FRIEDMAN INDUSTRIES INC 10-Q

Item 1. Financial Statements FRIEDMAN INDUSTRIES, INCORPORATED CONDENSED CONSOLIDATED BALANCE SHEETS — UNAUDITED (In thousands, except for share data) JUNE 30, 2025 MARCH 31, 2025 ASSETS CURRENT ASSETS: Cash $ 2,099 $ 3,686 Accounts receivable, net of allowances for credit losses and cash discounts of $ 124 and $ 147 at June 30, and March 31, 2025, respectively 50,717 47,476 Inventories 103,458 113,689 Current portion of derivative assets 328 636 Other current assets 1,327 980 TOTAL CURRENT ASSETS 157,929 166,467 PROPERTY, PLANT AND EQUIPMENT: Land 1,572 1,572 Buildings and yard improvements 30,393 30,393 Machinery and equipment 59,197 57,970 Construction in process 689 135 Less accumulated depreciation ( 34,641 ) ( 33,819 ) 57,210 56,251 OTHER ASSETS: Operating lease right-of-use asset 2,788 2,841 Other assets 1,151 1,263 TOTAL ASSETS $ 219,078 $ 226,822 LIABILITIES AND STOCKHOLDERS’ EQUITY CURRENT LIABILITIES: Accounts payable and accrued expenses $ 35,289 $ 35,304 Income taxes payable 2,272 647 Dividends payable 282 279 Employee compensation and related expenses 2,551 1,807 Current portion of derivative liability 82 287 TOTAL CURRENT LIABILITIES 40,476 38,324 POSTRETIREMENT BENEFITS OTHER THAN PENSIONS 118 115 DEFERRED INCOME TAX LIABILITY 5,452 5,478 NON-CURRENT LEASE LIABILITIES 2,713 2,752 ASSET BASED LENDING FACILITY 33,039 47,728 TOTAL LIABILITIES 81,798 94,397 COMMITMENTS AND CONTINGENCIES STOCKHOLDERS’ EQUITY: Common stock, par value $ 1 : Authorized shares — 10,000,000 ; Issued shares — 8,966,763 and 8,877,229 shares at June 30, and March 31, 2025 8,967 8,877 Additional paid-in capital 35,427 35,394 Treasury stock at cost ( 1,907,323 shares and 1,906,693 shares at June 30, and March 31, 2025, respectively) ( 13,110 ) ( 13,100 ) Retained earnings 105,996 101,254 TOTAL STOCKHOLDERS’ EQUITY 137,280 132,425 TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY $ 219,078 $ 226,822 The accompanying notes are an integral part of these financial statements. 3 Table of Contents FRIEDMAN INDUSTRIES, INCORPORATED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS — UNAUDITED (In thousands, except per share data) THREE MONTHS ENDED JUNE 30, 2025 2024 Net Sales $ 134,777 $ 114,551 Costs and expenses: Costs of materials sold (excludes items shown separately below) 105,704 96,414 Processing and warehousing expense 9,328 8,178 Delivery expense 6,400 6,051 Selling, general and administrative 5,455 4,511 Depreciation and amortization 847 795 127,734 115,949 EARNINGS (LOSS) FROM OPERATIONS 7,043 ( 1,398 ) Gain on economic hedges of risk 276 5,375 Interest expense ( 678 ) ( 681 ) Other income 4 3 EARNINGS BEFORE INCOME TAXES 6,645 3,299 Provision for (benefit from) income taxes: Current 1,643 742 Deferred ( 26 ) ( 10 ) 1,617 732 NET EARNINGS $ 5,028 $ 2,567 Net earnings per share: Basic $ 0.71 $ 0.37 Diluted $ 0.71 $ 0.37 Cash dividends declared per common share $ 0.04 $ 0.04 The accompanying notes are an integral part of these financial statements. 4 Table of Contents FRIEDMAN INDUSTRIES, INCORPORATED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS — UNAUDITED (In thousands) THREE MONTHS ENDED JUNE 30, 2025 2024 OPERATING ACTIVITIES Net earnings $ 5,028 $ 2,567 Adjustments to reconcile net earnings to cash provided by (used in) operating activities: Depreciation and amortization 847 795 Deferred taxes ( 26 ) ( 10 ) Compensation expense for restricted stock 123 47 Change in postretirement benefits 3 1 Loss (gain) recognized on open derivatives not designated for hedge accounting 103 ( 1,608 ) Right-of-use asset 18 ( 27 ) Decrease (increase) in operating assets: Accounts receivable ( 3,241 ) 9,574 Inventories 10,231 ( 3,998 ) Other current assets 53 260 Increase (decrease) in operating liabilities: Accounts payable and accrued expenses ( 19 ) ( 9,533 ) Income taxes payable 1,625 610 Employee compensation and related expenses 744 ( 4,737 ) NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES 15,489 ( 6,059 ) INVESTING ACTIVITIES Purchase of property, plant and equipment ( 1,781 ) ( 1,054 ) Increase in cash surrender value of officers’ life insurance ( 3 ) ( 3 ) NET CASH USED IN INVESTING ACTIVITIES ( 1,784 ) ( 1,057 ) FINANCING ACTIVITIES Cash dividends paid ( 282 ) ( 279 ) Cash paid for principal portion of finance lease — ( 27 ) Cash paid for share repurchases ( 10 ) ( 123 ) Borrowings on asset based lending facility 196,322 198,871 Repayments on asset based lending facility ( 211,011 ) ( 193,077 ) NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES ( 14,981 ) 5,365 DECREASE IN CASH AND RESTRICTED CASH ( 1,276 ) ( 1,751 ) CASH AND RESTRICTED CASH AT BEGINNING OF PERIOD 4,148 5,897 CASH AND RESTRICTED CASH AT END OF PERIOD $ 2,872 $ 4,146 Cash and restricted cash at June 30, 2025 and March 31, 2025 included approximately $0.8 million and $0.5 million, respectively, of cash required to collateralize open derivative positions. These amounts are reported in "Other current assets" on the Company's consolidated balance sheets at June 30, 2025 and March 31, 2025. The Company did not have any restricted cash as of June 30, 2024. The accompanying notes are an integral part of these financial statements. 5 Table of Contents 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 — NEW ACCOUNTING PRONOUNCEMENTS In November 2024, the Financial Accounting Standards Board (“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. In December 2023, the 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. NOTE 3 — INVENTORIES The Company operates in two segments: the flat-roll segment and the tubular segment. Both flat-roll segment and tubular segment inventories consist of raw material and finished goods. Cost for substantially all of the Company's inventory is determined using the average cost method. All inventories are valued at the lower of cost or net realizable value. Flat-roll raw material inventory consists of steel coils the Company will process into sheet and plate. Flat-roll finished goods consists of processed sheet and plate 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): June 30, 2025 March 31, 2025 Flat-Roll raw material $ 71,441 $ 85,865 Flat-Roll finished goods 16,439 15,737 Tubular raw material 9,619 7,055 Tubular finished goods 5,959 5,032 $ 103,458 $ 113,689 NOTE 4 — DEBT The Company has a $ 150 million asset-based lending facility ("ABL Facility") in place with JPMorgan Chase Bank, N.A. as the arranging agent and BMO Harris Bank, N.A. as a one - third syndicated participant. On May 6, 2025, the Company executed the fourth amendment to the credit agreement which extended the maturity date of the ABL Facility to August 19, 2026. The ABL Facility 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 % per annum. Term rate borrowings accrue interest at a rate equal to the SOFR rate applicable to the selected term plus 1.8 % 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 15 % of the revolving commitment or $ 22.5 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 1.10 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 $ 25 million, in minimum increments of $ 5 million. At June 30, 2025 , the Company had a balance of approximately $ 33.0 million under the ABL Facility with an applicable interest rate of 6.2 %. At June 30, 2025 , the Company's applicable borrowing base calculation supported access to approximately $ 103.7 million of the ABL Facility. The Company incurred debt issuance costs of approximately $ 0.4 million in connection with the ABL Facility with these costs being amortized on an equal monthly basis over the term of the ABL facility. 6 Table of Contents NOTE 5 — LEASES The Company has an operating lease for the Granite City, IL facility with an expiration date of August 31, 2028 and optional renewal provisions for up to 4 renewal terms of five years each. The lease calls for monthly rental payments that adjust on an annual basis. The monthly rental payment in place at June 30, 2025 and remaining in place until adjustment in September 2025 is approximately $ 13,000 per month. The anticipated execution of renewal options for this lease is included in the right-of-use ("ROU") asset and lease liability calculation. The Company has an operating lease for administrative office space in The Woodlands, TX with an expiration date of February 28, 2029 and a renewal option for one additional 60 month term. The lease calls for monthly rental payments that adjust on an annual basis. The monthly rental payment in place at June 30, 2025 and remaining in place until adjustment in March 2026 is approximately $ 12,000 per month. The Company’s lease of its office space in Longview, Texas is the only other operating lease included in the Company's ROU assets and lease liabilities. This lease expires on April 30, 2027 and calls for monthly rental payments of approximately $ 5,000 . The Company’s other operating leases for items such as IT equipment and storage space are either short-term in nature or immaterial. The Company does not have any finance leases in place. The components of expense related to leases for the three months ended June 30, 2025 and 2024 are as follows (in thousands): Three Months Ended June 30, 2025 2024 Operating lease expense 108 60 $ 108 $ 60 The following table illustrates the balance sheet classification for ROU assets and lease liabilities as of June 30, 2025 and March 31, 2025 (in thousands): June 30, 2025 March 31, 2025 Balance Sheet Classification Assets Operating lease right-of-use asset $ 2,788 $ 2,841 Operating lease right-of-use asset Total right-of-use assets $ 2,788 $ 2,841 Liabilities Operating lease liability, current $ 164 $ 160 Accrued expenses Operating lease liability, non-current 2,713 2,752 Non-current lease liabilities Total lease liabilities $ 2,877 $ 2,912 As of June 30, 2025 , the weighted-average remaining lease term was 19.3 years for operating leases. The weighted average discount rate was 7.5 % for operating leases . Maturities of lease liabilities as of June 30, 2025 were as follows (in thousands): Operating Leases Fiscal 2026 (remainder of fiscal year) 273 Fiscal 2027 371 Fiscal 2028 325 Fiscal 2029 303 Fiscal 2030 and beyond 4,740 Total undiscounted lease payments $ 6,012 Less: imputed interest ( 3,135 ) Present value of lease liability $ 2,877 7 Table of Contents NOTE 6 — PROPERTY, PLANT AND EQUIPMENT At June 30, 2025 , the Company's construction in process balance of approximately $ 0.7 million consisted of several smaller projects among our facilities. NOTE 7 — 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 three months ended June 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 June 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 three months ended June 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 expen se of approximately $ 0.1 milli on and $ 0.05 million in the three months ended June 30, 2025 and 2024 , respectively, relating to the restricted stock issued under the Plan. As of June 30, 2025 , unrecognized compensation expense related to unvested restricted stock was approximately $ 1.3 million which is expected to be recognized over a weighted average period of approximately 2.8 years. As of June 30, 2025 , a total of 24,438 shares were still available to be issued under the Plan. NOTE 8 — DERIVATIVE FINANCIAL INSTRUMENTS From time to time, we expect to utilize hot-rolled coil futures or options to reduce our exposure to commodity price risk that is inherent in our business. For the three months ended June 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. 8 Table of Contents At June 30, 2025 and March 31, 2025 , the Company did not have any hot-rolled coil futures contracts 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 June 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 $ 328 Current portion of derivative liability $ 82 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 March 31, 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 $ 636 Current portion of derivative liability $ 287 All derivatives are presented on a gross basis on the Consolidated Balance Sheets. During the three months ended June 30, 2025 and 2024 , the Company entered into hot-rolled coil futures 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 three months ended June 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 months ended June 30, 2025 (in thousands): Gain Recognized in Earnings Location of Gain for the Three Months Ended Recognized in Earnings June 30, 2025 Hot-rolled coil steel contracts Gain on economic hedges of risk $ 276 The following table summarizes the gain recognized in earnings for derivative instruments not designated as hedging instruments during the three months ended June 30, 2024 (in thousands): Gain Recognized in Earnings Location of Gain for the Three Months Ended Recognized in Earnings June 30, 2024 Hot-rolled coil steel contracts Gain on economic hedges of risk $ 5,375 The following table summarizes the Company's economic (non-designated) derivative instruments outstanding at June 30, 2025 (in thousands): Notional Amount Maturity Date Hot-rolled coil steel contracts $ ( 12,484 ) July 2025 - June 2026 The following table summarizes the Company's economic (non-designated) derivative instruments outstanding at March 31, 2025 (in thousands): Notional Amount Maturity Date Hot-rolled coil steel contracts $ ( 9,522 ) April 2025 - December 2025 At June 30, 2025 and March 31, 2025 , cash of approximately $ 0.8 million and $ 0.5 million, respectively, was held by our clearing agent to collateralize our open derivative positions. These cash requirements are included in "Other current assets" on the Company's Consolidated Balance Sheets at June 30, 2025 and March 31, 2025 . 9 Table of Contents NOTE 9 — FAIR VALUE MEASUREMENTS Accounting standards provide a comprehensive framework for measuring fair value and sets forth a definition of fair value and establishes a hierarchy prioritizing the inputs to valuation techniques, giving the highest priority to quoted prices in active markets for identical assets and liabilities and the lowest priority to unobservable value inputs. Levels within the hierarchy are defined as follows: ● Level 1 – Quoted prices for identical assets and liabilities in active markets. ● Level 2 – Inputs other than quoted prices included within Level 1 that are observable for the assets and liabilities, either directly or indirectly. ● Level 3 – Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets and liabilities. Recurring Fair Value Measurements At June 30, 2025 , our financial assets, net, measured at fair value on a recurring basis were as follows (in thousands): Quoted Prices in Active Significant Markets for Other Significant Identical Observable Unobservable Assets Inputs Inputs (Level 1) (Level 2) (Level 3) Total Commodity futures – financial assets, net $ 246 $ — $ — $ 246 Total $ 246 $ — $ — $ 246 At March 31, 2025 , our financial assets, net, measured at fair value on a recurring basis were as follows (in thousands): Quoted Prices in Active Significant Markets for Other Significant Identical Observable Unobservable Assets Inputs Inputs (Level 1) (Level 2) (Level 3) Total Commodity futures – financial assets, net $ 349 $ — $ — $ 349 Total $ 349 $ — $ — $ 349 At June 30, 2025 and March 31, 2025 , the Company did not have any fair value measurements on a non-recurring basis. 10 Table of Contents NOTE 10 — SEGMENT INFORMATION The Company is engaged in the steel processing, pipe manufacturing and processing and steel and pipe distribution business. Within the Company, there are two product groups: flat-roll and tubular. The Company’s flat-roll operations consist primarily of converting steel coils into flat sheet and plate steel cut to customer specifications. Through its tubular operations, the Company purchases, processes, manufactures and markets tubular products. Segment results are reviewed regularly by the Company’s Chief Operating Decision Makers (“CODMs”). The Company’s CODMs are comprised of the Chief Executive Officer and the Chief Financial Officer. The CODMs assess segment performance and allocate resources based on a number of factors with the most emphasis placed on earnings from operations. The following is a summary of significant financial information relating to the product groups (in thousands): Three Months Ended June 30, 2025 Flat-Roll Tubular Other Total Net Sales $ 124,067 $ 10,710 — $ 134,777 Cost and expenses: Cost of materials sold 99,154 6,550 — 105,704 Processing and warehousing expense 6,899 2,429 — 9,328 Delivery expense 6,260 140 — 6,400 Commercial expense 2,199 212 — 2,411 Depreciation and amortization 769 50 28 847 General corporate expenses — — 3,044 3,044 115,281 9,381 3,072 127,734 EARNINGS (LOSS) FROM OPERATIONS 8,786 1,329 ( 3,072 ) 7,043 Gain on economic hedges of risk 276 Interest expense ( 678 ) Other income 4 EARNINGS BEFORE INCOME TAXES $ 6,645 Three Months Ended June 30, 2024 Flat-Roll Tubular Other Total Net Sales $ 103,387 $ 11,164 — $ 114,551 Cost and expenses: Cost of materials sold 86,913 9,501 — 96,414 Processing and warehousing expense 5,768 2,410 — 8,178 Delivery expense 5,878 173 — 6,051 Commercial expense 1,482 182 — 1,664 Depreciation and amortization 680 83 32 795 General corporate expenses — — 2,847 2,847 100,721 12,349 2,879 115,949 EARNINGS (LOSS) FROM OPERATIONS 2,666 ( 1,185 ) ( 2,879 ) ( 1,398 ) Gain on economic hedges of risk 5,375 Interest expense ( 681 ) Other income 3 EARNINGS BEFORE INCOME TAXES $ 3,299 June 30, 2025 March 31, 2025 IDENTIFIABLE ASSETS: Flat-Roll $ 192,341 $ 204,890 Tubular 22,447 16,792 214,788 221,682 General corporate assets 4,290 5,140 $ 219,078 $ 226,822 General corporate expenses reflect general and administrative expenses not directly associated with segment operations and consist primarily of corporate and accounting salaries, professional fees and services, retirement plan contribution expense, corporate insurance expenses, restricted stock plan compensation expense and office supplies. At June 30, 2025 and March 31, 2025 , corporate assets consist primarily of cash, restricted cash, leased administrative office right-of-use assets, unamortized debt issuance costs and the cash value of officers’ life insurance. Although inventory is transferred at cost between product groups, there are no sales between product groups. 11 Table of Contents NOTE 11 — REVENUE Revenue is generated primarily from contracts to manufacture or process steel products. Most of the Company’s revenue is generated by sales of material out of the Company’s inventory but a portion of the Company’s revenue is derived from processing or storage of customer owned material. Generally, the Company’s performance obligations are satisfied, control of our products is transferred, and revenue is recognized at a single point in time, when title transfers to our customer for product shipped or when services are provided. Revenues are recorded net of any sales incentives. Shipping and other transportation costs charged to customers are treated as fulfillment activities and are recorded in both revenue and cost of sales at the time control is transferred to the customer. Costs related to obtaining sales contracts are incidental and expensed when incurred. Because customers are invoiced at the time title transfers and the Company’s rights to consideration are unconditional at that time, the Company does not maintain contract asset balances. Additionally, the Company does not maintain contract liability balances, as performance obligations are satisfied prior to customer payment for product. The Company offers industry standard payment terms. The Company has two reportable segments: Flat-Roll and Tubular. Flat-roll primarily generates revenue from cutting to length hot-rolled steel coils. Flat-roll segment revenue consists of two product types: Company Owned Flat-Roll Products and Processing or Storage of Customer Owned Coil. Tubular primarily generates revenue from selling steel pipe it has manufactured resulting in a single product type: Manufactured Pipe. The following table disaggregates our revenue by product for each of our reportable business segments for the three months ended June 30, 2025 and 2024 , respectively (in thousands): Three Months Ended June 30, 2025 2024 Flat-Roll Segment: Company Owned Flat-Roll Products 122,846 101,834 Processing or Storage of Customer Owned Coil 1,221 1,553 124,067 103,387 Tubular Segment: Manufactured Pipe 10,710 11,164 10,710 11,164 NOTE 12 — STOCKHOLDERS’ EQUITY The following tables reflect the changes in stockholders’ equity for each of the three months ended June 30, 2025 and June 30, 2024 (in thousands): Additional Common Paid-In Treasury Retained Stock Capital Stock Earnings Total BALANCE AT MARCH 31, 2025 $ 8,877 $ 35,394 $ ( 13,100 ) $ 101,254 $ 132,425 Net earnings — — — 5,028 5,028 Paid in capital – restricted stock units — 123 — — 123 Issuance of restricted stock 90 ( 90 ) — — — Repurchase of shares — — ( 10 ) — ( 10 ) Cash dividends ($ 0.04 per share) — — — ( 286 ) ( 286 ) BALANCE AT JUNE 30, 2025 $ 8,967 $ 35,427 $ ( 13,110 ) $ 105,996 $ 137,280 Additional Common Paid-In Treasury Retained Stock Capital Stock Earnings Total BALANCE AT MARCH 31, 2024 $ 8,873 $ 35,247 $ ( 12,929 ) $ 96,284 $ 127,475 Net earnings — — — 2,567 2,567 Paid in capital – restricted stock units — 47 — — 47 Repurchase of shares — — ( 123 ) — ( 123 ) Cash dividends ($ 0.04 per share) — — — ( 279 ) ( 279 ) BALANCE AT JUNE 30, 2024 $ 8,873 $ 35,294 $ ( 13,052 ) $ 98,572 $ 129,687 12 Table of Contents NOTE 13 — EARNINGS PER SHARE Basic and dilutive net earnings per share is computed based on the following information (in thousands, except for share data): Three Months Ended June 30, 2025 2024 Numerator (basic and diluted) Net earnings $ 5,028 $ 2,567 Less: Allocation to unvested restricted stock awards 67 11 Net earnings attributable to common shareholders $ 4,961 $ 2,556 Denominator (basic and diluted) Weighted average common shares outstanding 6,965,880 6,939,208 For the three months ended June 30, 2025 and 2024 , the Company allocated dividends and undistributed earnings to the unvested restricted stock awards. As the restricted stock qualifies as participating securities, the following restricted stock awards were not accounted in the computation of weighted average diluted common shares outstanding under the two -class method: Three Months Ended June 30, 2025 2024 Restricted Stock Awards 69,628 24,218 NOTE 14 — SUPPLEMENTAL CASH FLOW INFORMATION The Company paid interest o f approximately $ 0.7 million during both the three months ended June 30, 2025 and 2024 . Additionally, the Company paid income taxes of approximately $ 0.1 million during both the three months ended June 30, 2025 and 2024 . NOTE 15 — INCOME TAXES For the three months ended June 30, 2025 and 2024 , the Company recorded income tax provisio ns of approximately $ 1.6 million and $ 0.7 million, respectively. For both quarters, the effective tax rate differed from the federal statutory rate due primarily to the inclusion of state tax expenses in the provision with this impact partially reduced by the tax effect of restricted stock vesting during the quarters . 13 Table of Contents