A. M. Castle & Co. Reports 2009 Third Quarter Results

• Press Release
• Source: A. M. Castle & Co.
• On 8:00 am EDT, Tuesday October 27, 2009

FRANKLIN PARK, Ill., Oct. 27 /PRNewswire-FirstCall/ -- A. M. Castle & Co. (NYSE: CAS - News), 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, 2009.

Consolidated net sales were $184.0 million for the three months ended September 30, 2009, compared to $388.9 million in the third quarter of 2008 reflecting continued weakness in demand as a result of the global recession. The Company reported a net loss for the quarter of $6.3 million, or $0.28 loss per diluted share as compared to net income of $11.5 million, or $0.50 income per diluted share in the prior year quarter.

The Company's Metals segment sales were $161.8 million in the third quarter of 2009, compared to $360.1 million in the third quarter of 2008. Total Metals revenue declined 55% compared to the prior year quarter, as volume of tons sold per day declined approximately 49% from the record levels in the prior year quarter. The demand environment was significantly weaker in the third quarter compared to the prior year quarter. Virtually all products and end-markets served by the Company were impacted by softer demand conditions.

In the Plastics segment, third quarter sales were $22.2 million compared to $28.8 million in the prior year quarter.

"The continued weakness in the overall global economy obviously had a major impact on our activity levels and financial results for the third quarter of 2009," said Michael Goldberg, President and CEO of A.M. Castle.

"During the third quarter, we continued to focus on executing our key priorities during the economic downturn. We continued to reduce our operating costs, surpassing our annual cost reduction goal of $65 million during the quarter. We now expect 2009 operating costs to be at least $75 million lower than 2008 levels. We improved our strong balance sheet during this past quarter, reducing inventory by over $19 million and lowering accounts receivable days of sales outstanding by more than 3 days from second quarter levels on a trailing three month basis," Goldberg added.

"In addition to solid execution on our key financial priorities, I am pleased to report that we successfully completed the replacement of the Castle legacy system, and we are now running nearly all of our domestic businesses on the Oracle platform. Given the scale and complexity of this initiative, our employees have done exceedingly well in implementing the changes across the entire organization," Goldberg stated.

"While demand levels remained at historically low levels, we began to see improving macroeconomic trends and signs of stabilization in the third quarter. After numerous discussions with customers and suppliers, we believe that business has bottomed and started to recover. For the balance of 2009, we will continue to focus on expense control, managing working capital, and positioning ourselves for an improved operating environment in 2010," concluded Goldberg.

Webcast Information

Management will hold a conference call at 11:00 a.m. ET today to review the Company's results for the three- and nine-month periods ended September 30, 2009. The call can be accessed via he Internet live or as a replay. Those who would like to listen to the call may access the webcast through http://www.amcastle.com.

An archived version of the conference call webcast will be accessible for replay on the above website 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 4164702.

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 sector of the 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 subsidiary, Total Plastics, Inc., the Company also distributes a broad range of value-added industrial plastics. Together, Castle operates over 56 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 press 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 the attached financial statements, provides meaningful information and therefore we use it to supplement our GAAP guidance. Management often uses this information to assess and measure the performance of our operating segments. 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 provide an additional measure of performance.

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

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 Section 27A of the Securities Act of 1933, as amended ("Securities Act"), Section 21E 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, 2008. 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.

    CONSOLIDATED STATEMENTS OF OPERATIONS
    (Dollars in thousands,            For the Three       For the Nine
     except per share data)           Months Ended        Months Ended
    Unaudited                         September 30,       September 30,
                                      -------------       -------------
                                     2009      2008      2009        2008
                                     ----      ----      ----        ----

    Net sales                     $183,960  $388,898  $631,307  $1,179,492

    Costs and expenses:
    Cost of materials (exclusive
     of depreciation and
     amortization)                 137,671   287,773   464,917     876,313
    Warehouse, processing and
     delivery expense               26,160    40,547    83,305     119,163
    Sales, general and
     administrative expense         23,625    38,372    81,474     110,022
    Depreciation and
     amortization expense            5,149     5,574    16,107      17,452
                                     -----     -----    ------      ------
    Operating (loss) income         (8,645)   16,632   (14,496)     56,542

    Interest expense, net           (1,539)   (2,781)   (4,797)     (7,040)

                                   -------    ------   -------      ------
    (Loss) income before income
     taxes and equity in earnings
     of joint venture              (10,184)   13,851   (19,293)     49,502

    Income tax benefit
     (provision)                     3,607    (5,720)    7,834     (21,019)
                                     -----    ------     -----     -------
    (Loss) income before equity
     in earnings of joint venture   (6,577)    8,131   (11,459)     28,483

    Equity in earnings of joint
     venture                           240     3,347        81       8,060

                                   -------   -------  --------     -------
    Net (loss) income              $(6,337)  $11,478  $(11,378)    $36,543
                                   =======   =======  ========     =======

    Basic (loss) earnings per
     share                          $(0.28)    $0.51    $(0.50)      $1.63
                                    ======     =====    ======       =====
    Diluted (loss) earnings per
     share                          $(0.28)    $0.50    $(0.50)      $1.62
                                    ======     =====    ======       =====

    EBITDA *                       $(3,256)  $25,553    $1,692     $82,054
                                   =======   =======    ======     =======

    *Earnings before interest, taxes, and depreciation and amortization


    Reconciliation of EBITDA to net income:

                                      For the Three       For the Nine
                                      Months Ended        Months Ended
                                      September 30,       September 30,
                                     --------------       -------------
                                     2009      2008      2009        2008
                                     ----      ----      ----        ----

    Net (loss) income              $(6,337)  $11,478  $(11,378)    $36,543
    Depreciation and amortization
     expense                         5,149     5,574    16,107      17,452
    Interest expense, net            1,539     2,781     4,797       7,040
    Income taxes                    (3,607)    5,720    (7,834)     21,019
                                    ------     -----    ------      ------
    EBITDA                         $(3,256)  $25,553    $1,692     $82,054
                                   =======   =======    ======     =======



    CONDENSED CONSOLIDATED BALANCE SHEETS
    (Dollars in thousands, except par value data)             As of
    Unaudited                                      September 30,  December 31,
                                                       2009          2008
    ASSETS                                             ----          ----
    Current assets
      Cash and cash equivalents                       $20,110       $15,277
      Accounts receivable, less allowances of
       $3,864 at September 30, 2009
       and $3,318 at December 31, 2008                109,515       159,613
      Inventories, principally on last-in, first-out
       basis (replacement cost higher by $108,080
       at September 30, 2009 and  $133,748 at
       December 31, 2008)                             194,380       240,673
      Other current assets                              5,753         6,976
      Income taxes receivable                          24,657           640
      Deferred income taxes                                 -         5,244
                                                          ---         -----
           Total current assets                       354,415       428,423
    Investment in joint venture                        22,943        23,340
    Goodwill                                           51,411        51,321
    Intangible assets                                  50,330        55,742
    Prepaid pension cost                               27,471        26,615
    Other assets                                        4,549         5,303
    Property, plant and equipment, at cost
      Land                                              5,191         5,184
      Building                                         51,810        50,069
      Machinery and equipment (includes
       construction in progress)                      178,249       172,500
                                                      -------       -------
                                                      235,250       227,753
      Less - accumulated depreciation                (150,173)     (139,463)
                                                     --------      --------
                                                       85,077        88,290
                                                       ------        ------
    Total assets                                     $596,196      $679,034
                                                     ========      ========

    LIABILITIES AND STOCKHOLDERS' EQUITY
    Current liabilities
      Accounts payable                                $77,079      $126,490
      Accrued liabilities                              24,157        27,929
      Income taxes payable                                908         6,451
      Deferred income taxes - current                   6,050             -
      Current portion of long-term debt                10,876        10,838
      Short-term debt                                  11,925        31,197
                                                       ------        ------
           Total current liabilities                  130,995       202,905
                                                      -------       -------
    Long-term debt, less current portion               75,540        75,018
    Deferred income taxes                              36,812        38,743
    Other non-current liabilities                      13,724        15,068
    Commitments and contingencies
    Stockholders' equity
        Preferred stock, $0.01 par value - 10,000
         shares authorized; no shares issued and
         outstanding at September 30, 2009
         and December 31, 2008                              -             -
        Common stock, $0.01 par value - 30,000
         shares authorized; 23,115 shares issued
         and 22,908 outstanding at September 30,
         2009 and 22,850 shares issued and
         22,654 outstanding at December 31, 2008          230           228
        Additional paid-in capital                    177,819       176,653
        Retained earnings                             171,912       184,651
        Accumulated other comprehensive loss           (7,882)      (11,462)
        Treasury stock, at cost - 207 shares at
         September 30, 2009 and 197 shares at
         December 31, 2008                             (2,954)       (2,770)
                                                       ------        ------
           Total stockholders' equity                 339,125       347,300
                                                      -------       -------
    Total liabilities and stockholders' equity       $596,196      $679,034
                                                     ========      ========

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