Insteel Industries, Inc. today announced financial results for its first fiscal quarter ended December 28, 2019.
In a statement, the company said that despite favorable conditions in its construction end-markets, Insteel's results for the first quarter of fiscal 2020 continued to be adversely affected by low-priced import competition. Net earnings decreased to $0.6 million from $4.1 million in the same period a year ago.
Net sales decreased 6.3 percent to $97.6 million from $104.1 million in the prior year quarter driven by a 16.1 percent decrease in average selling prices that offset an 11.7 percent increase in shipments. On a sequential basis, shipments decreased 10.9 percent from the fourth quarter of fiscal 2019, which Insteel said reflects the usual seasonal slowdown, while average selling prices decreased 3.4 percent.
Imports remained at elevated levels in certain of Insteel's markets during the quarter as foreign competitors have increased their production of downstream products such as PC strand and standard welded wire reinforcement in order to circumvent the Section 232 tariffs on imported steel and expand their market share in the US, the company said. Gross margin narrowed to 6.4 percent from 10.5 percent in the prior year quarter primarily due to “lower spreads between selling prices and raw material costs largely driven by the import-related pricing pressure.”
As for an outlook, H.O. Woltz III, Insteel's president and CEO, said, “Looking ahead to the remainder of fiscal 2020, we should benefit from continued growth in infrastructure construction driven primarily by higher state and local spending in many of our markets together with modest increases in nonresidential construction.”
Woltz continued, “Our markets that are susceptible to imports, however, will continue to be unfavorably impacted by increased pricing pressure until a solution is reached on the Section 232 tariffs that restores the competitiveness of domestic manufacturers of downstream products relative to foreign producers. In the interim, we will maintain our focus on those factors we can control in aggressively pursuing further process improvements and strategic acquisition opportunities.”