Insteel Industries Reports Quarterly Results, Anticipates Seasonal Upturn in Demand
04/29/2013 - As it reported its second fiscal quarter 2013 results, Insteel Industries said it is seeing rising customer sentiment and improving conditions in its construction end-markets.
Insteel Industries, Inc. reported net earnings of US$3.7 million for the second quarter of fiscal 2013 compared with US$0.3 million in the same period a year ago. The prior year results include net restructuring charges related to the November 2010 acquisition of certain of the assets of Ivy Steel & Wire, Inc., which reduced pre-tax earnings by US$0.2 million.
Insteel's financial results for the second quarter of fiscal 2013 were favorably impacted by widening spreads between selling prices and raw material costs relative to the prior year quarter. Capacity utilization for the quarter was 46%, which was unchanged from the first quarter of fiscal 2013 and the prior year quarter.
Net sales for the second quarter of fiscal 2013 decreased 4.8% to US$82.9 million from US$87.0 million in the same period a year ago. Shipments decreased 1.5% from the prior year quarter while average selling prices decreased 3.4%. On a sequential basis, shipments decreased 3.7% from the first quarter of fiscal 2013 while average selling prices increased 0.2%. The reduction in shipments for the quarter was largely driven by adverse weather conditions in most of Insteel's markets.
For the first six months of fiscal 2013, net earnings were US$6.1 million compared with essentially breakeven in the same period a year ago. The six-month results for fiscal 2012 include restructuring charges related to the Ivy acquisition and a gain on the early extinguishment of debt, which, in the aggregate, reduced pre-tax earnings by US$0.4 million.
Net sales for the first six months of fiscal 2013 decreased 1.8% to US$168.8 million from US$171.8 million in the same period a year ago. Shipments increased 2.0% from the prior year period and average selling prices decreased 3.7%.
Operating activities provided US$2.4 million of cash for the second quarter of fiscal 2013 compared with US$12.3 million in the same period a year ago primarily due to the year-over-year changes in net working capital. Net working capital used US$5.2 million of cash in the current year quarter while providing US$8.6 million in the prior year quarter. Capital expenditures for the first six months of fiscal 2013 were US$3.7 million compared with US$4.0 million in the prior year period, and are not expected to exceed US$12.0 million for fiscal 2013. Insteel ended the quarter with US$7.9 million of cash and cash equivalents, and no borrowings outstanding on its US$100.0 million revolving credit facility.
"As we move into the second half of the year, the most recent macro data implies that conditions in our construction end-markets are gradually improving and customer sentiment appears to be on the rise," commented H.O. Woltz III, Insteel's president and CEO. "We expect that our financial results will be favorably impacted by the usual seasonal upturn in demand together with our ongoing performance improvement initiatives and the increasing contributions from the Ivy acquisition.
"We are pleased with the progress of our engineered structural mesh expansion projects, which are on schedule and on budget. The new production line at our Texas facility and the production line that was relocated to our Missouri facility were started up during the quarter. We expect the second new production line that is going into our North Carolina facility will be commissioned late in the current quarter and ramp up during the fourth quarter. We believe these investments will serve to strengthen our market leadership position and further our penetration of the rebar market by reducing lead times and expanding the range of concrete reinforcing solutions that we can offer."
Insteel is the USA'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, 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, N.C., Insteel operates nine manufacturing facilities located in the U.S.
