Longview, Texas-based Friedman Industries expects strong margins in Q2FY 2021 (ending September 30, 2021) after recording its most profitable quarter in company history during Q1 on rising steel prices.
Friedman foresees further improvement in operating results during Q2 versus Q1 also noting that hot-rolled coil (HRC) steel prices have increased about 10pc since Jun 30.
The steel products manufacturer and processor expects this upturn to continue through Sep 30 as HRC prices for Q1 2021 were around 200pc above Q1 2020 levels.
The company broke ground in August to build its new Sinton, Texas facility, located on Steel Dynamics’ (SDI) new flat-rolled steel mill site, which will lead to double the volumes of its coil segment sales. Operations are on track to commence in April 2022 for the project estimated at $21mn.
The processor also began commissioning a stretcher leveler line in March at its coil processing site in Decatur, Alabama. The new equipment expands processing capacity at the facility also adding to its coil product operations and goals to double total volumes.
Friedman’s coil inventory sales increased by 44pc to about 39,000nt (35,380mt) in Q1 2021 compared to approximately 27,000nt in Q1 2020. The average sales price of coil inventory surged 158pc to approximately $1,462/nt from about $566/nt in the same period.
Sales in the segment grew more than three-fold to $52.69mn in Q1 2021 against $15.43mn in Q1 2020 on higher selling prices, sales volumes, and higher HRC prices.
Tubular product division
Tubular inventory tonnage sold moved up by 32pc to about 14,500nt in Q1 2021 against approximately 11,000nt in Q1 2020. The segment’s average sales price rose by 28.6pc to about $930/nt from approximately $723/nt in this timeframe.
Sales in the tubular segment soared by 63.4pc to $13.22mn in Q1 2021 compared to $8.09mn in Q1 2020 on higher volumes sold and rising average selling prices.
The company’s total net sales reached $65.92mn in Q1 2021 surging 180pc compared to $23.52mn in Q1 2020 on strong margins from rising steel prices and the Decatur site cut-to-length line commencing operations.
Friedman’s net earnings also increased considerably to $11.31mn in Q1 2021 against a net loss of $858,862 in Q1 2020.