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.
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1/2/2026 Letter Continued (Full PDF)
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1/3/2024 IIIN Stockholder Letter
• 1/2/2025 IIIN Stockholder Letter
• More "Non-Precious Metals & Non-Metallic Mining" Category Stockholder Letters
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IIIN Benford's Law Stock Score = 66
1/2/2026 Letter Continued (Full PDF)
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1/3/2024 IIIN Stockholder Letter•
1/2/2025 IIIN Stockholder Letter•
More "Non-Precious Metals & Non-Metallic Mining" Category Stockholder Letters•
IIIN Benford's Law Stock Score = 66IIIN Shareholder/Stockholder Letter Transcript:
2O25 ANNUAL REPORT 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. Insteel Industries is the nation s largest manufacturer of steel wire reinforcing products for concrete construction applications. Manufacturing Locations Welded Wire Reinforcement Prestressed Concrete Strand BUSINESS OVERVIEW 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 REVENUES 34% 66% 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. PLANT LOCATIONS Dayton, TX | Hazleton, PA | Jacksonville, FL | Kingman, AZ | Mount Airy, NC | St. Joseph, MO | Upper Sandusky, OH CUSTOMER SEGMENTS Precast and Prestressed Producers | Rebar Fabricators | Distributors | Contractors Construction CONCRETE PIPE REINFORCEMENT 66% 34% 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. PLANT LOCATIONS Dayton, TX | Jacksonville, FL | Kingman, AZ | Mount Airy, NC | St. Joseph, MO | Upper Sandusky, OH CUSTOMER SEGMENTS Concrete Pipe and Precast Producers Prestressed Concrete Strand Welded END USES Wire Nonresidential Reinforcement END USES Nonresidential Construction | Residential Construction Welded Wire Reinforcement Prestressed Concrete Strand STANDARD WELDED WIRE REINFORCEMENT 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 Dayton, TX | Hazleton, PA | Hickman, KY | Jacksonville, FL | Mount Airy, NC CUSTOMER SEGMENTS Rebar Fabricators | Distributors MARKET END USES Nonresidential Construction | Residential Construction 85% Prestressed Concrete Strand 15% Nonresidential 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 CUSTOMER SEGMENTS END USES Gallatin, TN | Houston, TX | Sanderson, FL Precast Prestress Producers | Posttensioning Suppliers Nonresidential Construction | Residential Construction Residential 85% 15% 2025 ANNUAL REPORT Nonresidential Residential INSTEEL INDUSTRIES III LETTER TO SHAREHOLDERS MARKET CONDITIONS AND FINANCIAL PERFORMANCE Market conditions in 2025 improved materially from the prior year as we experienced recovering demand in our markets for both PC strand and welded wire reinforcing products. We also derived significant benefits from the two acquisitions we made in the first fiscal quarter of 2025. Net sales rose to $648 million and net earnings increased to $41 million. Return on total capital was 11.4% for the fiscal year. Capital expenditures for 2025 fell to $8.2 million as our management team focused on integrating the companies acquired in the first quarter. The integrations were rapid and successful, enabling the Company to realize quickly the substantial synergies projected from the business combinations. My sincere thanks to all our people, including those at the acquired companies, for rising to meet the integration challenges. REGULATORY ENVIRONMENT AND TARIFF DEVELOPMENTS With prospects in 2026 for improving demand and with the contributions we expect from recent capital investments and acquisitions, we look forward to improving performance. During much of fiscal 2025 we focused on how Insteel would be affected by various tariffs implemented by the Administration. I am pleased to report that, after years of work, the Administration adopted the derivative product philosophy and tariffed downstream products produced from steel products subject to the Section 232 tariff at the same rate as the upstream product. The impact on Insteel was to eliminate the nonsensical situation where our raw material (hot-rolled steel wire rod) was subject to the Section 232 tariff, but our finished product, PC strand, was tariff free, thereby encouraging foreign producers to avoid the tariff by shipping PC strand into the US rather than wire rod. While this resolution was obvious, it took seven years and the work of our entire supply chain to effect the derivative product change. We appreciate the leadership of our domestic wire rod suppliers in this effort. While the tariff landscape is always subject to change, today our exposure is to the Section 232 tariff of 50% on imported wire rod, and various Section 232 and reciprocal tariffs that apply to other imported products, which for Insteel is primarily equipment spare parts. Finally, imports of PC strand are also subject to the Section 232 tariff. STRATEGIC MARKET POSITIONING Unforeseeable consequences of government actions related to imports of steel products is one reason our Company elected to avoid markets where imports constitute a primary source of competition. History tells us that government action is often unpredictable, and frequently unfavorably affects purchasers of hot-rolled steel. Additionally, it is abundantly clear that many offshore competitors are perfectly satisfied earning less than their cost of capital on their US activities. For these reasons, less than 15% of Insteel s product portfolio is subject to direct competition from imported products. We have chosen to compete in markets where minimal lead times and the specialized nature of products do not favor offshore producers. Additionally, it is our intention to be the most effective manufacturer in the markets where we have chosen to compete. We have much to do to achieve this status, but these fundamentals drive our growth and capital investment strategies. EXPANSION INTO CAST-IN-PLACE MARKET During fiscal 2018, Insteel acquired a small, regional engineering firm that was engaged in supplying engineered structural mesh ( ESM ) to the cast-in-place concrete construction industry. While Insteel s products had become ubiquitous among producers of precast concrete products, hot-rolled rebar was the predominant reinforcement used in cast-in-place applications. In fact, many firms in the castin-place market were unaware of ESM or its value proposition. Precasters typically utilize the Company s reinforcing products in a factory setting, while cast-in-place applications generally involve shipping products to a job site where they are installed. The customer groups are distinct, with no overlap. Leveraging the infrastructure acquired in 2018, we have taken our cast-in-place effort nationwide. During fiscal IV INSTEEL INDUSTRIES 2025 ANNUAL REPORT 2024 and 2025, we stabilized our management group, built solid infrastructure internally and substantially increased shipments to cast-in-place projects. We expect further growth in this attractive market segment. CAPITAL ALLOCATION AND SHAREHOLDER RETURNS Our strong financial condition allowed the Board of Directors to authorize payment of a special dividend in the amount of $1.00 per share with a record date of November 28, 2025 and payment date of December 12, 2025. While payment of any special dividend is contingent upon projected capital requirements and operating results, Insteel has paid a special dividend nine times since 2016, cumulatively totaling $13.25 per share. Following payment of the dividend we expect to remain debt free, to fully fund our capital investment program and to retain sufficient financial flexibility to execute on other opportunities that may arise. OUTLOOK FOR 2026 We estimate that 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 as rising interest rates affected housing affordability and uncertainty contributed to risk aversion. We believe this cycle has bottomed out and that the housing market will slowly recover. 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 2026. We expect the well-known downturn in certain sectors of the private nonresidential market to correct in 2026, and meanwhile data center work provides a welcomed bridge to Insteel. Most construction activity projections for 2026 indicate a softer environment during the first months of the calendar year with a meaningful recovery commencing in the second calendar quarter. We are confident we are well positioned to meet the challenges of 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. The unknown consequences of the Administration s changes to the Section 232 tariff could cause raw material markets to remain tight during 2026. Should this occur, we believe we are well positioned to adapt. With prospects in 2026 for improving demand and with the contributions we expect from recent capital investments and acquisitions, we look forward to improving 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 2025 ANNUAL REPORT INSTEEL INDUSTRIES V