Mount Airy, North Carolina-based steel wire manufacturer Insteel Industries Inc. reported Thursday a $7.6 million net loss for the first quarter of fiscal 2011, compared with a net loss of $1.1 million in the first quarter of fiscal 2010. However, the net loss for the current year quarter includes $2.8 million of acquisition-related costs and $4.4 million of restructuring charges related to the acquisition of certain assets of Ivy Steel & Wire, Inc.
Net sales for the first quarter of fiscal 2011 increased 27 percent to $52.3 million from $41.2 million in the first quarter of fiscal 2010 due to the addition of Ivy's facilities and higher sales at the company's existing facilities. Shipments for the first quarter of fiscal 2011 increased 15.9 percent from the prior year quarter and average selling prices increased 9.5 percent. On a sequential basis, shipments decreased 7.7 percent from the fourth quarter of fiscal 2010 due to the usual seasonal downturn while average selling prices increased 0.9 percent.
Insteel's financial results for the first quarter of fiscal 2011 were unfavorably impacted by compressed spreads between selling prices and raw material costs, and elevated unit conversion costs. Demand for the Company's products continued to trend at depressed levels as the seasonal weakness was compounded by the recessionary conditions in the construction sector. Insteel's overall capacity utilization for the quarter was 35 percent compared with 49 percent in the fourth quarter of fiscal 2010 and 33 percent in the first quarter of fiscal 2010.
Commenting on the business outlook for the balance of fiscal 2011, H.O. Woltz III, Insteel's President and CEO, said, "We expect demand for concrete reinforcing products to remain at depressed levels during our second fiscal quarter due to the continued softness in our construction end markets and the usual seasonal weakness. Despite the anemic demand environment, prices for hot-rolled steel wire rod, our primary raw material, have surged higher since December driven by escalating scrap costs for steel producers. Although we have announced price increases to recover these additional costs in our markets, the eventual net impact on margins is uncertain at this time."