Sales Performance - Sales for the nine months ended December 31, 2019, decreased by $35,829,710 or approximately 10% in tons sold, from 175,500 tons in 2018 to 157,500 tons in 2019[49]. - Coil product segment sales decreased by $17,085,201 or approximately 18%, totaling $77,603,435 in the 2019 period compared to $94,688,636 in the 2018 period[52]. - Tubular product segment sales decreased by $18,744,509 or approximately 37%, totaling $31,518,282 in the 2019 period compared to $50,262,791 in the 2018 period[55]. Profitability - Gross profit as a percentage of sales dropped from approximately 8.3% in the 2018 period to approximately 0.7% in the 2019 period[49]. - Average selling price per ton for coil segment inventory decreased from approximately $890 in the 2018 period to approximately $667 in the 2019 period[52]. - Average selling price per ton for tubular segment inventory increased from approximately $704 in the 2018 period to approximately $750 in the 2019 period[55]. - Operating loss for the tubular segment was approximately $1,670,000 in the 2019 period, compared to an operating profit of approximately $4,348,000 in the 2018 period[55]. Costs and Expenses - General, selling, and administrative costs decreased by $173,649 in the 2019 period compared to the 2018 period[58]. Financial Position - The current ratio was 5.4 at December 31, 2019, down from 6.0 at March 31, 2019[71]. - Working capital was $56,420,996 at December 31, 2019, compared to $62,091,305 at March 31, 2019[71]. Capital Expenditures - The Company commenced two capital expenditure projects with a total estimated cost of $6,900,000, including a $1,100,000 building expansion in Arkansas and a $5,800,000 new processing line in Alabama[73]. - The new processing line in Alabama will increase the coil processing capability from up to 72" wide to up to 96" wide, allowing for higher strength grades[73]. - The Company expects the building expansion project to be completed by April 2020[73]. - Installation of the new processing equipment in Alabama is expected to begin in October 2020, with commercial use starting in February 2021[73]. Cash Flow and Credit - The Company believes its current cash position and cash flows from operations are adequate to fund expected cash requirements for the next 24 months[75]. - The Company's $5,000,000 revolving line of credit facility expired on December 12, 2019, with no borrowings outstanding at expiration[74]. Internal Controls and Reporting - There were no changes in the Company's internal control over financial reporting during the fiscal quarter ended December 31, 2019[80]. - The Company’s management evaluated the effectiveness of its disclosure controls and procedures as of December 31, 2019, concluding they were effective[79]. Risks and Estimates - The Company’s financial statements require significant estimates, including useful lives for fixed assets and allowance for doubtful accounts, which could differ from actual results[76]. - Forward-looking statements made by the Company involve risks and uncertainties that could cause actual results to differ materially[77].

Sales Performance - Sales for the six months ended September 30, 2019, decreased by $20,654,447 or approximately 10% compared to the same period in 2018, with tons sold dropping from approximately 124,000 to 112,000[43] - Coil product segment sales decreased by $9,355,567 or approximately 14%, totaling $56,602,077 in 2019 compared to $65,957,644 in 2018[45] - Tubular product segment sales decreased by $11,298,880 or approximately 32%, totaling $24,368,823 in 2019 compared to $35,667,703 in 2018[48] Profitability - Gross profit as a percentage of sales fell from approximately 10.0% in 2018 to approximately 1.0% in 2019, reflecting a significant decline in profitability[43] - The company recorded an operating loss of approximately $1,201,000 in the tubular segment for the 2019 period, compared to an operating profit of approximately $3,698,000 in 2018[48] Pricing and Volume - The average selling price per ton for coil segment inventory dropped from approximately $883 in 2018 to approximately $695 in 2019, despite an increase in shipment volume[45] - Tons sold in the tubular segment decreased from approximately 50,000 in 2018 to approximately 31,000 in 2019, while the average selling price per ton increased from approximately $697 to $787[48] Cost Management - General, selling, and administrative costs decreased by $319,941 in 2019 compared to 2018, primarily due to lower bonuses associated with decreased earnings[51] Liquidity and Financial Position - The current ratio improved to 7.3 at September 30, 2019, compared to 6.0 at March 31, 2019, indicating a strong liquidity position[62] - Cash increased primarily due to a reduction in inventory levels, despite purchases of property, plant, and equipment, and cash dividend payments[64] - The Company entered into a $5,000,000 revolving line of credit facility, which expires on December 12, 2019, with a borrowing base allowing access to approximately $4,988,000 as of September 30, 2019[65] - The Company was in violation of the debt service coverage ratio covenant, constituting an event of default that prohibits accessing funds unless waived by the Bank[65] - The Company believes its current cash position and cash flows from operations are adequate to fund expected cash requirements for the next 24 months[66] Estimates and Risks - Significant estimates in financial statements include useful lives for fixed assets and allowance for doubtful accounts, which could differ from actual results[67] - Forward-looking statements may involve risks and uncertainties that could cause actual results to differ materially from expectations, including changes in demand and prices for products[68]

Sales Performance - Sales for the three months ended June 30, 2019, decreased by $7,217,998 compared to the same period in 2018, with tons sold dropping from approximately 60,500 tons to 53,500 tons[41] - Coil segment sales totaled $28,181,468 in the 2019 quarter, down from $31,129,200 in the 2018 quarter, with the average selling price per ton decreasing from approximately $853 to $743[43] - Tubular segment sales for the 2019 quarter were $12,793,852, a decline from $17,064,118 in the 2018 quarter, while the average selling price per ton increased from approximately $670 to $819[46] Profitability - Gross profit as a percentage of sales fell from approximately 12.8% in the 2018 quarter to approximately 3.6% in the 2019 quarter[41] - Operating profits for the coil segment dropped from approximately $3,179,000 in the 2018 quarter to approximately $345,000 in the 2019 quarter[43] - The tubular segment's operating profits decreased from approximately $2,321,000 in the 2018 quarter to approximately $545,000 in the 2019 quarter[46] Financial Position - The current ratio improved to 7.7 at June 30, 2019, compared to 6.0 at March 31, 2019, indicating a strong liquidity position[53] - Working capital was $61,674,289 at June 30, 2019, slightly down from $62,091,305 at March 31, 2019[53] - The company maintained compliance with all financial covenants and had no borrowings outstanding under its $5,000,000 revolving line of credit facility as of June 30, 2019[55] Future Outlook - The company expects continued margin challenges into the second quarter of fiscal 2020 due to declining steel prices and softer demand[42] - No future outlook or performance guidance was included in the documents[67] Missing Information - No relevant financial data or performance summary was provided in the documents[65] - No user data or metrics were mentioned in the documents[66] - No information on new products or technology development was found in the documents[68] - No details on market expansion or acquisitions were present in the documents[69] - No new strategies or initiatives were discussed in the documents[69]

PART I [Business Overview](index=3&type=section&id=Item%201.%20Business) Friedman Industries, established in 1965, manufactures and processes steel products through coil and tubular segments, serving various industries with significant sales to a single customer in a competitive market - The company operates in two reportable segments: coil products and tubular products[13](index=13&type=chunk) - The coil product segment operates two hot-roll coil processing facilities in Hickman, Arkansas, and Decatur, Alabama, which improve steel quality and cut coils into sheets and plates[14](index=14&type=chunk) - The tubular product segment, Texas Tubular Products (TTP), operates two electric resistance welded pipe mills in Lone Star, Texas, manufacturing API-licensed line pipe and oil country pipe[17](index=17&type=chunk) Percentage of Total Sales by Product Group | Product and Service Groups | 2019 | 2018 | | :--- | :--- | :--- | | Coil Products | 67% | 74% | | Tubular Products | 33% | 26% | - Sales to a single customer, Trinity Industries, Inc., accounted for a significant portion of the company's total sales, representing approximately **21%** in fiscal 2019 and **16%** in fiscal 2018[20](index=20&type=chunk) - The company operates in a non-seasonal, highly-competitive business, competing with other processors of hot-rolled steel coils[24](index=24&type=chunk) - As of March 31, 2019, the company had **104** full-time employees[26](index=26&type=chunk) [Risk Factors](index=5&type=section&id=Item%201A.%20Risk%20Factors) Disclosure of risk factors is not required for this filing - Disclosure of risk factors is not required[28](index=28&type=chunk) [Unresolved Staff Comments](index=5&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) The company reports no unresolved staff comments - The company has no unresolved staff comments[29](index=29&type=chunk) [Properties](index=5&type=section&id=Item%202.%20Properties) The company's principal real properties include owned manufacturing plants and offices in Texas, Arkansas, and Alabama, alongside leased office space in Longview, Texas Principal Properties | Location | Facility | Size (sq. ft) | Ownership | | :--- | :--- | :--- | :--- | | Lone Star, Texas | Plant, Offices, Land | 161,000, 12,200, 122.4 acres | Owned | | Hickman, Arkansas | Plant, Offices, Land | 42,600, 2,500, 26.2 acres | Owned | | Decatur, Alabama | Plant, Offices, Land | 48,000, 2,000, 47.3 acres | Owned | | Longview, Texas | Offices | 2,600 | Leased | - All owned real properties are held in fee and are not subject to any mortgage or deed of trust[30](index=30&type=chunk) - The leased office in Longview, Texas has a lease expiring on **April 30, 2021**, with a monthly rent of **$2,728**[31](index=31&type=chunk) [Legal Proceedings](index=5&type=section&id=Item%203.%20Legal%20Proceedings) The company received **$56,500** in fiscal 2019 from a completed steel antitrust class action settlement, with no other material pending legal proceedings - In fiscal 2019, the company received settlement proceeds of **$56,500** as a class member of steel antitrust class action litigation, which is now considered complete[32](index=32&type=chunk) - The company is not a party to any other material pending legal proceedings[33](index=33&type=chunk) PART II [Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=6&type=section&id=Item%205.%20Market%20for%20Registrant%27s%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) The company's common stock trades on NYSE American under '**FRD**', with approximately **190** shareholders of record as of April 26, 2019, and other stock information incorporated by reference - The Company's Common Stock is traded on the NYSE – American under the symbol **FRD**[35](index=35&type=chunk) - As of April 26, 2019, the company had approximately **190** shareholders of record[37](index=37&type=chunk) [Selected Financial Data](index=6&type=section&id=Item%206.%20Selected%20Financial%20Data) Disclosure of selected financial data is not required for this filing - Disclosure of selected financial data is not required[38](index=38&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=6&type=section&id=Item%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section is incorporated by reference from the company's Annual Report to Shareholders for the fiscal year ended March 31, 2019 - The Management's Discussion and Analysis of Financial Condition and Results of Operations is incorporated by reference from the Annual Report to Shareholders for the fiscal year ended March 31, 2019[39](index=39&type=chunk) [Quantitative and Qualitative Disclosures about Market Risk](index=6&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) Quantitative and qualitative disclosures about market risk are not required for this filing - Disclosure about market risk is not required[40](index=40&type=chunk) [Financial Statements and Supplementary Data](index=6&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) Consolidated financial statements for fiscal years 2019 and 2018, including the independent auditor's report, are incorporated by reference from the Annual Report to Shareholders - The Consolidated Balance Sheets, Statements of Operations, Stockholders' Equity, Cash Flows, and Notes to Consolidated Financial Statements for the years ended March 31, 2019 and 2018 are incorporated by reference[41](index=41&type=chunk) - Schedule II — Valuation and Qualifying Accounts for the years ended March 31, 2019 and 2018 is included elsewhere in the report[42](index=42&type=chunk) [Changes in and Disagreements with Accountants on Accounting and Financial Disclosure](index=6&type=section&id=Item%209.%20Changes%20in%20and%20Disagreements%20with%20Accountants%20on%20Accounting%20and%20Financial%20Disclosure) The company reports no changes in or disagreements with its accountants on accounting and financial disclosure matters - There were no changes in or disagreements with accountants on accounting and financial disclosure[43](index=43&type=chunk) [Controls and Procedures](index=7&type=section&id=Item%209A.%20Controls%20and%20Procedures) Management concluded the company's disclosure controls and procedures were effective as of March 31, 2019, with no material changes to internal control over financial reporting during the fourth fiscal quarter - Based on an evaluation as of the end of the reporting period, the CEO and principal financial officer concluded that the company's disclosure controls and procedures were effective[44](index=44&type=chunk) - There were no changes in the company's internal control over financial reporting during the fiscal quarter ended March 31, 2019, that have materially affected, or are reasonably likely to materially affect, these controls[46](index=46&type=chunk) [Other Information](index=7&type=section&id=Item%209B.%20Other%20Information) The company reports no other information to disclose under this item - There is no information to report under this item[47](index=47&type=chunk) PART III [Directors, Executive Officers and Corporate Governance](index=8&type=section&id=Item%2010.%20Directors%2C%20Executive%20Officers%20and%20Corporate%20Governance) Information on directors and corporate governance is incorporated by reference from the 2019 Proxy Statement, executive officers from Item 1, and the company has adopted a Code of Conduct and Ethics - Information regarding directors and corporate governance is incorporated by reference from the 2019 Annual Meeting of Shareholders proxy statement[50](index=50&type=chunk) - Information regarding executive officers is incorporated by reference from the section 'Executive Officers of the Company' in Item 1 of this report[51](index=51&type=chunk) - The company has adopted the Friedman Industries, Incorporated Code of Conduct and Ethics[52](index=52&type=chunk) [Executive Compensation](index=8&type=section&id=Item%2011.%20Executive%20Compensation) This section on executive compensation is incorporated by reference from the 2019 Annual Meeting of Shareholders proxy statement - Information regarding executive compensation is incorporated by reference from the 2019 Annual Meeting of Shareholders proxy statement[53](index=53&type=chunk) [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=8&type=section&id=Item%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Stockholder%20Matters) Security ownership and equity compensation plan information is incorporated by reference from the 2019 Proxy Statement and Notes to Consolidated Financial Statements - Information regarding security ownership and related matters is incorporated by reference from the 2019 Annual Meeting of Shareholders proxy statement[54](index=54&type=chunk)[56](index=56&type=chunk) [Certain Relationships, Related Transactions and Director Independence](index=8&type=section&id=Item%2013.%20Certain%20Relationships%2C%20Related%20Transactions%20and%20Director%20Independence) This section is incorporated by reference from the company's proxy statement for the 2019 Annual Meeting of Shareholders - Information regarding certain relationships, related transactions, and director independence is incorporated by reference from the 2019 Annual Meeting of Shareholders proxy statement[57](index=57&type=chunk) [Principal Accountant Fees and Services](index=8&type=section&id=Item%2014.%20Principal%20Accountant%20Fees%20and%20Services) This section is incorporated by reference from the company's proxy statement for the 2019 Annual Meeting of Shareholders - Information regarding principal accountant fees and services is incorporated by reference from the 2019 Annual Meeting of Shareholders proxy statement[58](index=58&type=chunk) PART IV [Exhibits and Financial Statement Schedules](index=9&type=section&id=Item%2015.%20Exhibits%20and%20Financial%20Statement%20Schedules) This section lists documents filed with the Form 10-K, including financial statements, a schedule for valuation and qualifying accounts, and various exhibits like corporate governance documents and certifications - The financial statements and notes from the Annual Report to Shareholders for the fiscal year ended March 31, 2019, are incorporated by reference[60](index=60&type=chunk) - The report includes Schedule II — Valuation and Qualifying Accounts[60](index=60&type=chunk) - A list of **21** exhibits is provided, including Articles of Incorporation, loan agreements, the Code of Conduct and Ethics, and Sarbanes-Oxley certifications[61](index=61&type=chunk) [Signatures](index=11&type=section&id=Signatures) The Form 10-K report was authorized and signed on **July 1, 2019**, by the company's principal executive and financial officers and a majority of the board - The report was signed on **July 1, 2019**, by Michael J. Taylor, Interim President and Interim Chief Executive Officer, and Alex LaRue, Chief Financial Officer, along with the company's directors[66](index=66&type=chunk)[67](index=67&type=chunk) [SCHEDULE II — VALUATION AND QUALIFYING ACCOUNTS](index=12&type=section&id=SCHEDULE%20II%20%E2%80%94%20VALUATION%20AND%20QUALIFYING%20ACCOUNTS) This schedule details activity in the allowance for doubtful accounts and cash discounts for fiscal years 2019 and 2018, with the ending balance increasing to **$29,178** in 2019 from **$21,052** in 2018 Allowance for Doubtful Accounts and Cash Discounts | Fiscal Year Ended | Beginning Balance ($) | Additions (Costs & Expenses) ($) | Additions (Other Accounts) ($) | Deductions ($) | Ending Balance ($) | | :--- | :--- | :--- | :--- | :--- | :--- | | March 31, 2019 | $21,052 | $— | $765,732 | $757,606 | $29,178 | | March 31, 2018 | $27,276 | $— | $425,140 | $431,364 | $21,052 | - For fiscal year 2019, additions to the allowance included **$15,673** for bad debt expense and **$750,059** for cash discounts allowed on sales, while deductions included **$7,547** in accounts receivable written off and **$750,059** in cash discounts taken[69](index=69&type=chunk)[70](index=70&type=chunk)

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, 2018 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FROM THE TRANSITION PERIOD FROM TO UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 COMMISSION FILE NUMBER 1-7521 FRIEDMAN INDUSTRIES, INCORPORATED (Exact name of registrant as specified in its charter) TEXAS 74-1504405 (State or other jurisdicti ...