10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE QUARTERLY PERIOD ENDED DECEMBER 31, 2013

OR

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FROM THE TRANSITION PERIOD FROM                     TO                     

COMMISSION FILE NUMBER 1-7521

FRIEDMAN INDUSTRIES, INCORPORATED

(Exact name of registrant as specified in its charter)

TEXAS	74-1504405
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification Number)

19747 HWY 59 N, SUITE 200, HUMBLE, TEXAS 77338

(Address of principal executive offices) (Zip Code)

(713) 672-9433

(Registrant’s telephone number, including area code)

(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  x    No  ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).     Yes  x    No  ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer	¨	Accelerated filer	¨
Non-accelerated filer	¨  (Do not check if a smaller reporting company)	Smaller reporting company	x

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).     Yes  ¨    No  x

At December 31, 2013, the number of shares outstanding of the issuer’s only class of stock was 6,799,444 shares of Common Stock.

TABLE OF CONTENTS

Part I — FINANCIAL INFORMATION	2
Item 1. Financial Statements	2
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	7
Item 3. Quantitative and Qualitative Disclosures About Market Risk	9
Item 4. Controls and Procedures	9
Part II — OTHER INFORMATION	10
Item 6. Exhibits	10
SIGNATURES	11
EXHIBIT INDEX
EX-31.1
EX-31.2
EX-32.1
EX-32.2
EX-101 INSTANCE DOCUMENT
EX-101 SCHEMA DOCUMENT
EX-101 CALCULATION LINKBASE DOCUMENT
EX-101 DEFINITION LINKBASE DOCUMENT
EX-101 LABELS LINKBASE DOCUMENT
EX-101 PRESENTATION LINKBASE DOCUMENT

Part I — FINANCIAL INFORMATION

Item 1. Financial Statements

FRIEDMAN INDUSTRIES, INCORPORATED

CONDENSED CONSOLIDATED BALANCE SHEETS — UNAUDITED

	December 31, 2013			March 31, 2013
ASSETS
CURRENT ASSETS:
Cash	$	17,089,296		$	15,923,294
Accounts receivable, net of allowances for bad debts and cash discounts of $27,276 and $37,276 at December 31 and March 31, 2013, respectively		4,938,697			9,037,548
Inventories		38,027,470			39,219,168
Other		239,459			103,547
TOTAL CURRENT ASSETS		60,294,922			64,283,557
PROPERTY, PLANT AND EQUIPMENT:
Land		1,109,372			1,082,331
Buildings and yard improvements		7,014,180			7,014,180
Machinery and equipment		30,634,646			30,293,590
Less accumulated depreciation		(28,479,829	)		(27,111,529	)
		10,278,369			11,278,572
OTHER ASSETS:
Cash value of officers’ life insurance and other assets		1,059,500			1,013,000
TOTAL ASSETS	$	71,632,791		$	76,575,129
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES:
Accounts payable and accrued expenses	$	6,702,944		$	11,181,804
Dividends payable		135,989			543,956
Contribution to profit-sharing plan		210,000			52,500
Employee compensation and related expenses		317,932			533,822
TOTAL CURRENT LIABILITIES		7,366,865			12,312,082
DEFERRED INCOME TAXES		213,143			362,279
POSTRETIREMENT BENEFITS OTHER THAN PENSIONS		995,579			943,149
STOCKHOLDERS’ EQUITY:
Common stock, par value $1:
Authorized shares — 10,000,000
Issued shares — 7,975,160 at December 31 and March 31, 2013		7,975,160			7,975,160
Additional paid-in capital		29,003,674			29,003,674
Treasury stock at cost (1,175,716 shares at December 31 and March 31, 2013)		(5,475,964	)		(5,475,964	)
Retained earnings		31,554,334			31,454,749
TOTAL STOCKHOLDERS’ EQUITY		63,057,204			62,957,619
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	71,632,791		$	76,575,129

2

FRIEDMAN INDUSTRIES, INCORPORATED

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS — UNAUDITED

	Three months ended December 31,						Nine months ended December 31,
	2013			2012			2013			2012
Net sales	$	28,274,696		$	31,719,922		$	84,167,208		$	104,488,762
Costs and expenses
Costs of goods sold		26,427,918			28,835,644			78,798,672			93,179,930
General, selling and administrative costs		1,121,986			1,183,507			3,472,545			4,065,890
		27,549,904			30,019,151			82,271,217			97,245,820
Interest and other income		(15,501	)		(15,530	)		(46,508	)		(43,264	)
Earnings before income taxes		740,293			1,716,301			1,942,499			7,286,206
Provision for (benefit from) income taxes:
Current		275,970			587,173			768,149			2,469,478
Deferred		(23,145	)		(20,930	)		(149,136	)		(69,513	)
		252,825			566,243			619,013			2,399,965
Net earnings	$	487,468		$	1,150,058		$	1,323,486		$	4,886,241
Weighted average number of common shares outstanding:
Basic		6,799,444			6,799,444			6,799,444			6,799,444
Diluted		6,799,444			6,799,444			6,799,444			6,799,444
Net earnings per share:
Basic	$	0.07		$	0.17		$	0.19		$	0.72
Diluted	$	0.07		$	0.17		$	0.19		$	0.72
Cash dividends declared per common share	$	0.02		$	0.63		$	0.18		$	0.89

3

FRIEDMAN INDUSTRIES, INCORPORATED

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS — UNAUDITED

	Nine Months Ended December 31
	2013			2012
OPERATING ACTIVITIES
Net earnings	$	1,323,486		$	4,886,241
Adjustments to reconcile net earnings to cash provided by operating activities:
Depreciation		1,368,300			1,340,697
Provision for deferred taxes		(149,136	)		(69,513	)
Provision for postretirement benefits		52,430			67,059
Decrease (increase) in operating assets:
Accounts receivable, net		4,098,851			9,596,924
Inventories		1,191,698			3,846,976
Other		(135,912	)		(748,028	)
Increase (decrease) in operating liabilities:
Accounts payable and accrued expenses		(4,478,860	)		(7,464,299	)
Contribution to profit-sharing plan		157,500			157,500
Employee compensation and related expenses		(215,890	)		(272,218	)
Income taxes payable		—			(98,464	)
NET CASH PROVIDED BY OPERATING ACTIVITIES		3,212,467			11,242,875
INVESTING ACTIVITIES
Purchase of property, plant and equipment		(368,097	)		(466,218	)
Proceeds from sales of assets		—			42,375
Increase in cash surrender value of officers’ life insurance		(46,500	)		(46,500	)
NET CASH USED IN INVESTING ACTIVITIES		(414,597	)		(470,343	)
FINANCING ACTIVITIES
Cash dividends paid		(1,631,868	)		(6,051,505	)
NET CASH USED IN FINANCING ACTIVITIES		(1,631,868	)		(6,051,505	)
INCREASE IN CASH		1,166,002			4,721,027
Cash at beginning of period		15,923,294			11,881,548
CASH AT END OF PERIOD	$	17,089,296		$	16,602,575

4

FRIEDMAN INDUSTRIES, INCORPORATED

CONDENSED NOTES TO QUARTERLY REPORT — UNAUDITED

NOTE A — 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 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, 2013.

NOTE B — INVENTORIES

Inventories consist of prime coil, non-standard coil and tubular materials. Prime coil inventory consists primarily of raw materials, non-standard coil inventory consists primarily of raw materials and tubular inventory consists of both raw materials and finished goods. Inventories are valued at the lower of cost or replacement market. Cost for prime coil inventory is determined under the last-in, first-out (“LIFO”) method. Cost for non-standard coil inventory is determined using the specific identification method. Cost for tubular inventory is determined using the weighted average method.

A summary of inventory values by product group follows:

	December 31, 2013		March 31, 2013
Prime Coil Inventory	$	11,239,812	$	10,981,835
Non-Standard Coil Inventory		2,029,753		3,741,718
Tubular Raw Material		1,387,273		3,308,419
Tubular Finished Goods		23,370,632		21,187,196
	$	38,027,470	$	39,219,168

NOTE C — SEGMENT INFORMATION (in thousands)

	Three Months Ended December 31,						Nine Months Ended December 31,
	2013			2012			2013			2012
Net sales
Coil	$	14,554		$	15,636		$	46,394		$	49,188
Tubular		13,721			16,084			37,773			55,301
Total net sales	$	28,275		$	31,720		$	84,167		$	104,489
Operating profit (loss)
Coil	$	(389	)	$	104		$	(911	)	$	732
Tubular		1,584			2,015			4,341			8,437
Total operating profit		1,195			2,119			3,430			9,169
Corporate expenses		470			418			1,534			1,926
Interest & other income		(15	)		(15	)		(46	)		(43	)
Total earnings before taxes	$	740		$	1,716		$	1,942		$	7,286

5

	December 31, 2013		March 31, 2013
Segment assets
Coil	$	24,387	$	29,780
Tubular		29,054		29,834
		53,441		59,614
Corporate assets		18,192		16,961
	$	71,633	$	76,575

Corporate expenses reflect general and administrative expenses not directly associated with segment operations and consist primarily of corporate executive and accounting salaries, professional fees and services, bad debts, accrued profit sharing expense, corporate insurance expenses and office supplies. Corporate assets consist primarily of cash and the cash value of officers’ life insurance.

NOTE D — SUPPLEMENTAL CASH FLOW INFORMATION

The Company paid income taxes of approximately $748,000 and $3,306,000 in the nine months ended December 31, 2013 and 2012, respectively. The Company paid no interest in the nine months ended December 31, 2013 or 2012. Non-cash financing activities consisted of accrued dividends of $135,989 and $883,928 in the nine month periods ended December 31, 2013 and 2012, respectively.

6

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Results of Operations

Nine Months Ended December 31, 2013 Compared to Nine Months Ended December 31, 2012

During the nine months ended December 31, 2013, sales, costs of goods sold and gross profit decreased $20,321,554, $14,381,258 and $5,940,296, respectively, from the comparable amounts recorded during the nine months ended December 31, 2012. The decrease in sales was related to both a decline in tons sold and a decrease in the average per ton selling price. Tons sold decreased from approximately 139,000 tons in the 2012 period to approximately 120,000 tons in the 2013 period. The average per ton selling price decreased from approximately $750 per ton in the 2012 period to $704 per ton in the 2013 period. The decrease in costs of goods sold was related primarily to the decline in tons sold and a decrease in the average per ton cost, which decreased from approximately $669 per ton in the 2012 period to $659 per ton in the 2013 period. The decrease in gross profit was related primarily to a decline in margins earned on sales. Gross profit as a percentage of sales decreased from approximately 10.8% in the 2012 period to approximately 6.4% in the 2013 period. In the 2013 period, the Company experienced soft market conditions and reduced demand for its products and services.

Coil product segment sales decreased approximately $2,794,000 during the 2013 period. This decrease resulted primarily from a decline in the average per ton selling price of coil products from approximately $739 per ton in the 2012 period to $698 per ton in the 2013 period. In both the 2013 and 2012 periods, the coil segment sold approximately 66,500 tons. Coil segment operations recorded an operational loss of approximately $911,000 in the 2013 period and an operational income of approximately $732,000 in the 2012 period. Management believes that the operations of this segment have been adversely impacted in both the 2013 and 2012 periods by soft demand related primarily to a weak U.S. economy and that market conditions will remain soft until the U.S. economy experiences sustained, significant improvement.

The Company is primarily dependent on Nucor Steel Company (“NSC”) for its supply of coil inventory. In the 2013 period, NSC continued to supply the Company with steel coils in amounts that were adequate for the Company’s purposes. The Company does not currently anticipate any significant change in such supply from NSC. Loss of NSC as a supplier could have a material adverse effect on the Company’s business.

Tubular product segment sales decreased approximately $17,528,000 during the 2013 period. This decrease resulted from both a decline in tons sold and a decrease in the average per ton selling price. Tubular tons shipped decreased from approximately 73,000 tons in the 2012 period to approximately 53,000 tons in the 2013 period. The average per ton selling price of tubular products decreased from approximately $759 per ton in the 2012 period to $712 per ton in the 2013 period. The tubular product segment recorded a decrease in operational income of approximately $4,096,000 during the 2013 period. Tubular product segment operating profits as a percentage of segment sales were approximately 11.5% and 15.3% in the 2013 and 2012 periods, respectively. In the 2013 period, the tubular product segment experienced a reduction in tons sold which had the effect of increasing the per ton cost of production and decreasing margins earned. Management believes the decrease in sales was related to soft market conditions created by oversupply, foreign competition and, more significantly, a weak U.S. economy.

U. S. Steel Tubular Products, Inc. (“USS”) is the Company’s primary supplier of tubular products and coil material used in pipe manufacturing and is a major customer of the Company’s finished tubular products. Certain finished tubular products used in the energy business are manufactured by the Company and sold to USS. Loss of USS as a supplier or customer could have a material adverse effect on the Company’s business. The Company can make no assurances as to orders from USS or the amounts of pipe and coil material that will be available from USS in the future.

During the 2013 period, general, selling and administrative costs decreased $593,345 from the amount recorded in the 2012 period. This decrease was related primarily to a decrease in bonuses and commissions associated with the decreased earnings and sales volume.

Income taxes in the 2013 period decreased $1,780,952 from the amount recorded in the 2012 period. This decrease was related primarily to the decrease in earnings before taxes in the 2013 period. Effective tax rates were 31.9% and 32.9% in the 2013 and 2012 periods, respectively.

Three Months Ended December 31, 2013 Compared to Three Months Ended December 31, 2012

During the three months ended December 31, 2013, sales, costs of goods sold and gross profit decreased $3,445,226, $2,407,726 and $1,037,500, respectively, from the comparable amounts recorded during the three months ended December 31, 2012. The decrease in sales was related to both a decline in tons sold and a decrease in the average per ton selling price. Tons sold decreased from approximately 43,000 tons in the 2012 quarter to approximately 39,000 tons in the 2013 quarter. The average per ton selling price decreased from approximately $737 per ton in the 2012 quarter to $721 per ton in the 2013 quarter. The decrease in costs of goods sold was related primarily to the decrease in tons sold. The average per ton cost increased from approximately $670 per ton in the 2012 quarter to $673 per ton in the 2013 quarter. The decrease in gross profit was related primarily to a decline in margins earned on sales. Gross profit as a percentage of sales declined from approximately 9.1% in the 2012 quarter to approximately 6.5% in the 2013 quarter. In the 2013 quarter, the Company experienced soft market conditions and reduced demand for its products and services.

7

Coil product segment sales decreased approximately $1,082,000 during the 2013 quarter. This decrease resulted primarily from a decline in tons sold. Coil tons shipped decreased from approximately 22,000 tons in the 2012 quarter to approximately 20,000 tons in the 2013 quarter. The average selling price increased from approximately $712 per ton in the 2012 quarter to $715 per ton in the 2013 quarter. Coil segment operations recorded an operating loss of approximately $389,000 in the 2013 quarter and an operating profit of approximately $104,000 in the 2012 quarter. Management believes that the operations of this segment have been adversely impacted in both the 2013 and 2012 quarters by soft demand related primarily to a weak U.S. economy and that market conditions will remain soft until the U.S. economy experiences sustained, significant improvement.

The Company is primarily dependent on NSC for its supply of coil inventory. In the 2013 quarter, NSC continued to supply the Company with steel coils in amounts that were adequate for the Company’s purposes. The Company does not currently anticipate any significant change in such supply from NSC. Loss of NSC as a supplier could have a material adverse effect on the Company’s business.

Tubular product segment sales decreased approximately $2,363,000 during the 2013 quarter. This decrease resulted from both a decline in tons sold and a decrease in the average per ton selling price. Tubular tons shipped decreased from approximately 21,000 tons in the 2012 quarter to approximately 19,000 tons in the 2013 quarter. The average per ton selling price of tubular products decreased from approximately $763 per ton in the 2012 quarter to $727 per ton in the 2013 quarter. The tubular product segment recorded a decrease in operational income of approximately $431,000 during the 2013 quarter. This decrease was related primarily to the decrease in sales, which management believes is related to soft market conditions created by oversupply, foreign competition and, more significantly, a weak U.S. economy. Tubular product segment operating profits as a percentage of segment sales were approximately 11.5% and 12.5% in the 2013 and 2012 quarters, respectively.

USS is the Company’s primary supplier of tubular products and coil material used in pipe manufacturing and is a major customer of the Company’s finished tubular products. Certain finished tubular products used in the energy business are manufactured by the Company and sold to USS. Loss of USS as a supplier or customer could have a material adverse effect on the Company’s business. The Company can make no assurances as to orders from USS or the amounts of pipe and coil material that will be available from USS in the future.

Income taxes in the 2013 quarter decreased $313,418 from the amount recorded in the 2012 quarter. This decrease was related primarily to the decrease in earnings before taxes in the 2013 quarter. The effective tax rates were approximately 34.2% and 33.0% in the 2013 and 2012 quarters, respectively.

FINANCIAL POSITION, LIQUIDITY AND CAPITAL RESOURCES

The Company remained in a strong, liquid position at December 31, 2013. The current ratios were 8.2 and 5.2 at December 31, 2013 and March 31, 2013, respectively. Working capital was $52,928,057 at December 31, 2013 and $51,971,475 at March 31, 2013.

At December 31, 2013, 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. Cash was primarily generated from reductions in accounts receivable and inventories. 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 the nine months ended December 31, 2013 and 2012, the Company’s investing activities consisted primarily of purchasing property, plant and equipment. The Company’s financing activities consisted of cash dividends paid of $1,631,868 and $6,051,505 in the nine months ended December 31, 2013 and 2012, respectively. In the quarter ended December 31, 2012, the Company declared and paid a special cash dividend of $0.50 per common share.

The Company has in the past and may in the future borrow funds on a term basis to build or improve facilities. The Company currently has no plans to borrow any significant amount of funds on a term basis.

On January 23, 2014, the Company filed a Form 8-K with the U.S. Securities and Exchange Commission (the “SEC”) disclosing the Company’s commencement of the construction of a pipe-finishing facility. The Company’s management estimates construction of the facility, including yard improvements, buildings and equipment, will cost approximately $9,200,000. The Company plans to finance this project from internal sources.

The Company believes its cash flows from operations and borrowing capability due to its strong balance sheet are adequate to fund its expected cash requirements for the next 24 months.

8

CRITICAL ACCOUNTING POLICIES

The preparation of consolidated financial statements requires the Company to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses. One such accounting policy that requires significant estimates and judgments is the valuation of LIFO inventories in the Company’s quarterly reporting. The quarterly valuation of inventory requires estimates of the year-end quantities, which is inherently difficult. Historically, these estimates have been materially correct. Changes in the valuation of LIFO inventories at December 31, 2013 and 2012 were not significant.

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. 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 SEC under the Securities Act of 1933, as amended, and the Securities Exchange Act of 1934, as amended (the “Exchange Act”). 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 the demand for steel and steel products in general and the Company’s success in executing its internal operating plans, including any proposed expansion plans.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Not required

Item 4. Controls and Procedures

The Company’s management, with the participation of the Company’s principal executive officer (“CEO”) and principal financial officer, evaluated the effectiveness of the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) promulgated under the Exchange Act), as of the end of the fiscal quarter ended December 31, 2013. Based on this evaluation, the Company’s CEO and principal financial officer have concluded that the Company’s disclosure controls and procedures were effective as of the end of the fiscal quarter ended December 31, 2013 to ensure that information that is required to be disclosed by the Company in the reports it files or submits under the Exchange Act is (i) recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and (ii) accumulated and communicated to the Company’s management, including the CEO and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure.

There were no changes in the Company’s internal control over financial reporting that occurred during the fiscal quarter ended December 31, 2013 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

9

FRIEDMAN INDUSTRIES, INCORPORATED

Three Months Ended December 31, 2013

Part II — OTHER INFORMATION

Item 6. Exhibits

Exhibits
31.1	—	Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, signed by William E. Crow
31.2	—	Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, signed by Alex LaRue
32.1	—	Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, signed by William E. Crow
32.2	—	Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, signed by Alex LaRue
101.INS	—	XBRL Instance Document
101.SCH	—	XBRL Taxonomy Schema Document
101.CAL	—	XBRL Calculation Linkbase Document
101.DEF	—	XBRL Definition Linkbase Document
101.LAB	—	XBRL Label Linkbase Document
101.PRE	—	XBRL Presentation Linkbase Document

10

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	FRIEDMAN INDUSTRIES, INCORPORATED
Date: February 13, 2014
	By	/s/ ALEX LARUE
		Alex LaRue, Assistant Vice President – Secretary & Treasurer
		(Principal Financial Officer)

11

EXHIBIT INDEX

Exhibit No.		Description
Exhibit 31.1	—	Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, signed by William E. Crow
Exhibit 31.2	—	Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, signed by Alex LaRue
Exhibit 32.1	—	Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of The Sarbanes-Oxley Act of 2002, signed by William E. Crow
Exhibit 32.2	—	Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of The Sarbanes-Oxley Act of 2002, signed by Alex LaRue
101.INS	—	XBRL Instance Document
101.SCH	—	XBRL Taxonomy Schema Document
101.CAL	—	XBRL Calculation Linkbase Document
101.DEF	—	XBRL Definition Linkbase Document
101.LAB	—	XBRL Label Linkbase Document
101.PRE	—	XBRL Presentation Linkbase Document

EX-31.1

EXHIBIT 31.1

I, William E. Crow, certify that:

1. I have reviewed this report on Form 10-Q of Friedman Industries, Incorporated;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Dated: February 13, 2014

/S/ WILLIAM E. CROW

Chief Executive Officer and President

EX-31.2

EXHIBIT 31.2

I, Alex LaRue, certify that:

1. I have reviewed this report on Form 10-Q of Friedman Industries, Incorporated;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Dated: February 13, 2014

/s/ ALEX LARUE

Assistant Vice President – Secretary & Treasurer

EX-32.1

EXHIBIT 32.1

Certification Pursuant to

18 U.S.C. Section 1350,

as Adopted Pursuant to Section 906

of The Sarbanes-Oxley Act of 2002

Not Filed Pursuant to the Securities Exchange Act of 1934

In connection with the Quarterly Report of Friedman Industries, Incorporated (the “Company”) on Form 10-Q for the period ended December 31, 2013, as filed with the U.S. Securities and Exchange Commission on the date hereof (the “Report”), I, William E. Crow, Chief Executive Officer and President of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, as amended, that:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated: February 13, 2014

By	/s/ William E. Crow
Name:	William E. Crow
Title:	Chief Executive Officer and President

EX-32.2

EXHIBIT 32.2

Certification Pursuant to

18 U.S.C. Section 1350,

as Adopted Pursuant to Section 906

of The Sarbanes-Oxley Act of 2002

Not Filed Pursuant to the Securities Exchange Act of 1934

In connection with the Quarterly Report of Friedman Industries, Incorporated (the “Company”) on Form 10-Q for the period ended December 31, 2013, as filed with the U.S. Securities and Exchange Commission on the date hereof (the “Report”), I, Alex LaRue, Assistant Vice President – Secretary/Treasurer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, as amended, that:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated: February 13, 2014

By	/s/ Alex LaRue
Name:	Alex LaRue
Title:	Assistant Vice President Secretary/Treasurer

XML

Supplemental Cash Flow Information

9 Months Ended

Dec. 31, 2013

Supplemental Cash Flow Information

NOTE D — SUPPLEMENTAL CASH FLOW INFORMATION

The Company paid income taxes of approximately $748,000 and $3,306,000 in the nine months ended December 31, 2013 and 2012, respectively. The Company paid no interest in the nine months ended December 31, 2013 or 2012. Non-cash financing activities consisted of accrued dividends of $135,989 and $883,928 in the nine month periods ended December 31, 2013 and 2012, respectively.

XML

Segment Information

9 Months Ended

Dec. 31, 2013

Segment Information

NOTE C — SEGMENT INFORMATION (in thousands)

	Three Months Ended December 31,						Nine Months Ended December 31,
	2013			2012			2013			2012
Net sales
Coil	$	14,554		$	15,636		$	46,394		$	49,188
Tubular		13,721			16,084			37,773			55,301
Total net sales	$	28,275		$	31,720		$	84,167		$	104,489
Operating profit (loss)
Coil	$	(389	)	$	104		$	(911	)	$	732
Tubular		1,584			2,015			4,341			8,437
Total operating profit		1,195			2,119			3,430			9,169
Corporate expenses		470			418			1,534			1,926
Interest & other income		(15	)		(15	)		(46	)		(43	)
Total earnings before taxes	$	740		$	1,716		$	1,942		$	7,286

	December 31, 2013		March 31, 2013
Segment assets
Coil	$	24,387	$	29,780
Tubular		29,054		29,834
		53,441		59,614
Corporate assets		18,192		16,961
	$	71,633	$	76,575

Corporate expenses reflect general and administrative expenses not directly associated with segment operations and consist primarily of corporate executive and accounting salaries, professional fees and services, bad debts, accrued profit sharing expense, corporate insurance expenses and office supplies. Corporate assets consist primarily of cash and the cash value of officers’ life insurance.

XML

Condensed Consolidated Balance Sheets (USD $)	Dec. 31, 2013	Mar. 31, 2013
CURRENT ASSETS:
Cash	$ 17,089,296	$ 15,923,294
Accounts receivable, net of allowances for bad debts and cash discounts of $27,276 and $37,276 at December 31 and March 31, 2013, respectively	4,938,697	9,037,548
Inventories	38,027,470	39,219,168
Other	239,459	103,547
TOTAL CURRENT ASSETS	60,294,922	64,283,557
PROPERTY, PLANT AND EQUIPMENT:
Land	1,109,372	1,082,331
Buildings and yard improvements	7,014,180	7,014,180
Machinery and equipment	30,634,646	30,293,590
Less accumulated depreciation	(28,479,829)	(27,111,529)
Property, Plant and Equipment, Net, Total	10,278,369	11,278,572
OTHER ASSETS:
Cash value of officers' life insurance and other assets	1,059,500	1,013,000
TOTAL ASSETS	71,632,791	76,575,129
CURRENT LIABILITIES:
Accounts payable and accrued expenses	6,702,944	11,181,804
Dividends payable	135,989	543,956
Contribution to profit-sharing plan	210,000	52,500
Employee compensation and related expenses	317,932	533,822
TOTAL CURRENT LIABILITIES	7,366,865	12,312,082
DEFERRED INCOME TAXES	213,143	362,279
POSTRETIREMENT BENEFITS OTHER THAN PENSIONS	995,579	943,149
STOCKHOLDERS' EQUITY:
Common stock, par value $1: Authorized shares - 10,000,000 Issued shares - 7,975,160 at December 31 and March 31, 2013	7,975,160	7,975,160
Additional paid-in capital	29,003,674	29,003,674
Treasury stock at cost (1,175,716 shares at December 31 and March 31, 2013)	(5,475,964)	(5,475,964)
Retained earnings	31,554,334	31,454,749
TOTAL STOCKHOLDERS' EQUITY	63,057,204	62,957,619
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$ 71,632,791	$ 76,575,129

XML

Basis of Presentation

9 Months Ended

Dec. 31, 2013

Basis of Presentation

NOTE A — 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 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, 2013.

XML

Inventories

9 Months Ended

Dec. 31, 2013

Inventories

NOTE B — INVENTORIES

Inventories consist of prime coil, non-standard coil and tubular materials. Prime coil inventory consists primarily of raw materials, non-standard coil inventory consists primarily of raw materials and tubular inventory consists of both raw materials and finished goods. Inventories are valued at the lower of cost or replacement market. Cost for prime coil inventory is determined under the last-in, first-out (“LIFO”) method. Cost for non-standard coil inventory is determined using the specific identification method. Cost for tubular inventory is determined using the weighted average method.

A summary of inventory values by product group follows:

	December 31, 2013		March 31, 2013
Prime Coil Inventory	$	11,239,812	$	10,981,835
Non-Standard Coil Inventory		2,029,753		3,741,718
Tubular Raw Material		1,387,273		3,308,419
Tubular Finished Goods		23,370,632		21,187,196
	$	38,027,470	$	39,219,168

XML

Condensed Consolidated Balance Sheets (Parenthetical) (USD $)	Dec. 31, 2013	Mar. 31, 2013
Allowances for bad debts and cash discounts	$ 27,276	$ 37,276
Common stock, par value	$ 1	$ 1
Common stock, shares authorized	10,000,000	10,000,000
Common stock, shares issued	7,975,160	7,975,160
Treasury stock, shares	1,175,716	1,175,716

XML

Document and Entity Information	9 Months Ended
	Dec. 31, 2013
Document Information [Line Items]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Dec. 31, 2013
Document Fiscal Year Focus	2014
Document Fiscal Period Focus	Q3
Trading Symbol	FRD
Entity Registrant Name	FRIEDMAN INDUSTRIES INC
Entity Central Index Key	0000039092
Current Fiscal Year End Date	--03-31
Entity Filer Category	Smaller Reporting Company
Entity Common Stock, Shares Outstanding	6,799,444

XML

Condensed Consolidated Statements of Operations (USD $)	3 Months Ended		9 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2013	Dec. 31, 2012
Net sales	$ 28,274,696	$ 31,719,922	$ 84,167,208	$ 104,488,762
Costs and expenses
Costs of goods sold	26,427,918	28,835,644	78,798,672	93,179,930
General, selling and administrative costs	1,121,986	1,183,507	3,472,545	4,065,890
Costs and Expenses, Total	27,549,904	30,019,151	82,271,217	97,245,820
Interest and other income	(15,501)	(15,530)	(46,508)	(43,264)
Earnings before income taxes	740,293	1,716,301	1,942,499	7,286,206
Provision for (benefit from) income taxes:
Current	275,970	587,173	768,149	2,469,478
Deferred	(23,145)	(20,930)	(149,136)	(69,513)
Income Tax Expense (Benefit), Total	252,825	566,243	619,013	2,399,965
Net earnings	$ 487,468	$ 1,150,058	$ 1,323,486	$ 4,886,241
Weighted average number of common shares outstanding:
Basic	6,799,444	6,799,444	6,799,444	6,799,444
Diluted	6,799,444	6,799,444	6,799,444	6,799,444
Net earnings per share:
Basic	$ 0.07	$ 0.17	$ 0.19	$ 0.72
Diluted	$ 0.07	$ 0.17	$ 0.19	$ 0.72
Cash dividends declared per common share	$ 0.02	$ 0.63	$ 0.18	$ 0.89

XML

Summary of Inventory Values by Product Group (Detail) (USD $)	Dec. 31, 2013	Mar. 31, 2013
Inventory [Line Items]
Inventory, Net	$ 38,027,470	$ 39,219,168
Prime Coil Inventory
Inventory [Line Items]
Raw Materials	11,239,812	10,981,835
Non-Standard Coil Inventory
Inventory [Line Items]
Raw Materials	2,029,753	3,741,718
Tubular
Inventory [Line Items]
Raw Materials	1,387,273	3,308,419
Finished Goods	$ 23,370,632	$ 21,187,196

XML

Segment Information (Tables)

9 Months Ended

Dec. 31, 2013

Segment Information

	Three Months Ended December 31,						Nine Months Ended December 31,
	2013			2012			2013			2012
Net sales
Coil	$	14,554		$	15,636		$	46,394		$	49,188
Tubular		13,721			16,084			37,773			55,301
Total net sales	$	28,275		$	31,720		$	84,167		$	104,489
Operating profit (loss)
Coil	$	(389	)	$	104		$	(911	)	$	732
Tubular		1,584			2,015			4,341			8,437
Total operating profit		1,195			2,119			3,430			9,169
Corporate expenses		470			418			1,534			1,926
Interest & other income		(15	)		(15	)		(46	)		(43	)
Total earnings before taxes	$	740		$	1,716		$	1,942		$	7,286

	December 31, 2013		March 31, 2013
Segment assets
Coil	$	24,387	$	29,780
Tubular		29,054		29,834
		53,441		59,614
Corporate assets		18,192		16,961
	$	71,633	$	76,575

XML

Segment Information (Detail) (USD $)	3 Months Ended		9 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2013	Dec. 31, 2012	Mar. 31, 2013
Segment Reporting Information [Line Items]
Net sales	$ 28,274,696	$ 31,719,922	$ 84,167,208	$ 104,488,762
Operating profit (loss)	1,195,000	2,119,000	3,430,000	9,169,000
Interest & other income	(15,000)	(15,000)	(46,000)	(43,000)
Total earnings before taxes	740,293	1,716,301	1,942,499	7,286,206
Total assets	71,632,791		71,632,791		76,575,129
Coil
Segment Reporting Information [Line Items]
Net sales	14,554,000	15,636,000	46,394,000	49,188,000
Operating profit (loss)	(389,000)	104,000	(911,000)	732,000
Total assets	24,387,000		24,387,000		29,780,000
Tubular
Segment Reporting Information [Line Items]
Net sales	13,721,000	16,084,000	37,773,000	55,301,000
Operating profit (loss)	1,584,000	2,015,000	4,341,000	8,437,000
Total assets	29,054,000		29,054,000		29,834,000
Corporate
Segment Reporting Information [Line Items]
Corporate expenses	470,000	418,000	1,534,000	1,926,000
Total assets	18,192,000		18,192,000		16,961,000
Operating Segments
Segment Reporting Information [Line Items]
Total assets	$ 53,441,000		$ 53,441,000		$ 59,614,000

XML

Supplemental Cash Flow Information (Detail) (USD $)	9 Months Ended
	Dec. 31, 2013	Dec. 31, 2012
Income taxes paid	$ 748,000	$ 3,306,000
Interest paid	0	0
Accrued dividends	$ 135,989	$ 883,928

XML

Condensed Consolidated Statements of Cash Flows (USD $)	9 Months Ended
	Dec. 31, 2013	Dec. 31, 2012
OPERATING ACTIVITIES
Net earnings	$ 1,323,486	$ 4,886,241
Adjustments to reconcile net earnings to cash provided by operating activities:
Depreciation	1,368,300	1,340,697
Provision for deferred taxes	(149,136)	(69,513)
Provision for postretirement benefits	52,430	67,059
Decrease (increase) in operating assets:
Accounts receivable, net	4,098,851	9,596,924
Inventories	1,191,698	3,846,976
Other	(135,912)	(748,028)
Increase (decrease) in operating liabilities:
Accounts payable and accrued expenses	(4,478,860)	(7,464,299)
Contribution to profit-sharing plan	157,500	157,500
Employee compensation and related expenses	(215,890)	(272,218)
Income taxes payable		(98,464)
NET CASH PROVIDED BY OPERATING ACTIVITIES	3,212,467	11,242,875
INVESTING ACTIVITIES
Purchase of property, plant and equipment	(368,097)	(466,218)
Proceeds from sales of assets		42,375
Increase in cash surrender value of officers' life insurance	(46,500)	(46,500)
NET CASH USED IN INVESTING ACTIVITIES	(414,597)	(470,343)
FINANCING ACTIVITIES
Cash dividends paid	(1,631,868)	(6,051,505)
NET CASH USED IN FINANCING ACTIVITIES	(1,631,868)	(6,051,505)
INCREASE IN CASH	1,166,002	4,721,027
Cash at beginning of period	15,923,294	11,881,548
CASH AT END OF PERIOD	$ 17,089,296	$ 16,602,575

XML

Inventories (Tables)

9 Months Ended

Dec. 31, 2013

Summary of Inventory by Product Group

A summary of inventory values by product group follows:

	December 31, 2013		March 31, 2013
Prime Coil Inventory	$	11,239,812	$	10,981,835
Non-Standard Coil Inventory		2,029,753		3,741,718
Tubular Raw Material		1,387,273		3,308,419
Tubular Finished Goods		23,370,632		21,187,196
	$	38,027,470	$	39,219,168