Insteel Industries Reports Strong Q1 2025 Results, Driven by Acquisitions and Operational Efficiency

Insteel Industries Inc. (NYSE: IIIN), the nation's largest manufacturer of steel wire reinforcing products for concrete construction applications, reported robust financial results for its first quarter of fiscal 2025, ended December 28, 2024. The company's strong performance was driven by strategic acquisitions, operational efficiency, and a favorable demand environment.

Net earnings for the first quarter of fiscal 2025 remained unchanged from the prior year at $1.1 million or $0.06 per share. However, results for the current quarter included $1.0 million in restructuring charges and acquisition-related costs, which collectively reduced net earnings per share by $0.04. Insteel's first quarter results benefited from higher spreads between selling prices and raw material costs, as well as an improvement in demand for the Company's concrete reinforcement products, which were partially offset by an increase in selling, general, and administrative expense.

Net sales increased 6.6% to $129.7 million from $121.7 million in the prior year quarter, driven by an 11.4% increase in shipments partially offset by a 4.3% decline in average selling prices. Shipments for the current quarter benefited from favorable demand trends in the infrastructure and commercial construction markets, as well as the incremental volume generated from the two recent acquisitions. On a sequential basis, shipments decreased 4.5% from the fourth quarter of fiscal 2024, reflecting the usual seasonal slowdown, while average selling prices increased 1.1%. Gross margin expanded by 210 basis points to 7.3%, from 5.2% in the prior year quarter, primarily due to a combination of wider spreads between selling prices and raw material costs and higher shipment volume. Contributions from the acquisitions made during the quarter were nil due to purchase accounting conventions and weak seasonality.

Operating activities generated $19.0 million of cash during the quarter compared to $21.8 million in the prior year quarter, as both periods benefited from the relative changes in working capital. Working capital provided $12.3 million in the current quarter, driven by the reduction in inventories and receivables, while providing $16.3 million in the prior year quarter.

Capital Allocation and Liquidity
Capital expenditures for the first quarter of fiscal 2025 decreased to $2.7 million from $12.3 million in the prior year quarter. Capital outlays for fiscal 2025 are expected to total up to approximately $22.0 million, primarily focused on cost and productivity improvement initiatives as well as recurring maintenance requirements. On December 13, 2024, Insteel paid a special cash dividend totaling $19.4 million, or $1.00 per share, in addition to its regular quarterly cash dividend of $0.03 per share and ended the quarter with $36.0 million of cash and no borrowings outstanding on its $100.0 million revolving credit facility.

Acquisitions of Engineered Wire Products, Inc and O'Brien Wire Products of Texas, Inc.
As previously announced, on October 21, 2024, Insteel, through its wholly-owned subsidiary, Insteel Wire Products Company ("IWP"), acquired Engineered Wire Products, Inc. ("EWP") for an adjusted purchase price of $67.0 million in an asset transaction. Under the terms of the purchase agreement, Insteel acquired, among other assets, EWP's inventories and production equipment and EWP's Upper Sandusky, Ohio and Warren, Ohio production facilities. EWP was a leading manufacturer of welded wire reinforcement products for use in nonresidential and residential construction. The transaction was funded from cash on hand. Subsequent to closing the transaction, the Warren, Ohio facility was closed and its orders were distributed to logical Insteel legacy facilities.

On November 26, 2024, Insteel, through its wholly-owned subsidiary, IWP, acquired O'Brien Wire Products of Texas, Inc. ("OWP") for an adjusted purchase price of $5.1 million in an asset transaction. Under the terms of the purchase agreement, Insteel acquired certain inventories and all of OWP's production equipment. OWP was a manufacturer of welded wire reinforcement products for use in nonresidential and residential construction located in Houston, Texas. The transaction was funded from cash on hand.

During the quarter, Insteel incurred $0.7 million of restructuring charges related to the consolidation of the Company's welded wire manufacturing operations and $0.3 million of acquisition costs for legal, accounting, and other professional fees associated with the recent acquisitions.

Outlook
"We are encouraged by the strong demand trends in our infrastructure and commercial construction markets, as well as the contributions from our recent acquisitions," said H.O. Woltz III, President and Chief Executive Officer of Insteel. "Our focus on operational efficiency and cost reduction initiatives has enabled us to expand our gross margin and maintain a strong financial position. We remain committed to investing in our business and driving long-term growth."



In conclusion, Insteel Industries Inc. reported strong first quarter 2025 results, driven by strategic acquisitions, operational efficiency, and a favorable demand environment. The company's focus on cost and productivity improvement initiatives, as well as its strong cash position, positions it well for continued growth and success in the coming quarters.