Hello, and welcome to the Insteel Industries' third quarter 2022 earnings call. My name is Katie, and I'll be coordinating your call today. If you would like to ask a question during the presentation, you may do so by pressing star one on your telephone keypad. I'll now hand over to your host, H.O. Woltz III, President and CEO, to begin. H.O., please go ahead. Good morning. Thank you for your interest in Insteel, and welcome to our third quarter 2022 conference call, which will be conducted by Mark Carano, our Senior Vice President, CFO, and Treasurer, and me. Before we begin, let me remind you that some of the comments made in our presentation are considered to be forward-looking statements that are subject to various risks and uncertainties, which could cause actual results to differ materially from those projected. These risk factors are described in our periodic filings with the SEC. We're pleased with our third quarter results that were driven by surging demand for our reinforcing products and escalating steel prices. We believe the outlook for our markets is highly positive and has been materially enhanced by the passage of the Infrastructure Investment and Jobs Act. I'm gonna turn the call over to Mark to comment on our financial results for the quarter and the macro environment, and then I'll pick it back up to discuss our business outlook. Thank you, H, and good morning to everyone joining us for the call. As we highlighted in the release earlier today, the third quarter of 2022 was another historically strong period of financial performance, only exceeded by our record second quarter of this fiscal year. We reported quarterly revenue of $227.2 million, or an increase of 41.3% from $160.8 million in the prior year, and net earnings of $38.6 million, or $1.96 per diluted share as compared to $18.4 million or $0.84 per diluted share in the prior year period, representing a 109% increase in earnings per share. Our results continued to be favorably impacted by strong demand and incremental price increases to recover the continued escalation in raw material and operating costs. Average selling prices in the third quarter increased 53.9% relative to the prior year and were broad-based across all product lines. Sequentially, from Q2 2022, average selling prices increased 6.3%, which represents our eighth sequential quarter of rising ASPs. These increases support an expansion of our spread between average selling prices and raw materials relative to the prior year quarter, resulting in strong profitability. Despite the robust demand environment, shipments for the quarter decreased 8.2% from last year. Sequentially from Q2 2022, our shipments were essentially unchanged. This lack of shipment momentum resulted from two unanticipated challenges. First, we experienced some softness in our standard welded wire mesh product line, beginning in the latter half of the quarter, following an unprecedented level of demand during the first half of this fiscal year. As we highlighted in our release, this is our most commodity-like product and the only one that is sold through distribution channels rather than directly to end customers. We believe a moderation in home building activity over the last few months slowed demand and the supply chain, which was no longer combating limited product availability, began to manage their inventory down to more normalized levels. The second driver of the shipment decrease was directly related to labor availability and turnover across our plant footprint. With an adequate supply of raw materials from offshore sources to complement our domestic sources now available and thus no longer a production constraint, labor emerged as the key governor on ramping up plant production levels. The unusually tight labor market, which is being felt across all industries and regions in the United States, restricted our plants' ability to increase production to a capacity level consistent with customer demand. Turning to gross profit. Gross profit for the quarter increased $26.6 million or 84% from the same period last year to a record level of $58.1 million, and gross margin expanded over 600 basis points to 25.6%. This increase was due to widening in spreads as average selling prices outpaced rod cost increases during the period. On a sequential basis, gross profit increased $1 million or 2%, and gross margins remained above 20% for the fourth consecutive quarter. SG&A expense for the quarter increased from $2.1 million to $8.2 million, but as a percentage of sales, it decreased marginally to 3.6%. The dollar increase was primarily the result of an increase in compensation and benefit expenses and the relative quarterly change in the cash surrender value of life insurance policies of $1.3 million, which from an accounting perspective, is reflected as an increase in SG&A expense. These costs were partially offset by a reduction in legal expenses related to our successful PC Strand trade case actions that were concluded last year. Our effective tax rate for the quarter was largely unchanged at 22.7%, which is up minimally from 22.4% last year. Looking ahead to the balance of the year, we expect our effective tax rate will remain steady at around 23% subject to the level of pre-tax earnings, book tax differences, and the other assumptions and estimates that compose our tax provision calculation. Moving to the cash flow statement and balance sheet, cash flow from operations for the quarter used $5 million. Increased working capital due to higher inventory levels offset strong earnings performance. Inventories increased as we added primarily to our raw materials balances and marginally to our finished goods balance. Based on our sales forecast for Q4, our quarter-end inventories represented 3.4 months of shipments compared with 2.2 months at the end of the second quarter and 1.7 months at the end of the first quarter. While our raw material inventories have recovered to more normalized levels for the seasonally strongest portion of our fiscal year, our finished goods inventories remain low. The combination of the lingering impact of constrained raw material supply in much of Q2, which prevented us from building finished goods inventory into the start of the third quarter and the previously noted labor-driven production challenges muted our finished goods inventory levels during this period. Finally, our inventories at the end of the third quarter of 2022 were valued at an average unit cost that was higher than our second quarter cost of sales and remain on par with current replacement cost. We incurred $3.6 million in CapEx in the third quarter for a total of $12.3 million through the first half of our fiscal year. From a liquidity perspective, we ended the quarter with $63 million of cash on hand and no borrowings outstanding on our $100 million revolving credit facility. Looking ahead to our fourth quarter, we expect another period of strong financial performance. First, shipments and pricing trends in the first few weeks of the fourth quarter are trending around expected levels. Second, our customers remain optimistic with extended backlogs across both the private and public non-residential markets, which is yet to feel the impact of any projects funded by the Infrastructure Investment and Jobs Act. While the residential market appears to be transitioning to a slower growth period in the near to medium term, most economists believe it will continue to expand steadily. Regardless, the residential market only represents about 15% of our revenue, so we do not expect its impact to be meaningful. Finally, the third party leading indicators and forecasts for non-residential construction reflect a strong outlook for demand in our markets into calendar year 2023. That concludes my prepared remarks. I will now turn the call back over to H. Thank you, Mark. As reflected in the release, our strong third quarter results were driven by robust non-residential construction markets and escalating steel prices. Above all, we thank our Insteel teammates for their perseverance through challenging circumstances and their focus on execution, excellence, and working safely. Over the past few quarters, we identified inadequate supplies of our primary raw material, hot-rolled wire rod, as a constraint to production and shipments, and we indicated we had turned to offshore markets to supplement domestic supplies. By the end of the third quarter, receipts of imported wire rod had filled most of our supply gaps, and we expect to avoid further operating disruptions related to raw material supplies over the next few months. Once our raw material shortfall was resolved, we experienced staffing-related difficulties in ramping up operating hours to meet market demand at certain facilities. We've responded by implementing more flexible work schedules and adjusting compensation, although it's too soon to know the extent to which our actions will result in a material increase in operating hours, production, and shipments. Also during the quarter, we experienced softening conditions in the market for standard welded wire reinforcement, which is our most commodity-like product line. As Mark indicated, this is the only product we produce that is sold through distribution channels rather than direct to end users, and it is the product which is most heavily influenced by housing construction. For the last three or four quarters, supplies of standard welded wire reinforcement have been extraordinarily tight, prices rose sharply, and purchasing behaviors were frantic. We believe that during Q3, supply began to catch up with demand, while at the same time, housing starts softened. The combination of these changes caused purchasers to become ultra-conservative and tightly manage inventories, which adversely affected our production and shipments. The condition has carried over into our fourth fiscal quarter. Customer inventories continue to be uncomfortably high, a condition which must be resolved before we can expect volumes to recover. As we stated in the release, we've experienced no softening in our other welded wire reinforcement or PC Strand markets, where our backlogs, our customer backlogs are at near record levels, and there's considerable optimism that demand will continue to be robust into calendar 2023. Our task in these markets is to ramp up operating hours and increase production and shipments. Consistent with our past practice, we do not plan to disclose or discuss additional product line details. Our offshore raw material purchases, together with the slowdown in activity in the standard welded wire reinforcement market, have resulted in elevated inventory balances, although not to levels that are uncomfortable, and we expect inventories to remain elevated through the end of the calendar year. As Mark pointed out, our inventory carrying values are not excessive relative to replacement cost, and in reality, it's unlikely that domestic suppliers would be able to provide adequate volumes for us to sustain operations during our fourth and first quarters, making offshore supplies indispensable. In a perfect world, we would not find it necessary to participate to such an extent in the international market, and we would prefer to avoid the working capital implications. Unfortunately, the domestic supply profile does not allow us this luxury. We continue to be optimistic about the impact on our markets of the Infrastructure Investment and Jobs Act. We believe it will create significant demand for our products beginning in late 2022 or early 2023. The need for infrastructure investment in the U.S. has been obvious for decades, but funding has consistently been adequate to address the need. For the first time, it appears that funding shortfalls will decline in significance as obstacles to investment in view of the strong fiscal condition of state and local governments together with the new funding provided by the Infrastructure Investment and Jobs Act. Anecdotally, there's never been a time when our customer base has enjoyed the level of activity and strength of backlogs that they enjoy today. Many customers have backlogs that extend more than six months out, which is practically unprecedented. Turning to CapEx, we now project 2022 CapEx of approximately $20 million based on the timing of shipments from our vendors. The investments in state-of-the-art technology will expand our product capabilities and favorably impact our cash cost of production. We're considering additional projects that would have similar beneficial impact on our market position and our cost profile. Going forward, we plan to closely monitor market conditions and aggressively pursue the appropriate actions to maximize shipments and optimize our costs, and we're well positioned to pursue attractive growth opportunities, both organic and through acquisition. This concludes our prepared remarks, and we'll now take your questions. Kate, would you please explain the procedure for asking questions? Thank you. If you would like to ask a question, please press star followed by one on your telephone keypad now. If you would like to remove your question, please press star followed by two. When preparing to ask your question, please ensure your phone is unmuted locally. We take our first question from Julio Romero from Sidoti & Company. Please go ahead. Hey, good morning, everyone. Thank you for taking my questions. Good morning. Good morning. Could you guys maybe just dig into standard welded wire? What percentage of sales does that typically make up of overall sales? Maybe secondly, what percentage of that standard welded wire usually comes from residential? Julio, we don't disclose product line detail like that. Okay. Well, I guess maybe asked another way on the residential side, would it be, I think you guys have typically talked about, you know, 15% of your overall sales comes from residential. Does that kind of fall in line with that or deviate too far from that 15%? The residential market consumes both standard welded wire reinforcement and PC Strand. Got it. Okay. I guess maybe, you know, any way to rank order, you know, what you're seeing in terms of standard welded wire, any way to rank order distribution channel recovery versus slowing new construction as to the impact onto that product line? I don't think we have sufficient insight to give you a good answer to that. I think that, as I mentioned in my comments, the activity in that market was so frantic for so long that upon the first signs of a retreating residential market environment, I think the buying community just really slammed on the brakes and became ultra-conservative. To give you an answer for exactly the underlying drivers of why that happened, I'm not sure we can do that. We just don't have that information. Okay. Maybe just thinking about your inventory balance, $192 million, how does that compare to maybe last quarter on a unit basis? Did you guys mention that the average unit cost is on par with current replacement cost? To your latter question, that's correct. Unit volumes, I would say it's up marginally from where it was last quarter. I mean, obviously that's a dollar value that you're seeing there, and prices for the product have continued to increase. Julio, it really wasn't until the latter part of the third quarter that our offshore quantities actually arrived in the volumes that we had ordered. Okay. No, that's helpful. I'll turn it over and circle back with any follow-ups. Thanks very much. Thank you. Okay. The next question comes from Tyson Bauer from KC Capital. Please go ahead, Tyson. Good morning, gentlemen. Good morning, Tyson. I find it interesting that we have a record year that you've reported in earnings in six months, and it's viewed negatively, with $4 in EPS for the last six months. That's how the market goes. Residential, 8% or 15%, you've made that comment a couple of times already. Infrastructure, I think typically historically has been around 40%. Do we have a little timing issue where we haven't really seen that increase in spending in the infrastructure that should more than offset any current weakness that we may be experiencing on the residential. That backfill as we get into 2023 should be more than adequate to overcome any kind of softness in the housing market. Yeah, I mean, we don't view the outlook negatively at all. We view the outlook as extremely bullish, for reasons that you cite, given the balance of our revenue stream split between res and non-res. Even today, without the incremental spending that should come from the Infrastructure Investment and Jobs Act, business is extremely strong in those sectors. Yeah, I guess I would have a hard time spinning a negative yarn on this at all. Yeah. I mean, when we report, or you guys report the second highest margin ever, and it's almost like just because the froth has been taken off similar to what we saw in the lumber market a year ago, that all of a sudden that's viewed as a negative when maybe relatively it's a little softer. But absolute terms, you're still in a very robust multi-year situation that should be very strong for results and cash flow. I would agree with the statement. The shipments down 8.2%, you talked about, labor. Is that very regional, and do you have any remedies to solve a regional shortage by overcoming that with as freight eases up a little bit from your other facilities? Or is this just something you have to work your way through? It is regional, but I mean, every plant location has its own labor market. They're all in different states, but they're all strong. Nationally, I think unemployment's well under 4%. In our localities, unemployment ranges from a low of around 2% to 4%. In some respects, it appears that work has become optional in some of these markets, and it's really difficult. I, as I said in my prepared remarks, we've responded by trying to adjust our work schedules to become more flexible and more innovative. We've had success with that. We can expect to see some more of those activities. But I think we are experiencing the same problems that most manufacturers are experiencing. Okay. Is one of the unintended benefits the margin level because of product mix, if that standard welded wire has some softness, that you have some flexibility and can gear some of that manufacturing toward some of those end customer high demand items with the better margins? There's some opportunity to do that. In certain respects, the product is unique and the capacity is, you know, may or may not be transferable to other product lines. Was the timing of getting the raw materials in along with the staffing shortage does that contribute to just kind of the back of the napkin numbers about $20 million to $30 million of revenue loss that you potentially could have done had you been able to fully staff? Yeah. You know, it's hard for me to comment, Tyson, on the fly as to that exact calculation you've got. I will tell you that, you know, we entered, as we kind of mentioned, the third quarter obviously with low finished goods inventories. You know, in a normal operating environment, we would've entered that third and fourth quarter with much higher finished goods inventories. You know, some of that was driven by the lack of raw materials and the timing of those arriving late in the quarter, if you recall from the second quarter. Typically, at the end of a calendar year, you have a big increase in your fiscal Q1 in your cash balances, just the way the net working capital typically works out. Will we see that again this year, or are you gearing up to maintain higher inventory levels so you're well stocked as you enter in or you come out of next year's slower seasonal quarters, so you have that finished inventory available and ready to go? What's the mindset of how you're gonna play that cash management and also have adequate inventories? Well, let me start by saying we don't wanna put ourselves in the position we were in last year this time, the operations were extremely ragged because of inadequate raw material supplies. When you think of the deficiency in units that we experienced last year and the inflation in unit pricing, you can expect to see inventory balances remain higher certainly than they have been, driven by a combination of more units and substantially higher values. As I said, we're not uncomfortable with our inventory levels. I don't think that we would be able to rely on domestic supplies for the current quarter or solely domestic supplies for the current quarter or the first quarter of 2023. The necessary tactic is to bring it in from offshore. When you do that, you bring it in in reasonably large quantities, which causes a rather lumpy move in working capital. Inventory balances are gonna remain higher, but we would expect to see a working capital release in 2022 calendar. Okay. As you walk into your fiscal Q4 with the distribution adjustments from your distributors adjusting some of their inventories, the impact on pricing obviously doesn't show up this quarter. You have a very favorable outlook being provided by one of your competitors. Nucor this morning is doing well. Are we just talking relative terms that, yes, we may see some softness as far as these will take whatever product at whatever price we can get, but the pricing is still at a level that historically is extremely favorable to Insteel? are you referring to overall types? Right. Absolutely. I mean, the vast majority of your products, everything are still at great pricing. We have this one segment that may be experiencing some adjustments on the end markets, but we're going off of an extremely top level that even at an adjustment lower is still favorable, especially compared to previous years. Yeah. I mean, we've made the point for the last several quarters that there has been a FIFO tailwind that we've had, although we've not tried to quantify it. Inevitably, when pricing begins to level out, the tailwind dissipates. So if that's where we are, then the tailwind will subside. The fundamentals of the business now with spreads and volumes, I think is still extraordinarily favorable. As I said in my comments, our mission is to get our operating hours up, and to meet the demand that's available to us. All right. Thank you, gentlemen, and keep doing it. Thanks, Tyson. Thank you. As another reminder, to ask a question, please press star followed by one on your telephone keypad now. We currently have no further questions registered. H, I will hand it back to you. Okay. Thank you, Kate. We appreciate your interest in Insteel. We look forward to talking to you next quarter. In the meantime, don't hesitate to contact us, if you have questions. Thank you. Thank you all for joining. This now concludes today's call. Please disconnect your lines.