Insteel(IIIN) - 2025 Q2 - Quarterly Report

Financial Performance - Net sales for Q2 2025 increased by 26.1% to $160.7 million, driven by a 28.9$24.5 million, representing 15.3% of net sales, compared to 12.3% in the prior year quarter [83]. - Net earnings for Q2 2025 increased to $10.2 million ($0.52 per diluted share), a 47.4% rise from $6.9 million ($0.35 per diluted share) in the prior year [88]. - For the first half of 2025, net sales increased by 16.6% to $290.4 million, reflecting a 20.2$34.1 million, or 11.7% of net sales, compared to 8.8% in the same period last year [90]. Expenses and Charges - SG&A expenses for Q2 2025 increased by 37.1% to $10.8 million, accounting for 6.7$1.4 million were incurred in the first half of 2025 due to the closure of the Warren facility acquired through the EWP Acquisition [92]. Cash Flow and Investments - Net cash provided by operating activities for the first half of 2025 was $15.7 million, down from$23.2 million in the prior year [98]. - Operating activities generated $15.7 million in cash during the first half of 2025, with a net increase in working capital using$9.6 million of cash due to a $21.5 million increase in accounts receivable [99]. - Investing activities used$76.3 million in cash during the first half of 2025, primarily due to the EWP Acquisition ($66.4 million) and the OWP Acquisition ($5.1 million) [102]. - Financing activities used $22.4 million in cash during the first half of 2025, including$20.6 million for dividend payments and $1.7 million for stock repurchases [104]. Tax and Capital Expenditures - The effective tax rate for the first half of 2025 increased to 23.5$17.0 million, down from $14.2 million in the prior year [102]. Market Outlook and Strategy - The company anticipates a strong outlook for public nonresidential construction, supported by federal funding from the Infrastructure Investment and Jobs Act [114]. - The company plans to continue pursuing acquisitions to expand market penetration and support future growth [116]. - The company is focused on managing expenses and realizing synergies from recent acquisitions to improve productivity and effectiveness [116]. Pricing and Earnings Impact - A 10$17.0 million decrease in pre-tax earnings for the first half of 2025 [119]. - The company successfully implemented price increases to recover raw material cost escalations during the first half of 2025 [110]. Borrowing Capacity - As of March 29, 2025, the company had $98.5 million of borrowing capacity available under its$100.0 million revolving credit facility [106].