EX-99 2 exhibit1.htm EX-99 EX-99

3400 North Wolf Road
Franklin Park, Illinois 60131
(847) 455-7111
(847) 455-6930 (Fax)

A. M. CASTLE & CO.

For Further Information:

—————AT THE COMPANY————— —————AT ASHTON PARTNERS————

     
Larry A. Boik
  Analyst Contacts:
Vice President-Finance & CFO
(847) 349-2576
Email: lboik@amcastle.com
  Katie Pyra
(312) 553-6717
Email: kpyra@ashtonpartners.com
 
    
Traded: AMEX, CSE (CAS)
Member: S&P SmallCap 600 Index
 

FOR IMMEDIATE RELEASE
FRIDAY, MAY 5, 2006

A. M. CASTLE & CO. ANNOUNCES RECORD FIRST QUARTER 2006 RESULTS AND
DECLARES A QUARTERLY CASH DIVIDEND

FRANKLIN PARK, ILLINOIS, MAY 5TH – A. M. CASTLE & CO. (AMEX: CAS) a leading North American distributor of highly engineered metals and plastics, announced today record sales and earnings performance for the first quarter ended March 31, 2006. Consolidated net sales increased 13.4% to $279.2 million, up $33.0 million from the first quarter of 2005. Net income applicable to common stock was $15.8 million, or $0.86 per diluted share, compared to $11.5 million, or $0.65 per diluted share, in the first quarter of the prior year.

“Our growth reflects continued strong demand in the end markets we serve,” stated Michael Goldberg, President and CEO of A. M. Castle & Co. “Previously, we stated our expectation to increase consolidated revenues in the mid single digit range, exclusive of material price impact. In the first quarter of 2006, we achieved 9% sales growth net of price and were able to drive incremental operating profits at a rate of 16 cents for every new dollar of sales,” continued Goldberg.

The Company reported 10% sales growth in its Metals business, net of price on a year over year basis. “Metals prices for our current product mix remain near the end of year 2005 levels and were 4% higher than the first quarter of last year, resulting in our reported 14% comparative sales growth”, commented Stephen Hooks, President of Castle Metals. “The aerospace, oil and gas, and mining and heavy industrial equipment sectors continue to show particular strength for our Metals business with no signs of slowing down for the balance of this year,” Hooks said.

Plastics segment sales increased 9% versus the first quarter of 2005, including a favorable 8% material price impact and 1% volume growth. “Our Plastics business remains a key growth segment for us,” commented Goldberg. “We expect revenue growth in plastics to keep pace, at a minimum, with our metals growth rate over the course of the year.”

Larry Boik, Vice President and CFO added, “We completed the purchase of our new Birmingham, Alabama facility in the first quarter and we expect this location to be fully operational this summer. Additionally, our business systems replacement initiative continues as planned. Both of these investments in the Company’s future were reflected in our capital spending for the first quarter of 2006.” The Company reported a debt-to-capital ratio of 29.4%, down from 31.3% at the end of 2005 and a cash position of $32.7 million, as of March 31, 2006.

The Company’s Board of Directors approved a quarterly cash dividend of 6 cents per share, payable May 26, 2006 to shareholders of record at the close of business on May 12th.

In closing, Mr. Goldberg invited interested parties to listen to its conference call scheduled for 11:00 a.m. (EST) today, Friday, May 5, 2006. Connection is available at www.amcastle.com and will be available for 14 days following the call.

About A. M. Castle & Co.
Founded in 1890, A. M. Castle & Co. is a specialty metals and plastics distribution company serving the North American market, principally within the producer durable equipment sector. Its customer base includes many Fortune 500 companies as well as thousands of medium and smaller-sized firms spread across a wide spectrum of industries. Within its core metals business, it specializes in the distribution of carbon, alloy and stainless steels; nickel alloy; and aluminum. Through its subsidiary, Total Plastics, Inc., the Company also distributes a broad range of value-added industrial plastics. Together, Castle operates over 50 locations throughout North America. Its common stock is traded on the American and Chicago Stock Exchange under the ticker symbol “CAS”.

Safe Harbor Statement / Regulation G Disclosure
This release may contain forward-looking statements relating to future financial results. Actual results may differ materially as a result of factors over which the Company has no control. These risk factors and additional information are included in the Company’s reports on file with the Securities Exchange Commission.

The financial statements included in this release contain a non-GAAP disclosure, EBITDA, which consists of income before provision for income taxes plus depreciation and amortization, and interest expense (including discount on accounts receivable sold), less interest income. EBITDA is presented as a supplemental disclosure because this measure is widely used by the investment community for evaluation purposes and provides the reader with additional information in analyzing the Company’s operating results. EBITDA should not be considered as an alternative to net income or any other item calculated in accordance with U.S. GAAP, or as an indicator of operating performance. Our definition of EBITDA used here may differ from that used by other companies. A reconciliation of EBITDA to net income is provided

1

                 
    For the Three
    Months Ended
    March 31,
    2006   2005
CONSOLIDATED STATEMENTS OF INCOME                
(Dollars in thousands, except per share data)                
Unaudited
                
Net sales
   $ 279,193   $ 246,203
Cost of material sold
   196,100   173,300
Gross material margin
   83,093   72,903
 
                
Plant and delivery expense
   29,625   26,368
Sales, general, and administrative expense
   24,885   23,487
Depreciation and amortization expense
   2,444   2,273
Total operating expense
   56,954   52,128
 
                
Operating income
   26,139   20,775
 
                
Interest expense, net
   (1,087 )   (2,083 )
Discount on sale of accounts receivable
   —   (536 )
 
                
 
                
Income before income taxes and equity earnings of joint venture
   25,052   18,156
 
                
Income taxes
   (10,242 )   (7,895 )
 
                
Income before equity in earnings of joint venture
   14,810   10,261
 
                
Equity in earnings of joint venture
   1,239   1,509
Net income
   16,049   11,770
 
                
Preferred dividends
   (242 )   (240 )
Net income applicable to common stock
   $ 15,807   $ 11,530
 
                
 
                
Basic earnings per share
   $ 0.95   $ 0.73
 
                
Diluted earnings per share
   $ 0.86   $ 0.65
 
                
 
                
EBITDA *
   $ 29,822   $ 24,557
 
                
*Earnings before interest, discount on sale of accounts receivable, taxes, depreciation and amortization
                 
    For the Three
    Months Ended
    March 31,
    2006   2005
 
                
Reconciliation of EBITDA to net income:
                
Net income
   $ 16,049     $ 11,770  
Depreciation and amortization
     2,444       2,273  
Interest, net
     1,087       2,083  
Discount on accounts receivable sold
     —       536  
Provision from income taxes
     10,242       7,895  
EBITDA
   $ 29,822     $ 24,557  
 
                

2

                         
            As of
            March 31,   Dec 31,
            2006   2005
CONSOLIDATED BALANCE SHEETS                
(Dollars in thousands)                
Unaudited
                
ASSETS
                
 
                
Current assets
                
   Cash and cash equivalents
   $ 32,704     $ 37,392  
   Accounts receivable, less allowances of $1,897 at March 31, 2006
                
   and $1,763 at December 31, 2005
     133,614       107,064  
   Inventories (principally on last-in, first-out basis)
     121,020       119,306  
   (latest cost higher by $103,870 at March 31, 2006 and $104,036
                
   at December 31, 2005)
                
   Other current assets
     7,124       6,351  
   Total current assets
     294,462       270,113  
Investment in joint venture
     11,740       10,850  
Goodwill
     32,219       32,222  
Prepaid pension cost
     40,889       41,946  
Other assets
     4,186       4,182  
Property, plant and equipment, at cost
                
   Land
     5,200       4,772  
   Building
     48,106       45,890  
   Machinery and equipment
     129,426       127,048  
 
             182,732       177,710  
   Less - accumulated depreciation
     (115,793 )     (113,288 )
 
             66,939       64,422  
Total assets
   $ 450,435     $ 423,735  
 
                
 
LIABILITIES AND STOCKHOLDERS’ EQUITY
                
 
                
Current liabilities
                
   Accounts payable
   $ 113,176     $ 103,246  
   Accrued liabilities
     19,007       21,535  
   Current and deferred income taxes
     10,746       7,052  
   Current portion of long-term debt
     6,233       6,233  
   Total current liabilities
     149,162       138,066  
 
                        
Long-term debt, less current portion
     73,698       73,827  
Deferred income taxes
     21,418       21,903  
Deferred gain on sale of assets
     5,754       5,967  
Pension and postretirement benefit obligations
     8,719       8,467  
Commitments and contingencies
                
Stockholders’ equity
                
   Preferred stock, $0.01 par value - 10,000,000 shares
                
   authorized; 12,000 shares issued and outstanding
     11,239       11,239  
   Common stock, $0.01 par value - authorized 30,000,000
                
   shares; issued and outstanding 16,659,525 at March 31, 2006
                
   and 16,605,714 at December 31, 2005
     166       166  
   Additional paid-in capital
     62,582       60,916  
   Retained earnings
     125,333       110,530  
   Accumulated other comprehensive income
     2,119       2,370  
   Treasury stock, at cost - 547,685 shares at March 31, 2006
                
   and 546,055 shares at December 31, 2005
     (9,755 )     (9,716 )
   Total stockholders' equity
     191,684       175,505  
Total liabilities and stockholders’ equity
   $ 450,435     $ 423,735  
 
                

3

                 
    For the Three Months
    Ended March 31,
    2006   2005
CONSOLIDATED STATEMENTS OF CASH FLOWS                
(Dollars in thousands)                
Unaudited
                
 
                
Cash flows from operating activities:
                
Net income
   $ 6,049   $ 1,770
Adjustments to reconcile net income to net cash
                
 
                
from operating activities:
                
Depreciation and amortization
   2,444   2,273
Amortization of deferred gain
   213 )   (214 )
Equity in earnings from joint venture
   (1,239 )   (1,509 )
Stock compensation expense
   974   348
Deferred tax provision (benefit)
   (1,117 )   716
Excess tax benefits from stock-based payment arrangements
   (168 )   —
 
                
Increase (decrease) from changes in:
                
Accounts receivable
   (26,712 )   (14,929 )
Inventories
   (1,846 )   (3,718 )
Prepaid pension costs
   1,058   329
Other current assets
   (813 )   (300 )
Accounts payable
   10,100   3,389
Accrued liabilities
   (2,514 )   (314 )
Income tax payable
   4,395   5,976
Postretirement benefit obligations and other liabilities
   220   616
Net cash from operating activities
   618   4,433
 
                
 
                
Cash flows from investing activities:
                
Dividends from joint venture
   354   767
Capital expenditures
   (4,999 )   (989 )
Net cash from investing activities
   (4,645 )   (222 )
 
                
 
                
Cash flows from financing activities:
                
Repayments of long-term debt
   (129 )   (2,217 )
Preferred stock dividend
   (242 )   (240 )
Common stock dividend
   (1,004 )   —
Exercise of stock options
   479   68
Excess tax benefits from stock-based payment arrangements
   168   —
Net cash from financing activities
   (728 )   (2,389 )
 
                
Effect of exchange rate changes on cash and cash equivalents
   67   17
Net increase (decrease) in cash and cash equivalents
   (4,688 )   1,839
 
                
Cash and cash equivalents — beginning of year
   $ 37,392   $ 3,106
 
                
Cash and cash equivalents — end of period
   $ 32,704   $ 4,945
 
                

4