Overview
Friedman Industries, Incorporated is a manufacturer and processor of steel
products and operates in two reportable segments; coil products and tubular
products.
The coil product segment includes the operation of two hot-rolled coil
processing facilities; one in Hickman, Arkansas and the other in Decatur,
Alabama. The Hickman facility operates a temper mill and a cut-to-length line.
The temper mill improves the flatness and surface qualities of the coils and the
cut-to-length line levels the steel and cuts the coils into sheet and plate of
prescribed lengths. The Hickman facility is capable of cutting sheet and plate
with thicknesses ranging from 14 gauge to ½" thick in widths ranging from 36"
wide to 72" wide. The Decatur facility underwent an equipment replacement
project during our fiscal year ended March 31, 2021 and now operates a stretcher
leveler cut-to-length line that was placed into service in March 2021. This new
equipment expands the coil segment's processing capabilities to include material
up to 96" wide and material of higher grades and allows the Decatur facility to
cut material that is up to ½" thick compared to the previous equipment's
capability of 5/16" thick. In addition, sheet and plate that has been stretcher
leveled is preferable to some customers and applications compared to material
that has been leveled through the temper mill process. The coil product segment
sells its prime grade inventory under the Friedman Industries name but also
maintains an inventory of non-standard coil products, consisting primarily of
mill secondary and excess prime coils, which are sold through the Company's XSCP
division. The coil product segment also processes customer-owned coils on a fee
basis.
On May 25, 2021, the Company announced plans for the construction of a new
facility in Sinton, Texas that will be part of the coil product segment. The new
facility will be on the campus of Steel Dynamics, Inc.'s ("SDI") new flat roll
steel mill currently under construction in Sinton, Texas. The Company's
new location will consist of an approximately 70,000 square foot building
located on approximately 26.5 acres leased from SDI under a 99-year agreement.
The lease agreement calls for an annual rental payment of $1. The Company has
selected Red Bud Industries to build one of the world's largest stretcher
leveler cut-to-length lines, capable of handling material up to 1" thick, widths
up to 96" and yields exceeding 100,000 psi. The Company expects the location to
commence operations in August 2022 and estimates the total cost of the project
to be $21 million. The Company previously expected the facility to commence
operations in April 2022 but has received notification from the electricity
provider that electrical infrastructure necessary to operate the facility is not
expected to be complete until July 2022. At December 31, 2021, the Company's
construction in process related to the Sinton project was $12,983,850 consisting
of $7,383,850 in cash payments and $5,600,000 of accrued capital expenditures.
The Company expects to fund the remainder of the Sinton capital expenditure
through a combination of cash generated from operations and funds drawn under
the ABL Facility. After an initial ramp up period, the Company expects the
facility's annual shipments could be in the range of 110,000 tons to 140,000
tons for fiscal 2024.
The tubular product segment consists of the Company's Texas Tubular Products
division ("TTP") located in Lone Star, Texas. TTP operates two electric
resistance welded pipe mills with a combined outside diameter ("OD") size range
of 2 3/8" OD to 8 5/8" OD. Both pipe mills are American Petroleum Institute
("API") licensed to manufacture line pipe and oil country pipe and also
manufacture pipe for structural purposes that meets other recognized industry
standards. TTP has an API licensed pipe finishing facility that threads and
couples oil country tubular goods and performs other services that are customary
in the pipe finishing process. The pipe finishing facility is currently idled
due to market conditions. TTP's inventory consists of raw materials and finished
goods. Raw material inventory consists of hot-rolled steel coils that TTP will
manufacture into pipe. Finished goods inventory consists of pipe TTP has
manufactured and new mill reject pipe that TTP purchased from U.S. Steel Tubular
Products, Inc.
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Results of Operations
Nine Months Ended December 31, 2021 Compared to Nine Months Ended December 31,
2020
During the nine months ended December 31, 2021 (the " 2021 period"), sales,
costs of goods sold and gross profit increased $133,254,948, $95,677,752 and
$37,577,196, respectively, compared to the amounts recorded during the nine
months ended December 31, 2020 (the " 2020 period"). The increase in sales was
related to both an increase in the average per ton selling price and an increase
in tons sold. Tons sold increased from approximately 125,000 tons for the 2020
period to approximately 147,500 tons for the 2021 period. Sales volume for the
2020 period was negatively impacted by both the initial effects of the COVID-19
pandemic and the removal of the processing equipment at the Decatur, AL facility
for an equipment replacement project. For the 2021 period, sales volume
recovered well from the initial pandemic decline and because the new Decatur
equipment was operational. Discussion of the change in sales is expanded upon at
the segment level in the following paragraphs. Gross profit increased from
$5,843,700 for the 2020 period to $43,420,896 for the 2021 period. Gross profit
as a percentage of sales increased from approximately 7.6% for the 2020 period
to approximately 20.7% for the 2021 period. Gross profit for the 2021 period
included $12,317,960 of recognized net losses associated with hedging activities
while the 2020 period included $396,720 of recognized net gains associated with
hedging activities. Excluding the effect of hedging activities, gross profit
related to physical material as a percentage of sales was approximately 23.9%
for the 2021 period and approximately 7.1% for the 2020 period. Our operating
results are significantly impacted by the market price of hot-rolled steel coil.
The improved results for the 2021 period were driven by a historic rise in
steel prices with prices for the 2021 period being approximately 200% higher
than prices for the 2020 period. The impact of this rise in steel prices on each
of our segments is discussed further in the following paragraphs.
Coil Segment
Coil product segment sales for the 2021 period totaled $172,814,243 compared to
$55,561,017 for the 2020 period. 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 of customer owned material. Coil segment sales for the 2021 period
were reduced by $20,920,640 for the recognition of hedging related losses. Coil
segment sales for the 2020 period were not impacted by any hedging related gains
or losses. Sales generated from processing of customer owned material totaled
$1,013,801 for the 2021 period compared to $634,894 for the 2020 period. Sales
generated from coil segment inventory, excluding the impact of any hedging
related gains or losses, totaled $192,721,082 for the 2021 period compared to
$54,926,123 for the 2020 period. The average per ton selling price related to
these shipments increased from approximately $594 per ton for the 2020 period to
approximately $1,737 per ton for the 2021 period. Inventory tons sold increased
from approximately 92,500 tons in the 2020 period to approximately 111,000 tons
in the 2021 period. Sales volume for the 2020 period was significantly impacted
by the onset of the COVID-19 pandemic with volume for the 2020 period being down
approximately 19% compared to pre-pandemic average volumes for the fiscal year
ended March 31, 2020 ("fiscal 2020"). Volume for the 2021 period was
approximately 3% lower than pre-pandemic average volumes for fiscal 2020. Volume
for the 2021 period benefitted from the new equipment at the Decatur facility
being placed into service in March 2021. The prior equipment at the Decatur
facility was removed during the 2020 period for the equipment replacement
project. We have been pleased with the initial customer response to Decatur's
new capabilities. Sales volume for the Decatur plant averaged approximately
2,550 tons per month for the 2021 period. Based on prior years with the prior
equipment in place, the Decatur plant's average monthly sales volume was
approximately 1,700 tons. The Decatur plant is currently staffed to operate a
single shift with a monthly processing capability of approximately 5,500 tons
based on operating a single shift. Coil segment operations recorded an operating
profit of approximately $33,497,000 for the 2021 period compared to an
operating profit of approximately $3,529,000 for the 2020 period. Operating
results for the 2021 period benefitted from a significant increase in steel
prices and associated improvement in our margins. Operating profit for the 2021
period includes recognized net losses on hedging activities of $10,511,300.
Operating profit for the 2020 period included net gains on hedging activities
of $396,720. The 2020 period experienced declining steel prices for the first
two quarters of the period with low margins associated followed by steel prices
starting to increase during the last quarter of the period leading to margin
improvement.
The Company's coil 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.
Tubular Segment
Tubular product segment sales for the 2021 period totaled $37,329,034 compared
to $21,327,312 for the 2020 period. Sales increased due to both an increase
in the volume sold and an increase in the average selling price per ton. 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. Tubular segment sales for the 2021 period were reduced by $2,030,220 for
the recognition of hedging related losses. Tubular segment sales for the 2020
period were not impacted by any hedging related gains or losses. Sales generated
from tubular segment inventory, excluding the impact of any hedging related
gains or losses, totaled $39,359,254 for the 2021 period compared to
$21,327,312 for the 2020 period. The average per ton selling price related to
these shipments increased from approximately $658 per ton in the 2020 period to
approximately $1,074 per ton in the 2021 period. Tons sold increased from
approximately 32,500 tons in the 2020 period to approximately 36,500 tons in
the 2021 period. Sales volume for the 2020 period was significantly impacted by
the onset of the COVID-19 pandemic with volume for the 2020 period being down
approximately 25% compared to pre-pandemic average volumes for fiscal 2020.
Volume for the 2021 period was approximately 11% lower than pre-pandemic average
volumes for fiscal 2020. The tubular segment operations recorded operating
profit of approximately $3,951,000 for the 2021 period compared to an operating
loss of approximately $16,000 for the 2020 period. Operating results for the
2021 period benefitted from a significant increase in steel prices and
associated improvement in our margins but sales volume was challenged by energy
industry conditions which showed signs of improvement late in the period.
Operating profit for the 2021 period includes recognized net losses on hedging
activities of $1,806,660 while the Company did not have any significant hedging
related gains or losses affecting operating results for the 2020 period. The
2020 period was negatively impacted by low margins associated with declines in
hot-rolled steel prices and weak energy industry conditions.
The tubular 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. In March 2020, U.S. Steel announced the idling of their Lone
Star Tubular Operations which was our sole supplier of mill reject pipe. U.S.
Steel's facility was idled as announced and the Company's receipts of mill
reject pipe ceased in August 2020. At December 31, 2021 , we had approximately
3,000 tons of mill reject inventory and believe the balance will be
substantially sold within 6 months. We expect the idling to have a negative
impact on our operations as we sell out of mill reject pipe inventory. For the
2021 period, sales of mill reject pipe totaled approximately $9,439,000 and
accounted for approximately $3,532,000 of the tubular segment's operating profit
for the period with approximately $1,175,000 of allocated operating,
administrative and selling expenses included in the calculation of operating
profit related to mill reject pipe. For the fiscal year ended March 31, 2021,
sales of mill reject pipe totaled approximately $5,283,645 and accounted for
approximately $1,313,000 of the tubular segment's operating profit for the
period with approximately $802,000 of allocated operating, administrative and
selling expenses included in the calculation of operating profit related to mill
reject pipe. The Company plans to expand its manufactured pipe sales to
counteract the impact of mill reject sales ending in the near future. With this
objective, the tubular segment increased its volume of hot-rolled coil inventory
at the end of the 2021 period to support a higher level of pipe manufacturing
during the quarter ending March 31, 2022.
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General, Selling and Administrative Costs
During the 2021 period, general, selling and administrative costs increased
$6,115,622 compared to the 2020 period. The increase was related primarily to
incentive compensation associated with increased earnings and professional fees.
Other Income
During the 2021 period, the Company reported other loss of $4,801,121. This loss
consists primarily of a loss of $6,498,040 on derivative instruments not
designated for hedge accounting partially offset by a $1,706,614 gain associated
with the forgiveness of the Company's Paycheck Protection Program loan.
Income Taxes
Income taxes increased from a provision for the 2020 period of $298,668 to a
provision for the 2021 period of $6,303,899. This increase was related
primarily to the increased earnings before tax during the historical market
increases seen over the 2021 period.
Three Months Ended December 31, 2021 Compared to Three Months Ended December 31,
2020
During the three months ended December 31, 2021 (the "2021 quarter"), sales
and costs of goods sold increased $23,153,894 and $31,253,764, respectively,
while gross profit decreased $8,099,870, compared to the amounts recorded during
the three months ended December 31, 2020 (the "2020 quarter"). The increase in
sales was related to an increase in the average per ton selling price, offset
by a slight decrease in tons sold. Tons sold decreased from approximately 43,000
tons in the 2020 quarter to approximately 39,000 tons in the 2021 quarter. Sales
volume for the 2021 quarter was negatively impacted by customer reaction to
steel prices peaking at a historic level in September 2021 and then declining
significantly through the 2021 quarter. Discussion of the change in sales is
expanded upon at the segment level in the following paragraphs. Gross margin
decreased from a profit of $4,495,849 for the 2020 quarter to a loss of
$3,604,021 for the 2021 quarter. Gross margin for the 2021 quarter included
$14,716,860 in recognized net losses associated with hedging activities while
the 2020 quarter included $396,720 in recognized net gains associated with
hedging activities. Excluding the impact of hedging activities, gross profit
related to physical material as a percentage of sales was approximately 16.7%
for the 2021 quarter compared to 14.4% for the 2020 quarter. Our operating
results are significantly impacted by the market price of hot-rolled steel coil.
The 2020 quarter was the initial period of increasing steel prices in a historic
cycle that saw steel prices increase approximately 350% and reach a peak in
September 2021. At the end of the 2021 quarter, steel prices had declined
approximately 22% from the peak of the price cycle. Physical margins for both
the 2021 and 2020 quarters were higher than historical averages due primarily to
the effects of the historic increase in steel price. The impact of these
circumstances on each of our segments is discussed further in the following
paragraphs.
Coil Segment
Coil product segment sales for the 2021 quarter totaled $41,795,586 compared to
$21,672,147 for the 2020 quarter. 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 of customer owned material. Coil segment sales for the 2021 quarter
were reduced by $13,169,420 for the recognition of hedging related losses. Coil
segment sales for the 2020 quarter were not impacted by any hedging related
gains or losses. Sales generated from processing of customer owned material
totaled $354,876 for the 2021 quarter compared to $244,860 for the 2020 quarter.
Sales generated from coil segment inventory, excluding the impact of any hedging
related gains or losses, totaled $54,610,130 for the 2021 quarter compared to
$21,427,287 for the 2020 quarter. The average per ton selling price related to
these shipments increased from approximately $665 per ton in the 2020 quarter to
approximately $1,899 per ton in the 2021 quarter. Inventory tons sold decreased
from approximately 32,000 tons in the 2020 quarter to approximately 29,000 tons
in the 2021 quarter. Sales volume for the 2021 quarter was negatively impacted
by customer reaction to steel prices peaking at a historic level in September
2021 and then declining significantly through the 2021 quarter. Coil segment
operations recorded an operating loss of approximately $4,032,000 for the
2021 quarter compared to an operating profit of approximately $3,238,000 for
the 2020 quarter. The operating loss for the 2021 quarter includes recognized
net losses on hedging activities of $13,120,220 while the 2020 quarter operating
profit included recognized net gains on hedging activities of $396,720.
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The Company's coil 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.
Tubular Segment
Tubular product segment sales for the 2021 quarter totaled $9,860,357 compared
to $6,829,902 for the 2020 quarter. Sales increased due to an increase in
the average selling price per ton, offset by a slight decrease in tons sold. 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. Tubular segment sales for the 2021 quarter were reduced by $1,596,640 for
the recognition of hedging related losses. Tubular segment sales for the 2020
quarter were not impacted by any hedging related gains or losses. Sales
generated from tubular segment inventory, excluding the impact of any hedging
related gains or losses, totaled $11,456,997 for the 2021 quarter compared to
$6,829,902 for the 2020 quarter. The average per ton selling price related to
these shipments increased from approximately $616 per ton in the 2020 quarter to
approximately $1,111 per ton in the 2021 quarter. Tons sold decreased from
approximately 11,000 tons in the 2020 quarter to approximately 10,500 tons in
the 2021 quarter. Sales volume for both the 2021 and 2020 quarters was
challenged by energy industry conditions which showed signs of improvement late
in the 2021 quarter. The tubular segment recorded an operating loss of
approximately $647,000 for the 2021 quarter compared to an operating profit of
approximately $269,000 for the 2020 quarter. The operating loss for the 2021
quarter includes recognized net losses on hedging activities of $1,596,640 while
the Company did not have any significant hedging related gains or losses
affecting operating results for the 2020 quarter.
The tubular 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. As disclosed previously, the Company is no longer supplied
with mill reject pipe from U.S. Steel's Lone Star Tubular Operations due to the
idling of that facility. At December 31, 2021, we had approximately 3,000 tons
of mill reject inventory and believe the balance will be substantially sold
within 6 months. We expect the idling to have a negative impact on our
operations as we eventually sell out of mill reject pipe inventory.
General, Selling and Administrative Costs
During the 2021 quarter, general, selling and administrative costs increased
$269,099 compared to the 2020 quarter. The increase was related primarily to
increased payroll expenses, travel expenses and professional fees.
Other Income
During the 2021 quarter, the Company reported other income of $1,727,134. This
income consists primarily of a $1,721,700 gain on derivative instruments not
designated for hedge accounting.
Income Taxes
Income taxes decreased from a provision for the 2020 quarter of $639,152 to a
benefit for the 2021 quarter of $967,681. This decrease was related primarily to
the shift from income before taxes for the 2020 quarter to having a loss before
tax for the 2021 quarter.
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FINANCIAL POSITION, LIQUIDITY AND CAPITAL RESOURCES
The Company's current ratio was 2.8 at December 31, 2021 and 2.7 at March 31,
2021. Working capital was $78,032,235 at December 31, 2021 and $48,462,364 at
March 31, 2021.
During the nine months ended December 31, 2021, the Company maintained assets
and liabilities at levels it believed were commensurate with operations. Changes
in balance sheet amounts occurred in the ordinary course of business. Accounts
receivable, inventories and accounts payable increased significantly due
primarily to the significant increase in steel prices. Inventories and accounts
payable also increased due to the Decatur facility's higher operating level post
equipment replacement, the tubular segment's plans to expand manufactured pipe
production and the timing of inventory shipments with the December 31, 2021
inventory amount consisting of approximately $14,364,000 of material in-transit
to the Company. Cash decreased primarily from the Company's operating activities
and from the purchase of property, plant and equipment partially offset by cash
provided from the Company's credit facility. The Company expects to continue to
monitor, evaluate and manage balance sheet components depending on changes in
market conditions and the Company's operations.
In June 2021, the Small Business Administration authorized full forgiveness of
the Company's Paycheck Protection Program loan.
On March 8, 2021, the Company entered into a Credit Agreement providing for a
$10 million revolving line of credit facility (the "Interim Credit Facility)
with JPMorgan Chase Bank, N.A. (the "Bank"). The term of the Interim Credit
Facility had an expiration date of July 15, 2021 because the Company was
evaluating options for longer term credit arrangements. On April 12, 2021, the
Company executed a first amendment to the Interim Credit Facility that increased
the size of the facility from $10 million to $20 million. On May 19, 2021, the
Company entered into an Amended and Restated Credit Agreement with the Bank that
amends and restates the Interim Credit Facility and provides for asset-based
revolving loans in an aggregate principal amount up to $40 million (the "ABL
Facility"). The ABL Facility matures on May 19, 2026 and replaced the Interim
Credit Facility. The ABL Facility is secured by substantially all of the assets
of the Company and interest shall accrue on outstanding borrowings at a rate
equal to LIBOR plus 1.7% per annum. More details regarding the ABL Facility may
be found in Note D. As of the filing date of this Form 10-Q, the Company had
borrowings of $20,768,425 outstanding under the ABL Facility and the Company had
full access to the ABL Facility.
The Company believes that its current cash position along with cash flows from
operations and borrowing capability due to its financial position are adequate
to fund its expected cash requirements for the next 12 months.
DERIVATIVE CONTRACTS
From time to time, the Company may use futures contracts to partially manage
exposure to commodity price risk. The Company elects hedge accounting for some
of its derivatives and classifies the transactions as either cash flow hedges or
fair value hedges. All of the derivatives designated for hedge accounting during
the three month and nine month periods ended December 31, 2021 were classified
as cash flow hedges. From time to time, the Company may also transact futures
contracts where hedge accounting is not elected. The Company recognized net
losses related to derivatives designated for hedge accounting of $14,716,860 and
$12,317,960 for the three month and nine month periods ended December 31, 2021,
respectively. For derivatives not designated for hedge accounting, the Company
recognized a gain of $1,721,700 and a loss of $6,498,040 for the three month and
nine month periods ended December 31, 2021, respectively. See Note H for further
information.
OUTLOOK
The Company expects overall physical margins to decline slightly during its
fiscal fourth quarter ending March 31, 2022 due to continued decline in steel
prices but to remain at a level above historical average margins. The Company
expects fourth quarter sales volume for both the coil segment and tubular
segment to increase slightly compared to the third quarter sales volumes. At the
end of the third quarter, the Company's hedging positions with income statement
recognition deferred under hedge accounting consisted of total losses of
approximately $10,200,000 associated with closed hedging positions and total
gains of approximately $1,200,000 associated with open hedging positions. The
Company expects to reclassify approximately $9,000,000 of these hedging losses
into earnings during the fourth quarter.
CRITICAL ACCOUNTING ESTIMATES
The preparation of financial statements in conformity with U.S. generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the consolidated financial
statements and accompanying notes. The more significant estimates and judgements
include forecasted purchases of hot-rolled coil and forecasted sales of prime
coil inventory and manufactured pipe inventory in relation to hedging activities
and the fair value of the pipe-finishing facility, when impaired. From time to
time, the Company hedges these forecasted purchases and sales and may designate
those transactions for hedge accounting. If the original forecasts are
subsequently reduced, it could result in the Company's hedged positions
exceeding revised forecasts, thus warranting immediate recognition in earnings
of previously deferred hedge income or losses associated with excess hedges. A
pattern of missed forecasts could call into question the Company's ability to
accurately predict forecasted transactions and the propriety of using hedge
accounting in the future for similar forecasted transactions. To mitigate
against the negative consequences of missing forecasts we have set an internal
policy to designate hedging instruments for accounting purposes only up to 75%
of forecasted sales or purchases. Determination of forecasted purchases of
hot-rolled coil and forecasted sales of prime coil inventory and manufactured
pipe inventory require the Company to make assumptions related to customer
demand and the volume and timing of inventory purchases. The
pipe-finishing facility impairment analysis requires assumptions related to
future operations of the facility and estimates related to the replacement cost
and value in exchange for the assets. Actual results could differ from these
estimates.
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CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
From time to time, the Company may make certain statements that contain
forward-looking information (as defined in the Private Securities Litigation
Reform Act of 1996, as amended) and that involve risk and uncertainty. Such
statements may include those risks disclosed in the Management's Discussion and
Analysis of Financial Condition and Results of Operations section of this report
and our expectations for the construction and performance of our new Sinton, TX
facility. These forward-looking statements may include, but are not limited to,
future changes in the Company's financial condition or results of operations,
future production capacity, product quality and proposed expansion plans.
Forward-looking statements may be made by management orally or in writing
including, but not limited to, this Management's Discussion and Analysis of
Financial Condition and Results of Operations and other sections of the
Company's filings with the U.S. Securities and Exchange Commission (the "SEC")
under the Securities Act of 1933, as amended, and the Securities Exchange Act of
1934, as amended (the "Exchange Act"), including the Company's Annual Report on
Form 10-K and its other Quarterly Reports on Form 10-Q. Forward-looking
statements include those preceded by, followed by or including the words "will,"
"expect," "intended," "anticipated," "believe," "project," "forecast,"
"propose," "plan," "estimate," "enable," and similar expressions, including, for
example, statements about our business strategy, our industry, our future
profitability, growth in the industry sectors we serve, our expectations,
beliefs, plans, strategies, objectives, prospects and assumptions, and estimates
and projections of future activity and trends in the oil and natural gas
industry. These forward-looking statements are not guarantees of future
performance. These statements are based on management's expectations that
involve a number of business risks and uncertainties, any of which could cause
actual results to differ materially from those expressed in or implied by the
forward-looking statements. Although forward-looking statements reflect our
current beliefs, reliance should not be placed on forward-looking statements
because they involve known and unknown risks, uncertainties and other factors,
which may cause our actual results, performance or achievements to differ
materially from anticipated future results, performance or achievements
expressed or implied by such forward-looking statements. Actual results and
trends in the future may differ materially depending on a variety of factors
including, but not limited to, changes in the demand for and prices of the
Company's products, changes in government policy regarding steel, changes in the
demand for steel and steel products in general and the Company's success in
executing its internal operating plans, changes in and availability of raw
materials, unplanned shutdowns of our production facilities due to equipment
failures or other issues, increased competition from alternative materials and
risks concerning innovation, new technologies, products and increasing customer
requirements. Accordingly, undue reliance should not be placed on our
forward-looking statements. We undertake no obligation to publicly update or
revise any forward-looking statement, whether as a result of new information,
future events, changed circumstances or otherwise, except to the extent law
requires.
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FRIEDMAN INDUSTRIES, INCORPORATED 
