Insteel’s Q2 Profit Falls as Weather and Higher Rod Costs Squeeze Margins

Overview

• Insteel, which reported results Thursday, said net income fell to $5.2 million from $10.2 million a year earlier.
• Shipments declined 5.9% from last year but rose 6.9% from the first quarter, and gross margin narrowed to 9.6% even as average selling prices rose 14.2%.
• Management blamed severe winter weather and project deferrals that postponed deliveries, said April shipments ran above forecast, and expects margins to start improving in the third quarter.
• Wire-rod prices rose about $90 per ton during the quarter and higher plant conversion costs further tightened profits, even after price increases in Q2 and early April.
• Section 232 tariffs and U.S. mill closures pushed the company to buy more offshore wire rod, lifting net working capital by about $45 million over 12 months, while it ended the quarter with $15.1 million in cash and no borrowings.