Insteel Industries Reports Second Quarter Financial Results

Apr 18, 2013, 06:30 ET from Insteel Industries, Inc.

MOUNT AIRY, N.C., April 18, 2013 /PRNewswire/ -- Insteel Industries, Inc. (NasdaqGS: IIIN) today reported net earnings of $3.7 million, or $0.20 per diluted share for the second quarter of fiscal 2013 compared with $0.3 million, or $0.01 per share 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 $0.2 million and net earnings by $0.01 per share.

(Logo: http://photos.prnewswire.com/prnh/20130104/CL31002LOGO-b )

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 $82.9 million from $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 $6.1 million, or $0.34 per share 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 $0.4 million and net earnings per share by $0.02.

Net sales for the first six months of fiscal 2013 decreased 1.8% to $168.8 million from $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 $2.4 million of cash for the second quarter of fiscal 2013 compared with $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 $5.2 million of cash in the current year quarter while providing $8.6 million in the prior year quarter. Capital expenditures for the first six months of fiscal 2013 were $3.7 million compared with $4.0 million in the prior year period, and are not expected to exceed $12.0 million for fiscal 2013. Insteel ended the quarter with $7.9 million of cash and cash equivalents, and no borrowings outstanding on its $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."  

Conference Call

Insteel will hold a conference call at 10:00 a.m. ET today to discuss its second quarter 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 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, 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 engineered structural mesh and expand its shipments of engineered structural mesh; 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)

(Unaudited)

Three Months Ended

Six Months Ended

March 30,

March 31,

March 30,

March 31,

2013

2012

2013

2012

Net sales

$       82,873

$       87,029

$     168,760

$     171,840

Cost of sales

71,822

81,535

149,116

161,687

    Gross profit

11,051

5,494

19,644

10,153

Selling, general and administrative expense

5,245

4,906

10,087

9,498

Gain on early extinguishment of debt

-

-

-

(425)

Restructuring charges, net

-

203

-

802

Other income, net

(85)

(144)

(85)

(214)

Interest expense

53

119

125

372

Interest income

(2)

(2)

(2)

(2)

    Earnings before income taxes

5,840

412

9,519

122

Income taxes

2,126

150

3,403

40

    Net earnings

$         3,714

$            262

$         6,116

$              82

Net earnings per share:

    Basic

$           0.21

$           0.01

$           0.34

$              -

    Diluted

0.20

0.01

0.34

-

Weighted average shares outstanding

    Basic

17,846

17,649

17,785

17,630

    Diluted

18,286

18,038

18,187

17,986

Cash dividends declared per share

$           0.03

$           0.03

$           0.31

$           0.06

 

 

INSTEEL INDUSTRIES, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(In thousands)

(Unaudited)

(Audited)

March 30,

December 29,

September 29,

2013

2012

2012

Assets

Current assets:

    Cash and cash equivalents

$            7,903

$            4,815

$                 10

    Accounts receivable, net

33,586

35,247

42,138

    Inventories, net

66,215

56,239

65,774

    Other current assets

4,906

5,343

7,146

        Total current assets

112,610

101,644

115,068

Property, plant and equipment, net

86,944

88,068

87,716

Other assets

6,385

6,009

5,768

        Total assets

$        205,939

$        195,721

$        208,552

Liabilities and shareholders' equity

Current liabilities:

    Accounts payable

$          33,728

$          30,124

$          30,126

    Accrued expenses

5,709

6,371

5,877

        Total current liabilities

39,437

36,495

36,003

Long-term debt

-

-

11,475

Other liabilities

12,982

11,881

11,574

Shareholders' equity:

    Common stock

18,021

17,745

17,717

    Additional paid-in capital

53,489

50,763

50,379

    Retained earnings

84,451

81,278

83,845

    Accumulated other comprehensive loss

(2,441)

(2,441)

(2,441)

        Total shareholders' equity

153,520

147,345

149,500

        Total liabilities and shareholders' equity

$        205,939

$        195,721

$        208,552

 

INSTEEL INDUSTRIES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

Three Months Ended

Six Months Ended

March 30,

March 31,

March 30,

March 31,

2013

2012

2013

2012

Cash Flows From Operating Activities:

  Net earnings

$        3,714

$           262

$        6,116

$             82

  Adjustments to reconcile net earnings to net cash provided by

    operating activities:

      Depreciation and amortization

2,407

2,429

4,739

4,835

      Amortization of capitalized financing costs

25

25

51

45

      Stock-based compensation expense

780

757

1,093

1,126

      Gain on early extinguishment of debt

-

-

-

(425)

      Asset impairment charges

-

-

-

(11)

      Deferred income taxes

1,676

155

2,913

39

      Excess tax benefits from stock-based compensation

(295)

(126)

(331)

(131)

      Gain on sale of property, plant and equipment

(79)

(74)

(67)

(74)

      Gain from life insurance proceeds

(45)

-

(45)

-

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

(321)

(447)

(291)

(737)

      Net changes in assets and liabilities:

        Accounts receivable, net

1,661

(395)

8,552

5,447

        Inventories

(9,976)

4,177

(441)

7,149

        Accounts payable and accrued expenses

3,112

4,860

3,803

(6,819)

        Other changes

(218)

690

(13)

1,058

          Total adjustments

(1,273)

12,051

19,963

11,502

            Net cash provided by operating activities

2,441

12,313

26,079

11,584

Cash Flows From Investing Activities:

  Capital expenditures

(1,028)

(2,997)

(3,724)

(4,005)

  Proceeds from life insurance claims

-

-

505

-

  Increase in cash surrender value of life insurance policies

(28)

-

(26)

(427)

  Proceeds from surrender of life insurance policies

3

-

3

16

  Proceeds from sale of property, plant and equipment

100

81

100

96

            Net cash used for investing activities

(953)

(2,916)

(3,142)

(4,320)

Cash Flows From Financing Activities:

  Proceeds from long-term debt

891

10,374

4,385

51,894

  Principal payments on long-term debt

(891)

(18,757)

(15,860)

(57,625)

  Cash dividends paid

(541)

(530)

(5,510)

(1,059)

  Cash received from exercise of stock options

2,194

1

2,257

2

  Excess tax benefits from stock-based compensation

295

126

331

131

  Financing costs

-

(161)

-

(161)

  Other

(348)

(227)

(647)

(223)

            Net cash provided by (used for) financing activities

1,600

(9,174)

(15,044)

(7,041)

Net increase in cash and cash equivalents

3,088

223

7,893

223

Cash and cash equivalents at beginning of period

4,815

10

10

10

Cash and cash equivalents at end of period

$        7,903

$           233

$        7,903

$           233

Supplemental Disclosures of Cash Flow Information:

  Cash paid during the period for:

    Interest

$               2

$             66

$             20

$           618

    Income taxes, net

708

40

721

73

  Non-cash investing and financing activities:

    Purchases of property, plant and equipment in accounts payable

276

97

276

97

    Restricted stock surrendered for withholding taxes payable

267

263

267

263

 

 

SOURCE Insteel Industries, Inc.



RELATED LINKS

http://www.insteel.com