Friedman Industries (FRD) Q1 Earnings and Revenues Decline Y/Y

Core Viewpoint - Friedman Industries reported a significant decline in both earnings and revenues for the first quarter of fiscal 2025, indicating challenging market conditions and operational issues affecting performance [1][9][14]. Revenue Details - The company registered revenues of $114.6 million, down 16.6% year over year, attributed to declines in sales volume and average selling price per ton [2]. - Sales volume included approximately 119,000 tons from inventory (down 7.8% year over year) and 24,000 tons of toll-processing customer-owned material (flat year over year) [2][4]. Segment Performance - Revenues from the Flat-Roll segment were $103.4 million, down 17.4% from the previous year, with a sales volume of 109,000 tons from inventory [4]. - The average selling price per ton in the Flat-Roll segment decreased by 10.2% to $932 [5]. - The Tubular segment generated revenues of $11.2 million, down 7.7% year over year, but sales volume increased by 11.1% to 10,000 tons [5][6]. Gross Margin and Profitability - Gross profit declined 37.7% to $18.1 million, with gross margin contracting 536 basis points to 15.8% [7]. - The operating loss totaled $1.4 million compared to an operating profit of $10.4 million in the previous year [9]. Operating Expenses - Selling, general and administrative expenses decreased by 24% year over year to $4.5 million, primarily due to lower incentive compensation expenses [8]. Liquidity and Cash Flow - The company ended the first quarter with cash of $4.1 million, an increase from $2.9 million at the end of fiscal 2024 [10]. - Net cash used in operating activities was $6.1 million, compared to $4.6 million a year ago [11]. Guidance and Market Outlook - Management expects sales volume in the second quarter to be similar to that of the first quarter [12]. - There is an anticipated decline in hot-rolled coil (HRC) prices at the start of the second quarter, but recent trends indicate a potential increase in HRC index prices, which could improve margins later in the fiscal second quarter [13]. Overall Assessment - The first quarter results reflect a challenging environment for Friedman Industries, with disappointing revenue and profit figures, although there was a positive uptick in the Tubular segment's sales volume [14].