Carrie Gunnerson - President and CEO Marc McConnell - Chairman.

Roger Miller - Frontier Investment Sam Rebotsky - SER Asset Management.

Good morning, ladies and gentlemen. Today is February 02, and welcome to the Art's-Way Manufacturing Fourth Quarter Full Year 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 and Carrie Gunnerson, CEO and President of Art's-Way Manufacturing. I would like to turn it over to your host, Ms. Gunnerson, you may begin..

Good morning. You are also joining us today. I’m going to start by reading our forward-looking disclosure. 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 our 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 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 its forward-looking statements. With that, Marc I’ll give you the floor..

Okay. Well thank you all for joining us. You’ve all seen our earnings release and the financial result obviously is not what we would hope for, but there’s a lot to talk about there and it’s a lot of good things that are going on towards building for future prosperity that we will be talking about.

And I’ll like Carrie go through the presentation and touch on some of these things and we’ll be glad to take questions thereafter.

Carrie?.

Our consolidated fourth quarter revenues were $5,55,000 compared to $4,116,000 in the prior year or an increase of $939,000 or 23%. Our year-end revenue was $20,715,000 compared to $21,558,000 in the prior year, a decrease of just 4%. On September 28, we restructured our debt with Bank Midwest, away from U.S. Bank.

Bank Midwest is a local owned bank here in Armstrong, Iowa and they really understand the Ag economy and our business and we feel that they are a much better partner for us.

Our new loan agreement greatly improves our liquidity and reduces our annual debt service by over 60%, and establishes much more favorable loan covenants and allows us to move our bank debt from current for long term and for our November our reporting period.

We anticipate our bank fees to be down approximately $100,000 for 2018 due to our change in banking partnership. We continue to bring more focus to our key operations and simplify our business. At year end we had two facilities on the market for approximately $3.2 million.

We have signed a contract to sign, to sell the Dubuque [ph] for $1.5 million with a closing date of March 30. We did impair the building and the remaining assets in our November 30 numbers. The impairment was approximately $300,000. We also closed our production facility in Canada, here we were producing the Agro Trends snow blower line.

We concluded production in the fourth quarter and our lease came to, it was coming to an end and we did not feel that the revenue or the income that the product line was producing was really worth the complexity that it was adding and the required effort to have a firm presence.

We were able to sell the product line in December, and while that wasn’t a gain, there was also not a significant loss in closing down production as well. We have been working aggressively to bring down our inventory for the last two years in order to unlock the cash value. Let’s also simplify our business and our product offerings.

In November of 2015, our consolidated growth inventory was $18,115,000. As we close out 2017 our consolidated inventory was $14,588 a reduction of $3,527,000 for a two year period or 19%. In 2017 the draft was $1.5 or about 10%.

For our agricultural products, revenue for the quarter was $3,812,000 compared to $2,998,000 in the prior year or an increase of $814,000. Our year-to-date sales are $15,407,000 compared to $15,756,000 or a decrease of 2% or $349.

If you take into account an adjustment for sales of self-propelled beet harvester which were down $932,000 for the year, our sales year-to-date were up $583,000 or 4%. We just concluded our early order program and that was very successful for us this year. We had more than two times our dealers participate this year compared to last year.

Our backlogs right now are comparable to last year’s numbers however, last year we had two self-propelled units in the backlog which accounted for about $1.3 million. So our current backlog is $4.3 million and if you just look at products that Art Way manufacturing produces, that’s over a 20% increase over last year.

Our engineering expenses ended up 18% higher over last year due to our focus on new products. And we continue to push down on our inventory levels and in doing so some of our liquidating did affect our growth margins by approximately 5% for the year and 12% around 5% [ph]. Our growth margins for the quarter were 12% compared to 21% in the prior year.

Year-to-date our growth margins were 18% compared to 24%. Other factors impacting our margins are low efficiency numbers due to new production as well as turnover in our assembly area. We have made changes to our pay structure and are improving our work instructions in that department.

At Art’s-Way Scientific our sales for the quarter were $657,000 compared to $572,000, an increase of 15%. Our year-to-date sales were 2 million 700 compared to 3 million 674 a decrease of 27%. The decrease in sales is due to the poor dairy markets.

In 2016, we sold 2 million 360,000 of egg production buildings and in 2017 we were only able to sell 660,000 a decrease of 72%. We have had some extremely cold temperature here in the Midwest in the last couple of months and due to that we have seen an “increase” and thus may result in increase in the egg sales in 2018.

We did see an uptick in our animal research product line of 38% or 354,000 and our laboratory line was up 357,000. We believe that the increase in the laboratories is due to our development of the new food safety market. On December 18, we were able to hire our new General Manager, Mark [Indiscernible].

Mark has a diverse background prior working with Tax Base [ph] which later became Art’s-Way Scientific. Early on in his career is when he was with Tax base, he went onto work at a couple of other small businesses, one of which was later spun-off and purchased by Caterpillar.

So we believe he has a unique background or he understands the dynamics of a small business, yet his time with Caterpillar has given him some good back and training and lean initiative. He was focussing on our manufacturing processes, implementing those lean initiatives, training and eliminating waste.

Our President Dan Palmer will now focus all of his efforts on the sale side of the business. In the second half of the year we got pretty aggressive on moving finished goods inventories. We had speculated on some by variance [ph] or research buildings that had not been sold.

Since that time we have secured five contracts on buildings that we have had in stock. Two of those buildings went with financing leases and two were capital leases. And then the final one was a 12 month rental with an option to buy. We now only have egg production buildings left in inventory.

The contracts that I have talked about on these five leases, well they did incur in the second half of 2017 the customers have to get their preparations done that we will not see revenues for those deals until the first and second quarter of 2018. Our backlog at Art’s-Way Scientific is at 150,000 compared to 500,000 a year ago.

That decrease was a little bit deceiving because it doesn’t take into account lease buildings that we do have contracts on. And we do have buildings that we need to produce for signed contracts. So despite the low number for the backlog we do still have production to do to keep our factory busy.

At Ohio Metal, sales increased by 7% for the quarter from 546,000 plus [Ph] 586,000. Year-to-date sales were up 23% from 2 million 128,000 to 2 million 608,000. Our growth margin have improved from 24% in 2016 to 31% in 2017.

We continue to focus our efforts on growing the speciality departments in order to offset the peaks and valleys of the standard side. We have seen an increase in sales on the speciality side of 41% for the year and we anticipate continued increases on the speciality side of the business through our next fiscal year.

2017 was a difficult year for us and for our industry. We believe our focus on customer service and new product development will prove to be an investment in our future. Our focus on simplifying our business and reducing inventory has freed up both cash and management resources.

Our new banking relationship will allow us much more flexibility improving our liquidity by reducing our debt service requirements. The sale of the new property will further reduce our debt and our carrying [ph] expenses. We are cautiously optimistic that we have turned the corner.

We will continue to focus on new products and being relevant in our market space. Our image and our dealer relations also continue to be a focus through customer service and quality. Our backlog for Ag products is much stronger than a year ago and the margins associated with that backlog is are also much stronger.

While our sales have struggled over the past few years we have taken opportunity to drive costs out of our operations while focussing on quality, customer service and productivity to strengthen our core business. We believe these efforts will be recognized as we move forward and our markets improve. Marc, I’ll turn it over to you..

Okay, thank you. So you know you look at our finances for the year and it’s disappointing and there is no way to say that from a financial standpoint that we had, kind of here that we want to have cause we didn’t, it remained a very challenging market and we endure that.

While we did have great success and is continuing to build the foundation of the business, we have made quality and customer service and product development kind of essentials in the business and how we are going to build the brand to give us sustained success and profitability in future times when the market is a bit different and better, that really requires us to simplify our business to work on continuous improvement and really to do all those things in a cyclical business I think we need to do it from a lower debt standpoint and to really focus on liquidity so that we can live through the ups and downs in the industry and along those lines we are pleased to have the lowest debt level that we’ve had in probably six, seven years something like that and working very hard towards getting to as close to zero as possible perhaps next year.

So, that is a priority for us, as Carrie said we’ve really focussed a lot over the last couple of years and have seen some success in reducing inventory and that’s really been essential given the fact that we’ve been experiencing times where operating profits are elusive.

So we have a lot of work to do on a number of fronts this year, 2018 while we have momentum building at Art's-Way Scientific with the lease building and in food safety we are seeing improving there and really more action than we have for some period of time and we are also seeing growth of the precision side of our business at Ohio Metals in particular, at the same time their oil and gas is looking to start to drive the standard part of our business, there’s a momentum shift that are good for us and in Art's-Way Manufacturing where we’ve got a broader product line of fresh products and we’ve got 35 new dealers – was just phased in our early order program which was a huge movement for us, that’s probably the biggest improvement in that respect if anytime that I’m aware of since being involved with the company.

So and we have our backlog is up and the quality of our backlog is better because the gross margin of the products of this year’s mix is a lot better than it was a year ago.

So, for all these reasons we have the beginnings of some positive things to aid us as we enter this New Year, but it’s also going to be the case that this year we are continuing to focus on reducing debt, continuing to focus on reducing inventory. And we still got plant items to take care of.

I am extremely pleased to have a contract under view [ph] I am extremely pleased to have successfully sold the snow blower business in Canada and to do so and whether we came out pretty well, those are major steps towards getting us to the right position of being a simplier business and one with lower debt. So those are good starts to the year.

But we also know that in 2018 first quarter due to the tax law changes that we are going to have a hit due to our deferred tax asset coming down around 300,000 and it’s going to hamper our reported earnings for the year we know that.

And we’ll be continuing to build during the year, continuing to improve our business and at times the market is not completely turned around to the better yet, so I mean I would expect just to need to be able to continue to weather some difficulty during the year because it’s we don’t have $6, $7 corn and we don’t have milk really high yet and those factors aren’t in place yet.

So with that being the case, we felt like to send the message that and a lot of respect we really are still planting so to speak to use a term and harvesting we haven’t been able to do yet and I don’t know how much harvesting will be this year but long term we are building a stronger company that’s going to be successful long term.

In the short term we’ve got some loans to take and have been taking them and you know I’m tired of taking them. I’m pretty impatient about starting to show some short term profitability but we are going to keep the long term view and keep doing the right things for the business long term.

And with that, I’ll be glad to take any questions that you have..

[Operator Instructions] And our first question comes from Roger Miller from Frontier Investment. Please go ahead Roger..

Well good morning..

Good morning..

First thing I’d like to ask is that on a future conference call Dan Palmer, they will speak, is that a possibility?.

It is, yes..

Okay, well can you expand on how you manage to find 35 new dealers for the early ordering program? And also what considering the size of this company?.

Well it is a lot. And it wasn’t by accident. We were finding that most of our activity really was happening through a handful of dealers that really were not allowing all the dealers to be able to be very competitive against them.

Our program structure was such that the discounts were really leaning in their favour and consequently we had I guess too many of our eggs in the basket of a few dealers and it was impeding our ability to sign new dealers because they were a bit discouraged by the idea of not being able to compete from the start.

This is sort of a long term problem that we finally addressed. So for our earlier order program we changed the structure in such a way that the higher volume dealer has less advantage. They still have an advantage over smaller dealers, but it’s not to the point that they just preclude [Ph] the others from doing business.

Okay, so that’s one thing we did it on purpose. The other thing is we have added some sales reps in territories where we had gas and these were some key areas where we clearly should have representation, but have – and struggled to have representation over the years and consequently didn’t have much business.

So we filled some of those holes and we got good reps, good reputable people and in some cases we are leaning on their reputation to help us get started. And they have had some success.

And we’ve also added some products that’s appealing the different dealers and maybe we had before our [Indiscernible] process or appeals differently to and maybe to a broader area and its really and innovative, but it’s also not a ton of money, it’s about $10,000.

That’s an easier thing for someone to take a bet on and something that’s 50,000 or more. And that $10,000 unit is also something that can help get somebody over discount threshold to the next level and that sort of thing.

So those were key elements of it, but and we really have been focussing very hard on customer sort of side of things and in quality side and on being very responsive to the customer to handling warranty quickly and fairly, to answering the phone quickly, intending to be – I mean it’s sort of a long term thing to really improve how the customers deal with this and so we’ve just been making the case that we are trying to be the best in the industry with this kind of stuff and combined with their other efforts I think some dealers are willing to try.

And that’s – I maybe missing a couple of other elements but those are some of the key elements that allowed us to grow that dealer base. And some of these new dealers....

So these reps that you hire are they straight commission reps or are they in-house reps where they can always sell your line?.

No they are independent reps. They are independent reps that are commissioned only..

And so they are selling other lines, right?.

Yes, they are..

Do you find that favourable or fact that they could be selling other independent items that might fit in with what you have, you know a fair bit of way in fact they can get in the door?.

I think so, yeah because a lot of the cases they already have a relationship with a dealer based on the sale of their products. And so we are really borrowing from their relationship to open some doors. So yeah, I mean it’s good that they already have good reputable lines that they are carrying. And it also indicates that.....

One of your territories that you – I guess you could acquire through that..

Well one is Michigan and Indiana, we really had almost no activity over the years, be it equipment aside, okay Michigan has these equipments but that’s really entirely separate.

You know that’s the key part of the mid-west where we just did not have good representation and so we try to find the most reputable rep agency that we could in that area and make the case to them that we are a type of business that they are to business with and the better rep agencies are pretty mindful of their reputation to, so it takes a while for them to check us out and but when they come on board we’ve got to prove we are going to help them get started and take care of the customers that they land.

And so we’ve – it’s sort of a long sales cycle in some respects when you are trying to do that especially in a downturn. But you know we are making some progress, we are taking some things with us. And Indiana, Michigan is an example of that..

Well asking in a different direction, oil rigs are definitely coming on line. So it’s going to continue to come on line.

Is that helping Ohio Metals?.

I think that – we’re seeing an improvement in activity with those types of customers or with the steel mill. And I think that it’s going to be growing. I mean, I think that in 2018 that’s really a place where we could see some growth in an area that’s been weak for a number of years. So I don't think it impacted us hugely.

While our sales were up significantly, I think 23 or so percent for 2017, a lot of that was on precision side of the business which is not oil and gas driven, but I do think for 2018 it's going to help us..

And it was stated that these lease buildings in Scientific will report in the first and second quarter of this year, right?.

Yes..

The revenue -- so I would assume the Scientific should be profitable just from this and some of the -- in the backlog and some of the going forward.

Is that it is a fair assumption?.

Carrie, maybe if you can just speak to how that revenue is treated for capital leases versus operating leases and all that..

Yes. That not all of our leases are created equally, and if it’s a capital lease then we can go ahead and claim the entire revenue. But if it’s financing lease you only get to claim a portion of that monthly revenue that’s you’re bringing in, your monthly cash. And of course then there is depreciation that will offset some of those revenues as well.

But yes, we should definitely see in the first and second quarter and then we have a larger one wealthy [ph] college which that should always we should see most of that in the second quarter as well..

Well, what I am driving at is, when you look at the company as a whole, by the end of -- let's put it this way, by next year, do you think you'll be profitable? Or do you think the tax laws going forward will affect your earnings?.

You’re asking for 2018 fiscal – when 2018 is going wrapped up are going to be profitable? Is that you show a profit for the year? That’s the question. I’ve had to leave one direction another on that just because we are going to have impact of the deferred tax asset, that’s going to hamper us, right.

And the market still going be difficult and we still will be selling inventory, liquidating some things at cost, in some cases slightly above, slightly under as we have been which you not really impacted some of our margins, but it helps with us achieve these other objectives.

There’s still lot of moving parts that kind of cloud the picture a little bit I think and during this year there still going to be a lot of claim. So, it’s going to be hard to say. The market for our products will need to either be stable or improve, and for that happen if there is a retreat in those markets that’s going the whole lot harder.

I really think overall this year it’s going to be a lot of continue to work towards getting where we want to go. I think it’s going to difficult to show real profitability..

Okay. Well, that's all I have for today. Thank you..

Yes. Thank you..

Our next question comes from Sam Rebotsky from SER Asset Management. Please go ahead Sam..

Yes. Good morning, Marc and Carrie..

Good morning..

Let’s see how we improve the current year. The asset held for sale at the end of the third quarter, it was a 1.714 million.

Is that where we took the -- this will be closed at the end of March and we’re taking the 300,000 hit in the year ending November?.

That's correct. So, we hadn’t listed that paying on the higher price which is what created that gap. Now some of that would've been a gain if we would have fill list price. That’s why it doesn’t totally fill that gap. So the impairment was for what we did and applying it for versus our book value..

Okay.

Do we have any other assets for sale? I didn’t understand if you said there were some other assets other than inventory etcetera?.

Well, we have a facility in West Union, Iowa. It’s about 200,000 square feet, which is for sale as well..

What is that carried at?.

It’s currently stood at 1.7..

1.7. Okay..

Book value Carrier is – what’s that number?.

I don’t have..

It’s quite bit less than that..

It’s significantly less than that..

Okay, okay. So, in other words I’m looking at your balance sheet at the August 31st, looking to see to where that would be.

Are they included in fixed assets, property, plant and equipment?.

So, the financials are presented as our continuing operations..

Okay, okay. Then I get that.

Now the assets held for lease, the 1million 232 for 90 at August 31, what is that number at the end of November?.

Could you ask that again?.

Yes.

The assets held for lease of common net a million 232, 940 what is that number at November 30th?.

I don’t have that right in front of me..

Okay.

But would it be in a 1.5 million or it would have increased on the million 232, and this is where we’ll get a pickup income over the year from this asset as Roger refer to earlier?.

Yes. I believe that once you go out on lease. So when they’re in our whole goods inventory it’s actually an inventory..

Okay..

When they go out on lease they move to assets held for lease. So there is a movement on the balance sheet there. So you should see the assets held for lease increasing as these leases go out the door..

I think though that the West Union building which is now for sale we have been leasing it. And so, I would think that would move from assets held for lease to assets held for sale, but the assets held of lease would have -- also a Scientific leases coming into it.

So I would expect there will be movement there that probably once we’re seeing building is out of assets held for lease then there probably would be a steady increase over time of assets held for lease from Scientific as we continue to build that..

Okay. So -- and also it’s my understanding your inventory which is 14,588 you want to lower that a little more. You reduced inventory a 1.5 million.

Is there any – do you sort of have a range at this point in time? How much more you want to reduce inventory by?.

Well, we are trying to go over 2 million this year which I think is very achieving. And then there will still be some. So, overall I think that number at some point can get to closer to the ten, it just going to take longer than one year to do it.

And that also assumes that we don’t purposely increase the inventory of other desirable things to offset [ph], but overall, yes, we continue to have a lot of opportunity to reduce inventory and we’re going to be working on this year and I’m sure we’ll certainly do in the next year..

Okay. Now at this point you’ve indicated that the agriculture with the farm business that’s going down and relative to price of milk and corn and its difficult to predict where these things go.

But as Scientific do we see additional money coming in there or is there any, I mean, you been doing the leasing and is there any thought of setting up a separate company to do some leasing.

Can you increase that number significantly and use some other entity to help you sell more of your product if you could lease?.

Well, we we've not explore that a whole lot as far as a separate entity to do so.

We've done quite a lot – quite a fair bit of leasing of our own that we’re handling, but also for leases that are bigger than we want to handle, and we do have a third-party leasing provider that we've been working with itself and get -- helping some of our customers get lease financing.

So, I don't think we’re limited per se by our financial capacity because we do have a partner to work with there.

But longer term as we get into a better position – I mean, again we have the best liquidity and deposition we had in years but that’s going to get quite lot better as we go forward and we have to look at that strategy as to how heavy we want to go on our balance sheet with those kind of leases..

Is there a loosening up of the money? Is there more jobs to bid on Scientific than say six months ago? Or do see this improving going forward?.

I think it seems to be improving. It seems that we have a long -- we’ve talked about it for so long. We have a long sales cycle with these types of things. I think with leasing that sales cycle seems to get shorter.

And a lot of the clients we've been dealing with this year particularly with leases are in a corporation and I think that decision-making is a little faster. But we did just seem to find that a number of them were ready to say, yes, around the same time, and that over the last few months, and it doesn't seem to be for one common reason.

I don't think -- maybe they have funding and that kind of thing. But it also helps that, the President of Art's-Way Scientific can spend almost exclusive time in front of the customer and that’s the strategic changes we made. That's probably helping us as well. So, overall I do feel like we’re building momentum.

And a lot of the clients we’re working with right now do have other projects and they’ll be repeat business from it. So we’re – I feel better rather then I have for a while..

And as far as the tax situation it would appear even though initially you have to set up for the deferred tax asset you -- when you become assuming you become profitable on a regular basis, which that would seem to be the game plan and hopefully it sooner than later your rate will be lower, I think 21% versus 35%.

Does that give you any more flexibility going forward?.

I think it's going to be great. I mean, I fully expect that we will be back to year-in, year-out profitable. We have profitability before long and we went pretty much 15 years quarter after quarter profitable before the downturns in numerous industries affected.

So, yes, when we’re able to get over the hump [ph] over there and are making money like that that’s going to be great, it’s just going to be enhancement our income and our ability to organically grow capital.

And as far as flexibility, it provides – I guess I don't have a lot to say about that, because I’m really focus on getting to the point of paying taxes again, but I imagine it will help in all respect when we get there..

Good luck to everybody at Art’s-Way and for the shareholders..

Thank you..

Sam, I did pull up numbers which you were looking for, at November 30th our assets held for lease was at 1.2 million..

Okay..

And that did include 1.1 million for the West Union facility..

Okay..

So this number will shift as we go forward and we move Art’s-Way Scientific leases in and we move the West Union facility out for assets held for sale..

Okay, great. Thank you very much, Carrie..

Yep..

Our next question comes from Jeff Weldon [ph] an Investor. Please state your question, Jeff..

Hi, Marc, hi, Carrie..

Hello..

Hello..

Well, I think looking back a year it’s been a couple of steps forward, couple steps back, but I mean in terms of the things that you guys can control, I think you’ve done a pretty good job. So I think you guys and the team should hold their heads up high. I’ve got a couple of just kind of clarification questions.

The blower sale in Canada, the proceeds to that, are you planning to use that to reduce debt or use funds to invest in other areas of the business?.

Well, for the short-term and medium-term we’re putting that on pay down our line of credit of course. And there aren't -- there not a number varies that we feel that we need to invest. Real specifically there is some CapEx that we’ll considering this year that will be for good strategic purpose.

But overall there is not a whole lot specific that we would put it toward. I will say that we have already been maintaining elevated level in engineering research development, in new product development.

And also I think that as we build momentum with our dealers that marketing effort and expense is something that we’re probably need to not be bashful about, so you could say that that will help us be able to do some of those things the right way..

Sure. I it looks like….

But that is right place to apply..

Okay. Let me just ask one double quick down here.

With sort of the oil and gas market starting to show some signs of better environment, do we need to start thinking about investing a little bit more or expanding the metals division?.

Well, we have really access capacity to build the kind of product that is consumed by that market. So, we can meet that demand very easily. I mean, we’ve experienced really high levels of activity in oil and gas in prior times.

I mean, the years 2010, 2011, 2012, 2013, you know, in those times they were very busy servicing steel mills that were driven by oil and gas type of business. And so we’d be lucky to get to the level they are already at in that respect. So it’s not going to require investment for us to deal with whole lot more business there..

Okay. And in the prior question, I think you gave a target of $2 million of inventory, reduction quite about $2 million for 2018. I’d might have miss this.

Do you have a target debt reduction that you are looking for 2018?.

For 2018, well, we have a building sale, right. We have debt.....

Yes. That will be very helpful..

Yes. And we have inventory reduction as stated. And we’ve got principal payments as stated. And we intend to have positive EBITDA this year. So it’s going to take us a lot closer to zero but not zero probably this year..

Okay..

But I think that again that is with the thought that the market doesn't get worse than these kind of things, right. So in any case I would expect it to go down materially, but as to how much is really going to depend on a number of factors..

Okay. Very good. 35 dealers that you added; are there any more. Did that represents a 100% of opportunities or there others that are going to be added.

And on the other side were there any significant dealers that you lost in the year?.

No. There were not significant losses. There were some that did not participate in the program this year that seem to be one one-time sales where maybe a retail customer came and wanted something and they signed on for that purpose. And of the 35 this year there might be some of that as well, but I think less so.

But there are always more dealer opportunities out there and it's a real focus for our sales organization to grow the dealer network. And yes we’re going to be trying to add all year long..

Okay..

So, I can really give you a statistic as to percentage of opportunities but we’ve got plenty more to go..

Very good. I know that in 2017 you added some – you added a lot of new products. You revamped the line. And we saw that there were some operating inefficiencies with that.

Do we – have we kind of turned the corner and work out some of the bugs on those new things and would we expect to see any issues like this with new products in 2018?.

We work through the issues of the specific product that gave us problems in 2017 and also learned a lot of lessons about launching products aggressively. So, I think from this year pain and last year we’ve gained in our ability to not repeat some of those mistakes.

But on the specific products, yes, we know how to build those a lot more efficiently than we did last year when it hit us. We do have new products for this year that haven’t been announced yet, but they are all things that are well within our wheelhouse and really should not be of any disruption.

I can't imagine there’ll be any disruption, because they’re related products and we’ve done a better job of planning ahead of time from material standpoint, design, engineering everything. And so we’re better at that than we were a year ago and there’s less opportunity for miss that by far than it was a year ago..

Okay. And in terms of some of your comments in the Scientific space especially the food safety and I know we’ve kind of touched on this throughout last year, food safety being a nice possible niche target.

What kind of pipeline are we seeing in that space? Is it growing? Is it expanding? Is it – or do we see this is kind of a one-time blitz?.

I think its growing. It feels like its growing. Our – the clients that we’re getting a foot in the door with have a lot of opportunities identified across country and beyond frankly. So I think that it feels like a growth.

And not just short-term, you know for a while it seemed they would be regulatory driven for the Food Safety Modernization Act, the anticipation of enforcement was maybe part of what droves some people to be really interested, but it's become more apparent that the enforcement of that is not going to be the drivers.

So it’s going to be more for commercial purposes, for reputation, risk of people in the food business. And really I think that makes for a more sustainable driver of that type of business if it's for those kinds of purposes and not just because of regulation then I think that's probably good for us..

Okay. And with your new credit facility and in that are there any issues or flags from the bank on expanding through your leasing program? I mean, obviously you’re holding the asset on your balance sheet and leasing it.

So do they have any concerns or issues or restrictions on size or growth to that space?.

No. They haven’t raised any concerns with that..

Okay. Is the big Ag equipment show coming soon.

Is that drives that timing, right?.

Yes. I think its North American Farm show, I think it’s called the National Farms Show, excuse, it’s in Louisville February 14 to 17..

Okay, okay..

That is the show that we target for our product launches..

Right. That’s what I remember from last year. And finally, I mean, we definitely been in this prolong downward cycle and kind of just -- I feel like we’re skimming along the bottom here.

Do you have any sense of kind of what inning we are in this environment and what signs we should be looking for to kind of assess the turn of the corner?.

It will be real hard to give an inning. But I mean, there are some positive indications. I mean, lot of our business is diary. While diary prices has not been good, you know, I’m reading that the diary hut [ph] is actually shrinking for the first time and quite a number of quarters, and oversupply milk is been a problem, right.

So, if that trend starts to go the other way, I would expect prices to rebound some and that would be good for us.

As far as equipment itself though, part of what we’ve been seeing is dealers finally having sold through inventory, most dealers had an inventory problem with some kind over the last few years because they entered the period – or they left the period prosperity with straight to a down market it was sort of abrupt. They all had this inventory problem.

And after three, four years they work through a lot of that and aren’t carrying very much inventory, but they seem to be at least willing to take a product on to stock something. They’re not in a hurry you can pick it up, but they have confident that they will sell something. So they placed orders with us and they want to have available.

Of course they don’t want to pay for any sooner than they have to and that kind of thing, but it seems like they think that there’s going to more activity this year. And along the way, again three, four years in to the cycle the users have – they put that much more wear and tear on the product.

So I think all the while you’re building up some pent-up demand and for some people when their machine just breaks beyond repair or they just can’t delay any longer either really buying out necessity rather than out of tax planning and that kind of thing.

So I think that this extended period probably makes for a stronger recovery when it does happen I think. And if no prices are improving that will certainly be good and just commodities in general and get commodities moving at all, it will good. Currency is the factor as well.

If the dollars are too strong that’s going to be a bit more difficult for us to get there. So there are lot of macro factors that impact us on a micro level. But I do see some little signs that the commerce sort of buying equipment may improve. .

Okay. But like I said, I mean, you’re doing all the things you can that are in your control and just continue to keep doing that and then hopefully you’ll get some luck with the stuff you don’t control the macro environment. So….

I hope so, we’re certainly positioning..

And therefore you can do it at this point?.

No [ph]..

Thank you..

Thanks..

Our next question is a follow-up question from Sam Rebotsky.

Please go ahead, Sam?.

Hi. The question is for Carrie, its short. Is there way that when you release the number for the quarter or the year and that you could subtract out and so that you could also report what the quarter numbers which standing alone, subtract one from the other.

Is that possible or is that too complicated?.

We can look at doing that..

Okay. Because that would give a better handle how each quarter is represented instead of just happening to subtract it from the filings that are on board? So appreciate it. But keep up the improvements and hopefully we’ll [Indiscernible]. Good luck..

Thank you, Sam..

Thank you..

And at this time there are no further questions..

Okay. Well, thank you for the good questions. Appreciate your interest in the company and investment. And we’ll continue to try to do the right things to position ourselves to succeed going forward. And look forward to hopefully some improving results as we go. So thank you very much for your participation..

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