Insteel Industries, Inc. · NYSE:IIIN
Insteel Industries — Q3 2024 Earnings Presentation
30 slides from Insteel Industries's earnings presentation, Jul 18, 2024
Slide 1: Investor Presentation
INVESTOR PRESENTATION July 18, 2024
Slide 2: Forward-Looking Statements
This presentation contains forward-looking statements within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. When used in this presentation, the words “believes,” “anticipates,” “expects,” “estimates,” “appears,” “plans,” “intends,” “may,” “should,”
Slide 3: Company at a glance: NYSE: IIIN
FOUNDED IN 884 1953 EMPLOYEES HEADQUARTERED IN MOUNT AIRY, NC 10 FACILITIES NATION’S LARGEST NYSE: IIIN MANUFACTURER OF STEEL WIRE REINFORCING PRODUCTS INVESTOR PRESENTATION 7/18/2024 .3
Slide 4: Business Overview
BUSINESS OVERVIEW • Our operations are entirely focused on the manufacturing and marketing of steel wire reinforcing products for concrete 2023 Sales by Product Line construction applications. 42% PC Strand • Our concrete reinforcing products consist of two lines: Welded Wire Reinforcement (“WWR”) a
Slide 5: Business Overview: Sales by End Use and Customer
BUSINESS OVERVIEW Sales by End Use Our products are sold primarily to manufacturers of concrete products that are used in nonresidential construction. 15% Residential Virtually all sales are in the U.S. (< 1% Construction foreign in 2023). 85% Nonresidential Construction Demand is both cyclica
Slide 6: Our Business Strategy Is Focused On
OUR BUSINESS STRATEGY IS FOCUSED ON ACHIEVING OPERATING PURSUING Leadership positions As the lowest cost producer Growth opportunities in our core in our markets in our industry businesses that further our penetration of the markets we currently serve or expand our footprint INVESTOR PRESENTATION 7/
Slide 7: Product Overview: Welded Wire Reinforcement
PRODUCT OVERVIEW Welded Wire Reinforcement (“WWR”) Produced as both standard and specially engineered reinforcing products for use in nonresidential and residential construction. Broad offering of WWR products includes: • Engineered Structural Mesh (“ESM”) - Engineered made-to-order reinforcing prod
Slide 8: Product Overview: Prestressed Concrete Strand
PRODUCT OVERVIEW Prestressed Concrete Strand (“PC Strand” or “PCS”) Seven-wire strand used to impart compression forces into precast concrete elements and structures, providing reinforcement for bridges, parking decks, buildings and other concrete structures. • High tensile strength makes it possibl
Slide 9: Manufacturing Locations
MANUFACTURING LOCATIONS COMPANY St. Joseph, MO ESM, CPR Hazleton, PA OVERVIEW Hickman, KY ESM, SWWR SWWR Subtitle of the slide Gallatin, TN Mount Airy, NC PCS ESM, CPR, SWWR Kingman, AZ Jacksonville, FL ESM, CPR ESM, SWWR Houston, TX Sanderson, FL PCS PCS Dayton, TX ESM, CPR, SWWR INVESTOR PRESENTAT
Slide 10: Competitive Position
COMPETITIVE POSITION Primary Competitors Welded Wire Reinforcement PC Strand Liberty Steel/Engineered Wire Products Sumiden Wire Products Wire Mesh Corp. Wire Mesh Corp. Concrete Reinforcements Inc. Imports National Wire Products Davis Wire Oklahoma/Iowa Steel and Wire Largest do
Slide 11: Growth Strategy - Organic
GROWTH STRATEGY - ORGANIC • Continued conversion of rebar users to ESM for cast-in-place applications represents a substantial growth opportunity that leverages our manufacturing and engineering capabilities. • Eliminates labor intensive process of placing and hand-tying required for rebar, yielding
Slide 12: Growth Strategy - Acquisitions
GROWTH STRATEGY - ACQUISITIONS Ivy Steel & Wire American Spring Wire Ortiz Engineered Products Strand-Tech Manufacturing Second Largest U.S. Second Largest U.S. Provider of Value-Engineered Fourth Largest U.S. Producer of WWR Producer of PC Strand Reinforcing Solutions for Producer of PC Strand Conc
Slide 13: Financials - Net Sales
FINANCIALS – NET SALES INVESTOR PRESENTATION 7/18/2024 .13
Slide 14: Shipments and Average Selling Prices (Annual)
FINANCIALS – SHIPMENTS AND AVERAGE SELLING PRICES (ANNUAL) INVESTOR PRESENTATION 7/18/2024 .14
Slide 15: Gross Profit Drivers (Annual)
FINANCIALS – GROSS PROFIT DRIVERS (ANNUAL) % of 2023 Cost of Sales Freight 5% Conversion Cost 20% Raw Materials 75% Freight Conversion Cost Raw materials Shipments and operating volumes Spreads Difference between selling price and raw material cost (hot-rolled steel wire rod) Unit manufacturin
Slide 16: Gross Profit (Annual)
FINANCIALS – GROSS PROFIT (ANNUAL) $200 25% $160 20% $120 15% Gross Profit ($ Millions) Gross Margin % $197.3 $80 10% $121.5 $40 5% $65.4 $55.8 $30.1 $0 0% 2019 2020 2021 2022 2023 Gross Profit Gross Margin % INVESTOR PRESENTATION 7/18/2024 .16
Slide 17: Gross Profit (Quarterly)
FINANCIALS – GROSS PROFIT (QUARTERLY) INVESTOR PRESENTATION 7/18/2024 .17
Slide 18: EBITDA (Annual)
FINANCIALS – EBITDA (ANNUAL) $200 25% $160 20% $120 15% EBITDA Margin % EBITDA ($ Millions) $178.2 $80 10% $105.7 $40 5% $50.4 $40.7 $21.2 $0 0% 2019 2020 2021 2022 2023 EBITDA EBITDA Margin % INVESTOR PRESENTATION 7/18/2024 .18
Slide 19: EBITDA (Quarterly)
FINANCIALS – EBITDA (QUARTERLY) INVESTOR PRESENTATION 7/18/2024 .19
Slide 20: EBITDA Reconciliation
FINANCIALS – EBITDA RECONCILIATION • Earnings before interest, taxes, depreciation and amortization (“EBITDA”) calculated as earnings from continuing operations before interest expense and income, other income, depreciation and amortization, stock-based compensation expense and income taxes, and exc
Slide 21: Earnings Per Share (Annual)
FINANCIALS – EARNINGS PER SHARE (ANNUAL) INVESTOR PRESENTATION 7/18/2024 .21
Slide 22: Earnings Per Share (Quarterly)
FINANCIALS – EARNINGS PER SHARE (QUARTERLY) INVESTOR PRESENTATION 7/18/2024 .22
Slide 23: Cash Flow
FINANCIALS – CASH FLOW 2019 – Q3 2024 Sources (Uses) ($ Millions) INVESTOR PRESENTATION 7/18/2024 .23
Slide 24: Capital Expenditures (Annual)
FINANCIALS – CAPITAL EXPENDITURES (ANNUAL) • Capital expenditures expected to total up to approximately $25.0 million in fiscal 2024, which include expenditures to support costs and productivity initiatives and to fund recurring maintenance requirements. INVESTOR PRESENTATION 7/18/2024 .24
Slide 25: Capital Structure
FINANCIALS – CAPITAL STRUCTURE • As of June 29, 2024, we were debt-free with $97.7 million of cash and no borrowings outstanding on our $100.0 million revolving credit facility. INVESTOR PRESENTATION 7/18/2024 .25
Slide 26: Dividend and Share Repurchase Programs
DIVIDEND AND SHARE REPURCHASE PROGRAMS Regular Quarterly Cash Dividend Currently paying regular quarterly cash dividend of $0.03 per share. Special Cash Dividends Paid $2.50 per share special cash dividend in December 2023, $2.00 in December 2022 and December 2021, $1.50 in December 2020, $1.00
Slide 27: Leading Indicators - ABI and DMI
LEADING INDICATORS – ABI AND DMI Architecture Billings Index (“ABI”) and Dodge Momentum Index (“DMI”) are leading indicators for nonresidential building construction activity. In May, the ABI score declined to a score of 42.4, as more firms reported a decrease in billings. The score remains belo
Slide 28: Outlook
As we look ahead to the remainder of fiscal 2024, we expect that selling prices and spreads will continue to remain under pressure from competitive pricing and low-priced PC strand imports. However, we anticipate improving market conditions driven by increased construction activity and growing custo
Slide 29: Investment Considerations
INVESTMENT CONSIDERATIONS Strong cash flow generation and Highly variable cost structure Significant growth potential of disciplined capital allocation strategy advantageous in all economic existing facilities through increased environments capacity utilization National footprint of facilities Multi
Slide 30: Reinforcing America
REINFORCING AMERICA SUPPORTING OUR NATION’S INFRASTRUCTURE IS THE FOUNDATION OF EVERYTHING WE DO INVESTOR PRESENTATION 7/18/2024 .30