Arts Way Manufacturing Co Inc Files 2023 10-K

TL;DR

<b>Arts Way Manufacturing Co Inc's 2023 10-K reveals a slight revenue dip but increased net income, with significant long-term debt obligations.</b>

AI Summary

ARTS WAY MANUFACTURING CO INC (ARTW) filed a Annual Report (10-K) with the SEC on February 28, 2024. Arts Way Manufacturing Co Inc reported total revenue of $32,137,000 for FY 2023, a slight decrease from $33,288,000 in FY 2022. The company's net income for FY 2023 was $5,106,922, up from $5,013,671 in FY 2022. Earnings per share (EPS) for FY 2023 were $0.01, unchanged from FY 2022. Total assets stood at $19,648,000 as of November 30, 2023. The company has two long-term debt issuances: a $2,972,000 note due October 1, 2037, and a $731,000 note due May 15, 2027.

Why It Matters

For investors and stakeholders tracking ARTS WAY MANUFACTURING CO INC, this filing contains several important signals. The filing details the company's financial performance and position, providing investors with crucial data on revenue, profitability, and debt structure. Understanding the company's debt maturity dates and interest rates is essential for assessing its long-term financial stability and potential refinancing needs.

Risk Assessment

Risk Level: medium — ARTS WAY MANUFACTURING CO INC shows moderate risk based on this filing. The company has significant long-term debt obligations, including a $2,972,000 note maturing in 2037 and a $731,000 note maturing in 2027, which could pose refinancing risks or impact future cash flows.

Analyst Insight

Investors should monitor the company's debt management strategies and its ability to service its long-term obligations, especially given the upcoming maturity dates.

Key Numbers

• 32,137,000 — Total Revenue FY 2023 (artw20231130c_10k.htm)
• 33,288,000 — Total Revenue FY 2022 (artw20231130c_10k.htm)
• 5,106,922 — Net Income FY 2023 (artw20231130c_10k.htm)
• 5,013,671 — Net Income FY 2022 (artw20231130c_10k.htm)
• 0.01 — EPS FY 2023 (artw20231130c_10k.htm)
• 19,648,000 — Total Assets (artw20231130c_10k.htm)
• 2,972,000 — Long-term Debt (Note 1) (artw20231130c_10k.htm)
• 731,000 — Long-term Debt (Note 2) (artw20231130c_10k.htm)

Key Players & Entities

• ARTS WAY MANUFACTURING CO INC (company) — Filer
• 2023-11-30 (date) — Conformed Period of Report
• 2024-02-28 (date) — Filed as of Date
• ARMSTRONG (location) — City
• IA (location) — State

FAQ

Risk Factors

• Customer Concentration Risk [medium — financial]: The company's revenue is subject to customer concentration risk, with one customer accounting for a significant portion of sales in FY23 and FY22.

Key Financial Figures

• $2.48 — eported on the Nasdaq Stock Market LLC ($2.48 per share), was approximately $ 5,961,1
• $4,364,000 — ment had a net backlog of approximately $4,364,000 as of February 1, 2024 compared to $9,3
• $9,366,000 — ,000 as of February 1, 2024 compared to $9,366,000 on February 1, 2023. The Company saw a
• $6,170,00 — lar Buildings segment had approximately $6,170,00 of backlog as of February 1, 2024, comp
• $4,985,000 — log as of February 1, 2024, compared to $4,985,000 on that date in 2023. The Modular Build
• $5,300,000 — Modular Buildings segment contracted a $5,300,000 research project in December 2023, whic
• $6,000,000 — cts with a combined contract price over $6,000,000 that it is expected to land in fiscal 2

Filing Documents

• artw20231130c_10k.htm (10-K) — 1214KB
• ex_611382.htm (EX-21.1) — 3KB
• ex_611383.htm (EX-23.1) — 3KB
• ex_611384.htm (EX-31.1) — 13KB
• ex_611385.htm (EX-31.2) — 13KB
• ex_611386.htm (EX-32.1) — 5KB
• ex_611387.htm (EX-32.2) — 5KB
• 0001437749-24-005855.txt (&nbsp;) — 8328KB
• artw-20231130.xsd (EX-101.SCH) — 85KB
• artw-20231130_cal.xml (EX-101.CAL) — 87KB
• artw-20231130_def.xml (EX-101.DEF) — 536KB
• artw-20231130_lab.xml (EX-101.LAB) — 483KB
• artw-20231130_pre.xml (EX-101.PRE) — 586KB
• artw20231130c_10k_htm.xml (XML) — 1381KB

BUSINESS

Item 1. BUSINESS 2

RISK FACTORS

Item 1A. RISK FACTORS 6

UNRESOLVED STAFF COMMENTS

Item 1B. UNRESOLVED STAFF COMMENTS 6

PROPERTIES

Item 2. PROPERTIES 6

LEGAL PROCEEDINGS

Item 3. LEGAL PROCEEDINGS 6

MINE SAFETY DISCLOSURES

Item 4. MINE SAFETY DISCLOSURES 6 Part II

MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

Item 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES 7

RESERVED

Item 6. RESERVED 7

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 7

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Item 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK 12

FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA 13

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE 41

CONTROLS AND PROCEDURES

Item 9A. CONTROLS AND PROCEDURES 41

OTHER INFORMATION

Item 9B. OTHER INFORMATION 41 Part III

DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

Item 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE 42

EXECUTIVE COMPENSATION

Item 11. EXECUTIVE COMPENSATION 42

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS 42

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE 42

PRINCIPAL ACCOUNTING FEES AND SERVICES

Item 14. PRINCIPAL ACCOUNTING FEES AND SERVICES 42 Part IV

EXHIBITS, FINANCIAL STATEMENT SCHEDULES

Item 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES 43 Table of Contents

FORWARD LOOKING STATEMENTS

FORWARD LOOKING STATEMENTS This Annual Report on Form 10-K (this "report") may contain forward-looking statements that reflect future events, future business, industry and other conditions, our future performance, and our plans and expectations for future operations and actions. In some cases forward-looking statements may be identified by the use of words such as "may," "should," "anticipate," "believe," "expect," "plan," "future," "intend," "could," "estimate," "predict," "hope," "potential," "continue," or the negative of these terms or other similar expressions. Forward-looking statements in this report generally relate to: our business condition and results of operations; our expectations regarding our warranty costs and order backlog; our beliefs regarding the sufficiency of working capital and cash flows; our expectations regarding our continued ability to renew or obtain financing on reasonable terms when necessary as well as our continued positive relationship with our creditors and lenders; the impact of recently issued accounting pronouncements; our intentions and beliefs relating to our costs, product developments and business strategies; our expectations concerning our continued expansion into international markets; our expectations with respect to government spending and programs that may directly or indirectly be used to purchase our products; our beliefs concerning our ability to attract and maintain an adequate workforce in a competitive labor market; our expected operating and financial results; our beliefs about selling our Canton, Ohio property and the net proceeds from such sale; our beliefs concerning the effects of, and costs of compliance with government regulations; our expectations concerning our primary capital and cash flow needs; our beliefs regarding competitive factors and our competitive strengths; our expectations regarding our capabilities and demand for our products; our predictions regarding the impact of seasonality; our belief

BUSINESS

Item 1. BUSINESS . General Art's-Way Manufacturing Co., Inc., a Delaware corporation ("we," "us," "our," and the "Company"), began operations as a farm equipment manufacturer in 1956. Since that time, we have become a worldwide manufacturer of agricultural equipment and specialized modular science and agricultural buildings. Our principal manufacturing plant and corporate headquarters is located in Armstrong, Iowa. We have organized our business into two operating segments. Management separately evaluates the financial results of each segment because each is a strategic business unit offering different products and requiring different technology and marketing strategies. Our Agricultural Products segment manufactures and distributes farm equipment under the Art's-Way name. Our Modular Buildings segment manufactures modular buildings for various uses, commonly animal containment and research laboratories, through our wholly-owned subsidiary, Art's-Way Scientific, Inc., an Iowa corporation. During the third quarter of fiscal 2023, the Company ceased operations of its Tools business, which in previous periods, was reported in consolidated numbers as the Company's third operating segment. The remaining components of the Tools segment are reported in discontinued operation for the twelve months ended November 30, 2023 and has been modified retrospectively to be reported in discontinued operations for the twelve months ended November 30, 2022. For detailed financial information relating to segment reporting, see Note 18 "Segment Information" to our financial statements in "Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA" of this report. Corporate information about Art's-Way can be found on our website, http://www.artsway-mfg.com/ while information on our agriculture products can be found on http://www.artsway.com/ . We are subject to the reporting requirements of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). The Exchange Act requires us t

RISK FACTORS

Item 1A. RISK FACTORS. As a smaller reporting company, we are not required to provide disclosure pursuant to this Item.

UNRESOLVED STAFF COMMENTS

Item 1B. UNRESOLVED STAFF COMMENTS. As a smaller reporting company, we are not required to provide disclosure pursuant to this Item.

PROPERTIES

Item 2. PROPERTIES. Our executive offices, as well as the primary production and warehousing facilities for our Agricultural Products segment, are located in Armstrong, Iowa. These facilities were constructed after 1965 and remain in fair condition. The facilities in Armstrong contain approximately 249,000 square feet of usable space. We have engaged in several building improvement projects during the last several years including most recently updating our office spaces and employee break room in 2021, new shop and office boilers and roofing improvements in 2022 and remodeling our production facility bathrooms in fiscal 2023. In addition, we own approximately 30 acres of land west of Armstrong, on which the factory and inventory storage space is situated for our Agricultural Products segment. Our facility in Monona, Iowa was constructed by us in 2007, which houses the manufacturing for our Modular Buildings segment. The facility was custom-designed to meet our production needs. It has approximately 50,000 square feet of useable space and accommodates a sprinkler system and crane. We own a second building to the east with approximately 12,000 square feet of space which is used as our weld shop for building frames. Our facility in Canton, OH was purchased in connec