Insteel Industries Reports Second Quarter Financial Results
04/17/2015 - Insteel Industries, Inc. announced financial results for its second quarter ended March 28, 2015.
Second Quarter 2015 Results
Net earnings for the second quarter of fiscal 2015 fell to $2.5 million, or $0.14 per share from $3.5 million, or $0.19 per share in the same period a year ago. The second quarter results for fiscal 2015 include a $1.6 million net gain from insurance proceeds related to the January 2014 fire at the Gallatin, Tennessee facility and $0.3 million of restructuring charges associated with the March 2015 closure of the Newnan, Georgia pre-stressed concrete strand ("PC strand") facility. In the aggregate, these items increased pre-tax earnings by $1.3 million and net earnings per share by $0.04.
Net sales increased 11.3% to $101.8 million from $91.4 million in the prior year period due to the August 2014a cquisition of the PC strand business of American Spring Wire Corporation (ASW). Shipments increased 10.6% from the prior year quarter and average selling prices increased 0.7%. On a sequential basis, shipments decreased 6.7% from the first quarter of fiscal 2015 and average selling prices decreased 1.4%.
Insteel's second-quarter results were unfavorably impacted by the unusually harsh winter weather in many regions of the country, which curtailed shipments and production together with higher unit conversion costs and narrower spreads between selling prices and raw material costs relative to the prior year quarter. Capacity utilization for the quarter was 52% compared with 51% in the prior year quarter and 54% in the first quarter of fiscal 2015.
Operating activities provided $7.7 million of cash compared with $1.6 million in the prior year period primarily due to the relative changes in net working capital. Net working capital provided $2.7 million of cash while using$5.3 million in the same period a year ago. Capital expenditures were $1.1 million compared with $1.0 million in the prior year period.
Six Month 2015 Results
Net earnings for the first six months of fiscal 2015 increased to $6.7 million, or $0.36 per share from $6.3 million, or $0.34 per share in the same period a year ago. The six-month results for fiscal 2015 include a $1.6 million net gain from insurance proceeds related to the Gallatin fire and $0.3 million of restructuring charges associated with the closure of the Newnan facility. In the aggregate, these items increased pre-tax earnings by$1.3 million and net earnings per share by $0.04.
Net sales increased 18.9% to $212.4 million from $178.7 million in the prior year period due to the impact of the ASW acquisition. Shipments increased 15.7% year-over-year and average selling prices increased 2.8%.
Operating activities used $1.8 million of cash while providing $8.0 million in the prior year period primarily due to the relative changes in net working capital. Net working capital used $15.3 million of cash compared with $4.8 million in the same period a year ago. Capital expenditures were $4.6 million compared with $3.0 million in the prior year period and are expected to range from $11.0 to $13.0 million for fiscal 2015.
Balance Sheet
Insteel ended the quarter with $6.2 million of cash and cash equivalents, and $10.0 million of borrowings outstanding on its $100.0 million revolving credit facility.
Outlook
"As we move into the second half of the year, we expect significant improvement in our financial results driven by the usual seasonal upturn in demand, the ongoing recovery in our nonresidential construction end-markets and the consumption of lower cost inventory," commented H.O. Woltz III, Insteel's president and CEO. "We should also benefit from lower conversion costs through the consolidation of our PC strand facilities and ongoing process improvement initiatives at our other locations. The closure of our Newnan facility, which was completed in March, is expected to generate approximately $3.0 million of annualized cost savings beginning in the current quarter. We also anticipate lower costs at our Hazleton, Pennsylvania and Gallatin, Tennesseefacilities as we ramp up operating volumes following the recent completion of major capital projects."
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 ten manufacturing facilities located in the United States.
Net earnings for the second quarter of fiscal 2015 fell to $2.5 million, or $0.14 per share from $3.5 million, or $0.19 per share in the same period a year ago. The second quarter results for fiscal 2015 include a $1.6 million net gain from insurance proceeds related to the January 2014 fire at the Gallatin, Tennessee facility and $0.3 million of restructuring charges associated with the March 2015 closure of the Newnan, Georgia pre-stressed concrete strand ("PC strand") facility. In the aggregate, these items increased pre-tax earnings by $1.3 million and net earnings per share by $0.04.
Net sales increased 11.3% to $101.8 million from $91.4 million in the prior year period due to the August 2014a cquisition of the PC strand business of American Spring Wire Corporation (ASW). Shipments increased 10.6% from the prior year quarter and average selling prices increased 0.7%. On a sequential basis, shipments decreased 6.7% from the first quarter of fiscal 2015 and average selling prices decreased 1.4%.
Insteel's second-quarter results were unfavorably impacted by the unusually harsh winter weather in many regions of the country, which curtailed shipments and production together with higher unit conversion costs and narrower spreads between selling prices and raw material costs relative to the prior year quarter. Capacity utilization for the quarter was 52% compared with 51% in the prior year quarter and 54% in the first quarter of fiscal 2015.
Operating activities provided $7.7 million of cash compared with $1.6 million in the prior year period primarily due to the relative changes in net working capital. Net working capital provided $2.7 million of cash while using$5.3 million in the same period a year ago. Capital expenditures were $1.1 million compared with $1.0 million in the prior year period.
Six Month 2015 Results
Net earnings for the first six months of fiscal 2015 increased to $6.7 million, or $0.36 per share from $6.3 million, or $0.34 per share in the same period a year ago. The six-month results for fiscal 2015 include a $1.6 million net gain from insurance proceeds related to the Gallatin fire and $0.3 million of restructuring charges associated with the closure of the Newnan facility. In the aggregate, these items increased pre-tax earnings by$1.3 million and net earnings per share by $0.04.
Net sales increased 18.9% to $212.4 million from $178.7 million in the prior year period due to the impact of the ASW acquisition. Shipments increased 15.7% year-over-year and average selling prices increased 2.8%.
Operating activities used $1.8 million of cash while providing $8.0 million in the prior year period primarily due to the relative changes in net working capital. Net working capital used $15.3 million of cash compared with $4.8 million in the same period a year ago. Capital expenditures were $4.6 million compared with $3.0 million in the prior year period and are expected to range from $11.0 to $13.0 million for fiscal 2015.
Balance Sheet
Insteel ended the quarter with $6.2 million of cash and cash equivalents, and $10.0 million of borrowings outstanding on its $100.0 million revolving credit facility.
Outlook
"As we move into the second half of the year, we expect significant improvement in our financial results driven by the usual seasonal upturn in demand, the ongoing recovery in our nonresidential construction end-markets and the consumption of lower cost inventory," commented H.O. Woltz III, Insteel's president and CEO. "We should also benefit from lower conversion costs through the consolidation of our PC strand facilities and ongoing process improvement initiatives at our other locations. The closure of our Newnan facility, which was completed in March, is expected to generate approximately $3.0 million of annualized cost savings beginning in the current quarter. We also anticipate lower costs at our Hazleton, Pennsylvania and Gallatin, Tennesseefacilities as we ramp up operating volumes following the recent completion of major capital projects."
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 ten manufacturing facilities located in the United States.
