Insteel Industries Reports 6.6% Net Sales Increase in Q1 Fiscal 2025

Insteel Industries Inc. reported a net sales increase of 6.6% for the first quarter of fiscal 2025, reaching $129.7 million compared to $121.7 million in the same period last year. The growth was attributed to an 11.4% rise in shipments, driven by improved demand in infrastructure and commercial construction markets, as well as contributions from two recent acquisitions. However, this was partially offset by a 4.3% decline in average selling prices due to competitive market conditions. Gross profit surged 52% to $9.5 million, representing 7.3% of net sales, up from 5.2% in the prior year, primarily due to lower raw material costs and increased shipment volumes.

The company incurred restructuring charges of $696,000 related to the closure of its Warren, Ohio facility, which was part of the acquisition of Engineered Wire Products, Inc. (EWP). In addition, acquisition costs of $271,000 were recorded for legal and professional fees associated with the EWP and O’Brien Wire Products acquisitions. Despite these expenses, net earnings remained stable at $1.1 million, or $0.06 per share, reflecting a slight decrease from $1.1 million in the previous year. Selling, general, and administrative expenses rose 23.9% to $7.9 million, largely due to changes in the cash surrender value of life insurance policies and increased amortization expenses from the newly acquired intangible assets.

In terms of operational developments, Insteel completed two significant acquisitions in the first quarter: the EWP acquisition for $67 million and the OWP acquisition for $5.1 million. These acquisitions are expected to enhance the company's competitive position in the Midwest and Texas markets, respectively. The integration of these operations is ongoing, and the company anticipates that the acquisitions will contribute positively to its financial performance as synergies are realized.

On the balance sheet, total assets decreased to $404.7 million from $422.6 million at the end of the previous fiscal year, primarily due to a reduction in cash and cash equivalents. The company reported a significant drop in cash reserves, ending the quarter with $35.9 million compared to $111.5 million previously. Shareholders' equity also declined to $331.7 million from $350.9 million, reflecting the impact of dividends paid and share repurchases during the quarter.

Looking ahead, Insteel Industries anticipates continued improvement in financial performance, supported by strengthening conditions in construction markets and the contributions from recent acquisitions. The company remains focused on managing expenses, enhancing operational efficiencies, and pursuing further growth opportunities. However, it also acknowledges challenges posed by low-cost imports and competitive pricing pressures, which it plans to address through strategic advocacy and operational adjustments.