On October 17, 2024, Insteel Industries Inc (IIIN, Financial) released its 8-K filing detailing the financial results for its fourth quarter and fiscal year ended September 28, 2024. As the largest U.S. manufacturer of steel wire reinforcing products for concrete construction, Insteel faced significant challenges this quarter, resulting in earnings that fell short of analyst expectations.
Fourth Quarter Financial Performance
Insteel Industries Inc reported net earnings of $4.7 million, or $0.24 per share, for the fourth quarter of fiscal 2024. This represents a decline from $5.6 million, or $0.29 per share, in the same period last year. The company's performance was adversely affected by narrower spreads between selling prices and raw material costs, as well as a decrease in shipments.
Net sales for the quarter decreased by 14.7% to $134.3 million, down from $157.5 million in the prior year quarter. This decline was driven by a 12.9% decrease in average selling prices and a 2.1% reduction in shipments. The company attributed the lower selling prices to competitive pricing pressures and low-priced imports in its markets.
Fiscal Year 2024 Overview
For the full fiscal year 2024, Insteel Industries Inc reported net earnings of $19.3 million, or $0.99 per share, compared to $32.4 million, or $1.66 per share, in the previous year. The prior year's earnings included a $3.3 million gain from the sale of property, plant, and equipment.
Annual net sales decreased by 18.5% to $529.2 million, primarily due to a reduction in average selling prices, while shipments remained flat. The gross profit for the year fell to $49.6 million from $65.4 million, with the gross margin narrowing to 9.4% from 10.1%.
Cash Flow and Capital Allocation
Operating activities generated $58.2 million of cash for fiscal 2024, a significant decrease from $142.2 million in the prior year. This reduction was due to lower net earnings and changes in working capital. Capital expenditures for the year decreased to $19.1 million from $30.7 million, with plans to allocate up to $22.0 million in fiscal 2025 for cost and productivity improvements.
Balance Sheet Highlights
Insteel ended the fiscal year with $111.5 million in cash and no borrowings on its $100.0 million revolving credit facility. The company's total assets stood at $422.6 million, with shareholders' equity amounting to $350.9 million.
Industry Challenges and Outlook
Insteel Industries Inc continues to face challenges from import-related headwinds, particularly in its PC strand markets. These challenges are expected to persist, impacting selling prices, volumes, and spreads. The company is actively working to address these issues, including potential antidumping and countervailing duty actions.
“As we move forward into fiscal year 2025, we anticipate a gradual improvement in business conditions across our markets,” commented H.O. Woltz III, Insteel’s President and CEO. “We remain optimistic about the impact of spending from the Infrastructure Investment and Jobs Act, which is expected to boost infrastructure-related project activity and lay a stronger foundation for future growth.”
Conclusion
Insteel Industries Inc's financial performance in the fourth quarter and fiscal year 2024 reflects the challenging market conditions it faces. While the company has taken steps to manage these challenges, the ongoing competitive pressures and import-related issues continue to impact its financial results. Investors will be closely watching how Insteel navigates these challenges in the coming fiscal year.
Explore the complete 8-K earnings release (here) from Insteel Industries Inc for further details.
