Friedman earnings decline, expects stronger future

“We are pleased to report profitable results for our first quarter in a period of challenging price dynamics,” said President and CEO Michael J. Taylor in Friedman’s latest earnings report.

The Longview, Texas-based steel processor credited its positive earnings primarily to hedging gains, reported at $5.38 million in the quarter, saying its hedging strategy “worked as intended to help offset physical margin compression we experienced during the quarter as HRC price continued a downward trend.”

Friedman attributed weakening sales to difficult customer market conditions, as well as longer than expected downtimes for equipment upgrades at its plants in Sinton, Texas, and Decatur, Ala.

Flat rolled, tubular operations

Friedman said its flat rolled segment’s sales totaled $103.4 million in fiscal Q1’24, down from $125.2 million in Q1’23. Sales volumes were comprised of approximately 109,000 short tons (st) from inventory and another 24,000 st from toll processing vs. 120,000 st from inventory and 24,000 st of toll processing a year earlier. Between these two quarters, the average selling price per ton declined from approximately $1,038 to $932.

The tubular segment yielded approximately $11.2 million of sales in Q1’24, down from $12.1 million in Q1’23. Tons sold rose from approximately 9,000 st to 10,000 st, while average selling prices fell from approximately $1,358/st to $1,140.

Outlook

The company is optimistic about future demand, forecasting similar sales and a recovery in steel prices in the current quarter. If sustained, it expects improved margins by the end of the current quarter and into the following quarter.

“Despite the current macro-economic headwinds, I see a favorable long-term demand outlook for the industry and our products,” Taylor said. “Friedman remains in strong financial position and ready to capitalize on both short-term and long-term opportunities.”