Good day and welcome to this Insteel Industries third quarter earnings conference call. Today’s call is being recorded. At this time, I’d like to turn the conference over to Mr. H.O. Woltz III, President and CEO of Insteel Industries. Please go ahead.

Thank you, Katie. Thank you for your interest in Insteel and welcome to our third quarter 2009 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 the drivers of our third quarter financial results and then follow-up to comment more on market conditions and our business outlook.

As we’ve reported in this morning’s press release, Insteel incurred a net loss of $1.7 million or $0.10 per share for the third quarter ended June 27, compared of net earnings of $16.9 million or $0.97 per diluted share for the same period last year. The loss for the quarter includes the pre-tax charge of $2.9 million or $0.10 per share after tax for inventory write-downs to reduce the carrying value of inventory to the lower cost-to- market, due to further declines in selling prices. In addition to the inventory write-downs, our financial results for the quarter were unfavorably impacted by reductions in shipments and average selling prices, the consumption of higher cost inventory that was purchased prior to the downwards spiral in steel prices since beginning of the fiscal year and higher unit conversion costs resulting from reduced schedules in our manufacturing facilities. Net sales for the quarter were down 45.4% from a year ago, due to 28.7% decline in shipment and a 23.4% decreased in average selling prices. On a sequential basis, shipments for the quarter were up 34.1% from the second quarter, which is significantly higher than the usual seasonal upturn we experienced between the quarters. To put it in perspective, over the past three years the change in shipments from Q2 to Q3 as ranged from a 0.2% decrease in 2007 to 16.4% increase in 2006. We would attribute the additional pickup in volume this year to the completion of the customer inventory de-stocking that has been ongoing since the beginning of the fiscal year rather than a pronounced recovery in our market. Average selling prices for the quarter were down 15.7% on a sequential basis from Q2 due to the continuation of weak market condition, and are now down 34.7% on a cumulative basis from…

Thank you, Mike. During our third quarter business conditions strengthen somewhat resulting and rising shipments and operating volumes from the severely depressed levels of the previous two quarters. We believe the increased activity was driven by the winding down of de-stocking together with normal seasonal influences that generally boost activity as we move into our third quarter. At this point however, we see no evidence that the upturn is related to a recovery in the construction sector. It appears that we’re settling into a new market environment that maybe characterized by a greater degree of stability as compared to our experience over the previous three quarters, and which is likely to reflect depressed unit volume for the foreseeable further. Assuming that current conditions continue we should be passed the point of inventory carrying value adjustments. So, that during the fourth quarter our financial results will more closely reflect the new spread and volume environment. We expect to operate at a profit under these conditions, although our return on capital employed as likely to remain at reduced levels relative to recent years. Concerning developments in the wire rod market, two U.S. rod production facilities are in the process were being idled or closed which between them represented approximately 20% of total domestic capacity. Wire rod lead times are lengthening and we expect to general deterioration in service levels that seems to be customary whenever the mills work at higher levels of capacity utilization. Under these circumstances, we plan to increase rod inventory levels somewhat to assure smooth operations on our plans. Rod pricing is expected to rise during our fourth quarter driven by rising scrap prices at least temporarily and higher capacity utilization rates resulting from mills shutdowns rather than any recovery in demand. We planed to implement price increases in…

(Operator Instructions) Your first question comes from Nat Kellogg - Next Generation Equities.

Just a couple of quick question here, I guess could you guys talk a little bit on sort of what kind of working capital investment you thin you might need to make as you sort of go about the inventories again and as maybe sales [Inaudible] receivables increase?

Are you referring back to my comment on service levels from the Rod producers?

Yes, I’m just trying to figure out sort of what cash might look like going forward, but obviously you guys got a pretty nice cash balance right now. Just trying to think about what you guys are kind of do with an over the next couple of quarters, I guess. Some of that I would assumes, if you think rod pricing are going to start rising again, some of that are be consume at inventory and just trying to get a sense of how of that you’re going to invest in inventory and how much you have rest buyback shares or direct vision or just leave it on the balance sheet, so the environment improves?

The question presumes a lot of underlying facts that we don’t have right now, Nat that rod price increases between $40 of ton and $80 of ton have been announced. We don’t know where that will really shakeout, and we don’t know exactly what the impact of our pricing activity will be. I guess the part that I could speak to with some degree of our confidence is just on the rod inventory side. The bill that we contemplate is going to be modest in the range of $5 million to $6 million.

, :

I don’t detect it. I think there is interest in the cases among the customer base, but there is plenty of PC strand available and no one is trying to insulate against stop, our shortage certainly.

Then, just continued ops, that’s I assume just over right that continue, so that you guys have?

That’s correct.

Obviously, markets for that I assume is aught to be soft right now?

Yes, so we will stay markets pretty touch right now.

Did you guys just talked about the closures of the wire rod manufacturers. Those have actually happened yet or the management they actually haven’t quite close. I’m just curious, if those happened yet or those expected to happen?

That one of them happened as of July 12 and that mill was completely down the other scheduled to be down on September 12.

Does that mean that you guys will to be realign on the import market or is there enough flack up there that they shouldn’t have a [Inaudible] effecting or probably had to get wire rod?

I think the closures are really commenced with the decline in consumption of wire rods. So at this point, we’re not detecting any kind of short supply situation. So, I think we feel okay.

Just a last question, I guess it’s a little bit on my first one, but obviously you guys are in great financial shape and just sort of curious, if you guys have got any sound some sort of where your priorities are for use of cash or whether you just sort of feel like you would like to have a nice buffer here given the fact that things are so pretty weak out there?

I think you can expect to see continued conservative pasture on the part of the company, because I don’t get the feel and that we’re anywhere near out of the words, even I’d say, the economy, the financial markets, I think there’s a lot of risk out there.

Your next question comes from Robert Kelly - Sidoti.

Just a question on the dynamics wire rod pricing market, I guess for your raw materials, can we assume the same for your selling prices?

I think so Bob, it’s early to say, but I think we’ve been through a period were prices have fallen on a regular consistent basis and that is definitely turning around. I’m confident that will for wire rod and I’m reasonably confident it will for a finished products as well. The magnitude of the increases that are likely to be effective for wire rod or such that I can’t saw any rational player in our industry not tried to recover.

You guys have referred to in the past have been the disappointed of the market. Do you see they are continuing from your competitors?

Well, we haven’t seen a whole lot of disappointed over the last few months Bob. We would hope that we were going forward, but when we look at the whole pricing scenario, as it’s un-forwarded over the last few months, I really don’t think it had to happen in this way. So, I would say at this point we are hoping that we’ve seen that, but would not characterize recent experience as haven’t been highly disciplined.

I think you refer to in past calls that your selling prices had fallen slower than wire rod raw material. Is that still in a case?

Yes, that’s still the case this year. In my comments, I would mention that on a cumulative basis going back to the Q4 high pointed down 35% versus a larger reduction in wire rod cost.

Yes, I just too clarify I wouldn’t say that was a result, but discipline in our industry.

Understood, as far as steel wire rod prices increase in your confidence and raising prices, are you planed what you would need to be buying a whole lot of raw materials sounds like as far as your inventory cutbacks, you may have somewhat to go as far as…?

As a general statement we’re purchasing about what we use, but we have some flexibility. So, that I think we’re not in a corner where we just to have to purchase.

Then you talked about the improvement in your order book in Q3 relative to Q2. Are you seeing further progression or improvement in the current quarter relative to 3Q?

Yes.

As far as the cash flow story, is Insteel a user of cash and F-10 assuming some sort of stabilization or modest deterioration in demand or use of cash flow generator next year?

We would expect to be a generator next year. We’d expect cash flow to remain positive, borrowing any unforeseen spikes in prices and if obviously if there is a ramp up in pricing similar to what we experience last year that would consume some working capital investment, but generally speaking if they could have been a kind of just plot lined out at current level we’d expect cash flow to turn positive.

Yes, that’s an area, the high class probable. All right thanks guys.

We are just lucky that we have all our CapEx behind us and we are sitting in an awfully nice position in terms of having no pressing needs.

Your next question comes from Tyson Bowers - Wealth Monitors Incorporated.

Just following up on some of the questions on ASP. It sounds like, with your expectations of better capacity utilization going sequentially in the Q4, the question then becomes, are you actually looking for a net increase in your ASPs sequentially also are we stilly kind of balancing the lower cost inventories do you have and that still waiting its way through the marketplace, we are working out on a way to better margins but in no meant we are going to see a dramatic spick-up.

I’m not sure on a sequential basis, because we did experience some deterioration in ASPs within the quarter, but relative to where we ended the quarter, I guess just given what’s happened with wire rod pricing in our plans. Our plan is to get our prices up and I guess relative to current level, we would expect on the turnout during the quarter.

I’d also point out that, the rod price announcements that are out there our August announcements. So, we’re actually going to go through a significant part of the fourth fiscal quarter at about the same kind of run rate where we were in the third quarter.

So, with the better utilization and playing unit movements, you should sequentially see an up tick away from the top line going forward then we would have played with the margins accordingly.

The inventory level downstream, how would you characterize this is a kind of the bear bone scenario there all and which, if we gets some renewed activity on the infrastructure side, we could see a doubling effect of they also building up a little bit of the inventories plus what they are utilizing similar to what you are going to do with getting in more wire rod? How would you without planning out in the next several quarters?

It’s a very difficult question to answer because there’s just no objective data other than what we have internally hear, but my sense is that most of the excess inventories have been rolling out of the system and I don’t deduct that anybody really wants put themselves back in the position of holding a lot of steel that become speculative nature. I’m hopeful that we are at a steady state on that and that we don’t see, we just don’t see a lot of bouncing around over the next couple of quarters.

What gives you the confidence that we haven’t see the infrastructure boost as of yet, you believe that’s going to come, the money is there. That we are going to really see a dramatic effect from that part of the stimulus side of it as oppose to that really just back filling, what is not going to be spend and what have been spend otherwise. So, how much of that do you think that should be new relative to the confidence that just coming after shortly?

I think you are right. The upturn from stimulus will be somewhat offset by the other negative factors that are applied over the emphasis that you are reading about the state level on the actions being taken to cutback on spending [Inaudible], so that might be an offset there and outside the infrastructure segment just given the dismal outlook for commercial construction, and there is going to be more ugliness in that segment as well. So, we would agree with your statement. There will be some offset, we don’t expect there to be a dramatic upturn, when just based on the updated reports that are coming out on the spending, it’s pretty apparent that has been minimal at this point and I guess that’s consisting with our experience and with what we’re hearing. At this point, we would expect there to be kind of a gradual upturn beginning more in 2010 and continuing in 2011 rather than real dramatic bounce backs. The other fact, is going to be how this federal highway funding authorization is resolved and whether we’re looking at a longer term fixed that provides for a significant increase or whether it’s just the short term extension, which would create a lot of uncertainty and could result in this project deferrals?

I think the reality is that, for the stimulus and the highway build, the way that things are developed and it would hard to characterize it is extremely bullish for our industry.

A lot of that money still have to be matched by a municipalities or states or otherwise just not a blank check situation kind of like normal federal spending on the infrastructures anyway. Is that still the case, so really until we get these municipality states other people in a better financial shape? May and may now seek to utilize that money, because they still have to match a portion themselves anyway?

I think just on the normal highway funds, I think I’ll recall reading somewhere that some of the stimulus funds are not subject to local funding matches in the case that the stimulus funds, it just a question if getting them out there.

Last question from me, obviously on the PC strand, we don’t know ultimately what happens, but is it your thought that should things turned out favorably for you? You could at least get back to the market share you had in ‘06, if not greater, if the playing ground was even?

Well, I think the first assumption you’ve got to make is market size and I think that the market has shrunk probably in the range of a third measure by units. So, your question said, market share and I suppose market share, yes we could get back to where we were, but it’s a share of a much smaller time.

Your next question comes from Tim Hayes - Davenport & Company. Tim Hayes - Davenport & Company: Just I had one question on your comments on your outlook for private non-res construction. You mentioned that you see that softening. I want to know over what timeframe is that, we certainly would share that view over the next one to two years? I was curious, over the next one to two quarters? Would there be any rebound in that market now that de-stocking has ended and maybe the worse of the credit crunch is behind us?

Yes, we would expect some improvement. The improvement that we experienced within the quarter were that sequential increase was higher than it typically then we would attribute that as being a bounce back related to the end of de-stocking, but in terms of the next few quarters, I guess we would expect that higher level to continue, but and know way would we expect to be all the way backup to 2008 or 2007 level, but it would settle out somewhere in between. Tim Hayes - Davenport & Company: Could you get any rebound again, if you just isolated the impact of the credit crunch and how that it was two months back?

I don’t expect that. Tim Hayes - Davenport & Company: Just clarify, if we do get at lease of temporary short term rebound. Do you then see it turning lower, so later in fiscal 2010 and out into fiscal 2011?

You’re still referring the private non-res? Tim Hayes - Davenport & Company: That’s correct.

I think that the bleakest outlook would be for the commercial construction and in particularly it’s kind of a mix view right now. The largest declines are anticipated in that commercial construction segment in particular. In institutional with healthcare, educational those segments are generally expected to hold up better. The declines would be more moderate, where there would be some upside coming out of the stimulus spending and visibility continues to be pretty limited. I think most of the forecast that you see out there from the major firms would reflect pretty severe weakening through 2009 and then as we get later in the 2010, because we can see some improvement later in the year and then more so in 2011, but visibility it’s pretty limited right now.

Your next question comes from John Kohler - Oppenheimer & Close. John Kohler - Oppenheimer & Close: My question relates to capital expenditures. I know in the quarter it was a nice and low number and you mentioned in your commentary that the both of your CapEx is behind you? I was just wonder, what you thought ongoing, if this was a decent level normalized CapEx?

We’ve stated previously and I think it’s probably still the case that the baseline maintenance CapEx for the company is somewhere between $3 million and $5 million and I think that’s going to whole through going forward. John Kohler - Oppenheimer & Close: Then if you could talk a bit about possibilities given the current landscape, if you’re seeing any stress among your competitors you might be to take an advantage of?

It’s hard to really know given that most of our competitors or product or their part of large multinational companies. So, it’s hard to know exactly how everyone else is dealing with these conditions. I would say that I think our interest in growth opportunities is known widely and our ears into the ground and looking for opportunities all the time. John Kohler - Oppenheimer & Close: Last question, are you seeing any big deterioration or large deterioration in receivables?

It’s actually been pretty amazing that they’ve held up very well.

Yes, there are no significant issues.

At this time there are no further questions in the queue. I’d like to turn the conference back over to Mr. Woltz for any additional or closing remarks.

Thank you, Katie. We appreciate your interest in Insteel and you spending the time on the call today and don’t hesitate to follow up, what which you can convenience. Thank you.

This concludes today’s conference. We appreciate your participation.