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Jun 27, 2020
Insteel Q3 2020 Earnings Report
Reported an increase in net earnings due to higher spreads between selling prices and raw material costs, and strong shipping performance supported by robust construction activity.
Key Takeaways
Insteel Industries reported net earnings of $6.7 million, or $0.34 per diluted share, for the third quarter of fiscal 2020, compared to $2.2 million, or $0.11 per share, in the same period last year. Net sales decreased slightly to $122.0 million from $126.3 million in the prior year quarter, with shipments increasing by 9.5% but average selling prices decreasing by 11.7%.
Net earnings increased to $6.7 million, or $0.34 per diluted share, from $2.2 million, or $0.11 per share, in the prior year quarter.
Net sales decreased 3.4% to $122.0 million due to an 11.7% decrease in average selling prices, partially offset by a 9.5% increase in shipments.
Gross margin widened 560 basis points to 12.1% from 6.5% in the prior year quarter.
Operating activities generated $17.3 million of cash compared with $14.3 million in the prior year quarter.
Forward Guidance
While the company is pleased with the robust market conditions through the third quarter and expects the fourth quarter to remain strong, their visibility into fiscal 2021 is clouded by the uncertainty surrounding the impact of COVID-19 on their markets.
Positive Outlook
- Expect the fourth quarter to remain strong.
- Plant closure and integration plans associated with the STM acquisition remain on schedule.
- Currently proceeding with the initial relocation and upgrading of equipment that will be redeployed to other facilities, which is expected to be completed by the end of the second fiscal quarter of 2021.
- Confident that the integration of the STM assets with our PC strand plants will provide meaningful operating leverage for the company.
- Believe the facts supporting the trade cases against 15 countries exporting PC strand to U.S. markets and against Mexico are strong and that they will be successful in addressing violations of U.S. trade law by these countries.
Challenges Ahead
- Visibility into fiscal 2021 is clouded by the uncertainty surrounding the impact of COVID-19 on our markets.
Historical Earnings Impact
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Avg. Return Before/After Earnings
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