Insteel Industries Reports Fourth Quarter And Fiscal 2013 Financial Results

MOUNT AIRY, N.C., Oct. 17, 2013 /PRNewswire/ -- Insteel Industries, Inc. (NasdaqGS: IIIN) today announced financial results for its fourth quarter and fiscal year ended September 28, 2013.

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Fourth Quarter 2013 Results

Net earnings for the fourth quarter of fiscal 2013 were $2.3 million, or $0.13 per share compared with $0.8 million, or $0.05 per share in the same period a year ago. Net sales increased 0.3% to $98.2 million from $97.9 million in the prior year period. Shipments increased 4.7% year-over-year while average selling prices decreased 4.2%. On a sequential basis, shipments increased 2.3% from the third quarter of fiscal 2013 while average selling prices decreased 1.0%.

Insteel's fourth-quarter results were favorably impacted by widening spreads between selling prices and raw material costs and higher shipments relative to the same period a year ago. Capacity utilization for the quarter was 50% compared with 48% in the third quarter of fiscal 2013 and the fourth quarter of fiscal 2012.  

Operating activities provided $4.3 million of cash compared with $11.4 million in the prior year period primarily due to the relative changes in net working capital. Net working capital used $2.2 million of cash while providing $8.5 million in the same period a year ago. Capital expenditures were $0.2 million compared with $3.7 million in the prior year period.

Fiscal 2013 Results

Net earnings for fiscal 2013 were $11.7 million, or $0.64 per diluted share compared with $1.8 million, or $0.10 per share in the prior year. The current year results include a $0.3 million charge ($0.01 per share after-tax) for the loss on the disposal of equipment. The prior year results include restructuring charges related to the November 2010 acquisition of certain assets of Ivy Steel & Wire, Inc. and a gain on the early extinguishment of debt, which, in the aggregate, reduced pre-tax earnings by $0.4 million ($0.01 per diluted share after-tax). Net sales increased 0.2% to $363.9 million from $363.3 million a year ago. Shipments increased 4.6% year-over-year while average selling prices decreased 4.3%.

Operating activities provided $36.8 million of cash compared with $13.1 million in the prior year primarily due to the increase in earnings and the relative changes in net working capital. Net working capital provided $9.7 million of cash compared with $0.9 million a year ago. Capital expenditures were $5.0 million compared with $8.1 million in the prior year and are not expected to exceed $12.0 million in fiscal 2014.

Balance Sheet

Insteel ended the year debt-free with $15.4 million of cash and cash equivalents, and no borrowings outstanding on its $100.0 million revolving credit facility.

Outlook

"We are pleased with the start-up of the new engineered structural mesh ("ESM") production line at our North Carolina facility during the quarter, which significantly enhances our manufacturing capabilities," commented H.O. Woltz III, Insteel's president and CEO. "The new line offers unparalleled flexibility, allowing us to produce a broader array of ESM configurations and eliminating the need for costly offline processing for a wide range of products. The start-up of the North Carolina line follows the addition of another new ESM line at our Texas facility earlier in the year, further strengthening our market leadership position.   

"As we move into fiscal 2014, nonresidential construction, our primary demand driver, continues to recover at an exceedingly slow rate from a protracted recession. The most recent forecasts and leading indicators for our construction end-markets point to modest growth gradually improving over the course of the year, which should favorably impact our financial results. We look forward to a more meaningful recovery that allows us to demonstrate the increased earnings power we believe we have developed through the Ivy acquisition and subsequent reconfiguration of our welded wire reinforcement operations."

Conference Call

Insteel will hold a conference call at 10:00 a.m. ET today to discuss its fourth quarter and fiscal 2013 financial results. A live webcast of this call can be accessed on Insteel's website at http://investor.insteel.com/events.cfm 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 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 nine 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," "plans," "intends," "may," "should" and similar expressions are intended to identify forward-looking statements.  Although Insteel believes that its plans, intentions and expectations reflected in or suggested by such forward-looking statements are reasonable, such forward-looking statements are subject to a number of risks and uncertainties, and Insteel can provide no assurances that such plans, intentions or expectations will be achieved. Many of these risks and uncertainties are discussed in detail in Insteel's periodic and other reports and statements that it files with the United States Securities and Exchange Commission (the "SEC"), in particular in its Annual Report on Form 10-K for the year ended September 29, 2012. You should carefully review these risks and uncertainties.

All forward-looking statements attributable to Insteel or persons acting on its 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 Insteel does not undertake and specifically declines 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 Insteel's 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 Insteel operates; credit market conditions and the relative availability of financing for Insteel, its customers and the construction industry as a whole; the continuation of reduced spending for nonresidential and residential construction and the impact on demand for Insteel's 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 Insteel's products; the cyclical nature of the steel and building material industries; fluctuations in the cost and availability of Insteel's primary raw material, hot-rolled steel wire rod, from domestic and foreign suppliers; competitive pricing pressures and Insteel's ability to raise selling prices in order to recover increases in wire rod costs; changes in United States or foreign trade policy affecting imports or exports of steel wire rod or Insteel's products; unanticipated changes in customer demand, order patterns and inventory levels; the impact of weak demand and reduced capacity utilization levels on Insteel's unit manufacturing costs; Insteel's ability to further develop the market for ESM and expand its shipments of ESM; legal, environmental, economic or regulatory developments that significantly impact Insteel's operating costs; unanticipated plant outages, equipment failures or labor difficulties; continued escalation in certain of Insteel's operating costs; and the other risks and uncertainties discussed in Insteel's Annual Report on Form 10-K for the year ended September 29, 2012 and in other filings made by Insteel 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 29,


September 28,


September 29,



2013


2012


2013


2012










Net sales


$          98,190


$          97,865


$        363,896


$        363,303

Cost of sales


89,511


91,964


324,663


340,845

    Gross profit


8,679


5,901


39,233


22,458

Selling, general and administrative expense


5,222


4,578


20,682


18,911

Gain on early extinguishment of debt


-


-


-


(425)

Restructuring charges, net


-


-


-


832

Other expense (income), net


3


26


333


(188)

Interest expense


53


149


235


623

Interest income


(1)


(1)


(14)


(21)

    Earnings before income taxes


3,402


1,149


17,997


2,726

Income taxes


1,057


316


6,262


917

    Net earnings


$            2,345


$               833


$          11,735


$            1,809



















Net earnings per share:









    Basic


$              0.13


$              0.05


$              0.65


$              0.10

    Diluted


0.13


0.05


0.64


0.10










Weighted average shares outstanding









    Basic


18,157


17,705


17,948


17,664

    Diluted


18,541


17,995


18,353


17,990










Cash dividends declared per share


$              0.03


$              0.03


$              0.37


$              0.12










 

 

INSTEEL INDUSTRIES, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(In thousands)


















(Unaudited)





September 28,


June 29,


September 29,



2013


2013


2012

Assets







Current assets:







    Cash and cash equivalents


$          15,440


$          12,084


$                 10

    Accounts receivable, net


41,110


37,387


42,138

    Inventories, net


58,793


68,552


65,774

    Other current assets


5,863


4,996


7,146

        Total current assets


121,206


123,019


115,068

Property, plant and equipment, net


83,053


84,955


87,716

Other assets


8,390


8,208


5,768

        Total assets


$        212,649


$        216,182


$        208,552








Liabilities and shareholders' equity







Current liabilities:







    Accounts payable


$          30,561


$          38,019


$          30,126

    Accrued expenses


6,854


6,904


5,877

        Total current liabilities


37,415


44,923


36,003

Long-term debt


-


-


11,475

Other liabilities


14,178


13,410


11,574

Shareholders' equity:







    Common stock


18,185


18,132


17,717

    Additional paid-in capital


55,452


54,976


50,379

    Retained earnings


88,981


87,182


83,845

    Accumulated other comprehensive loss


(1,562)


(2,441)


(2,441)

        Total shareholders' equity


161,056


157,849


149,500

        Total liabilities and shareholders' equity


$        212,649


$        216,182


$        208,552








 

 


INSTEEL INDUSTRIES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)













Three Months Ended


Year Ended



(Unaudited)


(Unaudited)


(Unaudited)





September 28,


September 29,


September 28,


September 29,



2013


2012


2013


2012

Cash Flows From Operating Activities:









  Net earnings


$          2,345


$             833


$        11,735


$          1,809

  Adjustments to reconcile net earnings to net cash provided by









    operating activities:









      Depreciation and amortization


2,570


2,467


9,833


9,762

      Amortization of capitalized financing costs


25


27


102


97

      Stock-based compensation expense


707


744


2,161


2,208

      Gain on early extinguishment of debt


-


-


-


(425)

      Asset impairment recoveries


-


-


-


(11)

      Excess tax deficiencies (benefits) from stock-based compensation


(215)


120


(660)


-

      Loss (gain) on sale of property, plant and equipment


2


28


348


(46)

      Deferred income taxes


705


270


3,881


835

      Gain from life insurance proceeds


-


(505)


(45)


(505)

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


(262)


(180)


(555)


(750)

      Net changes in assets and liabilities:









        Accounts receivable, net


(3,723)


(1,424)


1,028


(167)

        Inventories


9,759


11,614


6,981


10,600

        Accounts payable and accrued expenses


(8,197)


(1,655)


1,645


(9,562)

        Other changes


547


(929)


374


(701)

          Total adjustments


1,918


10,577


25,093


11,335

            Net cash provided by operating activities


4,263


11,410


36,828


13,144










Cash Flows From Investing Activities:









  Capital expenditures


(150)


(3,705)


(5,030)


(8,066)

  Acquisition of intangible asset


-


-


(1,887)


-

  Increase in cash surrender value of life insurance policies


(10)


(11)


(64)


(467)

  Proceeds from life insurance claims


-


-


577


-

  Proceeds from sale of property, plant and equipment


7


209


107


305

  Proceeds from surrender of life insurance policies


-


21


3


37

            Net cash used for investing activities


(153)


(3,486)


(6,294)


(8,191)










Cash Flows From Financing Activities:









  Proceeds from long-term debt


101


11,471


4,602


91,150

  Principal payments on long-term debt


(101)


(18,611)


(16,077)


(93,406)

  Cash dividends paid


(546)


(531)


(6,599)


(2,121)

  Cash received from exercise of stock options


45


-


3,425


2

  Excess tax benefits (deficiencies) from stock-based compensation


215


(120)


660


-

  Payment of employee tax withholdings related to net share transactions


(438)


(122)


(705)


(446)

  Financing costs


-


(11)


-


(172)

  Other


(30)


-


(410)


40

            Net cash used for financing activities


(754)


(7,924)


(15,104)


(4,953)










Net increase in cash and cash equivalents


3,356


-


15,430


-

Cash and cash equivalents at beginning of period


12,084


10


10


10

Cash and cash equivalents at end of period


$        15,440


$               10


$        15,440


$               10










Supplemental Disclosures of Cash Flow Information:









  Cash paid during the period for:









    Interest


$                -


$               66


$               20


$             753

    Income taxes, net


1,244


5


2,667


176

  Non-cash investing and financing activities:









    Purchases of property, plant and equipment in accounts payable


432


176


432


176

    Restricted stock units and stock options surrendered for withholding taxes payable

438


122


705


446










 

SOURCE Insteel Industries, Inc.



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