INSTEEL INDUSTRIES, INC. MOUNT AIRY, N.C., Jan. 21, 2016 /PRNewswire/ -- Insteel Industries, Inc. (NasdaqGS: IIIN) today announced financial results for its first quarter ended January 2, 2016.
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First Quarter 2016 Results
Net earnings for the first quarter of fiscal 2016 increased to $6.7 million, or $0.36 per share from $4.2 million, or $0.22 per diluted share in the same period a year ago. Net sales decreased 16.5% to $92.4 million from $110.6 million in the prior year period on a 9.0% decrease in shipments and an 8.3% decrease in average selling prices. On a sequential basis, shipments decreased 19.9% from the fourth quarter of fiscal 2015 due to the usual seasonal slowdown in construction activity and the extra week in the fourth quarter while average selling prices decreased 2.3%.
Insteel's first-quarter results were favorably impacted by higher spreads between selling prices and raw material costs relative to the prior year quarter, which were partially offset by the decrease in shipments.
Operating activities provided $12.4 million of cash while using $9.5 million in the prior year quarter primarily due to the relative changes in net working capital and the increase in earnings. Net working capital provided $0.7 million of cash while using $17.9 million in the prior year quarter. Capital expenditures were $0.9 million compared with $3.5 million in the prior year quarter and are expected to increase to approximately $20.0 million in fiscal 2016 largely due to outlays related to the expansion of the Houston prestressed concrete strand ("PC strand") facility. Following the end of the quarter, on January 8, 2016 Insteel paid a special cash dividend totaling $18.6 million, or $1.00 per share, to shareholders of record as of December 11, 2015.
Balance Sheet and Liquidity
Cash and cash equivalents increased $12.4 million during the first quarter to $45.6 million. Insteel ended the quarter debt-free with no borrowings outstanding on its $100.0 million revolving credit facility.
Outlook
"As we move into the second fiscal quarter, we expect that our results will be affected by the usual seasonal slowdown in construction activity in most of our markets related to winter weather conditions," commented H.O. Woltz III, Insteel's president and CEO. "Looking ahead to the remainder of fiscal 2016, we anticipate improved demand for our concrete reinforcing products driven by the gradual recovery in nonresidential construction. We also expect to benefit from the recent passage of a five-year federal highway spending bill, which provides a higher degree of funding certainty for states and municipalities that should translate into increased infrastructure construction in the coming years."
Conference Call
Insteel will hold a conference call at 10:00 a.m. ET today to discuss its first quarter financial results. A live webcast of this call can be accessed on Insteel's website at http://investor.insteel.com/events.cfm and will be archived for replay until the next quarterly conference call.
About Insteel
Insteel is the nation's largest manufacturer of steel wire reinforcing products for concrete construction applications. Insteel manufactures and markets PC strand and welded wire reinforcement, including engineered structural mesh ("ESM"), concrete pipe reinforcement and standard welded wire reinforcement. Insteel's products are sold primarily to manufacturers of concrete products that are used in nonresidential construction. Headquartered in Mount Airy, North Carolina, Insteel operates ten manufacturing facilities located in the United States.
Cautionary Note Regarding Forward-Looking Statements
This news release contains forward-looking statements within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. When used in this news release, the words "believes," "anticipates," "expects," "estimates," "appears," "plans," "intends," "may," "should," "could" and similar expressions are intended to identify forward-looking statements. Although Insteel believes that its plans, intentions and expectations reflected in or suggested by such forward-looking statements are reasonable, such forward-looking statements are subject to a number of risks and uncertainties, and Insteel can provide no assurances that such plans, intentions or expectations will be achieved. Many of these risks and uncertainties are discussed in detail in Insteel's periodic and other reports and statements that it files with the U.S. Securities and Exchange Commission (the "SEC"), in particular in its Annual Report on Form 10-K for the year ended October 3, 2015. You should carefully review these risks and uncertainties.
All forward-looking statements attributable to Insteel or persons acting on its behalf are expressly qualified in their entirety by these cautionary statements. All forward-looking statements speak only to the respective dates on which such statements are made and Insteel does not undertake and specifically declines any obligation to publicly release the results of any revisions to these forward-looking statements that may be made to reflect any future events or circumstances after the date of such statements or to reflect the occurrence of anticipated or unanticipated events, except as may be required by law. It is not possible to anticipate and list all risks and uncertainties that may affect Insteel's future operations or financial performance; however, they include, but are not limited to, the following: general economic and competitive conditions in the markets in which Insteel operates; reduced spending for nonresidential and residential construction and the impact on demand for Insteel's products; changes in the amount and duration of transportation funding provided by federal, state and local governments and the impact on spending for infrastructure construction and demand for Insteel's products; the cyclical nature of the steel and building material industries; credit market conditions and the relative availability of financing for Insteel, its customers and the construction industry as a whole; fluctuations in the cost and availability of Insteel's primary raw material, hot-rolled steel wire rod, from domestic and foreign suppliers; competitive pricing pressures and Insteel's ability to raise selling prices in order to recover increases in wire rod costs; changes in United States or foreign trade policy affecting imports or exports of steel wire rod or Insteel's products; unanticipated changes in customer demand, order patterns and inventory levels; the impact of weak demand and reduced capacity utilization levels on Insteel's unit manufacturing costs; Insteel's ability to further develop the market for ESM and expand its shipments of ESM; legal, environmental, economic or regulatory developments that significantly impact Insteel's operating costs; unanticipated plant outages, equipment failures or labor difficulties; continued escalation in certain of Insteel's operating costs; and the other risks and uncertainties discussed in Insteel's Annual Report on Form 10-K for the year ended October 3, 2015 and in other filings made by Insteel with the SEC.
INSTEEL INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands except for per share data)
(Unaudited)
Three Months Ended
------------------
January 2, December 27,
2016 2014
---- ----
Net sales $92,391 $110,628
Cost of sales 75,968 98,585
------ ------
Gross profit 16,423 12,043
Selling, general and administrative expense 6,335 5,652
Restructuring recoveries, net (75) -
Other income, net (114) (40)
Interest expense 41 94
Interest income (18) -
--- ---
Earnings before income taxes 10,254 6,337
Income taxes 3,546 2,187
----- -----
Net earnings $6,708 $4,150
====== ======
Net earnings per share:
Basic $0.36 $0.23
Diluted 0.36 0.22
Weighted average shares outstanding:
Basic 18,525 18,377
Diluted 18,883 18,820
Cash dividends declared per share $1.03 $0.03
INSTEEL INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited) (Unaudited)
January 2, October 3, December 27,
2016 2015 2014
---- ---- ----
Assets
Current assets:
Cash and cash equivalents $45,619 $33,258 $11
Accounts receivable, net 40,368 46,782 40,688
Inventories 69,065 66,009 87,464
Other current assets 2,547 5,309 4,784
----- ----- -----
Total current assets 157,599 151,358 132,947
Property, plant and equipment, net 83,144 84,178 91,443
Intangibles, net 9,931 10,220 9,600
Goodwill 6,965 6,965 6,965
Other assets 7,681 7,518 7,102
----- ----- -----
Total assets $265,320 $260,239 $248,057
======== ======== ========
Liabilities and shareholders' equity
Current liabilities:
Accounts payable $31,467 $32,182 $30,874
Accrued expenses 12,033 13,644 9,096
Dividends payable 18,600 - -
------ --- ---
Total current liabilities 62,100 45,826 39,970
Long-term debt - - 10,000
Other liabilities 13,814 14,198 15,163
Shareholders' equity:
Common stock 18,600 18,466 18,377
Additional paid-in capital 62,475 60,967 59,309
Retained earnings 110,477 122,928 107,028
Accumulated other comprehensive loss (2,146) (2,146) (1,790)
------ ------ ------
Total shareholders' equity 189,406 200,215 182,924
------- ------- -------
Total liabilities and shareholders' equity $265,320 $260,239 $248,057
======== ======== ========
INSTEEL INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
Three Months Ended
------------------
January 2, December 27,
2016 2014
---- ----
Cash Flows From Operating Activities:
Net earnings $6,708 $4,150
Adjustments to reconcile net earnings to net cash provided by (used for)
operating activities:
Depreciation and amortization 2,742 2,869
Amortization of capitalized financing costs 16 26
Stock-based compensation expense 229 442
Deferred income taxes 1,215 935
Excess tax benefits from stock-based compensation (253) -
Gain on sale and disposition of property, plant and equipment (239) (77)
Increase in cash surrender value of life insurance policies over premiums paid - (136)
Net changes in assets and liabilities (net of assets and liabilities acquired):
Accounts receivable, net 6,414 10,360
Inventories (3,056) (5,565)
Accounts payable and accrued expenses (2,659) (22,716)
Other changes 1,274 199
----- ---
Total adjustments 5,683 (13,663)
----- -------
Net cash provided by (used for) operating activities 12,391 (9,513)
------ ------
Cash Flows From Investing Activities:
Capital expenditures (941) (3,515)
Acquisition of business - 411
Proceeds from sale of assets held for sale 180 -
Proceeds from sale of property, plant and equipment 60 89
Proceeds from surrender of life insurance policies 40 40
Increase in cash surrender value of life insurance policies (212) -
Net cash used for investing activities (873) (2,975)
---- ------
Cash Flows From Financing Activities:
Proceeds from long-term debt 65 47,757
Principal payments on long-term debt (65) (37,757)
Cash dividends paid (559) (551)
Cash received from exercise of stock options 1,492 -
Excess tax benefits from stock-based compensation 253 -
Financing costs (11) -
Payment of employee tax withholdings related to net share transactions (332) -
---- ---
Net cash provided by financing activities 843 9,449
--- -----
Net increase (decrease) in cash and cash equivalents 12,361 (3,039)
Cash and cash equivalents at beginning of period 33,258 3,050
------ -----
Cash and cash equivalents at end of period $45,619 $11
======= ===
Supplemental Disclosures of Cash Flow Information:
Cash paid during the period for:
Interest $ - $16
Income taxes, net 2,194 45
Non-cash investing and financing activities:
Purchases of property, plant and equipment in accounts payable 479 206
Declaration of cash dividends to be paid 18,600 -
Restricted stock units and stock options surrendered for withholding taxes payable 332 -
Post-closing purchase price adjustment for business acquired - 65
IIIN - E
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SOURCE Insteel Industries, Inc.
