Shares of Friedman Industries, Incorporated (FRD Quick QuoteFRD - Free Report) have lost 1.7% since the company reported its earnings for the quarter ended Sept. 30, 2025, lagging the S&P 500 Index’s 1.9% gain over the same period. Over the past month, the stock has gained 2.2% compared with the S&P 500’s rise of 3.5%.

FRD’s Earnings Snapshot

For second-quarter fiscal 2026, Friedman reported net earnings of $2.2 million, or $0.32 per diluted share, against a net loss of $0.7 million, or a loss of $0.10 per share, in the year-ago period. Net sales climbed to $152.4 million from $106.8 million, an increase of 42.7%. Sales volume reached a record, with about 154,500 tons of inventory sold and 24,500 tons of toll-processed material, compared with 121,500 tons and 18,000 tons, respectively, in the prior-year period — an overall volume increase of about 28% year over year. The quarter also included approximately $0.9 million of non-recurring costs tied to the Century Metals & Supplies acquisition.

Friedman’s Operational and Segment Trends

The flat-roll segment remained the primary growth engine. Segment sales climbed to $143.3 million from $97.4 million a year earlier, an increase of 47.2%. Inventory tons sold improved to around 147,000 from 112,000, while toll-processing tons rose to 24,500 from 18,000, reflecting both market-share gains and stronger customer demand. Average selling prices also moved higher, with the flat-roll inventory price per ton increasing to about $963 from $858, a gain of 12.2%. Segment operating profit jumped 113.5% to $5.7 million from $2.7 million in the prior-year quarter.

Performance in the tubular segment was more mixed. Sales declined 3.6% to $9 million from $9.4 million, with tons sold dropping to approximately 7,500 from 9,000. However, pricing improved, as the average selling price per ton rose to around $1,185 from $1,030 — an increase of 15%. The segment swung from an operating loss of $0.6 million a year ago to operating income of $0.9 million, highlighting the benefits of improved pricing and cost control despite lower volumes.

FRD’s Other Key Cost and Profitability Metrics

On the cost side, Friedman saw higher operating expenses as they supported greater volumes and absorbed deal-related items. Processing and warehousing expenses increased 15.3% year over year to $9.1 million from $7.9 million, while delivery expenses rose 32.6% to $7.1 million from $5.4 million, reflecting increased tonnage and activity levels. Selling, general and administrative expenses grew 59.8% to $6.3 million from $3.9 million, with a portion linked to the Century acquisition and ongoing strategic initiatives. Even with these pressures, earnings from operations improved to $2.9 million from a loss of $0.2 million, aided by stronger volumes, pricing and segment mix.

Friedman’s risk-management activities also contributed positively. The company recorded a gain of about $0.9 million on economic hedges of price risk compared with a $0.2 million gain in the prior-year quarter, helping to smooth the impact of steel price volatility. Interest expense decreased 13.2% to $0.8 million from $0.9 million, despite a larger balance sheet. Overall, earnings before income taxes improved to $2.9 million from a loss of $0.9 million.

From a balance-sheet perspective, total assets rose to $311.3 million as of Sept. 30, 2025, from $226.8 million as of March 31, 2025, while total stockholders’ equity increased to $139.3 million from $132.4 million. Liabilities also grew to $172 million from $94.4 million, reflecting higher borrowings and obligations associated with the company’s expansion and acquisition strategy.

Friedman’s Management Commentary and Strategic Direction

Management highlighted the quarter as a significant milestone, citing record sales volume and improved capacity utilization across operations. FRD underscored its strategic transformation, which combines organic growth with selective acquisitions and a disciplined capital-allocation framework, including ongoing dividends and opportunistic share repurchases. The company also emphasized performance, growth and value as key pillars, supported by a diversified customer base, robust risk-management practices and an expanding geographic footprint of coil-processing and pipe facilities.

Factors Behind FRD’s Headline Numbers

The improvement in headline results largely reflected stronger demand, share gains in flat-roll products and higher realized prices in both segments. The company’s use of hedging instruments helped protect inventory values and contributed incremental gains. At the same time, expenses rose as Friedman handled more volume, ramped up newer facilities and absorbed integration and transaction costs from Century Metals & Supplies. Non-recurring acquisition-related expenses of about $0.9 million weighed on the quarter’s profitability, partially offsetting the benefits from record shipments and better pricing.

Friedman’s Outlook and Guidance

Looking ahead to the third quarter of fiscal 2026, Friedman expects sales volumes to be roughly in line with second-quarter levels. Additional tonnage from the Century acquisition is anticipated to offset normal holiday-related seasonal softness. Management also projects a modest sequential improvement in margins, supported by anticipated increases in metals pricing. FRD believes that continued execution of its growth strategy and the integration of recent acquisitions should position it to deliver more consistent earnings over time.

FRD’s Other Developments

During the quarter, Friedman completed the acquisition of Century Metals & Supplies on Aug. 29, 2025. Century, based in Miami with additional operations in Orlando, expands the company’s product portfolio to include aluminum, copper, cold-rolled, galvanized, coated, stainless steel and other non-ferrous materials, and adds slitting and cut-to-length capabilities for value-added products. The acquisition broadens FRD’s geographic reach into the Southeast United States, Puerto Rico and Latin America, and is intended to support enhanced margins and growth as integration progresses.