Insteel Industries Inc. (IIIN, Financial) filed Quarterly Report for the period ended 2010-04-03.
Insteel Industries Inc. has a market cap of $207.5 million; its shares were traded at around $11.84 with a P/E ratio of 45.5 and P/S ratio of 0.9. The dividend yield of Insteel Industries Inc. stocks is 1%.IIIN is in the portfolios of Third Avenue Management, John Buckingham of Al Frank Asset Management, Inc., Chuck Royce of Royce& Associates.
SG&A expense for the first half of 2010 decreased 12.9% to $7.9 million, or 8.5% of net sales from $9.1 million, or 8.1% of net sales in the same year-ago period. The decrease was primarily due to increases in the cash surrender value of insurance policies ($1.0 million) together with reductions in employee benefit costs ($120,000), payroll taxes ($109,000) and
labor expense ($94,000). The cash surrender value of life insurance policies increased $284,000 in the current year period compared with a decrease of $757,000 in the prior year period due to the related changes in the value of the underlying investments. The reduction in employee benefit costs is primarily due to a decrease in employee medical expense during the current year period. The reduction in payroll taxes was due to the taxes associated with the payment of the fiscal 2008 employee incentive plan bonuses during the prior year. The reduction in labor expense was primarily due to the implementation of various cost reduction measures. These reductions were partially offset by higher legal expenses primarily associated with the trade cases that have been filed regarding imports of PC strand from China ($271,000) and increases in stock-based compensation expense ($143,000).
Operating activities provided $19.5 million of cash during the first half of 2010 while using $16.5 million during the same period last year. The year-over-year change was primarily due to the improvement in our financial results, the receipt of a $13.3 million income tax refund in the current year associated with the prior year loss and a decrease in the cash used by the net working capital components of accounts receivable, inventories, and accounts payable and accrued expenses. The current year earnings include a pre-tax charge of $1.9 million for inventory write-downs compared with a pre-tax charge of $23.0 million in the prior year period. Other changes in assets and liabilities reflects the receipt of the $13.3 million income tax refund in the current year that was recorded within prepaid expenses and other, and a $13.5 million increase in income taxes receivable that was recorded in the prior year period. Net working capital used $1.0 million in the current year while using $8.7 million in the same period last year. The cash used by net working capital in the current year was largely due to the $4.1 million decrease in accounts payable and accrued expenses primarily related to reduced raw material purchases and the $4.4 million decrease in inventories (excluding the impact of the $1.9 million of inventory write-downs) resulting from higher current year shipments. Accounts receivable rose $1.9 million in the current year due to the increase in sales. The cash used by working capital in the prior year period was largely due to the $28.2 million decrease in accounts payable and accrued expenses resulting from the payment of $10.9 million of accrued income taxes payable and lower raw material purchases. Inventories increased $6.8 million in the prior year (excluding the impact of the inventory write-downs) due to raw material receipts on previous purchase commitments. Accounts receivable decreased $26.2 million during the prior year as a result of the reductions in shipments and selling prices. As the impact and duration of the ongoing weakness in market conditions becomes clearer, we may make additional adjustments in our operating activities, which could materially impact our cash requirements. While an economic slowdown adversely affects sales to our customers, it generally reduces our working capital requirements.
Investing activities used $1.3 million of cash during the first half of 2010 compared to $602,000 during the same period last year. The increase in cash used was primarily due to the year-over-year change in the cash surrender value of life insurance policies, which increased by $410,000 during the current year as compared to a decrease of $354,000 in the prior year quarter as a result of premium payments and changes in the value of the underlying investments. In addition, $413,000 of proceeds were received from the surrender of life insurance policies in the prior year. These increases in cash used were partially offset by a $480,000 reduction in capital expenditures to $902,000 from $1.4 million in the prior year. Capital expenditures are expected to total less than $5.0 million for fiscal 2010. Investing activities are largely discretionary and future outlays could be reduced significantly or eliminated should economic conditions warrant.
Financing activities used $967,000 of cash during the first half of 2010 compared to $9.4 million during the same period last year. The year-over-year change was primarily due to the payment of a special cash dividend of $8.8 million ($0.50 per share) in addition to the usual quarterly cash dividend and $400,000 of borrowings on our revolving credit facility during the prior year period.
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Insteel Industries Inc. has a market cap of $207.5 million; its shares were traded at around $11.84 with a P/E ratio of 45.5 and P/S ratio of 0.9. The dividend yield of Insteel Industries Inc. stocks is 1%.IIIN is in the portfolios of Third Avenue Management, John Buckingham of Al Frank Asset Management, Inc., Chuck Royce of Royce& Associates.
Highlight of Business Operations:
Selling, general and administrative expense (SG&A expense) for the second quarter of 2010 decreased 4.3% to $4.2 million, or 8.0% of net sales from $4.4 million, or 8.7% of net sales in the same year-ago period primarily due to the relative changes in the cash surrender value of insurance policies ($205,000) together with reductions in bad debt expense ($96,000). The cash surrender value of life insurance policies increased $173,000 in the current year quarter compared with a decrease of $32,000 in the prior year quarter due to the related changes in the value of the underlying investments. The reduction in bad debt expense was due to lower estimates for customer payment defaults. These reductions were partially offset by higher legal expenses primarily associated with the trade cases that have been filed regarding imports of PC strand from China ($82,000).SG&A expense for the first half of 2010 decreased 12.9% to $7.9 million, or 8.5% of net sales from $9.1 million, or 8.1% of net sales in the same year-ago period. The decrease was primarily due to increases in the cash surrender value of insurance policies ($1.0 million) together with reductions in employee benefit costs ($120,000), payroll taxes ($109,000) and
labor expense ($94,000). The cash surrender value of life insurance policies increased $284,000 in the current year period compared with a decrease of $757,000 in the prior year period due to the related changes in the value of the underlying investments. The reduction in employee benefit costs is primarily due to a decrease in employee medical expense during the current year period. The reduction in payroll taxes was due to the taxes associated with the payment of the fiscal 2008 employee incentive plan bonuses during the prior year. The reduction in labor expense was primarily due to the implementation of various cost reduction measures. These reductions were partially offset by higher legal expenses primarily associated with the trade cases that have been filed regarding imports of PC strand from China ($271,000) and increases in stock-based compensation expense ($143,000).
Operating activities provided $19.5 million of cash during the first half of 2010 while using $16.5 million during the same period last year. The year-over-year change was primarily due to the improvement in our financial results, the receipt of a $13.3 million income tax refund in the current year associated with the prior year loss and a decrease in the cash used by the net working capital components of accounts receivable, inventories, and accounts payable and accrued expenses. The current year earnings include a pre-tax charge of $1.9 million for inventory write-downs compared with a pre-tax charge of $23.0 million in the prior year period. Other changes in assets and liabilities reflects the receipt of the $13.3 million income tax refund in the current year that was recorded within prepaid expenses and other, and a $13.5 million increase in income taxes receivable that was recorded in the prior year period. Net working capital used $1.0 million in the current year while using $8.7 million in the same period last year. The cash used by net working capital in the current year was largely due to the $4.1 million decrease in accounts payable and accrued expenses primarily related to reduced raw material purchases and the $4.4 million decrease in inventories (excluding the impact of the $1.9 million of inventory write-downs) resulting from higher current year shipments. Accounts receivable rose $1.9 million in the current year due to the increase in sales. The cash used by working capital in the prior year period was largely due to the $28.2 million decrease in accounts payable and accrued expenses resulting from the payment of $10.9 million of accrued income taxes payable and lower raw material purchases. Inventories increased $6.8 million in the prior year (excluding the impact of the inventory write-downs) due to raw material receipts on previous purchase commitments. Accounts receivable decreased $26.2 million during the prior year as a result of the reductions in shipments and selling prices. As the impact and duration of the ongoing weakness in market conditions becomes clearer, we may make additional adjustments in our operating activities, which could materially impact our cash requirements. While an economic slowdown adversely affects sales to our customers, it generally reduces our working capital requirements.
Investing activities used $1.3 million of cash during the first half of 2010 compared to $602,000 during the same period last year. The increase in cash used was primarily due to the year-over-year change in the cash surrender value of life insurance policies, which increased by $410,000 during the current year as compared to a decrease of $354,000 in the prior year quarter as a result of premium payments and changes in the value of the underlying investments. In addition, $413,000 of proceeds were received from the surrender of life insurance policies in the prior year. These increases in cash used were partially offset by a $480,000 reduction in capital expenditures to $902,000 from $1.4 million in the prior year. Capital expenditures are expected to total less than $5.0 million for fiscal 2010. Investing activities are largely discretionary and future outlays could be reduced significantly or eliminated should economic conditions warrant.
Financing activities used $967,000 of cash during the first half of 2010 compared to $9.4 million during the same period last year. The year-over-year change was primarily due to the payment of a special cash dividend of $8.8 million ($0.50 per share) in addition to the usual quarterly cash dividend and $400,000 of borrowings on our revolving credit facility during the prior year period.
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