Friedman Industries(FRD) ZACKS·2024-11-14 18:20Core Viewpoint - Friedman Industries, Incorporated (FRD) has faced significant challenges in its recent quarterly performance, with a notable decline in sales and net income, attributed to softer demand and political uncertainty affecting the market environment [2][6]. Financial Performance - For the quarter ending September 30, 2024, FRD reported net sales of approximately $106.8 million, down 18.3% from $130.7 million in the same period last year [2]. - The company posted a net loss of $0.7 million, or a diluted loss per share of $0.10, compared to a net income of $3.5 million, or $0.48 per share, in the prior year [2]. - Sales volume from inventory decreased to about 121,500 tons, down 6.2% from 129,500 tons year-over-year, while customer-owned material processed fell by 30.8% to 18,000 tons [3]. Segment Performance - The flat-roll segment reported sales of approximately $97.4 million, a decline of 19.2% from $120.5 million a year earlier, with an average selling price per ton dropping 12.7% to $858 [4]. - The tubular segment experienced sales of $9.4 million, down 8.2% from $10.2 million, with a 15.4% decrease in average selling price per ton from $1,217 to $1,030 [5]. Management Insights - The CEO highlighted the impact of industry-specific and broader economic pressures on margins, with soft demand and political uncertainties affecting customer behavior [6]. - Despite challenges, the company reduced its debt by 22% during the quarter, enhancing its financial flexibility [9]. Market Outlook - Looking ahead, the company anticipates a slight decline in sales volume for the third quarter due to seasonal slowdowns, while expecting a challenging margin environment due to limited upward momentum in steel prices [8]. - The stabilization of hot-rolled coil (HRC) prices is seen as a double-edged sword, providing cost management benefits but limiting pricing momentum [7].