Insteel Industries Inc.s earnings jumped in its fiscal
fourth quarter due to an improved price spread between wire rod
and finished product, as well as a gradually improving
The Mount Airy,
N.C.-based company posted net income of more than $2.3 million
for the three months ended Sept. 28 vs. $833,000 in the same
period last year. Sales rose just 0.3 percent to $98.2 million
as a 4.7-percent increase in shipments was offset by a
4.2-percent decline in average selling prices.
The overall improving
economy continued to undergird shipment volumes, the company
construction, our primary demand driver, should continue to
benefit from the ongoing recovery in the housing sector,
although we expect growth to remain modest until the economy
gains more momentum," vice president Michael Gazmarian said
during a conference call with investors.
margins grew to 8.8 percent in the fiscal fourth quarter from 6
percent a year earlier, the company said. Prices of steel wire
rod, the companys raw material input, have drifted
downward in the past few months due to import pressure and
decreasing scrap prices (amm.com, Oct. 10).
"The (wire rod) market
has become more competitive ... due to relatively high level of
imports and seasonal influences that are adversely affecting
demand, and unused capacity in wire rod industry. But the
advent of new capacity has added heat to that fire. Its a
competitive market," chief executive officer H.O. Woltz III
said during the conference call.
But the companys
putative improvement in margins has been partially offset by a
decline in finished product pricing.
were exposed to in welded wire reinforcement is primarily
of domestic origin. Our competitors, like us, face lethargic
markets and weak demand that is intensifying the competition we
see in every region of the country," Woltz said.
The company expects
continued gradual growth over the next year.
"Activity levels in
our markets improved marginally during the fourth quarter,
continuing a trend of sluggish construction spending and
employment," Woltz said. In the next quarter, "we expect
gradually improving conditions in the absence of a catalyst for
a more robust recovery."