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ARTS WAY MANUFACTURING CO INC (ARTW)·Q3 2025 Earnings Summary

Executive Summary

  • Q3 2025 delivered modest top-line growth with sales up 9.5% year over year to $6.43M, while profitability improved despite ag market headwinds; EPS was $0.05 versus $0.00 last year .
  • Sequentially, revenue rose slightly versus Q2, but net income fell to $0.25M from $1.48M due to the prior quarter’s Employee Retention Credit (ERC) benefit; operating income of $0.35M remained positive as cost actions and mix helped margins .
  • Segment mix favored Modular Buildings, with Q3 sales up 19.4% YoY to $3.45M, offsetting Agricultural Products’ flat demand; management cites strong quoting and expanding end markets in modular (labs, datacenters, wastewater, etc.) .
  • No Wall Street consensus estimates were available from S&P Global for Q3; the narrative suggests near-term catalysts include modular backlog conversion and a 3–5% ag price increase in the fall early order program to offset tariff- and steel-driven cost inflation .

What Went Well and What Went Wrong

What Went Well

  • Modular Buildings segment execution: Q3 sales up 19.4% YoY with strong margins driven by workforce proficiency and software/data analytics improvements; quoting activity remains robust into Q4 .
  • Consolidated operational discipline: operating expenses down 13.1% for the nine months, supporting improved profitability; nine-month net income improved by $2.11M, aided by an ERC refund .
  • Management tone: “We continue to be pleased by operational progress and improved profitability…benefited greatly from strong performance by our Modular Buildings segment…cautiously optimistic…” (Marc McConnell) .

What Went Wrong

  • Agricultural Products demand softness: Q3 segment sales down 0.2% YoY; persistent headwinds from high interest rates, low row crop prices, and dealer inventory overhang, pressuring gross margin .
  • Cost inflation and tariffs: elevated steel prices (not back to 2024 levels) and tariff charges on imported components are compressing margins; company expects to pass through a 3–5% price increase .
  • Sequential profit normalizing: Q2 benefited from ERC ($1.15M across nine months); Q3 net income declined sequentially to $0.25M as one-time support rolled off .

Financial Results

Quarterly Performance (oldest → newest)

MetricQ1 2025Q2 2025Q3 2025
Revenue ($USD)$5,141,000 $6,337,000 $6,432,000
Operating Income ($USD)$2,000 $510,000 $345,000
Net Income ($USD)$(56,000) $1,482,000 $254,000
EPS (Basic, $)$(0.01) $0.29 $0.05
EPS (Diluted, $)$(0.01) $0.29 $0.05
Weighted Avg Shares (Basic)5,054,665 5,094,188 5,106,033
Weighted Avg Shares (Diluted)5,054,665 5,094,188 5,106,033

Year-over-Year (Q3)

MetricQ3 2024Q3 2025
Revenue ($USD)$5,876,000 $6,432,000
Operating Income ($USD)$154,000 $345,000
Net Income ($USD)$2,000 $254,000
EPS (Basic, $)$0.00 $0.05
EPS (Diluted, $)$0.00 $0.05

Segment Sales (oldest → newest)

SegmentQ1 2025Q2 2025Q3 2025
Agricultural Products ($USD)$2,948,000 $4,025,000 $2,983,000
Modular Buildings ($USD)$2,193,000 $2,312,000 $3,449,000

KPIs and Notables

KPIValueContext
Nine-month Net Income ($USD)$1,680,000 (includes $1,154,000 ERC) ERC refund boosted YTD profitability
Nine-month Operating Expenses YoYDown 13.1% Cost discipline
Modular Nine-month Sales YoYUp 21.4% to $7,954,000 Execution on backlog, strong margins

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Ag Price IncreaseFall Early Order Program (Oct–Jan 15)None specified3–5% price increase to offset rising supplier costs/tariffs Initiated
Inventory StrategyFY2025 (through fiscal year-end)Build stock in Q3 to react to retail opportunities Continuing to build inventory through FY-end to capture retail/tax buying Maintained/Expanded
Ag Market OutlookNext 12–18 months (earlier view)Conditions to improve in 12–18 months Conditions to improve in 9–15 months; “bottom of the cycle” Narrowed timeline
Tariff/Steel Cost ImpactFY2025Minor tariff impact expected on gross profit Steel prices elevated vs 2024; tariff charges increasing costs; exploring reshoring Worsened
Quantitative Revenue/Margin/Tax GuidanceFY2025Not providedNot providedMaintained “no formal guidance”

Earnings Call Themes & Trends

Note: No Q3 2025 earnings call transcript was found; themes are derived from company earnings releases.

TopicPrevious Mentions (Q1 & Q2)Current Period (Q3)Trend
Modular Buildings momentumStrong demand, backlog conversion, added sales leadership, exploring new markets ~20% YoY sales growth; strong margins; expanding into datacenters, wastewater, labs Improving
Ag demand & cycleDealers destocking; bottom of cycle; grinders/beet equipment steady; interest rates high Modest demand; dealers still sitting on inventory; livestock profitability supportive Mixed/Bottoming
Tariffs & steelExpected minor impact; steel prices rising on tariff uncertainty Steel prices not back to 2024; tariff charges higher; price pass-through planned Cost pressure rising
Operating expensesRightsizing lowers OpEx; six-month OpEx down 15.3% Nine-month OpEx down 13.1% Positive cost control
Technology/processSoftware improvements aiding margins in modular Data analytics and workforce proficiency improving budget adherence Structural improvement
Market backdrop (modular)N/AGlobal modular construction projected 4.6% CAGR (2024–2030) Supportive external tailwind

Management Commentary

  • “We continue to be pleased by operational progress and improved profitability during our third quarter and year to date despite persistent headwinds in the ag equipment space…strong performance by our Modular Buildings segment while our Agricultural Products segment continued to experience modest demand…cautiously optimistic that strong profitability among livestock producers will lead to improvement in demand…” — Marc McConnell, President, CEO & Chairman .
  • “We are pleased to show operational progress and improved profitability during our second quarter despite challenging market conditions…benefited greatly from sustained performance from our Modular Buildings segment…” — Marc McConnell .
  • “We are pleased to finish the first quarter with meaningful operational and profitability improvements despite challenging conditions that persist…keeping a close eye on the impact of tariffs…” — Marc McConnell .

Q&A Highlights

  • No public earnings call transcript was available for Q3 2025; therefore, no Q&A details or clarifications could be reviewed [Output derived from 8-K press releases: Q3, Q2, Q1] .

Estimates Context

  • S&P Global consensus estimates for ARTW were unavailable for Q3 2025; no consensus EPS or revenue estimates and no target price coverage were present in SPGI for this period. As a result, no beat/miss analysis vs Street is provided [GetEstimates returned no consensus fields for EPS/revenue/targets].
  • The company reported Q3 revenue of $6.43M and diluted EPS of $0.05, which should guide any future estimate revisions by niche coverage initiations or company watchers .

Key Takeaways for Investors

  • Modular Buildings is the growth and margin engine; continued backlog execution and diversification into datacenters, wastewater, and labs support sustained performance and margin quality .
  • Agricultural Products remains pressured by macro (rates, row crop prices) and dealer inventory—but livestock profitability is a near-term tailwind for grinder mixers and year-end tax-driven purchases .
  • Cost inflation and tariffs are actively compressing margins; management plans 3–5% price increases and is exploring reshoring, which should mitigate gross margin impact over time .
  • Operating expense discipline is visible, enabling positive operating income through the cycle bottom; watch for continued OpEx control and mix toward higher-margin modular .
  • Sequential normalization from Q2’s ERC tailwind underscores core profitability dynamics; monitor underlying profit without one-offs and the cadence of modular project conversion .
  • External backdrop for modular construction is supportive (global 4.6% CAGR through 2030), providing a secular tailwind to ARTW’s scientific/custom building niche .
  • Near-term trading lens: catalysts include modular contract wins/backlog conversion and evidence of ag demand stabilization; risks center on steel/tariff costs and ag dealer destocking persistence .