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Exhibit 99.1
NEWS RELEASE
FOR IMMEDIATE RELEASE |
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Contact: |
Michael C. Gazmarian Vice President, CFO and Treasurer Insteel Industries, Inc. (336) 786-2141, Ext. 3020 |
INSTEEL INDUSTRIES REPORTS FOURTH QUARTER
AND FISCAL 2018 FINANCIAL RESULTS
MOUNT AIRY, N.C., October 18, 2018 – Insteel Industries, Inc. (NasdaqGS:IIIN) today announced financial results for its fourth quarter and fiscal year ended September 29, 2018.
Fourth Quarter 2018 Results
Net earnings for the fourth quarter of fiscal 2018 increased to $9.4 million, or $0.49 per share, from $3.8 million, or $0.20 per share, in the same period a year ago. Insteel’s fourth-quarter results for fiscal 2018 benefited from higher spreads between selling prices and raw material costs and a lower effective tax rate relative to the prior year quarter.
Net sales increased 25.3% to $121.4 million from $96.9 million in the prior year quarter driven by a 27.3% increase in average selling prices partially offset by a 1.6% decrease in shipments. The reduction in shipments was due to a combination of factors, including competitive pricing pressures, operational issues at certain locations, raw material availability and customer inventory rebalancing. On a sequential basis, average selling prices increased 11.3% from the third quarter of fiscal 2018 while shipments decreased 13.9%. Gross margin increased 390 basis points to 16.1% from 12.2% in the prior year quarter due to the higher spreads. Excluding a $0.4 million adjustment to reduce the estimated deferred tax gain that was recorded in the first quarter of fiscal 2018, Insteel’s effective tax rate decreased to 19.3% from 34.9% in the prior year quarter reflecting the reduction in the corporate tax rate under the Tax Cuts and Jobs Act.
Operating activities provided $4.1 million of cash in the fourth quarter of fiscal 2018 while using $1.2 million of cash in the prior year quarter primarily due to the increase in earnings. Net working capital used $9.8 million of cash compared to $8.4 million in the prior year quarter.
Fiscal 2018 Results
Net earnings for fiscal 2018 increased to $36.3 million, or $1.88 per diluted share, from $22.5 million, or $1.17 per diluted share in the prior year. Insteel’s results for fiscal 2018 benefited from a $3.3 million, or $0.17 per share gain on the remeasurement of deferred tax assets and liabilities related to the impact of the new tax law.
Net sales increased 16.5% to $453.2 million from $388.9 million in the prior year driven by an 11.5% increase in average selling prices and a 4.6% increase in shipments. Gross margin increased 20 basis points to 15.6% from 15.4% due to higher spreads, and, to a lesser extent, the increase in shipments and lower unit manufacturing costs on higher production volume. Excluding the deferred tax gain, Insteel’s effective tax rate decreased to 22.7% from 34.0% in the prior year.
Cash flow from operations in fiscal 2018 increased to $54.0 million from $20.8 million in the prior year primarily due to the relative changes in net working capital and the increase in earnings. Net working capital provided $4.7 million of cash in fiscal 2018 while using $15.5 million in the prior year.
(MORE)
1373 Boggs Drive, Mount Airy, NC 27030/PHONE: (336) 786-2141/FAX: (336) 786-2144
WWW.INSTEEL.COM
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Insteel Industries Inc's Definitive Proxy Statement (Form DEF 14A) filed after their 2018 10-K Annual Report includes:
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The effective rate for 2018 reflects a $3.3 million gain on the remeasurement of deferred tax assets and liabilities related to the lower corporate tax rate enacted under the Tax Cuts and Jobs Act in December 2017.
Unforeseen events and changes in circumstances and market conditions could negatively affect the value of assets and result in an impairment charge.
Key assumptions used to determine the fair value of the reporting unit as part of our annual testing (and any required interim testing) include: (a) expected cash flows for the five-year period following the testing date; (b) an estimated terminal value using a terminal year growth rate based on the growth prospects of the reporting unit; (c) a discount rate based on our estimated after-tax weighted average cost of capital; and (d) a probability-weighted scenario approach by which varying cash flows are assigned to alternative scenarios based on their likelihood of occurrence.
In 2017, we were unable to fully recover the increase in our raw material costs due to the weakening in demand and competitive pricing pressures.
Outlook Outlook Looking ahead to 2019, we expect our financial results will be favorably impacted by continued growth in our construction end-markets.
The cash surrender value of...Read more
The increase in shipments was...Read more
The projected benefit obligations and...Read more
The cash surrender value of...Read more
The decrease in compensation expense...Read more
Operating activities provided $20.8 million...Read more
The timing and magnitude of...Read more
The increase in spreads was...Read more
See Note 10 to our...Read more
During 2016, our raw material...Read more
Excluding the deferred tax gain,...Read more
The decrease in accounts receivable...Read more
Gross Profit Gross profit decreased...Read more
However, our ability to raise...Read more
We invest excess cash primarily...Read more
We invest excess cash primarily...Read more
A 0.25% decrease in the...Read more
Selling, General and Administrative Expense...Read more
Our business strategy is focused...Read more
As of September 29, 2018,...Read more
Assumptions for employee benefit plan....Read more
Assumptions for employee benefit plan...Read more
As of September 30, 2017,...Read more
Shipments in 2017 were unfavorably...Read more
We will continue to maintain...Read more
The preparation of our consolidated...Read more
Net working capital provided $4.7...Read more
Net working capital provided $3.2...Read more
Impact of Inflation Impact of...Read more
The increase in accounts payable...Read more
The leading indicators and industry...Read more
The discount rate is used...Read more
There was no goodwill impairment...Read more
Recent Accounting Pronouncements The nature...Read more
The decrease in accounts payable...Read more
The increase in accounts receivable...Read more
During 2018, we were successful...Read more
If it is determined that...Read more
We estimate the probability of...Read more
The discount rate we utilize...Read more
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Financial Statements, Disclosures and Schedules
Inside this 10-K Annual Report
Material Contracts, Statements, Certifications & more
Insteel Industries Inc provided additional information to their SEC Filing as exhibits
Ticker: IIIN
CIK: 764401
Form Type: 10-K Annual Report
Accession Number: 0001437749-18-018853
Submitted to the SEC: Fri Oct 26 2018 2:40:59 AM EST
Accepted by the SEC: Fri Oct 26 2018
Period: Saturday, September 29, 2018
Industry: Steel Works Blast Furnaces And Rolling And Finishing Mills