Good day ladies and gentlemen and welcome to the Insteel Industries’ Third Quarter 2015 Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will follow at that time. [Operator Instructions] As a reminder, today’s conference is being recorded. I would now like to introduce your host for today’s conference call Mr. H. Woltz, Insteel President and CEO. You may begin.

Thank you. Good morning and thank you for your interest in Insteel and welcome to our third quarter 2015 earnings 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 on today’s call are considered to be forward-looking statements, which 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. All forward-looking statements are based on our current expectations and information that is currently available. We do not assume any obligation to update these statements in the future to reflect the occurrence of anticipated or unanticipated events or new information. I’ll now turn the call over to Mike to review our third quarter financial results and the macro indicators for our end markets, then I’ll 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 of fiscal 2015 were 5.4 million or $0.29 a share compared with 5.8 million or $0.31 diluted share a year ago. On a pro forma basis, however, excluding the non-recurring charges in gains that were noted in today’s release, our net earnings for the quarter rose to the highest level since 2008 increasing to 6 million or $0.32 a share from 5.3 million or $0.28 a share a year ago. The improved results were achieved in-spite of the record rainfall and flooding that occurred in the central region of the U.S. during the quarter, particularly in our largest market Texas, which brought construction activity and customer operations to a standstill for extended periods. The NOAA reported the average rainfall in Texas for the April to June period reached an all-time highest 17 inches, almost double with historical average, and the total for the contiguous U.S. was the second weather stand record at 11 inches or almost 30% above average. We expect the resulting deferral of shipments will have a favorable impact on future business levels and potentially extend our busy season later into the year. Net sales for the quarter rose 3.3% from last year and a 5.1% increase in shipments driven by the additional business provided by the ASW acquisition, partially offset by 1.7% reduction in average selling prices. On a comparable basis, however, adjusting prior year shipments to include ASW’s pre acquisition volume, shipments for the quarter were down 8.8% year-over-year largely due to the adverse weather. Shipments were up 19.1% sequentially from the second quarter driven by the usual seasonal factors as compared to a 25.2% increase between the same period the year ago, again reflecting the weather related impact. Gross…

Thank you, Mike. During the third quarter, demand for our reinforcing products benefited from favorable seasonal influences partially offset by adverse weather conditions in some regions of the country which delayed construction projects and unfavorably affected production schedules of some of our customers particularly in the central part of the country. Normalizing for these conditions, demand for our products reflects a continuing recovery in construction markets. Capacity utilization for the quarter was 54% compared with 58% last year. Macro indicators as well as customer sentiment indicate continued growth as we look ahead to the next few quarters. During the Q2 earnings call, we mentioned the prospect for expanding spreads resulting from declining prices for metallic units and steel wire rod together with the potential for stable selling prices resulting from the cyclical recovery in construction markets and the usual seasonal upturn. Our Q3 results reflects on benefit from this confluence of market conditions although weaker than expected demand contributed to more competitive pricing activity than we had initially anticipated. Based on current conditions, we expect our fourth quarter financial performance to be favorably impacted by a continuation of these trends. As we’ve mentioned previously however, it’s difficult to forecast our selling prices and volume with a high degree of precision, given the dynamic nature of our markets, short order lead times, and minimal backlog. Looking ahead there does not appear to be a significant catalyst on the horizon for recovery in the metallics markets, which implies that our raw material pricing may fluctuate within a reasonably narrow range resulting in a rather long and flat bottom. China continues to exert enormous influence on world market depressing prices throughout the supply chain. We expect that the pending permanent closure of a domestic wire rod production facility will contribute to some strengthening…

[Operator Instructions]. Our first question comes from Michael Conti with Sidoti.

So I guess to start, I mean you cited weather as a drag, I was hoping if you can comment on how monthly sales progressed throughout the quarter, and then just maybe comment on the month of July, I know we are only two weeks in, but what are you seeing so far in terms of order flow?

Well, I think the normal seasonal upturn is in play, Mike. Certainly, the weather conditions that we referred to in the release and in the call affected the momentum during Q3, but I do not think that -- certainly there is no carryover of that into Q4 and we would expect for volumes to be about as expected going forward. So if you are wondering whether there is a continuing lag, there is not.

The bulk of the weather related impacts seem to be in the month of May and through the early part of June.

Okay. Thanks. And then secondly, I guess your comment just regarding the increased traction, I mean is that optimism on your part of your customers or are you seeing increased order flow or pipeline, expected shipments hitting their books, just wanted to be able to [indiscernible]

I think most of our expectations are driven by the macro projections that we read for the industry as well as the anecdotal sentiments expressed to us by our customers. We really are not tapped into any other sort of proprietary information loop.

And I guess just building on that, H. I mean you have been in the business a long time, I mean just given the estimates out there, we all look at the same macro data. Just given the estimates for non-res, I mean does this feel like a single -- high single digit construction recovery here, I mean what's your take on that?

Yes, I think you can make that case, Mike, that all along, we have up until the last quarter or two, we have referred to this recovery as somewhat subdued. There's certainly been no breakout from the downturn. It's been sort of plotting and steady. But I think mid-to-high single digits is a reasonable characterization of where we are.

Okay. Good. And then lastly, I mean you generated nice free cash flow and like you talked about eliminating your debt in the quarter, and what's your latest thinking on potential M&A opportunities in this space. Are you seeing any financially distressed companies out there or I mean what's the strategy behind this? I guess, related to backlog.

No, I mean I think the time where you would have expected to see a lot of distress as passed that we are not seeing that. We are continually looking for acquisition opportunities and believe that we are very well-positioned to effectively assimilate on additional acquisitions and you can rest assure that it's on near the top of our priority list.

Okay, great, I will hop back in queue.

Our next question comes from Tyson Bauer with KC Capital.

You touched on this a little bit, the weather situation, primarily Texas, some of the southern tier, they typically had a better strength early in the warmer weather season. Historically, we don't necessarily play catch-up per se with pent-up demand and also we get a big rush going through the following quarter. But, we have in cases have seen that you have a seasonal benefit that gets prolonged. Do you think because of where the weather situation occurred that you may see greater strength that may last a little longer through Q4 into Q1 that maybe we won't see otherwise, that we just get a prolonged benefit?

I suspect that's exactly what we'll see, Tyson. I can tell you that that I'm unaware of any project that has been permanently cancelled because of weather consideration. So, what we will see is a little more frenzy during our normal up season. We will see a little more frenzy on the part of customers to complete more work, and it is likely to go further into the fall than typical. So, but I don't think this thing has affected or the adverse weather situation has affected overall consumption of our products at all.

Correct, which also means we may not necessarily get the benefit on ASPs per se either because we're not dealing with the situation where we're going to increase capacity, say, 10 points.

You mean we are not going to see capacity utilisation, right?

Capacity utilization adequately, yes.

I think that's fair to say.

Still -- you've talked about to you should get some benefit the way you managed your raw materials, going forward obviously we will see some changes, anything that's more long term or more in length and duration that would create some visibility of where those costs should stay, or is it really just going to continue to fluctuate.

Well, I would expect that we would see fluctuations, Tyson, but I think worldwide the overall pressure from the Chinese in our industry today, it's coming in the form of extremely low priced steel billets that are being shipped around the world to rerollers and making a lot of wire-rod available at very low costs for many countries. And I don't see a catalyst for that change in the near term. So, I think that we will continue to see some -- we will continue to see some volatility, but in a relatively narrow $10 to $30 per ton range rather than some of these huge swings that we've seen over time in the $50 to $100 range.

In regards to the transportation bill; obviously some different radar coming out of the Senate versus the House, overall, would you anticipate that the size on any long-term bill maybe lower than previous funding levels, but the overall funding if we include state contributions and local municipality contributions may either be the same if not greater in spending, especially if we add in the private contributions?

I think it's difficult to say at the federal level because there's still high degree of uncertainty. It seems that with this repatriation approach that they are targeting to generate enough funds to maintain the spending at current levels and then you have the President's proposal which reflects a substantial increase. I don't know that we have clarity on that. But we would agree that we have seen some upside at the state level where it's gotten to the point where they can no longer defer their needs and they are moving ahead on other fronts to increases in the fuel tax and other revenue generating measures. I think you're likely to see that trend continue going forward.

Is there any movement with regards to allocation of those federal moneys as some of the larger states has squat in regards to their dis-propionate contribution into those funds as opposed to what they get back on federal level matching.

I think that just think always is going on, but I’m on aware of any significant change in that circumstance.

H, given your years in doing this, I know the [indiscernible] coming in California, you've obviously more infrastructure projects in election years. That’s how they know the elections coming up, more politicians with names and bridges and otherwise. Do you or have you seen that to be the case, we typically see a little more activity in those time periods?

Well, I’m certainly aware of the sentiment. And I’d tell you that when we have seen those conceptions and again it mainly takes the form of road paving with asphalt because it can be done quickly and it’s visible to voters. I can tell you, they have no impact on our business one way or the other.

So let’s a inch and half of pretty black asphalt to get votes?

That’s exactly right.

[Operator Instructions] And I’m not showing any further questions at this time.

Well, thank you for your time today. We appreciate your interest in the company and look forward to talking with you next quarter.