Good day, ladies and gentlemen, and welcome to the Insteel Industries’ second quarter conference call. [Operator Instructions] As a reminder this conference call is being recorded. I would now turn the conference over to host Mr. H.O.Woltz, President and CEO, you may begin.

Good morning. Thank you for your interest in Insteel and welcome to our second 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 second quarter financial results then I will 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 second quarter ended March 31, which is typically one of the seasonally weaker periods of our fiscal year, were 0.3 million or penny a share compared with 2.6 million or $0.15 per share in the year ago period. Excluding the Ivy related restructuring charges from both years and acquisition costs and bargain purchase gain from the 5-year period net earnings were $0.02 per share for the current year quarter versus $0.23 a year ago. Although, we are beginning to see signs of improvement on the horizon for our construction end markets, demand for our products remained at depressed levels during the quarter. The latest construction spending data recorded by the department of commerce reflected a similar lull in activity following 5 consecutive monthly increases over the latter part of 2011 with total construction and private nonresidential construction spending declining in February for the second straight month. On a year-over-year basis however, total construction spending was up 5.8% while private nonresidential construction, our primary demand driver, was up 14.5% from last year and has now risen year-over-year for 9 consecutive months. Insteel’s net sales for the second quarter relatively flat compared with the prior year as the 7% increase in average selling prices was largely offset by 6.4% decrease in shipments. The year-over-year drop-off in volume was relative to a prior year period in which shipments were favorably impacted to some extent that customer hedge buying in response to the escalation in our selling prices which rose 10% from December to March of last year while declining 1% over the same period this year. We believe the unusually mild winter weather accelerated construction activity earlier into the year in some of our markets although we are unable…

Thank you Mike. Our Q2 results reflect the continuation of the 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 our product lines. Although we are encouraged by the recent improvement in private nonresidential construction, indicators and the reports by some customers of a definite uptick in both quotation activity and bookings in the commercial market. We expect business conditions to remain challenging for the remainder of the year. As Mike pointed out, the outlook for infrastructure related portion of our business continues to be clouded by the uncertainty regarding a new federal highway funding bill given the election year politics that are likely to persist. As reported in today’s release, during the quarter we committed to the purchase of additional production lines for engineered structural mesh that will affect our Texas, Missouri and North Carolina facilities. These investments in the state-of-the-art technology will expand our capacity, broaden our product offering, reduce our conversion cost and enhance our customer service capabilities. You may recall that shortly after we completed the Ivy acquisition we closed Ivy’s Houston manufacturing facility and absorbed the volume at our Dayton, Texas plant without any equipment additions, consequently the Dayton plant and our ESM business as a whole have operated at high capacity utilization levels then implied by the overall rates referenced in our release to the point that we will soon require additional capacity to ensure satisfactory customer service levels and accommodate an eventual recovery in the Texas market. In addition to providing an incremental capacity the new production line will be nearly twice as productive as more conventional technology which is expected to favorably impact our unit conversion costs. Additionally, we plan to add a production line for…

[Operator Instructions]. Our first question comes from Robert Kelly of Sidoti.

Could you just maybe order of magnitude, walk through the margin compression year-on-year in 2Q, was it primarily the raw material spread, how much did the reconfiguration hurt you?

I would say that on a comparative basis, the spread compression was a lot more significant, where despite the year-over-year increase in selling prices, we are up 7%. The increase in raw materials, they exceeded that amount, so we expanded some compression and spreads. And then there were two facilities in particular that have suffered through disruptions related to our reconfiguration activities, the movement and reinstallation of equipment. But as we indicate, we are in the process of ramping up both plants and we’re expecting significant improvement in their costs, over the remainder of the year. But overall the spread compression would have been the more significant factor.

Can you quantify what the disruptions cost you, in the two facilities?

I don’t know that we could quantify that precisely.

Okay. As far as the competitive pricing, has that eased as you moved into April, and saw the signs, or the way you characterized it in your release to signs of increasing quoting and bidding activity in the commercial market?

Now, Bob there has been really no improvement, it’s still a real food fight out there, as everyone scrambles for available orders. So, I wish I could tell you that they have been a significant improvement, but unfortunately it’s not just the case.

Okay. And as far as what you’re holding in inventory, how did that relate to where the market price were for wire rod as?

Yeah, we feel pretty comfortable with where we’re at and there really isn’t a significant gap in terms of our inventory carrying values versus current market prices, here at the market now.

Okay. As far as the commentary for the new capacity in wire rod, does that necessarily help your cause? I mean one of the benefits that you guys have discussed in the past is having a wire rod market be tight, using that as a basis for getting price increases from your customer. How loose are wire rod market help Insteel?

I think really what we were referring to is that with the construction industry operating on at such a terribly low level of capacity utilization, if you would project a recovery in the construction market, I think there’s a clearly the possibility that there would be shortages of wire rod in the market place, which would obviously give us some concern relative to our ability to service our customers. And it would also give us some concern relative, to our competitiveness, with integrated suppliers of wire products. So overall we believe this is a positive development for Insteel.

Okay, I follow. And then just finally on the ESM line expansion, the need for more production capacity there indicates that demand levels still are pretty strong there. So, what is dragging down companywide utilization, is it all strand, is it all the standard welded?

Clearly, if you go back and look at the Ivy product mix, it was much more heavily oriented toward engineered structural mesh than Insteel’s product mix. So, bringing over those volumes and particularly the way that we did it in Texas, where we closed a facility and consolidated that production at our Dayton, Texas plant, without any addition of equipment, caused a significant ramp up in capacity utilization at date. As we look at it, I pointed out in my comments that our commissioning is at least a year away from the placement of an order. So, as we look down the road to the future, it’s clear to us that, to maintain our customer service capabilities and our market share in any kind of recovering environment, we had to go ahead and move on these opportunities. So, engineered structural mesh is definitely operating at a higher level of capacity utilization in Texas and elsewhere, for that matter, as compared to either of our other welded wire reinforcing product lines, and also our relative to PC strand.

Our next question comes from Alan Brochstein of AB Analytical.

I was just wondering. The competitive environment, it’s kind of challenging that your competition isn’t dropping, and this has been going on for a while. Now what do you think is going on here?

Well, it is -- we certainly note the same thing and I think that there are substance levels of spreads between the wire rod cost and selling values for our finished products that allow people to barely make it. And that’s what we’re facing in the market place on a daily basis. Why there hasn’t been more dropout, I can’t really answer.

So with that said, you know, obviously Ivy, the timing, though we could question, but it looks like great long term investment I am glad to see you guys extending upon that acquisition, but are there other potential acquisitions, what is your appetite for them?

Well, we think that one of the silver linings of this environment could be the opportunity for further acquisitions, that would fit well within our existing product lines and we’re very interested and active in searching out those opportunities. We believe that both, financially, operationally and from an infrastructure point of view internally, that we’re very capable of doing further acquisitions.

Are any of your competitors open to that at this point, or is this perspective?

No, I’d say its perspective.

Okay and then just lastly, I see you capped your CapEx expectations at $10 million, Mike I assume that even with these investments the DNA will continue to run about $10 million a year, is that accurate?

Yes, this should be relatively close to one another.

[Operator Instructions] Our next question is from Tyson Bauer of KC Capital.

Re-looking at similar capacity utilization than to last year as we kind of muddled our way through here?

I think that’s probably accurate.

You talked about the industry and some of the weakness obviously in some of the competitive aspects. Is there just an over capacity because of the current demand, or is there an absolute over capacity in which there needs to be attrition either through those folks falling off, or through consolidation efforts in which plants are then combined, has that taken our capacity ?

Well, I think, if you were to look back before the downturn, Mike you might need to help me some here, but Insteel generally ran in the 70’s and low 80’s as a percentage of utilization. Today, I know we’re running far below that, I think the question is really when does market begin to grow again and at what rate? I don’t think that at least in Insteel’s view we have resisted the more draconian consolidation kinds of all activities are under the belief that there will be a recovery and demand for the product. And with the objective of maintaining our geographic diversity and our ability to operate on a nationwide scale, so I think it’s just a matter of timing. But I don’t think anyone’s forecast would be for a rapid return to 2006, 2007 and 2008 kinds of volumes and that would definitely imply that consolidation, in terms of business combinations among some of the producers in this industry, would be a good idea.

Okay, you talked about some of the geographic divergence that’s going on in Texas, a little stronger than some of your other areas, that’s probably propping up your utilization that we’re seeing overall. What conditions are you seeing say, on the East Coast, or the Atlantic, opposed to some redundant area is that are really causing a little more pain, than say where Texas is a little bit stronger?

Texas is clearly the strongest for Insteel, both because of both the consolidation of manufacturing facilities as well as, a fiscal situation in the state that is better than what we see generally. The West Coast is clearly the weakest geography that we serve and it’s concerningly weak. The East Coast is some better than the West Coast but certainly not as robust as what we see in Texas.

When you attempted to do the price increase at the beginning of February, was that just a complete failure to get those prices, because nobody would follow suit, so that some of your volumes go away, or did you abandon it early just to maintain some of your utilization in the volumes?

Really the circumstances are different between product lines for instance, we reported in the call last time that we never even attempted to raise prices for PC strand, in view of the obvious waste of time that it would have represented. We were successful more or less in other product lines to certain degrees and in some of these product lines, we are quoting not for a period of time, that our price is good for a period of time, but we’re quoting on a job-by-job basis. And you can see pretty quickly, the direction that competitors are taking as these individual jobs are quoted out in the market, and so in areas where there was some opportunity to raise prices, we did. But to a larger extent our prices remained flat or even fell in some cases.

Ladies and gentlemen, am sure there are no further questions in the queue this time, I’ll hand the call back to management for closing remarks.

Okay. We appreciate your interest in the company and your participation in the call today. And feel free to call us up for follow up, as you’d like. Thank you.

Thank you. Ladies and gentlemen, this concludes the conference for today. You may all disconnect and have a wonderful day.