INSTEEL INDUSTRIES INC
For the period ended Apr 25, 2024. Filed Apr 25, 2024.
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Apr 25, 2024 · Filed Apr 25, 2024
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Contents
EX-99.1 · Cautionary Note Regarding Forward-Looking Statements
Cautionary Note Regarding Forward-Looking Statements
This news release contains forward-looking statements within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. When used in this news release, the words “believes,” “anticipates,” “expects,” “estimates,” “appears,” “plans,” “intends,” “may,” “should,” “could” and similar expressions are intended to identify forward-looking statements. Although we believe that our plans, intentions and expectations reflected in or suggested by such forward-looking statements are reasonable, they are subject to several risks and uncertainties, and we can provide no assurances that such plans, intentions or expectations will be implemented or achieved. Many of these risks and uncertainties are discussed in detail in our Annual Report on Form 10-K for the year ended September 30, 2023 and may be updated from time to time in our other filings with the U.S. Securities and Exchange Commission (the “SEC”).
All forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by these cautionary statements. All forward-looking statements speak only to the respective dates on which such statements are made, and we do not undertake any obligation to publicly release the results of any revisions to these forward-looking statements that may be made to reflect any future events or circumstances after the date of such statements or to reflect the occurrence of anticipated or unanticipated events, except as may be required by law.
It is not possible to anticipate and list all risks and uncertainties that may affect our future operations or financial performance; however, they include, but are not limited to, the following: general economic and competitive conditions in the markets in which we operate; changes in the spending levels for nonresidential and residential construction and the impact on demand for our products; changes in the amount and duration of transportation funding provided by federal, state and local governments and the impact on spending for infrastructure construction and demand for our products; the cyclical nature of the steel and building material industries; credit market conditions and the relative availability of financing for us, our customers and the construction industry as a whole; the impact of rising interest rates on the cost of financing for our customers; fluctuations in the cost and availability of our primary raw material, hot-rolled steel wire rod, from domestic and foreign suppliers; competitive pricing pressures and our ability to raise selling prices in order to recover increases in raw material or operating costs; changes in United States or foreign trade policy affecting imports or exports of steel wire rod or our products; unanticipated changes in customer demand, order patterns and inventory levels; the impact of fluctuations in demand and capacity utilization levels on our unit manufacturing costs; our ability to further develop the market for ESM and expand our shipments of ESM; legal, environmental, economic or regulatory developments that significantly impact our business or operating costs; unanticipated plant outages, equipment failures or labor difficulties; and the “Risk Factors” discussed in our Annual Report on Form 10-K for the year ended September 30, 2023, and in other filings made by us with the SEC.
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INSTEEL INDUSTRIES INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands except for per share data)
(Unaudited)
| Three Months Ended | Six Months Ended | |||
|---|---|---|---|---|
| March 30, | April 1, | March 30, | April 1, | |
| 2024 | 2023 | 2024 | 2023 | |
| Net sales | $127,394 | $159,051 | $249,119 | $325,950 |
| Cost of sales | 111,679 | 145,789 | 227,134 | 294,902 |
| Gross profit | 15,715 | 13,262 | 21,985 | 31,048 |
| Selling, general and administrative expense | 7,875 | 7,506 | 14,242 | 14,632 |
| Other expense (income), net | 9 | (57) | (13) | (3,399) |
| Interest expense | 28 | 23 | 57 | 47 |
| Interest income | (1,147) | (747) | (2,806) | (1,187) |
| Earnings before income taxes | 8,950 | 6,537 | 10,505 | 20,955 |
| Income taxes | 2,011 | 1,436 | 2,434 | 4,731 |
| Net earnings | $6,939 | $5,101 | $8,071 | $16,224 |
| Net earnings per share: | ||||
| Basic | $0.36 | $0.26 | $0.41 | $0.83 |
| Diluted | 0.35 | 0.26 | 0.41 | 0.83 |
| Weighted average shares outstanding: | ||||
| Basic | 19,508 | 19,503 | 19,503 | 19,514 |
| Diluted | 19,594 | 19,562 | 19,584 | 19,573 |
| Cash dividends declared per share | $0.03 | $0.03 | $2.56 | $2.06 |
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INSTEEL INDUSTRIES INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands)
| (Unaudited) · (Unaudited) | ||||
|---|---|---|---|---|
| March 30, | December 30, | September 30, | April 1, | |
| 2024 | 2023 | 2023 | 2023 | |
| Assets | ||||
| Current assets: | ||||
| Cash and cash equivalents | $83,945 | $85,615 | $125,670 | $80,156 |
| Accounts receivable, net | 55,549 | 43,354 | 63,424 | 65,874 |
| Inventories | 92,530 | 94,142 | 103,306 | 136,492 |
| Other current assets | 7,675 | 8,706 | 6,453 | 5,357 |
| Total current assets | 239,699 | 231,817 | 298,853 | 287,879 |
| Property, plant and equipment, net | 127,534 | 129,300 | 120,014 | 111,946 |
| Intangibles, net | 5,716 | 5,903 | 6,090 | 6,465 |
| Goodwill | 9,745 | 9,745 | 9,745 | 9,745 |
| Other assets | 14,533 | 13,803 | 12,811 | 12,189 |
| Total assets | $397,227 | $390,568 | $447,513 | $428,224 |
| Liabilities and shareholders' equity | ||||
| Current liabilities: | ||||
| Accounts payable | $25,409 | $23,852 | $34,346 | $36,936 |
| Accrued expenses | 7,975 | 9,585 | 11,809 | 8,153 |
| Total current liabilities | 33,384 | 33,437 | 46,155 | 45,089 |
| Other liabilities | 23,222 | 23,536 | 19,853 | 18,157 |
| Commitments and contingencies | ||||
| Shareholders' equity: | ||||
| Common stock | 19,467 | 19,448 | 19,454 | 19,441 |
| Additional paid-in capital | 85,332 | 84,425 | 83,832 | 82,708 |
| Retained earnings | 236,105 | 230,005 | 278,502 | 263,806 |
| Accumulated other comprehensive loss | (283) | (283) | (283) | (977) |
| Total shareholders' equity | 340,621 | 333,595 | 381,505 | 364,978 |
| Total liabilities and shareholders' equity | $397,227 | $390,568 | $447,513 | $428,224 |
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INSTEEL INDUSTRIES INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
| Three Months Ended | Six Months Ended | |||
|---|---|---|---|---|
| March 30, | April 1, | March 30, | April 1, | |
| 2024 | 2023 | 2024 | 2023 | |
| Cash Flows From Operating Activities: | ||||
| Net earnings | $6,939 | $5,101 | $8,071 | $16,224 |
| Adjustments to reconcile net earnings to net cash provided by operating activities: | ||||
| Depreciation and amortization | 3,866 | 3,223 | 7,575 | 6,573 |
| Amortization of capitalized financing costs | 13 | 16 | 26 | 32 |
| Stock-based compensation expense | 997 | 983 | 1,395 | 1,113 |
| Deferred income taxes | (579) | (101) | 2,769 | (1,479) |
| Loss (gain) on sale and disposition of property, plant and equipment | 24 | - | 24 | (3,324) |
| Increase in cash surrender value of life insurance policies over premiums paid | (383) | (369) | (1,058) | (732) |
| Net changes in assets and liabilities: | ||||
| Accounts receivable, net | (12,195) | 2,915 | 7,875 | 15,772 |
| Inventories | 1,612 | 34,693 | 10,776 | 61,162 |
| Accounts payable and accrued expenses | 62 | 2,069 | (12,859) | (19,451) |
| Other changes | 1,021 | (1,965) | (1,383) | 3,681 |
| Total adjustments | (5,562) | 41,464 | 15,140 | 63,347 |
| Net cash provided by operating activities | 1,377 | 46,565 | 23,211 | 79,571 |
| Cash Flows From Investing Activities: | ||||
| Capital expenditures | (1,957) | (7,200) | (14,225) | (15,400) |
| Increase in cash surrender value of life insurance policies | (247) | (246) | (369) | (327) |
| Proceeds from sale of property, plant and equipment | - | - | 3 | 9,920 |
| Proceeds from surrender of life insurance policies | - | 343 | 5 | 343 |
| Net cash used for investing activities | (2,204) | (7,103) | (14,586) | (5,464) |
| Cash Flows From Financing Activities: | ||||
| Proceeds from long-term debt | 67 | 75 | 134 | 142 |
| Principal payments on long-term debt | (67) | (75) | (134) | (142) |
| Cash dividends paid | (584) | (584) | (49,775) | (40,085) |
| Payment of employee tax withholdings related to net share transactions | (141) | (187) | (161) | (187) |
| Cash received from exercise of stock options | 185 | - | 428 | 94 |
| Financing costs | - | (164) | - | (164) |
| Repurchases of common stock | (303) | (1,009) | (842) | (1,925) |
| Net cash used for financing activities | (843) | (1,944) | (50,350) | (42,267) |
| Net (decrease) increase in cash and cash equivalents | (1,670) | 37,518 | (41,725) | 31,840 |
| Cash and cash equivalents at beginning of period | 85,615 | 42,638 | 125,670 | 48,316 |
| Cash and cash equivalents at end of period | $83,945 | $80,156 | $83,945 | $80,156 |
| Supplemental Disclosures of Cash Flow Information: | ||||
| Cash paid during the period for: | ||||
| Income taxes, net | $716 | $3,945 | $724 | $4,132 |
| Non-cash investing and financing activities: | ||||
| Purchases of property, plant and equipment in accounts payable | 1,824 | 2,123 | 1,824 | 2,123 |
| Restricted stock units and stock options surrendered for withholding taxes payable | 141 | 187 | 161 | 187 |
IIIN – E
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