Insteel(US:IIIN)2020-07-16 17:38Financial Data and Key Metrics Changes - Net earnings increased to $0.30 per share from $0.11 per share year-over-year, driven by recovery in selling prices and raw material spreads [7] - Gross profit rose by $6.6 million to $14.8 million, with gross margin widening to 12.1% from 6.5% [13] - Shipments increased by 9.5% year-over-year and 7.4% sequentially, marking the second highest quarter of shipments in the last 10 years [8] Business Line Data and Key Metrics Changes - Average selling prices declined 11.7% year-over-year and 1.2% sequentially, with significant pressure in markets susceptible to import competition [10] - In markets affected by imports, average selling prices fell 20% year-over-year, more than double the 8% decline in other business areas [11] Market Data and Key Metrics Changes - Strong shipment performance attributed to increased construction activity and favorable weather conditions [9] - The company experienced robust order entry, although some moderation was noted in the Northeast and Midwest due to COVID-19 regulations [26] Company Strategy and Development Direction - The company is focused on maintaining financial strength while pursuing organic growth through capital expenditures and strategic acquisitions [22] - Efforts are being made to address low-price import competition through actions with U.S. government and international trade authorities [12] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about strong market conditions for the remainder of the year, despite limited visibility for fiscal 2021 due to COVID-19 uncertainties [21] - The company is prepared to adjust operating plans if demand significantly drops [27] Other Important Information - The company completed the acquisition of Strand-Tech Manufacturing, with integration activities proceeding smoothly [29] - Capital expenditures for 2020 are now estimated at approximately $12 million, down from initial estimates [36] Q&A Session Summary Question: Impact of COVID-19 on operations - Management noted minimal operational impact but highlighted customer uncertainty and staffing challenges due to quarantine procedures [42][43] Question: Areas of strength in construction - Public construction remains robust, with strong activity in distribution centers noted [44] Question: Incremental tonnage from Strand-Tech acquisition - Management indicated difficulty in quantifying incremental tonnage from the acquisition but emphasized strong customer retention efforts [45][47] Question: State bonding activity and its impact - Management acknowledged that increased bonding activity by municipalities could positively impact the business, although federal funding concerns remain [50][52] Question: Outlook for 2021 - Management expressed concerns about both private non-residential and public construction sectors, with risks identified in bidding activity for 2021 [53] Question: Cash reserves and potential dividends - The company remains focused on growth opportunities and will consider returning excess cash to shareholders if it exceeds conservative operational needs [56]