8-K
INSTEEL INDUSTRIES INC (IIIN)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of report (Date of earliest event reported): April 25, 2024
Insteel Industries Inc.
(Exact Name of Registrant as Specified in Charter)
| North Carolina | 1-9929 | 56-0674867 |
|---|---|---|
| (State or Other Jurisdiction<br><br> <br>of Incorporation) | (Commission<br><br> <br>File Number) | (I.R.S. Employer<br><br> <br>Identification No.) |
1373 Boggs Drive
Mount Airy, North Carolina ### 27030
(Address of Principal Executive Offices, and Zip Code)
(336) 786-2141
Registrant’s Telephone Number, Including Area Code
(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
| ☐ | Written communication pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
|---|---|
| ☐ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| --- | --- |
| ☐ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| --- | --- |
| ☐ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
| --- | --- |
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
|---|---|---|
| Common Stock (No Par Value) | IIIN | The New York Stock Exchange |
| Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2 of this chapter).<br><br> <br>Emerging growth company ☐<br><br> <br><br><br> <br>If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐ | ||
| --- |
Item 2.02. Results of Operations and Financial Condition
On April 25, 2024, Insteel Industries Inc. issued a news release regarding its financial results for its second quarter ended March 30, 2024. A copy of this release is being furnished as Exhibit 99.1 to this Current Report on Form 8-K. The information in Item 2.02 of this Current Report on Form 8-K, including the related information in Exhibit 99.1, shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liability of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such a filing.
Item 9.01. Financial Statements and Exhibits
Exhibit 99.1 News Release dated April 25, 2024 announcing financial results for the second quarter ended March 30, 2024.
Exhibit 104 Cover Page Interactive Data File (embedded within Inline XBRL document).
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
INSTEEL INDUSTRIES INC.
| By: | /s/ Elizabeth C. Southern |
|---|---|
| Name: | Elizabeth C. Southern |
| Title: | Vice President Administration, Secretary and Chief Legal Officer |
| Date: | April 25, 2024 |
ex_656530.htm
Exhibit 99.1
NEWS RELEASE
| FOR IMMEDIATE RELEASE | Contact: | Scot Jafroodi |
|---|---|---|
| Vice President, | ||
| Chief Financial Officer and Treasurer | ||
| Insteel Industries Inc. | ||
| (336) 786-2141 |
INSTEEL INDUSTRIES REPORTS SECOND QUARTER 2024 RESULTS
MOUNT AIRY, N.C., April 25, 2024 – 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 announced financial results for its second quarter of fiscal 2024 ended March 30, 2024.
Second Quarter 2024 Highlights
| ● | Net earnings of $6.9 million, or $0.35 per diluted share |
|---|---|
| ● | Net sales of $127.4 million |
| ● | Gross profit of $15.7 million, or 12.3% of net sales |
| ● | Operating cash flow of $1.4 million |
| ● | Net cash balance of $83.9 million and no debt outstanding as of March 30, 2024 |
| ● | Improving demand environment and easing macroeconomic headwinds |
Second Quarter 2024 Results
Net earnings for the second quarter of fiscal 2024 increased to $6.9 million, or $0.35 per diluted share, from $5.1 million, or $0.26 per share, in the same period a year ago. Insteel’s results for the second quarter benefited from widening spreads between selling prices and raw material costs relative to the prior year quarter.
Net sales decreased 19.9% to $127.4 million from $159.1 million in the prior year quarter, driven by 17.3% decrease in average selling prices and a 3.2% decrease in shipments. Average selling prices continue to remain below the previous year’s levels due to a highly competitive pricing environment that has persisted for over a year, along with the growing impact of low-priced PC strand imports. On a sequential basis, average selling prices increased 2.7% from the first quarter, following price increases implemented during the current quarter to recover a rise in raw material costs. Shipments for the current quarter were unfavorably impacted by competitive pressure, weakness in the commercial construction market, and adverse weather conditions that reduced construction activity. Sequentially, shipments increased 1.9% from the first quarter due to the expected seasonal demand upturn.
Gross profit increased to $15.7 million from $13.3 million in the prior year quarter, and gross margin widened to 12.3% from 8.3% due to higher spreads between selling prices and raw material costs, which were partially offset by lower shipments. The widening spreads were driven by selling price increases in the current quarter and the consumption of lower cost inventory.
Operating activities generated $1.4 million of cash during the quarter compared with $46.6 million in the prior year quarter primarily due to the relative changes in net working capital. Net working capital used $10.5 million of cash in the current year quarter, driven by an increase in receivables, while providing $39.7 million of cash in the prior year quarter.
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1373 BOGGS DRIVE, MOUNT AIRY, NC 27030/PHONE: (336) 786-2141/FAX: (336) 786-2144
WWW.INSTEEL.COM
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Six Month 2024 Results
Net earnings for the first six months of fiscal 2024 were $8.1 million, or $0.41 per share, compared with $16.2 million, or $0.83 per share, for the same period a year ago.
Net sales decreased to $249.1 million from $326.0 million for the prior year period, driven by a 22.4% decrease in average selling prices and a 1.6% decrease in shipments. Gross profit decreased to $22.0 million from $31.0 million in the same period a year ago, and gross margin narrowed to 8.8% from 9.5% due primarily to lower spreads.
Capital Allocation and Liquidity
Capital expenditures for the first six months of fiscal 2024 decreased to $14.2 million from $15.4 million in the comparable prior year period. Capital outlays for fiscal 2024 are expected to total up to approximately $30.0 million, primarily focused on expenditures to modernize our facilities and information systems, advance the growth of the engineered structural mesh business and to support cost and productivity improvement initiatives in addition to recurring maintenance needs.
Insteel ended the quarter debt-free with $83.9 million of cash and no borrowings outstanding on its $100.0 million revolving credit facility.
Outlook
“We are encouraged by the improving business conditions we see as inventories appear to have corrected and seasonal forces begin to work in our favor, causing us to ramp up operating hours at most of our plants to maintain acceptable lead times. While our second quarter results benefited from the stabilization of selling prices and the consumption of lower cost inventory, shipment growth is required for the Company to demonstrate substantially improved financial performance. We are well prepared to meet higher levels of demand following the substantial capital investments we have made in recent years to broaden our product line and reduce the cash cost of production,” commented H.O. Woltz III, Insteel’s President and CEO.
Mr. Woltz further commented, “Looking ahead to the second half of the fiscal year, we anticipate growing momentum across our business driven by the seasonal upturn in construction activity, continued recovery in demand from our customers, and an improving macroeconomic outlook. We also remain optimistic about the expected growth in infrastructure construction, which will be driven in part by the spending associated with the Infrastructure Investment and Jobs Act.”
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
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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 ten 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 30, 2023 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 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 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; and the “Risk Factors” discussed in our Annual Report on Form 10-K for the year ended September 30, 2023, and in other filings made by us with the SEC.
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| 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, | April 1, | March 30, | April 1, | |||||||||
| 2024 | 2023 | 2024 | 2023 | |||||||||
| Net sales | $ | 127,394 | $ | 159,051 | $ | 249,119 | $ | 325,950 | ||||
| Cost of sales | 111,679 | 145,789 | 227,134 | 294,902 | ||||||||
| Gross profit | 15,715 | 13,262 | 21,985 | 31,048 | ||||||||
| Selling, general and administrative expense | 7,875 | 7,506 | 14,242 | 14,632 | ||||||||
| Other expense (income), net | 9 | (57 | ) | (13 | ) | (3,399 | ) | |||||
| Interest expense | 28 | 23 | 57 | 47 | ||||||||
| Interest income | (1,147 | ) | (747 | ) | (2,806 | ) | (1,187 | ) | ||||
| Earnings before income taxes | 8,950 | 6,537 | 10,505 | 20,955 | ||||||||
| Income taxes | 2,011 | 1,436 | 2,434 | 4,731 | ||||||||
| Net earnings | $ | 6,939 | $ | 5,101 | $ | 8,071 | $ | 16,224 | ||||
| Net earnings per share: | ||||||||||||
| Basic | $ | 0.36 | $ | 0.26 | $ | 0.41 | $ | 0.83 | ||||
| Diluted | 0.35 | 0.26 | 0.41 | 0.83 | ||||||||
| Weighted average shares outstanding: | ||||||||||||
| Basic | 19,508 | 19,503 | 19,503 | 19,514 | ||||||||
| Diluted | 19,594 | 19,562 | 19,584 | 19,573 | ||||||||
| Cash dividends declared per share | $ | 0.03 | $ | 0.03 | $ | 2.56 | $ | 2.06 |
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| INSTEEL INDUSTRIES INC. AND SUBSIDIARIES | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| CONSOLIDATED BALANCE SHEETS | ||||||||||||
| (In thousands) | ||||||||||||
| (Unaudited) | **** | **** | **** | (Unaudited) | ||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| March 30, | December 30, | September 30, | April 1, | |||||||||
| 2024 | 2023 | 2023 | 2023 | |||||||||
| Assets | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** |
| Current assets: | ||||||||||||
| Cash and cash equivalents | $ | 83,945 | $ | 85,615 | $ | 125,670 | $ | 80,156 | ||||
| Accounts receivable, net | 55,549 | 43,354 | 63,424 | 65,874 | ||||||||
| Inventories | 92,530 | 94,142 | 103,306 | 136,492 | ||||||||
| Other current assets | 7,675 | 8,706 | 6,453 | 5,357 | ||||||||
| Total current assets | 239,699 | 231,817 | 298,853 | 287,879 | ||||||||
| Property, plant and equipment, net | 127,534 | 129,300 | 120,014 | 111,946 | ||||||||
| Intangibles, net | 5,716 | 5,903 | 6,090 | 6,465 | ||||||||
| Goodwill | 9,745 | 9,745 | 9,745 | 9,745 | ||||||||
| Other assets | 14,533 | 13,803 | 12,811 | 12,189 | ||||||||
| Total assets | $ | 397,227 | $ | 390,568 | $ | 447,513 | $ | 428,224 | ||||
| Liabilities and shareholders' equity | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** |
| Current liabilities: | ||||||||||||
| Accounts payable | $ | 25,409 | $ | 23,852 | $ | 34,346 | $ | 36,936 | ||||
| Accrued expenses | 7,975 | 9,585 | 11,809 | 8,153 | ||||||||
| Total current liabilities | 33,384 | 33,437 | 46,155 | 45,089 | ||||||||
| Other liabilities | 23,222 | 23,536 | 19,853 | 18,157 | ||||||||
| Commitments and contingencies | ||||||||||||
| Shareholders' equity: | ||||||||||||
| Common stock | 19,467 | 19,448 | 19,454 | 19,441 | ||||||||
| Additional paid-in capital | 85,332 | 84,425 | 83,832 | 82,708 | ||||||||
| Retained earnings | 236,105 | 230,005 | 278,502 | 263,806 | ||||||||
| Accumulated other comprehensive loss | (283 | ) | (283 | ) | (283 | ) | (977 | ) | ||||
| Total shareholders' equity | 340,621 | 333,595 | 381,505 | 364,978 | ||||||||
| Total liabilities and shareholders' equity | $ | 397,227 | $ | 390,568 | $ | 447,513 | $ | 428,224 |
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| INSTEEL INDUSTRIES INC. AND SUBSIDIARIES | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||||||||
| (In thousands) | ||||||||||||
| (Unaudited) | ||||||||||||
| Three Months Ended | Six Months Ended | |||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| March 30, | April 1, | March 30, | April 1, | |||||||||
| 2024 | 2023 | 2024 | 2023 | |||||||||
| Cash Flows From Operating Activities: | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** |
| Net earnings | $ | 6,939 | $ | 5,101 | $ | 8,071 | $ | 16,224 | ||||
| Adjustments to reconcile net earnings to net cash provided by operating activities: | ||||||||||||
| Depreciation and amortization | 3,866 | 3,223 | 7,575 | 6,573 | ||||||||
| Amortization of capitalized financing costs | 13 | 16 | 26 | 32 | ||||||||
| Stock-based compensation expense | 997 | 983 | 1,395 | 1,113 | ||||||||
| Deferred income taxes | (579 | ) | (101 | ) | 2,769 | (1,479 | ) | |||||
| Loss (gain) on sale and disposition of property, plant and equipment | 24 | - | 24 | (3,324 | ) | |||||||
| Increase in cash surrender value of life insurance policies over premiums paid | (383 | ) | (369 | ) | (1,058 | ) | (732 | ) | ||||
| Net changes in assets and liabilities: | ||||||||||||
| Accounts receivable, net | (12,195 | ) | 2,915 | 7,875 | 15,772 | |||||||
| Inventories | 1,612 | 34,693 | 10,776 | 61,162 | ||||||||
| Accounts payable and accrued expenses | 62 | 2,069 | (12,859 | ) | (19,451 | ) | ||||||
| Other changes | 1,021 | (1,965 | ) | (1,383 | ) | 3,681 | ||||||
| Total adjustments | (5,562 | ) | 41,464 | 15,140 | 63,347 | |||||||
| Net cash provided by operating activities | 1,377 | 46,565 | 23,211 | 79,571 | ||||||||
| Cash Flows From Investing Activities: | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** |
| Capital expenditures | (1,957 | ) | (7,200 | ) | (14,225 | ) | (15,400 | ) | ||||
| Increase in cash surrender value of life insurance policies | (247 | ) | (246 | ) | (369 | ) | (327 | ) | ||||
| Proceeds from sale of property, plant and equipment | - | - | 3 | 9,920 | ||||||||
| Proceeds from surrender of life insurance policies | - | 343 | 5 | 343 | ||||||||
| Net cash used for investing activities | (2,204 | ) | (7,103 | ) | (14,586 | ) | (5,464 | ) | ||||
| Cash Flows From Financing Activities: | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** |
| Proceeds from long-term debt | 67 | 75 | 134 | 142 | ||||||||
| Principal payments on long-term debt | (67 | ) | (75 | ) | (134 | ) | (142 | ) | ||||
| Cash dividends paid | (584 | ) | (584 | ) | (49,775 | ) | (40,085 | ) | ||||
| Payment of employee tax withholdings related to net share transactions | (141 | ) | (187 | ) | (161 | ) | (187 | ) | ||||
| Cash received from exercise of stock options | 185 | - | 428 | 94 | ||||||||
| Financing costs | - | (164 | ) | - | (164 | ) | ||||||
| Repurchases of common stock | (303 | ) | (1,009 | ) | (842 | ) | (1,925 | ) | ||||
| Net cash used for financing activities | (843 | ) | (1,944 | ) | (50,350 | ) | (42,267 | ) | ||||
| Net (decrease) increase in cash and cash equivalents | (1,670 | ) | 37,518 | (41,725 | ) | 31,840 | ||||||
| Cash and cash equivalents at beginning of period | 85,615 | 42,638 | 125,670 | 48,316 | ||||||||
| Cash and cash equivalents at end of period | $ | 83,945 | $ | 80,156 | $ | 83,945 | $ | 80,156 | ||||
| Supplemental Disclosures of Cash Flow Information: | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** |
| Cash paid during the period for: | ||||||||||||
| Income taxes, net | $ | 716 | $ | 3,945 | $ | 724 | $ | 4,132 | ||||
| Non-cash investing and financing activities: | ||||||||||||
| Purchases of property, plant and equipment in accounts payable | 1,824 | 2,123 | 1,824 | 2,123 | ||||||||
| Restricted stock units and stock options surrendered for withholding taxes payable | 141 | 187 | 161 | 187 |
IIIN – E