Insteel Industries continued to see tight margins in the July-September quarter while sales took a hit as its two largest markets, Texas and Florida, were hammered by hurricanes, the US-based wire drawer said Thursday.
Shipments and production volumes in its fiscal fourth quarter were down from the prior-year period, it said, and narrower spreads between selling prices and raw material costs also adversely affected profits.
"Preliminary estimates indicate the hurricanes reduced our Q4 sales by approximately $4 million, or 4%, and gross profit by approximately $1 million, due to the unfavorable impact on shipments, production volumes, and unit manufacturing costs," said Insteel CFO Mike Gazmarian on an earnings conference call Thursday.
The company's facilities include four in Texas and Florida. Net income for July-September was $3.8 million on sales of $96.9 million, it said, down from net income of $9.9 million on sales of $103.1 million in the same period a year ago.
The 6% decrease in sales reflected a 5.1% decrease in shipments and a 1% decrease in average selling price, the company said.
Shipments for the quarter were up 1.9% sequentially, while average selling prices decreased 1.9% from the third quarter of fiscal 2017, Insteel said.
Net earnings for the full fiscal year 2017 decreased to $22.5 million, down from $37.2 million in fiscal year 2016. Net sales decreased 7.1% to $388.9 million from $418.5 million in the prior year, which the company attributed to lower shipments.
"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," said Insteel CEO H.O. Woltz III.
"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."
