Core Viewpoint - Friedman Industries, Incorporated will transfer its common stock listing to the Nasdaq Global Select Market, effective April 8, 2025, under the symbol "FRD" [1][7] Group 1: Company Overview - Friedman Industries is a manufacturer and processor of steel products, headquartered in Longview, Texas, with operating plants in multiple states including Arkansas, Alabama, Indiana, Illinois, and Texas [3] - The company has two reportable segments: flat-roll products and tubular products, with various facilities dedicated to processing hot-rolled steel coils and manufacturing electric resistance welded pipe [3] Group 2: Strategic Intent - The transfer to Nasdaq aims to increase market visibility and attract more investor capital, enhancing trading liquidity and institutional ownership [2][7] - The listing on Nasdaq aligns with the company's goal of building long-term equity value [2]

Core Viewpoint - Friedman Industries reported a significant decline in net sales and a net loss for the third quarter of fiscal 2025, reflecting challenges in the steel market and pricing pressures [2][8]. Financial Performance Overview - For the third quarter ended Dec. 31, 2024, net sales were $94.1 million, an 18.9% decline from $115.9 million in the prior-year quarter [2]. - The company posted a net loss of $1.2 million, or $0.17 per diluted share, compared to net earnings of $1.2 million, or $0.16 per diluted share, in the same period last year [2]. Cost Analysis - The cost of materials sold decreased by 14.6% year over year to $78.5 million from $91.9 million [3]. - Processing and warehousing expenses increased by 1.4% to $7.5 million, while selling, general, and administrative expenses decreased by 8.2% to $3.9 million [3]. Segmental Performance - The flat-roll segment reported sales of $86.1 million, a 19.1% decline from $106.4 million in the prior-year quarter, with a significant drop in operating profit by 85.1% to $1.3 million [4]. - The tubular segment's sales were $7.9 million, down 16.9% from $9.5 million a year ago, with an operating loss of $0.2 million compared to a $0.1 million loss in the prior-year quarter [5]. Key Business Metrics - The company ended the quarter with a working capital balance of approximately $107 million, down from $116 million at the end of March 31, 2024 [6]. - Operating cash flow generated was $2.7 million, and debt was reduced by 9% during the quarter [6]. - The quarter-end sales backlog volume was 11% higher compared to the prior year [6]. Management Commentary and Market Conditions - The CEO acknowledged industry-wide pricing pressures and reduced sales volume due to political uncertainty and holiday-related slowdowns, but noted an uptick in sales order activity post-U.S. presidential election [7]. - Confidence in the long-term industry outlook and strategic positioning of Friedman Industries was expressed [7]. Factors Influencing Performance - Earnings were negatively impacted by lower steel prices, particularly in the flat-roll segment, which contributed to a decline in gross margins [8]. - The tubular segment faced challenges despite stable sales volume due to lower pricing affecting revenue generation [8]. Hedging Activities - The company reported a modest gain of $0.3 million in hedging activities for the quarter, compared to a $4.1 million loss in the prior-year period [9]. Guidance and Outlook - Looking ahead, the company expects improved sales volume in the fourth quarter of fiscal 2025, supported by stronger order activity and rising hot-rolled coil prices [11]. Other Developments - During the quarter, the company focused on optimizing operations across its six manufacturing plants, with no acquisitions, divestitures, or restructuring activities reported [12].

Group 1 - The core investment strategy focuses on long-only investment, evaluating companies from an operational and buy-and-hold perspective, rather than market-driven dynamics [1] - The articles emphasize understanding the long-term earnings power of companies and the competitive dynamics within their industries [1] - The majority of recommendations will be holds, indicating a cautious approach to investment opportunities, with only a small fraction of companies deemed suitable for buying at any given time [1] Group 2 - The hold articles are intended to provide valuable information for future investors and introduce a healthy skepticism in a generally bullish market [1] - There is a clear distinction made between the author's opinions and professional investment advice, highlighting the importance of conducting due diligence [2][3]

Financial Performance - The company reported a net loss of approximately $1.2 million ($0.17 diluted loss per share) on sales of approximately $94.1 million for the quarter ended December 31, 2024, compared to net earnings of approximately $1.2 million ($0.16 diluted earnings per share) on sales of approximately $116.0 million for the same quarter in 2023[3]. - Flat-roll segment sales totaled approximately $86.1 million, down from approximately $106.4 million in the prior year, with operating profits decreasing from $8.7 million to $1.3 million[8]. - Tubular segment sales were approximately $7.9 million, down from approximately $9.5 million, with operating losses of approximately $0.2 million compared to a loss of $0.1 million in the previous year[9]. Sales and Order Activity - Sales backlog volume at quarter-end was 11% higher year over year, indicating continued strength in new order activity[2]. - The company expects fourth quarter sales volume for fiscal 2025 to be higher than the third quarter due to stronger order activity and improving market conditions[11]. Cash Flow and Debt Management - Operating cash flow during the quarter was approximately $2.7 million, and the company reduced its debt by 9%[5]. - The working capital balance at quarter-end was approximately $107 million, reflecting a solid financial position[5]. Asset and Liability Management - Total assets decreased from $230.0 million as of March 31, 2024, to $210.3 million as of December 31, 2024[7]. - Total liabilities decreased from $102.5 million to $82.9 million during the same period, indicating improved financial health[7]. Market Conditions - HRC prices were stable at the start of the fourth quarter but began to increase, with expectations for further price increases during the second half of the quarter[11].

Core Viewpoint - Friedman Industries reported challenging conditions in the third fiscal quarter, with margins affected by pricing pressure and political uncertainty, but noted a surge in sales order activity post-presidential election, leading to a 11% year-over-year increase in sales backlog volume [1][2][4]. Financial Performance - For the quarter ended December 31, 2024, the company recorded a net loss of approximately $1.2 million ($0.17 diluted loss per share) on sales of approximately $94.1 million, compared to a net earnings of approximately $1.2 million ($0.16 diluted earnings per share) on sales of approximately $116.0 million for the same quarter in 2023 [2][5]. - The total net sales for the nine months ended December 31, 2024, were approximately $315.4 million, down from $384.0 million in the same period of 2023 [3]. Segment Performance - Flat-roll product segment sales for the 2024 quarter totaled approximately $86.1 million, down from approximately $106.4 million in the 2023 quarter, with a decrease in average selling price per ton from approximately $960 to $813 [7]. - Tubular product segment sales for the 2024 quarter were approximately $7.9 million, compared to approximately $9.5 million in the 2023 quarter, with the average selling price per ton decreasing from approximately $1,164 to $1,013 [8]. Operational Metrics - The company reported a working capital balance of approximately $107 million and operating cash flow of approximately $2.7 million during the quarter [4]. - Debt was reduced by 9% during the quarter, indicating improved financial management [4]. Outlook - The company expects fourth quarter sales volume for fiscal 2025 to be higher than the third quarter due to stronger order activity, with expectations of improved sales margins compared to the third quarter [11]. - Industry participants anticipate further price increases in the second half of the fourth quarter, which may positively impact the company's financial performance [11]. Company Overview - Friedman Industries, headquartered in Longview, Texas, is a manufacturer and processor of steel products, operating in two segments: flat-roll products and tubular products [12].

Financial Performance - Sales for the nine months ended December 31, 2024, decreased by approximately $68.6 million to $1.1 billion compared to the same period in 2023[60] - Adjusted gross profit for the nine months ended December 31, 2024, was approximately $52.2 million, down from approximately $74.9 million in 2023, representing a decrease of 30.4%[60] - Flat-roll segment sales for the 2024 quarter totaled approximately $86.1 million, down from approximately $106.4 million in the 2023 quarter[70] - Tubular product segment sales for the 2024 period totaled approximately $28.5 million, down from approximately $31.9 million in 2023, primarily due to a decrease in average selling price per ton[64] - The tubular segment recorded operating losses of approximately $0.2 million for the 2024 quarter compared to a loss of approximately $0.1 million in the 2023 quarter[72] Pricing and Cost Analysis - The average selling price per ton for flat-roll products decreased from approximately $995 in the 2023 period to approximately $868 in the 2024 period[62] - Selling, general and administrative costs decreased by approximately $2.6 million during the 2024 period compared to the 2023 period[66] - Income tax provision decreased from approximately $3.8 million in the 2023 period to approximately $0.1 million in the 2024 period, reflecting lower earnings before taxes[67] Liquidity and Financial Position - The current ratio improved to 3.5 at December 31, 2024, compared to 3.1 at March 31, 2024[79] - The Company has a $150 million asset-based lending facility (ABL Facility) maturing on May 19, 2026, with a current balance of approximately $32.5 million and an applicable interest rate of 6.5%[81] - The Company's borrowing base calculation supports access to approximately $100.5 million of the ABL Facility as of the filing date[81] - The Company believes its current cash position and cash flows from operations are adequate to fund expected cash requirements for the next 12 months[82] Hedging and Risk Management - The Company recognized hedging related gains of approximately $5.8 million in the 2024 period, compared to $0.7 million in the 2023 period[61] - The Company recognized gains of approximately $0.3 million and $5.8 million in the three and nine months ended December 31, 2024, respectively, related to hedging activities[84] - The Company utilizes hot-rolled coil futures to manage price risk on unsold inventory and has classified most hedging activities as economic hedges of risk[83] Future Outlook - The Company expects fourth quarter sales volume for fiscal 2025 to be higher than the third quarter due to stronger order activity and holiday impacts[85] - HRC prices were stable at the start of the fourth quarter but began to increase, with industry participants anticipating further price increases in the second half of the quarter[85] Financial Covenants - The ABL Facility includes a financial covenant requiring a fixed charge coverage ratio of at least 1.10 to 1.00 for the trailing twelve months[81] - The Company may increase the ABL Facility by up to an aggregate of $25 million, in minimum increments of $5 million, if certain conditions are met[81] Accounting Estimates - The Company did not identify any significant estimates or judgments related to the consolidated financial statements in the Form 10-Q filing[86]

Core Viewpoint - Friedman Industries, Incorporated (FRD) has faced significant challenges in its recent quarterly performance, with a notable decline in sales and net income, attributed to softer demand and political uncertainty affecting the market environment [2][6]. Financial Performance - For the quarter ending September 30, 2024, FRD reported net sales of approximately $106.8 million, down 18.3% from $130.7 million in the same period last year [2]. - The company posted a net loss of $0.7 million, or a diluted loss per share of $0.10, compared to a net income of $3.5 million, or $0.48 per share, in the prior year [2]. - Sales volume from inventory decreased to about 121,500 tons, down 6.2% from 129,500 tons year-over-year, while customer-owned material processed fell by 30.8% to 18,000 tons [3]. Segment Performance - The flat-roll segment reported sales of approximately $97.4 million, a decline of 19.2% from $120.5 million a year earlier, with an average selling price per ton dropping 12.7% to $858 [4]. - The tubular segment experienced sales of $9.4 million, down 8.2% from $10.2 million, with a 15.4% decrease in average selling price per ton from $1,217 to $1,030 [5]. Management Insights - The CEO highlighted the impact of industry-specific and broader economic pressures on margins, with soft demand and political uncertainties affecting customer behavior [6]. - Despite challenges, the company reduced its debt by 22% during the quarter, enhancing its financial flexibility [9]. Market Outlook - Looking ahead, the company anticipates a slight decline in sales volume for the third quarter due to seasonal slowdowns, while expecting a challenging margin environment due to limited upward momentum in steel prices [8]. - The stabilization of hot-rolled coil (HRC) prices is seen as a double-edged sword, providing cost management benefits but limiting pricing momentum [7].

Core Insights - Friedman Industries reported a net loss of approximately $0.7 million for the second fiscal quarter ended September 30, 2024, compared to net earnings of approximately $3.5 million for the same quarter in 2023, with sales decreasing from approximately $130.7 million to $106.8 million [2][3][4] - The company experienced a decline in sales volume due to weaker demand and political uncertainty, with total sales volume for the 2024 quarter at approximately 121,500 tons of inventory sold and 18,000 tons of toll processing, down from 129,500 tons and 26,000 tons in the 2023 quarter [2][6][7] - Operating cash flow for the quarter was approximately $10.8 million, and the company reduced its debt by 22% during the quarter [1][2] Financial Performance - Net sales for the quarter were approximately $106.8 million, down from $130.7 million in the previous year, while cost of materials sold decreased from $110.3 million to $88.8 million [3][4] - The flat-roll segment reported sales of approximately $97.4 million, down from $120.5 million, with an average selling price per ton decreasing from approximately $983 to $858 [6] - The tubular segment's sales totaled approximately $9.4 million, compared to $10.2 million in the prior year, with an average selling price per ton decreasing from approximately $1,217 to $1,030 [7] Balance Sheet Overview - As of September 30, 2024, total assets were approximately $209.2 million, down from $230.0 million as of March 31, 2024, with current assets decreasing from $170.1 million to $148.0 million [5] - Total liabilities decreased from $102.5 million to $80.4 million, while total stockholders' equity increased from $127.5 million to $128.8 million [5] Market Conditions - The company faced industry-wide pricing pressure, with hot-rolled coil prices stabilizing after a decline earlier in 2024, but demand remained soft due to political uncertainty [1][2] - The outlook for the third quarter of fiscal 2025 anticipates slightly lower sales volume due to seasonal impacts, with stable HRC prices leading to minimal changes in sales prices and margins [9][10] Hedging Activities - The company recognized a gain on hedging activities of approximately $0.2 million for the quarter, with limited hedging activities due to a lack of price volatility [8]

Sales Performance - Sales for the six months ended September 30, 2024, decreased by approximately $46.7 million to $240.7 million compared to the same period in 2023[47]. - Flat-roll product segment sales for the 2024 period totaled approximately $200.8 million, a decrease from approximately $245.7 million in 2023, with average selling price per ton dropping from approximately $1,011 to $895[48]. - Tubular product segment sales for the 2024 period totaled approximately $20.5 million, down from approximately $22.3 million in 2023, with average selling price per ton decreasing from approximately $1,290 to $1,087[49]. - Sales volume for the three months ended September 30, 2024, was approximately 121,500 tons from inventory and 18,000 tons of toll processing, compared to 129,500 tons and 26,000 tons in 2023[51]. - Sales volume for the third quarter of fiscal 2025 is expected to be slightly lower than the second quarter due to seasonal impacts[60]. Profitability - Adjusted gross profit for the six months ended September 30, 2024, was approximately $36.7 million, down from approximately $50.1 million in 2023, representing a gross profit margin decrease from 18.7% to 16.6%[47]. - Flat-roll segment operations recorded operating profits of approximately $5.3 million in 2024, down from $15.0 million in 2023[48]. - Tubular segment recorded an operating loss of approximately $1.8 million for the 2024 period, compared to an operating profit of approximately $2.3 million in 2023[49]. - The Company recognized hedging related gains of approximately $5.6 million in the 2024 period, compared to $4.8 million in 2023[47]. - The Company anticipates a challenging margin environment in the third quarter due to stable hot-rolled coil prices[60]. Costs and Expenses - Selling, general and administrative costs decreased by approximately $2.2 million in the 2024 period compared to 2023, primarily due to lower incentive compensation expenses[49]. - Income tax provision decreased from approximately $3.7 million in 2023 to approximately $0.5 million in 2024, with the effective tax rate dropping from 24.9% to 21.1%[50]. Financial Position - The Company's current ratio improved to 4.1 as of September 30, 2024, up from 3.1 on March 31, 2024[58]. - Working capital was approximately $111.7 million at September 30, 2024, compared to $116.0 million at March 31, 2024[58]. - The Company had a balance of approximately $35.9 million under its $150 million asset-based lending facility (ABL Facility) with an interest rate of 7.0% as of September 30, 2024[58]. - The ABL Facility supported access to approximately $104.7 million based on the borrowing base calculation as of September 30, 2024[58]. - The Company believes its current cash position and cash flows from operations are adequate to fund expected cash requirements for the next 12 months[58]. - The Company has the option to increase the ABL Facility by up to an aggregate of $25 million, in minimum increments of $5 million, if certain conditions are met[58]. Estimates and Judgments - No significant estimates or judgments were identified related to the consolidated financial statements in the current filing[61].

Core Viewpoint - Friedman Industries reported a significant decline in both earnings and revenues for the first quarter of fiscal 2025, indicating challenging market conditions and operational issues affecting performance [1][9][14]. Revenue Details - The company registered revenues of $114.6 million, down 16.6% year over year, attributed to declines in sales volume and average selling price per ton [2]. - Sales volume included approximately 119,000 tons from inventory (down 7.8% year over year) and 24,000 tons of toll-processing customer-owned material (flat year over year) [2][4]. Segment Performance - Revenues from the Flat-Roll segment were $103.4 million, down 17.4% from the previous year, with a sales volume of 109,000 tons from inventory [4]. - The average selling price per ton in the Flat-Roll segment decreased by 10.2% to $932 [5]. - The Tubular segment generated revenues of $11.2 million, down 7.7% year over year, but sales volume increased by 11.1% to 10,000 tons [5][6]. Gross Margin and Profitability - Gross profit declined 37.7% to $18.1 million, with gross margin contracting 536 basis points to 15.8% [7]. - The operating loss totaled $1.4 million compared to an operating profit of $10.4 million in the previous year [9]. Operating Expenses - Selling, general and administrative expenses decreased by 24% year over year to $4.5 million, primarily due to lower incentive compensation expenses [8]. Liquidity and Cash Flow - The company ended the first quarter with cash of $4.1 million, an increase from $2.9 million at the end of fiscal 2024 [10]. - Net cash used in operating activities was $6.1 million, compared to $4.6 million a year ago [11]. Guidance and Market Outlook - Management expects sales volume in the second quarter to be similar to that of the first quarter [12]. - There is an anticipated decline in hot-rolled coil (HRC) prices at the start of the second quarter, but recent trends indicate a potential increase in HRC index prices, which could improve margins later in the fiscal second quarter [13]. Overall Assessment - The first quarter results reflect a challenging environment for Friedman Industries, with disappointing revenue and profit figures, although there was a positive uptick in the Tubular segment's sales volume [14].