Insteel Industries Inc has reported a net loss of USD 1.7 million for the third quarter ended June 27th 2009 as compared with net earnings of USD 16.9 million for the same period last year. The net loss for the current year quarter includes a pre tax charge of USD 2.9 million for inventory write downs to reduce the carrying value of inventory to the lower of cost or market.
Net sales for the third quarter decreased by 45.4% YoY to USD 57 million from USD 104.3 million in the same year ago period. Shipments decreased by 28.7% YoY while average selling prices decreased by 23.4% YoY.
For the 9 month period ended June 27th 2009, the net loss was USD 23.8 million as compared with net earnings of USD 28.1 million for the same period last year. The net loss for the current year includes a pre tax charge of USD 25.9 million for inventory write downs to reduce the carrying value of inventory to the lower of cost or market.
Net sales for the 9 month period decreased by 31.7% YoY to USD 169.2 million from USD 247.6 million in the same year ago period. Shipments decreased by 37.3% YoY while average selling prices increased by 9% YoY from the same period last year.
Insteel's financial results for the third quarter were unfavorably impacted by the reductions in shipments and selling prices, the consumption of higher cost inventory purchased prior to the collapse in steel prices during the current fiscal year and the escalation in unit conversion costs resulting from reduced operating schedules. Selling prices and margins for prestressed concrete strand continued to be adversely affected by exorbitantly low priced imports from China. The company's overall capacity utilization for the quarter dropped to 42% from 67% in the same period last year.
Operating activities provided USD 23.1 million of cash during the third quarter compared with USD 2.5 million during the same period last year primarily due to the year over year changes in net working capital, which more than offset the loss in the current year quarter. Net working capital provided USD 20.7 million of cash during the current year quarter primarily due to the company's inventory reduction initiatives while using USD 17.3 million during the same year ago period largely due to increases in inventories and accounts receivable resulting from the escalation in raw material costs and selling prices.
Capital expenditures for the 9 month period were USD 1.7 million compared with USD 8.4 million for the same period last year and are expected to total less than USD 3 million for fiscal 2009. Insteel ended the quarter debt free with USD 21.6 million of cash and cash equivalents.
Mr HO Woltz III president & CEO of Insteel said that "Although we have seen some improvement in demand during the quarter, the increase appears to be primarily a function of seasonal factors and the completion of customer inventory destocking rather than a recovery in our markets. We made considerable progress in realigning our inventories and working through the remainder of the higher cost inventory that has negatively impacted our financial results since the beginning of our fiscal year."
