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~~September 30, 2021

☐	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~~Judson Road, Suite 124, ~~LONGVIEW,~~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

Securities registered pursuant to Section 12(b) of the Act:

Title of each class		Trading Symbol		Name of each exchange on which registered
Common Stock, $1 Par Value		FRD		NYSE American

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 every Interactive Data File required to be submitted 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 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.

Large accelerated filer	☐	Accelerated filer	☐

Non-accelerated filer	☒	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 23,~~November 19, 2021, the number of shares outstanding of the issuer’s only class of stock ~~was 6,899,537~~was 6,905,537 shares of Common Stock.

Table of Contents

	*JUNE 30, 2021*			*MARCH 31, 2021*			*SEPTEMBER 30, 2021*			*MARCH 31, 2021*
ASSETS
CURRENT ASSETS:
Cash	$	890,858		$	8,191,001		$	2,943,597		$	8,191,001
Accounts receivable, net of allowances for bad debts and cash discounts of $32,834 at June 30, and March 31, 2021		29,984,388			20,377,967
Accounts receivable, net of allowances for bad debts and cash discounts of $32,834 at September 30, and March 31, 2021								32,333,608			20,377,967
Inventories		67,176,033			36,016,093			67,737,618			36,016,093
Current portion of derivative assets								1,832,840			622,400
Other current assets		33,001,422			12,949,574			6,807,381			12,327,174
TOTAL CURRENT ASSETS		131,052,701			77,534,635			111,655,044			77,534,635
PROPERTY, PLANT AND EQUIPMENT:
Land		1,179,831			1,179,831			1,179,831			1,179,831
Buildings and yard improvements		8,560,967			9,199,704			8,567,916			9,199,704
Machinery and equipment		34,025,160			35,253,000			30,375,429			35,253,000
Construction in process		2,687,807			9,614			5,994,357			9,614
Less accumulated depreciation		(28,573,603	)		(30,180,893	)		(25,340,164	)		(30,180,893	)
		17,880,162			15,461,256			20,777,369			15,461,256
OTHER ASSETS:
Cash value of officers’ life insurance and other assets		296,336			148,494			287,154			148,494
Deferred income tax asset		6,337,656			1,864,424			5,102,939			1,864,424
TOTAL ASSETS	$	155,566,855		$	95,008,809		$	137,822,506		$	95,008,809
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES:
Accounts payable and accrued expenses	$	44,012,195		$	15,185,038		$	26,748,702		$	15,185,038
Dividends payable		137,991			138,117			138,111			138,117
Contribution to retirement plan		100,000			50,000			150,000			50,000
Employee compensation and related expenses		4,680,580			2,643,538			4,354,803			2,643,538
Income taxes payable		3,622,124			1,455,099			3,331,540			1,455,099
Current portion of financing lease		103,185			102,689			103,684			102,689
Current portion of derivative liability		27,526,880			7,979,380			4,600,440			7,979,380
Current portion of Paycheck Protection Program loan		0			1,518,410			0			1,518,410
TOTAL CURRENT LIABILITIES		80,182,955			29,072,271			39,427,280			29,072,271
POSTRETIREMENT BENEFITS OTHER THAN PENSIONS		110,795			108,609			112,982			108,609
OTHER NON-CURRENT LIABILITIES		1,467,617			315,978			3,368,756			315,978
ASSET BASED LENDING FACILITY		10,863,213			0			14,578,487			0
LONG TERM PORTION OF PAYCHECK PROTECTION PROGRAM LOAN		0			171,975			0			171,975
TOTAL LIABILITIES		92,624,580			29,668,833			57,487,505			29,668,833
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS’ EQUITY:
Common stock, par value $1: Authorized shares — 10,000,000; Issued shares — 8,334,785 shares at June 30, and March 31, 2021		8,334,785			8,334,785
Common stock, par value $1: Authorized shares — 10,000,000; Issued shares — 8,340,785 shares and 8,334,785 shares at September 30, and March 31, 2021, respectively								8,340,785			8,334,785
Additional paid-in capital		30,125,166			30,003,462			30,245,203			30,003,462
Accumulated other comprehensive loss		(24,881,178	)		(11,187,841	)		(20,653,993	)		(11,187,841	)
Treasury stock at cost (1,435,248 shares at June 30, and March 31, 2021)		(7,203,342	)		(7,203,342	)
Treasury stock at cost (1,435,248 shares at September 30, and March 31, 2021)								(7,203,342	)		(7,203,342	)
Retained earnings		56,566,844			45,392,912			69,606,348			45,392,912
TOTAL STOCKHOLDERS’ EQUITY		62,942,275			65,339,976			80,335,001			65,339,976
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	155,566,855		$	95,008,809		$	137,822,506		$	95,008,809

	*THREE MONTHS ENDED JUNE 30,*						*SIX MONTHS ENDED SEPTEMBER 30,*
	*2021*			*2020*			*2021*			*2020*
OPERATING ACTIVITIES
Net earnings (loss)	$	11,311,797		$	(858,862	)	$	24,489,411		$	(1,108,867	)
Adjustments to reconcile net earnings (loss) to cash provided by (used in) operating activities:
Depreciation		337,358			335,479			663,164			530,968
Deferred taxes		(111,008	)		(108,722	)		(222,927	)		(217,443	)
Compensation expense for restricted stock		121,704			110,813			247,741			221,627
Change in postretirement benefits		2,186			2,967			4,373			5,933
Lower of cost or net realizable value inventory adjustment		0			274,093			0			274,093
Loss recognized on open derivatives not designated for hedge accounting		2,953,960			0
Gain recognized on open derivatives not designated for hedge accounting								(1,551,840	)		0
Deferred realized loss on derivatives		(3,812,820	)		0			(17,052,580	)		0
Forgiveness of Paycheck Protection Program Loan		(1,706,614	)		0			(1,706,614	)		0
Decrease (increase) in operating assets:
Accounts receivable		(9,606,421	)		1,235,255			(11,955,641	)		426,318
Inventories		(31,159,940	)		3,956,258			(31,721,525	)		8,894,641
Federal income taxes recoverable		0			(148,701	)		0			(109,230	)
Other current assets		233,347			(103,899	)		(1,274,124	)		(1,075,916	)
Increase (decrease) in operating liabilities:
Accounts payable and accrued expenses		29,300,241			(6,706,560	)		11,801,806			(4,199,863	)
Income taxes payable		2,167,025			0			1,876,441			0
Contribution to retirement plan		50,000			50,250			100,000			100,500
Employee compensation and related expenses		2,037,042			(98,083	)		1,711,265			(26,484	)
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES		2,117,857			(2,059,712	)		(24,591,050	)		3,716,277
INVESTING ACTIVITIES
Purchase of property, plant and equipment		(2,756,265	)		(1,373,573	)		(2,905,751	)		(2,933,637	)
Proceeds from sale of assets								160,542			0
Increase in cash surrender value of officers’ life insurance		(2,896	)		(4,323	)		(5,791	)		(8,647	)
NET CASH USED IN INVESTING ACTIVITIES		(2,759,161	)		(1,377,896	)		(2,751,000	)		(2,942,284	)
FINANCING ACTIVITIES
Paycheck Protection Program loan proceeds		0			1,690,385			0			1,690,385
Cash dividends paid		(137,991	)		(141,609	)		(275,981	)		(283,218	)
Cash paid for principal portion of finance lease		(25,486	)		(25,000	)		(51,097	)		(50,121	)
Asset based lending facility proceeds, net		10,863,213			0
Cash paid for share repurchases								0			(410,221	)
Asset based lending facility proceeds								14,578,487			0
NET CASH PROVIDED BY FINANCING ACTIVITIES		10,699,736			1,523,776			14,251,409			946,825
INCREASE (DECREASE) IN CASH AND RESTRICED CASH		10,058,432			(1,913,832	)		(13,090,641	)		1,720,818
CASH AND RESTRICTED CASH AT BEGINNING OF PERIOD		20,192,486			17,057,751			20,192,486			17,057,751
CASH AND RESTRICTED CASH AT END OF PERIOD	$	30,250,918		$	15,143,919		$	7,101,845		$	18,778,569

Cash and restricted cash at ~~June~~September 30, 2021 and March 31, 2021 included ~~$29,360,060~~$4,158,248 and $12,001,485, respectively, of cash required to collateralize open derivative positions. These amounts are reported in "Other current assets" on the Company's consolidated balance sheets at ~~June~~September 30, 2021 and March 31, 2021. At September 30, 2021, the Company had a margin call position of $422,877 to further collateralize open derivative positions. This margin requirement was funded subsequent to quarter end. The Company ~~did not have any~~had $118,125 in restricted cash at ~~June~~September 30, 2020.

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, 2021.

In December 2019, the FASB issued Accounting Standards Update 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes (“ASU 2019-12”), which simplifies accounting for income taxes by revising or clarifying existing guidance in ASC 740, as well as removing certain exceptions within ASC 740. We adopted this guidance on April 1, 2021. The adoption of this guidance did not have a material impact on the Company's Condensed Consolidated Financial Statements.

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 average cost method. 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.

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 the Company has purchased from U.S. Steel Tubular Products, Inc.

On June 22,2021, the Small Business Administration authorized full forgiveness of our Paycheck Protection Program loan. The gain of $1,706,614 from this extinguishment of debt included both principal and interest and is recorded as a component of "Other income (loss), net" on the Company's Condensed Consolidated Statement of Operations for the ~~three~~six months ended ~~June~~September 30, ~~2021.~~2021.

On March 8, 2021, the Company entered into a Credit Agreement providing for a $10 million revolving line of credit facility (the "Interim Credit Facility) with JPMorgan Chase Bank, N.A. (the "Bank"). The term of the Interim Credit Facility had an expiration date of July 15, 2021 because the Company was evaluating options for longer term credit arrangements. On April 14, 2021, the Company executed a first amendment to the Interim Credit Facility that increased the size of the facility from $10 million to $20 million. On May 19, 2021, the Company entered into an Amended and Restated Credit Agreement with the Bank that amends and restates the Interim Credit Facility and provides for asset-based revolving loans in an aggregate principal amount up to $40 million (the "ABL Facility"). The ABL Facility matures on May 19, 2026 and replaced the Interim Credit Facility in its entirety. The ABL Facility is secured by substantially all of the assets of the Company and borrowings bear interest at a rate equal to LIBOR plus 1.7% per annum. Availability of funds under the ABL Facility is subject to a borrowing base calculation determined as the sum of (a) 85% of eligible accounts receivable, plus (b) the product of 85% multiplied by the net orderly liquidating value percentage identified in the most recent inventory appraisal multiplied by eligible inventory and plus (c) a machinery and equipment component that is the lesser of 85% of the net orderly liquidating value of eligible equipment or the machinery and equipment component limit which is initially $5 million and reduces over the term of the facility. The ABL Facility contains a financial covenant restricting the Company from allowing its fixed charge coverage ratio be, as of the end of any calendar month, less than 1.10 to 1.00 for the trailing twelve month period then ending. The fixed charge coverage ratio is calculated as the ratio of (a) EBITDA, as defined in the ABL Facility, minus unfinanced capital expenditures to (b) cash interest expense plus scheduled principal payments on indebtedness plus taxes paid in cash plus restricted payments paid in cash plus capital lease obligation payments plus cash contributions to any employee pension benefit plans. The ABL Facility contains other representations and warranties and affirmative and negative covenants that are usual and customary. If certain conditions precedent are satisfied, the ABL facility may be increased by up to an aggregate of $10 million, in minimum increments of $5 million. At ~~June~~September 30, 2021, the Company had a balance of ~~$10,863,213~~$14,578,487 under the ABL Facility with an applicable interest rate of 1.79%. At ~~June~~September 30, 2021, the Company's borrowing base calculation provided full access to the ABL Facility and the Company was in compliance with all covenants related to the ABL Facility.

The Company’s lease of its office space in Longview, Texas is the only operating lease included in the Company's right-of-use ("ROU") asset and lease liability. The lease calls for monthly rent payments of $4,878 and expires on April 30, 2024. The Company’s other operating leases for items such as IT equipment and storage space are either short-term in nature or immaterial.

In October 2019, the Company received a new heavy-duty forklift under a 5-year finance lease arrangement with a financed amount of $518,616 and a monthly payment of $9,074.

The components of expense related to leases for the three and sixmonths ended ~~June~~September 30, 2021 and 2020 are as follows:

The following table illustrates the balance sheet classification for ROU assets and lease liabilities as of ~~June~~September 30, 2021 and March 31, 2021:

As of ~~June~~September 30, 2021, the weighted-average remaining lease term was ~~2.8~~2.6 years for operating leases and ~~3.3~~3.0 years for finance leases. The weighted average discount rate was 7% for operating leases and 1.9% for finance leases.

Maturities of lease liabilities as of ~~June~~September 30, 2021 were as follows:

On May 25, 2021, the Company announced plans for a new facility in Sinton, Texas that will be part of the coil product segment. The new facility will be on the campus of Steel Dynamics, Inc.'s ("SDI") new flat roll steel mill currently under construction in Sinton, Texas. The Company's new location will consist of an approximately 70,000 square foot building located on approximately 26.5 acres leased from SDI under a 99-year agreement with an annual rental payment of $1. The Company has selected Red Bud Industries to build a stretcher leveler cut-to-length line for the facility that is capable of handling material up to 1” thick, widths up to 96” and yields exceeding 100,000 psi. The Company expects the location to commence operations in April 2022 and estimates the total cost of the project to be $21 million. At ~~June~~September 30, 2021, the ~~Company had spent $2,687,807 on this~~Company's construction in process related to the Sinton project ~~with this amount reported as "Construction~~was $5,994,357 consisting of $2,760,289 in ~~process" on the Condensed Consolidated Balance Sheet.~~ cash payments and $3,234,068 of accrued capital expenditures.

During the three and six months ended ~~June~~September 30, 2021, the Company wrote off fully depreciated fixed assets that were no longer in use with an original cost and accumulated depreciation of approximately $115,578 and $~~1,944,650.~~2,060,226, respectively. During the three months ended September 30, 2021, the Company disposed of the temper mill that was taken out of the Decatur facility prior to the new stretcher leveler coil processing line being installed. The Company received $160,542 in proceeds from the disposal of the equipment which had an original cost of $3,604,209 and accumulated depreciation of $3,447,465.

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.

The following table summarizes the activity related to restricted stock awards for the ~~three~~six months ended ~~June~~September 30, 2021:

Compensation expense is recognized over the requisite service period applicable to each award. The Company recorded compensation expense ~~of $121,704~~of $247,741 and ~~$110,813~~$221,627 in the ~~three~~six months ended ~~June~~September 30, 2021 and 2020, respectively, relating to the stock awards issued under the Plan. As of ~~June~~September 30, 2021, unrecognized compensation expense related to stock awards was ~~approximately $744,296,~~approximately $696,921, which is expected to be recognized over a weighted average period of approximately 2.6 years. As of ~~June~~September 30, 2021, a total of ~~140,375~~134,375 shares were still available to be issued under the Plan.

In June 2020, the Company implemented its first commodity price risk management activities by transacting hot-rolled coil futures. From time to time, we expect to use derivative financial instruments to minimize our exposure to commodity price risk that is inherent in our business. At the time derivative contracts are entered into, we assess whether the nature of the instrument qualifies for hedge accounting treatment according to the requirements of ASC 815 – Derivatives and Hedging (“ASC 815”). By using derivatives, the Company is exposed to credit and market risk. The Company’s exposure to credit risk includes the counterparty’s failure to fulfill its performance obligations under the terms of the derivative contract. The Company attempts to minimize its credit risk by entering into transactions with high quality counterparties, and uses exchange-traded derivatives when available. Market risk is the risk that the value of the financial instrument might be adversely affected by a change in commodity prices. The Company manages market risk by continually monitoring exposure within its risk management strategy and portfolio. For those transactions designated as hedging instruments for accounting purposes, we document all relationships between hedging instruments and hedged items, as well as our risk-management objective and strategy for undertaking the various hedge transactions. We also assess, both at the hedge’s inception and on an ongoing basis, whether the derivatives used in hedging transactions are highly effective in offsetting changes in cash flows or fair value of hedged items.

From time to time, derivatives designated for hedge accounting may be closed prior to contract expiration. The accounting treatment of closed positions depends on whether the closure occurred due to the hedged transaction occurring early or if the hedged transaction is still expected to occur as originally forecasted. For hedged transactions that occur early, the closure results in the realized gain or loss from closure being recognized in the same period the accelerated hedged transaction affects earnings. For hedged transactions that are still expected to occur as originally forecasted, the closure results in the realized gain or loss being deferred until the hedged transaction affects earnings.

If it is determined that hedged transactions associated with cash flow hedges are no longer probable of occurring, the gain or loss associated with the instrument is recognized immediately into earnings.

From time to time, we may have derivative financial instruments for which we do not elect hedge accounting.

The Company has a forward physical purchase supply agreement in place with one of its suppliers for a portion of its monthly physical steel needs. This supply agreement is not subject to mark-to-market accounting due to the Company electing the normal purchase normal sale exclusion provided in ASC 815.

At ~~June~~September 30, 2021 and March 31, 2021, the Company held hot-rolled coil futures contracts which were designated as hedging instruments and classified as cash flow hedges, either as hedges of variable purchase prices or as hedges of variable sales prices. Accordingly, realized and unrealized gains and losses associated with the instruments are reported as a component of other comprehensive income and reclassified into earnings during the period in which the hedged transaction affects earnings. During the three ~~months~~and six month periods ended ~~June~~September 30, 2021, some of the Company's cash flow hedges were closed prior to expiration but the hedged transactions were still expected to occur as originally forecasted resulting in the realized gain or loss being deferred in other comprehensive income until the hedged transactions occur and affect earnings. At September 30, 2021, the Company removed some derivative instruments from hedge accounting due to the hedged transactions no longer being expected to occur. This was the result of the Company reducing its forecasted sales for the quarter ending December 31, 2021 due to anticipated customer reaction to plateauing and declining steel prices. Since these hedged sales are no longer expected to occur, a loss of $9,930,720 associated with these instruments was immediately recognized into earnings and is reported as a component of “Other income (loss), net” on the Condensed Consolidated Statement of Operations. During the three ~~months~~and six month periods ended ~~June~~September 30, 2021, the Company also entered into hot-rolled coil futures contracts that were not designated as hedging instruments for accounting purposes. Accordingly, the change in fair value related to these instruments was immediately recognized in earnings.

The following table summarizes the fair value of the Company’s derivative financial instruments and the respective line in which they were recorded in the Consolidated Balance Sheet as of ~~June~~September 30, 2021:

All derivatives are presented on a gross basis on the Consolidated Balance Sheet.

At ~~June~~September 30, 2021, the Company reported ~~$1,861,920~~$1,049,320 in "Other current assets" on its Consolidated Balance Sheet related to futures contracts for the month of ~~June~~ September 2021 that reached expiration but were pending cash settlement. At March 31, 2021, the Company reported $501,360 in "Accounts payable and accrued expenses" on its Consolidated Balance Sheet related to futures contracts for the month of March 2021that had reached expiration but were pending cash settlement.

The notional amounts (quantities) of our cash flow hedges outstanding at ~~June~~September 30, 2021 consisted of ~~7,180 tons hedging purchases with maturity dates ranging from~~ ~~July 2021~~ to ~~August~~ ~~2021~~ ~~and 38,520~~22,500 tons hedging sales with maturity dates ranging from ~~September~~January 2022 ~~2021~~to December 2022.

The following table summarizes the pre-tax loss recognized in ~~accumulated~~ other comprehensive income at ~~June 30, 2021~~ and the gain (loss) reclassified from accumulated other comprehensive loss into earnings ~~during the~~ ~~three~~ ~~months ended~~ ~~June 30, 2021~~for derivative financial instruments designated as cash flow ~~hedges:~~hedges for the periods presented:

The estimated amount of losses recognized in AOCI at ~~June~~September 30, 2021 expected to be reclassified into net earnings (loss) within the succeeding twelve months is ~~$31,544,060.~~$26,353,840. This amount consists of ~~$8,794,040~~$23,467,120 in realized losses associated with closed hedges and ~~$22,750,020~~$2,886,720 associated with open hedges that was computed using the fair value of the cash flow hedges as of ~~June~~September 30, 2021 and is subject to change before actual reclassification from AOCI to net earnings (loss).

The following table summarizes the loss recognized in earnings for derivative instruments not designated as hedging instruments during the three ~~months~~and six month periods ended ~~June~~September 30, 2021:

The notional amount (quantity) of our derivative instruments not designated as hedging instruments at ~~June~~September 30, 2021 consisted of ~~5,820~~9,160 tons of long positions with maturity dates ranging from October 2021 to January 2022 and 3,440 tons of short positions with maturity dates ranging from ~~September~~October 2021 to ~~October 2021.~~December 2022.

The following table reflects the change in accumulated other comprehensive income (loss), net of tax, for the ~~three~~six months ended ~~June~~September 30, 2021:

(1) The loss reclassified from AOCI is presented net of taxes of ~~$849,422~~ $1,819,688 which are included in provision for (benefit from) income taxes on the Company's Consolidated Statement of Operations for the ~~three~~six ~~months~~month period ended ~~June~~September 30, 2021.

At ~~June~~September 30, 2021 and March 31, 2021, cash of ~~$29,360,060~~$4,158,248 and $12,001,485, respectively, was ~~required~~held by our clearing agent to collateralize our open derivative positions. These cash requirements are included in "Other current assets" on the Company's Consolidated Balance Sheets at ~~June~~September 30, 2021 and March 31, 2021. At September 30, 2021, the Company had a margin call position of $422,877 to further collateralize open derivative positions. This margin requirement was funded subsequent to quarter end.

The Company had no cash flow hedges during the three and six months ended ~~June~~September 30, 2020, thus no AOCI or other comprehensive income or loss related to hedges.

Accounting standards provide a comprehensive framework for measuring fair value and sets forth a definition of fair value and establishes a hierarchy prioritizing the inputs to valuation techniques, giving the highest priority to quoted prices in active markets for identical assets and liabilities and the lowest priority to unobservable value inputs. Levels within the hierarchy are defined as follows:

At ~~June~~September 30, 2021, our financial liabilities, net, measured at fair value on a recurring basis were as follows:

At March 31, 2021, our financial liabilities, net, measured at fair value on a recurring basis were as follows:

At ~~June~~September 30, 2021 and March 31, 2021, the Company did not have any fair value measurements on a non-recurring basis.

Operating profit ~~(loss)~~ is total net sales less operating expenses, excluding general corporate expenses, interest expense and other ~~income.~~income (loss). General corporate expenses reflect general and administrative expenses not directly associated with segment operations and consist primarily of corporate and accounting salaries, professional fees and services, bad debts, retirement plan contribution expense, corporate insurance expenses, restricted stock plan compensation expense and office supplies. Other income (loss) for the three months ended ~~June~~September 30, 2021consisted primarily of a $~~1,706,614~~ ~~gain from the PPP Loan forgiveness partially offset by a $1,388,960~~6,830,780 loss related to derivatives not designated for hedge accounting. Other income (loss) for the six months ended September 30, 2021 consisted primarily of a $8,219,740 loss related to derivatives not designated for hedge accounting partially offset by a $1,706,614 gain from the PPP Loan forgiveness. Corporate assets consist primarily of cash, restricted cash and the cash value of officers’ life insurance. Although inventory is transferred at cost between product groups, there are no sales between product groups.

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 2 reportable segments: Coil and Tubular. Coil primarily generates revenue from 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 Company did not generate any revenue from pipe finishing services during either of the three month or six month periods ended ~~June~~September 30, 2021 or ~~June~~September 30, 2020. The pipe finishing facility is currently idled due to market conditions. The following table disaggregates our revenue by product for each of our reportable business segments for the three ~~months~~and six month periods ended ~~June~~September 30, 2021 and 2020, respectively:

The following tables reflect the changes in stockholders’ equity for each of the ~~quarters~~six month periods ended ~~June~~September 30, 2021 and ~~June~~September 30, 2020:

The following table summarizes the tax effects on each component of Other Comprehensive ~~Loss~~Income (Loss) for the periods presented:

For the ~~three~~six month period ended ~~June~~September 30, 2020, the Company did not have transactions to report in comprehensive income.

The Company paid interest of approximately ~~$23,000~~$96,000 during the ~~three~~six months ended ~~June~~September 30, 2021 and $~~6,000~~12,000 during the ~~three~~six months ended ~~June~~September 30, 2020. The Company paid income taxes of approximately ~~$616,000~~$5,645,000 and $10,000 during the ~~three~~six months ended ~~June~~September 30, 2021 and ~~did~~ ~~not~~ ~~pay any during the~~ ~~three~~ ~~months ended~~ ~~June~~September 30, 2020., respectively. At September 30, 2021, the “Construction in process” balance of $5,994,357 consisted of $3,234,068 of accrued capital expenditures for which cash outlay had not occurred.

For the ~~three~~six months ended ~~June~~September 30, 2021, the Company recorded an income tax provision of $~~2,956,880,~~7,271,580, or ~~20.7%~~22.9% of earnings before income taxes, compared to a tax benefit of $~~277,768,~~340,484, or ~~24.4%~~23.5% of loss before income taxes for the ~~three~~six months ended ~~June~~September 30, 2020. Typically, the Company’s effective tax rate differs from the federal statutory rate due to the inclusion of state tax expenses or benefits in the provision. However, for the ~~three~~six months ended ~~June~~September 30, 2021, the Company’s effective tax rate ~~was approximately equal to~~differed from the federal statutory rate due ~~primarily~~ to a combination of the inclusion of state tax expenses in the provision ~~being offset due to~~and the exclusion of the non-taxable gain associated with forgiveness of the Company’s PPP Loan from the provision. For the six months ended September 30, 2020 ~~quarter~~, the effective tax rate differed from the federal statutory rate due primarily to the inclusion of state tax benefits in the provision.

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

Friedman Industries, Incorporated is a manufacturer and processor of steel products and operates in two reportable segments; coil products and tubular products.

The coil product segment includes the operation of two hot-rolled coil processing facilities; one in Hickman, Arkansas and the other in Decatur, Alabama. The Hickman facility operates a temper mill and a cut-to-length line. The temper mill improves the flatness and surface qualities of the coils and the cut-to-length line levels the steel and cuts the coils into sheet and plate of prescribed lengths. The Hickman facility is capable of cutting sheet and plate with thicknesses ranging from 14 gauge to ½” thick in widths ranging from 36” wide to 72” wide. The Decatur facility underwent an equipment replacement project during our fiscal year ended March 31, 2021 and now operates a stretcher leveler cut-to-length line that was placed into service in March 2021. This new equipment expands the coil segment’s processing capabilities to include material up to 96” wide and material of higher grades and ~~will allow~~allows the Decatur facility to cut material that is up to ½” thick compared to the previous equipment’s capability of 5/16” thick. In addition, sheet and plate that has been stretcher leveled is preferable to some customers and applications compared to material that has been leveled through the temper mill process. The coil product segment sells its prime grade inventory under the Friedman Industries name but also maintains an inventory of non-standard coil products, consisting primarily of mill secondary and excess prime coils, which are sold through the Company’s XSCP division. The coil product segment also processes customer-owned coils on a fee basis.

On May 25, 2021, the Company announced plans for the construction of a new facility in Sinton, Texas that will be part of the coil product segment. The new facility will be on the campus of Steel Dynamics, Inc.'s ("SDI") new flat roll steel mill currently under construction in Sinton, Texas. The Company's new location will consist of an approximately 70,000 square foot building located on approximately 26.5 acres leased from SDI under a 99-year agreement. The lease agreement calls for an annual rental payment of $1. The Company has selected Red Bud Industries to build one of the world’s largest stretcher leveler cut-to-length lines, capable of handling material up to 1” thick, widths up to 96” and yields exceeding 100,000 psi. The Company expects the location to commence operations in April 2022 and estimates the total cost of the project to be $21 ~~million with approximately $2,688,000 having been spent as~~million. At September 30, 2021, the Company's construction in process related to the Sinton project was $5,994,357 consisting of ~~June 30, 2021.~~$2,760,289 in cash payments and $3,234,068 of accrued capital expenditures. The Company expects to fund the remainder of the Sinton capital expenditure through a combination of cash generated from operations and funds drawn under the ABL Facility.After an initial ramp up period during calendar 2022, the Company expects the facility’s annual shipments could be in the range of 110,000 tons to 140,000 tons for calendar 2023.

The tubular product segment consists of the Company’s Texas Tubular Products division (“TTP”) located in Lone Star, Texas. TTP operates two electric resistance welded pipe mills with a combined outside diameter (“OD”) size range of 2 3/8” OD to 8 5/8” OD. Both pipe mills are American Petroleum Institute (“API”) licensed to manufacture line pipe and oil country pipe and also manufacture pipe for structural purposes that meets other recognized industry standards. TTP has an API licensed pipe finishing facility that threads and couples oil country tubular goods and performs other services that are customary in the pipe finishing process. The pipe finishing facility is currently idled due to market conditions. TTP’s inventory consists of raw materials and finished goods. Raw material inventory consists of hot-rolled steel coils that TTP will manufacture into pipe. Finished goods inventory consists of pipe TTP has manufactured and new mill reject pipe that TTP purchased from U.S. Steel Tubular Products, Inc.

During the six months ended September 30, 2021 (the “ 2021 period”), sales, costs of goods sold and gross profit increased $110,101,054, $64,423,988 and $45,677,066, respectively, compared to the amounts recorded during the six months ended September 30, 2020 (the “ 2020 period”). The increase in sales was related to both an increase in the average per ton selling price and an increase in tons sold. Tons sold increased from approximately 81,500 tons for the 2020 period to approximately 108,500 tons for the 2021 period. Sales volume for the 2020 period was negatively impacted by both the initial effects of the COVID-19 pandemic and the removal of the processing equipment at the Decatur, AL facility for an equipment replacement project. For the 2021 period, sales volume recovered well from the initial pandemic decline and because the new Decatur equipment was operational. Discussion of the change in sales is expanded upon at the segment level in the following paragraphs. Gross profit increased from $1,347,851 for the 2020 period to $47,024,917 for the 2021 period. Gross profit as a percentage of sales increased from approximately 2.8% for the 2020 period to approximately 29.7% for the 2021 period. Gross profit for the 2021 period included $2,398,900 of recognized net gains associated with hedging activities while the 2020 period did not have any significant recognized hedging related gains or losses. Excluding the effect of hedging activities, gross profit related to physical material as a percentage of sales was approximately 26.8% for the 2021 period. Our operating results are significantly impacted by the market price of hot-rolled steel coil. The improved results for the 2021 period were driven by a historic rise in steel prices with prices for the 2021 period being approximately 245% higher than prices for the 2020 period. The impact of this rise in steel prices on each of our segments is discussed further in the following paragraphs.

Coil product segment sales for the 2021 period totaled $131,018,657 compared to $33,888,870 for the 2020 period. For a more complete understanding of the average selling prices of goods sold, it is helpful to exclude any hedging related gains or losses that are captured in sales and any sales generated from processing of customer owned material. Coil segment sales for the 2021 period were reduced by $7,751,460 for the recognition of hedging related losses. Coil segment sales for the 2020 period were not impacted by any hedging related gains or losses. Sales generated from processing of customer owned material totaled $658,925 for the 2021 period compared to $390,034 for the 2020 period. Sales generated from coil segment inventory, excluding the impact of any hedging related gains or losses, totaled $138,111,192 for the 2021 period compared to $33,498,836 for the 2020 period. The average per ton selling price related to these shipments increased from approximately $556 per ton for the 2020 period to approximately $1,681 per ton for the 2021 period. Inventory tons sold increased from approximately 60,000 tons in the 2020 period to approximately 82,000 tons in the 2021 period. Sales volume for the 2020 period was significantly impacted by the onset of the COVID-19 pandemic with volume for the 2020 period being down approximately 21% compared to pre-pandemic average volumes for the fiscal year ended March 31, 2020 ("fiscal 2020"). Volume for the 2021 period was approximately 8% higher than pre-pandemic average volumes for fiscal 2020. Volume for the 2021 period benefitted from the new equipment at the Decatur facility being placed into service in March 2021. The prior equipment at the Decatur facility was removed during the 2020 period for the equipment replacement project. We have been pleased with the initial customer response to Decatur's new capabilities. Sales volume for the Decatur plant averaged approximately 2,800 tons per month for the 2021 period. Based on prior years with the prior equipment in place, the Decatur plant's average monthly sales volume was approximately 1,700 tons. The Decatur plant is currently staffed to operate a single shift with a monthly processing capability of approximately 5,500 tons based on operating a single shift. Coil segment operations recorded an operating profit of approximately $37,529,000 for the 2021 period compared to an operating profit of approximately $291,000 for the 2020 period. Operating results for the 2021 period benefitted from a significant increase in steel prices and associated improvement in our margins. Operating profit for the 2021 period includes recognized net profit on hedging activities of approximately $2,609,000 while the Company did not have any significant hedging related gains or losses affecting operating results for the 2020 period. The 2020 period was negatively impacted by low margins associated with declines in hot-rolled steel prices.

Tubular product segment sales for the 2021 period totaled $27,468,677 compared to $14,497,410 for the 2020 period. Sales increased due to both an increase in the volume sold and an increase in the average selling price per ton. For a more complete understanding of the average selling prices of goods sold, it is helpful to exclude any hedging related gains or losses that are captured in sales. Tubular segment sales for the 2021 period were reduced by $433,340 for the recognition of hedging related losses. Tubular segment sales for the 2020 period were not impacted by any hedging related gains or losses. Sales generated from tubular segment inventory, excluding the impact of any hedging related gains or losses, totaled $27,902,017 for the 2021 period compared to $14,497,410 for the 2020 period. The average per ton selling price related to these shipments increased from approximately $680 per ton in the 2020 period to approximately $1,060 per ton in the 2021 period. Tons sold increased from approximately 21,000 tons in the 2020 period to approximately 26,500 tons in the 2021 period. Sales volume for the 2020 period was significantly impacted by the onset of the COVID-19 pandemic with volume for the 2020 period being down approximately 26% compared to pre-pandemic average volumes for fiscal 2020. Volume for the 2021 period was approximately 4% lower than pre-pandemic average volumes for fiscal 2020. The tubular segment operations recorded operating profit of approximately $4,598,000 for the 2021 period compared to an operating loss of approximately $285,000 for the 2020 period. Operating results for the 2021 period benefitted from a significant increase in steel prices and associated improvement in our margins. Operating profit for the 2021 period includes recognized net losses on hedging activities of approximately $210,000 while the Company did not have any significant hedging related gains or losses affecting operating results for the 2020 period. The 2020 period was negatively impacted by low margins associated with declines in hot-rolled steel prices and weak energy industry conditions.

The tubular segment purchases its inventory from a limited number of suppliers. Loss of any of these suppliers could have a material adverse effect on the Company’s business. In March 2020, U.S. Steel announced the idling of their Lone Star Tubular Operations which was our sole supplier of mill reject pipe. U.S. Steel's facility was idled as announced and the Company's receipts of mill reject pipe ceased in August 2020. At September 30, 2021 , we had approximately 8,900 tons of mill reject inventory which we believe to be slightly less than one year of inventory. We expect the idling to have a negative impact on our operations as we eventually sell out of mill reject pipe inventory. For the 2021 period, sales of mill reject pipe totaled approximately $6,485,000 and accounted for approximately $2,393,000 of the tubular segment's operating profit for the period with approximately $805,000 of allocated operating, administrative and selling expenses included in the calculation of operating profit related to mill reject pipe. For the fiscal year ended March 31, 2021, sales of mill reject pipe totaled approximately $5,283,645 and accounted for approximately $1,313,000 of the tubular segment's operating profit for the period with approximately $802,000 of allocated operating, administrative and selling expenses included in the calculation of operating profit related to mill reject pipe.

Three Months Ended ~~June~~September 30, 2021 Compared to Three Months Ended ~~June~~September 30, 2020

During the three months ended ~~June~~September 30, 2021 (the ~~“2021~~“2021 quarter”), sales, costs of goods sold and gross profit increased ~~$42,391,839, $25,318,658~~$67,709,215, $39,105,330 and ~~$17,073,181,~~$28,603,885, respectively, compared to the amounts recorded during the three months ended ~~June~~September 30, 2020 (the ~~“2020~~“2020 quarter”). The increase in sales was related to both an increase in the average per ton selling price and an increase in tons sold. Tons sold increased from approximately ~~38,000~~43,000 tons in the 2020 quarter to approximately ~~54,000~~54,500 tons in the 2021 quarter. ~~Sale~~Sales volume for the 2020 quarter was negatively impacted by both the initial effects of the COVID-19 pandemic and the removal of the processing equipment at the Decatur, AL facility for an equipment replacement project. For the 2021 quarter, sales volume had recovered well from the initial pandemic decline and because the new Decatur equipment was operational. Discussion of the change in sales is expanded upon at the segment level in the following paragraphs. Gross profit increased from ~~$256,754~~$1,091,097 for the 2020 quarter to ~~$17,329,935~~$29,694,982 for the 2021 quarter. Gross profit as a percentage of sales increased from approximately ~~1.1%~~4.4% in the 2020 quarter to approximately ~~26.3%~~32.1% in the 2021 quarter. Gross profit for the 2021 quarter ~~was reduced by $3,515,820~~included $5,914,720 in recognized ~~losses~~net gains associated with hedging activities while the 2020 quarter did not have any significant recognized hedging related gains or losses. Excluding the ~~recognized~~impact of hedging ~~losses,~~activities, gross profit related to physical material as a percentage of sales was approximately ~~29.4%~~24.9% for the 2021 quarter. Our operating results are significantly impacted by the market price of hot-rolled steel coil. The improved results for the 2021 quarter were driven by a historic rise in steel prices with prices for the 2021 quarter being approximately ~~200%~~280% higher than prices for the 2020 quarter. The impact of this rise in steel prices on each of our segments is discussed further in the following paragraphs.

Coil product segment sales for the 2021 quarter totaled ~~$52,694,730~~$78,323,927 compared to ~~$15,432,784~~$18,456,086 for the 2020 quarter. For a more complete understanding of the average selling prices of goods sold, it is helpful to exclude any hedging related gains or losses that are captured in sales and any sales generated from processing of customer owned material. Coil segment sales for the 2021 quarter were reduced by ~~$4,685,680~~$3,065,780 for the recognition of hedging related losses. Coil segment sales for the 2020 quarter were not impacted by any hedging related gains or losses. Sales generated from processing of customer owned material totaled ~~$119,643~~$366,991 for the 2021 quarter compared to ~~$184,313~~$205,721 for the 2020 quarter. Sales generated from coil segment inventory, excluding the impact of any hedging related gains or losses, totaled ~~$57,260,767~~$81,022,716 for the 2021 quarter compared to ~~$15,248,471~~$18,250,365 for the 2020 quarter. The average per ton selling price related to these shipments increased from approximately ~~$566~~$548 per ton in the 2020 quarter to approximately ~~$1,462~~$1,884 per ton in the 2021 quarter. Inventory tons sold increased from approximately ~~27,000~~33,000 tons in the 2020 quarter to approximately ~~39,000~~43,000 tons in the 2021 quarter. Sales volume for the 2020 quarter was ~~significantly~~ impacted by the onset of the COVID-19 pandemic with volume for the 2020 quarter being down approximately ~~30%~~13% compared to pre-pandemic average volumes for the fiscal year ended March 31, 2020 ("fiscal 2020"). Volume for the 2021 quarter was approximately 3%13% higher than pre-pandemic average volumes for fiscal 2020.Volume for the 2021 quarter benefitted from the new equipment at the Decatur facility being placed into service in March 2021. The prior equipment at the Decatur facility was removed during the 2020 quarter for the equipment replacement project. We have been pleased with the initial customer response to Decatur's new capabilities. Sales volume for the Decatur plant averaged approximately 2,800 tons per month for the 2021 quarter. Based on prior years with the prior equipment in place, the Decatur plant's average monthly sales volume was approximately 1,700 tons. The Decatur plant is currently staffed to operate a single shift with a monthly processing capability of approximately 5,500 tons based on operating a single shift. Coil segment operations recorded an operating profit of approximately ~~$13,256,000~~$24,273,000 for the 2021 quarter compared to an operating ~~loss~~profit of approximately ~~$459,000~~$751,000 for the 2020 quarter. Operating results for the 2021 quarter benefitted from a significant increase in steel prices and associated improvement in our margins. Operating profit for the 2021 quarter includes recognized ~~losses~~net gains on hedging activities of approximately ~~$3,103,000~~$5,712,000 while the Company did not have any significant hedging related gains or losses affecting operating results for the 2020 quarter. The 2020 quarter was negatively impacted by low margins associated with declines in hot-rolled steel prices.

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

Tubular product segment sales for the 2021 quarter totaled ~~$13,221,709~~$14,246,968 compared to ~~$8,091,816~~$6,405,594 for the 2020 quarter. Sales increased due to both an increase in the volume sold and an increase in the average selling price per ton. For a more complete understanding of the average selling prices of goods sold, it is helpful to exclude any hedging related gains or losses that are captured in sales. Tubular segment sales for the 2021 quarter were reduced by ~~$412,340~~$21,000 for the recognition of hedging related losses. Tubular segment sales for the 2020 quarter were not impacted by any hedging related gains or losses. Sales generated from tubular segment inventory, excluding the impact of any hedging related gains or losses, totaled ~~$13,634,049~~$14,267,968 for the 2021 quarter compared to ~~$8,091,816~~$6,405,594 for the 2020 quarter. The average per ton selling price related to these shipments increased from approximately ~~$723~~$634 per ton in the 2020 quarter to approximately ~~$930~~$1,223 per ton in the 2021 quarter. Tons sold increased from approximately ~~11,000~~10,000 tons in the 2020 quarter to approximately ~~14,500~~11,500 tons in the 2021 quarter. Sales volume for the 2020 quarter was significantly impacted by the onset of the COVID-19 pandemic with volume for the 2020 quarter being down approximately ~~23%~~29% compared to pre-pandemic average volumes for fiscal 2020. Volume for the 2021 quarter was approximately ~~6% higher~~15% lower than pre-pandemic average volumes for fiscal 2020. The tubular segment ~~operations~~ recorded operating ~~profits~~profit of approximately ~~$2,600,000 and $59,000~~$1,997,000 for the 2021 ~~and~~ quarter compared to an operating loss of approximately $344,000 for the 2020 ~~quarters, respectively.~~ quarter. Operating results for the 2021 quarter benefitted from a significant increase in steel prices and associated improvement in our margins. Operating profit for the 2021 quarter includes recognized ~~losses~~net gains on hedging activities of approximately ~~$412,000~~$203,000 while the Company did not have any significant hedging related gains or losses affecting operating results for the 2020 quarter. The 2020 quarter was negatively impacted by low margins associated with declines in hot-rolled steel prices and weak energy industry conditions.

The tubular segment purchases its inventory from a limited number of suppliers. Loss of any of these suppliers could have a material adverse effect on the Company’s business. ~~In March 2020,~~As disclosed previously, the Company is no longer supplied with mill reject pipe from U.S. ~~Steel announced the idling of their~~Steel's Lone Star Tubular Operations ~~which is our sole supplier~~due to the idling of ~~mill reject pipe. U.S. Steel's facility was idled as announced and the Company's receipts of mill reject pipe ceased in August 2020.~~that facility. At ~~June~~September 30, 2021, we had approximately ~~14,600~~8,900 tons of mill reject inventory which we believe to be ~~approximately~~slightly less than one year of inventory. We expect the idling to have a negative impact on our operations as we eventually sell out of ~~inventory. For the 2021 quarter, sales of~~ mill reject pipe totaled approximately $3,615,000 and accounted for approximately $1,333,000 of the tubular segment's operating profit for the period with approximately $377,000 of allocated operating, administrative and selling expenses included in the calculation of operating profit related to mill reject pipe. For the fiscal year ended March 31, 2021, sales of mill reject pipe totaled approximately $5,283,645 and accounted for approximately $1,313,000 of the tubular segment's operating profit for the period with approximately $802,000 of allocated operating, administrative and selling expenses included in the calculation of operating profit related to mill reject pipe.inventory.

During the 2021 quarter, general, selling and administrative costs increased ~~$1,958,400~~$3,888,167 compared to the 2020 quarter. The increase was related primarily to incentive compensation associated with increased earnings and professional fees.

During the 2021 quarter, the Company reported other ~~income~~loss of ~~$312,062.~~$6,840,317. This ~~income~~loss consists primarily of a ~~$1,706,614 gain associated with the forgiveness of the Company's Paycheck Protection Program loan partially offset by a~~$6,830,780 loss ~~of $1,388,960~~ on derivative instruments not designated for hedge accounting.

Income taxes increased from a benefit for the 2020 quarter of ~~$277,768~~$62,716 to a provision for the 2021 quarter of ~~$2,956,880.~~$4,314,700. This increase was related primarily to the shift from a loss before taxes for the 2020 quarter to having earnings before tax for the 2021 quarter.

The Company’s current ratio was ~~1.6~~2.8 at ~~June~~September 30, 2021 and 2.7 at March 31, ~~2021.~~2021. Working capital was ~~$50,869,746~~$72,227,764 at ~~June~~September 30, 2021 and $48,462,364 at March 31, ~~2021.~~2021.

During the ~~three~~six months ended ~~June~~September 30, 2021, the Company maintained assets and liabilities at levels it believed were commensurate with operations. Changes in balance sheet amounts occurred in the ordinary course of business. Accounts receivable, inventories and accounts payable increased significantly due primarily to the significant increase in steel prices. Inventories and accounts payable were also impacted by the timing of inventory receipts. Derivative liabilities are primarily associated with short positions on hot-rolled coil futures. ~~Derivative liabilities increased significantly due to the pricing of hot-rolled coil futures increasing significantly after executing these positions.~~ Cash ~~increased~~decreased primarily from ~~financing provided under~~ the Company's ~~credit facility and cash provided by~~ operating activities ~~partially offset by~~and from the purchase of property, plant and ~~equipment.~~equipment partially offset by cash provided from the Company's credit facility. The Company expects to continue to monitor, evaluate and manage balance sheet components depending on changes in market conditions and the Company’s operations.

In June 2021, the Small Business Administration authorized full forgiveness of the Company's Paycheck Protection Program loan.

On March 8, 2021, the Company entered into a Credit Agreement providing for a $10 million revolving line of credit facility (the "Interim Credit Facility) with JPMorgan Chase Bank, N.A. (the "Bank"). The term of the Interim Credit Facility had an expiration date of July 15, 2021 because the Company was evaluating options for longer term credit arrangements. On April 12, 2021, the Company executed a first amendment to the Interim Credit Facility that increased the size of the facility from $10 million to $20 million. On May 19, 2021, the Company entered into an Amended and Restated Credit Agreement with the Bank that amends and restates the Interim Credit Facility and provides for asset-based revolving loans in an aggregate principal amount up to $40 million (the "ABL Facility"). The ABL Facility matures on May 19, 2026 and replaced the Interim Credit Facility. The ABL Facility is secured by substantially all of the assets of the Company and interest shall accrue on outstanding borrowings at a rate equal to LIBOR plus 1.7% per annum. More details regarding the ABL Facility may be found in Note D. As of the filing date of this Form 10-Q, the Company had borrowings of ~~$23,381,289~~$11,758,879 outstanding under the ABL Facility and the Company had full access to the ABL Facility.

The Company believes that its current cash position along with cash flows from operations and borrowing capability due to its financial position are adequate to fund its expected cash requirements for the next 12 months.

From time to time, the Company may use futures contracts to partially manage exposure to commodity price risk. The Company elects hedge accounting for some of its derivatives and classifies the transactions as either cash flow hedges or fair value hedges. All of the derivatives designated for hedge accounting during the three month and six month periods ended September 30, 2021 ~~quarter~~ were classified as cash flow hedges. From time to time, the Company may also transact futures contracts where hedge accounting is not elected. ~~For the 2021 quarter, the~~The Company recognized ~~losses~~gains related to derivatives designated for hedge accounting of ~~$3,515,820~~$5,914,720 and $2,398,900 for the three month and six month periods ended September 30, 2021, respectively. The Company recognized losses related to derivatives not designated for hedge accounting of ~~$1,388,960.~~$6,830,780 and $8,219,740 for the three month and six month periods ended September 30, 2021, respectively. See Note H for further information.

The Company expects margins to ~~remain strong for~~decline slightly during its ~~second~~fiscal third quarter ending ~~September 30,~~December 31, 2021 but to remain at a level well above historical average margins. A modest decline in sales volume is expected due to a combination of typical demand seasonality around the holidays and ~~expects improvement in operating results compared to the first quarter. As of the filing date of this Form 10-Q, hot-rolled~~customer hesitancy with steel prices ~~have risen~~showing decline in the third quarter. The Company also expects to reclassify a loss of approximately ~~10% since June 30, 2021 and~~$14,717,000 into earnings during the ~~Company expects prices will continue~~third quarter related to ~~rise through September 30, 2021.~~derivatives designated for hedge accounting.

The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. The more significant estimates and judgements include forecasted purchases of hot-rolled coil and forecasted sales of prime coil inventory and manufactured pipe inventory in relation to hedging activities and the fair value of the pipe-finishing facility, when impaired. From time to time, the Company hedges these forecasted purchases and sales and may designate those transactions for hedge accounting. If the actual volume of these purchases and sales differs from the forecasted volumes, it may impact the application of hedge accounting related to those transactions and may disallow the use of hedge accounting on a go forward basis. Determination of forecasted purchases of hot-rolled coil and forecasted sales of prime coil inventory and manufactured pipe inventory require the Company to make assumptions related to customer demand and the volume and timing of inventory purchases. The pipe-finishing facility impairment analysis requires assumptions related to future operations of the facility and estimates related to the replacement cost and value in exchange for the assets. Actual results could differ from these estimates.

From time to time, the Company may make certain statements that contain forward-looking information (as defined in the Private Securities Litigation Reform Act of 1996, as amended) and that involve risk and uncertainty. Such statements may include those risks disclosed in the Management’s Discussion and Analysis of Financial Condition and Results of Operations section of this ~~report.~~report and our expectations for the construction and performance of our new Sinton, TX facility. These forward-looking statements may include, but are not limited to, future changes in the Company’s financial condition or results of operations, future production capacity, product quality and proposed expansion plans. Forward-looking statements may be made by management orally or in writing including, but not limited to, this Management’s Discussion and Analysis of Financial Condition and Results of Operations and other sections of the Company’s filings with the U.S. Securities and Exchange Commission (the “SEC”) under the Securities Act of 1933, as amended, and the Securities Exchange Act of 1934, as amended (the “Exchange Act”), including the Company’s Annual Report on Form 10-K and its other Quarterly Reports on Form 10-Q. Forward-looking statements include those preceded by, followed by or including the words “will,” “expect,” “intended,” “anticipated,” “believe,” “project,” “forecast,” “propose,” “plan,” “estimate,” “enable,” and similar expressions, including, for example, statements about our business strategy, our industry, our future profitability, growth in the industry sectors we serve, our expectations, beliefs, plans, strategies, objectives, prospects and assumptions, and estimates and projections of future activity and trends in the oil and natural gas industry. These forward-looking statements are not guarantees of future performance. These statements are based on management’s expectations that involve a number of business risks and uncertainties, any of which could cause actual results to differ materially from those expressed in or implied by the forward-looking statements. Although forward-looking statements reflect our current beliefs, reliance should not be placed on forward-looking statements because they involve known and unknown risks, uncertainties and other factors, which may cause our actual results, performance or achievements to differ materially from anticipated future results, performance or achievements expressed or implied by such forward-looking statements. Actual results and trends in the future may differ materially depending on a variety of factors including, but not limited to, changes in the demand for and prices of the Company’s products, changes in government policy regarding steel, changes in the demand for steel and steel products in general and the Company’s success in executing its internal operating plans, changes in and availability of raw materials, unplanned shutdowns of our production facilities due to equipment failures or other issues, increased competition from alternative materials and risks concerning innovation, new technologies, products and increasing customer requirements. Accordingly, undue reliance should not be placed on our forward-looking statements. We undertake no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events, changed circumstances or otherwise, except to the extent law requires.

Our management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rule 13a-15(f) and 15(d)-15(f) promulgated under the Securities Exchange Act of 1934, as amended). We have established disclosure controls and procedures designed to ensure that material information required to be disclosed in our reports filed under the Exchange Act is recorded, processed, summarized and reported within the time periods specified by the Securities and Exchange Commission and that any material information relating to us is recorded, processed, summarized and reported to our management including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosures. In designing and evaluating our disclosure controls and procedures, our management recognizes that controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving desired control objectives. In reaching a reasonable level of assurance, our management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

As required by Rule 13a-15(b) under the Exchange Act, we have evaluated, under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, the effectiveness of the design and operation of our disclosure controls and procedures (as defined in rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of the period covered by this quarterly report. Based upon our evaluation, the Chief Executive Officer and Chief Financial Officer have concluded that the Company’s internal control over financial reporting was not effective as of the end of the period covered by this Quarterly Report on Form 10-Q because the Company has not yet completed its remediation of the material weakness previously identified and disclosed in the Company’s Annual Report on Form 10-K for the fiscal year ended March 31, 2021.

Notwithstanding the identified material weakness, the Company's management, including our Chief Executive Officer and Chief Financial Officer, believes that the consolidated financial statements included in this Quarterly Report on Form 10-Q fairly present in all material respects our financial condition and results of operations for the ~~quarters~~three month and six month periods ended ~~June 31,~~September 30, 2021 and 2020 in accordance with U.S. Generally Accepted Accounting Principles.

A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the Company's annual or interim financial statements will not be prevented or detected on a timely basis.

During the audit process related to our fiscal year ended March 31, 2021, management, in connection with our independent auditors, identified a material weakness in our controls related to the review of the annual income tax provision prepared by a third-party firm. Specifically, we did not maintain effective controls to sufficiently review the completeness and accuracy of the annual tax provision.

Our Company is relatively small with~~104~~106 employees as of the filing date of this Quarter Report on Form 10-Q. Our accounting and finance team consisted of two degreed accountants as of March 31, 2021. Leading up to, and during the financial statement audit period, considerable time was expended by our accounting and finance team to finalize the ABL facility and to select our general contractor and equipment manufacturer related to our planned new facility in Sinton, Texas and to finalize contracts with such parties. This resulted in the Company falling behind in the timeline necessary to complete the audit process and regulatory filings in a timely manner. In an effort to meet regulatory deadlines, the Company did not perform a sufficient review of third-party materials. The Company concludes that the best remediation of the material weakness is an investment in human capital that will allow it to meet its regulatory requirements and growth objectives. On May 24, 2021, the Company hired an additional degreed accountant. The timing of this hire in relation to the audit process made it difficult for the hire to have a beneficial impact on the process related to our fiscal year end March 31, 2021. However, the Company believes the investment in human capital will provide sufficient remediation in future periods and the Company will continue to evaluate the appropriate level of staffing to ensure the controls over financial reporting are adhered to and the Company can meet its regulatory requirements in a timely manner.

We will continue to monitor the design and effectiveness of these procedures and controls and make any further changes the Company determines appropriate. We believe the additional investment in human capital described above will remediate the material weakness the Company has identified. However, this material weakness will not be considered remediated until the applicable remedial actions operate effectively for a sufficient period of time.

Except as discussed above, there were no changes in the Company's internal control over financial reporting that occurred during the fiscal quarter ended ~~June~~September 30, 2021 that have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting.

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.


Part I — FINANCIAL INFORMATION	3
Item 1. Financial Statements	3
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	15
Item 3. Quantitative and Qualitative Disclosures About Market Risk	18
~~Item 4. Controls and Procedures~~	18
~~Part II — OTHER INFORMATION~~	20
Item ~~6. Exhibits~~4. Controls and Procedures	20
~~SIGNATURES~~Part II — OTHER INFORMATION	2122
Item 6. Exhibits	22
SIGNATURES	23

							*THREE MONTHS ENDED*						*SIX MONTHS ENDED*
	*THREE MONTHS ENDED JUNE 30,*						*SEPTEMBER 30,*						*SEPTEMBER 30,*
	*2021*			*2020*			*2021*			*2020*			*2021*			*2020*
Net Sales	$	65,916,439		$	23,524,600		$	92,570,895		$	24,861,680		$	158,487,334		$	48,386,280
Costs and expenses:
Costs of products sold		48,586,504			23,267,846			62,875,913			23,770,583			111,462,417			47,038,429
Selling, general and administrative		3,350,110			1,391,754			5,290,055			1,401,888			8,640,165			2,793,642
Interest expense		23,210			5,953			72,296			6,255			95,506			12,208
		51,959,824			24,665,553			68,238,264			25,178,726			120,198,088			49,844,279
EARNINGS (LOSS) FROM OPERATIONS		13,956,615			(1,140,953	)		24,332,631			(317,046	)		38,289,246			(1,457,999	)
Other income, net		312,062			4,323
Other income (loss), net								(6,840,317	)		4,325			(6,528,255	)		8,648
EARNINGS (LOSS) BEFORE INCOME TAXES		14,268,677			(1,136,630	)		17,492,314			(312,721	)		31,760,991			(1,449,351	)
Provision for (benefit from) income taxes:
Current		3,067,888			(169,046	)		4,426,619			46,005			7,494,507			(123,041	)
Deferred		(111,008	)		(108,722	)		(111,919	)		(108,721	)		(222,927	)		(217,443	)
		2,956,880			(277,768	)		4,314,700			(62,716	)		7,271,580			(340,484	)
NET EARNINGS (LOSS)	$	11,311,797		$	(858,862	)	$	13,177,614		$	(250,005	)	$	24,489,411		$	(1,108,867	)

Weighted average number of common shares outstanding:
Basic		6,899,537			7,080,444			6,903,450			7,067,898			6,901,504			7,074,137
Diluted		6,899,537			7,080,444			6,903,450			7,067,898			6,901,504			7,074,137
Net earnings (loss) per share:
Basic	$	1.64		$	(0.12	)	$	1.91		$	(0.04	)	$	3.55		$	(0.16	)
Diluted	$	1.64		$	(0.12	)	$	1.91		$	(0.04	)	$	3.55		$	(0.16	)
Cash dividends declared per common share	$	0.02		$	0.02		$	0.02		$	0.02		$	0.04		$	0.04

							*THREE MONTHS ENDED*					*SIX MONTHS ENDED*
	THREE MONTHS ENDED JUNE 30,						*SEPTEMBER 30,*					*SEPTEMBER 30,*
	2021			2020			*2021*		*2020*			*2021*			*2020*
Net earnings (loss)	$	11,311,797		$	(858,862	)	$	13,177,614	$	(250,005	)	$	24,489,411		$	(1,108,867	)
Other comprehensive loss:
Other comprehensive income (loss):
Cash flow hedges, net of tax		(13,693,337	)		0			4,227,185		0			(9,466,152	)		0
		(13,693,337	)		0			4,227,185		0			(9,466,152	)		0
Comprehensive income (loss)	$	(2,381,540	)	$	(858,862	)	$	17,404,799	$	(250,005	)	$	15,023,259		$	(1,108,867	)

	*June 30, 2021*		*March 31, 2021*		*September 30, 2021*		*March 31, 2021*
Prime Coil Inventory	$	57,557,963	$	23,079,012	$	55,050,920	$	23,079,012
Non-Standard Coil Inventory		761,446		1,419,055		1,307,105		1,419,055
Tubular Raw Material		1,330,781		2,607,197		6,596,781		2,607,197
Tubular Finished Goods		7,525,843		8,910,829		4,782,812		8,910,829
	$	67,176,033	$	36,016,093	$	67,737,618	$	36,016,093

					*Three Months Ended*				*Six Months Ended*
	*THREE MONTHS ENDED JUNE 30,*				*September 30,*				*September 30,*
	*2021*		*2020*		*2021*		*2020*		*2021*		*2020*
Finance lease – amortization of ROU asset	$	25,487	$	25,000	$	25,610	$	25,121	$	51,097	$	50,121
Finance lease – interest on lease liability		1,736		2,223		1,613		2,102		3,349		4,325
Operating lease expense		14,634		12,384		14,634		14,634		29,268		27,018
	$	41,857	$	39,607	$	41,857	$	41,857	$	83,714	$	81,464

	*June 30, 2021*		*March 31, 2021*		*Balance Sheet Classification*	*September 30, 2021*		*March 31, 2021*		*Balance Sheet Classification*
Assets
Operating lease right-of-use asset	$	150,045	$	4,850	Other assets	$	137,967	$	4,850	Other assets
Finance lease right-of-use asset		475,397		481,880	Property, plant & equipment		468,914		481,880	Property, plant & equipment
Total right-of-use assets	$	625,442	$	486,730		$	606,881	$	486,730
Liabilities
Operating lease liability, current	$	49,604	$	4,850	Accrued expenses	$	50,477	$	4,850	Accrued expenses
Finance lease liability, current		103,185		102,689	Current portion of finance lease		103,684		102,689	Current portion of finance lease
Operating lease liability, non-current		100,441		0	Other non-current liabilities		87,490		0	Other non-current liabilities
Finance lease liability, non-current		239,575		265,557	Other non-current liabilities		213,466		265,557	Other non-current liabilities
Total lease liabilities	$	492,805	$	373,096		$	455,117	$	373,096

	*Operating Leases*			*Finance Leases*			*Operating Leases*			*Finance Leases*
Fiscal 2022 (remainder of fiscal year)		43,902			81,669			29,268			54,446
Fiscal 2023		58,536			108,888			58,536			108,888
Fiscal 2024		58,536			108,888			58,536			108,888
Fiscal 2025		4,878			54,445			4,878			54,445
Fiscal 2026		0			0			0			0
Total undiscounted lease payments	$	165,852		$	353,890		$	151,218		$	326,667
Less: imputed interest		(15,807	)		(11,130	)		(13,251	)		(9,517	)
Present value of lease liability	$	150,045		$	342,760		$	137,967		$	317,150

				*Weighted Average*					*Weighted Average*
	*Number of Shares*			*Grant Date Fair Value Per Share*		*Number of Shares*			*Grant Date Fair Value Per Share*
Unvested at March 31, 2021		339,625		$	6.07		339,625		$	6.07
Cancelled or forfeited		0			0		0			0
Granted		0			0		6,000			13.00
Vested		(25,000	)		4.41		(25,000	)		4.41
Unvested at June 30, 2021		314,625		$	6.20
Unvested at September 30, 2021							320,625		$	6.33

	*Pre-Tax Loss*			*Location of Gain (Loss) Reclassified*	*Pre-Tax Gain (Loss) Reclassified from*			*Pre-Tax Gain (Loss)*			*Location of Gain (Loss) Reclassified*	*Pre- Tax Gain (Loss) Reclassified from*
	*Recognized in AOCI*			*from AOCI into Net Earnings*	*AOCI into Net Earnings*			*Recognized in OCI*			*from AOCI into Net Earnings*	*AOCI into Net Earnings*
For the three months ended September 30, 2021:
Hot-rolled coil steel contracts	$	(32,807,460	)	*Sales*	$	(5,098,020	)	$	1,557,820		*Sales*	$	(3,086,780	)
				*Costs of goods sold*		1,582,200					*Costs of goods sold*		9,001,500
Total	$	(32,807,460	)		$	(3,515,820	)	$	1,557,820			$	5,914,720

For the six months ended September 30, 2021:
Hot-rolled coil steel contracts								$	(20,013,560	)	*Sales*	$	(8,184,800	)
											*Costs of goods sold*		10,583,700
Total								$	(20,013,560	)		$	2,398,900

		*Loss Recognized in Earnings*
	*Location of Loss*	*for Quarter Ended*
	*Recognized in Earnings*	*June 30, 2021*
Hot-rolled coil steel contracts	Other income, net	$	(1,388,960	)

		*Loss Recognized in Earnings*
	*Location of Loss*	*for the Three Months Ended*
	*Recognized in Earnings*	*September 30, 2021*
Hot-rolled coil steel contracts	Other income (loss), net	$	(6,830,780	)

		Loss Recognized in Earnings
	*Location of Loss*	*for the Six Months Ended*
	*Recognized in Earnings*	*September 30, 2021*
Hot-rolled coil steel contracts	Other income (loss), net	$	(8,219,740	)

	*Gain (Loss) on*			*Gain (Loss) on*
	*Derivatives*			*Derivatives*
Balance at March 31, 2021	$	(11,187,841	)	$	(11,187,841	)
Other comprehensive loss, net of income, before reclassification		(16,359,735	)		(15,178,284	)
Total loss reclassified from AOCI (1)		2,666,398			5,712,132
Net current period other comprehensive loss		(13,693,337	)		(9,466,152	)
Balance at June 30, 2021	$	(24,881,178	)
Balance at September 30, 2021				$	(20,653,993	)

	*Quoted Prices*
	*in Active*			*Significant*
	*Markets for*			*Other*		*Significant*
	*Identical*			*Observable*		*Unobservable*
	*Assets*			*Inputs*		*Inputs*
	*(Level 1)*			*(Level 2)*		*(Level 3)*		*Total*
Commodity futures – financial liabilities, net	$	(26,967,380	)	$	0	$	0	$	(26,967,380	)
Total	$	(26,967,380	)	$	0	$	0	$	(26,967,380	)

	*June 30, 2021*		*March 31, 2021*
Segment assets
Coil	$	109,328	$	56,670
Tubular		15,594		17,884
		124,922		74,554
Corporate assets		30,645		20,455
	$	155,567	$	95,009

					*Three Months Ended*				*Six Months Ended*
	*THREE MONTHS ENDED JUNE 30,*				*September 30,*				*September 30,*
	*2021*		*2020*		*2021*		*2020*		*2021*		*2020*
Coil Segment:
Prime Coil		49,751,884		13,307,468		74,928,149		17,049,230		124,507,742		30,356,698
Non-standard Coil		2,823,203		1,941,003		3,028,787		1,201,135		5,851,990		3,142,138
Customer Owned Coil		119,643		184,313		366,991		205,721		658,925		390,034
		52,694,730		15,432,784		78,323,927		18,456,086		131,018,657		33,888,870
Tubular Segment:
Manufactured Pipe		9,606,810		7,161,850		11,376,626		5,296,334		20,983,436		12,458,184
Mill Reject Pipe		3,614,899		929,966		2,870,342		1,109,260		6,485,241		2,039,226
		13,221,709		8,091,816		14,246,968		6,405,594		27,468,677		14,497,410

																		*Accumulated*
			Accumulated															*Other*
			Other		Additional													*Comprehensive*		*Additional*
	*Common*		*Comprehensive*		*Paid-In*		*Treasury*			*Retained*						*Common*		*Income,*		*Paid-In*		*Treasury*			*Retained*
	*Stock*		*Loss*		*Capital*		*Stock*			*Earnings*			*Total*			*Stock*		*Net of Tax*		*Capital*		*Stock*			*Earnings*			*Total*
BALANCE AT MARCH 31, 2020	$	8,295,160	$	0	$	29,565,416	$	(5,525,964	)	$	34,530,755		$	66,865,367		$	8,295,160		—	$	29,565,416	$	(5,525,964	)	$	34,530,755		$	66,865,367
Net loss		0		0		0		0			(858,862	)		(858,862	)		—		—		—		—			(858,862	)		(858,862	)
Issuance of restricted stock		11,000		0		0		0			0			11,000			11,000		—		(11,000)		—			—			0
Paid in capital – restricted stock awards		0		0		99,814		0			0			99,814			—		—		110,814		—			—			110,814
Cash dividends ($0.02 per share)		0		0		0		0			(143,229	)		(143,229	)		—		—		—		—			(143,229	)		(143,229	)
BALANCE AT JUNE 30, 2020	$	8,306,160	$	0	$	29,665,230	$	(5,525,964	)	$	33,528,664		$	65,974,090		$	8,306,160	$	—	$	29,665,230	$	(5,525,964	)	$	33,528,664		$	65,974,090
Net loss																	—		—		—		—			(250,005	)		(250,005	)
Paid in capital – restricted stock awards																	—		—		110,813		—			—			110,813
Repurchase of shares																	—		—		—		(410,221	)		—			(410,221	)
Cash dividends ($0.02 per share)																	—		—		—		0			(143,181	)		(143,181	)
BALANCE AT SEPTEMBER 30, 2020																$	8,306,160	$	—	$	29,776,043	$	(5,936,185	)	$	33,135,478		$	65,281,496

	Six Months Ended September 30,
	2021
	Before-Tax			Tax Benefit		Net-of-Tax

Cash flow hedges	$	(12,481,740	)	$	3,015,588	$	(9,466,152	)
Other comprehensive income (loss)	$	(12,481,740	)	$	3,015,588	$	(9,466,152	)

	FRIEDMAN INDUSTRIES, INCORPORATED

Date: ~~Augus~~November ~~t 23~~19, 2021	By	/s/ ALEX LARUE
		Alex LaRue, Chief Financial Officer – Secretary and Treasurer (Principal Financial Officer)

	*THREE MONTHS ENDED JUNE 30, 2021*
	*Before-Tax*			*Tax Benefit*		*Net-of-Tax*

Cash flow hedges	$	(18,055,560	)	$	4,362,223	$	(13,693,337	)
Other comprehensive loss	$	(18,055,560	)	$	4,362,223	$	(13,693,337	)

	Three Months Ended September 30,
	2021
	Before-Tax		Tax			Net-of-Tax

Cash flow hedges	$	5,573,820	$	(1,346,635	)	$	4,227,185
Other comprehensive income (loss)	$	5,573,820	$	(1,346,635	)	$	4,227,185

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~~as amended on ~~December 21, 2016).~~November 8, 2021.

31.1	—	Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, signed by Michael J. Taylor.

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 Michael J. Taylor.

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	—	Inline XBRL Instance Document.

101.SCH	—	Inline XBRL Taxonomy Schema Document.

101.CAL	—	Inline XBRL Calculation Linkbase Document.

101.DEF	—	Inline XBRL Definition Linkbase Document.

101.LAB	—	Inline XBRL Label Linkbase Document.

101.PRE	—	Inline XBRL Presentation Linkbase Document.

104	—	Cover Page Interactive File (formatted as Inline XBRL and contained in Exhibit 101)