frd20250930_10q.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE QUARTERLY PERIOD ENDED September 30, 2025

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FROM THE TRANSITION PERIOD FROM TO

COMMISSION FILE NUMBER 1-7521

FRIEDMAN INDUSTRIES, INCORPORATED

(Exact name of registrant as specified in its charter)

Texas

74-1504405

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer

Identification Number)

1121 Judson Road, Suite 124, Longview, Texas 75601

(Address of principal executive offices) (Zip Code)

Registrant’s telephone number, including area code (903)758-3431

Former name, former address and former fiscal year, if changed since last report

Securities registered pursuant to Section 12(b) of the Act:

Title of each class		Trading Symbol		Name of each exchange on which registered
Common Stock, $1 Par Value		FRD		Nasdaq Global Select Market

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☐	Accelerated filer	☒

Non-accelerated filer	☐	Smaller reporting company	☒

		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). (Check one): Yes ☐ No ☒

At November 10, 2025, the number of shares outstanding of the issuer’s only class of stock was 7,112,182 shares of Common Stock.

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TABLE OF CONTENTS

Part I — FINANCIAL INFORMATION	3
Item 1. Financial Statements (Unaudited)	3
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	15
Item 3. Quantitative and Qualitative Disclosures About Market Risk	19
Item 4. Controls and Procedures	19
Part II — OTHER INFORMATION	20
Item 5. Other Information	20
Item 6. Exhibits	20
SIGNATURES	21

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Part I — FINANCIAL INFORMATION

Item 1. Financial Statements

FRIEDMAN INDUSTRIES, INCORPORATED

CONDENSED CONSOLIDATED BALANCE SHEETS — UNAUDITED

(In thousands, except for share data)

	*SEPTEMBER 30, 2025*			*MARCH 31, 2025*
ASSETS
CURRENT ASSETS:
Cash	$	4,586		$	3,686
Accounts receivable, net of allowances for credit losses and cash discounts of $150 and $147 at September 30, and March 31, 2025, respectively		62,257			47,476
Inventories		161,566			113,689
Current portion of derivative assets		990			636
Other current assets		1,926			980
TOTAL CURRENT ASSETS		231,325			166,467
PROPERTY, PLANT AND EQUIPMENT:
Land		11,642			1,572
Buildings and yard improvements		33,253			30,393
Machinery and equipment		61,494			57,970
Construction in process		2,346			135
Less accumulated depreciation		(35,554	)		(33,819	)
		73,181			56,251
OTHER ASSETS:
Operating lease right-of-use asset		5,108			2,841
Other assets		1,675			1,263
TOTAL ASSETS	$	311,289		$	226,822
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES:
Accounts payable and accrued expenses	$	67,844		$	35,304
Income taxes payable		143			647
Dividends payable		282			279
Accrued employee compensation and related expenses		2,966			1,807
Current portion of derivative liability		142			287
TOTAL CURRENT LIABILITIES		71,377			38,324
POSTRETIREMENT BENEFITS OTHER THAN PENSIONS		118			115
DEFERRED INCOME TAX LIABILITY		5,445			5,478
NON-CURRENT LEASE LIABILITIES		4,466			2,752
SELLER NOTE PAYABLE, NET		3,489			—
CONTINGENT CONSIDERATION LIABILITY		3,580			—
ASSET BASED LENDING FACILITY		83,541			47,728
TOTAL LIABILITIES		172,016			94,397
COMMITMENTS AND CONTINGENCIES (SEE NOTE 2)
STOCKHOLDERS’ EQUITY:
Common stock, par value $1: Authorized shares — 10,000,000; Issued shares — 8,966,763 and 8,877,229 shares at September 30, and March 31, 2025		8,967			8,877
Additional paid-in capital		35,463			35,394
Treasury stock at cost (shares 1,907,323 and 1,906,693 shares at September 30, and March 31, 2025, respectively)		(13,110	)		(13,100	)
Retained earnings		107,953			101,254
TOTAL STOCKHOLDERS’ EQUITY		139,273			132,425
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	311,289		$	226,822

The accompanying notes are an integral part of these financial statements.

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FRIEDMAN INDUSTRIES, INCORPORATED

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS — UNAUDITED

(In thousands, except per share data)

	*THREE MONTHS ENDED*						*SIX MONTHS ENDED*
	*SEPTEMBER 30,*						*SEPTEMBER 30,*
	*2025*			*2024*			*2025*			*2024*
Net Sales	$	152,383		$	106,759		$	287,160		$	221,310
Costs and expenses:
Costs of materials sold (excludes items shown separately below)		126,082			88,761			231,786			184,656
Processing and warehousing expense		9,064			7,861			18,392			16,558
Delivery expense		7,134			5,381			13,534			11,432
Selling, general and administrative		6,287			3,935			11,742			8,446
Depreciation and amortization		937			823			1,784			1,618
Loss on disposal of property, plant and equipment		—			222			—			222
		149,504			106,983			277,238			222,932
EARNINGS (LOSS) FROM OPERATIONS		2,879			(224	)		9,922			(1,622	)
Gain on economic hedges of risk		851			194			1,127			5,569
Interest expense		(754	)		(869	)		(1,432	)		(1,550	)
Other income (expense)		1			(3	)		5			—
EARNINGS (LOSS) BEFORE INCOME TAXES		2,977			(902	)		9,622			2,397
Provision for (benefit from) income taxes:
Current		744			(219	)		2,387			523
Deferred		(7	)		(8	)		(33	)		(18	)
		737			(227	)		2,354			505
NET EARNINGS (LOSS)	$	2,240		$	(675	)	$	7,268		$	1,892
Net earnings (loss) per share:
Basic	$	0.32		$	(0.10	)	$	1.03		$	0.27
Diluted	$	0.32		$	(0.10	)	$	1.03		$	0.27
Cash dividends declared per common share	$	0.04		$	0.04		$	0.08		$	0.08

The accompanying notes are an integral part of these financial statements.

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FRIEDMAN INDUSTRIES, INCORPORATED

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS — UNAUDITED

(In thousands)

	*SIX MONTHS ENDED SEPTEMBER 30,*
	*2025*			*2024*
OPERATING ACTIVITIES
Net earnings	$	7,268		$	1,892
Adjustments to reconcile net earnings to cash provided by operating activities:
Depreciation and amortization		1,784			1,618
Deferred taxes		(33	)		(18	)
Compensation expense for restricted stock		159			89
Change in postretirement benefits		3			8
Gain recognized on open derivatives not designated for hedge accounting		(500	)		(1,629	)
Loss on disposal of property, plant and equipment		—			222
Amortization of right-of-use asset		36			(8	)
Decrease (increase) in operating assets, net of amounts acquired in business combination:
Accounts receivable		(2,108	)		7,709
Inventories		(13,254	)		10,753
Other current assets		(950	)		141
Other assets		(3	)		—
Increase (decrease) in operating liabilities, net of amounts assumed in business combination:
Accounts payable and accrued expenses		22,866			(9,295	)
Income taxes payable		(504	)		(2,018	)
Employee compensation and related expenses		1,159			(4,740	)
NET CASH PROVIDED BY OPERATING ACTIVITIES		15,923			4,724
INVESTING ACTIVITIES
Cash paid for Century business combination		(45,597	)		—
Purchase of property, plant and equipment		(4,238	)		(1,900	)
Deposit on steel processing equipment		—			(1,000	)
Increase in cash surrender value of officers’ life insurance		(4	)		(2	)
NET CASH USED IN INVESTING ACTIVITIES		(49,839	)		(2,902	)
FINANCING ACTIVITIES
Debt issuance cost		(395	)		—
Cash dividends paid		(565	)		(557	)
Cash paid for principal portion of finance lease		—			(54	)
Cash paid for share repurchases		(9	)		(134	)
Borrowings on asset based lending facility		415,028			326,988
Repayments on asset based lending facility		(379,215	)		(331,424	)
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES		34,844			(5,181	)
INCREASE (DECREASE) IN CASH AND RESTRICTED CASH		928			(3,359	)
CASH AND RESTRICTED CASH AT BEGINNING OF PERIOD		4,148			5,897
CASH AND RESTRICTED CASH AT END OF PERIOD	$	5,076		$	2,538

Cash and restricted cash at both September 30, 2025 and March 31, 2025 included approximately $0.5 million of cash required to collateralize open derivative positions. These amounts are reported in "Other current assets" on the Company's consolidated balance sheets at September 30, 2025 and March 31, 2025. The Company had approximately $0.1 million in restricted cash as of September 30, 2024.

The accompanying notes are an integral part of these financial statements.

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FRIEDMAN INDUSTRIES, INCORPORATED

CONDENSED NOTES TO QUARTERLY REPORT — UNAUDITED

NOTE 1 — BASIS OF PRESENTATION

The accompanying unaudited, condensed consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q and do not include all of the information and footnotes required by U.S. generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. For further information, refer to the consolidated financial statements and footnotes of Friedman Industries, Incorporated (the “Company”) included in its annual report on Form 10-K for the year ended March 31, 2025.

NOTE 2 — BUSINESS COMBINATIONS

On August 29, 2025, (the “Acquisition Date”), the Company acquired certain assets and liabilities of Century Metals & Supplies Inc. (“Century”) based in Miami, Florida. The Company acquired the working capital, buildings, processing and other equipment, and the related real estate of Century (the “Transaction”). In addition to the owned facilities in Miami, the Transaction also includes leased distribution and warehouse facilities in Orlando, Florida and Tampa, Florida. The operations will continue as Century Metals and Supplies LLC, a wholly owned subsidiary of the Company. Century is a metals processing company with cut-to-length and coil slitting capabilities which will operate as part of the Company's flat-roll business segment. As a result of the Transaction, the Company expanded its presence in the southeastern U.S. and Latin American markets and broadened the Company's product offerings to include cold-rolled, coated, and stainless steels, as well as non-ferrous materials such as aluminum, copper, and brass.

The Transaction resulted in the Company acquiring all the ownership interests in the assets noted above, for a total consideration of approximately $52.7 million, subject to final net working capital adjustments. The total consideration consists of (i) approximately $45.6 million of cash at close, (ii) a five-year seller's note with a fair value of approximately $3.5 million and (iii) contingent consideration possible through earn-out provisions with a fair value of approximately $3.6 million. The contingent consideration allows for up to $10 million in additional consideration over a four-year period based on certain performance metrics and is not contingent on the sellers employment with Century at the time of the payout and, as such, the fair value of such contingent consideration was recognized as consideration transferred.

The seller’s note was fair valued using a discounted cash flow analysis of the expected future payments, for which the significant inputs included the rate of return based on a reference rate plus a spread and the expected cash flows associated with the seller’s note over the remaining time to maturity. The contingent consideration was fair valued using a Monte Carlo simulation of the potential cash payments to the sellers utilizing an estimate of the average future EBITDA, which was discounted to present value. The significant inputs to the Monte Carlo simulation included projected future EBITDA, a discount rate, EBITDA targets, maximum payout and EBITDA volatility. Such contingent consideration is required to be measured at fair value at inception and at each reporting period, however management determined that there was no change in the fair value of the contingent consideration as of September 30, 2025. As of September 30, 2025, the value of the contingent consideration was $3.5 million and is included within contingent consideration liability on the consolidated balance sheet.

The Transaction was accounted for using the acquisition method of accounting, in accordance with Topic 805, Business Combinations, whereby the consideration transferred and the acquired identifiable assets and liabilities assumed are recorded at their respective fair values. The excess of the consideration transferred over the fair values of these identifiable net assets is recorded as goodwill. The Transaction resulted in no residual goodwill. The estimated fair values of assets acquired and liabilities assumed are provisional and are based on the information that was available as of the Acquisition Date to estimate the fair value of assets acquired and liabilities assumed. Therefore, the provisional measurements of fair value reflected are subject to change and such changes could be significant. The Company expects to finalize its fair value estimates as soon as practicable but no later than one year from the Acquisition Date.

*Fair value of assets acquired and liabilities assumed (in thousands)*
Accounts receivable	$	12,672
Inventory		34,623
Property, plant and equipment		14,428
Operating lease right-of-use asset		2,422
Other assets		26
Accounts payable		(9,083	)
Operating lease liability		(2,422	)
Total	$	52,666

The following unaudited pro forma consolidated operating results give effect to the Transaction as if it had been completed as of July 1, 2025 (in thousands). These pro forma amounts are not necessarily indicative of the operating results that would have occurred if the Transaction had occurred on such date. The pro forma adjustments are based on certain assumptions that we believe are reasonable.

	*Three Months Ended September 30,*				*Six Months Ended September 30,*
	*2025*		*2024*		*2025*		*2024*
Net sales	$	173,477	$	130,910	$	333,247		270,783
Earnings from operations	$	3,847	$	900	$	11,834		807

The Company recorded acquisition specific costs of approximately $0.9 million and $1.1 million in the three and six month periods ended September 30, 2025 as a component of "Selling, general and administrative" expenses on the Condensed Consolidated Statement of Operation.

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NOTE 3 — NEW ACCOUNTING PRONOUNCEMENTS

In December 2023, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update No. 2023-09, Improvements to Income Tax Disclosures ("ASU 2023-09"). ASU 2023-09 requires that an entity disclose specific categories in the rate reconciliation, provide additional information for reconciling items that are greater than 5 percent of the amount computed by multiplying pretax income (or loss) by the applicable statutory income tax rate, and provide income taxes paid by jurisdiction that are greater than 5 percent of total income taxes paid. The standard also requires that entities disclose income (or loss) from continuing operations before income tax expense (or benefit) and income tax expense (or benefit) each disaggregated between domestic and foreign operations. ASU 2023-09 is effective for annual periods beginning after December 15, 2024. Early adoption is permitted for annual financial statements that have not yet been issued or made available for issuance. ASU 2023-09 is to be applied on a prospective basis, but retrospective application is permitted. The Company is evaluating the impact that adoption of the provisions of ASU 2023-09 will have on its consolidated financial statements.

In November 2024, the FASB issued Accounting Standards Update No. 2024-03, Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures: Disaggregation of Income Statement Expenses (“ASU 2024-03”). ASU 2024-03 will require more detailed information about the types of expenses in commonly presented income statement captions such as “Cost of sales” and “Selling, general and administrative expenses”. The new guidance is effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027 with early adoption permitted. The Company is evaluating the impact that adoption of the provisions of ASU 2024-03 will have on its consolidated financial statements.

NOTE 4 — INVENTORIES

The Company operates in two segments: the flat-roll segment and the tubular segment. Both the flat-roll segment and tubular segment inventories consist of raw material and finished goods. Cost for all of the Company's flat-roll segment inventory, except for inventory of the Century Metals & Supplies subsidiary, is determined using the average cost method. The cost of Century Metals & Supplies is determined using the specific identification method. Cost for all of the Company's tubular segment inventory is determined using the weighted average cost method. All inventories are valued at the lower of cost or net realizable value. Flat-roll raw material inventory consists primarily of carbon steel, stainless steel and aluminum flat-roll products the Company will process into sheet, plate or slit coil. Flat-roll finished goods consists of processed sheet, plate or slit coil inventory. Tubular raw material inventory consists of hot-rolled steel coils that the Company will manufacture into pipe. Tubular finished goods inventory consists of pipe the Company has manufactured. Inventory costs include the costs of the purchased metals, inbound freight, transfer freight, certain external processing, internal processing, direct labor and applicable overhead costs.

A summary of inventory values by product group follows (in thousands):

	*September 30, 2025*		*March 31, 2025*
Flat-Roll raw material	$	110,125	$	85,865
Flat-Roll finished goods		30,614		15,737
Tubular raw material		11,164		7,055
Tubular finished goods		9,663		5,032
	$	161,566	$	113,689

NOTE 5 — DEBT

On August 29, 2025, the Company renewed its asset-based lending facility ("ABL Facility") led by JPMorgan Chase Bank, N.A by executing the fifth amendment to the credit agreement. Wells Fargo Bank, N.A. became the only syndicated participant of the ABL facility with a 40% holding. The $125 million ABL Facility matures on August 29, 2030 and is secured by substantially all of the assets of the Company. The Company can elect borrowings on a floating rate basis or a term basis. Floating rate borrowings accrue interest at a rate equal to the prime rate minus 1.45% per annum. Term rate borrowings accrue interest at a rate equal to the SOFR rate applicable to the selected term plus 1.65% per annum. Availability of funds under the ABL Facility is subject to a borrowing base calculation determined as the sum of (a) 90% of eligible accounts receivable, plus (b) the product of 85% multiplied by the net orderly liquidating value percentage identified in the most recent inventory appraisal multiplied by eligible inventory. The ABL Facility contains a springing financial covenant whereby the financial covenant is only tested when availability falls below the greater of 10% of the revolving commitment or $12.5 million. The financial covenant restricts the Company from allowing its fixed charge coverage ratio to be, as of the end of any calendar month, less than 1.00 to 1.00 for the trailing twelve-month period then ending. The fixed charge coverage ratio is calculated as the ratio of (a) EBITDA, as defined in the ABL Facility, minus unfinanced capital expenditures to (b) cash interest expense plus scheduled principal payments on indebtedness plus taxes paid in cash plus restricted payments paid in cash plus capital lease obligation payments plus cash contributions to any employee pension benefit plans. The ABL Facility contains other representations and warranties and affirmative and negative covenants that are usual and customary. If certain conditions precedent are satisfied, the ABL facility may be increased up to an aggregate of $75 million, in minimum increments of $5 million. At September 30, 2025, the Company had a balance of approximately $83.5 million under the ABL Facility with an applicable interest rate of 5.8%. At September 30, 2025, the Company's borrowing base supported full access to the ABL Facility.

The Company incurred debt issuance costs of approximately $0.4 million related to the renewal of the ABL Facility with these costs recorded as a non-current other asset which will be amortized on an equal monthly basis over the term of the ABL facility.

The Company issued a seller's note of $3.5 million related to the acquisition of Century Metals & Supplies described in Note 2. The promissory note has a maturity date of August 29, 2030 and accrues interest at a rate of 6.5% per annum, payable quarterly in arrears on the last date of each quarter, commencing September 30, 2025.

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NOTE 6 — LEASES

In August 2025, the Company was assigned operating leases for distribution and warehouse facilities in Orlando, FL and Tampa, FL and certain transportation equipment related to the acquisition of Century. The Orlando lease expires July 31, 2029 and calls for monthly rental payments of approximately $25,000. The Tampa lease expires November 30, 2029 but contains a 6 month extension option and calls for monthly rental payments of approximately $21,000. The Company recognized initial right-of-use ("ROU") assets and lease liabilities of approximately $2.4 million during the September 30, 2025 quarter related to the assumed Century leases. The Company's other ROU assets and lease liabilities consist primarily of operating leases for the Granite City, IL operating facility and administrative office spaces in The Woodlands, TX and Longview, TX. The Company’s other operating leases for items such as operations equipment, IT equipment and storage space are either short-term in nature or immaterial. The Company does not have any finance leases in place.

The Company determines if an arrangement contains a lease at inception based on if the arrangement conveys the right to control the use of an identified asset for a period of time in exchange for consideration and allows the Company to obtain substantially all of the economic benefit from the use of the identified asset. Certain lease agreements contain rent escalation clauses and one or more options to extend the lease. The Company considers these provisions when calculating operating lease obligations. The Company uses its incremental borrowing rate at lease commencement to determine the present value of lease payments.

The components of expense related to leases for the three and six months ended September 30, 2025 and 2024 are as follows (in thousands):

	*Three Months Ended*				*Six Months Ended*
	*September 30,*				*September 30,*
	*2025*		*2024*		*2025*		*2024*
Operating lease expense	$	168	$	108	$	276	$	168
	$	168	$	108	$	276	$	168

The following table illustrates the balance sheet classification for ROU assets and lease liabilities as of September 30, 2025 and March 31, 2025 (in thousands):

	*September 30, 2025*		*March 31, 2025*		*Balance Sheet Classification*
Assets
Operating lease right-of-use asset	$	5,108	$	2,841	Operating lease right-of-use asset
Total right-of-use assets	$	5,108	$	2,841
Liabilities
Operating lease liability, current	$	750	$	160	Accrued expenses
Operating lease liability, non-current		4,466		2,752	Non-current lease liabilities
Total lease liabilities	$	5,216	$	2,912

As of September 30, 2025, the weighted-average remaining lease term was 12.4 years for operating leases. The weighted average discount rate was 7.0% for operating leases.

Maturities of lease liabilities as of September 30, 2025 were as follows (in thousands):

	*Operating Leases*
Fiscal 2026 (remainder of fiscal year)		532
Fiscal 2027		1,054
Fiscal 2028		990
Fiscal 2029		959
Fiscal 2030 and beyond		5,034
Total undiscounted lease payments	$	8,569
Less: imputed interest		(3,353	)
Present value of lease liability	$	5,216

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NOTE 7 — PROPERTY, PLANT AND EQUIPMENT

At September 30, 2025, the Company's construction in process balance of approximately $2.3 million consisted of approximately $1.9 million associated with additional processing equipment being installed in our Granite City, IL facility. The remaining balance consists of several smaller projects among our facilities.

NOTE 8 — STOCK BASED COMPENSATION

The Company maintains the Friedman Industries, Incorporated 2016 Restricted Stock Plan (the “Plan”). The Plan is administered by the Compensation Committee (the “Committee”) of the Board of Directors (the “Board”) and continues indefinitely until terminated by the Board or until all shares allowed by the Plan have been awarded and earned. The aggregate number of shares of the Company’s Common Stock eligible for award under the Plan is 500,000 shares. Subject to the terms and provisions of the Plan, the Committee may, from time to time, select the employees, directors or consultants to whom awards will be granted and shall determine the amount and applicable restrictions of each award. Restricted awards entitle recipients to vote and receive non-forfeitable dividends during the restriction period. Because dividends are non-forfeitable, they are reflected in retained earnings. Forfeitures are accounted for upon their occurrence. Because the Company accounts for forfeitures as they occur, the non-forfeitable dividends are reclassified from retained earnings to additional stock compensation for the actual forfeitures that occurred.

The following table summarizes the activity related to restricted stock awards for the six months ended September 30, 2025:

				*Weighted Average*
	*Number of Shares*			*Grant Date Fair Value Per Share*
Unvested at March 31, 2025		18,026		$	7.07
Cancelled or forfeited		—			—
Granted		89,534			14.39
Vested		(14,000	)		4.32
Unvested at September 30, 2025		93,560		$	14.49

The Company measures compensation expense for restricted stock awards at the market price of the common stock as of the grant date. Compensation expense for awards with time based restrictions is recognized over the requisite service period applicable to each award. Compensation expense for awards with performance based restrictions is recognized once it is probable the performance conditions will be satisfied with a cumulative effect adjustment and the remaining expense recognized over the remaining service period. The stock awards granted during the six months ended September 30, 2025 consist of 53,221 time restricted shares with annual ratable vesting over a three year period and 36,313 performance restricted shares with vesting thresholds dependent on the percentage of average earnings before tax to average accounts receivable, inventory and net PP&E over a three year period. The Company recorded compensation expense of approximately $0.2 million and $0.1 million in the six months ended September 30, 2025 and 2024, respectively, relating to the restricted stock issued under the Plan. As of September 30, 2025, unrecognized compensation expense related to unvested restricted stock was approximately $0.7 million which is expected to be recognized over a weighted average period of approximately 2.5 years. As of September 30, 2025, a total of 24,438 shares were still available to be issued under the Plan.

In September 2025, the Company's shareholders approved the Friedman Industries, Incorporated 2025 Long-Term Incentive Plan (the "LTIP"). Under the LTIP, the Company may award stock-based compensation to employees, non-employee directors and third-party service providers. The LTIP permits the award of stock options, restricted stock awards, restricted stock units, stock appreciation rights and other stock-based awards for up to 550,000 shares of the Company's common stock. As of September 30, 2025, no stock-based compensation had been awarded under the LTIP.

NOTE 9 — DERIVATIVE FINANCIAL INSTRUMENTS

From time to time, we expect to utilize hot-rolled coil futures, options or swaps to reduce our exposure to commodity price risk that is inherent in our business. For the six months ended September 30, 2025 and 2024, all of the Company's hedging activities were classified as economic hedges of risk with mark-to-market ("MTM") accounting treatment. By using derivatives, the Company is exposed to credit and market risk. The Company’s exposure to credit risk includes the counterparty’s failure to fulfill its performance obligations under the terms of the derivative contract. The Company attempts to minimize its credit risk by entering into transactions with high quality counterparties and uses exchange-traded derivatives when available. Market risk is the risk that the value of the financial instrument might be adversely affected by a change in commodity prices. The Company manages market risk by continually monitoring exposure within its risk management strategy and portfolio. For any transactions designated as hedging instruments for accounting purposes, we document all relationships between hedging instruments and hedged items, as well as our risk-management objective and strategy for undertaking the various hedge transactions. We also assess, both at the hedge’s inception and on an ongoing basis, whether the derivatives used in hedging transactions are highly effective in offsetting changes in cash flows or fair value of hedged items.

The Company has forward physical purchase supply agreements in place with some of its suppliers for a portion of its monthly physical steel needs. These supply agreements are not subject to mark-to-market accounting due to the Company electing the normal purchase normal sale exclusion provided in ASC 815.

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At September 30, 2025 and March 31, 2025, the Company did not have any derivatives designated as hedging instruments and classified as cash flow or fair value hedges.

The following table summarizes the fair value of the Company’s derivative financial instruments and the respective line in which they were recorded in the Consolidated Balance Sheet as of September 30, 2025 (in thousands):

	*Asset Derivatives*			*Liability Derivatives*
	*Balance Sheet*			*Balance Sheet*
Derivatives not designated as hedging instruments:	*Location*	*Fair Value*		*Location*	*Fair Value*
Hot-rolled coil steel contracts	Current portion of derivative assets	$	990	Current portion of derivative liability	$	142

	*Asset Derivatives*			*Liability Derivatives*
	*Balance Sheet*			*Balance Sheet*
Derivatives not designated as hedging instruments:	*Location*	*Fair Value*		*Location*	*Fair Value*
Hot-rolled coil steel contracts	Current portion of derivative assets	$	636	Current portion of derivative liability	$	287

All derivatives are presented on a gross basis on the Consolidated Balance Sheets.

During the six months ended September 30, 2025 and 2024, the Company entered into hot-rolled coil futures and swap contracts that were not designated as hedging instruments for accounting purposes. Accordingly, the change in fair value related to these instruments was immediately recognized in earnings for these periods. During the six months ended September 30, 2025 and 2024, the Company did not designate any transactions as hedging instruments for accounting purposes.

The following table summarizes the gain recognized in earnings for derivative instruments not designated as hedging instruments during the three and six months ended September 30, 2025 (in thousands):

		*Gain Recognized in Earnings*
	*Location of Gain*	*for the Three Months Ended*
	*Recognized in Earnings*	*September 30, 2025*
Hot-rolled coil steel contracts	Gain on economic hedges of risk	$	851

SEC Form 10-Q filed by Friedman Industries Inc.