Form 8-K INSTEEL INDUSTRIES INC For: Oct 22

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): October 22, 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 October 22, 2015, Insteel Industries, Inc. issued a press release regarding its financial results for the fourth fiscal quarter and fiscal year ended October 3, 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 October 22, 2015 announcing fourth fiscal quarter and fiscal year 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: October 22, 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 October 22, 2015 announcing fourth fiscal quarter and fiscal year 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 FOURTH QUARTER

AND FISCAL 2015 FINANCIAL RESULTS

 

MOUNT AIRY, N.C., October 22, 2015 – Insteel Industries, Inc. (NasdaqGS: IIIN) today announced financial results for its fourth quarter and fiscal year ended October 3, 2015.

 

Fourth Quarter 2015 Results

 

Net earnings for the fourth quarter of fiscal 2015 increased to $9.6 million, or $0.51 per diluted share from $4.6 million, or $0.24 per diluted share in the same period a year ago. Insteel’s earnings for the current year quarter include $0.3 million of net restructuring recoveries, which increased net earnings per share by $0.01. Insteel’s earnings for the prior year quarter include net restructuring charges, acquisition costs and a net gain from insurance proceeds, which, in the aggregate, reduced pre-tax earnings by $0.5 million and net earnings per share by $0.02.

 

Net sales increased 0.9% to $118.1 million from $117.1 million in the prior year quarter due to the additional revenue provided by the August 2014 acquisition of the prestressed concrete strand (“PC strand”) business of American Spring Wire Corporation (the “ASW Acquisition”) and the extra week in the current year quarter based on Insteel’s fiscal calendar. Shipments increased 6.0% from the prior year quarter while average selling prices decreased 4.9%. On a sequential basis, shipments increased 2.3% from the third quarter of fiscal 2015 while average selling prices decreased 1.4%.

 

Insteel’s fourth-quarter results were favorably impacted by higher spreads between selling prices and raw material costs and the increase in shipments relative to the prior year quarter. Capacity utilization for the quarter was 51% compared with 54% in the third quarter of fiscal 2015 and 57% in the prior year quarter.

 

Operating activities provided $19.3 million of cash compared with $7.1 million in the prior year quarter primarily due to the relative changes in net working capital and the increase in earnings. Net working capital provided $7.8 million of cash compared with $0.2 million in the prior year quarter. Investing activities for the current year quarter include $3.5 million of net proceeds from the sale of the real estate and certain of the equipment associated with the Newnan facility, which was closed in March 2015. Capital expenditures were $0.4 million compared with $3.2 million in the prior year quarter.

 

Fiscal 2015 Results

 

Net earnings for fiscal 2015 increased to $21.7 million, or $1.15 per diluted share from $16.6 million, or $0.89 per diluted share in the prior year. Insteel’s earnings for the current year include net restructuring charges, a charge for the settlement of a customer dispute and a net gain from insurance proceeds, which in the aggregate, increased pre-tax earnings by $0.7 million and net earnings per share by $0.02. Insteel’s earnings for the prior year include net restructuring charges, acquisition costs and a net gain from insurance proceeds, which, in the aggregate, did not materially impact pre-tax earnings or net earnings per share.

 

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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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Net sales increased 9.4% to $447.5 million from $409.0 million in the prior year due to the additional revenue provided by the ASW Acquisition and the extra week in the current year based on Insteel’s fiscal calendar. Shipments increased 10.0% from the prior year while average selling prices decreased 0.5%.

 

Operating activities provided $35.8 million of cash compared with $29.2 million in the prior year primarily due to the increase in earnings. Net working capital provided $2.3 million of cash compared with $2.4 million in the prior year. Investing activities for the current year include $3.5 million of net proceeds from the sale of the real estate and certain of the equipment associated with the Newnan facility. Capital expenditures were $7.2 million compared with $9.0 million in the prior year. Capital expenditures are expected to increase to approximately $20.0 million in fiscal 2016 largely due to outlays related to the expansion of the Houston PC strand facility.

 

Balance Sheet

 

Cash and cash equivalents increased $21.8 million during the fourth quarter to $33.3 million. Insteel ended the year debt-free with no borrowings outstanding on its $100.0 million revolving credit facility.

 

Outlook

 

“Looking ahead to fiscal 2016, we expect that our financial results will be favorably impacted by improved market conditions driven by the continued recovery in nonresidential construction together with lower unit conversion costs,” commented H.O. Woltz III, Insteel’s president and CEO. “We should also benefit from the anticipated resolution of the technical issues that have hampered the performance of the new standard welded wire reinforcement production line at our Hazleton facility and curtailed shipments during the second half of the year.

 

“We are proceeding with the first phase of a significant expansion of our Houston PC strand facility that entails the installation of equipment previously located at the Newnan facility and the addition of a new state-of-the-art raw material cleaning process. This project, which is expected to be completed by the first quarter of fiscal 2017, should dramatically lower the plant’s conversion costs and further strengthen our market leadership position. Following the successful completion of the first phase of the expansion, we expect to add a third production line to the facility to realign its capacity with the requirements of its markets.”

 

Conference Call

 

Insteel will hold a conference call at 10:00 a.m. ET today to discuss its fourth 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.

 

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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.

 

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; 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; 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)

 

		Three Months Ended								Year Ended
		(Unaudited)				(Unaudited)				(Unaudited)
		October 3,				September 27,				October 3,				September 27,
		2015				2014				2015				2014
Net sales		$	118,093			$	117,097			$	447,504			$	408,978
Cost of sales			96,199				103,248				389,171				360,205
Gross profit			21,894				13,849				58,333				48,773
Selling, general and administrative expense			7,770				6,463				25,824				23,371
Restructuring charges (recoveries), net			(329	)			1,247				349				1,247
Acquisition costs			-				612				-				612
Other income, net			(75	)			(1,254	)			(1,113	)			(1,907	)
Interest expense			47				83				320				252
Interest income			(6	)			-				(11	)			(10	)
Earnings before income taxes			14,487				6,698				32,964				25,208
Income taxes			4,863				2,123				11,254				8,567
Net earnings		$	9,624			$	4,575			$	21,710			$	16,641
Net earnings per share:
Basic		$	0.52			$	0.25			$	1.18			$	0.91
Diluted			0.51				0.24				1.15				0.89
Weighted average shares outstanding
Basic			18,451				18,337				18,418				18,257
Diluted			18,740				18,755				18,803				18,665
Cash dividends declared per share		$	0.03			$	0.03			$	0.12			$	0.12

 

  

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INSTEEL INDUSTRIES, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(In thousands)

 

		(Unaudited)
		October 3,				June 27,				September 27,
		2015				2015				2014
Assets
Current assets:
Cash and cash equivalents		$	33,258			$	11,433			$	3,050
Accounts receivable, net			46,782				48,215				51,211
Inventories			66,009				70,793				81,899
Other current assets			5,309				3,923				6,433
Total current assets			151,358				134,364				142,593
Property, plant and equipment, net			84,178				86,642				90,386
Intangibles, net			10,220				10,532				9,816
Goodwill			6,965				6,965				6,965
Other assets			7,518				10,338				7,035
Total assets		$	260,239			$	248,841			$	256,795
Liabilities and shareholders' equity
Current liabilities:
Accounts payable		$	32,182			$	33,312			$	52,811
Accrued expenses			13,644				9,775				10,375
Total current liabilities			45,826				43,087				63,186
Other liabilities			14,198				14,844				14,726
Commitments and contingencies
Shareholders' equity:
Common stock			18,466				18,439				18,377
Additional paid-in capital			60,967				60,403				58,867
Retained earnings			122,928				113,858				103,429
Accumulated other comprehensive loss			(2,146	)			(1,790	)			(1,790	)
Total shareholders' equity			200,215				190,910				178,883
Total liabilities and shareholders' equity		$	260,239			$	248,841			$	256,795

  

 

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INSTEEL INDUSTRIES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

 

		Three Months Ended								Year Ended
		(Unaudited)				(Unaudited)				(Unaudited)
		October 3,				September 27,				October 3,				September 27,
		2015				2014				2015				2014
Cash Flows From Operating Activities:
Net earnings		$	9,624			$	4,575			$	21,710			$	16,641
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation and amortization			3,230				2,793				11,934				10,274
Amortization of capitalized financing costs			17				25				89				102
Stock-based compensation expense			796				884				2,298				2,661
Deferred income taxes			(213	)			154				333				41
Asset impairment charges			306				-				543				-
Excess tax benefits from stock-based compensation			(19	)			(353	)			(169	)			(575	)
Gain on sale and disposition of property, plant and equipment			(897	)			(1,204	)			(2,652	)			(1,629	)
Increase in cash surrender value of life insurance policies over premiums paid			-				(44	)			(39	)			(512	)
Net changes in assets and liabilities (net of assets and liabilities acquired):
Accounts receivable, net			1,433				3,451				4,266				(2,084	)
Inventories			4,784				3,560				15,890				(16,814	)
Accounts payable and accrued expenses			1,548				(6,789	)			(17,861	)			21,333
Other changes			(1,354	)			47				(568	)			(206	)
Total adjustments			9,631				2,524				14,064				12,591
Net cash provided by operating activities			19,255				7,099				35,774				29,232
Cash Flows From Investing Activities:
Capital expenditures			(386	)			(3,154	)			(7,153	)			(8,955	)
Acquisition of intangible asset			-				-				(1,460	)			-
Acquisition of business			-				(33,943	)			480				(33,943	)
Proceeds from sale of assets held for sale			3,537				-				3,537				-
Proceeds from fire loss insurance			-				1,352				1,713				2,732
Proceeds from sale of property, plant and equipment			28				-				132				1
Proceeds from surrender of life insurance policies			-				45				40				205
Decrease (increase) in cash surrender value of life insurance policies			150				(111	)			(328	)			(415	)
Net cash provided by (used for) investing activities			3,329				(35,811	)			(3,039	)			(40,375	)
Cash Flows From Financing Activities:
Proceeds from long-term debt			106				18,884				60,978				19,215
Principal payments on long-term debt			(106	)			(18,884	)			(60,978	)			(19,215	)
Cash dividends paid			(554	)			(551	)			(2,211	)			(2,193	)
Cash received from exercise of stock options			-				764				200				1,129
Excess tax benefits from stock-based compensation			19				353				169				575
Payment of employee tax withholdings related to net share transactions			(224	)			(253	)			(478	)			(758	)
Financing costs			-				-				(207	)			-
Net cash provided by (used for) financing activities			(759	)			313				(2,527	)			(1,247	)
Net increase (decrease) in cash and cash equivalents			21,825				(28,399	)			30,208				(12,390	)
Cash and cash equivalents at beginning of period			11,433				31,449				3,050				15,440
Cash and cash equivalents at end of period		$	33,258			$	3,050			$	33,258			$	3,050
Supplemental Disclosures of Cash Flow Information:
Cash paid during the period for:
Interest		$	24			$	28			$	143			$	30
Income taxes, net			3,607				3,425				7,805				7,889
Non-cash investing and financing activities:
Purchases of property, plant and equipment in accounts payable			570				680				570				680
Restricted stock units and stock options surrendered for withholding taxes payable			224				253				478				758
Post-closing purchase price adjustment for business acquired			-				45				-				45

 

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