Friedman Industries(FRD) - 2026 Q1 - Quarterly Results

Friedman Industries, Inc. Q1 FY2026 Earnings Release Financial Highlights and Performance Summary The company reported strong Q1 FY2026 results with significantly improved net earnings and sales, alongside robust operating cash flow Quarterly Performance Comparison | Metric | Q1 FY2026 (ended Jun 30, 2025) | Q1 FY2025 (ended Jun 30, 2024) | Change | | :--- | :--- | :--- | :--- | | Net Sales | $134.8 million | $114.6 million | +17.6% | | Net Earnings | $5.0 million | $2.6 million | +93.8% | | Diluted EPS | $0.71 | $0.37 | +91.9% | | Earnings from Operations | $7.0 million | -$1.4 million | N/A | - The increase in sales was driven by stronger customer demand and successful commercial efforts to increase capacity utilization[3] Sales Volume Breakdown | Sales Volume | Q1 FY2026 | Q1 FY2025 | | :--- | :--- | :--- | | Inventory Sold | 141,500 tons | 119,000 tons | | Toll Processing | 19,000 tons | 24,000 tons | - The company generated $15.5 million in operating cash flow, reduced debt by $14.7 million, and maintained a working capital balance of $117.5 million[5] Consolidated Financial Statements The statements show a significant turnaround in operational profitability and a strengthened balance sheet with reduced total liabilities Summary of Operations (Income Statement) Summary of Operations | (In thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | | :--- | :--- | :--- | | Net Sales | $134,777 | $114,551 | | Costs of materials sold | $105,704 | $96,414 | | Earnings (loss) from operations | $7,043 | $(1,398) | | Gain on economic hedges of risk | $276 | $5,375 | | Net earnings | $5,028 | $2,567 | Summarized Balance Sheets Summarized Balance Sheets | (In thousands) | June 30, 2025 | March 31, 2025 | | :--- | :--- | :--- | | Total Assets | $219,078 | $226,822 | | Total Liabilities | $81,798 | $94,397 | | Total Stockholders' Equity | $137,280 | $132,425 | Segment Performance The Flat-Roll segment showed strong growth while the Tubular segment saw declining sales but improved profitability Flat-Roll Segment Operations Flat-Roll Segment Performance | Flat-Roll Segment | Q1 FY2026 | Q1 FY2025 | | :--- | :--- | :--- | | Sales | $124.1 million | $103.4 million | | Sales Volume (Inventory) | 132,500 tons | 109,000 tons | | Avg. Selling Price | ~$926 / ton | ~$932 / ton | | Earnings from Operations | $8.8 million | $2.7 million | Tubular Segment Operations Tubular Segment Performance | Tubular Segment | Q1 FY2026 | Q1 FY2025 | | :--- | :--- | :--- | | Sales | $10.7 million | $11.2 million | | Sales Volume | 9,000 tons | 10,000 tons | | Avg. Selling Price | ~$1,206 / ton | ~$1,140 / ton | | Earnings (Loss) from Operations | $1.3 million | $(1.2) million | Hedging Activities The company uses HRC futures to manage price risk, resulting in a recognized gain of approximately $0.3 million for the quarter - The company uses mark-to-market (MTM) accounting for its hedging activities, which can cause gains or losses to be recognized in different periods than the corresponding changes in physical margins[9] - A gain of approximately $0.3 million was recognized on hedging activities for the quarter ended June 30, 2025[9] Business Outlook The company expects slightly higher sales volume but lower margins in Q2 FY2026 due to softening hot-rolled coil prices - Sales volume for Q2 FY2026 is expected to be slightly higher than Q1 as the company works to increase capacity utilization[10] - Margins are expected to be lower in Q2 FY2026 compared to Q1 due to softening HRC prices[10] - Management maintains a positive long-term outlook, citing a strong financial position and favorable long-term industry demand[11] About the Company and Forward-Looking Statements The company manufactures steel products and advises that forward-looking statements are subject to risks and uncertainties - The company operates plants in Arkansas, Alabama, Indiana, Illinois, and Texas[11] - The report's forward-looking statements, particularly under the "Outlook" section, are not guarantees of future performance and are subject to business risks and uncertainties[13][14]