MOUNT AIRY, N.C., Oct. 19, 2017 /PRNewswire/ -- Insteel Industries, Inc. (NasdaqGS: IIIN) today announced financial results for its fourth quarter and fiscal year ended September 30, 2017. The Company also announced that its board of directors declared a special cash dividend of $1.00 per share on the Company's common stock payable on January 5, 2018 to shareholders of record as of December 20, 2017.

Fourth Quarter 2017 Results

Net earnings for the fourth quarter of fiscal 2017 decreased to $3.8 million, or $0.20 per share, from $9.9 million, or $0.51 per diluted share, in the same period a year ago. The fourth-quarter results for the prior year reflect a charge related to the settlement and termination of a pension plan, which reduced pre-tax earnings by $2.5 million and net earnings per share by $0.09.

Insteel's fourth-quarter results were unfavorably impacted by narrower spreads between selling prices and raw material costs together with lower shipment and production volumes relative to the prior year quarter. The Company's four facilities located in Texas and Florida, its two largest markets, were adversely affected by reduced volumes related to hurricanes Harvey and Irma. Net sales decreased 6.0% to $96.9 million from $103.1 million in the prior year quarter, reflecting a 5.1% decrease in shipments and a 1.0% decrease in average selling prices. Shipments increased 1.9% sequentially from the third quarter of fiscal 2017 while average selling prices decreased 1.9%. Gross margin narrowed 970 basis points to 12.2% from 21.9% due to the lower spreads and shipments and higher manufacturing costs on the lower production volume.

Operating activities used $1.2 million of cash while providing $8.9 million in the prior year quarter primarily due to the decrease in earnings and the relative changes in net working capital. Net working capital used $8.4 million of cash compared with $4.2 million in the prior year quarter.

Fiscal 2017 Results

Net earnings for fiscal 2017 decreased to $22.5 million, or $1.17 per diluted share, from $37.2 million, or $1.95 per diluted share in the prior year. The prior year results reflect a charge related to the pension plan settlement and termination, which reduced pre-tax earnings by $2.5 million and net earnings per share by $0.09. Net sales decreased 7.1% to $388.9 million from $418.5 million in the prior year due to lower shipments as average selling prices were unchanged. Gross margin narrowed 500 basis points to 15.4% from 20.4% due to the lower spreads and shipments and higher manufacturing costs on the lower production volume.

Cash flow from operations decreased to $20.3 million from $54.5 million in the prior year primarily due to the relative changes in net working capital and the decrease in earnings. Net working capital used $15.5 million of cash while providing $3.2 million in the prior year.

Capital Allocation and Liquidity

Capital expenditures for fiscal 2017 increased to $20.6 million from $12.9 million in the prior year primarily due to the expansion of the Houston, Texas prestressed concrete strand ("PC strand") facility and the addition of a new engineered structural mesh ("ESM") production line at the St. Joseph, Missouri facility. Capital outlays for fiscal 2018 are expected to total up to $21.0 million largely related to additional investments in ESM manufacturing capabilities, the purchase of the leased Houston facility and further upgrades of production technology and information systems.

Insteel returned $26.0 million of capital to shareholders during fiscal 2017 through the payment of a special cash dividend of $1.25 per share and regular quarterly cash dividends of $0.03 per share. The Company ended the year debt-free with $32.1 million of cash and cash equivalents, and no borrowings outstanding on its $100.0 million revolving credit facility.

Outlook

"Looking ahead to fiscal 2018, we expect improved business conditions driven by higher state and local infrastructure funding, modest increases in nonresidential construction and continued expansion of the housing market," commented H.O. Woltz III, Insteel's president and CEO. "We should also benefit from the deferral of business resulting from the adverse weather in many of our markets during the second half of fiscal 2017. We expect spreads to remain under pressure until the anticipated rebound in demand is reflected in our order book."

The strategic investments we have made in our people, facilities and systems have enabled us to achieve market and cost leadership positions in our industry. We will continue to focus on realizing further improvements in our productivity and costs through our ongoing initiatives in the coming year."

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 https://insteelgcs.gcs-web.com/ 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 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 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 we believe that our plans, intentions and expectations reflected in or suggested by such forward-looking statements are reasonable, they are subject to a number of risks and uncertainties, and we can provide no assurances that such plans, intentions or expectations will be implemented or achieved. Many of these risks and uncertainties are discussed in detail, and are updated from time to time in our filings with the U.S. Securities and Exchange Commission (the "SEC"), in particular in our Annual Report on Form 10-K for the year ended October 1, 2016.

All forward-looking statements attributable to us or persons acting on our 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 we do not undertake 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 our 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 we operate; changes in the spending levels for nonresidential and residential construction and the impact on demand for our 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 our products; the cyclical nature of the steel and building material industries; credit market conditions and the relative availability of financing for us, our customers and the construction industry as a whole; fluctuations in the cost and availability of our primary raw material, hot-rolled steel wire rod, from domestic and foreign suppliers; competitive pricing pressures and our ability to raise selling prices in order to recover increases in raw material or operating costs; changes in United States or foreign trade policy affecting imports or exports of steel wire rod or our products; unanticipated changes in customer demand, order patterns and inventory levels; the impact of fluctuations in demand and capacity utilization levels on our unit manufacturing costs; our ability to further develop the market for ESM and expand our shipments of ESM; legal, environmental, economic or regulatory developments that significantly impact our operating costs; unanticipated plant outages, equipment failures or labor difficulties; and the "Risk Factors" discussed in our Annual Report on Form 10-K for the year ended October 1, 2016 and in other filings made by us with the SEC.

IIIN – E

View original content with multimedia:http://www.prnewswire.com/news-releases/insteel-industries-announces-fourth-quarter-and-fiscal-2017-results-and-declares-special-cash-dividend-300537278.html

SOURCE Insteel Industries, Inc.