Friedman Industries, Incorporated Announces Fourth Quarter and Fiscal Year 2024 Results
Friedman Industries reported its results for the fourth quarter and fiscal year ending March 31, 2024. The company achieved net earnings of $5.0 million for the quarter on sales of $132.2 million, reflecting a 13% increase in sales volume over the prior quarter. Fiscal year net earnings were $17.3 million with sales of $516.3 million, marking the second most profitable year in the company's history. Notably, sales volume increased by 19% due in part to output from the new Sinton, TX facility. Despite steel price volatility, the company maintained profitability each quarter. The flat-roll segment reported a sales volume increase to 159,000 tons, while the tubular segment saw a decline in operating profits. Looking forward, the company expects lower margins in Q1 FY 2025 due to declining HRC prices but anticipates hedging gains offsetting this impact.
- Net earnings of $5.0 million for Q4 and $17.3 million for FY 2024.
- Sales of $132.2 million for Q4, reflecting a 13% increase in sales volume from the prior quarter.
- Sales volume increased by 19% for FY 2024 due to the Sinton, TX facility.
- Fiscal year 2024 was the second most profitable in the company's history.
- Flat-roll segment Q4 sales totaled $120.6 million, up from $112.8 million in the previous year.
- Hedging gains of approximately $1.1 million for Q4 and $1.4 million for FY 2024.
- Company ended FY 2024 with working capital of $116.0 million.
- Net earnings for FY 2024 were $4.0 million lower than FY 2023.
- Total sales for FY 2024 decreased to $516.3 million from $547.5 million in FY 2023.
- The tubular segment's operating profits for Q4 decreased to $0.8 million from $2.5 million in the previous year.
- Declining HRC prices expected to impact margins in Q1 FY 2025.
Insights
Friedman Industries' fourth-quarter and fiscal year 2024 results reveal several key points worth examining for investors. Firstly, the company achieved net earnings of
When comparing year-over-year, there is a slight decline in overall net earnings (
The company's strong working capital balance of
However, declining margins forecasted for the first quarter of fiscal 2025 due to falling hot-rolled coil prices could affect short-term earnings. Nonetheless, expected hedging gains of
The robust growth in Friedman's flat-roll segment, with sales volume increasing from
Conversely, the tubular segment saw a price drop from
The company's strategy to hedge against price risk using hot-rolled coil futures is a prudent move. It provides a buffer against price volatility and helps stabilize financial performance. Given the inherent cyclicality of the steel market, these hedging activities demonstrate proactive risk management.
LONGVIEW, Texas, June 11, 2024 (GLOBE NEWSWIRE) -- Friedman Industries, Incorporated (NYSE American: FRD) announced today its results of operations for the quarter and fiscal year ended March 31, 2024.
March 31, 2024 Quarter Highlights:
- Net earnings of
$5.0 million - Sales of
$132.2 million 13% increase in sales volume over the preceding third quarter9% increase in sales volume over the prior year fourth quarter
Fiscal Year March 31, 2024 Highlights:
- Net earnings of
$17.3 million - second most profitable fiscal year in Company history - Sales of
$516.3 million 19% increase in sales volume over prior fiscal year- Working capital balance at year-end of
$116.0 million
“We ended fiscal 2024 with a strong fourth quarter that made it our second most profitable fiscal year in Friedman’s history,” said Michael J. Taylor, President and Chief Executive Officer. “This result is evidence of the quality of our assets and our strategy, as well as the hard work and dedication of our team members, who make and deliver our products to customers every day.”
Taylor continued, “Our sales volume increased approximately
“I am pleased that investors are starting to recognize the value of our Company. Our stock began fiscal 2024 trading in the
For the quarter ended March 31, 2024 (the “2024 quarter”), the Company recorded net earnings of approximately
For the year ended March 31, 2024 (“fiscal 2024”), the Company recorded net earnings of approximately
The table below provides our statements of operations for the quarters and fiscal years ended March 31, 2024 and 2023:
| SUMMARY OF OPERATIONS | |||||||||||||||
| (In thousands, except for per share data) | |||||||||||||||
| Three Months Ended March 31, | Year Ended March 31, | ||||||||||||||
| 2024 | 2023 | 2024 | 2023 | ||||||||||||
| Net Sales | $ | 132,232 | $ | 124,186 | $ | 516,251 | $ | 547,542 | |||||||
| Cost of materials sold | (104,724 | ) | (97,075 | ) | (417,143 | ) | (456,419 | ) | |||||||
| Processing and warehousing expense | (7,285 | ) | (5,557 | ) | (26,690 | ) | (21,146 | ) | |||||||
| Delivery expense | (6,356 | ) | (7,187 | ) | (23,791 | ) | (24,483 | ) | |||||||
| Selling, general and administrative expenses | (6,156 | ) | (6,525 | ) | (21,039 | ) | (21,894 | ) | |||||||
| Depreciation and amortization | (778 | ) | (588 | ) | (3,070 | ) | (2,526 | ) | |||||||
| Earnings from operations | 6,933 | 7,254 | 24,518 | 21,074 | |||||||||||
| Gain on economic hedges of risk | 1,142 | 1,980 | 1,848 | 9,306 | |||||||||||
| Interest expense | (937 | ) | (720 | ) | (3,072 | ) | (2,218 | ) | |||||||
| Other income | 3 | 3 | 20 | 27 | |||||||||||
| Earnings before income taxes | 7,141 | 8,517 | 23,314 | 28,189 | |||||||||||
| Income tax expense | (2,183 | ) | (2,206 | ) | (5,969 | ) | (6,845 | ) | |||||||
| Net earnings | $ | 4,958 | $ | 6,311 | $ | 17,345 | $ | 21,344 | |||||||
| Net earnings per share: | |||||||||||||||
| Basic | $ | 0.71 | $ | 0.86 | $ | 2.39 | $ | 2.91 | |||||||
| Diluted | $ | 0.71 | $ | 0.86 | $ | 2.39 | $ | 2.91 | |||||||
The table below provides summarized balance sheets as of March 31, 2024 and 2023:
| SUMMARIZED BALANCE SHEETS | |||||||
| (In thousands) | |||||||
| March 31, 2024 | March 31, 2023 | ||||||
| ASSETS: | |||||||
| Current Assets | 170,064 | 143,656 | |||||
| Noncurrent Assets | 59,955 | 55,656 | |||||
| Total Assets | 230,019 | 199,312 | |||||
| LIABILITIES AND STOCKHOLDERS' EQUITY: | |||||||
| Current Liabilities | 54,107 | 45,088 | |||||
| Noncurrent Liabilities | 48,437 | 38,792 | |||||
| Total Liabilities | 102,544 | 83,880 | |||||
| Total Stockholders' Equity | 127,475 | 115,432 | |||||
| Total Liabilities and Stockholders' Equity | 230,019 | 199,312 | |||||
FLAT-ROLL SEGMENT OPERATIONS
Flat-roll segment sales for the 2024 quarter totaled approximately
TUBULAR SEGMENT OPERATIONS
Tubular 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 fiscal year or fiscal quarter than the corresponding improvement or contraction in our physical margins. For the 2024 quarter, we recognized a gain on hedging activities of approximately
OUTLOOK
“Friedman had a strong fiscal 2024 and we believe we can deliver continued success in fiscal 2025,” Taylor said. “We have one of the best teams in the industry and a solid company with the foundation to grow long-term shareholder value.”
The Company expects sales volume for its first quarter of fiscal 2025 to be similar to the sales volume for the fourth quarter of fiscal 2024 despite the first quarter having half a month of planned downtime for new equipment installation at our Decatur facility and our Sinton facility having a week of planned maintenance downtime. The Company expects first quarter margins to be lower than fourth quarter margins due to declining HRC prices during the first quarter but anticipates the lower margin to be offset by hedging gains. As of the date of this release, hedging gains for the first quarter of fiscal 2025 totaled approximately
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 Sinton facility is a newly constructed facility with operations commencing in October 2022. The East Chicago and Granite City facilities were acquired from Plateplus, Inc. on April 30, 2022. 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, product quality and estimates and projections of future activity and trends in the oil and natural gas industry. 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-K as filed with the SEC on June 11, 2024 or contact Alex LaRue, Chief Financial Officer – Secretary and Treasurer, at (903)758-3431.
FAQ
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