Insteel Industries experiencing cost increases

Insteel Industries, Inc. (Nasdaq: IIIN) CEO H. Woltz III said the maker of steel wire reinforcing products is experiencing an escalation in raw material costs that is “without historical precedent in its magnitude.” Woltz made the comments during a morning conference call.

“First quarter, seasonally the slowest of the year, we continued to experience weak conditions across most of our markets that adversely affected shipments and resulted in inefficiencies related to curtailed production schedules at our plants,” Woltz said.

Before the opening, Insteel posted first-quarter sales of $65.98 million, down 5% from $69.72 million during the year-ago period. The results still, however, beat analysts’ estimates of $65 million.

“In view of the considerable challenges posed by these external factors, I’m pleased with the company’s strong financial performance and particularly encouraged by the strength of the balance sheet at the end of the quarter,” Woltz said.

For the three months ended late December, Insteel’s net earnings decreased 27% to $4.22 million, or $0.23 per share, from $5.78 million, or $0.32 per share, a year earlier. Wall Street analysts projected earnings of $0.21 per share.

Gross profit for the first quarter fell to $10.6 million, or 16.1% of net sales, from $13.6 million, or 19.5% of net sales, a year ago due to the “historical” escalation in raw material costs.

In midday trading, IIIN shares are down 3%, or $0.27, at $8.72. Over the last 52 weeks, shares have ranged from $8.61 to $23.09.

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