Art’s-Way(ARTW) - 2023 Q3 - Quarterly Report

Financial Performance - Consolidated corporate sales for the three months ended August 31, 2023, were $8,117,000, an increase of $641,000, or 8.6%, compared to the same period in fiscal 2022[91] - Agricultural Products segment sales for the three months ended August 31, 2023, were $5,530,000, a decrease of $815,000, or 12.8%, compared to the same period in fiscal 2022[92] - Modular Buildings segment sales for the three months ended August 31, 2023, were $2,587,000, an increase of $1,456,000, or 128.7%, compared to the same period in fiscal 2022[93] - Consolidated gross margin for the three-month period ended August 31, 2023, was 28.3%, up from 26.2% in the same period of fiscal 2022[91] - Consolidated net income from continuing operations for the three months ended August 31, 2023, was $241,000, compared to $304,000 for the same period in fiscal 2022[100] Order Backlog - The consolidated order backlog as of October 5, 2023, was $5,221,000, down from $8,424,000 as of October 5, 2022[101] - Agricultural Products segment order backlog as of October 5, 2023, was $3,753,000, compared to $4,719,000 in fiscal 2022[101] Segment Performance - Modular Buildings segment gross margin for the three-month period ended August 31, 2023, was 33.4%, compared to 6.5% for the same period in fiscal 2022[93] Administrative and Financing Expenses - Administrative expenses for the three-month period ended August 31, 2023, were $1,095,000, compared to $873,000 for the same period in fiscal 2022[98] - The primary source of funds for the nine months ended August 31, 2023, was cash generated by financing activities, with $1.3 million in accounts receivable on extended terms[102] - As of August 31, 2023, the outstanding principal balance on the revolving line of credit with Bank Midwest was $4,534,559 out of a total of $5,500,000[103] - A Reserve Line of Credit of $500,000 was secured in August 2023, maturing on November 30, 2023[103] Cash Generation and Future Expectations - The company estimates cash generation of approximately $950,000 from the liquidation of the Tools segment, excluding real estate[94] - The company expects to receive $1.2 million in Employer Retention Credit refunds, net of consulting fees, although the timing is uncertain[102] - The company anticipates that the sale of real estate from its Tools segment will provide a significant cash influx in the near future[102] - Current financing arrangements are expected to be sufficient to finance operations and pay debt when due over the next twelve months[105] - The company utilized its line of credit to increase inventory levels to meet customer demand and address supply chain delays[102] - The company plans to focus on operating costs, equipment purchases to improve operations, and debt retirement for its capital needs in the remainder of fiscal 2023[102] Market Risk Disclosure - As a smaller reporting company, the company is not required to provide disclosures regarding market risk[106]