Friedman Industries(FRD) - 2024 Q4 - Annual Results

Financial Highlights Friedman Industries reported its second most profitable year in FY2024 with $17.3 million net earnings on $516.3 million sales, driven by 19% volume growth Q4 Fiscal 2024 Highlights (Quarter ended March 31, 2024) | Metric | Value | | :--- | :--- | | Net Earnings ($ million) | $5.0 million | | Sales ($ million) | $132.2 million | | Sales Volume Increase (vs Q3) (%) | 13% | | Sales Volume Increase (vs Q4 2023) (%) | 9% | Fiscal Year 2024 Highlights (Year ended March 31, 2024) | Metric | Value | | :--- | :--- | | Net Earnings ($ million) | $17.3 million | | Sales ($ million) | $516.3 million | | Sales Volume Increase (vs FY 2023) (%) | 19% | | Year-End Working Capital ($ million) | $116.0 million | Management Commentary Management attributes fiscal 2024's strong profitability and 19% sales volume growth to strategic assets, anticipating continued expansion - Fiscal 2024 was the second most profitable fiscal year in the company's history, demonstrating the quality of its assets and strategy[4] - Sales volume grew by approximately 19% in fiscal 2024, driven by the new Sinton, TX facility, which is expected to continue ramping up towards full production capacity in fiscal 2025[4] - The company is expanding its market share among top US steel consumers and has proven its ability to remain profitable through steel price volatility[4] - Management's favorable outlook is supported by a recent dividend increase, with a focus on delivering long-term value and unlocking further growth from current assets[4] Consolidated Financial Results Consolidated results show decreased net earnings for Q4 and FY2024, with increased total assets and liabilities strengthening stockholders' equity Statements of Operations FY2024 net sales were $516.3 million with $17.3 million net earnings, while Q4 sales increased to $132.2 million but net earnings decreased Summary of Operations (In thousands, except for per share data) | | Three Months Ended March 31, | Year Ended March 31, | | :--- | :--- | :--- | | | 2024 (in thousands) | 2023 (in thousands) | 2024 (in thousands) | 2023 (in thousands) | | Net Sales | $132,232 | $124,186 | $516,251 | $547,542 | | Earnings from operations | $6,933 | $7,254 | $24,518 | $21,074 | | Net earnings | $4,958 | $6,311 | $17,345 | $21,344 | | Diluted EPS | $0.71 | $0.86 | $2.39 | $2.91 | Balance Sheets As of March 31, 2024, total assets increased to $230.0 million, liabilities to $102.5 million, and stockholders' equity to $127.5 million Summarized Balance Sheets (In thousands) | | March 31, 2024 (in thousands) | March 31, 2023 (in thousands) | | :--- | :--- | :--- | | Total Assets | $230,019 | $199,312 | | Total Liabilities | $102,544 | $83,880 | | Total Stockholders' Equity | $127,475 | $115,432 | Segment Performance Q4 2024 Flat-Roll segment sales and profit increased, while Tubular segment profit declined due to lower selling prices despite higher volume Flat-Roll Segment Operations Flat-Roll segment sales increased to $120.6 million in Q4 2024, with operating profit rising to $9.6 million, driven by higher selling prices and toll processing volume Flat-Roll Segment Performance (Q4) | Metric | 2024 Quarter | 2023 Quarter | | :--- | :--- | :--- | | Sales ($ million) | $120.6 million | $112.8 million | | Operating Profit ($ million) | $9.6 million | $7.7 million | | Sales Volume (Inventory) (tons) | ~120,000 tons | ~124,000 tons | | Sales Volume (Toll) (tons) | 29,500 tons | 14,000 tons | | Avg. Selling Price/ton ($) | $993 | $915 | Tubular Segment Operations Tubular segment sales remained flat at $11.6 million in Q4 2024, but operating profit sharply declined to $0.8 million due to lower average selling prices Tubular Segment Performance (Q4) | Metric | 2024 Quarter | 2023 Quarter | | :--- | :--- | :--- | | Sales ($ million) | $11.6 million | $11.4 million | | Operating Profit ($ million) | $0.8 million | $2.5 million | | Tons Sold (tons) | ~9,500 tons | ~8,000 tons | | Avg. Selling Price/ton ($) | $1,216 | $1,404 | Hedging Activities Friedman Industries uses HRC futures to manage price risk, recognizing hedging gains of approximately $1.1 million in Q4 2024 and $1.4 million for the full fiscal year - The company uses HRC futures to manage price risk and aims to produce more consistent financial results over price cycles[13] Recognized Hedging Gains | Period | Gain Recognized ($ million) | | :--- | :--- | | Q4 Fiscal 2024 | ~$1.1 million | | Fiscal Year 2024 | ~$1.4 million | Outlook Q1 fiscal 2025 sales volume is expected to be similar to Q4 fiscal 2024 despite downtime, with lower margins anticipated to be offset by $5.3 million in hedging gains - Sales volume for Q1 fiscal 2025 is expected to be similar to Q4 fiscal 2024, despite planned downtime for equipment installation and maintenance[14] - First-quarter margins are expected to be lower than fourth-quarter margins due to declining HRC prices[14] - The company anticipates the lower margin to be offset by hedging gains, which totaled approximately $5.3 million for Q1 fiscal 2025 as of the date of the release[14] About Friedman Industries Friedman Industries, headquartered in Longview, Texas, manufactures and processes steel products through its flat-roll and tubular segments across US facilities - The company has two reportable segments: flat-roll products (operating in Hickman, AR; Decatur, AL; East Chicago, IN; Granite City, IL; Sinton, TX) and tubular products (operating in Lone Star, TX)[15] - The Sinton facility is newly constructed, commencing operations in October 2022, while the East Chicago and Granite City facilities were acquired in April 2022[15]