Insteel Industries Reports First Quarter 2025 Results

MOUNT AIRY, N.C.--(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 first quarter of fiscal 2025, ended December 28, 2024. First Quarter 2025 Highlights Executed and integrated two acquisitions, strengthening our competitive position Payment of special cash dividend totaling $19.4 million, or $1.00 per share Net sales of $129.7 million Gross profit of $9.5 million, or 7.3% of net sales Net income of $1.1 million, or $0.06 per share Operating cash flow of $19.0 million Net cash balance of $36.0 million and no debt outstanding as of December 28, 2024 Improved demand environment and business outlook First Quarter 2025 Results Net earnings for the first quarter of fiscal 2025 remained unchanged from the prior year at $1.1 million or $0.06 per share. Results for the current quarter include $1.0 million in restructuring charges and acquisition-related costs, which collectively reduced net earnings per share by $0.04. Insteel’s first quarter results benefited from higher spreads between selling prices and raw material costs, as well as an improvement in demand for the Company’s concrete reinforcement products which were partially offset by an increase in selling, general and administrative expense. Net sales increased 6.6% to $129.7 million from $121.7 million in the prior year quarter, driven by an 11.4% increase in shipments partially offset by a 4.3% decline in average selling prices. Shipments for the current quarter benefited from favorable demand trends in our infrastructure and commercial construction markets, as well as the incremental volume generated from our two recent acquisitions. On a sequential basis, shipments decreased 4.5% from the fourth quarter of fiscal 2024, reflecting the usual seasonal slowdown, while average selling prices increased 1.1%. Gross margin expanded by 210 basis points to 7.3%, from 5.2% in the prior year quarter, primarily due to a combination of wider spreads between selling prices and raw material costs and higher shipment volume. Contributions from the acquisitions made during the quarter were nil due to purchase accounting conventions and weak seasonality. Operating activities generated $19.0 million of cash during the quarter compared to $21.8 million in the prior year quarter, as both periods benefited from the relative changes in working capital. Working capital provided $12.3 million in the current quarter, driven by the reduction in inventories and receivables, while providing $16.3 million in the prior year quarter. Capital Allocation and Liquidity Capital expenditures for the first quarter of fiscal 2025 decreased to $2.7 million from $12.3 million in the prior year quarter. Capital outlays for fiscal 2025 are expected to total up to approximately $22.0 million, primarily focused on cost and productivity improvement initiatives as well as recurring maintenance requirements. On December 13, 2024, Insteel paid a special cash dividend totaling $19.4 million, or $1.00 per share, in addition to its regular quarterly cash dividend of $0.03 per share and ended the quarter with $36.0 million of cash and no borrowings outstanding on its $100.0 million revolving credit facility. Acquisitions of Engineered Wire Products, Inc and O’Brien Wire Products of Texas, Inc. As previously announced, on October 21, 2024, Insteel, through its wholly-owned subsidiary, Insteel Wire Products Company (“IWP”), acquired Engineered Wire Products, Inc. (“EWP”) for an adjusted purchase price of $67.0 million in an asset transaction. Under the terms of the purchase agreement, Insteel acquired, among other assets, EWP’s inventories and production equipment and EWP’s Upper Sandusky, Ohio and Warren, Ohio production facilities. EWP was a leading manufacturer of welded wire reinforcement products for use in nonresidential and residential construction. The transaction was funded from cash on hand. Subsequent to closing the transaction, the Warren, Ohio facility was closed and its orders were distributed to logical Insteel legacy facilities. On November 26, 2024, Insteel, through its wholly-owned subsidiary, IWP, acquired O’Brien Wire Products of Texas, Inc. (“OWP”) for an adjusted purchase price of $5.1 million in an asset transaction. Under the terms of the purchase agreement, Insteel acquired certain inventories and all of OWP’s production equipment. OWP was a manufacturer of welded wire reinforcement products for use in nonresidential and residential construction located in Houston, Texas. The transaction was funded from cash on hand. During the quarter, Insteel incurred $0.7 million of restructuring charges related to the consolidation of the Company’s welded wire manufacturing operations and $0.3 million of acquisition costs for legal, accounting and other professional fees associated with the recent acquisitions. Outlook “We are encouraged by recovering order activity we experienced during the first quarter, which is typically seasonally weak,” said H.O. Woltz III, Insteel’s President and CEO. “The improved start to the year, together with increasing contributions from our recent acquisitions, positions us well as we move into the balance of fiscal 2025. While we are optimistic that our markets will recover during 2025, we continue to face the headwinds of low-priced PC strand imports entering the U.S. market. We are addressing this issue with both the Biden Administration and the incoming Trump Administration.” Mr. Woltz added, “Once again, our people did a remarkable job of integrating the acquisitions we completed during the first fiscal quarter. Within two weeks of closing, the legacy systems of the acquired companies were disabled and Insteel systems were up and running. While systems training will be ongoing, integration risk is substantially behind us, and we are well underway in capturing the significant cost reduction synergies that are available. Looking ahead to the remainder of fiscal 2025, we are focused on optimizing operations, taking advantage of emerging opportunities in our markets, and delivering long-term value to our shareholders.” Conference Call Insteel will hold a conference call at 10:00 a.m. ET today to discuss its first 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. 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 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; 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 December 28, December 30, 2024 2023 Net sales $ 129,720 $ 121,725 Cost of sales 120,191 115,455 Gross profit 9,529 6,270 Selling, general and administrative expense 7,887 6,367 Restructuring charges, net 696 - Acquisition costs 271 - Other income, net (14 ) (22 ) Interest expense 13 29 Interest income (786 ) (1,659 ) Earnings before income taxes 1,462 1,555 Income taxes 381 423 Net earnings $ 1,081 $ 1,132 Net earnings per share: Basic $ 0.06 $ 0.06 Diluted 0.06 0.06 Weighted average shares outstanding: Basic 19,497 19,497 Diluted 19,550 19,573 Cash dividends declared per share $ 1.03 $ 2.53 INSTEEL INDUSTRIES INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (In thousands) (Unaudited) December 28, December 30, September 28, 2024 2023 2024 Assets Current assets: Cash and cash equivalents $ 35,951 $ 85,615 $ 111,538 Accounts receivable, net 49,442 43,354 58,308 Inventories 98,670 94,142 88,840 Other current assets 8,422 8,706 8,608 Total current assets 192,485 231,817 267,294 Property, plant and equipment, net 136,379 129,300 125,540 Intangibles, net 17,998 5,903 5,341 Goodwill 35,641 9,745 9,745 Other assets 22,196 13,803 14,632 Total assets $ 404,699 $ 390,568 $ 422,552 Liabilities and shareholders' equity Current liabilities: Accounts payable $ 36,724 $ 23,852 $ 37,487 Accrued expenses 10,360 9,585 9,547 Total current liabilities 47,084 33,437 47,034 Other liabilities 25,965 23,536 24,663 Commitments and contingencies Shareholders' equity: Common stock 19,431 19,448 19,452 Additional paid-in capital 86,919 84,425 86,671 Retained earnings 225,908 230,005 245,340 Accumulated other comprehensive loss (608 ) (283 ) (608 ) Total shareholders' equity 331,650 333,595 350,855 Total liabilities and shareholders' equity $ 404,699 $ 390,568 $ 422,552 INSTEEL INDUSTRIES INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) (Unaudited) Three Months Ended December 28, December 30, 2024 2023 Cash Flows From Operating Activities: Net earnings $ 1,081 $ 1,132 Adjustments to reconcile net earnings to net cash provided by operating activities: Depreciation and amortization 4,429 3,709 Amortization of capitalized financing costs 13 13 Stock-based compensation expense 345 398 Deferred income taxes 777 3,348 Asset impairment charges 273 - Loss on sale and disposition of property, plant and equipment 3 - Increase in cash surrender value of life insurance policies over premiums paid - (675 ) Net changes in assets and liabilities (net of assets and liabilities acquired): Accounts receivable, net 8,866 20,070 Inventories 2,640 9,164 Accounts payable and accrued expenses 754 (12,921 ) Other changes (198 ) (2,404 ) Total adjustments 17,902 20,702 Net cash provided by operating activities 18,983 21,834 Cash Flows From Investing Activities: Acquisition of businesses (71,456 ) - Capital expenditures (2,667 ) (12,268 ) Decrease (increase) in cash surrender value of life insurance policies 184 (122 ) Proceeds from sale of property, plant and equipment - 3 Proceeds from surrender of life insurance policies - 5 Net cash used for investing activities (73,939 ) (12,382 ) Cash Flows From Financing Activities: Proceeds from long-term debt 69 67 Principal payments on long-term debt (69 ) (67 ) Cash dividends paid (20,014 ) (49,191 ) Payment of employee tax withholdings related to net share transactions - (20 ) Cash received from exercise of stock options - 243 Repurchases of common stock (617 ) (539 ) Net cash used for financing activities (20,631 ) (49,507 ) Net decrease in cash and cash equivalents (75,587 ) (40,055 ) Cash and cash equivalents at beginning of period 111,538 125,670 Cash and cash equivalents at end of period $ 35,951 $ 85,615 Supplemental Disclosures of Cash Flow Information: Cash paid during the period for: Income taxes, net $ 40 $ 8 Non-cash investing and financing activities: Purchases of property, plant and equipment in accounts payable 1,352 1,846 Restricted stock units and stock options surrendered for withholding taxes payable - 20 Accrued liability related to holdback for business acquired 657 - IIIN – E

Insteel Industries Reports First Quarter 2025 Results

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