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Insteel Industries Comments on Quarterly Results, Provides Outlook
04/18/2014 - Insteel Industries, Inc. announced financial results for its second quarter ended 29 March 2014.
Second Quarter 2014 Results
Net earnings for the second quarter of fiscal 2014 were US$3.5 million, or US$0.19 per share compared with US$3.7 million, or US$0.20 per diluted share in the same period a year ago. Net sales increased 10.3% to US$91.4 million from US$82.9 million in the prior year period. Shipments increased 12.8% year-over-year while average selling prices decreased 2.1%. On a sequential basis, shipments increased 2.0% from the first quarter of fiscal 2014 and average selling prices increased 2.8%.
Insteel's second-quarter results were favorably impacted by the increase in shipments, which was largely offset by lower spreads between selling prices and raw material costs and higher unit conversion costs relative to the same period a year ago. The previously reported fire that damaged a portion of the Company's Gallatin, Tennessee PC strand manufacturing facility on January 21, 2014 did not have a material impact on the results for the quarter. Capacity utilization for the quarter was 51% compared with 46% in the prior year quarter and 47% in the first quarter of fiscal 2014.
Operating activities provided US$1.6 million of cash compared with US$2.4 million in the prior year period. Net working capital used US$5.3 million of cash compared with US$5.2 million in the same period a year ago. Capital expenditures were US$1.0 million in both the current and prior year periods.
Six Month 2014 Results
Net earnings for the first six months of fiscal 2014 were US$6.3 million, or US$0.34 per share compared with US$6.1 million, or US$0.34 per share in the same period a year ago. Net sales increased 5.9% to US$178.7 million from US$168.8 million in the prior year period. Shipments increased 9.5% year-over-year while average selling prices decreased 3.3%.
Operating activities provided US$8.0 million of cash compared with US$26.1 million in the prior year period primarily due to the relative changes in net working capital. Net working capital used US$4.8 million of cash while providing US$11.9 million in the same period a year ago. Capital expenditures were US$3.0 million compared with US$3.7 million in the prior year period and are not expected to exceed US$12.0 million in fiscal 2014.
Balance Sheet
Insteel ended the quarter debt-free with US$19.2 million of cash and cash equivalents, and no borrowings outstanding on its US$100.0 million revolving credit facility.
Outlook
"As we move into the second half of the year, we expect to benefit from the usual seasonal factors, which could be amplified this year by pent-up demand resulting from the unusually severe winter weather we have experienced in many of our markets," commented H.O. Woltz III, Insteel's president and CEO. "We are also seeing continued improvement in private nonresidential construction, our primary demand driver, and a heightened degree of optimism that the slow growth recovery may be gaining momentum. We believe that Insteel is ideally positioned to capitalize on a strengthening market environment through the favorable impact of our ongoing process improvement initiatives together with the ramp up of our world-class manufacturing facilities."
Net earnings for the second quarter of fiscal 2014 were US$3.5 million, or US$0.19 per share compared with US$3.7 million, or US$0.20 per diluted share in the same period a year ago. Net sales increased 10.3% to US$91.4 million from US$82.9 million in the prior year period. Shipments increased 12.8% year-over-year while average selling prices decreased 2.1%. On a sequential basis, shipments increased 2.0% from the first quarter of fiscal 2014 and average selling prices increased 2.8%.
Insteel's second-quarter results were favorably impacted by the increase in shipments, which was largely offset by lower spreads between selling prices and raw material costs and higher unit conversion costs relative to the same period a year ago. The previously reported fire that damaged a portion of the Company's Gallatin, Tennessee PC strand manufacturing facility on January 21, 2014 did not have a material impact on the results for the quarter. Capacity utilization for the quarter was 51% compared with 46% in the prior year quarter and 47% in the first quarter of fiscal 2014.
Operating activities provided US$1.6 million of cash compared with US$2.4 million in the prior year period. Net working capital used US$5.3 million of cash compared with US$5.2 million in the same period a year ago. Capital expenditures were US$1.0 million in both the current and prior year periods.
Six Month 2014 Results
Net earnings for the first six months of fiscal 2014 were US$6.3 million, or US$0.34 per share compared with US$6.1 million, or US$0.34 per share in the same period a year ago. Net sales increased 5.9% to US$178.7 million from US$168.8 million in the prior year period. Shipments increased 9.5% year-over-year while average selling prices decreased 3.3%.
Operating activities provided US$8.0 million of cash compared with US$26.1 million in the prior year period primarily due to the relative changes in net working capital. Net working capital used US$4.8 million of cash while providing US$11.9 million in the same period a year ago. Capital expenditures were US$3.0 million compared with US$3.7 million in the prior year period and are not expected to exceed US$12.0 million in fiscal 2014.
Balance Sheet
Insteel ended the quarter debt-free with US$19.2 million of cash and cash equivalents, and no borrowings outstanding on its US$100.0 million revolving credit facility.
Outlook
"As we move into the second half of the year, we expect to benefit from the usual seasonal factors, which could be amplified this year by pent-up demand resulting from the unusually severe winter weather we have experienced in many of our markets," commented H.O. Woltz III, Insteel's president and CEO. "We are also seeing continued improvement in private nonresidential construction, our primary demand driver, and a heightened degree of optimism that the slow growth recovery may be gaining momentum. We believe that Insteel is ideally positioned to capitalize on a strengthening market environment through the favorable impact of our ongoing process improvement initiatives together with the ramp up of our world-class manufacturing facilities."
