10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

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

FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2018

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)

1121 JUDSON ROAD, SUITE 124, LONGVIEW, TEXAS 75601

(Address of principal executive offices) (Zip Code)

Registrant’s telephone number, including area code (903)758-3431

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  ☒    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  ☒    No  ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer”, “smaller reporting company” and “emerging growth 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	☒
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). (Check one):    Yes  ☐    No   ☒

At August 14, 2018, the number of shares outstanding of the issuer’s only class of stock was 7,009,444 shares of Common Stock.

TABLE OF CONTENTS

Part I — FINANCIAL INFORMATION	3
Item 1. Financial Statements	3
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	10
Item 3. Quantitative and Qualitative Disclosures About Market Risk	12
Item 4. Controls and Procedures	12
Part II — OTHER INFORMATION	13
Item 6. Exhibits	13
SIGNATURES	14

2

Part I — FINANCIAL INFORMATION

Item 1. Financial Statements

FRIEDMAN INDUSTRIES, INCORPORATED

CONDENSED CONSOLIDATED BALANCE SHEETS — UNAUDITED

	JUNE 30, 2018			MARCH 31, 2018 As Adjusted
ASSETS
CURRENT ASSETS:
Cash	$	3,298,781		$	4,052,582
Accounts receivable, net of allowances for bad debts and cash discounts of $21,052 at June 30 and March 31, 2018, respectively		18,247,788			17,458,289
Inventories		59,598,607			45,329,434
Other		535,922			429,101
TOTAL CURRENT ASSETS		81,681,098			67,269,406
PROPERTY, PLANT AND EQUIPMENT:
Land		1,452,799			1,452,799
Buildings and yard improvements		8,813,031			8,710,958
Machinery and equipment		39,368,094			39,282,944
Less accumulated depreciation		(35,638,296	)		(35,280,700	)
		13,995,628			14,166,001
OTHER ASSETS:
Cash value of officers’ life insurance and other assets		224,175			217,900
TOTAL ASSETS	$	95,900,901		$	81,653,307
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES:
Accounts payable and accrued expenses	$	19,624,966		$	10,233,431
Income taxes payable		862,259			—
Dividends payable		210,283			140,189
Contribution to retirement plan		90,000			45,000
Employee compensation and related expenses		925,277			612,015
TOTAL CURRENT LIABILITIES		21,712,785			11,030,635
POSTRETIREMENT BENEFITS OTHER THAN PENSIONS		182,486			175,056
DEFERRED INCOME TAX LIABILITY		1,968,330			1,872,166
TOTAL LIABILITIES		23,863,601			13,077,857
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS’ EQUITY:
Common stock, par value $1:
Authorized shares — 10,000,000
Issued shares — 8,185,160 at June 30 and March 31, 2018		8,185,160			8,185,160
Additional paid-in capital		29,227,114			29,154,874
Treasury stock at cost (1,175,716 shares at June 30 and March 31, 2018)		(5,475,964	)		(5,475,964	)
Retained earnings		40,100,990			36,711,380
TOTAL STOCKHOLDERS’ EQUITY		72,037,300			68,575,450
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	95,900,901		$	81,653,307

3

FRIEDMAN INDUSTRIES, INCORPORATED

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS — UNAUDITED

	THREE MONTHS ENDED JUNE 30,
	2018			2017 As Adjusted
Net Sales	$	48,193,318		$	23,083,269
Costs and expenses
Costs of goods sold		42,000,840			21,539,959
General, selling and administrative costs		1,492,740			1,038,394
		43,493,580			22,578,353
EARNINGS FROM OPERATIONS		4,699,738			504,916
Interest and other income		(62,775	)		(4,375	)
EARNINGS BEFORE INCOME TAXES		4,762,513			509,291
Income tax provision:
Current		1,066,456			—
Deferred		96,164			144,961
		1,162,620			144,961
NET EARNINGS	$	3,599,893		$	364,330
Average number of common shares outstanding:
Basic		7,009,444			7,009,444
Diluted		7,009,444			7,009,444
Net earnings per share:
Basic	$	0.51		$	0.05
Diluted	$	0.51		$	0.05
Cash dividends declared per common share	$	0.03		$	0.01

4

FRIEDMAN INDUSTRIES, INCORPORATED

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS — UNAUDITED

	THREE MONTHS ENDED JUNE 30,
	2018			2017 As Adjusted
OPERATING ACTIVITIES
Net earnings	$	3,599,893		$	364,330
Adjustments to reconcile net earnings to cash provided by (used in) operating activities:
Depreciation		357,596			282,064
Deferred taxes		96,164			144,961
Compensation expense for restricted stock		72,240			72,240
Change in postretirement benefits		7,430			1,720
Decrease (increase) in operating assets:
Accounts receivable		(789,499	)		680,046
Inventories		(14,269,173	)		(4,777,078	)
Other current assets		(106,821	)		96,747
Increase (decrease) in operating liabilities:
Accounts payable and accrued expenses		9,391,535			5,745,306
Income taxes payable		862,259			—
Contribution to retirement plan		45,000			42,000
Employee compensation and related expenses		313,262			24,143
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES		(420,114	)		2,676,479
INVESTING ACTIVITIES
Purchase of property, plant and equipment		(187,223	)		(159,465	)
Increase in cash surrender value of officers’ life insurance		(6,275	)		(4,375	)
NET CASH USED IN INVESTING ACTIVITIES		(193,498	)		(163,840	)
FINANCING ACTIVITIES
Cash dividends paid		(140,189	)		(70,094	)
NET CASH USED IN FINANCING ACTIVITIES		(140,189	)		(70,094	)
INCREASE (DECREASE) IN CASH		(753,801	)		2,442,545
Cash at beginning of period		4,052,582			1,461,695
CASH AT END OF PERIOD	$	3,298,781		$	3,904,240

5

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 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, 2018.

NOTE B — CHANGE IN ACCOUNTING PRINCIPLE

Effective April 1, 2018, the Company changed its method for valuing prime coil inventory of the coil segment from the last-in, first-out (“LIFO”) method to the average cost method. The effects of the change in accounting principle from LIFO to average cost have been retrospectively applied to all prior periods presented in all sections of this quarterly report on Form 10-Q. The Company believes the average cost method is preferable as it more closely resembles the physical flow of our inventory, it better matches revenues with expenses and it aligns with how we internally manage our business. As a result of the retrospective application of the change in accounting principle, certain financial statement line items in the Company’s consolidated balance sheet as of March 31, 2018 and its consolidated statement of operations and consolidated statement of cash flows for the quarter ended June 30, 2017 were adjusted as presented in the table below. In addition, retained earnings as of April 1, 2017 increased $4,418,318 as a result of the change in accounting principle.

	As Originally Reported			Effect of Change			As Adjusted
Consolidated Statement of Operations, Quarter Ended June 30, 2017
Cost of goods sold		21,819,846			(279,887	)		21,539,959
Income tax provision		58,784			86,177			144,961
Net earnings		170,620			193,710			364,330
Net earnings per share:
Basic		0.02			0.03			0.05
Diluted		0.02			0.03			0.05
Consolidated Statement of Cash Flows, Quarter Ended June 30, 2017
Net earnings		170,620			193,710			364,330
Change in inventories		(4,497,191	)		(279,887	)		(4,777,078	)
Change in deferred income taxes		58,784			86,177			144,961
Consolidated Balance Sheet, as of March 31, 2018
Inventories		38,039,332			7,290,102			45,329,434
Deferred income tax liability		103,198			1,768,968			1,872,166
Retained earnings		31,190,246			5,521,134			36,711,380

The following table shows the effect of the change in accounting principle from LIFO to average cost on the quarter ended June 30, 2018:

	As Computed Under LIFO		As Computed Under Average Cost		Effect of Change
Consolidated Statement of Operations, Quarter Ended June 30, 2018
Earnings before income taxes		2,100,440		4,762,513		2,662,073
Income tax provision		514,128		1,162,620		648,492
Net earnings		1,586,312		3,599,893		2,013,581
Net earnings per share:
Basic		0.23		0.51		0.28
Diluted		0.23		0.51		0.28

6

NOTE C — NEW ACCOUNTING STANDARDS

In May 2014, the FASB issued Accounting Standards Update No. 2014-09, Revenue from Contracts with Customers (“ASU 2014-09”). ASU 2014-09 states that an entity should recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. This update also requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments, and assets recognized from costs incurred to obtain or fulfill a contract. The update supersedes prior revenue recognition guidance, including industry-specific guidance. Effective April 1, 2018, the Company adopted the new standard through the modified retrospective method applied to those contracts that were not completed as of April 1, 2018 and those contracts initiated on or after April 1, 2018. Results for reporting periods beginning on or after April 1, 2018 are presented under the new standard, while prior period amounts are unadjusted and reported in accordance with historic accounting under the prior guidance. The modified retrospective method requires that the cumulative effect of initially applying the new guidance be recorded as an adjustment to the opening balance of retained earnings in the condensed consolidated balance sheet. The adoption of this new accounting guidance did not have an impact on any prior period earnings and no adjustment was recorded to the opening retained earnings balance as of April 1, 2018. The adoption did not have a financial statement impact to the Company but did result in expanded disclosures which are provided in Note H.

In August 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update No. 2016-15, Statement of Cash Flows: Classification of Certain Cash Receipts and Cash Payments (“ASU 2016-15”). ASU 2016-15 eliminates the diversity in practice related to the classification of certain cash receipts and payments in the statement of cash flows by adding or clarifying guidance on eight specific cash flow issues. The Company adopted this new guidance effective April 1, 2018. The adoption of this new guidance did not have a material impact on the Company’s consolidated financial statements.

In February 2016, the FASB issued Accounting Standards Update No. 2016-02, Leases (“ASU 2016-02”). ASU 2016-02 establishes a new lease accounting standard that requires lessees to recognize a right of use asset and related lease liability for most leases having lease terms of more than 12 months.  Leases with a term of 12 months or less will be accounted for similar to existing guidance for operating leases.  This new guidance is effective for annual and interim periods beginning after December 15, 2018, but can be early adopted.  The Company is evaluating the impact that adoption of the provisions of ASU 2016-02 will have on its consolidated financial statements but does not expect a material impact.

NOTE D — 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. Effective April 1, 2018, the Company changed the inventory valuation method of its prime coil inventory from the LIFO method to the average cost method. Prime coil inventory value for both periods presented in the table below are based on average cost valuation. Cost for non-standard coil inventory is determined using the specific identification method. Cost for tubular inventory is determined using the average cost method. All inventories are valued at the lower of cost or net realizable value.

A summary of inventory values by product group follows:

	June 30, 2018		March 31, 2018 As Adjusted
Prime Coil Inventory	$	24,679,720	$	14,185,858
Non-Standard Coil Inventory		4,727,898		2,971,324
Tubular Raw Material		12,178,658		6,734,076
Tubular Finished Goods		18,012,331		21,438,176
	$	59,598,607	$	45,329,434

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 and new mill reject pipe that the Company purchases from U.S. Steel Tubular Products, Inc. At June 30, 2018, the Company carried quantities of mill reject pipe on hand that exceeded the trailing twelve month sales volume. Based on improved market conditions and overall economic conditions as well as recent sales trends, the Company reasonably expects the sales volume for the future twelve month period to approximate or at least be a substantial portion of the June 30, 2018 quantity on hand, hence current classification of this inventory on the Company’s balance sheet. The Company’s projections are subject to significant estimates which may be different from actual results.

7

NOTE E - DEBT

On December 11, 2017, the Company entered into a loan agreement for a $7,500,000 revolving line of credit facility (the “Credit Facility”) with Citizens National Bank (the “Bank”). The Credit Facility expires on December 11, 2018 and is collateralized by the Company’s accounts receivable and inventory. Borrowings under the credit facility bear interest at the Bank’s prime rate minus 0.55% resulting in an applicable interest rate of 4.45% as of June 30, 2018. Interest payments on amounts advanced are due monthly and principal payments may be made at any time without penalty. All outstanding principal and accrued interest is due upon expiration of the Credit Facility. The Credit Facility contains financial covenants that require the Company to not permit: (1) tangible common shareholders’ equity to be less than $50.0 million and (2) maximum debt to exceed 50% of tangible common shareholders’ equity. At June 30, 2018, the Company had no borrowings outstanding under the Credit Facility. Subsequent to quarter-end, the Company borrowed funds under the Credit Facility and as of the filing date of this quarterly report on Form 10-Q, the balance under the credit facility is $2,500,000 with the applicable interest rate remaining at 4.45%.

NOTE F — STOCK BASED COMPENSATION

The Company maintains the Friedman Industries, Incorporated 2016 Restricted Stock Plan (the “Plan”). The Plan is administered by the Compensation Committee (the “Committee”) of the Board of Directors (the “Board”) and continues indefinitely until terminated by the Board or until all shares allowed by the Plan have been awarded and earned. The aggregate number of shares of the Company’s Common Stock eligible for award under the Plan is 500,000 shares. Subject to the terms and provisions of the Plan, the Committee may, from time to time, select the employees to whom awards will be granted and shall determine the amount and applicable restrictions of each award. Forfeitures are accounted for upon their occurrence.

As of June 30, 2018, the total number of restricted shares awarded under the Plan was 210,000 shares. All of the awarded shares have five year cliff vesting restrictions with vesting occurring on January 4, 2022. No other shares have been awarded under the Plan. The grant date fair value of the awarded shares is $1,444,800 and is being recognized as compensation expense over the 60 month requisite service period. The Company recorded compensation expense of $72,240 in each of the quarters ended June 30, 2018 and June 30, 2017 relating to the stock awards issued under the Plan.

NOTE G — SEGMENT INFORMATION (in thousands)

	THREE MONTHS ENDED JUNE 30,
	2018			2017 As Adjusted
Net sales
Coil	$	31,129		$	18,010
Tubular		17,064			5,073
Total net sales	$	48,193		$	23,083
Operating profit (loss)
Coil	$	3,179		$	1,033
Tubular		2,321			(1	)
Total operating profit (loss)		5,500			1,032
Corporate expenses		800			527
Interest & other income		(63	)		(4	)
Earnings (loss) before income taxes	$	4,763		$	509

	June 30, 2018		March 31, 2018 As Adjusted
Segment assets
Coil	$	45,895	$	34,359
Tubular		46,435		43,010
		92,330		77,369
Corporate assets		3,571		4,284
	$	95,901	$	81,653

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, retirement plan contribution expense, corporate insurance expenses, restricted stock plan compensation expense and office supplies. Corporate assets consist primarily of cash and the cash value of officers’ life insurance.

8

NOTE H — REVENUE

Revenue is generated primarily from contracts to manufacture or process steel 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 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: Coil and Tubular. Coil primarily generates revenue from temper passing and cutting to length hot-rolled steel coils. Coil segment revenue consists of three main product types: Prime Coil, Non-Standard Coil and Customer Owned Coil. Tubular primarily generates revenue from the manufacture, distribution and processing of steel pipe. Tubular segment revenue consists of three main product or service types: Manufactured Pipe, Mill Reject Pipe and Pipe Finishing Services. The following table disaggregates our revenue by product for each of our reportable business segments for the three months ended June 30, 2018 and 2017, respectively:

	Three Months Ended June 30,
	2018		2017
Coil Segment:
Prime Coil		24,776,031		14,275,590
Non-standard Coil		6,110,458		3,368,604
Customer Owned Coil		242,711		365,641
		31,129,200		18,009,835
Tubular Segment:
Manufactured Pipe		10,955,387		3,333,434
Mill Reject Pipe		5,420,861		1,221,936
Pipe Finishing Services		687,870		518,064
		17,064,118		5,073,434

NOTE I — SUPPLEMENTAL CASH FLOW INFORMATION

The Company paid no income taxes in the quarter ended June 30, 2018. The Company paid income taxes of approximately $8,000 in the quarter ended June 30, 2017. No interest was paid in the quarters ended June 30, 2018 and 2017, respectively. Noncash financing activities consisted of accrued dividends of $210,283 and $70,094 in the quarters ended June 30, 2018 and 2017, respectively. In the 2017 quarter, there was a noncash transaction of $246,000 for the transfer of ownership of a life insurance policy from the Company to an officer upon his retirement.

NOTE J — INCOME TAXES

For the quarter ended June 30, 2018, the Company recorded an income tax provision of $1,162,620, or 24.4% of pre-tax income, compared to $144,961, or 28.5% of pre-tax income, for the quarter ended June 30, 2017. The provision for the quarter ended June 30, 2017 has been adjusted by the retroactive application of the change in accounting principle disclosed in Note B.

On December 22, 2017, the U.S. government signed into law the Tax Cuts and Jobs Act (the “Tax Act”). The Tax Act, among other things, lowered the U.S. corporate income tax rate applicable to the Company from 34% to 21% effective January 1, 2018. For the quarter ended June 30, 2018, the Company’s effective tax rate differed from the corporate statutory rate due primarily to the inclusion of state tax expenses in the Company’s income tax provision. For the quarter ended June 30, 2017, the Company’s effective tax rate differed from the corporate statutory rate due primarily to tax benefits related to the ownership transfer of a life insurance policy from the Company to an officer upon retirement.

While the Company has substantially completed its analysis of the income tax effects of the Tax Act and recorded a reasonable provisional estimate of such effects, certain items related to the Tax Act may differ, possibly materially, due to further refinement of the calculations, changes in interpretations and assumptions made, additional guidance that may be issued by the U.S. government, and actions related to accounting policy decisions the Company may make as a result of the Tax Act. Pursuant to Staff Accounting Bulletin 118 (“SAB 118”) issued by the Securities and Exchange Commission on December 22, 2017, the Company will complete its analysis of these items over a one-year measurement period ending December 22, 2018 and any adjustments during this measurement period will be recorded as discrete adjustments to income tax expense in the period in which adjustments become estimable and/or are finalized.

9

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

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-roll coil processing facilities; one in Hickman, Arkansas and the other in Decatur, Alabama. Each 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. Combined, the facilities are capable of cutting sheet and plate with thicknesses ranging from 14 gauge to ½” thick. 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. Effective April 1, 2018, the Company changed the inventory valuation method for the coil segment’s prime coil inventory from the LIFO method to the average cost method. The impact of this change in accounting principle to both the current quarter and, as applied retrospectively, to the comparable quarter of the prior fiscal year are disclosed in Note B of this quarterly report on Form 10-Q. Prior period information provided in this Management’s Discussion and Analysis has been updated to reflect the retrospective application of the change in accounting principle.

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 a 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 API licensed and focuses on threading semi-premium connections. 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 purchases from U.S. Steel Tubular Products, Inc. (“USS”).

Results of Operations

Three Months Ended June 30, 2018 Compared to Three Months Ended June 30, 2017

During the three months ended June 30, 2018, sales, costs of goods sold and gross profit increased $25,110,049, $20,460,881 and $4,649,168, respectively, compared to the amounts recorded during the three months ended June 30, 2017. The increase in sales was related to both an increase in tons sold and an increase in the average per ton selling price. Tons sold increased approximately 81% from approximately 33,500 tons in the 2017 quarter to approximately 60,500 tons in the 2018 quarter. Discussion of the sales improvement is expanded upon at the segment level in the following paragraphs. Gross profit as a percentage of sales increased from approximately 6.7% in the 2017 quarter to approximately 12.8% in the 2018 quarter.

Coil Segment

Coil product segment sales for the 2018 quarter totaled $31,129,200 compared to $18,009,835 for the 2017 quarter, representing a sales increase of $13,119,365 or approximately 73%. For a more complete understanding of the average selling prices of goods sold, it is helpful to isolate sales generated from processing of customer owned material and sales generated from coil segment inventory. Sales generated from processing of customer owned material totaled $242,711 for the 2018 quarter compared to $365,641 for the 2017 quarter. Sales generated from coil segment inventory totaled $30,886,489 for the 2018 quarter compared to $17,644,194 for the 2017 quarter. The increase in coil segment sales was driven by an increase in tons shipped from inventory and an increase in the average selling price per ton for these shipments. Inventory tons sold increased from approximately 26,500 tons in the 2017 quarter to approximately 36,000 tons in the 2018 quarter. The average per ton selling price related to these shipments increased from approximately $670 per ton in the 2017 quarter to approximately $853 per ton in the 2018 quarter. The improved shipping volume for the 2018 quarter is attributable to increased demand among many of the segment’s customers and is also attributable to an increase in the number of customers sold. Coil segment operations recorded operating profits of approximately $3,179,000 and $1,033,000 in the 2018 and 2017 quarters, respectively. Management expects coil segment shipping volume in the second quarter to be similar to the first quarter volume but expects a slight contraction in margins for the second quarter as compared to the first quarter.

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.

10

Tubular Segment

Tubular product segment sales for the 2018 quarter totaled $17,064,118 compared to $5,073,434 for the 2017 quarter, representing a sales increase of $11,990,684 or approximately 236%. For a more complete understanding of the average selling prices of goods sold, it is helpful to isolate sales generated from the finishing of customer owned pipe and sales generated from tubular segment inventory. Sales generated from finishing of customer owned pipe totaled $687,870 for the 2018 quarter compared to $518,064 for the 2017 quarter. Sales generated from tubular segment inventory totaled $16,376,248 for the 2018 quarter compared to $4,555,370 for the 2017 quarter. The increase in tubular segment sales was driven by an increase in tons shipped from inventory and an increase in the average selling price per ton for these shipments. Tons sold increased from approximately 7,000 tons in the 2017 quarter to approximately 24,500 tons in the 2018 quarter. The average per ton selling price related to these shipments increased from approximately $637 per ton in the 2017 quarter to approximately $670 per ton in the 2018 quarter. The tubular segment recorded an operating profit of approximately $2,321,000 for the 2018 quarter compared to an operating loss of approximately $1,000 for the 2017 quarter.

Management believes the improved tubular results are primarily related to the sustained recovery of the U.S. energy industry and the segment’s new product offering of API line pipe. Late in the third quarter of fiscal 2018, TTP began actively producing, marketing and selling line pipe directly to distributors. Shipments of line pipe during the 2018 quarter totaled approximately 6,000 tons, or approximately 34%, of the 17,500 ton increase in tubular sales volume. Management expects line pipe sales to be a significant component of total tubular segment sales moving forward. Management expects second quarter line pipe shipments to slightly exceed the first quarter volume.

Shipments of mill reject pipe during the 2018 quarter totaled approximately 14,000 tons compared to 3,000 tons during the 2017 quarter, accounting for approximately 63% of the 17,500 ton increase in tubular sales volume. The increased shipping volume of mill reject pipe is due to improved demand and a concentrated effort to reduce the level of inventory. Based on current orders and the continued effort to achieve desired inventory levels, management expects shipping volume of mill reject pipe in the second quarter to be similar to the first quarter volume. Management currently expects a decline in volume during the third quarter as desired inventory levels are achieved.

Due to uncertainty in the market and fluctuations in our customers' needs, management expects revenue related to the finishing of customer owned pipe to be reduced in the second quarter as compared to the first quarter revenue.

USS has been the primary supplier of new mill reject pipe to the Company. In March 2016, USS announced it was temporarily idling pipe production at its Lone Star Tubular Operations facility due to weak market conditions. In December 2016, USS announced plans to permanently idle its #1 pipe mill at the Lone Star facility. In May 2017, USS resumed production at its Lone Star facility’s #2 pipe mill. The Company expects the volume and size range of new mill reject pipe supply from USS to be reduced given the permanent idling of the Lone Star facility’s #1 pipe mill. USS is also a significant customer of the tubular segment’s pipe-finishing facility. 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 amount of supply that will be available from USS in the future. In general, 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.

General, Selling and Administrative Costs

During the 2018 quarter, general, selling and administrative costs increased $454,346 compared to the 2017 quarter. This increase was related primarily to increases in bonuses and commissions associated with the increased earnings and sales volume.

Income Taxes

Income taxes in the 2018 quarter increased $1,017,659 from the amount recorded in the 2017 quarter. This increase was related primarily to the increase in earnings before taxes for the 2018 quarter compared to the 2017 quarter but partially offset due to effects of the Tax Cuts and Jobs Act (the “Tax Act”) that was enacted by the U.S. government on December 22, 2017. The Tax Act reduced the federal corporate tax rate applicable to the Company from 34% to 21% effective January 1, 2018.

FINANCIAL POSITION, LIQUIDITY AND CAPITAL RESOURCES

The Company remained in a strong, liquid position at June 30, 2018. The current ratios were 3.8 at June 30, 2018 and 6.1 at March 31, 2018. Working capital was $59,968,313 at June 30, 2018, and $56,238,771 at March 31, 2018.

During the quarter ended June 30, 2018, 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 decreased primarily as a result of an increase in inventory. The balance of accounts payable and inventory rose considerably due to the volume and timing of inventory purchases for both the Company’s coil and tubular segments. 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 December 2017, the Company put into place a $7,500,000 revolving line of credit facility (the “Credit Facility”) that expires December 11, 2018. At June 30, 2018, the Company had no borrowings outstanding under the Credit Facility. Subsequent to quarter-end, the Company borrowed funds under the Credit Facility and as of the filing date of this quarterly report on Form 10-Q, the balance under the credit facility is $2,500,000 with an applicable interest rate of 4.45%. The Company was not in violation of any terms or covenants related to the Credit Facility as of the filing date of this quarterly report on Form 10-Q.

11

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 24 months.

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. Significant estimates that are subject to the Company’s assumptions include the determination of useful lives for fixed assets and determination of the allowance for doubtful accounts. The determination of useful lives for depreciation of fixed assets requires the Company to make assumptions regarding the future productivity of the Company’s fixed assets. The allowance for doubtful accounts requires the Company to draw conclusions on the future collectability of the Company’s accounts receivable. Actual results could differ from these estimates.

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 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”). 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 June 30, 2018. 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 June 30, 2018 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 June 30, 2018 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

12

FRIEDMAN INDUSTRIES, INCORPORATED

Three Months Ended June 30, 2018

Part II — OTHER INFORMATION

Item 6. Exhibits

Exhibits
3.1	—	Articles of Incorporation of the Company, as amended (incorporated by reference from Exhibit 3.1 to the Company’s Form S-8 filed on December 21, 2016).
3.2	—	Articles of Amendment to the Articles of Incorporation of the Company, as filed with the Texas Secretary of State on September 22, 1987 (incorporated by reference from Exhibit 3.1 to the Company’s Form S-8 filed on December 21, 2016).
3.3	—	Amended and Restated Bylaws of the Company (incorporated by reference from Exhibit 3.2 to the Company’s Form S-8 filed on December 21, 2016).
10.1	—	Revolving Line of Credit Loan Agreement, dated December 11, 2017 (incorporated by reference from Exhibit 10.1 to the Company’s Current Report on Form 8-K, filed with the SEC on December 15, 2017).
10.2	—	Promissory Note, dated December 11, 2017 (incorporated by reference from Exhibit 10.2 to the Company’s Current Report on Form 8-K, filed with the SEC on December 15, 2017).
10.3	—	Commercial Security Agreement, dated December 11, 2017 (incorporated by reference from Exhibit 10.3 to the Company’s Current Report on Form 8-K, filed with the SEC on December 15, 2017).
18.1	—	Letter from Moss Adams LLP dated August 14, 2018
31.1	—	Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, signed by Robert Sparkman.
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 Robert Sparkman.
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.

13

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: August 14, 2018	By	/s/    ALEX LARUE
		Alex LaRue, Chief Financial Officer – Secretary and Treasurer (Principal Financial Officer)

14

EX-18.1

Exhibit 18.1

August 14, 2018

Mr. Alex LaRue, Chief Financial Officer

Friedman Industries, Incorporated

1121 Judson Road, Suite 124

Longview, Texas 75601

Dear Mr. LaRue:

At your request, we have read the description in Note B of your interim consolidated financial statements included in the Quarterly Report on Form 10-Q to the Securities and Exchange Commission for the three months ended June 30, 2018, of the facts relating to the change from last-in, first-out (LIFO) method to the average cost method for valuation of prime coil inventory. We concur, on the basis of the facts so set forth and other information furnished to us by appropriate officials of Friedman Industries, Incorporated (the “Company”), with management’s conclusion that the accounting change in prime coil inventory valuation method described in your Form 10-Q is preferable under the circumstances.

With regard to the aforementioned accounting change, it should be recognized that professional standards have not been established for evaluating the preferability of one acceptable method of accounting over another method. Accordingly, we are furnishing this letter solely for purposes of the Company’s compliance with the requirements of the Securities and Exchange Commission, and it should not be used or relied on for any other purpose.

We have not audited any consolidated financial statements of the Company as of any date or for any period subsequent to March 31, 2018. Therefore, we are unable to express, and we do not express, an opinion on the facts set forth in the above mentioned Form 10-Q, on the related information furnished to us by officials of the Company, or on the financial position, results of operations, or cash flows of the Company as of any date or for any period subsequent to March 31, 2018.

Very truly yours,

/s/ MOSS ADAMS LLP

Houston, Texas

EX-31.1

EXHIBIT 31.1

I, Robert Sparkman, 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: August 14, 2018

/s/ ROBERT SPARKMAN

President and Chief Executive Officer

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: August 14, 2018

/s/ ALEX LARUE

Chief Financial Officer – Secretary and 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 June 30, 2018, as filed with the U.S. Securities and Exchange Commission on the date hereof (the “Report”), I, Robert Sparkman, President and Chief Executive Officer 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; 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: August 14, 2018

By	/s/ Robert Sparkman
Name:	Robert Sparkman
Title:	President and Chief Executive Officer

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 June 30, 2018, as filed with the U.S. Securities and Exchange Commission on the date hereof (the “Report”), I, Alex LaRue, Chief Financial Officer – Secretary and 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; 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: August 14, 2018

By	/s/ Alex LaRue
Name:	Alex LaRue
Title:	Chief Financial Officer – Secretary and Treasurer

XML

Document And Entity Information - shares	3 Months Ended
	Jun. 30, 2018	Aug. 14, 2018
Document Information [Line Items]
Entity Registrant Name	FRIEDMAN INDUSTRIES INC
Entity Central Index Key	0000039092
Trading Symbol	frd
Current Fiscal Year End Date	--03-31
Entity Filer Category	Smaller Reporting Company
Entity Current Reporting Status	Yes
Entity Voluntary Filers	No
Entity Well-known Seasoned Issuer	No
Entity Common Stock, Shares Outstanding (in shares)		7,009,444
Document Type	10-Q
Document Period End Date	Jun. 30, 2018
Document Fiscal Year Focus	2019
Document Fiscal Period Focus	Q1
Amendment Flag	false

XML

Condensed Consolidated Balance Sheets - Current Period Unaudited - USD ($)	Jun. 30, 2018	Mar. 31, 2018
CURRENT ASSETS:
Cash	$ 3,298,781	$ 4,052,582
Accounts receivable, net of allowances for bad debts and cash discounts of $21,052 at June 30 and March 31, 2018, respectively	18,247,788	17,458,289
Inventories	59,598,607	45,329,434
Other	535,922	429,101
TOTAL CURRENT ASSETS	81,681,098	67,269,406
PROPERTY, PLANT AND EQUIPMENT:
Land	1,452,799	1,452,799
Buildings and yard improvements	8,813,031	8,710,958
Machinery and equipment	39,368,094	39,282,944
Less accumulated depreciation	(35,638,296)	(35,280,700)
Property, plant, and equipment, net	13,995,628	14,166,001
OTHER ASSETS:
Cash value of officers’ life insurance and other assets	224,175	217,900
TOTAL ASSETS	95,900,901	81,653,307
CURRENT LIABILITIES:
Accounts payable and accrued expenses	19,624,966	10,233,431
Income taxes payable	862,259
Dividends payable	210,283	140,189
Contribution to retirement plan	90,000	45,000
Employee compensation and related expenses	925,277	612,015
TOTAL CURRENT LIABILITIES	21,712,785	11,030,635
POSTRETIREMENT BENEFITS OTHER THAN PENSIONS	182,486	175,056
DEFERRED INCOME TAX LIABILITY	1,968,330	1,872,166
TOTAL LIABILITIES	23,863,601	13,077,857
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS’ EQUITY:
Common stock, par value $1: Authorized shares — 10,000,000 Issued shares — 8,185,160 at June 30 and March 31, 2018	8,185,160	8,185,160
Additional paid-in capital	29,227,114	29,154,874
Treasury stock at cost (1,175,716 shares at June 30 and March 31, 2018)	(5,475,964)	(5,475,964)
Retained earnings	40,100,990	36,711,380
TOTAL STOCKHOLDERS’ EQUITY	72,037,300	68,575,450
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$ 95,900,901	$ 81,653,307

XML

Condensed Consolidated Balance Sheets - Current Period Unaudited (Parentheticals) - USD ($)	Jun. 30, 2018	Mar. 31, 2018
Allowance for bad debt and cash discounts	$ 21,052	$ 21,052
Common stock, par value (in dollars per share)	$ 1	$ 1
Common stock, authorized (in shares)	10,000,000	10,000,000
Common stock, issued (in shares)	8,185,160	8,185,160
Treasury stock, shares (in shares)	1,175,716	1,175,716

XML

Condensed Consolidated Statements of Operations - Unaudited - USD ($)	3 Months Ended
	Jun. 30, 2018	Jun. 30, 2017
Net Sales	$ 48,193,318	$ 23,083,269
Costs and expenses
Costs of goods sold	42,000,840	21,539,959
General, selling and administrative costs	1,492,740	1,038,394
Costs and expenses, total	43,493,580	22,578,353
EARNINGS FROM OPERATIONS	4,699,738	504,916
Interest and other income	(62,775)	(4,375)
EARNINGS BEFORE INCOME TAXES	4,762,513	509,291
Income tax provision:
Current	1,066,456
Deferred	96,164	144,961
Income tax	1,162,620	144,961
NET EARNINGS	$ 3,599,893	$ 364,330
Average number of common shares outstanding:
Basic (in shares)	7,009,444	7,009,444
Diluted (in shares)	7,009,444	7,009,444
Net earnings per share:
Basic (in dollars per share)	$ 0.51	$ 0.05
Diluted (in dollars per share)	0.51	0.05
Cash dividends declared per common share (in dollars per share)	$ 0.03	$ 0.01

XML

Condensed Consolidated Statements of Cash Flows - Unaudited - USD ($)	3 Months Ended
	Jun. 30, 2018	Jun. 30, 2017
OPERATING ACTIVITIES
Net earnings	$ 3,599,893	$ 364,330
Adjustments to reconcile net earnings to cash provided by (used in) operating activities:
Depreciation	357,596	282,064
Deferred taxes	96,164	144,961
Compensation expense for restricted stock	72,240	72,240
Change in postretirement benefits	7,430	1,720
Decrease (increase) in operating assets:
Accounts receivable	(789,499)	680,046
Inventories	(14,269,173)	(4,777,078)
Other current assets	(106,821)	96,747
Increase (decrease) in operating liabilities:
Accounts payable and accrued expenses	9,391,535	5,745,306
Income taxes payable	862,259
Contribution to retirement plan	45,000	42,000
Employee compensation and related expenses	313,262	24,143
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES	(420,114)	2,676,479
INVESTING ACTIVITIES
Purchase of property, plant and equipment	(187,223)	(159,465)
Increase in cash surrender value of officers’ life insurance	(6,275)	(4,375)
NET CASH USED IN INVESTING ACTIVITIES	(193,498)	(163,840)
FINANCING ACTIVITIES
Cash dividends paid	(140,189)	(70,094)
NET CASH USED IN FINANCING ACTIVITIES	(140,189)	(70,094)
INCREASE (DECREASE) IN CASH	(753,801)	2,442,545
Cash at beginning of period	4,052,582	1,461,695
CASH AT END OF PERIOD	$ 3,298,781	$ 3,904,240

XML

Note A - Basis of Presentation

3 Months Ended

Jun. 30, 2018

Notes to Financial Statements

Organization, Consolidation and Presentation of Financial Statements Disclosure [Text Block]

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 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,

2018.

XML

Note B - Change in Accounting Principle

3 Months Ended

Jun. 30, 2018

Notes to Financial Statements

Accounting Changes [Text Block]

NOTE B — CHANGE IN ACCOUNTING PRINCIPLE

Effective

April 1, 2018,

the Company changed its method for valuing prime coil inventory of the coil segment from the last-in,

first

-out (“LIFO”) method to the average cost method. The effects of the change in accounting principle from LIFO to average cost have been retrospectively applied to all prior periods presented in all sections of this quarterly report on Form

10

-Q. The Company believes the average cost method is preferable as it more closely resembles the physical flow of our inventory, it better matches revenues with expenses and it aligns with how we internally manage our business. As a result of the retrospective application of the change in accounting principle, certain financial statement line items in the Company’s consolidated balance sheet as of

March 31, 2018

and its consolidated statement of operations and consolidated statement of cash flows for the quarter ended

June 30, 2017

were adjusted as presented in the table below. In addition, retained earnings as of

April 1, 2017

increased

$4,418,318

as a result of the change in accounting principle.

	As Originally Reported			Effect of Change			As Adjusted
Consolidated Statement of Operations, Quarter Ended June 30, 2017
Cost of goods sold		21,819,846			(279,887	)		21,539,959
Income tax provision		58,784			86,177			144,961
Net earnings		170,620			193,710			364,330
Net earnings per share:
Basic		0.02			0.03			0.05
Diluted		0.02			0.03			0.05
Consolidated Statement of Cash Flows, Quarter Ended June 30, 2017
Net earnings		170,620			193,710			364,330
Change in inventories		(4,497,191	)		(279,887	)		(4,777,078	)
Change in deferred income taxes		58,784			86,177			144,961
Consolidated Balance Sheet, as of March 31, 2018
Inventories		38,039,332			7,290,102			45,329,434
Deferred income tax liability		103,198			1,768,968			1,872,166
Retained earnings		31,190,246			5,521,134			36,711,380

The following table shows the effect of the change in accounting principle from LIFO to average cost on the quarter ended

June 30, 2018:

	As Computed Under LIFO		As Computed Under Average Cost		Effect of Change
Consolidated Statement of Operations, Quarter Ended June 30, 2018
Earnings before income taxes		2,100,440		4,762,513		2,662,073
Income tax provision		514,128		1,162,620		648,492
Net earnings		1,586,312		3,599,893		2,013,581
Net earnings per share:
Basic		0.23		0.51		0.28
Diluted		0.23		0.51		0.28

XML

Note C - New Accounting Standards

3 Months Ended

Jun. 30, 2018

Notes to Financial Statements

New Accounting Pronouncements and Changes in Accounting Principles [Text Block]

NOTE C — NEW ACCOUNTING STANDARDS

In

May 2014,

the FASB issued Accounting Standards Update

No.

2014

-

09,

Revenue from Contracts with Customers (“ASU

2014

-

09”

). ASU

2014

-

09

states that an entity should recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. This update also requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments, and assets recognized from costs incurred to obtain or fulfill a contract. The update supersedes prior revenue recognition guidance, including industry-specific guidance. Effective

April 1, 2018,

the Company adopted the new standard through the modified retrospective method applied to those contracts that were

not

completed as of

April 1, 2018

and those contracts initiated on or after

April 1, 2018.

Results for reporting periods beginning on or after

April 1, 2018

are presented under the new standard, while prior period amounts are unadjusted and reported in accordance with historic accounting under the prior guidance. The modified retrospective method requires that the cumulative effect of initially applying the new guidance be recorded as an adjustment to the opening balance of retained earnings in the condensed consolidated balance sheet. The adoption of this new accounting guidance did

not

have an impact on any prior period earnings and

no

adjustment was recorded to the opening retained earnings balance as of

April 1, 2018.

The adoption did

not

have a financial statement impact to the Company but did result in expanded disclosures which are provided in Note H.

In

August 2016,

the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update

No.

2016

-

15,

Statement of Cash Flows: Classification of Certain Cash Receipts and Cash Payments (“ASU

2016

-

15”

). ASU

2016

-

15

eliminates the diversity in practice related to the classification of certain cash receipts and payments in the statement of cash flows by adding or clarifying guidance on

eight

specific cash flow issues. The Company adopted this new guidance effective

April 1, 2018.

The adoption of this new guidance did

not

have a material impact on the Company’s consolidated financial statements.

In

February 

2016,

the FASB issued Accounting Standards Update

No.

2016

-

02,

Leases (“ASU

2016

-

02”

). ASU

2016

-

02

establishes a new lease accounting standard that requires lessees to recognize a right of use asset and related lease liability for most leases having lease terms of more than

12

months.  Leases with a term of

12

months or less will be accounted for similar to existing guidance for operating leases.  This new guidance is effective for annual and interim periods beginning after

December 

15,

2018,

but can be early adopted.  The Company is evaluating the impact that adoption of the provisions of ASU

2016

-

02

will have on its consolidated financial statements but does

not

expect a material impact.

XML

Note D - Inventories

3 Months Ended

Jun. 30, 2018

Notes to Financial Statements

Inventory Disclosure [Text Block]

NOTE D — 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. Effective

April 1, 2018,

the Company changed the inventory valuation method of its prime coil inventory from the LIFO method to the average cost method. Prime coil inventory value for both periods presented in the table below are based on average cost valuation. Cost for non-standard coil inventory is determined using the specific identification method. Cost for tubular inventory is determined using the average cost method. All inventories are valued at the lower of cost or net realizable value.

A summary of inventory values by product group follows:

	June 30, 201 8		Ma rch 31, 201 8 As Adjusted
Prime Coil Inventory	$	24,679,720	$	14,185,858
Non-Standard Coil Inventory		4,727,898		2,971,324
Tubular Raw Material		12,178,658		6,734,076
Tubular Finished Goods		18,012,331		21,438,176
	$	59,598,607	$	45,329,434

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 and new mill reject pipe that the Company purchases from U.S. Steel Tubular Products, Inc. At

June 30, 2018,

the Company carried quantities of mill reject pipe on hand that exceeded the trailing

twelve

month sales volume. Based on improved market conditions and overall economic conditions as well as recent sales trends, the Company reasonably expects the sales volume for the future

twelve

month period to approximate or at least be a substantial portion of the

June 30, 2018

quantity on hand, hence current classification of this inventory on the Company’s balance sheet. The Company’s projections are subject to significant estimates which

may

be different from actual results.

XML

Note E - Debt

3 Months Ended

Jun. 30, 2018

Notes to Financial Statements

Debt Disclosure [Text Block]

NOTE E - DEBT

On

December 11, 2017,

the Company entered into a loan agreement for a

$7,500,000

revolving line of credit facility (the “Credit Facility”) with Citizens National Bank (the “Bank”). The Credit Facility expires on

December 11, 2018

and is collateralized by the Company’s accounts receivable and inventory. Borrowings under the credit facility bear interest at the Bank’s prime rate minus

0.55%

resulting in an applicable interest rate of

4.45%

as of

June 30, 2018.

Interest payments on amounts advanced are due monthly and principal payments

may

be made at any time without penalty. All outstanding principal and accrued interest is due upon expiration of the Credit Facility. The Credit Facility contains financial covenants that require the Company to

not

permit: (

1

) tangible common shareholders’ equity to be less than

$50.0

million and (

2

) maximum debt to exceed

50%

of tangible common shareholders’ equity. At

June 30, 2018,

the Company had

no

borrowings outstanding under the Credit Facility. Subsequent to quarter-end, the Company borrowed funds under the Credit Facility and as of the filing date of this quarterly report on Form

10

-Q, the balance under the credit facility is

$2,500,000

with the applicable interest rate remaining at

4.45%.

XML

Note F - Stock Based Compensation

3 Months Ended

Jun. 30, 2018

Notes to Financial Statements

Disclosure of Compensation Related Costs, Share-based Payments [Text Block]

NOTE F — STOCK BASED COMPENSATION

The Company maintains the Friedman Industries, Incorporated

2016

Restricted Stock Plan (the “Plan”). The Plan is administered by the Compensation Committee (the “Committee”) of the Board of Directors (the “Board”) and continues indefinitely until terminated by the Board or until all shares allowed by the Plan have been awarded and earned. The aggregate number of shares of the Company’s Common Stock eligible for award under the Plan is

500,000

shares. Subject to the terms and provisions of the Plan, the Committee

may,

from time to time, select the employees to whom awards will be granted and shall determine the amount and applicable restrictions of each award. Forfeitures are accounted for upon their occurrence.

As of

June 30, 2018,

the total number of restricted shares awarded under the Plan was

210,000

shares. All of the awarded shares have

five

year cliff vesting restrictions with vesting occurring on

January 4, 2022.

No

other shares have been awarded under the Plan. The grant date fair value of the awarded shares is

$1,444,800

and is being recognized as compensation expense over the

60

month requisite service period. The Company recorded compensation expense of

$

72,240

in each of the quarters ended

June 30, 2018

and

June 30, 2017

relating to the stock awards issued under the Plan.

XML

Note G - Segment Information

3 Months Ended

Jun. 30, 2018

Notes to Financial Statements

Segment Reporting Disclosure [Text Block]

NOTE G — SEGMENT INFORMATION (in thousands)

	THREE MONTHS ENDED JUNE 30,
	201 8			201 7 As Adjusted
Net sales
Coil	$	31,129		$	18,010
Tubular		17,064			5,073
Total net sales	$	48,193		$	23,083
Operating profit (loss)
Coil	$	3,179		$	1,033
Tubular		2,321			(1	)
Total operating profit (loss)		5,500			1,032
Corporate expenses		800			527
Interest & other income		(63	)		(4	)
Earnings (loss) before income taxes	$	4,763		$	509

	June 30, 201 8		March 31, 201 8 As Adjusted
Segment assets
Coil	$	45,895	$	34,359
Tubular		46,435		43,010
		92,330		77,369
Corporate assets		3,571		4,284
	$	95,901	$	81,653

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, retirement plan contribution expense, corporate insurance expenses, restricted stock plan compensation expense and office supplies. Corporate assets consist primarily of cash and the cash value of officers’ life insurance.

XML

Note H - Revenue

3 Months Ended

Jun. 30, 2018

Notes to Financial Statements

Revenue from Contract with Customer [Text Block]

NOTE H — REVENUE

Revenue is generated primarily from contracts to manufacture or process steel 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 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: Coil and Tubular. Coil primarily generates revenue from temper passing and cutting to length hot-rolled steel coils. Coil segment revenue consists of

three

main product types: Prime Coil, Non-Standard Coil and Customer Owned Coil. Tubular primarily generates revenue from the manufacture, distribution and processing of steel pipe. Tubular segment revenue consists of

three

main product or service types: Manufactured Pipe, Mill Reject Pipe and Pipe Finishing Services. The following table disaggregates our revenue by product for each of our reportable business segments for the

three

months ended

June 30, 2018

and

2017,

respectively:

	Three Months Ended June 30,
	2018		2017
Coil Segment:
Prime Coil		24,776,031		14,275,590
Non-standard Coil		6,110,458		3,368,604
Customer Owned Coil		242,711		365,641
		31,129,200		18,009,835
Tubular Segment:
Manufactured Pipe		10,955,387		3,333,434
Mill Reject Pipe		5,420,861		1,221,936
Pipe Finishing Services		687,870		518,064
		17,064,118		5,073,434

XML

Note I - Supplemental Cash Flow Information

3 Months Ended

Jun. 30, 2018

Notes to Financial Statements

Cash Flow, Supplemental Disclosures [Text Block]

NOTE I — SUPPLEMENTAL CASH FLOW INFORMATION

The Company paid

no

income taxes in the quarter ended

June 30, 2018.

The Company paid income taxes of approximately

$8,000

in the quarter ended

June 30, 2017.

No

interest was paid in the quarters ended

June 

30,

2018

and

2017,

respectively. Noncash financing activities consisted of accrued dividends of

$210,283

and

$70,094

in the quarters ended

June 

30,

2018

and

2017,

respectively. In the

2017

quarter, there was a noncash transaction of

$246,000

for the transfer of ownership of a life insurance policy from the Company to an officer upon his retirement.

XML

Note J - Income Taxes

3 Months Ended

Jun. 30, 2018

Notes to Financial Statements

Income Tax Disclosure [Text Block]

NOTE J — INCOME TAXES

For the quarter ended

June 30, 2018,

the Company recorded an income tax provision of

$1,162,620,

or

24.4%

of pre-tax income, compared to

$144,961,

or

28.5%

of pre-tax income, for the quarter ended

June 30, 2017.

The provision for the quarter ended

June 30, 2017

has been adjusted by the retroactive application of the change in accounting principle disclosed in Note B.

On

December 22, 2017,

the U.S. government signed into law the Tax Cuts and Jobs Act (the “Tax Act”). The Tax Act, among other things, lowered the U.S. corporate income tax rate applicable to the Company from

34%

to

21%

effective

January 1, 2018.

For the quarter ended

June 30, 2018,

the Company’s effective tax rate differed from the corporate statutory rate due primarily to the inclusion of state tax expenses in the Company’s income tax provision. For the quarter ended

June 30, 2017,

the Company’s effective tax rate differed from the corporate statutory rate due primarily to tax benefits related to the ownership transfer of a life insurance policy from the Company to an officer upon retirement.

While the Company has substantially completed its analysis of the income tax effects of the Tax Act and recorded a reasonable provisional estimate of such effects, certain items related to the Tax Act

may

differ, possibly materially, due to further refinement of the calculations, changes in interpretations and assumptions made, additional guidance that

may

be issued by the U.S. government, and actions related to accounting policy decisions the Company

may

make as a result of the Tax Act. Pursuant to Staff Accounting Bulletin

118

(“SAB

118”

) issued by the Securities and Exchange Commission on

December 22, 2017,

the Company will complete its analysis of these items over a

one

-year measurement period ending

December 22, 2018

and any adjustments during this measurement period will be recorded as discrete adjustments to income tax expense in the period in which adjustments become estimable and/or are finalized.

XML

Note B - Change in Accounting Principle (Tables)

3 Months Ended

Jun. 30, 2018

Notes Tables

Schedule of New Accounting Pronouncements and Changes in Accounting Principles [Table Text Block]

	As Originally Reported			Effect of Change			As Adjusted
Consolidated Statement of Operations, Quarter Ended June 30, 2017
Cost of goods sold		21,819,846			(279,887	)		21,539,959
Income tax provision		58,784			86,177			144,961
Net earnings		170,620			193,710			364,330
Net earnings per share:
Basic		0.02			0.03			0.05
Diluted		0.02			0.03			0.05
Consolidated Statement of Cash Flows, Quarter Ended June 30, 2017
Net earnings		170,620			193,710			364,330
Change in inventories		(4,497,191	)		(279,887	)		(4,777,078	)
Change in deferred income taxes		58,784			86,177			144,961
Consolidated Balance Sheet, as of March 31, 2018
Inventories		38,039,332			7,290,102			45,329,434
Deferred income tax liability		103,198			1,768,968			1,872,166
Retained earnings		31,190,246			5,521,134			36,711,380

	As Computed Under LIFO		As Computed Under Average Cost		Effect of Change
Consolidated Statement of Operations, Quarter Ended June 30, 2018
Earnings before income taxes		2,100,440		4,762,513		2,662,073
Income tax provision		514,128		1,162,620		648,492
Net earnings		1,586,312		3,599,893		2,013,581
Net earnings per share:
Basic		0.23		0.51		0.28
Diluted		0.23		0.51		0.28

XML

Note D - Inventories (Tables)

3 Months Ended

Jun. 30, 2018

Notes Tables

Schedule of Inventory, Current [Table Text Block]

	June 30, 201 8		Ma rch 31, 201 8 As Adjusted
Prime Coil Inventory	$	24,679,720	$	14,185,858
Non-Standard Coil Inventory		4,727,898		2,971,324
Tubular Raw Material		12,178,658		6,734,076
Tubular Finished Goods		18,012,331		21,438,176
	$	59,598,607	$	45,329,434

XML

Note G - Segment Information (Tables)

3 Months Ended

Jun. 30, 2018

Notes Tables

Schedule of Segment Reporting Information, by Segment [Table Text Block]

	THREE MONTHS ENDED JUNE 30,
	201 8			201 7 As Adjusted
Net sales
Coil	$	31,129		$	18,010
Tubular		17,064			5,073
Total net sales	$	48,193		$	23,083
Operating profit (loss)
Coil	$	3,179		$	1,033
Tubular		2,321			(1	)
Total operating profit (loss)		5,500			1,032
Corporate expenses		800			527
Interest & other income		(63	)		(4	)
Earnings (loss) before income taxes	$	4,763		$	509

	June 30, 201 8		March 31, 201 8 As Adjusted
Segment assets
Coil	$	45,895	$	34,359
Tubular		46,435		43,010
		92,330		77,369
Corporate assets		3,571		4,284
	$	95,901	$	81,653

XML

Note H - Revenue (Tables)

3 Months Ended

Jun. 30, 2018

Notes Tables

Disaggregation of Revenue [Table Text Block]

	Three Months Ended June 30,
	2018		2017
Coil Segment:
Prime Coil		24,776,031		14,275,590
Non-standard Coil		6,110,458		3,368,604
Customer Owned Coil		242,711		365,641
		31,129,200		18,009,835
Tubular Segment:
Manufactured Pipe		10,955,387		3,333,434
Mill Reject Pipe		5,420,861		1,221,936
Pipe Finishing Services		687,870		518,064
		17,064,118		5,073,434

XML

Note B - Change in Accounting Principle (Details Textual) - USD ($)	Jun. 30, 2018	Mar. 31, 2018	Apr. 01, 2017
Retained Earnings (Accumulated Deficit), Ending Balance	$ 40,100,990	$ 36,711,380
Change in Inventory Costing Method from LIFO to Average Cost [Member]
Retained Earnings (Accumulated Deficit), Ending Balance			$ 4,418,318

XML

Note B - Change in Accounting Principle - Change in Accounting Principle From LIFO to Average Cost (Details) - USD ($)	3 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Mar. 31, 2018	Apr. 01, 2017
Costs of goods sold	$ 42,000,840	$ 21,539,959
Income Tax Expense (Benefit), Total	1,162,620	144,961
Net earnings	$ 3,599,893	$ 364,330
Basic (in dollars per share)	$ 0.51	$ 0.05
Diluted (in dollars per share)	$ 0.51	$ 0.05
Inventories	$ (14,269,173)	$ (4,777,078)
Change in deferred income taxes		144,961
Inventories	59,598,607		$ 45,329,434
Deferred income tax liability	1,968,330		1,872,166
Retained earnings	40,100,990		36,711,380
Earnings before income taxes	4,762,513	509,291
Change in Inventory Costing Method from LIFO to Average Cost [Member]
Retained earnings				$ 4,418,318
Computed under LIFO [Member]
Income Tax Expense (Benefit), Total	514,128
Net earnings	$ 1,586,312
Basic (in dollars per share)	$ 0.23
Diluted (in dollars per share)	$ 0.23
Earnings before income taxes	$ 2,100,440
Previously Reported [Member]
Costs of goods sold		21,819,846
Income Tax Expense (Benefit), Total		58,784
Net earnings		$ 170,620
Basic (in dollars per share)		$ 0.02
Diluted (in dollars per share)		$ 0.02
Inventories		$ (4,497,191)
Change in deferred income taxes		58,784
Inventories			38,039,332
Deferred income tax liability			103,198
Retained earnings			31,190,246
Restatement Adjustment [Member] | Change in Inventory Costing Method from LIFO to Average Cost [Member]
Costs of goods sold		(279,887)
Income Tax Expense (Benefit), Total		86,177
Net earnings		$ 193,710
Basic (in dollars per share)		$ 0.03
Diluted (in dollars per share)		$ 0.03
Inventories		$ (279,887)
Change in deferred income taxes		$ 86,177
Inventories			7,290,102
Deferred income tax liability			1,768,968
Retained earnings			$ 5,521,134
Restatement Adjustment [Member] | Difference Between LIFO and Average Cost Method [Member]
Income Tax Expense (Benefit), Total	648,492
Net earnings	$ 2,013,581
Basic (in dollars per share)	$ 0.28
Diluted (in dollars per share)	$ 0.28
Earnings before income taxes	$ 2,662,073

XML

Note D - Inventories - Summary of Inventory Values by Product Group (Details) - USD ($)	Jun. 30, 2018	Mar. 31, 2018
Inventories	$ 59,598,607	$ 45,329,434
Prime Coil Inventory [Member]
Raw materials	24,679,720	14,185,858
Non-standard Coil Inventory [Member]
Raw materials	4,727,898	2,971,324
Tubular Inventory [Member]
Raw materials	12,178,658	6,734,076
Finished goods	$ 18,012,331	$ 21,438,176

XML

Note E - Debt (Details Textual) - Citizens National Bank [Member] - Revolving Credit Facility [Member] - USD ($)	3 Months Ended
	Jun. 30, 2018	Aug. 13, 2018	Dec. 11, 2017
Line of Credit Facility, Maximum Borrowing Capacity			$ 7,500,000
Line of Credit Facility, Interest Rate at Period End	4.45%
Debt Instrument, Minimum Threshold of Shareholders' Equity			$ 50,000,000
Debt Instrument, Debt to Shareholders' Equity Maximum Threshold, Percent			50.00%
Long-term Line of Credit, Total	$ 0
Subsequent Event [Member]
Line of Credit Facility, Interest Rate at Period End		4.45%
Long-term Line of Credit, Total		$ 2,500,000
Prime Rate [Member]
Debt Instrument, Basis Spread on Variable Rate	(0.55%)

XML

Note F - Stock Based Compensation (Details Textual) - 2016 Restricted Stock Plan [Member] - USD ($)	3 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Sep. 01, 2016
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Authorized			500,000
Restricted Stock [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period	210,000
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period	5 years
Employee Service Share-based Compensation, Nonvested Awards, Compensation Not yet Recognized, Share-based Awards Other than Options	$ 1,444,800
Employee Service Share-based Compensation, Nonvested Awards, Compensation Cost Not yet Recognized, Period for Recognition	5 years
Allocated Share-based Compensation Expense, Total	$ 72,240	$ 72,240

XML

Note G - Segment Information - Segment Information (Details) - USD ($)	3 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Mar. 31, 2018
Total Net Sales	$ 48,193,318	$ 23,083,269
Operating profit (loss)	4,699,738	504,916
Interest & other income	(62,775)	(4,375)
Earnings before income taxes	4,762,513	509,291
Assets	95,900,901		$ 81,653,307
Coil [Member]
Total Net Sales	31,129,200	18,009,835
Tubular [Member]
Total Net Sales	17,064,118	5,073,434
Operating Segments [Member]
Operating profit (loss)	5,500,000	1,032,000
Assets	92,330,000		77,369,000
Operating Segments [Member] | Coil [Member]
Total Net Sales	31,129,000	18,010,000
Operating profit (loss)	3,179,000	1,033,000
Assets	45,895,000		34,359,000
Operating Segments [Member] | Tubular [Member]
Total Net Sales	17,064,000	5,073,000
Operating profit (loss)	2,321,000	(1,000)
Assets	46,435,000		43,010,000
Corporate, Non-Segment [Member]
Corporate expenses	800,000	$ 527,000
Assets	$ 3,571,000		$ 4,284,000

XML

Note H - Revenue (Details Textual)	3 Months Ended
	Jun. 30, 2018
Number of Reportable Segments	2

XML

Note H - Revenue - Disaggregation of Revenue (Details) - USD ($)	3 Months Ended
	Jun. 30, 2018	Jun. 30, 2017
Net Sales	$ 48,193,318	$ 23,083,269
Coil [Member]
Net Sales	31,129,200	18,009,835
Coil [Member] | Prime Coil [Member]
Net Sales	24,776,031	14,275,590
Coil [Member] | Secondary Coil [Member]
Net Sales	6,110,458	3,368,604
Coil [Member] | Customer Owned [Member]
Net Sales	242,711	365,641
Tubular [Member]
Net Sales	17,064,118	5,073,434
Tubular [Member] | Manufactured Pipe [Member]
Net Sales	10,955,387	3,333,434
Tubular [Member] | Mill Reject Pipe [Member]
Net Sales	5,420,861	1,221,936
Tubular [Member] | Pipe Finishing Services [Member]
Net Sales	$ 687,870	$ 518,064

XML

Note I - Supplemental Cash Flow Information (Details Textual) - USD ($)	3 Months Ended
	Jun. 30, 2018	Jun. 30, 2017
Income Taxes Paid	$ 0	$ 8,000
Interest Paid, Excluding Capitalized Interest, Operating Activities	0	0
Dividends Payable	$ 210,283	70,094
Other Significant Noncash Transaction, Value of Consideration Given		$ 246,000

XML

Note J - Income Taxes (Details Textual) - USD ($)	3 Months Ended
	Jun. 30, 2018	Jun. 30, 2017
Income Tax Expense (Benefit), Total	$ 1,162,620	$ 144,961
Effective Income Tax Rate Reconciliation, Percent, Total	24.40%	28.50%