Insteel Industries Inc. (NASDAQ:IIIN) Q1 2018 Earnings Conference Call Transcript
Jan 18, 2018 • 10:00 am ET
Good day, ladies and gentlemen, and welcome to the Insteel Industries' First Quarter 2018 Earnings Conference call. (Operator Instructions) As a reminder, this conference call may be recorded for replay purposes.
It is now my pleasure to hand the conference over to Mr. H. Woltz, Chief Executive Officer. Sir, you may begin.
Good morning. Thank you for your interest in Insteel and welcome to our first quarter 2018 earnings call, which will be conducted by Mike Gazmarian, our Vice President, CFO and Treasurer, and me.
(Forward-Looking Cautionary Statements)
I'll now turn it over to Mike to review our first quarter financial results and the macro indicators and outlook for our markets and then I will follow up to comment more on business conditions and our recent acquisition of Ortiz Engineered Products.
Thank you, H. and good morning to everyone joining us on the call. As we reported earlier today, Insteel's results for the first quarter of fiscal 2018 were favorably impacted by our rebound in shipments from the disappointing levels of the previous two quarters and the enactment of the Tax Cuts and Jobs Act in December.
Net earnings rose to $8.1 million or $0.42 per diluted share from $4.5 million or $0.23 per share in the prior year quarter. Excluding the non-recurring gain on the remeasurement of deferred tax liabilities related to the reduction in the corporate tax rate under the new law, earnings per share for the quarter were unchanged from last year at $0.23, but up $0.03 sequentially from the fourth quarter.
Shipments for the quarter were up 1.3% year-over-year and 1.7% sequentially from the depressed levels of Q4 which is highly unusual considering that our volumes typically drop off from the fourth to the first quarter due to the usual seasonal downturn in construction.
From a geographic standpoint, the pickup in activity during the quarter was more pronounced in the regions that were impacted by hurricanes Harvey and Irma in August and September with shipments into Texas and Florida both up double digits sequentially, although it's impossible to quantify how much of the increase may have been driven by any deferral of business related to the storms.
On a year-over-year basis, shipments strengthened considerably over the course of the quarter with our December volumes up almost 13% from last year. I would caution, however, that demand trends remain choppy and it would be premature to assume continued growth at these levels during our second quarter, particularly considering the weather related uncertainty this time of year.
Competitive pricing pressures moderated somewhat during the quarter with average selling prices falling 80 basis points sequentially from the fourth quarter which is less than half of the 1.9% reduction that we experienced from Q3 to Q4.
Gross profit for the quarter fell $1.3 million from a year ago to $11.7 million while gross margin narrowed 200 basis points to 11.9% due to the compression in spreads which were partially offset by lower unit manufacturing cost on the higher production volume and