Q3 2024 Insteel Industries Inc Earnings Call
Howard Osler Woltz: Thank you for your interest in Insteel and welcome to our third quarter 2024 conference call, which will be conducted by Scott Jafroodi, 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.
Thank you for your interest in <unk> and welcome to our third quarter of 2024 conference call, which will be conducted by Scott <unk>, Our vice President CFO and Treasurer and me.
Howard Osler Woltz: During Q3, we experienced a continuation of sluggish market conditions, although momentum increased steadily to the point that we began ramping up operating hours to manage lead times, primarily in our welded wire reinforcement business. While we're not pleased with our Q3 results, patience is the only viable strategy for us since we're unable to create demand, and competitors who believe that reducing prices will stimulate demand or result in market share gains are simply mistaken.
Howard Osler Woltz: We noted that market lethargy is not limited to reinforcing markets following reduced estimates for producers of cement, steel, aggregates, and other construction materials. The better news is that we believe market conditions are recovering and that the longer-term outlook for demand is quite positive. We look forward to attaining higher operating rates and lower costs to improve revenue and margins that we believe will be supported by market conditions. I'm going to turn the call over to Scott to comment on our financial results for the quarter and the macro environment, and then I'll pick it back up to discuss our business outlook. Thank you, David.
Before we begin let me remind you that some of the comments made on 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.
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Speaker Change: During Q3, we experienced a continuation of sluggish market conditions, all the momentum increased steadily to the point that we began ramping up operating hours to manage lead times, primarily in our welded wire reinforcement business, while we're not pleased with our Q3 results patients.
Speaker Change: Barbell strategy for us since we are unable to create demand and competitors, who believe that reducing prices will stimulate demand or result in market share gains are simply mistaken.
Speaker Change: We've noted that market <unk> is not limited to reinforcing markets. Following reduced estimates for producers of summit steel aggregates and other construction materials.
Speaker Change: The better news is that we believe market conditions are recovering and that the longer term outlook for demand is quite positive.
Speaker Change: Look forward to attain higher operating rates lower costs improved revenue and margins that we will we believe will be supported by market conditions.
Speaker Change: Ill turn the call over to Scott to comment on our financial results for the quarter and the macro environment and then I'll pick it back up to discuss our business outlook.
Scot R. Jafroodi: Thank you, H, and good morning to everyone joining us on the call. As reported in our release earlier today, our third quarter results were negatively affected by the narrowing of the spread between selling prices and raw material costs relative to the prior year quarter. The reduction in spread has more than offset the favorable impact of higher shipments in the current year. As a result, Insteel's net earnings for the third quarter of fiscal 2024 fell to $6.6 million or $0.34 per share from $10.6 million or $0.54 per share a year ago.
Scott: Thank you Nate and good morning to everyone joining us on the call and.
Scott: As reported in our release earlier today, our third quarter results were negatively on the narrowing spreads between selling prices and raw material costs relative to the prior year quarter the reduction in spreads more than offset the favorable impact of higher shipments in the current year as a result in steel net earnings for the third quarter of fiscal 2024.
Scott: Sales to $6 6 million or <unk> 34 per share from $10 6 million or <unk> 54 per share a year ago net.
Scot R. Jafroodi: Net sales for the quarter declined 12% to $145.8 million, driven by a 16.3% decrease in average selling prices, partially offset by a 5.1% increase in shipment. On a sequential basis, average selling prices fell by 5.3% while shipments rose 20.8%, and the growing impact of low-priced TC strand imports continues to pressure selling prices. Furthermore, steel scrap prices trended down during the quarter, which has created additional headwinds for AFPs.
Scott: Net sales for the quarter declined 12% to $145 8 million driven by 16, 3% decrease in average selling prices, partially offset by a five 1% increase in shipments.
Scott: On a sequential basis average selling prices fell by five 3% while shipments rose 28%.
Scott: There are pricing pressures within our welded wire reinforcing market and the growing impact of low priced PC strand imports continue to pressure selling prices. Furthermore, steel scrap prices trended down during the quarter, which has created an additional headwinds for asps.
Scott: Despite the decline in selling prices our shipments benefited this quarter from a strengthening demand environment for our products and increased activity across our construction end markets throughout each month of the quarter our year over year shipments were higher than the prior year. However.
Scot R. Jafroodi: Despite the decline in selling prices, our shipments benefited this quarter from a strengthened demand environment for our products and increased activity across our construction and markets. Throughout each month of the quarter, our year-over-year shipments were higher than the prior year. However, we did experience several challenges as unstable weather conditions and the growing influence of low-priced imports in certain of our PC strand markets negatively impacted shipments.
Scott: However, we did experience several challenges as unfavorable weather conditions and the growing influence of low price imports in certain of our PC strand market.
Scott: Negatively impacted shipments.
Scot R. Jafroodi: Furthermore, we actively worked throughout the quarter to ramp up operating schedules at certain of our facilities to fully meet an improving order book and reduce delivery lead times. Gross profit decreased to $15.4 million from $20.4 million in the prior year quarter, and gross margin narrowed to 10.6% from 12.3%, primarily due to lower spreads between selling prices and raw material costs, which offset the benefit of higher shipments. After rebounding in the second quarter following a January price increase, spreads again came under pressure in the current period, with the year-over-year decline in ASPs outpacing the reduction in our inventory carrying value. As we move into the fourth quarter, we anticipate spreads to remain near current levels as selling prices continue to face downward pressure.
Furthermore, we actively worked throughout the quarter to ramp up operating schedules at certain of our facilities to fully meet an improving order book and reduce delivery lead times.
Scott: Gross profit decreased to $15 4 million from $20 4 million in the prior year quarter and gross margin narrowed to 10, 6% from 12, 3%, primarily due to lower spreads between selling prices and raw material costs, which offset higher shipments.
Scott: After rebounding in the second quarter. Following a January price increase spreads again came under pressure in the current period with a year over year decline in Asps outpacing the reduction in our inventory carrying values.
Scott: As we move into the fourth quarter, we anticipate spreads to remain near current levels at silly prices continued to face downward pressure.
Scot R. Jafroodi: Unique conversion costs for the third quarter improved both year-over-year and sequentially from the second quarter, but remain elevated due to lower operating levels. As we enter our fourth quarter, we expect to make further progress in reducing our conversion costs as we continue ramping up operating schedules in response to improving market conditions and leveraging our recent capital investment. SGA expense for the quarter remained unchanged at $7.9 million, representing 5.4% of net sales compared to 4.8% of net sales in the previous year.
Scott: Unit conversion cost for the third quarter improved both year over year and sequentially from the second quarter, but remained elevated due to lower operating levels.
Scott: As we enter our fourth quarter, we expect to make further progress in reducing our conversion costs as we continue ramping up operating schedules in response to improving market conditions and leveraging our recent capital investments.
SG&A expense for the quarter remained unchanged at $7 9 million, representing a five 4% of net sales compared to four 8% of net sales in the previous year, an increase in depreciation expense combined with the relative year over year change in the cash surrender value of life insurance policies were offset by lower compensation.
Scot R. Jafroodi: The increase in appreciation expense combined with the relative year-over-year change in the cash-for-rental value of life insurance policies was offset by lower compensation expense under our return on capital-based assent plan, which was negatively impacted by weaker year-to-date results. Our effective tax rate for the quarter rose to 24.7%. 22% a year ago. The increase was already driven by the effect of a discrete tax item which had an amplified impact on the rate due to lower pre-tax earnings.
Scott: Under our return on capital based incentive plan, which was negatively impacted by weaker year to date results.
Scott: Our effective tax rate for the quarter rose to 24, 7%.
Scott: From 22% a year ago.
Scott: Greece was largely driven by the effect of the discrete tax items, which had an amplified impact on the rate due to the lower pre tax earnings looking.
Scot R. Jafroodi: Looking ahead to the balance of the year, we expect our effective rate to run close to 23%, sluggish due to the level of pre-tax earnings, both tax differences, and the other assumptions and estimates that compose our tax provision calculation. Moving to the cash flow statement of the balance sheet, cash flow from operations for the quarter generated $18.7 million of cash due mainly to net earnings and a reduction in net working capital. This reduction was driven mostly by a $10.4 million increase in accounts payable under crude expenses, as well as a $3.2 million decrease in inventories.
Scott: Looking ahead to the balance of the year, we expect our effective rate run close to 23% subject to the level of pre tax earnings book tax differences and the other assumptions and estimates that compose our tax provision calculation.
Scott: Due to the cash flow statement and the balance sheet cash flow from operations for the quarter generated $18 7 million of cash due mainly to net earnings and a reduction in net working capital.
Scott: This reduction was driven mostly by 10.4.
Scott: $4 million increase in accounts payable and accrued expenses as well as a $3 $2 million decrease in inventories.
Scot R. Jafroodi: Our inventory position at the end of the quarter represented 2.5 months of shipments on a forward-looking basis calculated off of forecasted Q4 shipments, which is down slightly from 2.6 months at the end of the second quarter. In addition, the average unit cost of our inventories at the end of the third quarter was lower than our third-quarter cost of sales. This is expected to have a favorable impact on spreads and margins in the fourth quarter as the lower cost materials consumed and reflect in the cost of sales, provided that average site prices did not decrease to a greater extent.
Scott: Inventory position at the end of the quarter represented two five months of shipments on a forward looking basis calculated off of forecasted Q4 shipments, which was down slightly from $2 six months at the end of the second quarter.
Scott: In addition, the average unit cost of our inventories at the end of the third quarter, but lower than our third quarter cost of sales. This is expected to have a favorable impact on spreads and margins in the fourth quarter is a lower cost materials consumed they reflect in cost of sales provided at average selling prices did not decrease to a greater extent.
Speaker Change: We incurred $3 2 million in capital expenditures in the quarter for a total of $17 5 million through the first nine months of our fiscal year based on our forecasted expenditures for the fourth quarter, we have reduced our full year target of $25 million from the previous communicated targeted $30 million each will provide more detail on this topic in his remarks.
Scot R. Jafroodi: We incurred $3.2 million in capital expenditures in the quarter for a total of $17.5 million through the first nine months of our fiscal year. Based on our forecasted expenditures for the fourth quarter, we have reduced our full-year target to $25 million from the previous communicated target of $30 million. H will provide more detail on this topic in his remarks. We continued our share buyback during the quarter, repurchasing $1 million of our common equity, equal to approximately 30,000 shares.
Speaker Change: We continued our share buyback during the quarter repurchasing $1 million of our common equity equal to approximately 30000 shares.
Scot R. Jafroodi: From a liquidity perspective, we have a quarter of $97.7 million of cash on hand, and we're debt-free with no borrowings outstanding on our $100 million revolving credit facility, which provides us with ample financial flexibility and the ability to pursue any attractive growth opportunities that may develop. Turning to the macro indicators for our construction and markets, the latest reports for the architectural billings and Dodge Amendment Indexes, which are leading indicators for non-residential building construction, offer a mixed view of market conditions going forward.
Speaker Change: On a liquidity perspective, we ended the quarter with $97 $7 million of cash on hand, and we're debt free with no borrowings outstanding on our $100 million revolving credit facility, providing us ample financial flexibility and the ability to pursue any attractive growth opportunities that may develop.
Scot R. Jafroodi: In May, the ABI declined to a score of 42.4, remaining well below the growth threshold of 50, as architectural firms reported both a decrease in billings and a slowdown in new, On the other hand, the Dodge Amendment Index, which tracks non-residential building projects entering the planning phase, rose by 10.4% in June to 198.6%, representing a 7% increase year-over-year. The higher June reading was largely due to a 14.5% rise in the commercial component of the index, fueled by data center planning activity.
Speaker Change: Turning to the macro indicators for our construction end markets. The latest reports to the architecture for the architectural billings and Dodge momentum index, which are leading indicators for nonresidential building construction offer a mixed view of market conditions going forward.
Speaker Change: The Abi declined to a score of $42 four remaining well below the growth threshold of 50 as architectural frankly for both a decrease in billings and a slowdown in new projects.
Speaker Change: On the other hand, the Dodge Amendment index, which tracks nonresidential building projects entering the planned phase rose by 10, 4% in June to 198 six.
Speaker Change: Represents a 7% increase year over year, the higher June reading was largely due to a 14, 5% rise in the commercial component of the index fueled by data center planning activity year over year. The commercial segment is up 25%.
Scot R. Jafroodi: Year-over-year, the commercial segment is up 25%. The latest May report from the U.S. Department of Commerce shows that the monthly constructive spending data remains strong. Total spending on a seasonally adjusted annual basis is up 6.4% from last year. Non-residential construction is up more than 6.2%, and public highway and street construction, which is one of the largest end-use applications for our product, is up 9%. However, while construction spending remains elevated, U.S. cement shipments, another measure that we track, continue to lag 20-23 levels, as shipments were down 8.1% in March and 4.4% for the calendar year.
Speaker Change: The latest name before from the U S Department of Commerce shows that the monthly construction spending data remained strong total spending a seasonally adjusted annual basis is up six 4% from last year.
Speaker Change: Nonresidential construction is up over six 2% and public Highway and street construction, which is one of the largest end use applications for our products.
Speaker Change: It was up 9% however, while construction spending remains elevated U S met shipments another measure that we track continue to lag 2023 levels as shipments were down eight 1% in March and four 4% for the calendar year.
Scot R. Jafroodi: Finally, this week the AIA released its semi-annual construction forecast for non-residential building construction for 2024-2025. Spending on non-residential buildings is projected to increase 7% in 2024, driven by strong gains in the industrial sector. However, the forecast also indicates that spending growth is expected to slow in 2025, with only 2% growth in overall spending projected.
Speaker Change: Finally, this week the AIA released its semi annual construction forecast for non residential building construction for 2020 for 2025.
Speaker Change: Spending on nonresidential building is projected to increase 7% through 2024, driven by strong gains in the industrial sector. However, the forecast also indicate that spending growth is expected to slow in 2025 with only 2% growth in overall spending projected.
Scot R. Jafroodi: This concludes my prepared remarks. I will now turn the call back over to Abe. Thank you, Scott.
This concludes my prepared remarks, I'll now turn the call back over to H.
H: Thank you Scott as we commented last quarter the operating environment during fiscal 2024, it's been difficult as we faced headwinds, including declining steel prices inventory liquidations by customers the need to align our finished goods inventories to reflect lower shipments and finalize.
Howard Osler Woltz: As we commented last quarter, the operating environment during Fiscal 2024 has been difficult as we faced headwinds including declining steel prices, inventory liquidations by customers, the need to align our finished goods inventories to reflect lower shipments, and finally, the normal seasonal downturn in construction activity. We're glad to report that these adverse conditions seem to have run their course, and we are experiencing rising demand driven by market fundamentals as well as the capital investments made by the company in recent years.
H: The normal seasonal downturn in construction activity.
H: Glad to report that these adverse conditions seem to have run their course, and we are experiencing rising demand driven by market fundamentals as well as the capital investments made by the company in recent years.
H: As we reported in Q2 shipments for Q3 were not impressive but each month showed an improvement as inventory positions through the supply chain improved and construction spending unemployment telegraphed improving market conditions we.
Howard Osler Woltz: As we reported in Q2, shipments for Q3 were not impressive, but each month showed improvement as inventory positions through the supply chain improved and construction spending and employment telegraphed improving market conditions. We believe the slow and steady demand improvements we've experienced recently will continue into our fourth quarter. Backlogs in our welded wire reinforcement business have lengthened to an uncomfortable degree due to compressed operating schedules that were dictated by weak order entry and shipments earlier in the year, together with more robust order entry activity.
H: We believe the slow and steady demand improvements we've experienced recently will continue into our fourth quarter.
Howard Woltz: Acrologues and our welded wire reinforcement business have weathened to an uncomfortable degree due to compressed operating schedules that were dictated by a week or entry and ship months earlier in the year, together with more robust order and reactivity, and we're ramping up operating hours at several facilities to respond to more robust demand.
H: Backlogs in our welded wire reinforcement business have lengthened too uncomfortable degree due to compressed operating schedules that were dictated by weight weak order entry and shipments earlier in the year together with more robust order entry activity and we're ramping up operating hours at several.
Howard Osler Woltz: And we're ramping up operating hours at several facilities to respond to more robust demand. Hiring continues to be difficult in view of low unemployment rates in most markets, but conditions have improved considerably since hiring challenges peaked.
H: <unk> to respond to more robust demand.
Scot Jafroodi: Irine continues to be difficult in view of low unemployment rates in most markets, but conditions have improved considerably since hiring challenges peats.
H: Hiring continues to be difficult in view of low unemployment rates in most markets, but conditions have improved considerably since hiring challenges peaks.
H: As Scott mentioned and as we've stated in the last couple of earnings calls we are increasingly affected by low priced imported PC strand from producers under a variety of countries that appear to be circumventing the section 232 tariff.
Howard Osler Woltz: Scott mentioned, and as we've stated in the last couple of earnings calls, we are increasingly affected by a low-priced imported PC strand from producers in a variety of countries that appear to be circumventing the Section 232 tariff on hot-rolled steel by downstreaming. Continuing the trend that began last year, the average unit value of imported PC strand is lower than the domestic market price for wire rod, the raw material from which we produce PC strand. The industry is carefully scrutinizing strand imports and will pursue any trade actions that are justified.
Scott Jafroodi: Scott mentioned, and as we've stated in the last couple of earnings calls, we are increasingly affected by low-priced imported PC strand from producers in a variety of that appear to be circumventing the Section 232 tariff on top rolled steel by downstreaming. Continuing the trend that began last year, the average unit value of imported PC strand is lower than the domestic market price for wire rod, the raw material from which we produce PC strand.
Scott: Rolled steel pipe down streaming.
Scott: Continuing the trend that began last year. The average unit value of imported PC strand is lower than the domestic market price for wire rod the raw material from which we produce PC strand.
The industry is carefully scrutinizing strand imports and will pursue any trade actions that are justified. We are also working with the administered administration to demonstrate the differential treatment of hot rolled wire Rod and PC strand with respect to the section 232 tariff.
Howard Woltz: The industry is carefully scrutinizing strand imports and will pursue any trade actions that are justified. We are also working with the administration to demonstrate that the differential treatment of hot rolled wire rod and PC strand with respect to the Section 232 tariff is undermining the intent of the tariff and damaging the very constituency the tariff was intended to benefit.
Howard Osler Woltz: We are also working with the administration to demonstrate that the differential treatment of hot-rolled wire rod and PC strand with respect to the Section 232 tariff is undermining the intent of the tariff and damaging the very constituency the tariff was intended to benefit. We're optimistic about the impact on our markets of the Infrastructure Investment and Jobs Act, although at this point, it's difficult to point to specific projects that have affected demand.
Scott: It's undermining the intent of the terror and damaging the very constituency the tariff was intended to benefit.
Scott: Yeah.
Howard Woltz: We're optimistic about the impact on our markets of the Infrastructure Investment in Jobs Act, although at this point it's difficult to point to the specific projects that have affected demand.
Speaker Change: We're optimistic about the impact on our market. So the infrastructure investment and jobs Act, although at this point, it's difficult to point to.
Scott: Specific projects that have affected demand.
Howard Osler Woltz: With respect to IIJA, the Secretary of Transportation has acknowledged delays of multiple years between appropriations and increased demand for construction services and materials. The administration has also been clear that it views IJA as a new way of funding infrastructure investment and not as a stimulus program. In other words, it does not appear to surprise the administration that the impact of the legislation on infrastructure spending thus far is muted.
Howard Woltz: With respect to IJA, the Secretary of Transportation has acknowledged delays of multiple years between appropriations and increased demand for construction services and materials. The administration is also being clear that if that abuse IJA is a new way of funding infrastructure investment and not as a stimulus program. In other words, it does not appear to surprise the administration that the impact of legislation on infrastructure spending thus far is muted.
Speaker Change: With respect to I E. The secretary of Transportation has acknowledged the delay is a multiple years between appropriations and increased demand for construction services and materials.
The administration has also been clear that if that appears.
Speaker Change: As a new way of funding infrastructure investment and not as a stimulus program in other words. It does not appear to surprise the administration that the impact of the legislation on infrastructure spending thus far is muted.
Howard Osler Woltz: Meanwhile, of course, inflation is impacting project costs and jeopardizing the viability of some projects. Despite these obstacles, we believe that IIJA funds will ultimately be allocated to projects and spent, as intended, with a beneficial impact on our industry.
Howard Woltz: Meanwhile, core simplation is impacting project costs and jeopardizing the bit viability of some projects. Despite these obstacles, we've laid that IJA funds will ultimately be allocated to projects and spent as intended, with a beneficial impact on our industry.
Speaker Change: Meanwhile of course inflation is impacting project costs and jeopardizing the viability of some projects. Despite these obstacles we've laid that out Jay a funds will ultimately be allocated to projects and spent as intended with a beneficial impact on our industry.
Speaker Change: Turning to Capex, while we had previously indicated that Capex for 2024 would come in at approximately $30 million, which scaled back our view based on actual expenditures through the third quarter and expectations for the balance of the year, we have not however canceled projects that had.
Howard Woltz: Turning to CapEx, while we had previously indicated that CapEx was from 2024, coming in at approximately 30 million, we scaled back our view based on actual expenditures through the third quarter and expectations for the balance of the year.
Howard Osler Woltz: While we had previously indicated that CapEx for 2024 would come in at approximately $30 million, we've scaled back our view based on actual expenditures through the third quarter and expectations for the balance of the year. We have not, however, canceled projects that have been approved previously. We expect to come in closer to $25 million based on actual experience. As we stated earlier, the elevated CapEx for 2023 and 2024 does not imply a permanent step up in our CapEx expectations.
Howard Woltz: We have not, however, cancelled projects that have been approved previously. We expect to come in closer to 25 million based on actual experience.
Speaker Change: Been approved previously.
Speaker Change: We expect to come in closer to 25 million based on actual experience as.
Howard Woltz: As we stated earlier, elevated CapEx for 2023 and 2024 does not apply a permanent step-up in our CapEx expectation.
Speaker Change: As we stated earlier elevated capex for 2023, and 2024 does not imply a permanent step up in our capex expectations on an ongoing basis, we would expect capex to range closer to depreciation and amortization and to be elevated in years, we elect.
Howard Osler Woltz: On an ongoing basis, we would expect CapEx to range closer to depreciation and amortization and to be elevated in years we elect to expand capacity or incorporate new technology into our facilities through equipment replacement. As a reminder, the capex amounts for 2023 and 2024 are heavily influenced by the addition of three new production lines at our welded wire reinforcement plants and the addition of a production line at a PC strand plant. The scale of these additions should be viewed as unusual and not a recurring event.
Speaker Change: To expand capacity or incorporate new technology into our facilities through equipment replacement.
Speaker Change: As a reminder, the capex amounts for 2023 and 2024 are heavily influenced by the addition of three new production lines at our welded wire reinforcement plants and the addition of a production line at our PC Strand plant.
Speaker Change: The scale of these additions should be viewed as unusual and nonrecurring event.
Speaker Change: The investments, we're making it's state of the art technology expand.
Howard Osler Woltz: The investments we're making in state-of-the-art technology will expand our product capabilities and favorably impact our cash cost of production. We believe that companies failing to take advantage of significant technological innovations will become increasingly uncompetitive. As you know, Insteel continues to be debt-free and has substantial flexibility to make decisions for the long-term best interests of its customers and shareholders. Looking ahead, we're aware of the substantial risk related to the future performance of the U.S. economy and are monitoring the environment.
Speaker Change: And our product capabilities and favorably impact our cash cost of production we.
Speaker Change: We believe that companies failing to take advantage of significant technological innovations will become increasingly uncompetitive.
As you know in steel continues to be debt free and has substantial flexibility to make decisions for the long term best interest of its customers and shareholders.
Speaker Change: Looking ahead, we're aware of the substantial risk related to the future performance of the U S economy and are monitoring the environment.
Howard Osler Woltz: In any event, we're well positioned to aggressively pursue actions to maximize shipments and optimize our costs and to pursue attractive growth opportunities, both organically and through acquisition. This concludes our prepared remarks, and we'll now take your questions. Carly, would you please explain the procedure for asking questions? Thank you.
Speaker Change: In any event, we're well positioned to aggressively pursue actions to maximize shipments and optimize our costs and to pursue attractive growth opportunities both organic and through acquisition.
Speaker Change: This concludes our prepared remarks, and we'll now take your questions Karli would you. Please explain the procedure for asking questions.
Karli: Thank you very much.
Operator: Thank you very much, H. If you'd like to ask a question, please press star followed by 1 on your telephone keypad now, and if you'd like to remove yourself from that line of questions, please press star followed by 2 on your telephone keypad. Our first question comes from Julio Romero of Sidoti. Julio, your line is now open.
Karli: I'll ask a question. Please press star followed by one telephone keypad now maybe less.
Karli: For me it yourself from that line of questioning Please press star followed by two when your telephone keypad.
Karli: Yeah.
Karli: Yeah.
Karli: Our first question comes from Julio Romero.
Julio Alberto Romero: Of Sidoti.
Speaker Change: Your line is now open.
Julio Alberto Romero: Thanks, Hey, good morning agent, Scott, maybe just to start on.
Julio Alberto Romero: Thanks. Hey, good morning, Agent Scott. Maybe just to start on demand.
Howard Osler Woltz: You sound much more optimistic about improving conditions. You talked about trying to ramp up operating hours. Just maybe talk about what you're seeing across Syrian markets, either from inquiries or orders, that kind of gives you optimism that demand is indeed improving. Well, payable. [inaudible]
Speaker Change: <unk>.
Speaker Change: Demand you sounded much more optimistic about improving conditions, you talked about trying to ramp up operating hours, just maybe talk about what you're seeing across your end markets either from inquiries or orders that kind of gives you optimism that demand is indeed improving.
Speaker Change: Well.
Speaker Change: Okay.
Speaker Change: Both our forecast and our order entry rate cause us to be optimistic about where we see things going but as I stated in my remarks.
Howard Osler Woltz: Both our forecast and our order entry rate cause us to be optimistic about where we see things going. But, as I stated in my remarks, we've seen a steady and slow improvement in our order intake and conditions in the market. I don't mean to imply that we should expect to see a big pop. It's more slow and steady. And as you know, we have scaled back operating hours pretty substantially to reflect earlier business conditions, which is...
Speaker Change: We've seen a steady and slow improvement and.
Speaker Change: Our order intake and conditions in the market.
Speaker Change: I don't mean to imply that we that we exploit expect to see a big pockets more slow and steady and as you know we have scaled back operating hours pretty substantially.
Speaker Change: To reflect earlier business conditions with switches is.
Howard Osler Woltz: It's partly a way of explaining why our backlog and lead times have expanded. It's partly due to the curtailed and truncated operating hours that we implemented earlier in the year and partly due to increasing order entry rates.
Speaker Change: Partly.
Speaker Change: Way of explaining why our backlog and lead times have expanded its partly due to the curtailed and truncated operating hours.
Speaker Change: Debt that.
Speaker Change: We implemented earlier in the year and partly due to increasing order entry rates.
Speaker Change: Yes understood.
Speaker Change: And you talked about scaling hours back you talked about the challenge of kind of retaining and.
Howard Osler Woltz: Yeah, understood. You talked about scaling hours back, you talked about the challenge of kind of retaining and attracting qualified folks, you know, talk about maybe how you're tackling the challenge at this point.
Speaker Change: In attracting qualified folks.
Speaker Change: Talk about maybe how you're how you're tackling that challenge at this point.
Speaker Change: Well I think it's I think it's typical of what you read and.
Howard Osler Woltz: Well, I think it's typical of what you read in the news and most stories about current labor markets that you hire five or six, and maybe two or three of them are still with you in 60 or 90 days. And, of course, we have to train those people, and we have to teach them how to work safely. So, it just, um...
Speaker Change: And most stories about current labor markets that.
Speaker Change: Hmm.
You hire five or six and maybe maybe two or three of them are still with you in 60 or 90 days and of course, we have to train those people in.
Speaker Change: And we have to teach them how to work safely.
Speaker Change: So so.
So it just is.
Howard Osler Woltz: It's just a challenging environment. I don't know that we operate in any labor market that has an unemployment rate over 4%. There are fewer people to choose from. There are fewer people who really appreciate or enjoy industrial kinds of work. And it's difficult, and it's not just a matter of compensation. I think it goes deeper than that.
Speaker Change: Just a challenging environment I don't know that we operate in any labor market that has.
Speaker Change: Unemployment rates over 4%.
Speaker Change: And so so.
Speaker Change: There are fewer people to choose from there are fewer people who really.
Speaker Change: I appreciate or enjoy industrial kinds of work.
Speaker Change: It's difficult and it's not just a matter it's not just a matter of.
Speaker Change: Compensation.
Speaker Change: I think it goes deeper than that.
Speaker Change: Got it.
Julio Alberto Romero: Got it, and um... You know, you gave us some preliminary fiscal 25 thoughts, which is certainly helpful and welcomed, and you mentioned it's difficult to kind of point to. Specific projects at this point that have boosted demand, that have received a demand boost from the IIJA, do you expect that to eventually be the case, that when the Infrastructure Act does benefit Insteel, the impact will be clear, and that you would be able to point to specific projects? And then secondly, you know, the big question is, when do you think that will happen? Will fiscal 25 be that year?
Speaker Change: You gave us some preliminary fiscal 'twenty five thoughts, which is certainly helpful and welcomed.
Speaker Change: And you mentioned it it's difficult.
Speaker Change: 0.2.
Speaker Change: Specific projects at this point that have boosted.
Speaker Change: I bet.
Steve: Steve do you have a demand boost from the Iia do you expect that to eventually be the case.
Speaker Change: When the the infrastructure does benefiting steel the impact will be clear with you.
Speaker Change: Be able to point to specific projects and then secondly.
Speaker Change: The Big question is.
Speaker Change: When do you think that when do you think that'll happen.
Speaker Change: Would fiscal 'twenty five for that year.
Speaker Change: That's the answer to the first part Julio is no I don't expect that we're going to see projects fall into the marketplace with a big banner all around that says funded by the.
Howard Osler Woltz: The answer to the first part, Julio, is no. I don't expect that we're going to see projects fall into the marketplace with a big banner on them that says funded by IIJA. The nature of the products that we supply just isn't consistent with that. I think that we'll begin to see the impact of IIJA in 2024 and 2025, but I'm not sure that we'll be able to talk to you and say 10% of our shipments are related to IIJA. I just don't think it's that transparent.
Speaker Change: The nature the nature of our products that we supply just just is inconsistent with that.
Speaker Change:
I think that will begin to see.
Speaker Change: The impact of I O J, a in 2024 and 2025, but I'm not sure that we'll be able to talk to you and say 10% of our shipments.
Speaker Change: For it related to I, just don't I, just don't think it's that transparency.
No that makes sense.
Julio Alberto Romero: Yeah, that makes sense. I'll pass it on at this point. Thanks so much.
Speaker Change: I'll pass it on at this point thanks, so much.
Speaker Change: Thank you.
Speaker Change: Our next question comes from Kevin Gagne of Thompson Davis.
Operator: Our next question comes from Kevin Gainey of Thompson Davis. Kevin, your line is now open.
Kevin Your line is now open.
Kevin Gagne: Thank you gentlemen.
Kevin Gainey: Thank you, gentlemen. Congratulations on the quarter. I kind of wanted to, we kind of, you guys have already kind of talked about public demand, but, maybe if we could go into private demand, how are you thinking about that underlying over the next few months and maybe into 2025?
Kevin Gagne: Congrats on the quarter I kind of wanted to.
Speaker Change: You guys had already kind of talked about public demand, but.
Speaker Change: Maybe if you could go into private demand, how youre thinking about that underlying over the next few months.
Speaker Change: Maybe in the 25.
Speaker Change: I think a lot of that Kevin is going to be dependent upon the interest rate environment that we're in surely if there is.
Howard Osler Woltz: I think a lot of that, Kevin, is going to be dependent on the interest rate environment that we're in. Surely, if there's..., generate some demand in that private commercial segment. That's too early to tell right now.
Speaker Change: Cut going for that.
Speaker Change: Generate some demand in that comprise the commercial segment.
Kevin Gagne: But it's too early to tell right now.
Kevin Gainey: When you speak of private, are you also speaking of residential?
Speaker Change: And what when you when you speak of private are you also speaking of residential.
Speaker Change: Oh, yeah, yeah residential non res yeah, but.
Kevin Gainey: Uh, yeah, yeah. Residential non-res. Yeah. So, it seems that...
Kevin Gagne: So it seems that that.
Howard Osler Woltz: So it seems that the outlook for residential is reasonably bullish, and I would say less uncertain than the outlook for private commercial. And if we were to get interest rate reductions, I think it would be very...
Speaker Change: The outlook for residential is reasonably bullish.
Speaker Change: And I would say less uncertain than then the outlook for profit commercial.
Speaker Change: And if we were to get interest rate reductions I think clearly.
Speaker Change: Clearly it would be very supportive of both segments.
Speaker Change: Private construction spending.
Since you guys kind of brought up the the rate have you have you found that any of your customers have.
Kevin Gainey: Since you guys kind of brought up the rate talk, have you found that any of your customers have changed the timing of projects in anticipation of rate cuts?
Speaker Change: Change the timing of projects for that.
Speaker Change: Anticipation of rate cuts.
Howard Osler Woltz: Yes, we have, and it's clear from the number of times that we re-float projects that developers and owners who are on the edge about starting a project are looking at two things. They're looking at sharply higher costs over the last couple of years, just due to the inflationary environment, and they're looking at higher financing costs, and some have elected to try to wait that out. I don't think the projects are dead, but when you re-quote a project four times, I mean, there's a clear message there, and we've seen that.
Yes, we have and and it is.
Speaker Change: It's clear and the number of times that we re quote projects.
Speaker Change: Yeah.
Speaker Change: <unk> offers and owners.
Speaker Change: Who are on the edge about starting a project.
Speaker Change: They're looking at two things, they're looking at sharply higher costs over the last couple of years, just due to the inflation area environment and Theyre looking at higher financing costs.
Speaker Change: Some have elected to try to wait that out I don't think the projects are dead, but when you required a project for comps I mean, theres, a clear message there and we've seen that.
Speaker Change: That sounds exhausting.
Kevin Gainey: And then maybe one final one. As you guys talk about ramping up the business, what kind of confidence do you have in the ability to keep up with it?
Speaker Change:
Speaker Change: And then maybe one final one as you guys talk about ramping up the business.
Speaker Change: What kind of confidence you have and the ability to keep at those higher.
Speaker Change: The higher operating levels.
Speaker Change: Well, okay. So the business is both seasonal and cyclical okay.
Howard Osler Woltz: Well, okay, so the business is both seasonal, and it's cyclical. Okay?
Howard Osler Woltz: And I think the seasonality It's certainly not going to go away, and you know, that April through really October, and November timeframe is when it reaches its peak level for whatever cycle we're in. So I don't see that we're going, or we're not expecting any change in seasonality. I think that the underlying level of demand for the products that we produce is extremely solid, although we've gone through a period of inventory correction, and unfortunately, there's no good objective data for us to look at to say that this much of our business has been affected by inventory corrections.
Speaker Change: Hey.
Speaker Change: I think the seasonality.
Speaker Change: It's certainly not going to go away.
Speaker Change: You know that April through really October November time frame as well.
Speaker Change: Quinn.
Speaker Change: Yeah.
Quinn: Construction really.
Quinn: Reaches its peak level for whatever cycle. We're in so I don't see I don't see that.
Quinn: We're going we're not expecting any change in seasonality.
Speaker Change: I think that the.
Speaker Change: The underlying level of demand for the products that we produce is extremely solid although we've gone through we've gone through a period of inventory correction and unfortunately, there is no. There's no. Good objective data for us to look at to say that that.
Speaker Change: This is.
Speaker Change: That that's much of our business has been affected by inventory corrections. It's more it's more information that comes from call reports and from.
Howard Osler Woltz: It's more information that comes from call reports and from just the feel of the business than objective data. But, seasonality is not going to change. The cyclicality, I think we've probably seen the worst of the down cycle.
Speaker Change: From just the feel of the business that it is objective data, but but.
Speaker Change: The seasonality is not going to change the cyclicality I think we're probably we've probably seen the worst of the down cycle.
Speaker Change: That sounds it sounds good I appreciate that I. Appreciate you guys taking my questions.
Kevin Gainey: Sounds good. I appreciate you guys taking the time to answer my questions.
Thank you.
Speaker Change: Thank you so much. Our next question is from Tyson Bauer of lenders Casey capital.
Operator: Thank you so much. Our next question is from Tyson Bauer of Lenders KC Capital. Typhon, your line is now open.
Speaker Change: Your line is now open.
Tyson Lee Bauer: Good morning, gentlemen.
Tyson Lee Bauer: Good morning, gentlemen. Good morning.
Speaker Change: Good morning Tyson.
Howard Osler Woltz: We talked about, you know, we ran into the PC import situation in previous years where we have to try to get the trade actions and have to have people in the administration that actually are listening to you to get those trade actions to go through, probably difficult in an election year, and possible changes as we go forth, especially with some of the judgments that are placed against some of the agencies. My focus is really more on the welded wire reinforcement type product.
Speaker Change: We talked about.
Speaker Change: Ran into the P. C import situation in prior years, where we have to try to get the trade actions.
Speaker Change: And a half to half.
Speaker Change: People in the administration that actually are listening to you to get those trade actions to go through.
Speaker Change: Probably difficult in an election year and possible changes as we go forward, especially with.
Speaker Change: Some of the judgments that are placed against some of the agencies.
Speaker Change: My focus is really more on the welded wire reinforcement type products.
Speaker Change: That more of a domestic capacity issue within the industry that there's too much slack capacity that is putting pressure on your ability to price hit.
Speaker Change: Historically, you've always kind of been a price leader.
Speaker Change: Have you has that diminished somewhat and with other competitors, maybe like a new core somebody else has a little more influence that you have to react to.
Speaker Change: Well first.
Howard Osler Woltz: Is that more of a domestic capacity issue within the industry, that there's too much slack capacity that is putting pressure on your ability to price? Historically, you've always kind of been a price leader. Has that diminished somewhat in that other competitors, maybe like Nucor or somebody else, have a little more influence that you have to react to? Well, first, let me just remind you that we have multiple product lines within our welded wire reinforcement. It probably will come as no surprise that the more commodity-like make-to-stop products have been under more pressure than the make-to-order products. The made-to-the-stop products largely are light commercial and housing-related, and they're highly seasonal.
Speaker Change: First let me just remind you.
Speaker Change: That we have multiple product lines within our welded wire reinforcement.
Speaker Change: <unk> business at <unk>.
Speaker Change: But it will come to notice as no surprise that the more commodity like make to stop products have been under more pressure than they make to order products the maintenance stop products largely.
Speaker Change: Our light commercial and housing related.
Speaker Change: I think and they're highly seasonal so so the way. This business works is that producers built significant inventories of finished goods.
Howard Osler Woltz: So the way that the business works is that producers build significant inventories of finished goods based on their outlook for demand in the busier parts of the year and fail to meet their shipment objectives, then there can be widespread panic in the market that results in a lot of price cuts. And that's some of what we've seen that, I think, some of the participants in the industry have built inventories that far exceed the needs of the market, and they've been unloading those products.
Speaker Change: Based on their outlook for demand and the pace of your parts of the year and if you go through with three or four months and and.
Speaker Change: And fail to meet your shipment objectives then.
Speaker Change: There can be widespread panic in the market that results in.
Speaker Change: A lot of price cutting.
Speaker Change: And that's some of what we've seen that I think I think.
Speaker Change: Some of the participants in the industry have built inventories that far exceed.
Speaker Change: The needs of the market and they've been a loading those products.
Howard Osler Woltz: That's much less a problem in the make-to-order engineered applications that we produce. Okay. And with your new capacity lines coming online and greater automation... Do you tend to focus more on your own fixed cost absorption, meaning that you're more prone to consider volume impact?
Speaker Change: That's much less a problem and in.
Speaker Change: The made to order engineered applications that we produce.
Speaker Change: Okay.
Speaker Change: And with your new capacity lines coming online in greater automation.
Do you tend to focus more on your own fixed cost absorption, meaning that you're more prone to consider volume impacts.
And Les.
Speaker Change: Let's focus on the pricing yourselves.
Howard Osler Woltz: Less focused on pricing yourselves? No, when you talk about labor increases. Is that specific to certain product lines and locations, or are you making a general statement company-wide? Well, it's company-wide, but it's rolled up from ten separate labor markets that we compete in. So I would say that the forces that have affected labor costs are the same nationwide, but the degree to which they have affected our company varies with each labor market that we're in. But as a general statement... All labor markets have been affected and are more costly by a wide margin today than they were previously. And actually, I don't consider that a bad thing, okay?
Speaker Change: No.
Speaker Change: Yeah.
Les: When you talk about labor increases.
Speaker Change: Is that specific to certain product lines and locations or are you, making a general statement.
Speaker Change: Company wide.
Speaker Change: Well, it's company wide, but company wide if rolled off.
Speaker Change: From 10 separate labor markets that we compete in.
Speaker Change: So I would say that the forces that have affected labor costs are the same nationwide, but the degree to which it has affected our company varies with each labor market that we're having but but as a general statement all.
Speaker Change: Labor markets have been affected and are more costly by a wide margin today.
Speaker Change: They werent previously and actually I do.
Speaker Change: Consider that a bad thing okay.
Speaker Change:
Speaker Change: Our position is that we're going to be competitive in every market that we operate.
Howard Osler Woltz: Our position is that we're going to be competitive in every market that we operate in, and I don't think that we're going to find that we have competitors who have substantially lower labor costs, so I think the playing field is level. You talked about the somewhat disappointing volume shipments you thought would be even greater, especially with seasonal impact, year-over-year-type metrics. As we've learned through the years, you don't necessarily ever get a catch-up quarter, per se.
Speaker Change: And and I don't think that we're going to find that we have competitors, who who have substantially lower labor costs.
Speaker Change: Yeah, So I think the playing field is level.
Speaker Change: Okay.
Speaker Change: You talked about the somewhat disappointing volume shipments you thought it would be even greater especially with seasonal impact year over year type of metrics.
Speaker Change: As we have learned through the years, you don't necessarily ever get a catch up quarter per se things as kind of get pushed to the right is that what youre seeing in this scenario also is that we may be ramping up and better but don't expect kind of that pig in the Python situation, where we're going to get an outsized quarter.
Howard Osler Woltz: Things just kind of get pushed to the right. Is that what you're seeing in this scenario, also, is that we may be ramping up and getting better, but don't expect kind of that pig-in-the-python situation where we're going to get an outsized quarter? I don't think there's a whole lot of catching up that goes on.
Yeah.
Speaker Change: Thanks, I don't think Theres, a whole lot of catching up that goes on.
Howard Osler Woltz: One of the problems that we see, and again, it's very hard to quantify, but it's obvious that our customers' customers also have challenges in the labor market. We have customers who have products that have been sold to contractors, but the contractors have insufficient labor to get those products in the ground, and therefore, we have customers whose yards have filled up, and that is affecting their ability to produce and to purchase from Insteel because they have nowhere to put finished goods, although the finished goods they have on their sites are generally sold for specific projects.
Speaker Change: That we see and again, it's very hard to quantify but it's obvious that our customers' customers also have challenges in the labor market, we have customers who have products that have been sold to contractors, but.
Speaker Change: Contractors had insufficient labor to get those products in the ground and therefore, we have customers whose yards that filled up.
Speaker Change: And that is affecting their ability to produce and <unk> purchased from in steel because they have nowhere to put finished goods. Although the finished goods I have on their sites are generally sold to specific projects. So so I think I think to every.
Howard Osler Woltz: So I think to every extent possible, and if weather allows, contractors and our customers will extend the season as far as they can in order to finish up projects, but I think you're also right that what we don't ship this year will be shipped next year. It's not a question of building a big backlog that you can blow out in the down part of the year. The business just doesn't work that way.
Speaker Change: Possible.
Speaker Change: Weather allows contractors what works.
Speaker Change: And our customers will extend well extend the season as far as they can in order to finish up projects, but but I think you're also right.
Speaker Change: But what we don't ship this year will be shipped next year, it's not a question of.
Speaker Change: Oh building, a big backlog that you can blow out in the down part of the year the business just doesn't work that way.
Okay and last question for me given your outlook given the improvements in your demand.
Howard Osler Woltz: Doug, and last question for me, given your outlook, given the improvements in your demand metrics that you're seeing currently... As management and as a board member, how do you go about converting that outlook and those increases in demand that you're expecting with your capacity expansion and turning that into shareholder return? Well, I think it's just as we've stated in the past that all of the new investments that we've made have a component, a return component of cost reduction as well as capacity expansion.
Speaker Change: Metrics that Youre seeing currently.
Speaker Change: As management and as a board member.
You go about converting that outlook in those increases in the band that you're expecting with your capacity expansion and turning that into shareholder return.
Speaker Change: Well I.
Speaker Change: I think it's just as we've stated in the past that all the new investments that we've made.
Speaker Change: Have a component.
Speaker Change: A return component of cost reduction as well as capacity expansion.
Howard Osler Woltz: And I think the reality is, if there's no market, or if there's an insufficient market, we're not going to realize, any part of that return that is based on increased demand and increased capacity until such time as we see better markets. And also, as I've said on multiple occasions, you don't choose your time to start these investments. That the lead time is a year and a half to two years in some cases to make these additions, and you have to have some confidence that you can think of the long-term implications of the investments, or you're probably in the wrong business.
Speaker Change: And I think the reality is if theres no market or if theres, an insufficient market, we're not going to realize part of that return that is based on.
Speaker Change: Increased demand and increased capacity until such time as we seek better market conditions.
Speaker Change: And also as I've said on multiple occasions, you don't choose your time to start these investments all that that the lead time is it year and a half to two years in some cases two to make these ambitions and you have to have some confidence that you can think of over the long term.
Speaker Change: Hum implications of investments or or.
Speaker Change: And they're all business.
Speaker Change: Okay.
Howard Osler Woltz: Okay, but you still have your dividend policy, you still have your share buybacks given the longer nature of where you think you could be within a year, two years, and operating results should then, with historical multiples, create that return on capital and of capital for your shareholders? Yeah, we're confident that the investments that we've made will return more than the cost of the capital that's invested in them, or we wouldn't have made the investment. Sounds great! Thanks a lot, gentlemen.
Speaker Change: So you still have your dividend policy you still have your share buybacks given the longer in nature that where you think you could be within a year or two years and operating results should then.
Speaker Change: With historical multiples create that return on capital and of capital for your shareholders.
Speaker Change: Yes.
Speaker Change: The investments that we've made.
Speaker Change: We will return greater than the cost of the capital that's invested or we wouldn't have made the investments.
Speaker Change: Sounds great. Thanks, a lot gentlemen.
Speaker Change: Thank you very much just as a reminder, if you would like to raise a question. Please press star followed by one and that sort of thing.
Operator: Thank you very much. Just as a reminder, if you would like to raise a question, please press star followed by one on your telephone keypad, and to remove yourself from that line of questioning, please press star followed by two. Our next question comes from Julio Romero of Citi.
Speaker Change: Keypad and Cemig yourself from that line of questioning Please press star followed by two.
Speaker Change: Our next question comes from Julio Romero with Sidoti.
Julio Alberto Romero: Great. Thanks, guys, for taking the follow-up question. You know, Tyson touched on it a little bit.
Speaker Change: Yeah.
Julio Alberto Romero: Great. Thanks, Thanks, guys for taking the follow up question.
Speaker Change: Tyson touched on it a little bit we are in an election year.
Julio Alberto Romero: We are in an election year. You know, some investors have a potential change in administration as kind of top of mind, particularly when it comes to the steel industry. Just how should we be thinking about the impact of a change or no change in administration in steel and any reason to maybe have optimism that either of the possible outcomes would be more amenable to expanding Section 232 to year-end products?
Some investors have a potential.
Speaker Change: Change in administration is kind of top of mind, particularly when it comes to the steel industry, just how should we be thinking about the impact from a from a change or no change in administration in steel and any reason to maybe have optimism to either of the possible outcomes would be more amenable to expanding section 200.
Speaker Change: 32, two year in product.
Speaker Change: It's hard to to know what an incoming Trump administration may do with respect to section 232 all of that.
Howard Osler Woltz: It's hard to know what an incoming Trump administration may do with respect to Section 232, although Trump implemented 232, and his people were very sympathetic to the problem that we described to them. But when we described it to the Trump administration, it was hypothetical. Today, we can demonstrate and quantify the impact of the hypothetical problem that we described in 2019 and 20 has actually come to pass.
Speaker Change: Well <unk>.
Speaker Change: Implemented $2 32.
Speaker Change: And his people.
Howard Woltz: were very sympathetic to the problem that we described to them.
Speaker Change: We're very sympathetic to two.
Speaker Change: Problem that we've described to them.
Howard Woltz: But when we described it to the Trump administration, it was hypothetical. Today, we can demonstrate and quantify the impact of the hypothetical problem that we described in 2019 and 2020 is actually on the past. And with the Biden administration, we actually had a group that was organized by our suppliers. And we went to Washington, and we talked through the fact that this differential treatment of a PC-strand and, and, and thought role, wire rod, with respect to 232 was having an extremely detrimental impact on our suppliers. And it was our suppliers who were to be the beneficiary of 232.
But when we describe it to the Trump administration it was hypothetical.
Speaker Change: Today, we can demonstrate and quantify the impact.
Speaker Change: <unk>.
Speaker Change: The hypothetical problem that we described in 2019 and 20 is actually come to pass.
Howard Osler Woltz: And with the Biden administration, we actually had a group that was organized by our suppliers. When we went to Washington, and we talked through the fact that this differential treatment of PC strand and hot-rolled wire rod with respect to 232 was having an extremely detrimental impact on our suppliers, and it was our suppliers who were to be the beneficiaries of 232, so they're very sympathetic to the problem.
Speaker Change: And what's the bias in the administration.
Speaker Change: We actually.
Speaker Change: We had a group that was organized by our suppliers and went to Washington, and when we talk through the fact that the.
Speaker Change: This differential treatment of PC strand and in hot rolled wire rod with respect to 30 to what's having an extremely detrimental.
Speaker Change: Impact on our suppliers and it was our suppliers who were to be the beneficiary of $2 32. So so it is that they're very sympathetic to the problem. There is adequate data to demonstrate what's exactly happen, but the real.
Howard Woltz: So, so it is that they're very sympathetic to the problem. They're at what data to demonstrate what's exactly happened.
Howard Osler Woltz: There is adequate data to demonstrate what exactly happened, but the real-life fact of the matter is, it takes a presidential proclamation to add PCStrand to 232, and that's a heavy lift, regardless of the underlying facts that support the addition. We believe that our current situation is a result of a mistake that was made by the administration, and we're positioning our request as... you need to just fix the mistake that was made.
Howard Woltz: But the real life back in the matter is it takes a presidential proclamation to add PC-strand to 232. And that supports the addition. We believe that our current situation is a result of a mistake that was made by the administration and where we're positioned in our request as you need to just fix the mistake that was made. And I have, I have an underlying belief that we will get this fixed.
Speaker Change: <unk> fact, the matter is it takes a presidential proclamation to add PC strand to $2 32, and that's a heavy lift regardless of the underlying facts that support.
Speaker Change: In addition, we believe that our current situation as a result of a mistake that was made by the administration and where we're positioned in our request as.
Speaker Change: You need to just fix the mistake that was made.
Howard Osler Woltz: And I have to underline that I believe that we will get this fixed. It's a question of whether we can do it, with the Biden administration in place, or whether it's the next administration, but the underlying logic is so compelling that I find it hard to believe we won't get it fixed.
Speaker Change #100: And I have I have.
Speaker Change #100: An underlying belief that we will get this fixed it's a question of whether we can do it.
Howard Woltz: It's a question of whether we can do it with the Biden administration in place or whether it's the next administration. But, but the underlying logic is so compelling that I find it hard to believe we won't get a fixed.
Speaker Change #100: With the by the administration in place or whether it's the next administration.
Speaker Change #100: But but but.
Speaker Change #100: The underlying logic is so compelling that I find it hard to believe we won't get it fixed.
Operator: Really helpful, Collar H, much appreciated. Thank you. Thank you very much.
Speaker Change #101: Really helpful color H much appreciate it thank you.
Julio Alberto Romero: Really helpful, Caller H. Much appreciated. Thank you.
Speaker Change #102: Thank you very much we currently have no further questions. So how about the haynesville for closing remarks.
Operator: Thank you very much. We currently have no further questions, so I'll hand back to H. Woltz for closing remarks. Okay, thank you, Carly, and thank you...
Operator: We currently have my further questions. So, I'm back at the H quotes closing our marks. Okay.
Howard Osler Woltz: Okay, thank you, Carly, and thanks to all of you who joined the call today. We appreciate your interest in the company, and we would encourage you to give us a call back if you have any questions.
Speaker Change #103: Okay. Thank you Carl and thanks to all of you who joined the call today. We appreciate your interest in the company.
Operator: Thank you, Collar. And thanks to all of you who joined the call today. We appreciate your interest in the company. And we would encourage you to get us a call back if you have any questions. And if not, we'll report talking to you next quarter. Thank you.
Speaker Change #103: And we would encourage you to give us a call back if you have any questions and if not we'll look forward to talking to you next quarter. Thank you.
Speaker Change #104: Thank you. This concludes today's call. Thank you to everyone for joining US you may now disconnect your lines.
Operator: Thank you, this concludes today's call. Thank you to everyone for joining us. You may now disconnect your lines.
Operator: This concludes today's call. Thank you to everyone for joining us. You may now disconnect your lines.
Speaker Change #104: [music].