Insteel(US:IIIN)2020-10-22 18:18Financial Data and Key Metrics Changes - Net earnings increased to $0.38 per share compared to a net loss of $0.09 per share last year [6] - Shipments for the quarter rose 27.7% year-over-year and 12.1% sequentially from Q3, marking the highest quarterly shipment level in the company's history [6] - Gross profit for the quarter increased by $15.6 million to $19.5 million, with gross margin expanding over 1,000 basis points to 14.1% [10] - SG&A expenses rose to $9.4 million, or 6.7% of net sales, from $5.9 million, or 5.2% of net sales last year [12] Business Line Data and Key Metrics Changes - Engineered structural mesh and PC strand led the growth in shipments, reflecting strong demand in construction markets [7] - Average selling prices declined 4.6% year-over-year but increased 1.1% sequentially, marking the first increase in seven quarters [7] Market Data and Key Metrics Changes - Low-priced import competition in the PC strand and standard welded wire markets remains intense, negatively impacting average selling prices [8] - Public construction spending increased 6.1% year-over-year, with highway and street construction rising by 2% [21] Company Strategy and Development Direction - The company aims to optimize operations, safeguard employees, and advance key growth initiatives despite economic uncertainties [21] - Continued focus on engineered structural mesh market expansion and pursuing acquisitions opportunistically [22][23] - Capital expenditures for 2021 are expected to total up to $20 million, focusing on growth initiatives and productivity improvements [17][35] Management's Comments on Operating Environment and Future Outlook - The lingering impact of COVID-19 on economic recovery poses risks to business, with cautious demand outlook [19] - Recent indicators show modest improvement in non-residential construction spending, but uncertainties remain [20] - The company expects to maintain normalized spread levels into Q1 of fiscal 2021, benefiting from lower raw material costs [11] Other Important Information - The company concluded the quarter with $68.7 million in cash and no borrowings on its revolving credit facility [18] - Trade cases filed against importers are progressing favorably, which may positively impact market conditions [31][34] Q&A Session Summary Question: Concerns about local funding and potential drop-off - Management noted a wide range of expectations among customers regarding funding, indicating a month-to-month evaluation approach [41][43] Question: Growth expectations for engineered structural mesh - Management indicated solid double-digit growth in engineered structural mesh but did not disclose specific figures [44] Question: Impact of CapEx for 2021 - Management confirmed that the $20 million CapEx includes catch-up for delayed projects from fiscal 2020 [45][46] Question: State and local municipal bond activity - Management acknowledged increased activity in financing infrastructure projects but lacked hard data [49] Question: Impact of trade actions on market conditions - Management highlighted that the retroactive nature of trade actions could create favorable market conditions, but winning the cases is crucial [51][52] Question: Public vs. private non-residential construction outlook - Management indicated that public spending is a larger question mark compared to private non-residential construction, which is expected to continue [58]