Shares of Friedman Industries, Incorporated (FRD Quick QuoteFRD - Free Report) have gained 14.8% since the company reported its earnings for the quarter ended June 30, 2025, significantly outpacing the S&P 500 Index’s 0.5% growth over the same period. Over the past month, the stock rose 7.7%, again beating the S&P 500’s 2.1% increase, reflecting strong investor enthusiasm following the quarterly release.

FRD’s Earnings Snapshot

Friedman Industries reported net earnings of $5 million, or $0.71 per diluted share, for the first quarter of fiscal 2026, compared with $2.6 million, or $0.37 per diluted share, a year earlier. Net sales were $134.8 million, up 17.7% from $114.6 million in the prior-year quarter.

Segmentally, the flat-roll division posted sales of $124.1 million, up 20% from $103.4 million, with operating income climbing to $8.8 million from $2.7 million, despite a slight drop in per-ton selling prices. The tubular segment saw a 4.1% sales dip to $10.7 million from $11.2 million due to lower volume, but operating results improved sharply, swinging from a $1.2 million loss to a $1.3 million profit on higher selling prices.

Friedman Industries’ Other Key Business Metrics

Adjusted gross profit rose 60.3% to $29.1 million from $18.1 million a year ago, with margins expanding from 15.8% to 21.6%. Operating cash flow was a robust $15.5 million, enabling a $14.7 million reduction in debt. FRD ended the quarter with $117.5 million in working capital and a current ratio of 3.9. Debt under its $150 million asset-based lending facility (ABL Facility) stood at $33 million at quarter-end. Inventory totaled $103.5 million as of June 30, 2025, compared with $113.7 million as of March 31, 2025, reflecting a strategic reduction from the prior quarter, led by lower flat-roll raw material levels.

FRD’s Management Commentary

CEO Michael J. Taylor highlighted the combination of improved margins and solid sales volume as the main drivers of the strong fiscal first-quarter performance. Taylor noted that demand from certain customers strengthened and that strategic commercial efforts boosted facility capacity utilization. Taylor expressed optimism about the long-term demand outlook for the industry, citing Friedman Industries’ readiness to capitalize on opportunities and confidence in the company’s ability to unlock its growth potential.

Factors Influencing Friedman Industries’ Headline Numbers

The quarter’s improved profitability reflected favorable market conditions for hot-rolled steel coil (HRC) compared with the prior-year period. While HRC prices softened slightly toward the end of the quarter, they remained stable enough to support stronger physical margins. This contrasted with last year’s quarter, when a declining HRC price environment compressed margins. Hedging activities also contributed positively, with FRD recording a $0.3 million gain compared with a $5.4 million gain in the prior-year quarter.

FRD’s Guidance

For the second quarter of fiscal 2026, Friedman Industries expects sales volumes to be slightly higher than in the fiscal first quarter, continuing its push to raise utilization rates. However, given the recent softening in HRC prices, management anticipates lower margins sequentially.

Friedman Industries’ Other Developments

On May 6, 2025, Friedman Industries executed the fourth amendment to its credit agreement, extending the maturity date of its $150 million ABL Facility to Aug. 19, 2026. The facility remains secured by substantially all of the company’s assets and provides flexibility for future borrowing, with an availability of approximately $103.7 million at quarter-end.