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Insteel Industries Reports First Quarter 2020 Results

Steel News - Published on Fri, 17 Jan 2020

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Insteel Industries Inc announced financial results for its first quarter ended December 28, 2019. Despite favorable conditions in the Company's construction end-markets, Insteel's results for the first quarter of fiscal 2020 continued to be adversely affected by low-priced import competition. Net earnings decreased to USD 0.6 million from UD 4.1 million in the same period a year ago. Net sales decreased 6.3% to USD 97.6 million from USD 104.1 million in the prior year quarter driven by a 16.1% decrease in average selling prices that offset an 11.7% increase in shipments. On a sequential basis, shipments decreased 10.9% from the fourth quarter of fiscal 2019 reflecting the usual seasonal slowdown while average selling prices decreased 3.4%.

Imports remained at elevated levels in certain of Insteel's markets during the quarter as foreign competitors have increased their production of downstream products such as PC strand and standard welded wire reinforcement in order to circumvent the Section 232 tariffs on imported steel and expand their market share in the U.S. Gross margin narrowed to 6.4% from 10.5% in the prior year quarter primarily due to lower spreads between selling prices and raw material costs largely driven by the import-related pricing pressure.

Insteel's president and CEO HO Woltz III said "Outlook "Looking ahead to the remainder of fiscal 2020, we should benefit from continued growth in infrastructure construction driven primarily by higher state and local spending in many of our markets together with modest increases in nonresidential construction. We also expect to make significant progress on our primary organic growth initiative, the expansion of our cast-in-place business, as we further our penetration of the rebar market where engineered structural mesh can serve as a more cost-effective solution for many concrete reinforcing applications. Our markets that are susceptible to imports, however, will continue to be unfavorably impacted by increased pricing pressure until a solution is reached on the Section 232 tariffs that restores the competitiveness of domestic manufacturers of downstream products relative to foreign producers. In the interim, we will maintain our focus on those factors we can control in aggressively pursuing further process improvements and strategic acquisition opportunities."

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Posted By : Rabi Wangkhem on Fri, 17 Jan 2020
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