Friedman Industries(US:FRD)2024-11-12 21:12Sales Performance - Sales for the six months ended September 30, 2024, decreased by approximately $46.7 million to $240.7 million compared to the same period in 2023[47]. - Flat-roll product segment sales for the 2024 period totaled approximately $200.8 million, a decrease from approximately $245.7 million in 2023, with average selling price per ton dropping from approximately $1,011 to $895[48]. - Tubular product segment sales for the 2024 period totaled approximately $20.5 million, down from approximately $22.3 million in 2023, with average selling price per ton decreasing from approximately $1,290 to $1,087[49]. - Sales volume for the three months ended September 30, 2024, was approximately 121,500 tons from inventory and 18,000 tons of toll processing, compared to 129,500 tons and 26,000 tons in 2023[51]. - Sales volume for the third quarter of fiscal 2025 is expected to be slightly lower than the second quarter due to seasonal impacts[60]. Profitability - Adjusted gross profit for the six months ended September 30, 2024, was approximately $36.7 million, down from approximately $50.1 million in 2023, representing a gross profit margin decrease from 18.7% to 16.6%[47]. - Flat-roll segment operations recorded operating profits of approximately $5.3 million in 2024, down from $15.0 million in 2023[48]. - Tubular segment recorded an operating loss of approximately $1.8 million for the 2024 period, compared to an operating profit of approximately $2.3 million in 2023[49]. - The Company recognized hedging related gains of approximately $5.6 million in the 2024 period, compared to $4.8 million in 2023[47]. - The Company anticipates a challenging margin environment in the third quarter due to stable hot-rolled coil prices[60]. Costs and Expenses - Selling, general and administrative costs decreased by approximately $2.2 million in the 2024 period compared to 2023, primarily due to lower incentive compensation expenses[49]. - Income tax provision decreased from approximately $3.7 million in 2023 to approximately $0.5 million in 2024, with the effective tax rate dropping from 24.9% to 21.1%[50]. Financial Position - The Company's current ratio improved to 4.1 as of September 30, 2024, up from 3.1 on March 31, 2024[58]. - Working capital was approximately $111.7 million at September 30, 2024, compared to $116.0 million at March 31, 2024[58]. - The Company had a balance of approximately $35.9 million under its $150 million asset-based lending facility (ABL Facility) with an interest rate of 7.0% as of September 30, 2024[58]. - The ABL Facility supported access to approximately $104.7 million based on the borrowing base calculation as of September 30, 2024[58]. - The Company believes its current cash position and cash flows from operations are adequate to fund expected cash requirements for the next 12 months[58]. - The Company has the option to increase the ABL Facility by up to an aggregate of $25 million, in minimum increments of $5 million, if certain conditions are met[58]. Estimates and Judgments - No significant estimates or judgments were identified related to the consolidated financial statements in the current filing[61].