IIIN Insteel Industries Inc

Insteel Industries Inc. (NYSE: IIIN) (“Insteel” or the “Company”), the nation’s largest manufacturer of steel wire reinforcing products for concrete construction applications, today announced financial results for its fourth quarter and fiscal year ended September 28, 2024.

Fourth Quarter 2024 Highlights

• Net sales of $134.3 million
• Gross profit of $12.3 million, or 9.1% of net sales
• Net income of $4.7 million, or $0.24 per share
• Operating cash flow of $16.2 million
• Net cash balance of $111.5 million and no debt outstanding as of September 28, 2024
• Improving business outlook

Fourth Quarter 2024 Results

Net earnings for the fourth quarter of fiscal 2024 were $4.7 million, or $0.24 per share, compared to $5.6 million, or $0.29 per share, in the same period a year ago. Insteel’s fourth quarter results were unfavorably impacted by narrower spreads between selling prices and raw material costs relative to the prior year quarter, along with lower shipments.

Net sales decreased 14.7% to $134.3 million, down from $157.5 million in the prior year quarter, reflecting a 12.9% decrease in average selling prices and a 2.1% decline in shipments. Average selling prices were negatively affected by persistent competitive pricing pressures in our welded wire reinforcing markets and the impact of low-priced PC strand imports. Shipments for the current year quarter were adversely impacted by weaker market conditions as compared to recent years and adverse weather conditions in certain of our markets during the period. Sequentially, average selling prices decreased 2.8% from the third quarter, while shipments declined 5.2%. Gross margin increased 20 basis points to 9.1% from 8.9% in the prior year quarter, mostly due to lower unit manufacturing costs on higher production volume.

Operating activities generated $16.2 million of cash during the fourth quarter compared to $38.6 million in the prior year quarter due to a reduction in the relative changes in net working capital. Working capital provided $5.3 million of cash in the current year, driven by a reduction in receivables and an increase in accounts payable and accrued expenses, compared to $28.6 million the prior year.

Fiscal 2024 Results

Net earnings for fiscal 2024 decreased to $19.3 million, or $0.99 per share, from $32.4 million, or $1.66 per share, in the prior year. Earnings for the prior year benefited from a $3.3 million, or $0.13 per share, gain on the sale of property, plant, and equipment.

Net sales decreased 18.5% to $529.2 million from $649.2 million in the prior year, driven entirely by a decrease in average selling prices as shipments remained flat. Gross profit decreased to $49.6 million from $65.4 million in the same period a year ago, and gross margin narrowed to 9.4% from 10.1% due to lower spreads.

Operating activities generated $58.2 million of cash compared to $142.2 million in the prior year due to a reduction in net earnings and the relative change in working capital. Working capital provided $18.9 million of cash in the current year, driven by a reduction in inventories and receivables, compared to $95.6 million in the prior year.

Capital Allocation and Liquidity

Capital expenditures for fiscal 2024 decreased to $19.1 million from $30.7 million in the prior year and are expected to total up to approximately $22.0 million in fiscal 2025, primarily focused on cost and productivity improvement initiatives as well as recurring maintenance requirements.

Insteel ended the year with $111.5 million of cash and no borrowings outstanding on its $100.0 million revolving credit facility.

Outlook

“As we move forward into fiscal year 2025, we anticipate a gradual improvement in business conditions across our markets,” commented H.O. Woltz III, Insteel’s President and CEO. “Although recent leading indicators for nonresidential construction spending have been mixed, we expect that declining inflation and the downward trajectory in interest rates will help stimulate demand in the months ahead. Additionally, we remain optimistic about the impact of spending from the Infrastructure Investment and Jobs Act, which is expected to boost infrastructure-related project activity and lay a stronger foundation for future growth.”

Mr. Woltz further commented, “We also acknowledge the challenges ahead as import related headwinds are expected to persist in our PC strand markets, putting further pressure on selling prices, volumes and spreads in our first quarter. We are continuing our efforts to eliminate the section 232 tariff distortion in the PC strand market, and we will carefully consider filing antidumping and countervailing duty actions that are warranted.”

Conference Call

Insteel will hold a conference call at 10:00 a.m. ET today to discuss its fourth quarter and 2024 fiscal year end financial results. A live webcast of this call can be accessed on Insteel’s website at https://investor.insteel.com and will be archived for replay until the next quarterly conference call.

About Insteel

Insteel is the nation’s largest manufacturer of steel wire reinforcing products for concrete construction applications. Insteel manufactures and markets prestressed concrete 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 and concrete contractors for use, primarily, in nonresidential construction applications. Headquartered in Mount Airy, North Carolina, Insteel operates ten 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 several 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 in our Annual Report on Form 10-K for the year ended September 30, 2023, and may be updated from time to time in our other filings with the U.S. Securities and Exchange Commission (the “SEC”).

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: 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; the impact of rising interest rates on the cost of financing for our customers; 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 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 business or 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 year ended September 30, 2023, and in other filings made by us with the SEC.

INSTEEL INDUSTRIES INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands except for per share data)

Three Months Ended

 

Year Ended

(Unaudited)

 

(Unaudited)

 

(Unaudited)

 

 

September 28,

 

September 30,

 

September 28,

 

September 30,

2024

 

2023

 

2024

 

2023

  Net sales

$

134,304

 

$

157,524

 

$

529,198

 

$

649,188

 

Cost of sales

 

122,045

 

 

143,541

 

 

479,566

 

 

583,790

 

Gross profit

 

12,259

 

 

13,983

 

 

49,632

 

 

65,398

 

Selling, general and administrative expense

 

7,531

 

 

8,129

 

 

29,652

 

 

30,685

 

Other expense (income), net

 

35

 

 

-

 

 

37

 

 

(3,423

)

Interest expense

 

13

 

 

20

 

 

89

 

 

87

 

Interest income

 

(1,382

)

 

(1,422

)

 

(5,433

)

 

(3,706

)

Earnings before income taxes

 

6,062

 

 

7,256

 

 

25,287

 

 

41,755

 

Income taxes

 

1,393

 

 

1,630

 

 

5,982

 

 

9,340

 

Net earnings

$

4,669

 

$

5,626

 

$

19,305

 

$

32,415

 

    Net earnings per share: Basic

$

0.24

 

$

0.29

 

$

0.99

 

$

1.66

 

Diluted

 

0.24

 

 

0.29

 

 

0.99

 

 

1.66

 

  Weighted average shares outstanding: Basic

 

19,502

 

 

19,499

 

 

19,502

 

 

19,504

 

Diluted

 

19,564

 

 

19,568

 

 

19,575

 

 

19,566

 

  Cash dividends declared per share

$

0.03

 

$

0.03

 

$

2.62

 

$

2.12

 

INSTEEL INDUSTRIES INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (In thousands)      

(Unaudited)

 

 

September 28,

 

June 29,

 

September 30,

2024

 

2024

 

2023

Assets Current assets: Cash and cash equivalents

$

111,538

 

$

97,745

 

$

125,670

 

Accounts receivable, net

 

58,308

 

 

61,234

 

 

63,424

 

Inventories

 

88,840

 

 

89,379

 

 

103,306

 

Other current assets

 

8,608

 

 

8,766

 

 

6,453

 

Total current assets

 

267,294

 

 

257,124

 

 

298,853

 

Property, plant and equipment, net

 

125,540

 

 

127,889

 

 

120,014

 

Intangibles, net

 

5,341

 

 

5,528

 

 

6,090

 

Goodwill

 

9,745

 

 

9,745

 

 

9,745

 

Other assets

 

14,632

 

 

14,329

 

 

12,811

 

Total assets

$

422,552

 

$

414,615

 

$

447,513

 

  Liabilities and shareholders' equity Current liabilities: Accounts payable

$

37,487

 

$

34,827

 

$

34,346

 

Accrued expenses

 

9,547

 

 

9,888

 

 

11,809

 

Total current liabilities

 

47,034

 

 

44,715

 

 

46,155

 

Other liabilities

 

24,663

 

 

23,885

 

 

19,853

 

Commitments and contingencies Shareholders' equity: Common stock

 

19,452

 

 

19,445

 

 

19,454

 

Additional paid-in capital

 

86,671

 

 

85,599

 

 

83,832

 

Retained earnings

 

245,340

 

 

241,254

 

 

278,502

 

Accumulated other comprehensive loss

 

(608

)

 

(283

)

 

(283

)

Total shareholders' equity

 

350,855

 

 

346,015

 

 

381,505

 

Total liabilities and shareholders' equity

$

422,552

 

$

414,615

 

$

447,513

 

INSTEEL INDUSTRIES INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands)  

Three Months Ended

 

Year Ended

(Unaudited)

 

(Unaudited)

 

(Unaudited)

 

 

September 28,

 

September 30,

 

September 28,

 

September 30,

2024

 

2023

 

2024

 

2023

Cash Flows From Operating Activities: Net earnings

$

4,669

 

$

5,626

 

$

19,305

 

$

32,415

 

Adjustments to reconcile net earnings to net cash provided by operating activities: Depreciation and amortization

 

4,001

 

 

3,469

 

 

15,413

 

 

13,304

 

Amortization of capitalized financing costs

 

12

 

 

12

 

 

50

 

 

57

 

Stock-based compensation expense

 

1,169

 

 

891

 

 

3,072

 

 

2,425

 

Deferred income taxes

 

557

 

 

1,229

 

 

4,195

 

 

238

 

Loss (gain) on sale and disposition of property, plant and equipment and assets held for sale

 

49

 

 

50

 

 

99

 

 

(3,271

)

Increase in cash surrender value of life insurance policies over premiums paid

 

(503

)

 

-

 

 

(1,532

)

 

(531

)

Net changes in assets and liabilities: Accounts receivable, net

 

2,926

 

 

2,939

 

 

5,116

 

 

18,222

 

Inventories

 

539

 

 

29,820

 

 

14,466

 

 

94,348

 

Accounts payable and accrued expenses

 

1,853

 

 

(4,204

)

 

(639

)

 

(16,949

)

Other changes

 

957

 

 

(1,281

)

 

(1,338

)

 

1,942

 

Total adjustments

 

11,560

 

 

32,925

 

 

38,902

 

 

109,785

 

Net cash provided by operating activities

 

16,229

 

 

38,551

 

 

58,207

 

 

142,200

 

  Cash Flows From Investing Activities: Capital expenditures

 

(1,689

)

 

(4,098

)

 

(19,149

)

 

(30,702

)

(Increase) decrease in cash surrender value of life insurance policies

 

(74

)

 

249

 

 

(517

)

 

(476

)

Proceeds from sale of property, plant and equipment

 

-

 

 

-

 

 

4

 

 

9,924

 

Proceeds from surrender of life insurance policies

 

-

 

 

-

 

 

25

 

 

358

 

Net cash used for investing activities

 

(1,763

)

 

(3,849

)

 

(19,637

)

 

(20,896

)

  Cash Flows From Financing Activities: Proceeds from long-term debt

 

68

 

 

68

 

 

298

 

 

323

 

Principal payments on long-term debt

 

(68

)

 

(68

)

 

(298

)

 

(323

)

Cash dividends paid

 

(583

)

 

(584

)

 

(50,942

)

 

(41,252

)

Cash received from exercise of stock options

 

-

 

 

48

 

 

428

 

 

239

 

Financing costs

 

-

 

 

-

 

 

-

 

 

(177

)

Payment of employee tax withholdings related to net share transactions

 

(90

)

 

(236

)

 

(352

)

 

(432

)

Repurchases of common stock

 

-

 

 

-

 

 

(1,836

)

 

(2,328

)

Net cash used for financing activities

 

(673

)

 

(772

)

 

(52,702

)

 

(43,950

)

  Net increase (decrease) in cash and cash equivalents

 

13,793

 

 

33,930

 

 

(14,132

)

 

77,354

 

Cash and cash equivalents at beginning of period

 

97,745

 

 

91,740

 

 

125,670

 

 

48,316

 

Cash and cash equivalents at end of period

$

111,538

 

$

125,670

 

$

111,538

 

$

125,670

 

  Supplemental Disclosures of Cash Flow Information: Cash paid during the period for: Income taxes, net

$

65

 

$

2,368

 

$

3,332

 

$

7,834

 

Non-cash investing and financing activities: Purchases of property, plant and equipment in accounts payable

 

2,449

 

 

1,301

 

 

2,449

 

 

1,301

 

Restricted stock units and stock options surrendered for withholding taxes payable

 

90

 

 

236

 

 

352

 

 

432

 

IIIN – E

View source version on businesswire.com: https://www.businesswire.com/news/home/20241017391813/en/

Scot Jafroodi Vice President, Chief Financial Officer and Treasurer Insteel Industries Inc. (336) 786-2141