Insteel Industries Inc (IIIN) 2026 Q1 法說會逐字稿

Hello and welcome, everyone, to the Insteel Industries first-quarter 2026 earnings call. My name is Becky, and I will be your operator today. (Operator Instructions)

大家好，歡迎參加 Insteel Industries 2026 年第一季財報電話會議。我叫貝基，今天由我來為您接聽電話。（操作說明）

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

現在我將把電話交給主持人，執行長 H.O. Woltz，由他開始通話。請繼續。

Good morning. Thank you for your interest in Insteel, and welcome to our first-quarter 2026 conference call which will be conducted by Scot Jafroodi, our Vice President, CFO, and Treasurer; and me.

早安.感謝您對 Insteel 的關注，歡迎參加我們 2026 年第一季電話會議，本次會議將由我們的副總裁、財務長兼財務主管 Scot Jafroodi 和我共同主持。

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.

在開始之前，請允許我提醒各位，我們在簡報中提出的一些評論被認為是前瞻性陳述，這些陳述受到各種風險和不確定性的影響，可能導致實際結果與預測結果有重大差異。這些風險因素已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。

The upturn in business activity we reported previously continued during our first quarter, and our fiscal 2025 acquisitions continue to perform well. While our ability to forecast future activity is limited, we are encouraged by the level of optimism in our markets as well as brisk order entry up to this point in January that causes us to believe that 2026 will be a strong year for the company. While the relative strength of our markets is real, we are aware of uncertainties created by the administration’s trade policies, the nation’s fiscal conditions, and by the economic cycle.

我們先前報告的業務活動回升趨勢在第一季得以延續，我們 2025 財年的收購項目也持續表現良好。雖然我們預測未來活動的能力有限，但我們對市場的樂觀情緒以及1月份至今的快速訂單進入感到鼓舞，這使我們相信2026年將是公司業績強勁的一年。雖然我們市場的相對強勢是真實存在的，但我們也意​​識到政府的貿易政策、國家的財政狀況以及經濟週期帶來的不確定性。

I am going to turn the call over to Scot to comment on our financial results, and following Scot’s comments, I will pick the call back up to discuss our business outlook.

我將把電話交給 Scot，讓他對我們的財務表現發表評論。在 Scot 評論完畢後，我將接聽電話，討論我們的業務前景。

Thank you, H., and good morning to everyone joining us today. As highlighted in this morning’s press release, we delivered a strong start to the year. First-quarter results benefited from improved demand for our concrete reinforcing products, which supported wider spreads between selling prices and raw material costs. Net earnings for the quarter rose to $7.6 million, or $0.39 per share, compared with $1.1 million or $0.06 per share in the same period last year. It's also worth noting that last year’s first-quarter results included $1 million of restructuring charges and acquisition‑related costs, which collectively reduced earnings per share by $0.04.

謝謝H，也祝今天所有參加我們節目的朋友們早安。正如今天早上的新聞稿中所強調的，我們今年開局強勁。第一季業績受惠於市場對我們混凝土加固產品需求的改善，這支撐了銷售價格與原料成本之間更大的價差。本季淨利增至 760 萬美元，即每股 0.39 美元，而去年同期淨利為 110 萬美元，即每股 0.06 美元。值得注意的是，去年第一季的業績包括 100 萬美元的重組費用和收購相關成本，這些費用加起來使每股收益減少了 0.04 美元。

First-quarter shipments, which are typically our softest period due to winter weather conditions and holiday schedules, increased 3.8% year over year. On a sequential basis, shipments declined 9.7% from the fourth quarter, which is consistent with normal seasonal patterns. The year‑over‑year growth in shipments reflects improved demand across our commercial and infrastructure markets along with incremental volume from the acquisitions we completed early last year. As we move forward, our year‑on‑year volume comparisons will normalize now that these acquisitions are fully integrated into our run rate.

由於冬季天氣狀況和假日安排，第一季通常是我們最淡的時期，但今年第一季的出貨量比去年同期增加了 3.8%。與第四季相比，出貨量較上季下降 9.7%，這與正常的季節性模式相符。出貨量年增率反映了我們商業和基礎設施市場需求的改善，以及我們去年初完成的收購所帶來的增量。隨著我們不斷向前發展，隨著這些收購完全融入我們的日常運營，我們的年比銷售比較將會趨於正常化。

Turning to pricing, average selling prices increased 18.8% year over year. This reflects the pricing actions we took throughout fiscal 2025 to offset higher steel wire rod costs which were driven by tight domestic supply conditions and increased Section 232 steel tariffs as well as to address rising operating costs. Sequentially, average selling prices were essentially unchanged from the fourth quarter as we did not take additional pricing actions during the current period. However, with scrap and wire rod prices now moving higher again, we implemented our own price increases across most product lines, which took effect earlier this month.

從價格方面來看，平均售價年增了 18.8%。這反映了我們在 2025 財年採取的定價措施，以抵消因國內供應緊張和 232 條款鋼材關稅增加而導致的鋼絲桿成本上漲，以及應對不斷上漲的營運成本。與第四季度相比，平均售價基本上保持不變，因為我們在本季沒有採取額外的定價措施。然而，由於廢鋼和線材價格再次上漲，我們已在大多數產品線中實施了價格上漲，並於本月初生效。

Gross profit for the quarter improved to $18.1 million from $9.5 million a year ago, with gross margin expanding 400 basis points to 11.3% from 7.3%. This improvement was driven by widening spreads, higher shipment volumes, and lower unit manufacturing costs. On a sequential basis, gross profit declined by $10.5 million from the fourth quarter, and gross margin narrowed by 480 basis points driven primarily by the consumption of higher cost inventory. As I just mentioned, the price increases implemented in January are expected to benefit second-quarter spreads and margins as higher selling prices begin to align with the consumption of lower cost inventories under the first‑in, first‑out accounting methodology.

本季毛利從去年同期的 950 萬美元增至 1,810 萬美元，毛利率從 7.3% 成長 400 個基點至 11.3%。這項改善得益於價差擴大、出貨量增加和單位製造成本降低。與第四季相比，毛利環比下降 1,050 萬美元，毛利率下降 480 個基點，主要原因是高成本庫存的消耗。正如我剛才提到的，1 月實施的價格上漲預計將有利於第二季的價差和利潤率，因為更高的售價開始與先進先出會計方法下低成本庫存的消耗相匹配。

SG&A expenses for the quarter rose by approximately $900,000 to $8.8 million or 5.5% of net sales compared with $7.9 million or 6.1% of net sales in the prior year. The year‑over‑year increase was driven primarily by an $800,000 rise in compensation expense under our return‑on‑capital‑based incentive plan reflecting stronger financial performance in the current year. As you may recall, we did not incur any incentive compensation expense in the first quarter of last year.

本季銷售、一般及行政費用增加約 90 萬美元，達到 880 萬美元，佔淨銷售額的 5.5%，而去年同期為 790 萬美元，佔淨銷售額的 6.1%。年比增幅主要源自於我們基於資本回報的激勵計劃下薪酬支出增加 80 萬美元，這反映了本年度更強勁的財務業績。您可能還記得，去年第一季我們沒有產生任何激勵性薪資支出。

Our effective tax rate decreased to 21% compared to 26.1% in the prior-year period. The decline was primarily driven by a reduction in the valuation allowance on deferred tax assets along with a discrete tax item related to the calculation of state deferred taxes. Looking ahead, we expect our effective tax rate for the remainder of the year to be approximately 23%, subject to the level of pre‑tax earnings, book‑to‑tax differences, and the other assumptions and estimates underlying our tax provision calculation.

我們的實際稅率從去年的 26.1% 下降到 21%。下降的主要原因是遞延所得稅資產估值準備金減少，以及與計算州遞延所得稅相關的個別稅項。展望未來，我們預計今年剩餘時間的實際稅率約為 23%，具體稅率取決於稅前收益水準、帳面稅後差異以及我們計算稅務準備金的其他假設和估計。

Moving to the cash flow statement and balance sheet, cash flow from operations used $700,000 in the quarter compared to providing $19 million last year. Net working capital used $16.6 million of cash in the first quarter, driven primarily by a $34.5 million increase in inventories partly offset by a $14.1 million reduction in accounts receivable. The inventory increase reflects higher raw material purchases, including a meaningful amount of offshore material, along with increase in the average carrying value of inventory. And on the receivable side, the decline was largely tied to lower shipments, which is consistent with the normal seasonal slowdown in sales we see this time of year. The quarter‑end inventory position represented approximately 3.9 months of shipments on a forward‑looking basis calculated off our forecast of the second-quarter volumes compared with 3.5 months at the end of the fourth quarter.

從現金流量表和資產負債表來看，本季經營活動產生的現金流為 70 萬美元，去年同期則為 1,900 萬美元。第一季淨營運資本使用了 1,660 萬美元現金，主要原因是庫存增加了 3,450 萬美元，部分被應收帳款減少了 1,410 萬美元所抵銷。庫存增加反映了原材料採購量的增加，其中包括大量海外原材料的採購，以及庫存平均帳面價值的增加。應收帳款方面，下降主要與出貨量減少有關，這與我們每年這個時候看到的正常季節性銷售放緩情況一致。根據我們對第二季銷售的預測，季末庫存相當於未來約 3.9 個月的出貨量，而第四季末則相當於 3.5 個月。

As we discussed on our prior call, we expected a temporary inventory build in the first quarter as we supplemented domestic wire rod supply with offshore purchases. Looking ahead, we expect inventory levels to moderate over the course of the second quarter as purchasing activity normalizes and shipment volumes increase. It is also worth noting that our first quarter inventories are carried at an average unit cost that is generally in line with our first-quarter cost of sales and remains below current replacement costs. We incurred $1.5 million in capital expenditures in the first quarter and remain committed to our full‑year target of $20 million. H.O. will provide more detail on this topic in his remarks.

正如我們在之前的電話會議中討論的那樣，由於我們透過海外採購補充國內線材供應，我們預計第一季將出現暫時的庫存增加。展望未來，我們預計隨著採購活動恢復正常和出貨量增加，第二季庫存水準將趨於穩定。值得注意的是，我們第一季的庫存平均單位成本與第一季的銷售成本基本一致，並且低於目前的重置成本。我們第一季資本支出為 150 萬美元，並將繼續致力於實現全年 2,000 萬美元的目標。他將在演講中就此主題提供更多細節。

In December, we returned $19.4 million of capital to our shareholders through the payment of a $1.00 per share special cash dividend in addition to our regular quarterly dividend. This marks the ninth time in the last 10 years that we have issued a special dividend, and also during the first quarter, we continued our share buyback, repurchasing $745,000 of common equity equal to approximately 24,000 shares. From a liquidity perspective, we ended the quarter with $15.6 million cash on hand and no borrowings outstanding on our $100 million revolving credit facility.

12 月，我們向股東返還了 1,940 萬美元的資本，除了常規的季度股息外，還支付了每股 1.00 美元的特別現金股息。這是過去 10 年中我們第九次派發特別股息，同時在第一季度，我們也繼續進行股票回購，回購了價值 745,000 美元的普通股，約合 24,000 股。從流動性角度來看，本季末我們手頭上有 1560 萬美元現金，並且在我們 1 億美元的循環信貸額度中沒有未償還的借款。

Turning to the macro indicators for our construction end markets, the latest readings from two key leading measures, the Architectural Billings Index and Dodge Momentum Index, continue to signal a mixed and somewhat cautious outlook for nonresidential commercial construction activity. In November, the ABI registered 45.3, remaining firmly in negative territory as any reading below 50 indicates a contraction in activity. This marks the 13th consecutive month of decline in billings. Inquiries for new projects showed only modest improvement, and the value of newly signed design contracts continued to soften. In contrast, the Dodge Momentum Index signaled strengthening activity, rising 7% in December and supported by more than 3.5% growth in commercial planning driven in large part by data center construction. Year over year, the DMI was up 50% overall including a 45% increase in the commercial segment.

從建築終端市場的宏觀指標來看，兩個關鍵領先指標——建築結算指數和道奇動量指數的最新讀數繼續表明，非住宅商業建築活動的前景喜憂參半，略顯謹慎。11 月份，ABI 指數為 45.3，仍處於負值區間，因為任何低於 50 的讀數都表示經濟活動萎縮。這是帳單金額連續第13個月下降。新項目的諮詢量僅略有改善，新簽訂的設計合約價值持續走軟。相較之下，道奇動量指數顯示市場活動正在增強，12 月上漲了 7%，這主要得益於資料中心建設推動的商業規劃成長超過 3.5%。與上年同期相比，DMI 整體成長了 50%，其中商業領域成長了 45%。

Turning to the broader market backdrop, the most recent construction spending data from the US Department of Commerce shows that through August, total construction spending on a seasonally adjusted basis was down about 1.6% year over year, while nonresidential spending declined 1.5%, and public highway and street construction, one of our key end markets, was down about 1% compared to the same period last year. Finally, the US cement shipments, another key measure that we monitor, fell 4.3% in August and were down 3.4% year to date.

從更廣泛的市場背景來看，美國商務部最新的建築支出數據顯示，截至 8 月，經季節性調整後的建築總支出同比下降約 1.6%，非住宅支出下降 1.5%，而作為我們主要終端市場之一的公共公路和街道建設，與去年同期相比下降約 1%。最後，我們關注的另一個關鍵指標——美國水泥出貨量，8 月下降了 4.3%，今年迄今下降了 3.4%。

That said, as we close out the first quarter of fiscal 2026, we are encouraged by the steady demand we are seeing across our core markets. While we recognize the broader economic backdrop remains uncertain, the demand trends we are seeing and the conversations we are having with customers give us confidence as we look ahead to the balance of the year.

儘管如此，隨著 2026 財年第一季的結束，我們對核心市場持續穩定的需求感到鼓舞。儘管我們意識到整體經濟狀況仍然不明朗，但我們觀察到的需求趨勢以及與客戶的溝通讓我們對今年剩餘時間充滿信心。

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

我的發言稿到此結束。現在我將把通話轉回給H。

Thank you, Scot. As I noted in my opening comments, we are pleased with the acceleration of business activity that continued through our first quarter. Our first-quarter performance will never be strong due to the limited number of working days in the quarter after giving effect to Thanksgiving and Christmas shutdowns through much of the industry and to seasonal weather patterns. So our first-quarter results are never indicative of the level of demand for our products. But nevertheless, we are pleased with the performance for the quarter and see no indication that the level of activity in our markets is poised to subside.

謝謝你，斯科特。正如我在開場白中提到的，我們對第一季業務活動的持續加速成長感到滿意。由於感恩節和聖誕節期間大部分行業停工以及季節性天氣模式的影響，第一季工作日數量有限，因此我們的第一季業績永遠不會強勁。因此，我們第一季的業績永遠無法反映我們產品的實際需求水準。但儘管如此，我們對本季的業績感到滿意，並且沒有跡象表明我們市場的活躍程度即將減弱。

As we consider the drivers of demand for our products, the facts are no clearer to us today than they have been in the past. We believe, however, that funding from the Infrastructure Investment and Jobs Act is responsible for much of the uptick in demand we have experienced, although we cannot definitively state that any single project was funded by IIJA. I suspect the same is true for our customers. They have enjoyed better volume levels without knowing the precise source of funding that drives demand for their products. While IIJA funding expires in the fall of 2026, funded projects will proceed into 2027 and beyond, and the consensus today is that there is bipartisan support for a replacement infrastructure funding mechanism. Of course, that remains to be seen.

當我們考慮產品需求驅動因素時，如今的事實對我們來說並不比過去更清晰。不過，我們認為，基礎設施投資和就業法案的資金是造成我們所經歷的需求成長的主要原因，儘管我們不能斷言任何單一項目是由 IIJA 資助的。我懷疑我們的客戶也是如此。他們雖然獲得了更高的銷量，但他們不知道推動其產品需求的確切資金來源。雖然 IIJA 的資金將於 2026 年秋季到期，但已獲資助的項目將持續到 2027 年及以後，目前的共識是，兩黨都支持建立替代的基礎設施融資機制。當然，這還有待觀察。

The other notable source of demand that we expect to remain robust into 2027 is from the data center construction boom that has been well publicized. While community pushback seems to be growing as the scale of data center resource intensity is more fully appreciated, we have commitments from customers for projects that have been approved and funded, and that should run through calendar 2026. The timing of the data center activity is fortuitous since other sectors of the private nonresidential construction market are weak. We believe the data center work will serve as a timely bridge while we wait for recovery of more traditional private nonresidential projects.

另一個值得關注的需求來源，我們預計到 2027 年仍將保持強勁勢頭，那就是廣為人知的資料中心建設熱潮。隨著人們對資料中心資源密集程度的認識不斷加深，社區的反對聲浪似乎越來越大，但我們已經從客戶那裡獲得了已獲批准和資助的計畫的承諾，這些計畫應該會持續到 2026 年。資料中心活動的時機恰到好處，因為私人非住宅建築市場的其他領域都比較疲軟。我們相信，資料中心專案將起到及時過渡的作用，幫助我們等待更傳統的私人非住宅專案恢復。

Turning to another subject, the steel industry may have been more affected by the administration’s tariff policy than any other industry. The Section 232 tariff of 50% on imports of steel has caused market prices in the US for hot‑rolled wire rod, our primary raw material, to rise to a level that is 50% to 100% higher than the global market price. While we are fortunate that imports of PC strand are now subject to the Section 232 tariff under the derivative products provision, domestic wire rod prices have risen to an extent that dilutes the benefit of the Section 232 tariff on PC strand. Probably of more importance is the uncertainty that continues to surround the administration’s tariff policy. Recently, I read that the Secretary of Commerce had speculated that the 232 tariff might be modified or removed with respect to the Europeans if the right trade deal was struck between the US and European Union. It is reasonable to assume that this could be true with respect to other countries as well, notably negotiations surrounding USMCA comes to mind.

再說另一個話題，鋼鐵業可能比其他任何產業都更容易受到政府關稅政策的影響。美國對進口鋼鐵徵收 50% 的第 232 條款關稅，導緻美國熱軋線材（我們的主要原料）的市場價格上漲到比全球市場價格高出 50% 至 100% 的水平。雖然我們很幸運，PC鋼絞線的進口現在根據衍生產品條款適用第232條關稅，但國內線材價格上漲到一定程度，削弱了第232條關稅對PC鋼絞線的益處。或許更重要的是，政府的關稅政策仍充滿不確定性。最近，我看到有報導稱，商務部長曾推測，如果美國和歐盟之間達成合適的貿易協議，那麼針對歐洲人的 232 關稅可能會被修改或取消。可以合理推斷，這種情況也可能適用於其他國家，尤其是圍繞美墨加協定進行的談判就是一個典型的例子。

Such speculation by the administration increases uncertainty and instability in US markets. It's important for investors to understand that Insteel operates in a small segment of the domestic hot‑rolled carbon steel market. Domestic production of wire rod, our primary raw material, is approximately 3.5 million tons per year, while US production of all hot‑rolled carbon steel is roughly 100 million tons per year. Difficult economic conditions in recent years for producers of wire rod resulted in the permanent closure of two producing mills and financial struggles together with significantly diminished output for a third producer. All together, these curtailments reduced actual domestic production of wire rod by more than 800,000 tons per year and reduced domestic capacity to produce wire rod by nearly 1.2 million tons per year relative to apparent domestic consumption of approximately 5 million tons per year. So by our calculation, capacity equal to nearly 25% of apparent domestic consumption is offline, most of it permanently.

政府的這種投機行為加劇了美國市場的不確定性和不穩定性。投資者需要了解的是，Insteel 僅佔國內熱軋碳鋼市場的一小部分。美國國內線材（我們的主要原料）的年產量約為 350 萬噸，而美國所有熱軋碳鋼的年產量約為 1 億噸。近年來，線材生產商面臨嚴峻的經濟形勢，導致兩家生產廠永久關閉，第三家生產商也面臨財務困境，產量大幅下降。綜上所述，這些減產措施使國內線材實際產量每年減少超過 80 萬噸，使國內線材產能每年減少近 120 萬噸，而國內表觀消費量約為每年 500 萬噸。因此，根據我們的計算，相當於國內表觀消費量近 25% 的產能處於離線狀態，其中大部分是永久性的。

These capacity curtailments, together with the imposition of the Section 232 tariffs, caused the US wire rod market to tighten significantly and created serious questions about the adequacy of domestic supply. Insteel, therefore, turned to the offshore market for a portion of its supply. The economics of offshore transactions, which include substantial freight costs, require the purchase of large quantities with the resulting impact on inventories and net working capital requirements as reflected on our balance sheet. Net working capital has risen over $50 million in the last 12 months. We expect to continue importing a portion of our raw material requirement until such time as domestic availability improves. We believe, however, that the net working capital impact of importing will be more muted going forward and that we will see significant working capital release as market conditions normalize, but it is not possible to quantify this at the present time.

這些產能削減措施，加上第 232 條關稅的實施，導緻美國線材市場大幅收緊，並引發了人們對國內供應是否足夠的嚴重質疑。因此，Insteel轉向海外市場採購部分原料。離岸交易的經濟效益（包括巨額運費）要求大量採購，這將對庫存和淨營運資本需求產生影響，並反映在我們的資產負債表上。過去 12 個月，淨營運資本增加了 5,000 多萬美元。在國內原料供應改善之前，我們預計將繼續進口部分原料需求。不過，我們認為，未來進口對淨營運資本的影響將會更加微弱，隨著市場狀況的正常化，我們將看到營運資本的顯著釋放，但目前還無法對此進行量化。

Finally, turning to CapEx, as mentioned in the release and by Scot, we expect to invest approximately $20 million in our plants and information systems infrastructure during 2026. You can expect our investments to support the growth of our engineered structural mesh business, to reduce our cash production costs, and to enhance the robust nature of our information systems. Consistent with past practice, we will provide quarterly updates of our investment activities and expectations as the year progresses, and we believe our estimate is conservative in keeping with prior forecasts for CapEx levels.

最後，關於資本支出，正如新聞稿和 Scot 所提到的，我們預計在 2026 年期間將投資約 2,000 萬美元用於我們的工廠和資訊系統基礎設施。您可以期待我們的投資能支持我們工程結構網業務的成長，降低我們的現金生產成本，並增強我們資訊系統的穩健性。與以往的做法一致，我們將按季度更新我們的投資活動和預期，我們認為我們的估計是保守的，與先前對資本支出水準的預測一致。

Looking ahead, we are aware of substantial risks related to the state of the economy and the administration’s tariff policies. Regardless of developments in these areas, we are well positioned to pursue growth‑related activities both organic and through acquisition and actions to optimize our costs.

展望未來，我們意識到與經濟狀況和政府關稅政策相關的重大風險。無論這些領域如何發展，我們都已做好充分準備，透過內生成長、收購以及優化成本等措施，進行與成長相關的活動。

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

我們的發言稿到此結束，現在我們將回答各位的問題。貝基，請你解釋一下提問的流程好嗎？

(Operator Instructions) Julio Romero, Sidoti & Company.

（操作說明）Julio Romero，Sidoti & Company。

To begin, you sounded pretty constructive on the overall demand outlook, particularly with the data center and IIJA‑related projects, and you mentioned the commitments you have from customers on the data‑center side that have been approved and funded and run through calendar 2026. Can you give us a little bit more color on these commitments? Are these new commitments in your pipeline? Have been accelerating, and what's your sense of how far out these commitments are beyond calendar '26?

首先，您對整體需求前景，特別是資料中心和IIJA相關項目，表達了相當正面的展望。您提到了資料中心方面客戶的承諾，這些承諾已經獲得批准和資金支持，並將持續到2026年。您能否詳細介紹一下這些承諾？這些是您計劃中的新項目嗎？一直在加速推進，您認為這些承諾到 2026 年後還有多遠？

Well, I mean, the data center business is new to Insteel just as it is new to much of the economy. I think 2025 was the first year we had done any significant data center business, but certainly, now that we are in that market and connected with some of the customers that regularly do that business, we are seeing repeat opportunities and robust demand, which comes as no surprise based on what has been publicized about that industry and that buildout.

嗯，我的意思是，資料中心業務對英特爾來說是一個新興領域，就像它對經濟中的許多其他領域一樣。我認為 2025 年是我們首次開展重要的資料中心業務，但現在我們已經進入這個市場，並與一些定期開展此類業務的客戶建立了聯繫，我們看到了重複的機會和強勁的需求，考慮到該行業和建設的公開情況，這並不令人意外。

Got it. That's helpful. And talking about the volumes in the quarter that you experienced, a growth of roughly 4%, can you talk about how it was affected, if at all, by constraints of the wire rod, both on this quarter and on a go‑forward basis?

知道了。那很有幫助。談到本季銷售成長約 4%，您能否談談線材供應的限制是否對本季及未來一段時間的銷售成長產生了影響？

Do you mean just the domestic situation?

你指的是家庭狀況嗎？

Yeah, I think the last couple of quarters you called that raw material constraints have constrained your volume output in the quarter, but it sounds like that was less of an effect this quarter.

是的，我認為你之前提到的幾個季度原材料短缺限制了你們當季的產量，但聽起來本季這種情況的影響較小。

So the reason that I went through the mill closures and sort of the macro picture with respect to wire rod supply and demand is to give readers of our release and participants on this call a sense of why inventories have grown. Our inventories have grown because we are unable to acquire sufficient quantities of wire rod domestically, and we are forced to go offshore. And I will point out that the situation in the wire rod market is very different than the situation that confronts purchasers of other hot‑rolled steel products because wire rod capacity has contracted significantly and capacity has expanded significantly in other hot‑rolled products. So when we concluded that it was unlikely we could support our business objectives by buying solely domestically, we went to the offshore market to fill the gaps, and we will continue doing so until such time as we see that availability improves in the US and that suppliers again are willing to work for an order.

我之所以詳細分析軋鋼廠關閉情況以及線材供需的宏觀情況，是為了讓閱讀我們新聞稿的讀者和參加本次電話會議的人員了解庫存增長的原因。由於我們在國內無法獲得足夠的線材數量，被迫從海外採購，導致我們的庫存增加。我還要指出，線材市場的情況與其他熱軋鋼材產品採購者面臨的情況截然不同，因為線材產能大幅縮減，而其他熱軋產品的產能則大幅擴張。因此，當我們得出結論，僅靠國內採購不太可能實現我們的業務目標時，我們就轉向海外市場來填補缺口，並且我們將繼續這樣做，直到我們看到美國的供應情況有所改善，供應商再次願意接受訂單為止。

Very helpful context there. Last one, if I may, and I'll pass it on is on the SG&A front. You were able to grow sales by 23% while SG&A grew by 11%. My question is, are you beginning to realize SG&A leverage from your acquisitions of EWP and OWP at this point in time, or is that leverage still coming to view?

這裡提供的背景資訊很有幫助。最後一個問題，如果可以的話，我會轉達給其他人，是關於銷售、管理及行政費用方面的。在銷售、一般及行政費用成長 11% 的情況下，你們實現了 23% 的銷售額成長。我的問題是，您目前是否已經開始從收購 EWP 和 OWP 中獲得銷售、管理及行政費用的槓桿效應，還是這種槓桿效應仍在顯現？

Well, I mean, we've certainly realized the synergies we expected to come from the acquisition, and I would say that together with the added shipments and sales volume is really what those acquisitions were all about. And we're pleased with this performance, and we're moving along well.

嗯，我的意思是，我們當然已經實現了我們預期從收購中獲得的協同效應，而且我認為，再加上增加的出貨量和銷售額，這才是這些收購的真正意義所在。我們對這次表現很滿意，目前進展順利。

(Operator Instructions) Tyson Bauer, KC Capital.

（操作說明）泰森鮑爾，KC Capital。

Insteel has consistently been able to run counter to the industry stats as far as your ability to grow shipments, your ability to grow as a company, versus, I think you mentioned, 13 straight months of ABI billings below 50 and some of the other general industry stats. What has allowed you to run counter to those? And are we seeing an underlying acceleration away from just standard rebar to more of your ESM products and other products that would account to your ability to grow facing those kinds of industry headwinds?

Insteel 在出貨量成長和公司發展方面一直能夠逆行業統計數據而行，這與你提到的 ABI 連續 13 個月的賬單低於 50 以及其他一些行業統計數據形成了鮮明對比。是什麼讓你能夠反其道而行？我們是否看到，企業正在加速從生產普通鋼筋轉向生產更多 ESM 產品和其他產品，從而增強企業在面對產業逆風時實現成長的能力？

If I remember correctly, Tyson, the first time that business conditions for Insteel seemed to diverge significantly from what the major macro indices would indicate was 2025, and several things have happened internally that have helped us with that. Our work in the cast‑in‑place market has helped, our acquisitions have helped, so I think there are things going on internally that are different than what you may see in macro indicators for construction activity in the US market. And we will continue pursuing the path that we're pursuing now.

如果我沒記錯的話，泰森，Insteel 的商業環境第一次與主要宏觀指數所指示的情況出現顯著偏差是在 2025 年，而公司內部發生的一些事情幫助我們實現了這一點。我們在預製件市場的工作有所幫助，我們的收購也有所幫助，所以我認為公司內部正在發生的事情與你在美國建築活動的宏觀指標中可能看到的情況有所不同。我們將繼續沿著我們現在正在走的道路前進。

In the past, you benefited from when we were going into 2000-2021 with the distribution centers. Now we are looking at data centers, both DC, ironically. You are working with those contractors that specialize there. Are you being spec'd into those designs as you were with some of the online retail customers before in the DCs? As we see that develop and that industry grow, are you kind of in lockstep with that?

過去，在 2000 年至 2021 年期間，你們從我們建造配送中心的過程中受益。現在我們正在關注資料中心，諷刺的是，都是華盛頓特區的資料中心。您正在與那些專門從事該領域的承包商合作。您是否像之前在資料中心為一些線上零售客戶一樣，被納入這些設計方案中？隨著該行業的發展壯大，您是否也與之同步前進？

Every project is different, but as a general whole, I would say, no, we are not spec'd in. Rebar is spec'd in, and we make a conversion of rebar applications to engineered structural mesh applications and rely on the value proposition of our product. And particularly with respect to data centers, one of the significant value propositions that we offer is speed, and these owners and lessors of these centers are really focused on constructing them and getting them up and operating quickly. And our product helps with that whole charge.

每個項目都不一樣，但總的來說，我認為，不，我們沒有被列入特定項目。鋼筋是規格中規定的，我們將鋼筋應用轉換為工程結構網格應用，並依賴我們產品的價值主張。尤其是在資料中心方面，我們提供的重要價值主張之一是速度，而這些資料中心的擁有者和租賃者都非常注重建造資料中心並使其快速投入營運。我們的產品有助於完成整個充電過程。

So you do have an inherent advantage based on what our product is to grow along with that growing segment, that niche?

所以，基於我們的產品特性，我們確實擁有與這個不斷成長的細分市場一同發展的固有優勢？

Yeah, I mean I think there is -- the value proposition of our product relative to rebar is solid. There is no question about that.

是的，我的意思是，我認為我們的產品相對於鋼筋的價值主張是穩固的。這點毋庸置疑。

Okay. Inventory levels, it sounds like that may have peaked this past quarter. We'll see a gradual downtick. Will that downtick accelerate as we get into fiscal three and fiscal four?

好的。庫存水準似乎在上個季度達到了峰值。我們會看到逐漸下降的趨勢。隨著第三財年和第四財年的到來，這種下滑趨勢會加速嗎？

Well, I think it depends on the level of shipments that we see. And if the scenario that we believe will unfold actually unfolds, and that is one of strong business conditions in 2026, then I think that is correct. But keep in mind that we will go back to the offshore market for Q3 and Q4 if we don't see significant improvements in the balance of supply and demand domestically.

嗯，我認為這取決於我們看到的貨運量水準。如果我們認為將會發生的事情真的發生了，也就是 2026 年商業環境強勁，那麼我認為這是正確的。但請記住，如果我們在國內看不到供需平衡的顯著改善，我們將在第三季和第四季重返海外市場。

Okay. The CapEx $20 million, is that roughly split 50-50, maintenance $10 million, $10 million for whether it be cost reductions or product line expansions, more of the growth side or improvement in margin? Is that kind of the split you are looking at?

好的。資本支出 2000 萬美元，大致可以 50-50 分配，維護費用 1000 萬美元，另外 1000 萬美元用於成本削減或產品線擴張，更多地用於增長方面或提高利潤率？這就是你所看到的這種比例嗎？

I would say that's close to correct. We are still identifying some of the capacity expansion opportunities that exist out there. And of course, we are always interested in incorporating new technology into our manufacturing operations that will help us reduce cash costs of operation. And we still have the underlying labor availability issue. And as you might suspect, the more new technology we bring into the plants, the less labor-intensive our operation is. So we are very much oriented toward looking at that.

我認為這基本上正確。我們仍在尋找一些現有的產能擴張機會。當然，我們也一直對將新技術融入我們的生產營運中感興趣，這將有助於我們降低營運現金成本。我們仍然面臨勞動力短缺的根本問題。正如你可能猜到的那樣，我們引進到工廠的新技術越多，我們的營運就越不需要大量勞動力。所以我們非常注重這方面的研究。

Okay. And last one for me. As the administration goes to Davos, it is supposed to lay a plan to increase and incentivize greater activity in the residential side which is about 15% of your overall business. Betting against the administration has proved futile. So you kind of go with what they are pushing, especially in an election year. How quickly can that residential market for you turn where it becomes a benefit as opposed to just kind of being stuck in the mud the last couple of years?

好的。這是我最後一個問題。政府前往達沃斯之際，應該制定一項計劃，以增加和激勵住宅領域的活動，該領域約佔您整體業務的 15%。事實證明，與政府作對是徒勞無功的。所以你基本上會順著他們的指示去做，尤其是在選舉年。對你而言，住宅市場需要多久才能扭轉頹勢，從過去幾年的停滯不前轉變為有利可圖？

My view would be probably not fast enough to have any meaningful impact on 2026 for Insteel. More importantly, our participation in residential markets would be related to slab-on-grade construction of housing units where the slabs are post-tensioned, and we are using PC strand. And that is the segment business where we knock heads with the imports most closely.

我的觀點可能不夠快，無法對2026年的國際鋼鐵協會（Insteel）產生任何實質影響。更重要的是，我們參與住宅市場將與住宅單元的地面板式結構施工有關，其中樓板採用後張法預應力，我們使用預力鋼絞線。而這正是我們與進口商衝突最激烈的細分市場。

I'm going to sneak one in. The labor cost outlook, we have heard other companies talk about general wage increases, health costs on that side of it. Have you indexed or looked at labor costs increases for this year and what kind of offsets you have there?

我打算偷偷帶一個進去。關於勞動成本前景，我們聽到其他公司談到普遍的工資上漲以及醫療成本上漲等問題。您是否已對今年的勞動成本成長進行指數化分析或考察，以及您有哪些抵銷措施？

Yeah. So we have 11 or 12 different considerations because we look at prevailing labor markets in each of the areas where we operate, and they are each different. But the upward pressure on labor costs still exists. We are incurring significant reciprocal and Section 232 tariff expenses in purchases of non-raw material items like spare parts. We're seeing energy increase. The inflationary environment is alive and well within our operations, and it really, like I say, every one's an independent event.

是的。因此，我們有 11 或 12 個不同的考慮因素，因為我們要檢視我們經營的每個地區的勞動市場，而每個地區的勞動市場都各不相同。但勞動成本上漲的壓力依然存在。我們在採購非原料項目（如備件）時，產生了大量的互惠關稅和第 232 條款關稅費用。我們看到能源消耗正在增加。通貨膨脹環境在我們營運中依然存在，而且正如我所說，每一件事都是獨立的。

We currently have no further questions, so I will hand back over to the management team for closing remarks.

目前我們沒有其他問題，所以我會把發言權交還給管理團隊，請他們作總結發言。

We appreciate your interest in Insteel and its operating results, and we look forward to talking to you next quarter. In the meantime, if you have questions, don't hesitate to follow up with us. Thank you.

我們感謝您對英鋼集團及其經營業績的關注，並期待下個季度與您進一步交流。同時，如果您有任何疑問，請隨時與我們聯繫。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。感謝您的參與。現在您可以斷開線路了。