Insteel Industries reports weaker earnings

Insteel Industries reports weaker earnings

Insteel Industries Inc, one of the US's leading manufacturers of wire products, reported its net sales for the fourth quarter ended October 1, 2005, fell 10.4 percent from the fourth quarter 2004. This decrease is largely due to lower prices in the fourth quarter as well as lower production levels. Net income fell to $6.4 million, or $0.67 per diluted share, compared to earnings of $9.9 million, or $1.06 per diluted share, for the same period last year. Year-to-date net income was reported as $25 million, compared to the year-to-date 2004 net income of $31.5 million. H.O. Woltz III, Insteel's president and chief executive officer, stated, “Business conditions improved during the fourth quarter, but not of a magnitude that significantly impacted earnings. Shipments were up 3 percent on a sequential basis and slightly higher than the prior year after an extended stretch of unfavorable year-to-year comparisons. We are hopeful that these improvements are early indications of a more pronounced upturn in demand in fiscal 2006. Gross margins continued to trend at attractive levels but were down from the third quarter due to the consumption of higher cost raw material inventories together with higher unit conversion costs resulting from reduced operating levels at our facilities.” Mr. Woltz explained to SteelOrbis, “The (wire rod) market tightened up with the Beaumont and Ivaco plants out of operation due to labor issues, so North American producers are taking advantage of that situation and raising prices. At some point, they're going to find themselves in competition with the world market, which could be a precursor to higher import levels.” When asked if the company had any pending plans to acquire more wire companies, Mr. Woltz replied, “We're certainly looking in that direction. We have nothing definitive pending but we've made no secret in our interest in acquiring other companies.” The overall positive result shown by Insteel Industries shows that the US wire industry is essentially in good shape. It may be less profitable than last year, but the volume and profit margin point to a sound and robust wire industry. Insteel Industries Inc. manufactures and markets concrete reinforcing and industrial wire products for construction and industrial applications. The company has facilities located in Delaware, Florida, Kentucky, North Carolina, Tennessee, Texas, and Virginia.