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, 2026 MARCH 31, 2026 ASSETS CURRENT ASSETS: Cash $ 5,028 $ 2,450 Accounts receivable, net of allowances for credit losses of $ 624 and $ 426 at June 30, and March 31, 2026, respectively 90,692 80,174 Inventories 191,080 172,223 Current portion of derivative assets 868 153 Income tax receivable — 521 Other current assets 3,438 1,518 TOTAL CURRENT ASSETS 291,106 257,039 PROPERTY, PLANT AND EQUIPMENT: Land 11,642 11,642 Buildings and yard improvements 32,756 32,667 Machinery and equipment 65,769 65,512 Construction in process 2,738 934 Less accumulated depreciation ( 38,147 ) ( 37,137 ) 74,758 73,618 OTHER ASSETS: Operating lease right-of-use asset 6,173 4,702 Other assets 1,401 1,451 TOTAL ASSETS $ 373,438 $ 336,810 LIABILITIES AND STOCKHOLDERS’ EQUITY CURRENT LIABILITIES: Accounts payable and accrued expenses $ 88,240 $ 67,169 Income taxes payable 3,563 — Dividends payable 289 284 Employee compensation and related expenses 6,376 8,270 Current portion of derivative liability 1,851 426 TOTAL CURRENT LIABILITIES 100,319 76,149 POSTRETIREMENT BENEFITS OTHER THAN PENSIONS 17 96 DEFERRED INCOME TAX LIABILITY 6,710 6,761 NON-CURRENT LEASE LIABILITIES 5,104 4,097 SELLER NOTE PAYABLE, NET 3,489 3,489 NON-CURRENT CONTINGENT CONSIDERATION LIABILITY 2,160 2,160 ASSET BASED LENDING FACILITY 91,488 92,564 TOTAL LIABILITIES 209,287 185,316 COMMITMENTS AND CONTINGENCIES (SEE NOTE 2) STOCKHOLDERS’ EQUITY: Common stock, par value $ 1 : Authorized shares — 10,000,000 ; Issued shares — 9,124,805 and 9,019,505 shares at June 30, and March 31, 2026 9,125 9,020 Additional paid-in capital 36,073 35,934 Treasury stock at cost (shares 1,912,014 and 1,907,323 shares at June 30, and March 31, 2026, respectively) ( 13,192 ) ( 13,110 ) Retained earnings 132,145 119,650 TOTAL STOCKHOLDERS’ EQUITY 164,151 151,494 TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY $ 373,438 $ 336,810 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, 2026 2025 Net Sales $ 239,971 $ 134,777 Costs and expenses: Costs of materials sold (excludes items shown separately below) 184,219 105,704 Processing and warehousing expense 13,427 9,328 Delivery expense 9,385 6,400 Selling, general and administrative 10,837 5,455 Depreciation and amortization 1,069 847 218,937 127,734 EARNINGS FROM OPERATIONS 21,034 7,043 Gain (loss) on economic hedges of risk ( 2,756 ) 276 Interest expense ( 1,224 ) ( 678 ) Other income (expense) ( 77 ) 4 EARNINGS BEFORE INCOME TAXES 16,977 6,645 Provision for (benefit from) income taxes: Current 4,244 1,643 Deferred ( 51 ) ( 26 ) 4,193 1,617 NET EARNINGS $ 12,784 $ 5,028 Net earnings per share: Basic $ 1.79 $ 0.71 Diluted $ 1.79 $ 0.71 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, 2026 2025 OPERATING ACTIVITIES Net earnings $ 12,784 $ 5,028 Adjustments to reconcile net earnings to cash provided by operating activities: Depreciation and amortization 1,069 847 Deferred taxes ( 51 ) ( 26 ) Compensation expense for restricted stock 244 123 Change in postretirement benefits ( 79 ) 3 Change in cash surrender value of officers' life insurance 78 ( 3 ) Loss recognized on open derivatives not designated for hedge accounting 710 103 Amortization of right-of-use asset 21 18 Decrease (increase) in operating assets: Accounts receivable ( 11,584 ) ( 3,241 ) Inventories ( 18,857 ) 10,231 Federal income taxes recoverable 521 — Other current assets 200 53 Increase (decrease) in operating liabilities: Accounts payable and accrued expenses 20,586 ( 19 ) Income taxes payable 3,563 1,625 Employee compensation and related expenses ( 1,894 ) 744 NET CASH PROVIDED BY OPERATING ACTIVITIES 7,311 15,486 INVESTING ACTIVITIES Cash received from Century business combination working capital true-up 1,066 — Purchase of property, plant and equipment ( 2,173 ) ( 1,781 ) NET CASH USED IN INVESTING ACTIVITIES ( 1,107 ) ( 1,781 ) FINANCING ACTIVITIES Cash dividends paid ( 284 ) ( 282 ) Cash paid for share repurchases ( 82 ) ( 10 ) Borrowings on asset based lending facility 229,697 196,322 Repayments on asset based lending facility ( 230,774 ) ( 211,011 ) NET CASH USED IN FINANCING ACTIVITIES ( 1,443 ) ( 14,981 ) INCREASE (DECREASE) IN CASH AND RESTRICTED CASH 4,761 ( 1,276 ) CASH AND RESTRICTED CASH AT BEGINNING OF PERIOD 3,231 4,148 CASH AND RESTRICTED CASH AT END OF PERIOD $ 7,992 $ 2,872 Cash and restricted cash at June 30, 2026 and March 31, 2026 included approximately $ 3.0 million and $ 0.8 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, 2026 and March 31, 2026 . The Company had approximately $ 0.8 million in restricted cash as of June 30, 2025 . 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, 2026 . 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 included leased distribution and warehouse facilities in Orlando, Florida and Tampa, Florida. The operations continue as Century Metals and Supplies LLC ("Century"), a wholly owned subsidiary of the Company. Century is a metals processing company with cut-to-length and coil slitting capabilities which operates 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 $ 51.6 million, after 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, (iii) contingent consideration possible through earn-out provisions with an initial fair value of approximately $ 3.6 million and a post-closing final working capital adjustment in favor of the Company of approximately $ 1.1 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. There were no changes to the valuation methodology during the interim period. As of June 30, 2026, the value of the contingent consideration was approximately $ 2.2 million and is reported on the consolidated balance sheet under non-current contingent consideration. 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. Fair value of assets acquired and liabilities assumed (in thousands): Accounts receivable $ 12,307 Inventory 34,623 Property, plant and equipment 13,727 Operating lease right-of-use asset 2,422 Other assets 26 Accounts payable ( 9,083 ) Operating lease liability ( 2,422 ) Total $ 51,600 6 Table of Contents NOTE 3 — NEW ACCOUNTING PRONOUNCEMENTS In November 2024, the Financial Accounting Standards Board 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 weighted 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): June 30, 2026 March 31, 2026 Flat-Roll raw material $ 131,118 $ 120,763 Flat-Roll finished goods 32,329 31,068 Tubular raw material 17,063 9,441 Tubular finished goods 10,570 10,951 $ 191,080 $ 172,223 NOTE 5 — DEBT The Company has a $ 140 million asset-based lending facility ("ABL Facility") led by JPMorgan Chase Bank, N.A. with Wells Fargo Bank, N.A. as a 40% syndicated participant. The 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 $ 14.0 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 $ 60 million, in minimum increments of $ 5 million. At June 30, 2026 , the Company had a balance of approximately $ 91.5 million under the ABL Facility with an applicable interest rate of 5.3 %. At June 30, 2026 , the Company's borrowing base supported full access to the ABL Facility. The Company issued a seller's note of $ 3.5 million related to the acquisition of Century 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. 7 Table of Contents NOTE 6 — LEASES In June 2026, the Company entered into a new operating lease for additional warehouse space in Miami, FL for Century's operations. This lease expires July 31, 2029 and calls for monthly rental payments of approximately $ 47,000 . The Company recognized initial right-of-use ("ROU") assets and lease liabilities of approximately $ 1.7 million related to the new lease. The Company's other ROU assets and lease liabilities consist primarily of operating leases for the operations facilities in Granite City, IL, Orlando, FL and Tampa, FL 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 months ended June 30, 2026 and 2025 are as follows (in thousands): Three Months Ended June 30, 2026 2025 Operating lease expense $ 287 $ 108 $ 287 $ 108 The following table illustrates the balance sheet classification for ROU assets and lease liabilities as of June 30, 2026 and March 31, 2026 (in thousands): June 30, 2026 March 31, 2026 Balance Sheet Classification Assets Operating lease right-of-use asset $ 6,173 $ 4,702 Operating lease right-of-use asset Total right-of-use assets $ 6,173 $ 4,702 Liabilities Operating lease liability, current $ 1,240 $ 756 Accrued expenses Operating lease liability, non-current 5,104 4,097 Non-current lease liabilities Total lease liabilities $ 6,344 $ 4,853 As of June 30, 2026 , the weighted-average remaining lease term was 10.1 years for operating leases. The weighted average discount rate was 7.0 % for operating leases . Maturities of lease liabilities as of June 30, 2026 were as follows (in thousands): Operating Leases Fiscal 2027 (remainder of fiscal year) $ 1,211 Fiscal 2028 1,572 Fiscal 2029 1,576 Fiscal 2030 684 Fiscal 2031 and beyond 4,544 Total undiscounted lease payments $ 9,587 Less: imputed interest ( 3,243 ) Present value of lease liability $ 6,344 8 Table of Contents NOTE 7 — PROPERTY, PLANT AND EQUIPMENT At June 30, 2026 , the Company's construction in process balance of approximately $ 2.7 million consisted primarily of approximately $ 1.8 million associated with a building and processing capability expansion project at the Sinton, TX facility. The remaining balance consists of several smaller projects among our facilities. NOTE 8 — STOCK BASED COMPENSATION The Company maintains two stock based compensation plans: the Friedman Industries, Incorporated 2016 Restricted Stock Plan (the “2016 Plan”) and the Friedman Industries, Incorporated 2025 Long-Term Incentive Plan (the "2025 Plan"). The plans are administered by the Compensation Committee of the Board of Directors (the “Board”) and continue indefinitely until terminated by the Board or until all shares allowed by the plans have been awarded and earned. All shares authorized under the 2016 Plan have been awarded with some of those shares still under vesting restrictions at June 30, 2026 . Under the 2025 Plan, the Company may award stock-based compensation to employees, non-employee directors and third -party service providers. The 2025 Plan 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 June 30, 2026 , all stock based compensation issued under the 2025 plan was in the form of restricted stock awards and a total of 416,396 shares were still available to be issued under the plan. 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, 2026 : Weighted Average Number of Shares Grant Date Fair Value Per Share Unvested at March 31, 2026 142,276 $ 16.86 Granted 105,300 23.89 Vested ( 17,740 ) 14.39 Unvested at June 30, 2026 229,836 $ 20.27 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, 2026 consist of 71,550 time restricted shares with annual ratable vesting over a three year period and 33,750 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 $ 0.2 million and $ 0.1 million in the three months ended June 30, 2026 and 2025 , respectively, relating to the restricted stock issued under the plans. As of June 30, 2026 , unrecognized compensation expense related to unvested restricted stock was approximately $ 3.1 million which is expected to be recognized over a weighted average period of approximately 2.2 years. NOTE 9 — DERIVATIVE FINANCIAL INSTRUMENTS From time to time, we expect to utilize futures, options or swaps to manage our exposure to metals price risk that is inherent in our business. For the three months ended June 30, 2026 and 2025 , 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. 9 Table of Contents At June 30, 2026 and March 31, 2026 , 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 June 30, 2026 (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 $ 868 Current portion of derivative liability $ 1,851 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, 2026 (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 $ 153 Current portion of derivative liability $ 426 All derivatives are presented on a gross basis on the Consolidated Balance Sheets. During the three months ended June 30, 2026 and 2025 , 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 three months ended June 30, 2026 and 2025 , the Company did not designate any transactions as hedging instruments for accounting purposes. The following table summarizes the loss recognized in earnings for derivative instruments not designated as hedging instruments during the three months ended June 30, 2026 (in thousands): Loss Recognized in Earnings Location of Loss for the Three Months Ended Recognized in Earnings June 30, 2026 Hot-rolled coil steel contracts Gain (loss) on economic hedges of risk $ ( 2,756 ) 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 (loss) on economic hedges of risk $ 276 The following table summarizes the Company's economic (non-designated) derivative instruments outstanding at June 30, 2026 (in thousands): Notional Amount Maturity Date Hot-rolled coil steel contracts $ ( 52,041 ) July 2026 - June 2027 The following table summarizes the Company's economic (non-designated) derivative instruments outstanding at March 31, 2026 (in thousands): Notional Amount Maturity Date Hot-rolled coil steel contracts $ ( 8,987 ) April 2026 - May 2027 At June 30, 2026 and March 31, 2026 , cash of approximately $ 3.0 million and $ 0.8 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, 2026 and March 31, 2026 . 10 Table of Contents NOTE 10 — FAIR VALUE MEASUREMENTS Accounting standards provide a comprehensive framework for measuring fair value, define fair value, and establish a hierarchy prioritizing the inputs to valuation techniques. The hierarchy gives the highest priority to quoted prices in active markets for identical assets and liabilities and the lowest priority to unobservable 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, 2026 , our financial assets and liabilities, 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 liabilities, net $ ( 983 ) $ — $ — $ ( 983 ) Contingent consideration for business combination - financial liability $ — $ — $ ( 2,160 ) $ ( 2,160 ) Total $ ( 983 ) $ — $ ( 2,160 ) $ ( 3,143 ) At March 31, 2026 , our financial assets and liabilities, 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 liabilities, net $ ( 273 ) $ — $ — $ ( 273 ) Contingent consideration for business combination - financial liability $ — $ — $ ( 2,160 ) $ ( 2,160 ) Total $ ( 273 ) $ — $ ( 2,160 ) $ ( 2,433 ) At June 30, 2026 and March 31, 2026 , the Company did not have any fair value measurements on a non-recurring basis. 11 Table of Contents NOTE 11 — SEGMENT INFORMATION The Company is engaged in the metals processing, pipe manufacturing, and metals 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 carbon steel, stainless steel and aluminum flat-roll products into sheet, plate or slit coil. 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, 2026 Flat-roll Tubular Other Total Net Sales $ 221,753 $ 18,218 $ — $ 239,971 Cost and expenses: Cost of materials sold 171,501 12,718 — 184,219 Processing and warehousing expense 10,717 2,710 — 13,427 Delivery expense 9,050 335 — 9,385 Commercial expense 4,833 251 — 5,084 Depreciation and amortization 906 81 82 1,069 General corporate expenses — — 5,753 5,753 197,007 16,095 5,835 218,937 EARNINGS (LOSS) FROM OPERATIONS: 24,746 2,123 ( 5,835 ) 21,034 Loss on economic hedges of risk ( 2,756 ) Interest expense ( 1,224 ) Other expense ( 77 ) EARNINGS BEFORE INCOME TAXES $ 16,977 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 June 30, 2026 March 31, 2026 IDENTIFIABLE ASSETS: Flat-Roll $ 329,262 $ 301,528 Tubular 34,948 28,822 364,210 330,350 General corporate assets 9,228 6,460 $ 373,438 $ 336,810 General corporate expenses reflect general and administrative expenses not directly associated with segment operations and consist primarily of payroll expenses related to corporate functions, professional fees and services, retirement plan contribution expense, corporate insurance expenses, restricted stock plan compensation expense and office supplies. At June 30, 2026 and March 31, 2026 , 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. 12 Table of Contents NOTE 12 — REVENUE Revenue is generated primarily from contracts to manufacture or process metal 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 or slitting flat-roll metals. 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, 2026 and 2025 , respectively (in thousands): Three Months Ended June 30, 2026 2025 Flat-Roll Segment: Company Owned Flat-Roll Products $ 220,589 $ 122,846 Processing or Storage of Customer Owned Coil 1,164 1,221 $ 221,753 $ 124,067 Tubular Segment: Manufactured Pipe $ 18,218 $ 10,710 $ 18,218 $ 10,710 NOTE 13 — STOCKHOLDERS’ EQUITY The following tables reflect the changes in stockholders’ equity for each of the three months ended June 30, 2026 and June 30, 2025 (in thousands): Additional Common Paid-In Treasury Retained Stock Capital Stock Earnings Total BALANCE AT MARCH 31, 2026 $ 9,020 $ 35,934 $ ( 13,110 ) $ 119,650 $ 151,494 Net earnings — — — 12,784 12,784 Paid in capital – restricted stock — 244 — — 244 Issuance of restricted stock 105 ( 105 ) — — — Repurchase of shares — — ( 82 ) — ( 82 ) Cash dividends ($ 0.04 per share) — — — ( 289 ) ( 289 ) BALANCE AT JUNE 30, 2026 $ 9,125 $ 36,073 $ ( 13,192 ) $ 132,145 $ 164,151 13 Table of Contents 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 — 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 NOTE 14 — EARNINGS PER SHARE Basic and dilutive net earnings per share are computed based on the following information (in thousands, except for share data): Three Months Ended June 30, 2026 2025 Numerator (basic and diluted) Net earnings $ 12,784 $ 5,028 Less: Allocation to unvested restricted stock awards 286 67 Net earnings attributable to common shareholders $ 12,498 $ 4,961 Denominator (basic and diluted) Weighted average common shares outstanding 6,982,955 6,965,880 For the three months ended June 30, 2026 and 2025 , 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 included in the computation of weighted average diluted common shares outstanding under the two -class method: Three Months Ended June 30, 2026 2025 Restricted Stock Awards 129,343 69,628 NOTE 15 — SUPPLEMENTAL CASH FLOW INFORMATION The Company paid interest o f approximately $ 1.3 million and $ 0.7 million during the three months ended June 30, 2026 and 2025 , respectively. Additionally, the Company paid income taxes of approximately $ 0.3 million and $ 0.1 million during the three months ended June 30, 2026 and 2025 , respectively. NOTE 16 — INCOME TAXES For the three months ended June 30, 2026 and 2025 , the Company recorded income tax provisio ns of approximately $ 4.2 million and $ 1.6 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. 14 Table of Contents