Insteel Industries, Inc. announced financial results for its fourth quarter and fiscal year ended September 28, 2019. The company incurred a net loss of $1.8 million compared with net earnings of $9.4 million in the same period a year ago.
Net sales decreased 6.6 percent to $113.4 million from $121.4 million in the prior year quarter driven by a 12.8 percent decrease in average selling prices that offset a 7.2 percent increase in shipments. On a sequential basis, shipments decreased 4.0 percent from the third quarter of fiscal 2019 while average selling prices decreased 6.5 percent.
In a statement, the company said shipments for the current year quarter were adversely impacted by escalating volumes of low-priced imports, “which have surged following the imposition of tariffs on imports of upstream steel products, including the company's raw materials, under Section 232 of the Trade Expansion Act of 1962.”
The company said, “foreign competitors have responded by shifting production to downstream products such as PC strand and standard welded wire reinforcement in order to circumvent the tariffs and further their penetration of the US market. Gross margin narrowed to 3.4 percent from 16.1 percent in the prior year quarter due to lower spreads between selling prices and raw material costs largely driven by the increased import competition.”
As for the full-year fiscal 2019, net earnings decreased to $5.6 million from $36.3 million in the prior year. Net sales increased 0.6 percent to $455.7 million from $453.2 million in the prior year driven by an 8.2 percent increase in average selling prices that offset a 7.1 percent decrease in shipments. Gross margin narrowed to 6.6 percent from 15.6 percent due to the lower spreads and, to a lesser extent, higher manufacturing costs and the reduction in shipments, the company said.
As for an outlook, H.O. Woltz III, Insteel's President and CEO, said, “As we move into fiscal 2020, we expect the continuation of favorable conditions in our construction end-markets. Public construction, particularly for roads and bridges, should remain strong driven by increased state and local spending together with FAST Act and supplementary funding. The latest third-party forecasts for our other primary demand driver, nonresidential construction, reflect continued growth supported by the ongoing economic expansion.”
However, the company expects “import-related headwinds” to persist in the PC strand and standard welded reinforcement markets, “as foreign competitors continue to gain market share by underpricing domestic producers.”