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What changed in INSTEEL INDUSTRIES INC's 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of INSTEEL INDUSTRIES INC's 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+133 added−118 removedSource: 10-K (2024-10-24) vs 10-K (2023-10-26)

Top changes in INSTEEL INDUSTRIES INC's 2024 10-K

133 paragraphs added · 118 removed · 105 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

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Biggest changeHuman Capital We value all our employees and their important role in the long-term success of the company. Our human capital strategy is centered around four key areas: Safe Operations, Performance Based Compensation, Equal Opportunity and Hiring and Retention. As of September 30, 2023, we had 884 employees, none of which were represented by labor unions.
Biggest changeHuman Capital We believe our employees are a key factor in the long-term success of the company. We seek to maintain a trusting and participative work environment throughout the organization, adhering to the highest standards of ethics, professionalism and excellence. Our human capital strategy is centered around four key pillars: Safe Operations, Performance-Based Compensation, Equal Opportunity and Hiring and Retention.
Safe Operations Our employees are extensively trained in a formal process of risk assessment, risk reduction and hazard elimination and empowered with the authority to stop equipment or tasks until work can be safely accomplished. “Safe Operations with Zero Harm,” our internal safety philosophy, is a key part of our ongoing employee training and operations.
Our employees are extensively trained in a formal process of risk assessment, risk reduction and hazard elimination and empowered with the authority to stop equipment or tasks until work can be safely accomplished. “Safe Operations with Zero Harm,” our internal safety philosophy, is a key part of our ongoing employee training and operations.
The information available on our website and the SEC’s website is not incorporated into this report or any of our filings with the SEC.
The information available on our website and the SEC’s website is not incorporated into this report or any of our filings with the SEC. 7
The delivery method selected is determined based on backhaul opportunities, comparative costs and customer service requirements. 5 Customers We sell our products to a broad range of customers that includes manufacturers of concrete products, and to a lesser extent, distributors, rebar fabricators and contractors.
The delivery method selected is determined based on backhaul opportunities, comparative costs and customer service requirements. 4 Customers We sell our products to a broad range of customers that includes manufacturers of concrete products, and to a lesser extent, distributors, rebar fabricators and contractors.
Backlog Backlog for our business is minimal due to the relatively short lead times that are required by our customers. We believe that the majority of our firm orders as of the end of fiscal 2023 will be shipped during the first quarter of fiscal 2024.
Backlog Backlog for our business is minimal due to the relatively short lead times that are required by our customers. We believe that the majority of our firm orders as of the end of fiscal 2024 will be shipped during the first quarter of fiscal 2025.
We did not have any single customers that represented 10% or more of our net sales in fiscal years 2023, 2022 or 2021. The loss of a single customer or a few customers would not have a material adverse impact on our business.
We did not have any single customers that represented 10% or more of our net sales in fiscal years 2024, 2023 or 2022. The loss of a single customer or a few customers would not have a material adverse impact on our business.
Customers purchasing PC strand and WWR for certain applications require the Company to certify compliance with Buy America laws. Selling prices for our products tend to be correlated with changes in wire rod prices. However, the timing and magnitude of the relative price changes varies depending upon market conditions and competitive factors.
Customers purchasing PC strand and WWR for certain applications require the Company to certify compliance with such laws. Selling prices for our products tend to be correlated with changes in wire rod prices. However, the timing and magnitude of the relative price changes varies depending upon market conditions and competitive factors.
Our products are sold mainly to manufacturers of concrete products that are used primarily in nonresidential construction. For fiscal 2023, we estimate that approximately 85% of our sales were related to nonresidential construction and 15% were related to residential construction.
Our products are sold mainly to manufacturers of concrete products that are used primarily in nonresidential construction. For fiscal 2024, we estimate that approximately 85% of our sales were related to nonresidential construction and 15% were related to residential construction.
In fiscal 2023, we estimate that approximately 70% of our net sales were to manufacturers of concrete products and 30% were to distributors, rebar fabricators and contractors.
In fiscal 2024, we estimate that approximately 70% of our net sales were to manufacturers of concrete products and 30% were to distributors, rebar fabricators and contractors.
Risk Factors”. We do not expect to incur material capital expenditures for environmental control facilities during fiscal 2024.
Risk Factors”. We do not expect to incur material capital expenditures for environmental control facilities during fiscal 2025.
U.S. government trade policies and trade actions by domestic wire rod producers can significantly impact the pricing and availability of imported wire rod, which during fiscal years 2023 and 2022 represented approximately 14% and 26%, respectively, of our total wire rod purchases.
U.S. government trade policies and trade actions by domestic wire rod producers can significantly impact the pricing and availability of imported wire rod, which during fiscal years 2024 and 2023 represented approximately 15% and 14%, respectively, of our total wire rod purchases.
In January 2021, with respect to 8 countries, and in April 2021, with respect to 7 countries, the DOC ruled in our favor and imposed anti-dumping duties ranging from 4% to 194%, which had the effect of limiting the participation of these countries in the domestic market.
In January 2021, with respect to eight countries, and in April 2021, with respect to seven countries, the DOC ruled in our favor and imposed anti-dumping duties ranging from 4% to 194%, which had the effect of limiting the participation of these countries in the domestic market.
Additionally, in 2020, we and four other domestic producers of SWWR filed anti-dumping petitions against Mexico. In July 2021, the DOC ruled in our favor and imposed final countervailing duty margins ranging from 23% to 110%, which had the effect of limiting the continued participation of Mexican producers in the domestic market.
Additionally, in 2020, we and four other domestic producers of SWWR filed anti-dumping petitions against Mexico following its violation of US trade laws. In July 2021, the DOC ruled in our favor and imposed final countervailing duty margins ranging from 23% to 110%, which had the effect of limiting the continued participation of Mexican producers in the domestic market.
In the event of production disruptions, we believe that our contingency plans would enable us to continue serving our customers, although there can be no assurances that a work slowdown or stoppage would not adversely impact our operating costs and financial results.
In the event of production disruptions, we believe that our contingency plans would enable us to continue serving our customers, although there can be no assurances that a work slowdown or stoppage would not adversely impact our operating costs and financial results. Safe Operations The safety of our people is of paramount importance.
Our growth strategy is focused on organic opportunities as well as strategic acquisitions in existing or related markets that leverage our infrastructure and core competencies in the manufacture and marketing of concrete reinforcing products. Products Our operations are entirely focused on the manufacture and marketing of steel wire reinforcing products for concrete construction applications.
Our growth strategy is focused on organic opportunities as well as strategic acquisitions in existing or related markets that leverage our infrastructure and core competencies in the manufacture and marketing of concrete reinforcing products.
Our concrete reinforcing products consist of two product lines: PC strand and WWR. Based on the criteria specified in Financial Accounting Standards Board Accounting Standards Codification Topic 280, Segment Reporting, we have one reportable segment.
Products Our operations are entirely focused on the manufacture and marketing of steel wire reinforcing products for concrete construction applications. Our concrete reinforcing products consist of two product lines: PC strand and WWR. Based on the criteria specified in Financial Accounting Standards Board Accounting Standards Codification Topic 280, Segment Reporting, we have one reportable segment.
Our goal is to create a positive and engaging work environment that meets evolving employee needs in areas like flexible work schedules beyond the traditional full-time work schedule (such as part-time, weekend only, shared shift and other flexible approaches that attract a broader candidate pool).
Our goal is to create a positive and engaging work environment that meets evolving employee needs in areas such as flexible work schedules beyond the traditional full-time work schedule, which allows us to attract a broader candidate pool.
Our salaried team members also have a compensation structure that rewards individual performance in addition to company performance. The Team Share incentive program is driven by variables that are controllable at the plant level.
Our salaried team members also have a compensation structure that rewards individual performance in addition to company performance. The Team Share incentive program is driven by variables that are controllable at the plant level. Equal Opportunity Our business depends on talented individuals who bring diverse skills, experiences and backgrounds.
Import competition is also a significant factor in certain segments of the PC strand and SWWR markets that are not subject to “Buy America” requirements. 6 In response to illegally traded import competition from offshore PC strand suppliers, we have pursued trade cases, when necessary, as a means of ensuring that foreign producers were complying with the applicable trade laws and regulations.
Import competition is also a significant factor in certain segments of the PC strand and SWWR markets that are not subject to “Buy America” requirements. 5 In response to illegally traded import competition from offshore PC strand suppliers, we have pursued antidumping and countervailing duty trade cases.
Zero Harm is identifying and managing risk to avoid injuries, illness or other negative impacts experienced by employees, the community, customers, property, the environment and shareholders. We monitor our safety performance through a key range of leading and lagging measures of safety.
Zero Harm is identifying and managing risk to avoid injuries, illness or other negative impacts experienced by employees, the community, customers, property, the environment and shareholders.
We have many team members in key leadership roles who started in entry-level roles and have grown in their careers by partnering with us in their development plans. Hiring and Retention Our performance relies on people who are developed and empowered to achieve results.
We have many team members in key leadership roles who started in entry-level roles and have grown in their careers by partnering with us in their development plans.
Our primary competitors for WWR products are Engineered Wire Products, Inc. (a subsidiary of Liberty), Wire Mesh Corporation, Concrete Reinforcements, Inc., National Wire Products, Davis Wire Corporation and Oklahoma Steel & Wire Co., Inc. Our primary competitors for PC strand are Sumiden Wire Products Corporation and Wire Mesh Corporation.
Our primary competitors for WWR products are Wire Mesh Corporation, Concrete Reinforcements, Inc., National Wire Products, Davis Wire Corporation, Oklahoma Steel & Wire Co., Inc. and, prior to our acquisition of substantially all of its assets in October of 2024 (see Note 19 of our consolidated financial statements), EWP (a then-subsidiary of Liberty).
Leading Indicator Measures: Lagging Indicator Measures: ● Hazard management process training ● Leadership engagement ● Employee involvement ● Rolling 12-month Incident Recordable Rate ● Lost Time Rate ● Severity Rate – Days Away, Restricted, and Transferred (DART) Performance Based Compensation Our production and skilled trades team members earn pay increases through our “Pay for Skills” program and share in productivity pay through our “Team Share” incentive program.
We monitor our safety performance through a key range of leading and lagging measures of safety. 6 Leading Indicator Measures: Lagging Indicator Measures: ● Hazard management process training ● Leadership engagement ● Employee involvement ● Rolling 12-month Incident Recordable Rate ● Lost Time Rate ● Severity Rate – Days Away, Restricted, and Transferred (DART) Performance-Based Compensation Our performance-based compensation system incentivizes our workforce and reinforces our culture.
We are improving the future of our company by identifying, developing and retaining talent that reflects our corporate philosophy.
Hiring and Retention Our performance relies on people who are developed and empowered to achieve results. We are improving the future of our company by identifying, developing and retaining talent that reflects our corporate philosophy. Our performance and succession development process includes all employees.
We believe in a collaborative workplace that is based on the fundamentals of dignity, respect, equality and opportunity for all and encourage transparency and access to leadership through our Open-Door Policy, Code of Business Conduct (including Whistleblower Hotline), Equal Opportunity Policy, Harassment Policy and Mission and Values. Our performance and succession development process includes all employees.
We believe in a collaborative workplace that is based on the fundamentals of dignity, respect, equality and opportunity for all. At Insteel, we believe demonstrating respect for our people and valuing their perspectives and contributions is critical to cultivating our best and most productive working environment.
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We believe a compensation structure, which rewards both individual initiative and team accomplishments, leads to higher levels of performance. 7 Equal Opportunity Our business depends on talented individuals who bring diverse skills, experiences and backgrounds.
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On October 21, 2024, the Company, through its wholly-owned subsidiary, IWP, entered into an Asset Purchase Agreement pursuant to which it has acquired substantially all of the assets, other than cash and accounts receivable, of Engineered Wire Products, Inc.
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(“EWP”), a leading manufacturer of welded wire reinforcement products for use in nonresidential and residential construction, and certain related assets of Liberty Steel Georgetown Inc. (“LSG”), for a purchase price of approximately $70.0 million, subject to certain adjustments (the “Acquisition”).
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Among other assets the Company acquired EWP’s inventories and production equipment and EWP’s Upper Sandusky, Ohio and Warren, Ohio production facilities. The Company also acquired certain equipment of LSG located in Georgetown, South Carolina, but such Georgetown facility was otherwise excluded from the Acquisition.
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Our primary competitors for PC strand are Sumiden Wire Products Corporation and Wire Mesh Corporation.
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As of September 28, 2024, we had 929 employees, all of which are located in the United States and none of which were represented by labor unions.
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Insteel employees typically earn a significant part of their compensation based on productivity. Our production and skilled trades team members have the opportunity to earn pay increases through our “Pay for Skills” program and share in productivity pay through our “Team Share” incentive program.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeThere may be other risks and uncertainties that are currently unknown to us or that we currently consider to be immaterial that could adversely affect our business, results of operations, financial condition and cash flows. 8 Industry Specific Risks Our business is cyclical and can be negatively impacted by prolonged economic downturns, rising interest rates or tightening in the financial markets that reduce the level of construction activity and demand for our products.
Biggest changeIndustry Specific Risks Our business is cyclical and can be negatively impacted by prolonged economic downturns, rising interest rates or tightening in the financial markets that reduce the level of construction activity and demand for our products. Demand for our products is cyclical in nature and sensitive to changes in the economy and in the financial markets.
Additionally, when raw material costs decline, our financial results would be negatively impacted if the selling prices for our products decrease to an even greater extent and if we are consuming higher cost material from inventory. Our financial results can also be significantly impacted if raw material supplies are inadequate to satisfy our purchasing requirements.
Additionally, when raw material costs decline, our financial results would be negatively impacted if the selling prices for our products decrease to an even greater extent and if we are consuming higher cost material from inventory. 8 Our financial results can also be significantly impacted if raw material supplies are inadequate to satisfy our purchasing requirements.
Data privacy breaches by employees and others with or without authorized access to our systems poses risks that sensitive data may be permanently lost or leaked to the public or other unauthorized persons. With the growing use and rapid evolution of technology, not limited to cloud-based computing and mobile devices, there are additional risks of unintentional data leaks.
Data privacy breaches by employees and others with or without authorized access to our systems pose risks that sensitive data may be permanently lost or leaked to the public or other unauthorized persons. With the growing use and rapid evolution of technology, not limited to cloud-based computing and mobile devices, there are additional risks of unintentional data leaks.
Operational Risks Our manufacturing facilities are subject to unexpected equipment failures, operational interruptions and casualty losses. Our manufacturing facilities are subject to risks that may limit our ability to manufacture and sell our products, including unexpected equipment failures, operational interruptions and catastrophic losses due to other unanticipated events such as fires, explosions, accidents, adverse weather conditions and transportation interruptions.
Our manufacturing facilities are subject to risks that may limit our ability to manufacture and sell our products, including unexpected equipment failures, operational interruptions and catastrophic losses due to other unanticipated events such as fires, explosions, accidents, pandemics, epidemics, adverse weather conditions and transportation interruptions.
The long-term effects of global climate change could present both physical risks and transition risks (such as regulatory or technology changes), which are expected to be widespread and unpredictable.
Our business and operations are subject to risks related to climate change. The long-term effects of global climate change could present both physical risks and transition risks (such as regulatory or technology changes), which are expected to be widespread and unpredictable.
In addition, increasing transaction prices for freight, natural gas, electricity, fuel and consumables would adversely affect our manufacturing and distribution costs. For most of our business, we incur the transportation costs associated with the delivery of products to our customers.
In addition, increasing transaction prices, as a result of general inflation or otherwise, for freight, natural gas, electricity, fuel and consumables would adversely affect our manufacturing and distribution costs. For most of our business, we incur the transportation costs associated with the delivery of products to our customers.
If our review indicates that goodwill has been impaired, the impaired portion would have to be written-off during that period which could adversely impact our business and financial results. Item 1B. Unresolved Staff Comments. None.
If our review indicates that goodwill has been impaired, the impaired portion would have to be written-off during that period which could adversely impact our business and financial results.
Our increasing reliance on technology systems and infrastructure heightens our potential vulnerability to system failure and malfunction, breakdowns due to natural disasters, human error, unauthorized access, power loss and other unforeseen events.
Our increasing reliance on technology systems and infrastructure, some of which are managed by third parties, heightens our potential vulnerability to system failure and malfunction, breakdowns due to natural disasters, human error, unauthorized access, power loss and other unforeseen events.
Because tight market conditions typically affect the entire industry, during past periods of short raw material supply, margins and profitability have been favorably impacted due to curtailed availability of PC strand and WWR that supported higher average selling prices.
Because tight market conditions typically affect the entire industry, during past periods of short raw material supply, margins and profitability have been favorably impacted due to curtailed availability of PC strand and WWR that supported higher average selling prices. However, there is no assurance that future short supply conditions in raw material markets would result in similar outcomes.
The imposition of tariffs, quotas or anti-dumping or countervailing duty margins by the U.S. government against exporting countries can have the effect of reducing or eliminating their competitiveness and participation in the domestic market.
The imposition of tariffs, quotas or anti-dumping or countervailing duty margins by the U.S. government, including those implemented following the change in administration after the 2024 U.S. presidential election, against exporting countries can have the effect of reducing or eliminating their competitiveness and participation in the domestic market.
Legislation and increased regulation regarding climate change, including mandatory reductions in energy consumption or emissions of greenhouse gases, could impose significant costs on us, including costs related to energy requirements, capital equipment, environmental monitoring and reporting and other costs to comply with such regulations.
Legislation and increased regulation regarding climate change, including mandatory reductions in energy consumption or emissions of greenhouse gases, could impose significant costs on us, including costs related to energy requirements, capital equipment, environmental monitoring and reporting and other costs to comply with such regulations. 10 General Risks Our stock price can be volatile, often in connection with matters beyond our control.
There are numerous factors that could cause the price of our common stock to fluctuate significantly, including: variations in our financial results; changes in our business outlook and expectations for the construction industry; changes in market valuations of companies in our industry; and announcements by us, our competitors or industry participants that may be perceived to impact our financial results. 11 We are increasingly dependent on information technology systems that are susceptible to certain risks, including cybersecurity breaches and data leaks, which could adversely impact our business.
There are numerous factors that could cause the price of our common stock to fluctuate significantly, including: variations in our financial results; changes in our business outlook and expectations for the construction industry; changes in market valuations of companies in our industry; and announcements by us, our competitors or industry participants that may be perceived to impact our financial results.
Our financial results could be adversely impacted by the impairment of goodwill. Our balance sheet includes intangible assets, including goodwill and other separately identifiable assets related to prior acquisitions, and we may acquire additional intangible assets in connection with future acquisitions.
Our balance sheet includes intangible assets, including goodwill and other separately identifiable assets related to prior acquisitions, and we may acquire additional intangible assets in connection with future acquisitions.
Demand for our products is driven by the level of construction activity, which tends to be correlated with conditions in the overall economy as well as other factors beyond our control.
Our products are sold primarily to manufacturers of concrete products that are used for a broad range of nonresidential and residential construction applications. Demand for our products is driven by the level of construction activity, which tends to be correlated with conditions in the overall economy as well as other factors beyond our control.
Furthermore, periods of extended inclement weather or associated flooding may inhibit construction activity utilizing our products and delay shipments of our products to customers.
Periods of extended inclement weather or associated flooding may inhibit construction activity utilizing our products and delay shipments of our products to customers, which can significantly affect our business, financial condition and results of operations.
Our operations are capital intensive and require substantial recurring expenditures for the routine maintenance of our equipment and facilities. Although we expect to finance our business requirements through internally generated funds or from borrowings under our $100 million revolving credit facility, we cannot provide any assurances these resources will be sufficient to support our business.
Although we expect to finance our business requirements through internally generated funds or from borrowings under our $100 million revolving credit facility, we cannot provide any assurances these resources will be sufficient to support our business.
If we are unable to pass these increases in costs to our customers it could adversely affect our business, financial condition and results of operations by increasing our overall cost structure. Our business and operations are subject to risks related to climate change.
If we are unable to pass these increases in costs to our customers it could adversely affect our business, financial condition and results of operations by increasing our overall cost structure. Additionally, our ability to recover the cost increases through price increases may lag our cost increases, which could negatively impact our margins.
There is no assurance that future short supply conditions in raw material markets would result in similar outcomes, however. 9 Demand for our products is highly variable and difficult to forecast due to our minimal backlog and unanticipated changes that can occur in customer order patterns or inventory levels. Demand for our products is highly variable.
Demand for our products is highly variable and difficult to forecast due to our minimal backlog and unanticipated changes that can occur in customer order patterns or inventory levels. Demand for our products is highly variable.
Although we have previously implemented numerous measures to offset the impact of increases in these costs, there can be no assurance that such actions will be effective. If we are unable to pass these additional costs through by raising our selling prices, our financial results could be adversely impacted.
Although we have previously implemented numerous measures to offset the impact of increases in these costs, there can be no assurance that such actions will be effective.
In response to illegally traded import competition from offshore PC strand and SWWR suppliers, we have pursued trade cases, when necessary, as a means of ensuring that foreign producers were complying with the applicable trade laws and regulations. Such actions may be costly and may not be successful.
In response to illegally traded import competition from offshore PC strand and SWWR suppliers, we have pursued trade cases with the objective of addressing illegal activities in our markets. Such actions may be costly and may not be successful.
Our business, financial condition and results of operations may be adversely impacted by the effects of inflation. The recent rise in inflation has increased the costs of labor, energy, operating supplies and raw materials.
If we are unable to pass these additional costs through by raising our selling prices, our financial results could be adversely impacted. 9 Our business, financial condition and results of operations may be adversely impacted by the effects of inflation. Rising inflation has increased, and may continue to increase, the costs of labor, energy, operating supplies and raw materials.
As the labor market continues to recover from the effects of the COVID-19 pandemic, availability of qualified employees and competition for them has escalated, which has increased costs associated with attracting and retaining employees.
Labor market shortages continue to impact the availability and competition for qualified workers, which has increased costs associated with attracting and retaining employees.
We believe that adaptation strategies to accommodate rising sea levels and other climate related phenomena could stimulate demand for our products to the extent that reinforced concrete products are essential to managing surface waters. 10 We also use natural gas, diesel fuel, gasoline and electricity in our operations, all of which could face increased regulation as a result of climate change or other environmental concerns.
We also use natural gas, diesel fuel, gasoline and electricity in our operations, all of which could face increased regulation as a result of climate change or other environmental concerns.
Our stock price can be volatile, often in connection with matters beyond our control. Equity markets in the U.S. have been increasingly volatile in recent years. During fiscal 2023, our common stock traded as high as $35.80 and as low as $24.00.
Equity markets in the U.S. have been increasingly volatile in recent years. During fiscal 2024, our common stock traded as high as $39.38 and as low as $26.87.
As a result, our cash flows may fluctuate from quarter to quarter due to these seasonal factors. Our capital resources may not be adequate to provide for our capital investment and maintenance expenditures if we were to experience a substantial downturn in our financial performance.
Our capital resources may not be adequate to provide for our capital investment and maintenance expenditures if we were to experience a substantial downturn in our financial performance. Our operations are capital intensive and require substantial recurring expenditures for the routine maintenance of our equipment and facilities.
While we have taken reasonable steps to protect the Company from cybersecurity risks and security breaches, there can be no assurance that such events will not occur. Failures of technology or related systems, cybersecurity incidents, or improper release of confidential information, could adversely impact our business or subject us to unexpected liabilities, expenditures and recovery time.
While we believe that we have taken reasonable steps to protect the Company from cybersecurity risks and security breaches, there can be no assurance that such events will not occur or that our security protocols and procedures will be adequate to prevent significant damage, system failure or data loss.
The primary raw material used to manufacture our products is hot-rolled carbon steel wire rod, which we purchase from both domestic and foreign suppliers. We do not use derivative commodity instruments to hedge our exposure to changes in the price of wire rod as such instruments are currently unavailable in the financial markets.
We may also experience significant production delays while locating new supply sources, which could result in our failure to timely deliver products to our customers. We do not use derivative commodity instruments to hedge our exposure to changes in the price of wire rod as such instruments are currently unavailable in the financial markets.
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The risk factors described below are not the only ones we face.
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The risk factors described below are not the only ones we face. There may be other risks and uncertainties that are currently unknown to us or that we currently consider to be immaterial that could adversely affect our business, results of operations, financial condition and cash flows.
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Demand for our products is cyclical in nature and sensitive to changes in the economy and in the financial markets. Our products are sold primarily to manufacturers of concrete products that are used for a broad range of nonresidential and residential construction applications.
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The primary raw material used to manufacture our products is hot-rolled carbon steel wire rod, which we purchase from both domestic and foreign suppliers. If any key supplier that we rely on for hot-rolled carbon steel wire rod ceases or limits production, we may incur significant additional costs in order to find alternative, reliable raw material suppliers.
Removed
General Risks Our business, results of operations, financial condition, cash flows and stock price can be adversely affected by pandemics, epidemics or other public health emergencies, such as the COVID-19 pandemic. The COVID-19 pandemic negatively impacted the global economy, disrupted supply chains and created significant volatility and disruption of financial markets.
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Operational Risks Our manufacturing facilities are subject to unexpected equipment failures, operational interruptions and casualty losses.
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In the event of the renewed outbreak of COVID-19, the emergence of new variants or an outbreak of a different virus or disease, we could experience disruptions in our supply chain, operations, facilities and workforce which could negatively affect our results of operations, financial condition, cash flows and stock price.
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Furthermore, production and shipment levels for our business correlate with construction activity, most of which occurs outdoors and, as a result, is affected by erratic weather patterns, seasonal changes, and other unusual or unexpected weather-related conditions, all of which may be impacted by weather patterns.
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As a result, our cash flows have fluctuated and may continue to fluctuate from quarter to quarter due to these seasonal factors, which could have a negative impact on our financial condition and results of operations.
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Many of the factors listed above are beyond our control. These factors may cause the market price of our common stock to decline, regardless of our business, financial condition or results of operations. We are increasingly dependent on information technology systems that are susceptible to certain risks, including cybersecurity breaches and data leaks, which could adversely impact our business.
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We have invested and continue to invest in risk management and information security and data privacy measures in order to protect our systems and data, including employee training, organizational investments, incident response plans, tabletop exercises and technical defenses.
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The cost and operational consequences of implementing, maintaining, and enhancing further data or system safeguards could increase significantly to keep pace with increasingly frequent, complex, and sophisticated global cyber threats.
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The same is true for our partners, suppliers, vendors and other third parties on whom we rely. Failures of technology or related systems, cybersecurity incidents, or improper release of confidential information, could adversely impact our business or subject us to unexpected liabilities, expenditures and recovery time.
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Additionally, an unauthorized disclosure or use of information could cause interruptions in our operations and might require us to spend significant management time and other resources investigating the event and dealing with local and federal law enforcement. Regardless of the merits and ultimate outcome of these matters, we may be required to devote time and expense to their resolution.
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In addition, the increase in the number and the scope of data privacy breaches has increased regulatory and industry focus on cybersecurity requirements and heightened data privacy industry practices. New regulation, evolving industry standards, and the interpretation of both, may cause us to incur additional expense in complying with any new data privacy requirements.
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We could also become the subject of regulatory action or litigation from our customers, employees, suppliers, service providers, and shareholders, which could damage our reputation, require significant expenditures of capital and other resources, and cause us to lose business.
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As a result, the failure to maintain the integrity of and protect customer or supplier data or our confidential internal data could have a material adverse effect on our business, operating results and financial condition. Our financial results could be adversely impacted by the impairment of goodwill.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeItem 2. Properties. Our corporate headquarters and IWP’s sales and administrative offices are located in Mount Airy, North Carolina. As of September 30, 2023, we operated ten manufacturing facilities located in Dayton, Texas; Gallatin, Tennessee; Hazleton, Pennsylvania; Hickman, Kentucky; Houston, Texas; Jacksonville, Florida; Kingman, Arizona; Mount Airy, North Carolina; Sanderson, Florida; and St. Joseph, Missouri.
Biggest changeItem 2. Properties. Our corporate headquarters and IWP’s sales and administrative offices are located in Mount Airy, North Carolina. As of September 28, 2024, we operated ten manufacturing facilities located in Dayton, Texas; Gallatin, Tennessee; Hazleton, Pennsylvania; Hickman, Kentucky; Houston, Texas; Jacksonville, Florida; Kingman, Arizona; Mount Airy, North Carolina; Sanderson, Florida; and St. Joseph, Missouri.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeItem 3. Legal Proceedings. We are involved in lawsuits, claims, investigations and proceedings, including commercial, environmental and employment matters, which arise in the ordinary course of business. We do not anticipate that the ultimate cost to resolve these matters will have a material adverse effect on our financial position, results of operations or cash flows.
Biggest changeItem 3. Legal Proceedings. We are involved in lawsuits, claims, investigations and proceedings, including commercial, environmental and employment matters, which arise in the ordinary course of business. We do not anticipate that the ultimate cost to resolve these matters will have a material adverse effect on our financial position, results of operations or cash flows. 12

Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

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Biggest changeSouthern 42 Vice President Administration, Secretary and Chief Legal Officer Richard T. Wagner 64 Senior Vice President and Chief Operating Officer James R. York 65 Senior Vice President, Sourcing and Logistics H. O.
Biggest changeSouthern 43 Vice President Administration, Secretary and Chief Legal Officer Richard T. Wagner 65 Senior Vice President and Chief Operating Officer James R. York 66 Senior Vice President, Sourcing and Logistics H. O.
Before joining us, he was a Senior Manager at BDO Seidman, LLP from June 2003 through June 2005 and, prior to that, had been employed for ten years at Deloitte & Touche USA, LLP, most recently as a Senior Manager. Elizabeth C. Southern, 42, has served as Vice President, Administration, Secretary and Chief Legal Officer since June 2023.
Before joining us, he was a Senior Manager at BDO Seidman, LLP from June 2003 through June 2005 and, prior to that, had been employed for ten years at Deloitte & Touche USA, LLP, most recently as a Senior Manager. Elizabeth C. Southern, 43, has served as Vice President Administration, Secretary and Chief Legal Officer since June 2023.
Prior to Insteel, he served in various senior management roles with Leggett & Platt, a publicly-held manufacturer of diversified engineered products, from 2002 to 2018, including Group President-Rod and Wire Products, Unit President-Wire Products and Unit President-Specialty Products. Mr. York served in a range of leadership positions at Bekeart Corporation, a U.S. subsidiary of N.V.
Prior to Insteel, he served in various senior management roles with Leggett & Platt, a publicly-held manufacturer of diversified engineered products, from 2002 to 2018, including Group President-Rod and Wire Products, Unit President-Wire Products and Unit President-Specialty Products. Mr. York served in a range of leadership positions at Bekaert Corporation, a U.S. subsidiary of N.V.
Wagner, 64, has served as Senior Vice President, Chief Operating Officer since October 2020 and as Vice President and General Manager of the Concrete Reinforcing Products Business Unit of our subsidiary, Insteel Wire Products Company, since 1998. He joined us in 1992 serving in various other management roles. From 1977 until 1992, Mr.
Wagner, 65, has served as Senior Vice President, Chief Operating Officer since October 2020 and as Vice President and General Manager of the Concrete Reinforcing Products Business Unit of our subsidiary, Insteel Wire Products Company, since 1998. He joined us in 1992 serving in various other management roles. From 1977 until 1992, Mr.
Wagner served in various positions with Florida Wire and Cable, Inc., a manufacturer of PC strand and galvanized strand products, which was later acquired by us in 2000. James R. York, 65, has served as Senior Vice President, Sourcing and Logistics since October 2020, and as Vice President, Sourcing and Logistics since joining us in 2018.
Wagner served in various positions with Florida Wire and Cable, Inc., a manufacturer of PC strand and galvanized strand products, which was later acquired by us in 2000. James R. York, 66, has served as Senior Vice President, Sourcing and Logistics since October 2020, and as Vice President, Sourcing and Logistics since joining us in 2018.
Woltz III, 67, has served as Chief Executive Officer since 1991, as President since 1989 and has been employed by us and our subsidiaries in various capacities since 1978. He was named President and Chief Operating Officer in 1989.
Woltz III, 68, has served as Chief Executive Officer since 1991, as President since 1989 and has been employed by us and our subsidiaries in various capacities since 1978. He was named President and Chief Operating Officer in 1989.
Woltz served as President of Florida Wire and Cable, Inc., formerly a subsidiary of our Company, until its merger with Insteel Wire Products Company in 2002. Mr. Woltz has served as Chairman of the Board since 2009. 12 Scot R. Jafroodi, 54, has served as Vice President, Chief Financial Officer and Treasurer since January 2023.
Woltz served as President of Florida Wire and Cable, Inc., formerly a subsidiary of our Company, until its merger with Insteel Wire Products Company in 2002. Mr. Woltz has served as Chairman of the Board since 2009. Scot R. Jafroodi, 55, has served as Vice President, Chief Financial Officer and Treasurer since January 2023.
Item 4. Mine Safety Disclosures . Not applicable. Information About Our Executive Officers Our executive officers are as follows: Name Age Position H. O. Woltz III 67 President, Chief Executive Officer and Chairman of the Board Scot R. Jafroodi 54 Vice President, Chief Financial Officer and Treasurer Elizabeth C.
Item 4. Mine Safety Disclosures . Not applicable. Information About Our Executive Officers Our executive officers are as follows: Name Age Position H. O. Woltz III 68 President, Chief Executive Officer and Chairman of the Board Scot R. Jafroodi 55 Vice President, Chief Financial Officer and Treasurer Elizabeth C.
Bekeart A.S. of Belgium, from 1983 to 2002. PART II
Bekaert A.S. of Belgium, from 1983 to 2002. PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

5 edited+1 added−0 removed1 unchanged
Biggest changeAdditional information regarding our share repurchase authorization is discussed in Note 18 to our consolidated financial statements and incorporated herein by reference. 13 Stock Performance Graph The graph below compares the cumulative total shareholder return on our common stock with the cumulative total return of the Russell 2000 Index and the S&P 500 Building Products Index for the five years ended September 30, 2023.
Biggest changeStock Performance Graph The graph below compares the cumulative total shareholder return on our common stock with the cumulative total return of the Russell 2000 Index and the S&P 500 Building Products Index for the five years ended September 28, 2024.
The graph and table assume that $100 was invested on September 29, 2018 in our common stock and in each of the two indices and the reinvestment of all dividends. Cumulative total shareholder returns for our common stock, the Russell 2000 Index and the S&P 500 Building Products Index are based on our fiscal year.
The graph and table assume that $100 was invested on September 28, 2019 in our common stock and in each of the two indices and the reinvestment of all dividends. Cumulative total shareholder returns for our common stock, the Russell 2000 Index and the S&P 500 Building Products Index are based on our fiscal year.
Item 5. Market for Registrant ’ s Common Equity, Related Shareholder Matters and Issuer Purchases of Equity Securities. Our common stock is listed on the New York Stock Exchange (“NYSE”) under the symbol “IIIN” and has traded on the NYSE since March 17, 2021. As of October 24, 2023, there were 449 shareholders of record.
Item 5. Market for Registrant ’ s Common Equity, Related Shareholder Matters and Issuer Purchases of Equity Securities. Our common stock is listed on the New York Stock Exchange (“NYSE”) under the symbol “IIIN” and has traded on the NYSE since March 17, 2021. As of October 22, 2024, there were 427 shareholders of record.
On November 15, 2022, our Board of Directors approved a one-time special cash dividend of $2.00 per share that was paid on December 23, 2022. Issuer Purchases of Equity Securities There were not any repurchases of common stock during the quarter ended September 30, 2023.
On November 14, 2023, our Board of Directors approved a special cash dividend of $2.50 per share that was paid on December 22, 2023 to shareholders of record as of December 8, 2023. 13 Issuer Purchases of Equity Securities There were no repurchases of common stock during the quarter ended September 28, 2024.
Fiscal Year Ended September 29, 2018 September 28, 2019 October 3, 2020 October 2, 2021 October 1, 2022 September 30, 2023 Insteel Industries, Inc. $ 100.00 $ 58.05 $ 53.49 $ 117.67 $ 84.30 $ 110.87 Russell 2000 100.00 91.11 91.47 135.08 103.34 112.56 S&P 500 Building Products 100.00 117.91 136.56 197.83 149.31 199.59 Item 6. Reserved.
Fiscal Year Ended September 28, 2019 October 3, 2020 October 2, 2021 October 1, 2022 September 30, 2023 September 28, 2024 Insteel Industries Inc. $ 100.00 $ 92.15 $ 202.72 $ 145.23 $ 191.01 $ 195.65 Russell 2000 100.00 100.39 148.25 113.42 123.55 156.61 S&P 500 Building Products 100.00 115.82 167.78 126.64 169.28 268.56 Item 6. Reserved. 14
Added
Additional information regarding our share repurchase authorization is discussed in Note 18 to our consolidated financial statements and incorporated herein by reference.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

31 edited+8 added−8 removed17 unchanged
Biggest changeNevertheless, we remain optimistic about demand in our private and public nonresidential construction markets as customer sentiment is mostly positive. Furthermore, the outlook for infrastructure construction remains favorable as federal spending associated with the Infrastructure Investment and Jobs Act is expected to accelerate as we progress through fiscal 2024 and help drive demand.
Biggest changeFurthermore, the outlook for public nonresidential construction is favorable, as federal spending associated with the Infrastructure Investment and Jobs Act is expected to drive new project activity in fiscal 2025 and beyond. We also expect our financial results for the coming year to benefit from our recent acquisition of EWP through the anticipated operational synergies upon completion of integration activities.
Contractual Obligations In addition to our discussion and analysis surrounding our liquidity and capital resources, our contractual obligations and commitments as of September 30, 2023, include: ● Raw Material Purchase Commitments – See Note 12, “Commitments and Contingencies,” within our consolidated financial statements for further details concerning our non-cancelable raw material purchase commitments. ● Supplemental Employee Retirement Plan Obligations – See Note 11, “Employee Benefit Plans,” within our consolidated financial statements for further detail of our obligations and the timing of expected future payments under our supplemental employee retirement plan. ● Operating Leases – See Note 13, “Leases,” within our consolidated financial statements for further detail of our obligations and the timing of expected future payments, including a five-year maturity schedule. ● Debt Obligations and Interest Payments - See Note 8, “Long-Term Debt,” within our consolidated financial statements for further detail of our debt and the timing of expected future principal and interest payments.
Contractual Obligations In addition to our discussion and analysis surrounding our liquidity and capital resources, our contractual obligations and commitments as of September 28, 2024, include: ● Raw Material Purchase Commitments – See Note 12, “Commitments and Contingencies,” within our consolidated financial statements for further details concerning our non-cancelable raw material purchase commitments. ● Supplemental Employee Retirement Plan Obligations – See Note 11, “Employee Benefit Plans,” within our consolidated financial statements for further detail of our obligations and the timing of expected future payments under our supplemental employee retirement plan. ● Operating Leases – See Note 13, “Leases,” within our consolidated financial statements for further detail of our obligations and the timing of expected future payments, including a five-year maturity schedule. ● Debt Obligations and Interest Payments - See Note 8, “Long-Term Debt,” within our consolidated financial statements for further detail of our debt and the timing of expected future principal and interest payments.
As of September 30, 2023, no borrowings were outstanding on the Credit Facility, $98.5 million of borrowing capacity was available and outstanding letters of credit totaled $1.5 million (see Note 8 to the consolidated financial statements). As of October 1, 2022, there were no borrowings outstanding on the Credit Facility.
As of September 28, 2024, no borrowings were outstanding on the Credit Facility, $98.5 million of borrowing capacity was available and outstanding letters of credit totaled $1.5 million (see Note 8 to the consolidated financial statements). As of September 30, 2023, there were no borrowings outstanding on the Credit Facility.
The table below presents a summary of our results of operations for fiscal 2023 and fiscal 2022.
The table below presents a summary of our results of operations for fiscal 2024 and fiscal 2023.
Discussions of our financial condition and results of operations for the year ended October 1, 2022 compared to October 2, 2021 that have been omitted under this item can be found in Part II, Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in our Annual Report on Form 10-K for the fiscal year ended October 1, 2022 , which was filed with the SEC on October 27, 2022.
Discussions of our financial condition and results of operations for the year ended September 30, 2023 compared to October 1, 2022 that have been omitted under this item can be found in Part II, Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in our Annual Report on Form 10-K for the fiscal year ended September 30, 2023, which was filed with the SEC on October 26, 2023.
Our discussion and analysis of our financial condition and results of operations are based on these consolidated financial statements. The preparation of our consolidated financial statements requires the application of these accounting principles in addition to certain estimates and judgments based on currently available information, actuarial estimates, historical results and other assumptions believed to be reasonable.
The preparation of our consolidated financial statements requires the application of these accounting principles in addition to certain estimates and judgments based on currently available information, actuarial estimates, historical results and other assumptions believed to be reasonable.
Other (Income) Expense, net Other income of $3.4 million for 2023 was primarily related to a net gain from the sale of property, plant and equipment ($3.3 million). Interest Income Interest income increased to $3.7 million due to an increase in cash and higher average interest rates.
Other income in the prior year was primarily related to a net gain from the sale of property, plant and equipment ($3.3 million). Interest Income Interest income increased $1.7 million due to higher average cash balances and interest rates.
As of September 30, 2023, there were no borrowings outstanding. ● Capital Expenditures – As of September 30, 2023, we had contractual commitments for capital expenditures of $15.3 million. 18 Impact of Inflation We are subject to inflationary risks arising from fluctuations in the market prices for our primary raw material, hot-rolled carbon steel wire rod, and, to a much lesser extent, labor, freight, energy and other consumables that are used in our manufacturing processes.
Impact of Inflation We are subject to inflationary risks arising from fluctuations in the market prices for our primary raw material, hot-rolled carbon steel wire rod, and, to a much lesser extent, labor, freight, energy and other consumables that are used in our manufacturing processes.
Selling, General and Administrative Expense Selling, general and administrative expense (“SG&A expense”) decreased 14.9% to $30.7 million, or 4.7% of net sales, in 2023 from $36.0 million, or 4.4% of net sales, in 2022 primarily due to lower compensation ($2.9 million), the relative year-over-year changes in the cash surrender value of life insurance policies ($2.4 million) and depreciation expense ($577,000) partially offset by higher employee benefit expense ($489,000).
Selling, General and Administrative Expense Selling, general and administrative expense (“SG&A expense”) decreased 3.6% to $29.6 million, or 5.6% of net sales, in 2024 from $30.7 million, or 4.7% of net sales, in 2023 primarily due to lower compensation expense ($1.4 million) and the relative year-over-year changes in the cash surrender value of life insurance policies ($1.0 million) partially offset by higher depreciation ($569,000) and bad debt ($350,000) expense.
Our business strategy is focused on: (1) achieving leadership positions in our markets; (2) operating as the lowest cost producer in our industry; and (3) pursuing growth opportunities within our core businesses that further our penetration of the markets we currently serve or expand our footprint. 14 Critical Accounting Estimates Our consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States.
Our business strategy is focused on: (1) achieving leadership positions in our markets; (2) operating as the lowest cost producer in our industry; and (3) pursuing growth opportunities within our core businesses that further our penetration of the markets we currently serve or expand our footprint.
In 2023, $41.3 million of cash was used for dividend payments (including a special cash dividend of $38.9 million, or $2.00 per share, and regular cash dividends totaling $2.4 million) and $2.3 million for the repurchase of common stock.
In 2023, $41.3 million of cash was used for dividend payments (including a special cash dividend of $38.9 million, or $2.00 per share, and regular cash dividends totaling $2.4 million) and $2.3 million for the repurchase of common stock. Cash Management Our cash is principally concentrated at one major financial institution, which at times exceeds federally insured limits.
The cash surrender value of life insurance policies increased $531,000 in the current year compared with a decrease of $1.9 million in the prior year due to the corresponding changes in the value of the underlying investments.
The decrease in compensation expense was largely driven by lower incentive plan expense due to a decline in financial results in the current year. The cash surrender value of life insurance policies increased $1.5 million in the current year compared with $531,000 in the prior year due to the corresponding changes in the value of the underlying investments.
The decrease in spreads was driven by lower average selling prices ($129.7 million) and an increase in freight expense ($1.4 million) partially offset by lower raw material costs ($25.4 million).
The decrease in spreads was driven by lower average selling prices ($119.7 million) partially offset by lower raw material costs ($102.8 million) and a decrease in freight expense ($291,000).
During 2023, we experienced a decline in wire rod prices primarily due to reductions in the cost of scrap for wire producers and a concurrent weakening in demand. Selling prices for our products fell in response to the softening demand and competitive pricing pressure.
Selling prices for our products declined during 2024 in response to weak demand, competitive pricing pressures and the impact of low-priced PC strand imports, which negatively impacted our financial results. During 2023, we experienced a decline in wire rod prices primarily due to reductions in the cost of scrap for wire producers and a concurrent weakening in demand.
Credit Facility We have a Credit Facility that is used to supplement our operating cash flow and fund our working capital, capital expenditure, general corporate and growth requirements.
We invest excess cash primarily in money market funds, which are highly liquid securities that bear minimal risk. 18 Credit Facility We have a Credit Facility that is used to supplement our operating cash flow and fund our working capital, capital expenditure, general corporate and growth requirements.
Statements of Operations – Selected Data (Dollars in thousands) Year Ended September 30, October 1, 2023 Change 2022 Net sales $ 649,188 (21.5% ) $ 826,832 Gross profit 65,398 (66.9% ) 197,310 Percentage of net sales 10.1 % 23.9 % Selling, general and administrative expense $ 30,685 (14.9% ) $ 36,048 Percentage of net sales 4.7 % 4.4 % Other (income) expense, net $ (3,423 ) N/M $ 88 Interest income $ (3,706 ) N/M $ (326 ) Effective income tax rate 22.4 % 22.7 % Net earnings $ 32,415 (74.1% ) $ 125,011 "N/M" = not meaningful 2023 Compared with 2022 Net Sales Net sales decreased 21.5% to $649.2 million in 2023 from $826.8 million in 2022, reflecting a 17.1% decrease in selling prices along with a 5.3% decrease in shipments.
Statements of Operations – Selected Data (Dollars in thousands) Year Ended September 28, September 30, 2024 Change 2023 Net sales $ 529,198 (18.5 %) $ 649,188 Gross profit 49,632 (24.1 %) 65,398 Percentage of net sales 9.4 % 10.1 % Selling, general and administrative expense $ 29,591 (3.6 %) $ 30,685 Percentage of net sales 5.6 % 4.7 % Other expense (income), net $ 37 N/M $ (3,423 ) Interest income $ (5,433 ) 46.6 % $ (3,706 ) Effective income tax rate 23.7 % 22.4 % Net earnings $ 19,305 (40.4 %) $ 32,415 "N/M" = not meaningful 2024 Compared with 2023 Net Sales Net sales decreased 18.5% to $529.2 million in 2024 from $649.2 million in 2023 driven entirely by a decrease in average selling prices as shipments remained relatively flat.
We have reviewed our accounting estimates, and none were deemed to be considered critical for the accounting periods presented. Recent Accounting Pronouncements . The nature and impact of recent accounting pronouncements is discussed in Note 3 to our consolidated financial statements and incorporated herein by reference.
We have reviewed our accounting estimates, and none were deemed to be considered critical for the accounting periods presented. Recent Accounting Pronouncements .
While a downturn in the level of construction activity affects sales to our customers, it generally reduces our working capital requirements. Investing Activities Investing activities used $20.9 million of cash in 2023 primarily due to capital expenditures ($30.7 million) partially offset by the receipt of proceeds from the sale of property, plant and equipment ($9.9 million).
Investing activities used $20.9 million of cash in 2023 primarily due to capital expenditures ($30.7 million) partially offset by the receipt of proceeds from the sale of property, plant and equipment ($9.9 million). Capital expenditures for both years focused on cost and productivity improvement initiatives in addition to recurring maintenance requirements.
The timing and magnitude of any future increases in raw material costs and the impact on selling prices for our products is uncertain at this time. Outlook Looking ahead to fiscal 2024, we are aware of the risks associated with higher interest rates and the implications for the broader U.S. economy and, ultimately, our end markets.
The timing and magnitude of any future increases in raw material costs and the impact on selling prices for our products is uncertain at this time. 19 Outlook Looking ahead to fiscal 2025, we expect our financial results will be favorably impacted by the improving business conditions in our construction end markets.
In 2022, $41.2 million of cash was used for dividend payments (including a special cash dividend of $38.8 million, or $2.00 per share, and regular cash dividends totaling $2.4 million) and $1.2 million for the repurchase of common stock, which was partially offset by $1.7 million of proceeds from the exercise of stock options.
Financing Activities Financing activities used $52.7 million of cash in 2024 and $44.0 million of cash in 2023. In 2024, $50.9 million of cash was used for dividend payments (including a special cash dividend of $48.6 million, or $2.50 per share, and regular cash dividends totaling $2.3 million) and $1.8 million for the repurchase of common stock.
Our investing activities are largely discretionary, providing us with the ability to significantly curtail outlays should future business conditions warrant that such actions be taken. Financing Activities Financing activities used $44.0 million of cash in 2023 and $41.2 million of cash in 2022.
Capital expenditures are expected to total up to approximately $22.0 million in 2025, including expenditures to support costs and productivity initiatives, as well as recurring maintenance requirements. Our investing activities are largely discretionary, providing us with the ability to significantly curtail outlays should future business conditions warrant that such actions be taken.
Selected Liquidity and Capital Resources Data (Dollars in thousands) Year Ended September 30, October 1, 2023 2022 Net cash provided by operating activities $ 142,200 $ 5,670 Net cash used for investing activities (20,896 ) (6,039 ) Net cash used for financing activities (43,950 ) (41,199 ) Cash and cash equivalents 125,670 48,316 Net working capital 252,698 272,736 Total debt - - Percentage of total capital - - Shareholders' equity $ 381,505 $ 389,744 Percentage of total capital 100 % 100 % Total capital (total debt + shareholders' equity) $ 381,505 $ 389,744 Operating Activities Operating activities provided $142.2 million of cash in 2023 primarily from net earnings adjusted for non-cash items together with a net decrease in working capital.
However, we believe that our strong balance sheet, flexible capital structure and borrowing capacity available to us under our Credit Facility position us to meet our anticipated liquidity requirements for the foreseeable future. 17 Selected Liquidity and Capital Resources Data (Dollars in thousands) Year Ended September 28, September 30, 2024 2023 Net cash provided by operating activities $ 58,207 $ 142,200 Net cash used for investing activities (19,637 ) (20,896 ) Net cash used for financing activities (52,702 ) (43,950 ) Cash and cash equivalents 111,538 125,670 Net working capital 220,260 252,698 Total debt - - Percentage of total capital - - Shareholders' equity $ 350,855 $ 381,505 Percentage of total capital 100 % 100 % Total capital (total debt + shareholders' equity) $ 350,855 $ 381,505 Operating Activities Operating activities provided $58.2 million of cash in 2024 primarily from net earnings adjusted for non-cash items together with a net decrease in working capital.
Net Earnings Net earnings decreased to $32.4 million ($1.66 per share) in 2023 from $125.0 million ($6.37 per diluted share) in 2022, primarily due to the decrease in gross profit partially offset by lower SG&A expense and increased other income and interest income. 16 Liquidity and Capital Resources Overview Our sources of liquidity include cash and cash equivalents, cash generated by operating activities and borrowing availability provided under our $100.0 million revolving credit facility (the “Credit Facility”).
Net Earnings Net earnings decreased to $19.3 million ($0.99 per share) in 2024 from $32.4 million ($1.66 per share) in 2023, primarily due to the decrease in gross profit and other income partially offset by lower SG&A expense and increased interest income.
Results of Operations The following discussion and analysis of our financial condition and results of operations is for the year ended September 30, 2023 compared with the year ended October 1, 2022.
The nature and impact of recent accounting pronouncements is discussed in Note 3 to our consolidated financial statements and incorporated herein by reference. 15 Results of Operations The following discussion and analysis of our financial condition and results of operations is for the year ended September 28, 2024 compared with the year ended September 30, 2023.
Investing activities used $6.0 million of cash in 2022 primarily due to capital expenditures ($15.9 million) partially offset by the receipt of proceeds from the sale of assets held for sale ($6.9 million), life insurance claims ($1.5 million) and a decrease in cash surrender value of life insurance policies ($1.4 million).
Investing Activities Investing activities used $19.6 million of cash in 2024 primarily due to capital expenditures ($19.1 million) and an increase in the cash surrender value of life insurance policies ($517,000).
The decrease in accounts payable and accrued expenses was primarily related to lower raw material purchases near the end of the current year. 17 We may elect to adjust our operating activities as there are changes in the conditions in our construction end-markets, which could materially impact our cash requirements.
We may elect to adjust our operating activities as there are changes in the conditions in our construction end-markets, which could materially impact our cash requirements. While a downturn in the level of construction activity affects sales to our customers, it generally reduces our working capital requirements.
Our principal capital requirements include funding working capital, capital expenditures, dividends and any share repurchases. As of September 30, 2023, our cash and cash equivalents totaled $125.7 million compared with $48.3 million as of October 1, 2022.
As of September 28, 2024, our cash and cash equivalents totaled $111.5 million compared with $125.7 million as of September 30, 2023.
Consequently, our financial results were adversely affected as we consumed higher cost inventory that was purchased in prior periods. During 2022, we were successful in implementing price increases sufficient to recover the escalation in our raw material costs that occurred over the course of the year.
Selling prices for our products fell in response to the softening demand and competitive pricing pressure. Consequently, our financial results were adversely affected as we consumed higher cost inventory that was purchased in prior periods.
Operating activities provided $5.7 million of cash in 2022 primarily from net earnings adjusted for non-cash items partially offset by an increase in working capital. Working capital used $134.3 million of cash due to a $118.6 million increase in inventories, a $13.7 million increase in accounts receivable and a $2.0 million decrease in accounts payable and accrued expenses.
Operating activities provided $142.2 million of cash in 2023 primarily from net earnings adjusted for non-cash items together with a net decrease in working capital.
The year-over-year decrease was primarily due to lower spreads between average selling prices and raw material costs ($105.7 million) along with a decrease in shipments ($11.8 million) and higher manufacturing costs ($14.4 million).
Gross Profit Gross profit decreased 24.1% to $49.6 million, or 9.4% of net sales, in 2024 from $65.4 million, or 10.1% of net sales, in 2023. The year-over-year decrease was primarily due to lower spreads between average selling prices and raw material costs ($16.6 million) partially offset by lower manufacturing costs ($782,000).
The decrease in average selling prices was driven by competitive pricing pressures resulting from weakening demand for our products and declining raw material costs.
The decrease in average selling prices was driven by persistent competitive pricing pressures in our welded wire reinforcing markets, the impact of low-priced PC strand and a decline in raw material costs. Shipments for the current year were adversely impacted by weaker market conditions, increasing volumes of PC strand imports and adverse weather conditions.
Removed
The decrease in shipments was due to reduced demand resulting from inventory management measures pursued by our customers during the fiscal year and a decrease in new project activity. 15 Gross Profit Gross profit decreased 66.9% to $65.4 million, or 10.1% of net sales, in 2023 from $197.3 million, or 23.9% of net sales, in 2022.
Added
Critical Accounting Estimates Our consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States. Our discussion and analysis of our financial condition and results of operations are based on these consolidated financial statements.
Removed
The decrease in compensation expense was largely driven by lower incentive plan expense due to a decline in financial results in the current year.
Added
The increase in depreciation expense was attributed to higher capital expenditures during the current year. The higher bad debt expense resulted from adjustments to customer credit reserves. 16 Other Expense (Income), net Other expense was $37,000 for 2024 compared with other income of $3.4 million in 2023.
Removed
The increase in employee benefits expense was due to a net gain on the settlement of life insurance policies ($364,000) in the prior year along with higher employee health insurance costs in the current year period.
Added
Income Taxes Our effective income tax rate for 2024 increased to 23.7% from 22.4% in 2023, primarily due to an adjustment to state income tax expense and an increase in the valuation allowance for a deferred tax asset that is not expected to be utilized.
Removed
Income Taxes Our effective income tax rate for 2023 decreased to 22.4% from 22.7% in 2022 due to changes in book versus tax differences.
Added
Liquidity and Capital Resources Overview Our sources of liquidity include cash and cash equivalents, cash generated by operating activities and borrowing availability provided under our $100.0 million revolving credit facility (the “Credit Facility”). Our principal capital requirements include funding working capital, capital expenditures, dividends and any share repurchases.
Removed
However, we believe that our strong balance sheet, flexible capital structure and borrowing capacity available to us under our Credit Facility position us to meet our anticipated liquidity requirements for the foreseeable future.
Added
Working capital provided $18.9 million of cash due to a $14.5 million decrease in inventories and a $5.1 million reduction in accounts receivable partially offset by a $639,000 decrease in accounts payable and accrued expenses. The decrease in inventories was primarily due to lower average unit costs. The decrease in accounts receivable was largely driven by lower average selling prices.
Removed
The increase in inventories was the result of higher raw material purchases during 2022 together with higher average unit costs. The increase in accounts receivable was due to higher average selling prices.
Added
As of September 28, 2024, there were no borrowings outstanding. ● Capital Expenditures – As of September 28, 2024, we had contractual commitments for capital expenditures of $2.1 million.
Removed
Capital expenditures for both years focused on cost and productivity improvement initiatives in addition to recurring maintenance requirements. Capital expenditures are expected to total up to approximately $30.0 million in 2024, including expenditures to support costs and productivity initiatives, modernize our facilities and information systems and recurring maintenance requirements.
Added
After initially rising in the first half of 2024, wire rod prices declined during the latter part of the year due to reductions in the cost of steel scrap for wire rod producers and weakening demand.
Removed
Cash Management Our cash is principally concentrated at one financial institution, which at times exceeds federally insured limits. We invest excess cash primarily in money market funds, which are highly liquid securities that bear minimal risk.
Added
Although recent key indicators and industry forecasts for nonresidential construction spending have been somewhat mixed, customer sentiment is generally positive, and easing inflation concerns and the downward trajectory of interest rates will likely stimulate demand going forward.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeForeign Exchange Exposure We have not typically hedged foreign currency exposures related to transactions denominated in currencies other than U.S. dollars, as such transactions have not been material historically. We will occasionally hedge firm commitments for certain equipment purchases that are denominated in foreign currencies. The decision to hedge any such transactions is made by us on a case-by-case basis.
Biggest changeWe will occasionally hedge firm commitments for certain equipment purchases that are denominated in foreign currencies. The decision to hedge any such transactions is made by us on a case-by-case basis. There were no forward contracts outstanding as of September 28, 2024.
Based on our 2023 shipments and average wire rod cost reflected in cost of sales, a 10% increase in the price of wire rod would have resulted in a $42.8 million decrease in our annual pre-tax earnings (assuming there was not a corresponding change in our selling prices).
Based on our 2024 shipments and average wire rod cost reflected in cost of sales, a 10% increase in the price of wire rod would have resulted in a $32.7 million decrease in our annual pre-tax earnings (assuming there was not a corresponding change in our selling prices).
There were no forward contracts outstanding as of September 30, 2023. During 2023, a 10% increase or decrease in the value of the U.S. dollar relative to foreign currencies to which we are typically exposed would not have had a material impact on our financial position, results of operations or cash flows.
During 2024, a 10% increase or decrease in the value of the U.S. dollar relative to foreign currencies to which we are typically exposed would not have had a material impact on our financial position, results of operations or cash flows.
We monitor our underlying market risk exposures on an ongoing basis and believe we can modify or adapt our hedging strategies as necessary. 19 Commodity Prices We are subject to significant fluctuations in the cost and availability of our primary raw material, hot-rolled carbon steel wire rod, which we purchase from both domestic and foreign suppliers.
Commodity Prices We are subject to significant fluctuations in the cost and availability of our primary raw material, hot-rolled carbon steel wire rod, which we purchase from both domestic and foreign suppliers.
Interest Rates Although we did not have any balances outstanding on our Credit Facility as of September 30, 2023, future borrowings under the facility are subject to a variable rate of interest and are sensitive to changes in interest rates.
Interest Rates Although we did not have any balances outstanding on our Credit Facility as of September 28, 2024, future borrowings under the facility are subject to a variable rate of interest and are sensitive to changes in interest rates. 20 Foreign Exchange Exposure We have not typically hedged foreign currency exposures related to transactions denominated in currencies other than U.S. dollars, as such transactions have not been material historically.
We do not use financial instruments for trading purposes and are not a party to any leveraged derivatives.
We do not use financial instruments for trading purposes and are not a party to any leveraged derivatives. We monitor our underlying market risk exposures on an ongoing basis and believe we can modify or adapt our hedging strategies as necessary.

Other IIIN 10-K year-over-year comparisons