On August 8, 2024, Friedman Industries Inc (FRD, Financial) released its 8-K filing announcing the results for the quarter ended June 30, 2024. Friedman Industries Inc is engaged in the manufacturing and processing of steel products, with operating segments including flat-roll products and tubular products. The company generates maximum revenue from the flat-roll products segment, offering products and services such as Temper Pass, Cut-To-Length, Whole Coils, Toll Processing, Electric Resistance Welded Pipe (ERW), New Mill Secondary, and Pipe Finishing Services.
Performance Overview
For the first quarter of fiscal 2024, Friedman Industries Inc reported net earnings of approximately $2.6 million ($0.37 diluted earnings per share) on net sales of approximately $114.6 million. This represents a significant decline from the same quarter in the previous year, where net earnings were approximately $7.7 million ($1.04 diluted earnings per share) on net sales of approximately $137.3 million. The company attributed the decline in sales volume to challenging conditions for some customers and extended planned downtime for equipment upgrades and maintenance at the Sinton and Decatur facilities.
Financial Achievements and Challenges
Despite the challenging market conditions, Friedman Industries Inc managed to capture hedging gains of approximately $5.4 million, which helped offset physical margin compression due to the downward trend in hot-rolled coil (HRC) prices. Michael J. Taylor, President and Chief Executive Officer, stated, “We are pleased to report profitable results for our first quarter in a period of challenging price dynamics.”
“The first quarter results further highlight our strategy as we captured hedging gains of approximately $5.4 million that worked as intended to help offset physical margin compression we experienced during the quarter as HRC price continued a downward trend,” Taylor concluded.
Income Statement Highlights
| Three Months Ended June 30 | 2024 | 2023 |
|---|---|---|
| Net Sales | $114,551 | $137,298 |
| Cost of materials sold | $96,414 | $108,203 |
| Processing and warehousing expense | $8,178 | $6,606 |
| Delivery Expense | $6,051 | $5,446 |
| Selling, general and administrative expenses | $4,511 | $5,937 |
| Depreciation and amortization | $795 | $749 |
| Earnings (loss) from operations | $(1,398) | $10,357 |
| Gain on economic hedges of risk | $5,375 | $430 |
| Interest expense | $(681) | $(540) |
| Other income | $3 | $6 |
| Earnings before income taxes | $3,299 | $10,253 |
| Income tax expense | $732 | $2,563 |
| Net earnings | $2,567 | $7,690 |
| Net earnings per share: | ||
| Basic | $0.37 | $1.04 |
| Diluted | $0.37 | $1.04 |
Balance Sheet Summary
| June 30, 2024 | March 31, 2024 | |
|---|---|---|
| Current Assets | $162,416 | $170,064 |
| Noncurrent Assets | $60,374 | $59,955 |
| Total Assets | $222,790 | $230,019 |
| Current Liabilities | $38,800 | $54,107 |
| Noncurrent Liabilities | $54,303 | $48,437 |
| Total Liabilities | $93,103 | $102,544 |
| Total Stockholders' Equity | $129,687 | $127,475 |
| Total Liabilities and Stockholders' Equity | $222,790 |
Explore the complete 8-K earnings release (here) from Friedman Industries Inc for further details.
