Good morning, ladies and gentlemen. Today is Thursday, February 2 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, Chairman of the Board of Directors of Art’s Way Manufacturing; Carrie Gunnerson, CEO and President of Art’s Way Manufacturing. I’ll now turn the call over to Ms. Gunnerson. You may begin.

Good morning. I’m just going to start by read through our forward-looking notes. 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 operation. 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 products, general economic conditions, and other risks 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 the forward-looking statements. With that I’ll turn the call over to Marc McConnell.

Thank you all for joining us. We appreciate you being interested and being involved with our call today. Obviously you would have all seen the results for the fourth quarter and full fiscal year for 2016 which has been a challenging one for us and the industry at large. We’ll be talking later about a lot of the more encouraging parts of what’s going in our business right now and look forward to going through that after Carrie’s presentation. Carrie?

Thank you, Marc. I’m going to start today by going over our corporate initiatives that we have established for 2016. The first one I’m going to talk about today is our customer experience enhancement. This is goal that we feel like we made great strides in accomplishing but it’s one of those goals that you never give up and you’ve never done [indiscernible]. This year we were able to upgrade our phone system, add a manager to the parts department, we consolidated our parts and our inside sales and cross trained the group in there and we significantly changed our warranty procedures to decrease the amount of time it takes to respond to our end users. Though we feel that we achieved our short-term goals, we’re going to continue to focus on this area with both short and long-term efforts. The next initiative is growth of new business at Art’s Way Scientific. During 2016, we did increase our sales at Art’s Way Scientific by 15% over last year. However, we did not see the increases that we were hoping to see in the key areas that we were working on, but this would be an initiative that we’re going to continue to work on as we go forward into 2017. The next initiative is increasing profitability across the board. Obviously this is an initiative that we were not able to achieve due to our significantly reduced revenue numbers. Now I’m going to move onto the balance sheet and looking at the items that we really were able to control despite the Ag economy. We had a goal to reduce our growth inventories by $2 million. We did achieve this goal, we ended decreasing our inventories by 12% or $2,029,000 that reduction allowed us to lead into our next corporate objective…

Yes, thank you Carrie. I’d just like to build on what Carrie said a bit. It really was a year of transition for us in 2016 and we made significant progress that doesn’t seem apparent when you looked fairly at the financials. But our efforts in 2016 and that will continue in 2017 we’re reducing inventory, continuing to improve our purchasing, trying to sell our vessels building, improving our performance overall. All these things have helped strengthen our balance sheet and will continue to do so and I think will be moving towards having a really low borrowing level toward the end of the year and all this does benefit our banking relationship and to this point, our lenders worked well with us to help us work through these slow times in industries that we serve and that’s been very important. So while we've really been through a tough time as Carrie said with the growth in the backlog mostly attributable to new products. We do feel like we have good reason for optimism that the year will be better than the year we just existed. The market overall as Carrie said that, it feels like is likely bottomed still probably going to be somewhat of a weak year for the industries we served in general, but I can tell you that for the first time in over two years, we’re hiring labor because our backlog and build schedules show us that we really need to and that’s a significant change from anywhere we’ve been here in recent times and that’s I’m speaking about the AG sector here. But that is a very good sign for us. Also what Carrie said, a lot of this backlog is for product that will ship in the second and third quarter. So our…

[Operator Instructions] our first question comes from Tyson Bower [ph] for Oppenheimer. Please state your question.

Couple of quick questions. Just trying to put together some of your comments, you talked about inventory reductions about $2.4 million at the same time of having growing backlogs that is been generated from the new products, does that imply that the new products will be built to order or to PO as oppose to spec where you’re trying to then push through the demand. Is it a pull through situation for you?

Well we’ll be having some small degree of speculation and trying our best not to have significant inventory upticks in the categories that you know related to the new products. So I think on a general level, it will be pretty minor in terms of inventory impact because we’re entering it with that intent.

I would just add that, where we see our reductions coming from, they’re not from our product lines that have really offered us the most benefit in prior years. It’s been slow moving lines and that’s where we really see most of that reduction come from and that should more than offset that increase.

Okay. It sounds like if we fast forward to Q2, Q3 you’re in a roll forward period you have far more confidence and your ability to achieve that profitability to recognize some of the clean-up activities you took in fiscal 2015 to really show up in the numbers at that point in time. Is the years then determined by how deep or how far behind you start out of Q1 whether or not we’ll have an overall successful year?

Well obviously it will, missing that remains to be seen. Obviously it will have an impact and but I think overall that later parts of the year will be significantly better and overall I think we’ll have positive results. I know it’s a little vague but - lot of things really depend on whether truck show up on the last day of the month to take equipment away. We find that at the end of every month. I mean our profitability in the quarter can depend on that, when it’s tight as it has been.

Great. Which is why I talked about having a rolling forward and based on evaluations off of smoothening effect in that basis. You talked about scientific then quite hit what you wanted or the areas within scientific then hit where you wanted them to be in 2016. What are the keys in 2017 to really drive or really get back on track to where you think that division of that segment can be?

Well I’ll tell you we’re undergoing strategic planning basically right now. That our intent is to lead to more targeted growth instead of I think to this point, where you’ve been trying to respond to the increase that we filled [ph] and do the best we can in years past, at times in years past that worked well enough for us but I think we need to think harder about, how we’re different and how we bring value and how we go after the market with more resources to capture more business and have a steadier business and ultimately have growth in that business.

And thank you for taking my questions.

Our next question comes from Roger Miller from Frontier Investments. Please state your questions.

With America [ph] first program going on, if the border taxes enacted which is included in the Paul Ryan plans which could be as low as 20% for Mexico and as high as 45% for China. Realizing 60% of the auto parts are made in Mexico and the rest primarily China and Canada. How does that affect foreign machinery parts?

Well I don’t think, for one thing we don’t import whole lot of parts and there is some things that we important, but overall we don’t see ourselves as having a lot of exposure to our cost in that respect. Most things are locally sourced or not locally, they’re domestically source. And steel is obviously a commodity that is likely to be quite impacted by all of that and if the price of steel goes up that’s what we’re going to have to pay a lot of attention to specifically, but most of the other components in purchased items I don’t think would affect us a lot.

And how do you feel about competitors? What were they at with this?

I’d thinking be similar. Most of the companies we compete with are other mid-west based small manufacturing companies. We are not really head-to-head to with John Deere on much.

Well the good news is, at least it will show memo price increases from the border tax. How about the corporate tax rate? The observation is that you’ll be able to take advantage of lower tax rates because of Made in America. How do you feel about that?

Well we would certainly welcome that. We waited on the full analysis on that aspect of it, we haven’t had lot of earnings to be managing here for couple of years, but obviously we think that would be good for us.

But it looks like you’re on the verge of earnings.

That’s right.

That’s what I see from listening and reading and you can bring back the dividend, if the earnings are there.

Right.

And I would hope the dividend would come back as soon as possible, maybe at least by first quarter of next year. Is that a possibility?

We have not talked a whole lot about that. But I can tell you just off top of my head that, we’re very focused on reducing debt and I think that would be probably given priority before dividend particularly if we think that getting bank paid off is in within sight.

Well it looks like you have a lot of new product and I would hope you’re going to make an announcement for your 2017 show schedule, is that correct?

I anticipate publishing that yes.

Yes, I noticed that you haven’t done that yet, normally you do that. Some suggestions I might give you which seems relative to where you manufacture and the fact that the climate out there right now. You might want to make your logo more transparent with brighter identification with Made in USA on it and the State you’re making it, whether it Iowa or Ohio. And since 1956, that would, I think that’s a selling point to put on your farm equipment.

Yes and agree we’d take that into consideration. I will say we’re probably similarly situated in that respect to our competitors most of them were multi-decade, family-owned, mid-west based similar story in that. But the point remains I mean we’re proud of that as anyone would be.

I would be more than proud of it. I think you should label it on each piece of equipment. And as far as Ohio Metal goes as the oil business definitely the drilling is improving each week, we notice that there is more drilling coming online that should affect Ohio Metal, correct?

We believe so yes.

So maybe we can look forward to profitability there.

We think that as a very real outcome. We’ve already seen some uptick in business, it hasn’t been a wild percentage, but it’s been a nice kind of steady growth that it’s good. And yes all of the signs seemed to be pointing towards that being good. A lot of our main customers are pipe mills, that use consumable product that we produce and all of that oil and gas activity, pipeline activity, all that is good for that industry and I think we’ll have the benefit, we’ll have them benefit to us.

Well the Army Corps of Engineers approved the pipelines. There would be a held back and no matter what your position is on that obviously it will be good for Ohio Metal. As far as international goes there wasn’t much briefing in the call about what’s going on in Canada, would you like to expound on that?

Well it falls under the AG piece for us generally. But you know as interesting this year, there was a fair bit of early snow which we always see as the sort of predictor of how year is going to be. We’re glad to see that, we had a fair bit of early activity and it’s been a little bit quite since then, so overall I think it’s kind of average year in terms of their performance. It remains extremely competitive. We’ll say we’ve made, I think our sales or snow blowers in the US has been stronger and maybe a little bit less of in Canada and on the whole I think it was probably similar last year, but it’s not been very impactful one way or another to our outcome.

As far as scientific goes, your biggest gains have been in food safety, is that correct?

Well our biggest gains have been in the AG buildings in the last couple of years. Food safety is where we’ve seen the biggest opportunity for growth and we do have activity around that, we do have orders that we’re working with. So I think that statement will probably be true sometime from now, that would be the biggest growth in contribution to the company. But to this point it’s actually been more of the AG building.

And I haven’t heard about Dan Palmer lately, is he still with the company?

Yes, he is.

And you do have a new member on the board? Correct.

We do.

Would you like to talk about that?

Sure. He came on a few months ago, his name is David White who is actually Canadian but lives in Philadelphia and he’s also on the board of Ag Growth International which is another farm equipment manufacturing company that’s public, that’s actually a lot larger than us and we’re introduced to him through shareholder and talked to him a fair bit last year and felt like he had a good kind of operating background and board background and sort of strategic mind that I thought would help us and in any case, he’s joined us and we’re happy to have him.

And going forward do you have any plans for any acquisitions or divestures?

I’ve nothing to announce at this point. We’ve been obviously getting our own health and order for the most part, but we would not be completely dismissive of an opportunity that came along. But no I don’t see any big changes in the near future in that respect.

Okay, well thank you for the call today and it’s been very informative and the new products. Thank you.

Yes, sir. Thank you.

At this time we have no further questions.

Okay, well thank you all for joining us and for your investment and interest in Art’s Way and we’ve laid out obviously where we’ve been this past year and how we think 2017 may will be different and what we’ve done to have a different outcome and we’ll be diligently work trying to make that a reality. We do thank you and look forward to talking to in the next quarter. Thank you.

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