 in the first six
months of 2006 as a result of a rise in the prime interest rate over the past
18 months and an additional borrowing of $1,500,000 during the second quarter.
The order backlog as of May 31, 2006 was $ 5,790,000 compared to $3,042,000
one year ago. Art's-Way Manufacturing's order backlog as of May 31, was
$3,099,000 while Art's-Way Vessel's was $2,691,000. Gehl, one of our main
competitors in the grinder mixer market, announced in April that it was ceasing
operations of its ag product lines. We feel that we are in an excellent
position to capture some of this market share and are optimistic that this will
increase our grinder mixer sales.
Art's-Way manufactures and distributes farm machinery niche products including
animal feed processing equipment, sugar beet and potato harvesting equipment,
edible bean equipment, land maintenance equipment, finished mowing, crop
shredding equipment and seed planting equipment. Art's-Way also produces
haylage machinery for several original equipment manufacturers (OEM's).
Starting in fiscal 2004, the Company is manufacturing moldboard plows under
its own label under a license agreement with CNH. Art's-Way also manufactures
and distributes truck bodies used in the agricultural, industrial and
commercial industries. After market service parts are also an important part
of the Company's business. Our wholly owned subsidiary Art's-Way Vessels Inc.
manufactures pressurized tanks and vessels.
This news release includes "forward-looking statements" within the meaning of
the federal securities laws. Statements of anticipated future results are
based on current expectations and are subject to a number of risks and
uncertainties, including but not limited to, quarterly fluctuations in results,
customer demand for the Company's products, domestic and international economic
conditions, the management of growth and other risks detailed from time to time
in the Company's Securities and Exchange Commission filings. Actual results may
differ markedly from management's expectations. The Company cautions readers
not to place undue reliance upon any such forward-looking statements.