Insteel Industries Inc (IIIN) 2025 Q3 法說會逐字稿

Hello and welcome, everyone to the Insteel Industries third-quarter 2025 earnings call. My name is Becky and I'll be your operator today.

大家好，歡迎參加 Insteel Industries 2025 年第三季財報電話會議。我叫貝基，今天我將擔任您的接線生。

(Operator Instructions)

（操作員指示）

I will now hand over to your host, H. Woltz to begin. Please go ahead.

現在我將把主持人 H. Woltz 交給他開始。請繼續。

Thank you. Good morning. Thank you for your interest in Insteel and welcome to our third quarter of 2025 conference call, which will be conducted by Scot Jafroodi, our Vice President, CFO, and Treasurer, and me.

謝謝。早安.感謝您對 Insteel 的關注，歡迎參加我們的 2025 年第三季電話會議，該會議將由我們的副總裁、財務長兼財務主管 Scot Jafroodi 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 that the upturn in business activity we experienced over the last couple of quarters continued during our third fiscal quarter, despite macro indicators that would indicate mediocre activity in the construction sector.

我們很高興看到，儘管宏觀指標顯示建築業活動平平，但過去幾季我們經歷的商業活動好轉的勢頭在第三財季得以延續。

While we're glad to see the ongoing recovery in our markets, we continue to be aware of uncertainties created by the rollout of the administration's trade policies and from the economic cycle.

雖然我們很高興看到我們的市場持續復甦，但我們仍然意識到政府貿易政策的推出和經濟週期所帶來的不確定性。

I'll now turn the call over to Scot to comment on our financial results and following Scot's comments, I'll pick it back up to discuss our business outlook and the view of the impact of tariffs on our company.

現在，我將把電話轉給斯科特，請他對我們的財務業績發表評論，在斯科特發表評論之後，我將再次討論我們的業務前景以及關稅對我們公司的影響的看法。

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

謝謝 H，今天參加我們電話會議的各位早安。

As we reported in this morning's press release, our strong third quarter performance was driven by higher shipment volumes, along with a significant recovery in spreads between selling prices and raw material costs.

正如我們在今天上午的新聞稿中所報導的那樣，我們第三季度的強勁業績得益於出貨量的增加，以及銷售價格和原材料成本之間的價差的大幅回升。

Net earnings for the quarter increased to $15.2 million or $0.78 per share compared to $6.6 million or $0.34 per share in the prior year. Excluding the non-recurring restructuring charges mentioned in the release, adjusted earnings were $0.81 per share.

本季淨收益增至 1,520 萬美元或每股 0.78 美元，去年同期為 660 萬美元或每股 0.34 美元。不包括新聞稿中提到的非經常性重組費用，調整後每股收益為 0.81 美元。

Our results this quarter are supported by the pricing actions we have taken to manage the continued rise in raw material costs. Average selling prices rose 11.7% year over year and 8.2% sequentially from the second quarter, reflecting price increases implemented throughout fiscal 2025, including additional adjustments made in the third quarter to help offset the impact of higher input costs.

我們為應對原材料成本持續上漲而採取的定價措施支持了本季的業績。平均售價年增 11.7%，季增 8.2%，反映了 2025 財年全年實施的價格上漲，包括第三季為幫助抵銷投入成本上升的影響而做出的額外調整。

As we mentioned on our last call, the US wire rod market remains tight, driven by reduced domestic production capacity alongside strong underlying demand. Since January, published prices for steel wire rod, our primary raw material, have increased by approximately $190 per ton.

正如我們在上次電話會議上提到的那樣，由於國內產能下降以及潛在需求強勁，美國線材市場仍然緊張。自一月份以來，我們的主要原料鋼線材的公佈價格已上漲約每噸 190 美元。

Despite these price increases, supplies remain limited. To help ease these conditions, we have supplemented our domestic purchases with significant offshore volumes which have improved our material availability and are helping to support production levels heading into the fourth quarter.

儘管價格上漲，但供應仍然有限。為了緩解這些情況，我們在國內採購的基礎上補充了大量海外採購，這提高了我們的材料可用性，並有助於支持進入第四季度的生產水平。

Despite these supply headwinds, shipments for the quarter increased 10.5% year over year and 3.5% sequentially. The growth was driven by contributions from our recent acquisitions along with improving demand in our construction end markets.

儘管存在供應阻力，本季出貨量仍年增 10.5%，季增 3.5%。這一增長得益於我們最近的收購以及建築終端市場需求的成長。

That said, we weren't able to fully meet all the market demand this quarter. Limited availability of wire rod created production challenges at several of our facilities, which in turn affected our ability to maintain typical lead times.

話雖如此，我們本季仍無法完全滿足所有市場需求。線材供應有限為我們的幾家工廠帶來了生產挑戰，進而影響了我們維持典型交貨時間的能力。

Gross profit for the quarter increased $15.4 million from a year ago to $30.8 million, while gross margin expanded by 650 basis points to 17.1%. This performance is driven primarily by an expansion of spreads as the increase in average selling prices outpace the rise in raw material costs during the quarter.

本季毛利較去年同期增加 1,540 萬美元，達到 3,080 萬美元，毛利率擴大 650 個基點，達到 17.1%。這一業績表現主要得益於本季平均銷售價格的上漲超過原材料成本的上漲，從而導致價差擴大。

As we've noted on prior calls, during periods of strong demand and rising steel rod prices, our financial results tend to benefit from both the timely implementation of price increases, enabling us to offset higher replacement costs and the favorable impact of lower cost inventory flowing through under our first-in, first-out accounting methodology.

正如我們在先前的電話會議中指出的，在需求強勁和鋼棒價格上漲的時期，我們的財務業績往往受益於及時實施的價格上漲，使我們能夠抵消更高的更換成本，以及根據先進先出會計方法流入的低成本庫存的有利影響。

As we move into the fourth quarter, we expect gross margin to remain near current levels, supported by strengthening demand, favorable raw material carrying values, and higher operating rates at our facilities. SG&A expense for the quarter rose to $10.6 million or 5.9% of net sales compared to $7.9 million or 5.4% of net sales in the prior year period.

進入第四季度，我們預計毛利率將保持在當前水準附近，這得益於需求增強、原材料持有價值有利以及工廠運營率提高。本季銷售、一般及行政費用 (SG&A) 上升至 1,060 萬美元，佔淨銷售額的 5.9%，而去年同期為 790 萬美元，佔淨銷售額的 5.4%。

The increase is primarily attributable to a $2.5 million rise in compensation expense under our return on capital based incentive plan, which reflects our improved financial performance during the quarter. We also recognize an increase of $300,000 in amortization expense related to intangible assets acquired through our recent acquisitions.

這一增長主要歸因於我們基於資本回報的激勵計劃下的薪酬費用增加了 250 萬美元，這反映了我們本季財務表現的改善。我們也確認，透過最近的收購獲得的無形資產相關的攤銷費用增加了 30 萬美元。

These increases are partially offset by $487,000 favorable year over year swing in the cash surrender value of life insurance policies, reflecting fluctuations in the value of the underlying investments. Separately, we incurred $843,000 in restructuring charges during the quarter tied to the consolidation of our welded wire manufacturing operations.

這些增長被人壽保險單現金退保價值 487,000 美元的同比有利波動部分抵消，反映了基礎投資價值的波動。另外，本季我們因合併焊接線製造業務而產生了 843,000 美元的重組費用。

These actions follow our acquisitions of Engineered Wire Products and O'Brien Wire Products of Texas earlier in the fiscal year. While the majority of the remaining restructuring activities are expected to be completed during the fourth quarter, some related costs may extend into the first quarter of fiscal 2026.

此前，我們在本財年早些時候收購了 Engineered Wire Products 和德克薩斯州的 O'Brien Wire Products。雖然剩餘重組活動的大部分預計將在第四季度完成，但一些相關成本可能會延續到 2026 財年第一季。

Our effective tax rate for the quarter fell to 23.3% from 24.7% a year ago. Looking ahead to the balance of the year, we expect our effective rate to run close to 23.4%, subject to the level of pre-tax earnings, both tax differences, and other assumptions and estimates that compose our tax provision calculation.

本季我們的有效稅率從一年前的 24.7% 下降至 23.3%。展望今年的剩餘時間，我們預計我們的有效稅率將接近 23.4%，這取決於稅前收益水準、稅收差異以及構成我們的稅務準備金計算的其他假設和估計。

Turning to the cash flow statement and balance sheet. Operating activities generated $28.2 million cash during the quarter, driven primarily by higher net earnings and a reduction in net working capital. Working capital improvement was largely attributed to a $36 million increase in accounts payable and accrued expenses, reflecting elevated rod purchases and an increase in average rod cost.

轉向現金流量表和資產負債表。本季經營活動產生了 2,820 萬美元的現金，主要原因是淨收益增加和淨營運資本減少。營運資本的改善主要歸因於應付帳款和應計費用增加了 3,600 萬美元，反映了桿採購量的增加和平均桿成本的增加。

This benefit was partially offset by a $23.1 million increase in inventories, which was also tied to the rod purchasing activity and the higher average carrying value of raw materials. Our inventory position at the end of the quarter represented 2.7 months of shipments on a forward-looking basis, calculated it off of forecasted Q4 shipments, which is up from 2.2 months at the end of the second quarter.

這項收益被庫存增加 2,310 萬美元部分抵消，這也與桿材採購活動和原材料平均帳面價值較高有關。我們本季末的庫存狀況代表了前瞻性基礎上 2.7 個月的出貨量，這是根據預測的第四季出貨量計算得出的，高於第二季末的 2.2 個月。

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

最後，我們第三季末的庫存平均單位成本估值高於第三季的銷售成本，但相對於目前的重置成本仍然有利，這將對第四季的利差和利潤率產生正面影響。

We incurred $1.6 million in capital expenditures in the quarter for a total of $6.5 million through the first nine months of our fiscal year. Based on forecasted expenditures for the remainder of fiscal 2025, we reduced our full year target to $11 million from a previously communicated target of $17 million.

本季我們的資本支出為 160 萬美元，本財政年度前九個月的總支出為 650 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 1,700 萬美元下調至 1,100 萬美元。

H. will provide more detail on this topic in his remarks. We continued our share buyback program during the quarter, repurchasing $200,000 of common equity, equal to approximately 6,000 shares. From a liquidity perspective, we ended the quarter with $53.7 million of cash on hand, and we're debt-free with no borrowings outstanding on our $100 million revolving credit facility, providing us ample financial flexibility and ability to pursue any attractive growth opportunities that may develop.

H. 將在他的評論中提供有關該主題的更多細節。我們在本季繼續執行股票回購計劃，回購了價值 20 萬美元的普通股，相當於約 6,000 股。從流動性角度來看，本季末我們手頭上有 5,370 萬美元現金，而且我們沒有債務，1 億美元的循環信貸額度中沒有未償還的借款，這為我們提供了充足的財務靈活性和追求任何可能出現的有吸引力的增長機會的能力。

Turning to the macro indicators for our construction end markets. Recent data continues to reflect a mixed and uncertain outlook. The latest readings from key leading indicators for non-residential construction suggests that the market conditions may remain -- could remain challenging over the near term.

轉向我們的建築終端市場的宏觀指標。最近的數據繼續反映出混合且不確定的前景。非住宅建築主要領先指標的最新讀數表明，市場狀況可能在短期內保持——仍然充滿挑戰。

In May, the architectural billing index increased to 47.2, reflecting a modest easing in the rate of decline. While this uptick suggests some early signs of stabilization, particularly with an increase in new project inquiries, the index remains below the 50 threshold that indicates growth.

5月份，建築業營業額指數回升至47.2，降幅略為收窄。儘管這種上漲表明了一些穩定的早期跡象，特別是新項目諮詢數量的增加，但該指數仍然低於表明增長的 50 的門檻。

Meanwhile, the Dodge Momentum Index which tracks non-residential projects entering the planning stage, offered a more encouraging outlook in June. The index rose 6.8% month over month to 225.1. It is now approximately 20% higher than it was in June of last year.

同時，追蹤進入規劃階段的非住宅項目的道奇動量指數在 6 月呈現了更為令人鼓舞的前景。該指數季增6.8%，至225.1點，較去年6月上漲約20%。

Much of the game was in the commercial segment, which climbs 7.3% for May and is up 11% year over year. This tickup in activity -- planning activity suggests a growing pipeline that could support future non-residential construction demand.

大部分遊戲都屬於商業領域，5 月該領域成長了 7.3%，比去年同期成長了 11%。規劃活動的增加表明，不斷增長的建設管道可以支持未來非住宅建築的需求。

US cement shipments, another proxy for construction activity showed modest improvement in March, rising 1.4% year over year. However, on a year to date basis through March, shipments remained down 7.5% compared to the same period in 2024.

另一個反映建築活動的指標——美國水泥出貨量——3 月出現小幅改善，較去年同期成長 1.4%。然而，截至 3 月的年初至今，出貨量與 2024 年同期相比仍下降了 7.5%。

Construction spending data from the US Department of Commerce also reflects the softer demand environment. In May, total construction spending declined 0.3% from April on a seasonally adjusted annual basis and it was down 3.5% compared to the prior year.

美國商務部的建築支出數據也反映出需求環境疲軟。5月份，經季節性調整後的年率，總建築支出較4月份下降0.3%，較上年同期下降3.5%。

Non-residential spending fell 0.2% month over month and 1.1% year over year. Within that category, street -- highway and street construction, a key end use market for our products was down 0.7% versus May of last year.

非住宅支出較上季下降0.2%，較去年同期下降1.1%。在該類別中，街道——公路和街道建設，我們產品的一個主要最終用途市場與去年 5 月相比下降了 0.7%。

The broader macroeconomic environment is also contributing to the uncertainty moving forward. While the Federal Reserve has indicated a possible shift towards lower interest rates later in the year, persistent inflationary pressures and uneven economic data could delay or limit the extent of easing.

更廣泛的宏觀經濟環境也加劇了未來的不確定性。儘管聯準會已表示可能在今年稍後轉向降低利率，但持續的通膨壓力和不均衡的經濟數據可能會推遲或限制寬鬆的幅度。

At the same time, the evolving US trade and tariff landscape, particularly around steel, presents further uncertainty with potential implications for both input costs and our long-term demand forecasts. While market conditions remain competitive and visibility beyond the near term is limited, we believe we're still well-positioned to capitalize on improving demand trends of the close out fiscal 2025.

同時，不斷變化的美國貿易和關稅格局，尤其是鋼鐵領域的關稅格局，帶來了進一步的不確定性，可能對投入成本和我們的長期需求預測產生影響。儘管市場條件依然競爭激烈，且短期內前景可預見性有限，但我們相信，我們仍能充分利用 2025 財年末需求趨勢的改善。

By staying disciplined in our operations, closely managing working capital, and maintaining strong customer relationships, we aim to navigate near-term challenges while building long-term value for our shareholders.

透過在營運中保持紀律、密切管理營運資金以及維持良好的客戶關係，我們旨在應對短期挑戰，同時為股東創造長期價值。

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

我的準備好的發言到此結束，現在我將把電話轉回給 H。

Thank you, Scot.

謝謝你，斯科特。

We noted a substantial acceleration of demand for concrete reinforcing products in Q1 and Q2 and commented that we expected the demand recovery to continue through fiscal 2025. We're glad to confirm that the positive trend continued through our third fiscal quarter and into the strongest seasonal period for our company, giving us confidence that we should perform well for the balance of the calendar year.

我們注意到第一季和第二季對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 財年。我們很高興地確認，這一積極趨勢持續到了第三財季，並進入了公司業績最強勁的季節性時期，這使我們有信心在整個日曆年中取得良好的業績。

As stated in release in the release, the brisk pace of business we experienced over the past few months is not reflected in broader macroeconomic indicators that are generally used to measure the strength of the construction industry, but the demand recovery is nevertheless real.

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，但需求復甦卻是真實存在的。

The confidence level of most customers, interactions between our salespeople and customers, and favorable seasonal trends lead us to believe business conditions should remain reasonably robust for the balance of the calendar year.

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，在整個日曆年中，商業狀況應該保持相當強勁。

The administration's tariff strategy continues to be a work in process and affects our industry in unpredictable ways. Before updating listeners on our view of tariffs and how they may affect Insteel, let me reiterate that only about 10% of Insteel's revenue base is directly affected by imports and therefore potentially subject to unintended consequences of the administration's tariff policy.

政府的關稅策略仍在實施中，並將以難以預測的方式影響我們的產業。在向聽眾介紹我們對關稅的看法以及關稅可能對 Insteel 產生的影響之前，請允許我重申，Insteel 的收入基礎中只有約 10% 直接受到進口的影響，因此可能會受到政府關稅政策的意外後果的影響。

This is not coincidental, as we've recognized the futility of competing in markets where imports constitute a major source of competition. The objectives and disciplines driving offshore competitors and offshore investors are fundamentally different from those influencing domestic producers and domestic investors.

這並非巧合，因為我們已經意識到在進口產品構成主要競爭來源的市場上競爭是徒勞無功的。驅動海外競爭對手和海外投資者的目標和原則與影響國內生產商和國內投資者的目標和原則有著根本的不同。

While we're committed to retaining our position in import effective markets going forward, it's unlikely that Insteel would materially increase its exposure to import competition.

雖然我們致力於在未來保持在進口有效市場中的地位，但 Insteel 不太可能大幅增加其在進口競爭中的風險。

With those comments of context, let me provide a current view of the tariff landscape while acknowledging that my comments are valid today and may not be valid tomorrow, depending on the actions the administration may take.

透過這些背景評論，讓我提供對關稅情況的當前看法，同時承認我的評論今天有效，但明天可能無效，這取決於政府可能採取的行動。

Everyone probably knows that the Section 232 tariff, which has been in effect since March of 2018, was doubled to 50% of value effective in June following a determination by the administration that the 25% tariff was insufficient to protect the domestic steel industry.

大家可能都知道，自 2018 年 3 月起生效的第 232 條關稅於 6 月翻倍至價值的 50%，因為美國政府認定 25% 的關稅不足以保護國內鋼鐵業。

While we welcomed the increase to 50%, which would further level the playing field with respect to imports of PC strands, we were surprised to learn that the increased Section 232 tariff would apply only to the steel value of imports.

雖然我們對增加至 50% 表示歡迎，這將進一步為 PC 鋼絞線的進口創造公平的競爭環境，但我們驚訝地得知，增加的第 232 條關稅僅適用於進口的鋼材價值。

The executive order increasing the Section 232 tariff was ambiguous enough to give rise to a variety of interpretations with respect to the value that was actually tariff. While PC strand is a product that is 100% steel, the steel value subject to the tariff is reported to US Customs by the Importer of Record.

提高第 232 條關稅的行政命令含糊不清，引發了對實際關稅價值的各種解釋。雖然 PC 鋼絞線是 100% 由鋼製成的產品，但受關稅約束的鋼價值由記錄進口商向美國海關報告。

Not surprisingly, some parties have elected to interpret the executive order in accordance with their interests. While we have no visibility into the tariff actually paid by PC strand importers of record, we understand that some importers of record are reporting steel values equal to wire rod value, and in the case of vertically integrated producers that produce wire rod, may be reporting steel values equal to the value of steel scrap that they purchase, melt, and roll into wire rod.

毫不奇怪，一些政黨選擇根據自己的利益來解釋行政命令。雖然我們無法了解 PC 鋼絞線進口商實際支付的關稅，但我們了解到，一些進口商報告的鋼材價值等於盤條價值，而對於生產盤條的垂直整合生產商，他們報告的鋼材價值可能等於他們購買、熔化並軋製成盤條的廢鋼價值。

Prior to the increase in the tariff to 50%, it was clear that the tariff was imposed on the full value of the imported PC strand. We understand, however, that US Customs is meticulous in requiring thorough documentation of tariff values, and we believe that this matter will be resolved appropriately.

在關稅上調至50%之前，明確規定關稅是按進口PC鋼絞線全額徵收的。然而，我們理解美國海關對關稅價值的完整文件要求十分嚴格，我們相信此事將得到妥善解決。

Erroneous interpretations of the tariff undermine the administration's intent with respect to the Section 232 tariff, and we're working with the Department of Commerce to raise the visibility of this matter and to seek corrections that may be warranted.

對關稅的錯誤解讀破壞了政府關於第 232 條關稅的意圖，我們正在與商務部合作，提高此事的知名度，並尋求必要的糾正。

Meanwhile, the uncertainty surrounding the issue is sufficient to induce caution in the importing community, since there is a prospect for retroactive truing up and intentional violations could constitute customs fraud, which is a criminal offense.

同時，圍繞該問題的不確定性足以引起進口界的謹慎，因為存在追溯調整的可能性，而故意違法行為可能構成海關欺詐，這是一種刑事犯罪。

Aside from the impact on PC strand imports, the administration's tariff policy is affecting our purchase of spare parts and our primary raw material, hot rolled carbon steel wire rod. Concerning spare parts, most are imported primarily from Europe and are subject to the Section 232 tariff on steel and aluminum, as well as to reciprocal tariffs on any non-steel or non-aluminum content.

除了對 PC 鋼絞線進口的影響外，政府的關稅政策也影響了我們的備件採購和主要原料熱軋碳鋼線材。至於備件，大部分主要從歐洲進口，並須遵守第 232 條對鋼鐵和鋁徵收的關稅，以及對任何非鋼鐵或非鋁成分徵收的互惠關稅。

This creates a substantial administrative challenge because US Customs will not clear apart until confirming it's steel content, it's aluminum content, it's non-steel or aluminum content, and the country of origin for non-steel or non-aluminum content.

這帶來了巨大的行政挑戰，因為美國海關只有在確認貨物的鋼含量、鋁含量、非鋼或鋁含量以及非鋼或非鋁含量的原產國後才會清關。

Only then can customs apply the relevant tariffs to the part. The result, of course, is longer lead time for spare parts and higher costs. The tariff regime also affects our purchases of offshore raw materials. As a reminder, imports of wire rod are essential for Insteel today, as there is insufficient domestic wire rod production capacity to supply domestic demand.

只有這樣，海關才能對該部件徵收相應的關稅。當然，其結果是備件交付週期更長且成本更高。關稅制度也影響我們對海外原料的採購。需要提醒的是，目前線材進口對 Insteel 來說至關重要，因為國內線材產能不足以滿足國內需求。

Our choice is to pursue offshore sourcing or to scale back operations to the point that our ability to support customers is threatened. With this trade-off in mind, we've elected to import sufficient volumes of wire rod to assure we can support our markets.

我們的選擇是尋求離岸採購或縮減業務規模，直到我們支援客戶的能力受到威脅。考慮到這種權衡，我們選擇進口足夠數量的線材以確保我們能夠支持我們的市場。

We were surprised by the administration's June action to increase the Section 232 tariff, which will affect the undelivered portion of our offshore wire rod purchases. Inasmuch as there's no supply alternative, we elected to proceed with the offshore transactions, and we will pass through the higher costs.

我們對政府 6 月提高第 232 條關稅的行動感到驚訝，這將影響我們海外線材採購中未交付的部分。由於沒有其他供應選擇，我們選擇繼續進行離岸交易，並將轉嫁更高的成本。

We're convinced that competitors are similarly situated, although some may find themselves short of raw materials. The reality of wire rod supply in the US required us to make commitments to import substantial quantities.

我們確信，競爭對手也面臨類似的情況，儘管有些競爭對手可能會發現自己缺乏原料。美國線材供應的現實情況要求我們承諾進口大量線材。

While we entered into these transactions reluctantly due to the inherent higher risk of longer lead times, there was no alternative available except to take downtime at our manufacturing facilities. We believe the bullish domestic pricing trajectory for wire rod 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，我們別無選擇。我們認為，國內線材價格走勢看漲，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 temporarily, although any such spike would be short-lived.

根據實際交付情況，我們可能會看到原材料庫存水準暫時飆升，儘管這種飆升都是短暫的。

Moving to acquisition activity. We continue to be pleased with the operation and results of the Upper Sandusky, Ohio facility that we acquired during Q1. Our Texas acquisition, while considerably smaller, has also yielded the expected benefits.

轉向收購活動。我們對第一季度收購的俄亥俄州上桑達斯基工廠的營運和業績感到滿意。我們在德州的收購雖然規模相當小，但也產生了預期的效益。

I, again, compliment and thank our people, including those at the acquired facilities for their professional and effective integration efforts.

我再次讚揚並感謝我們的員工，包括被收購工廠的員工，感謝他們的專業和有效的整合努力。

Turning to CapEx. As mentioned in the release, we now estimate $11 million expenditures for fiscal 2025. The resources consumed by integration activities related to our acquisitions impacted our investment programs at our manufacturing facilities which we expect to rebound in coming years as we execute on our commitment to lower our cash, cost of production and expand our product offering.

轉向資本支出。正如新聞稿中所提到的，我們現在估計 2025 財年的支出為 1,100 萬美元。與我們的收購相關的整合活動所消耗的資源影響了我們在製造工廠的投資計劃，隨著我們履行降低現金、生產成本和擴大產品供應的承諾，我們預計未來幾年這些投資計劃將出現反彈。

No projects have been canceled and we are evaluating a number of attractive opportunities. We'll provide a view of 2026 CapEx next quarter.

沒有任何項目被取消，我們正在評估一些有吸引力的機會。我們將在下個季度提供 2026 年資本支出的展望。

Looking ahead, we're aware of the substantial risks related to the administration's tariff policies and the future of performance of the US economy. Regardless of developments in these areas, we are well-positioned to pursue actions to maximize shipments and optimize our costs and to pursue attractive growth opportunities, both organic and through acquisition.

展望未來，我們意識到與政府關稅政策和美國經濟未來表現相關的巨大風險。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，並透過有機成長和收購來尋求有吸引力的成長機會。

This concludes our prepared remarks, and we'll now take your questions.

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。

Becky, would you please explain the procedure for asking questions?

貝基，你能解釋一下提問的程序嗎？

(Operator Instructions)

（操作員指示）

Julio Romero, Sidoti & Company.

胡里奧·羅梅羅，西多蒂公司。

You talked about the strong business activity you saw in April that you called out last quarter on your call continuing into the third quarter. I'm curious if you've also seen floating levels for newer projects follow that same trajectory.

您談到了 4 月份強勁的商業活動，您在上個季度的電話會議上提到，這種活動將持續到第三季。我很好奇，您是否也看到新專案的浮動水平遵循相同的軌跡。

Keep in mind that we really operate with minimal backlogs. Raw material constrictions have actually caused our backlogs to grow and I think it's difficult to compare this year with prior years because circumstances have changed.

請記住，我們確實以最少的積壓量進行營運。原材料的限制實際上導致了我們的積壓訂單增加，我認為今年與往年很難進行比較，因為情況已經改變了。

But our backlogs are lengthy enough to concern me at this point from just the perspective of providing the requisite level of service that our customers expect and in more project-oriented markets, we're seeing that data centers and the like have clearly filled the gap that the slower commercial construction has created.

但是，僅從提供客戶期望的必要服務水平的角度來看，我們的積壓工作量已經足夠大，這讓我感到擔憂，而在更多以項目為導向的市場中，我們看到數據中心等已經明顯填補了商業建設速度較慢所造成的空白。

So overall, we're pretty optimistic about what we're seeing out there.

所以總的來說，我們對目前看到的情況非常樂觀。

When thinking about Section 232 and the first implementation of Section 232 back in 2018, the resolution to include downstream steel didn't get resolved until about seven years later and just thinking about that historical context, I wanted to ask what's your sense of the timeline -- potential timeline to resolve the most recent Section 232 disconnect between the metal value of the import versus the full value of the import.

在思考第 232 條以及 2018 年第 232 條的首次實施時，包括下游鋼鐵的決議直到大約七年後才得到解決，考慮到這一歷史背景，我想問一下您對時間表的看法——解決最近第 232 條進口金屬價值與進口總價值之間的脫節的潛在時間表。

Well, keep in mind that we don't know that importers of record are not actually declaring the full value of PC strand. We believe that it is the administration's intent that the tariff should be on the full value of the product.

嗯，請記住，我們不知道記錄的進口商實際上沒有申報 PC 鋼絞線的全部價值。我們相信，政府的意圖是按照產品的全部價值徵收關稅。

And therefore, by implication, anyone who is acknowledging the steel value as wire rod value or steel scrap value is playing outside the rules and we don't think that that will be allowed to persist on an ongoing basis and we are, as you might expect, very vocal with commerce about this and it would be nice, but I guess it's not unexpected that there's a considerable amount of ambiguity in this thing the way it was rolled out.

因此，從言外之意來說，任何將鋼材價值視為線材價值或廢鋼價值的人都是在違反規則，我們認為這種情況不會被允許持續下去，而且正如您所料，我們會就此向商業界發出強烈抗議，這很好，但我想，這件事在推出時存在相當大的模糊性也就不足為奇了。

And then just last one for me would just be thinking about the integration of engineered wire products, how is that going and can you maybe speak to any synergies you may be seeing on the freight cost per ton side of things from that acquisition?

然後，對我來說，最後一個問題是考慮工程線材產品的整合，進展如何？您能否談談此次收購在每噸運費成本方面可能產生的任何協同效應？

Well, keep in mind that we competed with this group for a lot of years, and we could tell just from a competitive point of view that the facility was a good facility and the people knew what they were doing and certainly, our view has not changed.

好吧，請記住，我們與這個集團競爭了很多年，我們可以從競爭的角度判斷出，這個設施是一個很好的設施，人們知道他們在做什麼，當然，我們的觀點沒有改變。

We're learning as much as we teach, and we feel real solid about where we are with the acquisition. We've moved a lot of products around, so there's no real comparable performance between last year and this year. It's just a fundamentally different operating approach.

我們學到的和教的一樣多，我們對收購的進展感到非常滿意。我們已經移動了很多產品，因此去年和今年的表現沒有真正的可比性。這只是一種根本不同的操作方法。

But they obviously know what they're doing and they're productive and we know how to quantify those things.

但他們顯然知道自己在做什麼，而且很有成效，我們知道如何量化這些事情。

Tyson Bauer, KC Capital.

泰森·鮑爾（KC Capital）。

Well done.

做得好。

I'm just going to piggyback on that last question since you opened up the door. H., do you think that EWP acquisition is probably the best one you've done as CEO as far as timing, impact and benefit for shareholders?

既然你打開了門，我只是想順便回答最後一個問題。H.，從時機、影響和股東利益來看，您是否認為 EWP 收購可能是您作為執行長所做的最好的收購？

No.

不。

You go back to the --

你回到--

I think the Ivy acquisition in fiscal 2011 was more transformative for the company. But I think it was a very good one, Tyson. So -- but when you say the best, I mean we acquired five plants with the Ivy acquisition.

我認為 2011 財年對 Ivy 的收購對公司來說具有更大的變革意義。但我認為這是一個非常好的例子，泰森。所以——但是當你說最好的時，我的意思是我們透過收購 Ivy 獲得了五家工廠。

Which gave you the scale and the -- of economies and really put your market share on the map at that point in time.

這為你提供了規模和經濟，並在當時真正提高了你的市場份額。

Yeah. I mean and it gave us a nationwide presence.

是的。我的意思是，它讓我們在全國範圍內有了影響力。

Challenges meeting demand that you reference, is it the challenges are trying to meet that physical demand and capacity to meet it, or are you talking more that challenges and meeting that demand while maintaining or expanding your current spreads and margins?

您提到的滿足需求的挑戰，是試圖滿足物理需求和滿足需求的能力，還是您更多地談論挑戰和滿足需求，同時保持或擴大當前的利差和利潤？

I mean I think that the challenges have been first, when we have less than about 45 days of raw material, then scheduling becomes a real problem. We run into more frequent changeovers and changeovers that logically we wouldn't make under other circumstances and we've had plants at 10 days of raw materials. We've had plants with no raw material.

我的意思是，我認為首先面臨的挑戰是，當我們的原材料少於 45 天時，調度就會成為一個真正的問題。我們遇到了更頻繁的轉換，從邏輯上講，在其他情況下我們不會進行這種轉換，而且我們的工廠的原材料供應量只有 10 天。我們擁有沒有原料的植物。

So scheduling has been a tremendous headache for us and as we've said for many quarters, we continue to have concerns about properly staffing our plants. That continues to be a problem for us. So it's a chicken and the egg question in some respects, but clearly, we incurred higher costs.

因此，時間安排對我們來說是一個巨大的難題，正如我們多個季度以來所說的那樣，我們仍然擔心工廠的人員配備是否到位。這對我們來說仍然是一個問題。所以從某些方面來說，這是一個先有雞還是先有蛋的問題，但顯然，我們承擔了更高的成本。

We lost shipments and the such due to raw material disruptions in the quarter.

由於本季原材料中斷，我們損失了貨物運輸等。

Given the strength and the tramps as you see leading in the Q4, do you anticipate being able to sustain or maintain your current marginal levels?

鑑於您在第四季度看到的領先優勢和實力，您是否預計能夠維持或維持當前的邊際水平？

Well, as Scot said in his comments, yeah, we expect that we're going to pass through higher costs. There's no company in the industry that can afford to absorb the tariff rates that we're seeing. So it's difficult from a day to day point of view to know exactly where selling prices are going to be and where costs are, but from a big picture, I wouldn't expect our margins to deteriorate in a market such as we have now.

嗯，正如斯科特在評論中所說，是的，我們預計我們將轉嫁更高的成本。業內沒有任何一家公司能夠承擔我們所看到的關稅稅率。因此，從日常的角度來看，很難確切地知道銷售價格和成本在哪裡，但從總體上看，我預計在目前的市場中我們的利潤率不會下降。

The benefit of these trends have all occurred with basically residential and housing as a non-participant or certainly has not had any recovery of note. That doesn't look like it's changing anytime soon. What needs to occur to see that area improve?

這些趨勢帶來的好處基本上都發生在住宅和住房方面，因為它們沒有參與其中，或者肯定沒有任何值得注意的復甦。看起來這種情況短期內不會改變。需要發生什麼才能使該地區得到改善？

Are you satisfied that the commercial side and the infrastructure side is strong enough that you really don't need housing to be an area of strength?

您是否認為商業方面和基礎設施方面已經足夠強大，以至於您真的不需要將住房作為強項？

Well, to say we don't need it, I think maybe, going beyond what I would say, but one of the things that we talk about is the impact of the infrastructure investment in that our customers don't necessarily know the funding sources for the projects that they're shipping, and we certainly don't know.

好吧，要說我們不需要它，我想也許超出了我的範圍，但我們談論的事情之一是基礎設施投資的影響，因為我們的客戶不一定知道他們正在運送的項目的資金來源，我們當然也不知道。

No one comes to us and says, I need five truckloads of steel because I have an IIJA project. That just doesn't happen. But we can see that customers really throughout the country and throughout most of the segments of our business are busy and I suspect that finally some of those IIJA funds are ceding this market and resulting in real demand for real products.

沒有人來找我們說，我需要五卡車的鋼材，因為我有一個 IIJA 專案。那是根本不可能發生的事。但我們可以看到，全國各地以及我們業務的大部分領域的客戶都很忙，我懷疑最終一些 IIJA 基金正在放棄這個市場，並導致對實際產品的真正需求。

And the housekeeping question. The cash management, obviously working capital needs, inventory costs continue to need funding. What kind of year-end outlook are we seeing for cash balance and are we able to get that closer to that $75 million, $80 million?

還有家事問題。現金管理，顯然營運資金需求，庫存成本繼續需要資金。我們對年底現金餘額的前景有何預期？我們能否使其更接近 7500 萬美元或 8000 萬美元？

We'll know when we get there, Tyson, but I mean keep in mind that we put out nearly $100 million in cash during Q1 between acquisitions and our special dividend. So at $53.7 million wherever we wound up in June, I'm not at all dissatisfied.

泰森，到時候我們就知道了，但請記住，我們在第一季度的收購和特別股息之間投入了近 1 億美元現金。因此，對於我們 6 月最終的 5,370 萬美元收入，我一點也不感到失望。

Last one for me. The wire rods supply shortage that you talk about domestically, any sense of the magnitude of what that is and relative to like when the COVID years occurred and that revenue slippage as a result, any way to quantify what that opportunity cost was?

對我來說是最後一個。您談到的國內線材供應短缺，能否了解其嚴重程度，與新冠疫情期間相比，以及由此導致的收入下滑，有沒有辦法量化這種機會成本？

I don't think we could give you an answer that would be very good, but I would say that when we rack it all up, we probably will have imported 25% to 30% of our steel requirements which would approximate the domestic shortfall.

我認為我們無法給你一個很好的答案，但我想說，當我們把所有東西都加起來時，我們可能需要進口 25% 到 30% 的鋼鐵需求，這將接近國內的缺口。

And are you viewing '25, '26 more favorably than '21, '22 just in the current setup being more sustainable for you to continue your success as shipment volumes have been a key component this time?

您是否認為 25、26 年比 21、22 年更有利，因為在目前的環境下，出貨量是這次的關鍵因素，因此更有利於您繼續取得成功？

That's a hard one to answer. The circumstances in '21 and '22 post-COVID were so fundamentally different than what we're seeing now that I'm not really sure I could give you an answer to that that makes any sense.

這個問題很難回答。2021 年和 2022 年新冠疫情之後的情況與我們現在看到的情況有著根本的不同，我不確定我能否給你一個合理的答案。

(Operator Instructions)

（操作員指示）

We currently have no further questions. So I'll hand back to our speaker teams for closing remarks.

目前我們沒有其他問題。因此，我將把發言時間交還給我們的演講團隊，請他們作最後的發言。

Okay. Well, we appreciate your interest in Insteel. If questions arise later, don't hesitate to call us, and otherwise, we'll talk to you next quarter.

好的。好吧，我們感謝您對 Insteel 的關注。如果以後還有問題，請隨時致電我們，否則，我們將在下個季度與您聯繫。

Thank you.

謝謝。

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

今天的電話會議到此結束。感謝您的加入。現在您可以斷開線路了。