Insteel Industries, Inc. F2Q10 (Qtr End 04/03/10) Earnings Call Transcript
The prior year loss for the quarter includes the pretax charge of $16.1 million or $0.58 per share after tax for inventory write-downs to reduce the carrying value of inventory to the lower cost-to-market, excluding these write-downs; the year ago loss would have been $0.36 per share.
Insteel results for the second quarter were favorably impacted by higher shipment wider spreads between selling prices and raw material cost, lower unit conversion cost and the lower effective income tax rate. Net sales for the quarter increased 3.7% from the prior year driven by 34.7% increase in shipment, which more than offset at 23% decrease in average selling prices.
On a sequential basis, net sales rose 26.9% from the first quarter of fiscal 2010. Despite the adverse weather conditions that we experienced during the quarter, Q2 shipments were up 25.7% sequentially from Q1. The sequential increase in shipments were significantly higher than the usual seasonal improvement we experienced between Q1 and Q2 which prior to 2009 had ranged from 8% to 13% over the previous five years.
We believe the larger increase this year was driven by customer inventory restocking and hedge buying in anticipation to future price increases, which more than offset the negative impact of the unusually severe winter weather in most of our markets. Even with the pickup in volume for the quarter, our Q2 shipments were still anywhere from 27% to 36% under the comparable period in 2006 to 2008.Average selling prices for the second quarter rose 0.9% sequentially from Q1 due to the price increases that were implemented during the quarter in response to the escalation in the cost of our primary raw material, hot-rolled steel-wire rod. The timing of our increases has lagged somewhat behind the announced increases for wire rod due to competitive pricing pressures.
Select the service that is right for you!COMPARE ALL SERVICES
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV