Financial Performance - Total sales for the three months ended February 28, 2025, were $5,140,955, a decrease of 10.2% compared to $5,723,394 for the same period in 2024[11] - Gross profit for the same period was $1,496,509, representing a slight increase of 1.8% from $1,473,524 in the prior year[11] - The company reported a net loss of $55,757 for the three months ended February 28, 2025, compared to a net loss of $465,040 for the same period in 2024, indicating a significant improvement[11] - Consolidated corporate sales for the three-month period ended February 28, 2025, were $5,141,000, a decrease of $582,000, or 10.2%, compared to $5,723,000 in the same period of fiscal 2024[74] - Consolidated net loss from continuing operations improved to $56,000 in Q1 fiscal 2025 from a net loss of $424,000 in Q1 fiscal 2024[80] Assets and Liabilities - Current assets totaled $13,000,700 as of February 28, 2025, slightly down from $13,124,309 as of November 30, 2024[9] - Total liabilities decreased to $8,923,851 as of February 28, 2025, from $9,146,861 as of November 30, 2024[9] - The total stockholders' equity as of February 28, 2025, was $12,080,743, a slight decrease from $12,093,823 as of November 30, 2024[9] - Total assets as of February 28, 2025, were $21,005,000, down from $23,216,000 as of February 29, 2024[69] Cash and Receivables - Cash at the end of the period increased to $4,133 from $2,485 at the end of the same period in 2024[17] - The company experienced a decrease in accounts receivable, net, to $1,407,411 from $2,372,876 year-over-year[9] - The Company had approximately $1,407,000 in receivables as of February 28, 2025, down from $2,373,000 on November 30, 2024, indicating a decrease of about 40.7%[38] - Expected credit losses for accounts receivable decreased to $106,236 as of February 28, 2025, from $32,528 as of February 29, 2024[36] Inventory and Expenses - Total gross inventory increased to $12,552,629 as of February 28, 2025, from $11,984,915 as of November 30, 2024, reflecting a rise of approximately 4.75%[41] - The Company’s net inventory increased to $10,881,082 as of February 28, 2025, compared to $10,327,913 as of November 30, 2024, reflecting an increase of approximately 5.3%[41] - Engineering expenses decreased to $85,230 from $160,353, a reduction of 46.8% compared to the same period last year[11] - Consolidated selling expenses decreased to $350,000 in Q1 fiscal 2025 from $463,000 in Q1 fiscal 2024, representing 6.8% of sales compared to 8.1%[77] - Administrative expenses decreased to $1,059,000 in Q1 fiscal 2025 from $1,230,000 in Q1 fiscal 2024, representing 20.6% of sales compared to 21.5%[79] Credit and Loans - The Company has a $5,500,000 revolving line of credit with Bank Midwest, with a balance of $2,199,437 and $3,300,563 available as of February 28, 2025[47] - The interest rate on the Line of Credit was 8.25% per annum as of February 28, 2025, with a floor set at 6.00%[47] - The Company entered into a new $4,000,000 revolving line of credit on March 27, 2025, with an interest rate of 7.5% per annum[48] - The Company has a $2,600,000 term loan with Bank Midwest, accruing interest at 7.00%, with monthly payments of $19,648 required[49] - Total term debt as of February 28, 2025, is $2,066,284, down from $2,094,966 on November 30, 2024[56] Segment Performance - Revenue from external customers for the Modular Buildings segment was $2,119,000 for the three months ended February 28, 2025, compared to $1,392,000 for the same period in 2024, representing a growth of approximately 52.4%[34] - Agricultural Products segment sales decreased by $1,288,000, or 30.4%, to $2,948,000 in Q1 2025 from $4,236,000 in Q1 2024, attributed to rising interest rates and declining commodity prices[75] - Modular Buildings segment sales for Q1 fiscal 2025 were $2,193,000, a 47.5% increase from $1,487,000 in Q1 fiscal 2024[76] - Gross margin for the three months ended February 28, 2025, was 29.1%, an increase from 25.7% in the same period of fiscal 2024[74] - Gross margin for the Agricultural Products segment was 26.7% for Q1 2025, compared to 26.9% in Q1 2024, despite a significant decrease in sales[75] Future Outlook - The company expects destocking in the agricultural market to continue in fiscal 2025, which may increase demand for its products moving forward[75] - The company plans to release product-specific programs in fiscal 2025 to manage inventory levels and unlock cash[75] - The company anticipates two interest rate cuts for fiscal 2025, which may stimulate economic growth[75] - The company expects $1.2 million in net Employer Retention Credit refunds, although the timing is uncertain[82] Other Financial Information - The Company recognized approximately $197,000 in revenue from contract liabilities for the first three months of fiscal 2025, down from $560,000 in the same period of fiscal 2024, a decline of about 64.8%[38] - The Company’s accrued expenses decreased to $856,888 as of February 28, 2025, from $1,303,718 as of November 30, 2024, a reduction of about 34.3%[42] - The accrued warranty balance decreased from $295,113 on February 29, 2024, to $225,186 on February 28, 2025[45] - Finance lease liabilities totaled $701,376 as of February 28, 2025, down from $755,344 on November 30, 2024[60] - Operating lease right-of-use assets decreased from $13,774 on November 30, 2024, to $11,546 on February 28, 2025[60] - The fair value of financial instruments approximates their carrying amounts due to the short maturity of these instruments[64] - The Company adopted ASU 2023-07 in Q1 of fiscal 2025, which did not have a significant impact on segment disclosures[30] - Related party transactions resulted in an expense of $3,355 for the three months ended February 28, 2025, compared to $3,931 for the same period in 2024[59] - Capital expenditures for the three months ended February 28, 2025, were $83,000, compared to $281,000 for the same period in fiscal 2024[69]
Art’s-Way(ARTW) - 2025 Q1 - Quarterly Report