Friedman Industries (FRD) Q2 2025 earnings summary

Executive summary

• Net sales for the six months ended September 30, 2024, were $221.3 million, down from $268.0 million year-over-year, driven by lower sales volume and average selling prices in both segments.

• Net earnings for the six months were $1.9 million, a sharp decline from $11.2 million in the prior year period, reflecting margin compression and lower demand.

• Q2 FY2024 reported net loss of $0.7 million on sales of $106.8 million, compared to net earnings of $3.5 million on $130.7 million sales in Q2 FY2023.

• Sales volume declined due to weaker demand and political uncertainty, with 121,500 tons of inventory sold and 18,000 tons of toll processing in Q2 FY2024.

• Hedging activities contributed $5.6 million in gains for the six months, partially offsetting margin pressures.

Financial highlights

• Six months ended September 30, 2024: Net sales $221.3 million (down 17% year-over-year), net earnings $1.9 million (down 83%), EPS $0.27 (vs. $1.52), and cash dividends declared per share $0.08.

• Three months ended September 30, 2024: Net sales $106.8 million (down from $130.7 million), net loss of $0.7 million (vs. net income of $3.5 million), and adjusted gross profit of $18.0 million (16.9% of sales).

• Operating cash flow for the six months was $4.7 million, compared to $(20.2) million in the prior year; Q2 operating cash flow was $10.8 million.

• Working capital at September 30, 2024, was $111.7 million, with a current ratio of 4.1.

• Debt reduced by 22% during the quarter; debt under the ABL facility was $35.9 million at quarter-end, with $104.7 million available.

Outlook and guidance

• Sales volume for the third quarter of fiscal 2025 is expected to be slightly lower than the second quarter due to seasonal holiday impacts.

• HRC prices remained stable entering Q3, with margins expected to remain challenged.

• Management maintains a favorable long-term demand outlook and believes current cash, operations, and borrowing capacity are adequate for the next 12 months.