Good day ladies and gentlemen and welcome to Insteel Industries second quarter 2013 conference call. At this time all participants are in a listen-only mode. Later we’ll conduct a question-and-answer session and instructions will be given at that time. (Operator Instructions). I would now like to turn the conference over to Mr. H. Woltz. Sir, you may begin.

Good morning. Thank you for your interest in Insteel and welcome to our second quarter 2013 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 on today’s call 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. All forward-looking statements are based on our current expectations and information that is currently available. We disclaim any obligation to update these statements in the future to reflect the occurrence of anticipated events, unanticipated events or new information. I’ll now turn the call over to Mike to review our second quarter financial results and macro indicators for our construction end markets; then I’ll follow up and comment on market conditions and our business outlook.

Thank you H. As we reported earlier this morning, Insteel posted improved results for the second quarter ended March 30, with net earnings rising to $3.7 million or $0.20 per diluted share from $0.3 million or $0.001 a share last year. Through the first half of fiscal 2013, which is typically the seasonally weakest period of the year, net earnings were $0.34 per share, the highest level in five years prior to the downturn in our construction end markets. Our improved results for the quarter were largely driven by widening spreads between selling prices and raw material costs, relative to the depressed levels of the year ago. Net sales for the second quarter fell 4.8% from the prior year and the 1.5% decrease in shipment and a 3.4% reduction in average selling prices. On a sequential basis net sales decreased 3.5% from Q1, due to a 3.7% reduction in shipments. The year-over-year and sequential reduction in shipments were largely driven by the adverse weather conditions we experienced in most of our markets during the quarter, ranging from harsh winter weather in the north to excessive rainfall in the south. Our average selling prices for the second quarter rose slightly from Q1 by 0.2%. Marking a second straight quarter they have remained relatively stable, following four consecutive quarterly decreases. Gross profit for the second quarter more than doubled to $11.1 million from $5.5 million a year ago with gross margins rising to 13.3% in net sales from 6.3%, primarily due to the improvement in spreads. SG&A expense rose $0.3 million from the prior year, largely due to higher incentive compensation driven by our improved results, which were partially offset by lower bad debt expense. Our effective income class rate for the second quarter was unchanged from the prior year at 36.4%.…

Thank you, Mike. As reflected in our release and in Mike’s comments, shipment momentum decelerated during the second quarter relative to the favorable trends we experienced during the first quarter. We believe that weather conditions played a significant role in reducing the consumption of our products during Q2, as a variety of adverse weather patterns played out over much of the country. Contrary to the recent reports from some of the Hot Rolled steel producers and the broader manufacturing sector, we do not perceive there to be an overall weakening in the underlying demand for our products over the last few months. While there is little objective data available for purposes of forecasting demand anecdotally our customers are generally more optimistic about their business prospects for 2013 than at any time since the beginning of the construction down term. Continuing the trend that began last quarter, spreads between raw material costs and selling values widened somewhat from the depressed level of last year. Our markets will continue to be highly competitive. We are seeing preliminary signs of a more pronounced seasonal upturn in demand that should have a stabilizing influence on pricing and provide increased operating levels for Q3 and Q4. Our performance for the first half of fiscal 2013 and our outlook for the balance of the year affirm our belief that we will experience a modest increase in shipments for 2013 and a more robust growth and demand for our products is contingent on a broader based economic recovery that spurs more meaningful improvements in job creation and construction activity. Our ESM expansion projects have proceeded on schedule. The new production line that was commissioned at the Texas plant will begin ramping up on a third ship during April. Our people did an excellent job installing and commissioning…

Thank you, sir. (Operator Instructions). And our first question comes from Robert Kelly from Sidoti.

Good morning guys.

Good morning Bob.

Good morning Bob.

If I heard you right shipments up sequentially, better than the seasonal cyclical upturns. Should we expect volume growth year-over-year in the second half ‘13, over second half ’12.

Yes, I would say it is based on the macro factors and what we are seeing in our markets; that would be a reasonable assumption.

That’s encouraging. And as far as the raw material position, your expectations were pretty stable in raw materials for the balance of F’13. Should we expect sequential spread expansion from what did in 2Q?

Right now our feeling is that raw material costs are not one to run away on us. And in terms of margins and in spreads, I think Mike’s comment was that as we look forward, if selling prices were to remain the same, the inventory valuations are favorable relative to the second quarter.

Okay that sounds like spread expansion. What sort of lag would you expect from the TIFIA funding and the tax and fee adjustments that you referenced. Is that an immediate volume impact or does that play out over a six to nine month period. How should we think that improved funding level?

On the TIFIA funding, most of the indication that we’ve seen point to an upturn in the second half of calendar 2013 that would continue through 2014. As far as the state funding increases, it’s still pretty fluid at this point. We are at different states, are at varying points in evaluating and enacting changes that I don’t know that I could really put a timeline on that. But we are encouraged that there is movement on a state level.

Okay. Just as far as the comment that your customers are feeling better about the world, I mean that seems to be what you implied. Is that just the macro indicators, either the economy is getting better or is that standing from like a growing order book, which is translating to higher volume for Insteel. These are kind of comments on…

Bob, I think both factors are at play. I think that the encouraging macro drivers that you are seeing publicized are daily and weekly basis certainly just help the outlook and the attitude of our customers and us too for that matter. But I think also what we are seeing are, we are cases and its spotty and its regional, but we are seeing cases where we are actually having customers gear up and hiring people and operating more hours. So it is very spotty, but it’s the first really encouraging sign of that sort of recovery that we’ve seen.

Okay. One final one, its just the second quarter results, the margins, we haven’t seen for sometime here and your sub-50 utilization, volumes are still weaker than a year ago. What do you subscribe to the – to explain why spreads are so good relative to the low point we are here as far as cyclical demand.

I think one factor at play is just the unrealistically low spreads that we were experiencing last year this time through a good part of 2012. And as you know, you’ve watched long enough to see that these things can change rapidly, but perhaps it was some underlying favorable momentum in our markets. It would just seem that a lot of more irresponsible pricing that we’ve seen over time would subside.

I was just going to touch on the price discipline getting better. Is that prevalent in both via the concrete reinforcement products as well as the PC strand side?

I don’t think there is a big different in what we are seeing across our markets. There is not a lot of variability there.

Okay, great. Thank you guys.

Thank you. (Operator Instructions). Gentlemen, I’m showing no further questions at this time.

Okay, thank you Sayed and thank all of you who dialed in for your participation today and feel free to call us to follow-up if you’d like.

Ladies and gentlemen, thank you for participating in today’s conference. This concludes our program for today. You may all disconnect and have a wonderful day.