Insteel Industries Reports First Quarter 2025 Results

Rhea-AI Summary

Insteel Industries (NYSE: IIIN) reported its Q1 2025 financial results, with net earnings remaining flat at $1.1 million ($0.06 per share) compared to the previous year. The quarter included $1.0 million in restructuring charges and acquisition costs, reducing EPS by $0.04.

Net sales increased 6.6% to $129.7 million, driven by an 11.4% increase in shipments, despite a 4.3% decline in average selling prices. Gross margin expanded to 7.3% from 5.2% year-over-year. The company completed two strategic acquisitions: Engineered Wire Products for $67.0 million and O'Brien Wire Products for $5.1 million.

The company maintained a strong financial position with $36.0 million in cash and no debt, while paying a special dividend of $1.00 per share totaling $19.4 million. Operating cash flow was $19.0 million, and capital expenditures decreased to $2.7 million.

Positive

• Net sales increased 6.6% to $129.7 million
• Shipments increased 11.4% year-over-year
• Gross margin expanded by 210 basis points to 7.3%
• Strong cash position with $36.0 million and no debt
• Strategic acquisitions completed to strengthen market position

Negative

• Average selling prices declined 4.3%
• Sequential shipments decreased 4.5% from Q4 2024
• Restructuring charges and acquisition costs reduced EPS by $0.04
• Facing headwinds from low-priced PC strand imports
• No immediate contribution from acquisitions due to purchase accounting conventions

Insights

Financial Analyst

The Q1 FY2025 results reveal a complex financial picture. Net sales increased 6.6% to $129.7 million, driven by an 11.4% increase in shipments, despite a 4.3% decline in average selling prices. The strategic acquisitions of EWP ($67.0 million) and OWP ($5.1 million) demonstrate aggressive market consolidation, though initial contributions were minimal due to seasonality and accounting conventions. The gross margin expansion to 7.3% from 5.2% indicates improved operational efficiency, but restructuring charges of $1.0 million impacted the bottom line. The strong balance sheet with $36.0 million cash and zero debt provides flexibility for future growth initiatives.

Market Research Analyst

The market dynamics present a mixed outlook. While infrastructure and commercial construction markets show favorable demand trends, the threat of low-priced PC strand imports remains a significant concern. The strategic acquisitions have strengthened Insteel's competitive position, particularly in welded wire reinforcement products. The 4.5% sequential decline in shipments reflects typical seasonal patterns rather than structural weakness. The rapid integration of acquired companies within two weeks suggests efficient operational execution, though the full realization of synergies will take time. The special dividend of $1.00 per share indicates management's confidence in the company's financial position and commitment to shareholder returns.

Industry Expert

The acquisition strategy is transformative for Insteel's market position. The closure of the Warren, Ohio facility and redistribution of orders to legacy facilities indicates a focus on operational optimization. The $22.0 million planned capital expenditure for FY2025 suggests continued investment in cost and productivity improvements. The company's proactive engagement with both the current and potential future administrations regarding import challenges demonstrates strategic political awareness. The improved order activity in Q1, typically a weak season, combined with anticipated synergies from acquisitions, positions Insteel for potentially stronger performance in the coming quarters, though execution risks remain.

MOUNT AIRY, N.C.--(BUSINESS WIRE)-- 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 reported financial results for its first quarter of fiscal 2025, ended December 28, 2024.

First Quarter 2025 Highlights

• Executed and integrated two acquisitions, strengthening our competitive position
• Payment of special cash dividend totaling $19.4 million, or $1.00 per share
• Net sales of $129.7 million
• Gross profit of $9.5 million, or 7.3% of net sales
• Net income of $1.1 million, or $0.06 per share
• Operating cash flow of $19.0 million
• Net cash balance of $36.0 million and no debt outstanding as of December 28, 2024
• Improved demand environment and business outlook

First Quarter 2025 Results

Net earnings for the first quarter of fiscal 2025 remained unchanged from the prior year at $1.1 million or $0.06 per share. Results for the current quarter include $1.0 million in restructuring charges and acquisition-related costs, which collectively reduced net earnings per share by $0.04. Insteel’s first quarter results benefited from higher spreads between selling prices and raw material costs, as well as an improvement in demand for the Company’s concrete reinforcement products which were partially offset by an increase in selling, general and administrative expense.

Net sales increased 6.6% to $129.7 million from $121.7 million in the prior year quarter, driven by an 11.4% increase in shipments partially offset by a 4.3% decline in average selling prices. Shipments for the current quarter benefited from favorable demand trends in our infrastructure and commercial construction markets, as well as the incremental volume generated from our two recent acquisitions. On a sequential basis, shipments decreased 4.5% from the fourth quarter of fiscal 2024, reflecting the usual seasonal slowdown, while average selling prices increased 1.1%. Gross margin expanded by 210 basis points to 7.3%, from 5.2% in the prior year quarter, primarily due to a combination of wider spreads between selling prices and raw material costs and higher shipment volume. Contributions from the acquisitions made during the quarter were nil due to purchase accounting conventions and weak seasonality.

Operating activities generated $19.0 million of cash during the quarter compared to $21.8 million in the prior year quarter, as both periods benefited from the relative changes in working capital. Working capital provided $12.3 million in the current quarter, driven by the reduction in inventories and receivables, while providing $16.3 million in the prior year quarter.

Capital Allocation and Liquidity

Capital expenditures for the first quarter of fiscal 2025 decreased to $2.7 million from $12.3 million in the prior year quarter. Capital outlays for fiscal 2025 are expected to total up to approximately $22.0 million, primarily focused on cost and productivity improvement initiatives as well as recurring maintenance requirements.

On December 13, 2024, Insteel paid a special cash dividend totaling $19.4 million, or $1.00 per share, in addition to its regular quarterly cash dividend of $0.03 per share and ended the quarter with $36.0 million of cash and no borrowings outstanding on its $100.0 million revolving credit facility.

Acquisitions of Engineered Wire Products, Inc and O’Brien Wire Products of Texas, Inc.

As previously announced, on October 21, 2024, Insteel, through its wholly-owned subsidiary, Insteel Wire Products Company (“IWP”), acquired Engineered Wire Products, Inc. (“EWP”) for an adjusted purchase price of $67.0 million in an asset transaction. Under the terms of the purchase agreement, Insteel acquired, among other assets, EWP’s inventories and production equipment and EWP’s Upper Sandusky, Ohio and Warren, Ohio production facilities. EWP was a leading manufacturer of welded wire reinforcement products for use in nonresidential and residential construction. The transaction was funded from cash on hand. Subsequent to closing the transaction, the Warren, Ohio facility was closed and its orders were distributed to logical Insteel legacy facilities.

On November 26, 2024, Insteel, through its wholly-owned subsidiary, IWP, acquired O’Brien Wire Products of Texas, Inc. (“OWP”) for an adjusted purchase price of $5.1 million in an asset transaction. Under the terms of the purchase agreement, Insteel acquired certain inventories and all of OWP’s production equipment. OWP was a manufacturer of welded wire reinforcement products for use in nonresidential and residential construction located in Houston, Texas. The transaction was funded from cash on hand.

During the quarter, Insteel incurred $0.7 million of restructuring charges related to the consolidation of the Company’s welded wire manufacturing operations and $0.3 million of acquisition costs for legal, accounting and other professional fees associated with the recent acquisitions.

Outlook

“We are encouraged by recovering order activity we experienced during the first quarter, which is typically seasonally weak,” said H.O. Woltz III, Insteel’s President and CEO. “The improved start to the year, together with increasing contributions from our recent acquisitions, positions us well as we move into the balance of fiscal 2025. While we are optimistic that our markets will recover during 2025, we continue to face the headwinds of low-priced PC strand imports entering the U.S. market. We are addressing this issue with both the Biden Administration and the incoming Trump Administration.”

Mr. Woltz added, “Once again, our people did a remarkable job of integrating the acquisitions we completed during the first fiscal quarter. Within two weeks of closing, the legacy systems of the acquired companies were disabled and Insteel systems were up and running. While systems training will be ongoing, integration risk is substantially behind us, and we are well underway in capturing the significant cost reduction synergies that are available. Looking ahead to the remainder of fiscal 2025, we are focused on optimizing operations, taking advantage of emerging opportunities in our markets, and delivering long-term value to our shareholders.”

Conference Call

Insteel will hold a conference call at 10:00 a.m. ET today to discuss its first 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 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 eleven 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 28, 2024 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 business, 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 carbon 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; the impact of cybersecurity breaches and data leaks: and the “Risk Factors” discussed in our Annual Report on Form 10-K for the year ended September 28, 2024, 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 data)
(Unaudited)
		Three Months Ended
		December 28,				December 30,
		2024				2023
Net sales		$	129,720			$	121,725
Cost of sales			120,191				115,455
Gross profit			9,529				6,270
Selling, general and administrative expense			7,887				6,367
Restructuring charges, net			696				-
Acquisition costs			271				-
Other income, net			(14	)			(22	)
Interest expense			13				29
Interest income			(786	)			(1,659	)
Earnings before income taxes			1,462				1,555
Income taxes			381				423
Net earnings		$	1,081			$	1,132
Net earnings per share:
Basic		$	0.06			$	0.06
Diluted			0.06				0.06
Weighted average shares outstanding:
Basic			19,497				19,497
Diluted			19,550				19,573
Cash dividends declared per share		$	1.03			$	2.53

INSTEEL INDUSTRIES INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands)
		(Unaudited)
		December 28,				December 30,				September 28,
		2024				2023				2024
Assets
Current assets:
Cash and cash equivalents		$	35,951			$	85,615			$	111,538
Accounts receivable, net			49,442				43,354				58,308
Inventories			98,670				94,142				88,840
Other current assets			8,422				8,706				8,608
Total current assets			192,485				231,817				267,294
Property, plant and equipment, net			136,379				129,300				125,540
Intangibles, net			17,998				5,903				5,341
Goodwill			35,641				9,745				9,745
Other assets			22,196				13,803				14,632
Total assets		$	404,699			$	390,568			$	422,552
Liabilities and shareholders' equity
Current liabilities:
Accounts payable		$	36,724			$	23,852			$	37,487
Accrued expenses			10,360				9,585				9,547
Total current liabilities			47,084				33,437				47,034
Other liabilities			25,965				23,536				24,663
Commitments and contingencies
Shareholders' equity:
Common stock			19,431				19,448				19,452
Additional paid-in capital			86,919				84,425				86,671
Retained earnings			225,908				230,005				245,340
Accumulated other comprehensive loss			(608	)			(283	)			(608	)
Total shareholders' equity			331,650				333,595				350,855
Total liabilities and shareholders' equity		$	404,699			$	390,568			$	422,552

INSTEEL INDUSTRIES INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
		Three Months Ended
		December 28,				December 30,
		2024				2023
Cash Flows From Operating Activities:
Net earnings		$	1,081			$	1,132
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation and amortization			4,429				3,709
Amortization of capitalized financing costs			13				13
Stock-based compensation expense			345				398
Deferred income taxes			777				3,348
Asset impairment charges			273				-
Loss on sale and disposition of property, plant and equipment			3				-
Increase in cash surrender value of life insurance policies over premiums paid			-				(675	)
Net changes in assets and liabilities (net of assets and liabilities acquired):
Accounts receivable, net			8,866				20,070
Inventories			2,640				9,164
Accounts payable and accrued expenses			754				(12,921	)
Other changes			(198	)			(2,404	)
Total adjustments			17,902				20,702
Net cash provided by operating activities			18,983				21,834
Cash Flows From Investing Activities:
Acquisition of businesses			(71,456	)			-
Capital expenditures			(2,667	)			(12,268	)
Decrease (increase) in cash surrender value of life insurance policies			184				(122	)
Proceeds from sale of property, plant and equipment			-				3
Proceeds from surrender of life insurance policies			-				5
Net cash used for investing activities			(73,939	)			(12,382	)
Cash Flows From Financing Activities:
Proceeds from long-term debt			69				67
Principal payments on long-term debt			(69	)			(67	)
Cash dividends paid			(20,014	)			(49,191	)
Payment of employee tax withholdings related to net share transactions			-				(20	)
Cash received from exercise of stock options			-				243
Repurchases of common stock			(617	)			(539	)
Net cash used for financing activities			(20,631	)			(49,507	)
Net decrease in cash and cash equivalents			(75,587	)			(40,055	)
Cash and cash equivalents at beginning of period			111,538				125,670
Cash and cash equivalents at end of period		$	35,951			$	85,615
Supplemental Disclosures of Cash Flow Information:
Cash paid during the period for:
Income taxes, net		$	40			$	8
Non-cash investing and financing activities:
Purchases of property, plant and equipment in accounts payable			1,352				1,846
Restricted stock units and stock options surrendered for withholding taxes payable			-				20
Accrued liability related to holdback for business acquired			657				-

IIIN – E

View source version on businesswire.com: https://www.businesswire.com/news/home/20250116205106/en/

Scot Jafroodi

Vice President,

Chief Financial Officer and Treasurer

Insteel Industries Inc.

(336) 786-2141

Source: Insteel Industries Inc.

FAQ

What was Insteel's (IIIN) net income for Q1 2025?

Insteel reported net income of $1.1 million, or $0.06 per share, for Q1 2025, unchanged from the previous year.

How much did IIIN pay in special dividends in December 2024?

Insteel paid a special cash dividend of $19.4 million, or $1.00 per share, in addition to its regular quarterly dividend of $0.03 per share.

What acquisitions did Insteel (IIIN) complete in Q1 2025?

Insteel acquired Engineered Wire Products for $67.0 million and O'Brien Wire Products for $5.1 million during Q1 2025.

What was IIIN's operating cash flow in Q1 2025?

Insteel generated operating cash flow of $19.0 million during Q1 2025.

How much did IIIN's shipments increase in Q1 2025?

Shipments increased by 11.4% compared to the prior year quarter.