Friedman Industries Q4 Earnings Decline Y/Y, Margins Down

Friedman Industries, Incorporated FRD delivered earnings per share (EPS) of 71 cents in the fourth quarter of fiscal 2024, down 17.4% year over year.

Full-year EPS was $2.39, down 17.9% compared with the fiscal 2023 period.

Revenues in Detail

Friedman Industries registered revenues of $132.2 million in the fiscal fourth quarter, up 6.5% year over year.

Robust performances by both segments drove the topline.

Sales volumes were 159,000 tons in the fiscal fourth quarter, up 8.9% from the year-ago quarter's 146,000 tons.

Full-year revenues were $516.3 million, indicating a 5.7% decline from the comparable fiscal 2023 period.

Segment Details

Friedman Industries' operations consist of two business segments — Flat-roll and Tubular.

For the quarter under review, Flat-roll reported revenues of $120.6 million, up 6.9% from the year-ago quarter.

During the quarter, the segment had a sales volume of approximately 120,000 tons from inventory and another 29,500 tons of toll processing, down 3.2% and up 110.7%, respectively, year over year. The average per ton selling price of flat-roll segment inventory in fourth-quarter fiscal 2024 was $993 per ton, up 8.5% year over year.

Revenues in the Tubular segment totaled $11.6 million, up 1.8% year over year.

The segment also recorded an 18.8% year-over-year uptick in tons sold, which was 9,500 tons during the quarter. However, the average per ton selling price of tubular segment inventory was $1,216 per ton in the fiscal fourth quarter, down 13.4% from the year-ago quarter.

Friedman Industries Adjusted Gross Margin

In the quarter under review, Friedman Industries' adjusted gross profit increased 1.5% to $27.5 million. However, the adjusted gross margin contracted 103 basis points (bps) to 20.8%.

Operating Expenses Analysis

Selling, general and administrative expenses decreased 5.7% to $6.2 million.

Profitability

Adjusted operating profit totaled $21.4 million, indicating a 3.7% uptick from the year-ago quarter. The adjusted operating margin in the fiscal fourth quarter contracted 43 bps to 16.1%.

In the fiscal fourth quarter, Friedman Industries' net income was $4.9 million, down 21.4% from $6.3 million in the prior-year quarter.

Liquidity & Debt Management

Friedman Industries exited fiscal 2024 with cash of $2.89 million compared with $2.99 million at the fiscal 2023-end.

Cumulative net cash provided by operating activities at the end of fiscal 2024 was $4.9 million compared with $63.9 million a year ago.

Our Take

Friedman Industries exited the fourth quarter of fiscal 2024 with solid top-line results. Robust performances by both its segments were impressive. The strength in sales volume during the quarter was also encouraging. The output generation from the new Sinton, TX facility and near-completion of an upgrade to the company's Decatur, AL processing line that will allow it to increase the sales volume from that facility in fiscal 2025 looks promising.

However, Friedman Industries' dismal bottom-line performances in the reported quarter were disappointing. The decline in the average per ton selling price of tubular segment inventory during the quarter was also concerning. The contraction of both margins does not bode well.

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