On July 18, 2024, Insteel Industries Inc (IIIN, Financial) released its 8-K filing detailing the financial results for the third quarter of fiscal 2024, which ended on June 29, 2024. Insteel Industries Inc, the nation’s largest manufacturer of steel wire reinforcing products for concrete construction applications, reported a decline in both net earnings and revenue compared to the same period last year.
Company Overview
Insteel Industries Inc manufactures and markets prestressed concrete strand (PC strand) and welded wire reinforcement (WWR), including engineered structural mesh (ESM), concrete pipe reinforcement, and standard welded wire reinforcement. The company's products are primarily sold to manufacturers of concrete products used in nonresidential construction. Insteel generates its geographical revenue from the United States.
Third Quarter 2024 Financial Highlights
Insteel Industries Inc reported net earnings of $6.6 million, or $0.34 per share, for the third quarter of fiscal 2024, a decrease from $10.6 million, or $0.54 per share, in the same period last year. This result fell short of the analyst estimate of $0.46 per share. Net sales also declined by 12.0% to $145.8 million, missing the estimated revenue of $153.04 million. The decrease in net sales was primarily driven by a 16.3% decrease in average selling prices, partially offset by a 5.1% increase in shipments.
Performance Analysis
Despite higher shipments, Insteel’s third quarter results were negatively impacted by narrower spreads between selling prices and raw material costs compared to the prior year quarter. The decline in net sales was attributed to competitive pricing pressures in the WWR markets and the impact of low-priced PC strand imports. Gross profit decreased to $15.4 million from $20.4 million in the prior year quarter, and gross margin narrowed to 10.6% from 12.3%.
Key Financial Metrics
| Metric | Q3 2024 | Q3 2023 |
|---|---|---|
| Net Earnings | $6.6 million | $10.6 million |
| Net Sales | $145.8 million | $165.7 million |
| Gross Profit | $15.4 million | $20.4 million |
| Gross Margin | 10.6% | 12.3% |
| Operating Cash Flow | $18.7 million | $23.8 million |
| Net Cash Balance | $97.7 million | No debt |
Challenges and Outlook
Insteel Industries Inc faces ongoing challenges, including competitive pricing pressures and the impact of low-priced imports. The company is also grappling with the difficulty of ramping up operating hours to meet improved demand. Despite these challenges, the company remains optimistic about its business outlook, citing improving macroeconomic conditions and a favorable business environment.
“Improving conditions in our markets require that we continue ramping up operating hours at certain WWR plants to manage lead times and maximize shipments. As has been the case for several quarters, it is difficult to attract and retain qualified people in our plants, which is necessary to expand operating hours," commented H.O. Woltz III, Insteel’s President and CEO.
Looking ahead, Insteel Industries Inc anticipates that easing inflation and potential lower interest rates will drive demand in both commercial and residential end markets. The company also expects to benefit from federal spending associated with the Infrastructure Investment and Jobs Act.
For more detailed information, please refer to the full 8-K filing.
Explore the complete 8-K earnings release (here) from Insteel Industries Inc for further details.
