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
quarter
- 9% 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 19% in fiscal 2024 compared to our previous fiscal
year with the growth driven by output from our new Sinton, TX
facility. We expect further growth from our Sinton facility in
fiscal 2025 as we approach full production capacity. At the end of
fiscal 2024, we neared completion of an upgrade to our Decatur, AL
processing line that will allow us to increase the sales volume
from that facility in fiscal 2025. The Company’s market share
continues to expand with our products being a vital part of the
defined supply chain for more of the country’s top steel consumers.
Fiscal 2024 was another year of considerable steel price volatility
but we maintained profitability in each quarter of fiscal 2024,
demonstrating our ability to analyze and respond appropriately to
changing market conditions.”
“I am pleased that investors are starting to
recognize the value of our Company. Our stock began fiscal 2024
trading in the $11 per share range and ended the fiscal year
considerably higher. We have more value to unlock by delivering
consistent profitability across price cycles and maximizing output
from our current assets. In addition, our strategy remains focused
on opportunities that will deliver long-term value to the Company
and its shareholders. Our dividend increase in March reflects our
favorable outlook; I see value in Friedman today along with
significant opportunities for growth in the future,” Taylor
concluded.
For the quarter ended March 31, 2024 (the “2024
quarter”), the Company recorded net earnings of approximately $5.0
million ($0.71 diluted earnings per share) on sales of
approximately $132.2 million compared to net earnings of
approximately $6.3 million ($0.86 diluted earnings per share) on
net sales of approximately $124.2 million for the quarter ended
March 31, 2023 (the “2023 quarter”). Sales volume increased from
approximately 146,000 tons for the 2023 quarter to approximately
159,000 tons for the 2024 quarter.
For the year ended March 31, 2024 (“fiscal
2024”), the Company recorded net earnings of approximately $17.3
million ($2.39 diluted earnings per share) on sales of
approximately $516.3 million. For the year ended March 31, 2023
(“fiscal 2023”), the Company recorded net earnings of approximately
$21.3 million ($2.91 diluted earnings per share) on sales of
approximately $547.5 million.
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 $120.6 million compared to approximately
$112.8 million for the 2023 quarter. The flat-roll segment had
sales volume of approximately 120,000 tons from inventory and
another 29,500 tons of toll processing for the 2024 quarter
compared to approximately 124,000 tons from inventory and 14,000
tons of toll processing for the 2023 quarter. The average per ton
selling price of flat-roll segment inventory increased from
approximately $915 per ton in the 2023 quarter to
approximately $993 per ton in the 2024 quarter. The flat-roll
segment recorded operating profits of approximately $9.6
million and $7.7 million for the 2024 quarter and
2023 quarter, respectively.
TUBULAR SEGMENT OPERATIONS
Tubular segment sales for the 2024 quarter
totaled approximately $11.6 million compared to approximately $11.4
million for the 2023 quarter. Tons sold increased from
approximately 8,000 tons for the 2023 quarter to
approximately 9,500 tons for the 2024 quarter. The average per ton
selling price of tubular segment inventory decreased from
approximately $1,404 per ton in the 2023 quarter to
approximately $1,216 per ton in the 2024 quarter. The tubular
segment recorded operating profits of approximately $0.8 million
and $2.5 million for the 2024 quarter and 2023 quarter,
respectively.
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 $1.1 million. For fiscal 2024,
we recognized a total hedging gain of approximately $1.4
million.
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
$5.3 million.
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.
Friedman Industries (AMEX:FRD)
Historical Stock Chart
From Nov 2024 to Dec 2024
Friedman Industries (AMEX:FRD)
Historical Stock Chart
From Dec 2023 to Dec 2024