Executive Summary

Q1 FY2026 delivered strong top-line and earnings: revenue $134.8M (+17.7% YoY) and diluted EPS $0.71 (+91.9% YoY), with EBIT margin expanding to 5.2% on higher volumes and stable HRC pricing .
Segment performance was robust: Flat-Roll net sales $124.1M with operating income $8.8M; Tubular net sales $10.7M with a swing to $1.3M operating profit on better pricing .
Cash generation and balance sheet strength: operating cash flow $15.5M; working capital $117.5M; ABL availability ~$103.7M; ABL balance ~$33.0M at quarter-end .
Outlook: Q2 volumes expected “slightly higher” but margins “lower” sequentially due to softer HRC prices; dividend maintained at $0.04/share .
Stock reaction: shares rose ~14.8% post-earnings as investors responded to margin expansion and volume strength .

What Went Well and What Went Wrong

What Went Well

Volumes and margins drove EPS acceleration: “Improved margins and solid sales volume drove net earnings of $5.0 million” ($0.71 diluted EPS) .
Flat-Roll profitability surged: operating income $8.8M vs. $2.7M YoY on stronger demand and commercial execution to raise utilization .
Tubular turnaround: segment operating profit $1.3M vs. a $1.2M loss YoY, with average price rising to ~$1,206/ton .

What Went Wrong

Sequential margin headwind ahead: management guided Q2 margins “lower” vs. Q1 due to softening HRC prices, tempering the near-term trajectory .
Toll processing volumes declined YoY (19k vs. 24k tons) even as inventory shipments rose, modestly diluting the mix benefit .
SG&A increased by ~$0.9M YoY driven by incentive compensation from higher earnings, adding fixed cost pressure .

Financial Results

Sequential trend (oldest → newest)

Metric	Q3 FY2025 (Dec 31, 2024)	Q4 FY2025 (Mar 31, 2025)	Q1 FY2026 (Jun 30, 2025)
Revenue ($USD Millions)	$94.1	$129.2	$134.8
Diluted EPS ($)	($0.17)	$0.76	$0.71
EBIT ($USD Millions)	($1.19)	$5.85	$7.04
EBIT Margin %	-1.3% (calc from -$1.19 / $94.1)	4.5% (calc from $5.85 / $129.2)	5.2% (calc from $7.04 / $134.8)
Net Income ($USD Millions)	($1.15)	$5.35	$5.03
Net Income Margin %	-1.2% (calc from -$1.15 / $94.1)	4.1% (calc from $5.35 / $129.2)	3.7% (calc from $5.03 / $134.8)

Year-over-year comparison (Q1 FY2025 → Q1 FY2026)

Metric	Q1 FY2025 (Jun 30, 2024)	Q1 FY2026 (Jun 30, 2025)	YoY Change
Revenue ($USD Millions)	$114.6	$134.8	+$20.2M / +17.7% (calc)
Diluted EPS ($)	$0.37	$0.71	+$0.34 / +91.9% (calc)
Net Income ($USD Millions)	$2.57	$5.03	+$2.46M / +95.9% (calc)
GAAP Gross Profit ($USD Millions)	$3.11	$12.50	+$9.39M / +301% (calc)
Adjusted Gross Profit ($USD Millions)	$18.14	$29.07	+$10.94M / +60.3% (calc)
Hedging Gain ($USD Millions)	$5.38	$0.28	-$5.10M (timing/MTM) (calc)

Segment breakdown (Q1 FY2026)

Segment	Net Sales ($USD Millions)	Tons Sold (Inventory)	Toll Processing Tons	Avg Price ($/ton)	Operating Income ($USD Millions)
Flat-Roll	$124.07	~132,500	~19,000	~$926	$8.79
Tubular	$10.71	~9,000	N/A	~$1,206	$1.33

KPIs (Q1 FY2026)

KPI	Value
Operating Cash Flow ($USD Millions)	$15.49
Working Capital ($USD Millions)	~$117.5
Hedging Gain ($USD Millions)	$0.276
ABL Availability ($USD Millions)	~$103.7
ABL Balance ($USD Millions)	~$33.0
Cash and Restricted Cash ($USD Millions)	$2.87
Dividend per Share ($)	$0.04 (declared 6/25/2025)

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Sales Volume	Q2 FY2026	Q1 FY2026 volume expected slightly lower than Q4 FY2025 due to equipment downtime	Q2 FY2026 volume expected slightly higher than Q1 FY2026	Raised sequential volume trajectory
Margins	Q2 FY2026	Q1 FY2026 margins expected improved vs. Q4 FY2025	Q2 FY2026 margins expected lower vs. Q1 FY2026 due to softer HRC prices	Lowered margins sequentially
Dividend	Q1–Q2 FY2026	$0.04 per share maintained	No change communicated	Maintained

Earnings Call Themes & Trends

Note: No earnings call transcript was available for Q1 FY2026; themes sourced from press releases and 10-Q – – – – –.

Topic	Q3 FY2025 Mentions	Q4 FY2025 Mentions	Q1 FY2026 Current Period	Trend
HRC Prices & Margins	Pricing pressure; margins compressed; limited hedging gains ($0.3M)	HRC +35% in Q4 helped margins; hedging gains $1.8M	Stable-to-soft late Q1; margins expanded in Q1 but guided lower for Q2	Margins up in Q1, expected down in Q2
Capacity Utilization	Political/holiday impact; backlog +11% YoY –	Record volumes; Sinton at full capacity	“Strive to increase capacity utilization” driving volume strength	Improving utilization
Hedging Strategy	Economic hedges MTM; modest gain [$0.3M]	Economic hedges; significant gain [$1.8M]	Economic hedges; gain [$0.276M]; timing mismatch noted	Active risk management; gains vary with volatility
Segment Performance	Flat-Roll +$86.1M sales; Tubular -$7.9M sales; Tubular operating loss	Flat-Roll $117.7M; Tubular $11.5M; both profitable –	Flat-Roll $124.1M; Tubular $10.7M; both profitable	Broad-based profitability
Credit Facility	Not highlighted	ABL extended to Aug 19, 2026	ABL availability ~$103.7M; balance ~$33.0M	Liquidity strong
Leadership/M&A	—	—	New COO (7/14) and acquisition of Century Metals (9/2), accretive, diversifies product/geography –	Strengthening ops and footprint

Management Commentary

“Improved margins and solid sales volume drove net earnings of $5.0 million for the quarter.” — Michael J. Taylor, President & CEO .
“Friedman remains in a strong financial position and ready to capitalize on both short-term and long-term opportunities… favorable long-term demand…” — Michael J. Taylor .
Q1 MD&A emphasized adjusted gross profit improvement (to $29.1M; 21.6% of sales) on higher volumes and stable pricing, with explicit caution on MTM hedging timing .

Q&A Highlights

No earnings call transcript was available for Q1 FY2026; therefore, no Q&A themes or clarifications can be reported [ListDocuments returned none for earnings-call-transcript].

Estimates Context

S&P Global Wall Street consensus estimates were unavailable for FRD for Q1 FY2026; as a result, no formal comparison to consensus EPS or revenue can be provided at this time [GetEstimates returned no consensus fields for EPS/revenue].

Metric	Consensus (S&P Global)	Actual
Revenue ($USD Millions)	N/A	$134.8
Diluted EPS ($)	N/A	$0.71

Key Takeaways for Investors

Q1 FY2026 was a quality beat on the fundamentals (YoY growth in revenue, EPS, and adjusted gross profit) driven by volume and stable HRC pricing; the sequential margin mix remains constructive despite caution for Q2 .
Flat-Roll is the earnings engine; sustained operating income strength and volume suggest utilization initiatives are gaining traction, with Tubular now contributing positively on pricing .
Cash generation is robust and liquidity ample (OCF $15.5M; ABL availability ~$103.7M), supporting flexibility for growth and working capital needs into Q2 .
Near-term risk: softer HRC prices point to margin compression in Q2; traders should watch weekly HRC trends and potential hedging gains/losses timing effects under MTM .
Strategic developments (new COO, Century Metals acquisition) expand capabilities (slitting; coated/stainless/non-ferrous) and geographic reach (SE U.S./LatAm), potentially smoothing cyclicality and enhancing customer mix over medium term –.
Dividend continuity ($0.04/share) underscores capital discipline; any margin pressure should be weighed against balance sheet strength and index inclusion visibility (Russell) .
Stock momentum post-print suggests the market is rewarding the execution/margin narrative; monitor Q2 margin trajectory for confirmation or reset .

Appendix: Additional Data Points and Cross-References

Q1 FY2026 disaggregated revenue: Flat-Roll company-owned products $122.85M; processing/storage $1.22M; Tubular manufactured pipe $10.71M .
Inventory mix at quarter-end: Flat-Roll raw $71.44M; finished $16.44M; Tubular raw $9.62M; finished $5.96M .
ABL facility: $150M capacity, maturity Aug 19, 2026; prime-1% or SOFR+1.8%; fixed charge coverage covenant springs <15% availability or <$22.5M .
Outlook statements caution on MTM hedging timing and effective tax rate drivers (state taxes; restricted stock effects) .

FRIEDMAN INDUSTRIES INC (FRD)·Q1 2026 Earnings Summary