Art's-Way Manufacturing Q2 2025 Earnings: Revenue Down 5.8%, EPS Up to $0.29

Art's-Way Manufacturing reported Q2 2025 earnings with revenue at $6.34m, down 5.8% from Q2 2024. Net income was $1.48m, up from a $4.7k loss in Q2 2024, and profit margin was 23%, driven by lower expenses. EPS was $0.29, up from a $0.001 loss in Q2 2024.

Art's-Way Manufacturing (ARTW) has reported its Q2 2025 earnings, showcasing a significant turnaround in profitability driven by a one-time Employee Retention Credit (ERC) refund. The company's Q2 2025 results highlight a sharp swing to profitability, with core operations delivering mixed performance.

The quarterly sales fell by 5.8% to $6.34 million, while the six-month sales decreased by 7.8% to $11.48 million. Despite the revenue decline, the company's gross profit rose by 8.0% to $2.06 million, with the margin expanding to 32.5% from 28.3% the previous year. This improvement was attributed to better cost control and a richer mix in Modular Buildings.

Operating income improved to $0.51 million, reversing a $0.21 million loss in the previous year. Other income of $1.46 million, primarily reflecting ERC refunds, lifted pre-tax income to $1.88 million. Net income from continuing operations reached $1.48 million, with earnings per share (EPS) at $0.29, compared to a small loss in the previous year. The six-month net income was $1.43 million, up from a $0.43 million loss.

Segment performance varied, with Agricultural Products experiencing a 11.6% decline in revenue to $4.03 million, resulting in an operating loss of $0.05 million. Management cited weak row-crop prices and high rates as factors, expecting destocking to bottom within 12-18 months. Modular Buildings, however, saw a 6.3% increase in revenue to $2.31 million, with operating income surging to $0.56 million and a 41.7% margin.

The balance sheet and liquidity position improved, with cash rising to $4,534 and the line-of-credit balance reduced to $1.06 million. Total liabilities fell by 21% to $7.26 million, while equity climbed to $13.62 million. The net working capital requirement covenant of $4 million was met, with the next test scheduled for November 30, 2025.

Operating cash flow from continuing operations was $1.25 million, boosted by ERC and working-capital releases. Investing outflow was $0.21 million for capital expenditures, while financing outflow was $1.04 million, mainly for line-of-credit pay-down.

The order backlog, which combines Agricultural and Modular Buildings, fell by 39% year-over-year to $4.73 million, signaling softer near-term visibility. Management expects agricultural demand to improve as dealer inventory normalizes and livestock margins remain strong. The Modular Buildings pipeline remains active, with expanded sales leadership aiming to tap new research-facility markets.

In summary, while the quarter's profitability is largely attributable to a non-recurring ERC benefit, underlying sales contracted, and the backlog declined. However, lower leverage, higher gross margin, and robust Modular Buildings profitability are constructive signs, while Agricultural Products remain under pressure.

[1] https://www.stocktitan.net/sec-filings/ARTW/10-q-arts-way-manufacturing-co-inc-quarterly-earnings-report-15a3192fbabe.html