Friedman Industries reported Q1 2025 revenue of $114.6 million, down 16.6% year-over-year and 13.4% sequentially, accompanied by a very modest gross profit of $3.11 million and a gross margin of 2.72%. Despite a positive net income of $2.57 million, the quarter featured a negative operating income of $1.40 million, underscoring material operating margin compression amid softer volumes and a cost base that remains challenging in the current steel cycle. The net result was aided by total other income of $4.70 million, highlighting that a portion of earnings came from non-operating items rather than core operations. From a cash-flow perspective, operating cash flow was negative at $6.06 million and free cash flow was negative at $7.11 million, driven by working-capital needs and modest capital expenditure.
The balance sheet remains liquid with a strong current ratio of 4.19 and total assets of $222.79 million, but leverage remains meaningful: total debt stands at $48.98 million and net debt at $44.83 million. Cash at period end was $4.15 million. Financing activities provided $5.37 million, partially offsetting a negative free cash flow profile. The quarter’s results reinforce the cyclicality of Friedman’s Coil and Tubular businesses and the sensitivity of earnings to working-capital dynamics and the broader steel pricing environment. Going forward, the key for investors will be: (1) whether core EBITDA margins can stabilize above maintenance costs as volumes recover, (2) the trajectory of working-capital normalization, and (3) the company’s ability to manage debt and sustain liquidity in a volatile cycle.