EPS of $0.70 decreased by 16.7% from previous year
Gross margin of 50.3%
Net income of 4.96M
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Friedman Industries Incorporated (FRD) QQ4 2024 Results: Margin Expansion and Cash Generation in a Cyclical Steel Processing Market
Executive Summary
Friedman Industries delivered a solid Q4 2024 with pronounced margin expansion and robust cash generation. Revenue reached $132.232 million, up 6.5% year-over-year and 14% quarter-over-quarter, while gross profit rose to $66.516 million for a gross margin of 50.3%. Operating income was $10.003 million (operating margin 7.56%), and net income was $4.959 million, translating to $0.70 per share. The quarter benefited from improved product mix and disciplined cost management, contributing to a meaningful step-up in profitability despite a cyclical steel environment.
Cash flow remained a bright spot: operating cash flow (CFO) was $3.962 million, capital expenditures were modest at $1.018 million, yielding free cash flow of $2.944 million. The company ended the period with cash of $5.891 million and a net cash position of approximately $2.954 million, underscoring a conservative balance sheet with very low leverage. The balance sheet shows total assets of $230.019 million against liabilities of $102.544 million and stockholders’ equity of $127.475 million, with a current ratio of 3.14 and a quick ratio near 1.00, signaling ample liquidity to navigate a cyclical steel market.
Valuation and cycle considerations suggest a mixed but constructive investment backdrop. FRD trades with a trailing P/E around 6.4 and a price-to-book ratio near 1.0, reflecting a defensible earnings profile in a volatile steel cycle but also implying sensitivity to macro-driven volume and steel pricing. The company’s two-segment Coil and Tubular operations provide some diversification within steel processing, aiding margin resilience when demand conditions improve. Investors should monitor steel-product demand signals, input costs, inventory dynamics, and continued capital discipline as the cycle evolves.
Key Performance Indicators
Revenue
132.23M
QoQ: 14.02% | YoY:6.48%
Gross Profit
66.52M
50.30% margin
QoQ: 537.00% | YoY:388.94%
Operating Income
10.00M
QoQ: 62.04% | YoY:37.90%
Net Income
4.96M
QoQ: 318.75% | YoY:-21.46%
EPS
0.70
QoQ: 337.50% | YoY:-16.67%
Revenue Trend
Margin Analysis
Key Insights
Revenue: $132.232 million in Q4 2024, YoY +6.5%, QoQ +14.02%.
Gross Profit: $66.516 million; Gross Margin: 50.30% (vs. 0.5030 in the metric; indicates strong product mix and cost control).
Cash flow and liquidity
- Operating Cash Flow: $3.962 million; CFO as a % of revenue modest, reflecting working capital dynamics in a steel processing business.
- Free Cash Flow: $2.944 million; Free Cash Flow per Share: $0.422.
- Capital Expenditures: $1.018 million.
- Net Change in Cash: -$2.918 million; Cash at End of Period: $5.891 million; Cash at Beginning: $8.809 million.
- Net Debt: -$2.954 million (net cash position).
Balance sheet health
- Total Assets: $230.019 million; Total Liabilities: $102.544 million; Total Stockholders’ Equity: $127.475 million.
- Current Ratio: 3.14; Quick Ratio: 1.003; Cash Ratio: 0.109.
- Liquidity is solid, with working capital support and a conservative leverage profile (very low debt burden relative to assets).
Efficiency and capitalization metrics
- DSO: 32.21 days; DIO: 158.60 days; DPO: 56.51 days; Cash Conversion Cycle: 134.30 days, reflecting a high inventory holding period common in steel processing but offset by favorable supplier terms and cash generation.
- Debt-To-Capitalization: 0.0225; Interest Coverage: 10.68x; ROE: 3.89%; ROA: 2.16%; ROCE: 5.69%.
- Price metrics (as of QQ4 2024): P/E ~6.44, P/B ~1.00, P/S ~0.97, Dividend Yield ~0.11%.
Income Statement
Metric
Value
YoY Change
QoQ Change
Revenue
132.23M
6.48%
14.02%
Gross Profit
66.52M
388.94%
537.00%
Operating Income
10.00M
37.90%
62.04%
Net Income
4.96M
-21.46%
318.75%
EPS
0.70
-16.67%
337.50%
Key Financial Ratios
currentRatio
3.14
grossProfitMargin
50.3%
operatingProfitMargin
7.56%
netProfitMargin
3.75%
returnOnAssets
2.16%
returnOnEquity
3.89%
debtEquityRatio
0.02
operatingCashFlowPerShare
$0.57
freeCashFlowPerShare
$0.42
dividendPayoutRatio
2.78%
priceToBookRatio
1
priceEarningsRatio
6.44
Net Income vs. Revenue
Expense Breakdown
Management Commentary
Note: The earnings transcript data set for QQ4 2024 is not provided in the material supplied. As a result, management quotes and call-specific guidance could not be extracted. The analysis herein integrates the reported results with observable market trends and industry context to outline potential themes typically discussed in earnings calls, such as: (1) strategic focus on cost control and margin discipline, (2) expectations for coil and tubular order trends in a cyclical environment, (3) capital allocation priorities and balance-sheet resilience. Without the transcript, quotes and theme-specific quotes from executives are not available in this document.
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Forward Guidance
No formal numeric forward guidance was provided in the QQ4 2024 data set. Nevertheless, several qualitative signals underpin an cautiously constructive outlook: (i) sustained gross margin strength around 50% suggests continued value-added processing and favorable product mix, (ii) strong cash-flow generation and a net cash position support ongoing capital allocation flexibility (maintenance capex, potential opportunistic acquisitions or share optimization if pursued), (iii) a conservative balance sheet with minimal leverage enhances resilience to steel-cycle downturns. Investors should monitor: (a) evolving demand in coil transformation and tubular end-markets (oil/gas, construction, distribution), (b) commodity cost dynamics and raw material pricing, (c) inventory levels and days of inventory outstanding, and (d) any signs of capex acceleration or dividend policy adjustments if cash flow strength persists. If conditions remain favorable, FRD could extend margin discipline and maintain the current payout and capitalization trajectory, though cyclical volatility remains a key risk.
Competitive Position
Company
Gross Margin
Operating Margin
Return on Equity
P/E Ratio
FRD Focus
50.30%
7.56%
3.89%
6.44%
AMSYF
1.41%
95.60%
-3.86%
-2.83%
APEMY
5.22%
0.06%
2.03%
8.42%
ANIOY
18.50%
4.94%
-2.06%
-12.76%
ASTLW
5.12%
-0.03%
1.86%
1.76%
Gross Profit Margin
Operating Profit Margin
Return on Equity
P/E Ratio Comparison
Investment Outlook
Quantitatively, FRD demonstrates attractive margin discipline and robust cash generation within a cyclical industry. The Q4 2024 results show revenue growth (+6.5% YoY, +14% QoQ) and a meaningful margin uplift (gross margin 50.3%, operating margin 7.56%), supported by a net cash balance sheet and modest capex. The stock’s valuation multiple (~P/E 6.4, P/B ~1.0) implies a muted growth premium, aligning with the cyclicality backdrop. Qualitatively, the two-segment Coil and Tubular operations provide some resilience against mix shocks, while the balance sheet affords strategic flexibility in a volatile cycle. The primary investment considerations are: (1) macro-driven steel demand and pricing dynamics, (2) inventory management and working-capital sensitivity in downturns, and (3) potential capital-allocation actions if cash flow trajectory remains favorable. Overall, the stance is cautiously constructive with a favorable risk-reward given liquidity, margin durability, and low leverage, provided the cycle remains favorable and end-market demand holds steady. A more definitive stance would benefit from management commentary on demand outlook, capex plans, and any formal guidance for the coming year.
Key Investment Factors
Growth Potential
Two-segment specialization (Coil and Tubular) supports diversified revenue streams within steel processing. Margin resilience at ~50% gross margin and ongoing free cash flow generation imply capacity for disciplined expansions in capacity or selective acquisitions should end-market demand improve.
Profitability Risk
Cyclicality of the steel industry drives demand and price volatility; inventory build and long inventory days (DIO ~159 days) can compress cash flow during downturns. Very low leverage reduces debt capacity for counter-cyclical investments; any deterioration in orders or input costs could pressure margins. External factors such as tariffs, steel pricing cycles, and infrastructure capex volatility pose key risk vectors.
Financial Position
Conservative balance sheet with net cash, modest capital expenditure, strong liquidity metrics (Current Ratio 3.14, Quick Ratio 1.00). Low debt burden provides resilience in downturns and flexibility to fund selective growth opportunities.
SWOT Analysis
Strengths
Strong gross margin (50.3%) and solid операting margin (7.56%), driven by value-added coil processing and favorable product mix.
Solid cash generation and a net cash position, providing balance-sheet resilience.
Conservative leverage with ample liquidity (Current ratio 3.14, Net debt negative).
Two-segment diversification (Coil and Tubular) within steel processing adds product and end-market breadth.
Weaknesses
High days of inventory (158.6 days) and long cash conversion cycle (134.3 days) typical of steel processing but problematic in downturns.
Cyclicality of steel markets exposes FRD to volume and price volatility.
Relatively modest scale versus larger integrated steel players may limit pricing power in certain cycles.
Opportunities
Sustained infrastructure and energy sector activity could lift tubular and coil-processing demand.
Opportunity to sustain or modestly increase margins through continued cost controls and operational improvements.
Strong balance sheet affords flexibility for strategic capex, acquisitions, or opportunistic share actions if favorable.
Threats
Macro downturns or material price declines in steel can compress volumes and margins.
Inflationary input costs or supply-chain disruptions could affect profitability.
Industry cyclicality and potential regulatory or tariff changes could impact demand for steel products.
Friedman Industries Incorporated (FRD) QQ1 2026 Results – Two-Segment Steel Processor Delivers Positive Net Income with Modest Margin Pressure in a ...