UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

FOR THE QUARTERLY PERIOD ENDED DECEMBER 31, 2016JUNE 30, 2017

OR

FROM THE TRANSITION PERIOD FROM                    TO                    

COMMISSION FILE NUMBER 1-7521

FRIEDMAN INDUSTRIES, INCORPORATED

(Exact name of registrant as specified in its charter)

1121 JUDSON ROAD, SUITE 124, LONGVIEW, TEXAS 75601

(Address of principal executive offices) (Zip Code)

(903) 758-3431

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

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

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

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

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 revisedfinancial 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 FebruaryAugust 14, 2017, 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

FRIEDMAN INDUSTRIES, INCORPORATED

CONDENSED CONSOLIDATED BALANCE SHEETS — UNAUDITED

FRIEDMAN INDUSTRIES, INCORPORATED

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS — UNAUDITED

FRIEDMAN INDUSTRIES, INCORPORATED

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS — UNAUDITED

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, 2016.2017.

NOTE B — CHANGE IN ACCOUNTING ESTIMATE

During the quarter ended June 30, 2017, the Company determined that the economic useful lives of certain fixed assets at the Decatur, Alabama coil processing facility were greater than the useful lives used to calculate depreciation. As a result, effective April 1, 2017, the Company revised the useful lives of these assets resulting in a decrease in depreciation expense of approximately $160,000, an increase in net earnings of approximately $102,000 and an increase in diluted earnings per share of approximately $0.01 for the quarter ended June 30, 2017.

NOTE C — NEW ACCOUNTING STANDARDS

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. This new guidance is effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. Early adoption is permitted. The Company is evaluating the impact that adoption of the provisions of ASU 2016-15 will have on its consolidated financial statements but does not expect a material impact.

In March 2016, the FASB issued Accounting Standards Update No. 2016-09, Compensation – Stock Compensation (“ASU 2016-09”). ASU 2016-09 simplifies the accounting and reporting of certain aspects of share-based payment transactions, including income tax requirements, forfeitures and presentation on the balance sheet and statement of cash flows. This new guidance is effective for annual and interim periods beginning after December 15, 2016. Early adoption is permitted. The Company is evaluating the impact that adoption of the provisions of ASU 2016-09 will have on its 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.

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 most current revenue recognition guidance, including industry-specific guidance. ASU 2014-09 is effective for interim and annual periods beginning after December 15, 2016; early application is not permitted. In August 2015, the FASB issued Accounting Standards Update No. 2015-14, Revenue from Contracts with Customers - Deferral of the Effective Date (“ASU 2015-14”). ASU 2015-14 defers the effective date of ASU 2014-09 to annual reporting periods beginning after December 15, 2017, including interim reporting periods within that reporting period, and only permits entities to adopt the standard one year earlier as of annual reporting periods beginning after December 15, 2016, including interim reporting periods within that reporting period. The Company is evaluating the impact that adoption of the provisions of ASU 2014-09 will have on its consolidated financial statements but does not expect a material impact.

NOTE CD — 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. Cost for prime coil inventory is determined using the last-in, first-out (“LIFO”) method. The Company’s LIFO reserve was approximately $5,873,000 at June 30, 2017 and $5,593,000 at March 31, 2017. The LIFO reserve signifies the difference between LIFO value used for financial reporting and the value under weighted average cost used for the Company’s internal perpetual inventory records. Cost for non-standard coil inventory is determined using the specific identification method. Cost for tubular inventory is determined using the weighted average method. LIFO inventories are valued at the lower of cost or market. All other inventories are valued at the lower of cost or net realizable value. During the nine months ended December 31, 2016, LIFO inventories were liquidated. The Company anticipates partial replacement of LIFO inventories by March 31, 2017 and has recorded a deferred debit of $165,841 to reflect the difference between estimated replacement cost and LIFO cost.

A summary of inventory values by product group follows:

NOTE DE — STOCK BASED COMPENSATION

On September 1, 2016,The Company maintains the Friedman Industries, Incorporated 2016 Restricted Stock Plan (the “Plan”) was approved by the Company’s shareholders. On December 21, 2016, the Company filed a Form S-8 Registration Statement with the U.S. Securities and Exchange Commission related to 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. Subsequent to quarter end,Forfeitures are accounted for upon their occurrence.

As of June 30, 2017, the total number of restricted stock awards totalingshares awarded under the Plan was 210,000 shares. All of the awarded shares were granted with an effective grant date of January 4, 2017 andhave five year cliff vesting restrictions (i.e.,with vesting for 100% of the awarded shares occurs only uponoccurring on January 4, 2022).2022. No other shares have been awarded under the Plan. The grant date fair value of the awarded shares is $1,444,800 and will beis being recognized as compensation expense over the 60 month requisite service period. The Company recorded compensation expense of $72,240 in the quarter ended June 30, 2017 relating to the stock awards issued under the Plan. In the quarter ended June 30, 2016, the Company maintained no equity compensation plans.

NOTE EF — SEGMENT INFORMATION (in thousands)

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 and office supplies. Corporate assets consist primarily of cash, the cash value of officers’ life insurance, deferred taxes and federal income taxes recoverable.

NOTE FG — SUPPLEMENTAL CASH FLOW INFORMATION

The Company paid income taxes of approximately $13,500$8,000 and $162,000$13,500 in the nine monthsquarters ended December 31,June 30, 2017 and 2016, and 2015, respectively. The CompanyNo interest was paid no interest in the nine monthsquarters ended December 31,June 30, 2017 and 2016, or 2015. Non-cashrespectively. Noncash financing activities consisted of accrued dividends of $70,094 and $67,994 in both the nine month periodsquarters ended December 31,June 30, 2017 and 2016, respectively. There were noncash transactions of $246,000 and 2015, respectively. $293,000 in the quarters ended June 30, 2017 and 2016, respectively, for the transfer of ownership of life insurance policies from the Company to officers upon their retirement.

NOTE H — INCOME TAXES

The nine monthsCompany’s effective tax rate for the quarter ended December 31, 2016 included a $293,000 non-cash transactionJune 30, 2017 differed from the statutory rate due primarily to transfertax benefits related to the ownership transfer of a life insurance policy from the Company to an officer upon retirement.

NOTE G — INCOME TAXES

The Company’s effective tax rate for the nine monthsquarter ended December 31,June 30, 2016 differed from the statutory rate due primarily to state income tax benefits resulting from the loss before taxes. The Company’s effective tax rate for the nine months ended December 31, 2015 approximated the statutory rate.

Results of Operations

NineThree Months Ended December 31, 2016June 30, 2017 Compared to NineThree Months Ended December 31, 2015June 30, 2016

During the ninethree months ended December 31, 2016,June 30, 2017, sales increased $689,505 and costs of goods andsold decreased $1,826,906 resulting in a gross profit decreased $8,982,505, $3,738,492 and $5,244,013, respectively, fromincrease of $2,516,411 compared to the comparable amounts recorded during the ninethree months ended December 31, 2015.June 30, 2016. The decreaseincrease in sales was related to both a declineresulted from an increase in tons sold andthe average selling price partially offset by a decrease in the average per ton selling price. Tons sold declined from approximately 115,000 tons in the 2015 period to approximately 101,000 tons in the 2016 period.sold. The average per ton selling price decreasedincreased from approximately $569 per ton in the 2015 period to approximately $560$519 per ton in the 2016 period.quarter to approximately $689 per ton in the 2017 quarter. Tons sold decreased from approximately 43,000 tons in the 2016 quarter to approximately 33,500 tons in the 2017 quarter. The decrease in costs of goods sold was related primarily to the decline in tons sold partially offset by an increase in the average per ton cost which increased from approximately $530 per ton in the 2015 period to approximately $567$548 per ton in the 2016 period.quarter to approximately $651 per ton in the 2017 quarter. Gross margin as a percentage of sales decreasedincreased from a gross loss of approximately 5.6% in the 2016 quarter to a gross profit of approximately 6.9%5.5% in the 2015 period to a gross loss of approximately 1.3% in the 2016 period.2017 quarter.

Coil product segment sales decreased approximately $4,893,000$989,000 during the 2016 period.2017 quarter. This decrease resulted from bothwas related to a decreasedecline in coil tons sold partially offset by an increase in the average per ton selling price of coil products and a declineprice. Tons sold decreased from approximately 37,000 tons in the 2016 quarter to approximately 26,500 tons sold.in the 2017 quarter. The average per ton selling price of coil products decreasedincreased from approximately $570 per ton in the 2015 period to approximately $561$515 per ton in the 2016 period. Coil tons shipped decreased fromquarter to approximately 93,000 tons$683 per ton in the 2015 period to approximately 85,500 tons in the 2016 period.2017 quarter. The decline in coil segment sales volume was primarily attributable to reduced sales to customers manufacturing products used in the commercial freight industry. Coil segment operations recorded an operating profit of approximately $753,000 in the 2017 quarter and an operating loss of approximately $858,000$1,515,000 in the 2016 period and an operating profit of approximately $4,858,000 in the 2015 period. Coil segment operating results were negatively impacted during the 2016 period by volatility in the price of hot-rolled steel coils, specifically during the first three months of the period.quarter. The coil product segment’s prime coil inventory is valued usingprofit margins are significantly impacted by the last-in, first-out (“LIFO”) method. The LIFO method applies the most recent inventory costs to sales. Therefore, it is characteristicapplication of the LIFO method for costs of goods sold to be higher during periods of rising costsinventory valuation. LIFO charges or credits are driven by relative changes in the cost and for costs of goods sold to be lower during periods of declining costs. The pricequantities of hot-rolled steel coils purchased bypurchased. During the Company during the first three months ended June 30, 2017, the coil segment experienced relatively stable pricing for hot-rolled coils and recorded a LIFO charge of approximately $280,000. During the three months ended June 30, 2016, period increased sharply resulting in higher costs of goods sold and reduced margins. Operating results for the 2016 period were also negatively impacted bycoil segment experienced a high volume of shipments under orders with fixed selling prices that were received from customers during fiscal 2016 when steel prices were at a lower level. The Company purchased the material necessary to fulfill these orders when they were accepted to take advantage of the lower steel prices; however, due to LIFO valuation and the subsequentsignificant rise in steel prices, sales against these orders during the 2016 period were matched with the more recent higher material costs. The Company concluded shipments against these orders during the quarter ending December 31, 2016.costs for hot-rolled coils and recorded a LIFO charge of approximately $2,336,000. The Company continues to experience intense competition for sales due to the general availability of both domestic and foreign hot-rolled sheet and plate.

The Company is primarily dependent onCompany’s coil segment purchases a significant amount of its hot-rolled coils from steel mills operated by Nucor Steel Company (“NSC”) for its supply of coil inventory.. In the 2016 period,2017 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 decreasedincreased approximately $4,090,000$1,678,000 during the 2016 period.2017 quarter. This decreaseincrease resulted from both a decline in tons sold and a decreaseincreases in the average per ton selling price. Tubular tons shipped decreased from approximately 23,000 tons inprice and sales volume for the 2015 period to approximately 16,000 tons in the 2016 period.Company’s inventoried tubular products. The average per ton selling price of these tubular products decreasedincreased from approximately $565 per ton in the 2015 period to approximately $558$540 per ton in the 2016 period. Thequarter to approximately $637 per ton in the 2017 quarter. Tons sold increased from approximately 6,000 tons in the 2016 quarter to approximately 7,000 tons in the 2017 quarter. In addition, tubular product segment sales increased due to the Company’s newly constructed pipe finishing facility commencing operations during May 2017 and generating revenue of approximately $518,000 for the quarter ended June 30, 2017. Tubular segment operations recorded operating losses of approximately $1,360,000$1,000 and $2,324,000$274,000 in the 2017 and 2016 and 2015 periods,quarters, respectively. Tubular segment results for both the 2017 and 2016 periodquarters were negatively impacted by the effects of a prolonged recession in the U.S. energy business. The recession directly impacted demand for the Company’s products used in the oil and gas industry. Management further believes that the recession had a negative indirect impact on the segment’s other products, due to the ensuing reluctance among pipe distributors, the segment’s primary customers, to purchase tubular products, generally. Management believes the low demand for its tubular products is related to soft market conditions created by oversupply, foreign competition and the most recent recession in the U.S. energy business.

U.S. Steel Tubular Products, Inc. (“USS”) has been the primary supplier of new mill reject pipe to the Company and a significant customer of the Company’s manufactured tubular products used in the energy business. Historically, the Company’s manufactured tubular products sold to USS were produced from coil material purchased from USS. In recent years, salesSales of tubular products to USS have declined.declined in recent years and in the 2017 quarter no sales were recorded to USS. Management believes the downward trend is a direct impact ofprimarily due to the increased presence of low-priced imported material. Inmaterial, the 2016 and 2015 periods, sales to USS were also negatively affected by amost recent recession in the U.S. energy business.business and the structural change in energy exploration created by technological improvements revolving around shale production and hydraulic fracturing. The Company is unable to provide an estimate of the timing or quantity of future pipe orders from USS. 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 welded pipe mill at the Lone Star facility. TheIn May 2017, USS resumed production at its Lone Star facility’s #2 welded pipe mill remains temporarily idled and the Company is unable to provide an estimate of how long the mill will be idled.mill. The Company expects orders from USS to remain lowthe volume and suppliessize range of new mill reject pipe supply from USS to be significantly reduced while production at USS’sgiven the permanent idling of the Lone Star facility’s #1 pipe mill. As of the date of this filing, all finishing services performed by the Company at its newly operational finishing facility remains idled and until the U.S. energy industry experiences sustained recovery.have been performed for USS. The Company continues to manufacture pipe for sale to customers other than USS and sources coil material for this pipe production from domestic steel mills other than USS. Accordingly, the Company does not believe the idling of any USS facility will impact the ability of the Company to receive adequate coil supply for pipe manufacturing demands. 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 2016 period, general, selling and administrative costs decreased $700,090 from the amount recorded during the 2016 period. This decrease was related primarily to a reduction in the number of administrative employees for the Company’s tubular segment, decreases in bonuses and commissions associated with the decline in earnings and sales volume and a decrease in corporate expenses.

Income taxes in the 2016 period decreased $1,743,2272017 quarter increased $928,553 from the amount recorded in the 2015 period.2016 quarter. This decreaseincrease was related primarily to the decreaseincrease in earnings before taxes in the 2016 period.

Three Months Ended December 31, 2016 Compared to Three Months Ended December 31, 2015

During the three months ended December 31, 2016, sales, costs of goods sold and gross profit decreased $2,559,502, $1,663,784 and $895,718, respectively, from the comparable amounts recorded during the three months ended December 31, 2015. The decrease in sales was related to a decline in tons sold partially offset by an increase in the average per ton selling price. Tons sold decreased from approximately 36,500 tons in the 2015 quarter to approximately 26,000 tons in the 2016 quarter. The average per ton selling price increased from approximately $509 per ton in the 2015 quarter to approximately $608 per ton in the 2016 quarter. The decrease in costs of goods sold was related to the decline in tons sold partially offset by an increase in the per ton cost from approximately $469 per ton in the 2015 quarter to approximately $587 per ton in the 2016 quarter. Gross profit as a percentage of sales decreased from approximately 7.9% in the 2015 quarter to approximately 3.6% in the 2016 quarter.

Coil product segment sales decreased approximately $1,708,000 during the 2016 quarter. This decrease resulted from a decline in tons sold partially offset by an increase in the average per ton selling price. Coil tons shipped decreased from approximately 30,000 tons in the 2015 quarter to approximately 22,000 tons in the 2016 quarter. The average selling price increased from approximately $512 per ton in the 2015 quarter to $611 per ton in the 2016 quarter. The decline in coil segment sales volume was primarily attributable to reduced sales to customers manufacturing products used in the commercial freight industry. Coil segment operations recorded operating profits of approximately $538,000 and $1,817,000 in the 2016 and 2015 quarters, respectively. The Company continues to experience intense competition for sales due to the general availability of both domestic and foreign hot-rolled sheet and plate.

The Company is primarily dependent on NSC for its supply of coil inventory. In the 2016 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 $851,000 during the 2016 quarter. This decrease resulted from a decline in tons sold partially offset by an increase in the average per ton selling price. Tubular tons shipped decreased from approximately 7,000 tons in the 2015 quarter to approximately 4,000 tons in the 2016 quarter. The average per ton selling price of tubular products increased from approximately $495 per ton in the 2015 quarter to approximately $595 per ton in the 2016 quarter. The tubular product segment recorded operating losses of approximately $437,000 and $977,000 in the 2016 and 2015 quarters, respectively. Tubular segment results for the 2016 quarter were negatively impacted by a prolonged recession in the U.S. energy business. The recession directly impacted demand for the Company’s products used in the oil and gas industry. Management further believes that the recession had a negative indirect impact on the segment’s other products, due to the ensuing reluctance among pipe distributors, the segment’s primary customers, to purchase tubular products, generally. Management believes the low demand for its tubular products is related to soft market conditions created by oversupply, foreign competition and the recent recession in the U.S. energy business.

U.S. Steel Tubular Products, Inc. (“USS”) has been the primary supplier of new mill reject pipe to the Company and a significant customer of the Company’s manufactured tubular products used in the energy business. Historically, the Company’s manufactured tubular products sold to USS were produced from coil material purchased from USS. In recent years, sales of tubular products to USS have declined. Management believes the downward trend is a direct impact of the increased presence of low-priced imported material. In the 2016 and 2015 quarters, sales to USS were also negatively affected by a recession in the U.S. energy business. 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 welded pipe mill at the Lone Star facility. The Lone Star facility’s #2 welded pipe mill remains temporarily idled and the Company is unable to provide an estimate of how long the mill will be idled. The Company expects orders from USS to remain low and supplies of new mill reject pipe from USS to be significantly reduced while production at USS’s Lone Star facility remains idled and until the U.S. energy industry experiences sustained recovery. The Company continues to manufacture pipe for sale to customers other than USS and sources coil material for this pipe production from domestic steel mills other than USS. Accordingly, the Company does not believe the idling of any USS facility will impact the ability of the Company to receive adequate coil supply for pipe manufacturing demands. 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 2016 quarter, general, selling and administrative costs decreased $142,377 from the amount recorded during the 2015 quarter. This decrease was related primarily to a reduction in the number of administrative employees for the Company’s tubular segment, decreases in bonuses and commissions associated with the decline in earnings and sales volume and a decrease in corporate expenses.

Income taxes in the 2016 quarter decreased $345,401 from the amount recorded in the 2015 quarter. This decrease was related primarily to the decrease in earnings before taxes in the 20162017 quarter.

FINANCIAL POSITION, LIQUIDITY AND CAPITAL RESOURCES

The Company remained in a strong, liquid position at December 31, 2016.June 30, 2017. The current ratios were 19.76.3 at June 30, 2017 and 17.319.3 at December 31, 2016 and March 31, 2016, respectively.2017. Working capital was $43,289,967$43,427,740 at December 31, 2016June 30, 2017, and $46,835,906$43,076,246 at March 31, 2016.2017.

At December 31, 2016,During the quarter ended June 30, 2017, 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 increased primarily as a result of reducing inventories.a decrease in accounts receivable and an increase in accounts payable partially offset by an increase in inventory. The increases in accounts payable and inventory were primarily related to the volume, timing and payment terms of inventory purchases for the Company’s coil segment. The Company willexpects to continue to monitor, evaluate and manage balance sheet components depending on changes in market conditions and the Company’s operations.

The Company expects to place its newly constructed pipe-finishing facility in Lone Star, Texas into service during March 2017. The facility will operate under the existing Texas Tubular Products (“TTP”) division of the Company. TTP comprises the Company’s tubular reporting segment. Management expects the utilization of the facility to be low until there is sustained improvement in the U.S. energy business. As of December 31, 2016, capitalized expenditures related to the construction of the facility totaled approximately $9,313,000.

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. One such accounting policySignificant estimates that requires significant estimates and judgments isare subject to the Company’s assumptions include the valuation of LIFO inventories in the Company’s quarterly reporting. Thereporting, determination of useful lives for fixed assets and determination of the allowance for doubtful accounts. Valuation of LIFO inventories in the Company’s quarterly valuation of inventoriesreporting requires estimates of the year-endyear end quantities, which is inherently difficult. Historically,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 have been materially correct. During the nine months ended December 31, 2016, LIFO inventories were liquidated. The Company anticipates partial replacement of LIFO inventories by March 31, 2017 and has recorded a deferred debit of $165,841 to reflect the difference between estimated replacement cost and LIFO cost.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 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 SECU.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.

Not requiredRequired

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, 2016.June 30, 2017. 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, 2016June 30, 2017 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, 2016June 30, 2017 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

FRIEDMAN INDUSTRIES, INCORPORATED

Three Months Ended December 31, 2016June 30, 2017

Part II — OTHER INFORMATION

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.

EXHIBIT INDEX

1513