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    Roger Miller

    Research Analyst at Frontier Investment

    Roger Miller's questions to ARTS WAY MANUFACTURING CO (ARTW) leadership

    Roger Miller's questions to ARTS WAY MANUFACTURING CO (ARTW) leadership • Q4 2017

    Question

    Roger Miller from Frontier Investment inquired about the strategy behind successfully adding 35 new dealers, the compensation structure for the new sales representatives, the potential impact of the oil and gas market recovery on the Ohio Metals division, and the outlook for profitability in the Scientific segment and the company overall for fiscal 2018.

    Answer

    Chairman Marc McConnell explained that the dealer network expanded due to a restructured discount program that created a more level playing field for smaller dealers, the addition of new independent, commission-only sales reps in key territories, and the introduction of new, lower-priced products. He confirmed the oil and gas recovery should benefit the Ohio Metals division in 2018. Regarding profitability, McConnell expressed caution for 2018, citing a one-time deferred tax asset charge, ongoing inventory liquidation impacting margins, and a challenging market. President and CEO Carrie Gunnerson added that revenue recognition for new leases in the Scientific segment varies based on lease type.

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    Roger Miller's questions to ARTS WAY MANUFACTURING CO (ARTW) leadership • Q3 2017

    Question

    Roger Miller from Frontier Investment asked for updates on the modular/scientific market, the industries served by Ohio Metals' specialty sales, and the outlook for the Ag business. He also inquired about the use of proceeds from asset sales, the new banking relationship, and the rationale for discontinuing the Canadian snow blower line.

    Answer

    Chairman Marc McConnell explained that the Art's Way Scientific segment struggled in the first half of the year but has seen better activity recently. For Ohio Metals, he noted specialty sales to the aerospace and automotive industries have driven significant margin improvement. McConnell believes the Ag business recovery is driven by replacement needs, not a commodity boom. He confirmed proceeds from building sales would likely pay down debt. Finally, he detailed the strategic decision to exit the low-margin, high-risk Canadian snow blower business to simplify operations, noting they are exploring a sale of that business line.

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