FRIEDMAN INDUSTRIES INC

Flat-Roll Segment

Flat-roll product segment sales for fiscal 2024 totaled approximately $472.8 million compared to approximately $485.6 million for fiscal 2023. For a more complete understanding of the average selling prices of goods sold, it is helpful to exclude any hedging related gains or losses that are captured in sales and any sales generated from processing or storage of customer owned material. Flat-roll segment sales for fiscal 2024 were reduced by approximately $0.4 million for the recognition of hedging related losses. Flat-roll segment sales for fiscal 2023 were reduced by approximately $4.1 million for the recognition of hedging related losses. Sales generated from processing or storage of customer owned material totaled approximately $5.3 million for fiscal 2024 compared to approximately $2.8 million for fiscal 2023. Sales generated from flat-roll segment inventory, excluding the impact of any hedging related gains or losses, totaled approximately $467.9 million for fiscal 2024 compared to approximately $486.9 million for fiscal 2023. The average per ton selling price related to these shipments decreased from approximately $1,131 per ton in fiscal 2023 to approximately $987 per ton in fiscal 2024. Flat-roll segment sales volume for fiscal 2024 consisted of approximately 474,000 tons from inventory and another 101,000 tons of toll processing customer owned material compared to fiscal 2023 volume consisting of approximately 430,500 tons from inventory and 48,000 tons of toll processing. The growth in sales volume was primarily related to the Sinton, TX facility operating for the full fiscal 2024 period compared to commencing operations in October 2022 of the fiscal 2023 period. Flat-roll segment operations recorded operating profits of approximately $33.2 million and $23.4 million in fiscal 2024 and fiscal 2023, respectively. Operating profit for fiscal 2024 includes recognized net losses on hedging activities of approximately $0.4 million while fiscal 2023 operating profit included recognized net losses on hedging activities of approximately $4.1 million.

The Company’s flat-roll segment purchases its inventory from a limited number of suppliers. Loss of any of these suppliers could have a material adverse effect on the Company’s business.