10-Q

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended January 2, 2021

OR

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ________ to ________

Commission File Number: 1-9929

Insteel Industries, Inc.

(Exact name of registrant as specified in its charter)

North Carolina (State or other jurisdiction of incorporation or organization)	56-0674867 (I.R.S. Employer Identification No.)
1373 Boggs Drive, Mount Airy, North Carolina (Address of principal executive offices)	27030 (Zip Code)

Registrant’s telephone number, including area code: (336) 786-2141

Securities registered subject to Section 12(b) of the Exchange Act:

Title of Each Class	Trading Symbol(s)	Name of Each Exchange on Which Registered
Common Stock (No Par Value)	IIIN	The Nasdaq Stock Market LLC (Nasdaq Global Select Market)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☐	Accelerated filer ☒
Non-accelerated filer ☐	Smaller reporting company ☐
	Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ☐ No ☒

As of January 20, 2021, 19,313,967 shares of the registrant’s common stock were outstanding.

TABLE OF CONTENTS

PART I – FINANCIAL INFORMATION

Item 1.	Unaudited Financial Statements
	Consolidated Statements of Operations and Comprehensive Income	3
	Consolidated Balance Sheets	4
	Consolidated Statements of Cash Flows	5
	Consolidated Statements of Shareholders' Equity	6
	Notes to Consolidated Financial Statements	7
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	17
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	23
Item 4.	Controls and Procedures	23
PART II – OTHER INFORMATION
Item 1.	Legal Proceedings	24
Item 1A.	Risk Factors	24
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	24
Item 6.	Exhibits	24
SIGNATURES		25

2

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements

INSTEEL INDUSTRIES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME

(In thousands, except per share amounts)

(Unaudited)

	Three Months Ended
	January 2,			December 28,
	2021			2019
Net sales	$	119,605		$	97,569
Cost of sales		99,754			91,332
Gross profit		19,851			6,237
Selling, general and administrative expense		8,553			5,744
Restructuring charges, net		657			-
Other expense (income), net		13			(25	)
Interest expense		25			26
Interest income		(5	)		(226	)
Earnings before income taxes		10,608			718
Income taxes		2,465			163
Net earnings	$	8,143		$	555
Net earnings per share:
Basic	$	0.42		$	0.03
Diluted		0.42			0.03
Weighted average shares outstanding:
Basic		19,309			19,261
Diluted		19,434			19,370
Cash dividends declared per share	$	1.53		$	0.03
Comprehensive income	$	8,143		$	555

See accompanying notes to consolidated financial statements. 

3

INSTEEL INDUSTRIES, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(In thousands)

	(Unaudited)
	January 2,			October 3,
	2021			2020
Assets
Current assets:
Cash and cash equivalents	$	50,182		$	68,688
Accounts receivable, net		49,224			53,817
Inventories		64,276			68,963
Other current assets		5,201			5,570
Total current assets		168,883			197,038
Property, plant and equipment, net		101,351			101,392
Intangibles, net		8,331			8,567
Goodwill		9,745			9,745
Other assets		21,641			21,160
Total assets	$	309,951		$	337,902
Liabilities and shareholders' equity
Current liabilities:
Accounts payable	$	31,761		$	38,961
Accrued expenses		15,012			14,717
Total current liabilities		46,773			53,678
Other liabilities		19,444			19,421
Commitments and contingencies
Shareholders' equity:
Common stock		19,314			19,304
Additional paid-in capital		76,716			76,387
Retained earnings		149,660			171,068
Accumulated other comprehensive loss		(1,956	)		(1,956	)
Total shareholders' equity		243,734			264,803
Total liabilities and shareholders' equity	$	309,951		$	337,902

See accompanying notes to consolidated financial statements.

4

INSTEEL INDUSTRIES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

	Three Months Ended
	January 2,			December 28,
	2021			2019
Cash Flows From Operating Activities:
Net earnings	$	8,143		$	555
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation and amortization		3,610			3,478
Amortization of capitalized financing costs		16			16
Stock-based compensation expense		224			186
Deferred income taxes		(64	)		186
Loss on sale and disposition of property, plant and equipment		32			-
Increase in cash surrender value of life insurance policies over premiums paid		(364	)		(339	)
Net changes in assets and liabilities (net of assets and liabilities acquired):
Accounts receivable, net		4,593			8,777
Inventories		4,687			5,599
Accounts payable and accrued expenses		(9,753	)		10,225
Other changes		2,826			892
Total adjustments		5,807			29,020
Net cash provided by operating activities		13,950			29,575
Cash Flows From Investing Activities:
Capital expenditures		(2,860	)		(600	)
Increase in cash surrender value of life insurance policies		(197	)		(42	)
Proceeds from sale of assets held for sale		19			-
Proceeds from surrender of life insurance policies		18			-
Net cash used for investing activities		(3,020	)		(642	)
Cash Flows From Financing Activities:
Proceeds from long-term debt		45			67
Principal payments on long-term debt		(45	)		(67	)
Cash dividends paid		(29,551	)		-
Payment of employee tax withholdings related to net share transactions		(13	)		-
Cash received from exercise of stock options		128			-
Net cash used for financing activities		(29,436	)		-
Net increase (decrease) in cash and cash equivalents		(18,506	)		28,933
Cash and cash equivalents at beginning of period		68,688			38,181
Cash and cash equivalents at end of period	$	50,182		$	67,114
Supplemental Disclosures of Cash Flow Information:
Cash paid during the period for:
Income taxes, net	$	95		$	14
Non-cash investing and financing activities:
Purchases of property, plant and equipment in accounts payable		500			310
Declaration of cash dividends to be paid		-			578
Restricted stock units and stock options surrendered for withholding taxes payable		13			-

See accompanying notes to consolidated financial statements

5

INSTEEL INDUSTRIES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY 

(In thousands)

(Unaudited)

											Accumulated
					Additional						Other			Total
	Common Stock				Paid-In			Retained			Comprehensive			Shareholders'
	Shares		Amount		Capital			Earnings			Loss			Equity
For the three months ended January 2, 2021
Balance at October 3, 2020		19,304	$	19,304	$	76,387		$	171,068		$	(1,956	)	$	264,803
Net earnings									8,143						8,143
Stock options exercised, net		10		10		118									128
Compensation expense associated with stock-based plans						224									224
Restricted stock units and stock options surrendered for withholding taxes payable						(13	)								(13	)
Cash dividends declared									(29,551	)					(29,551	)
Balance at January 2, 2021		19,314	$	19,314	$	76,716		$	149,660		$	(1,956	)	$	243,734
For the three months ended December 28, 2019
Balance at September 28, 2019		19,261	$	19,261	$	74,632		$	154,372		$	(2,248	)	$	246,017
Net earnings									555						555
Compensation expense associated with stock-based plans						186									186
Cash dividends declared									(578	)					(578	)
Balance at December 28, 2019		19,261	$	19,261	$	74,818		$	154,349		$	(2,248	)	$	246,180

See accompanying notes to consolidated financial statements

6

INSTEEL INDUSTRIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 

(Unaudited)

(1) Basis of Presentation

The accompanying unaudited interim consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the U.S. (“GAAP”) on a basis consistent with that used in the Annual Report on Form 10-K for the year ended October 3, 2020 (“2020 Form 10-K”) filed by us with the Securities and Exchange Commission (the “SEC”). These statements include all normal recurring adjustments necessary to present fairly the consolidated balance sheets and the statements of operations and comprehensive income, cash flows and shareholders’ equity for the periods indicated. The October 3, 2020 consolidated balance sheet was derived from audited consolidated financial statements but does not include all the disclosures required by GAAP. These statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in our 2020 Form 10-K. The results of operations for the periods indicated are not necessarily indicative of the results that may be expected for the full fiscal year or any future periods.

On March 16, 2020, we, through our wholly-owned subsidiary, Insteel Wire Products Company (“IWP”), purchased substantially all of the assets of Strand-Tech Manufacturing, Inc. (“STM”) (see Note 3 to the consolidated financial statements).

(2) Recent Accounting Pronouncements

Current Adoptions

In June 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standard Update (“ASU”) No. 2016-13 “Credit Losses - Measurement of Credit Losses on Financial Instruments.” ASU No. 2016-13 significantly changes how entities will measure credit losses for most financial assets, including accounts and notes receivables, by replacing today’s “incurred loss” approach with an “expected loss” model under which allowances will be recognized based on expected rather than incurred losses. We adopted ASU No. 2016-13 in the current quarter. The adoption of this update did not have an impact on our consolidated financial statements. We estimate our allowance for doubtful accounts based upon several factors, including customer credit quality and historical write-off trends. The adoption of this guidance did not significantly impact our accounting policies or methods utilized to determine the allowance for doubtful accounts.

In January 2017, the FASB issued ASU No. 2017-04 “Intangibles – Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment,” which simplifies the accounting for goodwill impairments by eliminating step 2 from the goodwill impairment test. ASU No. 2017-04 became effective for us in the current quarter. The adoption of this update did not have a material impact on our consolidated financial statements.

Future Adoptions

In December 2019, the FASB issued ASU 2019-12 "Simplifying the Accounting for Income Taxes (Topic 740)." ASU No. 2019-12 removes certain exceptions to the general principles in Accounting Standards Codification (“ASC”) 740 and also clarifies and amends existing guidance to provide for more consistent application. ASU 2019-12 will become effective for us in the first quarter of fiscal 2022. The adoption of this update will not have a material impact on our consolidated financial statements.

(3) Business Combination

On March 16, 2020, we purchased substantially all of the assets of STM for an adjusted purchase price of $19.4 million, reflecting certain post-closing adjustments (the “STM Acquisition”), which included a $1.0 million holdback that is payable one year from the acquisition date.

STM was a leading manufacturer of prestressed concrete strand (“PC strand”) for concrete construction applications. We acquired, among other assets, STM’s accounts receivable, inventories, production equipment and facility located in Summerville, South Carolina, and assumed certain of its accounts payable and accrued liabilities. The STM Acquisition serves to strengthen our competitive position as we contend with increased low-priced import competition.

7

 

Following is a summary of our final allocation of the adjusted purchase price to the fair values of the assets acquired and liabilities assumed as of the acquisition date:

(In thousands)
Assets acquired:
Accounts receivable	$	3,829
Inventories		3,172
Other current assets		178
Property, plant and equipment		10,919
Intangibles		970
Total assets acquired	$	19,068
Liabilities assumed:
Accounts payable	$	852
Accrued expenses		312
Total liabilities assumed		1,164
Net assets acquired		17,904
Adjusted purchase price		19,356
Goodwill	$	1,452

In connection with the STM Acquisition, we acquired certain intangible assets including customer relationships, a trade name and non-competition agreement. Goodwill associated with the STM Acquisition, which is deductible for tax purposes, consists largely of the synergies we expect to realize through the integration of the acquired assets with our operations.

The STM Acquisition was accounted for as a business purchase pursuant to ASC Topic 805, Business Combinations (“ASC 805”). Under the provisions of ASC 805, acquisition and integration costs are recorded as expenses in the period in which such costs are incurred rather than included as components of consideration transferred.

The following unaudited supplemental pro forma financial information reflects our combined results of operations had the STM Acquisition occurred at the beginning of fiscal 2019. The pro forma information reflects certain adjustments related to the STM Acquisition, including adjusted amortization and depreciation expense based on the fair values of the assets acquired. The pro forma information does not reflect any potential operating efficiencies or cost savings that may result from the STM Acquisition. Accordingly, this pro forma information is for illustrative purposes and is not intended to represent the actual results of operations of the combined company that would have been achieved had the STM Acquisition occurred at the beginning of fiscal 2019, nor is it intended to indicate future results of operations. The pro forma combined results of operations for the three-months ended December 28, 2019 are as follows:

	December 28,
(In thousands)	2019
Net sales	$	103,641
Earnings before income taxes		212
Net earnings		183

Restructuring charges. In connection with the STM acquisition, we elected to consolidate our PC strand operations through the closure of the Summerville facility and the redeployment of its equipment to our other three PC strand production facilities located in Gallatin, Tennessee; Houston, Texas; and Sanderson, Florida. Operations at the Summerville facility ceased during the third quarter of fiscal 2020. Following is a summary of the restructuring activity during the three-month period ended January 2, 2021:

	Employee Separation Costs			Equipment Relocation Costs			Facility Closure Costs			Asset Impairments			Total
(In thousands)
Liability as of October 3, 2020	$	-		$	20		$	151		$	-		$	171
Restructuring charges		13			88			552			4			657
Cash payments		(13	)		(95	)		(669	)		-			(777	)
Non-cash charges		-			-			-			(4	)		(4	)
Liability as of January 2, 2021	$	-		$	13		$	34		$	-		$	47

8

 

As of January 2, 2021 and October 3, 2020, we recorded a liability of $47,000 and $171,000, respectively, for restructuring liabilities in accrued expenses on our consolidated balance sheet. We currently expect to incur approximately $800,000 of additional restructuring charges for equipment relocation and facility closure costs.

(4) Revenue Recognition

We recognize revenues when performance obligations under the terms of a contract with our customers are satisfied, which generally occurs when products are shipped and control is transferred. We enter into contracts that pertain to products, which are accounted for as separate performance obligations and typically one year or less in duration. We do not exercise significant judgment in determining the timing for the satisfaction of performance obligations or the transaction price. Revenue is measured as the amount of consideration expected to be received in exchange for our products. We have elected to apply the practical expedient provided for in ASU No. 2014-09 and not disclose information regarding remaining performance obligations that have original expected durations of one year or less.

Variable consideration that may affect the total transaction price, including contractual discounts, rebates, returns and credits are included in net sales. Estimates for variable consideration are based on historical experience, anticipated performance and management's judgment and are updated as of each reporting date. Shipping and related expenses associated with outbound freight are accounted for as fulfillment costs and included in cost of sales. We do not have significant financing components.

Our net sales by product line are as follows:

	Three Months Ended
	January 2,		December 28,
(In thousands)	2021		2019
Welded wire reinforcement	$	74,026	$	61,827
Prestressed concrete strand		45,579		35,742
Total	$	119,605	$	97,569

Our net sales by geographic region are as follows:

	Three Months Ended
	January 2,		December 28,
(In thousands)	2021		2019
United States	$	118,337	$	97,257
Foreign		1,268		312
Total	$	119,605	$	97,569

Contract assets primarily relate to our rights to consideration for products that are delivered but not billed as of the reporting date and are reclassified to receivables when the customer is invoiced. Contract liabilities primarily relate to performance obligations that are to be satisfied in the future and arise when we bill the customer in advance of shipments. Contract costs are not significant and are recognized as incurred. Contract assets and liabilities were not material as of January 2, 2021 and October 3, 2020.

Accounts receivable includes amounts billed and currently due from customers stated at their net estimated realizable value. Customer payment terms are generally 30 days. We maintain an allowance for doubtful accounts to provide for the estimated receivables that will not be collected, which is based upon our assessment of customer creditworthiness, historical payment experience and the age of outstanding receivables. Past-due trade receivable balances are written off when our collection efforts have been unsuccessful.

9

 

(5) Fair Value Measurements

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The authoritative guidance for fair value measurements establishes a three-level fair value hierarchy that encourages an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The three levels of inputs used to measure fair value are as follows:

Level 1 - Quoted prices in active markets for identical assets or liabilities.

Level 2 - Observable inputs other than quoted prices included in Level 1, such as quoted prices for similar assets and liabilities in active markets.

Level 3 - Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities, including certain pricing models, discounted cash flow methodologies and similar techniques that use significant unobservable inputs.

As of January 2, 2021 and October 3, 2020, we held financial assets that are required to be measured at fair value on a recurring basis, which are summarized below:

(In thousands)	Total		Quoted Prices in Active Markets (Level 1)		Observable Inputs (Level 2)
As of January 2, 2021:
Current assets:
Cash equivalents	$	52,725	$	52,725	$	-
Other assets:
Cash surrender value of life insurance policies		11,127		-		11,127
Total	$	63,852	$	52,725	$	11,127
As of October 3, 2020:
Current assets:
Cash equivalents	$	72,234	$	72,234	$	-
Other assets:
Cash surrender value of life insurance policies		10,584		-		10,584
Total	$	82,818	$	72,234	$	10,584

Cash equivalents, which include all highly liquid investments with original maturities of three months or less, are classified as Level 1 of the fair value hierarchy. The carrying amount of our cash equivalents, which consist of investments in money market funds, approximates fair value due to their short maturities. Cash surrender value of life insurance policies are classified as Level 2. The fair value of the life insurance policies was determined by the underwriting insurance company’s valuation models and represents the guaranteed value we would receive upon surrender of these policies as of the reporting date.

As of January 2, 2021 and October 3, 2020, we had no nonfinancial assets that were required to be measured at fair value on a nonrecurring basis other than the assets and liabilities that were acquired from STM at fair value during the prior year ended October 3, 2020 (see Note 3 to the consolidated financial statements). The carrying amounts of accounts receivable, accounts payable and accrued expenses approximate fair value due to the short-term maturities of these financial instruments.

10

 

(6) Intangible Assets

The primary components of our intangible assets and the related accumulated amortization are as follows:

(In thousands)	Gross Amount		Accumulated Amortization			Net Book Value
As of January 2, 2021:
Customer relationships	$	9,870	$	(2,996	)	$	6,874
Developed technology and know-how		1,800		(572	)		1,228
Non-competition agreements		400		(224	)		176
Trade name		250		(197	)		53
	$	12,320	$	(3,989	)	$	8,331
As of October 3, 2020:
Customer relationships	$	9,870	$	(2,837	)	$	7,033
Developed technology and know-how		1,800		(551	)		1,249
Non-competition agreements		1,860		(1,663	)		197
Trade name		250		(162	)		88
	$	13,780	$	(5,213	)	$	8,567

Amortization expense for intangibles was $236,000 and $273,000 for the three-month periods ended January 2, 2021 and December 28, 2019, respectively.

(7) Stock-Based Compensation

Under our equity incentive plan, employees and directors may be granted stock options, restricted stock, restricted stock units and performance awards. Effective February 28, 2020, our shareholders approved an amendment to the 2015 Equity Incentive Plan of Insteel Industries, Inc. (the “2015 Plan”), which authorizes up to an additional 750,000 shares of our common stock for future grants under the plan and expires on February 17, 2025. As of January 2, 2021, there were 738,000 shares of our common stock available for future grants under the 2015 Plan, which is our only active equity incentive plan.

Stock option awards. Under our equity incentive plan, employees and directors may be granted options to purchase shares of common stock at the fair market value on the date of the grant. Options granted under these plans generally vest over three years and expire ten years from the date of the grant. Compensation expense associated with stock options was $76,000 and $60,000 for the three-month periods ended January 2, 2021 and December 28, 2019, respectively. As of January 2, 2021, there was $292,000 of unrecognized compensation cost related to unvested options which is expected to be recognized over a weighted average period of 1.57 years.

The following table summarizes stock option activity:

										Contractual		Aggregate
	Options			Exercise Price Per Share						Term - Weighted		Intrinsic
	Outstanding							Weighted		Average		Value
	(in thousands)			Range				Average		(in years)		(in thousands)
Outstanding at October 3, 2020		482			$10.23	-	$41.85	$	24.90
Exercised		(22	)		13.06	-	18.25		17.11
Outstanding at January 2, 2021		460			10.23	-	41.85		25.28		6.53	$	589
Vested and anticipated to vest in the future at January 2, 2021		454							25.33		6.50		578
Exercisable at January 2, 2021		261							27.84		4.77		274

Stock option exercises include “net exercises” for which the optionee received shares of common stock equal to the intrinsic value of the options (fair market value of common stock on the date of exercise less exercise price) reduced by any applicable withholding taxes.

Restricted stock units. Restricted stock units (“RSUs”) granted under our equity incentive plans are valued based upon the fair market value on the date of the grant and provide for a dividend equivalent payment which is included in compensation expense. The vesting period for RSUs is generally one year from the date of the grant for RSUs granted to directors and three years from the date of the grant for RSUs granted to employees. RSUs do not have voting rights. Compensation expense associated with RSUs was $148,000 and $126,000 for the three-month periods ended January 2, 2021 and December 28, 2019, respectively.

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As of January 2, 2021, there was $441,000 of unrecognized compensation cost related to unvested RSUs which is expected to be recognized over a weighted average period of 1.90 years.

The following table summarizes RSU activity:

			Weighted
	Restricted		Average
	Stock Units		Grant Date
(Unit amounts in thousands)	Outstanding		Fair Value
Balance, October 3, 2020		122	$	23.07
Released		-		-
Balance, January 2, 2021		122		23.07

(8) Income Taxes

Effective income tax rate. Our effective income tax rate was 23.2% for the three-month period ended January 2, 2021 compared with 22.7% for the three-month period ended December 28, 2019. The effective income tax rates for both periods were based upon the estimated rate applicable for the entire fiscal year adjusted to reflect any significant items related specifically to interim periods.

Deferred income taxes. As of January 2, 2021 and October 3, 2020, we recorded a deferred tax liability (net of valuation allowance) of $6.5 million and $6.6 million, respectively, in other liabilities on our consolidated balance sheet. We have $2.9 million of state net operating loss carryforwards (“NOLs”) that begin to expire in 2031, but principally expire between 2031 and 2036.

The realization of our deferred tax assets is entirely dependent upon our ability to generate future taxable income in applicable jurisdictions. GAAP requires that we periodically assess the need to establish a reserve against our deferred tax assets to the extent we no longer believe it is more likely than not that they will be fully realized. As of January 2, 2021 and October 3, 2020, we recorded a valuation allowance of $162,000 and $207,000, respectively, pertaining to various state NOLs and tax credits that were not expected to be utilized. The valuation allowance is subject to periodic review and adjustment based on changes in facts and circumstances and would be reduced should we utilize the state NOLs and tax credits against which an allowance had previously been provided or determine that such utilization was more likely than not.

Uncertainty in income taxes. We establish contingency reserves for material, known tax exposures based on our assessment of the estimated liability that would be incurred in connection with the settlement of such matters. As of January 2, 2021, we had no material, known tax exposures that required the establishment of contingency reserves for uncertain tax positions.

We file U.S. federal, state and local income tax returns in various jurisdictions. Federal and various state tax returns filed subsequent to 2015 remain subject to examination.

(9) Employee Benefit Plans

Supplemental retirement benefit plan. We have Supplemental Retirement Benefit Agreements (each, a “SRBA”) with certain of our employees (each, a “Participant”). Under the SRBAs, if the Participant remains in continuous service with us for a period of at least 30 years, we will pay the Participant a supplemental retirement benefit for the 15-year period following the Participant’s retirement equal to 50% of the Participant’s highest average annual base salary for five consecutive years in the 10-year period preceding the Participant’s retirement. If the Participant retires prior to the later of age 65 or the completion of 30 years of continuous service with us, but has completed at least 10 years of continuous service, the amount of the Participant’s supplemental retirement benefit will be reduced by 1/360th for each month short of 30 years that the Participant was employed by us.

12

 

Net periodic pension cost for the SRBAs includes the following components:

	Three Months Ended
	January 2,		December 28,
(In thousands)	2021		2019
Interest cost	$	79	$	82
Service cost		78		83
Recognized net actuarial loss		54		72
Net periodic pension cost	$	211	$	237

(10) Long-Term Debt

Revolving Credit Facility. We have a $100.0 million revolving credit facility (the “Credit Facility”) that is used to supplement our operating cash flow and fund our working capital, capital expenditure, general corporate and growth requirements. In May 2019, we entered into a new credit agreement, which amended and restated in its entirety the previous agreement pertaining to the revolving credit facility that had been in effect since June 2010. The new credit agreement, among other changes, extended the maturity date of the Credit Facility from May 13, 2020 to May 15, 2024 and provided for an accordion feature whereby its size may be increased by up to $50.0 million, subject to our lender’s approval. Advances under the Credit Facility are limited to the lesser of the revolving loan commitment amount (currently $100.0 million) or a borrowing base amount that is calculated based upon a percentage of eligible receivables and inventories. As of January 2, 2021, no borrowings were outstanding on the Credit Facility, $81.8 million of borrowing capacity was available and outstanding letters of credit totaled $1.5 million.

Interest rates on the Credit Facility are based upon (1) an index rate that is established at the highest of the prime rate, 0.50% plus the federal funds rate or the LIBOR rate plus the excess of the then-applicable margin for LIBOR loans over the then-applicable margin for index rate loans, or (2) at our election, a LIBOR rate, plus in either case, an applicable interest rate margin. The applicable interest rate margins are adjusted on a quarterly basis based upon the amount of excess availability on the Credit Facility within the range of 0.25% to 0.50% for index rate loans and 1.25% to 1.50% for LIBOR loans. In addition, the applicable interest rate margins would be increased by 2.00% upon the occurrence of certain events of default provided for under the terms of the Credit Facility. Based on our excess availability as of January 2, 2021, the applicable interest rate margins on the Credit Facility were 0.25% for index rate loans and 1.25% for LIBOR loans.

Our ability to borrow available amounts under the Credit Facility will be restricted or eliminated in the event of certain covenant breaches, events of default or if we are unable to make certain representations and warranties provided for under the terms of the Credit Facility. We are required to maintain a fixed charge coverage ratio of not less than 1.0 at the end of each fiscal quarter for the twelve-month period then ended when the amount of liquidity on the Credit Facility is less than $10.0 million. In addition, the terms of the Credit Facility restrict our ability to, among other things: engage in certain business combinations or divestitures; make investments in or loans to third parties, unless certain conditions are met with respect to such investments or loans; pay cash dividends or repurchase shares of our stock subject to certain minimum borrowing availability requirements; incur or assume indebtedness; issue securities; enter into certain transactions with our affiliates; or permit liens to encumber our property and assets. The terms of the Credit Facility also provide that an event of default will occur upon the occurrence of, among other things: defaults or breaches under the loan documents, subject in certain cases to cure periods; defaults or breaches by us or any of our subsidiaries under any agreement resulting in the acceleration of amounts above certain thresholds or payment defaults above certain thresholds; certain events of bankruptcy or insolvency; certain entries of judgment against us or any of our subsidiaries, which are not covered by insurance; or a change of control. As of January 2, 2021, we were in compliance with all of the financial and negative covenants under the Credit Facility and there have not been any events of default.

Amortization of capitalized financing costs associated with the Credit Facility was $16,000 for each of the three-month periods ended January 2, 2021 and December 28, 2019.

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(11) Earnings Per Share

The computation of basic and diluted earnings per share attributable to common shareholders is as follows:

	Three Months Ended
	January 2,		December 28,
(In thousands, except per share amounts)	2021		2019
Net earnings	$	8,143	$	555
Basic weighted average shares outstanding		19,309		19,261
Dilutive effect of stock-based compensation		125		109
Diluted weighted average shares outstanding		19,434		19,370
Net earnings per share:
Basic	$	0.42	$	0.03
Diluted	$	0.42	$	0.03

Options and RSUs that were antidilutive and not included in the dilutive earnings per share calculation amounted to 254,000 and 293,000 shares for the three-month periods ended January 2, 2021 and December 28, 2019, respectively.

(12) Share Repurchases

On November 18, 2008, our Board of Directors approved a share repurchase authorization to buy back up to $25.0 million of our outstanding common stock (the “Authorization”). Under the Authorization, repurchases may be made from time to time in the open market or in privately negotiated transactions subject to market conditions, applicable legal requirements and other factors. We are not obligated to acquire any common stock and the program may be commenced or suspended at any time at our discretion without prior notice. The Authorization continues in effect until terminated by the Board of Directors. As of January 2, 2021, there was $24.8 million remaining available for future share repurchases under this Authorization. There were no share repurchases during the three-month periods ended January 2, 2021 and December 28, 2019.

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(13) Other Financial Data

Balance sheet information

	January 2,			October 3,
(In thousands)	2021			2020
Accounts receivable, net:
Accounts receivable	$	49,489		$	54,108
Less allowance for doubtful accounts		(265	)		(291	)
Total	$	49,224		$	53,817
Inventories:
Raw materials	$	27,015		$	31,553
Work in process		3,637			3,813
Finished goods		33,624			33,597
Total	$	64,276		$	68,963
Other current assets:
Prepaid insurance	$	3,582		$	4,096
Other		1,619			1,474
Total	$	5,201		$	5,570
Other assets:
Cash surrender value of life insurance policies	$	11,127		$	10,584
Assets held for sale		7,754			7,778
Right-of-use asset		2,494			2,522
Capitalized financing costs, net		155			170
Other		111			106
Total	$	21,641		$	21,160
Property, plant and equipment, net:
Land and land improvements	$	14,540		$	14,520
Buildings		52,501			52,462
Machinery and equipment		172,268			172,617
Construction in progress		5,717			3,978
		245,026			243,577
Less accumulated depreciation		(143,675	)		(142,185	)
Total	$	101,351		$	101,392
Accrued expenses:
Salaries, wages and related expenses	$	4,555		$	4,971
Income taxes		3,636			1,201
Customer rebates		2,304			1,581
Property taxes		1,445			1,726
Operating lease liability		1,284			1,230
Holdback for business acquired		1,000			1,000
State sales and use taxes		315			544
Other		473			2,464
Total	$	15,012		$	14,717
Other liabilities:
Deferred compensation	$	11,722		$	11,553
Deferred income taxes		6,504			6,568
Operating lease liability		1,218			1,300
Total	$	19,444		$	19,421

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(14) Business Segment Information

Our operations are entirely focused on the manufacture and marketing of steel wire reinforcing products for concrete construction applications. Our concrete reinforcing products consist of two product lines: PC strand and welded wire reinforcement. Based on the criteria specified in ASC Topic 280, Segment Reporting, we have one reportable segment.

(15) Leases

We have operating leases for certain equipment, office space and vehicles. We determine whether an arrangement is a lease at its inception if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. Leases with an initial term of twelve months or less are not recorded on our consolidated balance sheet. Lease expense for operating leases with original terms of more than twelve months was $360,000 and $327,000 for the three-month periods ended January 2, 2021 and December 28, 2019, respectively.

Most of our leases include options to extend or terminate the leases which are exercised at our sole discretion. As most of our leases do not provide an implicit interest rate, we use our incremental borrowing rate as of the commencement date in determining the present value of lease payments.

Supplemental cash flow and non-cash information related to leases is as follows:

	Three Months Ended
(In thousands)	January 2, 2021		December 28, 2019
Cash paid for operating leases included in operating cash flows	$	361	$	335
Right-of-use assets obtained in exchange for new lease obligations		303		358

Supplemental balance sheet information related to leases is as follows:

(In thousands)	January 2, 2021		October 3, 2020
Right-of-use assets:
Other assets	$	2,494	$	2,522
Lease liabilities:
Accrued expenses		1,284		1,230
Other liabilities		1,218		1,300
Total operating lease liabilities	$	2,502	$	2,530

As of January 2, 2021, our operating leases had a weighted average remaining lease term of 2.2 years and a weighted average discount rate of 4.3%. Aggregate future operating lease payments as of January 2, 2021 are as follows:

(In thousands)
2021	$	1,283
2022		889
2023		436
2024		54
Total future operating lease payments		2,662
Less: imputed interest		(160	)
Present value of lease liabilities	$	2,502

(16) Contingencies

Insurance recoveries. We maintain general liability, business interruption and replacement cost property insurance coverage on our facilities.

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Legal proceedings. We are involved in lawsuits, claims, investigations and proceedings, including commercial, environmental and employment matters, which arise in the ordinary course of business. We do not expect the ultimate outcome or cost to resolve these matters will have a material adverse effect on our financial position, results of operations or cash flows.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Cautionary Note Regarding Forward-Looking Statements

This report contains forward-looking statements within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, particularly under the caption “Outlook” below. When used in this report, the words “believes,” “anticipates,” “expects,” “estimates,” “appears,” “plans,” “intends,” “continue,” “outlook,” “may,” “should,” “could” and similar expressions are intended to identify forward-looking statements. Although we believe that our plans, intentions and expectations reflected in or suggested by such forward-looking statements are reasonable, they are subject to numerous risks and uncertainties and involved certain assumptions. Actual results may differ materially from those expressed in forward-looking statements, and we can provide no assurances that such plans, intentions or expectations will be implemented or achieved. Many of these risks and uncertainties are discussed in detail, and where appropriate, updated in our filings with the U.S. Securities and Exchange Commission (“SEC”), in particular in our Annual Report on Form 10-K for the fiscal year ended October 3, 2020 (our “2020 Annual Report”). You should carefully review these risks and uncertainties.

All forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by these cautionary statements. All forward-looking statements speak only to the respective dates on which such statements are made and we do not undertake any obligation to publicly release the results of any revisions to these forward-looking statements that may be made to reflect any future events or circumstances after the date of such statements or to reflect the occurrence of anticipated or unanticipated events, except as may be required by law.

It is not possible to anticipate and list all risks and uncertainties that may affect our business, future operations or financial performance; however, they include, but are not limited to, the following:

● the impact of COVID-19 on the economy, demand for our products and our operations, including the measures taken by governmental authorities to address it, which may precipitate or exacerbate other risks and/or uncertainties;

● general economic and competitive conditions in the markets in which we operate;

● changes in the spending levels for nonresidential and residential construction and the impact on demand for our products;

● changes in the amount and duration of transportation funding provided by federal, state and local governments and the impact on spending for infrastructure construction and demand for our products;

● the cyclical nature of the steel and building material industries;

● credit market conditions and the relative availability of financing for us, our customers and the construction industry as a whole;

● fluctuations in the cost and availability of our primary raw material, hot-rolled carbon steel wire rod, from domestic and foreign suppliers;

● competitive pricing pressures and our ability to raise selling prices in order to recover increases in raw material or operating costs;

● changes in U.S. or foreign trade policy, including the Section 232 tariff on imported steel, affecting imports or exports of steel wire rod or our products;

● unanticipated changes in customer demand, order patterns and inventory levels;

● the impact of fluctuations in demand and capacity utilization levels on our unit manufacturing costs;

● our ability to further develop the market for engineered structural mesh (“ESM”) and expand our shipments of ESM;

● legal, environmental, economic or regulatory developments that significantly impact our business or operating costs;

● unanticipated plant outages, equipment failures or labor difficulties; and

● the “Risk Factors” discussed in our 2020 Annual Report and in other filings made by us with the SEC.

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Overview

Insteel Industries, Inc. (“we,” “us,” “our,” “the Company” or “Insteel”) is the nation’s largest manufacturer of steel wire reinforcing products for concrete construction applications. We manufacture and market prestressed concrete strand (“PC strand”) and welded wire reinforcement, including ESM, concrete pipe reinforcement and standard welded wire reinforcement. Our products are sold primarily to manufacturers of concrete products that are used in nonresidential construction. We market our products through sales representatives who are our employees. We sell our products nationwide across the U.S. and, to a much lesser extent, into Canada, Mexico, and Central and South America, delivering them primarily by truck, using common or contract carriers. Our business strategy is focused on: (1) achieving leadership positions in our markets; (2) operating as the lowest cost producer in our industry; and (3) pursuing growth opportunities within our core businesses that further our penetration of the markets we currently serve or expand our footprint.

On March 16, 2020, we, through our wholly-owned subsidiary, Insteel Wire Products (“IWP”), purchased substantially all of the assets of Strand-Tech Manufacturing, Inc. (“STM”) for an adjusted purchase price of $19.4 million, which reflects certain post-closing adjustments (the “STM Acquisition”). STM was a leading manufacturer of PC strand for concrete construction applications. We acquired, among other assets, STM’s accounts receivable, inventories, production equipment and facility located in Summerville, South Carolina and assumed certain of its accounts payable and accrued liabilities.

COVID-19 Update

In March 2020, the World Health Organization characterized COVID-19 as a pandemic, and the President of the United States declared the COVID-19 outbreak a national emergency. The rapid spread of the outbreak has caused significant disruptions in the U.S. and global economies. We are a company operating in a critical infrastructure industry, as defined by the U.S. Department of Homeland Security, and our facilities have been allowed to remain open. Accordingly, COVID-19 has had limited impact on our operations to date. The situation remains dynamic and the ultimate duration and magnitude of the impact on the economy and our business are not known at this time. We are continuing to monitor the progression of the pandemic, measures taken by governmental authorities to address it, and the potential effect on our financial position, results of operations, and cash flows.

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Results of Operations

Statements of Operations – Selected Data

(Dollars in thousands)

	Three Months Ended
	January 2,						December 28,
	2021			Change			2019
Net sales	$	119,605			22.6	%	$	97,569
Gross profit		19,851			218.3	%		6,237
Percentage of net sales		16.6	%					6.4	%
Selling, general and administrative expense	$	8,553			48.9	%	$	5,744
Percentage of net sales		7.2	%					5.9	%
Restructuring charges, net	$	657			100.0	%	$	-
Other expense (income), net		13		N/M				(25	)
Interest expense		25			(3.8	%)		26
Interest income		(5	)		(97.8	%)		(226	)
Effective income tax rate		23.2	%					22.7	%
Net earnings	$	8,143		N/M			$	555

"N/M" = not meaningful

First Quarter of Fiscal 2021 Compared to First Quarter of Fiscal 2020

Net Sales

Net sales for the first quarter of 2021 increased 22.6% to $119.6 million from $97.6 million in the prior year quarter, reflecting an 21.6% increase in shipments together with a 1.0% increase in average selling prices. The increase in shipments was primarily due to improved market conditions, the additional business provided by the STM Acquisition and strengthening demand for our products relative to the prior year quarter. Shipments for the current year quarter were not materially impacted by the COVID-19 pandemic.

Gross Profit

Gross profit for the first quarter of 2021 increased 218.3% to $19.9 million, or 16.6% of net sales, from $6.2 million, or 6.4% of net sales, in the prior year quarter due to higher spreads between average selling prices and raw material costs ($11.4 million), lower manufacturing costs ($1.1 million) and an increase in shipments ($1.1 million). The increase in spreads was driven by lower raw material costs ($9.2 million), higher average selling prices ($1.7 million) and lower freight expense ($449,000).

Selling, General and Administrative Expense

Selling, general and administrative expense (“SG&A expense”) for the first quarter of 2021 increased 48.9% to $8.6 million, or 7.2% of net sales, from $5.7 million, or 5.9% of net sales in the prior year quarter primarily due to higher compensation ($2.3 million) and legal expense ($658,000) partially offset by lower employee benefit expense ($99,000). The increase in compensation expense was largely driven by higher incentive plan expense due to our improved financial results in the current year quarter. The increase in legal expense was primarily related to costs associated with trade matters. The decrease in employee benefit expense was due to lower employee health insurance costs in the current year quarter.

Restructuring Charges, Net

Net restructuring charges of $657,000 were incurred in the first quarter of 2021 related to the closure of the Summerville, South Carolina facility, which had been acquired through the STM Acquisition. Restructuring charges included facility closure ($552,000), equipment relocation ($88,000), employee separation costs ($13,000) and asset impairments charges ($4,000).

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Income Taxes

Our effective tax rate for the first quarter of 2021 increased to 23.2% from 22.7% for the prior year quarter primarily due to changes in book versus tax differences during the prior year quarter.

Net Earnings

Net earnings for the first quarter of 2021 increased to $8.1 million ($0.42 per share) from $555,000 ($0.03 per share) in the prior year quarter primarily due to the increase in gross profit partially offset by higher SG&A expense and restructuring charges associated with the consolidation of our PC strand operations.

Liquidity and Capital Resources

Selected Financial Data

(Dollars in thousands)

	Three Months Ended
	January 2,			December 28,
	2021			2019
Net cash provided by operating activities	$	13,950		$	29,575
Net cash used for investing activities		(3,020	)		(642	)
Net cash used for financing activities		(29,436	)		-
Net working capital		122,110			133,959
Total debt		-			-
Percentage of total capital		-			-
Shareholders' equity	$	243,734		$	246,180
Percentage of total capital		100.0	%		100.0	%
Total capital (total debt + shareholders' equity)	$	243,734		$	246,180

Operating Activities

Operating activities provided $13.9 million of cash during the first quarter of 2021 primarily from net earnings adjusted for non-cash items together with a net decrease in working capital. Working capital used $0.5 million of cash due to a $9.8 million decrease in accounts payable and accrued expenses partially offset by a $4.7 million decrease in inventories and $4.6 million decrease in accounts receivable. The decrease in accounts payable and accrued expenses was largely related to lower raw material purchases throughout the quarter together with decreases in accrued salaries, wages and related expenses and the earnout liability partially offset by an increase in accrued customer rebates. The decrease in inventories was due to the lower raw material purchases along with higher shipments during the current quarter. The decrease in accounts receivable was largely driven by the seasonal decline in shipments during the quarter partially offset by higher average selling prices.

Operating activities provided $29.6 million of cash during the first quarter of 2020 primarily from a net decrease in working capital together with net earnings adjusted for non-cash items. Working capital provided $24.6 million of cash due to a $10.2 million increase in accounts payable and accrued expenses, an $8.8 million decrease in accounts receivable and a $5.6 million decrease in inventories. The increase in accounts payable and accrued expenses was largely due to higher raw material purchases near the end of the quarter. The reduction in accounts receivable was largely related to the usual seasonal downturn in sales and decrease in selling prices. The reduction in inventories was driven by lower average unit costs.

We may elect to adjust our operating activities as there are changes in our construction end-markets, which could materially impact our cash requirements. While a downturn in the level of construction activity adversely affects sales to our customers, it generally reduces our working capital requirements.

20

Investing Activities

Investing activities used $3.0 million of cash during the first quarter of 2021 compared to $642,000 during the prior year quarter primarily due to higher capital expenditures ($2.3 million). Capital expenditures increased to $2.9 million from $600,000 in the prior year quarter and are expected to total up to $20.0 million for fiscal 2021, which include expenditures to upgrade and deploy the STM assets, advance the growth of our engineered structural mesh business and support cost and productivity improvement initiatives in addition to recurring maintenance requirements.

Our investing activities are largely discretionary, providing us with the ability to significantly curtail outlays when warranted based on business conditions.

Financing Activities

Financing activities used $29.4 million of cash during the first quarter of 2021 while not providing or using any significant amounts of cash during the prior year quarter. During the first quarter of 2021, we declared and paid a special dividend totaling $29.0 million, or $1.50 per share, and a regular quarterly dividend of $578,000, or $0.03 per share. During the first quarter of 2020, we declared a regular quarterly cash dividend of $578,000, or $0.03 per share, which was paid in the second quarter of 2020.

Cash Management 

Our cash is principally concentrated at one financial institution, which at times exceeds federally insured limits. We invest excess cash primarily in money market funds, which are highly liquid securities that bear minimal risk.

Credit Facility

We have a $100.0 million revolving credit facility (the “Credit Facility”) that is used to supplement our operating cash flow and fund our working capital, capital expenditure, general corporate and growth requirements. In May 2019, we entered into a new credit agreement, which amended and restated in its entirety the previous agreement pertaining to the revolving credit facility that had been in effect since June 2010. The new credit agreement, among other changes, extended the maturity date of the Credit Facility from May 13, 2020 to May 15, 2024 and provided for an accordion feature whereby its size may be increased by up to $50.0 million, subject to our lender’s approval. Advances under the Credit Facility are limited to the lesser of the revolving loan commitment amount (currently $100.0 million) or a borrowing base amount that is calculated based upon a percentage of eligible receivables and inventories. As of January 2, 2021, no borrowings were outstanding on the Credit Facility, $81.8 million of borrowing capacity was available and outstanding letters of credit totaled $1.5 million (see Note 10 to the consolidated financial statements).

We believe that, in the absence of significant unanticipated funding requirements, cash and cash equivalents, net cash generated by operating activities and the borrowing availability provided under the Credit Facility will be sufficient to satisfy our expected requirements for working capital, capital expenditures, dividends and share repurchases, if any. We expect to have access to the amounts available under the Credit Facility as required. However, should we experience future reductions in our operating cash flows due to weakening conditions in our construction end-markets and reduced demand from our customers, we may need to curtail capital and operating expenditures, cease dividend payments, delay or restrict share repurchases and/or realign our working capital requirements. 

Should we determine, at any time, that we require additional short-term liquidity, we would evaluate the alternative sources of financing that would be potentially available to provide such funding. There can be no assurance that any such financing, if pursued, would be obtained, or if obtained, would be adequate or on terms acceptable to us. However, we believe that our strong balance sheet and borrowing capacity available to us under our Credit Facility position us to meet our anticipated liquidity requirements for the foreseeable future, including the next 12 months. 

Seasonality and Cyclicality

Demand in our markets is both seasonal and cyclical, driven by the level of construction activity, but can also be impacted by fluctuations in the inventory positions of our customers. From a seasonal standpoint, shipments typically reach their highest level of the year when weather conditions are the most conducive to construction activity. As a result, assuming normal seasonal weather patterns, shipments and profitability are usually higher in the third and fourth quarters of the fiscal year and lower in the first and second quarters. From a cyclical standpoint, construction activity and demand for our products is generally correlated with general economic conditions, although there can be significant differences between the relative strength of nonresidential and residential construction for extended periods.

21

Impact of Inflation

We are subject to inflationary risks arising from fluctuations in the market prices for our primary raw material, hot-rolled carbon steel wire rod, and, to a much lesser extent, freight, energy and other consumables that are used in our manufacturing processes. We have generally been able to adjust our selling prices to pass through increases in these costs or offset them through various cost reduction and productivity improvement initiatives. However, our ability to raise our selling prices depends on market conditions and competitive dynamics, and there may be periods during which we are unable to fully recover increases in our costs. Inflation did not have a material impact on our sales or earnings during the first quarter of fiscal 2021. The timing and magnitude of any future increases in our raw material costs and the selling prices for our products is uncertain at this time.   

Off-Balance Sheet Arrangements

We do not have any material transactions, arrangements, obligations (including contingent obligations), or other relationships with unconsolidated entities or other persons, as described by Item 303(a)(4) of Regulation S-K of the SEC, that have or are reasonably likely to have a material current or future impact on our financial condition, results of operations, liquidity, capital expenditures, capital resources or significant components of revenues or expenses.

Contractual Obligations

There have been no material changes in our contractual obligations and commitments as disclosed in our 2020 Annual Report other than those which occur in the ordinary course of business.

Critical Accounting Policies 

Our Management’s Discussion and Analysis of Financial Condition and Results of Operations is based on our unaudited financial statements, which have been prepared in accordance with accounting principles generally accepted in the U.S. for interim financial information. The preparation of our financial statements requires the application of these accounting principles in addition to certain estimates and judgments based on current available information, actuarial estimates, historical results and other assumptions believed to be reasonable. Actual results could differ from these estimates. Please refer to “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Critical Accounting Policies” included in our 2020 Annual Report for further information regarding our critical accounting policies and estimates. As of January 2, 2021, there were no changes in our critical accounting policies or the application of those policies from those reported in our 2020 Annual Report.

Recent Accounting Pronouncements

Refer to Note 2 of the Notes to Consolidated Financial Statements in Item 1 of this Quarterly Report for recently adopted and issued accounting pronouncements including the expected dates of adoption and estimated effects, if any, on our consolidated financial statements.

Outlook

Looking ahead to the remainder of 2021, we are cautiously optimistic that our financial results will benefit from continued strong demand in our construction end-markets. Near term business conditions remain positive and should support higher shipments and operating levels, and reduced unit manufacturing costs at our facilities. In particular, our strong growth in the ESM market during the current quarter should continue and the recent favorable ruling in the PC strand trade case is expected to have a positive financial impact for us in certain of our markets going forward. Additionally, the new administration and Congress have publicly signaled support for additional infrastructure spending that may potentially benefit our markets. However, our outlook remains vulnerable to an uncertain near-term recovery in the U.S. economy and our visibility continues to be limited by the ultimate impact of COVID-19 on our operations and markets. As a result, the prospect, if any, of future funding constraints for public infrastructure projects and economic weakness slowing the non-residential construction markets cannot be measured at this time.

22

In response to these challenges, we will continue to focus on those factors that we can control: closely managing and controlling our expenses; aligning our production schedules with demand in a proactive manner as there are changes in market conditions to minimize our cash operating costs; and pursuing further improvements in the productivity and effectiveness of all our manufacturing, selling and administrative activities. We also expect gradually increasing contributions from the substantial investments we have made in our facilities in the form of reduced operating costs and additional capacity to support future growth. In addition, we will continue to pursue acquisitions opportunistically in our existing businesses that expand our penetration of markets we currently serve or expand our footprint.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Our cash flows and earnings are subject to fluctuations resulting from changes in commodity prices, interest rates and foreign exchange rates. We manage our exposure to these market risks through internally established policies and procedures and, when appropriate, the use of derivative financial instruments. We do not use financial instruments for trading purposes and are not a party to any leveraged derivatives. We monitor our underlying market risk exposures on an ongoing basis and believe we can modify or adapt our hedging strategies as necessary.

Commodity Prices

We are subject to significant fluctuations in the cost and availability of our primary raw material, hot-rolled carbon steel wire rod, which we purchase from both domestic and foreign suppliers. We negotiate quantities and pricing for both domestic and foreign wire rod purchases for varying periods (most recently monthly for domestic suppliers), depending upon market conditions, to manage our exposure to price fluctuations and to ensure adequate availability of material consistent with our requirements. We do not use derivative commodity instruments to hedge our exposure to changes in prices as such instruments are not currently available for wire rod. Our ability to acquire wire rod from foreign sources on favorable terms is impacted by fluctuations in foreign currency exchange rates, foreign taxes, duties, tariffs, quotas and other trade actions. Although changes in our wire rod costs and selling prices tend to be correlated, in weaker market environments, we may be unable to fully recover increased wire rod costs through higher selling prices, which would reduce our earnings and cash flows. Additionally, when raw material costs decline, our financial results may be negatively impacted if the selling prices for our products decrease to an even greater extent and if we are consuming higher cost material from inventory. Based on our shipments and average wire rod cost reflected in cost of sales for the first quarter of 2021, a 10% increase in the price of wire rod would have resulted in a $6.7 million decrease in our pre-tax earnings (assuming there was not a corresponding change in our selling prices).

Interest Rates 

Although we did not have any balances outstanding on our Credit Facility as of January 2, 2021, future borrowings under the facility are subject to a variable rate of interest and are sensitive to changes in interest rates.

Foreign Exchange Exposure

We have not typically hedged foreign currency exposures related to transactions denominated in currencies other than U.S. dollars, as such transactions have not been material historically. We will occasionally hedge firm commitments for certain equipment purchases that are denominated in foreign currencies. The decision to hedge any such transactions is made by us on a case-by-case basis. There were no forward contracts outstanding as of January 2, 2021.

Item 4. Controls and Procedures

We have conducted an evaluation of the effectiveness of our disclosure controls and procedures as of January 2, 2021. This evaluation was conducted under the supervision and with the participation of management, including our principal executive officer and our principal financial officer. Based upon that evaluation, our principal executive officer and our principal financial officer concluded that our disclosure controls and procedures were effective to ensure that information required to be disclosed in the reports that we file or submit under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Further, they concluded that our disclosure controls and procedures were effective to ensure that information is accumulated and communicated to management, including our principal executive officer and our principal financial officer, as appropriate to allow timely decisions regarding required disclosure.

23

There has been no change in our internal control over financial reporting that occurred during the quarter ended January 2, 2021 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II – OTHER INFORMATION

Item 1. Legal Proceedings

We are involved in lawsuits, claims, investigations and proceedings, including commercial, environmental and employment matters, which arise in the ordinary course of business. We do not anticipate that the ultimate costs to resolve these matters will have a material adverse effect on our financial position, results of operations or cash flows.

Item 1A. Risk Factors

During the quarter ended January 2, 2021, there have been no material changes from the risk factors set forth under Part I, Item 1A. “Risk Factors” in our 2020 Annual Report. You should carefully consider these factors in addition to the other information set forth in this report which could materially affect our business, financial condition or future results. The risks and uncertainties described in this report and in our 2020 Annual Report, as well as other reports and statements that we file with the SEC, are not the only risks and uncertainties facing us. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial may also have a material adverse effect on our financial position, results of operations or cash flows.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

On November 18, 2008, our Board of Directors approved a share repurchase authorization to buy back up to $25.0 million of our outstanding common stock (the “Authorization”). Repurchases may be made from time to time in the open market or in privately negotiated transactions subject to market conditions, applicable legal requirements and other factors. We are not obligated to acquire any common stock and may commence or suspend the program at any time at our discretion without prior notice. The Authorization continues in effect until terminated by our Board of Directors. As of January 2, 2021, there was $24.8 million remaining available for future share repurchases under the Authorization. There were no share repurchases during the three-month periods ended January 2, 2021 and December 28, 2019.

Item 6. Exhibits
31.1	Certification of the Chief Executive Officer pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	Certification of the Chief Financial Officer pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1	Certification of the Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2	Certification of the Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101	The following financial information from the Quarterly Report on Form 10-Q of Insteel Industries, Inc. for the quarter ended January 2, 2021, formatted in iXBRL (Inline eXtensible Business Reporting Language): (i) the Consolidated Statements of Operations and Comprehensive Income for the three months ended January 2, 2021 and December 28, 2019, (ii) the Consolidated Balance Sheets as of January 2, 2021 and October 3, 2020, (iii) the Consolidated Statements of Cash Flows for the three months ended January 2, 2021 and December 28, 2019, (iv) the Consolidated Statements of Shareholders’ Equity for the three months ended January 2, 2021 and December 28, 2019, and (v) the Notes to Consolidated Financial Statements.
104	The cover page from our Quarterly Report on Form 10-Q for the quarter ended January 2, 2021, formatted in iXBRL
	Our SEC file number reference for documents filed with the SEC pursuant to the Securities Exchange Act of 1934, as amended, is 1-09929.

24

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

INSTEEL INDUSTRIES, INC.

Registrant

Date: January 21, 2021	By:	/s/  Mark A. Carano
		Mark A. Carano
		Senior Vice President, Chief Financial Officer and Treasurer
		(Duly Authorized Officer and Principal Financial Officer)

25

EX-31.1

EXHIBIT 31.1

Certification

I, H.O. Woltz III, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q for the quarter ended January 2, 2021 of Insteel Industries, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: January 21, 2021

/s/ H. O. Woltz III

H. O. Woltz III

President, Chief Executive Officer and Chairman of the Board

EX-31.2

Exhibit 31.2

Certification

I, Mark A. Carano, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q for the quarter ended January 2, 2021 of Insteel Industries, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: January 21, 2021

/s/ Mark A. Carano

Mark A. Carano

Senior Vice President, Chief Financial Officer and Treasurer

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report on Form 10-Q of Insteel Industries, Inc. (the “Company”) for the period ended January 2, 2021 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, H. O. Woltz III, President, Chief Executive Officer and Chairman of the Board of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that, to my knowledge:

(1)     the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

(2)     the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ H.O. Woltz III

H.O. Woltz III

President, Chief Executive Officer and Chairman of the Board

January 21, 2021

EX-32.2

Exhibit 32.2

CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report on Form 10-Q of Insteel Industries, Inc. (the “Company”) for the period ended January 2, 2021 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Mark A. Carano, Senior Vice President, Chief Financial Officer and Treasurer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that, to my knowledge:

(1)     the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

(2)     the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Mark A. Carano

Mark A. Carano

Senior Vice President, Chief Financial Officer and Treasurer 

January 21, 2021

XML

Document And Entity Information - shares	3 Months Ended
	Jan. 02, 2021	Jan. 20, 2021
Document Information [Line Items]
Entity Central Index Key	0000764401
Entity Registrant Name	INSTEEL INDUSTRIES INC
Amendment Flag	false
Current Fiscal Year End Date	--10-02
Document Fiscal Period Focus	Q1
Document Fiscal Year Focus	2021
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Jan. 02, 2021
Document Transition Report	false
Entity File Number	1-9929
Entity Incorporation, State or Country Code	NC
Entity Tax Identification Number	56-0674867
Entity Address, Address Line One	1373 Boggs Drive
Entity Address, City or Town	Mount Airy
Entity Address, State or Province	NC
Entity Address, Postal Zip Code	27030
City Area Code	336
Local Phone Number	786-2141
Title of 12(b) Security	Common Stock (No Par Value)
Trading Symbol	IIIN
Security Exchange Name	NASDAQ
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		19,313,967

XML

Consolidated Statements of Operations and Comprehensive Income (Unaudited) - USD ($) shares in Thousands, $ in Thousands	3 Months Ended
	Jan. 02, 2021	Dec. 28, 2019
Net sales	$ 119,605	$ 97,569
Cost of sales	99,754	91,332
Gross profit	19,851	6,237
Selling, general and administrative expense	8,553	5,744
Restructuring charges	657	0
Other expense (income), net	13	(25)
Interest expense	25	26
Interest income	(5)	(226)
Earnings before income taxes	10,608	718
Income taxes	2,465	163
Net earnings	$ 8,143	$ 555
Net earnings per share:
Basic (in dollars per share)	$ 0.42	$ 0.03
Diluted (in dollars per share)	$ 0.42	$ 0.03
Weighted average shares outstanding:
Basic (in shares)	19,309	19,261
Diluted (in shares)	19,434	19,370
Cash dividends declared per share (in dollars per share)	$ 1.53	$ 0.03
Comprehensive income	$ 8,143	$ 555

XML

Consolidated Balance Sheets (Current Period Unaudited) - USD ($) $ in Thousands	Jan. 02, 2021	Oct. 03, 2020
Assets
Cash and cash equivalents	$ 50,182	$ 68,688
Accounts receivable, net	49,224	53,817
Inventories	64,276	68,963
Other current assets	5,201	5,570
Total current assets	168,883	197,038
Property, plant and equipment, net	101,351	101,392
Intangibles, net	8,331	8,567
Goodwill	9,745	9,745
Other assets	21,641	21,160
Total assets	309,951	337,902
Liabilities and shareholders' equity
Accounts payable	31,761	38,961
Accrued expenses	15,012	14,717
Total current liabilities	46,773	53,678
Other liabilities	19,444	19,421
Shareholders' equity:
Common stock	19,314	19,304
Additional paid-in capital	76,716	76,387
Retained earnings	149,660	171,068
Accumulated other comprehensive loss	(1,956)	(1,956)
Total shareholders' equity	243,734	264,803
Total liabilities and shareholders' equity	$ 309,951	$ 337,902

XML

Consolidated Statements of Cash Flows (Unaudited) - USD ($)	3 Months Ended
	Jan. 02, 2021	Dec. 28, 2019
Cash Flows From Operating Activities:
Net earnings	$ 8,143,000	$ 555,000
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation and amortization	3,610,000	3,478,000
Amortization of capitalized financing costs	16,000	16,000
Stock-based compensation expense	224,000	186,000
Deferred income taxes	(64,000)	186,000
Loss on sale and disposition of property, plant and equipment	32,000	0
Increase in cash surrender value of life insurance policies over premiums paid	(364,000)	(339,000)
Net changes in assets and liabilities (net of assets and liabilities acquired):
Accounts receivable, net	4,593,000	8,777,000
Inventories	4,687,000	5,599,000
Accounts payable and accrued expenses	(9,753,000)	10,225,000
Other changes	2,826,000	892,000
Total adjustments	5,807,000	29,020,000
Net cash provided by operating activities	13,950,000	29,575,000
Cash Flows From Investing Activities:
Capital expenditures	(2,860,000)	(600,000)
Increase in cash surrender value of life insurance policies	(197,000)	(42,000)
Proceeds from sale of assets held for sale	19,000	0
Proceeds from surrender of life insurance policies	18,000	0
Net cash used for investing activities	(3,020,000)	(642,000)
Cash Flows From Financing Activities:
Proceeds from long-term debt	45,000	67,000
Principal payments on long-term debt	(45,000)	(67,000)
Cash dividends paid	(29,551,000)	0
Payment of employee tax withholdings related to net share transactions	(13,000)	0
Cash received from exercise of stock options	128,000	0
Net cash used for financing activities	(29,436,000)	0
Net increase (decrease) in cash and cash equivalents	(18,506,000)	28,933,000
Cash and cash equivalents at beginning of period	68,688,000	38,181,000
Cash and cash equivalents at end of period	50,182,000	67,114,000
Supplemental Disclosures of Cash Flow Information:
Income taxes, net	95,000	14,000
Non-cash investing and financing activities:
Purchases of property, plant and equipment in accounts payable	500,000	310,000
Declaration of cash dividends to be paid	0	578,000
Restricted stock units and stock options surrendered for withholding taxes payable	$ 13,000	$ 0

XML

Consolidated Statements of Shareholders' Equity (Unaudited) - USD ($) shares in Thousands, $ in Thousands	Common Stock [Member]	Additional Paid-in Capital [Member]	Retained Earnings [Member]	AOCI Attributable to Parent [Member]	Total
Balance (in shares) at Sep. 28, 2019	19,261
Balance at Sep. 28, 2019	$ 19,261	$ 74,632	$ 154,372	$ (2,248)	$ 246,017
Net earnings			555		555
Compensation expense associated with stock-based plans		186			186
Cash dividends declared			(578)		(578)
Balance (in shares) at Dec. 28, 2019	19,261
Balance at Dec. 28, 2019	$ 19,261	74,818	154,349	(2,248)	246,180
Balance (in shares) at Oct. 03, 2020	19,304
Balance at Oct. 03, 2020	$ 19,304	76,387	171,068	(1,956)	264,803
Net earnings			8,143		$ 8,143
Stock options exercised, net (in shares)	10				22
Stock options exercised, net	$ 10	118			$ 128
Compensation expense associated with stock-based plans		224			224
Restricted stock units and stock options surrendered for withholding taxes payable		(13)			(13)
Cash dividends declared			(29,551)		(29,551)
Balance (in shares) at Jan. 02, 2021	19,314
Balance at Jan. 02, 2021	$ 19,314	$ 76,716	$ 149,660	$ (1,956)	$ 243,734

XML

Note 1 - Basis of Presentation

3 Months Ended

Jan. 02, 2021

Notes to Financial Statements

Business Description and Basis of Presentation [Text Block]

(1) Basis of Presentation

The accompanying unaudited interim consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the U.S. (“GAAP”) on a basis consistent with that used in the Annual Report on Form 10-K for the year ended October 3, 2020 (“2020 Form 10-K”) filed by us with the Securities and Exchange Commission (the “SEC”). These statements include all normal recurring adjustments necessary to present fairly the consolidated balance sheets and the statements of operations and comprehensive income, cash flows and shareholders’ equity for the periods indicated. The October 3, 2020 consolidated balance sheet was derived from audited consolidated financial statements but does not include all the disclosures required by GAAP. These statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in our 2020 Form 10-K. The results of operations for the periods indicated are not necessarily indicative of the results that may be expected for the full fiscal year or any future periods.

On March 16, 2020, we, through our wholly-owned subsidiary, Insteel Wire Products Company (“IWP”), purchased substantially all of the assets of Strand-Tech Manufacturing, Inc. (“STM”) (see Note 3 to the consolidated financial statements).

XML

Note 2 - Recent Accounting Pronouncements

3 Months Ended

Jan. 02, 2021

Notes to Financial Statements

Accounting Standards Update and Change in Accounting Principle [Text Block]

(2) Recent Accounting Pronouncements

Current Adoptions

In June 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standard Update (“ASU”) No. 2016-13 “Credit Losses - Measurement of Credit Losses on Financial Instruments.” ASU No. 2016-13 significantly changes how entities will measure credit losses for most financial assets, including accounts and notes receivables, by replacing today’s “incurred loss” approach with an “expected loss” model under which allowances will be recognized based on expected rather than incurred losses. We adopted ASU No. 2016-13 in the current quarter. The adoption of this update did not have an impact on our consolidated financial statements. We estimate our allowance for doubtful accounts based upon several factors, including customer credit quality and historical write-off trends. The adoption of this guidance did not significantly impact our accounting policies or methods utilized to determine the allowance for doubtful accounts.

In January 2017, the FASB issued ASU No. 2017-04 “Intangibles – Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment,” which simplifies the accounting for goodwill impairments by eliminating step 2 from the goodwill impairment test. ASU No. 2017-04 became effective for us in the current quarter. The adoption of this update did not have a material impact on our consolidated financial statements.

Future Adoptions

In December 2019, the FASB issued ASU 2019-12 "Simplifying the Accounting for Income Taxes (Topic 740)." ASU No. 2019-12 removes certain exceptions to the general principles in Accounting Standards Codification (“ASC”) 740 and also clarifies and amends existing guidance to provide for more consistent application. ASU 2019-12 will become effective for us in the first quarter of fiscal 2022. The adoption of this update will not have a material impact on our consolidated financial statements.

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Note 3 - Business Combination

3 Months Ended

Jan. 02, 2021

Notes to Financial Statements

Business Combination Disclosure [Text Block]

(3) Business Combination

On March 16, 2020, we purchased substantially all of the assets of STM for an adjusted purchase price of $19.4 million, reflecting certain post-closing adjustments (the “STM Acquisition”), which included a $1.0 million holdback that is payable one year from the acquisition date.

STM was a leading manufacturer of prestressed concrete strand (“PC strand”) for concrete construction applications. We acquired, among other assets, STM’s accounts receivable, inventories, production equipment and facility located in Summerville, South Carolina, and assumed certain of its accounts payable and accrued liabilities. The STM Acquisition serves to strengthen our competitive position as we contend with increased low-priced import competition.

Following is a summary of our final allocation of the adjusted purchase price to the fair values of the assets acquired and liabilities assumed as of the acquisition date:

(In thousands)
Assets acquired:
Accounts receivable	$	3,829
Inventories		3,172
Other current assets		178
Property, plant and equipment		10,919
Intangibles		970
Total assets acquired	$	19,068
Liabilities assumed:
Accounts payable	$	852
Accrued expenses		312
Total liabilities assumed		1,164
Net assets acquired		17,904
Adjusted purchase price		19,356
Goodwill	$	1,452

In connection with the STM Acquisition, we acquired certain intangible assets including customer relationships, a trade name and non-competition agreement. Goodwill associated with the STM Acquisition, which is deductible for tax purposes, consists largely of the synergies we expect to realize through the integration of the acquired assets with our operations.

The STM Acquisition was accounted for as a business purchase pursuant to ASC Topic 805, Business Combinations (“ASC 805”). Under the provisions of ASC 805, acquisition and integration costs are recorded as expenses in the period in which such costs are incurred rather than included as components of consideration transferred.

The following unaudited supplemental pro forma financial information reflects our combined results of operations had the STM Acquisition occurred at the beginning of fiscal 2019. The pro forma information reflects certain adjustments related to the STM Acquisition, including adjusted amortization and depreciation expense based on the fair values of the assets acquired. The pro forma information does not reflect any potential operating efficiencies or cost savings that may result from the STM Acquisition. Accordingly, this pro forma information is for illustrative purposes and is not intended to represent the actual results of operations of the combined company that would have been achieved had the STM Acquisition occurred at the beginning of fiscal 2019, nor is it intended to indicate future results of operations. The pro forma combined results of operations for the three-months ended December 28, 2019 are as follows:

	December 28,
(In thousands)	2019
Net sales	$	103,641
Earnings before income taxes		212
Net earnings		183

Restructuring charges. In connection with the STM acquisition, we elected to consolidate our PC strand operations through the closure of the Summerville facility and the redeployment of its equipment to our other three PC strand production facilities located in Gallatin, Tennessee; Houston, Texas; and Sanderson, Florida. Operations at the Summerville facility ceased during the third quarter of fiscal 2020. Following is a summary of the restructuring activity during the three-month period ended January 2, 2021:

	Employee Separation Costs			Equipment Relocation Costs			Facility Closure Costs			Asset Impairments			Total
(In thousands)
Liability as of October 3, 2020	$	-		$	20		$	151		$	-		$	171
Restructuring charges		13			88			552			4			657
Cash payments		(13	)		(95	)		(669	)		-			(777	)
Non-cash charges		-			-			-			(4	)		(4	)
Liability as of January 2, 2021	$	-		$	13		$	34		$	-		$	47

As of January 2, 2021 and October 3, 2020, we recorded a liability of $47,000 and $171,000, respectively, for restructuring liabilities in accrued expenses on our consolidated balance sheet. We currently expect to incur approximately $800,000 of additional restructuring charges for equipment relocation and facility closure costs.

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Note 4 - Revenue Recognition

3 Months Ended

Jan. 02, 2021

Notes to Financial Statements

Revenue from Contract with Customer [Text Block]

(4) Revenue Recognition

We recognize revenues when performance obligations under the terms of a contract with our customers are satisfied, which generally occurs when products are shipped and control is transferred. We enter into contracts that pertain to products, which are accounted for as separate performance obligations and typically one year or less in duration. We do not exercise significant judgment in determining the timing for the satisfaction of performance obligations or the transaction price. Revenue is measured as the amount of consideration expected to be received in exchange for our products. We have elected to apply the practical expedient provided for in ASU No. 2014-09 and not disclose information regarding remaining performance obligations that have original expected durations of one year or less.

Variable consideration that may affect the total transaction price, including contractual discounts, rebates, returns and credits are included in net sales. Estimates for variable consideration are based on historical experience, anticipated performance and management's judgment and are updated as of each reporting date. Shipping and related expenses associated with outbound freight are accounted for as fulfillment costs and included in cost of sales. We do not have significant financing components.

Our net sales by product line are as follows:

	Three Months Ended
	January 2,		December 28,
(In thousands)	2021		2019
Welded wire reinforcement	$	74,026	$	61,827
Prestressed concrete strand		45,579		35,742
Total	$	119,605	$	97,569

Our net sales by geographic region are as follows:

	Three Months Ended
	January 2,		December 28,
(In thousands)	2021		2019
United States	$	118,337	$	97,257
Foreign		1,268		312
Total	$	119,605	$	97,569

Contract assets primarily relate to our rights to consideration for products that are delivered but not billed as of the reporting date and are reclassified to receivables when the customer is invoiced. Contract liabilities primarily relate to performance obligations that are to be satisfied in the future and arise when we bill the customer in advance of shipments. Contract costs are not significant and are recognized as incurred. Contract assets and liabilities were not material as of January 2, 2021 and October 3, 2020.

Accounts receivable includes amounts billed and currently due from customers stated at their net estimated realizable value. Customer payment terms are generally 30 days. We maintain an allowance for doubtful accounts to provide for the estimated receivables that will not be collected, which is based upon our assessment of customer creditworthiness, historical payment experience and the age of outstanding receivables. Past-due trade receivable balances are written off when our collection efforts have been unsuccessful.

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Note 5 - Fair Value Measurements

3 Months Ended

Jan. 02, 2021

Notes to Financial Statements

Fair Value Disclosures [Text Block]

(5) Fair Value Measurements

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The authoritative guidance for fair value measurements establishes a three-level fair value hierarchy that encourages an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The three levels of inputs used to measure fair value are as follows:

Level 1 - Quoted prices in active markets for identical assets or liabilities.

Level 2 - Observable inputs other than quoted prices included in Level 1, such as quoted prices for similar assets and liabilities in active markets.

Level 3 - Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities, including certain pricing models, discounted cash flow methodologies and similar techniques that use significant unobservable inputs.

As of January 2, 2021 and October 3, 2020, we held financial assets that are required to be measured at fair value on a recurring basis, which are summarized below:

(In thousands)	Total		Quoted Prices in Active Markets (Level 1)		Observable Inputs (Level 2)
As of January 2, 2021:
Current assets:
Cash equivalents	$	52,725	$	52,725	$	-
Other assets:
Cash surrender value of life insurance policies		11,127		-		11,127
Total	$	63,852	$	52,725	$	11,127
As of October 3, 2020:
Current assets:
Cash equivalents	$	72,234	$	72,234	$	-
Other assets:
Cash surrender value of life insurance policies		10,584		-		10,584
Total	$	82,818	$	72,234	$	10,584

Cash equivalents, which include all highly liquid investments with original maturities of three months or less, are classified as Level 1 of the fair value hierarchy. The carrying amount of our cash equivalents, which consist of investments in money market funds, approximates fair value due to their short maturities. Cash surrender value of life insurance policies are classified as Level 2. The fair value of the life insurance policies was determined by the underwriting insurance company’s valuation models and represents the guaranteed value we would receive upon surrender of these policies as of the reporting date.

As of January 2, 2021 and October 3, 2020, we had no nonfinancial assets that were required to be measured at fair value on a nonrecurring basis other than the assets and liabilities that were acquired from STM at fair value during the prior year ended October 3, 2020 (see Note 3 to the consolidated financial statements). The carrying amounts of accounts receivable, accounts payable and accrued expenses approximate fair value due to the short-term maturities of these financial instruments.

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Note 6 - Intangible Assets

3 Months Ended

Jan. 02, 2021

Notes to Financial Statements

Intangible Assets Disclosure [Text Block]

(6) Intangible Assets

The primary components of our intangible assets and the related accumulated amortization are as follows:

(In thousands)	Gross Amount		Accumulated Amortization			Net Book Value
As of January 2, 2021:
Customer relationships	$	9,870	$	(2,996	)	$	6,874
Developed technology and know-how		1,800		(572	)		1,228
Non-competition agreements		400		(224	)		176
Trade name		250		(197	)		53
	$	12,320	$	(3,989	)	$	8,331
As of October 3, 2020:
Customer relationships	$	9,870	$	(2,837	)	$	7,033
Developed technology and know-how		1,800		(551	)		1,249
Non-competition agreements		1,860		(1,663	)		197
Trade name		250		(162	)		88
	$	13,780	$	(5,213	)	$	8,567

Amortization expense for intangibles was $236,000 and $273,000 for the three-month periods ended January 2, 2021 and December 28, 2019, respectively.

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Note 7 - Stock-based Compensation

3 Months Ended

Jan. 02, 2021

Notes to Financial Statements

Share-based Payment Arrangement [Text Block]

(7) Stock-Based Compensation

Under our equity incentive plan, employees and directors may be granted stock options, restricted stock, restricted stock units and performance awards. Effective February 28, 2020, our shareholders approved an amendment to the 2015 Equity Incentive Plan of Insteel Industries, Inc. (the “2015 Plan”), which authorizes up to an additional 750,000 shares of our common stock for future grants under the plan and expires on February 17, 2025. As of January 2, 2021, there were 738,000 shares of our common stock available for future grants under the 2015 Plan, which is our only active equity incentive plan.

Stock option awards. Under our equity incentive plan, employees and directors may be granted options to purchase shares of common stock at the fair market value on the date of the grant. Options granted under these plans generally vest over three years and expire ten years from the date of the grant. Compensation expense associated with stock options was $76,000 and $60,000 for the three-month periods ended January 2, 2021 and December 28, 2019, respectively. As of January 2, 2021, there was $292,000 of unrecognized compensation cost related to unvested options which is expected to be recognized over a weighted average period of 1.57 years.

The following table summarizes stock option activity:

										Contractual		Aggregate
	Options			Exercise Price Per Share						Term - Weighted		Intrinsic
	Outstanding							Weighted		Average		Value
	(in thousands)			Range				Average		(in years)		(in thousands)
Outstanding at October 3, 2020		482			$10.23	-	$41.85	$	24.90
Exercised		(22	)		13.06	-	18.25		17.11
Outstanding at January 2, 2021		460			10.23	-	41.85		25.28		6.53	$	589
Vested and anticipated to vest in the future at January 2, 2021		454							25.33		6.50		578
Exercisable at January 2, 2021		261							27.84		4.77		274

Stock option exercises include “net exercises” for which the optionee received shares of common stock equal to the intrinsic value of the options (fair market value of common stock on the date of exercise less exercise price) reduced by any applicable withholding taxes.

Restricted stock units. Restricted stock units (“RSUs”) granted under our equity incentive plans are valued based upon the fair market value on the date of the grant and provide for a dividend equivalent payment which is included in compensation expense. The vesting period for RSUs is generally one year from the date of the grant for RSUs granted to directors and three years from the date of the grant for RSUs granted to employees. RSUs do not have voting rights. Compensation expense associated with RSUs was $148,000 and $126,000 for the three-month periods ended January 2, 2021 and December 28, 2019, respectively.

As of January 2, 2021, there was $441,000 of unrecognized compensation cost related to unvested RSUs which is expected to be recognized over a weighted average period of 1.90 years.

The following table summarizes RSU activity:

			Weighted
	Restricted		Average
	Stock Units		Grant Date
(Unit amounts in thousands)	Outstanding		Fair Value
Balance, October 3, 2020		122	$	23.07
Released		-		-
Balance, January 2, 2021		122		23.07

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Note 8 - Income Taxes

3 Months Ended

Jan. 02, 2021

Notes to Financial Statements

Income Tax Disclosure [Text Block]

(8) Income Taxes

Effective income tax rate. Our effective income tax rate was 23.2% for the three-month period ended January 2, 2021 compared with 22.7% for the three-month period ended December 28, 2019. The effective income tax rates for both periods were based upon the estimated rate applicable for the entire fiscal year adjusted to reflect any significant items related specifically to interim periods.

Deferred income taxes. As of January 2, 2021 and October 3, 2020, we recorded a deferred tax liability (net of valuation allowance) of $6.5 million and $6.6 million, respectively, in other liabilities on our consolidated balance sheet. We have $2.9 million of state net operating loss carryforwards (“NOLs”) that begin to expire in 2031, but principally expire between 2031 and 2036.

The realization of our deferred tax assets is entirely dependent upon our ability to generate future taxable income in applicable jurisdictions. GAAP requires that we periodically assess the need to establish a reserve against our deferred tax assets to the extent we no longer believe it is more likely than not that they will be fully realized. As of January 2, 2021 and October 3, 2020, we recorded a valuation allowance of $162,000 and $207,000, respectively, pertaining to various state NOLs and tax credits that were not expected to be utilized. The valuation allowance is subject to periodic review and adjustment based on changes in facts and circumstances and would be reduced should we utilize the state NOLs and tax credits against which an allowance had previously been provided or determine that such utilization was more likely than not.

Uncertainty in income taxes. We establish contingency reserves for material, known tax exposures based on our assessment of the estimated liability that would be incurred in connection with the settlement of such matters. As of January 2, 2021, we had no material, known tax exposures that required the establishment of contingency reserves for uncertain tax positions.

We file U.S. federal, state and local income tax returns in various jurisdictions. Federal and various state tax returns filed subsequent to 2015 remain subject to examination.

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Note 9 - Employee Benefit Plans

3 Months Ended

Jan. 02, 2021

Notes to Financial Statements

Retirement Benefits [Text Block]

(9) Employee Benefit Plans

Supplemental retirement benefit plan. We have Supplemental Retirement Benefit Agreements (each, a “SRBA”) with certain of our employees (each, a “Participant”). Under the SRBAs, if the Participant remains in continuous service with us for a period of at least 30 years, we will pay the Participant a supplemental retirement benefit for the 15-year period following the Participant’s retirement equal to 50% of the Participant’s highest average annual base salary for five consecutive years in the 10-year period preceding the Participant’s retirement. If the Participant retires prior to the later of age 65 or the completion of 30 years of continuous service with us, but has completed at least 10 years of continuous service, the amount of the Participant’s supplemental retirement benefit will be reduced by 1/360th for each month short of 30 years that the Participant was employed by us.

Net periodic pension cost for the SRBAs includes the following components:

	Three Months Ended
	January 2,		December 28,
(In thousands)	2021		2019
Interest cost	$	79	$	82
Service cost		78		83
Recognized net actuarial loss		54		72
Net periodic pension cost	$	211	$	237

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Note 10 - Long-term Debt

3 Months Ended

Jan. 02, 2021

Notes to Financial Statements

Long-term Debt [Text Block]

(10) Long-Term Debt

Revolving Credit Facility. We have a $100.0 million revolving credit facility (the “Credit Facility”) that is used to supplement our operating cash flow and fund our working capital, capital expenditure, general corporate and growth requirements. In May 2019, we entered into a new credit agreement, which amended and restated in its entirety the previous agreement pertaining to the revolving credit facility that had been in effect since June 2010. The new credit agreement, among other changes, extended the maturity date of the Credit Facility from May 13, 2020 to May 15, 2024 and provided for an accordion feature whereby its size may be increased by up to $50.0 million, subject to our lender’s approval. Advances under the Credit Facility are limited to the lesser of the revolving loan commitment amount (currently $100.0 million) or a borrowing base amount that is calculated based upon a percentage of eligible receivables and inventories. As of January 2, 2021, no borrowings were outstanding on the Credit Facility, $81.8 million of borrowing capacity was available and outstanding letters of credit totaled $1.5 million.

Interest rates on the Credit Facility are based upon (1) an index rate that is established at the highest of the prime rate, 0.50% plus the federal funds rate or the LIBOR rate plus the excess of the then-applicable margin for LIBOR loans over the then-applicable margin for index rate loans, or (2) at our election, a LIBOR rate, plus in either case, an applicable interest rate margin. The applicable interest rate margins are adjusted on a quarterly basis based upon the amount of excess availability on the Credit Facility within the range of 0.25% to 0.50% for index rate loans and 1.25% to 1.50% for LIBOR loans. In addition, the applicable interest rate margins would be increased by 2.00% upon the occurrence of certain events of default provided for under the terms of the Credit Facility. Based on our excess availability as of January 2, 2021, the applicable interest rate margins on the Credit Facility were 0.25% for index rate loans and 1.25% for LIBOR loans.

Our ability to borrow available amounts under the Credit Facility will be restricted or eliminated in the event of certain covenant breaches, events of default or if we are unable to make certain representations and warranties provided for under the terms of the Credit Facility. We are required to maintain a fixed charge coverage ratio of not less than 1.0 at the end of each fiscal quarter for the twelve-month period then ended when the amount of liquidity on the Credit Facility is less than $10.0 million. In addition, the terms of the Credit Facility restrict our ability to, among other things: engage in certain business combinations or divestitures; make investments in or loans to third parties, unless certain conditions are met with respect to such investments or loans; pay cash dividends or repurchase shares of our stock subject to certain minimum borrowing availability requirements; incur or assume indebtedness; issue securities; enter into certain transactions with our affiliates; or permit liens to encumber our property and assets. The terms of the Credit Facility also provide that an event of default will occur upon the occurrence of, among other things: defaults or breaches under the loan documents, subject in certain cases to cure periods; defaults or breaches by us or any of our subsidiaries under any agreement resulting in the acceleration of amounts above certain thresholds or payment defaults above certain thresholds; certain events of bankruptcy or insolvency; certain entries of judgment against us or any of our subsidiaries, which are not covered by insurance; or a change of control. As of January 2, 2021, we were in compliance with all of the financial and negative covenants under the Credit Facility and there have not been any events of default.

Amortization of capitalized financing costs associated with the Credit Facility was $16,000 for each of the three-month periods ended January 2, 2021 and December 28, 2019.

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Note 11 - Earnings Per Share

3 Months Ended

Jan. 02, 2021

Notes to Financial Statements

Earnings Per Share [Text Block]

(11) Earnings Per Share

The computation of basic and diluted earnings per share attributable to common shareholders is as follows:

	Three Months Ended
	January 2,		December 28,
(In thousands, except per share amounts)	2021		2019
Net earnings	$	8,143	$	555
Basic weighted average shares outstanding		19,309		19,261
Dilutive effect of stock-based compensation		125		109
Diluted weighted average shares outstanding		19,434		19,370
Net earnings per share:
Basic	$	0.42	$	0.03
Diluted	$	0.42	$	0.03

Options and RSUs that were antidilutive and not included in the dilutive earnings per share calculation amounted to 254,000 and 293,000 shares for the three-month periods ended January 2, 2021 and December 28, 2019, respectively.

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Note 12 - Share Repurchases

3 Months Ended

Jan. 02, 2021

Notes to Financial Statements

Stockholders' Equity Note Disclosure [Text Block]

(12) Share Repurchases

On November 18, 2008, our Board of Directors approved a share repurchase authorization to buy back up to $25.0 million of our outstanding common stock (the “Authorization”). Under the Authorization, repurchases may be made from time to time in the open market or in privately negotiated transactions subject to market conditions, applicable legal requirements and other factors. We are not obligated to acquire any common stock and the program may be commenced or suspended at any time at our discretion without prior notice. The Authorization continues in effect until terminated by the Board of Directors. As of January 2, 2021, there was $24.8 million remaining available for future share repurchases under this Authorization. There were no share repurchases during the three-month periods ended January 2, 2021 and December 28, 2019.

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Note 13 - Other Financial Data

3 Months Ended

Jan. 02, 2021

Notes to Financial Statements

Other Financial Data [Text Block]

(13) Other Financial Data

Balance sheet information

	January 2,			October 3,
(In thousands)	2021			2020
Accounts receivable, net:
Accounts receivable	$	49,489		$	54,108
Less allowance for doubtful accounts		(265	)		(291	)
Total	$	49,224		$	53,817
Inventories:
Raw materials	$	27,015		$	31,553
Work in process		3,637			3,813
Finished goods		33,624			33,597
Total	$	64,276		$	68,963
Other current assets:
Prepaid insurance	$	3,582		$	4,096
Other		1,619			1,474
Total	$	5,201		$	5,570
Other assets:
Cash surrender value of life insurance policies	$	11,127		$	10,584
Assets held for sale		7,754			7,778
Right-of-use asset		2,494			2,522
Capitalized financing costs, net		155			170
Other		111			106
Total	$	21,641		$	21,160
Property, plant and equipment, net:
Land and land improvements	$	14,540		$	14,520
Buildings		52,501			52,462
Machinery and equipment		172,268			172,617
Construction in progress		5,717			3,978
		245,026			243,577
Less accumulated depreciation		(143,675	)		(142,185	)
Total	$	101,351		$	101,392
Accrued expenses:
Salaries, wages and related expenses	$	4,555		$	4,971
Income taxes		3,636			1,201
Customer rebates		2,304			1,581
Property taxes		1,445			1,726
Operating lease liability		1,284			1,230
Holdback for business acquired		1,000			1,000
State sales and use taxes		315			544
Other		473			2,464
Total	$	15,012		$	14,717
Other liabilities:
Deferred compensation	$	11,722		$	11,553
Deferred income taxes		6,504			6,568
Operating lease liability		1,218			1,300
Total	$	19,444		$	19,421

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Note 14 - Business Segment Information

3 Months Ended

Jan. 02, 2021

Notes to Financial Statements

Segment Reporting Disclosure [Text Block]

(14) Business Segment Information

Our operations are entirely focused on the manufacture and marketing of steel wire reinforcing products for concrete construction applications. Our concrete reinforcing products consist of two product lines: PC strand and welded wire reinforcement. Based on the criteria specified in ASC Topic 280, Segment Reporting, we have one reportable segment.

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Note 15 - Leases

3 Months Ended

Jan. 02, 2021

Notes to Financial Statements

Lessee, Operating Leases [Text Block]

(15) Leases

We have operating leases for certain equipment, office space and vehicles. We determine whether an arrangement is a lease at its inception if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. Leases with an initial term of twelve months or less are not recorded on our consolidated balance sheet. Lease expense for operating leases with original terms of more than twelve months was $360,000 and $327,000 for the three-month periods ended January 2, 2021 and December 28, 2019, respectively.

Most of our leases include options to extend or terminate the leases which are exercised at our sole discretion. As most of our leases do not provide an implicit interest rate, we use our incremental borrowing rate as of the commencement date in determining the present value of lease payments.

Supplemental cash flow and non-cash information related to leases is as follows:

	Three Months Ended
(In thousands)	January 2, 2021		December 28, 2019
Cash paid for operating leases included in operating cash flows	$	361	$	335
Right-of-use assets obtained in exchange for new lease obligations		303		358

Supplemental balance sheet information related to leases is as follows:

(In thousands)	January 2, 2021		October 3, 2020
Right-of-use assets:
Other assets	$	2,494	$	2,522
Lease liabilities:
Accrued expenses		1,284		1,230
Other liabilities		1,218		1,300
Total operating lease liabilities	$	2,502	$	2,530

As of January 2, 2021, our operating leases had a weighted average remaining lease term of 2.2 years and a weighted average discount rate of 4.3%. Aggregate future operating lease payments as of January 2, 2021 are as follows:

(In thousands)
2021	$	1,283
2022		889
2023		436
2024		54
Total future operating lease payments		2,662
Less: imputed interest		(160	)
Present value of lease liabilities	$	2,502

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Note 16 - Contingencies

3 Months Ended

Jan. 02, 2021

Notes to Financial Statements

Commitments and Contingencies Disclosure [Text Block]

(16) Contingencies

Insurance recoveries. We maintain general liability, business interruption and replacement cost property insurance coverage on our facilities.

Legal proceedings. We are involved in lawsuits, claims, investigations and proceedings, including commercial, environmental and employment matters, which arise in the ordinary course of business. We do not expect the ultimate outcome or cost to resolve these matters will have a material adverse effect on our financial position, results of operations or cash flows.

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Note 3 - Business Combination (Tables)

3 Months Ended

Jan. 02, 2021

Notes Tables

Schedule of Recognized Identified Assets Acquired and Liabilities Assumed [Table Text Block]

(In thousands)
Assets acquired:
Accounts receivable	$	3,829
Inventories		3,172
Other current assets		178
Property, plant and equipment		10,919
Intangibles		970
Total assets acquired	$	19,068
Liabilities assumed:
Accounts payable	$	852
Accrued expenses		312
Total liabilities assumed		1,164
Net assets acquired		17,904
Adjusted purchase price		19,356
Goodwill	$	1,452

Business Acquisition, Pro Forma Information [Table Text Block]

	December 28,
(In thousands)	2019
Net sales	$	103,641
Earnings before income taxes		212
Net earnings		183

Restructuring and Related Costs [Table Text Block]

	Employee Separation Costs			Equipment Relocation Costs			Facility Closure Costs			Asset Impairments			Total
(In thousands)
Liability as of October 3, 2020	$	-		$	20		$	151		$	-		$	171
Restructuring charges		13			88			552			4			657
Cash payments		(13	)		(95	)		(669	)		-			(777	)
Non-cash charges		-			-			-			(4	)		(4	)
Liability as of January 2, 2021	$	-		$	13		$	34		$	-		$	47

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Note 4 - Revenue Recognition (Tables)

3 Months Ended

Jan. 02, 2021

Notes Tables

Disaggregation of Revenue [Table Text Block]

	Three Months Ended
	January 2,		December 28,
(In thousands)	2021		2019
Welded wire reinforcement	$	74,026	$	61,827
Prestressed concrete strand		45,579		35,742
Total	$	119,605	$	97,569

	Three Months Ended
	January 2,		December 28,
(In thousands)	2021		2019
United States	$	118,337	$	97,257
Foreign		1,268		312
Total	$	119,605	$	97,569

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Note 5 - Fair Value Measurements (Tables)

3 Months Ended

Jan. 02, 2021

Notes Tables

Fair Value, Assets Measured on Recurring Basis [Table Text Block]

(In thousands)	Total		Quoted Prices in Active Markets (Level 1)		Observable Inputs (Level 2)
As of January 2, 2021:
Current assets:
Cash equivalents	$	52,725	$	52,725	$	-
Other assets:
Cash surrender value of life insurance policies		11,127		-		11,127
Total	$	63,852	$	52,725	$	11,127
As of October 3, 2020:
Current assets:
Cash equivalents	$	72,234	$	72,234	$	-
Other assets:
Cash surrender value of life insurance policies		10,584		-		10,584
Total	$	82,818	$	72,234	$	10,584

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Note 6 - Intangible Assets (Tables)

3 Months Ended

Jan. 02, 2021

Notes Tables

Schedule of Finite-Lived Intangible Assets [Table Text Block]

(In thousands)	Gross Amount		Accumulated Amortization			Net Book Value
As of January 2, 2021:
Customer relationships	$	9,870	$	(2,996	)	$	6,874
Developed technology and know-how		1,800		(572	)		1,228
Non-competition agreements		400		(224	)		176
Trade name		250		(197	)		53
	$	12,320	$	(3,989	)	$	8,331
As of October 3, 2020:
Customer relationships	$	9,870	$	(2,837	)	$	7,033
Developed technology and know-how		1,800		(551	)		1,249
Non-competition agreements		1,860		(1,663	)		197
Trade name		250		(162	)		88
	$	13,780	$	(5,213	)	$	8,567

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Note 7 - Stock-based Compensation (Tables)

3 Months Ended

Jan. 02, 2021

Notes Tables

Share-based Payment Arrangement, Option, Activity [Table Text Block]

										Contractual		Aggregate
	Options			Exercise Price Per Share						Term - Weighted		Intrinsic
	Outstanding							Weighted		Average		Value
	(in thousands)			Range				Average		(in years)		(in thousands)
Outstanding at October 3, 2020		482			$10.23	-	$41.85	$	24.90
Exercised		(22	)		13.06	-	18.25		17.11
Outstanding at January 2, 2021		460			10.23	-	41.85		25.28		6.53	$	589
Vested and anticipated to vest in the future at January 2, 2021		454							25.33		6.50		578
Exercisable at January 2, 2021		261							27.84		4.77		274

Share-based Payment Arrangement, Restricted Stock and Restricted Stock Unit, Activity [Table Text Block]

			Weighted
	Restricted		Average
	Stock Units		Grant Date
(Unit amounts in thousands)	Outstanding		Fair Value
Balance, October 3, 2020		122	$	23.07
Released		-		-
Balance, January 2, 2021		122		23.07

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Note 9 - Employee Benefit Plans (Tables)

3 Months Ended

Jan. 02, 2021

Notes Tables

Schedule of Net Benefit Costs [Table Text Block]

	Three Months Ended
	January 2,		December 28,
(In thousands)	2021		2019
Interest cost	$	79	$	82
Service cost		78		83
Recognized net actuarial loss		54		72
Net periodic pension cost	$	211	$	237

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Note 11 - Earnings Per Share (Tables)

3 Months Ended

Jan. 02, 2021

Notes Tables

Schedule of Earnings Per Share, Basic and Diluted [Table Text Block]

	Three Months Ended
	January 2,		December 28,
(In thousands, except per share amounts)	2021		2019
Net earnings	$	8,143	$	555
Basic weighted average shares outstanding		19,309		19,261
Dilutive effect of stock-based compensation		125		109
Diluted weighted average shares outstanding		19,434		19,370
Net earnings per share:
Basic	$	0.42	$	0.03
Diluted	$	0.42	$	0.03

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Note 13 - Other Financial Data (Tables)

3 Months Ended

Jan. 02, 2021

Notes Tables

Other Financial Information, Balance Sheet [Table Text Block]

	January 2,			October 3,
(In thousands)	2021			2020
Accounts receivable, net:
Accounts receivable	$	49,489		$	54,108
Less allowance for doubtful accounts		(265	)		(291	)
Total	$	49,224		$	53,817
Inventories:
Raw materials	$	27,015		$	31,553
Work in process		3,637			3,813
Finished goods		33,624			33,597
Total	$	64,276		$	68,963
Other current assets:
Prepaid insurance	$	3,582		$	4,096
Other		1,619			1,474
Total	$	5,201		$	5,570
Other assets:
Cash surrender value of life insurance policies	$	11,127		$	10,584
Assets held for sale		7,754			7,778
Right-of-use asset		2,494			2,522
Capitalized financing costs, net		155			170
Other		111			106
Total	$	21,641		$	21,160
Property, plant and equipment, net:
Land and land improvements	$	14,540		$	14,520
Buildings		52,501			52,462
Machinery and equipment		172,268			172,617
Construction in progress		5,717			3,978
		245,026			243,577
Less accumulated depreciation		(143,675	)		(142,185	)
Total	$	101,351		$	101,392
Accrued expenses:
Salaries, wages and related expenses	$	4,555		$	4,971
Income taxes		3,636			1,201
Customer rebates		2,304			1,581
Property taxes		1,445			1,726
Operating lease liability		1,284			1,230
Holdback for business acquired		1,000			1,000
State sales and use taxes		315			544
Other		473			2,464
Total	$	15,012		$	14,717
Other liabilities:
Deferred compensation	$	11,722		$	11,553
Deferred income taxes		6,504			6,568
Operating lease liability		1,218			1,300
Total	$	19,444		$	19,421

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Note 15 - Leases (Tables)

3 Months Ended

Jan. 02, 2021

Notes Tables

Lease, Cost [Table Text Block]

	Three Months Ended
(In thousands)	January 2, 2021		December 28, 2019
Cash paid for operating leases included in operating cash flows	$	361	$	335
Right-of-use assets obtained in exchange for new lease obligations		303		358

Lessee, Operating Lease, Assets and Liabilities [Table Text Block]

(In thousands)	January 2, 2021		October 3, 2020
Right-of-use assets:
Other assets	$	2,494	$	2,522
Lease liabilities:
Accrued expenses		1,284		1,230
Other liabilities		1,218		1,300
Total operating lease liabilities	$	2,502	$	2,530

Lessee, Operating Lease, Liability, Maturity [Table Text Block]

(In thousands)
2021	$	1,283
2022		889
2023		436
2024		54
Total future operating lease payments		2,662
Less: imputed interest		(160	)
Present value of lease liabilities	$	2,502

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Note 3 - Business Combination (Details Textual) - USD ($)	Mar. 16, 2020	Jan. 02, 2021	Oct. 03, 2020
Restructuring Reserve, Ending Balance		$ 47,000	$ 171,000
Restructuring and Related Cost, Expected Cost Remaining		800,000,000,000
Accrued Expenses [Member]
Restructuring Reserve, Ending Balance		$ 47,000	$ 171,000
STM [Member]
Business Combination, Consideration Transferred, Total	$ 19,400,000
Business Combination, Consideration Transferred, Liabilities Incurred	$ 1,000,000.0

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Note 3 - Business Combination - Assets Acquired and Liabilities Assumed (Details) - USD ($) $ in Thousands	Jan. 02, 2021	Oct. 03, 2020	Mar. 16, 2020
Goodwill	$ 9,745	$ 9,745
STM [Member]
Accounts receivable			$ 3,829
Inventories			3,172
Other current assets			178
Property, plant and equipment			10,919
Intangibles			970
Total assets acquired			19,068
Accounts payable			852
Accrued expenses			312
Total liabilities assumed			1,164
Net assets acquired			17,904
Adjusted purchase price			19,356
Goodwill			$ 1,452

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Note 3 - Business Combination - Pro Forma Results (Details) - STM [Member] $ in Thousands	3 Months Ended
	Dec. 28, 2019 USD ($)
Net sales	$ 103,641
Earnings before income taxes	212
Net earnings	$ 183

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Note 3 - Business Combination - Restructuring Activity (Details) - USD ($) $ in Thousands	3 Months Ended
	Jan. 02, 2021	Dec. 28, 2019
Liability balance	$ 171
Restructuring charges	657	$ 0
Cash payments	(777)
Non-cash charges	(4)
Liability balance	47
Employee Severance [Member]
Liability balance	0
Restructuring charges	13
Cash payments	(13)
Non-cash charges	0
Liability balance	0
Equipment Relocation [Member]
Liability balance	20
Restructuring charges	88
Cash payments	(95)
Non-cash charges	0
Liability balance	13
Facility Closing [Member]
Liability balance	151
Restructuring charges	552
Cash payments	(669)
Non-cash charges	0
Liability balance	34
Asset Impairments [Member]
Liability balance	0
Restructuring charges	4
Cash payments	0
Non-cash charges	(4)
Liability balance	$ 0

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Note 4 - Revenue Recognition - Disaggregation of Net Sales by Product Line (Details) - USD ($) $ in Thousands	3 Months Ended
	Jan. 02, 2021	Dec. 28, 2019
Revenue	$ 119,605	$ 97,569
UNITED STATES
Revenue	118,337	97,257
Non-US [Member]
Revenue	1,268	312
Welded Wire Reinforcement [Member]
Revenue	74,026	61,827
Prestressed Concrete Strand [Member]
Revenue	$ 45,579	$ 35,742

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Note 5 - Fair Value Measurements (Details Textual) - USD ($) $ in Thousands	Jan. 02, 2021	Oct. 03, 2020
Non Financial [Member] | Fair Value, Nonrecurring [Member]
Assets, Fair Value Disclosure	$ 0	$ 0

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Note 5 - Fair Value Measurements - Fair Value of Financial Assets (Details) - Fair Value, Recurring [Member] - USD ($) $ in Thousands	Jan. 02, 2021	Oct. 03, 2020
Cash equivalents	$ 52,725	$ 72,234
Cash surrender value of life insurance policies	11,127	10,584
Total	63,852	82,818
Fair Value, Inputs, Level 1 [Member]
Cash equivalents	52,725	72,234
Cash surrender value of life insurance policies	0	0
Total	52,725	72,234
Fair Value, Inputs, Level 2 [Member]
Cash equivalents	0	0
Cash surrender value of life insurance policies	11,127	10,584
Total	$ 11,127	$ 10,584

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Note 6 - Intangible Assets (Details Textual) - USD ($)	3 Months Ended
	Jan. 02, 2021	Dec. 28, 2019
Amortization of Intangible Assets, Total	$ 236,000	$ 273,000

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Note 6 - Intangible Assets - Summary of Intangible Assets (Details) - USD ($) $ in Thousands	Jan. 02, 2021	Oct. 03, 2020
Gross	$ 12,320	$ 13,780
Accumulated Amortization	(3,989)	(5,213)
Net Book Value	8,331	8,567
Customer Relationships [Member]
Gross	9,870	9,870
Accumulated Amortization	(2,996)	(2,837)
Net Book Value	6,874	7,033
Technology-Based Intangible Assets [Member]
Gross	1,800	1,800
Accumulated Amortization	(572)	(551)
Net Book Value	1,228	1,249
Noncompete Agreements [Member]
Gross	400	1,860
Accumulated Amortization	(224)	(1,663)
Net Book Value	176	197
Trade Names [Member]
Gross	250	250
Accumulated Amortization	(197)	(162)
Net Book Value	$ 53	$ 88

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Note 7 - Stock-based Compensation (Details Textual) - USD ($)		3 Months Ended
	Feb. 28, 2020	Jan. 02, 2021	Dec. 28, 2019
Share-based Payment Arrangement, Option [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period (Year)		3 years
Share-based Compensation Arrangement by Share-based Payment Award, Expiration Period (Year)		10 years
Share-based Payment Arrangement, Expense		$ 76,000	$ 60,000
Share-based Payment Arrangement, Nonvested Award, Option, Cost Not yet Recognized, Amount		$ 292,000
Share-based Payment Arrangement, Nonvested Award, Cost Not yet Recognized, Period for Recognition (Year)		1 year 6 months 25 days
Restricted Stock Units (RSUs) [Member]
Share-based Payment Arrangement, Expense		$ 148,000	$ 126,000
Share-based Payment Arrangement, Nonvested Award, Cost Not yet Recognized, Period for Recognition (Year)		1 year 10 months 24 days
Share-based Payment Arrangement, Nonvested Award, Excluding Option, Cost Not yet Recognized, Amount		$ 441,000
Restricted Stock Units (RSUs) [Member] | Director [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period (Year)		1 year
Restricted Stock Units (RSUs) [Member] | Employees [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period (Year)		3 years
The 2015 Equity Incentive Plan [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Number of Additional Shares Authorized (in shares)	750,000
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Available for Grant (in shares)		738,000

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Note 7 - Stock-based Compensation - Stock Option Activity (Details) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended
	Jan. 02, 2021 USD ($) $ / shares shares
Options outstanding, balance (in shares) | shares	482
Weighted average exercise price per share (in dollars per share)	$ 24.90
Options outstanding, exercised (in shares) | shares	(22)
Weighted average exercise price per share, exercised (in dollars per share)	$ 17.11
Options outstanding, balance (in shares) | shares	460
Weighted average exercise price per share (in dollars per share)	$ 25.28
Contractual term - weighted average, balance (Year)	6 years 6 months 10 days
Aggregate intrinsic value, balance | $	$ 589
Options outstanding, vested and anticipated to vest in future (in shares) | shares	454
Weighted average exercise price per share, vested and anticipated to vest in futur (in dollars per share)	$ 25.33
Contractual term - weighted average, vested and anticipated to vest in future (Year)	6 years 6 months
Aggregate intrinsic value, vested and anticipated to vest in future | $	$ 578
Options outstanding, exercisable (in shares) | shares	261
Weighted average exercise price per share, exercisable (in dollars per share)	$ 27.84
Contractual term - weighted average, exercisable (Year)	4 years 9 months 7 days
Aggregate intrinsic value, exercisable | $	$ 274
Minimum [Member]
Exercise price per share, balance, lower (in dollars per share)	$ 10.23
Exercise price per share, exercised, lower (in dollars per share)	13.06
Maximum [Member]
Exercise price per share, balance, upper (in dollars per share)	41.85
Exercise price per share, exercised, upper (in dollars per share)	$ 18.25

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Note 7 - Stock-based Compensation - RSU Activity (Details) - Restricted Stock Units (RSUs) [Member] shares in Thousands	3 Months Ended
	Jan. 02, 2021 $ / shares shares
Restricted stock units outstanding, beginning balance (in shares) | shares	122
Weighted average grant date fair value, beginning balance (in dollars per share) | $ / shares	$ 23.07
Restricted stock units outstanding, released (in shares) | shares	0
Weighted average grant date fair value, released (in dollars per share) | $ / shares	$ 0
Restricted stock units outstanding, ending balance (in shares) | shares	122
Weighted average grant date fair value, ending balance (in dollars per share) | $ / shares	$ 23.07

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Note 8 - Income Taxes (Details Textual)	3 Months Ended
	Jan. 02, 2021 USD ($) item	Dec. 28, 2019	Oct. 03, 2020 USD ($)
Effective Income Tax Rate Reconciliation, Percent, Total	23.20%	22.70%
Deferred Tax Liabilities, Net, Total	$ 6,504,000		$ 6,568,000
Deferred Tax Assets, Valuation Allowance, Total	162,000		$ 207,000
State and Local Jurisdiction [Member]
Operating Loss Carryforwards, Total	$ 2,900,000
State and Local Jurisdiction [Member] | Earliest Tax Year [Member]
Operating Loss Carryforwards Expiration Date 1 | item	2,031
State and Local Jurisdiction [Member] | Latest Tax Year [Member]
Operating Loss Carryforwards Expiration Date 1 | item	2,036

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Note 9 - Employee Benefit Plans (Details Textual)	3 Months Ended
	Jan. 02, 2021
Supplemental Employee Retirement Plan [Member]
Supplemental Retirement Benefit Period (Year)	15 years
Defined Benefit Plan Percent of Highest Average Salary Base	50.00%
Defined Benefit Plan Number of Years in Average Annual Base Salary (Year)	5 years
Defined Benefit Plan Number of Years Preceding Retirement for Average Annual Base Salary Calculation (Year)	10 years
Supplemental Employee Retirement Plan [Member] | Minimum [Member]
Defined Benefit Plan Employment Term (Year)	30 years
Reduced SERP [Member]
Defined Benefit Plan Retirement Age	65
Defined Benefit Plan, Reduction for Each Month	0.0028%
Reduced SERP [Member] | Minimum [Member]
Defined Benefit Plan Employment Term (Year)	10 years

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Note 9 - Employee Benefit Plans - Net Periodic Pension Costs and Related Components (Details) - Supplemental Employee Retirement Plan [Member] - USD ($) $ in Thousands	3 Months Ended
	Jan. 02, 2021	Dec. 28, 2019
Interest cost	$ 79	$ 82
Service cost	78	83
Recognized net actuarial loss	54	72
Net periodic pension cost	$ 211	$ 237

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Note 10 - Long-term Debt (Details Textual) - USD ($)	1 Months Ended	3 Months Ended
	May 31, 2019	Jan. 02, 2021	Dec. 28, 2019
Amortization of Debt Issuance Costs		$ 16,000	$ 16,000
Revolving Credit Facility [Member]
Line of Credit Facility, Maximum Borrowing Capacity		100,000,000.0
Line Of Credit Facility, Additional Borrowing Capacity	$ 50,000,000.0
Long-term Line of Credit, Total		0
Line of Credit Facility, Remaining Borrowing Capacity		81,800,000
Letters of Credit Outstanding, Amount		$ 1,500,000
Debt Instrument, Interest Rate, Increase (Decrease)		2.00%
Fixed Charge Coverage Ratio		1.0
Credit Facility, Liquidity Amount		$ 10,000,000.0
Revolving Credit Facility [Member] | Federal Funds Rate [Member]
Debt Instrument, Basis Spread on Variable Rate		0.50%
Revolving Credit Facility [Member] | Base Rate [Member]
Line of Credit Facility, Interest Rate at Period End		0.25%
Revolving Credit Facility [Member] | Base Rate [Member] | Minimum [Member]
Debt Instrument, Basis Spread on Variable Rate		0.25%
Revolving Credit Facility [Member] | Base Rate [Member] | Maximum [Member]
Debt Instrument, Basis Spread on Variable Rate		0.50%
Revolving Credit Facility [Member] | London Interbank Offered Rate (LIBOR) [Member]
Line of Credit Facility, Interest Rate at Period End		1.25%
Revolving Credit Facility [Member] | London Interbank Offered Rate (LIBOR) [Member] | Minimum [Member]
Debt Instrument, Basis Spread on Variable Rate		1.25%
Revolving Credit Facility [Member] | London Interbank Offered Rate (LIBOR) [Member] | Maximum [Member]
Debt Instrument, Basis Spread on Variable Rate		1.50%

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Note 11 - Earnings Per Share (Details Textual) - shares	3 Months Ended
	Jan. 02, 2021	Dec. 28, 2019
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount (in shares)	254,000	293,000

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Note 11 - Earnings Per Share - Basic and Diluted Earnings Per Share Attributable to Common Shareholders (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended
	Jan. 02, 2021	Dec. 28, 2019
Net earnings	$ 8,143	$ 555
Basic weighted average shares outstanding (in shares)	19,309	19,261
Dilutive effect of stock-based compensation (in shares)	125	109
Diluted weighted average shares outstanding (in shares)	19,434	19,370
Basic (in dollars per share)	$ 0.42	$ 0.03
Diluted (in dollars per share)	$ 0.42	$ 0.03

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Note 12 - Share Repurchases (Details Textual) - USD ($) shares in Thousands, $ in Millions	3 Months Ended
	Jan. 02, 2021	Nov. 18, 2008
Stock Repurchase Program, Authorized Amount		$ 25.0
Stock Repurchase Program, Remaining Authorized Repurchase Amount	$ 24.8
Stock Repurchased During Period, Shares (in shares)	0

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Note 13 - Other Financial Data - Balance Sheet Information (Details) - USD ($) $ in Thousands	Jan. 02, 2021	Oct. 03, 2020
Accounts receivable	$ 49,489	$ 54,108
Less allowance for doubtful accounts	(265)	(291)
Total	49,224	53,817
Raw materials	27,015	31,553
Work in process	3,637	3,813
Finished goods	33,624	33,597
Total	64,276	68,963
Prepaid insurance	3,582	4,096
Other	1,619	1,474
Total	5,201	5,570
Cash surrender value of life insurance policies	11,127	10,584
Assets held for sale	7,754	7,778
Other assets	2,494	2,522
Capitalized financing costs, net	155	170
Other	111	106
Total	21,641	21,160
Land and land improvements	14,540	14,520
Buildings	52,501	52,462
Machinery and equipment	172,268	172,617
Construction in progress	5,717	3,978
Property, plant and equipment, gross	245,026	243,577
Less accumulated depreciation	(143,675)	(142,185)
Total	101,351	101,392
Salaries, wages and related expenses	4,555	4,971
Income taxes	3,636	1,201
Customer rebates	2,304	1,581
Property taxes	1,445	1,726
Operating lease liability	1,284	1,230
Holdback for business acquired	1,000	1,000
State sales and use taxes	315	544
Other	473	2,464
Total	15,012	14,717
Deferred compensation	11,722	11,553
Deferred Tax Liabilities, Net, Total	6,504	6,568
Operating lease liability	1,218	1,300
Total	$ 19,444	$ 19,421

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Note 14 - Business Segment Information (Details Textual)	3 Months Ended
	Jan. 02, 2021
Number of Reportable Segments	1

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Note 15 - Leases (Details Textual) - USD ($)	3 Months Ended
	Jan. 02, 2021	Dec. 28, 2019
Operating Lease, Expense	$ 360,000	$ 327,000
Operating Lease, Weighted Average Remaining Lease Term (Year)	2 years 2 months 12 days
Operating Lease, Weighted Average Discount Rate, Percent	4.30%

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Note 15 - Leases - Supplement Cash Flow and Non-cash Information, Weighted Average Remaining Lease Term and Discount Rate Related to Lease (Details) - USD ($) $ in Thousands	3 Months Ended
	Jan. 02, 2021	Dec. 28, 2019
Cash paid for operating leases included in operating cash flows	$ 361	$ 335
Right-of-use assets obtained in exchange for new lease obligations	$ 303	$ 358

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Note 15 - Leases - Supplemental Balance Sheet Information Related to Leases (Details) - USD ($) $ in Thousands	Jan. 02, 2021	Oct. 03, 2020
Other assets	$ 2,494	$ 2,522
Accrued expenses	1,284	1,230
Other liabilities	1,218	1,300
Other Noncurrent Assets [Member]
Other assets	2,494	2,522
Accrued Expenses, Current [Member]
Accrued expenses	1,284	1,230
Other Noncurrent Liabilities [Member]
Other liabilities	1,218	1,300
Accrued Expenses Current and Other Noncurrent Liabilities [Member]
Total operating lease liabilities	$ 2,502	$ 2,530

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Note 15 - Leases - Aggregate Future Operating Lease Payments (Details) $ in Thousands	Jan. 02, 2021 USD ($)
2021	$ 1,283
2022	889
2023	436
2024	54
Total future operating lease payments	2,662
Less: imputed interest	(160)
Other Liabilities [Member]
Present value of lease liabilities	$ 2,502