Art’s-Way(ARTW) - 2024 Q4 - Annual Report

Financial Performance - Sales for the year ended November 30, 2024, were $24,499,371, a decrease of 19.5% compared to $30,280,957 in 2023[118] - Gross profit for the year ended November 30, 2024, was $7,309,865, down 14.9% from $8,583,882 in 2023[118] - Income from operations decreased significantly to $460,697 in 2024 from $1,531,241 in 2023, representing a decline of 69.9%[118] - Net income for the year ended November 30, 2024, was $307,375, an increase of 15.1% compared to $266,969 in 2023[118] - The company reported a net loss from continuing operations of $(94,466) for 2024, compared to a profit of $762,789 in 2023[124] - Revenue from the Agricultural Products segment for the twelve months ended November 30, 2024 was $14,663,000, compared to $19,188,000 for the same period in 2023, a decrease of approximately 23.5%[160] - Revenue from the Modular Buildings segment for the twelve months ended November 30, 2024 was $9,836,000, compared to $7,590,000 for the same period in 2023, an increase of approximately 29.6%[160] - The Company recognized revenues of approximately $1,073,000 and $3,110,000 at the completion of production in fiscal years 2024 and 2023, respectively, indicating a decrease of about 65.5%[155] - Consolidated gross profit decreased to $7,310,000 in FY 2024 from $8,584,000 in FY 2023, a decline of approximately 15%[228] Assets and Liabilities - Total current assets decreased from $15,085,494 in 2023 to $13,124,309 in 2024, representing a decline of approximately 13%[116] - Total assets decreased from $24,402,114 in 2023 to $21,240,684 in 2024, a reduction of about 13%[116] - Total current liabilities decreased from $9,395,023 in 2023 to $6,632,493 in 2024, a decrease of approximately 29%[116] - Long-term debt, excluding current portion, decreased from $2,629,862 in 2023 to $1,975,232 in 2024, a reduction of about 25%[116] - Cash at the end of the period was $1,860, down from $4,014 at the end of the previous year[124] - Contract receivables decreased from $3,432,000 in November 30, 2023 to $2,373,000 in November 30, 2024, reflecting a decrease of approximately 30.9%[164] - Total term debt as of November 30, 2024, is $2,094,966, a decrease of 27.8% from $2,899,654 in 2023[210] - Total assets decreased to $21,241,000 in FY 2024 from $23,347,000 in FY 2023, a decline of approximately 9%[228] Equity and Stockholder Information - Stockholders' equity increased from $11,641,255 in 2023 to $12,093,823 in 2024, reflecting an increase of approximately 4%[116] - The net shares issued under the 2020 Equity Incentive Plan were 42,251 in 2024, a decrease of 54.7% from 93,251 in 2023[215] Expenses and Costs - The Company reported stock-based compensation of $182,847 for the year ended November 30, 2024, compared to $292,185 in 2023[124] - The total income tax expense for fiscal year 2024 was $74,305, down 34.5% from $113,466 in 2023[220] - Advertising costs decreased significantly from $229,000 in fiscal year 2023 to $153,000 in fiscal year 2024, a reduction of about 33.2%[173] - Research and development costs increased to $216,000 in fiscal year 2024 from $204,000 in fiscal year 2023, representing a growth of approximately 5.9%[172] - The Company recognized $15,193 in expenses from related party transactions in fiscal year 2024, down from $16,102 in 2023[211] Operational Changes and Strategy - The company is focused on managing warranty costs and order backlog as part of its operational strategy[14] - The company has implemented expense savings measures due to recent layoffs and strategic terminations[14] - The company ceased operations of its Tools business during the third quarter of fiscal 2023, which was reported as a discontinued operation[129] - The Tools segment was discontinued, with a reported net income from discontinued operations of $401,841 for the twelve months ended November 30, 2024, compared to a loss of $495,820 in the prior year[182] - The Company recorded a gain of $683,685 on the disposal of real estate from the Tools segment, included in income from discontinued operations[182] Credit and Risk Management - The company reported an allowance for expected credit losses of $108,636 as of November 30, 2024[116] - The company anticipates increased credit risk over the next year due to current economic conditions affecting the agricultural sector[134] - The allowance for expected credit losses increased from $32,137,000 at the beginning of the year to $108,636,000 by November 30, 2024, reflecting a provision charged to expense of $67,170,000[187] Lease and Asset Management - Operating lease right-of-use assets decreased from $22,427,000 in November 30, 2023 to $13,774,000 in November 30, 2024, a decline of approximately 38.5%[146] - The total operating lease liabilities also decreased from $22,427,000 in November 30, 2023 to $13,774,000 in November 30, 2024, reflecting a reduction of about 38.5%[146] - The Company recorded $10,199,000 in operating lease expense for the year ended November 30, 2024, down from $17,459,000 in the same period of fiscal 2023, representing a decrease of approximately 41.5%[146] - Finance lease right-of-use assets decreased from $511,367,000 in November 30, 2023 to $377,753,000 in November 30, 2024, a reduction of about 26.1%[147] - Total finance lease liabilities decreased from $979,654,000 in November 30, 2023 to $755,344,000 in November 30, 2024, a decline of approximately 22.9%[147] - The Company incurred $171,830,000 of amortization expense from ROU assets related to finance leases in fiscal 2024, compared to $129,891,000 in fiscal 2023, an increase of about 32.2%[148] Future Projections and Plans - The company anticipates continued expansion into international markets as part of its future operations[14] - Future minimum lease receipts from assets held for lease are projected at $79,720 for the year ending November 30, 2025[195] - The Company maintains a $5,500,000 revolving line of credit, with a balance of $1,928,437 as of November 30, 2024, leaving $3,571,563 available[200] - The term loan with Bank Midwest amounts to $2,600,000, requiring monthly payments of $19,648, with an interest rate of 7.00%[201] - The Company has a minimum maturity of term debt of $119,734 due in 2025, increasing to $1,408,222 in 2030 and thereafter[210] Compliance and Governance - The company reported no subsequent events that would require recognition or disclosure in the financial statements[229] - There were no disagreements with accountants on accounting and financial disclosure[230]