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 December 30, 2023.

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

(336) 786-2141

(Registrant’s telephone number, including area code)

Not Applicable

(Former name, former address and former fiscal year, if changed since last report)

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

Title of each class	Trading  Symbol(s)	Name of each exchange on which registered
Common Stock (No Par Value)	IIIN	New York Stock Exchange

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, 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 ☒

APPLICABLE ONLY TO CORPORATE ISSUERS

Indicate the number of shares outstanding of each of the Registrant’s classes of common stock, as of the latest practicable date.

Common Stock (No Par Value)	19,448,318
Title of Class	Number of Shares Outstanding as of January 17, 2024

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	14
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	20
Item 4.	Controls and Procedures	20
PART II – OTHER INFORMATION
Item 1.	Legal Proceedings	21
Item 1A.	Risk Factors	21
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	21
Item 5.	Other Information	21
Item 6.	Exhibits	22
SIGNATURES		23

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
	December 30,			December 31,
	2023			2022
Net sales	$	121,725		$	166,899
Cost of sales		115,455			149,113
Gross profit		6,270			17,786
Selling, general and administrative expense		6,367			7,126
Other income, net		(22	)		(3,342	)
Interest expense		29			24
Interest income		(1,659	)		(440	)
Earnings before income taxes		1,555			14,418
Income taxes		423			3,295
Net earnings	$	1,132		$	11,123
Net earnings per share:
Basic	$	0.06		$	0.57
Diluted		0.06			0.57
Weighted average shares outstanding:
Basic		19,497			19,525
Diluted		19,573			19,584
Cash dividends declared per share	$	2.53		$	2.03
Comprehensive income	$	1,132		$	11,123

See accompanying notes to consolidated financial statements.        

3

INSTEEL INDUSTRIES INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(In thousands)

	(Unaudited)
	December 30,			September 30,
	2023			2023
Assets
Current assets:
Cash and cash equivalents	$	85,615		$	125,670
Accounts receivable, net		43,354			63,424
Inventories		94,142			103,306
Other current assets		8,706			6,453
Total current assets		231,817			298,853
Property, plant and equipment, net		129,300			120,014
Intangibles, net		5,903			6,090
Goodwill		9,745			9,745
Other assets		13,803			12,811
Total assets	$	390,568		$	447,513
Liabilities and shareholders' equity
Current liabilities:
Accounts payable	$	23,852		$	34,346
Accrued expenses		9,585			11,809
Total current liabilities		33,437			46,155
Other liabilities		23,536			19,853
Commitments and contingencies
Shareholders' equity:
Common stock		19,448			19,454
Additional paid-in capital		84,425			83,832
Retained earnings		230,005			278,502
Accumulated other comprehensive loss		(283	)		(283	)
Total shareholders' equity		333,595			381,505
Total liabilities and shareholders' equity	$	390,568		$	447,513

See accompanying notes to consolidated financial statements.    

4

INSTEEL INDUSTRIES INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

	Three Months Ended
	December 30,			December 31,
	2023			2022
Cash Flows From Operating Activities:
Net earnings	$	1,132		$	11,123
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation and amortization		3,709			3,350
Amortization of capitalized financing costs		13			16
Stock-based compensation expense		398			130
Deferred income taxes		3,348			(1,378	)
Gain on sale and disposition of property, plant and equipment		-			(3,324	)
Increase in cash surrender value of life insurance policies over premiums paid		(675	)		(363	)
Net changes in assets and liabilities:
Accounts receivable, net		20,070			12,857
Inventories		9,164			26,469
Accounts payable and accrued expenses		(12,921	)		(21,520	)
Other changes		(2,404	)		5,646
Total adjustments		20,702			21,883
Net cash provided by operating activities		21,834			33,006
Cash Flows From Investing Activities:
Capital expenditures		(12,268	)		(8,200	)
Increase in cash surrender value of life insurance policies		(122	)		(81	)
Proceeds from sale of property, plant and equipment		3			9,920
Proceeds from surrender of life insurance policies		5			-
Net cash (used for) provided by investing activities		(12,382	)		1,639
Cash Flows From Financing Activities:
Proceeds from long-term debt		67			67
Principal payments on long-term debt		(67	)		(67	)
Cash dividends paid		(49,191	)		(39,501	)
Payment of employee tax withholdings related to net share transactions		(20	)		-
Cash received from exercise of stock options		243			94
Repurchases of common stock		(539	)		(916	)
Net cash used for financing activities		(49,507	)		(40,323	)
Net decrease in cash and cash equivalents		(40,055	)		(5,678	)
Cash and cash equivalents at beginning of period		125,670			48,316
Cash and cash equivalents at end of period	$	85,615		$	42,638
Supplemental Disclosures of Cash Flow Information:
Cash paid during the period for:
Income taxes, net	$	8		$	187
Non-cash investing and financing activities:
Purchases of property, plant and equipment in accounts payable		1,846			1,520
Restricted stock units and stock options surrendered for withholding taxes payable		20			-

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 December 30, 2023
Balance at September 30, 2023		19,454		$	19,454		$	83,832		$	278,502		$	(283	)	$	381,505
Net earnings											1,132						1,132
Stock options exercised, net		13			13			297									310
Compensation expense associated with stock-based plans								398									398
Repurchases of Common Stock		(19	)		(19	)		(82	)		(438	)					(539	)
Restricted stock units and stock options surrendered for withholding taxes payable								(20	)								(20	)
Cash dividends declared											(49,191	)					(49,191	)
Balance at December 30, 2023		19,448		$	19,448		$	84,425		$	230,005		$	(283	)	$	333,595
For the three months ended December 31, 2022
Balance at October 1, 2022		19,478		$	19,478		$	81,997		$	289,246		$	(977	)	$	389,744
Net earnings											11,123						11,123
Stock options exercised, net		5			5			89									94
Compensation expense associated with stock-based plans								130									130
Repurchases of Common Stock		(32	)		(32	)		(134	)		(750	)					(916	)
Cash dividends declared											(39,501	)					(39,501	)
Balance at December 31, 2022		19,451		$	19,451		$	82,082		$	260,118		$	(977	)	$	360,674

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 September 30, 2023 (“2023 Form 10-K”) filed by us with the Securities and Exchange Commission. 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 September 30, 2023 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 2023 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.

(2) Recent Accounting Pronouncements

In November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2023-07, “Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures”. ASU No. 2023-07 requires disclosures to include significant segment expenses that are regularly provided to the chief operating decision maker (“CODM”), a description of other segment items by reportable segment and any additional measures of a segment's profit or loss used by the CODM when deciding how to allocate resources. The ASU requires all annual disclosures currently required by Topic 280 to be included in interim periods and is applicable to entities with a single reportable segment. ASU No. 2023-07 will be effective for us in fiscal 2025 for annual reporting and in the first quarter of fiscal 2026 for interim reporting. Retrospective application is required for all prior periods presented in the financial statements. We are currently evaluating the impact of the ASU on our disclosures within the consolidated financial statements.

In December 2023, the FASB issued ASU No. 2023-09, “Income Taxes (Topic 740): Improvements to Income Tax Disclosures”. ASU No. 2023-09 requires disaggregated information about a reporting entity’s effective tax rate reconciliation as well as information on income tax paid. ASU No. 2023-09 will become effective for us in fiscal 2026. We are currently evaluating the impact of the ASU on our income tax disclosures within the consolidated financial statements.

(3) 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 present revenue net of amounts collected from customers for sales tax.

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. Contract costs are not significant and are recognized as incurred.

Our net sales by product line are as follows:

	Three Months Ended
	December 30,		December 31,
(In thousands)	2023		2022
Welded wire reinforcement	$	68,802	$	95,968
Prestressed concrete strand		52,923		70,931
Total	$	121,725	$	166,899

7

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 collect from the customer in advance of shipments. Contract assets and liabilities were not material as of December 30, 2023, and September 30, 2023.

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 credit losses 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.

(4) 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 December 30, 2023, and September 30, 2023, 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 December 30, 2023:
Current assets:
Cash equivalents	$	83,291	$	83,291	$	-
Other assets:
Cash surrender value of life insurance policies		11,378		-		11,378
Total	$	94,669	$	83,291	$	11,378
As of September 30, 2023:
Current assets:
Cash equivalents	$	125,805	$	125,805	$	-
Other assets:
Cash surrender value of life insurance policies		10,586		-		10,586
Total	$	136,391	$	125,805	$	10,586

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.

8

As of December 30, 2023, and September 30, 2023, we had no nonfinancial assets that were required to be measured at fair value on a nonrecurring basis. The carrying amounts of accounts receivable, accounts payable and accrued expenses approximate fair value due to the short-term maturities of these financial instruments.

(5) Intangible Assets

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

(In thousands)	Weighted- Average Useful Life (Years)		Gross		Accumulated Amortization			Net Book Value
As of December 30, 2023:
Customer relationships		17.1	$	9,870	$	(4,941	)	$	4,929
Developed technology and know-how		20.0		1,800		(841	)		959
Non-competition agreements		5.0		60		(45	)		15
			$	11,730	$	(5,827	)	$	5,903
As of September 30, 2023:
Customer relationships		17.1	$	9,870	$	(4,779	)	$	5,091
Developed technology and know-how		20.0		1,800		(818	)		982
Non-competition agreements		5.0		400		(383	)		17
			$	12,070	$	(5,980	)	$	6,090

Amortization expense for intangibles was $187,000 and $194,000 for the three-month periods ended December 30, 2023, and December 31, 2022, respectively. Amortization expense for the next five years is $562,000 in 2024, $743,000 in 2025, $752,000 in 2026, $480,000 in 2027, $453,000 in 2028 and $2.9 million thereafter.

(6) 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 11, 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 December 30, 2023, there were 439,000 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 $153,000 and $36,000 for the three-month periods ended December 30, 2023, and December 31, 2022 respectively. As of December 30, 2023, there was $592,000 of unrecognized compensation cost related to unvested options which is expected to be recognized over a weighted average period of 1.94 years.

9

The following table summarizes stock option activity:

						Contractual		Aggregate
	Options			Weighted		Term - Weighted		Intrinsic
	Outstanding			Average		Average		Value
	(in thousands)			Exercise Price		(in years)		(in thousands)
Outstanding at September 30, 2023		411		$	30.68
Granted		-			-
Forfeited		(8	)		41.86
Exercised		(34	)		30.84			$	171
Outstanding at December 30, 2023		369			30.42		7.04		3,073
Vested and anticipated to vest in the future at December 30, 2023		362			30.39		7.01		3,030
Exercisable at December 30, 2023		216			28.98		5.75		2,148

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 plan 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 $245,000 and $94,000 for the three-month periods ended December 30, 2023, and December 31, 2022, respectively.

As of December 30, 2023, there was $887,000 of unrecognized compensation cost related to unvested RSUs which is expected to be recognized over a weighted average period of 1.65 years.

The following table summarizes RSU activity:

			Weighted
	Restricted		Average
	Stock Units		Grant Date
(Unit amounts in thousands)	Outstanding		Fair Value
Balance, September 30, 2023		105	$	35.07
Granted		-		-
Balance, December 30, 2023		105		35.07

(7) Income Taxes

Effective income tax rate. Our effective income tax rate was 27.2% for the three-month period ended December 30, 2023, compared with 22.9% for the three-month period ended December 31, 2022. 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 or discrete items related specifically to interim periods. The increase in the effective rate for the three-month period ended December 30, 2023 is primarily attributed to permanent book versus tax differences for stock-based compensation which were treated as discrete in the current quarter.

Deferred income taxes. As of December 30, 2023, and September 30, 2023, we recorded a deferred tax liability (net of valuation allowance) of $10.9 million and $7.5 million, respectively, in other liabilities on our consolidated balance sheets. We have $31,000 of state net operating loss carryforwards (“NOLs”) that expire in 2031.

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 December 30, 2023, and September 30, 2023, we recorded a valuation allowance of $149,000 and $3,000, respectively, pertaining to deferred tax assets that were not expected to be utilized. The valuation allowance is subject to periodic review and adjustment based on changes in facts and circumstances.

10

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 December 30, 2023, 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 2018 remain subject to examination.

(8) 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
	December 30,		December 31,
(In thousands)	2023		2022
Interest cost	$	147	$	130
Service cost		63		83
Recognized net actuarial loss		-		3
Net periodic pension cost	$	210	$	216

(9) 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 March 2023, we amended our credit agreement to extend the maturity date of the Credit Facility from May 15, 2024, to March 15, 2028, and replaced the London Inter-Bank Offered Rate with the Secured Overnight Financing Rate (“SOFR”). The Credit Facility provides 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 December 30, 2023, no borrowings were outstanding on the Credit Facility, $96.7 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 SOFR rate plus 1.00% or (2) at our election, a SOFR rate including a credit adjustment of 0.10% 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 SOFR-based 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 December 30, 2023, the applicable interest rate margins on the Credit Facility were 0.25% for index rate loans and 1.25% for SOFR-based loans.

11

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 December 30, 2023, 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 $13,000 and $16,000 for the three-month periods ended December 30, 2023, and December 31, 2022, respectively.

(10) Earnings Per Share

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

	Three Months Ended
	December 30,		December 31,
(In thousands, except per share amounts)	2023		2022
Net earnings	$	1,132	$	11,123
Basic weighted average shares outstanding		19,497		19,525
Dilutive effect of stock-based compensation		76		59
Diluted weighted average shares outstanding		19,573		19,584
Net earnings per share:
Basic	$	0.06	$	0.57
Diluted	$	0.06	$	0.57

Options and RSUs that were antidilutive and not included in the dilutive earnings per share calculation amounted to 39,000 and 94,000 shares for the three-month periods ended December 30, 2023, and December 31, 2022, respectively.

(11) 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. The Company repurchased $539,000 or 19,076 shares and $916,000 or 31,654 shares of its common stock during the three-month periods ended December 30, 2023, and December 31, 2022, respectively. As of December 30, 2023, there was $20.7 million remaining available for future share repurchases under this Authorization.

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(12) Other Financial Data

Balance sheet information:

	December 30,			September 30,
(In thousands)	2023			2023
Accounts receivable, net:
Accounts receivable	$	43,659		$	63,735
Less allowance for credit losses		(305	)		(311	)
Total	$	43,354		$	63,424
Inventories:
Raw materials	$	38,123		$	39,341
Work in process		5,264			5,852
Finished goods		50,755			58,113
Total	$	94,142		$	103,306
Other current assets:
Prepaid insurance	$	3,510		$	4,043
Income tax receivable		2,748			-
Other		2,448			2,410
Total	$	8,706		$	6,453
Other assets:
Cash surrender value of life insurance policies	$	11,378		$	10,586
Right-of-use asset		2,152			1,939
Capitalized financing costs, net		163			175
Other		110			111
Total	$	13,803		$	12,811
Property, plant and equipment, net:
Land and land improvements	$	15,151		$	15,107
Buildings		56,697			56,653
Machinery and equipment		214,999			198,528
Construction in progress		13,065			18,019
		299,912			288,307
Less accumulated depreciation		(170,612	)		(168,293	)
Total	$	129,300		$	120,014
Accrued expenses:
Customer rebates	$	2,906		$	2,132
Salaries, wages and related expenses		2,279			5,082
Property taxes		1,367			1,912
Sales allowance reserves		1,270			745
Operating lease liability		1,055			999
State sales and use taxes		158			268
Income taxes		-			187
Other		550			484
Total	$	9,585		$	11,809
Other liabilities:
Deferred compensation	$	11,555		$	11,374
Deferred income taxes		10,891			7,543
Operating lease liability		1,090			936
Total	$	23,536		$	19,853

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(13) 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: prestressed concrete strand and welded wire reinforcement. Based on the criteria specified in Accounting Standards Codification Topic 280, Segment Reporting, we have one reportable segment.

(14) Contingencies

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 involve 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 September 30, 2023 (our “2023 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:

● 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;

● the impact of rising interest rates on the cost of financing for our customers;

● 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 affecting imports or exports of steel wire rod or our products;

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

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● 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 2023 Annual Report and in other filings made by us with the SEC.

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 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.

Results of Operations

Statements of Operations – Selected Data

(Dollars in thousands)

	Three Months Ended
	December 30,						December 31,
	2023			Change			2022
Net sales	$	121,725			(27.1%	)	$	166,899
Gross profit		6,270			(64.7%	)		17,786
Percentage of net sales		5.2	%					10.7	%
Selling, general and administrative expense	$	6,367			(10.7%	)	$	7,126
Percentage of net sales		5.2	%					4.3	%
Other income, net	$	(22	)		N/M		$	(3,342	)
Interest income		(1,659	)		N/M			(440	)
Effective income tax rate		27.2	%					22.9	%
Net earnings	$	1,132			(89.8%	)	$	11,123

"N/M" = not meaningful

First Quarter of Fiscal 2024 Compared to First Quarter of Fiscal 2023

Net Sales

Net sales for the first quarter of 2024 decreased 27.1% to $121.7 million from $166.9 million in the prior year quarter as relatively flat shipments were offset by a 27.1% decrease in average selling prices. The decrease in average selling prices was driven by competitive pricing pressures and a decline in raw material costs.

Gross Profit

Gross profit for the first quarter of 2024 decreased 64.7% to $6.3 million, or 5.2% of net sales, from $17.8 million, or 10.7% of net sales, in the prior year quarter due to lower spreads between average selling prices and raw material costs ($11.0 million) and higher manufacturing costs ($499,000). The decrease in spreads was driven by lower average selling prices ($45.8 million) partially offset by lower raw material costs ($34.6 million) and freight expense ($201,000).

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Selling, General and Administrative Expense

Selling, general and administrative expense (“SG&A expense”) for the first quarter of 2024 decreased 10.7% to $6.4 million, or 5.2% of net sales, from $7.1 million, or 4.3% of net sales, in the prior year quarter primarily due to lower compensation expense ($674,000) and the relative year-over-year change in the cash surrender value of life insurance policies ($312,000) partially offset by higher legal expense ($147,000). The decrease in compensation expense was primarily driven by a decrease in incentive plan expense due to a decline in financial results. The cash surrender value of life insurance policies increased $675,000 in the current year quarter compared with an increase of $363,000 in the prior year quarter due to the corresponding changes in the value of the underlying investments.

Other Income, net

Other income for the first quarter of 2024 decreased to $22,000 from $3.3 million in the prior year quarter. The decrease was primarily due to the prior year period including a $3.3 million net gain from the sale of property, plant and equipment.

Interest Income

Interest income increased $1.2 million from the prior year quarter due to an increase in cash and higher average interest rates.

Income Taxes

Our effective tax rate for the first quarter of 2024 increased to 27.2% from 22.9% for the prior year quarter primarily due to permanent book versus tax differences for stock-based compensation which were treated as discrete in the current period.

Net Earnings

Net earnings for the first quarter of 2024 decreased to $1.1 million ($0.06 per share) from $11.1 million ($0.57 per share) in the prior year quarter primarily due to the decrease in gross profit and other income partially offset by the increase in interest income and lower SG&A expense.

Liquidity and Capital Resources

Selected Financial Data

(Dollars in thousands)

	Three Months Ended
	December 30,			December 31,
	2023			2022
Net cash provided by operating activities	$	21,834		$	33,006
Net cash (used for) provided by investing activities		(12,382	)		1,639
Net cash used for financing activities		(49,507	)		(40,323	)
Net working capital		198,380			243,298
Total debt		-			-
Percentage of total capital		-			-
Shareholders' equity	$	333,595		$	360,674
Percentage of total capital		100.0	%		100.0	%
Total capital (total debt + shareholders' equity)	$	333,595		$	360,674

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Operating Activities

Operating activities provided $21.8 million of cash during the first quarter of 2024 primarily from net earnings adjusted for non-cash items together with a net decrease in working capital. Working capital provided $16.3 million of cash due to a $20.1 million reduction in accounts receivable and a $9.2 million decrease in inventories partially offset by a $12.9 million decrease in accounts payable and accrued expenses. The decrease in accounts receivable was largely driven by the decrease in shipments in the quarter combined with lower average selling prices. The decrease in inventories was primarily due to lower average unit costs. The decrease in accounts payable and accrued expenses was largely due to lower raw material purchases near the end of the period, lower raw material unit costs and decreases in accrued salaries, wages and related expenses.

Operating activities provided $33.0 million of cash during the first quarter of 2023 primarily from net earnings adjusted for non-cash items together with a net decrease in working capital. Working capital provided $17.8 million of cash due to a $26.5 million decrease in inventories and a $12.9 million reduction in accounts receivable partially offset by a $21.5 million decrease in accounts payable and accrued expenses. The decrease in inventories was primarily due to lower raw material purchases during the quarter along with lower average unit costs. The decrease in accounts receivable was largely driven by the decrease in shipments in the quarter combined with lower average selling prices. The decrease in accounts payable and accrued expenses was largely due to lower raw material purchases during the period.

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.

Investing Activities

Investing activities used $12.4 million of cash during the first quarter of 2024 compared to providing $1.6 million during the prior year period primarily due the decreased receipt of proceeds from the sale of property, plant and equipment ($9.9 million) partially offset by higher capital expenditures ($4.1 million). Capital expenditures increased to $12.3 million from $8.2 million in the prior year period and are expected to total up to approximately $30.0 million for fiscal 2024. Capital expenditures for fiscal 2024 are to support costs and productivity initiatives, modernize our facilities and information systems, advance the growth of our engineered structural mesh business and 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 $49.5 million of cash during the first quarter of 2024 compared to $40.3 million during the prior year period. During the first quarter of 2024, $49.2 million of cash was used for dividend payments (including a special dividend of $48.6 million, or $2.50 per share, and regular quarterly dividend totaling $583,000, or $0.03 per share) and $539,000 for the repurchase of common stock. During the first quarter of 2023, $39.5 million of cash was used for dividend payments (including a special dividend of $38.9 million, or $2.00 per share, and regular quarterly dividend totaling $584,000, or $0.03 per share) and $916,000 for the repurchase of common stock.

Cash Management

Our cash is principally concentrated at one major 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 March 2023, we amended our credit agreement to extend the maturity date of the Credit Facility from May 15, 2024, to March 15, 2028 and replaced the London Inter-Bank Offered Rate with the Secured Overnight Financing Rate. The Credit Facility provides 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 December 30, 2023, no borrowings were outstanding on the Credit Facility, $96.7 million of borrowing capacity was available and outstanding letters of credit totaled $1.5 million (see Note 9 to the consolidated financial statements).

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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.

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, labor rates, 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. During the first quarter of 2024, selling prices for our products declined in response to the softening demand and competitive pricing pressures which negatively impacted our financial results as we consumed higher cost inventory. The timing and magnitude of any future increases in our raw material costs and the selling prices for our products are uncertain at this time.

Contractual Obligations

There have been no material changes in our contractual obligations and commitments as disclosed in our 2023 Annual Report other than those which occur in the ordinary course of business.

Critical Accounting Estimates

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. These estimates, assumptions and judgments are affected by our application of accounting policies, which are discussed in our 2023 Annual Report. Estimates are used for, but not limited to, determining the net carrying value of trade accounts receivable, inventories, recording self-insurance liabilities and other accrued liabilities. Actual results could differ from these estimates. Please refer to “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Critical Accounting Estimates” included in our 2023 Annual Report for further information regarding our critical accounting policies and estimates. As of December 30, 2023, none of our accounting estimates were deemed to be critical for the accounting periods presented, which is consistent with our assessment of critical accounting estimates disclosed in our 2023 Annual Report.

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Recent Accounting Pronouncements

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

Outlook

As we look ahead to the remainder of fiscal 2024, we anticipate stronger market fundamentals and improving financial results. Customer sentiment remains mostly positive, and the macroeconomic outlook is improving with the apparent end of the recent rising interest rate cycle. Furthermore, the outlook for infrastructure construction remains favorable as federal spending from the Infrastructure Investment and Jobs Act is expected to increase demand as we progress through the fiscal year.

We will continue to focus on those factors that we can reasonably control, including closely managing expenses; aligning our production schedules with demand 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 recent years and expect to continue to make in our facilities in the form of reduced operating costs and additional capacity to support future growth. Also, we will continue to pursue acquisitions opportunistically to expand our penetration of markets we currently serve or to expand our footprint.

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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 2024, a 10% increase in the price of wire rod would have resulted in a $7.9 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 December 30, 2023, 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 December 30, 2023.

Item 4. Controls and Procedures

We have conducted an evaluation of the effectiveness of our disclosure controls and procedures as of December 30, 2023. 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.

There has been no change in our internal control over financial reporting that occurred during the quarter ended December 30, 2023, that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

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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 December 30, 2023, there have been no material changes from the risk factors set forth under Part I, Item 1A. “Risk Factors” in our 2023 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 2023 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

The following table summarizes the repurchases of common stock during the quarter ended December 30, 2023.

(In thousands except share and per share amounts)	Total Number of Shares Purchased		Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plan or Program		Maximum Number (or Approximate Dollar Value) of Shares That May Yet Be Purchased Under the Plan or Program
For the three months ended December 30, 2023
October 1, 2023 - November 4, 2023		14,239	$	27.85		14,239	$	20,828	(1)
November 5, 2023 - December 2, 2023		4,837	$	29.45		4,837	$	20,686	(1)
December 3, 2023 - December 30, 2023		-		-		-	$	20,686	(1)
		19,076				19,076

(1) Under the $25.0 million share repurchase authorization announced on November 18, 2008, which continues in effect until terminated by the Board of Directors.

Additional information regarding our share repurchase authorization is discussed in Note 11 to our consolidated financial statements and incorporated herein by reference.

Item 5. Other Information

Insider Adoption or Termination of Trading Arrangements

During the fiscal quarter ended December 30, 2023, none of our directors or officers adopted or terminated a “Rule 10b5-1 trading arrangement” or a “non-Rule 10b5-1 trading arrangement,” as those terms are defined in Item 408 of Regulation S-K.

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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 December 30, 2023, formatted in iXBRL (Inline eXtensible Business Reporting Language): (i) the Consolidated Statements of Operations and Comprehensive Income for the three months ended December 30, 2023, and December 31, 2022, (ii) the Consolidated Balance Sheets as of December 30, 2023, and September 30, 2023, (iii) the Consolidated Statements of Cash Flows for the three months ended December 30, 2023, and December 31, 2022, (iv) the Consolidated Statements of Shareholders’ Equity for the three months ended December 30, 2023, and December 31, 2022, and (v) the Notes to Consolidated Financial Statements.
104	The cover page from our Quarterly Report on Form 10-Q for the quarter ended December 30, 2023, formatted in iXBRL and contained in Exhibit 101.
	Our SEC file number reference for documents filed with the SEC pursuant to the Securities Exchange Act of 1934, as amended, is 1-09929.

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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 18, 2024	By:	/s/ Scot R. Jafroodi
		Scot R. Jafroodi
		Vice President, Chief Financial Officer and Treasurer   (Duly Authorized Officer and Principal Financial  Officer)

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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 December 30, 2023 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 18, 2024

/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, Scot R. Jafroodi, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q for the quarter ended December 30, 2023 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 18, 2024

/s/ Scot R. Jafroodi

 Scot R. Jafroodi

 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 December 30, 2023 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 18, 2024

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 December 30, 2023 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Scot R. Jafroodi, 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/ Scot R. Jafroodi

      Scot R. Jafroodi

      Vice President, Chief Financial Officer and Treasurer

      January 18, 2024

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Document And Entity Information - shares	3 Months Ended
	Dec. 30, 2023	Jan. 17, 2024
Document Information [Line Items]
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Dec. 30, 2023
Document Transition Report	false
Entity File Number	1-9929
Entity Registrant Name	Insteel Industries Inc
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	NYSE
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 (in shares)		19,448,318
Entity Central Index Key	0000764401
Current Fiscal Year End Date	--09-28
Document Fiscal Year Focus	2024
Document Fiscal Period Focus	Q1
Amendment Flag	false

XML

Consolidated Statements of Operations and Comprehensive Income (Unaudited) - USD ($) shares in Thousands, $ in Thousands	3 Months Ended
	Dec. 30, 2023	Dec. 31, 2022
Net sales	$ 121,725	$ 166,899
Cost of sales	115,455	149,113
Gross profit	6,270	17,786
Selling, general and administrative expense	6,367	7,126
Other income, net	(22)	(3,342)
Interest expense	29	24
Interest income	(1,659)	(440)
Earnings before income taxes	1,555	14,418
Income taxes	423	3,295
Net earnings	$ 1,132	$ 11,123
Net earnings per share:
Basic (in dollars per share)	$ 0.06	$ 0.57
Diluted (in dollars per share)	$ 0.06	$ 0.57
Weighted average shares outstanding:
Basic (in shares)	19,497	19,525
Diluted (in shares)	19,573	19,584
Cash dividends declared per share (in dollars per share)	$ 2.53	$ 2.03
Comprehensive income	$ 1,132	$ 11,123

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Consolidated Balance Sheets (Unaudited) - USD ($) $ in Thousands	Dec. 30, 2023	Sep. 30, 2023
Assets
Cash and cash equivalents	$ 85,615	$ 125,670
Accounts receivable, net	43,354	63,424
Inventories	94,142	103,306
Other current assets	8,706	6,453
Total current assets	231,817	298,853
Property, plant and equipment, net	129,300	120,014
Intangibles, net	5,903	6,090
Goodwill	9,745	9,745
Other assets	13,803	12,811
Total assets	390,568	447,513
Liabilities and shareholders' equity
Accounts payable	23,852	34,346
Accrued expenses	9,585	11,809
Total current liabilities	33,437	46,155
Other liabilities	23,536	19,853
Commitments and Contingencies
Shareholders' equity:
Common stock	19,448	19,454
Additional paid-in capital	84,425	83,832
Retained earnings	230,005	278,502
Accumulated other comprehensive loss	(283)	(283)
Total shareholders' equity	333,595	381,505
Total liabilities and shareholders' equity	$ 390,568	$ 447,513

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Consolidated Statements of Cash Flows (Unaudited) - USD ($)	3 Months Ended
	Dec. 30, 2023	Dec. 31, 2022
Cash Flows From Operating Activities:
Net earnings	$ 1,132,000	$ 11,123,000
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation and amortization	3,709,000	3,350,000
Amortization of capitalized financing costs	13,000	16,000
Stock-based compensation expense	398,000	130,000
Deferred income taxes	3,348,000	(1,378,000)
Gain on sale and disposition of property, plant and equipment	0	(3,324,000)
Increase in cash surrender value of life insurance policies over premiums paid	(675,000)	(363,000)
Net changes in assets and liabilities:
Accounts receivable, net	20,070,000	12,857,000
Inventories	9,164,000	26,469,000
Accounts payable and accrued expenses	(12,921,000)	(21,520,000)
Other changes	(2,404,000)	5,646,000
Total adjustments	20,702,000	21,883,000
Net cash provided by operating activities	21,834,000	33,006,000
Cash Flows From Investing Activities:
Capital expenditures	(12,268,000)	(8,200,000)
Increase in cash surrender value of life insurance policies	(122,000)	(81,000)
Proceeds from sale of property, plant and equipment	3,000	9,920,000
Proceeds from surrender of life insurance policies	5,000	0
Net cash (used for) provided by investing activities	(12,382,000)	1,639,000
Cash Flows From Financing Activities:
Proceeds from long-term debt	67,000	67,000
Principal payments on long-term debt	(67,000)	(67,000)
Cash dividends paid	(49,191,000)	(39,501,000)
Payment of employee tax withholdings related to net share transactions	(20,000)	0
Cash received from exercise of stock options	243,000	94,000
Repurchases of common stock	(539,000)	(916,000)
Net cash used for financing activities	(49,507,000)	(40,323,000)
Net decrease in cash and cash equivalents	(40,055,000)	(5,678,000)
Cash and cash equivalents at beginning of period	125,670,000	48,316,000
Cash and cash equivalents at end of period	85,615,000	42,638,000
Supplemental Disclosures of Cash Flow Information:
Income taxes, net	8,000	187,000
Non-cash investing and financing activities:
Purchases of property, plant and equipment in accounts payable	1,846,000	1,520,000
Restricted stock units and stock options surrendered for withholding taxes payable	$ 20,000	$ 0

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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 Oct. 01, 2022	19,478
Balance at Oct. 01, 2022	$ 19,478	$ 81,997	$ 289,246	$ (977)	$ 389,744
Net earnings			11,123		11,123
Stock options exercised, net (in shares)	5
Stock options exercised, net	$ 5	89			94
Compensation expense associated with stock-based plans		130			130
Repurchases of common stock (in shares)	(32)
Repurchases of common stock	$ (32)	(134)	(750)		(916)
Cash dividends declared			(39,501)		(39,501)
Balance (in shares) at Dec. 31, 2022	19,451
Balance at Dec. 31, 2022	$ 19,451	82,082	260,118	(977)	360,674
Balance (in shares) at Sep. 30, 2023	19,454
Balance at Sep. 30, 2023	$ 19,454	83,832	278,502	(283)	381,505
Net earnings			1,132		$ 1,132
Stock options exercised, net (in shares)	13				34
Stock options exercised, net	$ 13	297			$ 310
Compensation expense associated with stock-based plans		398			398
Repurchases of common stock (in shares)	(19)
Repurchases of common stock	$ (19)	(82)	(438)		(539)
Restricted stock units and stock options surrendered for withholding taxes payable		(20)			(20)
Cash dividends declared			(49,191)		(49,191)
Balance (in shares) at Dec. 30, 2023	19,448
Balance at Dec. 30, 2023	$ 19,448	$ 84,425	$ 230,005	$ (283)	$ 333,595

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Note 1 - Basis of Presentation

3 Months Ended

Dec. 30, 2023

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 September 30, 2023 (“2023 Form 10-K”) filed by us with the Securities and Exchange Commission. 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 September 30, 2023 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 2023 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.

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Note 2 - Recent Accounting Pronouncements

3 Months Ended

Dec. 30, 2023

Notes to Financial Statements

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

(2) Recent Accounting Pronouncements

In November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2023-07, “Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures”. ASU No. 2023-07 requires disclosures to include significant segment expenses that are regularly provided to the chief operating decision maker (“CODM”), a description of other segment items by reportable segment and any additional measures of a segment's profit or loss used by the CODM when deciding how to allocate resources. The ASU requires all annual disclosures currently required by Topic 280 to be included in interim periods and is applicable to entities with a single reportable segment. ASU No. 2023-07 will be effective for us in fiscal 2025 for annual reporting and in the first quarter of fiscal 2026 for interim reporting. Retrospective application is required for all prior periods presented in the financial statements. We are currently evaluating the impact of the ASU on our disclosures within the consolidated financial statements.

In December 2023, the FASB issued ASU No. 2023-09, “Income Taxes (Topic 740): Improvements to Income Tax Disclosures”. ASU No. 2023-09 requires disaggregated information about a reporting entity’s effective tax rate reconciliation as well as information on income tax paid. ASU No. 2023-09 will become effective for us in fiscal 2026. We are currently evaluating the impact of the ASU on our income tax disclosures within the consolidated financial statements.

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Note 3 - Revenue Recognition

3 Months Ended

Dec. 30, 2023

Notes to Financial Statements

Revenue from Contract with Customer [Text Block]

(3) 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 present revenue net of amounts collected from customers for sales tax.

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. Contract costs are not significant and are recognized as incurred.

Our net sales by product line are as follows:

	Three Months Ended
	December 30,		December 31,
(In thousands)	2023		2022
Welded wire reinforcement	$	68,802	$	95,968
Prestressed concrete strand		52,923		70,931
Total	$	121,725	$	166,899

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 collect from the customer in advance of shipments. Contract assets and liabilities were not material as of December 30, 2023, and September 30, 2023.

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 credit losses 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 4 - Fair Value Measurements

3 Months Ended

Dec. 30, 2023

Notes to Financial Statements

Fair Value Disclosures [Text Block]

(4) 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 December 30, 2023, and September 30, 2023, 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 December 30, 2023:
Current assets:
Cash equivalents	$	83,291	$	83,291	$	-
Other assets:
Cash surrender value of life insurance policies		11,378		-		11,378
Total	$	94,669	$	83,291	$	11,378
As of September 30, 2023:
Current assets:
Cash equivalents	$	125,805	$	125,805	$	-
Other assets:
Cash surrender value of life insurance policies		10,586		-		10,586
Total	$	136,391	$	125,805	$	10,586

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 December 30, 2023, and September 30, 2023, we had no nonfinancial assets that were required to be measured at fair value on a nonrecurring basis. 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 5 - Intangible Assets

3 Months Ended

Dec. 30, 2023

Notes to Financial Statements

Intangible Assets Disclosure [Text Block]

(5) Intangible Assets

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

(In thousands)	Weighted- Average Useful Life (Years)		Gross		Accumulated Amortization			Net Book Value
As of December 30, 2023:
Customer relationships		17.1	$	9,870	$	(4,941	)	$	4,929
Developed technology and know-how		20.0		1,800		(841	)		959
Non-competition agreements		5.0		60		(45	)		15
			$	11,730	$	(5,827	)	$	5,903
As of September 30, 2023:
Customer relationships		17.1	$	9,870	$	(4,779	)	$	5,091
Developed technology and know-how		20.0		1,800		(818	)		982
Non-competition agreements		5.0		400		(383	)		17
			$	12,070	$	(5,980	)	$	6,090

Amortization expense for intangibles was $187,000 and $194,000 for the three-month periods ended December 30, 2023, and December 31, 2022, respectively. Amortization expense for the next five years is $562,000 in 2024, $743,000 in 2025, $752,000 in 2026, $480,000 in 2027, $453,000 in 2028 and $2.9 million thereafter.

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Note 6 - Stock-based Compensation

3 Months Ended

Dec. 30, 2023

Notes to Financial Statements

Share-Based Payment Arrangement [Text Block]

(6) 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 11, 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 December 30, 2023, there were 439,000 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 $153,000 and $36,000 for the three-month periods ended December 30, 2023, and December 31, 2022 respectively. As of December 30, 2023, there was $592,000 of unrecognized compensation cost related to unvested options which is expected to be recognized over a weighted average period of 1.94 years.

The following table summarizes stock option activity:

						Contractual		Aggregate
	Options			Weighted		Term - Weighted		Intrinsic
	Outstanding			Average		Average		Value
	(in thousands)			Exercise Price		(in years)		(in thousands)
Outstanding at September 30, 2023		411		$	30.68
Granted		-			-
Forfeited		(8	)		41.86
Exercised		(34	)		30.84			$	171
Outstanding at December 30, 2023		369			30.42		7.04		3,073
Vested and anticipated to vest in the future at December 30, 2023		362			30.39		7.01		3,030
Exercisable at December 30, 2023		216			28.98		5.75		2,148

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 plan 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 $245,000 and $94,000 for the three-month periods ended December 30, 2023, and December 31, 2022, respectively.

As of December 30, 2023, there was $887,000 of unrecognized compensation cost related to unvested RSUs which is expected to be recognized over a weighted average period of 1.65 years.

The following table summarizes RSU activity:

			Weighted
	Restricted		Average
	Stock Units		Grant Date
(Unit amounts in thousands)	Outstanding		Fair Value
Balance, September 30, 2023		105	$	35.07
Granted		-		-
Balance, December 30, 2023		105		35.07

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Note 7 - Income Taxes

3 Months Ended

Dec. 30, 2023

Notes to Financial Statements

Income Tax Disclosure [Text Block]

(7) Income Taxes

Effective income tax rate. Our effective income tax rate was 27.2% for the three-month period ended December 30, 2023, compared with 22.9% for the three-month period ended December 31, 2022. 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 or discrete items related specifically to interim periods. The increase in the effective rate for the three-month period ended December 30, 2023 is primarily attributed to permanent book versus tax differences for stock-based compensation which were treated as discrete in the current quarter.

Deferred income taxes. As of December 30, 2023, and September 30, 2023, we recorded a deferred tax liability (net of valuation allowance) of $10.9 million and $7.5 million, respectively, in other liabilities on our consolidated balance sheets. We have $31,000 of state net operating loss carryforwards (“NOLs”) that expire in 2031.

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 December 30, 2023, and September 30, 2023, we recorded a valuation allowance of $149,000 and $3,000, respectively, pertaining to deferred tax assets that were not expected to be utilized. The valuation allowance is subject to periodic review and adjustment based on changes in facts and circumstances.

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 December 30, 2023, 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 2018 remain subject to examination.

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Note 8 - Employee Benefit Plans

3 Months Ended

Dec. 30, 2023

Notes to Financial Statements

Retirement Benefits [Text Block]

(8) 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
	December 30,		December 31,
(In thousands)	2023		2022
Interest cost	$	147	$	130
Service cost		63		83
Recognized net actuarial loss		-		3
Net periodic pension cost	$	210	$	216

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Note 9 - Long-term Debt

3 Months Ended

Dec. 30, 2023

Notes to Financial Statements

Long-Term Debt [Text Block]

(9) 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 March 2023, we amended our credit agreement to extend the maturity date of the Credit Facility from May 15, 2024, to March 15, 2028, and replaced the London Inter-Bank Offered Rate with the Secured Overnight Financing Rate (“SOFR”). The Credit Facility provides 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 December 30, 2023, no borrowings were outstanding on the Credit Facility, $96.7 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 SOFR rate plus 1.00% or (2) at our election, a SOFR rate including a credit adjustment of 0.10% 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 SOFR-based 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 December 30, 2023, the applicable interest rate margins on the Credit Facility were 0.25% for index rate loans and 1.25% for SOFR-based 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 December 30, 2023, 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 $13,000 and $16,000 for the three-month periods ended December 30, 2023, and December 31, 2022, respectively.

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Note 10 - Earnings Per Share

3 Months Ended

Dec. 30, 2023

Notes to Financial Statements

Earnings Per Share [Text Block]

(10) Earnings Per Share

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

	Three Months Ended
	December 30,		December 31,
(In thousands, except per share amounts)	2023		2022
Net earnings	$	1,132	$	11,123
Basic weighted average shares outstanding		19,497		19,525
Dilutive effect of stock-based compensation		76		59
Diluted weighted average shares outstanding		19,573		19,584
Net earnings per share:
Basic	$	0.06	$	0.57
Diluted	$	0.06	$	0.57

Options and RSUs that were antidilutive and not included in the dilutive earnings per share calculation amounted to 39,000 and 94,000 shares for the three-month periods ended December 30, 2023, and December 31, 2022, respectively.

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Note 11 - Share Repurchases

3 Months Ended

Dec. 30, 2023

Notes to Financial Statements

Equity [Text Block]

(11) 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. The Company repurchased $539,000 or 19,076 shares and $916,000 or 31,654 shares of its common stock during the three-month periods ended December 30, 2023, and December 31, 2022, respectively. As of December 30, 2023, there was $20.7 million remaining available for future share repurchases under this Authorization.

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Note 12 - Other Financial Data

3 Months Ended

Dec. 30, 2023

Notes to Financial Statements

Other Financial Data [Text Block]

(12) Other Financial Data

Balance sheet information:

	December 30,			September 30,
(In thousands)	2023			2023
Accounts receivable, net:
Accounts receivable	$	43,659		$	63,735
Less allowance for credit losses		(305	)		(311	)
Total	$	43,354		$	63,424
Inventories:
Raw materials	$	38,123		$	39,341
Work in process		5,264			5,852
Finished goods		50,755			58,113
Total	$	94,142		$	103,306
Other current assets:
Prepaid insurance	$	3,510		$	4,043
Income tax receivable		2,748			-
Other		2,448			2,410
Total	$	8,706		$	6,453
Other assets:
Cash surrender value of life insurance policies	$	11,378		$	10,586
Right-of-use asset		2,152			1,939
Capitalized financing costs, net		163			175
Other		110			111
Total	$	13,803		$	12,811
Property, plant and equipment, net:
Land and land improvements	$	15,151		$	15,107
Buildings		56,697			56,653
Machinery and equipment		214,999			198,528
Construction in progress		13,065			18,019
		299,912			288,307
Less accumulated depreciation		(170,612	)		(168,293	)
Total	$	129,300		$	120,014
Accrued expenses:
Customer rebates	$	2,906		$	2,132
Salaries, wages and related expenses		2,279			5,082
Property taxes		1,367			1,912
Sales allowance reserves		1,270			745
Operating lease liability		1,055			999
State sales and use taxes		158			268
Income taxes		-			187
Other		550			484
Total	$	9,585		$	11,809
Other liabilities:
Deferred compensation	$	11,555		$	11,374
Deferred income taxes		10,891			7,543
Operating lease liability		1,090			936
Total	$	23,536		$	19,853

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Note 13 - Business Segment Information

3 Months Ended

Dec. 30, 2023

Notes to Financial Statements

Segment Reporting Disclosure [Text Block]

(13) 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: prestressed concrete strand and welded wire reinforcement. Based on the criteria specified in Accounting Standards Codification Topic 280, Segment Reporting, we have one reportable segment.

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Note 14 - Contingencies

3 Months Ended

Dec. 30, 2023

Notes to Financial Statements

Commitments and Contingencies Disclosure [Text Block]

(14) Contingencies

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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Insider Trading Arrangements

3 Months Ended

Dec. 30, 2023

Insider Trading Arr Line Items

Material Terms of Trading Arrangement [Text Block]

Item 5. Other Information

Insider Adoption or Termination of Trading Arrangements

During the fiscal quarter ended December 30, 2023, none of our directors or officers adopted or terminated a “Rule 10b5-1 trading arrangement” or a “non-Rule 10b5-1 trading arrangement,” as those terms are defined in Item 408 of Regulation S-K.

Rule 10b5-1 Arrangement Adopted [Flag]

false

Non-Rule 10b5-1 Arrangement Adopted [Flag]

false

Rule 10b5-1 Arrangement Terminated [Flag]

false

Non-Rule 10b5-1 Arrangement Terminated [Flag]

false

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Note 3 - Revenue Recognition (Tables)

3 Months Ended

Dec. 30, 2023

Notes Tables

Disaggregation of Revenue [Table Text Block]

	Three Months Ended
	December 30,		December 31,
(In thousands)	2023		2022
Welded wire reinforcement	$	68,802	$	95,968
Prestressed concrete strand		52,923		70,931
Total	$	121,725	$	166,899

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Note 4 - Fair Value Measurements (Tables)

3 Months Ended

Dec. 30, 2023

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 December 30, 2023:
Current assets:
Cash equivalents	$	83,291	$	83,291	$	-
Other assets:
Cash surrender value of life insurance policies		11,378		-		11,378
Total	$	94,669	$	83,291	$	11,378
As of September 30, 2023:
Current assets:
Cash equivalents	$	125,805	$	125,805	$	-
Other assets:
Cash surrender value of life insurance policies		10,586		-		10,586
Total	$	136,391	$	125,805	$	10,586

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Note 5 - Intangible Assets (Tables)

3 Months Ended

Dec. 30, 2023

Notes Tables

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

(In thousands)	Weighted- Average Useful Life (Years)		Gross		Accumulated Amortization			Net Book Value
As of December 30, 2023:
Customer relationships		17.1	$	9,870	$	(4,941	)	$	4,929
Developed technology and know-how		20.0		1,800		(841	)		959
Non-competition agreements		5.0		60		(45	)		15
			$	11,730	$	(5,827	)	$	5,903
As of September 30, 2023:
Customer relationships		17.1	$	9,870	$	(4,779	)	$	5,091
Developed technology and know-how		20.0		1,800		(818	)		982
Non-competition agreements		5.0		400		(383	)		17
			$	12,070	$	(5,980	)	$	6,090

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Note 6 - Stock-based Compensation (Tables)

3 Months Ended

Dec. 30, 2023

Notes Tables

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

						Contractual		Aggregate
	Options			Weighted		Term - Weighted		Intrinsic
	Outstanding			Average		Average		Value
	(in thousands)			Exercise Price		(in years)		(in thousands)
Outstanding at September 30, 2023		411		$	30.68
Granted		-			-
Forfeited		(8	)		41.86
Exercised		(34	)		30.84			$	171
Outstanding at December 30, 2023		369			30.42		7.04		3,073
Vested and anticipated to vest in the future at December 30, 2023		362			30.39		7.01		3,030
Exercisable at December 30, 2023		216			28.98		5.75		2,148

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, September 30, 2023		105	$	35.07
Granted		-		-
Balance, December 30, 2023		105		35.07

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Note 8 - Employee Benefit Plans (Tables)

3 Months Ended

Dec. 30, 2023

Notes Tables

Schedule of Net Benefit Costs [Table Text Block]

	Three Months Ended
	December 30,		December 31,
(In thousands)	2023		2022
Interest cost	$	147	$	130
Service cost		63		83
Recognized net actuarial loss		-		3
Net periodic pension cost	$	210	$	216

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Note 10 - Earnings Per Share (Tables)

3 Months Ended

Dec. 30, 2023

Notes Tables

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

	Three Months Ended
	December 30,		December 31,
(In thousands, except per share amounts)	2023		2022
Net earnings	$	1,132	$	11,123
Basic weighted average shares outstanding		19,497		19,525
Dilutive effect of stock-based compensation		76		59
Diluted weighted average shares outstanding		19,573		19,584
Net earnings per share:
Basic	$	0.06	$	0.57
Diluted	$	0.06	$	0.57

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Note 12 - Other Financial Data (Tables)

3 Months Ended

Dec. 30, 2023

Notes Tables

Other Financial Information, Balance Sheet [Table Text Block]

	December 30,			September 30,
(In thousands)	2023			2023
Accounts receivable, net:
Accounts receivable	$	43,659		$	63,735
Less allowance for credit losses		(305	)		(311	)
Total	$	43,354		$	63,424
Inventories:
Raw materials	$	38,123		$	39,341
Work in process		5,264			5,852
Finished goods		50,755			58,113
Total	$	94,142		$	103,306
Other current assets:
Prepaid insurance	$	3,510		$	4,043
Income tax receivable		2,748			-
Other		2,448			2,410
Total	$	8,706		$	6,453
Other assets:
Cash surrender value of life insurance policies	$	11,378		$	10,586
Right-of-use asset		2,152			1,939
Capitalized financing costs, net		163			175
Other		110			111
Total	$	13,803		$	12,811
Property, plant and equipment, net:
Land and land improvements	$	15,151		$	15,107
Buildings		56,697			56,653
Machinery and equipment		214,999			198,528
Construction in progress		13,065			18,019
		299,912			288,307
Less accumulated depreciation		(170,612	)		(168,293	)
Total	$	129,300		$	120,014
Accrued expenses:
Customer rebates	$	2,906		$	2,132
Salaries, wages and related expenses		2,279			5,082
Property taxes		1,367			1,912
Sales allowance reserves		1,270			745
Operating lease liability		1,055			999
State sales and use taxes		158			268
Income taxes		-			187
Other		550			484
Total	$	9,585		$	11,809
Other liabilities:
Deferred compensation	$	11,555		$	11,374
Deferred income taxes		10,891			7,543
Operating lease liability		1,090			936
Total	$	23,536		$	19,853

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Note 3 - Revenue Recognition - Disaggregation of Net Sales by Product Line (Details) - USD ($) $ in Thousands	3 Months Ended
	Dec. 30, 2023	Dec. 31, 2022
Revenue	$ 121,725	$ 166,899
Welded Wire Reinforcement [Member]
Revenue	68,802	95,968
Prestressed Concrete Strand [Member]
Revenue	$ 52,923	$ 70,931

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Note 4 - Fair Value Measurements (Details Textual) - USD ($) $ in Thousands	Dec. 30, 2023	Sep. 30, 2023
Non Financial [Member] | Fair Value, Nonrecurring [Member]
Assets, Fair Value Disclosure	$ 0	$ 0

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Note 4 - Fair Value Measurements - Fair Value of Financial Assets (Details) - Fair Value, Recurring [Member] - USD ($) $ in Thousands	Dec. 30, 2023	Sep. 30, 2023
Cash equivalents	$ 83,291	$ 125,805
Cash surrender value of life insurance policies	11,378	10,586
Total	94,669	136,391
Fair Value, Inputs, Level 1 [Member]
Cash equivalents	83,291	125,805
Cash surrender value of life insurance policies	0	0
Total	83,291	125,805
Fair Value, Inputs, Level 2 [Member]
Cash equivalents	0	0
Cash surrender value of life insurance policies	11,378	10,586
Total	$ 11,378	$ 10,586

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Note 5 - Intangible Assets (Details Textual) - USD ($)	3 Months Ended
	Dec. 30, 2023	Dec. 30, 2022
Amortization of Intangible Assets	$ 187,000	$ 194,000
Finite-Lived Intangible Asset, Expected Amortization, Remainder of Fiscal Year	562,000
Finite-Lived Intangible Asset, Expected Amortization, Year One	743,000
Finite-Lived Intangible Asset, Expected Amortization, Year Two	752,000
Finite-Lived Intangible Asset, Expected Amortization, Year Three	480,000
Finite-Lived Intangible Asset, Expected Amortization, Year Four	453,000
Finite-Lived Intangible Asset, Expected Amortization, After Year Four	$ 2,900,000

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Note 5 - Intangible Assets - Summary of Intangible Assets (Details) - USD ($) $ in Thousands	Dec. 30, 2023	Sep. 30, 2023
Intangible assets, gross	$ 11,730	$ 12,070
Intangible assets, accumulated amortization	(5,827)	(5,980)
Net book value	$ 5,903	$ 6,090
Customer Relationships [Member]
Weighted average useful life (Year)	17 years 1 month 6 days	17 years 1 month 6 days
Intangible assets, gross	$ 9,870	$ 9,870
Intangible assets, accumulated amortization	(4,941)	(4,779)
Net book value	$ 4,929	$ 5,091
Technology-Based Intangible Assets [Member]
Weighted average useful life (Year)	20 years	20 years
Intangible assets, gross	$ 1,800	$ 1,800
Intangible assets, accumulated amortization	(841)	(818)
Net book value	$ 959	$ 982
Noncompete Agreements [Member]
Weighted average useful life (Year)	5 years	5 years
Intangible assets, gross	$ 60	$ 400
Intangible assets, accumulated amortization	(45)	(383)
Net book value	$ 15	$ 17

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Note 6 - Stock-based Compensation (Details Textual) - USD ($)		3 Months Ended
	Feb. 11, 2020	Dec. 30, 2023	Dec. 31, 2022
Share-Based Payment Arrangement, Option [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award, Award Vesting Period		3 years
Share-Based Compensation Arrangement by Share-Based Payment Award, Expiration Period		10 years
Share-Based Payment Arrangement, Expense		$ 153,000	$ 36,000
Share-Based Payment Arrangement, Nonvested Award, Option, Cost Not yet Recognized, Amount		$ 592,000
Share-Based Payment Arrangement, Nonvested Award, Cost Not yet Recognized, Period for Recognition		1 year 11 months 8 days
Restricted Stock Units (RSUs) [Member]
Share-Based Payment Arrangement, Expense		$ 245,000	$ 94,000
Share-Based Payment Arrangement, Nonvested Award, Cost Not yet Recognized, Period for Recognition		1 year 7 months 24 days
Share-Based Payment Arrangement, Nonvested Award, Excluding Option, Cost Not yet Recognized, Amount		$ 887,000
Restricted Stock Units (RSUs) [Member] | Director [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award, Award Vesting Period		1 year
Restricted Stock Units (RSUs) [Member] | Employees [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award, Award Vesting Period		3 years
The 2015 Equity Incentive Plan [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award, Number of Additional Shares Authorized	750,000
Share-Based Compensation Arrangement by Share-Based Payment Award, Number of Shares Available for Grant		439,000

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Note 6 - Stock-based Compensation - Stock Option Activity (Details) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended
	Dec. 30, 2023 USD ($) $ / shares shares
Options outstanding, balance (in shares) | shares	411
Weighted average exercise price per share (in dollars per share) | $ / shares	$ 30.68
Options outstanding, granted (in shares) | shares	0
Weighted average exercise price per share, granted (in dollars per share) | $ / shares	$ 0
Options outstanding, forfeited (in shares) | shares	(8)
Weighted average exercise price per share, forfeited (in dollars per share) | $ / shares	$ 41.86
Options outstanding, exercised (in shares) | shares	(34)
Weighted average exercise price per share, exercised (in dollars per share) | $ / shares	$ 30.84
Aggregate intrinsic value, exercised | $	$ 171
Options outstanding, balance (in shares) | shares	369
Weighted average exercise price per share (in dollars per share) | $ / shares	$ 30.42
Contractual term - weighted average, balance (Year)	7 years 14 days
Aggregate intrinsic value, outstanding | $	$ 3,073
Options outstanding, vested and anticipated to vest in future (in shares) | shares	362
Weighted average exercise price per share, vested and anticipated to vest in future (in dollars per share) | $ / shares	$ 30.39
Contractual term - weighted average, vested and anticipated to vest in future (Year)	7 years 3 days
Aggregate intrinsic value, vested and anticipated to vest in future | $	$ 3,030
Options outstanding, exercisable (in shares) | shares	216
Weighted average exercise price per share, exercisable (in dollars per share) | $ / shares	$ 28.98
Contractual term - weighted average, exercisable (Year)	5 years 9 months
Aggregate intrinsic value, exercisable | $	$ 2,148

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Note 6 - Stock-based Compensation - Restricted Stock Units Activity (Details) - Restricted Stock Units (RSUs) (Details) - Restricted Stock Units (RSUs) [Member] shares in Thousands	3 Months Ended
	Dec. 30, 2023 $ / shares shares
Restricted stock units outstanding, beginning balance (in shares) | shares	105
Weighted average grant date fair value, beginning balance (in dollars per share) | $ / shares	$ 35.07
Restricted stock units outstanding, granted (in shares) | shares	0
Weighted average grant date fair value, granted (in dollars per share) | $ / shares	$ 0
Restricted stock units outstanding, ending balance (in shares) | shares	105
Weighted average grant date fair value, ending balance (in dollars per share) | $ / shares	$ 35.07

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Note 7 - Income Taxes (Details Textual) - USD ($)	3 Months Ended
	Dec. 30, 2023	Dec. 31, 2022	Sep. 30, 2023
Effective Income Tax Rate Reconciliation, Percent	27.20%	22.90%
Deferred Tax Liabilities, Net	$ 10,891,000		$ 7,543,000
Deferred Tax Assets, Valuation Allowance	149,000		$ 3,000
State and Local Jurisdiction [Member]
Operating Loss Carryforwards	$ 31,000
Operating Loss Carryforwards Expiration Date 1	2031

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Note 8 - Employee Benefit Plans (Details Textual)	3 Months Ended
	Dec. 30, 2023
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	0.28%
Reduced SERP [Member] | Minimum [Member]
Defined Benefit Plan, Employment Term (Year)	10 years

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Note 8 - Employee Benefit Plans - Net Periodic Pension Costs and Related Components (Details) - Supplemental Employee Retirement Plan [Member] - USD ($) $ in Thousands	3 Months Ended
	Dec. 30, 2023	Dec. 31, 2022
Interest cost	$ 147	$ 130
Service cost	63	83
Recognized net actuarial loss	0	3
Net periodic pension cost	$ 210	$ 216

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Note 9 - Long-term Debt (Details Textual) - USD ($)	3 Months Ended
	Dec. 30, 2023	Dec. 31, 2022
Amortization of Debt Issuance Costs	$ 13,000	$ 16,000
Revolving Credit Facility [Member]
Line of Credit Facility, Maximum Borrowing Capacity	100,000,000
Line Of Credit Facility, Additional Borrowing Capacity	50,000,000
Long-Term Line of Credit, Total	0
Line of Credit Facility, Remaining Borrowing Capacity	96,700,000
Letters of Credit Outstanding, Amount	$ 1,500,000
Debt Instrument, Interest Rate, Increase (Decrease)	2.00%
Fixed Charge Coverage Ratio	1
Credit Facility, Liquidity Amount	$ 10,000,000
Revolving Credit Facility [Member] | Federal Funds Rate [Member]
Debt Instrument, Basis Spread on Variable Rate	0.50%
Revolving Credit Facility [Member] | Secured Overnight Financing Rate (SOFR) [Member]
Debt Instrument, Basis Spread on Variable Rate	1.00%
Revolving Credit Facility [Member] | Secured Overnight Financing Rate (SOFR) [Member] | Minimum [Member]
Debt Instrument, Basis Spread on Variable Rate	1.25%
Revolving Credit Facility [Member] | Secured Overnight Financing Rate (SOFR) [Member] | Maximum [Member]
Debt Instrument, Basis Spread on Variable Rate	1.50%
Revolving Credit Facility [Member] | Secured Overnight Financing Rate (SOFR) [Member] | SOFR Based Loans [Member]
Debt Instrument, Basis Spread on Variable Rate	1.25%
Revolving Credit Facility [Member] | Secured Overnight Financing Rate (SOFR) Credit Adjustment [Member] | SOFR Based Loans [Member]
Debt Instrument, Basis Spread on Variable Rate	0.10%
Revolving Credit Facility [Member] | Base Rate [Member]
Debt Instrument, Basis Spread on Variable Rate	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%

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Note 10 - Earnings Per Share (Details Textual) - shares	3 Months Ended
	Dec. 30, 2023	Dec. 31, 2022
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount (in shares)	39,000	94,000

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Note 10 - 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
	Dec. 30, 2023	Dec. 31, 2022
Net earnings	$ 1,132	$ 11,123
Basic weighted average shares outstanding (in shares)	19,497	19,525
Dilutive effect of stock-based compensation (in shares)	76	59
Diluted weighted average shares outstanding (in shares)	19,573	19,584
Basic (in dollars per share)	$ 0.06	$ 0.57
Diluted (in dollars per share)	$ 0.06	$ 0.57

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Note 11 - Share Repurchases (Details Textual) - USD ($)	3 Months Ended
	Dec. 30, 2023	Dec. 31, 2022	Nov. 18, 2008
Stock Repurchase Program, Authorized Amount			$ 25,000,000
Stock Repurchased During Period, Value	$ 539,000	$ 916,000
Stock Repurchased During Period, Shares	19,076	31,654
Stock Repurchase Program, Remaining Authorized Repurchase Amount	$ 20,700,000

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Note 12 - Other Financial Data - Balance Sheet Information (Details) - USD ($) $ in Thousands	Dec. 30, 2023	Sep. 30, 2023
Accounts receivable	$ 43,659	$ 63,735
Less allowance for credit losses	305	311
Total	43,354	63,424
Raw materials	38,123	39,341
Work in process	5,264	5,852
Finished goods	50,755	58,113
Total	94,142	103,306
Prepaid insurance	3,510	4,043
Income tax receivable	2,748	0
Other	2,448	2,410
Total	8,706	6,453
Cash surrender value of life insurance policies	11,378	10,586
Right-of-use asset	2,152	1,939
Capitalized financing costs, net	163	175
Other	110	111
Total	13,803	12,811
Land and land improvements	15,151	15,107
Buildings	56,697	56,653
Machinery and equipment	214,999	198,528
Construction in progress	13,065	18,019
Property, Plant and Equipment, Gross	299,912	288,307
Less accumulated depreciation	(170,612)	(168,293)
Total	129,300	120,014
Customer rebates	2,906	2,132
Salaries, wages and related expenses	2,279	5,082
Property taxes	1,367	1,912
Sales allowance reserves	1,270	745
State sales and use taxes	158	268
Income taxes	0	187
Other	550	484
Total	9,585	11,809
Deferred compensation	11,555	11,374
Deferred Tax Liabilities, Net	10,891	7,543
Total	23,536	19,853
Accrued Expenses, Current [Member]
Operating lease liability	1,055	999
Other Noncurrent Liabilities [Member]
Operating lease liability	$ 1,090	$ 936

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Note 13 - Business Segment Information (Details Textual)	3 Months Ended
	Dec. 30, 2023
Number of Reportable Segments	1