MOUNT AIRY, N.C., April 17, 2025--(BUSINESS WIRE)--Insteel Industries Inc. (NYSE: IIIN) ("Insteel" or the "Company"), the largest manufacturer of steel wire reinforcing products for concrete construction applications in the United States, today reported financial results for its second quarter of fiscal 2025, ended March 29, 2025.
Second Quarter 2025 Highlights
Net earnings of $10.2 million, or $0.52 per diluted share
Net sales of $160.7 million
Gross profit of $24.5 million, or 15.3% of net sales
Net cash balance of $28.4 million and no debt outstanding as of March 29, 2025
Improving customer demand and cautiously positive market outlook
Second Quarter 2025 Results
Net earnings for the second quarter of fiscal 2025 rose to $10.2 million, or $0.52 per diluted share, from $6.9 million, or $0.35 per diluted share, in the same period a year ago. The results for the current quarter include $0.7 million in restructuring charges and acquisition-related costs, which collectively reduced net earnings per share by $0.03. Insteel’s second quarter results benefited from recovering demand for the Company’s concrete reinforcement products along with lower unit manufacturing costs on higher production volume, partially offset by an increase in selling, general and administrative expense.
Net sales increased 26.1% to $160.7 million from $127.4 million in the prior-year quarter, driven by a 28.9% increase in shipments, partially offset by a 2.2% decline in average selling prices. The rise in shipments was driven by strengthening demand in our construction end markets, along with incremental volume from our first-quarter acquisitions. Sequentially, shipments grew 17.9% from the first quarter, while average selling prices rose 5.1%. Gross margin expanded by 300 basis points to 15.3%, from 12.3% in the same quarter last year, reflecting higher shipment volumes, lower unit manufacturing costs, and contributions from our recent acquisitions.
Operating activities used $3.3 million of cash during the quarter compared to generating $1.4 million in the prior year quarter, primarily due to the relative changes in net working capital. Net working capital used $21.9 million in the current quarter, driven by an increase in receivables, compared to using $10.5 million in the prior year quarter.
Six Month 2025 Results
Net earnings for the first six months of fiscal 2025 increased to $11.3 million, or $0.58 per share, from $8.1 million, or $0.41 per share, in the same period a year ago. Insteel’s earnings for the current year period reflect $1.7 million of restructuring charges and acquisition-related costs, which collectively reduced net earnings per share by $0.07. Net sales increased to $290.4 million from $249.1 million for the prior year period, driven by a 20.2% increase in shipments partially offset by a 3.1% decrease in average selling prices. Gross profit increased to $34.1 million from $22.0 million in the same period a year ago, and gross margin widened to 11.7% from 8.8% due primarily to higher shipment volumes, lower unit manufacturing costs, improved spreads and contributions from our recent acquisitions.
Capital Allocation and Liquidity
Capital expenditures for the first six months of fiscal 2025 decreased to $4.9 million from $14.2 million in the comparable prior year period. Capital outlays for fiscal 2025 are expected to total up to approximately $17.0 million, primarily focused on cost and productivity improvement initiatives as well as recurring maintenance requirements.
Insteel ended the quarter with $28.4 million of cash and no borrowings outstanding on its $100.0 million revolving credit facility.
Outlook
"We are encouraged by the strengthening demand for our products that began during our first quarter," said H.O. Woltz III, President and CEO of Insteel. "The positive momentum we experienced through our second fiscal quarter was driven by improving business conditions and rising customer confidence, trends that are not fully reflected in the broader macroeconomic indices generally used to measure the strength of the construction industry. It is important to note that our results, and my comments, reflect conditions we experienced prior to the recent turmoil created by the changing tariff policy of the Trump Administration. Nevertheless, as we move into the second half of fiscal 2025, we are encouraged by the pace of activity in our markets and believe it is likely to continue through the summer and into the fall.
"A beneficial aspect for Insteel of the Trump Administration’s recent tariff actions was the expansion of the Section 232 steel tariff to derivative products, including PC strand, which eliminated the significant competitive disadvantage that the Section 232 tariff created for Insteel in 2018. This important development should reduce the adverse impact of low-priced PC strand imports within the U.S. market."
Mr. Woltz continued, "At the same time, the Section 232 steel tariff was restored for shipments to the US from Canada and Mexico. Costs will rise in the US as a result of this action and, together with the impact of several steel wire rod capacity reductions that have been announced in the US, North American supplies will be severely curtailed. Significantly, however, because we have lived with the Section 232 steel tariff for many years, we view the impact of the Administration’s recent actions as positive for the Company since the Section 232 tariff was expanded to derivative products, and steel is generally not subject to reciprocal tariffs. We are assessing the potential impact of reciprocal tariffs on offshore purchases of capital equipment, spare parts and operating supplies. It is clear, however, that the possible imposition of these new tariffs would cause costs to rise substantially. This new environment requires a disciplined approach to pricing and that we manage our tariff exposure to every extent possible."
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 https://investor.insteel.com and will be archived for replay.
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 engineered structural mesh ("ESM"), concrete pipe reinforcement and standard welded wire reinforcement. Insteel’s products are sold primarily to manufacturers of concrete products and concrete contractors for use, primarily, in nonresidential construction applications. Headquartered in Mount Airy, North Carolina, Insteel operates eleven manufacturing facilities located in the United States.
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 we believe that our plans, intentions and expectations reflected in or suggested by such forward-looking statements are reasonable, they are subject to several risks and uncertainties, and we can provide no assurances that such plans, intentions or expectations will be implemented or achieved. Many of these risks and uncertainties are discussed in detail in our Annual Report on Form 10-K for the year ended September 28, 2024 and may be updated from time to time in our other filings with the U.S. Securities and Exchange Commission (the "SEC").
All forward-looking statements attributable to us or persons acting on our 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 we do not undertake 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 our business, 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 we operate, including uncertainty over global trade policies and the financial impact of related tariffs and retaliatory tariffs; changes in the spending levels for nonresidential and residential construction and the impact on demand for our 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 our products; the cyclical nature of the steel and building material industries; credit market conditions and the relative availability of financing for us, our customers and the construction industry as a whole; the impact of rising interest rates on the cost of financing for our customers; fluctuations in the cost and availability of our primary raw material, hot-rolled carbon steel wire rod, from domestic and foreign suppliers; competitive pricing pressures and our ability to raise selling prices in order to recover increases in raw material or operating costs; changes in United States or foreign trade policy affecting imports or exports of steel wire rod or our products; unanticipated changes in customer demand, order patterns and inventory levels; the impact of fluctuations in demand and capacity utilization levels on our unit manufacturing costs; our ability to further develop the market for ESM and expand our shipments of ESM; legal, environmental, economic or regulatory developments that significantly impact our business or operating costs; unanticipated plant outages, equipment failures or labor difficulties; the impact of cybersecurity breaches and data leaks: and the "Risk Factors" discussed in our Annual Report on Form 10-K for the year ended September 28, 2024, and in other filings made by us 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 29,
March 30,
March 29,
March 30,
2025
2024
2025
2024
Net sales
$
160,656
$
127,394
$
290,376
$
249,119
Cost of sales
136,127
111,679
256,318
227,134
Gross profit
24,529
15,715
34,058
21,985
Selling, general and administrative expense
10,800
7,875
18,687
14,242
Restructuring charges, net
662
-
1,358
-
Acquisition costs
27
-
298
-
Other expense (income), net
18
9
4
(13
)
Interest expense
13
28
26
57
Interest income
(316
)
(1,147
)
(1,102
)
(2,806
)
Earnings before income taxes
13,325
8,950
14,787
10,505
Income taxes
3,095
2,011
3,476
2,434
Net earnings
$
10,230
$
6,939
$
11,311
$
8,071
Net earnings per share:
Basic
$
0.53
$
0.36
$
0.58
$
0.41
Diluted
0.52
0.35
0.58
0.41
Weighted average shares outstanding:
Basic
19,482
19,508
19,490
19,503
Diluted
19,529
19,594
19,539
19,584
Cash dividends declared per share
$
0.03
$
0.03
$
1.06
$
2.56
INSTEEL INDUSTRIES INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
(Unaudited)
March 29,
December 28,
September 28,
March 30,
2025
2024
2024
2024
Assets
Current assets:
Cash and cash equivalents
$
28,424
$
35,951
$
111,538
$
83,945
Accounts receivable, net
79,792
49,442
58,308
55,549
Inventories
96,033
98,670
88,840
92,530
Other current assets
6,536
8,422
8,608
7,675
Total current assets
210,785
192,485
267,294
239,699
Property, plant and equipment, net
133,944
136,379
125,540
127,534
Intangibles, net
17,514
17,998
5,341
5,716
Goodwill
37,755
35,641
9,745
9,745
Other assets
21,862
22,196
14,632
14,533
Total assets
$
421,860
$
404,699
$
422,552
$
397,227
Liabilities and shareholders' equity
Current liabilities:
Accounts payable
$
42,998
$
36,724
$
37,487
$
25,409
Accrued expenses
11,427
10,360
9,547
7,975
Total current liabilities
54,425
47,084
47,034
33,384
Other liabilities
26,022
25,965
24,663
23,222
Commitments and contingencies
Shareholders' equity:
Common stock
19,412
19,431
19,452
19,467
Additional paid-in capital
87,959
86,919
86,671
85,332
Retained earnings
234,650
225,908
245,340
236,105
Accumulated other comprehensive loss
(608
)
(608
)
(608
)
(283
)
Total shareholders' equity
341,413
331,650
350,855
340,621
Total liabilities and shareholders' equity
$
421,860
$
404,699
$
422,552
$
397,227
INSTEEL INDUSTRIES INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
Three Months Ended
Six Months Ended
March 29,
March 30,
March 29,
March 30,
2025
2024
2025
2024
Cash Flows From Operating Activities:
Net earnings
$
10,230
$
6,939
$
11,311
$
8,071
Adjustments to reconcile net earnings to net cash (used for) provided by operating activities:
Depreciation and amortization
4,603
3,866
9,032
7,575
Amortization of capitalized financing costs
13
13
26
26
Stock-based compensation expense
1,343
997
1,688
1,395
Deferred income taxes
(770
)
(579
)
7
2,769
Asset impairment charges
320
-
593
-
Loss on sale and disposition of property, plant and equipment
31
24
34
24
Increase in cash surrender value of life insurance policies over premiums paid
-
(383
)
-
(1,058
)
Net changes in assets and liabilities (net of assets and liabilities acquired):
Accounts receivable, net
(30,350
)
(12,195
)
(21,484
)
7,875
Inventories
2,637
1,612
5,277
10,776
Accounts payable and accrued expenses
5,823
62
6,577
(12,859
)
Other changes
2,802
1,021
2,604
(1,383
)
Total adjustments
(13,548
)
(5,562
)
4,354
15,140
Net cash (used for) provided by operating activities
(3,318
)
1,377
15,665
23,211
Cash Flows From Investing Activities:
Acquisition of businesses
-
-
(71,456
)
-
Capital expenditures
(2,226
)
(1,957
)
(4,893
)
(14,225
)
Increase in cash surrender value of life insurance policies
(240
)
(247
)
(56
)
(369
)
Proceeds from sale of property, plant and equipment
37
-
37
3
Proceeds from surrender of life insurance policies
30
-
30
5
Net cash used for investing activities
(2,399
)
(2,204
)
(76,338
)
(14,586
)
Cash Flows From Financing Activities:
Proceeds from long-term debt
66
67
135
134
Principal payments on long-term debt
(66
)
(67
)
(135
)
(134
)
Cash dividends paid
(582
)
(584
)
(20,596
)
(49,775
)
Payment of employee tax withholdings related to net share transactions
(103
)
(141
)
(103
)
(161
)
Cash received from exercise of stock options
-
185
-
428
Repurchases of common stock
(1,125
)
(303
)
(1,742
)
(842
)
Net cash used for financing activities
(1,810
)
(843
)
(22,441
)
(50,350
)
Net decrease in cash and cash equivalents
(7,527
)
(1,670
)
(83,114
)
(41,725
)
Cash and cash equivalents at beginning of period
35,951
85,615
111,538
125,670
Cash and cash equivalents at end of period
$
28,424
$
83,945
$
28,424
$
83,945
Supplemental Disclosures of Cash Flow Information:
Cash paid during the period for:
Income taxes, net
$
237
$
716
$
277
$
724
Non-cash investing and financing activities:
Purchases of property, plant and equipment in accounts payable
1,618
1,824
1,618
1,824
Restricted stock units and stock options surrendered for withholding taxes payable
103
141
103
161
Accrued liability related to holdback for business acquired
