FRIEDMAN INDUSTRIES INC Income Taxes Disclosure

10.   INCOME TAXES

 

Components of tax expense are as follows (in thousands):

 

		Year Ended March 31,
		2026				2025
Federal
Current		$	4,297			$	1,234
Deferred			1,049				112
			5,346				1,346
State
Current			1,259				153
Deferred			234				109
			1,493				262
Total		$	6,839			$	1,608

 

Reconciliations of the statutory rates to the actual effective tax rates for fiscal years 2026 and 2025 are as follows (in thousands, except percentages):

 

		Fiscal 2026						Fiscal 2025
Income tax expense at U.S. federal statutory rate		$	5,538		21.0	%		$	1,615		21.0	%
Current year state and local income taxes net of federal income tax benefit (1)			1,179		4.4				208		2.7
Other			122		0.5				(215	)	(2.8	)
Provision for income taxes		$	6,839		25.9	%		$	1,608		20.9	%

 

Note: Certain percentages may not sum to totals due to rounding.

(1) State taxes in Alabama, Arkansas, Florida, Illinois, Indiana and Texas made up the majority (greater than 50 percent) of the tax effect in this category. 

 

The following table presents income taxes paid (in thousands):

 

		Fiscal 2026				Fiscal 2025
Federal		$	5,489			$	2,750
Domestic state and local:
Illinois			456				401
Other (1)			740				99
Domestic state and local subtotal			1,196				500
Total income taxes paid		$	6,685			$	3,250

 

(1) All other domestic state and local jurisdictions individually represented less than 5% and are aggregated into "Other"

 

The Company’s tax returns may be subject to examination by the Internal Revenue Service for the fiscal years ended March 31, 2023 through March 31, 2025. State and local returns may be subject to examination for fiscal years ended March 31, 2022 through March 31, 2025.

 

Deferred income taxes are provided for temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of the Company’s consolidated deferred tax assets (liabilities) are as follows (in thousands):

 

		March 31,
		2026				2025
Deferred tax liabilities:
Depreciation		$	(8,021	)		$	(6,199	)
Unrealized gain - mark to market derivatives			—				(87	)
Total deferred tax liabilities			(8,021	)			(6,286	)
Deferred tax assets:
Inventory capitalization			832				537
Interest expense limitation			—				140
Postretirement benefits other than pensions			24				29
Restricted stock compensation			163				23
Unrealized loss - mark to market derivatives			68				—
Other			173				79
Total deferred tax assets			1,260				808
Net deferred tax liability		$	(6,761	)		$	(5,478	)