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Insteel optimistic as earnings up sharply

Keywords: Tags  Insteel Industries, earnings report, H.O. Woltz III, construction, steel wire reinforcing products, Samuel Frizell

NEW YORK — Insteel Industries Inc. posted net income of $3.71 million in its fiscal second quarter, up sharply from $262,000 in the same period last year, which the company attributed to widening spreads between selling prices and raw material costs.

Net income of $6.12 million for the six months ended March 30 vs. just $82,000 a year earlier was the highest level for the first half of any fiscal year since the recession, and president and chief executive officer H.O. Woltz III said during a conference call that improving construction markets and sentiment would continue to improve business.

"Anecdotally, our customers are more optimistic about their business prospects than at any time since the construction downturn," he said.

Poor weather during the fiscal second quarter dampened demand for construction products, however, and net sales fell 4.8 percent to $82.87 million from a year earlier as shipments slipped 1.5 percent and average selling prices decreased 3.4 percent.

The Mount Airy, N.C.-based steel wire reinforcing products manufacturer charted several new engineered structural mesh production lines in 2013, including a new production line at its Texas facility that started up in the fiscal second quarter and a production line at its North Carolina facility to be commissioned in the fiscal third quarter.

"(It’s) a highly flexible line that will produce a wide variety of shapes and circles. ... There’s a tremendous amount of flexibility," Woltz told AMM in an interview after the conference call. The line will reduce waste from excess steel use. "We’re putting the steel exactly where the customer needs it and avoiding the waste of steel."

The expansions come despite the company running at a 46-percent capacity utilization rate, in part because it seeks to position itself to take advantage of improved construction this year in regional markets, Woltz said, particularly in Texas, the highest user of concrete reinforcing bar in the country, a competitor product to engineered structural mesh, according to Concrete Reinforcing Steel Institute data.

"In the Texas market, we see a number of large products that actually are having us operating at reasonable rates of capacity. And some of our operations are at six days a week," Woltz said. "Our outlook for that market its pretty bullish based on new work that’s coming."

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