Insteel Industries Reports First Quarter Financial Results

          Insteel Industries Reports First Quarter Financial Results

PR Newswire

MOUNT AIRY, N.C., Jan. 17, 2013

MOUNT AIRY, N.C., Jan. 17, 2013 /PRNewswire/ -- Insteel Industries, Inc.
(NasdaqGS: IIIN) today reported net earnings of $2.4 million, or $0.13 per
diluted share for the first quarter of fiscal 2013 compared with a net loss of
$0.2 million, or $0.01 per share in the same period a year ago. The prior year
results include a gain on the early extinguishment of debt and restructuring
charges related to the November 2010 acquisition of certain of the assets of
Ivy Steel & Wire, Inc., which, in the aggregate, reduced pre-tax earnings by
$0.2 million and net earnings by $0.01 per share.

(Logo: http://photos.prnewswire.com/prnh/20130104/CL31002LOGO-b )

Insteel's financial results for the first quarter of fiscal 2013 were
favorably impacted by widening spreads between selling prices and raw material
costs relative to the prior year quarter together with higher shipments and
lower unit conversion costs. Capacity utilization for the quarter was 46%
compared with 48% in the fourth quarter of fiscal 2012 and 42% in the prior
year quarter reflecting continued weakness in Insteel's construction
end-markets.

Net sales for the first quarter of fiscal 2013 increased 1.3% to $85.9 million
from $84.8 million in the same period a year ago. Shipments increased 5.5%
from the prior year quarter while average selling prices decreased 4.0%. On a
sequential basis, shipments decreased 12.6% from the fourth quarter of fiscal
2012 while average selling prices increased 0.5%.

Operating activities provided $23.5 million of cash for the first quarter of
fiscal 2013 while using $0.7 million in the same period a year ago primarily
due to the year-over-year changes in net working capital. Net working capital
provided $17.0 million of cash in the current year while using $2.9 million in
the prior year. Operating cash flow for the quarter was primarily used to
repay $11.5 million of borrowings outstanding on Insteel's $100.0 million
revolving credit facility, return $5.0 million to shareholders through the
payment of a $4.5 million special cash dividend and a $0.5 million regular
cash dividend, and fund $2.6 million of capital expenditures. Capital
expenditures for fiscal 2013 are not expected to exceed $12.0 million. Insteel
ended the quarter debt-free with $4.8 million of cash and cash equivalents.

"Market conditions for the first quarter were stronger than anticipated during
what is typically our weakest period of the year due to the seasonal downturn
in construction activity," commented H.O. Woltz III, Insteel's president and
CEO. "We are encouraged by the ongoing recovery in the housing market, which
may improve the prospects for a broader upturn in nonresidential construction
activity and demand for our products. Our outlook for the remainder of the
year, however, remains cautious in view of the high degree of economic
uncertainty. Nevertheless, we expect that our results will be favorably
impacted by the recently completed reconfiguration of our welded wire
reinforcement operations and the ramp up of our engineered structural mesh
expansion."

Conference Call

Insteel will hold a conference call at 10:00 a.m. ET today to discuss its
first quarter financial results. A live webcast of this call can be accessed
on Insteel's website at http://investor.insteel.com/events.cfm and will be
archived for replay until the next quarterly conference call.

About Insteel

Insteel is the nation's largest manufacturer of steel wire reinforcing
products for concrete construction applications. Insteel manufactures and
markets PC strand and welded wire reinforcement, including engineered
structural mesh, concrete pipe reinforcement and standard welded wire
reinforcement. Insteel's products are sold primarily to manufacturers of
concrete products that are used in nonresidential construction. Headquartered
in Mount Airy, North Carolina, Insteel operates nine manufacturing facilities
located in the United States.

Cautionary Note Regarding Forward-Looking Statements

This news release contains forward-looking statements within the meaning of
the safe harbor provisions of the Private Securities Litigation Reform Act of
1995. When used in this news release, the words "believes," "anticipates,"
"expects," "estimates," "plans," "intends," "may," "should" and similar
expressions are intended to identify forward-looking statements. Although
Insteel believes that its plans, intentions and expectations reflected in or
suggested by such forward-looking statements are reasonable, such
forward-looking statements are subject to a number of risks and uncertainties,
and Insteel can provide no assurances that such plans, intentions or
expectations will be achieved. Many of these risks and uncertainties are
discussed in detail in Insteel's periodic and other reports and statements
that it files with the U.S. Securities and Exchange Commission (the "SEC"), in
particular in its Annual Report on Form 10-K for the year ended September 29,
2012. You should carefully review these risks and uncertainties.

All forward-looking statements attributable to Insteel or persons acting on
its behalf are expressly qualified in their entirety by these cautionary
statements. All forward-looking statements speak only to the respective dates
on which such statements are made and Insteel does not undertake and
specifically declines any obligation to publicly release the results of any
revisions to these forward-looking statements that may be made to reflect any
future events or circumstances after the date of such statements or to reflect
the occurrence of anticipated or unanticipated events, except as may be
required by law.

It is not possible to anticipate and list all risks and uncertainties that may
affect Insteel's future operations or financial performance; however, they
include, but are not limited to, the following: general economic and
competitive conditions in the markets in which Insteel operates; credit market
conditions and the relative availability of financing for Insteel, its
customers and the construction industry as a whole; the continuation of
reduced spending for nonresidential construction and the impact on demand for
Insteel's products; the severity and duration of the downturn in residential
construction and the impact on those portions of Insteel's business that are
correlated with the housing sector; changes in the amount and duration of
transportation funding provided by federal, state and local governments and
the impact on spending for infrastructure construction and demand for
Insteel's products; the cyclical nature of the steel and building material
industries; fluctuations in the cost and availability of Insteel's primary raw
material, hot-rolled steel wire rod, from domestic and foreign suppliers;
competitive pricing pressures and Insteel's ability to raise selling prices in
order to recover increases in wire rod costs; changes in United States
("U.S.") or foreign trade policy affecting imports or exports of steel wire
rod or Insteel's products; unanticipated changes in customer demand, order
patterns and inventory levels; the impact of weak demand and reduced capacity
utilization levels on Insteel's unit manufacturing costs; Insteel's ability to
further develop the market for engineered structural mesh and expand its
shipments of engineered structural mesh; legal, environmental, economic or
regulatory developments that significantly impact Insteel's operating costs;
unanticipated plant outages, equipment failures or labor difficulties;
continued escalation in certain of Insteel's operating costs; and the other
risks and uncertainties discussed in Insteel's Annual Report on Form 10-K for
the year ended September 29, 2012 and in other filings made by Insteel with
the SEC.

INSTEEL INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands except for per share data)
(Unaudited)
                                     Three Months Ended
                                     December 29,         December 31,
                                     2012                 2011
Net sales                            $     85,887    $     84,811
Cost of sales                        77,294               80,152
 Gross profit                     8,593                4,659
Selling, general and administrative  4,842                4,592
expense
Gain on early extinguishment of      -                    (425)
debt
Restructuring charges, net           -                    599
Other income, net                    -                    (70)
Interest expense                     72                   253
 Earnings (loss) before income    3,679                (290)
taxes
Income taxes                         1,277                (110)
 Net earnings (loss)              $      2,402   $       (180)
Net earnings (loss) per share:
 Basic                            $       0.14  $       (0.01)
 Diluted                          0.13                 (0.01)
Weighted average shares
outstanding:
 Basic                            17,724               17,610
 Diluted                          18,088               17,610
Cash dividends declared per share    $       0.28  $       0.03





INSTEEL INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands)
                                      (Unaudited)         (Audited)
                                      December 29,        September 29,
                                      2012                2012
Assets
Current assets:
 Cash and cash equivalents         $      4,815  $         10
 Accounts receivable, net          35,247              42,138
 Inventories, net                  56,239              65,774
 Other current assets              5,343               7,146
 Total current assets          101,644             115,068
Property, plant and equipment, net    88,068              87,716
Other assets                          6,009               5,768
 Total assets                  $    195,721    $    208,552
Liabilities and shareholders' equity
Current liabilities:
 Accounts payable                  $     30,124   $     30,126
 Accrued expenses                  6,371               5,877
 Total current liabilities     36,495              36,003
Long-term debt                        -                   11,475
Other liabilities                     11,881              11,574
Shareholders' equity:
 Common stock                      17,745              17,717
 Additional paid-in capital        50,763              50,379
 Retained earnings                 81,278              83,845
 Accumulated other comprehensive   (2,441)             (2,441)
loss
 Total shareholders' equity    147,345             149,500
 Total liabilities and         $    195,721    $    208,552
shareholders' equity





INSTEEL INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
                                              Three Months Ended
                                              December 29,     December 31,
                                              2012             2011
Cash Flows From Operating Activities:
 Net earnings (loss)                       $           $      
                                              2,402           (180)
 Adjustments to reconcile net earnings
(loss) to net cash provided by (used for)
 operating activities:
 Depreciation and amortization     2,332            2,406
 Amortization of capitalized       26               20
financing costs
 Stock-based compensation expense  313              369
 Gain on early extinguishment of   -                (425)
debt
 Asset impairment charges          -                (11)
 Deferred income taxes             1,237            (116)
 Excess tax benefits from          (36)             (5)
stock-based compensation
 Loss on sale of property, plant   12               -
and equipment
 Increase in cash surrender value  -                (290)
of life insurance policies over premiums paid
 Net changes in assets and
liabilities (net of assets and liabilities
acquired):
 Accounts receivable, net      6,891            5,842
 Inventories                   9,535            2,972
 Accounts payable and accrued  556              (11,679)
expenses
 Other changes                 205              368
 Total adjustments         21,071           (549)
 Net cash provided by  23,473           (729)
(used for) operating activities
Cash Flows From Investing Activities:
 Capital expenditures                      (2,561)          (1,008)
 Proceeds from life insurance claims       505              -
 Increase in cash surrender value of life  32               (427)
insurance policies
 Proceeds from surrender of life           -                16
insurance policies
 Proceeds from sale of property, plant     -                15
and equipment
 Net cash used for     (2,024)          (1,404)
investing activities
Cash Flows From Financing Activities:
 Proceeds from long-term debt              3,494            41,520
 Principal payments on long-term debt      (14,969)         (38,868)
 Cash dividends paid                       (4,969)          (529)
 Cash received from exercise of stock      63               1
options
 Excess tax benefits from stock-based      36               5
compensation
 Other                                     (299)            4
 Net cash provided by  (16,644)         2,133
(used for) financing activities
Net increase in cash and cash equivalents     4,805            -
Cash and cash equivalents at beginning of     10               10
period
Cash and cash equivalents at end of period    $           $       
                                              4,815            10
Supplemental Disclosures of Cash Flow
Information:
 Cash paid during the period for:
 Interest                              $         $       
                                               18             552
 Income taxes                          13               33
 Non-cash investing and financing
activities:
 Purchases of property, plant and      135              342
equipment in accounts payable

SOURCE Insteel Industries, Inc.

Website: http://www.insteel.com
Contact: Michael C. Gazmarian, Vice President, Chief Financial Officer and
Treasurer, Insteel Industries, Inc., +1-336-786-2141, Ext. 3020
 
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