Good day, ladies and gentlemen, and welcome to the Insteel Industries’ Fourth Quarter 2012 Earnings Call. [Operator Instructions] As a reminder, this call may be recorded. I’d now like to introduce your host for today’s conference, H. O. Woltz. Sir, you may begin.

Thank you. Good morning and thank you for your interest in Insteel and welcome to our fourth 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 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. I'll now turn it over to Mike to review our fourth quarter financial results and 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 fourth quarter ended September 29, remained relatively flat at $0.8 million compared to $0.9 million in the third quarter and $1 million in the same period a year-ago. Earnings per diluted share were unchanged from both the third quarter and the prior-year at $0.05. Our fourth quarter results were unfavorably impacted by continued weakness in our construction end markets and further compression and spread similar to what we experienced during the third quarter reflecting the consumption of higher cost inventory under FIFO accounting that was purchased in earlier period, matched against declining selling prices. Net sales for the fourth quarter were down 1.2% from the prior-year as a 5.1% reduction in average selling prices offset a 4.1% increase in shipments. On a sequential basis, net sales were up 4.6% from Q3 on a 6.8% increase in shipments partially offset by a 2.1% decrease in average selling prices. Gross profit for the fourth quarter fell to $5.9 million from $7.7 million in the year-ago quarter with gross margins narrowing to 6% in net sales from 7.8% due to the compression in spread which more than offset the favorable impact of higher shipments and lower unit conversion costs. On a sequential basis, gross profit fell $0.5 million from Q3 and gross margins decreased 80 basis points primarily due to further compression in spread. SG&A expense for the fourth quarter was down $1.4 million from the prior-year primarily due to the relative year-over-year changes in the cash surrender value of life insurance policies, the net gain on the proceeds from the life insurance claim and lower compensation expense. Interest expense for the fourth quarter fell to about half the prior-year level, largely due to the lower borrowing rates in…

Thank you, Mike. Our Q4 results reflect the continuation of weak market conditions we’ve reported to you over the last several quarters. Our expectation going into 2013 is for only a modest increase in shipments, pending a broader based economic recovery that would spur more robust job creation and construction activity. In view of these trends, we continue to focus on further cost reduction opportunities in our operations, and additional investments that broaden our product offering, reduce our operating costs, and enhance our ability to capitalize on an eventual recovery in demand. As Mike mentioned, our ESM expansion products remain on track, which entail the commissioning during our second fiscal quarter of new production lines at the North Carolina and Texas facilities, and the relocation of a third line to the Missouri facility. We previously indicated that these projects will enable us to reduce our operating costs, enhance our customer responsiveness and expand the scope of the rebar replacement options that we provide to the market. Taken together, we expect that they will generate $15 million to $20 million of incremental revenues when fully operational and they should contribute to earnings during the current fiscal year. Turning to our raw material markets, we continue to experience heightened levels of volatility since our last earnings call. After dropping precipitously in July, steel scrap prices rebounded in August only to fall off significantly again in September and in October. While these fluctuations have generally translated into corresponding changes in the prices for our primary raw material, hot-rolled steel wire rod, our suppliers are motivated to use scrap market volatility as an opportunity to enhance their metal margins. Their ability to do so however is ultimately determined by the relative supply-demand balance in the marketplace. The impact of declining wire rod pricing on the profitability of our industry ultimately depends on the competitive dynamics in our markets and ongoing uncertainty precludes us from forecasting margins over the next few months. As we’ve indicated previously we’re focused on providing quality products and exemplary service at competitive prices and maintaining our market leading position. In summary, conditions in our markets for the first half of 2013 are likely to resemble those we’ve experienced for the last several quarters, characterized by the continuation of weak demand and highly competitive pricing environment. While we expect modest growth in shipments of engineered structural mesh over the next few quarters, the growth expectations for our other product lines are muted pending a broader based economic recovery or until we’re able to consummate an another acquisition. This concludes our prepared remarks, and we will now take your questions. Sandy [ph], would you please explain the procedure for asking questions?

[Operator Instructions] Our first question comes from Tyson Bauer of KC Capital.

Couple of quick items, you talked about the recent housing starts being better than what you’ve seen in years past, and that as kind of an early indicator for some of the non-res construction. Given your past cycles or your history here, what kind of time lag is typical and as a different -- disco around because we’re working off such small beginning numbers that even a small percentage increase although favorable, it may take a little longer to trigger some of these non-res construction numbers to improve quicker?

Yes, I think -- I don’t know that -- know the historical relationships or their trends will necessarily repeat themselves this time, just given the magnitude of the downturn that -- that’s occurred. As you said, the housing start growth from a percentage standpoint has been pretty hefty, but that is often an extremely low base, relatively speaking when you go and look at the normal level over a longer period to be in the $1.5 million range or the peak level a few years ago, even with these high percentage increase is going to take an extended period to get back up to those levels. And I’d say we probably expect the same that to be true for a non-res, that typically lags after housing. Housing is the first sector that turns up and then you gradually see improvement in non-res. And I think at this point we expect the upturn to be gradual over an extended period.

Is there a displacement that you’re viewing between public spending decline with the private sectors improving. Are we kind of in a rough path right now where those lines aren't matching up so we're ending up with a little bit of a void?

Yes, earlier in the year we were seeing more of an upturn in private non-res and that’s consistent with the macro data. When you look at the spending data, there was a nice run up earlier in the year. Then over the past few months -- the past 3 months in particular, there has been a drop-off. So at this point it’s difficult to say, I think some of that’s related to the increased uncertainty approaching the end of the year with all these political and economic issues. So moving into next year we could see -- could be some improvement, but at this point it's unclear. And public -- the public sector spending has continued to decline and the recent extension of the federal highway funding bill should alleviate that and serve to mitigate that decrease. But you still have budget pressures at the state and local level that are pushing it lower.

Tyson, one other point that I will make is, despite the fact that we saw some reasonably robust increases in private non-res spending earlier in the year, it really didn’t translate into a noticeable impact on our business which is I’m curious in some respect, but nonetheless a fact.

I was going to -- that’s my last topic, when we did the Ivy transaction and combining 1 and 2 in several of your markets, one of the main tenants that we thought we were going to see is much better pricing power by your firm. We really have not seen that some transaction even now we have taken the cost out of the business. Any thoughts there on why we haven’t had better pricing controls or ability with such a large market share?

Well, I mean, I’m not so sure that we share that same feeling that we were going to have a whole lot of pricing power in this market. I think that with Insteel operating below 50% capacity is reasonable to expect that many of our competitors are doing the same and that conditions are very difficult. It’s just a huge scramble in the industry for -- maybe not just market share, but for survival. So I think the difficult conditions have had bred desperate tactics on the part of lot of competitors and it's hard to say, when that changes.

[Operator Instructions] And at this time, I’m not showing any further questions from the phone line.

Okay. In that case, thank you for your interest in the Company. If you have questions later on, don’t hesitate to call us for follow-up. 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.