MOUNT AIRY, NC – December 12, 2008 – Insteel Industries, Inc. (NASDAQ:IIIN) today announced guidance for its first quarter ending December 27, 2008. While the Company had not previously provided numerical guidance for the first quarter, it now expects to report a loss for the period. The Company’s order entry rate has continued to trend at severely depressed levels during the quarter due to the tightening in the credit markets, the weakening economic outlook and the inventory destocking measures being pursued by customers to increase their liquidity. Through the first two months of the quarter, shipments were down 39% from the prior year and all of the Company’s manufacturing facilities operated on reduced schedules, which will continue through the remainder of the quarter. After doubling from January 2008 to August 2008, prices for hot-rolled steel wire rod, the Company’s primary raw material have given back most of their gains since September. Although selling prices for Insteel’s products have fallen to a lesser extent, the Company’s financial results will be negatively impacted until the higher cost material in inventory that was purchased earlier in the year is completely consumed. Depending on future shipment levels, the timeline for this process may extend into the third quarter of fiscal 2009.
There is no historical precedent for the recent developments that have occurred in our markets and we have minimal visibility as to what the next few months may hold for the Company, commented H. O. Woltz III, Insteel’s president and chief executive officer. We are confident, however, that Insteel is financially and operationally well-positioned to navigate through this difficult period. We expect margins to recover during the second half of fiscal 2009 following the actions we have taken to reduce operating costs and as selling prices and raw material costs stabilize. We also believe that order levels will rebound as the realignment of customer inventories is completed and demand for our products begins to reflect the actual underlying rates of consumption. In addition, the increasing likelihood of economic stimulus measures that provide for substantial increases in government funding for infrastructure projects should favorably impact demand for concrete reinforcing products, although the timing and magnitude remain uncertain at this time.
Insteel is one of the nation’s largest manufacturers of steel wire reinforcing products for concrete construction applications. The Company manufactures and markets prestressed concrete strand (PC strand) and welded wire reinforcement, including concrete pipe reinforcement, engineered structural mesh (ESM) and standard welded wire reinforcement. Insteel’s products are sold primarily to manufacturers of concrete products that are used in nonresidential construction.
Headquartered in Mount Airy, North Carolina, Insteel operates six manufacturing facilities located in the United States.