Friedman's Earnings Increase in Fiscal 2019
By Metal Center News Staff
on Jul 8, 2019
Friedman Industries, Longview, Texas, reported net earnings of $5.1 million on sales of $187.2 million in its Fiscal Year 2019. Earnings increased 29.6 percent compared with the prior fiscal year, while sales were up 54.5 percent from the past year.
Company executives said the fiscal year was affected by the significant volatility in steel prices, driven by the Section 232 determination. From January 2018, steel prices increased approximately 40 percent until reaching a peak in July 2018, holding at nearly a 10-year high until September 2018 when prices started to decline and continued that downward trend through the remainder of fiscal 2019, dropping approximately 22 percent.
The company’s operating results showed similar volatility, with operating profit of approximately $8,801,000 for the first and second quarters combined and operating profit of approximately $1,666,000 for the third and fourth quarters. Operating results for the first half of Fiscal 2019 were further supported by a sustained recovery of the energy industry, which then entered a correction and remained soft for the second half of fiscal 2019.
Coil segment sales for the fiscal year totaled $124.6 million compared to $90.1 million for the prior year. The increase in sales was driven by an increase in the average selling price associated with higher hot-rolled steel prices and an increase in sales volume.
Tubular segment sales totaled $62.6 million, more than double the total from the previous year. The increase in sales was primarily driven by an increase in sales volume with an increase in average selling prices being a secondary factor.
For the first quarter of fiscal 2020, management expects revenue of approximately $40 million and a sales volume of approximately 52,500 tons. The company continues to see solid demand for its coil division products, but more challenging demand for its tubular division products due primarily to softness in the U.S. energy industry and a hesitation of pipe distributors to hold inventory.