On this page of StockholderLetter.com we present the latest annual shareholder letter from INSTEEL INDUSTRIES INC — ticker symbol IIIN. Reading current and past IIIN letters to shareholders can bring important insights into the investment thesis.
ANNUAL REPORT 2O24
REINFORCING AMERICA We manufacture and market prestressed concrete strand and welded wire reinforcement, including engineered structural mesh, concrete pipe reinforcement and standard welded wire reinforcement. Our products are sold to manufacturers of concrete products and concrete contractors for use primarily in nonresidential construction applications. Headquartered in Mount Airy, North Carolina, we operate eleven manufacturing facilities located in the United States. Manufacturing Locations Welded Wire Reinforcement Prestressed Concrete Strand Insteel Industries is the nation s largest manufacturer of steel wire reinforcing products for concrete construction applications.
BUSINESS OVERVIEW 58% Welded Wire Reinforcement REVENUES 42% Prestressed Concrete Strand 85% 15% MARKETS Nonresidential Residential Welded Wire Reinforcement Prefabricated reinforcement consisting of high-strength wires that are welded into specified patterns according to customer requirements, which may provide for alternative wire diameters, lengths and spacings. Wire intersections are electrically resistance-welded by computer-controlled continuous automatic welding lines that use pressure and heat to fuse longitudinal and transverse wires in their proper position. Engineered Structural Mesh Concrete Pipe Reinforcement Standard Welded Wire Reinforcement Engineered made-to-order product that is used as the primary reinforcement in concrete elements or structures, frequently serving as a replacement for hot-rolled rebar. Engineered made-to-order product that is used as the primary reinforcement in concrete pipe and box culverts for drainage and sewage systems, water treatment facilities and other related applications. Secondary reinforcing product that is produced in standard styles for crack control applications in residential and light nonresidential construction, including driveways, sidewalks and a wide range of slab-on-grade applications. PLANT LOCATIONS PLANT LOCATIONS PLANT LOCATIONS Dayton, TX | Hazleton, PA | Jacksonville, FL | Kingman, AZ | Mount Airy, NC | St. Joseph, MO | Upper Sandusky, OH Dayton, TX | Jacksonville, FL | Kingman, AZ | Mount Airy, NC | St. Joseph, MO | Upper Sandusky, OH Dayton, TX | Hazleton, PA | Hickman, KY | Jacksonville, FL | Mount Airy, NC CUSTOMER SEGMENTS CUSTOMER SEGMENTS CUSTOMER SEGMENTS Precast and Prestressed Producers | Rebar Fabricators | Distributors | Contractors Concrete Pipe and Precast Producers Rebar Fabricators | Distributors END USES END USES END USES Nonresidential Construction Nonresidential Construction | Residential Construction Nonresidential Construction | Residential Construction Prestressed Concrete Strand High-strength seven-wire reinforcement consisting of six wires that are continuously wrapped around a center wire forming a strand, which is then heat-treated while under tension. Provides compression forces in concrete elements and structures, allowing for the use of longer, thinner and lighter spans or sections. May be used in either pretensioned or posttensioned applications to reinforce bridges, parking decks, buildings, other concrete structures and concrete slabs for new homes in regions that have expansive soil. Prestressed Concrete Strand PLANT LOCATIONS Gallatin, TN | Houston, TX | Sanderson, FL CUSTOMER SEGMENTS Precast Prestress Producers | Posttensioning Suppliers END USES Nonresidential Construction | Residential Construction 2024 ANNUAL REPORT | INSTEEL INDUSTRIES | III
LETTER TO SHAREHOLDERS Market conditions in 2024 continued to exhibit weakness that was apparent in 2023, with steel prices in the doldrums for much of the year. The price of steel scrap, the primary raw material used by producers of hot rolled steel wire rod, declined or was flat for an unprecedented (in recent times) nine consecutive months, reflecting weak demand for hot rolled steel throughout the economy. For Insteel, weak order intake volumes, continued inflationary pressures, and soft pricing contributed to operational inefficiencies and compressed spreads that resulted in net earnings declining to $0.99 per share and cash flow from operations to $58.2 million. After tax return on capital employed fell to 5.3%. Capital expenditures for 2024 totaled $19.1 million as we continued to pursue cost and productivity improvement measures in addition to funding recurring maintenance requirements. Last year we reported that two production lines had been commissioned during fiscal 2023 and there was one remaining production line to be installed and commissioned during fiscal 2024. The third commissioning was completed during the third fiscal quarter of 2024. The line is now operating at over 85% utilization, and we plan to schedule additional operating hours as the demand environment improves. Shortly following the close of fiscal 2024, the Company completed two acquisitions that should strengthen our competitive position in the important midwestern and Texas markets. We acquired two manufacturing facilities in Ohio (Upper Sandusky and Warren) and certain assets from a producer in the Houston, Texas market. Total consideration approximated $73 million which was funded with cash on hand, leaving the company debt free following the transactions. On November 18, we announced that we would close the Warren, Ohio plant, which had been operating at an unsustainably low level of capacity utilization. Orders previously produced at the Warren facility will be moved to geographically logical Insteel legacy facilities that have open capacity. Consistent with prior experience, we expect substantial operational synergies from these transactions, with meaningful cost reductions in SG&A and freight, as well as improved asset utilization. This acquisition activity is consistent with our stated capital allocation strategy which prioritizes appropriate growth opportunities as our primary objective. Throughout fiscal 2024 we highlighted the adverse impact on Insteel of growing volumes of low-priced imports of PC strand, a trend that is not improving. We continue to monitor imports and to evaluate various courses of action to eliminate the inherent advantage that U.S. trade policies have provided offshore producers. Decisive action by the U.S. government is required to restore reasonable conditions of competition in the market. We believe the Administration understands and supports our position. They now need to act. In view of our strong financial position, the Board of Directors authorized payment of a special dividend in the amount of $1.00 per share with a record date of November 29, 2024, and payment date of December 13, 2024. While payment of any special dividend is contingent upon projected capital requirements and operating results, Insteel has paid a special dividend eight times since 2016, cumulatively totaling $12.25 per share. Following payment of the dividend, we expect to remain debt free, to be well positioned to fully fund our capital investment program and to retain sufficient financial flexibility to execute on other opportunities that may arise. We have been asked to explain our rationale for returning capital to shareholders through special dividends rather than through purchases of IIIN common shares. The Board considers all options when evaluating returning capital, and several factors influence our eventual decision. First, the relative illiquidity of the Company s common shares has been a concern since our initial public offering in 1985 and reducing the number of outstanding shares would exacerbate this problem. Second, the Board considers the likely purchase price of Company shares relative to their intrinsic value. Third, regulations severely restrict the volume of shares the Company is allowed to purchase in the open market. With these factors in mind, the Board has elected to return more significant amounts of capital through special dividends, although in recent years we have also acquired common shares with the objective of offsetting dilution from the Company s equity incentive plan. These factors will likely continue to be primary considerations of the Board when it considers returning capital to shareholders. A differentiating factor for Insteel as compared to competitors in the industry is our commitment to continually invest in our facilities and information systems. To that end, in fiscal 2024 we invested $19.1 million to adopt state-of-the-art manufacturing technology and to upgrade our information systems. We have entertained investor questions concerning the timing of our investments in view of weaker than expected business conditions in certain markets. Given the nature of our industry, we do not attempt to time the market with respect to commissioning and startup of new technology. With lead times of approximately two years for most significant capital investments, it is impossible to forecast prevailing business conditions at the time of startup. Additionally, achieving lower cash cost of production and broadening our product offerings are substantial return components of nearly every significant capital investment made by the Company, making market conditions at the time of startup somewhat less consequential. The Company believes its disciplined investment philosophy is aligned with the interests of shareholders across the business cycle, and that companies failing to adopt the best technology will become uncompetitive. IV | 2024 ANNUAL REPORT | INSTEEL INDUSTRIES
OUTLOOK We estimate that approximately 85% of our revenues are generated from activity in the nonresidential construction market with about 35% of revenues derived from public sector spending and about 50% from private sector spending. We are optimistic about nonresidential construction markets in view of substantial incremental funding that has become available through various federal programs. Residential construction markets, accounting for approximately 15% of Insteel revenues, experienced an abrupt and significant slowdown beginning in the third fiscal quarter of 2022 as rising interest rates affected housing affordability and uncertainty caused risk aversion. Subsequently, activity in residential markets rebounded following inventory corrections, although pricing has remained highly competitive. We expect gradual improvement in residential markets during fiscal 2025. While it is not possible to quantify the impact of rising or elevated interest rates on our markets, we believe that the current downward trajectory will stimulate demand for construction materials and reinforcing products during 2025. Longer term, the magnitude of the federal budget deficit is likely to exert upward pressure on long-term interest rates. Most construction activity projections for 2025 are favorable relative to 2024, but forecasting demand trends for our products remains challenging. We are confident, however, that we are well positioned to adapt to varying conditions in our markets. Insteel s business continues to be cyclical, and our financial results can be impacted significantly by volatility in steel prices. With the abrupt exit from the market of a hot rolled wire rod producer during the first fiscal quarter of 2025, conditions in our raw material markets are expected to tighten for the next few months. Imports of wire rod are likely to fill any supply shortfall that develops, and availability should normalize by our third fiscal quarter. With prospects in 2025 for improving demand and with the contributions we expect from recent acquisitions, we look forward to improving financial performance. Regardless of market conditions, we remain committed to industry leadership. Thank you for your support. H.O. Woltz III Chairman, President and Chief Executive Officer 2024 ANNUAL REPORT | INSTEEL INDUSTRIES | V
 • shareholder letter icon 1/2/2025 Letter Continued (Full PDF)
 • stockholder letter icon 1/3/2024 IIIN Stockholder Letter
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IIIN Shareholder/Stockholder Letter Transcript:

ANNUAL REPORT
2O24

REINFORCING
AMERICA
We manufacture and market
prestressed concrete
strand and welded wire
reinforcement, including
engineered structural mesh,
concrete pipe reinforcement
and standard welded wire
reinforcement. Our products
are sold to manufacturers of
concrete products and concrete
contractors for use primarily
in nonresidential construction
applications. Headquartered in
Mount Airy, North Carolina, we
operate eleven manufacturing
facilities located in the
United States.
Manufacturing Locations
Welded Wire Reinforcement
Prestressed Concrete Strand
Insteel Industries is
the nation   s largest
manufacturer of steel
wire reinforcing products
for concrete construction
applications.

BUSINESS OVERVIEW
58%
Welded
Wire
Reinforcement
REVENUES
42%
Prestressed
Concrete
Strand
85%
15%
MARKETS
Nonresidential
Residential
Welded Wire Reinforcement
Prefabricated reinforcement consisting of high-strength wires that are welded into specified patterns according to
customer requirements, which may provide for alternative wire diameters, lengths and spacings. Wire intersections are
electrically resistance-welded by computer-controlled continuous automatic welding lines that use pressure and heat
to fuse longitudinal and transverse wires in their proper position.
Engineered Structural Mesh
Concrete Pipe Reinforcement
Standard Welded Wire Reinforcement
Engineered made-to-order product that
is used as the primary reinforcement in
concrete elements or structures, frequently
serving as a replacement for hot-rolled
rebar.
Engineered made-to-order product that
is used as the primary reinforcement in
concrete pipe and box culverts for drainage
and sewage systems, water treatment
facilities and other related applications.
Secondary reinforcing product that is
produced in standard styles for crack
control applications in residential and light
nonresidential construction, including
driveways, sidewalks and a wide range of
slab-on-grade applications.
PLANT LOCATIONS
PLANT LOCATIONS
PLANT LOCATIONS
Dayton, TX | Hazleton, PA |
Jacksonville, FL | Kingman, AZ |
Mount Airy, NC | St. Joseph, MO |
Upper Sandusky, OH
Dayton, TX | Jacksonville, FL |
Kingman, AZ | Mount Airy, NC |
St. Joseph, MO | Upper Sandusky, OH
Dayton, TX | Hazleton, PA | Hickman, KY |
Jacksonville, FL | Mount Airy, NC
CUSTOMER SEGMENTS
CUSTOMER SEGMENTS
CUSTOMER SEGMENTS
Precast and Prestressed Producers |
Rebar Fabricators | Distributors |
Contractors
Concrete Pipe and Precast Producers
Rebar Fabricators | Distributors
END USES
END USES
END USES
Nonresidential Construction
Nonresidential Construction |
Residential Construction
Nonresidential Construction |
Residential Construction
Prestressed Concrete Strand
High-strength seven-wire reinforcement consisting of six wires that are continuously wrapped around a center wire forming
a strand, which is then heat-treated while under tension. Provides compression forces in concrete elements and structures,
allowing for the use of longer, thinner and lighter spans or sections. May be used in either pretensioned or posttensioned
applications to reinforce bridges, parking decks, buildings, other concrete structures and concrete slabs for new homes in
regions that have expansive soil.
Prestressed Concrete Strand
PLANT LOCATIONS
Gallatin, TN | Houston, TX | Sanderson, FL
CUSTOMER SEGMENTS
Precast Prestress Producers |
Posttensioning Suppliers
END USES
Nonresidential Construction |
Residential Construction
2024 ANNUAL REPORT
| INSTEEL INDUSTRIES |
III

LETTER TO SHAREHOLDERS
Market conditions in 2024 continued to exhibit weakness that was apparent in 2023, with
steel prices in the doldrums for much of the year. The price of steel scrap, the primary
raw material used by producers of hot rolled steel wire rod, declined or was flat for an
unprecedented (in recent times) nine consecutive months, reflecting weak demand for hot
rolled steel throughout the economy. For Insteel, weak order intake volumes, continued
inflationary pressures, and soft pricing contributed to operational inefficiencies and
compressed spreads that resulted in net earnings declining to $0.99 per share and cash flow
from operations to $58.2 million. After tax return on capital employed fell to 5.3%. Capital
expenditures for 2024 totaled $19.1 million as we continued to pursue cost and productivity
improvement measures in addition to funding recurring maintenance requirements.
Last year we reported that two production lines had been commissioned during fiscal 2023
and there was one remaining production line to be installed and commissioned during
fiscal 2024. The third commissioning was completed during the third fiscal quarter of
2024. The line is now operating at over 85% utilization, and we plan to schedule additional
operating hours as the demand environment improves.
Shortly following the close of fiscal 2024, the Company completed two acquisitions that should strengthen our competitive position
in the important midwestern and Texas markets. We acquired two manufacturing facilities in Ohio (Upper Sandusky and Warren)
and certain assets from a producer in the Houston, Texas market. Total consideration approximated $73 million which was funded
with cash on hand, leaving the company debt free following the transactions. On November 18, we announced that we would close
the Warren, Ohio plant, which had been operating at an unsustainably low level of capacity utilization. Orders previously produced
at the Warren facility will be moved to geographically logical Insteel legacy facilities that have open capacity. Consistent with prior
experience, we expect substantial operational synergies from these transactions, with meaningful cost reductions in SG&A and
freight, as well as improved asset utilization. This acquisition activity is consistent with our stated capital allocation strategy which
prioritizes appropriate growth opportunities as our primary objective.
Throughout fiscal 2024 we highlighted the adverse impact on Insteel of growing volumes of low-priced imports of PC strand, a trend
that is not improving. We continue to monitor imports and to evaluate various courses of action to eliminate the inherent advantage
that U.S. trade policies have provided offshore producers. Decisive action by the U.S. government is required to restore reasonable
conditions of competition in the market. We believe the Administration understands and supports our position. They now need to act.
In view of our strong financial position, the Board of Directors authorized payment of a special dividend in the amount of $1.00 per
share with a record date of November 29, 2024, and payment date of December 13, 2024. While payment of any special dividend is
contingent upon projected capital requirements and operating results, Insteel has paid a special dividend eight times since 2016,
cumulatively totaling $12.25 per share. Following payment of the dividend, we expect to remain debt free, to be well positioned to
fully fund our capital investment program and to retain sufficient financial flexibility to execute on other opportunities that may arise.
We have been asked to explain our rationale for returning capital to shareholders through special dividends rather than through
purchases of IIIN common shares. The Board considers all options when evaluating returning capital, and several factors influence
our eventual decision. First, the relative illiquidity of the Company   s common shares has been a concern since our initial public
offering in 1985 and reducing the number of outstanding shares would exacerbate this problem. Second, the Board considers the
likely purchase price of Company shares relative to their intrinsic value. Third, regulations severely restrict the volume of shares the
Company is allowed to purchase in the open market. With these factors in mind, the Board has elected to return more significant
amounts of capital through special dividends, although in recent years we have also acquired common shares with the objective of
offsetting dilution from the Company   s equity incentive plan. These factors will likely continue to be primary considerations of the
Board when it considers returning capital to shareholders.
A differentiating factor for Insteel as compared to competitors in the industry is our commitment to continually invest in our
facilities and information systems. To that end, in fiscal 2024 we invested $19.1 million to adopt state-of-the-art manufacturing
technology and to upgrade our information systems. We have entertained investor questions concerning the timing of our
investments in view of weaker than expected business conditions in certain markets. Given the nature of our industry, we do
not attempt to time the market with respect to commissioning and startup of new technology. With lead times of approximately
two years for most significant capital investments, it is impossible to forecast prevailing business conditions at the time of startup.
Additionally, achieving lower cash cost of production and broadening our product offerings are substantial return components of
nearly every significant capital investment made by the Company, making market conditions at the time of startup somewhat less
consequential. The Company believes its disciplined investment philosophy is aligned with the interests of shareholders across the
business cycle, and that companies failing to adopt the best technology will become uncompetitive.
IV
| 2024 ANNUAL REPORT | INSTEEL INDUSTRIES

OUTLOOK
We estimate that approximately 85% of our revenues are generated from activity in the nonresidential construction market with
about 35% of revenues derived from public sector spending and about 50% from private sector spending. We are optimistic
about nonresidential construction markets in view of substantial incremental funding that has become available through various
federal programs. Residential construction markets, accounting for approximately 15% of Insteel revenues, experienced an abrupt
and significant slowdown beginning in the third fiscal quarter of 2022 as rising interest rates affected housing affordability and
uncertainty caused risk aversion. Subsequently, activity in residential markets rebounded following inventory corrections, although
pricing has remained highly competitive. We expect gradual improvement in residential markets during fiscal 2025.
While it is not possible to quantify the impact of rising or elevated interest rates on our markets, we believe that the current
downward trajectory will stimulate demand for construction materials and reinforcing products during 2025. Longer term, the
magnitude of the federal budget deficit is likely to exert upward pressure on long-term interest rates. Most construction activity
projections for 2025 are favorable relative to 2024, but forecasting demand trends for our products remains challenging. We are
confident, however, that we are well positioned to adapt to varying conditions in our markets.
Insteel   s business continues to be cyclical, and our financial results can be impacted significantly by volatility in steel prices. With
the abrupt exit from the market of a hot rolled wire rod producer during the first fiscal quarter of 2025, conditions in our raw material
markets are expected to tighten for the next few months. Imports of wire rod are likely to fill any supply shortfall that develops, and
availability should normalize by our third fiscal quarter.
With prospects in 2025 for improving demand and with the contributions we expect from recent acquisitions, we look forward to
improving financial performance. Regardless of market conditions, we remain committed to industry leadership.
Thank you for your support.
H.O. Woltz III
Chairman, President and
Chief Executive Officer
2024 ANNUAL REPORT
| INSTEEL INDUSTRIES |
V



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