Good day, ladies and gentlemen, and welcome to the Insteel Industries' Third Quarter 2018 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, this conference call is being recorded. I would now like to turn the conference over to H. Woltz. Please go ahead, sir.

Good morning. Thank you for your interest in Insteel and welcome to our third quarter 2018 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 it over to Mike to review our third quarter financial results and outlook for construction markets and then I’ll follow-up to comment more on business conditions.

Thank you, H and good morning to everyone joining us on the call. As we reported earlier today, Insteel posted strong results for the third quarter fiscal 2018 driven by the continuation of strengthening demand in our markets and widening spreads between selling prices and raw material costs. Earnings per share for the quarter improved to $0.67, which is up $0.36 sequentially from the second quarter and $0.31 from a year-ago. Shipments for the quarter increased 5.3% sequentially from Q2, benefiting from the typical seasonal pickup in activity as compared to the unusual 7.5% drop-off we experienced between the same period last year. On a year-over-year basis, shipments were up 16.5%. The volume growth for the quarter was broad-based extending across our footprint with shipments into Texas, our largest market rebounding from the weather-related drop-off in Q2 and volume into the Midwestern states rising substantially as well. Average selling prices were up 12% sequentially from the second quarter and 12.2% year-over-year, reflecting the additional price increases we implemented in response to rising raw material costs and the [resulting] compression in spreads we had experienced in prior periods. These cost pressures have been driven by the Section 232 tariffs together with the duties that were imposed related to the recent trade cases initiated by domestic wire rod producers, which have eliminated certain countries from the U.S. market. Going forward, we will continue to exercise commercial discipline and pursue additional pricing adjustments when appropriate to maintain our margins at acceptable levels. Gross profit rose $8.8 million sequentially from the second quarter and gross margin widened 470 basis points due to the price increases together with the growth in shipments. On a year-over-year basis, gross profit increased $7.5 million and gross margin rose 190 basis points driven by the widening and spreads, higher…

Thank you, Mike. Our third quarter results were significantly impacted by the imposition of the Section 232 import tariffs on steel products by the Trump administration in March. The ensuing uncertainty surrounding the availability of our primary raw material, hot-rolled steel wire rod resulted in speculative purchasing throughout the supply chain and sharp price increases reflecting the 25% tariff that was eventually applied to practically all imports of carbon steel products. These supply concerns have been exacerbated by the Antidumping and Countervailing Duty Orders that were entered in April, following the conclusion of trade cases that have been filed by domestic producers in January 2017, which had already dramatically reduced the availability of offshore material. During the early part of Q3, the market reaction to these developments clouded our view of the underlying demand trends for our reinforcing products. Following the frenetic activity of March and April, market conditions began to moderate in June reflecting healthy more sustainable activity levels we expect will continue through the balance of the 2018 construction season. The tightening and wire rod availability resulted in production disruptions at several of our plants during the quarter due to poor schedule performance by certain domestic suppliers and supply chain disruptions with respect to imports. Supplier performance has improved recently to the point that we believe the production interruptions should be resolved by the end of August. We mentioned during the Q2 call that we expected the new owners of the previously idle wire rod production facility in Georgetown, South Carolina to commence operations during June. Due to delays and commissioning of the operation, we now expect regular production from the mill beginning later in our fourth fiscal quarter or during the first fiscal quarter of 2019. The mill is strategically located relative to several of our manufacturing…

Sure. Thank you. [Operator Instructions] And our first question comes from Julio Romero from Sidoti & Co. Your line is now open.

Yes. Good morning, gentlemen.

Good morning, Julio.

Good morning.

So how much do you guys think the investments into Houston facility translated to in the quarter in terms of EPS or maybe even a dollar amount? Is it kind of on that $0.03 to $0.04 run rate per quarter at this point?

I’m not so sure that we can quantify that precisely Julio, but suffice it to say that we continue to make the expected progress at the Houston facility and we’re on the right glide path to realize the returns from those investments.

Great. And can you just give some color on the inventory levels? I know you mentioned you had just under two months based on your Q4 forecast? Is that generally due to the tightening of supply in the industry? Or anything you can give on there would be great?

Yes. It's both on tightening of raw material supplies and the really quite poor performance that we've seen from some of our domestic vendors together with the accelerated rate of shipments that we’ve seen. I would tell you that it's probably a little lower than we are comfortable with and we will begin to see more reasonable levels restored through the next quarter.

Got it. That's all I have. Thanks for taking my questions.

[Operator Instructions] And we see no further questions. I would like now to turn the call over to H. Woltz for closing remarks.

We appreciate your interest in Insteel. We look forward to keeping up with you during the quarter and look forward to the fourth quarter call that would be coming up. Thank you.

Ladies and gentlemen, that concludes the call. Have a great day.