Annual Report for Fiscal Year Ending 10-03, 2026 (Form 10-K)

Management's Discussion and Analysis of Financial Condition and Results of Operations.

The matters discussed in this section include forward-looking statements that are subject to numerous risks. You should carefully read the "Cautionary Note Regarding Forward-Looking Statements" and "Risk Factors" in this Form 10-K.

Overview

Our operations are entirely focused on the manufacture and marketing of concrete reinforcing products for the concrete construction industry. 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.

In August 2026, we announced plans to close our Upper Sandusky, Ohio manufacturing facility and consolidate its operations into our remaining WWR facilities. The consolidation is intended to improve the operating efficiency and cost competitiveness of our WWR business. We expect to cease manufacturing operations at the facility during the first quarter of fiscal 2027.

Critical Accounting Estimates

Our consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States. Our discussion and analysis of our financial condition and results of operations are based on these consolidated financial statements. The preparation of our consolidated financial statements requires the application of these accounting principles in addition to certain estimates and judgments based on currently 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 Note 2, "Summary of Significant Accounting Policies", and elsewhere in the accompanying consolidated financial statements. 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. Estimates are also used in establishing opening balances in relation to purchase accounting. Actual results could differ from these estimates.

Accounting estimates are considered critical if both of the following conditions are met: (1) the nature of the estimates or assumptions is material because of the levels of subjectivity and judgment needed to account for matters that are highly uncertain and susceptible to change and (2) the effect of the estimates and assumptions is material to the financial statements.

We have reviewed our accounting estimates and none were deemed to be considered critical for the accounting periods presented.

Recent Accounting Pronouncements.

The nature and impact of recent accounting pronouncements is discussed in Note 3 to our consolidated financial statements and incorporated herein by reference.

Results of Operations

The following discussion and analysis of our financial condition and results of operations is for the year ended October 3, 2026 compared with the year ended September 27, 2025. Discussions of our financial condition and results of operations for the year ended September 27, 2025 compared to September 28, 2024 that have been omitted under this item can be found in Part II, Item 7 "Management's Discussion and Analysis of Financial Condition and Results of Operations" included in our Annual Report on Form 10-K for the fiscal year ended September 27, 2025, which was filed with the SEC on October 23, 2025.

The table below presents a summary of our results of operations for fiscal 2026 and fiscal 2025. Fiscal year 2026 was a 53-week period, and fiscal year 2025 was a 52-week period.

Statements of Operations - Selected Data

(Dollars in thousands)

		Year Ended
		(53 weeks)								(52 weeks)
		October 3,								September 27,
		2026				Change				2025
Net sales		$	739,514				14.2	%		$	647,706
Gross profit			75,682				(19.0%	)			93,438
Percentage of net sales			10.2	%							14.4	%
Selling, general and administrative expense		$	37,358				(4.2%	)		$	39,002
Percentage of net sales			5.1	%							6.0	%
Restructuring charges, net		$	756				(67.2%	)		$	2,304
Acquisition costs			-			N/M					325
Interest income			(872	)			(57.8%	)			(2,067	)
Effective income tax rate			22.8	%							23.8	%
Net earnings		$	29,547				(28.0%	)		$	41,020

"N/M" = not meaningful

2026 Compared with 2025

Net Sales

Net sales increased 14.2% to $739.5 million in 2026 from $647.7 million in 2025 reflecting an 11.5% rise in average selling prices and a 2.4% increase in shipments. The increase in average selling prices was driven by pricing actions implemented to recover higher raw material, freight and operating costs. The increase in shipments was primarily due to the benefit of the additional week in fiscal 2026, which included 53 weeks compared with 52 weeks in fiscal 2025. Expansion of the customer base for our engineered structural mesh business also supported shipment volumes despite continued softness across much of the broader private nonresidential construction market.

Gross Profit

Gross profit decreased 19.0% to $75.7 million, or 10.2% of net sales, in 2026 from $93.4 million, or 14.4% of net sales, in 2025. The year-over-year decrease was primarily due to lower spreads between average selling prices and raw material costs ($12.6 million), higher manufacturing costs ($4.0 million) and other material costs and adjustments ($3.5 million) partially offset by higher shipments ($2.4 million). The decrease in spreads was driven by higher raw material costs ($78.7 million) and an increase in freight expense ($7.8 million) partially offset by higher average selling prices ($73.9 million).

Selling, General and Administrative Expense

Selling, general and administrative expense ("SG&A expense") decreased 4.2% to $37.4 million, or 5.1% of net sales, in 2026 from $39.0 million, or 6.0% of net sales, in 2025 primarily due to lower compensation expense ($3.1 million) partially offset by higher legal ($782,000) and employee benefits ($213,000) expenses. The decrease in compensation expense was largely driven by lower incentive plan costs due to a decline in financial results. Legal expenses increased due to costs associated with various legal matters.

Restructuring Charges, Net

We incurred restructuring charges in 2026 and 2025 related to separate initiatives to consolidate our WWR operations. The first initiative, announced in 2025, included the closure of our Warren, Ohio facility. A further consolidation initiative, announced in 2026, included the closure of our Upper Sandusky, Ohio facility. Restructuring charges totaled $756,000 in 2026, consisting of $699,000 related to the Upper Sandusky closure and $57,000 related to the prior consolidation initiative. These charges included $547,000 for employee separation costs, $155,000 for facility closure costs and $54,000 for equipment relocation costs. Restructuring charges totaled $2.3 million in 2025, consisting of $2.0 million related to the Warren closure and $326,000 for other costs associated with the initial consolidation initiative. These charges included $1.0 million for asset impairment charges, $681,000 for facility closure costs, $371,000 for equipment relocation costs and $251,000 for employee separation costs.

Acquisition Costs

Acquisition costs of $325,000 were incurred in 2025 for legal, accounting and other professional fees related to the acquisition of Engineered Wire Products, Inc. (the "EWP Acquisition") and the acquisition of O'Brien Wire Products of Texas, Inc. (the "OWP Acquisition").

Interest Income

Interest income decreased $1.2 million due to lower average cash balances and interest rates.

Income Taxes

Our effective income tax rate for 2026 decreased to 22.8% from 23.8% in 2025 due to changes in book versus tax differences.

Net Earnings

Net earnings decreased to $29.5 million ($1.51 per diluted share) in 2026 from $41.0 million ($2.10 per diluted share) in 2025 primarily due to the decrease in gross profit and lower interest income partially offset by lower SG&A expense, restructuring charges and acquisition costs.

Liquidity and Capital Resources

Overview

Our sources of liquidity include cash and cash equivalents, cash generated by operating activities and borrowing availability provided under our $100.0 million revolving credit facility (the "Credit Facility"). Our principal capital requirements include funding working capital, capital expenditures, dividends and any share repurchases. As of October 3, 2026, our cash and cash equivalents totaled $37.5 million compared with $38.6 million as of September 27, 2025.

We believe that, in the absence of significant unanticipated cash demands, cash and cash equivalents, 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, in both the short- and long-term. We also expect to have access to the amounts available under our 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, delay or restrict share repurchases, cease dividend payments 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 were 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, flexible capital structure and borrowing capacity available to us under our Credit Facility position us to meet our anticipated liquidity requirements for the foreseeable future.

Selected Liquidity and Capital Resources Data

(Dollars in thousands)

		Year Ended
		October 3,				September 27,
		2026				2025
Net cash provided by operating activities		$	36,627			$	27,163
Net cash used for investing activities			(12,426	)			(75,674	)
Net cash used for financing activities			(25,351	)			(24,397	)
Cash and cash equivalents			37,480				38,630
Net working capital			209,342				195,938
Total debt			-				-
Percentage of total capital			-				-
Shareholders' equity		$	379,606			$	371,532
Percentage of total capital			100	%			100	%
Total capital (total debt + shareholders' equity)		$	379,606			$	371,532

Operating Activities

Operating activities provided $36.6 million of cash in 2026 primarily from net earnings adjusted for non-cash items partially offset by a net increase in working capital. Working capital used $12.8 million of cash due to a $13.0 million increase in inventories and a $10.6 million increase in accounts receivable, partially offset by a $10.8 million increase in accounts payable and accrued expenses. The increase in inventories was the result of higher average unit costs along with higher raw material purchases near the end of the period. The increase in accounts receivable was largely driven by higher average selling prices combined with an increase in shipments. The increase in accounts payable and accrued expenses was related to higher raw material purchases near the end of the period, higher unit costs and the timing of payments related to raw material purchases.

Operating activities provided $27.2 million of cash in 2025 primarily from net earnings adjusted for non-cash items partially offset by a net increase in working capital. Working capital used $37.6 million of cash due to a $36.5 million increase in inventories and a $20.4 million increase in accounts receivable, partially offset by a $19.3 million increase in accounts payable and accrued expenses. The increase in inventories was the result of higher average unit costs along with higher raw material purchases during 2025. The increase in accounts receivable was largely driven by higher average selling prices combined with an increase in shipments. The increase in accounts payable and accrued expenses was related to higher raw material purchases near the end of the period, higher unit costs, the timing of payments related to raw material purchases and an increase in accrued salaries, wages and related expenses.

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

Investing Activities

Investing activities used $12.4 million of cash in 2026, primarily due to capital expenditures ($11.8 million) and an increase in the cash surrender value of life insurance policies ($645,000). Investing activities used $75.7 million of cash in 2025, primarily due to the EWP Acquisition ($67.0 million), the OWP Acquisition ($5.1 million) and capital expenditures ($8.2 million) partially offset by the receipt of proceeds from the sale of assets held for sale ($5.0 million). Capital expenditures for both years focused on cost and productivity improvement initiatives in addition to recurring maintenance requirements. Capital expenditures are expected to total up to approximately $30.0 million in 2027, including expenditures to support expansion of our ESM business, strategic investments in our prestressed concrete strand operations, cost reduction and productivity initiatives, and routine maintenance. Our investing activities are largely discretionary, providing us with the ability to significantly curtail outlays should future business conditions warrant that such actions be taken.

Financing Activities

Financing activities used $25.4 million of cash in 2026 and $24.4 million of cash in 2025. In 2026, $21.7 million of cash was used for dividend payments (including a special cash dividend of $19.4 million, or $1.00 per share, and regular cash dividends totaling $2.3 million) and $3.2 million for the repurchase of common stock. In 2025, $21.8 million of cash was used for dividend payments (including a special cash dividend of $19.4 million, or $1.00 per share, and regular cash dividends totaling $2.4 million) and $2.3 million 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 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 October 3, 2026, no borrowings were outstanding on the Credit Facility, $98.7 million of borrowing capacity was available and outstanding letters of credit totaled $1.3 million (see Note 8 to the consolidated financial statements). As of September 27, 2025, there were no borrowings outstanding on the Credit Facility.

Off-Balance Sheet Arrangements

We do not have any material transactions, arrangements, obligations (including contingent obligations) or other relationships with unconsolidated entities or other persons that have or are reasonably likely to have a material current or future impact on our financial condition, results of operations, liquidity, capital expenditures, capital resources or significant components of revenues or expenses.

Contractual Obligations

In addition to our discussion and analysis surrounding our liquidity and capital resources, our contractual obligations and commitments as of October 3, 2026, include:

●

Raw Material Purchase Commitments - See Note 12, "Commitments and Contingencies," within our consolidated financial statements for further details concerning our non-cancelable raw material purchase commitments.

●

Supplemental Employee Retirement Plan Obligations - See Note 11, "Employee Benefit Plans," within our consolidated financial statements for further detail of our obligations and the timing of expected future payments under our supplemental employee retirement plan.

●

Operating Leases - See Note 13, "Leases," within our consolidated financial statements for further detail of our obligations and the timing of expected future payments, including a five-year maturity schedule.

●

Debt Obligations and Interest Payments - See Note 8, "Long-Term Debt," within our consolidated financial statements for further detail of our debt and the timing of expected future principal and interest payments. As of October 3, 2026, there were no borrowings outstanding.

●

Capital Expenditures - As of October 3, 2026, we had contractual commitments for capital expenditures of $31.3 million expected to be incurred in 2027 and beyond.

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, 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 2026, higher raw material costs, freight and other operating costs outpaced the increase in our selling prices. In 2025, we were successful in implementing price increases sufficient to recover the escalation in our raw material costs that occurred over the course of the year. The timing and magnitude of any future increases in raw material costs and the impact on selling prices for our products are uncertain at this time.

Outlook

As we enter fiscal 2027, publicly funded infrastructure activity continues to provide a solid foundation for our business, while data center investment remains the primary source of activity in our private nonresidential construction markets. Our pursuit of growth opportunities within our engineered structural mesh business has broadened our customer base and supported shipment volumes despite softness across much of the broader construction market. We expect these opportunities to continue supporting our business in fiscal 2027.

Domestic wire rod prices remain at historically high levels and well above prices in global markets, while domestic availability continues to be constrained. As a result, we have supplemented domestic purchases with offshore purchases, contributing to elevated inventories and working capital requirements. Higher freight costs and persistent inflation across much of our cost structure also continue to pressure profitability. We remain focused on managing the relationship between selling prices and costs and monitoring developments in raw material pricing, transportation costs and trade policy.

We also remain focused on improving our cost competitiveness and operating efficiency. The consolidation of our welded wire operations is progressing and is expected to generate cost reductions as the transition is completed. We will continue investing in the expansion of our engineered structural mesh business and other strategic initiatives that support long-term growth and operating efficiency. Our strong balance sheet provides the financial flexibility to pursue these opportunities while navigating changing market conditions.

Regardless of the market environment, we remain focused on the factors within our control, including disciplined cost management, completing the consolidation of our welded wire operations, aligning production schedules with customer demand, and improving the productivity and effectiveness of our manufacturing, selling and administrative activities. We expect the consolidation to generate cost reductions and our investments in manufacturing facilities to improve operating efficiency and provide additional capacity to support growth, particularly in our engineered structural mesh business. We will also continue to evaluate acquisition opportunities that strengthen our presence in existing markets and expand our geographic footprint.

The statements contained in this section are forward-looking statements. See "Cautionary Note Regarding Forward-Looking Statements" and "Risk Factors".