Insteel Industries Inc (IIIN) 2025 Q4 法說會逐字稿

Good morning, and thank you for attending the Insteel Industries fourth-quarter 2025 earnings call. My name is Braco, and I will be your moderator for today.

早安，感謝您參加 Insteel Industries 2025 年第四季財報電話會議。我叫 Braco，今天我將擔任你們的主持人。

(Operator Instructions) I would now like to pass the conference over to your host, Mr. H. Woltz, Chairman, President, and Chief Executive Officer at Insteel Industries. Thank you. You may proceed.

（操作員指示）現在，我想將會議交給主持人、Insteel Industries 董事長、總裁兼執行長 H. Woltz 先生。謝謝。您可以繼續。

Thank you, Braco. Thank you for your interest in Insteel. And welcome to our fourth-quarter 2025 conference call, which will be conducted by Scot Jafroodi, our Vice President, CFO, and Treasurer; and me.

謝謝你，布拉科。感謝您對 Insteel 的關注。歡迎參加我們的 2025 年第四季電話會議，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 our -- 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. The upturn in business activity that we reported previously continued during our fourth quarter, and our fiscal 2025 acquisitions performed well.

在我們開始之前，請允許我提醒您，我們在簡報中提出的一些評論被視為前瞻性陳述，受各種風險和不確定性的影響，這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。我們先前報告的業務活動好轉趨勢在第四季度持續，並且我們 2025 財年的收購表現良好。

While our ability to forecast future activity is limited, we see no evidence of a broad-based slowdown in our markets, although housing continues to lag significantly as it has all year. While the ongoing recovery of our markets is real, we are aware of uncertainties created by the administration's trade policies and from the economic cycle.

雖然我們預測未來活動的能力有限，但我們沒有看到市場全面放緩的跡象，儘管住房市場像全年一樣繼續大幅落後。雖然我們的市場正在持續復甦，但我們意識到政府的貿易政策和經濟週期所帶來的不確定性。

I'll turn the call over to Scot to comment on our financial results. And following Scot's comments, I'll take the call back up to discuss our business outlook.

我將把電話轉給斯科特，讓他對我們的財務結果發表評論。根據斯科特的評論，我將再次接聽電話討論我們的業務前景。

Thank you, H., and good morning to everyone joining us today. As noted in this morning's press release, we delivered a strong fourth-quarter performance, supported by higher shipment volumes and a continued recovery in spreads between selling prices and raw material costs.

謝謝 H.，今天參加我們的所有人早安。正如今天上午的新聞稿所述，我們第四季度業績表現強勁，這得益於出貨量的增加以及銷售價格與原材料成本之間的價差持續回升。

Our net earnings rose to $14.6 million or $0.74 per diluted share, compared to $4.7 million or $0.24 per share during the same period last year. Quarterly shipments increased 9.8% year over year, driven by contributions from our recent acquisitions and stronger demand across non-residential construction markets. On a sequential basis, shipments declined 5.8% from the third quarter.

我們的淨收益增至 1,460 萬美元，即每股 0.74 美元，而去年同期為 470 萬美元，即每股 0.24 美元。季度出貨量年增 9.8%，這得益於我們最近的收購以及非住宅建築市場更強勁的需求。與上一季相比，出貨量下降了 5.8%。

Supply constraints for steel wire rod, which we discussed during our third-quarter call, eased gradually during the quarter, allowing us to better align production with customer demand and begin reducing lead times as we close out the quarter. That said, residential construction continues to be a headwind for volumes, with activity levels remaining subdued and has yet to show any meaningful signs of recovery.

我們在第三季電話會議上討論過的鋼線材供應限制在本季度逐漸緩解，使我們能夠更好地根據客戶需求調整生產，並在季度末開始縮短交貨時間。儘管如此，住宅建築仍然對建築量構成阻力，活動水平仍然低迷，尚未顯示出任何有意義的復甦跡象。

Average selling prices for the quarter rose 20.3% year over year and 4.7% sequentially from Q3, reflecting continued pricing momentum. As we discussed in our prior calls, the US steel wire rod markets have remained tight through much of 2025. And the increase of Section 232 tariffs have added further upward pressure on raw material costs. As a result, wire rod prices have moved meaningfully higher since the start of the year.

本季平均售價年增 20.3%，季減第三季上漲 4.7%，反映出價格走勢持續強勁。正如我們在之前的電話會議中所討論的那樣，美國鋼線材市場在 2025 年的大部分時間裡都將保持緊張。而232條款關稅的增加，進一步增加了原料成本的上漲壓力。因此，自今年初以來，線材價格大幅上漲。

In response, we have implemented a series of price increases throughout fiscal 2025, including further adjustments at the beginning of the fourth quarter, to help offset these higher costs and support our margins.

作為回應，我們在整個 2025 財年實施了一系列價格上調，包括在第四季度初的進一步調整，以幫助抵消這些更高的成本並支持我們的利潤率。

Gross profit for the quarter rose $16.3 million year over year to $28.6 million, with gross margin improving by 700 basis points to 16.1%. The increase was largely attributed to wider spreads, as higher-average selling prices more than offset the rise in raw material costs.

本季毛利年增 1,630 萬美元，達到 2,860 萬美元，毛利率提高 700 個基點，達到 16.1%。成長的主要原因是價差擴大，因為平均售價的上漲足以抵銷原材料成本的上漲。

As we discussed on previous calls, our results typically would benefit during periods of strong demand and increasing steel rod prices, both from the timely execution of price adjustments to recover higher replacement costs and from the flow-through effect of lower-cost inventory under our first-in, first-out accounting method.

正如我們在先前的電話會議上所討論的那樣，我們的業績通常會在需求強勁和鋼棒價格上漲的時期受益，這既得益於及時執行價格調整以收回更高的重置成本，也得益於先進先出會計方法下低成本庫存的流通效應。

On sequential basis, gross profits fell $2.2 million from the third quarter and gross margin narrowed 100 basis points, reflecting lower shipment and a slight decline in spreads. SG&A expense for the quarter increased to $9.7 million or 5.5% of net sales, compared to $7.5 million or 5.6% of net sales in the prior-year period.

以環比計算，毛利較第三季下降 220 萬美元，毛利率收窄 100 個基點，反映出出貨量下降和利差略有下降。本季銷售、一般及行政費用增至 970 萬美元，佔淨銷售額的 5.5%，而去年同期為 750 萬美元，佔淨銷售額的 5.6%。

The year-over-year increase was driven primarily by a $1.3 million rise in compensation expense under our return on capital-based incentive plan, reflecting stronger financial performance in the current year. We also recorded an additional $300,000 in amortization expense related to intangible assets from our recent acquisitions, along with a $200,000 unfavorable year-over-year swing in the cash surrender value of life insurance policies.

年比成長主要由於我們基於資本回報的激勵計劃下的薪酬費用增加了 130 萬美元，反映了本年度更強勁的財務業績。我們還記錄了與最近收購的無形資產相關的額外 30 萬美元攤銷費用，以及人壽保險單現金退保價值同比 20 萬美元的不利波動。

Our effective tax rate for the fourth quarter was 24.4%, up from 23% in the same period last year. The increase was mainly driven by changes in both tax differences and the true-up of state apportionment percentages.

我們第四季的有效稅率為 24.4%，高於去年同期的 23%。這一增長主要是由於稅收差異和州分配百分比的變化。

For the full year, our effective tax rate was 23.8%. Looking into next year, we expect our effective rate will run around 23.5%, subject to the level of pre-tax earnings and other tax-related assumptions and estimates that compose our tax provision calculation.

全年我們的有效稅率為23.8%。展望明年，我們預計我們的有效稅率將在 23.5% 左右，具體取決於稅前收益水準以及構成我們的稅務準備金計算的其他稅務相關假設和估計。

Moving to the cash flow statement and balance sheet, cash flow from operations used $17 million in the quarter compared to providing $16.2 million last year. Net working capital used $37.4 million in cash in the fourth quarter, primarily reflecting an $18.6 million increase in inventories and a $23.4 million decrease in accounts payable and accrued expenses.

轉向現金流量表和資產負債表，本季經營活動現金流為 1,700 萬美元，去年同期為 1,620 萬美元。第四季淨營運資本使用現金 3,740 萬美元，主要反映庫存增加 1,860 萬美元以及應付帳款和應計費用減少 2,340 萬美元。

The increase in inventories was driven by the timing of raw material purchases and an increase in the average carrying value of inventory. The reduction in accounts payable and accrued expenses primarily reflect the timing of supplier payments.

庫存的增加是由於原料採購的時間和庫存平均帳面價值的增加。應付帳款和應計費用的減少主要反映了供應商付款的時間。

At the end of the quarter, our inventory position represented 3.5 months of shipments on a forward-looking basis, calculated off of our forecasted Q1 shipments, compared with 2.7 months at the end of the third quarter. As you may recall, inventories have fallen below desired levels in Q3 due to stronger shipment activity and limited wire rod availability from domestic suppliers.

截至本季末，根據我們預測的第一季出貨量計算，我們的庫存狀況代表前瞻性基礎上 3.5 個月的出貨量，而第三季末為 2.7 個月。您可能還記得，由於出貨活動增加以及國內供應商的線材供應有限，第三季庫存已降至預期水準以下。

To address this, we supplemented supply in Q4 with offshore rod purchases, which allowed us to increase production and rebuild inventories. Looking ahead, we expect inventory to rise in the near term as additional import shipments are received, before gradually normalizing as raw material purchasing volumes moderate in the coming months.

為了解決這個問題，我們在第四季度透過購買海上桿材來補充供應，這使我們能夠提高產量並重建庫存。展望未來，我們預計隨著進口貨物增加，庫存將在短期內上升，然後隨著未來幾個月原材料採購量的放緩，庫存將逐漸恢復正常。

Additionally, it's worth noting that our inventories at the end of the fourth quarter were valued at an average unit cost that was both higher than our beginning inventory balance and our Q4 cost of sales. As such, we could experience a margin compression during the first quarter as the higher-cost material is consumed, depending on our ability to push through additional price increases.

此外，值得注意的是，我們第四季末的庫存平均單位成本估值高於我們的期初庫存餘額和第四季的銷售成本。因此，隨著高成本材料的消耗，我們在第一季可能會經歷利潤率壓縮，這取決於我們推動進一步漲價的能力。

We incurred $1.7 million in capital expenditures in the fourth quarter for a total of $8.2 million for the year, which is down $10.9 million from last year. Looking ahead to fiscal 2026, we expect capital expenditures to total $20 million. H. will provide more detail on this topic in his remarks.

我們在第四季的資本支出為 170 萬美元，全年總計 820 萬美元，比去年減少了 1,090 萬美元。展望 2026 財年，我們預期資本支出總額將達到 2,000 萬美元。H. 將在他的評論中提供有關該主題的更多細節。

In addition to our ongoing investments in the business, our financial strength has enabled us to continue returning capital to shareholders. In fiscal 2025, we returned $24 million through a combination of dividends and share repurchases. This included a $1 per share special cash dividend and four regular quarterly dividends, marking the eighth year out of the last 10 that we have paid a special dividend.

除了我們對業務的持續投資之外，我們的財務實力使我們能夠繼續向股東返還資本。在 2025 財年，我們透過股利和股票回購的方式返還了 2,400 萬美元。其中包括每股 1 美元的特別現金股息和四次定期季度股息，這是我們在過去 10 年中第八次支付特別股息。

We also repurchased approximately 76,000 shares of our common stock during fiscal 2025, representing $2.3 million under our share buyback program. From a liquidity perspective, we entered the quarter with $38.6 million of cash on hand. And we're debt-free, with no borrowing outstanding on our $100 million revolving credit facility.

我們也在 2025 財年回購了約 76,000 股普通股，根據我們的股票回購計劃，回購金額為 230 萬美元。從流動性角度來看，我們本季手頭上有 3,860 萬美元的現金。我們沒有債務，我們的 1 億美元循環信貸額度中沒有未償還的借款。

Going forward, our capital deployment strategy will remain focused on three objectives: one, reinvesting in the business to drive growth and to improve our cost and productivity; two, maintaining the appropriate financial strength and flexibility; and three, returning capital to shareholders in a disciplined manner.

展望未來，我們的資本配置策略將繼續專注於三個目標：一、對業務進行再投資以推動成長並改善成本和生產力；二、維持適當的財務實力和靈活性；三、以有紀律的方式向股東返還資本。

Looking at the broader economic picture as we enter fiscal 2026, conditions remain mixed. Raw material availability has improved, and demand across most non-residential markets is generally strong, so residential construction continues to lag. At the same time, macroeconomic uncertainty remains. And while potential rate cuts from the Federal Reserve could provide some support, we're approaching the year cautiously.

放眼 2026 財年的整體經濟情勢，情況依然好壞參半。原材料供應有所改善，且大多數非住宅市場的需求普遍強勁，因此住宅建設持續落後。同時，宏觀經濟的不確定性依然存在。儘管聯準會可能降息可能會提供一些支持，但我們仍將謹慎地迎接新的一年。

On the demand side, we continue to monitor leading measures of non-residential construction activity. In August, the Architectural Billing Index rose slightly to 47.2 from 46.2 in July, but remained below the 50 threshold signaling growth. Although fewer architectural firms reported decline in billings compared to the prior month, the overall trend continues to point downward.

在需求方面，我們持續監測非住宅建築活動的領先指標。8月份，建築業營業額指數從7月的46.2小幅上升至47.2，但仍低於標誌著成長的50的門檻。儘管與上個月相比，報告營業額下降的建築公司數量有所減少，但整體趨勢仍在下降。

Meanwhile, the Dodge Momentum Index showed continued strength in the healthy project pipeline, rising 3.4% in September and now up 33% year-to-date, driven by strong commercial construction planning activity, particularly in the data center development. In contrast, US Dimension, as another proxy for construction activity, climbed 2.2% year over year in June and are down 5.3% year-to-date, reflecting some underlying softness in the sector.

同時，道奇動量指數顯示健康項目儲備持續走強，9 月上漲 3.4%，今年迄今已上漲 33%，這得益於強勁的商業建築規劃活動，尤其是數據中心開發。相較之下，作為建築活動的另一個指標，美國建築尺寸 6 月年增 2.2%，今年迄今已下降 5.3%，反映出該行業存在一些潛在的疲軟。

Finally, the most recent available construction spending data from the US Department of Commerce shows that through July, total spending on a seemingly adjusted basis was down about 3% from last year. Non-residential construction held relatively steady. Public highway and street construction, one of our major end markets, was essentially flat compared to a year ago.

最後，美國商務部最新公佈的建築支出數據顯示，截至7月份，經調整後的總支出較去年同期下降了約3%。非住宅建築保持相對穩定。公共公路和街道建設是我們的主要終端市場之一，與一年前相比基本持平。

Even with a mixed demand backdrop, we're entering fiscal 2026 with solid momentum. The actions we took during the past year, including completing two acquisitions, consolidating our local wire operations, and maintaining pricing disciplines, have strengthened our position and improved our ability to adapt to changing market conditions.

即使需求背景複雜，我們仍將以強勁的勢頭進入 2026 財年。我們在過去一年中採取的行動，包括完成兩次收購、鞏固我們的本地電報業務以及維持定價紀律，鞏固了我們的地位並提高了我們適應不斷變化的市場條件的能力。

While we remain mindful of broader economic uncertainty, our focus on serving customers and executing on our key priorities give us confidence in our ability to manage near-term challenges and continue building long-term value for our shareholders.

雖然我們仍然關注更廣泛的經濟不確定性，但我們專注於服務客戶和執行關鍵優先事項，這使我們對應對短期挑戰和繼續為股東創造長期價值的能力充滿信心。

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

我的準備發言到此結束。我現在將電話轉回給 H。

Thank you, Scot. We noted a substantial acceleration of demand for concrete reinforcing products early in fiscal 2025 and commented that we expected the demand recovery to continue through the fiscal year. We're glad to confirm that positive trend continued through our fourth fiscal quarter, giving us confidence that we should perform well for the balance of the calendar year.

謝謝你，斯科特。我們注意到 2025 財年初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整個財年。我們很高興地確認，這一積極趨勢在整個第四財季持續保持，這使我們有信心在整個日曆年度內取得良好的業績。

The accelerated pace of business we experienced over the past few months is not reflected in the broader macroeconomic indicators that are (technical difficulty) to measure the strength of the construction industry. But the demand recovery is nonetheless real. The confidence level of most customers and interactions between our salespeople and customers leads us to believe business conditions should remain reasonably robust into calendar 2026.

過去幾個月我們經歷的業務加速步伐並沒有反映在衡量建築業實力的更廣泛的宏觀經濟指標中（技術難度）。但需求復甦是真實存在的。大多數客戶的信心程度以及我們的銷售人員與客戶之間的互動使我們相信，到 2026 年，商業狀況應該會保持相當強勁。

As most of the people on this call are aware, housing is not a major driver of demand for Insteel. We estimate that about 15% of our revenues are derived directly from housing construction, with standard welded wire reinforcement and PC strand intended for slab-on-grade, post-tension applications being the product lines most affected by this sector.

正如參加這次電話會議的大多數人所知，住房並不是 Insteel 需求的主要驅動力。我們估計，我們約有 15% 的收入直接來自房屋建築，其中標準焊接鋼絲鋼筋和用於樓板、後張應用的 PC 鋼絞線是受該行業影響最大的產品線。

Demand for new housing continues to be weak. And inventory of both materials and finished housing units are too high. With respect to finished housing units, we hear from customers that builders are experiencing the affordability problem created by higher material prices and interest rates that we've all read about and that they are de-risking their businesses by reducing inventories.

新房需求持續疲軟。材料和成品房屋的庫存都過高。關於已完工的房屋單元，我們從客戶那裡聽說，建築商正面臨由我們都讀到的材料價格和利率上漲造成的負擔能力問題，他們正在透過減少庫存來降低業務風險。

We hear that this process, which has been underway for quite a while, may run its course by the first of the year when volume begins to recover to more normal levels. Over the past several months, we have spent substantial time and resources understanding the administration's tariff plan. As with any conversation about tariffs, we can speak about what we know now, which may or may not be true tomorrow.

我們聽說，這一進程已經進行了相當長一段時間，可能在年初完成，屆時交易量將開始恢復到更正常的水平。在過去的幾個月裡，我們花了大量的時間和資源來了解政府的關稅計畫。就像任何有關關稅的對話一樣，我們可以談論我們現在所知道的事情，但明天這些事情可能還是事實，也可能不是。

But as of now, we are affected by tariffs in two ways. First, the most significant tariff exposure we have is the Section 232 tariff on steel and aluminum, which is 50% of the value on all raw material imports purchased by Insteel. As a point of interest, the 50% Section 232 tariff also is applied to imports of PC strand under the derivative products provision.

但截至目前，我們受到關稅的兩方面影響。首先，我們面臨的最重大關稅風險是針對鋼鐵和鋁的第 232 條關稅，佔 Insteel 購買的所有原料進口價值的 50%。值得注意的是，根據衍生性商品條款，50% 的第 232 條關稅也適用於 PC 鋼絞線的進口。

The 232 tariff has caused domestic steel prices to rise to levels that reflect the 50% tariff on imports. And predictably, imports have declined precipitously. This is particularly notable in the hot-rolled wire rod segment of the steel industry, as it has been recently undersupplied domestically, making imports necessary for Insteel and other consumers.

232關稅已導致國內鋼鐵價格上漲至反映進口50%關稅的水平。不出所料，進口量急劇下降。這在鋼鐵業的熱軋線材領域尤其明顯，因為最近國內供應不足，使得 Insteel 和其他消費者需要進口。

The increase in our net working capital for Q4 is largely attributable to imports of wire rod that were delivered during Q4. And additional quantities will be delivered in Q1 2026. These purchases were made because domestic sources could not or would not provide assurances that our needs would be covered and they're priced competitively after giving effect to the Section 232 tariff.

我們第四季淨營運資本的增加主要歸因於第四季度交付的線材進口。其餘數量將於 2026 年第一季交付。之所以進行這些採購，是因為國內來源無法或不願保證滿足我們的需求，並且在第 232 條關稅生效後，它們的價格具有競爭力。

You may recall, last quarter, we expressed concern that the administration's proclamation, doubling the Section 232 tariff to 50%, may have diluted the effectiveness of the tariff with respect to imports of PC strand. Up to this point, we do not believe this has occurred, although we are requesting that the administration clarifies its expectation that the tariff is to be applied to the full customs value of imported PC strand.

您可能還記得，上個季度，我們曾表示擔心，政府宣布將第 232 條關稅提高一倍至 50%，這可能會削弱該關稅對 PC 鋼絞線進口的有效性。到目前為止，我們認為這種情況尚未發生，儘管我們要求政府澄清其預期，即關稅將適用於進口 PC 鋼絞線的全部海關價值。

Because Department of Commerce Statistics are offline during the government shutdown, we are unable to monitor the collection of tariffs applied to PC strand imports. But we will be active again as soon as services are restored.

由於商務部統計局在政府關閉期間處於離線狀態，我們無法監控對 PC 鋼絞線進口徵收的關稅。但一旦服務恢復，我們就會再次活躍起來。

The second way we're affected by the administration's tariff policy is through our purchases of any imported goods that are subject to reciprocal tariffs in addition to Section 232 tariffs on steel and aluminum. Practically, all of our production equipment is imported. And purchases of spare parts, which are not discretionary, are subject to Section 232 and reciprocal tariffs.

我們受到政府關稅政策影響的第二種方式是，我們購買的任何進口商品除了要繳納第 232 條規定的鋼鐵和鋁關稅外，還要繳納互惠關稅。實際上，我們所有的生產設備都是進口的。購買非自由支配的備件須遵守第 232 條和互惠關稅。

Administration of the tariff regime largely falls on our suppliers, who must sort through the exposure to Section 232 and reciprocal tariffs for each part shipped to the US. I want to 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. This is not coincidental, as we've recognized the futility of competing in markets where imports constitute a major source of competition.

關稅制度的管理主要落在我們的供應商身上，他們必須對運往美國的每個零件承擔第 232 條和互惠關稅的風險。我想重申的是，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。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。

Moving to acquisition activity, we continue to be pleased with the operation and results of our Upper Sandusky, Ohio, facility that was acquired during Q1. Our Texas acquisition, while considerably smaller, has also yielded the expected benefits. While improvements are ongoing, we consider the integration of these operations to be complete and successful.

談到收購活動，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。雖然改進仍在進行中，但我們認為這些操作的整合是完整且成功的。

Turning to CapEx, as mentioned in the release, we expect to invest approximately $20 million in our plants and information systems infrastructure during 2026. You can expect our investments to broaden our product offering, reduce our cash production costs, and enhance the robust nature of our information systems. Consistent with past practice, we will provide quarterly updates on our investment activities and expectations as the year progresses.

談到資本支出，正如新聞稿中提到的，我們預計在 2026 年期間向我們的工廠和資訊系統基礎設施投資約 2000 萬美元。您可以期待我們的投資能擴大我們的產品範圍、降低我們的現金生產成本並增強我們資訊系統的穩健性。與過去的做法一致，我們將隨著時間的推移每季更新我們的投資活動和預期。

Looking ahead, we're aware of the substantial risk related to the administration's tariff policies and the future 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 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，並尋求有吸引力的成長機會，包括有機成長和透過收購實現的成長。

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

Thanks. Hey, good morning, H. and Scot.

謝謝。嘿，早上好，H. 和 Scot。

Good morning.

早安.

Start on demand -- hey, good morning, guys. To start on demand, it sounds like the confidence level of customers continues to be positive. And then last quarter, you mentioned your view that data center construction and infrastructure projects were kind of filling the gap from commercial and residential.

按需開始——嘿，大家早安。從需求來看，聽起來客戶的信心程度仍然保持正面。上個季度，您提到資料中心建設和基礎設施項目正在填補商業和住宅之間的空白。

Does that still stand the same today? And is there any incremental kind of data points or anecdotal points that have materialized since the last quarter that can better support that view?

今天情況還一樣嗎？自上個季度以來，是否有任何增量數據點或軼事點可以更好地支持這一觀點？

Well, I think it continues to be the fact that the data center construction is filling a hole that has existed in other markets. But consistent with what we've said for many quarters, our view is not several-months long. It's only several-weeks long. So we see the activity out there. We think it will continue. But our lead times remain compressed just by the nature of the industry.

嗯，我認為事實是資料中心建設正在填補其他市場存在的空白。但與我們多個季度以來所說的一致，我們的觀點不是幾個月的長期目標。它只有幾個星期長。所以我們看到了那裡的活動。我們認為這種情況將會持續下去。但由於行業性質的原因，我們的交貨時間仍然很短。

Okay. Got it. That's helpful. And on the raw material front, it sounds like you ended the quarter with 3.5 months of shipments of inventory. How would you describe the current supply of raw material? Would you describe it as normalized at this point, or is there still improvement to come?

好的。知道了。這很有幫助。在原材料方面，聽起來您在本季結束時庫存出貨量相當於 3.5 個月。您如何描述目前的原材料供應情況？您認為目前這種情況已經正常化了嗎，還是說還有進步的空間？

Well, I mean, the first thing we want to do, Julio, is operate our plants effectively. And during our fourth quarter, particularly at the beginning of our fourth quarter, we were unable to do that because of supply constraints.

嗯，我的意思是，胡里奧，我們要做的第一件事就是有效地運作我們的工廠。在第四季度，特別是第四季度初，由於供應限制，我們無法做到這一點。

So the quantities that we imported, we imported for a distinct reason, for distinct applications, and at plants that were deficient in domestic supply. And so we're not surprised at all about where we stand. And we're not disappointed about where we stand, that we have what we need.

因此，我們進口的數量是出於不同的原因、不同的用途，並且是為國內供應不足的工廠進口的。因此，我們對於自己的現況一點也不感到驚訝。我們對我們的現狀並不失望，我們已經擁有了我們所需要的一切。

And the import market has changed some -- whereas we used to be able to buy 3,000 or 4,000 tons at a time, those quantities have moved up just based on the origin and shipping costs that are associated with imports. So all things considered, we're exactly where we thought we would be.

進口市場也發生了一些變化——過去我們一次可以購買 3,000 或 4,000 噸，但僅根據與進口相關的原產地和運輸成本，這些數量就有所增加。所以綜合考慮，我們目前的情況正是我們所期望的。

Okay, got it. And with a year under your belt for the Engineered Wire Products deal, I believe, this month, any way you could have us think about the year-one contribution from EWP, whether it's on an earnings or margin or mixed basis?

好的，明白了。我相信，鑑於您在工程線材產品交易方面已經工作了一年，這個月，您能否讓我們考慮一下 EWP 第一年的貢獻，無論是基於收益、利潤還是混合基礎？

And then secondly, H., as you've mentioned in the past, that acquisitions are made not really for year one but with the longer term in mind, do you feel like the true synergies from EWP are still to come?

其次，H.，正如您過去提到的，收購實際上並不是為了第一年，而是為了更長遠的考慮，您是否覺得 EWP 的真正協同效應還未到來？

Well, we can't really calculate the exact impact of EWP at the Upper Sandusky site itself. And that's because a considerable amount of the output of Upper Sandusky has been moved to other Insteel production facilities that are better located to customers and suppliers than Upper Sandusky.

嗯，我們無法真正計算 EWP 對上桑達斯基網站本身的確切影響。這是因為上桑達斯基的大量產量已被轉移到其他 Insteel 生產設施，這些設施比上桑達斯基的地理位置更有利於客戶和供應商。

With that said, the financial performance of Upper Sandusky has been solid and exactly where we thought it would be. It has a very attractive product mix. It's a very effective manufacturer, and we're pleased as punch with that transaction.

話雖如此，上桑達斯基的財務表現一直很穩健，完全符合我們的預期。它的產品組合非常吸引人。這是一家非常有效率的製造商，我們對這筆交易非常滿意。

Very helpful. Last one, and I'll pass it on after this. You mentioned your residential still remains soft. And I think, historically, you've described it as comprising around the 15% of sales range. But you've acquired EWP, and it's obviously made up less of a portion of sales. I guess, just if you could give us a sense of where that stands as a percentage of your mix.

非常有幫助。這是最後一個，之後我會繼續傳遞它。您提到您的住宅仍然很柔軟。我認為，從歷史上看，您將其描述為佔銷售額的 15% 左右。但你已經收購了 EWP，而且它所佔的銷售額比例顯然有所減少。我想，如果您能讓我們了解一下這佔您混合物的百分比是多少的話。

Yeah. Keep in mind that it's really difficult for us to pinpoint the exact end markets that our products go into. And if you'll look back at my comment a few minutes ago, I referred to the direct impact of housing on our business. The indirect impact is infrastructure that goes into housing developments and streets and sanitary sewers and storm sewers.

是的。請記住，我們很難準確定位我們的產品所進入的終端市場。如果您回顧我幾分鐘前的評論，我提到了住房對我們業務的直接影響。間接影響包括住宅開發、街道、衛生下水道和雨水下水道等基礎設施。

And so when our customers ship a joint of concrete pipe or a box culvert out, they don't necessarily know exactly what that application is. And if it goes into infrastructure in a development, the way that we look at it, it's not a direct housing application. It's more of an infrastructure application. So it's really difficult to pinpoint the end use.

因此，當我們的客戶運送混凝土管道接頭或箱形涵洞時，他們不一定確切知道該用途是什麼。如果它進入開發案的基礎設施，從我們的角度來看，它並不是直接的住房應用。它更像是一個基礎設施應用程式。因此很難確定最終用途。

Very good. I'll leave it there. Thanks very much.

非常好。我就把它留在那裡。非常感謝。

Thank you.

謝謝。

(Operator Instructions) Tyson Bauer, KC Capital.

（操作員指示）泰森鮑爾，KC Capital。

Good morning, gentlemen.

先生們，早安。

Good morning.

早安.

I'm just going to follow up on that last question. In general, with your comments on demand for '26 -- and obviously, that's for fiscal '26 -- it sounds like you're not baking in any real meaningful recovery in residential.

我只是想繼續回答最後一個問題。總的來說，根據您對 26 年需求的評論（顯然，這是針對 26 財年的需求），聽起來您並沒有預見到住宅市場會出現任何真正有意義的復甦。

You're treating that as something that is a wait-and-see portion of your end markets. You're looking at strength and demand in other areas in the non-residential, really, being the lead dog here. And residential, you're just -- you're going to wait until you actually see some evidence of any kind of recovery.

您將其視為終端市場的觀望部分。您正在關注非住宅領域其他領域的實力和需求，實際上，他們是這裡的領導者。對於住宅，你只需要等待，直到你真正看到任何復甦的跡象。

Yeah. I mean, I think non-residential is always the lead dog for Insteel. And we know what our customers tell us about residential demand and applications. And I think there's some thought that the inventory issues will have run their course through the end of the calendar year.

是的。我的意思是，我認為非住宅領域始終是 Insteel 的領導者。我們知道客戶對住宅需求和應用的看法。我認為有人認為庫存問題將在今年年底前解決。

And therefore, we should see improved residential demand. But as we've said on multiple occasions, we really don't stay out very far. So yeah, we're not banking on a huge housing recovery in 2026.

因此，我們應該會看到住宅需求的改善。但正如我們多次說過的那樣，我們確實不會走得太遠。所以，是的，我們並不指望 2026 年會出現房屋市場的大幅復甦。

Right. Okay. In regards to the inventory carry strategy, given the current environment and domestic supply issues, should we continue to see a heavier carry or elevated levels in that inventory? And if so, will that then increase the variability of your margins given the FIFO accounting? We could see some more quarter-to-quarter variability.

正確的。好的。關於庫存持有策略，考慮到當前的環境和國內供應問題，我們是否應該繼續看到庫存持有量增加或庫存水準上升？如果是這樣，那麼根據先進先出會計法，這是否會增加利潤的波動性？我們可以看到季度間的變化。

I think through our second quarter, inventories will be somewhat elevated relative to where they might be if we were acquiring raw materials domestically to a larger extent, but probably no higher than they are now. So -- and here's the other thing about imports.

我認為，到第二季度，庫存量相對於我們在國內大規模採購原材料的情況會增加，但可能不會高於現在的水平。那麼——這是關於進口的另一件事。

Of course, we acquired offshore products at a known cost. Nobody knows what the cost domestically is going to be. So I think there is a benefit from just a pricing point of view of knowing what the price is going to be in those out-months.

當然，我們以已知的成本收購了海外產品。沒有人知道國內的成本將會是多少。因此，我認為從定價的角度來看，了解未來幾個月的價格是有益的。

So all things considered, we're not at all displeased with where we are or where we think we're going to be with respect to our sourcing activities and the cost of our raw materials.

因此，綜合考慮所有因素，我們對於目前的採購活動和原材料成本狀況以及我們預期的未來狀況一點也不感到不滿意。

Does that actually make your pricing strategy a little -- I don't want to say easier -- but a little more, you know what you need to hit, given that certainty on the inventory side? Or as we go into some of these seasonally weaker quarters, pushing through those price increases can be a challenge?

這是否實際上會使您的定價策略變得有點——我不想說它變得更容易——但更重要的是，考慮到庫存方面的確定性，您知道需要達到什麼目標嗎？或者，當我們進入一些季節性較弱的季度時，推動這些價格上漲可能會是一個挑戰？

Yeah. I mean, I would say the answer to that is all of the above. In certain of our markets, the price will move as the price moves irrespective of what happens in the raw material markets.

是的。我的意思是，我想說這個問題的答案就是以上全部。在我們的某些市場中，無論原物料市場發生什麼，價格都會隨之變動。

In other project-related business, where we have to give a price for a project that is some months out, the import pricing is actually a huge advantage for us. So it's a mixed bag. But keep in mind, the underlying reason that we went to the offshore markets was the inability to assure that we had availability domestically. And that's it.

在其他與專案相關的業務中，我們必須為幾個月後的專案報價，進口定價實際上對我們來說是一個巨大的優勢。所以這是一個混合體。但請記住，我們進入海外市場的根本原因是無法確保國內市場有供應。就是這樣。

And in the fourth quarter, when we look at that shipment volume sequentially and the 5.8% decline, it doesn't sound like demand was the issue for you at all.

而在第四季度，當我們按順序查看出貨量並發現其下降了 5.8% 時，聽起來需求根本不是您的問題。

Was a lot of that just based upon production supply issues and not being able to run efficiently and meet timelines on shipments? So how much of the quarter in the shipment decline was really related to the production issue side as opposed to demand?

其中很大一部分是否僅僅是基於生產供應問題以及無法有效運作和滿足裝運時間表？那麼本季出貨量下降有多少是與生產問題有關，而不是與需求有關？

I can't tell you how much, but the answer to your question is yes. Early in the quarter, we were operating short weeks at plants that were unable to get adequate quantities of raw materials.

我無法告訴你有多少，但你的問題的答案是肯定的。本季初，由於無法取得足夠數量的原料，我們的工廠只能開工很短的時間。

And that situation has been resolved as we've entered into the current quarter?

進入本季後，這種情況已經解決嗎？

Yes. Both domestically, there's additional production as compared to our third quarter. And we took action offshore, as we've talked about extensively.

是的。與第三季相比，國內產量都有所增加。正如我們廣泛討論的那樣，我們在海外採取了行動。

And the last question for me, you talked about -- you don't know exactly what your products are used for as far as the final destination. We kind of were able to derive that one distribution centers were the hot item a few years back, that was tilt-up kind of construction.

對我來說，您談到的最後一個問題是——您不知道您的產品最終的用途是什麼。我們能夠推斷出幾年前配送中心很熱門，那就是傾斜式建築。

So you kind of had an idea based on what the specs and what you were shipping out. Do you have that ability to have some kind of inference on what goes into data centers? Is that a tilt-up-type construction? Is that other that's more specific? Any clarity on that side that you kind of have an idea of where or how much that is helping?

因此，根據規格和要運送的貨物，您大概會有一個想法。您是否有能力對資料中心的情況做出某種推論？那是傾斜式結構嗎？還有更具體的嗎？您是否清楚這一點，知道這在哪些方面或多大程度上有所幫助？

Yes, we know. I mean, certainly, we know when demand is project-related, we can pinpoint it. When demand is more generic in nature, we can't necessarily pinpoint the end use. But the data center construction has been important to the company and will continue to be.

是的，我們知道。我的意思是，當然，我們知道當需求與專案相關時，我們可以準確地找到它。當需求本質上更為普遍時，我們不一定能確定最終用途。但資料中心建設對公司來說一直很重要，並且將繼續如此。

And probably, more than just data center, that our venture into the whole world of cast-in-place applications for our product is interesting and will be a source of growth for us. But it's not a segment of our business that we plan to disclose details on.

而且可能，不只是資料中心，我們進軍整個現澆應用領域的產品探索是件很有趣的事，並且將成為我們成長的來源。但這不是我們計劃披露細節的業務部分。

Okay. Thank you.

好的。謝謝。

(Operator Instructions) Julio Romero, Sidoti & Company.

（操作員指示）Julio Romero，Sidoti & Company。

Okay, thanks. Thanks for taking the follow-ups. Could you guys just maybe speak a little more to demand from a geographic standpoint? What areas are you seeing demand strength compared to three months ago, and what areas may be relatively weaker?

好的，謝謝。感謝您的後續關注。你們能否從地理角度再多談談需求？與三個月前相比，哪些地區的需求強勁，哪些地區的需求相對較弱？

I don't know that there are any geographic trends that jump out at us. The legacy business of our supplying pre-casters is pretty steady over the entire country. The cast-in-place business that we do is so project-oriented that it could be in Miami today and Las Vegas tomorrow. So it's not dominated by any one geographic region; neither of our product lines or activities is.

我不知道是否有任何引人注目的地理趨勢。我們向全國供應預製件的傳統業務相當穩定。我們所做的現澆業務以專案為導向，今天可能在邁阿密，明天可能在拉斯維加斯。因此，它不受任何一個地理區域的支配；我們的產品線或活動也不受任何一個地理區域的支配。

Got it. One other question. It's about water infrastructure. I know you guys make the concrete pipe culverts that are used in water treatment facilities and sewer systems and other kind of related applications there.

知道了。還有一個問題。這是關於水利基礎設施的。我知道你們製造用於水處理設施和下水道系統以及其他相關應用的混凝土管道涵洞。

There are states that are making initiatives to address the aging water infrastructure. Texas is talking about passing Prop 4 in November, which would add a lot of state taxes towards that initiative. Would that benefit you guys at all, particularly the Prop 4 in Texas?

一些州正在採取措施解決老化的水利基礎設施問題。德州正在討論在 11 月通過第 4 號提案，這將為該提案增加大量州稅。這對你們有好處嗎，特別是德克薩斯州的 Prop 4？

Yeah, I think it's positive, Julio, to the extent that additional funding is available in those sorts of projects. There's going to be plastic pipe. There's going to be all kinds of non-concrete product that goes into those applications.

是的，胡里奧，我認為這是積極的，因為這類項目可以獲得額外的資金。將會有塑膠管。將會有各種各樣的非混凝土產品應用於這些應用中。

But there'll also be concrete pipe. And there'll be box culverts and concrete-related things that definitely help Insteel. And I would tell you that I think that part of the recovery in demand that we've seen has been related to the funding provided by the Infrastructure Investment and Jobs Act, which is now five or six years old.

但也會有混凝土管道。而且還會有箱形涵洞和混凝土相關的東西，這肯定會對 Insteel 有幫助。我想告訴你們，我認為我們所看到的需求復甦部分與《基礎設施投資和就業法案》提供的資金有關，該法案已經實施五六年了。

But I think those funds are beginning to find their way into the market and translate into demand, although I would hasten to say that we can't track any particular shipment that we've made to an IIJA funding mechanism. But nevertheless, something's responsible for the uptick that we see. And I believe it's funding-related.

但我認為這些資金正開始進入市場並轉化為需求，儘管我必須聲明，我們無法追蹤我們向 IIJA 融資機制發出的任何特定貨物。但無論如何，我們看到的上漲是有原因的。我認為這與資金有關。

And to that last point, H., you mentioned IIJA funding is several years old. But you guys are basically just kind of beginning to see that push now. And then, therefore, there is runway to when the IIJ funds -- there's a multi-year runway remaining to -- as regards to the benefit of IIJA funding to Insteel's P&L.

關於最後一點，H.，您提到 IIJA 的資助已有數年了。但你們現在基本上才開始看到這種推動力。因此，就 IIJA 資金對 Insteel 損益表的益處而言，IIJ 資金還有很長的路要走——還有多年的時間可以走。

Yeah. I mean, I have no objective data to support my belief, Julio. But I think the answer is yes. And if you go back to the Department of Transportation's comment on IIJA some years ago, they said, this is not a stimulus program. This is a new way we're considering a funding infrastructure.

是的。我的意思是，我沒有客觀數據來支持我的信念，胡里奧。但我認為答案是肯定的。如果你回顧幾年前交通部對 IIJA 的評論，他們說，這不是一個刺激計劃。這是我們正在考慮的資助基礎設施的新方式。

And they acknowledged that the lead time is measured in years, not weeks or months, between the funding being available and it translating into actual activity on job sites. And to the extent that that's the case, I think we're now seeing activity on job sites.

他們承認，從資金到位到轉化為實際工作活動，準備時間是以年而不是周或月來衡量的。就這種情況而言，我認為我們現在看到了工作現場的活動。

Very helpful. Thanks very much.

非常有幫助。非常感謝。

Okay, thank you.

好的，謝謝。

Thank you. We currently have no further questions. (Operator Instructions) I can confirm that does conclude the question-and-answer session here. And I would like to hand it back to the management team.

謝謝。目前我們沒有其他問題。（操作員指示）我可以確認，這裡的問答環節確實結束了。我想把它交還給管理團隊。

Okay. We appreciate your interest in Insteel. Look forward to talking to you next quarter. And if you have questions, don't hesitate to follow up with us. Thank you.

好的。感謝您對 Insteel 的關注。期待下個季度與您交談。如果您有任何疑問，請隨時與我們聯繫。謝謝。

Thank you for dialing in for the Insteel Industries fourth-quarter 2025 earnings call. Today's call has now concluded. Thank you, all, for your participation, and you may now disconnect.

感謝您撥打 Insteel Industries 2025 年第四季財報電話會議。今天的電話會議已經結束。感謝大家的參與，現在可以斷開連結了。