Item 1A. Risk Factors
Not required.
Item 1B. Unresolved Staff Comments
None.
Item 2. Properties
The principal real properties of the Company are described in the following table:
Location Approximate Size Ownership
Lone Star, Texas
Plant — Texas Tubular Products 161,000 sq. feet Owned(1)
Offices — Texas Tubular Products 12,200 sq. feet Owned(1)
Land — Texas Tubular Products 122.4 acres Owned(1)
Longview, Texas
Offices 5,100 sq. feet Leased(2)
Hickman, Arkansas
Plant and Warehouse — Coil Products 64,600 sq. feet Owned(1)
Offices — Coil Products 2,500 sq. feet Owned(1)
Land — Coil Products 26.2 acres Owned(1)
Decatur, Alabama
Plant and Warehouse — Coil Products 48,000 sq. feet Owned(1)
Offices — Coil Products 2,000 sq. feet Owned(1)
Land — Coil Products 47.3 acres Owned(1)
Sinton, Texas
Plant and Warehouse 70,000 sq. feet Leasehold Improvement (3)
Offices — Coil Products 3,100 sq. feet Leasehold Improvement (3)
Land — Coil Products 26.5 acres Leased(3)
Item 3. Legal Proceedings
The Company is not, and during fiscal year 2022 was not, a party to, nor is its property the subject of, any material pending legal proceedings.
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PART II
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
The Company’s Common Stock is traded principally on the NYSE – American (Symbol: FRD).
Reference is hereby made to the sections of the Company’s Annual Report to Shareholders for the fiscal year ended March 31, 2022, entitled “Description of Business — Range of High and Low Sales Prices of Common Stock” and “Description of Business — Cash Dividends Declared Per Share of Common Stock”, which sections are hereby incorporated herein by reference.
The approximate number of shareholders of record of Common Stock of the Company as of April 29, 2022 was 175. Because many of the Company’s common shares are held by brokers and other institutions on behalf of shareholders, the Company is unable to estimate the total number of individual shareholders represented by these record holders.
Item 6. Selected Financial Data
Not required.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Information with respect to Item 7 is hereby incorporated herein by reference from the section of the Company’s Annual Report to Shareholders for the fiscal year ended March 31, 2022, entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations”.
Item 7A. Quantitative and Qualitative Disclosures about Market Risk
Not required.
Item 8. Financial Statements and Supplementary Data
The following financial statements and notes thereto of the Company included in the Company’s Annual Report to Shareholders for the fiscal year ended March 31, 2022, are hereby incorporated herein by reference:
Consolidated Balance Sheets — March 31, 2022 and 2021
Consolidated Statements of Operations — Years ended March 31, 2022 and 2021
Consolidated Statements of Comprehensive Income — Years ended March 31, 2022 and 2021
Consolidated Statements of Stockholders’ Equity — Years ended March 31, 2022 and 2021
Consolidated Statements of Cash Flows — Years ended March 31, 2022 and 2021
Notes to Consolidated Financial Statements
Reports of Independent Registered Public Accounting Firm
The following supplementary schedule for the Company for the years ended March 31, 2022 and 2021, is incorporated herein by reference above in this Item 8 from the Company's Annual Report to Shareholders for the fiscal year ended March 31, 2022.
Schedule II — Valuation and Qualifying Accounts
All other schedules for which provision is made in the applicable accounting regulation of the U.S. Securities and Exchange Commission (the “SEC”) are not required under the related instructions or are inapplicable and, therefore, have been omitted.
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
None.
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Item 9A. Controls and Procedures
Information with respect to Item 9A is hereby incorporated herein by reference from the sections of the Company’s Annual Report to Shareholders for the fiscal year ended March 31, 2022, entitled “Evaluation of Disclosure Controls and Procedures” and “Management's Report on Internal Control Over Financial Reporting”.
Item 9B. Other Information
None.
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PART III
Item 10. Directors, Executive Officers and Corporate Governance
Board of Directors
The following table sets forth the names of the nominees for election to the Board of Directors, the principal occupation or employment of each of the nominees, the period during which each nominee has served as a director of the Company and the age of each nominee:
Executive Officers of the Company
Information with respect to Item 10 regarding executive officers is hereby incorporated by reference from the information set forth under the caption “Executive Officers of the Company” in Item 1 of this Annual Report on Form 10-K.
Delinquent Section 16(a) Reports
Under the Exchange Act, our directors, executive officers and 10% shareholders must report to the SEC certain transactions involving Common Stock. Based solely on a review of the copies of the reports required pursuant to Section 16(a) of the Exchange Act that have been furnished to us and written representations that no other reports were required, we believe that these filing requirements have been satisfied for the fiscal year ended March 31, 2022 except for: one Form-4 filed by Durga D. Agrawal on December 30, 2021 (filed 87 days late); one Form-4 filed by Max Reichenthal on December 30, 2021 (filed 87 days late); one Form-4 filed by Joel Spira on December 30, 2021 (filed 87 days late); one Form-4 filed by Tim Stevenson on December 30, 2021 (filed 87 days late); one Form-4 filed by Joe L. Williams on December 30, 2021 (filed 87 days late); and one Form-4 filed by Alex LaRue on August 1, 2022 (filed 209 days late).
Audit Committee
The Board of Directors has established an Audit Committee which currently consists of Messrs. Agrawal, Reichenthal and Spira (Chairman). The Audit Committee discusses with the independent accountants and management our financial statements and the scope of the audit examinations, reviews with the independent accountants the audit budget, receives and reviews the audit report submitted by the independent accountants, reviews with the independent accountants internal accounting and control procedures and engages our independent auditor. The Audit Committee’s responsibilities to the Board of Directors are further detailed in the Second Amended and Restated Charter of the Audit Committee, as amended, which is not available on our website but is attached as Appendix A to this proxy statement. The Audit Committee met four times in fiscal year 2022.
The Board of Directors has affirmatively determined that all members of the Audit Committee are independent in accordance with the applicable rules of the NYSE – American and Rule 10A-3(b)(1) of the Exchange Act. The Board also has determined that each of the members of the Audit Committee is able to read and understand fundamental financial statements. In addition, the Board has determined that Mr. Spira meets the financial sophistication requirements set forth in the applicable rules of the NYSE – American and qualifies as an “audit committee financial expert,” as that term is defined in the rules promulgated by the SEC pursuant to the Sarbanes-Oxley Act of 2002, as amended.
The Company has adopted the Friedman Industries, Incorporated Code of Conduct and Ethics (the “Code”), which applies to the Company’s employees, directors and officers, including its principal executive officer, principal financial officer, principal accounting officer or controller or persons performing similar functions. A copy of the Code is filed as an exhibit hereto.
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Item 11. Executive Compensation
Summary Compensation Table
The following table sets forth certain information regarding compensation paid for services rendered during the fiscal years ended March 31, 2022 and March 31, 2021, to each of our executive officers, including our principal executive officer and our principal financial officer (collectively, the “Named Executive Officers”):
Summary Compensation Table for Fiscal Year 2022
(1) Represents base salary.
(2) Includes quarterly bonuses based on a percentage of our quarterly net income and Christmas bonuses, each of which is paid at the discretion of the Board of Directors.
(3) Reflects the aggregate grant date fair value for stock awards computed in accordance with FASB ASC Topic 718.
(4) Reflects contributions by the Company to the Friedman Industries, Inc. Employees’ Retirement and 401(k) Plan for the benefit of the Named Executive Officers and cash dividends received related to restricted shares awarded under the Company’s restricted stock plan.
Outstanding Equity Awards at Fiscal Year-End 2022
Option Awards Stock Awards
(a) (b) (c) (d) (e) (f) (g) (h) (i) (j)
Michael J. Taylor ____ ____ ____ ____ ____ 40,000 (1) $352,400 ____ ____
Alex LaRue ____ ____ ____ ____ ____ 4,000 (2) $35,240 ____ ____
(1) The unvested stock awards for Mr. Taylor will vest in 10,000 share increments on April 1, 2022, April 1 2023, April 1, 2024 and April 1 2025.
(2) The unvested stock awards for Mr. LaRue will vest in 1,000 share increments on April 1, 2022, April 1 2023, April 1, 2024 and April 1 2025.
(3) Based on the closing price of our common stock on March 31, 2022 of $8.81.
Potential Payments upon Termination or Change-in-Control
The Named Executive Officers will receive the same benefits as our other employees upon termination of their employment. We maintain the Friedman Industries, Inc. Employees’ Retirement and 401(k) Plan (the “Plan”), a defined contribution and 401(k) plan. The Plan covers substantially all employees, including officers, and employees fully vest in the Plan upon six years of service. The Company maintains a life insurance policy on Mr. LaRue but does not currently have a policy in place on Mr. Taylor. From time to time and in its discretion, the Board has approved the transfer of the applicable policy to an officer upon their retirement. At March 31, 2022, the cash surrender value of the life insurance policy held by the Company on Mr. LaRue was approximately $6,500. None of the Named Executive Officers has a change-in-control agreement with us.
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Director Compensation
For the fiscal year ended March 31, 2022, directors were paid $9,000 per quarter. In addition, the Chairman and members of the Audit Committee received $3,000 and $2,250, respectively, per quarter. Mr. Taylor did not receive any compensation for serving as a director.
Except for Mr. Taylor, who is a Named Executive Officer (as defined in “Executive Compensation” below), the following table summarizes compensation paid to each director during the fiscal year ended March 31, 2022. Sandy Scott and Sharon Taylor are not listed in the table below due to them being added to the Board of Directors subsequent to March 31, 2022.
Director Compensation Table for Fiscal Year 2022
Name Fees Earned or Paid in Cash ($) All Other Compensation ($) (1) Total ($)
Procedures and Processes for Determining Executive and Director Compensation
The Compensation Committee of the Board of Directors is responsible for reviewing and recommending to the full Board of Directors the compensation of our Chief Executive Officer and our other Named Executive Officers. The Committee also reviews and discusses with the Chief Executive Officer, and recommends to the full Board of Directors, the compensation for all other officers of the Company. The Committee may retain compensation consultants or other advisers it deems appropriate. Based on the Committee’s analysis of relevant data, the Committee determines its recommendation regarding the compensation of our Chief Executive Officer during an executive session of the Committee at which the Chief Executive Officer is not present. Our Chief Executive Officer makes recommendations regarding the compensation of our other executive officers and other officers to the Committee. The Committee considers the recommendations, discusses the recommendations with our Chief Executive Officer, may discuss the matter in executive session and then makes recommendations to the full Board of Directors. The final determination as to the compensation of the Chief Executive Officer and all other officers of the Company is made by the full Board of Directors based on the recommendations of the Committee.
The Board of Directors, or an authorized committee thereof, may from time to time review and determine the form and amount of director compensation, including cash, equity-based awards and other director compensation to maintain a transparent and readily understandable compensation program which ensures that the directors continue to receive fair and appropriate compensation for the time commitment required to discharge their duties as directors for a company of our size.
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
Equity Compensation Plan Information
The table below sets forth the following information as of March 31, 2022 for all equity compensation plans, including those previously approved by our shareholders.
Equity Compensation Plan Table
Equity Compensation Plans Approved By Security Holders - - 130,185
Equity Compensation Plans Not Approved By Security Holders - - -
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Additional information with respect to Item 12 regarding equity compensation plan information relating to the Company is hereby incorporated herein by reference from Note 2 — Equity Compensation Plans and Capital Stock included in the Notes to Consolidated Financial Statements of the Company included in the Company’s Annual Report to Shareholders for the fiscal year ended March 31, 2022.
Security Ownership Information
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information concerning the beneficial ownership of Common Stock by directors, nominees for director, Named Executive Officers, executive officers and directors as a group and persons who owned of record more than 5% of the outstanding Common Stock as of July 28, 2022:
6300 Bee Cave Road, Building One
800 Third Avenue
21 Waterway Ave. Suite 525
* Less than 1%.
(a) Based upon information obtained from the officers, directors, director nominees and beneficial owners. Includes all shares beneficially owned according to the definition of “beneficial ownership” in the rules promulgated under the Exchange Act. Except as otherwise indicated, the indicated person has sole voting and investment power with respect to the shares.
(b) Based upon information contained in a Schedule 13G/A filed with the SEC on February 8, 2022 by Dimensional Fund Advisors LP (“Dimensional”). Dimensional is deemed to have beneficial ownership of 544,919 shares of the Common Stock as of December 31, 2021.
(c) Based upon information contained in a Schedule 13G/A filed with the SEC on February 11, 2022 by Renaissance Technologies Holdings Corporation (“Renaissance”). Renaissance is deemed to have beneficial ownership of 488,018 shares of the Common Stock as of December 31, 2021.
(d) Based upon information contained in a Schedule 13G filed with the SEC on May 9, 2022 by Plateplus, Inc. (“Plateplus”). Plateplus is deemed to have beneficial ownership of 516,041 shares of the Common Stock as of April 29, 2022.
Item 13. Certain Relationships, Related Transactions and Director Independence
Related Party Transactions
There were no transactions in fiscal year 2022 with related persons which required disclosure pursuant to Item 404(a) of Regulation S-K (17 CFR Part 229).
Policies and Procedures with Respect to Approval of Related Party Transactions
The Audit Committee of the Board of Directors has adopted a written policy with respect to related party transactions to document procedures pursuant to which such transactions are reviewed, approved or ratified. The policy applies to any transaction between us and any related party other than transactions (i) available to all employees generally or (ii) involving less than $5,000 when aggregated with all similar transactions. The Audit Committee is responsible for reviewing, approving and ratifying any related party transaction. In general, the policy prohibits all related party transactions although the Audit Committee may approve related party transactions (A) in exceptional circumstances where the situation is urgent and no reasonable alternatives exist, (B) when the benefit is unique and significant or (C) the economic value to us is highly compelling over an extended period.
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Item 14. Principal Accountant Fees and Services
Audit Fees
In fiscal years 2022 and 2021, we retained Moss Adams LLP (Houston, Texas PCAOB ID: 659) to provide services and incurred fees therefor as indicated in the following table:
Audit-Related Fees — —
Tax Fees — —
All Other Fees — —
(1) Includes fees and expenses incurred related to the fiscal year audit and interim reviews, notwithstanding when the fees and expenses were billed or when the services were rendered.
The Audit Committee has implemented pre-approval policies and procedures for all audit and non-audit services to be provided by our independent public accountants to us. With regard to all permissible non-audit services, the Audit Committee has designated the Chairman of the Audit Committee to approve in advance the provision by the independent public accountants of such services.
There were no services approved by the Audit Committee pursuant to the de minimis exception in paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation S-X (17 CFR Part 210) during fiscal year 2022.
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PART IV
Item 15. Exhibits and Financial Statement Schedules
(a) Documents included in this report
1. Financial Statements
The following financial statements and notes thereto of the Company are included in the Company’s Annual Report to Shareholders for the fiscal year ended March 31, 2022, which is incorporated herein by reference:
Consolidated Balance Sheets — March 31, 2022 and 2021
Consolidated Statements of Operations — Years ended March 31, 2022 and 2021
Consolidated Statements of Comprehensive Income — Years ended March 31, 2022 and 2021
Consolidated Statements of Stockholders’ Equity — Years ended March 31, 2022 and 2021
Consolidated Statements of Cash Flows — Years ended March 31, 2022 and 2021
Notes to Consolidated Financial Statements
Reports of Independent Registered Public Accounting Firm
2. Financial Statement Schedules
The following financial statement schedule is included in the Company's Annual Report to Shareholders for the fiscal year ended March 31, 2022, which is incorporated herein by reference:
Schedule II — Valuation and Qualifying Accounts
All other schedules for which provision is made in the applicable accounting regulations of the SEC are not required under the related instructions or are inapplicable and, therefore, have been omitted.
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3. Exhibits
Exhibit No. Description
**14.1 — Friedman Industries, Incorporated Code of Conduct and Ethics.
**21.1 — List of Subsidiaries.
**23.1 — Consent of Moss Adams LLP.
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**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.
** Filed herewith.
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, Friedman Industries, Incorporated has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
FRIEDMAN INDUSTRIES, INCORPORATED
By: /S/ MICHAEL J. TAYLOR
Michael J. Taylor
President and Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of Friedman Industries, Incorporated in the capacities and on the dates indicated.
Signature Title Date
/S/ MICHAEL J. TAYLOR President and Chief Executive Officer and August 2, 2022
Michael J. Taylor Director (Principal Executive Officer)
/S/ ALEX LARUE Chief Financial Officer — Secretary and August 2, 2022
Alex LaRue Treasurer (Principal Financial Officer
and Principal Accounting Officer)
/S/ DURGA D. AGRAWAL Director August 2, 2022
Durga D. Agrawal
/S/ MAX REICHENTHAL Director August 2, 2022
Max Reichenthal
/S/ SANDY SCOTT Director August 2, 2022
Sandy Scott
/S/ JOEL SPIRA Director August 2, 2022
Joel Spira
/S/ TIM STEVENSON Director August 2, 2022
Tim Stevenson
/S/ SHARON TAYLOR Director August 2, 2022
Sharon Taylor
/S/ JOE L. WILLIAMS Director August 2, 2022
Joe L. Williams
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