Friedman Industries, Incorporated

What they do

Friedman Industries processes and distributes flat-rolled steel (sheet, plate, slit coil) through facilities in Arkansas, Alabama, Florida, Indiana, Illinois, and Texas, including temper mills, cut-to-length lines, and a fiber laser. It also operates an electric resistance welded pipe mill in Lone Star, Texas (Texas Tubular Products) producing API-licensed line pipe, oil country pipe, and structural pipe. The flat-roll segment generates about 92% of sales, with tubular products contributing roughly 8%.

Revenue drivers

• Flat-Roll Products — Generates ~92% of total sales from processing and selling flat-rolled steel, plus fee-based processing/storage. Sold to ~1,160 customers, with O'Neal Steel accounting for ~15% of total sales in fiscal 2026.
• Tubular Products — ~8% of total sales from sales of company-owned inventory of ERW pipe (2-3/8" to 8-5/8" OD), sold nationally to about 80 steel and pipe distributors.
• Century Metals acquisition — Acquired in August 2025, contributed to record sales volume growth in the June 2026 quarter, with ~12,500 tons of the volume increase attributed to this acquisition.

Recent performance

For the June 2026 quarter, net sales rose 78% year-over-year to $240.0 million, with record sales volume of ~206,000 tons (up 28%). Net earnings were $12.8 million ($1.79 diluted EPS) versus $5.0 million ($0.71) a year earlier. Operating cash flow was $7.3 million, and EBITDA reached $19.3 million. The company ended the quarter with $5.0 million cash, $191.1 million inventory, and $91.5 million drawn on its asset-based lending facility.

Strategy

Management emphasizes disciplined investment and operational execution to expand capacity utilization and win new business. The Century Metals acquisition has been integrated and expands geographic reach and customer offering. The company is investing in its processing platform (e.g., construction in process rose from $0.9M to $2.7M) and continues to align cybersecurity with the NIST framework. Focus remains on organic growth at legacy facilities, with a strong balance sheet supporting long-term growth.

Risks

• Supplier concentration — Flat-roll and tubular segments purchase inventory from a limited number of suppliers; loss of any could have a material adverse effect.
• Customer concentration — O'Neal Steel represents ~15% of total sales; loss of this customer would significantly impact revenue.
• Derivative and hedging losses — The company recorded a $2.8 million loss on economic hedges in the latest quarter, which can adversely affect earnings if hedges don't align with market moves.
• Debt and liquidity — The company has drawn $91.5 million on its asset-based lending facility, and rising interest expense (up to $1.2 million in the quarter) could pressure margins if rates rise or volumes decline.

Outlook

Management expects continued growth driven by strong commercial strategy and the benefits of the expanded operating platform. They believe the company is well positioned to continue growing and delivering value, with a focus on capacity utilization and customer relationships. No specific forward guidance was provided.