Insteel Industries Inc (IIIN) 2023 Q2 法說會逐字稿

Ladies and gentlemen, welcome to the Insteel Industries' Second Quarter 2023 Earnings Call. My name is Glenn, and I will be the moderator for today's call. (Operator Instructions) I will now hand you over the host, H. Woltz, Chairman, President and Chief Executive Officer of Insteel Industries. Mr. Woltz, please go ahead.

女士們，先生們，歡迎來到 Insteel Industries 2023 年第二季度財報電話會議。我叫格倫，我將擔任今天電話會議的主持人。 （操作員說明）現在我將向您介紹主持人，Insteel Industries 董事長、總裁兼首席執行官 H. Woltz。沃爾茲先生，請繼續。

Thank you. Good morning, and thank you for your interest in Insteel. Welcome to our second quarter 2023 conference call, which will be conducted by Scot Jafroodi, our Vice President, CFO and Treasurer; and me.

謝謝。早上好，感謝您對 Insteel 的關注。歡迎參加我們的 2023 年第二季度電話會議，該電話會議將由我們的副總裁、首席財務官兼財務主管 Scot Jafroodi 主持；和我。

Before we begin, let me remind you that some of the comments made in our presentation are considered to be forward-looking statements that are subject to various risks and uncertainties, which could cause actual results to differ materially from those projected. These risk factors are described in our periodic filings with the SEC.

在我們開始之前，讓我提醒您，我們在演示文稿中發表的一些評論被認為是前瞻性陳述，受到各種風險和不確定性的影響，可能導致實際結果與預期結果存在重大差異。我們定期向美國證券交易委員會提交的文件中描述了這些風險因素。

The first 2 quarters of fiscal 2023 have been challenging for the company in view of inventory accumulations throughout the supply chain and a significant downward reset in steel prices that occurred following several quarters of extreme supply tightness and significant market price escalations. As stated in the release, we believe these headwinds have about run their course, and we're optimistic about the underlying level of demand for our products in the margin environment.

鑑於整個供應鏈的庫存積累以及在幾個季度的極端供應緊張和市場價格大幅上漲之後出現的鋼鐵價格大幅下調，2023 財年的前兩個季度對公司來說充滿挑戰。正如新聞稿中所述，我們認為這些逆風即將結束，我們對利潤率環境中對我們產品的潛在需求水平持樂觀態度。

I'm going to turn the call over to Scot to comment on our financial results for the quarter and the macro environment, and then I'll pick it back up to discuss our outlook.

我將把電話轉給 Scot 來評論我們本季度的財務業績和宏觀環境，然後我會再接電話討論我們的前景。

Thank you, H, and good morning to everyone joining us on the call.

謝謝你，H，早上好，所有加入我們的人。

As we reported in our release earlier today, going against difficult prior year comps, the second quarter of fiscal 2023 proved to be another challenging period for Insteel as we continue to contend with narrowing spreads between selling prices and raw material costs, lower shipments and higher unit conversion costs.

正如我們在今天早些時候發布的報告中所報導的那樣，與上一年的困難相比，2023 財年第二季度對 Insteel 來說是另一個充滿挑戰的時期，因為我們繼續應對銷售價格和原材料成本之間的價差縮小、出貨量下降和更高的價格單位轉換成本。

Net earnings for the second quarter fell to $5.1 million from record earnings of $39 million a year ago and earnings per share dropped to $0.26 from $1.99 per diluted share in the prior year. We reported net sales for the quarter of $159.1 million, a decrease of 25.4% from the prior year. Shipments rose 5.2% sequentially from Q1 due to the normal seasonal demand upturn, but fell 12.8% year-over-year. Our shipping volume during the quarter was weaker than we anticipated due to a combination of winter weather conditions in several of our markets, reducing construction activity as well as the continuation of the inventory destocking activities pursued by our customers, which has now extended out over the first half of our fiscal year.

第二季度的淨收益從一年前創紀錄的 3900 萬美元降至 510 萬美元，每股收益從上一年的每股攤薄收益 1.99 美元降至 0.26 美元。我們報告本季度的淨銷售額為 1.591 億美元，比去年同期下降 25.4%。由於正常的季節性需求好轉，出貨量較第一季度環比增長 5.2%，但同比下降 12.8%。由於我們幾個市場的冬季天氣條件、建築活動減少以及我們客戶繼續進行的庫存去庫存活動的持續進行，我們本季度的出貨量低於我們的預期，現在已經延長了整個我們財政年度的上半年。

However, as we move into our third quarter, we believe most customers have largely completed their inventory management programs and are returning to a more predictable ordering pattern. Average selling prices declined during the second quarter falling 9.4% from Q1 and 14.5% from a year ago. Competitive pricing pressures triggered by the softening of shipments and the drop-off in steel prices continued to erode ASPs. Not unexpectedly, the largest decline in average selling prices from Q1 is within our product line, most impacted by the continued weakness in the residential construction market.

然而，隨著我們進入第三季度，我們相信大多數客戶已經基本完成了他們的庫存管理計劃，並且正在恢復到更可預測的訂購模式。第二季度平均售價較第一季度下降 9.4%，較去年同期下降 14.5%。出貨量疲軟和鋼鐵價格下跌引發的競爭性定價壓力繼續侵蝕平均售價。不出所料，第一季度平均售價降幅最大的是我們的產品線，受住宅建築市場持續疲軟的影響最大。

However, looking ahead to the third quarter, we expect gradually increasing ASPs across most of our product lines, driven by price increases that became effective earlier this month in response to rising raw material costs. More on this in a moment.

然而，展望第三季度，我們預計我們大部分產品線的平均售價將逐漸增加，這是由於本月早些時候為應對原材料成本上漲而生效的價格上漲所推動的。稍後會詳細介紹這一點。

Gross profit for the quarter fell $43.8 million from a year ago, and gross margin narrowed to 8.3% from 26.8% due to a combination of lower spreads, the reduction in shipments and higher overall unit conversion costs resulting from lower production levels. On a sequential basis, gross profit fell $4.5 million from the first quarter and gross margin decreased 240 basis points.

本季度毛利潤較上年同期下降 4380 萬美元，毛利率從 26.8% 收窄至 8.3%，原因是價差下降、出貨量減少以及生產水平下降導致整體單位轉換成本上升。按順序計算，毛利潤比第一季度下降 450 萬美元，毛利率下降 240 個基點。

As we conveyed in our first quarter call, the spread compression we have experienced in the first half of the fiscal year has been intensified by the continued consumption of higher cost inventory in a declining price environment. Considering that we typically carry around 3 months of inventory valued on a FIFO basis, our spreads and margins have been adversely affected by the matching of higher cost inventory purchased in prior periods against lower ASPs for our products. This time lag has the effect of deferring the favorable impact of the reduction in raw material costs until the higher cost inventory purchased in earlier periods is sold.

正如我們在第一季度電話會議中傳達的那樣，我們在本財年上半年經歷的利差壓縮因在價格下跌環境中持續消耗較高成本庫存而加劇。考慮到我們通常持有大約 3 個月的庫存，以先進先出的方式進行估值，我們的價差和利潤率受到了前期購買的較高成本庫存與我們產品較低平均售價的匹配的不利影響。這種時間滯後會推遲原材料成本降低的有利影響，直到出售早期購買的成本較高的存貨。

Fortunately, this negative trend could be coming to an end, given the growing signs that steel prices may have reached the bottom from the recent decline, with scrap prices rising now for 4 consecutive months and by a total of $155 since January, wire rod producers have follow suit, announcing price increases in March and April, and we have rolled out an initial increase across most of our product lines that went into effect earlier this month. If these increases mark the beginning of an upward trend or at least a leveling out of prices, it could potentially remove the weight that has been pulling down our results since the start of the fiscal year.

幸運的是，鑑於越來越多的跡象表明鋼材價格可能已從近期下跌中觸底，廢鋼價格現已連續 4 個月上漲，自 1 月以來總計上漲 155 美元，線材生產商表示，這種負面趨勢可能即將結束我們紛紛效仿，宣佈在 3 月和 4 月提價，並且我們已經對本月早些時候生效的大部分產品線進行了初步提價。如果這些上漲標誌著上升趨勢的開始或至少價格趨於平穩，它可能會消除自本財年開始以來一直拖累我們業績的壓力。

SG&A expense for the quarter increased to $7.5 million or 4.7% of net sales from $7.2 million or 3.4% of net sales last year. The dollar increase was primarily the result of higher compensation and employee benefit expense, partially offset by the relative year-over-year change in the cash surrender value of life insurance policies.

本季度的 SG&A 費用從去年的 720 萬美元或淨銷售額的 3.4% 增至 750 萬美元或淨銷售額的 4.7%。美元的增長主要是由於薪酬和員工福利支出增加，部分被人壽保險退保現金價值的相對同比變化所抵消。

Our effective tax rate for the quarter was virtually unchanged at 22%, which is down slightly from 22.3% last year.

我們本季度的有效稅率幾乎沒有變化，為 22%，略低於去年的 22.3%。

Looking ahead to the balance of the year, we expect our effective rate will remain steady at around 23%, subject to the level of pretax earnings, book tax differences and other assumptions and estimates that compose our tax provision calculation.

展望今年餘下時間，我們預計我們的實際利率將穩定在 23% 左右，具體取決於稅前收益水平、賬面稅差和構成我們稅收撥備計算的其他假設和估計。

Moving to the cash flow statement and balance sheet. Cash flow from operations for the quarter generated $46.6 million of cash due to a working capital reduction that was driven mainly by $34.7 million decrease in inventories. Our inventory position at the end of the quarter represented 3.1 months of shipments on a forward-looking basis calculated off of forecasted Q3 shipments compared with 3.9 months at the end of the first quarter. Additionally, our inventories at the end of the second quarter were valued at an average unit cost that were lower than our second quarter cost of sales, which should favorably impact margins during the third quarter as the lower cost materials consumed and reflected in cost of sales, provided that ASPs do not fall to a greater extent.

轉到現金流量表和資產負債表。本季度運營產生的現金流產生了 4660 萬美元的現金，主要是由於庫存減少 3470 萬美元導致營運資金減少。我們在本季度末的庫存狀況代表 3.1 個月的前瞻性出貨量，這是根據預測的第三季度出貨量計算的，而第一季度末為 3.9 個月。此外，我們第二季度末的庫存按平均單位成本估值，低於我們第二季度的銷售成本，這應該會對第三季度的利潤率產生有利影響，因為消耗的成本較低並反映在銷售成本中，前提是 ASP 不會大幅下降。

We incurred $7.2 million in capital expenditures in the quarter for a total of $15.4 million through the first half of our fiscal year. We remain committed to our full year target of $30 million, given the many initiatives underway that we've highlighted in previous calls. H will provide more detail on this topic in his remarks.

本季度我們的資本支出為 720 萬美元，整個財政年度上半年的資本支出總額為 1540 萬美元。考慮到我們在之前的電話會議中強調的許多正在進行的舉措，我們仍然致力於實現 3000 萬美元的全年目標。 H 將在他的發言中提供有關此主題的更多詳細信息。

From a liquidity standpoint, we ended the quarter with $80.2 million of cash on hand and no borrowings outstanding on our $100 million revolving credit facility. Furthermore, in March, we completed an amendment to our credit facility, which extended its maturity date to March 2028.

從流動性的角度來看，我們在本季度結束時手頭有 8020 萬美元的現金，並且我們的 1 億美元循環信貸額度沒有未償還的借款。此外，在 3 月，我們完成了對信貸額度的修訂，將到期日延長至 2028 年 3 月。

Finally, during the second quarter, we continued our share buyback program, repurchasing $1 million of common equity, equal to approximately 34,000 shares.

最後，在第二季度，我們繼續我們的股票回購計劃，回購了 100 萬美元的普通股，相當於約 34,000 股。

Looking ahead to the remainder of fiscal 2023, the leading indicators for nonresidential construction, architectural billings and Dodge Momentum Indexes remain healthy. In March, the ABI score increased to 50.4, up from 48 in February, moving above the 50 growth threshold for the first time in 6 months. However, while the billings increase, new project inquiries grew at a slower pace and the value of new design contracts declined. The Dodge Momentum Index, which tracks nonresidential building projects going into planning, has fallen over the last several months. The March report showed a drop to 183.7 down 8.6% from February. However, year-over-year, the index is still 24% higher than in March 2022.

展望 2023 財年剩餘時間，非住宅建築、建築賬單和道奇動量指數的領先指標保持健康。 3 月份，ABI 得分從 2 月份的 48 升至 50.4，6 個月來首次突破 50 的增長門檻。然而，雖然賬單增加，但新項目諮詢的增長速度放緩，新設計合同的價值下降。跟踪進入規劃的非住宅建築項目的道奇動量指數在過去幾個月中有所下降。 3 月份的報告顯示下降至 183.7，比 2 月份下降了 8.6%。然而，與去年同期相比，該指數仍比 2022 年 3 月高出 24%。

In the most recent report, Dodge noted that lending standards for small banks have tightened as a result of the recent upheaval in the banking sector, likely resulting in developers and owners pulling back in the short term, which could also result in the DMI contracting as we continue further into the year.

在最近的一份報告中，Dodge 指出，由於最近銀行業的動盪，小型銀行的貸款標準已經收緊，這可能導致開發商和業主在短期內撤資，這也可能導致 DMI 收縮，因為我們將繼續深入到這一年。

Finally, the monthly construction spending data has remained strong over the last several months with the latest February data showing total construction spending, on a seasonally adjusted annual basis, up approximately 5% from last year, with nonresidential construction up almost 17% and public highway and street construction, 1 of the largest end-use applications for our products, up nearly 19%.

最後，過去幾個月的月度建築支出數據一直保持強勁，最新的 2 月份數據顯示，經季節性因素調整後的年度建築支出總額比去年增長約 5%，其中非住宅建設增長近 17%，公共公路建設增長和街道建設，這是我們產品最大的最終用途應用之一，增長了近 19%。

Despite the challenges experienced in the first half of the fiscal year, we expect to regain momentum as we enter the time of the year that is traditionally our busy season and the weather-related headwinds begin to subside. Additionally, we anticipate favorable market conditions driven by continued strong demand in our private nonresidential construction markets, along with a gradual recovery in residential construction.

儘管本財年上半年遇到了挑戰，但隨著我們進入一年中傳統上繁忙的季節，並且與天氣相關的逆風開始消退，我們預計將重拾動力。此外，我們預計，在私人非住宅建築市場持續強勁的需求以及住宅建築的逐步復甦的推動下，市場環境有利。

Finally, we should benefit from the rebalancing of our inventories, which will result in the consumption of more recent lower-priced raw material. These conditions should support widening spreads, higher operating levels and lower conversion costs at our facilities.

最後，我們應該受益於庫存的重新平衡，這將導致消耗更多近期的低價原材料。這些條件應該支持擴大我們設施的價差、更高的運營水平和更低的轉換成本。

This concludes my prepared remarks and I will now turn the call back over to H.

我準備好的發言到此結束，我現在將把電話轉回給 H。

Thank you, Scot. While our weak Q2 results were the result of depressed shipment volume and spread compression, we do not think our markets are deteriorating under pressure of macroeconomic weakness that jeopardizes performance for fiscal 2023. Rather, we think underlying demand from residential markets has stabilized over the last few months and is recovering and that demand is robust in nonresidential markets.

謝謝你，蘇格蘭人。雖然我們疲軟的第二季度業績是出貨量低迷和利差壓縮的結果，但我們認為我們的市場在宏觀經濟疲軟的壓力下不會惡化，這會危及 2023 財年的業績。相反，我們認為住宅市場的潛在需求在過去幾個月，並且正在恢復，非住宅市場的需求強勁。

It's not surprising that the market is experiencing inventory corrections following an extended period of constrained supply conditions when customers made purchases and commitments just in case, rather than following more typical demand pull purchasing tactics. Our view of the market is formed by conversations with many customers focusing on their projected operating rates, backlogs and overall expectations for business conditions during the year.

毫不奇怪，在長時間的供應受限條件下，市場正在經歷庫存調整，當時客戶為了以防萬一而進行購買和承諾，而不是遵循更典型的需求拉動採購策略。我們對市場的看法是通過與許多客戶的對話形成的，重點關注他們在這一年中的預計開工率、積壓訂單和對業務狀況的總體預期。

During Q2, weak incoming orders caused us to schedule 4 plants down for between 1 and 2 weeks. At other plants, weak order entry caused us to curtail scheduled operating hours, but the facilities were not idled. In view of the ongoing tightness in the labor market, we paused hiring in some cases, but did not actively reduce employment levels at plants that were curtailed because our conviction was that weakness was related to inventory liquidations while the underlying level of consumption of our products was healthy and would warrant ramping up operating hours during Q3 and Q4.

在第二季度，疲軟的新訂單導致我們將 4 家工廠停工 1 到 2 週。在其他工廠，疲軟的訂單輸入導致我們縮短了預定的運營時間，但設施並沒有閒置。鑑於勞動力市場持續緊張，我們在某些情況下暫停了招聘，但並未主動降低被削減工廠的就業水平，因為我們堅信疲軟與庫存清算有關，而我們產品的潛在消費水平是健康的，將保證在第三季度和第四季度增加營業時間。

Currently, we are experiencing gradual improvements in demand and are comfortable with the temporary curtailments we took during Q2 to adjust operating rates. We expect our volume ramp up to continue through Q3 and provided ASPs remain stable, spreads are sufficient to support favorable financial performance.

目前，我們的需求正在逐步改善，並且對我們在第二季度為調整開工率而採取的臨時削減措施感到滿意。我們預計我們的銷量增長將持續到第三季度，如果平均售價保持穩定，利差足以支持良好的財務業績。

We continue to be optimistic about the impact on our markets of the Infrastructure Investment and Jobs Act and believe it will positively impact our markets during 2023. We are aware that funds have been released at the federal level for projects that consume our reinforcing products, and we expect this trend to accelerate. The need for infrastructure investments in the U.S. has been obvious for decades, but funding has consistently been inadequate. It now appears that funding shortfalls will decline in significance as obstacles to investment in view of the strong fiscal condition of state and local governments, together with the new funding provided by the Infrastructure Investment and Jobs Act.

我們繼續對《基礎設施投資和就業法案》對我們市場的影響持樂觀態度，並相信它將在 2023 年對我們的市場產生積極影響。我們知道，聯邦層面已經為使用我們增強產品的項目發放了資金，並且我們預計這一趨勢會加速。幾十年來，美國對基礎設施投資的需求一直很明顯，但資金一直不足。現在看來，鑑於州和地方政府強勁的財政狀況，以及《基礎設施投資和就業法》提供的新資金，資金短缺作為投資障礙的重要性將下降。

Turning to CapEx. Through the first 2 quarters of 2023, we invested $15.4 million in our manufacturing facilities and information systems. Depending on the timing of deliveries and commissioning activities, we expect 2023 to come in at approximately $30 million, which is consistent with our prior estimates for the year. The investments we're making in state-of-the-art technology will expand our product capabilities and favorably impact our cash cost of production.

轉向資本支出。到 2023 年前兩個季度，我們在製造設施和信息系統上投資了 1540 萬美元。根據交付和調試活動的時間安排，我們預計 2023 年的收入約為 3000 萬美元，這與我們之前對該年度的估計一致。我們對最先進技術的投資將擴大我們的產品能力，並對我們的現金生產成本產生有利影響。

As we mentioned in an earlier call, new production lines will be installed at the Missouri, Kentucky and Arizona plants to better address market needs. The Missouri production line will be commissioned during Q3 and we expect Kentucky and Arizona commissioning during Q4. We're evaluating additional projects would have similar beneficial impact on our market position and cost profile.

正如我們在之前的電話會議中提到的，新的生產線將安裝在密蘇里州、肯塔基州和亞利桑那州的工廠，以更好地滿足市場需求。密蘇里生產線將在第三季度投產，我們預計肯塔基州和亞利桑那州將在第四季度投產。我們正在評估其他項目是否會對我們的市場地位和成本概況產生類似的有益影響。

Going forward, we are aware of rising risk related to the future performance of the U.S. economy and are monitoring the environment. At the same time, we plan to aggressively pursue actions to maximize shipments and optimize our costs and to pursue attractive growth opportunities, both organic and through acquisition.

展望未來，我們意識到與美國經濟未來表現相關的風險不斷上升，並正在監測環境。與此同時，我們計劃積極採取行動以最大化出貨量和優化我們的成本，並尋求有吸引力的增長機會，包括有機增長和收購。

This concludes our prepared remarks, and we'll now take your questions. Glenn, would you please explain the procedure for asking questions?

我們準備好的發言到此結束，現在我們將回答您的問題。格倫，你能解釋一下提問的程序嗎？

(Operator Instructions) We have our first question, comes from Julio Romero from Sidoti & Co.

（操作員說明）我們有第一個問題，來自 Sidoti & Co. 的 Julio Romero。

Good morning. Can you guys hear me?

早上好。你們能聽到我說話嗎？

Yes.

是的。

All right. Good. This is (inaudible) on for Julio Romero. My first question is, can you speak to the trend line in pricing for your product line, most exposed to residential markets?

好的。好的。這是 Julio Romero 的（聽不清）。我的第一個問題是，您能否談談您的產品線的定價趨勢線，這些產品線最受住宅市場的影響？

Well, I think what we would tell you on residential markets is they began to swoon in April or May of 2022, probably reached, what we believe to be, the low point back in the fall of 2023 and subsequently, we've seen a recovery in those markets. Pricing matters are day-to-day, suffice to say at this point, that we have announced increases in those markets, and we're collecting the increases. But it is a day-to-day situation and it's hard to say what next week brings.

好吧，我想我們要告訴你的是住宅市場在 2022 年 4 月或 5 月開始低迷，可能達到我們認為的 2023 年秋季的低點，隨後，我們看到了這些市場的複蘇。定價問題是日常事務，在這一點上足以說明，我們已經宣佈在這些市場上增加價格，並且我們正在收取增加的費用。但這是日常情況，很難說下週會發生什麼。

Thank you for the color. Can you talk about what you're hearing from customers and suppliers regarding any impact of a credit crunch on commercial construction?

謝謝你的顏色。你能談談你從客戶和供應商那裡聽到的關於信貸緊縮對商業建築的影響嗎？

Yes. I mean we certainly recognize the risk that's out there and we have seen some projects that have been pushed out or delayed, but it is not a trend at this point. We believe that interest rates obviously will affect the private nonres markets more than they will the public markets. And all things considered, the private market seemed to be healthy, and there are a lot of projects that are underway. And like I say, some have been pushed, there probably have been some that have been canceled, but it is not a trend at this point that we would say compromises on our view of the prospects for the company through the rest of fiscal 2023.

是的。我的意思是我們當然認識到存在的風險，我們已經看到一些項目被推遲或推遲，但這不是目前的趨勢。我們認為，利率顯然對私人非資源市場的影響要大於對公共市場的影響。考慮到所有因素，私人市場似乎很健康，並且有很多項目正在進行中。就像我說的，有些已經被推遲，可能有些已經被取消，但在這一點上，我們不會對我們對公司 2023 財年剩餘時間前景的看法做出妥協。

All right. And the last 1 for me is, are you seeing any benefit yet from the Infrastructure Investment and Jobs Act?

好的。最後一個對我來說是，你是否看到基礎設施投資和就業法案有任何好處？

I don't think that we've seen tangible results of that on our order book at this point, but we are aware that billions of dollars has been released at the federal level for both bridge and for water infrastructure projects, and those applications are directly in Insteel's wheelhouse.

我認為目前我們還沒有在我們的訂單簿上看到具體的結果，但我們知道聯邦政府已經為橋樑和水利基礎設施項目撥款數十億美元，這些應用程序是直接在 Insteel 的駕駛室內。

(Operator Instructions) We have our next question comes from Tyson Bauer from KC Capital.

（操作員說明）我們的下一個問題來自 KC Capital 的 Tyson Bauer。

It sounds like some of these additional costs incurred in your fiscal second quarter were strategic in nature with the expectation that as we get into the seasonally stronger quarters, that capacity, that trained workforce was going to be needed. And so you took some of that pain in the second quarter to get the benefit as we go forward. Do you anticipate that as it was accentuated in Q1 and in Q2, the downside that the flip side of this as you do price increases as scrap steel increases and the demand and shipments increase that the reverse will be as accentuated, thus, our seasonal pattern is really going to be pre market this year?

聽起來你們第二財季產生的一些額外成本本質上是戰略性的，預計隨著我們進入季節性強勁的季度，將需要這種能力、訓練有素的勞動力。因此，您在第二季度經歷了一些痛苦，以便在我們前進的過程中獲得收益。您是否預計，正如第一季度和第二季度所加劇的那樣，隨著廢鋼價格上漲以及需求和出貨量增加，這種情況的另一面將會加劇，因此我們的季節性模式會加劇今年真的要上市了嗎？

Well, I think it's a good question and anticipating this conversation, I thought back more to 2023 versus 2022. And in 2022, of course, we were shipping everything that we could produce and the constraint was really steel availability as well as people availability. And those constraints seem to have moderated for 2023. As we look to the balance of 2023 for Q3 and Q4, we do expect that we're going to see the volume ramp up, but whether it mirrors -- whether it mirrors the downside is hard -- is hard to say.

好吧，我認為這是一個很好的問題，並且期待這次對話，我更多地回想了 2023 年與 2022 年的情況。當然，在 2022 年，我們正在運送我們可以生產的所有產品，而限制因素實際上是鋼鐵的可用性以及人員的可用性。這些限制似乎在 2023 年有所緩和。當我們展望 2023 年第三季度和第四季度的平衡時，我們確實預計我們會看到交易量增加，但它是否反映——是否反映下行趨勢是難——很難說。

As of today, we are still running unfavorable volume comps with last year, although momentum is accelerating and we see customers that are busy. And as Scot mentioned in his comments, are returning to more normal ordering patterns. So I think there may not be a panic buying surge that results in significant increases in volume, but I think the underlying level of demand is certainly good and that we'll see favorable momentum through Q3 and Q4.

截至今天，儘管勢頭正在加速並且我們看到客戶很忙，但我們的銷量與去年相比仍然不利。正如 Scot 在他的評論中提到的，正在恢復到更正常的訂購模式。所以我認為可能不會出現導致交易量顯著增加的恐慌性購買激增，但我認為潛在的需求水平肯定是好的，我們將在第三季度和第四季度看到有利的勢頭。

And just to fortify that comment, when you put in these price increases, you haven't gotten really any pushback. They've been accepted for the most part. And would do you anticipate further increases as needed?

只是為了強化這一評論，當你提出這些價格上漲時，你並沒有真正遇到任何阻力。他們大部分都被接受了。您是否預計會根據需要進一步增加？

Well, Tyson, we almost always get pushback on price increases. So I wouldn't agree that that's the case. We do get pushed back. But I think as Scot mentioned, the underlying level of scrap increases and wire rod increases will mandate that our industry collect these increases, but it could take time to do it. And as we look out, I don't think anyone can predict what's going to happen on steel scrap prices, but there are many moderating influences in the global market right now. And I don't see -- I would be surprised if scrap ran away from us in the next few months. I think it's going to be a little softer than that.

好吧，泰森，我們幾乎總是在漲價時遇到阻力。所以我不同意這種情況。我們確實被推遲了。但我認為正如 Scot 提到的那樣，廢料和線材增加的潛在水平將要求我們的行業收取這些增加的費用，但這可能需要時間才能做到。當我們往外看時，我認為沒有人能預測廢鋼價格會發生什麼，但目前全球市場有許多緩和的影響。而且我看不到 - 如果廢料在接下來的幾個月裡從我們身邊消失，我會感到驚訝。我認為它會比那更柔和一些。

Okay. So you're talking about increased shipments, maybe not to the same degree as we had seen before, but yet, we're doing a lot of capital projects to expand capacity. What is the end goal there as far as the net impact for revenue generation? Or is it more of a sustainability on maintaining a more consistent revenue pattern by having more product SKUs available and offerings and allow you to a little more automation to have a little better cost controls?

好的。所以你說的是出貨量的增加，可能與我們以前看到的程度不同，但是，我們正在做很多資本項目來擴大產能。就創收的淨影響而言，最終目標是什麼？還是通過提供更多可用的產品 SKU 和產品來維持更一致的收入模式，並允許您進行更多的自動化以實現更好的成本控制，這更像是一種可持續性？

Yes. For sure, the technology reduces the labor content of our product. Most of these investments are also expanding our product capabilities, so that we can profitably produce products that we only reluctantly produced up to this point and that obviously implies that we will solicit these products rather than produce an amount of duress as customer accommodation. So those are very positive developments for us.

是的。可以肯定的是，這項技術減少了我們產品的勞動含量。這些投資中的大部分也在擴大我們的產品能力，這樣我們就可以生產我們迄今為止勉強生產的產品並從中獲利，這顯然意味著我們將徵求這些產品，而不是生產一定數量的脅迫作為客戶住宿。所以這些對我們來說是非常積極的發展。

And I mean I wouldn't want to overstate their impact on overall revenues, but incrementally, they're very important to us.

我的意思是我不想誇大它們對整體收入的影響，但逐漸地，它們對我們非常重要。

Are you willing to share a dollar number on those costs for idling those plants for certain weeks and the labor force that may not necessarily be working, but you're still paying them for when the business comes back? Just to give us a sense of what the low-hanging fruit is as we go forward on a normal operating schedule.

您是否願意分享這些工廠閒置數週的成本以及可能不一定工作但業務恢復時您仍在支付的勞動力的費用？只是為了讓我們了解當我們按照正常的運營計劃前進時，唾手可得的果實是什麼。

No, we're not prepared to do that, Tyson.

不，我們不准備這樣做，泰森。

Well, I figured I'd try. And the last question -- the last question for me. Are you feeling more confident in the residential markets' recovery this year or more confident in the nonres remaining strong and continuing to be robust, especially as we get more federal dollars into the system, hopefully? What's kind of your general outlook that we're fairly certain that residential bottomed out in 2022, we're going to see some recovery of some sort? Is that more applicable as opposed to the nonres?

好吧，我想我會試試。最後一個問題——我的最後一個問題。您是對今年住宅市場的複蘇更有信心，還是對非資源市場保持強勁並繼續保持強勁更有信心，尤其是當我們有希望將更多的聯邦資金投入系統時？您如何看待我們相當確定住宅在 2022 年觸底反彈，我們將看到某種形式的複蘇？這比 nonres 更適用嗎？

I would tell you that personally, I'm pleasantly surprised with the recovery that we're seeing in the residential markets. And keep in mind that our view is relatively short term in nature. That in June, we might have a different outlook than we have today. But customers in that segment rapidly destocked beginning in last April and May. And I think they dealt with that problem and they're back to purchasing. And I think they're reasonably pleased and surprised by the rebound in residential demand.

我個人會告訴你，我對住宅市場的複蘇感到驚喜。請記住，我們的觀點本質上是相對短期的。在 6 月，我們的前景可能與今天不同。但從去年 4 月和 5 月開始，該細分市場的客戶迅速去庫存。我認為他們已經解決了這個問題，並且他們又開始採購了。我認為他們對住宅需求的反彈感到相當高興和驚訝。

On the nonres side, as you know, it's split into the private and to the public sectors. And I think it's hard to make an argument that the public sector is going to be anything other than strong. On the private sector, certainly, interest rates are a huge risk out there on not just -- I mean, to the whole economy. But the lagging nature of our business would tell me that we're going to be solid through 2023 and into 2024 and if there is a -- if there is a downturn, that we may see late in 2024.

如您所知，在非資源方面，它分為私營部門和公共部門。而且我認為很難證明公共部門將變得強大。在私營部門，當然，利率是一個巨大的風險，不僅僅是——我的意思是，對整個經濟。但我們業務的滯後性會告訴我，我們將在 2023 年和 2024 年保持穩定，如果出現——如果出現衰退，我們可能會在 2024 年晚些時候看到。

All right. That sounds wonderful, and we'll be ready for the bounce back in the summer months.

好的。這聽起來很棒，我們會為夏季的反彈做好準備。

(Operator Instructions) We have no further questions on the line.

（操作員說明）我們沒有其他問題了。

Okay. Thank you. We appreciate your interest in Insteel and look forward to talking to you next quarter. In the meantime, we would invite your follow-ups. Call us as you may be interested in doing so. Thank you.

好的。謝謝。感謝您對 Insteel 的關注，期待下個季度與您交談。同時，我們會邀請您跟進。如果您有興趣，請致電我們。謝謝。

Thank you. Ladies and gentlemen, this concludes today's call. Thank you for joining. You may now disconnect your lines.

謝謝。女士們，先生們，今天的電話會議到此結束。感謝您的加入。您現在可以斷開線路。