Insteel Industries, Inc. today announced financial results for its fourth quarter and fiscal year ended September 29, 2018.
Net earnings for the fourth quarter of fiscal 2018 increased to $9.4 million, from $3.8 million in the same period a year ago. Insteel said in a statement that fourth-quarter results for fiscal 2018 benefited from higher spreads between selling prices and raw material costs and a lower effective tax rate relative to the prior year quarter.
Net sales increased 25.3 percent to $121.4 million from $96.9 million in the prior year quarter driven by a 27.3 percent increase in average selling prices partially offset by a 1.6 percent decrease in shipments. The company said the reduction in shipments was due to a combination of factors, including competitive pricing pressures, operational issues at certain locations, raw material availability and customer inventory rebalancing. On a sequential basis, average selling prices increased 11.3 percent from the third quarter of fiscal 2018 while shipments decreased 13.9 percent.
Net earnings for fiscal 2018 increased to $36.3 million, from $22.5 million in the prior year. Net sales for the year increased 16.5 percent to $453.2 million from $388.9 million in the prior year driven by an 11.5 percent increase in average selling prices and a 4.6 percent increase in shipments.
As for an outlook on fiscal 2019, H.O. Woltz III, Insteel's president and CEO, said in a statement that the outlook for the company’s markets remains positive. “The leading indicators and industry forecasts for nonresidential building construction are signaling modest growth in the coming year,” Woltz said. “We believe the infrastructure-related portion of our business will benefit from increased federal funding through the FAST Act and supplemental measures together with higher state and local spending supported by various initiatives in many of our markets. Residential construction is also expected to strengthen driven by favorable employment and demographic trends.”
However, Woltz said that business conditions are becoming “increasingly challenging” due to Section 232 imported steel tariffs, which has “driven domestic prices for our primary raw material, hot-rolled steel wire rod, well above world market levels.”
Woltz said that considering that no tariffs were placed on imports of downstream products such as welded wire reinforcement and PC strand, Insteel expects a surge in low-priced import competition that results in market share erosion and margin compression for domestic producers.