Insteel Industries Reports First Quarter 2022 Results
Insteel Industries Inc. (NYSE: IIIN) reported first-quarter 2022 financial results with record revenue of $178.5 million and net earnings of $23.1 million ($1.18 per diluted share), significantly up from $8.1 million ($0.42 per diluted share) a year prior. Demand for concrete reinforcing products remained strong despite an 11.9% decline in shipments due to tight raw material supplies. Average selling prices rose 69.4%, primarily to offset increased costs. Insteel ended the quarter debt-free with $63 million in cash and declared a $38.8 million special dividend.
- Record quarterly revenue of $178.5 million, up 49.2% year-over-year.
- Net earnings increased to $23.1 million, or $1.18 per diluted share, up 181% from the prior year.
- Gross margin widened to 23.7%, an increase of 710 basis points from the prior year.
- Cash generation from operating activities was stable at $13.6 million.
- Debt-free status maintained with $63 million in cash at quarter-end.
- Shipments declined 11.9% due to tight raw material supply conditions.
- Ongoing labor challenges could impact operations in the current quarter.
First Quarter 2022 Results
For the first quarter of fiscal 2022, Insteel recorded record quarterly revenue of
Demand for the Company’s concrete reinforcing products remained strong despite the normal seasonal slowdown in construction activity. Spreads between selling prices and raw material costs widened due to a
Gross margin widened 710 basis points to
Operating activities generated
Capital Allocation and Liquidity
Capital expenditures decreased to
On
Outlook
“Our outlook for 2022 remains optimistic. Private and public non-residential construction markets are robust today and key leading market indicators are signaling sustained growth,” commented H.O. Woltz III, Insteel’s President and CEO. “In addition, we expect the recently enacted
Woltz continued, “Despite the favorable demand outlook, inadequate availability of domestic hot rolled steel wire rod and persistent labor challenges, both of which were highlighted in recent quarterly reports, are expected to continue impacting our operations during the current quarter. We turned to the international steel market to supplement domestic supplies of steel wire rod and believe our purchasing plan will fill the gaps that caused plant inefficiencies and customer service difficulties over the last three quarters. Our international sourcing strategy going forward will be influenced by the performance of our domestic suppliers during our second and third quarters.”
“We are pleased to have recently completed agreements in principle with a group of capital equipment suppliers for purchases of nearly
Conference Call
Insteel will hold a conference call at
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, 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
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 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 in our Annual Report on Form 10-K for the year ended
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: the impact of COVID-19 on the economy, demand for our products and our operations, including the measures taken by governmental authorities to address it, which may precipitate or exacerbate other risks and/or uncertainties; 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
| CONSOLIDATED STATEMENTS OF OPERATIONS | ||||||||
| (In thousands except for per share data) | ||||||||
| (Unaudited) | ||||||||
Three Months Ended |
||||||||
|
|
|
||||||
2022 |
|
2021 |
||||||
| Net sales | $ |
178,459 |
|
$ |
119,605 |
|
||
| Cost of sales |
|
136,095 |
|
|
99,754 |
|
||
| Gross profit |
|
42,364 |
|
|
19,851 |
|
||
| Selling, general and administrative expense |
|
12,281 |
|
|
8,553 |
|
||
| Restructuring charges, net |
|
47 |
|
|
657 |
|
||
| Other expense (income), net |
|
(5 |
) |
|
13 |
|
||
| Interest expense |
|
22 |
|
|
25 |
|
||
| Interest income |
|
(14 |
) |
|
(5 |
) |
||
| Earnings before income taxes |
|
30,033 |
|
|
10,608 |
|
||
| Income taxes |
|
6,904 |
|
|
2,465 |
|
||
| Net earnings | $ |
23,129 |
|
$ |
8,143 |
|
||
| Net earnings per share: | ||||||||
| Basic | $ |
1.19 |
|
$ |
0.42 |
|
||
| Diluted |
|
1.18 |
|
|
0.42 |
|
||
| Weighted average shares outstanding: | ||||||||
| Basic |
|
19,411 |
|
|
19,309 |
|
||
| Diluted |
|
19,636 |
|
|
19,434 |
|
||
| Cash dividends declared per share | $ |
2.03 |
|
$ |
1.53 |
|
||
| CONSOLIDATED BALANCE SHEETS | ||||||||||||
| (In thousands) | ||||||||||||
(Unaudited) |
|
|
||||||||||
|
|
|
|
|
||||||||
2022 |
|
2021 |
|
2021 |
||||||||
| Assets | ||||||||||||
| Current assets: | ||||||||||||
| Cash and cash equivalents | $ |
63,020 |
|
$ |
50,182 |
|
$ |
89,884 |
|
|||
| Accounts receivable, net |
|
73,562 |
|
|
49,224 |
|
|
67,917 |
|
|||
| Inventories |
|
81,558 |
|
|
64,276 |
|
|
79,049 |
|
|||
| Other current assets |
|
8,664 |
|
|
5,201 |
|
|
10,056 |
|
|||
| Total current assets |
|
226,804 |
|
|
168,883 |
|
|
246,906 |
|
|||
| Property, plant and equipment, net |
|
103,442 |
|
|
101,351 |
|
|
105,624 |
|
|||
| Intangibles, net |
|
7,460 |
|
|
8,331 |
|
|
7,668 |
|
|||
|
9,745 |
|
|
9,745 |
|
|
9,745 |
|
||||
| Other assets |
|
21,328 |
|
|
21,641 |
|
|
20,767 |
|
|||
| Total assets | $ |
368,779 |
|
$ |
309,951 |
|
$ |
390,710 |
|
|||
| Liabilities and shareholders' equity | ||||||||||||
| Current liabilities: | ||||||||||||
| Accounts payable | $ |
35,369 |
|
$ |
31,761 |
|
$ |
49,443 |
|
|||
| Accrued expenses |
|
27,205 |
|
|
15,012 |
|
|
19,406 |
|
|||
| Total current liabilities |
|
62,574 |
|
|
46,773 |
|
|
68,849 |
|
|||
| Long-term debt |
|
- |
|
|
- |
|
|
- |
|
|||
| Other liabilities |
|
20,185 |
|
|
19,444 |
|
|
19,823 |
|
|||
| Commitments and contingencies | ||||||||||||
| Shareholders' equity: | ||||||||||||
| Common stock |
|
19,414 |
|
|
19,314 |
|
|
19,408 |
|
|||
| Additional paid-in capital |
|
78,945 |
|
|
76,716 |
|
|
78,688 |
|
|||
| Retained earnings |
|
190,103 |
|
|
149,660 |
|
|
206,384 |
|
|||
| Accumulated other comprehensive loss |
|
(2,442 |
) |
|
(1,956 |
) |
|
(2,442 |
) |
|||
| Total shareholders' equity |
|
286,020 |
|
|
243,734 |
|
|
302,038 |
|
|||
| Total liabilities and shareholders' equity | $ |
368,779 |
|
$ |
309,951 |
|
$ |
390,710 |
|
|||
| CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||||
| (In thousands) | ||||||||
| (Unaudited) | ||||||||
Three Months Ended |
||||||||
|
|
|
||||||
2022 |
|
2021 |
||||||
| Cash Flows From Operating Activities: | ||||||||
| Net earnings | $ |
23,129 |
|
$ |
8,143 |
|
||
| Adjustments to reconcile net earnings to net cash provided by operating activities: | ||||||||
| Depreciation and amortization |
|
3,705 |
|
|
3,610 |
|
||
| Amortization of capitalized financing costs |
|
16 |
|
|
16 |
|
||
| Stock-based compensation expense |
|
272 |
|
|
224 |
|
||
| Deferred income taxes |
|
16 |
|
|
(64 |
) |
||
| Loss on sale and disposition of property, plant and equipment |
|
14 |
|
|
32 |
|
||
| Increase in cash surrender value of life insurance policies over premiums paid |
|
(115 |
) |
|
(364 |
) |
||
| Net changes in assets and liabilities (net of assets and liabilities acquired): | ||||||||
| Accounts receivable, net |
|
(5,645 |
) |
|
4,593 |
|
||
| Inventories |
|
(2,509 |
) |
|
4,687 |
|
||
| Accounts payable and accrued expenses |
|
(13,231 |
) |
|
(9,753 |
) |
||
| Other changes |
|
7,979 |
|
|
2,826 |
|
||
| Total adjustments |
|
(9,498 |
) |
|
5,807 |
|
||
| Net cash provided by operating activities |
|
13,631 |
|
|
13,950 |
|
||
| Cash Flows From Investing Activities: | ||||||||
| Capital expenditures |
|
(838 |
) |
|
(2,860 |
) |
||
| Increase in cash surrender value of life insurance policies |
|
(308 |
) |
|
(197 |
) |
||
| Proceeds from sale of property, plant and equipment |
|
6 |
|
|
- |
|
||
| Proceeds from sale of assets held for sale |
|
- |
|
|
19 |
|
||
| Proceeds from surrender of life insurance policies |
|
64 |
|
|
18 |
|
||
| Net cash used for investing activities |
|
(1,076 |
) |
|
(3,020 |
) |
||
| Cash Flows From Financing Activities: | ||||||||
| Cash dividends paid |
|
(39,410 |
) |
|
(29,551 |
) |
||
| Proceeds from long-term debt |
|
45 |
|
|
45 |
|
||
| Principal payments on long-term debt |
|
(45 |
) |
|
(45 |
) |
||
| Payment of employee tax withholdings related to net share transactions |
|
(55 |
) |
|
(13 |
) |
||
| Cash received from exercise of stock options |
|
46 |
|
|
128 |
|
||
| Net cash used for financing activities |
|
(39,419 |
) |
|
(29,436 |
) |
||
| Net increase (decrease) in cash and cash equivalents |
|
(26,864 |
) |
|
(18,506 |
) |
||
| Cash and cash equivalents at beginning of period |
|
89,884 |
|
|
68,688 |
|
||
| Cash and cash equivalents at end of period | $ |
63,020 |
|
$ |
50,182 |
|
||
| Supplemental Disclosures of Cash Flow Information: | ||||||||
| Cash paid during the period for: | ||||||||
| Income taxes, net | $ |
83 |
|
$ |
95 |
|
||
| Non-cash investing and financing activities: | ||||||||
| Purchases of property, plant and equipment in accounts payable |
|
497 |
|
|
500 |
|
||
| Restricted stock units and stock options surrendered for withholding taxes payable |
|
55 |
|
|
13 |
|
||
| Declaration of cash dividends to be paid |
|
- |
|
|
- |
|
||
IIIN – E
View source version on businesswire.com: https://www.businesswire.com/news/home/20220120005018/en/
Senior Vice President,
Chief Financial Officer and Treasurer
(336) 786-2141
Source:
FAQ
What were Insteel Industries' Q1 2022 financial results?
How much did Insteel's earnings per share increase in Q1 2022?
What factors contributed to Insteel's revenue increase in Q1 2022?
Did Insteel pay any dividends in Q1 2022?
What challenges is Insteel facing in 2022?
