Group 1 - Friedman Industries has been added to the Russell 3000 Index, effective June 30, 2025, enhancing its market visibility and attracting investor capital [1][7] - The company aims to increase institutional ownership and improve capital inflows following its recent listing on Nasdaq in April 2025 [1][7] - Membership in the Russell 3000 Index also includes automatic inclusion in the small-cap Russell 2000 Index and relevant growth and value style indexes, which are widely utilized by investment managers [1][7] Group 2 - Friedman Industries is headquartered in Longview, Texas, and operates manufacturing plants in multiple states, including Arkansas, Alabama, Indiana, Illinois, and Texas [2] - The company has two reportable segments: flat-roll products and tubular products, with specific operations detailed for each segment [2]

Group 1 - The core investment strategy of Quipus Capital focuses on long-only investment, evaluating companies from an operational and buy-and-hold perspective rather than market-driven dynamics [1] - Quipus Capital emphasizes understanding the long-term earnings potential of companies and the competitive dynamics within their industries [1] - The majority of recommendations from Quipus Capital will be holds, indicating a cautious approach to market conditions and a belief that only a small fraction of companies are suitable for buying at any given time [1] Group 2 - The articles produced by Quipus Capital aim to provide valuable information for future investors while maintaining a healthy skepticism towards a generally bullish market [1]

Core Viewpoint - Friedman Industries' stock has underperformed following its earnings release, with a 3.2% decline compared to a 0.7% dip in the S&P 500 Index, although it showed a slight gain of 0.5% over the past month [1] Earnings and Revenue Summary - For Q4 fiscal 2025, Friedman Industries reported net earnings of $5.3 million ($0.76 per diluted share), a 7.8% increase from $4.9 million ($0.71 per share) in the previous year [2] - Quarterly sales decreased by 2.3% to $129.2 million from $132.2 million, despite achieving record sales volume of 166,500 tons, a 4.7% year-over-year rise and a 28% sequential increase [2] - Full-year net earnings fell 64.9% to $6.1 million ($0.87 per diluted share) from $17.3 million ($2.39 per share) in fiscal 2024, with annual sales dropping 13.9% to $444.6 million from $516.3 million [2] Segment Performance - The flat-roll segment generated $117.7 million in sales, down 2.4% from $120.6 million year-over-year, with tons sold from inventory rising 15.8% to 139,000 [3] - The tubular segment's sales were nearly flat at $11.5 million, with volume increasing 15.8% to 11,000 tons, while the average selling price declined 14.1% to $1,044 per ton [4] Hedging and Financial Metrics - The company recorded a $1.8 million gain from hot-rolled coil futures in Q4 and $7.6 million for the full fiscal year, aiding in offsetting price volatility in the steel market [5] - Management noted that hedging capabilities were crucial in stabilizing margins during a challenging pricing environment [6] Cost Control and Expense Management - SG&A expenses decreased by 37.5% to $3.8 million in Q4 from $6.1 million a year earlier, and full-year SG&A expenses fell 23.1% to $16.2 million from $21 million [7] Management Commentary and Strategy - CEO Michael J. Taylor highlighted the disciplined execution of the growth strategy, noting a 28% sequential increase in quarterly sales volume and a 4.7% year-over-year rise [8] - The new facility in Sinton, TX, achieved the highest profit margin among all locations, reaching full production capacity during the year [8][9] Forward Guidance - The company expects slightly lower sales volume in Q1 fiscal 2026 due to planned equipment downtime but anticipates improved margins from pricing actions and operational streamlining [10] - Management expressed confidence in capitalizing on growth opportunities, citing favorable industry demand and a strong balance sheet [10] Other Developments - No acquisitions, divestitures, or restructuring initiatives were reported in Q4 fiscal 2025, but management reaffirmed its commitment to disciplined capital allocation and a continued quarterly dividend policy since 1972 [11]

Financial Performance - For the quarter ended March 31, 2025, the company recorded net earnings of approximately $5.3 million ($0.76 diluted earnings per share) on sales of approximately $129.2 million, compared to net earnings of approximately $5.0 million ($0.71 diluted earnings per share) on net sales of approximately $132.2 million for the same quarter in 2024[3] - For fiscal year 2025, the company recorded net earnings of approximately $6.1 million ($0.87 diluted earnings per share) on sales of approximately $444.6 million, a decrease from net earnings of approximately $17.3 million ($2.39 diluted earnings per share) on sales of approximately $516.3 million in fiscal 2024[4] Sales Volume and Segments - The company achieved a 28% increase in sales volume over the preceding third quarter and a 5% increase over the prior year fourth quarter, with sales volume reaching approximately 166,500 tons for the 2025 quarter[2][5] - The flat-roll segment sales for the 2025 quarter totaled approximately $117.7 million, with a sales volume of approximately 139,000 tons from inventory and 16,500 tons of toll processing[8] - The tubular segment sales for the 2025 quarter totaled approximately $11.5 million, with tons sold increasing from approximately 9,500 tons in the 2024 quarter to approximately 11,000 tons in the 2025 quarter[9] Hedging and Financial Position - The company recognized a total hedging gain of approximately $7.6 million for fiscal 2025, with a gain on hedging activities of approximately $1.8 million for the 2025 quarter[10] - The working capital balance at year-end was $128.1 million, reflecting a strong financial position[5] - The company maintains a strong financial position and is poised to capitalize on both short-term and long-term opportunities in the industry[12] Future Outlook - The company expects sales volume for the first quarter of fiscal 2026 to be slightly lower than the fourth quarter of fiscal 2025 due to equipment downtime, but anticipates improved margins[11] - The newest facility in Sinton, Texas, reached full capacity levels during the year and contributed the highest profit margin among all facilities[2]

Core Insights - Friedman Industries reported improved margins and a record sales volume for the fourth quarter of fiscal 2025, with a 28% increase in sales volume compared to the previous quarter and a 5% increase year-over-year [3][4] - The company achieved net earnings of approximately $6.1 million for fiscal 2025, despite challenging steel price trends and economic factors [3][5] - The company's sales volume remained stable at approximately 500,000 tons for the year, reflecting resilience amid various challenges [3][5] Quarterly Performance - For the quarter ended March 31, 2025, net earnings were approximately $5.3 million ($0.76 diluted earnings per share) on sales of approximately $129.2 million, compared to net earnings of approximately $5.0 million ($0.71 diluted earnings per share) on sales of approximately $132.2 million for the same quarter in 2024 [4][7] - Sales volume increased from approximately 159,000 tons in the 2024 quarter to approximately 166,500 tons in the 2025 quarter [4][7] Annual Performance - For the fiscal year ended March 31, 2025, net earnings were approximately $6.1 million ($0.87 diluted earnings per share) on sales of approximately $444.6 million, down from net earnings of approximately $17.3 million ($2.39 diluted earnings per share) on sales of approximately $516.3 million for fiscal 2024 [5][7] - The working capital balance at year-end was $128.1 million [7] Segment Operations - Flat-roll segment sales for the 2025 quarter totaled approximately $117.7 million, with a sales volume of approximately 139,000 tons from inventory and 16,500 tons of toll processing [10] - Tubular segment sales for the 2025 quarter totaled approximately $11.5 million, with tons sold increasing from approximately 9,500 tons in the 2024 quarter to approximately 11,000 tons in the 2025 quarter [11] Hedging Activities - The company recognized a gain on hedging activities of approximately $1.8 million for the 2025 quarter and a total hedging gain of approximately $7.6 million for fiscal 2025 [12] Outlook - For the first quarter of fiscal 2026, the company expects sales volume to be slightly lower than the fourth quarter of fiscal 2025 due to equipment downtime, but anticipates improved margins [13]

Sales and Product Segmentation - Flat-roll products accounted for 91% of total sales in fiscal 2025, while tubular products contributed 9%[17] - Sales to O'Neal Steel represented approximately 16% of total sales for both fiscal years 2025 and 2024[17] - The company operates five flat-roll processing facilities and two tubular pipe mills, with a combined capacity to produce various steel products[12][15] - The company’s flat-roll segment primarily generates revenue from sales of company-owned inventory, with additional income from processing or storage services[12] - The company’s tubular segment generates all revenue from sales of company-owned inventory[15] - The company’s sales force for flat-roll products consisted of 29 personnel as of March 31, 2025[18] - The company’s flat-roll products are sold on a wholesale, rapid-delivery basis, competing with other processors of hot-rolled steel coils[13] Employee and Operational Information - The company had 271 full-time employees as of March 31, 2025[21] - The company’s Texas Tubular Products division operates two electric resistance welded pipe mills with an outside diameter size range of 2 3/8" to 8 5/8"[15] Governance and Compliance - The company’s cybersecurity program is aligned with the NIST Cybersecurity Framework 2.0 to ensure comprehensive controls and oversight[28] - The Company has adopted a Code of Conduct and Ethics applicable to all employees, directors, and officers[54] - The Company has a Clawback Policy in place as part of its governance practices[65] Financial Reporting and Statements - The Company's Annual Report to Shareholders for the fiscal year ended March 31, 2025, includes consolidated financial statements and notes[63] - The financial statements include Consolidated Balance Sheets, Statements of Operations, and Statements of Cash Flows for the years ended March 31, 2025, and 2024[63] - The Company is required to disclose security ownership information of certain beneficial owners and management in its proxy statement[58] - Definitive copies of the proxy statement for the 2025 Annual Meeting of Shareholders are expected to be filed with the SEC within 120 days after the end of the fiscal year[55] - The Company is expected to file definitive copies of its equity compensation plan information with the SEC within 120 days after the end of the fiscal year[57] Accounting and Financial Amendments - The independent public accounting firm for the Company is Moss Adams LLP, Houston, Texas[61] - The Company has undergone amendments to its Amended and Restated Credit Agreement, with the latest amendment referenced in a Form 8-K filed on May 9, 2025[64] - The Company has a 2016 Restricted Stock Plan in place for employee compensation[64]

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].