Insteel Industries (IIIN) investor relations material

Executive summary

• Net sales for Q1 2026 rose 23.3% year-over-year to $159.9 million, driven by higher selling prices, increased shipments, and strong demand in infrastructure and commercial construction, with contributions from recent acquisitions.

• Net earnings surged to $7.6 million ($0.39/share) from $1.1 million ($0.06/share) in the prior year, primarily due to higher gross profit and lower restructuring and acquisition costs.

• Gross profit margin expanded to 11.3% from 7.3% year-over-year, reflecting higher spreads between selling prices and raw material costs and lower manufacturing costs.

• Special cash dividend of $19.4 million ($1.00/share) paid in addition to regular dividends.

• Operations focus on manufacturing and marketing steel wire reinforcing products for concrete construction, with national market leadership and a strategy centered on cost leadership and growth through organic initiatives and acquisitions.

Financial highlights

• Average selling prices increased 18.8% and shipments rose 3.8% year-over-year, though shipments declined 9.7% sequentially due to seasonality.

• SG&A expenses rose to $8.8 million, mainly from higher incentive compensation and employee benefits tied to improved performance.

• Net cash used in operating activities was $0.7 million, reflecting a net increase in working capital, especially inventories.

• Ended quarter with $15.6 million in cash and no borrowings on a $100 million credit facility.

• Capital expenditures for Q1 2026 were $1.5 million; full-year CapEx expected up to $20 million, focused on productivity and maintenance.

Outlook and guidance

• Management expects 2026 to be a strong year, driven by infrastructure funding, data center construction, and positive customer sentiment.

• Inventory levels are expected to moderate in Q2 as purchasing normalizes and shipments increase.

• Effective tax rate guidance is approximately 23% for the year.

• Focus remains on expense control, realizing acquisition synergies, and productivity improvements.

• Only about 10% of revenues are directly affected by import competition.