Friedman Industries, Incorporated Announces Third Quarter Results
Rhea-AI Summary
Friedman Industries (NYSE American: FRD) reported Q3 fiscal 2024 results with sales of $94.1 million and a net loss of $1.2 million ($0.17 loss per share), compared to net earnings of $1.2 million ($0.16 earnings per share) on sales of $116.0 million in Q3 2023.
The company faced challenging conditions with industry-wide pricing pressure and reduced sales volume due to political uncertainty and holidays. However, sales order activity increased following the presidential election, with quarter-end sales backlog volume up 11% year-over-year. The flat-roll segment recorded operating profits of $1.3 million on sales of $86.1 million, while the tubular segment posted a $0.2 million operating loss on sales of $7.9 million.
The company maintains a strong financial position with working capital of $107 million and generated operating cash flow of $2.7 million during the quarter, reducing debt by 9%.
Positive
- 11% increase in sales backlog volume year-over-year
- Operating cash flow of $2.7 million in Q3
- 9% debt reduction during the quarter
- Strong working capital position of $107 million
- Flat-roll segment maintained profitability with $1.3 million operating profit
Negative
- Net loss of $1.2 million compared to $1.2 million profit in prior year
- Sales declined 18.9% to $94.1 million from $116.0 million year-over-year
- Flat-roll segment operating profit decreased from $8.7 million to $1.3 million
- Average selling price per ton decreased from $960 to $813 in flat-roll segment
- Tubular segment losses increased to $0.2 million from $0.1 million
News Market Reaction 1 Alert
On the day this news was published, FRD declined 0.88%, reflecting a mild negative market reaction.
Data tracked by StockTitan Argus on the day of publication.
LONGVIEW, Texas, Feb. 07, 2025 (GLOBE NEWSWIRE) -- Friedman Industries, Incorporated (NYSE American: FRD) announced today its results of operations for the third fiscal quarter ended December 31, 2024.
December 31, 2024 Quarter Highlights:
- Sales of approximately
$94.1 million - Working capital balance at quarter-end of approximately
$107 million - Operating cash flow of approximately
$2.7 million during the quarter - Debt reduced
9% during the quarter - Quarter-end sales backlog volume
11% higher compared to prior year
“We continued to experience challenging conditions during the third fiscal quarter,” said Michael Taylor, President and Chief Executive Officer. “Our margins were adversely affected by continued industry-wide pricing pressure and sales volume was dampened by political uncertainty and the holidays. On an encouraging note, our sales order activity surged following the presidential election and our latest commercial initiatives. We have seen continued strength in new order activity. At quarter-end, our sales backlog volume was
For the quarter ended December 31, 2024 (the “2024 quarter”), the Company recorded a net loss of approximately
The table below provides our unaudited statements of operations for the three- and nine-month periods ended December 31, 2024 and 2023:
| SUMMARY OF OPERATIONS (unaudited) | ||||||||||||||||
| (In thousands, except for per share data) | ||||||||||||||||
| Three Months Ended December 31, | Nine Months Ended December 31, | |||||||||||||||
| 2024 | 2023 | 2024 | 2023 | |||||||||||||
| Net Sales | $ | 94,074 | $ | 115,973 | $ | 315,384 | $ | 384,019 | ||||||||
| Cost and expenses: | ||||||||||||||||
| Cost of materials sold (excludes items shown separately below) | 78,509 | 91,972 | 263,165 | 309,157 | ||||||||||||
| Processing and warehousing expense | 7,472 | 7,370 | 24,030 | 22,678 | ||||||||||||
| Delivery expense | 4,941 | 5,469 | 16,373 | 17,435 | ||||||||||||
| Selling, general and administrative expense | 3,887 | 4,235 | 12,333 | 14,902 | ||||||||||||
| Depreciation and amortization | 827 | 754 | 2,445 | 2,262 | ||||||||||||
| 95,636 | 109,800 | 318,346 | 366,434 | |||||||||||||
| Gain on disposal of property, plant and equipment | 375 | - | 153 | - | ||||||||||||
| Earnings (loss) from operations | (1,187 | ) | 6,173 | (2,809 | ) | 17,585 | ||||||||||
| Gain (loss) on economic hedges of risk | 264 | (4,126 | ) | 5,833 | 706 | |||||||||||
| Interest expense | (632 | ) | (790 | ) | (2,182 | ) | (2,135 | ) | ||||||||
| Other income | 3 | 1 | 3 | 17 | ||||||||||||
| Earnings (loss) before income taxes | (1,552 | ) | 1,258 | 845 | 16,173 | |||||||||||
| Income tax expense (benefit) | (400 | ) | 74 | 105 | 3,786 | |||||||||||
| Net earnings (loss) | $ | (1,152 | ) | $ | 1,184 | $ | 740 | $ | 12,387 | |||||||
| Net earnings (loss) per share: | ||||||||||||||||
| Basic | $ | (0.17 | ) | $ | 0.16 | $ | 0.11 | $ | 1.69 | |||||||
| Diluted | $ | (0.17 | ) | $ | 0.16 | $ | 0.11 | $ | 1.69 | |||||||
The table below provides summarized unaudited balance sheets as of December 31, 2024 and March 31, 2024:
| SUMMARIZED BALANCE SHEETS (unaudited) | |||
| (In thousands) | |||
| December 31, 2024 | March 31, 2024 | ||
| ASSETS: | |||
| Current Assets | 149,286 | 170,064 | |
| Noncurrent Assets | 60,966 | 59,955 | |
| Total Assets | 210,252 | 230,019 | |
| LIABILITIES AND STOCKHOLDERS' EQUITY: | |||
| Current Liabilities | 42,276 | 54,107 | |
| Noncurrent Liabilities | 40,647 | 48,437 | |
| Total Liabilities | 82,923 | 102,544 | |
| Total Stockholders' Equity | 127,329 | 127,475 | |
| Total Liabilities and Stockholders' Equity | 210,252 | 230,019 | |
FLAT-ROLL SEGMENT OPERATIONS
Flat-roll product segment sales for the 2024 quarter totaled approximately
TUBULAR SEGMENT OPERATIONS
Tubular product segment sales for the 2024 quarter totaled approximately
HEDGING ACTIVITIES
We utilize hot-rolled coil (“HRC”) futures to manage price risk on unsold inventory and longer-term fixed price sales agreements. We typically account for our hedging activities under mark-to-market (“MTM”) accounting treatment and all hedging decisions are intended to protect the value of our inventory and produce more consistent financial results over price cycles. With MTM accounting treatment it is possible that hedging related gains or losses might be recognized in a different period than the corresponding improvement or contraction in our physical margins. For the 2024 quarter, we recognized a gain on hedging activities of approximately
OUTLOOK
The Company expects sales volume for the fourth quarter of fiscal 2025 to be higher than the third quarter volume due to stronger order activity and the impact of holidays on third quarter volume. HRC prices were stable at the start of the fourth quarter but began to increase at the time of this release. Most industry participants anticipate prices to increase further during the second half of the quarter. The Company expects fourth quarter sales margins to improve compared to the third quarter.
“Friedman remains in a strong financial position and ready to capitalize on both short-term and long-term opportunities” Taylor said. “I see favorable long-term demand for the industry and our products and believe we have a team uniquely qualified to recognize Friedman’s fullest potential.”
ABOUT FRIEDMAN INDUSTRIES
Friedman Industries, Incorporated (“Company”), headquartered in Longview, Texas, is a manufacturer and processor of steel products with operating plants in Hickman, Arkansas; Decatur, Alabama; East Chicago, Indiana; Granite City, Illinois; Sinton, Texas and Lone Star, Texas. The Company has two reportable segments: flat-roll products and tubular products. The flat-roll product segment consists of the operations in Hickman, Decatur, East Chicago, Granite City and Sinton where the Company processes hot-rolled steel coils. The Hickman, East Chicago and Granite City facilities operate temper mills and corrective leveling cut-to-length lines. The Sinton and Decatur facilities operate stretcher leveler cut-to-length lines. The tubular product segment consists of the operations in Lone Star where the Company manufactures electric resistance welded pipe and distributes pipe through its Texas Tubular Products division.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This news release contains forward-looking statements within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act, and such statements involve risk and uncertainty. Forward-looking statements include those preceded by, followed by or including the words “will,” “expect,” “intended,” “anticipated,” “believe,” “project,” “forecast,” “propose,” “plan,” “estimate,” “enable,” and similar expressions, including, for example, statements about our business strategy, our industry, our future profitability, growth in the industry sectors we serve, our expectations, beliefs, plans, strategies, objectives, prospects and assumptions, future production capacity and product quality. These forward-looking statements may include, but are not limited to, everything under the header “Outlook” above, including sales volumes, margins, hedging results, and potential price increases, expectations as to financial results during the Company’s upcoming fiscal quarters, future changes in the Company’s financial condition or results of operations, future production capacity, product quality and proposed expansion plans. Forward-looking statements may be made by management orally or in writing including, but not limited to, this news release.
Forward-looking statements are not guarantees of future performance. These statements are based on management’s expectations that involve a number of business risks and uncertainties, any of which could cause actual results to differ materially from those expressed in or implied by the forward-looking statements. Although forward-looking statements reflect our current beliefs, reliance should not be placed on forward-looking statements because they involve known and unknown risks, uncertainties and other factors, which may cause our actual results, performance or achievements to differ materially from anticipated future results, performance or achievements expressed or implied by such forward-looking statements.
Actual results and trends in the future may differ materially depending on a variety of factors including, but not limited to, changes in the demand for and prices of the Company’s products, changes in government policy regarding steel, changes in the demand for steel and steel products in general and the Company’s success in executing its internal operating plans, changes in and availability of raw materials, our ability to satisfy our take or pay obligations under certain supply agreements, unplanned shutdowns of our production facilities due to equipment failures or other issues, increased competition from alternative materials and risks concerning innovation, new technologies, products and increasing customer requirements. Accordingly, undue reliance should not be placed on our forward-looking statements. Such risks and uncertainty are also addressed in our Management’s Discussion and Analysis of Financial Condition and Results of Operations and other sections of the Company’s filings with the U.S. Securities and Exchange Commission (the “SEC”) under the Securities Act of 1933, as amended, and the Securities Exchange Act of 1934, as amended (the “Exchange Act”), including the Company’s Annual Report on Form 10-K and its other Quarterly Reports on Form 10-Q. We undertake no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events, changed circumstances or otherwise, except to the extent law requires.
For further information, please refer to the Company's Form 10-Q as filed with the SEC on February 7, 2025 or contact Alex LaRue, Chief Financial Officer – Secretary and Treasurer, at (903)758-3431.
FAQ
What were FRD's Q3 2024 financial results?
How much did FRD reduce its debt in Q3 2024?
What was FRD's sales backlog performance in Q3 2024?
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