Insteel(IIIN)2025-01-16 17:30Financial Performance - Net sales for the first quarter of 2025 increased by 6.6% to $129.7 million, driven by an 11.4% increase in shipments, despite a 4.3% decrease in average selling prices[83]. - Gross profit rose by 52.0% to $9.5 million, representing 7.3% of net sales, due to higher spreads between average selling prices and raw material costs[84]. - Net earnings remained flat at $1.1 million, as increases in gross profit were offset by higher SG&A expenses and restructuring charges[90]. - The company anticipates continued improvement in financial performance for fiscal 2025, driven by strengthening conditions in construction end markets and contributions from recent acquisitions[108]. Expenses and Charges - Selling, general and administrative expenses increased by 23.9% to $7.9 million, accounting for 6.1% of net sales, primarily due to changes in cash surrender value of life insurance policies and higher amortization expenses[85]. - Restructuring charges of $696,000 were incurred related to the closure of the Warren facility, including asset impairment and facility closure costs[86]. - Acquisition costs totaled $271,000 for legal and professional fees associated with the EWP and OWP acquisitions[87]. Cash Flow and Financing - Net cash provided by operating activities was $18.9 million, a decrease from $21.8 million in the prior year, primarily due to a reduction in accounts receivable[92][93]. - Investing activities used $73.9 million, mainly due to the EWP and OWP acquisitions, compared to $12.4 million in the prior year[96]. - Financing activities used $20.6 million, including $20.0 million for dividend payments, a decrease from $49.5 million in the prior year[98]. - The company has a $100.0 million revolving credit facility with $98.5 million of borrowing capacity available as of December 28, 2024[100]. - Future borrowings under the Credit Facility are subject to variable interest rates, making them sensitive to changes in interest rates[113]. Market Outlook - Customer sentiment remains positive, supported by easing inflation concerns and declining interest rates, which are expected to stimulate demand[108]. - The outlook for public nonresidential construction is strong, bolstered by federal funding from the Infrastructure Investment and Jobs Act, expected to drive significant project activity in fiscal 2025 and beyond[108]. - The ongoing influx of low-cost PC strand imports into the U.S. market remains a headwind, and the company is committed to advocating for the expansion of Section 232 tariffs[108]. Inflation and Cost Management - The company has not experienced material impacts from inflation on sales or earnings during the first quarter of 2025[104]. - The company continues to focus on managing expenses, integrating recent acquisitions, and aligning production schedules with demand to minimize operating costs[109]. Price Sensitivity - A 10% increase in the price of hot-rolled carbon steel wire rod would have resulted in a $7.9 million decrease in pre-tax earnings, assuming no corresponding change in selling prices[112]. Currency Exposure - The company has not typically hedged foreign currency exposures related to transactions denominated in currencies other than U.S. dollars, as these have not been material historically[114].