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Form 8-K INSTEEL INDUSTRIES INC For: Apr 16

April 16, 2015 6:32 AM EDT

 

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM 8-K

 

CURRENT REPORT

 

 

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

 

Date of Report (Date of earliest event reported): April 16, 2015

 

 

Commission File Number 1-9929

 

 

 

Insteel Industries, Inc.

(Exact name of registrant as specified in its charter)

 

 

 

North Carolina

(State or other jurisdiction of

incorporation or organization)

 

56-0674867

(I.R.S. Employer

Identification No.)

     

1373 Boggs Drive, Mount Airy, North Carolina

(Address of principal executive offices)

 

27030

(Zip Code)

 

Registrant’s telephone number, including area code: (336) 786-2141

 

  

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

   

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

   

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

   

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

   

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

 
 

 

 

Item 2.02. Results of Operations and Financial Condition

 

On April 16, 2015, Insteel Industries, Inc. issued a press release regarding its financial results for the second fiscal quarter ended March 28, 2015. A copy of this release is being furnished as Exhibit 99.1 to this Current Report on Form 8-K. The information in Item 2.02 of this Current Report on Form 8-K, including the related information in Exhibit 99.1, shall not be deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liability of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such a filing.

 

 

Item 9.01. Financial Statements and Exhibits

 

(d)     Exhibits

 

Exhibit 99.1

Press release dated April 16, 2015 announcing second fiscal quarter 2015 financial results of Insteel Industries, Inc.

 

 
 

 

 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

 

 

INSTEEL INDUSTRIES, INC.

Registrant

 

 

Date: April 16, 2015

By:

/s/ Michael C. Gazmarian

   

     Michael C. Gazmarian

   

     Vice President, Chief Financial Officer and Treasurer

 

 
 

 

 

EXHIBIT INDEX

 

Exhibit

Number

Description

99.1

Press release dated April 16, 2015 announcing second fiscal quarter 2015 financial results of Insteel Industries, Inc.

 

 

 

 

Exhibit 99.1

NEWS RELEASE

 

FOR IMMEDIATE RELEASE

Contact:

Michael C. Gazmarian

   

Vice President, CFO and Treasurer

    Insteel Industries, Inc.
    (336) 786-2141, Ext. 3020

 

INSTEEL INDUSTRIES REPORTS SECOND QUARTER FINANCIAL RESULTS

 

MOUNT AIRY, N.C., April 16, 2015 – Insteel Industries, Inc. (NasdaqGS: IIIN) today announced financial results for its second quarter ended March 28, 2015.

 

Second Quarter 2015 Results

 

Net earnings for the second quarter of fiscal 2015 fell to $2.5 million, or $0.14 per share from $3.5 million, or $0.19 per share in the same period a year ago. The second quarter results for fiscal 2015 include a $1.6 million net gain from insurance proceeds related to the January 2014 fire at the Gallatin, Tennessee facility and $0.3 million of restructuring charges associated with the March 2015 closure of the Newnan, Georgia prestressed concrete strand (“PC strand”) facility. In the aggregate, these items increased pre-tax earnings by $1.3 million and net earnings per share by $0.04.

 

Net sales increased 11.3% to $101.8 million from $91.4 million in the prior year period due to the August 2014 acquisition of the PC strand business of American Spring Wire Corporation (“ASW”). Shipments increased 10.6% from the prior year quarter and average selling prices increased 0.7%. On a sequential basis, shipments decreased 6.7% from the first quarter of fiscal 2015 and average selling prices decreased 1.4%.

 

Insteel’s second-quarter results were unfavorably impacted by the unusually harsh winter weather in many regions of the country, which curtailed shipments and production together with higher unit conversion costs and narrower spreads between selling prices and raw material costs relative to the prior year quarter. Capacity utilization for the quarter was 52% compared with 51% in the prior year quarter and 54% in the first quarter of fiscal 2015.

 

Operating activities provided $7.7 million of cash compared with $1.6 million in the prior year period primarily due to the relative changes in net working capital. Net working capital provided $2.7 million of cash while using $5.3 million in the same period a year ago. Capital expenditures were $1.1 million compared with $1.0 million in the prior year period.

 

Six Month 2015 Results

 

Net earnings for the first six months of fiscal 2015 increased to $6.7 million, or $0.36 per share from $6.3 million, or $0.34 per share in the same period a year ago. The six-month results for fiscal 2015 include a $1.6 million net gain from insurance proceeds related to the Gallatin fire and $0.3 million of restructuring charges associated with the closure of the Newnan facility. In the aggregate, these items increased pre-tax earnings by $1.3 million and net earnings per share by $0.04.

 

Net sales increased 18.9% to $212.4 million from $178.7 million in the prior year period due to the impact of the ASW acquisition. Shipments increased 15.7% year-over-year and average selling prices increased 2.8%.

 

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1373 Boggs Drive, Mount Airy, NC 27030/PHONE: (336) 786-2141/FAX: (336) 786-2144

WWW.INSTEEL.COM

 

 
 

 

 

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Operating activities used $1.8 million of cash while providing $8.0 million in the prior year period primarily due to the relative changes in net working capital. Net working capital used $15.3 million of cash compared with $4.8 million in the same period a year ago. Capital expenditures were $4.6 million compared with $3.0 million in the prior year period and are expected to range from $11.0 to $13.0 million for fiscal 2015.

 

Balance Sheet

 

Insteel ended the quarter with $6.2 million of cash and cash equivalents, and $10.0 million of borrowings outstanding on its $100.0 million revolving credit facility.

 

Outlook

 

“As we move into the second half of the year, we expect significant improvement in our financial results driven by the usual seasonal upturn in demand, the ongoing recovery in our nonresidential construction end-markets and the consumption of lower cost inventory,” commented H.O. Woltz III, Insteel’s president and CEO. “We should also benefit from lower conversion costs through the consolidation of our PC strand facilities and ongoing process improvement initiatives at our other locations. The closure of our Newnan facility, which was completed in March, is expected to generate approximately $3.0 million of annualized cost savings beginning in the current quarter. We also anticipate lower costs at our Hazleton, Pennsylvania and Gallatin, Tennessee facilities as we ramp up operating volumes following the recent completion of major capital projects.”

 

Conference Call

 

Insteel will hold a conference call at 10:00 a.m. ET today to discuss its second quarter financial results. A live webcast of this call can be accessed on Insteel’s website at http://investor.insteel.com/events.cfm and will be archived for replay until the next quarterly conference call.

 

About Insteel

 

Insteel is the nation’s largest manufacturer of steel wire reinforcing products for concrete construction applications. Insteel manufactures and markets PC strand and welded wire reinforcement, including engineered structural mesh (“ESM”), concrete pipe reinforcement and standard welded wire reinforcement. Insteel’s products are sold primarily to manufacturers of concrete products that are used in nonresidential construction. Headquartered in Mount Airy, North Carolina, Insteel operates ten manufacturing facilities located in the United States.

 

Cautionary Note Regarding Forward-Looking Statements

 

This news release contains forward-looking statements within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. When used in this news release, the words “believes,” “anticipates,” “expects,” “estimates,” “appears,” “plans,” “intends,” “may,” “should,” “could” and similar expressions are intended to identify forward-looking statements. Although Insteel believes that its plans, intentions and expectations reflected in or suggested by such forward-looking statements are reasonable, such forward-looking statements are subject to a number of risks and uncertainties, and Insteel can provide no assurances that such plans, intentions or expectations will be achieved. Many of these risks and uncertainties are discussed in detail in Insteel’s periodic and other reports and statements that it files with the U.S. Securities and Exchange Commission (the “SEC”), in particular in its Annual Report on Form 10-K for the year ended September 27, 2014. You should carefully review these risks and uncertainties.

 

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All forward-looking statements attributable to Insteel or persons acting on its behalf are expressly qualified in their entirety by these cautionary statements. All forward-looking statements speak only to the respective dates on which such statements are made and Insteel does not undertake and specifically declines any obligation to publicly release the results of any revisions to these forward-looking statements that may be made to reflect any future events or circumstances after the date of such statements or to reflect the occurrence of anticipated or unanticipated events, except as may be required by law. It is not possible to anticipate and list all risks and uncertainties that may affect Insteel’s future operations or financial performance; however, they include, but are not limited to, the following: general economic and competitive conditions in the markets in which Insteel operates; the continuation of reduced spending for nonresidential and residential construction and the impact on demand for Insteel’s products; changes in the amount and duration of transportation funding provided by federal, state and local governments and the impact on spending for infrastructure construction and demand for Insteel’s products; the cyclical nature of the steel and building material industries; credit market conditions and the relative availability of financing for Insteel, its customers and the construction industry as a whole; fluctuations in the cost and availability of Insteel’s primary raw material, hot-rolled steel wire rod, from domestic and foreign suppliers; competitive pricing pressures and Insteel’s ability to raise selling prices in order to recover increases in wire rod costs; changes in United States or foreign trade policy affecting imports or exports of steel wire rod or Insteel’s products; unanticipated changes in customer demand, order patterns and inventory levels; the impact of weak demand and reduced capacity utilization levels on Insteel’s unit manufacturing costs; Insteel’s ability to further develop the market for ESM and expand its shipments of ESM; legal, environmental, economic or regulatory developments that significantly impact Insteel’s operating costs; unanticipated plant outages, equipment failures or labor difficulties; continued escalation in certain of Insteel’s operating costs; potential difficulties in realizing reduced operating costs associated with the closure of the Newnan, Georgia facility; and the other risks and uncertainties discussed in Insteel’s Annual Report on Form 10-K for the year ended September 27, 2014 and in other filings made by Insteel with the SEC.

 

 

 

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INSTEEL INDUSTRIES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands except for per share data)

(Unaudited)

 

 

   

Three Months Ended

   

Six Months Ended

 
   

March 28,

   

March 29,

   

March 28,

   

March 29,

 
   

2015

   

2014

   

2015

   

2014

 
                                 

Net sales

  $ 101,767     $ 91,436     $ 212,395     $ 178,654  

Cost of sales

    93,065       79,830       191,650       157,993  

Gross profit

    8,702       11,606       20,745       20,661  

Selling, general and administrative expense

    5,975       5,984       11,627       10,689  

Restructuring charges, net

    333       -       333       -  

Other expense (income), net

    (1,599 )     228       (1,639 )     196  

Interest expense

    114       57       208       113  

Interest income

    (4 )     (1 )     (4 )     (6 )

Earnings before income taxes

    3,883       5,338       10,220       9,669  

Income taxes

    1,339       1,816       3,526       3,400  

Net earnings

  $ 2,544     $ 3,522     $ 6,694     $ 6,269  
                                 
                                 

Net earnings per share:

                               

Basic

  $ 0.14     $ 0.19     $ 0.36     $ 0.34  

Diluted

    0.14       0.19       0.36       0.34  
                                 

Weighted average shares outstanding

                               

Basic

    18,404       18,234       18,391       18,212  

Diluted

    18,822       18,637       18,821       18,612  
                                 

Cash dividends declared per share

  $ 0.03     $ 0.03     $ 0.06     $ 0.06  

 

  

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Page 5 of 6

 

 

INSTEEL INDUSTRIES, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(In thousands)

 

 

   

(Unaudited)

           

(Unaudited)

 
   

March 28,

   

December 27,

   

September 27,

   

March 29,

 
   

2015

   

2014

   

2014

   

2014

 

Assets

                               

Current assets:

                               

Cash and cash equivalents

  $ 6,172     $ 11     $ 3,050     $ 19,181  

Accounts receivable, net

    44,025       40,688       51,211       41,175  

Inventories

    83,439       87,464       81,899       71,399  

Other current assets

    4,887       4,784       6,433       5,114  

Total current assets

    138,523       132,947       142,593       136,869  

Property, plant and equipment, net

    87,164       91,443       90,386       81,169  

Intangibles, net

    10,821       9,600       9,816       1,536  

Goodwill

    6,965       6,965       6,965       -  

Other assets

    10,076       7,102       7,035       6,877  

Total assets

  $ 253,549     $ 248,057     $ 256,795     $ 226,451  
                                 

Liabilities and shareholders' equity

                               

Current liabilities:

                               

Accounts payable

  $ 36,076     $ 30,874     $ 52,811     $ 38,318  

Accrued expenses

    6,727       9,096       10,375       6,327  

Total current liabilities

    42,803       39,970       63,186       44,645  

Long-term debt

    10,000       10,000       -       -  

Other liabilities

    14,925       15,163       14,726       14,486  

Shareholders' equity:

                               

Common stock

    18,436       18,377       18,377       18,257  

Additional paid-in capital

    60,156       59,309       58,867       56,469  

Retained earnings

    109,019       107,028       103,429       94,156  

Accumulated other comprehensive loss

    (1,790 )     (1,790 )     (1,790 )     (1,562 )

Total shareholders' equity

    185,821       182,924       178,883       167,320  

Total liabilities and shareholders' equity

  $ 253,549     $ 248,057     $ 256,795     $ 226,451  

 

  

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Page 6 of 6

 

  

INSTEEL INDUSTRIES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

 

 

   

Three Months Ended

   

Six Months Ended

 
   

March 28,

   

March 29,

   

March 28,

   

March 29,

 
   

2015

   

2014

   

2015

   

2014

 

Cash Flows From Operating Activities:

                               

Net earnings

  $ 2,544     $ 3,522     $ 6,694     $ 6,269  

Adjustments to reconcile net earnings to net cash provided by (used for)

                               

operating activities:

                               

Depreciation and amortization

    2,928       2,478       5,797       4,902  

Amortization of capitalized financing costs

    25       25       51       51  

Stock-based compensation expense

    831       820       1,273       1,228  

Deferred income taxes

    (107 )     (102 )     828       217  

Asset impairment charges

    237       -       237       -  

Excess tax benefits from stock-based compensation

    (147 )     (105 )     (147 )     (191 )

Loss (gain) on sale of property, plant and equipment

    (1,602 )     510       (1,679 )     510  

Increase in cash surrender value of life insurance policies over premiums paid

    (147 )     (69 )     (283 )     (358 )

Net changes in assets and liabilities (net of assets and liabilities acquired):

                               

Accounts receivable, net

    (3,337 )     (7,421 )     7,023       (65 )

Inventories

    4,025       (1,373 )     (1,540 )     (12,606 )

Accounts payable and accrued expenses

    1,983       3,485       (20,733 )     7,872  

Other changes

    452       (133 )     651       130  

Total adjustments

    5,141       (1,885 )     (8,522 )     1,690  

Net cash provided by (used for) operating activities

    7,685       1,637       (1,828 )     7,959  
                                 

Cash Flows From Investing Activities:

                               

Capital expenditures

    (1,072 )     (980 )     (4,587 )     (2,964 )

Acquisition of intangible asset

    (1,460 )     -       (1,460 )     -  

Acquisition of business

    69       -       480       -  

Proceeds from fire loss insurance

    1,613       135       1,613       135  

Proceeds from sale of property, plant and equipment

    -       (170 )     89       -  

Proceeds from surrender of life insurance policies

    -        -       40       113  

Increase in cash surrender value of life insurance policies

    (196 )     85       (196 )     (269 )

Net cash used for investing activities

    (1,046 )     (930 )     (4,021 )     (2,985 )
                                 

Cash Flows From Financing Activities:

                               

Proceeds from long-term debt

    12,717       99       60,474       217  

Principal payments on long-term debt

    (12,717 )     (99 )     (50,474 )     (217 )

Cash dividends paid

    (553 )     (548 )     (1,104 )     (1,094 )

Cash received from exercise of stock options

    176       163       176       175  

Excess tax benefits from stock-based compensation

    147       105       147       191  

Payment of employee tax withholdings related to net share transactions

    (248 )     (231 )     (248 )     (505 )

Net cash provided by (used for) financing activities

    (478 )     (511 )     8,971       (1,233 )
                                 

Net increase in cash and cash equivalents

    6,161       196       3,122       3,741  

Cash and cash equivalents at beginning of period

    11       18,985       3,050       15,440  

Cash and cash equivalents at end of period

  $ 6,172     $ 19,181     $ 6,172     $ 19,181  
                                 

Supplemental Disclosures of Cash Flow Information:

                               

Cash paid during the period for:

                               

Interest

  $ 77     $ -     $ 93     $ 2  

Income taxes, net

    3,358       2,469       3,403       2,502  

Non-cash investing and financing activities:

                               

Purchases of property, plant and equipment in accounts payable

    227       375       227       375  

Restricted stock units and stock options surrendered for withholding taxes payable

    248       231       248       505  

 

 

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