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Insteel Industries reports weakening sales

September 19th, 2007 · No Comments

Insteel Industries, Inc. (Nasdaq: IIIN) in Mount Airy today announced that shipments for the fourth quarter, which ends Sept. 29, are expected to be down 7 to 13 percent from the prior year due to weaker than anticipated market conditions.

Insteel had not previously provided numerical guidance for its fourth-quarter shipments, but had indicated in its third-quarter conference call that it expected fourth-quarter shipments to exceed prior year levels. Today’s news sent its stock price down 10 to 12 percent from Tuesday’s closing price of $18.48 per share.

Insteel said its shipments for the fourth quarter have been negatively impacted by weak demand from customers affected by the ongoing downturn in the housing market, high levels of PC strand imports and adverse weather conditions that have delayed projects in certain regions of the country.

“We believed that the inventory corrections by our customers would have been completed by now which would have had a positive impact on shipments during our fourth quarter,” said H.O. Woltz III, Insteel’s president and chief executive officer. “Circumstances clearly have not developed as forecast, however, and we are beginning to have some concerns about customers scaling back purchases in response to the increasing uncertainties regarding the future direction of the economy. In addition, weakening market conditions have caused pricing pressures which have compressed margins in certain product lines.

“During the quarter, we achieved a milestone with the start up of the new engineered structural mesh (ESM) production line at our Texas facility. We expect gradually increasing contributions from this project and the previously completed expansions of our Tennessee PC strand and North Carolina ESM operations as we ramp up production on the new equipment. Looking ahead to fiscal 2008, we anticipate similar benefits from the equipment upgrades that are under way at our Delaware welded-wire reinforcement and Florida PC strand plants.”

The company has not historically provided earnings guidance and Woltz said it is uncertain at this time as to the magnitude of the decrease in fourth-quarter earnings per share that is expected to result from the lower level of shipments.

Insteel Industries is one of the nation’s largest manufacturers of steel wire reinforcing products for concrete construction applications. The company manufactures and markets PC strand and welded wire reinforcement, including concrete pipe reinforcement, ESM and standard welded wire reinforcement. Insteel’s products are sold primarily to manufacturers of concrete products that are used in nonresidential construction.

Including its plant in Mount Airy, Insteel operates six manufacturing facilities in the United States. The company employs approximately 700 people.

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