Insteel industries, Inc. (NYSE:IIIN) Q2 2022 Earnings Conference Call April 21, 2022 10:00 AM ET Company Participants H.O. Woltz III – Chairman, President and Chief Executive Officer Mark Carano – Senior Vice President, Chief Financial Officer and Treasurer Conference Call Participants Tyson Bauer – KC Capital Julio Romero – Sidoti Operator Hello, and welcome to today's In-steel Industries. Second Quarter 2022, Earnings Call. My name is Bally and I will be your moderator for today's call. All lines will be ...

[PART I – FINANCIAL INFORMATION](index=4&type=section&id=PART%20I%20%E2%80%93%20FINANCIAL%20INFORMATION) [Item 1. Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) Unaudited consolidated financial statements for Q2 and H1 2022, covering operations, balance sheets, cash flows, equity, and notes [Consolidated Statements of Operations and Comprehensive Income](index=4&type=section&id=Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Income) Q2 and H1 2022 showed significant revenue and profitability growth, with Q2 net sales up 53.4% and net earnings up 161.5% Consolidated Statements of Operations Highlights (In thousands, except per share amounts) | Metric | Three Months Ended April 2, 2022 | Three Months Ended April 3, 2021 | YoY Change | Six Months Ended April 2, 2022 | Six Months Ended April 3, 2021 | YoY Change | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | **Net sales** | $213,209 | $138,999 | +53.4% | $391,668 | $258,604 | +51.5% | | **Gross profit** | $57,069 | $30,228 | +88.8% | $99,433 | $50,079 | +98.6% | | **Net earnings** | $39,017 | $14,920 | +161.5% | $62,146 | $23,063 | +169.5% | | **Diluted EPS** | $1.99 | $0.76 | +161.8% | $3.17 | $1.18 | +168.6% | [Consolidated Balance Sheets](index=5&type=section&id=Consolidated%20Balance%20Sheets) Strong financial position as of April 2, 2022, with total assets of $420.6 million, driven by inventories and receivables Consolidated Balance Sheet Highlights (In thousands) | Account | April 2, 2022 (Unaudited) | October 2, 2021 | | :--- | :--- | :--- | | **Total current assets** | $282,804 | $246,906 | | Cash and cash equivalents | $69,725 | $89,884 | | Inventories | $127,049 | $79,049 | | **Total assets** | $420,558 | $390,710 | | **Total current liabilities** | $73,816 | $68,849 | | **Total shareholders' equity** | $325,147 | $302,038 | [Consolidated Statements of Cash Flows](index=6&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) H1 2022 operating cash flow decreased to $20.1 million due to inventory, while financing cash flow rose from a special dividend Consolidated Statements of Cash Flows Highlights (Six Months Ended, In thousands) | Cash Flow Activity | April 2, 2022 | April 3, 2021 | | :--- | :--- | :--- | | **Net cash provided by operating activities** | $20,066 | $29,239 | | **Net cash used for investing activities** | $(86) | $(8,923) | | **Net cash used for financing activities** | $(40,139) | $(30,064) | | **Net decrease in cash and cash equivalents** | $(20,159) | $(9,748) | | **Cash and cash equivalents at end of period** | $69,725 | $58,940 | [Notes to Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) Detailed financial statement notes cover revenue, restructuring, credit facility, and tax rates - Restructuring activities related to the consolidation of PC strand operations following the STM acquisition resulted in a net recovery of **$365,000** in Q2 2022, primarily from a gain on the sale of the Summerville facility. The company does not expect further restructuring charges from this consolidation[26](index=26&type=chunk)[76](index=76&type=chunk) Net Sales by Product Line (Six Months Ended, In thousands) | Product Line | April 2, 2022 | April 3, 2021 | YoY Change | | :--- | :--- | :--- | :--- | | Welded wire reinforcement | $247,044 | $155,949 | +58.4% | | Prestressed concrete strand | $144,624 | $102,655 | +40.9% | | **Total** | **$391,668** | **$258,604** | **+51.5%** | - The company has a **$100.0 million** revolving credit facility maturing in May 2024. As of April 2, 2022, there were no borrowings outstanding, with **$98.6 million** of borrowing capacity available[52](index=52&type=chunk)[95](index=95&type=chunk) - The effective income tax rate was **22.6%** for the first six months of fiscal 2022, slightly down from **22.8%** in the same period of fiscal 2021[45](index=45&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A)](index=18&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses financial performance, highlighting price-driven sales growth, strong liquidity, and positive outlook [Results of Operations](index=20&type=section&id=Results%20of%20Operations) Strong Q2 and H1 2022 performance driven by higher price-raw material spreads, with Q2 net sales up 53.4% and gross profit up 88.8% - Q2 2022 net sales increased **53.4%** year-over-year, reflecting a **65.4%** increase in average selling prices partially offset by a **7.2%** decrease in shipments[73](index=73&type=chunk) - Gross profit for Q2 2022 increased **88.8%** to **$57.1 million**, or **26.8%** of net sales, up from **21.7%** in the prior year quarter, due to higher spreads between selling prices and raw material costs[74](index=74&type=chunk) - First half 2022 net sales increased **51.5%** year-over-year, driven by a **67.5%** increase in average selling prices, which was partially offset by a **9.5%** decrease in shipments due to tight raw material supply[79](index=79&type=chunk) [Liquidity and Capital Resources](index=23&type=section&id=Liquidity%20and%20Capital%20Resources) Robust liquidity with no debt and $69.7 million cash, despite decreased operating cash flow due to inventory and special dividend - The company remains debt-free with **$98.6 million** of available borrowing capacity under its **$100.0 million** revolving credit facility as of April 2, 2022[87](index=87&type=chunk)[95](index=95&type=chunk) - Cash from operations decreased to **$20.1 million** in H1 2022 from **$29.2 million** in H1 2021, largely due to a **$48.0 million** increase in inventories[88](index=88&type=chunk) - During H1 2022, the company paid a special dividend of **$38.8 million** (**$2.00** per share) and regular quarterly dividends totaling **$1.2 million** (**$0.06** per share)[93](index=93&type=chunk) [Outlook](index=25&type=section&id=Outlook) Strong financial results expected for the fiscal year due to robust demand, addressing raw material supply and high steel prices - The company expects strong financial results for the balance of the fiscal year due to robust demand and seasonal upturns in construction[104](index=104&type=chunk) - Inadequate domestic supply of hot-rolled steel wire rod is a primary concern, leading the company to supplement its needs with foreign sources to support demand[105](index=105&type=chunk) - Future strategy includes managing expenses, improving productivity, and opportunistically pursuing acquisitions to expand market penetration or footprint[106](index=106&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=26&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) Primary market risk is commodity price fluctuations for steel wire rod, with minimal interest rate or foreign exchange risk - The company is subject to significant fluctuations in the cost and availability of its primary raw material, hot-rolled carbon steel wire rod[108](index=108&type=chunk) - A hypothetical **10%** increase in the price of wire rod would have resulted in a **$22.3 million** decrease in pre-tax earnings for the first half of 2022, assuming selling prices remained constant[108](index=108&type=chunk) [Item 4. Controls and Procedures](index=26&type=section&id=Item%204.%20Controls%20and%20Procedures) Disclosure controls and procedures were effective as of April 2, 2022, with no material changes in internal control - Management concluded that the company's disclosure controls and procedures were effective as of April 2, 2022[111](index=111&type=chunk) - No changes occurred in the company's internal control over financial reporting during the quarter that materially affected, or are reasonably likely to materially affect, its internal controls[112](index=112&type=chunk) [PART II – OTHER INFORMATION](index=27&type=section&id=PART%20II%20%E2%80%93%20OTHER%20INFORMATION) [Item 1. Legal Proceedings](index=27&type=section&id=Item%201.%20Legal%20Proceedings) Ongoing legal matters are not expected to materially affect financial condition or results of operations - The company does not anticipate that the ultimate costs to resolve ongoing lawsuits, claims, and investigations will have a material adverse effect on its financial position, results of operations, or cash flows[115](index=115&type=chunk) [Item 1A. Risk Factors](index=27&type=section&id=Item%201A.%20Risk%20Factors) No material changes to risk factors from the 2021 Annual Report on Form 10-K - No material changes to the risk factors set forth in the 2021 Annual Report occurred during the quarter ended April 2, 2022[116](index=116&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=27&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) No share repurchases in Q2/H1 2022; $24.8 million remains for future repurchases - There were no share repurchases during the three- and six-month periods ended April 2, 2022 and April 3, 2021[117](index=117&type=chunk) - As of April 2, 2022, **$24.8 million** remained available for future share repurchases under the company's authorization[117](index=117&type=chunk) [Item 6. Exhibits](index=27&type=section&id=Item%206.%20Exhibits) Lists exhibits including management compensation, officer certifications, and iXBRL financial data - The report includes exhibits such as forms of Restricted Stock Unit and Stock Option Agreements, CEO and CFO certifications (pursuant to Sections 302 and 906 of Sarbanes-Oxley), and iXBRL financial data[119](index=119&type=chunk)

[PART I – FINANCIAL INFORMATION](index=4&type=section&id=PART%20I%20%E2%80%93%20FINANCIAL%20INFORMATION) [Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) In Q1 fiscal 2022, Insteel Industries reported significant year-over-year growth in net sales and profitability, with net earnings up 184.0% to $23.1 million, while total assets slightly decreased due to lower cash balances [Consolidated Statements of Operations and Comprehensive Income](index=4&type=section&id=Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Income) The company experienced substantial growth in Q1 fiscal 2022, with net sales increasing by 49.2% and net earnings surging by 184.0% Consolidated Statements of Operations (Unaudited) | Metric | Three Months Ended Jan 1, 2022 (in thousands) | Three Months Ended Jan 2, 2021 (in thousands) | Change (%) | | :--- | :--- | :--- | :--- | | Net sales | $178,459 | $119,605 | +49.2% | | Gross profit | $42,364 | $19,851 | +113.4% | | Earnings before income taxes | $30,033 | $10,608 | +183.1% | | Net earnings | $23,129 | $8,143 | +184.0% | | Diluted EPS | $1.18 | $0.42 | +181.0% | [Consolidated Balance Sheets](index=5&type=section&id=Consolidated%20Balance%20Sheets) As of January 1, 2022, total assets decreased to $368.8 million, primarily due to a $26.9 million reduction in cash and cash equivalents Consolidated Balance Sheet Highlights (Unaudited) | Metric (in thousands) | January 1, 2022 | October 2, 2021 | | :--- | :--- | :--- | | Cash and cash equivalents | $63,020 | $89,884 | | Total current assets | $226,804 | $246,906 | | Total assets | $368,779 | $390,710 | | Total current liabilities | $62,574 | $68,849 | | Total shareholders' equity | $286,020 | $302,038 | [Consolidated Statements of Cash Flows](index=6&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Net cash provided by operating activities was $13.6 million, while financing activities used significantly more cash due to a larger special dividend payment Consolidated Cash Flows (Unaudited) | Metric (in thousands) | Three Months Ended Jan 1, 2022 | Three Months Ended Jan 2, 2021 | | :--- | :--- | :--- | | Net cash provided by operating activities | $13,631 | $13,950 | | Net cash used for investing activities | ($1,076) | ($3,020) | | Net cash used for financing activities | ($39,419) | ($29,436) | | Net decrease in cash and cash equivalents | ($26,864) | ($18,506) | [Consolidated Statements of Shareholders' Equity](index=7&type=section&id=Consolidated%20Statements%20of%20Shareholders%27%20Equity) Shareholders' equity decreased to $286.0 million, primarily due to $39.4 million in cash dividends, partially offset by $23.1 million in net earnings Changes in Shareholders' Equity (Q1 2022, in thousands) | Description | Amount | | :--- | :--- | | Balance at October 2, 2021 | $302,038 | | Net earnings | $23,129 | | Cash dividends declared | ($39,410) | | Other (stock plans, etc.) | $263 | | **Balance at January 1, 2022** | **$286,020** | [Notes to Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) The notes detail accounting policies, revenue breakdown by product line, and the company's $100 million undrawn credit facility - In connection with the 2020 STM Acquisition, the company closed the Summerville facility, which was subsequently sold for net cash proceeds of **$6.8 million**, expected to result in a gain of approximately **$470,000** in the next quarter[28](index=28&type=chunk) Net Sales by Product Line (in thousands) | Product Line | Q1 2022 | Q1 2021 | | :--- | :--- | :--- | | Welded wire reinforcement | $113,393 | $74,026 | | Prestressed concrete strand | $65,066 | $45,579 | | **Total** | **$178,459** | **$119,605** | - The company has a **$100.0 million** revolving credit facility maturing in May 2024, with **$98.6 million** of borrowing capacity available and no outstanding borrowings as of January 1, 2022[53](index=53&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=18&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management attributes the 49.2% increase in Q1 net sales to higher selling prices, offsetting volume declines due to raw material constraints, while maintaining a strong liquidity position [Results of Operations](index=20&type=section&id=Results%20of%20Operations) Net sales for Q1 2022 increased 49.2% to $178.5 million, driven by price increases that offset an 11.9% decrease in shipments due to raw material supply issues - The increase in net sales was driven by price increases implemented to recover escalating raw material costs amid strong product demand, while decreased shipments were due to sustained tight supply conditions for raw materials[75](index=75&type=chunk) - Gross profit increased by **$22.5 million**, primarily due to higher spreads between average selling prices and raw material costs (**$27.2 million**), partially offset by higher manufacturing costs (**$2.5 million**) and the impact of lower shipments (**$2.1 million**)[76](index=76&type=chunk) - SG&A expense increased by **$3.7 million**, largely driven by higher compensation expense (**$3.8 million**) resulting from improved financial performance[77](index=77&type=chunk) [Liquidity and Capital Resources](index=22&type=section&id=Liquidity%20and%20Capital%20Resources) The company maintained a strong, debt-free balance sheet with $286.0 million in shareholders' equity, with capital expenditures for fiscal 2022 expected to be up to $25.0 million Liquidity and Capitalization | Metric (in thousands) | January 1, 2022 | January 2, 2021 | | :--- | :--- | :--- | | Net working capital | $164,230 | $122,110 | | Total debt | $0 | $0 | | Shareholders' equity | $286,020 | $243,734 | - Capital expenditures are expected to total up to **$25.0 million** for fiscal 2022, focused on growing the engineered structural mesh business and cost/productivity initiatives[87](index=87&type=chunk) - In Q1 2022, the company paid a special dividend of **$38.8 million** (**$2.00 per share**) and a regular dividend of **$582,000** (**$0.03 per share**)[89](index=89&type=chunk) [Outlook](index=24&type=section&id=Outlook) Management is optimistic for the remainder of fiscal 2022, anticipating strong market demand and infrastructure spending benefits, despite challenges from raw material shortages and cost inflation - The company is optimistic for the remainder of 2022, expecting continued strong market demand and incremental demand from the Infrastructure Investment and Jobs Act beginning in the latter half of 2022[100](index=100&type=chunk) - Significant challenges include inadequate domestic supplies of hot-rolled steel wire rod, leading to commitments for imported material, and sharply escalating costs for labor, transportation, utilities, and other purchases[101](index=101&type=chunk) - The company will continue to focus on controlling expenses, aligning production with demand, and pursuing productivity improvements and opportunistic acquisitions[102](index=102&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=24&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company's primary market risk is exposure to commodity price fluctuations for hot-rolled carbon steel wire rod, with a hypothetical 10% increase in cost reducing Q1 2022 pre-tax earnings by $10.4 million - The company is subject to significant fluctuations in the cost and availability of its primary raw material, hot-rolled carbon steel wire rod, and does not use derivative instruments to hedge this exposure[104](index=104&type=chunk) - Based on Q1 2022 results, a **10% increase** in the price of wire rod would have resulted in a **$10.4 million** decrease in pre-tax earnings, assuming selling prices remained unchanged[104](index=104&type=chunk) [Controls and Procedures](index=25&type=section&id=Item%204.%20Controls%20and%20Procedures) The company's disclosure controls and procedures were deemed effective as of January 1, 2022, with no material changes in internal control over financial reporting during the quarter - Management, including the CEO and CFO, concluded that the company's disclosure controls and procedures were effective as of January 1, 2022[107](index=107&type=chunk) - No change in internal control over financial reporting occurred during the quarter that has materially affected, or is reasonably likely to materially affect, internal controls[108](index=108&type=chunk) [PART II – OTHER INFORMATION](index=25&type=section&id=PART%20II%20%E2%80%93%20OTHER%20INFORMATION) [Legal Proceedings](index=25&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in various ordinary course lawsuits and claims, but management does not anticipate a material adverse effect on its financial position or results - The company is involved in ordinary course lawsuits and claims but does not expect the ultimate cost to resolve these matters will have a material adverse effect on its financial position, results of operations or cash flows[110](index=110&type=chunk) [Risk Factors](index=26&type=section&id=Item%201A.%20Risk%20Factors) There were no material changes to the risk factors previously disclosed in the company's Annual Report on Form 10-K for the fiscal year ended October 2, 2021 - There have been no material changes from the risk factors set forth in the company's 2021 Annual Report[112](index=112&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=26&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) As of January 1, 2022, $24.8 million remained available for future share repurchases under the company's authorization, with no repurchases made during the quarter - As of January 1, 2022, **$24.8 million** remained available for future share repurchases under the company's authorization, with no repurchases made during the quarter[113](index=113&type=chunk) [Exhibits](index=26&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including CEO and CFO certifications and financial data in iXBRL format - Exhibits filed include CEO and CFO certifications pursuant to Sarbanes-Oxley Act Sections 302 and 906, and financial statements formatted in iXBRL[116](index=116&type=chunk)

Insteel Industries, Inc. (NYSE:IIIN) Q1 2022 Earnings Conference Call January 20, 2022 10:00 AM ET Company Participants H.O. Woltz - Chairman, President and Chief Executive Officer Mark Carano - Senior Vice President, Chief Financial Officer and Treasurer Conference Call Participants Tyson Bauer - Kansas City Capital Associates Julio Romero - Sidoti & Company Disclaimer*: This transcript is designed to be used alongside the freely available audio recording on this page. Timestamps within the transcript are ...

Company Overview - Insteel Industries is the largest manufacturer of steel wire reinforcing products for concrete construction, with approximately 85% of sales related to nonresidential construction and 15% to residential construction in fiscal 2021[14]. - The company operates ten manufacturing facilities in the U.S. and focuses on achieving leadership positions, low-cost production, and growth through organic opportunities and strategic acquisitions[16]. - The company is the largest manufacturer of steel wire reinforcing products for concrete construction applications in the U.S.[141]. Acquisitions and Growth - In March 2020, Insteel acquired substantially all assets of Strand-Tech Manufacturing for an adjusted purchase price of $19.4 million, consolidating PC strand operations[17]. - The adjusted purchase price for the STM Acquisition was $19.356 million, with net assets acquired totaling $17.904 million and goodwill of $1.452 million[174][178]. - The company did not acquire any businesses in 2021, contrasting with an acquisition of $18,356,000 in 2020[139]. Sales and Revenue - In fiscal 2021, approximately 70% of net sales were to manufacturers of concrete products, while 30% were to distributors, rebar fabricators, and contractors[23]. - Net sales increased by 25.0% to $590.6 million in 2021 from $472.6 million in 2020, driven by a 25.7% increase in selling prices[92]. - Pro forma combined net sales for the year ended October 3, 2020, were $485.121 million, compared to $487.467 million for the year ended September 28, 2019, reflecting a slight decrease of 0.5%[177]. Financial Performance - Gross profit rose 117.9% to $121.5 million, representing 20.6% of net sales, compared to $55.8 million or 11.8% of net sales in 2020[93]. - Net earnings increased to $66.6 million ($3.41 per diluted share) in 2021 from $19.0 million ($0.98 per diluted share) in 2020[99]. - Total capital increased to $302.0 million in 2021 from $264.8 million in 2020, with shareholders' equity comprising 100% of total capital[101]. Costs and Expenses - Selling, general and administrative expenses increased by 3.3% to $32.4 million, or 5.5% of net sales, from $31.3 million, or 6.6% of net sales in 2020[94]. - Rising labor, medical, and workers' compensation costs are expected to continue, adversely impacting profitability[53]. - Increasing prices for freight, natural gas, and other consumables could negatively affect manufacturing and distribution costs[54]. Cash Flow and Liquidity - Cash and cash equivalents totaled $89.9 million as of October 2, 2021, compared to $68.7 million as of October 3, 2020[100]. - Net cash provided by operating activities was $69.9 million in 2021, up from $56.2 million in 2020[101]. - As of October 2, 2021, the company had $98.6 million of borrowing capacity available under its Credit Facility[108]. Market Conditions and Risks - Demand for Insteel's products is seasonal and cyclical, typically peaking in the third and fourth quarters due to favorable weather conditions for construction[25]. - The primary raw material, hot-rolled carbon steel wire rod, is subject to price fluctuations, with imports representing approximately 16% of total wire rod purchases in fiscal 2021[27]. - Foreign competition in the PC strand and SWWR markets poses a risk to the company's financial results, potentially affecting market share and profit margins[46]. Compliance and Environmental Considerations - The company believes it is in compliance with environmental laws and does not expect material capital expenditures for environmental control facilities during fiscal 2022[40]. - The company faces risks related to climate change, which could impact raw material availability and operational costs[55]. Employee and Labor Relations - As of October 2, 2021, Insteel employed 913 individuals, with no union representation, emphasizing a culture of safety and performance-based compensation[33]. Pension and Retirement Plans - The projected benefit obligation for the Supplemental Retirement Benefit Plans (SRBAs) increased to $12.888 million as of October 2, 2021, up from $11.610 million in 2020, reflecting a year-over-year increase of 11.0%[204]. - The net periodic pension cost for the SRBAs was $843,000 in 2021, a decrease of 12.7% from $966,000 in 2020[206].

Financial Data and Key Metrics Changes - Insteel reported record financial performance for Q4 2021, with net earnings more than tripling to $25.2 million from $7.4 million a year ago, and earnings per diluted share rising to $1.28 from $0.38 [6][28] - Gross profit for the quarter increased by $20.5 million year-over-year, with gross margin expanding to 23.3% due to a widening in spreads as average selling prices outpaced rod cost increases [12] - SG&A expense decreased by $2 million to $7.3 million, and as a percentage of sales, it decreased 240 basis points to 4.3% [13] Business Line Data and Key Metrics Changes - Average selling prices in Q4 were up 56.1% year-over-year and increased 18.8% sequentially from Q3 2021, marking the third consecutive quarter of price increases greater than 10% [9] - Shipments for the quarter decreased 20.6% from last year and 10.3% sequentially from Q3 2021, attributed to tight global rod supply rather than lack of demand [10][11] Market Data and Key Metrics Changes - The construction end markets remained strong with no signs of a slowdown, supported by leading indicators and consensus growth estimates for construction spending [19] - Non-residential construction spending has rebounded dramatically since January 2021, with the Architectural Billings Index registering its highest monthly score in history during the summer [20][24] Company Strategy and Development Direction - The company plans to pursue important transactions for non-buy America applications to fill voids created by domestic production challenges [33] - Capital expenditures for 2022 are estimated to be between $20 million and $25 million, aimed at supporting growth in the engineered structural mesh product line and improving production quality [37] Management's Comments on Operating Environment and Future Outlook - Management expressed that the current conditions in the market are unprecedented and unsustainable, with tight supplies of hot-rolled steel rod leading to substantial price increases [28][30] - The company expects robust demand to continue supporting price increases through the supply chain, despite challenges in raw material availability [33][58] Other Important Information - Free cash flow for the year was $52.4 million, representing 8.9% of revenues, with $31.3 million returned to shareholders through dividends [18] - The effective tax rate for the quarter increased to 22.7% from 20.8% year-over-year, with expectations of around 23% for the next year barring changes in corporate tax rates [15] Q&A Session Summary Question: Was the decrease in shipments due to weather or tight wire rod supply? - Management indicated that while there was some production time lost due to hurricanes, the primary reason for the decrease in shipments was related to supply concerns [39] Question: Have there been any recent changes in foreign wire rod availability? - Management acknowledged that there are some opportunities emerging, but global markets remain strong, limiting imports [40] Question: What is the impact of wire rod supply on shipments? - Management confirmed that the entire shipment shortfall is related to wire rod availability, not demand, with a pro forma decrease of about 14.5% [53] Question: Will pricing soften if supply improves? - Management believes that pricing will remain firm even with increased wire rod supply due to strong market demand [58] Question: What are the implications of the infrastructure bill? - Management expressed concerns that the Bipartisan Infrastructure Bill may be inflationary and questioned the necessity of stimulating the industry at this time [61][63]

Insteel Industries, Inc. (NYSE:IIIN) Q3 2021 Earnings Conference Call July 22, 2021 10:00 AM ET Company Participants Howard Woltz - President, CEO & Chairman Mark Carano - SVP, CFO & Treasurer Conference Call Participants Julio Romero - Sidoti & Company Tyson Bauer - KC Capital Operator Good day, and thank you for standing by. Welcome to the Insteel Industries Third Quarter 2021 Conference Call. [Operator Instructions]. I would now like to hand the conference over to your speaker today, Mr. Woltz. Please go ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended July 3, 2021 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ________ to ________ Commission File Number: 1-9929 Insteel Industries, Inc. (Exact name of registrant as specified in its charter) North Carolina (State or other jurisdic ...

Financial Data and Key Metrics Changes - Net earnings for Q2 2021 increased to $14.9 million or $0.76 per diluted share, up from $4.4 million or $0.23 per share a year ago, representing more than a tripling of earnings [4] - Shipments increased by 5% year-over-year and 3.1% sequentially from Q1 [4] - Average selling prices rose by 15% compared to last year and 12.7% sequentially from Q1 [5] - Gross profit increased by $15 million year-over-year, with gross margin expanding to 21.7% [6] Business Line Data and Key Metrics Changes - The demand for concrete reinforcing products remained robust, contributing to strong financial results [4] - The company successfully passed rising costs through the supply chain, maintaining gross margins above 20% throughout the quarter [6][7] Market Data and Key Metrics Changes - The supply of wire rod in the U.S. market became constrained, leading to substantial price increases [5] - Steel scrap prices increased by over 60% in the last six months, impacting production costs [6] - Recent market indicators like ABI and Dodge have rebounded, suggesting growth in private nonresidential construction markets in the next 9 to 12 months [12] Company Strategy and Development Direction - The company expects continued market strength driven by improved public finances and elevated activity in the distribution and e-commerce segments [15] - There is a focus on expanding engineered structural mesh products and cast-in-place applications [16] - The company plans to invest approximately $20 million in capital expenditures for 2021 to support growth initiatives [18] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about steady demand and strong order books, despite uncertainties related to COVID-19 [12][13] - The company is actively managing the tight supply environment for raw materials and expects to pass costs through the supply chain [17] - Management acknowledged risks associated with elevated steel prices and supply constraints but believes that existing tariffs and dumping orders will mitigate sudden market changes [33] Other Important Information - The effective tax rate for the quarter increased to 22.5% from 21.2% year-over-year [9] - Cash flow from operations generated $15.3 million, with no borrowings on the revolving credit facility, providing financial flexibility [11] Q&A Session Summary Question: Demand trends in the horizontal market - Management noted that distribution, including e-commerce, has been extremely robust and has a long run ahead [25] Question: Availability of trucking and cost pass-through - Management confirmed that trucking availability is extremely tight, which has driven costs up significantly [28] Question: Progress on the Strand-Tech acquisition - Management reported that major equipment refurbishment is complete, and commissioning is expected to occur soon [30] Question: Risks associated with elevated steel prices - Management highlighted that while risks are high, they are managing quantities of steel purchased to fulfill customer commitments [32] Question: Trade action rulings - Management expressed satisfaction with the trade rulings, which aligned with their expectations [35] Question: Seasonal impact and government spending - Management anticipates that government stimulus may not have an immediate impact but could extend the pipeline for future projects [41]

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended April 3, 2021 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ________ to ________ Commission File Number: 1-9929 Insteel Industries, Inc. (Exact name of registrant as specified in its charter) North Carolina 56-0674867 (State or ot ...