Insteel(IIIN) - 2025 Q3 - Quarterly Results

News Release and Company Overview Insteel Industries Inc. announced Q3 2025 financial results and detailed its business as the largest US steel wire reinforcing products manufacturer Introduction Insteel Industries Inc., the largest US manufacturer of steel wire reinforcing products for concrete construction, announced its financial results for the third quarter of fiscal 2025, ended June 28, 2025 - Insteel Industries Inc. announced financial results for its third quarter of fiscal 2025 ended June 28, 2025[3] - Insteel is the largest manufacturer of steel wire reinforcing products for concrete construction applications in the United States[3] About Insteel Insteel, the nation's largest manufacturer of steel wire reinforcing products for concrete construction, produces prestressed concrete strand and welded wire reinforcement primarily for nonresidential construction, operating eleven US facilities - Insteel is the nation's largest manufacturer of steel wire reinforcing products for concrete construction applications[17] - The company manufactures and markets prestressed concrete strand and welded wire reinforcement, including engineered structural mesh (ESM), concrete pipe reinforcement, and standard welded wire reinforcement[17] - Insteel's products are sold primarily to manufacturers of concrete products and concrete contractors for nonresidential construction, operating eleven manufacturing facilities in the United States[17] Financial Highlights This section summarizes Insteel's strong financial performance for Q3 and the first nine months of fiscal 2025, showing significant growth in net earnings and sales Third Quarter 2025 Highlights Insteel reported significant increases in Q3 2025 net earnings and net sales, driven by higher shipments and wider spreads, with expanded gross profit and strong operating cash flow Third Quarter 2025 Financial Performance | Metric | Q3 2025 | Q3 2024 | Change (YoY) | | :----- | :------ | :------ | :----------- | | Net earnings | $15.2 million | $6.6 million | +130.3% | | EPS | $0.78 | $0.34 | +129.4% | | Net sales | $179.9 million | $145.8 million | +23.4% | | Gross profit | $30.8 million | $15.4 million | +100.0% | | Gross margin | 17.1% | 10.6% | +6.5 pp | | Operating cash flow | $28.2 million | $18.7 million | +50.8% | - Q3 2025 results include $0.9 million in restructuring charges and acquisition-related costs, reducing net earnings per share by $0.03[4] - The rise in net sales was driven by an 11.7% rise in average selling prices and a 10.5% increase in shipments[5] - Sequentially, average selling prices increased by 8.2% and shipments were up 3.5% from Q2 fiscal 2025[5] Nine Month 2025 Highlights For the first nine months of fiscal 2025, Insteel achieved substantial growth in net earnings and net sales, driven by increased shipments and improved market conditions, alongside expanded gross profit and slightly increased operating cash flow Nine Month 2025 Financial Performance | Metric | 9M 2025 | 9M 2024 | Change (YoY) | | :----- | :------ | :------ | :----------- | | Net earnings | $26.5 million | $14.6 million | +81.5% | | Diluted EPS | $1.35 | $0.75 | +80.0% | | Net sales | $470.3 million | $394.9 million | +19.1% | | Gross profit | $64.8 million | $37.4 million | +73.3% | | Gross margin | 13.8% | 9.5% | +4.3 pp | | Operating cash flow | $44.2 million | $42.0 million | +5.2% | - Nine-month earnings reflect $2.5 million of restructuring charges and acquisition-related costs, reducing net earnings per share by $0.10[10] - Net sales increased due to a 16.5% increase in shipments and a 2.2% rise in average selling prices[11] Detailed Financial Results This section provides a detailed breakdown of Insteel's consolidated statements of operations for the third quarter and first nine months of fiscal 2025 Consolidated Statements of Operations - Third Quarter 2025 The consolidated statements of operations reveal a strong third quarter for Insteel, with net sales increasing by 23.4% and net earnings more than doubling year-over-year, as gross profit margin significantly improved to 17.1% Consolidated Statements of Operations (Q3) | Metric (in thousands) | Q3 2025 | Q3 2024 | YoY Change | | :-------------------- | :------ | :------ | :--------- | | Net sales | $179,886 | $145,775 | +23.4% | | Cost of sales | $149,114 | $130,387 | +14.4% | | Gross profit | $30,772 | $15,388 | +100.0% | | Gross margin | 17.1% | 10.6% | +6.5 pp | | Selling, general and administrative expense | $10,607 | $7,879 | +34.6% | | Restructuring charges, net | $843 | $0 | N/A | | Acquisition costs | $27 | $0 | N/A | | Net earnings | $15,159 | $6,565 | +130.9% | | Diluted EPS | $0.78 | $0.34 | +129.4% | Consolidated Statements of Operations - Nine Month 2025 For the first nine months of fiscal 2025, Insteel's net sales grew by 19.1% and net earnings increased by 80.9% year-over-year, with gross profit margin expanding to 13.8% Consolidated Statements of Operations (Nine Months) | Metric (in thousands) | 9M 2025 | 9M 2024 | YoY Change | | :-------------------- | :------ | :------ | :--------- | | Net sales | $470,262 | $394,894 | +19.1% | | Cost of sales | $405,432 | $357,521 | +13.4% | | Gross profit | $64,830 | $37,373 | +73.5% | | Gross margin | 13.8% | 9.5% | +4.3 pp | | Selling, general and administrative expense | $29,294 | $22,121 | +32.4% | | Restructuring charges, net | $2,201 | $0 | N/A | | Acquisition costs | $325 | $0 | N/A | | Net earnings | $26,470 | $14,636 | +80.9% | | Diluted EPS | $1.35 | $0.75 | +80.0% | Capital Allocation and Liquidity This section details Insteel's capital allocation strategies and strong liquidity position, including cash balances and capital expenditures Capital Allocation and Liquidity Details Insteel maintained a strong liquidity position, ending the quarter debt-free with $53.7 million in cash, while nine-month capital expenditures decreased significantly, with full-year outlays focused on cost and productivity improvements Capital Expenditures | Metric | 9M 2025 | 9M 2024 | Change (YoY) | | :----- | :------ | :------ | :----------- | | Capital expenditures | $6.5 million | $17.5 million | -62.9% | - Insteel ended the quarter debt-free with $53.7 million of cash and no borrowings on its $100.0 million revolving credit facility[13] - Capital outlays for fiscal 2025 are expected to total up to approximately $11.0 million, focused on cost, productivity, and maintenance[12] - The company's investment program was temporarily slowed by integration activities related to recent acquisitions during fiscal 2025[12] Outlook This section outlines Insteel's business outlook, addressing challenges like supply chain disruptions and rising costs, while highlighting optimism from acquisitions and improved customer demand Business Outlook and Challenges Insteel faced near-term challenges from reduced domestic steel wire rod capacity, escalating prices, and increased Section 232 tariffs, yet remains cautiously optimistic, leveraging acquisitions for performance and noting improved customer demand - Experienced sourcing challenges in Q3 due to reduced domestic steel wire rod capacity, disrupting production and impacting customer demand[14] - Turned to international markets to fill the supply gap, expecting to ease supply constraints into Q4[14] - Experienced sharply escalating wire rod prices in domestic and international markets, exacerbated by doubled Section 232 tariffs on steel imports[15] - Recent acquisitions are meaningfully contributing to performance by enhancing shipment volumes and improving competitive positioning[15] - Customers express optimism and demand has improved, despite cautious broader macroeconomic indicators for construction[15] Conference Call Information This section provides details for Insteel's upcoming conference call to discuss its third-quarter financial results and how to access the webcast Conference Call Details Insteel scheduled a conference call for July 17, 2025, at 10:00 a.m. ET to discuss its third-quarter financial results, with a live webcast and archived replay available on its investor relations website - Insteel will hold a conference call at 10:00 a.m. ET on July 17, 2025, to discuss its Q3 financial results[16] - A live webcast of this call can be accessed on Insteel's website at https://investor.insteel.com and will be archived for replay[16] Cautionary Note Regarding Forward-Looking Statements This section advises that the news release contains forward-looking statements subject to risks and uncertainties, with no obligation for public updates unless legally required Forward-Looking Statements and Risks This section highlights that the news release contains forward-looking statements subject to various risks and uncertainties, detailed in the company's Form 10-K and other SEC filings, with no public update obligation unless legally required - This news release contains forward-looking statements under the Private Securities Litigation Reform Act of 1995, identified by specific terminology[18] - These statements are subject to risks and uncertainties detailed in the Annual Report on Form 10-K for the year ended September 28, 2024, and other SEC filings[18][20] - The company does not undertake to publicly release revisions to these forward-looking statements, except as legally required[19] - Risks include general economic and competitive conditions, changes in construction spending, raw material cost fluctuations, trade policy changes, and other 'Risk Factors' in SEC filings[20] Consolidated Financial Statements This section presents Insteel's unaudited consolidated statements of operations, balance sheets, and cash flows for the specified periods Consolidated Statements of Operations The unaudited consolidated statements of operations present the company's revenues, costs, and earnings for the three and nine months ended June 28, 2025, and June 29, 2024, showing significant year-over-year improvements in net sales, gross profit, and net earnings Consolidated Statements of Operations (Unaudited) | Metric (in thousands) | Three Months Ended June 28, 2025 | Three Months Ended June 29, 2024 | Nine Months Ended June 28, 2025 | Nine Months Ended June 29, 2024 | | :-------------------- | :------------------------------- | :------------------------------- | :------------------------------ | :------------------------------ | | Net sales | $179,886 | $145,775 | $470,262 | $394,894 | | Cost of sales | $149,114 | $130,387 | $405,432 | $357,521 | | Gross profit | $30,772 | $15,388 | $64,830 | $37,373 | | Selling, general and administrative expense | $10,607 | $7,879 | $29,294 | $22,121 | | Restructuring charges, net | $843 | - | $2,201 | - | | Acquisition costs | $27 | - | $325 | - | | Earnings before income taxes | $19,769 | $8,720 | $34,556 | $19,225 | | Income taxes | $4,610 | $2,155 | $8,086 | $4,589 | | Net earnings | $15,159 | $6,565 | $26,470 | $14,636 | | Basic EPS | $0.78 | $0.34 | $1.36 | $0.75 | | Diluted EPS | $0.78 | $0.34 | $1.35 | $0.75 | | Cash dividends declared per share | $0.03 | $0.03 | $1.09 | $2.59 | Consolidated Balance Sheets The unaudited consolidated balance sheets provide a snapshot of Insteel's financial position, showing total assets, liabilities, and shareholders' equity, with increased cash and cash equivalents and a debt-free status as of June 28, 2025 Consolidated Balance Sheets (Unaudited) | Metric (in thousands) | June 28, 2025 | March 29, 2025 | December 28, 2024 | September 28, 2024 | June 29, 2024 | | :-------------------- | :------------ | :------------- | :---------------- | :----------------- | :------------ | | Cash and cash equivalents | $53,665 | $28,424 | $35,951 | $111,538 | $97,745 | | Total current assets | $263,542 | $210,785 | $192,485 | $267,294 | $257,124 | | Total assets | $471,892 | $421,860 | $404,699 | $422,552 | $414,615 | | Total current liabilities | $89,725 | $54,425 | $47,084 | $47,034 | $44,715 | | Total liabilities and shareholders' equity | $471,892 | $421,860 | $404,699 | $422,552 | $414,615 | - Accounts receivable, net, increased to $83,264 thousand as of June 28, 2025, from $61,234 thousand a year prior[24] - Inventories increased to $119,171 thousand as of June 28, 2025, from $89,379 thousand a year prior[24] - Accounts payable increased to $73,424 thousand as of June 28, 2025, from $34,827 thousand a year prior[24] Consolidated Statements of Cash Flows The unaudited consolidated statements of cash flows detail cash generated from operating, investing, and financing activities, with significant operating cash and substantial investing outflows due to business acquisitions Consolidated Statements of Cash Flows (Unaudited) | Metric (in thousands) | Three Months Ended June 28, 2025 | Three Months Ended June 29, 2024 | Nine Months Ended June 28, 2025 | Nine Months Ended June 29, 2024 | | :-------------------- | :------------------------------- | :------------------------------- | :------------------------------ | :------------------------------ | | Net cash provided by operating activities | $28,199 | $18,738 | $44,170 | $41,978 | | Net cash used for investing activities | $(2,167) | $(3,259) | $(78,811) | $(17,874) | | Net cash used for financing activities | $(791) | $(1,679) | $(23,232) | $(52,029) | | Net increase (decrease) in cash and cash equivalents | $25,241 | $13,800 | $(57,873) | $(27,925) | | Cash and cash equivalents at end of period | $53,665 | $97,745 | $53,665 | $97,745 | - Acquisition of businesses resulted in a significant cash outflow of $72,056 thousand for the nine months ended June 28, 2025[26] - Capital expenditures for the nine months ended June 28, 2025, were $6,490 thousand, a decrease from $17,460 thousand in the prior year[26] - Cash dividends paid for the nine months ended June 28, 2025, were $21,178 thousand, a decrease from $50,359 thousand in the prior year[26]