Service Centers

Friedman earnings fall, lower margins expected

Written by Ethan Bernard

June 12, 2024

Friedman Industries reported lower earnings in its fiscal fourth quarter and expects margin compression in the current quarter due to declining HRC prices.

Friedman Industries

Fourth quarter ended March 3120242023Change
Net sales$132.2$124.26.4%
Net earnings (loss)$4.96$6.31-21.4%
Per diluted share$0.71$0.86-17.4%
Twelve months ended March 31
Net sales$516.3$547.5-5.7%
Net earnings (loss)$17.3$21.3-18.8%
Per diluted share$2.39$2.91 -17.9%
(in millions of dollars except per share)

The Longview, Texas-based steel processor logged net earnings of just under $5 million in its Q4 ended March 31, down 21% from $6.3 million a year earlier. However, net sales rose 6% to $132.2 million in the same time period.

“We ended fiscal 2024 with a strong fourth quarter that made it our second most profitable fiscal year in Friedman’s history,” President and CEO Michael J. Taylor said in a statement on Tuesday.

“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, Texas, facility,” he added.

Friedman’s coil processing facility there, which started shipping material in 2022, is on the campus of Steel Dynamics Inc.’s newest sheet mill.

Taylor said the company expects further growth from the Sinton facility in fiscal 2025 “as we approach full production capacity.”

He also noted that at the end of fiscal 2024, “we neared completion of an upgrade to our Decatur, Ala., (HRC) processing line.” This will allow Friedman to increase the sales volume from that facility in fiscal 2025.

Flat rolled, tubular operations

Friedman said its flat rolled segment’s sales totaled ~$120.6 million in Q4’24, up from $112.8 million in the same period last year.

The segment had sales volume of ~120,000 tons from inventory and another 29,500 tons of toll processing for Q4’24 vs. ~124,000 tons from inventory and 14,000 tons of toll processing a year earlier.

Meanwhile, its tubular segment had Q4’24 sales of ~$11.6 million, ticking up from ~$11.4 million in Q4’23. Tons sold rose from ~8,000 tons for Q4’23 to ~9,500 tons for Q4’24, Friedman said.

Outlook

The company expects sales volumes for Q1’25 to be similar to Q4’24, around 159,000 tons. This is “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,” according to the statement.

Also, Friedman forecasts that Q1’25 margins will be lower than Q4’24 due to falling HRC prices in the first quarter but anticipates hedging gains will offset this.

“Friedman had a strong fiscal 2024 and we believe we can deliver continued success in fiscal 2025,” Taylor said.

Ethan Bernard

Ethan Bernard is managing editor for Steel Market Update. He previously worked for American Metal Market as a copy editor in the New York office for two years, starting in 2008. Later, he copy edited AMM’s monthly magazine on a freelance basis from 2015 until 2017. With experience in financial copywriting and textbook publishing, he holds a BA in Comparative Literature from UC Berkeley, and an MFA. in Creative Writing from New York University. He can be reached at ethan@steelmarketupdate.com or 724-759-7871.

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