Insteel Industries Reports Third Quarter Financial Results

MOUNT AIRY, N.C., July 17, 2014 /PRNewswire/ -- Insteel Industries, Inc. (NasdaqGS: IIIN) today announced financial results for its third quarter ended June 28, 2014.

Third Quarter 2014 Results

Net earnings for the third quarter of fiscal 2014 were $5.8 million, or $0.31 per diluted share compared with $3.3 million, or $0.18 per share in the same period a year ago. Insteel's earnings for the current year quarter include a net gain of $0.8 million ($0.03 per share after-tax) in other income for insurance recoveries in excess of the carrying value of property and equipment destroyed in the January 2014 fire at the Gallatin, Tennessee prestressed concrete strand ("PC strand") manufacturing facility.

Net sales increased 16.8% to a record high $113.2 million from $96.9 million in the prior year period. Shipments increased 16.0% year-over-year, also to a new record high, and average selling prices increased 0.7%. On a sequential basis, shipments increased 25.2% from the second quarter of fiscal 2014 while average selling prices decreased 1.1%.

Insteel's third-quarter results were favorably impacted by the increase in shipments, higher spreads between selling prices and raw material costs, and lower unit conversion costs relative to the same period a year ago. Capacity utilization for the quarter was 58% compared with 48% in the prior year quarter and 51% in the second quarter of fiscal 2014. 

Operating activities provided $14.2 million of cash compared with $5.7 million in the prior year period primarily due to the relative changes in net working capital and the increase in earnings. Net working capital provided $6.9 million of cash while using $0.9 million in the same period a year ago. Capital expenditures were $2.8 million, including $1.7 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.

Nine Month 2014 Results

Net earnings for the first nine months of fiscal 2014 were $12.1 million, or $0.65 per diluted share compared with $9.4 million, or $0.51 per diluted share in the same period a year ago. Insteel's earnings for the current year nine-month period include a net gain of $0.4 million ($0.01 per share after-tax) in other income for insurance recoveries in excess of the carrying value of property and equipment destroyed in the Gallatin fire.

Net sales increased 9.9% to $291.9 million from $265.7 million in the prior year period. Shipments increased 11.9% year-over-year while average selling prices decreased 1.9%.

Operating activities provided $22.1 million of cash compared with $32.1 million in the prior year period primarily due to the relative changes in net working capital, which was partially offset by the increase in earnings. Net working capital provided $2.2 million of cash compared with $11.3 million in the same period a year ago. Capital expenditures were $5.8 million, including $1.9 million of outlays related to the replacement of property and equipment damaged in the Gallatin fire for which the Company expects to be reimbursed under its insurance coverage. Capital expenditures for fiscal 2014 are not expected to exceed $5.0 million, excluding the outlays related to the Gallatin fire.

Balance Sheet

Insteel ended the quarter debt-free with $31.4 million of cash and cash equivalents, and no borrowings outstanding on its $100.0 million revolving credit facility.

Outlook

"We are encouraged by the continued improvement in private nonresidential construction across most of our markets, which has become more pronounced over the past few months and is expected to continue through the remainder of our fiscal year," commented H.O. Woltz III, Insteel's president and CEO. "The outlook for infrastructure construction, however, is uncertain at this time in view of the projected shortfall in the highway trust fund and upcoming expiration of the current MAP-21 federal transportation funding authorization in September. It now appears likely that a short-term stop-gap funding measure will be enacted, which could have an unfavorable effect on state and local spending levels. Nevertheless, there appears to be a heightened degree of focus on developing a longer-term funding solution to address the critical needs that exist, and we expect this issue will ultimately be resolved."  

Conference Call

Insteel will hold a conference call at 10:00 a.m. ET today to discuss its third 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 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," "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; 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; 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; 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.

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

SOURCE Insteel Industries, Inc.