Shares of Friedman Industries, Incorporated (FRD) have lost 3.9% since the company reported its earnings for the quarter ended Dec. 31, 2025. This compares with the S&P 500 Index’s 1.6% decline over the same time frame. Over the past month, the stock slipped 0.3%, faring better than the S&P 500’s 1.9% decline.FRD’s Earnings SnapshotFor the third quarter of fiscal 2026 ended Dec. 31, 2025, Friedman reported net earnings of $3 million, or $0.43 per diluted share, against a net loss of $1.2 million, or $0.17 p ...

Financial Performance - Net earnings for the quarter ended December 31, 2025, were approximately $3.0 million, compared to a net loss of approximately $1.2 million for the same quarter in 2024[3]. - Sales for the 2025 quarter were approximately $168.0 million, representing a 79% increase year-over-year from $94.1 million in the 2024 quarter[5]. - The average selling price rose from approximately $813 per ton in the 2024 quarter to approximately $1,016 per ton in the 2025 quarter[10]. Sales Volume and Product Segments - Sales volume increased by 36% year-over-year, with approximately 149,500 tons from inventory and 15,500 tons of toll processing in the 2025 quarter[9]. - The flat-roll product segment generated sales of approximately $153.0 million in the 2025 quarter, compared to approximately $86.1 million in the 2024 quarter[8]. - The tubular product segment sales increased to approximately $14.9 million in the 2025 quarter from approximately $7.9 million in the 2024 quarter[11]. Asset and Equity Growth - Total assets increased to approximately $311.9 million as of December 31, 2025, up from $226.8 million as of March 31, 2025[7]. - Total stockholders' equity rose to approximately $142.2 million as of December 31, 2025, compared to $132.4 million as of March 31, 2025[7]. Risk Management - The company recognized a gain on hedging activities of approximately $1.4 million for the 2025 quarter, which helped mitigate commodity price volatility[13]. Future Outlook - Management expects fourth quarter fiscal 2026 sales volumes to remain consistent with third quarter levels, with anticipated improvements in sales margins[14].

Table of Contents 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 31, 2025 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FROM THE TRANSITION PERIOD FROM TO COMMISSION FILE NUMBER 1-7521 FRIEDMAN INDUSTRIES, INCORPORATED (Exact name of registrant as specified in its charter) Texas 74-1504405 (State o ...

Core Insights - Friedman Industries, Incorporated (FRD) has been upgraded to "Outperform" from "Neutral" following a record-volume quarter and the acquisition of Century Metals, marking a transition to a larger operational scale [1] - The stock is currently trading close to tangible book value, suggesting the market views FRD more as a commodity distributor rather than a growing service-center network with enhanced geography and product offerings [1] Acquisition and Synergies - The acquisition of Century Metals expands FRD's product offerings beyond flat-roll and pipe to include cold-rolled, coated sheet, stainless, and non-ferrous products, enhancing its Southeast footprint and opening new demand channels in Latin America [2] - Management anticipates "promising synergies" from the acquisition, with initial benefits including volume smoothing to offset seasonal slowdowns [2] Valuation Metrics - FRD's tangible book value per share has been increasing, yet the stock trades at approximately 0.9x P/B, which is below several peers despite the expanded earnings capacity from the Century acquisition [3] - Near-term earnings are impacted by integration costs and a non-normalized steel margin environment, with the company incurring about $0.9 million in one-time acquisition expenses in Q2 fiscal 2026 [4] Capacity Expansion - Organic capacity growth is a significant driver for FRD, with the new Sinton, TX facility reaching full capacity and delivering the highest margins in the system [5] - Additional processing capacity is being added across the network, including $1.9 million for equipment upgrades at Granite City, IL, which supports continued tonnage growth and lower unit costs [6] Insider Activity - Recent modest insider buying is notable given the stock's pricing near book value, indicating that insiders perceive the current valuation as misaligned with the company's expanding earnings and capacity [7] Structural Positioning and Outlook - FRD is enhancing its operational scale with the Century acquisition, which adds new geographies and higher-value products, while upgrades at Granite City and Sinton facilities are expected to improve throughput and margins [11] - If integration and capacity expansion continue successfully, FRD is positioned to increase earnings in the next up-cycle, with the market not yet reflecting this operational leverage in its valuation [12]

Core Insights - Friedman Industries reported a net earnings of $2.2 million for Q2 fiscal 2026, a significant recovery from a net loss of $0.7 million in the same quarter last year, with net sales increasing by 42.7% to $152.4 million [2][10] - The company experienced record sales volume, selling approximately 154,500 tons of inventory and 24,500 tons of toll-processed material, marking a 28% year-over-year increase [2][10] - The flat-roll segment was the primary growth driver, with sales rising 47.2% to $143.3 million and operating profit jumping 113.5% to $5.7 million [3][10] Financial Performance - The tubular segment saw a mixed performance, with sales declining 3.6% to $9 million, but the average selling price per ton increased by 15% to $1,185, resulting in a swing to operating income of $0.9 million from a loss of $0.6 million [4][10] - Operating expenses increased due to higher volumes and acquisition-related costs, with processing and warehousing expenses rising 15.3% to $9.1 million and delivery expenses increasing 32.6% to $7.1 million [5][10] - Earnings before income taxes improved to $2.9 million from a loss of $0.9 million, aided by effective risk management and lower interest expenses [6][10] Balance Sheet and Equity - Total assets rose to $311.3 million as of September 30, 2025, from $226.8 million in March 2025, while total stockholders' equity increased to $139.3 million [7] - Liabilities grew to $172 million, reflecting higher borrowings associated with the company's expansion and acquisition strategy [7] Strategic Direction - Management highlighted the quarter as a significant milestone, emphasizing record sales volume and improved capacity utilization [8] - The company is focused on a strategic transformation that combines organic growth with selective acquisitions and disciplined capital allocation, including ongoing dividends and opportunistic share repurchases [8][9] - The acquisition of Century Metals & Supplies is expected to enhance margins and growth, broadening the product portfolio and geographic reach [12] Future Outlook - For Q3 fiscal 2026, the company expects sales volumes to remain consistent with Q2 levels, with additional tonnage from the Century acquisition anticipated to offset seasonal softness [11] - Management projects a modest sequential improvement in margins, supported by expected increases in metals pricing [11]

Financial Performance - Net earnings for the quarter ended September 30, 2025, were approximately $2.2 million, compared to a net loss of approximately $0.7 million for the same quarter in 2024[4]. - Sales for the 2025 quarter were approximately $152.4 million, representing a 43% increase year-over-year from approximately $106.8 million in 2024[5]. - The company achieved the highest sales volume in its history, with a 28% increase year-over-year and a 12% increase quarter-over-quarter, totaling approximately 154,500 tons of inventory sold[5]. Segment Performance - Flat-roll segment sales for the 2025 quarter totaled approximately $143.3 million, up from approximately $97.4 million in the 2024 quarter, with an operating profit of approximately $5.7 million[8]. - Tubular segment sales for the 2025 quarter were approximately $9.0 million, down from approximately $9.4 million in the 2024 quarter, but with an operating profit of approximately $0.9 million compared to a loss in the previous year[9]. Acquisitions and Integration - The acquisition of Century Metals & Supplies was completed on August 29, 2025, enhancing the company's product portfolio and geographic reach[5]. - The integration of Century Metals & Supplies is progressing well, with promising synergies expected to enhance future performance[12]. Asset and Future Outlook - Total assets as of September 30, 2025, were approximately $311.3 million, up from $226.8 million as of March 31, 2025[7]. - The company recognized a gain on hedging activities of approximately $0.9 million for the 2025 quarter[10]. - The company anticipates that third quarter fiscal 2026 sales volume will remain consistent with second quarter levels, with expected improvements in margins due to anticipated increases in metals pricing[11].

Sales Performance - Sales for the six months ended September 30, 2025, increased by approximately $65.9 million to a total of $362.4 million compared to the same period in 2024[67]. - Flat-roll segment sales for the 2025 period totaled approximately $267.4 million, up from $200.8 million in 2024, with an average selling price per ton increasing from approximately $895 to $946[69]. - Tubular segment sales for the 2025 period decreased to approximately $19.8 million from $20.5 million in 2024, despite an increase in average selling price per ton from approximately $1,087 to $1,196[71]. - Sales volume for the six months ended September 30, 2025, included approximately 296,500 tons from inventory and 43,500 tons of toll processing, compared to 240,000 tons and 42,000 tons, respectively, in 2024[67]. Profitability - Adjusted gross profit for the six months ended September 30, 2025, was approximately $55.4 million, representing an increase of $18.7 million from the prior year, with a gross profit margin of 19.3%[67]. - The Company expects third quarter fiscal 2026 sales volume to remain consistent with second quarter levels, with margins anticipated to improve modestly due to expected increases in metals pricing[92]. Costs and Expenses - Selling, general and administrative costs increased by approximately $3.3 million in the 2025 period, primarily due to higher incentive compensation and transaction-related expenses from the acquisition of Century Metals & Supplies[73]. - Income tax provision increased from approximately $0.5 million in 2024 to approximately $2.4 million in 2025, with an effective tax rate of 24.5%[74]. Liquidity and Financial Position - The company's current ratio was 3.2 at September 30, 2025, down from 4.3 at March 31, 2025, indicating a decrease in liquidity[87]. - The Company believes its current cash position and cash flows from operations are adequate to fund expected cash requirements for the next 12 months[90]. Acquisition Impact - The acquisition of Century Metals & Supplies resulted in notable increases in accounts receivable, inventory, fixed assets, accounts payable, and ABL facility debt[88]. - The Company’s financial statements preparation involves significant estimates and judgments, particularly related to the Century Metals & Supplies business combination[93]. Hedging Activities - The Company recognized hedging-related gains of approximately $1.1 million in the 2025 period, down from $5.6 million in the 2024 period[68]. - The Company recognized hedging gains of approximately $1.1 million and $5.6 million for the six months ended September 30, 2025, and 2024, respectively, related to economic hedges of risk[91]. - The Company’s hedging activities are classified as economic hedges with mark-to-market accounting treatment, which may result in gains or losses being recognized in different fiscal periods[91]. Debt and Financing - The Company renewed its asset-based lending facility (ABL Facility) for $125 million, maturing on August 29, 2030, with a current balance of approximately $84.2 million and an interest rate of 5.8%[89]. - The ABL Facility allows for borrowings based on a borrowing base calculation, which includes 90% of eligible accounts receivable and 85% of eligible inventory's net orderly liquidating value[89]. - The ABL Facility includes a financial covenant requiring a fixed charge coverage ratio of at least 1.00 to 1.00 for the trailing twelve-month period[89]. - The Company may increase the ABL Facility by up to $75 million, in minimum increments of $5 million, if certain conditions are met[89]. Forward-Looking Statements - Forward-looking statements regarding future sales, prices, and margins involve risks and uncertainties that could cause actual results to differ materially[94].

Core Viewpoint - Friedman Industries has acquired Century Metals and Supplies, Inc., enhancing its market presence and product offerings in the southeastern U.S. and Latin American markets [1][2]. Group 1: Acquisition Details - The acquisition includes working capital, buildings, processing and other equipment, and related real estate [1]. - Century Metals has generated average annual revenues of approximately $111.0 million over the past three fiscal years [1]. - The transaction is an all-cash purchase and is expected to be immediately accretive [1]. Group 2: Strategic Implications - The acquisition broadens Friedman's reach into new regions and enhances its core hot-rolled steel business [2]. - It adds coil slitting capabilities and expands the product portfolio to include cold-rolled, coated, and stainless steels, as well as non-ferrous materials like aluminum, copper, and brass [2]. - The acquisition provides strategic access to growing residential and corrosion-resistant markets [2]. Group 3: Company Background - Friedman Industries is headquartered in Longview, Texas, and operates multiple manufacturing plants across the U.S. [4]. - The company has two reportable segments: flat-roll products and tubular products, processing both ferrous and non-ferrous coils [4].

Core Insights - Friedman Industries' shares have increased by 14.8% since the earnings report for the quarter ended June 30, 2025, significantly outperforming the S&P 500 Index's 0.5% growth during the same period [1] - The company reported net earnings of $5 million, or $0.71 per diluted share, for the first quarter of fiscal 2026, compared to $2.6 million, or $0.37 per diluted share, a year earlier [2] - Net sales reached $134.8 million, reflecting a 17.7% increase from $114.6 million in the prior-year quarter [2] Financial Performance - The flat-roll division generated sales of $124.1 million, up 20% from $103.4 million, with operating income rising to $8.8 million from $2.7 million [3] - The tubular segment experienced a 4.1% sales decline to $10.7 million from $11.2 million, but operating results improved from a $1.2 million loss to a $1.3 million profit [3] - Adjusted gross profit increased by 60.3% to $29.1 million from $18.1 million, with margins expanding from 15.8% to 21.6% [4] Cash Flow and Debt Management - Operating cash flow was reported at $15.5 million, allowing for a $14.7 million reduction in debt [4] - The company ended the quarter with $117.5 million in working capital and a current ratio of 3.9 [4] - Debt under the $150 million asset-based lending facility stood at $33 million at quarter-end [4] Management Insights - CEO Michael J. Taylor emphasized improved margins and solid sales volume as key drivers of the strong fiscal first-quarter performance [5] - Taylor noted strengthened demand from certain customers and strategic efforts that enhanced facility capacity utilization [5] - The management expressed optimism about the long-term demand outlook for the industry [5] Market Conditions - The improved profitability was attributed to favorable market conditions for hot-rolled steel coil (HRC) compared to the prior-year period [6] - Although HRC prices softened slightly towards the end of the quarter, they remained stable enough to support stronger physical margins [6] - Hedging activities contributed positively, with a recorded gain of $0.3 million compared to a $5.4 million gain in the prior-year quarter [6] Future Guidance - For the second quarter of fiscal 2026, Friedman Industries expects sales volumes to be slightly higher than in the fiscal first quarter [7] - Management anticipates lower margins sequentially due to recent softening in HRC prices [7] Other Developments - On May 6, 2025, the company executed the fourth amendment to its credit agreement, extending the maturity date of its $150 million ABL Facility to August 19, 2026 [8] - The facility remains secured by substantially all of the company's assets, providing flexibility for future borrowing [8]

Core Insights - Friedman Industries reported strong financial results for Q1 FY2026, with revenue of $134.8 million, a 17.6% increase from $114.6 million in Q1 FY2025, and net earnings nearly doubled to $5.0 million from $2.6 million [1][2] - The diluted earnings per share rose significantly to $0.71, up 91.9% from $0.37 in the same quarter last year [2] Financial Performance - The flat-roll segment generated $124.1 million in revenue, a 20.0% increase from $103.4 million in Q1 FY2025, while the tubular segment revenue decreased by 4.5% to $10.7 million [2][5] - Total tons sold in the flat-roll segment increased to 141,500 from 119,000, indicating strong demand despite a slight decline in average selling price from $932 per ton to $926 per ton [5] Operational Highlights - The company achieved an operating cash flow of $15.5 million and reduced debt by $14.7 million, enhancing its balance sheet [6] - The focus on increasing operational efficiency and processing inventory effectively has been a priority, with over 160,000 tons processed [4][6] Business Model and Strategy - Friedman Industries operates primarily in two segments: flat-roll products and tubular products, with flat-roll products accounting for the majority of sales [3][8] - The company serves a diverse customer base, including over 440 customers in flat-roll and 80 in tubular, which helps mitigate risks associated with supplier concentration [10] Future Outlook - Management anticipates a slight increase in shipped volume for Q2 FY2026, although margins are expected to contract due to softening prices for Hot-Rolled Coil steel [11] - Key factors to monitor include price trends for core steel products and the company's ability to maintain profitability in both segments [12]