April 20, 2017

Insteel Industries Reports Second Quarter 2017 Financial Results

MOUNT AIRY, N.C., April 20, 2017 /PRNewswire/ -- Insteel Industries, Inc. (NasdaqGS: IIIN) today announced financial results for its second quarter ended April 1, 2017.

Second Quarter 2017 Results

Net earnings for the second quarter of fiscal 2017 increased to $7.4 million, or $0.39 per share, from $7.2 million, or $0.38 per share, in the same period a year ago. Insteel's results were favorably impacted by widening spreads between selling prices and raw material costs and lower operating expenses relative to the prior year quarter.

Net sales decreased 5.8% to $101.2 million from $107.4 million in the prior year quarter, reflecting a 6.9% decrease in shipments and a 1.1% increase in average selling prices. Shipments increased 5.6% sequentially from the first quarter of fiscal 2017 while average selling prices increased 2.0%. Gross margin widened 80 basis points to 18.1% from 17.3% due to higher spreads, which were offset by the decrease in shipments and higher unit conversion costs on lower production volumes.

Cash flow from operations increased to $13.3 million from $11.4 million in the prior year quarter primarily due to the relative changes in net working capital and the increase in earnings. Net working capital provided $3.2 million of cash compared with $0.4 million in the prior year quarter.

Six Month 2017 Results

Net earnings for the first six months of fiscal 2017 decreased to $11.9 million, or $0.62 per diluted share, from $13.9 million, or $0.73 per diluted share in the same period a year ago. Net sales decreased 2.4% to $195.0 million from $199.8 million in the prior year period, reflecting lower average selling prices and flat shipments. Gross margin narrowed 150 basis points to 16.0% from 17.5% due to lower spreads and higher unit conversion costs on lower production volumes.

Cash flow from operations decreased to $17.1 million from $23.7 million in the prior year period primarily due to the relative changes in net working capital and the decrease in earnings. Net working capital used $1.4 million of cash while providing $1.1 million in the prior year period.

Capital Allocation and Liquidity

Capital expenditures for the first six months of fiscal 2017 increased to $10.7 million from $4.3 million in the prior year period. Capital outlays for fiscal 2017 are expected to total up to $25.0 million largely related to the expansion of the Houston, Texas prestressed concrete strand ("PC strand") facility, additional investments in engineered structural mesh ("ESM") manufacturing capabilities and further upgrades of production technology and information systems. 

During the second quarter of fiscal 2017, Insteel returned $24.9 million of capital to shareholders through the payment of a special cash dividend of $1.25 per share and two regular quarterly cash dividends of $0.03 per share. Insteel ended the quarter debt-free with $40.2 million of cash and cash equivalents, and no borrowings outstanding on its $100.0 million revolving credit facility.

Outlook

"Looking ahead to the second half of fiscal 2017, we expect increasing shipments driven by continued growth in the construction sector together with the usual seasonal upturn in demand," commented H.O. Woltz III, Insteel's president and CEO. "Recent leading indicators for private construction are signaling further expansion, which should be supported by rising public construction activity later in the year. We expect the higher operating volumes coupled with targeted process improvements will translate into lower manufacturing costs at our facilities. We should also benefit from the cost reductions anticipated at our Houston PC strand facility as we begin to ramp up the new raw material cleaning and production lines."   

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 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 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 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 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 a number of 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, and are updated from time to time in our filings with the U.S. Securities and Exchange Commission (the "SEC"), in particular in our Annual Report on Form 10-K for the year ended October 1, 2016.

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; 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 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 October 1, 2016 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 amounts)

(Unaudited)






























Three Months Ended


Six Months Ended



April 1,


April 2,


April 1,


April 2,



2017


2016


2017


2016










Net sales


$     101,159


$     107,414


$     195,047


$     199,805

Cost of sales


82,865


88,799


163,743


164,767

    Gross profit


18,294


18,615


31,304


35,038

Selling, general and administrative expense


7,055


7,636


13,319


13,971

Restructuring charges, net


25


100


73


25

Other expense (income), net


10


29


-


(85)

Interest expense


35


40


69


81

Interest income


(48)


(32)


(100)


(50)

    Earnings before income taxes


11,217


10,842


17,943


21,096

Income taxes


3,797


3,690


6,063


7,236

    Net earnings


$         7,420


$         7,152


$       11,880


$       13,860



















Net earnings per share:









    Basic


$           0.39


$           0.38


$           0.63


$           0.75

    Diluted


0.39


0.38


0.62


0.73










Weighted average shares outstanding:









    Basic


19,004


18,678


18,992


18,601

    Diluted


19,224


19,015


19,217


18,949










Cash dividends declared per share


$           0.03


$           0.03


$           1.31


$           1.06










 

 

INSTEEL INDUSTRIES, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(In thousands)






















(Unaudited)




(Unaudited)



April 1,


December 31,


October 1,


April 2,



2017


2016


2016


2016

Assets









Current assets:









    Cash and cash equivalents


$          40,185


$          57,020


$          58,873


$          36,402

    Accounts receivable, net


49,577


44,155


47,389


48,578

    Inventories


59,230


61,590


71,186


56,574

    Other current assets


3,264


3,258


3,039


2,563

        Total current assets


152,256


166,023


180,487


144,117

Property, plant and equipment, net


94,805


92,332


88,193


83,788

Intangibles, net


8,484


8,774


9,063


9,641

Goodwill


6,965


6,965


6,965


6,965

Other assets


8,712


8,463


8,184


7,813

        Total assets


$        271,222


$        282,557


$        292,892


$        252,324










Liabilities and shareholders' equity









Current liabilities:









    Accounts payable


$          35,605


$          29,001


$          42,759


$          30,654

    Accrued expenses


7,222


8,394


11,024


9,096

    Dividends payable


-


24,298


-


-

        Total current liabilities


42,827


61,693


53,783


39,750

Other liabilities


15,736


15,888


14,543


13,498

Shareholders' equity:









    Common stock


19,025


18,985


18,976


18,786

    Additional paid-in capital


68,850


68,056


67,817


65,370

    Retained earnings


126,325


119,476


139,314


117,066

    Accumulated other comprehensive loss


(1,541)


(1,541)


(1,541)


(2,146)

        Total shareholders' equity


212,659


204,976


224,566


199,076

        Total liabilities and shareholders' equity


$        271,222


$        282,557


$        292,892


$        252,324










 

 

INSTEEL INDUSTRIES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)












Three Months Ended


Six Months Ended



April 1,


April 2,


April 1,


April 2,



2017


2016


2017


2016

Cash Flows From Operating Activities:









  Net earnings


$        7,420


$        7,152


$      11,880


$      13,860

  Adjustments to reconcile net earnings to net cash provided by operating









    activities:









      Depreciation and amortization


2,711


2,878


5,729


5,620

      Amortization of capitalized financing costs


16


16


32


32

      Stock-based compensation expense


876


1,047


1,133


1,276

      Deferred income taxes


(277)


(344)


910


871

      Asset impairment charges


-


20


-


20

      Excess tax benefits from stock-based compensation


(388)


(571)


(488)


(824)

      Loss (gain) on sale and disposition of property, plant and equipment


10


31


46


(208)

      Increase in cash surrender value of life insurance policies over premiums paid


(287)


(103)


(360)


(96)

      Net changes in assets and liabilities:









        Accounts receivable, net


(5,422)


(8,210)


(2,188)


(1,796)

        Inventories


2,360


12,491


11,956


9,435

        Accounts payable and accrued expenses


6,280


(3,844)


(11,132)


(6,503)

        Other changes


(5)


787


(430)


2,061

          Total adjustments


5,874


4,198


5,208


9,888

            Net cash provided by operating activities


13,294


11,350


17,088


23,748










Cash Flows From Investing Activities:









  Capital expenditures


(5,239)


(3,393)


(10,656)


(4,334)

  Proceeds from surrender of life insurance policies


77


-


77


40

  Increase in cash surrender value of life insurance policies


(56)


(45)


(277)


(264)

  Proceeds from sale of assets held for sale


-


-


-


180

  Proceeds from sale of property, plant and equipment


-


-


-


60

            Net cash used for investing activities


(5,218)


(3,438)


(10,856)


(4,318)










Cash Flows From Financing Activities:









  Proceeds from long-term debt


79


107


176


172

  Principal payments on long-term debt


(79)


(107)


(176)


(172)

  Cash dividends paid


(24,869)


(19,163)


(24,869)


(19,722)

  Cash received from exercise of stock options


72


1,760


107


3,252

  Excess tax benefits from stock-based compensation


388


571


488


824

  Payment of employee tax withholdings related to net share transactions


(502)


(297)


(646)


(629)

  Financing costs


-


-


-


(11)

            Net cash used for financing activities


(24,911)


(17,129)


(24,920)


(16,286)










Net increase (decrease) in cash and cash equivalents


(16,835)


(9,217)


(18,688)


3,144

Cash and cash equivalents at beginning of period


57,020


45,619


58,873


33,258

Cash and cash equivalents at end of period


$      40,185


$      36,402


$      40,185


$      36,402










Supplemental Disclosures of Cash Flow Information:









  Cash paid during the period for:









    Income taxes, net


$        4,116


$        6,339


$        4,160


$        8,533

  Non-cash investing and financing activities:









    Purchases of property, plant and equipment in accounts payable


1,152


369


1,152


369

    Restricted stock units and stock options surrendered for withholding taxes payable

502


297


646


629










 

IIIN - E

To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/insteel-industries-reports-second-quarter-2017-financial-results-300440304.html

SOURCE Insteel Industries, Inc.

News Provided by Acquire Media


Close window | Back to top

Copyright 2017 Insteel Industries, Inc.