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A.M. Castle & Co. (CTAM)

Other OTC - Other OTC Delayed Price. Currency in USD
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Previous Close4.7500
Open6.1600
Bid0.0000 x 0
Ask0.0000 x 0
Day's Range4.7500 - 4.7500
52 Week Range0.9900 - 13.8000
Volume1
Avg. Volume78
Market Cap34.462M
Beta (5Y Monthly)0.20
PE Ratio (TTM)N/A
EPS (TTM)-7.2700
Earnings DateN/A
Forward Dividend & YieldN/A (N/A)
Ex-Dividend DateMar 17, 2009
1y Target EstN/A
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  • GlobeNewswire

    A. M. Castle & Co. Reports Third Quarter Results, Announces Agreement in Principle for New Term Loan Facility, and Extension of and Expanded Capital Access Under Existing ABL Credit Facility

    Generated cash flow from operations of $3.9 million in the quarter and aggressively reduced costs in face of challenging end-marketsOAK BROOK, Ill., Nov. 16, 2020 (GLOBE NEWSWIRE) -- A. M. Castle & Co. (OTCQX: CTAM) (the "Company" or "Castle"), a global distributor of specialty metal and supply chain solutions, today reported its third quarter 2020 financial results. The Company also announced today that it has reached an agreement in principle with certain of its stockholders to provide a new $8.0 million term loan, subordinated only to the “A” tranche of the Company’s existing revolving credit facility. Additionally, as part of this agreement in principle, the Company and its first lien lender, PNC Bank, National Association ("PNC") agreed to extend the maturity of the Company’s existing revolving credit facility to February 28, 2023, and to amend certain aspects of the facility to provide expanded access to approximately $3.8 million of capital generated by the Company’s recent cash flow improvements. The agreement in principle is subject to customary conditions to closing, including execution of acceptable documentation and final approval, which the Company expects to complete within the next 30 days.Third Quarter 2020 Financial Results Summary: * Generated net sales of $79.5 million, a 6.1% decrease compared to $84.7 million in the previous quarter and a 41.6% decrease compared to $136.1 million in the third quarter of 2019. * Reported an operating loss of $10.6 million, an increase in operating loss of $6.1 million compared to $4.5 million in the previous quarter and an increase in operating loss of $6.8 million compared to the same quarter last year. * Reported a net loss of $14.7 million, which included $5.1 million of interest expense, of which $4.1 million was non-cash, compared to a net loss of $12.2 million in the third quarter of 2019, which included $10.2 million of interest expense, of which $8.4 million was non-cash. Included in the reported net loss in the third quarter of 2020 was a foreign currency gain on intercompany loan of $0.2 million, compared to a foreign currency loss on intercompany loan of $0.5 million in the third quarter of 2019. * Reported adjusted net loss of $8.0 million, compared to an adjusted net loss of $3.2 million in the third quarter of the prior year. * Reported EBITDA of negative $8.3 million and adjusted EBITDA of negative $4.6 million in the third quarter of 2020, compared to EBITDA of negative $1.0 million and adjusted EBITDA of $1.4 million in the third quarter of 2019. * Cash flow provided by operations was $19.8 million during the first nine months of 2020, compared to cash flow provided by operations of $4.6 million during the first nine months of 2019. * Maintained gross material margin of 26.3% compared to 28.1% in the second quarter of 2020 and 25.3% in the third quarter of the prior year, which excluded a non-cash inventory charge of $1.3 million. President and CEO, Marec Edgar commented, “From an operational perspective, we believe the third quarter was the bottom of the pandemic impacts in our volume and revenue performance. In fact, in both our industrial and aerospace end-markets we have begun to see recovery in billings and, more promisingly, in forward bookings for the coming months. That said, these improvements remain cautious and measured and we expect that returning to pre-pandemic levels will be a long, slow process. Since the pandemic began, we have responded to the rapid downturn by pulling together and implementing difficult but necessary productivity improvements and expense reductions, which have lowered our cash operating expenses by 22.7% compared to the third quarter of last year. We implemented additional aggressive steps late in the third quarter to further reduce our operating costs due to the more prolonged recovery trajectory we now anticipate. While these additional projected savings will not be fully realized until later in the fourth quarter, we believe that they have positioned Castle to be a stronger, more efficient company as our industry recovers from the impacts of the pandemic. Mr. Edgar continued, "To that end, we appreciate the significant expression of support from our shareholders and PNC evidenced by this new term loan and the extension and expansion of our existing revolving credit facility. Access to this additional capital will enable us to more quickly rebound from the pandemic by providing us the opportunity to make additional investments in inventory, our facilities, and our people, all of which will ultimately enhance our ability to serve our customers.”Executive Vice President of Finance and Administration Pat Anderson commented, “We are pleased to have generated cash flow from operations of $3.9 million during the quarter through disciplined expense and working capital management despite the continued disruption to the market and the substantial challenges that continue to impact our order and inventory lead times. We reacted timely and decisively to adjust our working capital and operating expenses to align our business with the unfavorable economic conditions caused by the COVID-19 pandemic, and have implemented additional steps to further rationalize our cost structure, resulting in the recognition of $0.7 million in severance costs during the quarter. Our aggressive reaction to the market downturn has resulted in our adjusted EBITDA being approximately break-even year-to-date, excluding foreign exchange impacts.”Mr. Anderson added, “Throughout this year we have made strategic decisions to reduce operating expenses. We expect these cost reductions, which we estimate to be at least $15 million on an annualized basis, to generate increased profitability leverage as markets recover. Additionally, we have continued to use our operating cash generation to reduce our working capital debt, both in the third quarter and after, which remains one of our primary goals following the significant long-term debt reduction we achieved through our exchange offer earlier this year. We believe coupling this enhanced profitability leverage and improved balance sheet will position us well to take advantage of the eventual recovery in our end markets.”Mr. Edgar concluded, “Though there are some signs of stabilization in our end markets, we expect revenue and volume to remain suppressed compared to historical levels in the near to medium-term as the ultimate duration and severity of the dislocation caused by COVID-19, and the timing and scope of any economic recovery thereafter, remains uncertain. Although the outlook remains challenging and volatile, we believe we are positioned to maintain positive operational performance by executing our business strategy focused on highly accretive sales, particularly those including our expanding value-added service offerings, and maintaining liquidity through expense control and enhanced execution in the management of our working capital. We remain confident that this strategy will allow us to not only survive the challenge presented by this pandemic, but thrive once we emerge from it.”About A. M. Castle & Co.Founded in 1890, A. M. Castle & Co. is a global distributor of specialty metal and supply chain services, principally serving the producer durable equipment, commercial aircraft, heavy equipment, industrial goods, and construction equipment 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. It specializes in the distribution of alloy and stainless steels; nickel alloys; aluminum and carbon. Together, Castle and its affiliated companies operate out of 19 metals service centers located throughout North America, Europe and Asia. Its common stock is traded on the OTCQX® Best Market under the ticker symbol "CTAM".Non-GAAP Financial MeasuresThis release and the financial information 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. Investors should recognize that these non-GAAP financial measures might not be comparative to similarly titled measures of other companies. 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 analysis 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 loss before provision for income taxes plus depreciation and amortization, and interest expense, is widely used by the investment community for evaluation purposes and provides investors, analysts and other interested parties with additional information in analyzing the Company’s operating results. EBITDA, adjusted non-GAAP net loss and adjusted EBITDA 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 loss and adjusted EBITDA to evaluate the performance of the business.Cautionary Statement on Risks Associated with Forward Looking StatementsInformation 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 reflect our expectations, estimates or projections concerning our possible or assumed future results of operations, including, but not limited to, descriptions of our business strategy, and the benefits we expect to achieve from our working capital management initiative. These statements often include words such as “believe,” “expect,” “anticipate,” “intend,” “predict,” “plan,” “should,” 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. These factors include the impact of volatility of metals prices, the cyclical and seasonal aspects of our business, our ability to effectively manage inventory levels, the impact of our substantial level of indebtedness, the impact of the novel Coronavirus (COVID-19) pandemic on our financial results and business, as well as those risk factors identified in our Annual Report on Form 10-K for the fiscal year ended December 31, 2019, our Annual Report on Form 10-K/A for the fiscal year ended December 31, 2019, Part II Item 1A of our quarterly report on Form 10-Q for the quarter ended March 31, 2020, Part II Item 1A of quarterly report on Form 10-Q for the quarter ended June 30, 2020, and Part II Item 1A of quarterly report on Form 10-Q for the quarter ended September 30, 2020, which will be subsequently filed with the Securities and Exchange Commission. 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 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, to reflect the occurrence of unanticipated events or for any other reason.CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS  Three Months Ended Nine Months Ended (Dollars in thousands, except per share data)September 30, September 30, Unaudited2020 2019 2020 2019 Net sales$79,535  $136,113  $290,857  $433,570  Costs and expenses:        Cost of materials (exclusive of depreciation)58,610  103,019  211,806  323,918  Warehouse, processing and delivery expense13,394  18,759  45,584  59,577  Sales, general and administrative expense13,515  16,048  41,815  49,027  Depreciation expense1,921  2,055  6,035  6,306  Impairment of goodwill2,676  —  2,676  —  Total costs and expenses90,116  139,881  307,916  438,828  Operating loss(10,581) (3,768) (17,059) (5,258) Interest expense, net5,077  10,204  20,146  29,503  Unrealized gain on embedded debt conversion option—  —  (2,010) —  Other (income) expense, net(342) (697) (2,194) (4,779) Loss before income taxes(15,316) (13,275) (33,001) (29,982) Income tax benefit(572) (1,079) (3,163) (1,479) Net loss$(14,744) $(12,196) $(29,838) $(28,503) Reconciliation of Reported Net Loss to EBITDA and Adjusted EBITDA:  Three Months Ended Nine Months Ended (Dollars in thousands)September 30, September 30, Unaudited2020 2019 2020 2019 Net loss, as reported$(14,744) $(12,196) $(29,838) $(28,503) Depreciation expense1,921  2,055  6,035  6,306  Interest expense, net5,077  10,204  20,146  29,503  Income tax benefit(572) (1,079) (3,163) (1,479) EBITDA(8,318) (1,016) (6,820) 5,827  Non-GAAP adjustments (a)3,690  2,367  4,923  2,626  Adjusted EBITDA$(4,628) $1,351   $(1,897) $8,453            (a) Refer to "Reconciliation of Reported Net Loss to Adjusted Non-GAAP Net Loss" table for additional details on these amounts. Reconciliation of Reported Net Loss to Adjusted Non-GAAP Net Loss:         Three Months Ended Nine Months Ended (Dollars in thousands)September 30, September 30, Unaudited2020 2019 2020 2019 Net loss, as reported$(14,744) $(12,196) $(29,838) $(28,503) Non-GAAP adjustments:        Noncash compensation expense199  524  778  1,715  Foreign exchange (gain) loss on intercompany loan(215) 506  692  (426) Noncash impairment of goodwill(a)2,676  —  2,676  —  Noncash write-off on inventory(b)—  1,277  —  1,277  Noncash loss on disposal of equipment(b)—  60  —  60  Unrealized gain on embedded debt conversion option—  —  (2,010) —  Common stock registration fees294  —  294  —  Employee severance charges736  —  1,117  —  Debt restructuring expenses—  —  1,376  —  Non-GAAP adjustments to arrive at Adjusted EBITDA3,690  2,367  4,923  2,626  Non-cash interest expense(c)3,054  7,139  13,484  20,321  Total non-GAAP adjustments6,744  9,506  18,407  22,947  Tax effect of adjustments—  (468) —  (468) Adjusted non-GAAP net loss$(8,000) $(3,158) $(11,431) $(6,024)          (a) Due to the ongoing unfavorable impacts of the COVID-19 pandemic, which represented a triggering event in the third quarter of 2020, the Company performed an assessment of its goodwill as of September 30, 2020. As a result of the goodwill impairment assessment, the Company recorded a non-cash impairment charge of $2.7 million during the third quarter of fiscal 2020. (b) Amounts relates to the nonrecurring noncash disposal of equipment and nonrecurring noncash write-down of inventory in conjunction with the Company's decision to exit a portion of its carbon flat-roll business in one of its Mexican operations. (c) Non-cash interest expense for the three months ended September 30, 2020 and September 30, 2019 includes interest paid in kind of $2,112 and $4,022, respectively, and amortization of debt discount of $942 and $2,829, respectively. Non-cash interest expense for the nine months ended September 30, 2020 and September 30, 2019 includes interest paid in kind of $8,277 and $11,810, respectively, and amortization of debt discount of $5,207 and $8,511, respectively. CONDENSED CONSOLIDATED BALANCE SHEETS  (Dollars in thousands, except par value data)As of UnauditedSeptember 30, 2020 December 31, 2019 ASSETS    Current assets:    Cash and cash equivalents$24,230  $6,433  Accounts receivable46,768  74,697  Inventories140,085  144,411  Prepaid expenses and other current assets9,717  9,668  Income tax receivable2,486  1,995  Total current assets223,286  237,204  Goodwill and intangible assets5,500  8,176  Prepaid pension cost7,504  5,758  Deferred income taxes1,497  1,534  Operating right-of-use assets29,943  29,423  Other noncurrent assets550  792  Property, plant and equipment:    Land5,578  5,579  Buildings20,928  20,950  Machinery and equipment41,562  41,054  Property, plant and equipment, at cost68,068  67,583  Accumulated depreciation(24,115) (20,144) Property, plant and equipment, net43,953  47,439  Total assets$312,233  $330,326  LIABILITIES AND STOCKHOLDERS’ DEFICIT    Current liabilities:    Accounts payable$40,589  $41,745  Accrued and other current liabilities10,785  11,188  Operating lease liabilities6,508  6,537  Income tax payable542  573  Short-term borrowings1,980  2,888  Current portion of finance leases663  596  Current portion of long-term debt2,000  —  Total current liabilities63,067  63,527  Long-term debt, less current portion213,253  263,523  Deferred income taxes1,543  3,775  Finance leases, less current portion7,893  8,208  Other noncurrent liabilities3,621  2,894  Pension and postretirement benefit obligations6,554  6,709  Noncurrent operating lease liabilities23,563  22,760  Commitments and contingencies    Stockholders’ equity (deficit):    Common stock, $0.01 par value—400,000 Class A shares authorized with 74,079 shares issued and — shares outstanding at September 30, 2020, and 3,818 shares issued and 3,650 shares outstanding at December 31, 2019741  38  Additional paid-in capital123,958  61,461  Accumulated deficit(118,579) (88,741) Accumulated other comprehensive loss(12,927) (13,374) Treasury stock, at cost — 168 shares at September 30, 2020 and 168 shares at December 31, 2019(454) (454) Total stockholders’ equity (deficit)(7,261) (41,070) Total liabilities and stockholders’ deficit$312,233  $330,326  CONSOLIDATED STATEMENTS OF CASH FLOWS  Nine Months Ended (Dollars in thousands)September 30, Unaudited2020 2019 Operating activities:    Net loss$(29,838) $(28,503) Adjustments to reconcile net loss to net cash provided by (used in) operating activities:    Depreciation6,035  6,306  Amortization of deferred financing costs and debt discount5,207  8,511  Loss on sale of property, plant & equipment101  210  Unrealized foreign currency loss (gain)682  (223) Unrealized gain on embedded debt conversion option(2,010) —  Noncash interest paid in kind8,277  11,810  Noncash rent expense290  204  Noncash compensation expense778  1,715  Noncash impairment of goodwill2,676  —  Deferred income taxes(2,319) (2,016) Changes in assets and liabilities:    Accounts receivable27,926  (8,356) Inventories4,679  10,029  Prepaid expenses and other current assets(39) 5,873  Other noncurrent assets911  (134) Prepaid pension costs(1,671) (566) Accounts payable(1,460) 5,093  Income tax payable and receivable(512) (1,805) Accrued and other current liabilities(448) (3,451) Pension and postretirement benefit obligations and other noncurrent liabilities572  (111) Net cash provided by operating activities19,837  4,586  Investing activities:    Capital expenditures(2,426) (3,530) Proceeds from sale of property, plant and equipment78  442  Net cash used in investing activities(2,348) (3,088) Financing activities:    Proceeds from long-term debt including credit facilities19,673  3,500  Repayments of long-term debt including credit facilities(15,655) (4,488) Repayments of (proceeds from) short-term borrowings, net(931) (1,238) Principal paid on finance leases(243) (454) Payments of debt restructuring costs(2,752) —  Net cash provided by (used in) financing activities92  (2,680) Effect of exchange rate changes on cash and cash equivalents216  13  Net change in cash and cash equivalents17,797  (1,169) Cash and cash equivalents—beginning of year6,433  8,668  Cash and cash equivalents—end of period$24,230  $7,499  LONG-TERM DEBT    (Dollars in thousands)As of  September 30, 2020 December 31, 2019      Floating rate Revolving A Credit Facility due February 28, 2022$89,246  $102,000  12.00% Revolving B Credit Facility due February 28, 2022(a)28,216  25,788  3.00% / 5.00% Convertible Senior Secured PIK Toggle Notes due August 31, 2024(b)97,568  —  5.00% / 7.00% Convertible Senior Secured PIK Toggle Notes due August 31, 2022(c)3,890  193,660  1.00% Paycheck Protection Program Term Note due April 28, 202210,000  —  France Term Loan7,020  —  Total principal balance of long-term debt235,940  321,448  Less: unvested restricted 3.00% / 5.00% Convertible Senior Secured PIK Toggle Notes due August 31, 2024(d)(109) —  Less: unvested restricted 5.00% / 7.00% Convertible Senior Secured PIK Toggle Notes due August 31, 2022(d)—  (323) Less: unamortized discount(20,389) (57,313) Less: unamortized debt issuance costs(189) (289) Total long-term debt215,253  263,523  Less: current portion of long-term debt2,000  —  Total long-term portion$213,253  $263,523       (a) Included in balance is interest paid in kind of $6,716 as of September 30, 2020 and $4,288 as of December 31, 2019. (b) Included in balance is interest paid in kind of $2,434 as of September 30, 2020.   (c) Included in balance is interest paid in kind of $198 as of September 30, 2020 and $28,991 as of December 31, 2019. (d) Represents the unvested portion of restricted 3.00% / 5.00% Convertible Senior Secured PIK Toggle Notes due August 31, 2024 issued to certain members of management and the unvested portion of restricted 5.00% / 7.00% Convertible Senior Secured PIK Toggle Notes due August 31, 2022 issued to certain members of management. For Further Information:Ed Quinn +1 (847) 455-7111 Email: Inquiries@amcastle.com

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