Good morning, ladies and gentlemen. Today is Monday, July 18 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 Marc McConnell, Chair of the Board of Directors of Art's-Way Manufacturing; and Carrie Majeski, CEO and President of Art's-Way Manufacturing. I'll now turn the call over to Ms. Majeski. You may begin.

Good morning. I'm going to start by reading our forward-looking statements. You should note that some of the statements made during this call may be 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 operations. Forward-looking statements are inherently subject to risks and uncertainties such as competitive factors, difficulties and delays in development, manufacturing, marketing and sales of Art's-Way Manufacturing products, general economic conditions, and other risks and uncertainties described in Art's-Way's periodic reports on file with the SEC. Actual results may differ materially from anticipated results and Art's-Way does not undertake to update its forward-looking statements. With that, I'll turn the call over to Marc.

Yes, thank you. Hi, I appreciate you having interest in the company and calling in to follow us. Obviously, if you’ve seen our results for the quarter, we continue to experience the headwinds that the whole industry is experiencing and we are battling through every day to try to achieve profitability and we’ve been improving our company day by day and we’ll be talking more about that later, but clearly we remain in the midst of challenging times and are working through it. So, we’ll talk about that a little bit at the end in the outlook and Carrie will go through the numbers.

Okay. Thank you, Marc. And today we have already filed our 10-Q with the SEC, so all of that information is already public and was public on Friday. So, we’re really going to do more of a high level overview and I’m going to start today by just talking again about our corporate initiatives. We’ve talked about those each quarter now. We have five corporate initiatives. Our first one was increased profitability. This is an extremely difficult, given the severe decrease in sales due to the overall ag economy. We have been able to reduce our operating expenses by about 14.5% for the quarter and just over 12% year to date. We continue to push sales and reduce inventory levels, looking for cost savings and reductions and all aspects of the business. We believe that we have taken the necessary steps to strengthen our business to ensure profitability as the ag markets improve. Our next corporate initiative was inventory reductions and we had a goal of reducing our inventory by 10% during the [indiscernible] fiscal year. Our main focus was going to be in our ag sector, as it does carry the highest volume of inventory. We are down $993,000 or 6.2% in our ag sector, and overall all corporate wide inventory is down $1.2 million or 6.5%. So, we are pretty pleased with how we’ve been able to produce our inventory over the first two quarters. We do have a couple of sectors that have increased their inventory values since our year-end and that would be Art's-Way International and that is due to their highly cyclical snow blower product line. Typically that inventory will ship out in the fourth quarter. At this point, we’ve seen an increase over year-end of $236,000, but still would look for a decrease in…

Okay, thank you. I’ll talk a little bit about our outlook for the rest of the year. We are prepared for rest of 2016 to continue to be weak. Our demand level currently feels pretty similar to what it did a year ago and we would therefore expect the revenue to be similarly weak. Last year the third and fourth quarter had losses and those losses were a lot worse due to some inventory write downs. For this year, we’ve significantly reduced overhead and we have no looming inventory write downs on the horizon here. So, I would envision that the revenue maybe similar to the third and fourth quarter last year, but our profitability would be better. That said, achieving profitability in the current circumstances will continue to be very difficult. So, we were trying very hard, we continue to try to find cost to remove, but we are in the midst of a period that’s causing challenges for everybody in our industry, particularly the ag industry. What we are trying to focus on are things that are within our control and demand is largely driven by external factors, but there are things we can do to help ourselves. And so we continue to focus on improving our business every day. As Carrie said, the slow times are off and the best time to make the company better and that’s how we view this. This is an opportunity for us to improve our future. So we're very focused on the customer experience, how the customer interacts with us at all points of contact, whether it’s sales department or parts department, warranty, et cetera, we're trying to get a lot closer to our dealers and actively seek their feedback and take action on their feedback to be just a more…

[Operator Instructions] Our first question comes from Sam Rebotsky. Please state your question.

Yes, good morning Carrie and Marc

Good morning

It's been tough. Could you sort of indicate as far as the University buildings, what's the size of bids you have out there and that you are working with a partner to lease some of the buildings or trying to lease? Is that opened up or is there a possibility of additional business or what needs to be done there?

I believe that our research buildings, I think their average value right now the ones in the funnel are about $1.6 million [per] [ph] research facility. I think it might be a little too early for us to know on the research side how the lease availability is going to factor in there. We do know that historically money is a problem for these research facilities because they have to get grants and the grants only last a year and to pay for a facility is a problem. So, we do believe that the leases should give everybody a few more options, but I would say it’s a little too soon for us to tell.

Okay. And now as far as agricultural buildings, do you see by dealing with the farms more and more with the agricultural buildings that could produce additional business when the economy turns around in the farming end?

Yes, it is a little bit surprising that on one side our ag business is down significantly because of the farm economy and yet Art's-Way Scientific is selling these buildings to these ag farmer. So yes, we definitely think that that business can pick-up further as the ag economy picks up. We talked about forage box business being down significantly, I think, like 70% to 75%, that’s dairy. So we definitely feel like when the overall ag picks up, you’ll see those forage boxes and the other dairy type products pick up and we should be able to see it pick up on the scientific side as well.

Okay. And as far as your financial statements, do you feel for the next year or so, you have an ability to have enough funds or would you need any type of rights offering with shareholders or anything like that?

I can speak to that. I think that we’re in good shape there. Our line of credit balance is quite low compared to where it’s been in recent times and the availability has changed as well, but we see that continuing to go down and our inventory efforts continue and so that cash that’s freed up and in the event that we may want to sell assets anyway, that is another source. So from our standpoint, we would feel liquidity going forward as being adequate and strong.

Okay. Good luck, Marc and Carrie.

Thank you, sir.

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

Okay. Well, thank you all for your interest and your investment and we will keep ploughing away at these initiatives and battling through kind of slow period in our industry and it will continue for some period of time. I don’t think that the ag economy will turnaround overnight, it would probably be gradual when it happens, but we are positioning the company to be in a really good shape when that occurs and perhaps before that occurs. So, thank you again and we will speak to you next quarter. Thank you.

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