Friedman Industries, Incorporated (NYSE American: FRD) today
announced its results of operations for the third fiscal quarter
ended December 31, 2023.
December 31, 2023 Quarter
Highlights:
- Sales of
approximately $116.0 million
- Earnings
from operations of approximately $6.2 million
- Net
earnings of approximately $1.2 million
- 11%
increase in sales volume over prior year quarter
volume
- Working
capital balance at quarter-end of approximately $116.3
million
“We experienced higher hot-rolled coil (“HRC”)
pricing during the third quarter which increased our physical
margins, particularly during the second half of the quarter,” said
Michael J. Taylor, President and Chief Executive Officer. “Our
gross margin percentage increased to 9.0% for the third quarter
compared to 4.5% for the preceding second quarter. The rise in HRC
price brought a corresponding increase in HRC futures pricing,
which caused the improved physical margin to be partially offset by
our downside hedging protection. The market value of our inventory
increased substantially during the third quarter and we expect to
realize this value appreciation during our fourth quarter. We are
also pleased to see increased sales volume compared to prior year
periods and expect this trend to continue as we work toward our
goal of maximizing facility utilization,” Taylor concluded.
For the quarter ended December 31, 2023 (the
“2023 quarter”), the Company recorded net earnings of approximately
$1.2 million ($0.16 diluted earnings per share) on sales of
approximately $116.0 million compared to net earnings of
approximately $1.4 million ($0.19 diluted earnings per share) on
sales of approximately $111.9 million for the quarter ended
December 31, 2022 (the “2022 quarter”).
The table below provides our unaudited
statements of operations for the three- and nine-month periods
ended December 31, 2023 and 2022:
SUMMARY OF
OPERATIONS (unaudited) |
(In thousands,
except for per share data) |
|
|
|
|
|
|
|
|
|
Three Months Ended December 31, |
|
Nine Months Ended December 31, |
|
2023 |
|
2022 |
|
2023 |
|
2022 |
|
|
|
|
|
|
|
|
Net Sales |
$ |
115,973 |
|
|
$ |
111,860 |
|
|
$ |
384,019 |
|
|
$ |
423,356 |
|
|
|
|
|
|
|
|
|
Cost of
products sold |
|
105,531 |
|
|
|
105,730 |
|
|
|
351,427 |
|
|
|
393,876 |
|
Selling,
general and administrative expenses |
|
4,269 |
|
|
|
4,701 |
|
|
|
15,007 |
|
|
|
15,662 |
|
|
|
|
|
|
|
|
|
Earnings
from operations |
|
6,173 |
|
|
|
1,429 |
|
|
|
17,585 |
|
|
|
13,818 |
|
|
|
|
|
|
|
|
|
Gain (loss)
on economic hedges of risk |
|
(4,126 |
) |
|
|
822 |
|
|
|
706 |
|
|
|
7,326 |
|
Interest
expense |
|
(790 |
) |
|
|
(448 |
) |
|
|
(2,135 |
) |
|
|
(1,498 |
) |
Other
income |
|
1 |
|
|
|
4 |
|
|
|
17 |
|
|
|
24 |
|
|
|
|
|
|
|
|
|
Earnings
before income taxes |
|
1,258 |
|
|
|
1,807 |
|
|
|
16,173 |
|
|
|
19,670 |
|
|
|
|
|
|
|
|
|
Income tax
expense |
|
74 |
|
|
|
431 |
|
|
|
3,786 |
|
|
|
4,639 |
|
|
|
|
|
|
|
|
|
Net
earnings |
$ |
1,184 |
|
|
$ |
1,376 |
|
|
$ |
12,387 |
|
|
$ |
15,031 |
|
|
|
|
|
|
|
|
|
Net earnings
per share: |
|
|
|
|
|
|
|
Basic |
$ |
0.16 |
|
|
$ |
0.19 |
|
|
$ |
1.69 |
|
|
$ |
2.06 |
|
Diluted |
$ |
0.16 |
|
|
$ |
0.19 |
|
|
$ |
1.69 |
|
|
$ |
2.06 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The table below provides summarized unaudited
balance sheets as of December 31, 2023 and March 31, 2023:
SUMMARIZED BALANCE SHEETS (unaudited) |
(In thousands) |
|
|
|
|
|
|
|
December 31, 2023 |
|
March 31, 2023 |
ASSETS: |
|
|
|
|
|
Current
Assets |
170,897 |
|
|
143,656 |
|
Noncurrent
Assets |
58,058 |
|
|
55,656 |
|
Total
Assets |
228,955 |
|
|
199,312 |
|
|
|
|
|
|
|
LIABILITIES
AND STOCKHOLDERS' EQUITY: |
|
|
|
|
|
Current
Liabilities |
54,601 |
|
|
45,088 |
|
Noncurrent
Liabilities |
51,611 |
|
|
38,792 |
|
Total
Liabilities |
106,212 |
|
|
83,880 |
|
|
|
|
|
|
|
Total
Stockholders' Equity |
122,743 |
|
|
115,432 |
|
|
|
|
|
|
|
Total
Liabilities and Stockholders' Equity |
228,955 |
|
|
199,312 |
|
|
|
|
|
|
|
FLAT-ROLL SEGMENT OPERATIONS (previously
referred to as the “coil segment”)
Flat-roll product segment sales for the
2023 quarter totaled approximately
$106.4 million compared to approximately
$100.2 million for the 2022 quarter. The flat-roll
segment had sales volume of approximately 110,000 tons from
inventory and another 22,000 tons of toll processing for the 2023
quarter compared to approximately 106,000 tons from inventory and
13,000 tons of toll processing for the 2022 quarter. The growth in
sales volume was primarily related to the increased production at
the Company's Sinton, TX facility which commenced
operations in October 2022. The average per ton selling price
related to inventory tons sold increased from approximately
$949 per ton in the 2022 quarter to approximately
$960 per ton in the 2023 quarter. Flat-roll segment
operations recorded operating profits of approximately
$8.7 million and $3.3 million for the 2023 quarter
and 2022 quarter, respectively.
TUBULAR SEGMENT OPERATIONS
Tubular product segment sales for the 2023
quarter totaled approximately $9.5 million compared to
approximately $11.6 million for the 2022 quarter. Sales
decreased due to a decrease in the average
selling price per ton, partially offset by an
increase in the volume sold. The average per ton selling
price decreased from approximately $1,648 per ton in the 2022
quarter to approximately $1,164 per ton in the 2023 quarter.
Tons sold increased from approximately 7,000 tons in the 2022
quarter to approximately 8,000 tons in the 2023
quarter. The tubular segment recorded an operating
loss of approximately $0.1 million for the 2023 quarter
compared to operating profit of approximately
$0.7 million for the 2022 quarter.
HEDGING ACTIVITIES
We utilize 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 quarter than the corresponding
improvement or contraction in our physical margins. For the third
quarter, we recognized a loss on hedging activities of
approximately $4.1 million. Of this amount, $3.0 million was
associated with realized closed positions and $1.1 million was
associated with unrealized open positions. We experienced an
inflection point in steel prices during the third quarter with both
HRC price and the futures prices increasing. This resulted in our
physical margins improving in the second half of the quarter with
this margin improvement being partially offset by hedging losses.
We expect to recognize the appreciation in our inventory value
through increased physical margins on fourth quarter sales.
OUTLOOK
The Company expects to conclude fiscal year 2024
with a strong fourth quarter characterized by solid margins
associated with a substantial increase in HRC price entering the
fourth quarter. Sales volume for the fourth quarter of fiscal 2024
is expected to be slightly higher than the third quarter
volume.
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-Q as filed with the SEC on February 14, 2024 or
contact Alex LaRue, Chief Financial Officer – Secretary and
Treasurer, at (903)758-3431.
Grafico Azioni Friedman Industries (AMEX:FRD)
Storico
Da Nov 2024 a Dic 2024
Grafico Azioni Friedman Industries (AMEX:FRD)
Storico
Da Dic 2023 a Dic 2024