Insteel Industries, Inc. (NYSE:IIIN) Q3 2024 Earnings Call Transcript July 18, 2024 10:00 AM ET

Company Participants

H. Woltz - CEO
Scot Jafroodi - VP, CFO and Treasurer

Conference Call Participants

Julio Romero - Sidoti
Kevin Gainey - Thompson Davis
Tyson Bauer - KC Capital

Operator

Good morning, all. Thank you for joining us for the Insteel Industries Third Quarter 2024 Earnings Call. My name is Carly, and I will be coordinating your call today. [Operator Instructions] I will now hand over to your host, H. Woltz, CEO of Insteel Industries, to begin.

H. Woltz

Good morning. Thank you for your interest in Insteel, and welcome to our third quarter of 2024 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 on our presentation are considered to be forward-looking statements that are subject to various risks and uncertainties which could cause actual results to differ materially from those projected. These risk factors are described in our periodic filings with the SEC.

During Q3, we experienced a continuation of sluggish market conditions, although momentum increased steadily to the point that we began ramping up operating hours to manage lead times, primarily in our welded wire reinforcement business. While we're not pleased with our Q3 results, patience is the only viable strategy for us since we're unable to create demand and competitors who believe that reducing prices will stimulate demand or result in market share gains are simply mistaken. We've noted that market lethargy is not limited to reinforcing markets following reduced estimates for producers of cement, steel, aggregates and other construction materials. The better news is that we believe market conditions are recovering and that the longer term outlook for demand is quite positive. We look forward to attaining higher operating rates, lower costs, improved revenue and margins that we believe will be supported by market conditions.

I'm going to 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 reported in our release earlier today, our third quarter results were negatively affected by the narrowing of spreads between selling prices and raw material costs relative to the prior year quarter. The reduction in spread has more than offset the favorable impact of higher shipments in the current year. As a result, Insteel's net earnings for the third quarter of fiscal 2024 fell to $6.6 million or $0.34 per share from $10.6 million or $0.54 per share a year ago. Net sales for the quarter declined 12% to $145.8 million, driven by a 16.3% decrease in average selling prices, partially offset by a 5.1% increase in shipments.