Insteel Industries, Inc. (NYSE:IIIN) Q4 2023 Earnings Conference Call October 19, 2023 10:00 AM ET

Company Participants

H. Woltz - President & Chief Executive Officer

Scot Jafroodi - Vice President, Chief Financial Officer & Treasurer

Conference Call Participants

Julio Romero - Sidoti & Company

Tyson Bauer - KC Capital

Operator

Hello, everyone and welcome to Insteel Industries Fourth Quarter 2023 Earnings Call. My name is Runo [ph] and I will be operating your call today. [Operator Instructions]

I will now hand over to your host and CEO, H. Woltz. Please go ahead.

H. Woltz

Good morning. Thank you for your interest in Insteel and welcome to our fourth quarter 2023 conference call which will be conducted by Scot Jafroodi, our Vice President, CFO and Treasurer; and me.

Before we begin, let me remind you that some of the comments made in our presentation are considered to be forward-looking statements that are subject to various risks and uncertainties and which could cause actual results to differ materially from those projected. These risk factors are described in our periodic filings with the SEC. 2023 was challenging for the company in view of inventory accumulations throughout the supply chain and a significant downward reset in steel prices that occurred following several quarters of extreme supply tightness and significant market price escalations. We believe these headwinds have about run their course and we continue to be optimistic about the underlying level of demand for our products.

I'm going to call -- turn the call over to Scot to comment on our financial results for the quarter and the macro environment. And then, I'll pick it back up to discuss our business outlook.

Scot Jafroodi

Thank you, H and good morning to everyone joining us on the call. As highlighted in our press release earlier today, our performance in the fourth quarter of fiscal 2023 reflects the continued pressure of narrow spreads between selling prices and raw material costs following with elevated unit conversion costs. As a result, net earnings for the fourth quarter fell to $5.6 million or $0.29 a share from $24.3 million or $1.24 per diluted share a year ago. Our net sales for the quarter of base headwinds, declining 24.3% from last year on a 27.8% decrease in average selling prices, although this was partially offset by a 4.9% increase in shipments.

On a sequential basis, average selling prices declined 6.6%, while shipments were 1.8% higher. The ongoing challenges of the competitive pricing environment, the persistent downward trend in steel scrap prices and the growing influence of low-priced imported PC strand all contributed to a decline in our average selling prices during the fourth quarter. As I've mentioned in previous calls, our product is most exposed to the residential construction market has experienced the largest decline in average selling prices, a trend that continued throughout our fourth quarter.