Insteel Industries Inc (IIIN) 2026 Q2 法說會逐字稿

Hello, and welcome, everyone, to the Insteel Industries second-quarter 2026 earnings call. My name is Becky and I will be your operator today. (Operator Instructions) I will now hand over to your host, H. Woltz, CEO, to begin. Please go ahead.

各位好，歡迎參加 Insteel Industries 2026 會計年度第二季財報電話會議。我是 Becky，今天將擔任會議接線員。(接線員指示) 現在我將把時間交給本次會議主持人、執行長 H. Woltz 開始。請開始。

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

謝謝你，Becky。各位早安，感謝各位對 Insteel 的關注，並歡迎參加我們 2026 會計年度第二季電話會議。本次會議將由我們的副總裁、財務長兼財務主管（Treasurer）Scot Jafroodi，以及我共同進行。

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，提醒各位，我們簡報中的部分評論屬於前瞻性陳述，可能受到各種風險與不確定性影響，導致實際結果與預期有重大差異。這些風險因素已在我們向美國證券交易委員會（SEC）提交的定期申報文件中說明。

Despite falling well short of our expected financial performance in Q2, we believe the upturn in business activity we reported previously is still intact. Winter weather is a fact of life in our business and happens that during Q2, conditions were severe and prolonging in many geographies, particularly compared to recent years and project delays, while undesirable, are rather common in the industry. We regret that we experienced both of these phenomena during Q2, but we're confident that short-term weather conditions and project delays neither create nor destroy demand and that postponed demand will be evident during the balance of fiscal 2026.

儘管第二季的財務表現遠低於我們的預期，我們仍相信先前所提到的業務活動回升趨勢依然存在。冬季天候是我們業務中不可避免的一部分，而在第二季，許多地區的天候狀況嚴峻且持續時間長，尤其相較近年更為明顯；此外，專案延宕雖不理想，但在產業中相當常見。我們對於第二季同時遭遇這兩種情況深感遺憾，但我們有信心，短期天候與專案延宕既不會創造也不會消滅需求，而被延後的需求將在 2026 會計年度剩餘期間逐步顯現。

I'm going to turn the call over to Scot to comment on our financial results. And then following his comments, I'll pick the call back up to discuss our business outlook.

接下來我將把電話交給 Scot，請他說明我們的財務結果。在他說明之後，我會再接續討論我們的業務展望。

Thank you, H, and good morning to everyone joining us on the call. As we reported earlier this morning, our second quarter results were weaker than expected, reflecting the compounding impact of winter weather disruptions, lower spreads, and higher unit conversion costs. Net earnings for the quarter were $5.2 million or $0.27 per share compared with $10.2 million or $0.52 per diluted share in the same period last year.

謝謝你，H，也向所有加入本次電話會議的各位道早安。如同我們今天稍早所公布的，第二季結果弱於預期，反映冬季天候干擾、價差縮小以及單位轉換成本上升等因素的疊加影響。本季淨利為 520 萬美元，或每股 0.27 美元；相較去年同期淨利 1,020 萬美元，或稀釋後每股 0.52 美元。

Shipments for the quarter declined 5.9% from the prior year but increased 6.9% sequentially from the first quarter. While the second quarter typically reflects some seasonal softness, conditions this year were significantly more severe. Following a solid start in January, we experienced extended periods of winter weather across most of our markets, with reduced construction activity and disrupted operating schedules for both our customers in Insteel, which weighed out order flow and shipments.

本季出貨量較去年同期下降 5.9%，但較第一季季增 6.9%。雖然第二季通常會反映一些季節性走弱，但今年的情況明顯更為嚴峻。在 1 月有一個穩健的開局之後，我們在多數市場經歷了長時間的冬季天候，導致施工活動減少，且我們客戶與 Insteel 的營運排程均受到干擾，進而壓抑了訂單流入與出貨量。

In addition, certain projects originally scheduled for delivery during the quarter were deferred to later in the year for reasons unrelated to weather. Although we are still early in the third quarter, recent order activity has been solid, with April shipments trending above forecasted loans.

此外，部分原訂於本季交付的專案，因與天候無關的原因延後至今年稍晚。雖然我們目前仍處於第三季初期，但近期接單活動表現穩健，4 月出貨趨勢高於預測水準。

With that backdrop on volumes, let me turn to pricing. Average selling prices were up 14.2% year over year, driven by the pricing actions we put in place throughout fiscal 2025 and into the current year to offset higher rod costs, increased Section 232 tariffs and rising operating expenses. Sequentially, ASPs were up 1% from the first quarter even as wire rod costs continued to move higher. For context, published prices for steel wire rod, our primary raw material, rose $90 per tonne during the quarter.

在說明完量的背景後，我來談價格。平均銷售價格（ASP）年增 14.2%，主要受我們在 2025 會計年度及本年度持續採取的定價措施帶動，以抵銷線材成本上升、第 232 條關稅增加，以及營運費用攀升。就季比而言，即使線材成本持續走高，ASP 仍較第一季上升 1%。作為參考，本季鋼線材（我們的主要原料）的公告價格每公噸上漲 90 美元。

Although we implemented additional price increases during Q2, the limited sequential improvement in ASPs was influenced by product mix, existing contractual pricing, and softer volumes. We expect these recent pricing actions, along with the additional price increase implemented in April to provide further benefit in the coming periods as they are more fully reflected in our realized pricing.

雖然我們在第二季實施了額外的漲價，但 ASP 的季比改善幅度有限，受到產品組合、既有合約定價以及較疲弱的出貨量所影響。我們預期這些近期的定價措施，加上 4 月實施的額外漲價，將在未來期間帶來更多助益，因其將更完整地反映在我們的實現售價中。

Gross profit declined $8 million year over year, $16.5 million, and gross margin narrowed to 9.6%. The decline primarily reflects lower shipment volumes, reduced spreads between selling prices and raw material costs, and higher unit conversion costs resulting from lower production levels and weather-related operational inefficiencies.

毛利年減 800 萬美元至 1,650 萬美元，毛利率收斂至 9.6%。下滑主要反映出貨量降低、銷售價格與原料成本之間的價差縮小，以及因產量較低與天候相關的營運效率不佳所導致的單位轉換成本上升。

Sequentially, gross profit declined $1.6 million and gross margin contracted by 170 basis points as the slowdown of shipments delayed the tailwinds of recent price increases and extended the lag between raw material cost increases and realized pricing. As we enter the third quarter, we expect several factors to support a recovery in gross margin. Demand is improving as we move into the seasonally stronger portion of the year. Recent price increases are beginning to gain traction, and our current raw material carrying values are more favorable.

就季比而言，毛利減少 160 萬美元，毛利率下滑 170 個基點，原因在於出貨放緩延後了近期漲價帶來的順風效應，並拉長了原料成本上升與實現售價反映之間的時間落差。進入第三季後，我們預期有數項因素將支撐毛利率回升。隨著進入一年中季節性較強的期間，需求正在改善。近期漲價開始發揮效果，而我們目前的原料帳面成本也較為有利。

In addition, higher operating rates across our facilities should enhance fixed cost absorption. Taking together, these factors are expected to support a gradual improvement in margin performance as the quarter progresses. SG&A expense for the quarter decreased to $9.7 million or 5.6% of net sales compared to $10.8 million or 6.7% of net sales in the prior year period. The decline was primarily driven by a $1.1 million reduction in compensation costs tied to our return on capital-based incentive plan, reflecting weaker financial performance this year.

此外，各廠區較高的稼動率應可提升固定成本吸收。綜合而言，預期這些因素將在本季進行期間支撐毛利率表現逐步改善。本季銷售、一般及管理費用（SG&A）降至 970 萬美元，約占淨銷售額 5.6%，相較去年同期為 1,080 萬美元、占比 6.7%。下降主要來自與資本報酬（return on capital）為基礎的獎酬計畫相關之薪酬成本減少 110 萬美元，反映今年財務表現較弱。

SG&A expense was also affected by $203,000 unfavorable year-over-year change in cash surrender value of life insurance policies, reflecting the downturn in financial markets and its effect on the underlying investments. Our effective tax rate for the quarter was 23.3%, which is up slightly from 23.2% last year. Looking ahead, we expect our effective tax rate for the remainder of the year to be approximately 23%, subject to the level of pretax earnings, book-to-tax differences, and the other assumptions and estimates underlying our tax provision calculation.

SG&A 亦受到壽險保單現金解約價值年對年不利變動 20.3 萬美元的影響，反映金融市場下行及其對底層投資的影響。本季有效稅率為 23.3%，較去年 23.2% 略為上升。展望未來，我們預期今年剩餘期間的有效稅率約為 23%，但仍將視稅前盈餘水準、帳稅差異（book-to-tax differences），以及其他用於計算所得稅費用之假設與估計而定。

Turning to cash flow statement and balance sheet. Operating cash flow provided $4.8 million in the current quarter compared with using $3.3 million of cash in the prior year period, driven primarily by the change in net working capital. Net working capital used $1.4 million in cash in the second quarter, reflecting a $16.8 million increase in receivables resulting from higher sales and average selling prices, partially offset by a $13.3 million reduction in inventory as we scale back raw material purchases.

接著看現金流量表與資產負債表。本季營業活動現金流入 480 萬美元，相較去年同期為現金流出 330 萬美元，主要由淨營運資金變動所帶動。第二季淨營運資金使用現金 140 萬美元，反映應收帳款增加 1,680 萬美元（因銷售與平均銷售價格提高），部分被存貨減少 1,330 萬美元所抵銷，因我們縮減原料採購規模。

Our quarter-end inventory position represented approximately 3.4 months of shipments on a forward-looking basis calculated off of our third-quarter forecast. That's down from 3.9 months at the end of the first quarter. As we mentioned on our Q1 call, we increased inventory levels early in the year as we supplemented domestic wire rod with offshore material, and that build naturally eased as we move through the second quarter.

以我們第三季預測為基礎、以前瞻方式計算，季末存貨水位約相當於 3.4 個月的出貨量。較第一季季末的 3.9 個月下降。如同我們在第一季電話會議中提到的，我們在年初提高存貨水位，因我們以海外材料補充國內鋼線材供應；而隨著進入第二季，該存貨增加自然趨緩。

Looking ahead, we expect a modest increase in inventory as we move into the seasonal busy period, positioning us to support higher shipment volumes. Additionally, our inventories at the end of the second quarter were valued at an average unit cost that approximates our second-quarter cost of sales and remain stable relative to current replacement costs, which will have a positive impact on spreads and margins as we move through the third quarter.

展望未來，隨著進入季節性繁忙期，我們預期存貨將小幅增加，以便支援更高的出貨量。此外，第二季季末的存貨係以平均單位成本入帳，該成本大致接近第二季銷貨成本，且相對於目前重置成本仍保持穩定；這將在第三季期間對價差與毛利率帶來正面影響。

We incurred $4.4 million in capital expenditures in the quarter for a total of $5.9 million through the first half of our fiscal year, and we remain committed to our full-year target of $20 million. Finally, from a liquidity perspective, we ended the quarter with $15.1 million of cash on hand and no borrowings outstanding on our $100 million revolving credit facility, providing us ample liquidity and financial flexibility going forward.

本季資本支出為 440 萬美元，使本會計年度上半年累計達 590 萬美元；我們仍致力於全年 2,000 萬美元的目標。最後，就流動性而言，我們在季末持有現金 1,510 萬美元，且在 1 億美元循環信用額度下沒有任何未償借款，為未來提供充足的流動性與財務彈性。

Turning to the macroeconomic indicators for our construction end markets. The latest readings from our two leading measures, Architectural Billing Index and the Dodge Momentum Index point to an environment that remains uneven, but generally stable. Architectural Billing Index, which typically leads nonresidential construction activity by approximately 9 to 12 months improved to 49.4% in February from 43.8% in January. While the index remained below the breakeven level of 50%, the improvement indicates that the rate of contraction moderated with fewer firm reporting decline in billings compared with the prior year.

接著談到我們建築終端市場的總體經濟指標。我們兩項領先指標——建築師帳單指數（Architectural Billing Index）與 Dodge 動能指數（Dodge Momentum Index）——的最新讀數顯示，環境仍然不均衡，但整體而言相對穩定。建築師帳單指數通常領先非住宅建築活動約 9 至 12 個月，2 月份由 1 月的 43.8% 回升至 49.4%。雖然該指數仍低於 50% 的損益兩平水準，但這項改善顯示收縮速度已放緩，與前一年相比，回報帳單下滑的公司數量減少。

Additionally, the Dodge Momentum Index attracts nonresidential building projects, entering the planning phase increased 1.8% in March. The gain was driven by a 7% improvement in commercial planning activity, which continues to be supported by strong data center construction. Monthly construction spending from the US Department of Commerce suggests only modest growth in overall activity.

此外，Dodge 動能指數（衡量進入規劃階段的非住宅建築專案）在 3 月上升 1.8%。此增幅主要由商業規劃活動改善 7% 所帶動，而該領域持續受惠於強勁的資料中心建設。美國商務部的月度建築支出數據顯示，整體活動僅呈現溫和成長。

In January, total construction spending on a seasonally adjusted annualized basis increased approximately 1% year over year. Nonresidential spending was essentially flat during the period with public highway and street construction, one of our key end-use markets remain comparably stronger, increasing around 4% from the prior year.

1 月份，以經季節調整的年化基礎計算，建築總支出年增約 1%。期間非住宅支出基本持平；而公共公路與街道建設（我們的主要終端用途市場之一）相對更為強勁，較前一年增加約 4%。

As we closed out the second quarter, we remain encouraged by the demand trends we're seeing across our core end markets, while the broader macroeconomic backdrop continues to evolve, including the risk of renewed inflation, uncertainty around the timing of interest rate cuts, potential changes in tariff policy, and the geopolitical developments affecting energy and shipping costs, our customers remain engaged and project activity continue to move forward.

在結束第二季之際，我們對核心終端市場所見的需求趨勢仍感到鼓舞；同時，更廣泛的總體經濟背景仍在演變，包括通膨再起的風險、降息時點的不確定性、關稅政策可能的變動，以及影響能源與航運成本的地緣政治發展；在此情況下，我們的客戶仍保持投入，專案活動也持續推進。

Our ongoing dialogue with customers combined with recent improvement in several leading indicators support our confidence in the direction of the business. At the same time, we recognize that these external factors could influence the pace of the activity in the near term. Even though underlying demand conditions remain healthy, and we believe we are well positioned as we move through the second half of the fiscal year.

我們與客戶持續的對話，加上多項領先指標近期的改善，支持我們對業務走向的信心。同時，我們也認知到，這些外部因素可能在短期內影響活動推進的速度。儘管基礎需求狀況仍然健康，我們相信在本會計年度下半年推進之際，公司已具備良好定位。

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

以上為我事先準備的發言。接下來我把電話交回給 H。

Thank you, Scot. As I noted in my opening comments, we were affected during Q2 by weather-related and nonweather-related circumstances that resulted in our operating rate, shipments, financial performance, following short expectations. Making matters worse, we had staffed up at certain facilities ahead of the seasonally more active part of our year in anticipation of expanding operating hours, which would reduce lead times and result in increased shipments.

謝謝你，Scot。如我在開場評論中提到的，我們在第二季受到與天候相關及非天候相關因素影響，導致我們的稼動率、出貨量與財務表現未達預期。更糟的是，我們為了迎接一年中季節性較為繁忙的時段，已提前在部分廠區增聘人力，預期擴大營運時數，以縮短交期並提升出貨量。

So we carry the cost of ramping up through the quarter but were unable to operate at expected levels. While we continue to believe that demand will be solid during 2026, we will reduce costs if this forecast fails to materialize. At this point, however, we do not expect to be in a cost reduction mode driven by demand-related concerns.

因此，我們在整個季度承擔了擴產爬坡的成本，但卻無法以預期水準運作。雖然我們仍相信 2026 年需求將保持穩健，但若此預測未能實現，我們將降低成本。不過就目前而言，我們不預期會因需求相關疑慮而進入成本削減模式。

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 called market prices in the US for hot-rolled wire rod, our primary raw material, to rise to a level that's 50% to 100% over the global market price.

再談另一個主題，鋼鐵產業可能比任何其他產業都更受到本屆政府關稅政策的影響。對進口鋼材課徵 50% 的 232 條款（Section 232）關稅，已使美國熱軋線材（wire rod；我們的主要原料）的市場價格上升至較全球市場價格高出 50% 至 100% 的水準。

While last summer, we questioned the effectiveness of the derivative products tariff strategy implemented by the administration, we are glad to report a significant decline in the volume of imported PC strand that has entered the US since the tariff was increased to 50% and derivative products, including PC strand recovered. From August to December, the five-month period following the changes the administration made to the Section 232 tariff regime, PC strand imports fell by more than 50%.

雖然去年夏天我們曾質疑政府所採取的衍生產品關稅策略之有效性，但我們很高興報告：自關稅提高至 50% 且衍生產品（包括 PC 鋼絞線）納入後，進入美國的進口 PC 鋼絞線數量已大幅下降。自 8 月至 12 月，在政府對 232 條款關稅制度作出調整後的五個月期間，PC 鋼絞線進口量下降超過 50%。

The application of the Section 232 tariff to PC strand, together with global uncertainty and higher transportation insurance and insurance costs related to the conflict with Iran clearly work in the favor of the domestic industry.

將 232 條款關稅適用於 PC 鋼絞線，再加上全球不確定性，以及與伊朗衝突相關而上升的運輸保險與保險成本，顯然對國內產業有利。

Turning to the raw material environment. Investors should understand that Insteel operates in a small segment of the domestic hot-rolled carbon steel market. Domestic production of steel wire rod, our primary raw material is approximately 3.5 million tonnes per year, while US production of all hot-rolled carbon steel is roughly 100 million tonnes per year. Difficult economic conditions in recent years for producers of hot-rolled wire rod resulted in the permanent closure of two producing mills and financial struggles together with significantly diminished output for a third producer.

接著談原料環境。投資人應了解，Insteel 所處的是美國國內熱軋碳鋼市場中的一個小型細分領域。國內鋼線材（我們的主要原料）年產量約 350 萬公噸，而美國所有熱軋碳鋼的產量約為每年 1 億公噸。近年來熱軋線材生產商面臨艱困的經濟環境，導致兩座生產廠永久關閉，另有第三家生產商陷入財務困境並大幅減產。

Altogether, these curtailments reduced actual domestic production of wire rod by more than 800,000 tonnes per year, and reduced domestic capacity to produce wire rod by nearly 1.2 million tonnes per year relative to apparent domestic consumption of wire rod of approximately 5 million tonnes per year. So by our calculation, capacity equal to nearly 20% of apparent domestic consumption is offline, most of it permanently.

總體而言，這些限產使國內線材實際產量每年減少超過 80 萬公噸，並使國內線材產能相較於約每年 500 萬公噸的表觀國內消費量，減少近 120 萬公噸。因此依我們的估算，相當於表觀國內消費量近 20% 的產能已離線，其中多數為永久性。

These capacity curtailments together with changes to the Section 232 tariff caused the US wire -- market for wire rod to tighten significantly and created serious questions about the adequacy of domestic supply. Insteel, therefore, was forced to turn 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.

這些產能縮減，加上 232 條款關稅的變動，使美國線材市場顯著收緊，並引發對國內供應是否充足的嚴重疑慮。因此，Insteel 被迫轉向海外市場以取得部分供應。海外交易的經濟性（包含可觀的運費成本）要求採購大量貨物，進而影響庫存與淨營運資金需求，並反映在我們的資產負債表上。

Net working capital rose approximately $45 million over the last 12 months. We will continue to import a portion of our raw material requirements until such time as domestic availability improves, and we will incur excess net working capital requirements as compared to purchasing domestically, although we have some options to mitigate this adverse impact.

過去 12 個月，淨營運資金增加約 4,500 萬美元。在國內供應可得性改善之前，我們將持續進口部分原料需求；相較於國內採購，我們將承擔較高的淨營運資金需求，儘管我們有一些選項可緩解此不利影響。

Finally, turning to CapEx. As mentioned in the release, we expect to invest approximately $20 million in our plants and information systems infrastructure during 2026. Our investments will support the growth of our engineered structural mesh business, 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.

最後談資本支出（CapEx）。如新聞稿所述，我們預期在 2026 年於廠房與資訊系統基礎建設投資約 2,000 萬美元。這些投資將支持我們工程結構網（engineered structural mesh）業務的成長、降低現金製造成本，並提升資訊系統的穩健性。依照過往慣例，我們將隨著年度推進，按季提供投資活動與預期的更新。

Looking ahead, we are aware of the substantial risk 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 to pursue actions to optimize our costs.

展望未來，我們了解經濟狀況與政府關稅政策存在重大風險。無論這些領域如何發展，我們都具備良好條件推動成長相關活動（包括有機成長與併購），並採取行動以最佳化成本。

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

以上為我們事先準備的發言，接下來我們將開始問答。Becky，請你說明提問流程，好嗎？

(Operator Instructions) Julio Romero, Sidoti.

（接線員指示）Julio Romero，Sidoti。

H and Scot, can we start on volumes a bit and talk a bit about the projects originally scheduled for the quarter that were delayed into later quarters. Any way you could help us better understand how much of this was weighed on -- may weighed on your shipments? And secondly, if you could expand on the drivers of the project delays. I think you mentioned they were unrelated to weather. Just hoping you could elaborate there a little bit.

H 和 Scot，我們能否先從出貨量談起，並談談原本排定在本季度、但延後到後續季度的專案？你們是否能協助我們更清楚了解，這些因素對你們出貨量造成了多大程度的拖累？第二，如果可以的話，請你們進一步說明專案延遲的驅動因素。我想你們提到這些與天候無關。希望你們能在這部分再多做一些說明。

Well, so if you can envision a construction project that the owner and contractor would like to start the project and operate continuously until the finish of the project or a portion of the project, but they don't want to open up mother earth. Two months ahead of having all of their other needed materials and suppliers in line. And so therefore the project that we're involved in was delayed and should -- we should begin shipping it in the current quarter.

嗯，所以如果你能想像一個建築專案，業主和承包商希望專案一開工就能持續運作直到專案完工或完成其中一部分，但他們不想去挖開地表。在他們把其他所有所需材料與供應商都安排到位之前兩個月。因此，我們所參與的這個專案被延後了，而我們——我們應該會在本季度開始出貨。

The delays are unfortunate, but I don't think they're surprising at all. And as we try to emphasize, this is a delay of business. It's not a cancellation. So we just -- we'll have to sit tight and see that come to fruition in the current quarter. And this project will go through our fiscal year and into 2027.

延遲確實令人遺憾，但我不認為這有任何令人意外之處。而且正如我們試圖強調的，這是業務上的延後。不是取消。所以我們只能——先耐心等待，看看它在本季度落實。而這個專案會跨過我們的會計年度並延續到2027年。

Okay. Great. Very helpful. And then you talked about April shipments trending above forecasted levels. Just what's your sense of how much those shipments are related to the project delays pushed to the right, maybe some catch up from the February weather delays or any other underlying demand trends that are (inaudible) there.

好的。很好。非常有幫助。然後你提到4月出貨量的走勢高於預測水準。你怎麼看這些出貨有多少是與專案延遲往後遞延有關，可能是補上2月天氣延誤的進度，或是其他任何潛在需求趨勢在（聽不清）那裡。

I don't think any of it is related to project delays because it's still delayed, and we should see some benefits later in the quarter of that. But the current performance and current shipping performance is pretty solid relative to our expectations, and our prices are coming up as we expected them to.

我不認為其中任何一部分與專案延遲有關，因為它仍然延後中，而我們應該會在本季度稍晚看到一些好處。但目前的表現與目前的出貨表現相對於我們的預期相當穩健，而且我們的價格也如我們預期般在上升。

Okay. Perfect. And maybe last one for me here is you talked about project mix a little bit impacting the ASP numbers, the other numbers within your release. Can you talk a little about where ESM mix stands today.

好的。完美。那我這邊最後一個問題是，你提到專案組合在某種程度上影響了ASP數字，以及你們公告中的其他數字。你能談談目前ESM組合的狀況嗎？

Can you ask that question again, Julio?

Julio，你可以再問一次那個問題嗎？

Yeah. Just talk a little bit about -- this is the second quarter where you were talking about project mix kind of impacting the ASP number and maybe the spread number. If you could just talk a little bit about whether ESM is playing a factor in that at all? And just broadly where ESM mix kind of stands at the moment?

可以。就是再談一下——這是你們連續第二個季度提到專案組合某種程度上影響ASP數字，可能也影響價差（spread）數字。如果可以的話，請談談ESM是否在其中扮演任何因素？以及更廣泛地說，ESM組合目前大概處於什麼位置？

Let me start at the beginning. So you'll understand the difficulty that we have in trying to quantify some of these things. And also while we don't spend a lot of time on trying to dissect the reality of the market. But if you'll recall, in February the adverse winter weather began in Texas and ended up in New England. That means that it affected 9 of our 11 facilities, which is pretty unfortunate, but it's just what had happened.

我從頭開始說。這樣你會理解我們在嘗試量化其中一些事情時所面臨的困難。另外，我們也不會花太多時間去試圖拆解市場的實際狀況。但如果你還記得，2月不利的冬季天氣從德州開始，最後一路影響到新英格蘭。這表示它影響了我們11個設施中的9個，這相當不幸，但事情就是這樣發生了。

So we had issues in various geographies of various types. In some cases, we've had roads that were not passable or stayed hazardous for extended periods of time. But the other reality setting aside road conditions and moving around, is that when it's very, very cold, you can't pour concrete. Various people have various opinions about the level or the temperature at which hydration becomes a big concern, but suffice it to say at low temperatures, foreign concrete becomes not feasible.

所以我們在不同地區遇到各種不同類型的問題。在某些情況下，我們遇到道路無法通行，或長時間維持危險狀態。但撇開道路狀況與移動不談，另一個現實是：天氣非常、非常冷的時候，你無法澆置混凝土。不同的人對於水化作用何時會成為重大疑慮的溫度門檻有不同看法，但總之，在低溫下，澆置混凝土就不可行。

So in North Carolina, for instance, we had multiple weeks of cold weather where I don't think the temperature ever broke freezing. And while the roads were unpassable for a period of time, the temperature staying low were probably of more significance. So I guess the reality is we didn't go through every customer in every plant and try to quantify the impact. We're more concerned about getting our plants operating and covering the eventual demand that would come back as weather conditions improve.

例如在北卡羅來納州，我們遇到好幾週的寒冷天氣，我認為氣溫一直沒有高於冰點。雖然道路在一段時間內無法通行，但氣溫持續偏低可能更為關鍵。所以我想現實是，我們並沒有逐一檢視每個工廠的每位客戶，並嘗試量化其影響。我們更關心的是讓工廠恢復運作，並在天氣狀況改善、最終需求回來時能夠滿足。

Tyson Bauer, KC Capital.

Tyson Bauer，KC Capital。

When you talk about the freight expenses, are there two considerations there, the increased freight cost to get your inputted supplies in on the imported side as far as the inventories that you're looking -- where you have to absorb per se as opposed to making shipments from your facilities that maybe you're able to do surcharges and recoup those, the freight cost is even though it may be at zero margin, but you're getting it in the revenue line there.

當你談到運費費用時，這裡是否有兩個考量：一個是進口端把投入用的供應品運進來的運費成本上升，對於你正在看的庫存——你必須吸收的部分；相對地，從你們設施出貨的運費，也許你能加收附加費並回收那些成本，即使可能是零毛利，但你會把它反映在營收那一行。

So is there two different pods here on the freight charges, one you have to absorb and the other that you can pass along?

所以運費是否有兩種不同的類別：一種你必須吸收，另一種你可以轉嫁？

I wouldn't look at it that way, Tyson. In terms of the raw materials that we're importing, we're very well located for inbound freight cost purposes, if you were to compare that to our locations relative to domestic supplies. So I don't think we incur any excess inbound freight costs because we're importing.

Tyson，我不會用那種方式來看。就我們進口的原物料而言，若以進貨運費成本來看，我們的地理位置非常有利；如果你拿它與我們相對於國內供應來源的位置做比較，就會更明顯。所以我不認為因為我們進口就會產生任何額外的進貨運費成本。

Now freight costs, whether inbound or outbound have risen substantially following the conflict in Iran, and it happened extremely quickly and it coincided with the immigration efforts of the administration that took thousands of truck drivers off the road who couldn't speak English. And without commenting on good, better and different, the practical impact of those two things of much higher diesel cost and far fewer drivers has meant that our costs have gone up, and it also means that many of our loads have been rejected by carriers who we could count on in the past.

不過，無論是進貨或出貨，運費成本在伊朗衝突之後都大幅上升，而且上升得非常快；同時也碰上政府的移民執法行動，讓數千名不會說英語的卡車司機離開道路。不評論好壞對錯，這兩件事——柴油成本大幅提高以及司機大幅減少——在實務上的影響就是我們的成本上升了，也意味著我們許多貨載被過去我們能倚賴的承運商拒載。

And they reject loads because they can find one that pays more. And certainly, we're working through those issues, but I was reading just recently that in the flatbed sector of the freight market, more than 40% of loads tendered to carriers have been rejected, and that's not just in our industry, that's overall in the entire economy. So we're dealing with something there that is that is out of our control, but certainly, it's our responsibility to deal with it from a cost point of view. And we debated surcharges or we debated price increases, and we've elected just to increase our prices.

他們拒載是因為他們可以找到付得更多的貨。當然，我們正在處理這些問題；但我最近讀到，在貨運市場的平板車（flatbed）領域，超過40%提交給承運商的貨載都被拒絕，而這不只是我們產業，這是整個經濟的普遍現象。所以我們正在面對一個我們無法控制的狀況，但從成本角度來看，處理它當然是我們的責任。我們討論過附加費，也討論過調價，而我們選擇直接提高價格。

Okay. So you are recovering those as of now.

好的。所以你們目前已經把那些成本回收回來了。

Well, I wouldn't say we recovered them prospectively. But certainly, we absorb some of those costs until the effective data price increases that will, among other things, serve to recover these higher costs.

嗯，我不會說我們是以前瞻性的方式把它們回收回來。但可以肯定的是，在調價生效日期之前，我們會吸收其中一部分成本；而這些調價在其他目的之外，也將用來回收這些較高的成本。

Okay. And regarding price increases, you've done some early in your fiscal year in Q1. You've done some -- you announced in April. Any idea of the magnitude of those? And are we expecting additional price increases to try to get yourself whole?

好的。關於漲價，你們在會計年度的第一季已經做了一些。你們也在4月宣布了一些——。那些漲價幅度大概是多少？我們是否預期還會有額外的漲價，讓你們把缺口補回來？

Let me answer the last part of the question first. Our price increases are implemented to reflect what's happening in our marketplace, both with our raw material costs and with the other costs that we incur in our operations. And addressing the operating costs, we see these rather rosy inflation numbers that are published by the federal government. But I would tell you that the impact on our operations has been much more significant than you might think, by looking at official government statistics.

我先回答問題的最後一部分。我們的漲價是為了反映我們市場上正在發生的事情，包括原物料成本以及我們營運中發生的其他成本。談到營運成本，我們看到聯邦政府公布的那些相當樂觀的通膨數字。但我會告訴你，對我們營運的影響比你從官方政府統計數據所看到的要顯著得多。

Everything from labor to chemicals to everything that we consume, electricity, natural gas, all. Everything has gone up substantially, and wire rod has continued to increase substantially as well. So we're primarily looking to recover our costs by implementing price increases. And we've implemented three since the first of the year. And when volume falls as it did in Q2, we honor the commitments that we've made to customers.

從勞動力到化學品到我們消耗的一切，電力、天然氣，全部。所有東西都大幅上漲，而線材盤元（wire rod）也持續大幅上漲。所以我們主要是透過實施漲價來回收成本。而我們自年初以來已經實施了三次。而當銷量像第二季那樣下滑時，我們仍會履行對客戶所做的承諾。

And let's say, we're not operating on the basis of pricing effect at time of shipment. We are honoring the commitments that we've made, and it would be the next orders that are affected by price increases. So that's the way the business is done and that's the way Insteel is operating.

再假設，我們並不是以出貨時點的定價效應作為營運基礎。我們會履行我們已做出的承諾，而會受到漲價影響的是後續的新訂單。所以這就是這門生意的運作方式，也是 Insteel 的運作方式。

Okay. And I don't know if you want to take a stab at this one or not. But on April 2, supposedly, there was clarification on Section 232 for steel and aluminum, would you want to provide your two cents whether that did indeed provide some clarity as far as foreign content, US content, and different baskets, that some of these imports fall into at different rates.

好的。我不確定你是否想試著回答這題。但據說 4 月 2 日對鋼鐵與鋁的 232 條款有了釐清，你是否願意分享一下你的看法：這是否確實在外國成分、美國成分，以及不同籃子（某些進口品以不同稅率歸類）方面提供了一些清晰度。

Yeah. So we are affected by two different types of tariffs. The Section 232 tariff is the primary effect on our business. And there was confusion that was created by the administration's inclusion of derivative products, which occurred last summer, and that confusion was related to how do you calculate the tariff on the product. And so to know for sure how the tariffs are being calculated, we went back to the entry documents and could confirm that in practically all cases, PC strand that was entering was being assessed a 50% tariff rate.

是的。所以我們受到兩種不同類型關稅的影響。232 條款關稅是對我們業務影響最大的主要因素。而行政部門在去年夏天把衍生產品納入後造成了一些混淆，混淆點在於：要如何計算產品的關稅。因此，為了確定關稅究竟如何計算，我們回頭檢視報關入境文件，並可確認幾乎在所有情況下，進口的 PC 鋼絞線都被課以 50% 的關稅稅率。

We did not pick up that a lot of importers of record we're playing games with this and trying to minimize their tariff exposure. So because of that, the recent clarifications really don't have -- on 232, the recent clarifications don't have a whole lot of impact on us because we don't believe we were being nickeled and dimed on falsification of values to begin with.

我們沒有發現有很多登記進口商（importer of record）在這方面耍花招、試圖把關稅曝險降到最低。因此，近期的釐清對我們的影響其實不大——就 232 而言，近期的釐清對我們沒有太大影響，因為我們不認為一開始就有人透過虛報價值來在關稅上對我們斤斤計較。

So now, I guess, any questions about how the values are calculated have been put to rest, but we weren't really a victim of that. On the other side or the IEEPA tariffs -- and IEEPA tariffs would have affected any capital equipment that we purchased as well as primarily our purchases of spare parts, and I'll point out that purchases of spare parts are not really discretionary. There -- we just have to do it.

所以現在，我想，任何關於價值如何計算的疑問都已經塵埃落定，但我們並不是那種情況的受害者。另一方面是 IEEPA 關稅——IEEPA 關稅會影響我們購買的任何資本設備，以及主要是我們採購的備品零件；我也要指出，備品零件的採購其實不是可選的。我們——就是必須買。

And the importer of record declares the value of that part and applies the tariff rate to it. And in most cases, the tariff was a line item on our invoices. So we are studying now the implications of the Supreme Court's action on IEEPA tariffs and the Court of International Trade requirement that those tariffs are rebated to -- well, actually, the tariffs are rebated to the importers of record, but that's not Insteel.

而登記進口商會申報該零件的價值，並將關稅稅率套用在其上。在多數情況下，關稅會在我們的發票上以一個明細項目列示。所以我們目前正在研究最高法院對 IEEPA 關稅的裁定，以及國際貿易法院要求退還這些關稅所帶來的影響——嗯，實際上，關稅是退還給登記進口商，但那不是 Insteel。

So we're going to be in the position of talking with our vendors about first, their obligation to recover those tariffs. And second, what do you do with any refunds that you obtain because we actually paid those tariffs. But we're not going to be rebated by the government. That will go to the importer of record. So (inaudible) -- and then all of that is overlaid by the question of where is the money going to come from?

所以我們將會處於需要與供應商溝通的立場：第一，他們有義務去追回這些關稅。第二，如果你拿到任何退款，要怎麼處理，因為實際上是我們支付了這些關稅。但政府不會把款項退給我們。那會退給登記進口商。所以（聽不清）——而且這一切還疊加了一個問題：這筆錢要從哪裡來？

I understand that they've collected $160 billion of IEEPA tariffs. And I guess ostensibly, all that has to go back to the people who paid it, but I would bet you a lot that it won't happen that simply. And as we've discussed it here, we certainly will not be booking any kinds of receivables for tariff collections because I think it's highly improbable that it will happen in any simplistic kind of way.

我了解他們已經徵收了 1,600 億美元的 IEEPA 關稅。而我想，表面上看，這些都必須退回給支付的人，但我敢打賭事情不會那麼簡單。而且如同我們在這裡討論的，我們當然不會就關稅退還去入帳任何應收款，因為我認為以任何簡化的方式發生的可能性都非常低。

Yeah. I kind of figured we'll leave the refund line item off the model for, well, ever. The last question for me. Data centers as kind of a headline catalyst for nonres and that obviously gets a lot of attention. Those are the most prone to delays it sounds like from reports, not necessarily due to anything that you specifically do but because of transformers, switches, anything that relates to power and the actual operations of the data center.

是的。我大概也猜到，我們會把「退款」這個明細項目從模型裡拿掉——嗯，可能永遠都不放回去。我最後一個問題。資料中心作為非住宅（nonres）的一個頭條催化劑，顯然受到很多關注。從一些報告看起來，這類專案最容易延宕，不一定是因為你們具體做的事情，而是因為變壓器、開關，以及任何與供電和資料中心實際運作相關的設備。

So a lot of announcements, a lot of expectations, especially in out years, but the reality is those that have been announced have been getting pushed to the right for permitting reasons, supply issues, those things. Is this one of those that it's a great opportunity but it's going to be ripe for these kind of scenarios where things continually get pushed to the right?

所以有很多公告、很多預期，尤其是在更遠期的年度，但現實是，那些已宣布的專案因為許可（permitting）原因、供應問題等因素而不斷往後延。這會不會是那種「機會很大，但也很容易出現這種情境、事情持續往後推」的領域？

Well, I think I would look at it from a broader perspective, that from our point of view, the good news is that we don't think that the data center phenomenon goes away in 2026 or '27. I think you have five solid years of data center activity. And as we pointed out in our last earnings release and conference call, it's a really good thing that's here because the rest of the of the private nonres market seems to be on its back.

嗯，我想我會從更宏觀的角度來看：以我們的觀點，好消息是我們不認為資料中心這個現象會在 2026 或 2027 年消失。我認為你會有五年扎實的資料中心活動期。而且如同我們在上一份財報新聞稿與法說會中指出的，這是一件很好的事，因為私人非住宅市場的其他部分似乎正處於低迷。

So the delay is a delay. But my guess is when we look back at it, it's reasonably insignificant. The better news is that this is going to be a solid marketplace for a pretty good while. And while we're doing business on site with some of these projects. When I recall reports from our salespeople who are dealing with our legacy business, it's hard to tell how much data center business is really included in the legacy business.

所以延遲就是延遲。但我猜當我們回頭看時，它的影響相對不大。更好的消息是，這將會是一個相當穩健的市場，會持續好一段時間。而且我們也在一些專案現場做生意。當我回想我們業務人員針對既有（legacy）業務所回報的內容時，很難判斷既有業務中到底包含了多少資料中心的需求。

We'll (inaudible) reinforcing products who makes wall panels or double tees, but we don't necessarily know where those are going, and there are more and more references in call reports to data centers that are consuming products out of our legacy business as well as from our cast-in-place business.

我們會（聽不清）向製作牆板或雙 T 梁（double tees）的鋼筋補強產品客戶供貨，但我們不一定知道那些產品最後用到哪裡；而且在通話回報中，越來越常提到資料中心正在消耗我們既有業務的產品，以及我們現澆（cast-in-place）業務的產品。

Okay. That sounds good. All right. Thanks a lot, gentlemen.

好的。聽起來不錯。好。非常感謝，各位先生。

(Operator Instructions) We currently have no further questions, so I'll hand back over to H for closing remarks.

(接線員指示) 目前沒有其他問題，我把時間交回給 H 作結語。

Okay. Thank you. We appreciate your interest in Insteel. We look forward to talking to you next quarter and encourage you to call if you have questions in the meantime. Thank you.

好的。謝謝。我們感謝各位對 Insteel 的關注。我們期待下個季度再與各位交流；若期間有任何問題，也歡迎來電。謝謝。

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

今天的電話會議到此結束。感謝各位參與。您現在可以掛斷電話線。