Insteel Industries Reports Third Quarter 2025 Results

Business Wire

17-07-2025

MOUNT AIRY, N.C.--(BUSINESS WIRE)--Insteel Industries Inc. (NYSE: IIIN) ('Insteel' or the 'Company'), the largest manufacturer of steel wire reinforcing products for concrete construction applications in the United States, today announced financial results for its third quarter of fiscal 2025 ended June 28, 2025.
Third Quarter 2025 Highlights
Net earnings of $15.2 million, or $0.78 per share
Net sales of $179.9 million
Gross profit of $30.8 million, or 17.1% of net sales
Operating cash flow of $28.2 million
Net cash balance of $53.7 million and no debt outstanding as of June 28, 2025
Navigating near-term challenges with cautiously optimistic outlook
Net earnings for the third quarter of fiscal 2025 increased to $15.2 million, or $0.78 per share, from $6.6 million, or $0.34 per share, for the same period a year ago. The results for the current quarter include $0.9 million in restructuring charges and acquisition-related costs, which collectively reduced net earnings per share by $0.03. Insteel's third quarter performance was driven by higher shipments of its concrete reinforcement products along with wider spreads between selling prices and raw material costs, partially offset by an increase in selling, general and administrative expense driven by higher incentive plan expense.
Net sales rose 23.4% to $179.9 million from $145.8 million in the prior year quarter, driven by an 11.7% rise in average selling prices and a 10.5% increase in shipments. Higher average selling prices reflect pricing actions taken across all product lines to recover escalating raw material and operating costs. The rise in shipments was driven by the incremental volume generated from acquisitions completed earlier in the year and improved demand in construction markets. Sequentially, average selling prices increased by 8.2% from the second quarter of fiscal 2025, while shipments were up 3.5%. Gross profit improved to $30.8 million from $15.4 million in the prior year quarter, and gross margin expanded to 17.1% from 10.6%, reflecting the improvement in market conditions.
Operating activities generated $28.2 million of cash during the quarter compared with $18.7 million in the prior year quarter due to a combination of higher net earnings and the relative change in net working capital. Net working capital provided $9.4 million in the current year, compared to $7.8 million in the prior year quarter.
Nine Month 2025 Results
Net earnings for the first nine months of fiscal 2025 were $26.5 million, or $1.35 per diluted share, compared with $14.6 million, or $0.75 per share, for the same period a year ago. Insteel's earnings for the current year period reflect $2.5 million of restructuring charges and acquisition-related costs, which collectively reduced net earnings per share by $0.10.
Net sales increased to $470.3 million from $394.9 million for the prior year period, driven by a 16.5% increase in shipments and a 2.2% rise in average selling prices. Gross profit increased to $64.8 million from $37.4 million in the same period a year ago, and gross margin widened to 13.8% from 9.5% due to improved conditions in reinforcing markets. Operating activities generated $44.2 million of cash compared with $42.0 million in the prior year period due to a combination of higher net earnings and the relative change in net working capital.
Capital Allocation and Liquidity
Capital expenditures for the first nine months of fiscal 2025 decreased to $6.5 million from $17.5 million in the comparable prior year period. Capital outlays for fiscal 2025 are expected to total up to approximately $11.0 million, primarily focused on cost and productivity improvement initiatives as well as recurring maintenance requirements. During fiscal 2025, the Company's investment program in its facilities was temporarily slowed by integration activities related to recent acquisitions.
Insteel ended the quarter debt-free with $53.7 million of cash and no borrowings outstanding on its $100.0 million revolving credit facility.
Outlook
'As we had previously indicated, we experienced sourcing challenges during our third quarter related to reduced domestic capacity to produce steel wire rod, our primary raw material,' said H.O. Woltz III, President and CEO of Insteel. 'Reduced domestic supplies of wire rod disrupted our production schedules, extended lead times, and impacted our ability to fully meet customer demand. As we indicated we would do, we turned to international markets to fill the supply gap, which will ease supply constraints moving forward into the fourth quarter.
'Alongside these availability challenges, we experienced sharply escalating wire rod prices in both domestic and international markets. Contributing to the upward pressure on prices was the unexpected decision by the Administration to double the Section 232 tariff on steel imports, which will affect our cost for substantial quantities of offshore purchases and require disciplined pricing strategies moving forward as we seek to recover higher costs in our markets.'
Mr. Woltz continued, 'Despite these challenges, we remain confident in our business outlook. Our recent acquisitions are meaningfully contributing to our performance by enhancing shipment volumes and improving our competitive positioning in certain geographies. We are encouraged that customers generally express optimism about their business prospects, and demand has improved, even as broader macroeconomic indicators for the construction activity suggest a more cautious environment. That said, we are taking proactive steps to manage our costs and remain confident in our long-term competitive positioning.'
Conference Call
Insteel will hold a conference call at 10:00 a.m. ET today to discuss its third quarter financial results. A live webcast of this call can be accessed on Insteel's website at https://investor.insteel.com and will be archived for replay.
About Insteel
Insteel is the nation's largest manufacturer of steel wire reinforcing products for concrete construction applications. Insteel manufactures and markets prestressed concrete 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 and concrete contractors for use, primarily, in nonresidential construction applications. Headquartered in Mount Airy, North Carolina, Insteel operates eleven 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 we believe that our plans, intentions and expectations reflected in or suggested by such forward-looking statements are reasonable, they are subject to several risks and uncertainties, and we can provide no assurances that such plans, intentions or expectations will be implemented or achieved. Many of these risks and uncertainties are discussed in detail in our Annual Report on Form 10-K for the year ended September 28, 2024 and may be updated from time to time in our other filings with the U.S. Securities and Exchange Commission (the 'SEC').
All forward-looking statements attributable to us or persons acting on our 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 we do not undertake 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 our business, 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 we operate, including uncertainty over global trade policies and the financial impact of related tariffs and retaliatory tariffs; changes in the spending levels for nonresidential and residential construction and the impact on demand for our 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 our products; the cyclical nature of the steel and building material industries; credit market conditions and the relative availability of financing for us, our customers and the construction industry as a whole; the impact of rising interest rates on the cost of financing for our customers; fluctuations in the cost and availability of our primary raw material, hot-rolled carbon steel wire rod, from domestic and foreign suppliers; competitive pricing pressures and our ability to raise selling prices in order to recover increases in raw material or operating costs; changes in United States or foreign trade policy affecting imports or exports of steel wire rod or our products; unanticipated changes in customer demand, order patterns and inventory levels; the impact of fluctuations in demand and capacity utilization levels on our unit manufacturing costs; our ability to further develop the market for ESM and expand our shipments of ESM; legal, environmental, economic or regulatory developments that significantly impact our business or operating costs; unanticipated plant outages, equipment failures or labor difficulties; the impact of cybersecurity breaches and data leaks: and the 'Risk Factors' discussed in our Annual Report on Form 10-K for the year ended September 28, 2024, and in other filings made by us with the SEC.
INSTEEL INDUSTRIES INC. AND SUBSIDIARIES
(In thousands)
(Unaudited) (Unaudited)
June 28, March 29, December 28, September 28, June 29,
2025
2025
2024
2024
2024
Assets
Current assets:
Cash and cash equivalents
$
53,665
$
28,424
$
35,951
$
111,538
$
97,745
Accounts receivable, net
83,264
79,792
49,442
58,308
61,234
Inventories
119,171
96,033
98,670
88,840
89,379
Other current assets
7,442
6,536
8,422
8,608
8,766
Total current assets
263,542
210,785
192,485
267,294
257,124
Property, plant and equipment, net
131,083
133,944
136,379
125,540
127,889
Intangibles, net
17,034
17,514
17,998
5,341
5,528
Goodwill
37,755
37,755
35,641
9,745
9,745
Other assets
22,478
21,862
22,196
14,632
14,329
Total assets
$
471,892
$
421,860
$
404,699
$
422,552
$
414,615
Liabilities and shareholders' equity
Current liabilities:
Accounts payable
$
73,424
$
42,998
$
36,724
$
37,487
$
34,827
Accrued expenses
16,301
11,427
10,360
9,547
9,888
Total current liabilities
89,725
54,425
47,084
47,034
44,715
Other liabilities
25,959
26,022
25,965
24,663
23,885
Commitments and contingencies
Shareholders' equity:
Common stock
19,410
19,412
19,431
19,452
19,445
Additional paid-in capital
88,368
87,959
86,919
86,671
85,599
Retained earnings
249,038
234,650
225,908
245,340
241,254
Accumulated other comprehensive loss
(608
)
(608
)
(608
)
(608
)
(283
)
Total shareholders' equity
356,208
341,413
331,650
350,855
346,015
Total liabilities and shareholders' equity
$
471,892
$
421,860
$
404,699
$
422,552
$
414,615
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INSTEEL INDUSTRIES INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
Three Months Ended Nine Months Ended
June 28, June 29, June 28, June 29,
2025
2024
2025
2024
Cash Flows From Operating Activities:
Net earnings
$
15,159
$
6,565
$
26,470
$
14,636
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation and amortization
4,694
3,837
13,726
11,412
Amortization of capitalized financing costs
12
12
38
38
Stock-based compensation expense
427
508
2,115
1,903
Deferred income taxes
(548
)
869
(541
)
3,638
Asset impairment charges
408
-
1,001
-
Loss on sale and disposition of property, plant and equipment
52
26
86
50
Increase in cash surrender value of life insurance policies over premiums paid
(458
)
-
(152
)
(1,029
)
Net changes in assets and liabilities (net of assets and liabilities acquired):
Accounts receivable, net
(3,472
)
(5,685
)
(24,956
)
2,190
Inventories
(23,138
)
3,151
(17,861
)
13,927
Accounts payable and accrued expenses
36,035
10,367
42,612
(2,492
)
Other changes
(972
)
(912
)
1,632
(2,295
)
Total adjustments
13,040
12,173
17,700
27,342
Net cash provided by operating activities
28,199
18,738
44,170
41,978
Cash Flows From Investing Activities:
Acquisition of businesses
(600
)
-
(72,056
)
-
Capital expenditures
(1,597
)
(3,235
)
(6,490
)
(17,460
)
Increase in cash surrender value of life insurance policies
(109
)
(45
)
(471
)
(443
)
Proceeds from sale of assets held for sale
57
-
57
-
Proceeds from sale of property, plant and equipment
62
1
99
4
Proceeds from surrender of life insurances policies
20
20
50
25
Net cash used for investing activities
(2,167
)
(3,259
)
(78,811
)
(17,874
)
Cash Flows From Financing Activities:
Proceeds from long-term debt
88
96
223
230
Principal payments on long-term debt
(88
)
(96
)
(223
)
(230
)
Cash dividends paid
(582
)
(584
)
(21,178
)
(50,359
)
Payment of employee tax withholdings related to net share transactions
(47
)
(101
)
(150
)
(262
)
Cash received from exercise of stock options
62
-
62
428
Repurchases of common stock
(224
)
(994
)
(1,966
)
(1,836
)
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 beginning of period
28,424
83,945
111,538
125,670
Cash and cash equivalents at end of period
$
53,665
$
97,745
$
53,665
$
97,745
Supplemental Disclosures of Cash Flow Information:
Cash paid during the period for:
Income taxes, net
$
4,876
$
2,543
$
5,153
$
3,267
Non-cash investing and financing activities:
Purchases of property, plant and equipment in accounts payable
1,435
2,624
1,435
2,624
Restricted stock units and stock options surrendered for withholding taxes payable
47
101
150
262
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