Insteel’s earnings dip slightly

Insteel’s earnings dip slightly

North Carolina-based Insteel Industries on Monday (May 2) reported net earnings of $5.0 million for its second fiscal quarter ended April 2, 2005; Insteel had declared earnings of $5.5 million for the same period a year ago. Excluding gains from the disposal of assets associated with a discontinued operation, earnings for the current year quarter were $4.3 million. Sales for the second quarter increased 11% year on year to $81.7 million. Average selling prices for the second quarter rose 42% while shipments decreased 22% from levels the prior year. Insteel's president, H.O. Woltz III, commented, "In spite of the depressed order rates for the quarter, we were able to make significant progress in reducing our inventories to desired levels. While we are comfortable with our inventory position at the end of the second quarter, we expect further reductions as favorable seasonal trends boost shipments and the domestic component of our raw material supply increases." Looking ahead to the second half of the company’s fiscal year, Woltz said, "We are proceeding with the execution of our plans to add another engineered structural mesh line that is scheduled to be fully operational before the end of the current quarter and to reconfigure and expand our PC strand operation in Gallatin, Tennessee, which is expected to be completed in the third quarter of fiscal 2006. We believe that the timing of these initiatives is opportune in positioning us to capitalize on the anticipated growth in these markets." Insteel is one of the major wire mesh producers in the US. Up until 2004 they were going through some tough times, plagued by heavy debts and intense domestic competition. They have improved their results and closed their debt load significantly since. However, Insteel, like the rest of the mesh produces, is experiencing decaying mesh prices, high and expensive raw material inventories, and weaker than expected construction demand. In addition, smaller mesh producers are appearing in the building mesh market and the margins have eroded. All of the factors will likely take the bloom off what some had initially predicted would be a rosy 2005.