On October 19, 2023, Insteel Industries Inc (IIIN, Financial), the largest manufacturer of steel wire reinforcing products for concrete construction applications in the United States, announced its financial results for the fourth quarter and fiscal year ended September 30, 2023.
Fourth Quarter 2023 Performance
Net earnings for the fourth quarter of fiscal 2023 were $5.6 million, or $0.29 per share, compared to $24.3 million, or $1.24 per share, in the same period a year ago. Despite improved demand, Insteel’s fourth quarter results were unfavorably impacted by narrower spreads between selling prices and raw material costs and higher unit manufacturing costs relative to the prior year quarter.
Fiscal 2023 Results
Net earnings for fiscal 2023 decreased to $32.4 million, or $1.66 per diluted share, from a record $125.0 million, or $6.37 per diluted share, in the prior year. Earnings for the current year benefited from a $3.3 million, or $0.13 per share, gain on the sale of property, plant and equipment.
Financial Statements Summary
Insteel's net sales decreased 21.5% to $649.2 million from $826.8 million in the prior year driven by a 17.1% decrease in average selling prices and a 5.3% decrease in shipments. Gross profit decreased to $65.4 million from $197.3 million in the same period a year ago, and gross margin narrowed to 10.1% from 23.9% due to lower spreads, reduced shipments and higher operating costs.
Operating activities generated $142.2 million of cash compared to $5.7 million in the prior year due to relative changes in working capital. Working capital provided $95.6 million in the current year, driven by a reduction in inventories and receivables, while using $134.3 million in the prior year.
Capital Allocation and Liquidity
Capital expenditures for fiscal 2023 increased to $30.7 million from $15.9 million in the prior year and are expected to total up to approximately $30 million in fiscal 2024. Insteel ended the year with a record $125.7 million of cash and no borrowings outstanding on its $100.0 million revolving credit facility.
Outlook
Insteel's President and CEO, H.O. Woltz III, commented on the company's performance, stating,
In the wake of record financial results in the previous year, fiscal year 2023 presented a highly challenging business environment that required rebalancing our supply chain, a significant downward reset of steel prices and ongoing weakness in the residential construction market. Looking ahead to fiscal 2024, we remain cautiously optimistic as customer sentiment is mostly positive, and spending associated with the Infrastructure Investment and Jobs Act is expected to accelerate as we progress through fiscal 2024 and help drive demand."
