Insteel Industries Inc (IIIN) 2025 Q2 法說會逐字稿

Hello and welcome everyone to the Insteel Industries second quarter 2025 earnings call. My name is Becky and I'll be your operator today. (Operator Instructions) I will now hand over to your host, H. Woltz, CEO, to begin. Please go ahead.

大家好，歡迎參加 Insteel Industries 2025 年第二季財報電話會議。我叫貝基，今天我將擔任您的接線生。（操作員指示）現在我將把麥克風交給主持人、執行長 H. Woltz 開始。請繼續。

Thank you, Becky. Good morning and thank you for your interest in Insteel. Welcome to our second quarter 2025 conference call, which will be conducted by Scott Giuffruti, our Vice President, CFO and treasurer, and me.

謝謝你，貝基。早安，感謝您對 Insteel 的關注。歡迎參加我們的 2025 年第二季電話會議，該會議將由我們的副總裁、財務長兼財務主管 Scott Giuffruti 和我主持。

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，請允許我提醒您，我們簡報中的某些評論被視為前瞻性陳述，這些陳述受各種風險和不確定性的影響，可能導致實際結果與預測結果有重大差異。這些風險因素在我們定期向美國證券交易委員會提交的文件中進行了描述。

We’re pleased to have experienced a material upturn in business activity during the second fiscal quarter relative to the same period last year. While we’re glad to see the ongoing recovery in our markets, the tumultuous events that followed the rollout of the administration’s tariff strategy created new uncertainties for the company.

我們很高興看到第二財季的業務活動與去年同期相比出現了實質的改善。雖然我們很高興看到市場持續復甦，但政府推出關稅策略後的動盪事件為公司帶來了新的不確定性。

And before I turn the call over to Scott to comment on our financial results, we again thank all of our people for the effective integration of our acquired assets during the first fiscal quarter. Following Scott’s comments, I’ll kick the call back off to discuss our business outlook and the impact of tariffs on our company.

在我將電話轉給史考特對我們的財務表現進行評論之前，我們再次感謝所有員工在第一財季對我們收購的資產進行有效整合。根據斯科特的評論，我將再次開始討論我們的業務前景以及關稅對我們公司的影響。

Thank you, H, and good morning to everyone joining us on the call. As we reported earlier today, the second quarter of fiscal 2025 proved to be a strong quarter for Insteel and marked the second consecutive quarter of favorable shipment trends following the weaker volumes we experienced in the prior year.

謝謝 H，大家早安，歡迎參加我們的電話會議。正如我們今天早些時候報導的那樣，2025 財年第二季度對 Insteel 來說是一個強勁的季度，並且是繼上一年銷量較弱之後，連續第二個季度出現良好的出貨趨勢。

Improved demand in our construction end markets in addition to lower manufacturing costs and higher production volume were the key drivers in our Q2 performance. Net earnings for the quarter rose to $10.2 million from $6.9 million a year ago and earnings per share increased to $0.52 per diluted share from $0.35 per diluted share in the prior year. Excluding the non-recurring restructuring charges referenced in our release, net earnings rose to $0.55 per share.

除了製造成本降低和產量增加之外，建築終端市場需求的增加也是我們第二季業績的主要驅動力。本季淨收益從去年同期的 690 萬美元增至 1,020 萬美元，每股收益從去年同期的每股 0.35 美元增至每股 0.52 美元。除去我們新聞稿中提到的非經常性重組費用，淨收益增至每股 0.55 美元。

Shipments for the quarter increased 28.9% from last year and 17.9% sequentially from Q1. The improved shipping performance in the second quarter was driven by increased activity across most of our construction end markets along with the additional tonnage generated from our first quarter acquisitions.

本季出貨量較去年同期成長 28.9%，較第一季成長 17.9%。第二季航運業績的改善得益於我們大多數建築終端市場活動的增加以及第一季收購產生的額外噸位。

Volume growth remained relatively consistent throughout all three months of the quarter despite disruptions caused by adverse winter weather conditions in various regions of the country. On a year-over-year basis, average selling prices declined 2.2% but rose 5.1% sequentially from the first quarter, driven by price increases implemented in the first and second quarters to offset escalating raw material costs.

儘管全國各地冬季惡劣天氣條件造成了乾擾，但本季三個月的銷售成長仍然相對穩定。與去年同期相比，平均銷售價格下降了 2.2%，但比第一季度上漲了 5.1%，這主要是由於第一季和第二季實施了漲價以抵消原材料成本上漲的影響。

The supply of wire rod in the US market has become progressively more constrained during the quarter, leading to price increases. To add some perspective to this, published prices for steel wire rod, our primary raw material have increased approximately 150 per ton during calendar Q1. Despite these price increases, availability remains limited, and our primary focus moving forward is on securing an adequate supply to minimize potential disruptions to our operations.

本季度，美國市場的線材供應逐漸受到限制，導致價格上漲。為了進一步說明這一點，我們的主要原料鋼絲棒的公佈價格在第一季每噸上漲了約 150 美元。儘管價格上漲，但供應仍然有限，我們今後的主要重點是確保充足的供應，以盡量減少對我們營運的潛在幹擾。

Gross profit for the quarter increased $8.800 million from a year ago to $24.5 million while gross margin expanded to 15.3% from 12.3%. This growth was driven primarily by higher sales volume and to a lesser extent a reduction in conversion costs per ton due to increased production levels. On a sequential basis, gross profit rose $15 million from the first quarter, accompanied by 800 basis point expansion in gross margin. This improvement was supported by the same quarter-over-quarter drivers as well as higher spreads tied to selling price increases mentioned earlier.

本季毛利較去年同期增加 88 億美元，達到 2,450 萬美元，毛利率從 12.3% 擴大至 15.3%。這一增長主要得益於銷售量的增加，其次是由於生產水準的提高導致每噸加工成本的降低。與上一季相比，毛利增加了 1500 萬美元，毛利率也增加了 800 個基點。這項改善得益於相同的季度環比驅動因素以及前面提到的與銷售價格上漲相關的更大利差。

Additionally, margins recovered from the temporary pressure in Q1 related to the fair value accounting of inventory acquired in our first quarter acquisitions. That inventory was fully depleted early in Q2 and replaced with inventory valued at standard cost, which allowed gross margins to normalize.

此外，利潤率已從第一季的暫時壓力中恢復，這與我們第一季收購中獲得的庫存的公允價值核算有關。該庫存在第二季初已完全耗盡，並被按標準成本計價的庫存所取代，使毛利率恢復正常。

As we move into the third quarter, we anticipate that a combination of strengthening demand, improving spreads supported by our recent price increases, current raw material carrying values and higher operating levels at our facilities will continue to restore gross margin to more attractive levels.

隨著進入第三季度，我們預計，在需求增強、近期價格上漲推動利差改善、當前原材料賬面價值上升以及工廠運營水平提高等因素的共同作用下，毛利率將繼續恢復到更具吸引力的水平。

SG&A expense for the quarter increased to $10.8 million or 6.7% of net sales compared to $7.9 million or 6.2% of net sales in the prior year period. The increase was primarily driven by a $1.4 million rise in compensation costs tied to our return on capital base incentive plan reflecting stronger financial performance this year.

本季銷售、一般及行政費用增至 1,080 萬美元，佔淨銷售額的 6.7%，而去年同期為 790 萬美元，佔淨銷售額的 6.2%。這一增長主要是由於與我們的資本基礎回報激勵計劃相關的薪酬成本增加了 140 萬美元，這反映了今年財務業績的強勁增長。

As a reminder, no incentive compensation expense was recorded in the second quarter of last year. Additionally, SG&A expense was impacted by $414,000 unfavorable year-over-year swing in the cash surrender value of life insurance policies, which declined by $31,000 in the current quarter versus a $383,000 gain in the prior year, reflecting fluctuations in the value of the underlying investments.

提醒一下，去年第二季沒有記錄任何激勵薪資費用。此外，銷售、一般及行政費用受到人壽保險單現金退保價值同比不利波動 414,000 美元的影響，本季度下降了 31,000 美元，而去年同期則增加了 383,000 美元，反映了基礎投資價值的波動。

Lastly, amortization expense rose by $297,000 driven by intangible assets recognized from our recent acquisitions. In addition to the increase in SG&A expenses, we recorded $662,000 in restructuring charges during the quarter. These charges reflect costs associated with the previous announced consolidation of our welded wire manufacturing operations following the Q1 acquisitions of Engineered Wire Products and O’Brien Wire Products of Texas.

最後，攤銷費用增加了 297,000 美元，這是由於我們最近的收購確認了無形資產。除了銷售、一般及行政費用增加之外，本季我們還記錄了 662,000 美元的重組費用。這些費用反映了我們在第一季收購 Engineered Wire Products 和 O'Brien Wire Products of Texas 之後宣布的焊接線材製造業務整合的相關成本。

Our effective tax rate for the quarter was 23.2%, which is up slightly from 22.5% last year. 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, both tax differences and the other assumptions and estimates that compose our tax provision calculation.

本季我們的有效稅率為 23.2%，略高於去年的 22.5%。展望今年餘下的時間，我們預計我們的有效稅率將保持穩定在 23% 左右，但取決於稅前收益水平、稅收差異以及構成我們的稅收準備金計算的其他假設和估計。

Moving to the cash flow statement and balance sheet. Cash flow from operations used $3.3 million in the quarter compared to providing $1.4 million last year. Net working capital used approximately $21.9 million of cash in the second quarter due to a $30.4 million increase in receivables resulting from higher sales and an increase in average selling prices, which was partially offset by a $5.8 million increase in accounts payable and a $2.6 million decline in inventory.

轉到現金流量表和資產負債表。本季經營活動現金流為 330 萬美元，去年同期為 140 萬美元。由於銷售額增加和平均售價上漲導致應收帳款增加 3,040 萬美元，第二季淨營運資本使用了約 2,190 萬美元的現金，但應付帳款增加 580 萬美元和庫存減少 260 萬美元部分抵消了這一增加。

Our inventory position at the end of the quarter represented 2.2 months of shipments on a forward looking basis calculated off of forecasted Q3 shipments compared with 2.8 months at the end of the first quarter.

根據預測的第三季出貨量計算，本季末我們的庫存狀況相當於 2.2 個月的出貨量，而第一季末為 2.8 個月。

Finally, our inventories at the end of the second quarter were valued at an average unit cost that approximates our second quarter cost of sales and remains favorable relative to current replacement cost, which will have a positive impact on spreads and margins as we move through the third quarter.

最後，我們第二季末的庫存按平均單位成本估價，該成本接近我們第二季的銷售成本，並且相對於當前重置成本仍然有利，這將對第三季的利差和利潤率產生積極影響。

We incurred $2.2 million in capital expenditures in the quarter for a total of $4.9 million through the first half of our fiscal year. Based on forecasted expenditures for the remainder of fiscal 2025, we reduced our full year target to $17 million from the previous communicated target of $22 million. [Abe] will provide more detail on this topic in his remarks.

本季我們的資本支出為 220 萬美元，整個財政年度上半年的資本支出總額為 490 萬美元。根據 2025 財年剩餘時間的預測支出，我們將全年目標從先前公佈的 2,200 萬美元下調至 1,700 萬美元。 [安倍]將在他的演講中就此主題提供更多細節。

Additionally, the second quarter, we continued our share buyback program repurchasing $1.1 million of our common equity equal to approximately 40,000 shares. Finally, a liquidity perspective, we ended the quarter with $28.4 million of cash on hand and no borrowings outstanding on our $100 million revolving credit facility providing us ample liquidity and financial flexibility going forward.

此外，第二季度，我們繼續執行股票回購計劃，回購了價值 110 萬美元的普通股，相當於約 40,000 股。最後，從流動性角度來看，本季末我們手頭上有 2,840 萬美元現金，且 1 億美元循環信貸額度中沒有未償還的借款，這為我們未來提供了充足的流動性和財務靈活性。

As we enter the third quarter of fiscal 2025, we are cautiously optimistic about our market outlook for the remainder of the year supported by the continued strength in demand across our markets. Recent shipment trends and overall market sentiment reinforces this view. Although we are still early in the third quarter, our order book has remained strong and shipments in April have exceeded levels from the previous year.

隨著我們進入 2025 財年第三季度，由於市場需求持續強勁，我們對今年剩餘時間的市場前景持謹慎樂觀的態度。最近的出貨趨勢和整體市場情緒強化了這種觀點。儘管我們仍處於第三季初期，但我們的訂單依然強勁，四月份的出貨量已超過去年同期的水平。

However, there are still uncertainties that support our cautious outlook. The long-term demand forecast remains clouded by shifting US trade policies and the potential economic fallout from the Trump administration’s tariff strategy. Turning to the macroeconomic indicators for our construction end markets, the latest reports for the architectural billing index and the Dodge Momentum Index suggest a challenging outlook for business conditions moving forward.

然而，仍然存在一些不確定性，支持我們保持謹慎的看法。美國貿易政策的變化以及川普政府關稅戰略可能造成的經濟影響使長期需求預測仍然不明朗。談到我們建築終端市場的宏觀經濟指標，建築業計費指數和道奇動量指數的最新報告表明，未來的商業環境前景充滿挑戰。

In February, the ABI ratio score of 45.5 remaining well below the growth threshold of 50, signaling that most firms continue to experience declining billings. Additionally, the Dodge Momentum Index, which tracks nonresidential billing projects entering the planning phase, saw a decrease of 6.9% in March with commercial planning activity dropping by 7.8%.

2 月份，ABI 比率得分為 45.5，遠低於 50 的成長門檻，這表明大多數公司的營業額繼續下降。此外，追蹤進入規劃階段的非住宅計費項目的道奇動量指數 3 月下降了 6.9%，其中商業規劃活動下降了 7.8%。

US cement shipments, another key metric we monitor, reflected ongoing weakness with January 2025 shipments down 3.1% year-over-year. Finally, the monthly construction spending data from the US Department of Commerce continues to indicate modest growth. The latest February data revealed that total construction spending on a seasonally adjusted annual basis increased by approximately 3% compared to last year.

我們監測的另一個關鍵指標是美國水泥出貨量持續疲軟，2025 年 1 月出貨量年減 3.1%。最後，美國商務部月度建築支出數據持續顯示溫和成長。最新二月數據顯示，經季節性調整後的年度總建築支出較去年同期成長約3%。

Nonresidential construction spending rose by around 4%. However, spending on public highway and street construction, a major end use application for our products, remained relatively flat with an increase of less than 1%. This concludes my prepared remarks.

非住宅建築支出增加了約4%。然而，公共公路和街道建設支出（我們產品的主要最終用途）保持相對平穩，增幅不到 1%。我的準備好的發言到此結束。

I’ll now turn the call back over to H. Thank you, Scott.

現在我將把電話轉回給 H。謝謝你，斯科特。

Thank you, Scott. During our first quarter conference call and in the earnings release, we noted a substantial acceleration of demand for concrete reinforcing products and commented that we expected the demand recovery to continue into calendar 2025. We’re glad to confirm that the positive trend continued through our second quarter, which takes us past the riskiest seasonal influences on our business and gives us confidence that we should perform well for the balance of the year.

謝謝你，斯科特。在我們的第一季電話會議和收益發布中，我們注意到混凝土增強產品的需求大幅加速，並表示我們預計需求復甦將持續到 2025 年。我們很高興地確認，這一積極趨勢延續到了第二季度，這使我們度過了業務面臨的最具風險的季節性影響，並讓我們有信心在今年剩餘時間內取得良好的業績。

As stated in the release, the brisk pace of business we’ve experienced over the past few months is not reflected in the broader macroeconomic indicators that are generally used to measure the strength of the construction industry, but it is nonetheless real. The confidence level of most customers, interactions between our salespeople and customers, and favorable seasonal trends lead us to believe business conditions should remain robust at least through the end of our fiscal year.

如新聞稿所述，過去幾個月我們經歷的業務快速成長並沒有反映在通常用於衡量建築業實力的更廣泛的宏觀經濟指標中，但它卻是真實存在的。大多數客戶的信心水平、我們的銷售人員和客戶之間的互動以及有利的季節性趨勢使我們相信，至少在本財政年度結束前，業務狀況應該會保持強勁。

For several quarters in earnings releases and conference calls, we have lamented the unreasonable impact on Insteel of the 2018 Section 232 steel tariff that was applied to most imports of our raw material, hot rolled steel, but not to imports of finished PC strand.

在幾個季度的收益發布和電話會議中，我們一直哀嘆 2018 年第 232 條鋼鐵關稅對 Insteel 造成的不合理影響，該關稅適用於我們大部分原材料熱軋鋼的進口，但不適用於成品 PC 鋼絞線的進口。

We worked for years with multiple administrations to correct this obvious mistake without any success until recently. While there may be reasons to object to the administration’s tariff strategy, I’m glad to report that one provision of the new tariff regime is application of the 25% Section 232 steel tariff to imports of PC strand and other derivative products of hot rolled steel wire rod.

我們多年來與多個政府部門合作試圖糾正這個明顯的錯誤，但直到最近才取得任何成功。雖然可能有理由反對政府的關稅策略，但我很高興地報告，新關稅制度的一項規定是對 PC 鋼絞線和熱軋鋼絲等衍生產品的進口適用 25% 的第 232 條鋼鐵關稅。

This precludes the easy circumvention of the tariff by offshore companies that elected to ship finished PC strand into the US rather than hot rolled steel wire rod, and it eliminates the inequity of our incurring high US cost for raw materials while competing with world market steel prices used to produce imported PC strand. This tariff anomaly cost in steel millions of dollars over the course of seven years.

這就防止了離岸公司輕易地將成品 PC 鋼絞線而不是熱軋鋼絲棒運往美國以規避關稅，也消除了我們在與用於生產進口 PC 鋼絞線的世界市場鋼材價格競爭時承擔美國高昂原材料成本的不公平現象。七年來，這項關稅異常現象對鋼鐵業造成了數百萬美元的損失。

We’re also relieved to see that the reciprocal tariffs announced and subsequently paused by the president would not apply to steel products that are covered by the Section 232 steel tariff. This means that with one notable exception, the world raw material marketplace for Insteel remains as it has been since 2018. That is the Section 232 steel tariff affects imports of hot rolled steel wire rod.

我們也很欣慰地看到，總統宣布並隨後暫停的互惠關稅不適用於第 232 條鋼鐵關稅所涵蓋的鋼鐵產品。這意味著，除了一個明顯的例外，Insteel 的全球原物料市場自 2018 年以來一直保持不變。即232鋼鐵關稅影響熱軋鋼盤條的進口。

The exception I mentioned relates to the reimposition of Section 232 tariff on Mexico and Canada, whereas both companies -- countries had been exempted from 232 until March 12. This could impact Insteel marginally in as much as severe US supply constraints had required us to purchase from Canada on a regular basis. We do not expect the Canadian Section 232 tariff impact to be material, although we have serious concerns about adequate domestic supplies of wire rod going forward.

我提到的例外涉及對墨西哥和加拿大重新實施第 232 條關稅，而這兩個國家在 3 月 12 日之前都已獲得第 232 條關稅豁免。這可能會對 Insteel 產生輕微影響，因為美國嚴重的供應限制要求我們定期從加拿大採購。儘管我們對未來國內線材供應是否足夠感到嚴重擔憂，但我們預計加拿大第 232 條關稅的影響不會很大。

I should note that reciprocal tariffs, if they come to pass, could affect Insteel with respect to purchases of capital equipment, spare parts, and certain operating supplies, all of which are imported. At this point, it’s impossible to know whether the reciprocal tariffs will become reality, or if so, to what extent Enfield might be affected.

我應該指出，如果互惠關稅得以實施，可能會影響 Insteel 購買資本設備、備件和某些營運用品，因為所有這些都是進口的。目前，我們無法知道互惠關稅是否會成為現實，或者如果成為現實，恩菲爾德會受到多大程度的影響。

While we would take advantage of all opportunities to manage our exposure to tariffs, if forced to incur higher costs, we would plan to pass them through in the form of higher selling prices. In our last call, I mentioned that domestic supplies of our primary raw material, hot rolled steel wire rod, were tight due to two permanent mill closures that occurred or been announced and the absence of a third mill from the market for an indefinite period.

雖然我們會利用一切機會來管理關稅風險，但如果被迫承擔更高的成本，我們計劃以提高銷售價格的形式轉嫁這些成本。在我們上次的通話中，我提到，由於兩家鋼廠已經關閉或已宣布永久關閉，且第三家鋼廠無限期退出市場，我們的主要原材料熱軋鋼線材的國內供應緊張。

As of today, the third mill has communicated plans to restart production, but it could not be considered a source of supply today. And we wonder what changes might make the environment for it more hospitable today than last fall when it shut down.

截至今天，第三家工廠已傳達了重新開始生產的計劃，但目前還不能將其視為供應來源。我們想知道，與去年秋天關閉時相比，什麼樣的變化可能會使今天的環境更適合。

And as mentioned, Canada and Mexico are now subject to the Section 232 tariff, which has affected their competitiveness and further tightened supplies available to US purchasers. Uncertainties surrounding adequate supplies of wire rod during our third and fourth fiscal quarters resulted in our making commitments to import substantial quantities.

如上所述，加拿大和墨西哥現在受到第 232 條關稅的約束，這影響了它們的競爭力，並進一步收緊了美國買家的供應。由於第三和第四財季線材供應不足，我們承諾進口大量線材。

While we enter entered into these transactions reluctantly due to the higher inherent higher risk of longer lead times, there was clearly no alternative available except to take downtime at our manufacturing facilities. Additionally, the bullish domestic pricing trajectory greatly reduces the pricing risk normally associated with importing, but that risk has not been eliminated.

雖然我們因為較長的交貨時間固有的較高風險而勉強進行這些交易，但除了停工生產之外，顯然沒有其他選擇。此外，國內價格走勢看漲，大大降低了通常與進口相關的價格風險，但這種風險並未消除。

Depending on actual deliveries, we could see raw material inventory levels spike next quarter. Any increase would be short lived unless we conclude that a higher proportion of offshore supply is required going forward.

根據實際交付情況，我們可能會看到下個季度原材料庫存水準飆升。除非我們得出結論認為未來需要更高比例的海上供應，否則任何成長都將是短暫的。

As you know, during our first quarter, we acquired two manufacturing facilities and production equipment from a third facility. While we closed one manufacturing facility, the integration of the remaining assets is complete and successful. We’re pleased with the operations of the Upper Sandusky, Ohio facility and with the operational and freight synergies we’ve been able to realize today and that we expect to realize in the future.

如您所知，在第一季度，我們從第三家工廠收購了兩家製造工廠和生產設備。雖然我們關閉了一家製造工廠，但剩餘資產的整合已經完成並成功。我們對俄亥俄州上桑達斯基工廠的運作以及我們目前已經實現的營運和貨運協同效應以及我們期望在未來實現的協同效應感到非常滿意。

We could not have accomplished the integrations as quickly or efficiently without sophisticated information systems and diligent professionals at the Upper Sandusky plant and throughout the Insteel organization who made it happen. I’m grateful to everyone involved.

如果沒有上桑達斯基工廠和整個 Insteel 組織的先進資訊系統和勤奮的專業人員，我們就不可能如此快速有效地完成整合。我感謝所有參與的人。

Turning to CapEx. As reported in the release, through six months CapEx totaled $4.9 million , which is well off the pace of our initial forecast for fiscal 2025 of $22 million due primarily to the resources devoted to acquisitions, equipment relocations, and integration activities. We have canceled no projects and continue to seek opportunities to expand our product offering and reduce our cash cost of production.

轉向資本支出。根據新聞稿報導，六個月的資本支出總計 490 萬美元，遠低於我們最初預測的 2025 財年的 2,200 萬美元，這主要是因為用於收購、設備搬遷和整合活動的資源。我們沒有取消任何項目，並繼續尋找機會擴大我們的產品供應並降低我們的現金生產成本。

Given that we’re now in the third quarter of fiscal 2025, we have lowered our CapEx estimate to $17 million and we’ll update expectations during our next call. Looking ahead, we’re aware of the substantial risk related to the administration’s tariff policies and the future performance of the US economy.

鑑於我們現在處於 2025 財年第三季度，我們已將資本支出估算下調至 1700 萬美元，並將在下次電話會議中更新預期。展望未來，我們意識到政府的關稅政策和美國經濟未來表現存在巨大風險。

Regardless of developments in these areas, we’re well positioned to pursue actions to maximize shipments and optimize our costs and to pursue attractive growth opportunities, both organic and through acquisition. This concludes our prepared remarks, and we’ll now take your questions. Becky, would you please explain again the procedure for asking questions?

無論這些領域的發展如何，我們都已做好準備，採取行動最大限度地提高出貨量、優化成本，並透過自然成長和收購來尋求有吸引力的成長機會。我們的準備好的演講到此結束，現在我們將回答大家的提問。貝基，你能再解釋一下提問的程序嗎？

(Operator Instructions) Julio Romero, Sidoti & Company.

（操作員指示）Julio Romero，Sidoti & Company。

Great. Thanks. Good morning, H. Good morning, Scott. I wanted to start on you are viewing hey, good morning, guys.

偉大的。謝謝。早上好，H。早安，史考特。我想從您正在觀看的內容開始，嘿，大家早安。

I wanted to start on how you guys are viewing and managing the broader operating environment. It sounds like the March for Insteel that did see improving business conditions. Sounds like the order book in April is good.

我想先了解你們如何看待和管理更廣泛的營運環境。這聽起來像是 Insteel 的三月確實看到了商業環境的改善。聽起來四月的訂單情況不錯。

But was hoping you could maybe speak to specifically the conditions, April to date, in terms of the changing tariff policy, the overall level of uncertainty and just provide some color to what you’re hearing from your conversations with customers, suppliers and the overall value chain as to how to manage through this level of uncertainty.

但我希望您能具體談談從四月份到現在的情況，包括關稅政策的變化、整體不確定性水平，並就您與客戶、供應商和整個價值鏈的對話中了解到的如何應對這種不確定性提供一些說明。

Well, I would tell you, Julio, that we saw a distinct acceleration of our business beginning in the first quarter. So, I would view our second quarter as continued momentum, that was first evident during our first quarter. I see no reason at this point that we would expect our third or fourth quarters to be different, that business is robust. Our year-over-year shipping comparable through April are really solid. And the limiting factor probably in what our company can do at this point is going to be the availability of raw material.

好吧，胡里奧，我想告訴你，從第一季開始，我們的業務明顯加速發展。因此，我認為我們第二季的勢頭將持續下去，這在第一季就已經顯現。目前我認為沒有理由認為我們的第三季或第四季會有所不同，業務依然強勁。截至四月份，我們的年比出貨量確實非常強勁。目前，我們公司所能做的限制因素可能是原料的可用性。

So as I mentioned in my prepared comments, the bullish conditions that we see in the market really aren’t reflected in the broader macroeconomic indicators that we normally refer to. So something else is responsible for the pickup. But the pickup’s real. The customers are optimistic. They have good backlogs. They’re quoting a lot of business. And I readily acknowledge that all that is subject to change based on people’s perception of the impact of the Trump administration’s trade policies.

因此，正如我在準備好的評論中提到的那樣，我們在市場上看到的看漲狀況實際上並沒有反映在我們通常提到的更廣泛的宏觀經濟指標中。因此，還有其他因素負責拾取。但這輛車是真的。顧客們都很樂觀。他們有充足的積壓訂單。他們引用了很多商業案例。我欣然承認，所有這些都可能根據人們對川普政府貿易政策影響的看法而改變。

So, the comments that you hear today are as of today, and we know that the conditions could change. We are working to ramp up operating hours, at all of our facilities, to accommodate the increasing business levels we see. But, of course, that those ramp up aspirations are tempered by our view of the availability of raw materials and our outlook for continued robust conditions in the market.

所以，您今天聽到的評論都是截至今天的，我們知道情況可能會改變。我們正在努力增加所有設施的營運時間，以適應不斷增長的業務水平。但是，當然，這些提高產量的願望受到我們對原材料供應情況的看法以及對市場持續強勁狀況的展望的影響。

But as of right now, I’ll tell you that we’re trying to operate more hours at every facility, and it continues to be difficult to hire people. So that’s where we are.

但截至目前，我可以告訴您，我們正在嘗試在每個設施中延長營運時間，但招工仍然很困難。這就是我們現在的狀況。

Okay. Very helpful there. I’m tempted to ask you, like, what are your thoughts on that disconnect between the macro indicators what you’re seeing on the ground? Why do you think that is?

好的。非常有幫助。我很想問您，您對宏觀指標與您實際看到的脫節有何看法？您認為這是為什麼呢？

Well, so over time, we have mentioned on numerous occasions that the lack of objective data connected with consumption of our products or even with our customers’ products is frustrating, which has caused us to take a step up the chain and look at more macro factors.

嗯，隨著時間的推移，我們多次提到，缺乏與我們產品消費甚至我們客戶產品相關的客觀數據令人沮喪，這促使我們更進一步，關注更宏觀的因素。

Clearly, somewhere in this whole scheme, inventories have to have a bearing on what’s going on. But it it’s not simply that our customers and their customers are wanting to get product in the ground and get projects started. I would tell you that the quotation activity that our customers are seeing and the quotation activity we are seeing is solid. So, does it mean that the macro factors lag, or does it mean that there’s an anomaly in the market that we really can’t name?

顯然，在整個計劃的某個階段，庫存必定會對正在發生的事情產生影響。但這不僅僅是我們的客戶和他們的客戶想要生產產品並啟動專案。我想告訴你，我們的客戶看到的報價活動和我們看到的報價活動是可靠的。那麼，這是否意味著宏觀因素滯後，或者是否意味著市場存在我們無法命名的異常現象？

I don’t know which it is. And we’ll continue trying to analyze those factors going forward. But right now, we’re blowing and going.

我不知道是哪一個。我們將繼續嘗試分析這些因素。但現在，我們正風馳電掣。

Very helpful. One more, and I’ll pass it on, is, obviously, congratulations on the Section 232 extension, finally, to downstream products, including your PC strand product lines. Just if you could speak to how you’re thinking about pricing in this environment, given you’re likely going to have to see continued rising input costs. You talked about sourcing wire rod from imports, but you’re also likely going to benefit from the supply demand dynamics that your domestic suppliers were in back in 2018 during the first kind of implementation of 232.

非常有幫助。還有一點，我要傳達的是，顯然，祝賀第 232 條最終擴展到下游產品，包括你們的 PC 股線產品線。鑑於您可能會看到投入成本持續上升，您是否可以談談在這種環境下您如何考慮定價？您談到了從進口採購線材，但您也可能會受益於 2018 年首次實施 232 法案期間國內供應商的供需動態。

Yeah. So we did suffer since 2018. But if you think back to what happened in 2018, 2019 and 2020, we were somewhat insulated from the full impact of the 232 anomaly when ocean freight rates from Asia rose by a factor of 10x. It really had the impact of raising the cost of imported PC strand, and it kept that problem sort of in a bayonet for a while. Okay.

是的。所以自 2018 年以來我們確實遭受了損失。但如果回想一下 2018 年、2019 年和 2020 年發生的情況，當來自亞洲的海運費上漲了 10 倍時，我們在某種程度上並未受到 232 異常現象的全面影響。它確實提高了進口 PC 鋼絞線的成本，並且使這一問題在一段時間內處於僵持狀態。好的。

And then the last three years, when ocean rates -- ocean freight rates fell back and normalized, the imported PC strand has been a major problem to us. There’s no way that the extension of 232 to PC strand can be interpreted as bad news. It is good news, but it’s not a panacea.

過去三年，當海運費回落並恢復正常時，進口 PC 鋼絞線對我們來說是一個大問題。232 到 PC 鏈的擴充絕對不能被解讀為壞消息。這是個好消息，但不是萬能的。

The fact of the matter is that the world market price of hot rolled steel is $300 or $400 a ton lower than the US price of comparable product. And that means that our offshore competitors continue to have a substantial advantage, but no longer do they have the Section 232 advantage as well.

事實是，熱軋鋼的全球市場價格比美國同類產品的價格每噸低 300 或 400 美元。這意味著我們的海外競爭對手仍然擁有巨大優勢，但他們不再擁有第 232 條優勢。

So clearly, is this extension to PC strand is a positive thing for Insteel. We hung in those markets that are affected by imports for seven years while we were not covered by Section 232, and it has become more tenable for us to hang in going forward.

顯然，PC 鋼絞線的擴展對 Insteel 來說是一件好事。在不受第232條款約束的情況下，我們在受進口產品影響的市場堅持了七年，現在我們堅持下去就變得更加穩固了。

But until US steel prices and world market steel prices somehow become more equalized still be in a disadvantage position relative to imports. And I would note, as I have before, that only about 10% of Insteel’s revenues are subject to direct import competition, and there’s no accident about that. It is exactly these kinds of anomalies that have caused us to take the direction that we have.

但直到美國鋼鐵價格和世界市場鋼鐵價格以某種方式變得更加均衡之前，美國相對於進口仍處於不利地位。我想指出的是，正如我之前提到的，Insteel 的收入中只有約 10% 受到直接進口競爭的影響，這並非偶然。正是這些異常現象導致我們採取了現在的方向。

Great, thanks for all the coloration, Scott. I'll pass it on.

太好了，謝謝你的精彩講解，斯科特。我會傳達的。

Tyson Bauer, KC Capital.

泰森·鮑爾（KC Capital）。

Good morning, gentlemen, and congratulations. The last time we had all the disruptions in supply and kind of the end markets and those things was when we were in the COVID years not that long ago. It seems like you’re in a far better position this time because a lot of the growth is based upon shipment growth, volume growth, better health of the end markets as opposed to just having a benefit from pricing capabilities.

先生們，早安，祝賀你們。上一次我們遭遇供應和終端市場全面中斷等情況還是在不久前的新冠疫情時期。看起來你這次的處境要好得多，因為很多成長是基於出貨量成長、銷售成長、終端市場的健康狀況改善，而不是僅僅從定價能力中獲益。

How do you view or how do you differentiate what we saw in COVID that had the high inflation and the pricing versus now with the tariffs, but you still have strong underlying growth, which is evident by your shipment growth?

您如何看待或區分我們在 COVID 中看到的高通膨和定價與現在的關稅，但您仍然擁有強勁的潛在增長，這可以從您的出貨量增長中看出？

Yes. I mean, I would tell you that COVID created some artificial conditions in the supply chain, particularly related to inventories. And with the shutdown of part of the economy that ran supply chains dry, the rebuilding of those supply chains when it happened was sort of manic.

是的。我的意思是，我想告訴你，COVID 在供應鏈中創造了一些人為條件，特別是與庫存相關的條件。隨著部分經濟部門的停擺，供應鏈陷入癱瘓，重建這些供應鏈的工作也變得十分瘋狂。

And so I would agree with you that the underlying fundamentals of what we’re seeing today, should it continue, are much more solid than what we saw as the economy recovered from COVID. And I don’t think we’ve ever been under an illusion that solid supply and demand relationships are really essential for our business to do well.

因此，我同意你的觀點，如果這種狀況持續下去，我們今天所看到的基本面將比經濟從新冠疫情中復甦時所看到的要穩固得多。我認為我們從未幻想過穩固的供需關係對於我們業務的成功至關重要。

And today, we have that in ’24 and ’23, we didn’t have it. And our results reflected that. So, I don’t think any of this should really come as a surprise except that I don’t know that anyone forecast the strength of the marketplace that we’re seeing today. Certainly, we didn’t.

而今天，我們擁有了 24 年和 23 年所沒有的東西。我們的結果也反映了這一點。所以，我認為這一切都不應該讓人感到意外，只是我不知道是否有人預測我們今天所看到的市場實力。當然，我們沒有。

Would you anticipate, obviously, with 232 expansion of PC strand, the very timely acquisition as it’s turning out to be allowing you that pricing ability within the industry along with going into the seasonally strong second half of the year. Are you really seeing any pushback at all to your price increases as you push them through? And are you seeing other competitors just following your lead?

您是否預計，隨著 PC 線 232 的擴張，這是非常及時的收購，因為它將使您在行業內擁有定價能力，並進入季節性強勁的下半年。在你們推行漲價政策的過程中，你們是否真的遇到了任何阻力？您是否看到其他競爭對手正在效仿您的做法？

Yes. Well, I mean, keep in mind that as we as we look at what's going on in the marketplace and we're uncertain about whether we'll have sufficient quantities of raw materials to fully serve our market, our sensitivity to competitive conditions in the market is lessened.

是的。嗯，我的意思是，請記住，當我們觀察市場上發生的事情時，我們不確定我們是否有足夠數量的原材料來充分服務我們的市場，我們對市場競爭條件的敏感度就會降低。

But right now, I think every consumer of steel wire rod is feeling the same impacts of tight supplies and uncertainties about availability so that the natural reaction is that prices are elevating for the hot rolled product, they're elevating for our products. And how long that continues, it is unknown that I certainly see it going through our third quarter. Does it carry over into our fourth quarter?

但目前，我認為每位鋼絲線材消費者都感受到了供應緊張和供應不確定性的同樣影響，因此自然的反應就是熱軋產品的價格上漲，我們的產品價格也上漲。這種情況會持續多久，目前還不得而知，但我肯定認為這種情況會持續到第三季。它會延續到我們的第四季嗎？

It's hard to say. I would -- And I would tell you that Insteel is not the only company out there that has turned to the offshore markets to supplement domestic supplies, which are clearly inadequate. So I think in the fourth quarter, the -- our suppliers and our market will look around at conditions and we'll just we'll just analyze the impact of hot-rolled prices and downstream prices and hopefully make the appropriate decisions at the time.

這很難說。我想——我想告訴你，Insteel 並不是唯一一家轉向海外市場來補充國內供應（國內供應明顯不足）的公司。因此我認為在第四季度，我們的供應商和市場將會觀察情況，我們將分析熱軋價格和下游價格的影響，並希望當時做出適當的決定。

Okay. Given those comments, does that imply that we will see ASP growth year-over-year next quarter and really for the second half, along with that shipment growth better utilization, which should create a favorable environment for your spreads. Are all those three things aligning at least for the next couple of quarters?

好的。鑑於這些評論，這是否意味著我們將在下個季度以及下半年看到平均售價同比增長，同時出貨量增長和利用率提高，這將為您的利差創造有利的環境。至少在接下來的幾個季度裡，這三件事都會協調一致嗎？

Well, I mean I think it would be hard to see a deterioration in those factors during our third fiscal quarter. I can't comment on our fourth quarter.

嗯，我的意思是，我認為在我們的第三財季，這些因素很難惡化。我無法對我們的第四季度發表評論。

Okay. From looking at state budgets as they're in that process, the federal budget, the continuing resolution, what may or may not be untapped going forward. It doesn't appear to be any lowering of spending, especially on your key markets and the public spending, which should be favorable for you.

好的。從目前州預算、聯邦預算、持續決議的情況來看，未來哪些方面可能會或可能不會充分利用。看起來並沒有減少任何支出，特別是在主要市場和公共支出方面，這對您來說是有利的。

And because we are starting off such a low base on residential construction, are all those things favorable as we go forward, that may be planning maybe lower confidence may be lower, but things that are in the pipeline or things that are imminent to begin construction, all those are really just on schedule as they were intended to be.

而且由於我們的住宅建設起點很低，所有這些事情對我們未來的發展都是有利的，這可能是計劃中的，也許信心較低，但正在籌備中的事情或即將開始建設的事情，所有這些都確實按照計劃進行。

I mean I think one of the more optimistic things that we're seeing in the marketplace is that while the infrastructure consumption of our product has been pretty consistent, we've seen some of the commercial -- some of the commercial guys with really weak order books over the past couple of years but that's starting to turn around, the warehouse people, the wall panel people, they are beginning to build backlogs that are -- that are certainly encouraging.

我的意思是，我認為我們在市場上看到的更樂觀的事情之一是，雖然我們產品的基礎設施消耗一直相當穩定，但我們看到一些商業 - 一些商業人員在過去幾年中的訂單量非常薄弱，但這種情況開始好轉，倉庫人員、牆板人員，他們開始建立積壓訂單 - 這當然是令人鼓舞的。

So from our perspective of the world, it appears that part of the market is showing signs of life, which have been rare over the last couple of years.

因此，從我們的世界視角來看，部分市場似乎正在顯示出復甦的跡象，這在過去幾年中並不常見。

Okay. And a bookkeeping question, last one for me. On the incentive accrual, did we have any catch-up in the quarter or pull forward based upon your -- now your ongoing trend line here. that we get back to a more normalized accrual in the third and fourth quarter, Scott?

好的。還有一個簿記問題，對我來說是最後一個。在激勵累積方面，我們在本季是否有任何追趕或提前的表現，這取決於您現在的持續趨勢線。史考特，我們能在第三季和第四季恢復到更正常的應計水準嗎？

I don't know if you can say there's a normalized accrual is purely going to be dependent on performance. The better we do, the higher that expense is going to be.

我不知道您是否可以說標準化應計純粹取決於績效。我們做得越好，花費就會越高。

But we didn't have any catch-up in the quarter based on where we were in the first quarter.

但與第一季相比，我們本季的表現並沒有任何追趕。

Not necessarily. The quarter expense reflects what happened in the quarter. It fails on itself throughout the year. So obviously, there were some build in Q1 that got triggered in Q2 as we continued moving higher. But I wouldn't say there's any carryover.

未必。季度費用反映的是該季度發生的情況。它全年都無法正常工作。因此顯然，隨著我們繼續走高，第一季的一些建設在第二季度得到了觸發。但我不會說有任何延續。

Thank you. We currently have no further questions. So I'll hand back to H. for closing remarks.

謝謝。目前我們沒有其他問題。因此我將把發言交還給 H. 進行結束語。

Okay. Thank you, Betty. We appreciate your interest in the company. We look forward to talking to you next quarter and encourage you to contact us in the meantime if you have questions. Thank you.

好的。謝謝你，貝蒂。我們感謝您對我們公司的關注。我們期待下個季度與您交談，並鼓勵您在此期間與我們聯繫，如果您有任何疑問。謝謝。

This concludes today's call. Thank you for joining us. You may now disconnect your lines.

今天的電話會議到此結束。感謝您加入我們。現在您可以斷開線路了。