Steel wire reinforcing products manufacturer Insteel Industries Inc. (IIIN:NYSE), which fabricates prestressed concrete strand (PC strand) and welded wire reinforcement (WWR) used for reinforcing concrete building products, today announced financial results for its second quarter of 2022 ended April 2, 2022.
The company reported that net sales in Q2/22 increased by 53% to $213.2 million, compared to $139.0 million in Q2/21. The company highlighted that the gain in revenue was attributed to a 65.4% increase in average selling prices and a 7.2% decrease in shipments.
The firm listed that during Q2/22 gross profit improved by 510 basis points to 26.8% versus 21.7% in Q2/21. As a result of the combination of higher margins and revenues, the company was able to increase its gross margin in Q2/22 to $57.1 million, which was up from $30.2 million in Q2/21. Insteel noted that the gains were primarily driven by higher spreads between selling prices and raw material costs. The company added that "it benefitted from strong demand for its reinforcing products and incremental price increases to recover the continued escalation in costs."
The company stated that for Q2/22 it recorded record quarterly net earnings of $39.0 million, or $1.99 per diluted share, versus $14.9 million, or $0.76 per diluted share in Q1/21.
For H1/22, Insteel reported net sales of to $391.7 million, which represented a 51.5% increase over the $258.6 million registered in H1/21. The company advised that for H1/22 it posted net earnings of $62.1 million, or $3.17 per diluted share, compared to $23.1 million, or $1.18 per diluted share during H1/21.
The company listed that as of the end of Q2/22, it held $69.7 million in cash on its balance sheet and had no outstanding balance on its $100.0 million revolving credit line.
Insteel's President and CEO H.O. Woltz III commented on the outlook for the company's business for the rest of FY/22 stating, "Momentum across our business remains positive driven by robust demand from our customer base and price increase initiatives to recover rapidly rising raw material, labor, utility and freight costs…For the balance of our fiscal year, we expect continued strong performance due to underlying strength across all our non-residential construction markets together with the usual seasonal upturn in demand that occurs during our third and fourth quarters."
"While concerns surrounding inadequate supplies of domestically produced wire rod persist, we have supplemented our requirements with offshore material to bridge the gaps we previously identified and do not expect raw material-related disruptions to our operations through the fourth fiscal quarter. We have concerns about the impact of record high steel prices on demand for reinforcing products, but up to this point momentum in our markets remains strong and there is no indication of weakening," Woltz added.
Insteel is headquartered in Mount Airy, N.C. and operates ten manufacturing facilities in the U.S. The company claims that "it is the nation's largest manufacturer of steel wire reinforcing products for concrete construction applications." Insteel produces and sells drawn and formed wire, PC strand for adding structural support to precast concrete used in construction of bridges, parking decks, buildings and other concrete structures and WWR products such as engineered structural mesh, concrete pipe reinforcement and standard welded wire reinforcement. The firm markets its products mostly to concrete products makers and concrete contractors for use in commercial construction projects. Nonresidential construction accounts for about 85% of the Insteel's total revenues with residential sales making up the remaining 15%.
Insteel started the day with a market cap of around $778.3 million with approximately 19.4 million shares outstanding and a short interest of about 2.6%. IIIN shares opened 6% higher today at $42.58 (+$2.49, +6.21%) over yesterday's $40.09 closing price. The stock has traded today between $42.52 and $46.15 per share and is currently trading at $44.36 (+$4.27, +10.65%).
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