Good day, ladies and gentlemen, and welcome to the Insteel Industries Third Quarter 2012 Conference Call. [Operator Instructions] I would now like to introduce your host for today’s conference H. O. Woltz, President and CEO. Sir, you may begin.

Thank you, Sam. Thank you for your interest in Insteel and welcome to our third quarter 2012 conference call which will be conducted by Mike Gazmarian our Vice President, CFO and Treasurer and me. Before we begin let me remind you that some of the comments made in our presentation are considered to be forward-looking statements. 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 filings with the SEC. I’ll now turn it over to Mike to review our third quarter financial results and then follow up to comment more on market conditions and our business outlook.

Thank you, H. As we reported earlier this morning, Insteel’s net earnings for the third quarter ended June 30 dropped to $0.9 million or $0.05 a share from $3.7 million or $0.20 a diluted share in the year ago period. On a comparable basis net earnings for the prior year quarter were $0.27 a diluted share excluding the $2 million of Ivy related restructuring charges. Our third quarter results were unfavorably impacted by the continuation of weak conditions in our construction end markets and reduced spread between selling prices and raw material cost. Net sales for the third quarter fell 5.1% from a year ago, on a 4.5% decrease in shipments and a 0.6% decrease in average selling prices. On a sequential basis shipments for the quarter were up 9.7% from Q2 reflecting the usual seasonal improvement which was slightly higher than last year’s 7.5% increase and a 8% increase of 2 years ago. Average selling prices fell 2% from the second quarter as a result of competitive pressures. Gross profit for the third quarter fell to $6.4 million from $12.5 million in the year ago quarter with gross margins narrowing to 6.8% of net sales from 12.7% due to the compression in spreads, the drop off in shipments and higher unit conversion costs. On a sequential basis gross profit rose $0.9 million from Q2 and gross margins increased 0.5% primarily due to the seasonal increase in volume. SG&A expenses in the third quarter was relatively flat compared with the prior year, decreasing $0.1 million as lower compensation expense more than offset a reduction in the cash surrender value of life insurance policies in the current year. Interest expense for the third quarter fell to less than half the prior year level due to lower interest rates on the borrowings…

Thank you, Mike. Our Q3 results reflect the continuation of depressed market conditions that we have experienced since the fourth quarter of fiscal 2008, together with competitive pricing pressures that have compressed spreads across all of our product lines. Although we are encouraged by the recent improvement in product construction spending and the passage of 2-year federal transportation bill, we expect business conditions to remain challenging in the absence of a broader-based economic growth that results in significant new job creation. Turning to our raw material markets, following the relative stability that characterized conditions in the steel scrap market between January and May, scrap prices declined sharply during June and July. Most wire rod producers responded by announcing decreases in pricing amounting to about half of the scrap price reduction. We believe that it’s unlikely that scrap prices will remain at current levels, would not be surprised to see them begin to rebound in August when steel producers settle their monthly purchase commitments. Mike mentioned that during the third quarter we had returned to the offshore market for a portion of our wire rod requirements, following several quarters where our presence in offshore markets had been minimal. 23% of our rod receipts were foreign origin during the third quarter. As the foreign percentage of our purchasing mix rises, logistics considerations generally result in higher inventory levels due to larger order sizes. The cost associated with the additional investment in inventory, however, is more than offset by the lower prices for imported material relative to domestic. Whether declining wire rod pricing will eventually have a favorable impact on spreads for our industry largely depends on the competitive dynamics in our markets. Also, in view of the recent indications that scrap pricing may have already bottomed out, the drop off in wire rod prices may prove to be fleeting. Commercially, we’ll continue to provide quality products and exemplary service at competitive prices and maintain our market leadership position. We reported last quarter that we had committed to the purchase of additional productions lines for engineered structural mesh that are expected to be commissioned in the second quarter or early third quarter of fiscal 2013. Taken together, these new lines had incremental revenue generating capacity of $15 million to $20 million. We can report that these projects are on schedule and on budget. In summary, although we are encouraged to see some early signs of improvement for the construction sector, we expect the balance of 2012 to be difficult, the likely continuation of weak demand in highly competitive pricing environment. While we expect modest growth in shipments of engineered structural mesh over the next few quarters, growth expectations are muted within our other product lines, pending a broader-based economic recovery or until we complete another acquisition. This concludes our prepared remarks, and we’ll now take your questions. Sam, would you please explain the procedure for asking questions?

[Operator Instructions] Our first question comes from Tim Hayes of Davenport & Company.

First question is on the operator rate which declined a little bit sequentially, yet the shipments were up sequentially. What is causing that? Is that a mix issue or maybe some capacity creep you’re getting a little bit more out of your facilities?

Tim, I think it’s mainly an anomaly there. As we continue to contend with weakness in markets, we worked on inventory control of finished goods, we have adjusted operating schedules as required. So I think it’s more -- I think it’s just more of a working capital consideration than anything else. I wouldn’t read too much significance into it as any kind of fundamental change in the business.

Okay. And then on to the margins, you gave some color on your expectations near term, certainly a lot of moving parts with all the volatility recently in pricing, but would you expect that the margins could -- are more likely to rebound in the next say quarter or 2 rather than continue to contract, and that’s aside from once we get through the FIFO issues, what now would be -- given at least still enough time to let the FIFO lag move through the numbers?

Well I would tell you that you could paint a plausible scenario for either a continuation of the difficult margin environment that we have now or you could paint a scenario that’s plausible for somewhat expanding spreads and margins depending on what happens with wire rod pricing and with competitive pricing in our markets. But to tell you that we really had a firm handle on that I think would be misleading.

[Operator Instruction] Our next question comes from Tyson Bauer of KC Capital.

Can you discuss -- we seem to not see the same or normal seasonal impact that we’ve seen in years past, is there geographical concerns here that maybe north of the Mason Dickson line -- is just the lack of activity in the south which has been stronger in the Texas market and other areas continue to be so all year round, so we are kind of muted some of that seasonal effect. And also can you comment on kind of the geographic competition, because given your market share overall it doesn’t seem to give you the pricing authority or ability to set the market rate. Is it really just these little pods geographically that you are facing these tough conditions?

Let me speak to the geographic part of the question first. I think there has been really no change in the way we would have responded to this question over the past few quarters that the Texas area seems to have been the most robust market environment that we have had in the last quarter and in previous quarters recently. The west coast is probably the weakest. Florida market is also weak but about -- really with no change from previous quarters. And Mid-Atlantic and Northeast is weak but I wouldn’t say it’s further weakening, it’s just -- I would say it’s about typical. Clearly, the only thing that stands out is -- impressive at all has been demand in Texas and even that is up and down.

When we look at your overall market share, is it somewhat not -- it doesn’t help you as much as one would think because we are really just looking at these small, say 400 mile radiuses around your plant and if there is one other guy, that could be enough to squeeze these spreads?

Well, I think there is regional competition certainly in every region. There is no region of this market that is underserved. But the other reality is I suspect that most of our competitors are seeing capacity utilization levels that are similar to ours. So I think there is just a struggle going on out there to keep plants operating, to keep people employed at some reasonable level. So it’s -- the conditions and fundamentals are just really difficult.

When you've commented in the past, meaning the most efficient and having the lowest cost of operations within the industry and we're looking at the margins you have been producing the last 4 quarters, is it reasonable to think -- we haven't seen it yet but the attrition, whether you guys get a little more aggressive on your M&A, whether you chose a defensive posture, how do you see that playing out in your opinion?

Well I guess I would continue to believe that Insteel is cost-competitive with any of its competitors, integrated, non-integrated, independent, small, large. I think that we have some economies of scale that we have been able to realize and I think that we have the quality of operations that will allow us to occupy a cost leadership position. With that said, I think the industry has hunkered down and we have a lot of competitors who are efficient and actually there has never been any room in this business to hold an umbrella over inefficiency. So we have effective competitors. So I think this thing has a way to play out and our view of the proper strategy for us going forward is really more of the same.

Okay. If you are unable to find attractive acquisition candidates, does your own shares become attractive?

Certainly. I think we have an authorization in place and if you would look at our behavior over time you would see that we have been pretty opportunistic in acquiring our shares and we would plan to be so going forward.

And at this time, I'm having any further questions.

Okay. Well we appreciate your interest in Insteel and feel free to call us if you have follow-up questions. Thank you.

Ladies and gentlemen, thank you for participating in today’s conference. This concludes today’s program. You may all disconnect. Everyone, have a great day.