Shares of Friedman Industries, Incorporated FRD have lost 1.1% since the company reported its earnings for the quarter ended Dec. 31, 2024. This compares to the S&P 500 Index’s 0.4% decline over the same time frame. Over the past month, the stock gained 15.9% compared with the S&P 500’s 3.8% rise.
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Financial Performance Overview
For the third quarter of fiscal 2025 ended Dec. 31, 2024, Friedman Industries reported net sales of $94.1 million, representing an 18.9% decline from $115.9 million in the prior-year quarter. The company posted a net loss of $1.2 million, or $0.17 per diluted share, against net earnings of $1.2 million, or $0.16 per diluted share, in the same period last year.
The cost of materials sold declined 14.6% year over year to $78.5 million from $91.9 million in the prior-year period, though processing and warehousing expenses increased 1.4% to $7.5 million from $7.4 million. Selling, general, and administrative expenses decreased 8.2% to $3.9 million from $4.2 million in the prior-year period.
Friedman Industries Inc. Price, Consensus and EPS Surprise
Friedman Industries Inc. price-consensus-eps-surprise-chart | Friedman Industries Inc. Quote
Segmental Performance
Sales from the flat-roll segment were $86.1 million, a 19.1% decline from $106.4 million in the prior-year quarter. Sales volume decreased to 105,000 tons from inventory and 18,000 tons of toll processing, compared with 110,000 tons and 22,000 tons, respectively, in the previous year. The average selling price per ton for flat-roll inventory declined 15.3% from $960 to $813, contributing to an 85.1% drop in segment operating profit to $1.3 million.
The tubular segment reported sales of $7.9 million, down 16.9% from $9.5 million a year ago. Sales volume remained steady at 8,000 tons, though the average selling price per ton fell 12.9% from $1,164 to $1,013. The segment recorded an operating loss of $0.2 million compared with a $0.1 million loss in the prior-year quarter.
Other Key Business Metrics
FRD ended the quarter with a working capital balance of approximately $107 million at the end of Dec. 31, 2024, compared with $116 million at the end of March 31, 2024. The company generated $2.7 million in operating cash flow and reduced its debt by 9% during the quarter. Additionally, the quarter-end sales backlog volume was 11% higher compared to the prior year.
Management Commentary and Market Conditions
President and CEO Michael Taylor acknowledged industry-wide pricing pressures and dampened sales volume due to political uncertainty and holiday-related slowdowns. However, he highlighted an uptick in sales order activity following the U.S. presidential election and new commercial initiatives. Taylor expressed confidence in the long-term industry outlook and Friedman Industries’ strategic positioning.
Factors Influencing Performance
The company’s earnings were adversely affected by lower steel prices, leading to a significant decline in gross margins. The flat-roll segment’s price decline was a major contributor to the weaker performance. Additionally, tubular segment challenges persisted despite stable sales volume, as lower pricing impacted revenue generation.
On the hedging front, Friedman Industries reported a modest gain of $0.3 million in the quarter against a $4.1 million loss in the prior-year period. The company’s hedging activities were limited due to low market volatility.
Guidance and Outlook
Looking ahead, Friedman Industries expects fourth-quarter fiscal 2025 sales volume to improve sequentially, supported by stronger order activity and the absence of holiday-related slowdowns. The company also noted that hot-rolled coil prices began rising at the start of the fiscal fourth quarter and are expected to increase further in the latter half of the period, potentially boosting sales margins.
Other Developments
During the quarter, FRD maintained its strategic focus on optimizing operations across its six manufacturing plants. No acquisitions, divestitures, or restructuring activities were reported.
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