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Mar 28, 2020
Insteel Q2 2020 Earnings Report
Insteel's Q2 2020 financial results were released, showing increased net sales and net earnings compared to the same period last year.
Key Takeaways
Insteel Industries reported an increase in net sales by 2.6% to $114.9 million and net earnings increased to $4.4 million, or $0.23 per share, driven by robust demand for concrete reinforcement products, which was partially offset by margin pressure from import competition.
Net earnings increased to $4.4 million, or $0.23 per share, up from $1.0 million, or $0.05 per share, in the prior year quarter.
Net sales increased by 2.6% to $114.9 million compared to $111.9 million in the same quarter last year.
Shipments increased by 19.7%, offsetting a 14.3% decrease in average selling prices.
Gross margin widened to 13.3% from 6.3% in the prior year quarter due to higher spreads between selling prices and raw material costs and the increase in shipments.
Insteel
Insteel
Forward Guidance
Visibility is limited due to the ongoing uncertainty surrounding the impact of COVID-19, but Insteel believes it is well-positioned to navigate through this challenging environment due to its debt-free balance sheet, significant cash on hand, and highly variable cost structure. The integration of the STM acquisition and closure plans for the Summerville facility are proceeding as planned.
Positive Outlook
- Debt-free balance sheet
- Significant cash on hand
- Highly variable cost structure
- STM acquisition integration proceeding as planned
- Summerville facility closure proceeding as planned
Challenges Ahead
- Uncertainty surrounding the impact of COVID-19
- Potential additional mitigation measures by governmental authorities
- Surge in low-priced imports of PC strand
- Increased production of downstream products by foreign producers circumventing Section 232 tariffs
- Foreign producers expanding market share in the U.S.