MOUNT AIRY, N.C., March 17, 2020 /PRNewswire/ -- Insteel
Industries, Inc. (NasdaqGS: IIIN) today announced that its
wholly-owned subsidiary, Insteel Wire Products Company (together
referred to as "Insteel" or the "Company" in this press release),
has acquired substantially all of the assets of Strand-Tech
Manufacturing, Inc. ("STM") for $22.5
million, subject to certain post-closing adjustments.
STM is a leading manufacturer of prestressed concrete strand
("PC strand") for concrete construction applications. For the
twelve months ended February 2, 2020,
STM's sales were $29.0 million.
Under the terms of the purchase agreement, Insteel acquired,
among other assets, STM's accounts receivable, inventories,
production equipment and facility located in Summerville, South Carolina. The purchase
price is subject to an adjustment to be determined based on STM's
closing working capital balance. The transaction was funded from
cash on hand.
Insteel plans to close the Summerville facility and move most of its
equipment to the Company's other three PC strand production
facilities located in Gallatin,
Tennessee; Houston, Texas;
and Sanderson, Florida. Insteel
expects to recover approximately $8.0
million of its initial investment in STM through the sale of
the facility and the avoidance of future capital outlays resulting
from the redeployment of the equipment.
The consolidation of facilities is expected to result in the
elimination of up to 42 positions at the Summerville facility. Summerville employees will be offered
employment at Insteel's other facilities, together with relocation
and transition assistance. It is anticipated that operations at the
Summerville facility will cease by
the end of the third quarter of fiscal 2020. Insteel expects to
record a restructuring charge of approximately $1.8 million in connection with the closure of
the facility.
"The STM acquisition represents a significant milestone for our
PC strand business," commented H.O. Woltz III, Insteel president
and chief executive officer. "We believe the consolidation of
facilities will strengthen our competitive position by leveraging
our operating costs and optimizing our manufacturing footprint.
"Our decision to close the Summerville facility reflects the harsh market
conditions created by the surge in low-priced PC strand import
competition following the imposition of the Section 232 tariff on
hot-rolled steel wire rod, Insteel's primary raw material. We are
continuing to work with the Administration to address the
unfavorable impact of the increased imports on U.S. manufacturers.
We are committed to making the transition as smooth as possible for
the STM employees who are impacted by the plant closure and hope to
welcome many of them to Insteel facilities."
About Insteel
Insteel is the nation's largest manufacturer of steel wire
reinforcing products for concrete construction applications.
Insteel manufactures and markets PC strand and welded wire
reinforcement, including engineered structural mesh ("ESM"),
concrete pipe reinforcement and standard welded wire reinforcement.
Insteel's products are sold primarily to manufacturers of concrete
products that are used in nonresidential construction.
Headquartered in Mount Airy, North
Carolina, Insteel operates eleven manufacturing facilities
located in the United States.
Cautionary Note Regarding Forward-Looking Statements
This news release contains forward-looking statements within the
meaning of the safe harbor provisions of the Private Securities
Litigation Reform Act of 1995. When used in this news release, the
words "believes," "anticipates," "expects," "estimates," "appears,"
"plans," "intends," "may," "should," "could" and similar
expressions are intended to identify forward-looking statements.
Although we believe that our plans, intentions and
expectations reflected in or suggested by such forward-looking
statements are reasonable, they are subject to a number of risks
and uncertainties, and we can provide no assurances that such
plans, intentions or expectations will be implemented or achieved.
Many of these risks and uncertainties are discussed in detail and
are updated from time to time in our filings with the U.S.
Securities and Exchange Commission (the "SEC"), in particular in
our Annual Report on Form 10-K for the fiscal year ended
September 28, 2019.
All forward-looking statements attributable to us or persons
acting on our behalf are expressly qualified in their entirety by
these cautionary statements. All forward-looking statements speak
only to the respective dates on which such statements are made and
we do not undertake any obligation to publicly release the results
of any revisions to these forward-looking statements that may be
made to reflect any future events or circumstances after the date
of such statements or to reflect the occurrence of anticipated or
unanticipated events, except as may be required by law.
It is not possible to anticipate and list all risks and
uncertainties that may affect our future operations or financial
performance; however, they include, but are not limited to, the
following: potential difficulties that may be encountered in
integrating the assets acquired from STM into our existing
business, consolidating our PC strand facilities and realizing the
anticipated synergies in connection with the acquisition;
competitive and customer responses to our expanded PC strand
business; general economic and competitive conditions in the
markets in which we operate; changes in the spending levels for
nonresidential and residential construction and the impact on
demand for our products; changes in the amount and duration of
transportation funding provided by federal, state and local
governments and the impact on spending for infrastructure
construction and demand for our products; the cyclical nature of
the steel and building material industries; credit market
conditions and the relative availability of financing for us, our
customers and the construction industry as a whole; fluctuations in
the cost and availability of our primary raw material, hot-rolled
steel wire rod, from domestic and foreign suppliers; competitive
pricing pressures and our ability to raise selling prices in order
to recover increases in raw material or operating costs; changes in
United States or foreign trade
policy, including the Section 232 tariff on imported steel,
affecting imports or exports of steel wire rod or our products;
unanticipated changes in customer demand, order patterns and
inventory levels; the impact of fluctuations in demand and capacity
utilization levels on our unit manufacturing costs; our ability to
further develop the market for ESM and expand our shipments of ESM;
legal, environmental, economic or regulatory developments that
significantly impact our operating costs; unanticipated plant
outages, equipment failures or labor difficulties; and the "Risk
Factors" discussed in our Annual Report on Form 10-K for the fiscal
year ended September 28, 2019 and in
other filings made by us with the SEC.
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SOURCE Insteel Industries, Inc.