Good morning, ladies and gentlemen. Today is Tuesday, June 30 and welcome to the Art’s-Way Manufacturing Quarterly Investor Call. At this time, all participants are in a listen-only mode. [Operator Instructions] Your call leaders for today’s call are Carrie Majeski, President, Chief Executive Officer; J. Ward McConnell, Jr., Vice Chairman of the Board of Directors of Art’s-Way Manufacturing; Marc McConnell, Chairman of the Board of Directors of Art’s-Way Manufacturing. I will now turn the call over to Ms. Majeski. You may begin.

Good morning. I am just going to read the forward-looking statements for you quickly. You should note that some of the statements made during this call maybe considered forward-looking statements. Forward-looking statements include, but are not limited to statements relating to our market position, strategies for growth and future results of operation. Forward-looking statements are inherently subject to risks and uncertainties such as competitive factors, difficulties and delays and developments, manufacturing, marketing and sales of Art’s-Way products, general economic conditions and other risk factors and uncertainties described in Art’s-Way’s periodic reports on file with the Securities and Exchange Commission. Actual results may differ materially from anticipated results and Art’s-Way does not undertake to update these forward-looking statements. And with that, I am going to turn the call over to Marc.

Yes, thank you all for joining us for our quarterly call. As you have seen from the release, we had a profitable quarter, and we are pleased about that, and we look forward to tell you in more detail about that, and I will have more comments at the end and will allow Carrie to go through the numbers more specifically.

I am going to start again by going through our Ag sector and starting with Art’s-Way Manufacturing, our largest business. In the second quarter, our sales for 2015 are $6,050,000 compared to $6,360,000 in 2014. This was a decrease of $310,000. Our income before tax in the second quarter for 2015 is $704,000 compared to $360,000 in 2014. That is an increase of $344,000, or 95%. The bulk of the decrease in sales comes from a decrease in the OEM blower sales, and this is really a timing issue from the first quarter to the second quarter. When we look at our blower sales year-on-year, we are actually showing OEM blower sales are up 2.5%. So, we just had so much more throughput in the factory in the first quarter compared to last year. Our sales of our Art’s-Way Manufacturing whole goods remained consistent quarter-on-quarter. Year-to-date sales for 2015 are $10,815,000 compared $9,144,000. This is an increase of $1,671,000, or 18%. Our year-to-date income before tax for 2015 is $1,302,000 compared to a loss of $71,000 in 2014. This is an increase of $1,373,000. Our backlog currently is sitting at $2,677,000 compared to $5,358,000. This is a decrease of $2,681,000. The sales of our grinder mixers are up approximately $2 million over last year. Again, this is due to accelerated deliveries in the first and second quarters and just having so much more additional throughput in the factories in quarter one especially over quarter one of 2014, but continuing that throughput into the second quarter of 2015 as well. Our income has much improved for both quarters and year-to-date. This is due to increased efficiencies and improved management of our slow moving inventories as well as that shift with the grinder mixer sales. Grinder mixers do have strong margins for…

Okay, alright. Well, I would just start by saying that we kind of find ourselves in interesting time. We have long heard about, known about the down-cycle that’s been happening in the Ag industry. It’s been talked about for a year and a half, 2 years and in fact in more people that were road crop oriented and we have been fortunate to go through the last year and a half or so with the demand brought on by a lot of livestock and dairy sectors of the business. And so that has been really good for us, but – and clearly, we have had another profitable quarter. We are very pleased with that. But what we are seeing is some changes happening on the dairy and livestock side. Dairy prices have been treated a good bit and as have some other meat commodities. So, it’s created a situation where those of us that were getting quite a bit of the benefit from the livestock are starting to feel a little bit of it. We are obviously in a number of different businesses and several of them seem to be pretty cyclical obviously, Ohio Metal with oil and gas manufacturing sector, with the Ag business itself in some of our other sectors. But as I said in the quote from our news release, where we have really been focused on managing profitably through the down cycle and this quarter was a proof that we are able to do that, particularly in the Art’s-Way Manufacturing business with sales having been challenging we have been a lot more profitable, a lot more efficient that we feel like we are doing a better job, making a lot of progress on the – in issues that we have had in recent times, but we…

Ladies and gentlemen, at this time, we will conduct the question-and-answer session. [Operator Instructions] Our first question comes from Roger Miller from Frontier Investments. Please say your question.

Well, good morning guys…

Good morning.

Anyone else who is listening. Let’s talk about vessels first.

Okay.

Things appear to be turning around, you have cut the losses even though you are still showing one. The backlog is up significantly, you have on-demand product now, so maybe you would like to explain how that’s working out since in the past you didn’t have it?

Alright. Carrie would you like to touch on that?

Yes. The on-demand product at this point, we have not seen a very large increase in our sales because of that. However, we just started advertising and marketing that product as well. So that is a product that we have out there that really goes to a different user than we typically build our tanks for. Typically, the tanks that we are building do go into industry of some sort. These exchange tanks that we now have available would really go more to like your local colleague and dealer, so he could have his own exchange system on site, so that’s really just getting started, and we haven’t seen a real big benefit from that yet. However, we do anticipate we will see some as we move forward. Where the real increase in our backlog has come is through our more traditional sales outlets and just providing a better level of sales and support and delivery to those customers and having some larger orders come through, and really improving our production system and controlling our capacity and really being able to answer the customers’ requests. And when am I going to be able to get that and then hitting that delivery timeline. It’s very important to these customers, because they are potentially shutting down a factory when we don’t deliver on time.

So, under sales and support, are you doing print now, I mean actually doing color pages that you can hand out to the customer?

We are just putting together a literature piece and really we need to have a couple of different ones, one for these stock tanks that can be handed out of one set of customers and the other that really explains our overall capabilities and practices and offerings for that more traditional tank customer, and that’s all -- it’s a one-off custom production for their needs.

So, are the different divisions working to increase sales between them, for instance when your sales people go out selling Ag equipment, wouldn’t it be wise to take some literature on vessels with them?

We do, do that more specifically with Art’s Way Scientific and Art’s Way Manufacturing. There are a number of shows where we definitely take literature, but there are two large Ag shows that we go to the World Pork Expo and the World Dairy Expo, where we actually take a building and then we also take some of our agricultural equipment. We also showed at Tulare this year with the grinder mixer, but then also had sales staff on hand at the show from Art’s-Way Scientific. Those two entities we feel really have a lot of common pole and we try to playoff of those two more often than we do vessels or Ohio Metals.

Well, it seems like you have a lot of crossover here. And in my opinion, vessels have been neglected somewhat, because you have concentrated on the industrial accounts and possibly you could even take the literature with Dan Palmer when he attends his shows over the Ag people, and it would be hard to take a tank with you, but not hard to take literature with you. And in certain areas of the country, these tanks are primarily metal, is that correct?

Yes, all of the tanks that we produced are metal. Some of them will have a lining in.

Right. And wouldn’t that be deemed something that maybe in certain parts of the country would be more so in demand like in traditional areas, where the Mennonites and Amish are?

I am not pretty sure about that. I can’t comment on that, Roger. But I can say that Pat O'Neill has been our salesperson at vessels, and he came from the water industry and has been very focused on the water industry. So, with vessels, we feel that, that’s a real opportunity that we have is to get outside of the water industry to expand our customer base.

Right. And Dave Luellen is concentrating on Ohio Metals and he is basically based out of Ohio, correct?

That is correct, but vessels is the next entity that we are going to have Dave focus on. And Dave and I were down in Dubuque just earlier this month working with them and he is also scheduled to travel with Pat. So, we are moving him into the vessels segment at this point as well.

I commend you for that. I feel that well, if you get Dave Luellen in the vessels and Ohio Metals the same time, I think he is going to see maybe some crossover in the areas that he covers and his knowledge in business will enable you. So, it seems like in the bottom has hit – is maybe in place in some of the commodities at this point especially in beans and corn, and with the increase in rain in the Midwest, I know our corn crop is looking really good. Other areas, they may be flooded out. Would you like to comment on that anyone?

I have certainly comment on the Midwest area here, where there is a large concentration of our equipment sold. Our crops right now are looking very good. We have had very good moisture content and we do not have in this area a lot of grounding out. They have been rather slow rains that have been able to absorb into the ground. So, in this area, things are looking pretty well.

Well, where I am going with this, how it affects you is on the conference call, it was stated that the dealers aren’t stocking your equipment as much. It would seem to me it’s got to do with the inventory as they start to move larger inventory, they are more apt to strategically increase the inventory with you due to the fact that they need to get some of the larger inventory off their book. So, would you agree to that?

Yes. As you drive by these dealerships when you look at the inventory that they have, it’s the combines and it’s the tractors and a combine and a tractor cause significantly more than any one piece of equipment that we have, but because their capital is tied up, they are not willing to put any inventory on their lot. So, yes, as some of that larger equipment, the self-propelled tractors and combines start moving, yes, I think the dealers will start speculating a little bit and we don’t know when that’s going to be and we don’t know how much of a recovery those dealers are going to need at that point either.

Well, in my opinion, it’s right around the corner, because we have seen an increase already off the bottom in beans and corn not a great deal, but it looks like there is definitely a bottom is set in and an increase will warrant more sales. And I don’t think the market has seen that yet, but it’s coming, so that’s a positive view point and I hope I am correct with this?

And that’s positive certainly for dealers at large and for their tolerance of inventory. On the other hand, it doesn’t help the people buying grinder mixers at all. So, it’s kind of a complicated thing for us. If it significantly went back the other way with the corn, a good bit higher, we probably have another product mix shift away from grinder mixers.

Well, I think you have to recognize there has to be an equilibrium on cash flow and therefore I will help the grinder mixers in the fact that the increase in the commodities won’t be that great, but should be enough to sustain the farmer and obviously he has got to be profitable we all agree on that, correct?

Yes.

So, that’s where I am going with this, I am not sure what the level of profitability is, but definitely I think all around the negative part of the Ag business is at the bottom and I think it’s the positive part is coming and I think it will help you too. As far as Universal Harvester goes, at this point, have you thought about spinning it off?

Well…

Is there anyone that would be interested in it or can you take the other viewpoint? Is there anyone you could acquire and put the two companies together and take more market share?

Well, I would say or for one thing they kind of fulfill the niche within the real business, but our general thought is well, for one thing we haven’t sold companies or entities so much that any others can remember. And to do so I think our general mentality was unless we are completely desperate who wouldn’t be doing it when it’s in a bad state or when the market is in a bad state as it sounds. So, we would probably be more likely to take the other tackle of looking at what interesting opportunities might be that go with it. But at this point, I would say that probably wouldn’t be our focus if we were looking for places to do acquisitions, but you don’t know what might come along. In the real business specifically this one company in particular that is larger than the others that did the vast majority of the OEM business with Deere and Case and others and we were kind of on the higher end as the real business with aluminum, higher quality product. I am sure that with their business being almost entirely OEM that they are struggling, I would have to think pretty significantly it would be like what’s happening at UHC for us, but on a larger scale. And then there are also some other companies that make other sort of niche products like Aerial things like that, but I don’t know what’s going to happen in that world, but I know that there has to be some serious struggle going on for those that are not as diverse as we are.

Well, you have always been an acquirer, I agree there, so what are you looking at?

Well, one thing we are of course focusing on what our cash flows are and all those kinds of things. So, we are having a bit of conservative fact right now just in general, but if we were very active in looking at anything, it would likely be something that could combine with scientific and stabilize its income and improve its product offering and that kind of thing. So, that would kind of be what would be most interesting to us.

Well, in my opinion, scientific as going forward has the most positive of all the divisions, including in the Ag division. I think scientific has possibilities that are way beyond any volume of revenue where you are at now?

I agree.

And recently there was a huge investment made in your company and shares, if I was going to purchase shares at this point that’s what I would be looking at. So as far as scientific goes, are you looking at bringing in any more personnel to relieve Dan Palmer with some of his duties?

Well, we are having those conversations, yes, because I think that we ultimately need him to be freed up and have the capacity to chase the opportunities that are out there. So we don’t have a listing up for anything right now, but we are talking about what kind of person would complement what he does and helps them in performing at a higher level even yet capacity wise. So yes, that’s on our radar.

Well, every day we hear about food safety.

Yes.

And it’s all over the marketplace from organic foods to the main stream food companies and they have been acquiring other industries what not in the food industry. Today, we had another private label deal, but anyway the point is Dan Palmer is out given speeches on food safety, I would imagine that’s perking up the division as far as who you are, have been pretty quiet since the division was formed and mostly involving universities, correct?

Yes, to a large degree. Yes, food safety in general is kind of, it seems to be a recent half button thing and we were the first to bring the modular concept to food safety here recently really and so we are in the early stages of all that and it takes a while to develop. Unfortunately, it takes longer than we wanted to develop but we think there is a real opportunity within food safety that’s perhaps going to be communicated for us for future years probably not going to hit tomorrow or something. But he is spending a lot of time on those things and those are really long-term benefits in long-term demand kind of thing, so we are all over it and we need to be more able even to be responsive than we are.

So basically you are applying your capital in a going forward into that division, is that correct?

Well, for looking at it strategically it would seem that that would be the particular division where we have a), we have already got a pretty good platform there, but that some strategic investing and building up that I think could give the biggest upside for the shareholders. And like you said, I mean there is – that could become something far and above what we have a concept of now and we have the same view of that. So, just from the strategic standpoint, it would appear that that’s the place to be a little bit speculative.

Other than that, do you have any other strategies of growth that you want to expound on at this point?

Well, not in real specific terms, I mean of several our divisions particularly ones that were more recently acquired have suffered from prior to our acquisition some degree of neglect in terms of sales and marketing. So we are really trying to provide that support much as the case with the Ohio Metals for example and obviously we need to do that further with vessels. I would say there is ton of opportunity within what we already have if we apply the proper expertise and support to it. So we are really kind of focusing on trying to take better range of opportunities that have probably been sitting there for us for some period of time. And from there if the growth that requires investment a lot of it has to do with the scientific that I just discussed. And we would continue to be somewhat opportunistic in other areas if things come along that provide the synergy of what we are already doing and we are open minded to that, but I don’t have a specific plan beyond mentioning those things to lay out with you.

In Canada the reason for the move was…

Well, we inherited a leased facility that was really somewhat come from us in terms of where we would want to be to put it lightly.

I thought it was stated myself.

Did you go by there?

I didn’t go by there, but I viewed the pictures on the internet and made some telephone calls, yes.

Well, I would say it would stand out, has been quite different from the rest of our facilities and I will leave it at that. So, we were eager for moving on when our lease came up and we had actually quite a bit of difficulty finding another facility to lease that would be kind of appropriate for our needs in that general area, while being able to retain the workforce that we have and all that. So, eventually we were able to find location 20 minutes away or so that would allow us to retain the folks that we have and it’s the rightsizing it. It suits what we do. So, we are in a much, much, much better facility with paint system and all that than what we had before. And so from the time that we were in the old buildings, we had our eyes on finding something else. So, there was no surprise that we moved.

So, in Canada, is there possibilities of putting more product on ground up there stocking it to increase sales?

Whole goods, yes, we have done that for some period of time and had a good bit up there and particularly with currency where it is now it’s been – it’s been problematic for us selling whole goods of Art’s-Way’s into Canada, but we have had some on the ground and we are trying to be a bit more aggressive in terms of selling whole goods in that area. Ontario, which is where the plan is, is that it should be generally a pretty good fit for what lot of our products are dairy, hay and forage, all those kinds of things trying to make sure as manure spreaders could be a good market for that. A lot of it is – lot of the competing product is produced within the province and so it’s a bit harder to compete and then when you have a currency disadvantage, it’s that much harder. So, right now, it’s not highly successful selling whole goods in Ontario, but under different circumstances at a different time, it can be and we have made sales there, but right now, it’s not really active.

Okay, I think that’s all I have today. Thank you for answering my questions.

Yes, thank you.

[Operator Instructions] At this time, we have no further questions.

Alright, well thank you all for your interest in Art’s-Way and your continued investment. We appreciate your time. And again, we are pleased with the profitability we have and we are pretty focused on continuing that profitability for the rest of the year despite some headwinds that maybe there. And again, thank you and have a good day.

This concludes today’s conference call. Thank you for attending.