During the remainder of its fiscal year 2020, Insteel Industries expects to benefit from higher state and local spending on infrastructure construction.
Additionally, the company will expand its cast-in-place business as its presence in the rebar market grows with its engineered structural mesh, which is a lower-cost solution for many concrete-reinforcing applications. Moreover, Insteel expects progress in its primary organic growth initiative.
Insteel Industries saw its net earnings decrease to $600,000 during the first quarter of fiscal 2020, as low-priced import competition continues affecting its bottom line.
Net sales also declined by 6.3pc to $97.6mn from $104.1mn during the fourth quarter of fiscal 2019. The company’s average selling prices decreased by 16.1pc even though its shipments rose by 11.7pc. On a sequential basis, the company’s shipments fell by 10.9pc from the previous quarter because of the typically slow seasonal period, which also caused average selling prices to decline by 3.4pc.
Foreign competitors that circumvented tariff Section 232 grew their US market share at the company’s expense. Insteel’s gross margin declined to 6.4pc from 10.5pc during the first quarter of fiscal 2019 due to lower spreads between raw material costs and selling prices, which is a consequence of import-related pricing pressure. However, compared to fiscal Q1-2019, Insteel gained $700,000 on the disposition of property, plant and equipment during the first quarter of fiscal 2020.
The company’s operating activities provided $29.6mn in cash. During the first quarter of fiscal 2019, Insteel used $22.8mn because of a $24.6mn working capital reduction, the result of increased payables and reductions in receivables and inventories.
Insteel is the US’s largest manufacturer of steel wire reinforcing products for applications in concrete construction.