Earnings call transcript: Insteel Industries Q2 2025 earnings beat expectations

Insteel Industries Inc. (IIIN) reported its Q2 FY2025 earnings, showcasing a notable performance with earnings per share (EPS) of $0.52, surpassing the forecast of $0.29. This earnings surprise was accompanied by a revenue of $160.7 million, exceeding the anticipated $149.85 million. Following the earnings announcement, Insteel Industries’ stock surged by 10.7%, reflecting investor optimism. According to InvestingPro analysis, the company maintains a FAIR financial health score of 2.47 and is currently trading near its Fair Value. InvestingPro has identified 8 additional key investment tips for IIIN, available to subscribers.

Key Takeaways

• Insteel Industries’ EPS of $0.52 exceeded expectations by 79.3%.
• Revenue increased to $160.7 million, beating forecasts by 7.2%.
• Stock price rose by 10.7% post-earnings announcement.
• Gross margin expanded to 15.3% from 12.3% year-over-year.
• The company completed integration of two new manufacturing facilities.

Company Performance

Insteel Industries demonstrated strong performance in Q2 FY2025, with net earnings rising to $10.2 million from $6.9 million in the previous year. The company benefited from a significant increase in shipments, up 28.9% year-over-year. The expansion of the gross margin to 15.3% from 12.3% reflects improved operational efficiencies and cost management.

Financial Highlights

• Revenue: $160.7 million, up from $149.85 million forecasted
• Earnings per share: $0.52, compared to $0.29 forecasted
• Gross profit: $24.5 million, up from the previous year
• Gross margin: 15.3%, up from 12.3%

Earnings vs. Forecast

Insteel Industries exceeded market expectations with an EPS of $0.52, a 79.3% increase over the forecast of $0.29. The revenue of $160.7 million also surpassed the forecasted $149.85 million, marking a 7.2% beat. This performance highlights the company’s effective cost management and strategic initiatives.

Market Reaction

Following the earnings announcement, Insteel Industries’ stock price increased by 10.7%, reaching $29.58. This movement places the stock closer to its 52-week high of $35.52, reflecting positive investor sentiment driven by the earnings beat and optimistic outlook. InvestingPro data shows analysts have set a target price of $39.00, suggesting potential upside, with two analysts recently revising their earnings estimates upward for the upcoming period.

Outlook & Guidance

Looking forward, Insteel Industries remains cautiously optimistic about market conditions. The company expects robust business conditions through the fiscal year-end, supported by a strong order book and ongoing management of tariff policy uncertainties. The company has revised its full-year CapEx forecast downward to $17 million from $22 million, indicating a focus on cost control.

Executive Commentary

CEO H. Waltz expressed confidence in the company’s trajectory, stating, "We’re blowing and going." He emphasized the solid underlying fundamentals compared to the post-COVID recovery, noting, "The underlying fundamentals of what we’re seeing today, should it continue, are much more solid than what we saw as the economy recovered from COVID."

Risks and Challenges

• Supply Chain Constraints: Challenges in securing adequate wire rod supply could impact production.
• Competitive Pressure: Approximately 10% of revenues are subject to direct import competition.
• Labor Market: Difficulty in hiring personnel may affect operational capacity.
• Tariff Uncertainties: Ongoing tariff policy management is crucial for strategic planning.
• Market Indicators: Declines in the Dodge Momentum Index and US cement shipments could signal potential headwinds.

Insteel Industries continues to navigate these challenges while capitalizing on opportunities for growth and expansion.

Full transcript - Insteel Industries Inc (IIIN) Q2 2025:

Operator: Hello, and welcome, everyone, to the Instill Industries Second Quarter twenty twenty five Earnings Call. My name is Becky, and I’ll be your operator today. I will now hand over to your host, H. Waltz, CEO, to begin. Please go ahead.

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

We’re pleased to have experienced a material upturn in business activity during the second fiscal quarter relative to the same period last year. While we’re glad to see the ongoing recovery in our markets, the tumultuous events that followed the rollout of the administration’s tariff strategy created new uncertainties for the company. And before I turn the call over to Scott to comment on our financial results, we again thank all of our people for the effective integration of our acquired assets during the first fiscal quarter. Following Scott’s comments, I’ll kick the call back off to discuss our business outlook and the impact of tariffs on our company.

Scott Giuffruti, CFO and Treasurer, Insteel Industries: Thank you, H, and good morning to everyone joining us on the call. As we reported earlier today, the second quarter of fiscal twenty twenty five proved to be a strong quarter for Insteel and marked the second consecutive quarter of favorable shipment trends following the weaker volumes we experienced in the prior year. Improved demand in our construction end markets in addition to lower manufacturing costs and higher production volume were the key drivers in our Q2 performance. Net earnings for the quarter rose to $10,200,000 from $6,900,000 a year ago and earnings per share increased to zero five two dollars per diluted share from $0.35 per diluted share in the prior year. Excluding the non recurring restructuring charges referenced in our release, net earnings rose to $0.55 per share.

Shipments for the quarter increased 28.9% from last year and 17.9% sequentially from Q1. The improved shipping performance in the second quarter was driven by increased activity across most of our construction end markets along with the additional tonnage generated from our first quarter acquisitions. Volume growth remained relatively consistent throughout all three months of the quarter despite disruptions caused by adverse winter weather conditions in various regions of the country. On a year over year basis, average selling prices declined 2.2%, but rose 5.1% sequentially from the first quarter driven by price increases implemented in the first and second quarters to offset escalating raw material costs. The supply of wire rod in The U.

S. Market has become progressively more constrained during the quarter, leading to price increases. To add some perspective to this, published prices for steel wire rod, our primary raw material, have increased approximately 150 per ton during calendar Q1. Despite these price increases, availability remains limited, and our primary focus moving forward is on securing an adequate supply to minimize potential disruptions to our operations. Gross profit for the quarter increased $8,800,000 from a year ago to $24,500,000 while gross margin expanded to 15.3% from 12.3%.

This growth was driven primarily by higher sales volume and to a lesser extent a reduction in conversion costs per ton due to increased production levels. On a sequential basis, gross profit rose $15,000,000 from the first quarter accompanied by 800 basis point expansion in gross margin. This improvement was supported by the same quarter over quarter drivers as well as higher spreads tied to selling price increases mentioned earlier. Additionally, margins recovered from the temporary pressure in Q1 related to the fair value accounting of inventory acquired in our first quarter acquisitions. That inventory was fully depleted early in Q2 and replaced with inventory valued at standard cost, which allowed gross margins to normalize.

As we move into the third quarter, we anticipate that a combination of strengthening demand, improving spreads supported by our recent price increases, current raw material carrying values and higher operating levels at our facilities will continue to restore gross margin to more attractive levels. SG and A expense for the quarter increased to $10,800,000 or 6.7 percent of net sales compared to $7,900,000 or 6.2% of net sales in the prior year period. The increase was primarily driven by a $1,400,000 rise in compensation costs tied to our return on capital base incentive plan reflecting stronger financial performance this year. As a reminder, no incentive compensation expense was recorded in the second quarter of last year. Additionally, SG and A expense was impacted by $414,000 unfavorable year over year swing in the cash surrender value of life insurance policies, which declined by $31,000 in the current quarter versus a $383,000 gain in the prior year, reflecting fluctuations in the value of the underlying investments.

Lastly, amortization expense rose by $297,000 driven by intangible assets recognized from our recent acquisitions. In addition to the increase in SG and A expense, we recorded $662,000 in restructuring charges during the quarter. These charges reflect costs associated with the previous announced consolidation of our welded wire manufacturing operations following the Q1 acquisitions of Engineered Wire Products and O’Brien Wire Products of Texas. Our effective tax rate for the quarter was 23.2%, which is up slightly from 22.5% last year. Looking ahead to the balance of the year, we expect our effective rate will remain steady at around 23%, subject to the level of pretax earnings, both tax differences and the other assumptions and estimates that compose our tax provision calculation.

Moving to the cash flow statement and balance sheet. Cash flow from operations used $3,300,000 in the quarter compared to providing $1,400,000 last year. Net working capital used approximately $21,900,000 of cash in the second quarter due to a $30,400,000 increase in receivables resulting from higher sales and an increase in average selling prices, which was partially offset by a $5,800,000 increase in accounts payable and a $2,600,000 decline in inventory. Our inventory position at the end of the quarter represented two point two months of shipments on a forward looking basis calculated off of forecasted Q3 shipments compared with two point eight months at the end of the first quarter. Finally, our inventories at the end of the second quarter were valued at an average unit cost that approximates our second quarter cost of sales and remains favorable relative to current replacement cost, which will have a positive impact on spreads and margins as we move through the third quarter.

We incurred $2,200,000 in capital expenditures in the quarter for a total of $4,900,000 through the first half of our fiscal year. Based on forecasted expenditures for the remainder of fiscal twenty twenty five, we reduced our full year target to $17,000,000 from the previous communicated target of $22,000,000 Abe will provide more detail on this topic in his remarks. Additionally, the second quarter, we continued our share buyback program repurchasing 1,100,000 of our common equity equal to approximately 40,000 shares. Finally, a liquidity perspective, we ended the quarter with $28,400,000 of cash on hand and no borrowings outstanding on our $100,000,000 revolving credit facility providing us ample liquidity and financial flexibility going forward. As we enter the third quarter of fiscal twenty twenty five, we are cautiously optimistic about our market outlook for the remainder of the year supported by the continued strength in demand across our markets.

Recent shipment trends and overall market sentiment reinforces this view. Although we are still early in the third quarter, our order book has remained strong and shipments in April have exceeded levels from the previous year. However, there are still uncertainties that support our cautious outlook. The long term demand forecast remains clouded by shifting US trade policies and the potential economic fallout from the Trump administration’s tariff strategy. Turning to the macroeconomic indicators for our construction end markets, the latest reports for the architectural billing index and the Dodge Momentum Index suggest a challenging outlook for business conditions moving forward.

In February, the ABI ratio score of 45.5 remaining well below the growth threshold of 50, signaling that most firms continue to experience declining billings. Additionally, the Dodge Momentum Index, which tracks nonresidential billing projects entering the planning phase, saw a decrease of 6.9% in March with commercial planning activity dropping by 7.8. US cement shipments, another key metric we monitor, reflected ongoing weakness with January 2025 shipments down 3.1% year over year. Finally, the monthly construction spending data from the U. S.

Department of Commerce continues to indicate modest growth. The latest February data revealed that total construction spending on a seasonally adjusted annual basis increased by approximately 3% compared to last year. Non residential construction spending rose by around 4%. However, spending on public highway and street construction, a major end use application for our products, remained relatively flat with an increase of less than 1%. This concludes my prepared remarks.

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

H. Waltz, CEO, Insteel Industries: During our first quarter conference call and in the earnings release, we noted a substantial acceleration of demand for concrete reinforcing products and commented that we expected the demand recovery to continue into calendar twenty twenty five. We’re glad to confirm that the positive trend continued through our second quarter, which takes us past the riskiest seasonal influences on our business and gives us confidence that we should perform well for the balance of the year. As stated in the release, the brisk pace of business we’ve experienced over the past few months is not reflected in the broader macroeconomic indicators that are generally used to measure the strength of the construction industry, but it is nonetheless real. The confidence level of most customers, interactions between our salespeople and customers, and favorable seasonal trends lead us to believe business business conditions should remain robust at least through the end of our fiscal year. For several quarters in earnings releases and conference calls, we have lamented the unreasonable impact on Insteel of the 02/2018 section two thirty two steel tariff that was applied to most imports of our raw material, hot rolled steel, but not to imports of finished PC strand.

We worked for years with multiple administrations to correct this obvious mistake without any success until recently. While there may be reasons to object to the administration’s tariff strategy, I’m glad to report that one provision of the new tariff regime is application of the 25% section two thirty two steel tariff to imports of PC strand and other derivative products of hot rolled steel wire rod. This precludes the easy circumvention of the tariff by offshore companies that elected to ship finished PC strand into The US rather than hot rolled steel wire rod, and it eliminates the inequity of our incurring high US cost for raw materials while competing with world market steel prices used to produce imported PC strand. This tariff anomaly cost in steel millions of dollars over the course of seven years. We’re also relieved to see that the reciprocal tariffs announced and subsequently paused by the president would not apply to steel products that are covered by the section two thirty two steel tariff.

This means that with one notable exception, the world raw material marketplace for Insteel remains as it has been since 02/2018. That is the section two thirty two steel tariff affects imports of hot rolled steel wire rod. The exception I mentioned relates to the reimposition of section two thirty two tariff on Mexico and Canada, whereas both companies countries had been exempted from two thirty two until March 12. This could impact Insteel marginally in as much as severe US supply constraints had required us to purchase from Canada on a regular basis. We do not expect the Canadian section two thirty two tariff impact to be material, although we have serious concerns about about adequate domestic supplies of wire rod going forward.

I should note that reciprocal tariffs, if they come to pass, could affect EnStill with with respect to purchases of capital equipment, spare parts, and certain operating supplies, all of which are imported. At this point, it’s impossible to know whether the reciprocal tariffs will become reality, or if so, to what extent Enfield might be affected. While we would take advantage of all opportunities to manage our exposure to tariffs, if forced to incur higher costs, we would plan to pass them through in the form of higher selling prices. In our last call, I mentioned that domestic supplies of our primary raw material, hot rolled steel wire rod, were tight due to two permanent mill closures that occurred or been announced and the absence of a third mill from the market for an indefinite period. As of today, the third mill has communicated plans to restart production, but it could not be considered a source of supply today.

And we wonder what changes might make the environment for it more hospitable today than last fall when it shut down. And as mentioned, Canada and Mexico are now subject to the section two thirty two tariff, which has affected their competitiveness and further tightened supplies available to US purchasers. Uncertainties surrounding adequate supplies of wire rod during our third and fourth fiscal quarters resulted in our making commitments to import substantial quantities. While we enter entered into these transactions reluctantly due to the higher inherent higher risk of longer lead times, there was clearly no alternative available except to take downtime at our manufacturing facilities. Additionally, the bullish domestic pricing trajectory greatly reduces the pricing risk normally associated with importing, but that risk has not been eliminated.

Depending on actual deliveries, we could see raw material inventory levels spike next quarter. Any increase would be short lived unless we conclude that a higher proportion of offshore supply is required going forward. As you know, during our first quarter, we acquired two manufacturing facilities and production equipment from a third facility. While we closed one manufacturing facility, the integration of the remaining assets is complete and successful. We’re pleased with the operations of the Upper Sandusky, Ohio facility and with the operational and freight synergies we’ve been able to realize today and that we expect to realize in the future.

We could not have accomplished the integrations as quickly or efficiently without sophisticated information systems and diligent professionals at the Upper Sandusky plant and throughout the NSTEAL organization who made it happen. I’m grateful to everyone involved. Turning to CapEx. As reported in the release, through six months CapEx totaled 4,900,000.0, which is well off the pace of our initial forecast for fiscal two thousand twenty five of 22,000,000 due primarily to the resources devoted to acquisitions, equipment relocations, and integration activities. We have canceled no projects and continue to seek opportunities to expand our product offering and reduce our cash cost of production.

Given that we’re now in the third quarter of fiscal two thousand twenty five, we have lowered our CapEx estimate to 17,000,000 and we’ll update expectations during our next call. Looking ahead, we’re aware of the substantial risk related to the administration’s tariff policies and the future performance of The US economy. Regardless of developments in these areas, we’re well positioned to pursue actions to maximize shipments and optimize our costs and to pursue attractive growth opportunities, both organic and through acquisition. This concludes our prepared remarks, and we’ll now take your questions. Becky, would you please explain again the procedure for asking questions?

Operator: Of course. Our first question comes from Giulio Romero from Sidoti and Company. Your line is now open. Please go ahead.

Giulio Romero, Analyst, Sidoti and Company: Great. Thanks. Good morning, H. Good morning, Scott. Wanted to start on you are viewing hey, Good morning, guys.

I wanted to start on how you guys are viewing and managing the broader operating environment. It sounds like the March for Insteel that did see improving business conditions. Sounds like the the order book in April is good. But was hoping you could maybe speak to specifically the conditions, April to date, in terms of the changing tariff policy, the overall level of uncertainty and just provide some color to what you’re hearing from your conversations with customers, suppliers and the overall value chain as to how to manage through this level of uncertainty.

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

So so as I mentioned in in my prepared comments, the the bullish conditions that we see in the market really aren’t reflected in the in the broader macroeconomic indicators that we normally refer to. So something else is responsible for for the pickup. But the pickup’s real. The customers are optimistic. They have good backlogs.

They’re quoting a lot of business. And and I readily acknowledge that all that is subject to change based on people’s perception of the impact of of of the Trump administration’s trade policies. So so the comments that that you hear today are as of today, and and we know that the conditions could change. We are working to ramp up operating hours, at all of our facilities, to accommodate the the increasing business levels we see. But, of course, that those ramp up aspirations are tempered by our view of the availability of raw materials and and our outlook for for continued robust conditions in the market.

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

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

H. Waltz, CEO, Insteel Industries: Well, so so so over time, we have mentioned on numerous occasions that the lack of objective data connected with consumption of our products or even with our customers’ products is frustrating, which has caused us to take a step up the up the the the chain and look at at more macro factors. Clearly, somewhere in in this whole scheme, inventories have to have a a a bearing on what’s going on. But but it it’s not simply that our customers and their customers are wanting to get product in the ground and and and get projects started. I would tell you that the quotation activity that our customers are seeing and the quotation activity we are seeing is solid. So so does it mean that the macro factors lag, or does it mean that there’s an anomaly in the market that we really can’t name?

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

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

H. Waltz, CEO, Insteel Industries: Yeah. So we did suffer since 02/2018. But if you think back to to what happened in 02/1920, We were somewhat insulated from the full impact of the February anomaly when ocean freight rates from Asia rose by a factor of 10 x. It really had the impact of of raising the cost of imported PC strand, and and it kept that problem sort of in a bayonet for a while. Okay.

And and then the last three years, when ocean rates ocean freight rates fell back and normalized, the imported PC strand has been a major problem to us. There’s no way that the extension of two thirty two to PC strand can be interpreted as bad news. It is good news, but it’s not a panacea. The fact of the matter is that the world market price of hot rolled steel is 300 or $400 a ton lower than The US price of comparable product. And that means that our offshore competitors continue to have a substantial advantage, but no longer do they have the the section two thirty two advantage as well.

So so clearly, is this extension to PC strand is is a a positive thing for Insteel. We hung in those markets that are affected by imports for seven years while while we were not covered by section two thirty two, and it has become more tenable for us to hang in going forward. But but but until US steel prices and world market steel prices somehow become more equalized, still be in a in a in a disadvantage position relative to imports. And I would note, as I have before, that only about 10% of Insteel’s revenues are subject to direct import competition, and there’s no accident about that. It is exactly these kinds of anomalies that have caused us to to take the direction that we have.

Giulio Romero, Analyst, Sidoti and Company: Great. Thanks for the coloration, Scott. I’ll pass it on.

H. Waltz, CEO, Insteel Industries: Thank you.

Operator: Thank you. Our next question is from Tyson Bauer from KC Capital. Your line is now open. Please go ahead.

Tyson Bauer, Analyst, KC Capital: Good morning, gentlemen, and congratulations.

Scott Giuffruti, CFO and Treasurer, Insteel Industries: Thanks, Doug. Good morning.

Tyson Bauer, Analyst, KC Capital: The last time we had all the disruptions in supply and kind of the end markets and those things was when we were in the COVID years not that long ago. It seems like you’re in a far better position this time because a lot of the growth is based upon shipment growth, volume growth, better health of the end markets as opposed to just having a benefit from pricing capabilities. How do you view or how do you differentiate what we saw in COVID that had the high inflation and the pricing versus now with the tariffs, but you still have strong underlying growth, which is evident by your shipment growth?

H. Waltz, CEO, Insteel Industries: Yes. I mean, I would tell you that COVID created some artificial conditions in the supply chain, particularly related to inventories. And with with the shutdown of part of the economy that ran supply chains dry, The the rebuilding of those supply chains when it happened was sort of manic. And and so I would agree with you that that the underlying fundamentals of what we’re seeing today, should it continue, are much more solid than than what we saw as as the economy recovered from COVID. And and I I don’t think we’ve ever been under an illusion that solid supply and demand relationships are really essential for our business to do well.

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

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

H. Waltz, CEO, Insteel Industries: Yes. Well, I mean, in mind that as we look at at what’s going on in in the marketplace and we’re uncertain about whether we’ll have sufficient quantities of raw materials to to fully serve our market, you know, our our sensitivity to competitive conditions in the market is lessened. But right now, I think I think every consumer of steel wire rod is feeling the same impacts of tight supplies and and uncertainties about availability so that that that the natural reaction is that prices are elevating for the hot rolled product. They’re elevating for our products. And and how long that continues is, you know, it’s it’s that, I certainly see it going through our third quarter.

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

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

H. Waltz, CEO, Insteel Industries: Well, I mean, I think I think it it would be hard it would be hard to see a deterioration in in those factors during our third fiscal quarter. I I I can’t comment on our fourth quarter.

Giulio Romero, Analyst, Sidoti and Company: Okay.

Tyson Bauer, Analyst, KC Capital: From looking at state budgets as they’re in that process, the federal budget to continue resolution, what may or may not be untapped going forward. It doesn’t appear to be any lowering of spending, especially on your key markets and the public spending, which should be favorable for you. And because we are starting off such a low base on residential construction, are all those things favorable as we go forward that maybe planning, lower confidence, maybe lower, But things that are in the pipeline or things that are imminent to begin construction, all those are really just on schedule as they were intended to be.

H. Waltz, CEO, Insteel Industries: I mean, I I think one of the one of the more optimistic things that we’re seeing in the marketplace is that while while the infrastructure consumption of our product has been pretty consistent. We’ve seen some of the commercial some of the commercial guys with really weak order books over the past couple of years, but that’s starting to turn around. The the the warehouse people, the wall panel people, they are beginning to build backlogs that are are that are certainly encouraging. So so from from our perspective of the world, it appears that that that part of of the market is showing signs of life, which have been rare over the last couple of years.

Tyson Bauer, Analyst, KC Capital: Okay. And a bookkeeping question, last one for me. On the incentive accrual, did we have any catch up in the quarter or pull forward based upon your now your ongoing trend line here that we get back to a more normalized accrual in third and fourth quarter, Scott? I don’t know if you can

Scott Giuffruti, CFO and Treasurer, Insteel Industries: say that the normalized accrual is purely going be dependent on performance. The better we do, the higher that expense is going to be.

Tyson Bauer, Analyst, KC Capital: But we didn’t have any catch up in the quarter based on where we were in the first quarter?

Scott Giuffruti, CFO and Treasurer, Insteel Industries: Not necessarily. It it it the the the quarter expense reflects what happened in the quarter. It builds on itself throughout the year. So obviously, there was some build in Q1 that got triggered in Q2 as we continued moving higher. But I wouldn’t say there’s any carryover.

Tyson Bauer, Analyst, KC Capital: We

Operator: currently have no further questions, so I’ll hand back to H for closing remarks.

H. Waltz, CEO, Insteel Industries: Okay. Thank you, Becky. We appreciate your interest in the company. We look forward to talking to you next quarter and encourage you to contact us in the meantime if you have questions. Thank you.

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

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