Friedman Industries(FRD)2020-11-16 21:40Sales Performance - Sales for the six months ended September 30, 2020, decreased by $32,584,620 compared to the same period in 2019, with tons sold dropping from approximately 112,000 to 81,500[58]. - Coil segment sales for the 2020 period totaled $33,888,870, down from $56,602,077 in the 2019 period, with average selling price per ton decreasing from approximately $695 to $556[59]. - Tubular segment sales for the 2020 period totaled $14,497,410, down from $24,368,823 in the 2019 period, with tons sold decreasing from approximately 31,000 to 21,000[62]. - The company experienced a decline in sales volume due to the economic impacts of COVID-19, with significant drops in April and August 2020[60][64]. - The company anticipates that sales volumes for both segments in the third quarter will be comparable to the second quarter, with potential seasonal declines[76]. Profitability and Margins - Gross profit as a percentage of sales increased from approximately 1.0% in the 2019 period to approximately 2.8% in the 2020 period[58]. - Hot-rolled steel pricing increased approximately 60% as of the filing date, positively impacting coil segment margins[76]. - The tubular segment margins are expected to improve, although they do not respond as quickly to fluctuations in steel prices[76]. Costs and Expenses - General, selling, and administrative costs increased by $331,405 during the 2020 period compared to the 2019 period, primarily due to increased payroll and professional fees[66]. Financial Position - The Company's current ratio improved to 9.0 as of September 30, 2020, compared to 6.8 at March 31, 2020[77]. - Working capital decreased to $51,947,484 at September 30, 2020, from $55,566,158 at March 31, 2020[77]. - The Company received a $1,690,385 loan under the Paycheck Protection Program with a 0.98% interest rate, deferring principal and interest payments for six months[79]. - The Company believes its current cash position and cash flows from operations are adequate to meet expected cash requirements for the next 12 months[82]. Share Repurchase Program - A share repurchase program was authorized to buy back up to 1,062,067 shares, equating to 15% of outstanding shares as of June 25, 2020[80]. - During the quarter ended September 30, 2020, the Company repurchased 67,281 shares at a total cost of $410,221[90]. - The share repurchase program may be modified, suspended, or discontinued at any time based on various factors[81]. Internal Controls and Future Outlook - The Company has not experienced any changes in internal control over financial reporting that materially affected its financial reporting[87]. - Forward-looking statements regarding future performance involve risks and uncertainties that could cause actual results to differ materially[85]. - The Company plans to apply for forgiveness of the PPP Loan, but there is no assurance that any portion will be forgiven[79].