Insteel Industries Reports Fourth Quarter And Fiscal 2014 Financial Results

MOUNT AIRY, N.C., Oct. 16, 2014 /PRNewswire/ -- Insteel Industries, Inc. (NasdaqGS: IIIN) today announced financial results for its fourth quarter and fiscal year ended September 27, 2014.

Fourth Quarter 2014 Results

Net earnings for the fourth quarter of fiscal 2014 increased to $4.6 million, or $0.24 per diluted share from $2.3 million, or $0.13 per share in the same period a year ago. The fourth quarter results for fiscal 2014 include $1.2 million of restructuring charges and $0.6 million of acquisition costs, both associated with the transaction that was completed during the quarter, and a $1.4 million net gain from insurance proceeds related to the January 2014 fire at the Gallatin, Tennessee facility. In the aggregate, these items reduced pre-tax earnings by $0.5 million and net earnings per share by $0.02.

Net sales increased 19.3% to a record high $117.1 million from $98.2 million in the same period a year ago. Shipments increased 15.0% from the prior year quarter, also to a new record high, and average selling prices increased 3.7%. On a sequential basis, shipments increased 1.4% from the third quarter of fiscal 2014 and average selling prices increased 2.0%.

Insteel's fourth-quarter results were favorably impacted by higher spreads between selling prices and raw material costs and the increase in shipments relative to the prior year quarter. Capacity utilization for the quarter was 57% compared with 50% in the prior year quarter and 58% in the third quarter of fiscal 2014. 

Operating activities provided $7.1 million of cash compared with $4.3 million in the same period a year ago primarily due to the increase in earnings and the relative changes in net working capital. Net working capital provided $0.2 million of cash while using $2.2 million in the prior year quarter. Capital expenditures were $3.2 million, including $3.0 million of outlays related to the replacement of property and equipment damaged in the Gallatin fire for which Insteel expects to be reimbursed under its insurance coverage.

Fiscal 2014 Results

Net earnings for fiscal 2014 increased to $16.6 million, or $0.89 per diluted share from $11.7 million, or $0.64 per diluted share in the prior year. The fiscal 2014 results include $1.2 million of restructuring charges and $0.6 million of acquisition costs, both associated with the transaction that was completed during the year, and a $1.8 million net gain from insurance proceeds related to the Gallatin fire. In the aggregate, these items did not materially impact pre-tax earnings or net earnings per share for the year.

Net sales increased 12.4% to a record high $409.0 million from $363.9 million in the prior year. Shipments increased 12.8% from the prior year while average selling prices decreased 0.3%.

Operating activities provided $29.2 million of cash compared with $36.8 million in the prior year primarily due to the relative changes in net working capital partially offset by the increase in earnings. Net working capital provided $2.4 million of cash compared with $9.7 million in the prior year. Capital expenditures were $9.0 million, including $4.8 million of outlays related to the replacement of property and equipment damaged in the Gallatin fire for which Insteel expects to be reimbursed under its insurance coverage. Capital expenditures for fiscal 2015 are expected to range from $11.0 to $13.0 million, excluding the outlays related to the Gallatin fire.

Balance Sheet

Insteel ended the quarter and year debt-free with $3.1 million of cash and cash equivalents, and no borrowings outstanding on its $100.0 million revolving credit facility.

ASW Acquisition

As previously announced, on August 15, 2014, Insteel, through its wholly-owned subsidiary, Insteel Wire Products Company, acquired substantially all of the assets associated with the prestressed concrete strand ("PC strand") business of American Spring Wire Corporation ("ASW") for an adjusted purchase price of $33.9 million, subject to certain additional post-closing adjustments. ASW was previously the second largest producer of PC strand in the U.S. behind Insteel. For the twelve months ended June 30, 2014, ASW's sales of PC strand were $67.8 million.

Under the terms of the purchase agreement, Insteel acquired, among other assets, the accounts receivable and inventories related to ASW's PC strand business, production equipment at its facility in Houston, Texas and its production facility in Newnan, Georgia. Insteel will lease the Houston facility from ASW. The transaction was funded from cash on hand and borrowings on Insteel's $100.0 million revolving credit facility, which were subsequently repaid.

During the quarter, Insteel recorded $1.2 million of restructuring charges related to the ASW acquisition for employee separation costs associated with staffing reductions and $0.6 million of acquisition costs for legal, accounting and other professional fees. 

"We are pleased with the substantial progress that was made in executing our integration plan during the quarter," said H.O. Woltz III, Insteel's president and CEO. "Both ASW facilities have transitioned to Insteel's information systems and the same operating metrics and procedures as our existing PC strand plants. We are evaluating the optimal operating configuration for our newly combined facilities, which will be significantly influenced by the prospects for a continued recovery in our construction end-markets." 

Outlook

"As we move into fiscal 2015, the most recent macro indicators and forecasts for our primary demand driver, private nonresidential construction, point to continued improvement over the course of the year," commented Woltz. "We expect that our financial results will also be favorably impacted by the full-year contribution of the ASW acquisition and higher operating levels at our facilities driven by the strengthening market environment."

Conference Call

Insteel will hold a conference call at 10:00 a.m. ET today to discuss its fourth 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 ("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 eleven 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," "appears," "plans," "intends," "may," "should," "could" 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 U.S. Securities and Exchange Commission (the "SEC"), in particular in its Annual Report on Form 10-K for the year ended September 28, 2013. 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; 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; credit market conditions and the relative availability of financing for Insteel, its customers and the construction industry as a whole; 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; the adverse impact of the fire at Insteel's Gallatin, Tennessee PC strand manufacturing facility, including operational interruptions, higher than anticipated repair costs, reduced production levels and lower than anticipated insurance reimbursements; potential difficulties that may be encountered in integrating the ASW acquisition into Insteel's existing business and realizing the anticipated synergies; and the other risks and uncertainties discussed in Insteel's Annual Report on Form 10-K for the year ended September 28, 2013 and in other filings made by Insteel with the SEC.

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SOURCE Insteel Industries, Inc.

Related Links

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