Part I — FINANCIAL INFORMATION Item 1. Financial Statements (Unaudited) For the quarter ended June 30, 2025, Friedman Industries reported significant year-over-year growth, with net sales increasing to $134.8 million from $114.6 million and net earnings rising to $5.0 million from $2.6 million. This performance translated to a diluted EPS of $0.71, up from $0.37 in the prior-year quarter. The balance sheet shows total assets of $219.1 million and total stockholders' equity of $137.3 million as of June 30, 2025. Cash flow from operations was a positive $15.5 million, a substantial improvement from a $6.1 million use of cash in the same period last year, primarily driven by a decrease in inventories Condensed Consolidated Balance Sheets Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | June 30, 2025 | March 31, 2025 | | :--- | :--- | :--- | | Total Current Assets | $157,929 | $166,467 | | Inventories | $103,458 | $113,689 | | Total Assets | $219,078 | $226,822 | | Total Current Liabilities | $40,476 | $38,324 | | Asset Based Lending Facility | $33,039 | $47,728 | | Total Liabilities | $81,798 | $94,397 | | Total Stockholders' Equity | $137,280 | $132,425 | - Total assets decreased from $226.8 million at March 31, 2025, to $219.1 million at June 30, 2025, primarily due to a reduction in inventories and cash10 - Total liabilities decreased significantly from $94.4 million to $81.8 million, largely driven by a $14.7 million reduction in the asset-based lending facility balance10 Condensed Consolidated Statements of Operations Quarterly Statement of Operations (in thousands, except per share data) | Metric | Q1 FY2026 (Ended June 30, 2025) | Q1 FY2025 (Ended June 30, 2024) | Change (YoY) | | :--- | :--- | :--- | :--- | | Net Sales | $134,777 | $114,551 | +17.7% | | Earnings (Loss) from Operations | $7,043 | $(1,398) | Significant Turnaround | | Net Earnings | $5,028 | $2,567 | +95.9% | | Diluted EPS | $0.71 | $0.37 | +91.9% | - The company experienced a significant turnaround in operating performance, moving from an operating loss of $1.4 million in Q1 2024 to an operating profit of $7.0 million in Q1 202511 - Gain on economic hedges of risk was substantially lower at $0.28 million compared to $5.38 million in the prior-year quarter, indicating that the improved operating performance was driven by core operations rather than hedging gains11 Condensed Consolidated Statements of Cash Flows Quarterly Cash Flow Summary (in thousands) | Cash Flow Activity | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | | :--- | :--- | :--- | | Net Cash from Operating Activities | $15,489 | $(6,059) | | Net Cash used in Investing Activities | $(1,784) | $(1,057) | | Net Cash from (used in) Financing Activities | $(14,981) | $5,365 | | Decrease in Cash | $(1,276) | $(1,751) | - Cash from operations improved significantly to a $15.5 million inflow, compared to a $6.1 million outflow in the prior year, mainly due to a $10.2 million decrease in inventories13 - Financing activities used $15.0 million in cash, primarily due to net repayments of $14.7 million on the asset-based lending facility13 Notes to Condensed Consolidated Financial Statements The notes detail the company's accounting policies and provide further breakdown of financial statement items. Key details include a decrease in inventory to $103.5 million, an outstanding balance of $33.0 million on the $150 million ABL facility, and segment performance showing the Flat-Roll division as the primary driver of revenue and operating income. The company also reported a $0.28 million gain on economic hedges and disaggregated its revenue, with Company Owned Flat-Roll Products contributing $122.8 million in the quarter Inventory Breakdown (in thousands) | Inventory Type | June 30, 2025 | March 31, 2025 | | :--- | :--- | :--- | | Flat-Roll raw material | $71,441 | $85,865 | | Flat-Roll finished goods | $16,439 | $15,737 | | Tubular raw material | $9,619 | $7,055 | | Tubular finished goods | $5,959 | $5,032 | | Total | $103,458 | $113,689 | - The company has a $150 million asset-based lending facility, which was amended to extend the maturity date to August 19, 2026. As of June 30, 2025, the outstanding balance was approximately $33.0 million with an interest rate of 6.2%2122 Segment Performance - Q1 FY2026 (in thousands) | Segment | Net Sales | Earnings from Operations | | :--- | :--- | :--- | | Flat-Roll | $124,067 | $8,786 | | Tubular | $10,710 | $1,329 | | Other | — | $(3,072) | | Total | $134,777 | $7,043 | - The company utilizes hot-rolled coil futures for economic hedges, recognizing a gain of $0.28 million for the quarter ended June 30, 2025, compared to a much larger gain of $5.38 million in the prior-year period3136 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management attributes the strong quarterly performance to increased sales volume and improved margins. Sales volume rose to 141,500 tons from inventory (plus 19,000 tons toll processing) from 119,000 tons (plus 24,000 tons toll processing) year-over-year, driven by stronger demand and successful commercial efforts. Adjusted gross profit increased to $29.1 million from $18.1 million. The company's liquidity remains strong, with $103.7 million available under its ABL facility. Looking ahead, the company expects slightly higher sales volume in Q2 fiscal 2026 but anticipates lower margins due to softening hot-rolled coil prices Results of Operations - Compared to the prior-year quarter, sales increased by $20.2 million, primarily due to higher sales volume. Adjusted gross profit (a non-GAAP measure) rose by $10.9 million to $29.1 million55 - The market price of hot-rolled steel coil (HRC) was relatively stable at the top of a price cycle during the quarter, leading to increased margins. This contrasts with the declining price trend in the prior-year quarter which compressed margins56 - The Flat-roll segment's operating earnings increased to $8.8 million from $2.7 million YoY, driven by higher sales volume despite a slight decrease in average per-ton selling price57 - The Tubular segment's operating results improved from a loss of $1.2 million to earnings of $1.3 million YoY, despite a decrease in tons sold, due to a higher average selling price per ton60 Financial Position, Liquidity and Capital Resources - The company's working capital was $117.5 million at June 30, 2025, down from $128.1 million at March 31, 2025. The current ratio stood at 3.966 - As of June 30, 2025, the company had an outstanding balance of $33.0 million on its $150 million ABL facility and had access to approximately $103.7 million under the borrowing base calculation68 - Management believes its current cash position, cash flows from operations, and borrowing capability are adequate to fund expected cash requirements for the next 12 months and is in the process of renewing its credit arrangement69 Outlook - The company expects sales volume for the second quarter of fiscal 2026 to be slightly higher than the first quarter72 - Due to softening hot-rolled coil prices at the end of Q1 and start of Q2, the company anticipates lower margins for the second quarter compared to the first quarter72 Item 3. Quantitative and Qualitative Disclosures About Market Risk The company states that this disclosure is not required for this filing - Disclosure for this item is not required76 Item 4. Controls and Procedures Management, including the CEO and CFO, evaluated the company's disclosure controls and procedures and concluded they were effective as of June 30, 2025. There were no material changes to the company's internal control over financial reporting during the quarter - Based on an evaluation as of the end of the quarter, the CEO and CFO concluded that the company's disclosure controls and procedures were effective77 - No changes occurred during the fiscal quarter ended June 30, 2025, that have materially affected, or are reasonably likely to materially affect, the company's internal control over financial reporting78 Part II — OTHER INFORMATION Item 5. Other Information The company reported that none of its officers or directors adopted, modified, or terminated a Rule 10b5-1 trading arrangement or a non-Rule 10b5-1 trading arrangement during the quarter ended June 30, 2025 - During the three months ended June 30, 2025, no officers or directors adopted, modified, or terminated a Rule 10b5-1 or non-Rule 10b5-1 trading arrangement for the purchase or sale of company securities80 Item 6. Exhibits This section lists the exhibits filed with the Form 10-Q, including certifications by the CEO and CFO pursuant to the Sarbanes-Oxley Act of 2002 and Inline XBRL documents - The exhibits filed with this report include certifications from the Principal Executive Officer and Principal Financial Officer as required by Sections 302 and 906 of the Sarbanes-Oxley Act81 - Interactive data files (Inline XBRL documents) are also included as exhibits81
Friedman Industries(FRD) - 2026 Q1 - Quarterly Report