US-based Insteel Industries reports Q3 financial results

Net sales for the third quarter of fiscal 2010 increased 8.8 percent to $62 million from $57 million in the third quarter of fiscal 2009. Shipments for the third quarter of fiscal 2010 increased 8.5 percent on a year-over-year basis while average selling prices increased 0.3 percent. On a sequential basis, shipments increased 8.0 percent from the second quarter of fiscal 2010 and average selling prices increased 9.7 percent.

For the first nine months of fiscal 2010, net earnings were $2.1 million compared with a net loss of $23.8 million in the first nine months of fiscal 2009.

Net sales for the first nine months of fiscal 2010 decreased 8.1 percent to $155.4 million from $169.2 million in the first nine months of fiscal 2009. Shipments for the first nine months of fiscal 2010 increased 14.5 percent from the first nine months of fiscal 2009 while average selling prices decreased 19.8%.

Insteel's financial results for the third quarter of fiscal 2010 were favorably impacted by the increase in shipments, higher spreads between selling prices and raw material costs, and lower unit conversion costs. Despite the improvement in shipments for the quarter, demand for the Company's products remained at depressed levels due to the ongoing weakness in the construction sector.

Commenting on the outlook for the remainder of 2010, H.O. Woltz III, Insteel's president and CEO said, "As we move into the second half of the year, we expect business conditions to remain challenging with private nonresidential construction, our primary demand driver, continuing to trend at depressed levels. This weakness is likely to persist until a recovery takes hold in the private sector that includes job growth as well as increased availability of credit for construction financing, particularly for commercial projects. The near-term outlook for infrastructure construction is clouded by the ongoing delay in enacting a new multi-year federal highway funding authorization, with no action anticipated until sometime after the November mid-term elections together with the massive budget shortfalls at the state and local level.

As reflected in our third quarter results, heightened competitive pricing activity has prevented us from fully recovering higher raw material costs in our markets. It is likely that this margin pressure will intensify during our fourth fiscal quarter before abating, assuming that raw material costs moderate as expected in the coming months. As we navigate our way through this difficult environment, we continue to focus on our operating fundamentals and those factors we can control, closely aligning our production schedules with demand, managing our costs, maintaining our strong balance sheet and financial flexibility, and positioning ourselves to capitalize on any strategic growth opportunities that may develop."