EPS of $-0.17 decreased by 206.3% from previous year
Gross margin of 8.6%
Net income of -1.15M
"N/A" - N/A
Friedman Industries Incorporated (FRD) QQ3 2025 Results Analysis: Revenue Down, Margins Constrained, and Cash Flow Recovery Amid Steel Industry Cyclicality
Executive Summary
Friedman Industries’ QQ3 2025 results show a weaker top line and pressured margins set against a backdrop of cyclical steel demand. Revenue declined to 94.07 million, down 11.9% QoQ and 18.9% YoY, while gross profit of 8.09 million produced a modest 8.6% gross margin. The quarter delivered an operating loss of 1.19 million and a net loss of 1.15 million (EPS -0.17), reflecting a combination of lower volumes, ongoing cost structure, and cyclicality in Steel processing. Notably, cash flow from operations was positive at 2.70 million, supporting a free cash flow of 1.55 million, but the company ended the quarter with modest cash of 1.23 million as cash usage was concentrated in financing activity and working capital dynamics. The balance sheet remains solid on a per-share basis with a strong equity base (stockholders’ equity of 127.33 million) and a conservative debt footprint (long-term debt 35.30 million; net debt 34.22 million), yet profitability remains the primary overhang while liquidity remains adequate (current ratio 3.53). The results underline Friedman’s exposure to cyclical steel markets and the need for ongoing discipline in cost and working capital to support earnings resilience through the cycle.
Key Performance Indicators
Revenue
94.07M
QoQ: -11.88% | YoY:-18.88%
Gross Profit
8.09M
8.60% margin
QoQ: 105.77% | YoY:-22.50%
Operating Income
-1.19M
QoQ: -429.91% | YoY:-119.23%
Net Income
-1.15M
QoQ: -70.67% | YoY:-197.30%
EPS
-0.17
QoQ: -74.54% | YoY:-206.25%
Revenue Trend
Margin Analysis
Key Insights
Operating cash flow: 2.70M
- Free cash flow: 1.55M
- Capex: -1.15M
- Net change in cash: -1.31M
- Cash at end of period: 1.23M
Balance Sheet Highlights:
- Total assets: 210.25M; Total liabilities: 82.92M; Total equity: 127.33M
- Current ratio: 3.53; Quick ratio: 0.80; Cash ratio: 0.0254
- Inventory: 115.39M; Days inventory outstanding: 120.79; DSO: 0; DPO: 43.00; CCC: 77.79 days
- Long-term debt: 35.30M; Net debt: 34.22M
- P/BV: 0.83; P/S: 1.13; P/E: negative (loss-making quarter)
Financial Highlights
Revenue: 94.07M; YoY -18.9%, QoQ -11.88%
Gross Profit: 8.09M; Gross Margin 8.60%; YoY -22.50%, QoQ +105.77%
Operating Income: -1.19M; Operating Margin -1.26%; YoY -119.23%, QoQ -429.91%
Net Income: -1.15M; Net Margin -1.22%; YoY -197.30%, QoQ -70.67%
EPS: -0.17; EPS Diluted -0.17; YoY -206.25%, QoQ -74.54%
Cash Flow:
- Operating cash flow: 2.70M
- Free cash flow: 1.55M
- Capex: -1.15M
- Net change in cash: -1.31M
- Cash at end of period: 1.23M
Balance Sheet Highlights:
- Total assets: 210.25M; Total liabilities: 82.92M; Total equity: 127.33M
- Current ratio: 3.53; Quick ratio: 0.80; Cash ratio: 0.0254
- Inventory: 115.39M; Days inventory outstanding: 120.79; DSO: 0; DPO: 43.00; CCC: 77.79 days
- Long-term debt: 35.30M; Net debt: 34.22M
- P/BV: 0.83; P/S: 1.13; P/E: negative (loss-making quarter)
Income Statement
Metric
Value
YoY Change
QoQ Change
Revenue
94.07M
-18.88%
-11.88%
Gross Profit
8.09M
-22.50%
105.77%
Operating Income
-1.19M
-119.23%
-429.91%
Net Income
-1.15M
-197.30%
-70.67%
EPS
-0.17
-206.25%
-74.54%
Key Financial Ratios
currentRatio
3.53
grossProfitMargin
8.6%
operatingProfitMargin
-1.26%
netProfitMargin
-1.22%
returnOnAssets
-0.55%
returnOnEquity
-0.91%
debtEquityRatio
0.28
operatingCashFlowPerShare
$0.39
freeCashFlowPerShare
$0.22
dividendPayoutRatio
-24.2%
priceToBookRatio
0.83
priceEarningsRatio
-23.05
Net Income vs. Revenue
Expense Breakdown
Management Commentary
No earnings call transcript was provided in the supplied data. Consequently, there are no management quotes or theme-specific highlights to extract. The analysis below leverages the disclosed financials and the implied cycle in the steel processing business to frame key considerations for investors.
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Forward Guidance
No formal forward guidance is contained in the provided dataset. Given Friedman’s cyclically exposed steel business, investors should monitor: (1) domestic steel demand and capacity utilization trends, (2) input costs (steel, energy, and scrap) and their pass-through to pricing, (3) working capital dynamics (notably inventory and receivables days), (4) capex plans and any efficiency-improvement initiatives, (5) debt maturity profile and liquidity. In a base-case scenario where steel demand stabilizes and pricing improves modestly, FRD could see a gradual margin recovery; upside would hinge on leveraging fixed cost absorption and controlling working capital. Downside risk remains a continued demand downturn, higher raw material costs, or sustained negative earnings momentum that pressure cash flow and debt covenants.
Competitive Position
Company
Gross Margin
Operating Margin
Return on Equity
P/E Ratio
FRD Focus
8.60%
-1.26%
-0.91%
-23.05%
AMSYF
1.00%
4.36%
0.54%
15.32%
APEMY
1.00%
3.28%
5.27%
2.66%
ANIOY
1.00%
0.00%
1.94%
13.07%
ASTLW
-14.80%
-21.10%
-4.41%
-5.77%
Gross Profit Margin
Operating Profit Margin
Return on Equity
P/E Ratio Comparison
Investment Outlook
Baseline: In the near term, FRD faces a challenging earnings trajectory given negative quarterly profitability and a fragile margin structure, even as operating cash flow remains positive. The company’s balance sheet shows a resilient equity position and modest leverage, but profitability recovery is contingent on a stabilizing or improving steel cycle and disciplined cost management. Best-case catalysts include a rebound in steel demand, better price realization in coil/tubular products, and working-capital optimization that tightens days inventory and receivables. Worst-case scenarios involve renewed downcycles in steel demand or sustained cost pressures that erode margins and strain liquidity. Investors should monitor industry-wide steel demand indicators, energy and input costs, and Friedman’s ability to convert operating cash flow into sustained earnings growth.
Key Investment Factors
Growth Potential
Potential earnings resilience if steel market recovers and cost-structure becomes more efficient. A stabilization in revenue around the low-to-mid 90s million range could enable marginal margin expansion if fixed costs are absorbed more effectively and working capital is optimized.
Profitability Risk
Cyclical steel demand, falling gross margin (8.6%), negative EBIT and net income, negative interest coverage (-1.878x), high inventory days (~121 days), reliance on positive operating cash flow to fund financing needs, and modest liquidity (cash ratio ~0.025).
Financial Position
Solid equity base (127.33M) with moderate leverage (long-term debt 35.30M; debt-to-capitalization ~21.7%). Net debt (~34.22M) and a return profile that remains negative in the near term suggest patience on a recovery thesis until profitability improves and working capital cycles normalize.
SWOT Analysis
Strengths
Diversified coil and tubular processing operations with a broad Midwest-to-Southeast footprint, supporting a wide customer base.
Positive operating cash flow in QQ3 2025: 2.70M, contributing to free cash flow of 1.55M.
Solid balance sheet metrics for the sector: total assets 210.25M and stockholders’ equity 127.33M; current ratio 3.53 indicating short-term liquidity.
Two-segment business model (Coil and Tubular) provides product mix flexibility and cross-selling opportunities.
Weaknesses
Negative profitability in QQ3 2025: operating income -1.19M; net income -1.15M; EBITDA near break-even (-93k).
Low cash ratio (0.0254) despite a strong current ratio, indicating limited liquidity cushion if working capital needs rise.
Cyclicality sensitivity: revenue down YoY (-18.9%) and QoQ (-11.88%), highlighting exposure to steel market downturns.
High inventory levels (inventory 115.39M, DIO 120.79) which compresses cash flow if demand deteriorates.
Opportunities
Stabilization or improvement in domestic steel demand could support a multi-quarter margin recovery as fixed costs are absorbed and utilization improves.
Potential to optimize working capital and reduce days inventory to enhance cash conversion cycle (77.79 days).
Capex and efficiency initiatives could lift productivity and reduce unit costs over time.
Threats
Sharp cyclicality of steel markets which can drive volatile margins and earnings.
Commodity-price volatility (steel, energy, scrap) affecting cost of revenue and pricing power.
Competitive pressure within the steel processing and distribution ecosystem; potential pricing pressure in a commodity-driven market.
Friedman Industries Incorporated (FRD) QQ1 2026 Results – Two-Segment Steel Processor Delivers Positive Net Income with Modest Margin Pressure in a ...