Insteel(US:IIIN)2022-07-21 14:52Financial Performance - Net sales for the third quarter of 2022 increased 41.3% to $227.2 million from $160.7 million in the prior year quarter, driven by a 53.9% increase in average selling prices [73]. - Gross profit for the third quarter of 2022 rose 84.1% to $58.1 million, representing 25.6% of net sales, compared to 19.6% in the prior year quarter [74]. - Net earnings for the third quarter of 2022 increased to $38.6 million ($1.96 per diluted share) from $18.4 million ($0.94 per diluted share) in the prior year quarter [78]. - For the first nine months of 2022, net sales increased 47.6% to $618.8 million from $419.3 million in the same year-ago period, reflecting a 62.2% increase in average selling prices [79]. - Gross profit for the first nine months of 2022 increased 93.0% to $157.5 million, or 25.5% of net sales, compared to 19.5% in the same year-ago period [80]. - Net earnings for the first nine months of 2022 rose to $100.7 million ($5.13 per diluted share) from $41.5 million ($2.13 per diluted share) in the same year-ago period [84]. Expenses and Cash Flow - Selling, general and administrative expense for the third quarter of 2022 increased 33.2% to $8.2 million, or 3.6% of net sales, from 3.8% in the prior year quarter [75]. - Net cash provided by operating activities for the first nine months of 2022 was $15.1 million, primarily from net earnings adjusted for non-cash items [87]. - Operating activities generated $65.5 million in cash during the first nine months of 2021, primarily from net earnings adjusted for non-cash items and a net decrease in working capital [89]. - Financing activities used $39.2 million of cash in the first nine months of 2022, including a special dividend of $38.8 million, or $2.00 per share [93]. Equity and Taxation - Total shareholders' equity increased to $364.9 million in the first nine months of 2022 from $277.0 million in the prior year [86]. - The effective income tax rate for the third quarter of 2022 was 22.7%, up from 22.4% in the prior year quarter [77]. Investments and Financing - Investing activities used $2.7 million of cash in the first nine months of 2022, a decrease from $13.9 million in the prior year, with capital expenditures expected to total up to $20.0 million for fiscal 2022 [91]. - The company has a $100.0 million revolving credit facility, with $98.6 million of borrowing capacity available as of July 2, 2022 [95]. Market Conditions and Strategy - Customer sentiment remains positive, with leading indicators for nonresidential construction end markets at expansionary levels, signaling continued robust demand [103]. - The company is managing through tight labor markets, implementing innovative work schedules and higher pay levels to support increased production [104]. - The company plans to pursue acquisitions opportunistically to expand market penetration and footprint [105]. - Cash and cash equivalents, along with borrowing availability under the credit facility, are expected to meet anticipated liquidity requirements for the next 12 months [96]. - The company has successfully implemented price increases to recover raw material cost escalations during the first nine months of 2022 [99]. - A 10% increase in the price of hot-rolled carbon steel wire rod would have resulted in a $35.5 million decrease in pre-tax earnings for the first nine months of 2022 [107].