Friedman Industries(FRD)2019-11-14 22:14Sales 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]