A. M. Castle & Co. Reports 2012 Third Quarter Results

            A. M. Castle & Co. Reports 2012 Third Quarter Results

PR Newswire

OAK BROOK, Ill., Nov. 1, 2012

OAK BROOK, Ill., Nov. 1, 2012 /PRNewswire/ -- A. M. Castle & Co. (NYSE: CAS)
("the Company"), a global distributor of specialty metal and plastic products,
value-added services and supply chain solutions, today reported financial
results for the third quarter ended September 30, 2012.

Consolidated net sales were $304.0 million for the three months ended
September 30, 2012, compared to $294.9 million in the third quarter of 2011.
Reported net income for the quarter was $3.2 million, or $0.13 per diluted
share, as compared to $3.8 million, or $0.16 per diluted share, in the prior
year quarter. Adjusted non-GAAP net income, as reconciled below, was $2.4
million, or $0.10 per diluted share, for the third quarter of 2012 compared to
$4.9 million, or $0.21 per diluted share, in the prior year quarter.

The Company's reported EBITDA, as defined and reconciled in the financial
statement table below, rose 80.3% to $20.2 million, or 6.6% of net sales, in
the third quarter of 2012, compared to $11.2 million, or 3.8% of net sales, in
the third quarter of 2011 and $17.1 million, or 5.2% of net sales, in the
second quarter of this year.

"We made progress toward our goal to improve operating margins," said Scott
Stephens, Vice President-Finance and CFO of A. M. Castle & Co., and interim
CEO during the third quarter. "Through strong gross material margin execution
and effective cost management, we achieved the third quarter profit levels
that we had anticipated, despite external headwinds, including declining scrap
and commodity prices and continued uncertain customer demand."

Operating income as a percent of net sales increased to 4.1% compared to 1.1%
in the prior year quarter and 2.7% in the second quarter of 2012. In
addition, average tons sold per day rose sequentially throughout the quarter,
increasing 8.5% from July to September. Gross material margins remained
strong for the quarter at 27.9%, excluding the impact of the unrealized gains
on commodity hedges. Reported third quarter 2012 cost of materials includes a
pre-tax LIFO credit, or income, of $4.4 million, compared to a pre-tax LIFO
charge, or expense, of $4.0 million for the third quarter of 2011 and expense
of $1.5 million for the second quarter of 2012.

Reconciliation of 2012 adjusted net income to reported net income (loss) for
the period ended September 30:
(Dollars in millions, except per
share data)
Unaudited
                        For the       For the       For the       For the
                        Three        Three
                                                    Nine         Nine
                        Months Ended  Months Ended
                        2012          2011          Months Ended  Months Ended
                                                    2012          2011
Net income (loss), as   $         $         $         $   
reported                3.2          3.8          (4.1)         10.2
Unrealized loss on debt -             -             15.6          -
conversion option
CEO transition costs,   -             -             0.6           -
net
Unrealized (gains)
losses on commodity     (1.1)         1.6           (0.2)         1.6
hedges
Tax effect of           0.3           (0.5)         (0.1)         (0.5)
adjustments
Adjusted non-GAAP net   $         $         $          $   
income                 2.4          4.9          11.8         11.3
Adjusted non-GAAP basic $          $          $          $    
income per share        0.11         0.21         0.51         0.50
Adjusted non-GAAP
diluted income per      0.10          0.21          0.49          0.49
share

In the Metals segment, third quarter 2012 net sales of $272.4 million were
$8.0 million, or 3.0% higher than last year, primarily due to the acquisition
of Tube Supply in December 2011, which contributed net sales of $39.9 million
in the third quarter of 2012. Metals segment tons sold per day, excluding
Tube Supply, for the third quarter of 2012 were down 9.2% from the third
quarter of 2011. Sequentially, tons sold per day, excluding Tube Supply, were
7.6% lower than the second quarter of 2012 asmost key end-use markets
experienced softer demand as customers adjusted inventory levels due to a more
cautious outlook.

In the Plastics segment, third quarter 2012 net sales of $31.6 million were
$1.1 million, or 3.6% higher than the prior year period, primarily due to
increased volume in the automotive sector.

Equity in earnings of the Company's joint venture was $1.4 million in the
third quarter of 2012, which was $1.8 million less than the same period last
year and $0.4 million less than the second quarter of this year.

The Company's debt-to-capital ratio was 46.6% at September 30, 2012, compared
to 50.2% at December 31, 2011. Total debt outstanding, net of unamortized
discount, was $303.6 million at September 30, 2012 and $314.9 million at
December 31, 2011. Refer to the 'Total Debt' table below for details related
to the Company's outstanding debt obligations.

Commenting on the Company's outlook, Stephens said, "We remain cautious
heading into the fourth quarter, which has historically been seasonally slower
for the Company. Nevertheless, we expect daily sales in the fourth quarter of
2012 to be comparable to third quarter levels and expect gross material
margins in the fourth quarter of approximately 27%. We continue to be
optimistic about our global growth opportunities in our targeted end markets,
and we are committed to expanding our business as we focus on cost management
and improved operating efficiency for the balance of 2012 and into 2013."

Subsequent to the end of the third quarter, the Board of Directors of the
Company elected Scott J. Dolan, 41, to serve as President and Chief Executive
Officer and as a member of the Board of the Company, effective October15,
2012.

"Scott Dolan possesses the qualities we sought in a CEO to execute A. M.
Castle's strategy, engage our employees and deliver improved results for
shareholders," reiterated Brian P. Anderson, chairman of the board.

Subsequent to the filing of a Schedule 13-D filed on August 20, 2012 by
Platinum Equity and various affiliates, representatives of the Board of
Directors of the Company communicated with Platinum Equity with respect to its
intentions. Consistent with its responsibilities to shareholders, the Board
of Directors diligently and deliberately evaluated Platinum's stated
intentions and strategic alternatives available to the Company. In addition,
with its financial advisors, the Board of Directors reviewed the opportunities
and challenges presented by A. M. Castle's strategic and business plans.

Based on its evaluation, the Board of Directors has determined that it is in
the best interests of the Company and its shareholders to pursue the Company's
business plans as a standalone entity.

"We view our Company's prospects, leadership and long-term strategic direction
positively as the Company executes on its standalone business plan to build
long-term shareholder value," concluded Anderson.

Webcast Information

Management will hold a conference call at 11:00 a.m. ET today to review the
Company's results for the third quarter and discuss business conditions and
outlook. The call can be accessed via the Internet live or as a replay.
Those who would like to listen to the call may access the webcast through a
link on the investor relations page of the Company's website at
http://www.amcastle.com/investors/default.aspx. A supplemental presentation
accompanying the webcast can also be accessed at the link provided.

An archived version of the conference call webcast will be available for
replay at the link above approximately three hours following its conclusion,
and will remain available until the next earnings conference call. A replay
of the conference call will also be available for seven days by calling
303-590-3030 (international) or 800-406-7325 and citing code 4571381.

About A. M. Castle & Co.

Founded in 1890, A. M. Castle & Co. is a global distributor of specialty metal
and plastic products and supply chain services, principally serving the
producer durable equipment, oil and gas, commercial aircraft, heavy equipment,
industrial goods, construction equipment, retail, marine and automotive
sectors of the global economy. Its customer base includes many Fortune 500
companies as well as thousands of medium and smaller-sized firms spread across
a variety of industries. Within its metals business, it specializes in the
distribution of alloy and stainless steels; nickel alloys; aluminum and
carbon. Through its wholly-owned subsidiary, Total Plastics, Inc., the
Company also distributes a broad range of value-added industrial plastics.
Together, Castle and its affiliated companies operate out of more than 60
locations throughout North America, Europe and Asia. Its common stock is
traded on the New York Stock Exchange under the ticker symbol "CAS".

Regulation G Disclosure

This release and the financial statements included in this release include
non-GAAP financial measures. The non-GAAP financial information should be
considered supplemental to, and not as a substitute for, or superior to,
financial measures calculated in accordance with GAAP. However, we believe
that non-GAAP reporting, giving effect to the adjustments shown in the
reconciliation contained in this release and in the attached financial
statements, provides meaningful information and therefore we use it to
supplement our GAAP reporting and guidance. Management often uses this
information to assess and measure the performance of our business. We have
chosen to provide this supplemental information to investors, analysts and
other interested parties to enable them to perform additional analyses of
operating results, to illustrate the results of operations giving effect to
the non-GAAP adjustments shown in the reconciliations and to assist with
period-over-period comparisons of such operations. The exclusion of the
charges indicated herein from the non-GAAP financial measures presented does
not indicate an expectation by the Company that similar charges will not be
incurred in subsequent periods.

In addition, the Company believes that the use and presentation of EBITDA,
which is defined by the Company as income before provision for income taxes
plus depreciation and amortization, and interest expense, less interest
income, is widely used by the investment community for evaluation purposes and
provides the investors, analysts and other interested parties with additional
information in analyzing the Company's operating results.Adjusted non-GAAP
net income and adjusted EBITDA, which are defined as reported net income and
EBITDA adjusted for non-cash items and items which are not considered by
management to be indicative of the underlying results,are presented as the
Company believes the information is important to provide investors, analysts
and other interested parties additional information about the Company's
financial performance.Management uses EBITDA, adjusted non-GAAP net income
and adjusted EBITDA to evaluate the performance of the business.

Cautionary Statement on Risks Associated with Forward Looking Statements

Information provided and statements contained in this release that are not
purely historical are forward-looking statements within the meaning of
Section27A of the Securities Act of 1933, as amended ("Securities Act"),
Section21E of the Securities Exchange Act of 1934, as amended ("Exchange
Act"), and the Private Securities Litigation Reform Act of 1995.

Such forward-looking statements only speak as of the date of this release and
the Company assumes no obligation to update the information included in this
release. Such forward-looking statements include information concerning our
possible or assumed future results of operations, including descriptions of
our business strategy. These statements often include words such as
"believe," "expect," "anticipate," "intend," "predict," "plan," or similar
expressions. These statements are not guarantees of performance or results,
and they involve risks, uncertainties, and assumptions. Although we believe
that these forward-looking statements are based on reasonable assumptions,
there are many factors that could affect our actual financial results or
results of operations and could cause actual results to differ materially from
those in the forward-looking statements, including those risk factors
identified in Item 1A "Risk Factors" of our Annual Report on Form 10-K for the
fiscal year ended December 31, 2011. All future written and oral
forward-looking statements by us or persons acting on our behalf are expressly
qualified in their entirety by the cautionary statements contained or referred
to above. Except for our ongoing obligations to disclose material information
as required by the federal securities laws, we do not have any obligations or
intention to release publicly any revisions to any forward-looking statements
to reflect events or circumstances in the future or to reflect the occurrence
of unanticipated events.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in thousands, except per share data)
Unaudited
                          For the Three                For the Nine

                          Months Ended                 Months Ended

                          September 30,                September 30,
                          2012           2011          2012          2011
Net sales                 $ 304,039      $ 294,860     $ 996,347     $ 850,216
Costs and expenses:
 Cost of materials
(exclusive of             218,015        221,690       722,663       631,588
depreciation and
amortization)
 Warehouse, processing   36,894         35,076        113,894       102,092
and delivery expense
 Sales, general, and     30,319         30,060        100,425       92,045
administrative expense
 Depreciation and        6,263          4,861         19,350        14,919
amortization expense
Operating income         12,548         3,173         40,015        9,572
Interest expense, net     (10,280)       (1,221)       (30,437)      (3,327)
Interest expense -
unrealized loss on debt   -              -             (15,597)      -
conversion option
Income (loss) before
income taxes and equity   2,268          1,952         (6,019)       6,245
in earnings of joint
venture
Income taxes              (453)          (1,266)       (4,185)       (5,000)
Income (loss) before
equity in earnings of     1,815          686           (10,204)      1,245
joint venture
Equity in earnings of     1,358          3,117         6,099         8,958
joint venture
Net income (loss)        $   3,173    $   3,803   $  (4,105)   $ 
                                                                     10,203
Basic income (loss) per   $    0.14   $          $           $   
share                                   0.17          (0.18)        0.45
Diluted income (loss)     $    0.13   $          $           $   
per share                                0.16          (0.18)        0.44
EBITDA *                  $  20,169     $  11,151    $  65,464    $ 
                                                                     33,449
*Earnings before interest, taxes, and depreciation and amortization
Reconciliation of adjusted EBITDA to net income:
                          For the Three                For the Nine

                          Months Ended                 Months Ended

                          September 30,                September 30,
                          2012           2011          2012          2011
Net income (loss)        $   3,173    $   3,803   $  (4,105)   $ 
                                                                     10,203
Depreciation and          6,263          4,861         19,350        14,919
amortization expense
Interest expense, net     10,280         1,221         30,437        3,327
Interest expense -
unrealized loss on debt   -              -             15,597        -
conversion option
Income taxes              453            1,266         4,185         5,000
EBITDA                    20,169         11,151        65,464        33,449
Non-GAAP net income       (1,068)        1,571         355           1,571
adjustments (a)
Adjusted EBITDA           $  19,101     $  12,722    $  65,819    $ 
                                                                     35,020
(a) Non-GAAP net income adjustments relate to CEO transition costs and
unrealized (gains) losses for commodity hedges. Refer to 'Reconciliation of
2012 adjusted net income to reported net income (loss)' table on page 2.



CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in thousands, except par value     As of
data)
Unaudited                                   September 30,     December 31,
                                            2012              2011
ASSETS
Current assets
 Cash and cash equivalents                  $             $     30,524
                                            19,988
 Accounts receivable, less allowances       171,253           181,036
 of $4,768 and $3,584
 Inventories, principally on last-in,
 first-out basis (replacement cost         357,382           272,039
  higher by $140,544 and $138,882)
 Prepaid expenses and other current         16,629            10,382
 assets
 Income tax receivable                      6,041             8,287
  Total current assets                  571,293           502,268
Investment in joint venture                 40,731            36,460
Goodwill                                   70,516            69,901
Intangible assets                           85,709            93,813
Prepaid pension cost                        16,773            15,956
Other assets                                20,321            21,784
Property, plant and equipment
 Land                                       5,196             5,194
 Building                                  52,838            52,434
 Machinery and equipment                   177,627           172,833
 Property, plant and equipment, at cost     235,661           230,461
 Less - accumulated depreciation            (155,839)         (148,320)
  Property, plant and equipment, net     79,822            82,141
Total assets                                $    885,165  $    822,323
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
 Accounts payable                           $    133,723  $    116,874
 Accrued liabilities                        48,542            33,828
 Income taxes payable                       1,357             1,884
 Current portion of long-term debt        309               192
 Short-term debt                            1,000             500
  Total current liabilities             184,931           153,278
Long-term debt, less current portion       302,283           314,240
Deferred income taxes                      33,995            25,650
Other non-current liabilities               6,191             7,252
Pension and post retirement benefit         9,913             9,624
obligations
Commitments and contingencies
Stockholders' equity
 Preferred stock, $0.01 par value - 9,988
 shares authorized (including 400 Series B
 Junior Preferred $0.00 par value shares); -                 -
 no shares issued and outstanding at
 September 30, 2012 and December 31, 2011
 Common stock, $0.01 par value -
 60,000 shares authorized and 23,211
 shares issued and 23,092 outstanding
 at September 30, 2012; 30,000 shares
 authorized and 23,159 shares
  issued and 23,010 outstanding at       232               232
 December 31, 2011
  Additional paid-in capital               221,297           184,596
  Retained earnings                        144,882           148,987
  Accumulated other comprehensive loss     (17,134)          (19,824)
  Treasury stock, at cost - 119 shares
 at September 30, 2012 and 149 shares
 at
  December 31, 2011                        (1,425)           (1,712)
  Total stockholders' equity           347,852           312,279
Total liabilities and stockholders'         $    885,165  $    822,323
equity



TOTAL DEBT
(Dollars in thousands)
unaudited
                                       September 30, 2012  December 31, 2011
SHORT-TERM DEBT
Foreign                                $           $         
                                       1,000              500
Total short-term debt                  1,000               500
LONG-TERM DEBT
12.75% Senior Secured Notes due        225,000             225,000
December 15, 2016
7.0% Convertible Notes due December    57,500              57,500
15, 2017
New Revolving Credit Facility due      46,800              35,500
December 15, 2015
Other, primarily capital leases       996                 244
Total long-term debt                  330,296             318,244
Plus: derivative liability for
conversion feature associated with     -                   26,440
convertible debt
Less: unamortized discount            (27,704)            (30,252)
Less: current portion                 (309)               (192)
Total long-term portion                302,283             314,240
TOTAL DEBT                             $            $      
                                       303,592             314,932

SOURCE A. M. Castle & Co.

Website: http://www.amcastle.com
Contact: Scott F. Stephens, Vice President-Finance & CFO, +1-847-349-2577,
sstephens@amcastle.com; Analyst Contact, Stephen Leow, +1-312-252-9313,
stephen.leow@fticonsulting.com
 
Press spacebar to pause and continue. Press esc to stop.