Good day, everyone, and welcome to the Insteel Industries first quarter 2008 conference call. At this time I would like to turn the call over to Mr. H. O. Woltz III, President and CEO. Please go ahead, Sir.

Thank you, Craig. Good morning and thank you for your interest in Insteel and welcome to our first quarter 2008 conference call, which will be conducted by Mike Gazmarian, our Vice President and Chief Financial Officer, and me. Before we begin let me remind you that some of the comments that are made in our presentation are considered to be forward-looking statements. Forward-looking statements are subject to various risks and uncertainties that could cause actual results to differ materially from those projected. These risk factors are described in our periodic reports with the SEC. During our first quarter, which is seasonally our slowest period of the year, we continued to experience weak conditions across most of our markets that adversely affected shipments and resulted in inefficiencies related to curtailed production schedules at our plants. Further, during the second half of the quarter, we began to experience an escalation in raw material costs that is proving to be without historical precedence in its magnitude. In view of the considerable challenges posed by these external factors I’m pleased with the company’s strong financial performance and particularly encouraged by the strength of our balance sheet at the end of the quarter. I’m going to turn the presentation over to Mike to comment on our financial results for the quarter and then I’ll pick it back up to comment on our business outlook.

Thank you, H. As we reported in this morning’s press release, despite the continuation of soft demand in certain of our markets together with increasing raw material costs, Insteel posted solid results for the first quarter ended December 29th. Considering the challenging business conditions that we experienced, we are pleased with the company’s financial performance during what has historically been our weakest shipment period of the year. Net earnings for the quarter were $4.2 million or $0.23 per diluted share compared with $5.8 million or $0.32 per diluted in the prior year. We continued to experience wide variations in market conditions across product lines during the quarter that were consistent with the most recent monthly construction spending data reported by the US Census Bureau. In the most recent report, which was for the month of November, the seasonally adjusted annual rate of total construction spending rose 0.1% from the revised October estimate, but was down 0.1% from a year ago due to the weakness in the housing market. Private non-residential construction for November increased 1.7% from the previous month and 19.5% from last year, and public construction is up 2.5% from October and 16.3% from a year ago. Conversely, private residential construction was down 2.5% from October and 17.8% from last year. It has now fallen for 21 straight months, dropping 30% from the February 2006 peak, with construction spending for new single family homes falling 44% over the same period. The 11-month year-to-date spending totals reflect the same trends with private non-residential construction of 18.1% from last year, public construction up 12.7%, and private residential construction down 17.8%. Insteel’s net sales for the quarter were down 5.4% from a year ago due to a 6.1% decrease in shipment. The reduction in shipments was primarily driven by the same factors…

Thank you, Mike. Market conditions have become increasingly challenging in recent months as there are growing indications that the ongoing weakness in the housing market has begun to affect commercial construction. In addition, the continued growth in other non-residential construction categories could be jeopardized if the economy enters recession or protracted period of no growth that affects demand for new projects or the ability of state and federal government agencies to adequately fund transportation and infrastructure initiatives. In addition to these demand related risks, recent developments in the market for our primary raw material, hot-rolled steel wire rod, contribute to our uncertain outlook as it appears that prices are poised to rise approximately 30% on a cumulative basis between October and March – an increase of unprecedented magnitude that’s driven by the weak dollar and strong world-wide demand for steel products. While the potential for short supplies should support our efforts to pass through these additional costs in our markets the resulting inflationary impact could at some point begin to impact a level of construction activity, particularly considering the escalation and cost of other building materials. In response to these challenges we’ll continue to carefully control our operating expenses, closely aligned production schedules at our facilities with demand to reflect changes in market conditions, and deferred discretionary spending to the full extent possible. Before opening it up for questions let me comment on import competition in the PC strand market. Through 11 months of calendar 2007 strand imports have declined 19% from the prior year with 89% of the volume entering the US from China. While the reduction is somewhat encouraging, we believe market demand has declined by a similar amount. The average unit value of imports has risen $80 per tonne from the 2007 low point, but the Chinese…

Yes, thank you. (Operator Instructions). And we will take our first question from Chris Haverland of Davenport and Company. Please go ahead. Chris Haverland – Davenport and Company: Good morning.

Good morning, Chris.

Good morning. Chris Haverland – Davenport and Company: I just had a quick question on the conversion cost. They all of a sudden, they increased year over year. There’s been I guess four facility expansions and upgrades that have come on line since then. When do you all expect to see year-over-year improvement in your conversion costs as a result of these expansions?

There are actually a few different answers to the question, but let me first say that the overall reason for the unfavourable comparison relates to the down time that was scheduled in the facilities which is related to just weak order patterns and our desire to control inventories. Some of the investments that we’ve made, for instance in engineered structural mesh, have in fact reduced our product line conversion costs on a comparable basis, although the depreciation load that we’re carrying has contributed to an overall higher conversion cost on an average basis at the facility. But if you were to look at product for product engineered structural mesh that was produced prior to our investment and after we clearly significantly reduced the labour content of that product line. Moving to PC strand, the pay back that we will realize from our PC strand investments in the near term is really solely related to the lower labour content component of conversion costs as we will not see overall benefits on the costs side until we’re able to realize fuller utilization of these facilities. Chris Haverland – Davenport and Company: Okay. Thank you.

One other comment to add on the Q1 increase year over year and then on scaling back to where our production schedules are. Production volumes for the quarter were down about 14% from the prior year, just to kind of put it in perspective as far as, that was really the primary factor driving the increase. Chris Haverland – Davenport and Company: Okay. Thank you.

And as a reminder, please press *1 to ask a question. Our next question will come from Walt Blaser with Parthenon. Walt Blaser – Parthenon: Good morning. H, you mentioned that you thought rod prices were poised to go up about 30%. I want to make sure I understood that. Is that based on announced price increases or trends that you see? What leads you to –

Actually, both, Walt. The cumulative increases that have been announced in the industry would support that 30%, but also these increases are being collected, there’s no question about it. So it’s happening. Walt Blaser – Parthenon: And historically higher rod prices would translate into better margins for you guys, but it sounds like this time it’s different.

Well, I think our comment on steel prices has been in the past that it’s difficult to generalize as to whether higher rod prices are good or bad for our business that if we’re in markets where demand is strong for our products then we’re generally able to pass those increases through and increase our margins. When demand for our products is weak of course it’s much more difficult to pass on raw material increases. The thing that is different this time and really where we have no experience is the magnitude of these increases. At round numbers of $150 to $200 a tonne of increase in raw material costs, there’s not a producer or competitor in the marketplace that can reasonably consider absorbing this. So I think that the shock value of the size and the magnitude of these increases together with the prospect that domestic wire rod may be in short supply are going to support our ability to pass these through. So if time is only going to tell, but at this point one of my top concerns is not that we will not be able to be able, that we’ll not be able to pass these through. I think we’ll get the increases. Walt Blaser – Parthenon: Okay. And currently your rod purchases are pretty much evenly split domestic and overseas or how would you characterize that?

No, it’s really almost exclusively domestic today. While, over time we’ve been as much as 60% or 65% offshore and generally we’re at least 20% offshore, but the thing that has caused this run up in large part is the absence of import material in the marketplace and that absence is driven by strong world-wide demand and the weak dollar. So I would guess that we’ll certainly be under 10% offshore material as we look at the next few months. Walt Blaser – Parthenon: Okay. Okay, great. Well, thanks for the info and look forward to talking to you next time.

Thanks, Walt.

And our next question comes from Casey Flavin with CJS Securities. Casey Flavin – CJS Securities: Hi, Mike and H. So you can give us a better understanding of your business can you give us a breakdown of the welded wire segment PC strand by revenue and margin?

No, we don’t disclose that information. Casey Flavin – CJS Securities: How about by revenue?

We haven’t disclosed that on a quarterly basis previously. I don’t know that we’d want to set a precedent. Casey Flavin – CJS Securities: Okay. Well, then given that your shipments were down 6% in units in the quarter and inventories were also reduced, were price reducing inventories in the quarter versus actually building heading into a higher priced environment?

It’s a timing matter, Casey. We did begin building inventories when we saw what was happening in the market and I think that you’ll see that we probably didn’t receive all that we had ordered for our first quarter. The balance of that will be received in our second quarter and we have taken measures to protect ourselves from short supply by arranging to build some inventories during the current quarter. Casey Flavin – CJS Securities: Okay, H, the question was actually regarding your clients and not your own view of the inventories.

Oh, I apologize. I didn’t understand that. We’ve seen little or no activity by our customers in terms of building inventory. Many of them are still reeling from the reduction in their own order books and it just does not appear that this has been on their radar screen as a priority. Casey Flavin – CJS Securities: Got it. And then to recover 30% increase in costs over, I guess, a four- to six-month time period here, how much do you anticipate you’ll raise prices?

Well, the rod increases are variously, that have been announced so far, are variously between $150 and $200 a tonne. So to stay even we certainly have to pass through that amount. Through the month of January we have announced increases in welded wire fabric of $80 per tonne and approximately $40 in PC strand and you will see additional increases being announced by the company in the very near future. Casey Flavin – CJS Securities: Great. And then given current utilization demand and higher costs, are the 16% gross margins reported in the current quarter achievable in Q2?

Well, typically we’d see some seasonal benefit moving into Q2 where the volumes would increase from the first quarter, so we should see some benefit from that. And then just from a timing standpoint and the rising rod costs environment there is typically some interim benefit where to the extent that we’re getting increases through those would be matched up against lower costs, material, and inventory over an interim period. As I indicated, we had about three months worth of inventory on hand as of the end of the quarter. At the end of that period then rod costs would be elevated to those higher levels and there would be an offset, but just from a timing standpoint we would expect some benefit. Casey Flavin – CJS Securities: Thank you. I’ll get back in the cue.

And as a final reminder, press *1 to ask a question. Our next question will come from Scott Arnold with (inaudible) Group. Scott Arnold – (?) Group: Good morning. Congrats on a relatively strong quarter and what I’m sure has been a challenging period. I have one question just about what was said earlier. There was a lot of double negatives in the sentence. H, you said that you were not concerned that you would not be able to pass on costs. If I could turn that around, that means you’re relatively sanguine and positive about your ability to recoup some of your higher raw material, of course. Is that correct?

That is correct and I apologize for the twisted – Scott Arnold – (?) Group: No, that’s fine. I just want to make sure that we’re on the same page. And second of all, relative to the, kind of your future forecasts of demand, I’ve looked at the ABI index from the architectural people and I’ve actually spent some time with them going over the trends and whatnot and both from a geographic basis and kind of a sector basis, the areas you guys are active in, they actually look to be pretty strong and look to probably continue to be pretty strong. Could you comment on that?

I think we would agree with that. The point that I would make is that you can’t view the non-residential and residential as totally independent of one another in our marketplace. Keep in mind that Insteel and all of Insteel’s competitors are vying for business and the products that we produce that go non-res and res are going across in many cases the same production lines, the same people, and the dramatic fall off that residential has seen definitely impacts competitive activity in those product lines that are primarily non-residential. So these things work together, they’re just not independent events. Scott Arnold – (?) Group: Right. And then historically you’ve been about 85% non-residential. Is that still the case?

It would be right in that range. Scott Arnold – (?) Group: Okay. Very well. If I have any other questions I’ll get back in the cue. Thank you.

Thank you.

And our next question is from Vic Kumar of Sound Post Partems (sic). Vic Kumar – Sound Post Partems: Hi, guys. I just wanted to get a better sense for the wire rod price increases you were talking about. You mentioned $150 to $200 in price increases. I think last quarter, during the last call you talked about there being about $30 in increases. So does that mean in this quarter there’s about $120 to $170 that’s been announced that’s going to blow through this quarter? Is that the right way to think about it?

I don’t actually recall each effective date, but I think there in our first quarter we’ve seen two increases announced that totalled $70 or $80 a tonne and the balance of the $150 to $200 various by grade and supplier would have been announced, at this point, really, through just the month of February. We haven’t seen pricing for March at this point. Vic Kumar – Sound Post Partems: Got it. So it sounds like $70 to $80 last quarter and then about half way in the last month or so been announced.

Yes. Vic Kumar – Sound Post Partems: And will be flowing through and going forward. Okay. One other question which was I wanted to ask about, you mentioned imports and the differential between pricing for imports and domestic. I think you’d said it was $200 a tonne. I just wanted to confirm, what is the differential these days between import pricing and domestic pricing?

The $200 is approximately the differential in the Chinese pricing and domestic pricing. Vic Kumar – Sound Post Partems: And has that differential come down over the last year, since last year in May or June I guess the Chinese decreased the vat for PC strand. Has that differential come down since then?

It’s hard for me to recall exactly what the numbers are, but I think that differential has shrunk some over the last six or eight months. Vic Kumar – Sound Post Partems: Okay.

And the $200 would be applicable to shipments taking place within the quarter and looking forward the Chinese prices are on the rise, but as H. indicated, our costs for steel are on the rise as well, so it’s going to be a function of whether they’re going to be feeling the same pain that we are just from a raw material standpoint. Vic Kumar – Sound Post Partems: Got it.

Whether that channels from differential. Vic Kumar – Sound Post Partems: Okay. Actually, one more question. When you talk about, you said you guys feel comfortable that you’ll be able to raise prices to match the wire rod increases. Is there any differential you’re seeing in the ability to raise prices between your strand product lines and your ESM or WWR product lines? How is that looking?

I think it’s too early for us to really tell, but the higher degree of confidence we have comes from, as I mentioned earlier, just the sheer magnitude of these increases. And the increases are mirrored across other steel products, so I think that the marketplace is seeing this not just in welded wire reinforcing and PC strand, but they’re seeing it in rebar and other products as well. So I think we’re in pretty good company. Right now it is my intuition that we’re going to be able to pass these costs through, but I would emphasize that we don’t have a lot of facts to base that on right now. Vic Kumar – Sound Post Partems: Okay. Those are my questions. Thanks.

And there are no more questions presently in the cue.

Okay. Well, we invite your follow up. We appreciate your interest in the company and we’ll talk again in the next quarter. Thank you.

And thank you for attending today’s conference. That concludes it. Have a great day.