UNITEDSTATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
8-K
CURRENT
REPORT
Pursuant
to Section 13 OR 15(d) of The Securities Exchange Act of
1934
|
Date
of Report (Date of earliest event reported)
|
October
26, 2007
|
|
A.
M. Castle & Co.
|
|
(Exact
name of registrant as specified in its
charter)
|
|
Maryland
|
1-5415
|
36-0879160
|
|
(State
or other jurisdiction
of
incorporation)
|
(Commission
File
Number)
|
(IRS
Employer
Identification
No.
|
|
3400
N. Wolf Road, Franklin Park, Illinois
|
60131
|
|
(Address
of principal executive offices)
|
(Zip
Code)
|
|
Registrant's
telephone number including area code
|
847/455-7111
|
|
(Former
name or former address if changed since last
report.)
|
Check
the
appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following
provisions (see General Instruction A.2. below):
[ ]
Written communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
[ ]
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
[ ]
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange
Act
(17 CFR 240.14d-2(b))
[ ]
Pre-commencement communications pursuant to Rule 13 e-4(c) under the Exchange
Act (17 CFR 240.13 e-4(c))
Item
2.02 Results of Operations and Financial Conditions.
On
October 26, 2007, A. M. Castle & Co. issued a news release reporting its
2007 third quarter financial results. A copy of the news release is
attached hereto as Exhibit 99.1 to this report and is incorporated herein by
reference.
Item
9.01 Financial Statements and Exhibits.
(c)
Exhibits.
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|
|
|
|||
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Exhibit
Number
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|
Description
|
|||
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99.1
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A.
M. Castle & Co. Press Release Dated October 26, 2007
|
|||
SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant
has
duly caused this report to be signed on its behalf by the undersigned hereunto
duly authorized.
|
A.
M. Castle & Co.
|
|
|
/s/
Sherry L. Holland
|
|
|
Sherry
L. Holland
|
|
|
Vice
President – General Counsel and Secretary
|
|
|
|
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Date
|
October
26, 2007
|
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
|
Katie
Pyra
|
|
(847)
349-2576
|
(312)
553-6717
|
|
Email:
lboik@amcastle.com
|
Email:kpyra@ashtonpartners.com
|
Traded:
NYSE (CAS)
Member:
S&P SmallCap 600
Index
FOR
IMMEDIATE RELEASE
FRIDAY,
OCTOBER 26, 2007
A.
M. Castle & Co. Reports 2007 Third Quarter and Year-to-Date
Results
FRANKLIN
PARK, IL, OCTOBER 26th — A. M. Castle & Co.
(NYSE:CAS), a global distributor of specialty
metal and plastic products, value-added services and supply chain solutions,
today reported its financial results for the third quarter and nine-months
ended
September 30, 2007.
For
the
third quarter, consolidated net sales were $350.3 million, an increase of $49.5
million, or 16.5%, from the third quarter of 2006. Net income
applicable to common stock for the quarter was $12.9 million, or $0.57 per
diluted share, as compared to $15.3 million or $0.82 per diluted share in the
prior year.
Consolidated
net sales for the nine-months ended September 30, 2007 were $1,098.3 million,
an
increase of $242.7 million, or 28.4% from 2006. Net income applicable
to common stock was $44.5 million, or $2.14 per diluted share, as compared
to
$45.2 million, or $2.45 per diluted share, in the prior year.
“We
continue to experience softer demand across our business in general,” stated
Mike Goldberg, President and CEO of A.M. Castle. “This trend began
during the second half of 2006 and it has continued through 2007 to
date. The effect of this softer manufacturing demand cycle on our
results has been somewhat mitigated through our acquisition of Transtar Metals
in September of 2006 and higher pricing levels. Demand from our
aerospace customers has also slowed, which we attribute to a build-up of
inventory throughout the whole aerospace supply chain. Even in light
of the current slowdown, we believe that our strategy to become the foremost
provider of specialty metals and value-added services to targeted industries,
including aerospace and energy has us well positioned for growth in the
longer-term through the economic cycles,” Goldberg continued.
Metal
segment sales were $320.8 million
in the third quarter, an increase of $48.7 million, or 17.9%, versus the third
quarter of 2006. The acquisition of Transtar Metals, contributed
17.1% of the 17.9% increase in sales. “Commodity metal prices declined during
the quarter, but were still 14.4% higher than the third quarter of last year,
“Goldberg added.
Metal
segment sales for the first
nine-months of the year were $1,010.8 million, an increase of $243.3 million,
or
31.7%, from the same period in 2006. The Transtar acquisition
accounted for 25.0% of the increase.
Plastic
segment sales were $29.5
million in the quarter, a $0.8 million increase versus the third quarter of
2006.
Plastic
segment sales for the
nine-month period of 2007 were $87.5 million, a decrease of $0.6 million
compared to last year.
The
Company’s debt-to-capital ratio was reduced to 27% as of September 30, 2007 from
51% at the beginning of the year and 31% at June 30, 2007. “We’ve
reduced our inventory from the peak levels we saw at the end of the second
quarter and this reduction, coupled with our strong earnings performance, have
allowed us to continue to pay down debt in the third quarter,” commented Larry
Boik, Vice President and CFO of A.M. Castle.
“Our
fourth quarter is typically our
slowest due to fewer effective shipping days. In addition, softer
market conditions will likely continue through at least the end of the
year. Our focus will continue to be on managing inventory and margins
for the balance of 2007 and remaining steadfast on the execution of our
long-term strategy,” Goldberg concluded.
The
Company announced a cash dividend
of $0.06 per share payable November 22, 2007 to shareholders of record at close
of business on November 8, 2007.
The
Company also announced on October
2, 2007 the sale of Metal Mart LLC doing business as Metal Express, a wholly
owned subsidiary, to Metal Supermarkets (Chicago) Ltd., a unit of Metal
Supermarkets Corp. for approximately $6.7 million. The net proceeds
from the sale were used to repay a portion of the Company’s outstanding
debt.
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,
2007. 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 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 303-590-3000 (international) or
800-405-2236 and citing code 11099524.
About
A. M. Castle & Co.
Founded
in 1890, A. M. Castle & Co. is a global distributor of specialty metal and
plastic products, value-added services and supply chain solutions, 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 core
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 50 locations
throughout North America and Europe. Its common stock is traded on
the New York 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, 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 per U.S. Securities and Exchange Commission requirements.
|
CONSOLIDATED
STATEMENTS OF INCOME
|
For
the Three
|
For
the Nine
|
||||||||||||||
|
(Dollars
in thousands, except per share data)
|
Months
Ended
|
Months
Ended
|
||||||||||||||
|
Unaudited
|
Sept
30,
|
Sept
30,
|
||||||||||||||
|
2007
|
2006
|
2007
|
2006
|
|||||||||||||
|
Net
sales
|
$ |
350,319
|
$ |
300,809
|
$ |
1,098,278
|
$ |
855,610
|
||||||||
|
Costs
and expenses:
|
||||||||||||||||
|
Cost
of materials (exclusive of depreciation)
|
253,121
|
214,792
|
792,834
|
606,136
|
||||||||||||
|
Warehouse,
processing and delivery expense
|
35,136
|
30,117
|
104,999
|
88,720
|
||||||||||||
|
Sales,
general, and administrative expense
|
34,852
|
26,847
|
105,193
|
76,805
|
||||||||||||
|
Depreciation
and amortization expense
|
4,903
|
3,225
|
14,776
|
8,323
|
||||||||||||
|
Operating
income
|
22,307
|
25,828
|
80,476
|
75,626
|
||||||||||||
|
Interest
expense, net
|
(2,746 | ) | (1,903 | ) | (11,170 | ) | (3,949 | ) | ||||||||
|
Income
before income taxes and equity earnings of joint venture
|
19,561
|
23,925
|
69,306
|
71,677
|
||||||||||||
|
Income
taxes
|
(8,073 | ) | (9,470 | ) | (27,944 | ) | (29,110 | ) | ||||||||
|
Net
income before equity in earnings of joint venture
|
11,488
|
14,455
|
41,362
|
42,567
|
||||||||||||
|
Equity
in earnings of joint venture
|
1,422
|
1,037
|
3,745
|
3,332
|
||||||||||||
|
Net
income
|
12,910
|
15,492
|
45,107
|
45,899
|
||||||||||||
|
Preferred
stock dividends
|
-
|
(235 | ) | (593 | ) | (720 | ) | |||||||||
|
Net
income applicable to common stock
|
$ |
12,910
|
$ |
15,257
|
$ |
44,514
|
$ |
45,179
|
||||||||
|
Basic
earnings per share
|
$ |
0.58
|
$ |
0.82
|
$ |
2.22
|
$ |
2.46
|
||||||||
|
Diluted
earnings per share
|
$ |
0.57
|
$ |
0.82
|
$ |
2.14
|
$ |
2.45
|
||||||||
|
EBITDA
*
|
$ |
28,632
|
$ |
30,090
|
$ |
98,997
|
$ |
87,281
|
||||||||
|
*Earnings
before interest, taxes, and depreciation and
amortization
|
||||||||||||||||
|
Reconciliation
of EBITDA to net income:
|
For
the Three
|
For
the Nine
|
||||||||||||||
|
Months
Ended
|
Months
Ended
|
|||||||||||||||
|
Sept
30,
|
Sept
30,
|
|||||||||||||||
|
2007
|
2006
|
2007
|
2006
|
|||||||||||||
|
Net
income
|
$ |
12,910
|
$ |
15,492
|
$ |
45,107
|
$ |
45,899
|
||||||||
|
Depreciation
and amortization expense
|
4,903
|
3,225
|
14,776
|
8,323
|
||||||||||||
|
Interest
expense, net
|
2,746
|
1,903
|
11,170
|
3,949
|
||||||||||||
|
Income
taxes
|
8,073
|
9,470
|
27,944
|
29,110
|
||||||||||||
|
EBITDA
|
$ |
28,632
|
$ |
30,090
|
$ |
98,997
|
$ |
87,281
|
||||||||
|
CONDENSED
CONSOLIDATED BALANCE SHEETS
|
||||||||
|
(Dollars
in thousands, except share and per share data)
|
As
of
|
|||||||
|
Unaudited
|
Sept
30,
|
Dec
31,
|
||||||
|
2007
|
2006
|
|||||||
|
ASSETS
|
||||||||
|
Current
assets
|
||||||||
|
Cash and cash equivalents
|
$ |
19,078
|
$ |
9,526
|
||||
|
Accounts receivable, less allowances of $3,324 at September 30,
2007
|
||||||||
|
and $3,112 at December 31, 2006
|
184,101
|
160,999
|
||||||
|
Inventories (principally on last-in, first-out basis) (latest cost
higher
by $146,787
|
||||||||
|
at September 30, 2007 and $128,404 at December 31,
2006)
|
228,331
|
202,394
|
||||||
|
Other current assets
|
14,760
|
18,743
|
||||||
|
Total
current assets
|
446,270
|
391,662
|
||||||
|
Investment
in joint venture
|
16,278
|
13,577
|
||||||
|
Goodwill
|
100,904
|
101,783
|
||||||
|
Intangible
assets
|
61,254
|
66,169
|
||||||
|
Prepaid
pension cost
|
5,607
|
5,681
|
||||||
|
Other
assets
|
6,274
|
5,850
|
||||||
|
Property,
plant and equipment, at cost
|
||||||||
|
Land
|
5,195
|
5,221
|
||||||
|
Building
|
48,660
|
49,017
|
||||||
|
Machinery and equipment (includes construction in
progress)
|
153,037
|
141,090
|
||||||
|
206,892
|
195,328
|
|||||||
|
Less - accumulated depreciation
|
(134,874 | ) | (124,930 | ) | ||||
|
72,018
|
70,398
|
|||||||
|
Total
assets
|
$ |
708,605
|
$ |
655,120
|
||||
|
LIABILITIES
AND STOCKHOLDERS' EQUITY
|
||||||||
|
Current
liabilities
|
||||||||
|
Accounts payable
|
$ |
111,393
|
$ |
117,561
|
||||
|
Accrued liabilities
|
35,631
|
30,152
|
||||||
|
Income taxes payable
|
2,436
|
931
|
||||||
|
Deferred income taxes - current
|
13,576
|
16,339
|
||||||
|
Short-term debt
|
60,470
|
123,261
|
||||||
|
Current portion of long-term debt
|
6,823
|
12,834
|
||||||
|
Total current liabilities
|
230,329
|
301,078
|
||||||
|
Long-term
debt, less current portion
|
67,164
|
90,051
|
||||||
|
Deferred
income taxes
|
28,934
|
31,782
|
||||||
|
Other
non-current liabilities
|
17,772
|
16,302
|
||||||
|
Commitments
and contingencies
|
||||||||
|
Stockholders'
equity
|
||||||||
|
Preferred stock, $0.01 par value - 10,000,000
shares
|
||||||||
|
authorized; no shares issued at September 30, 2007 and 12,000
shares
|
||||||||
|
issued and outstanding at December 31,
2006
|
-
|
11,239
|
||||||
|
Common stock, $0.01 par value - 30,000,000 shares authorized;
22,327,946
|
||||||||
|
shares issued and 22,094,869 shares outstanding at September 30,
2007;
and
|
||||||||
|
17,447,205 shares issued and 17,085,091
outstanding at December 31, 2006
|
220
|
170
|
||||||
|
Additional paid-in capital
|
178,960
|
69,775
|
||||||
|
Retained earnings
|
201,761
|
160,625
|
||||||
|
Accumulated other comprehensive loss
|
(11,962 | ) | (18,504 | ) | ||||
|
Deferred unearned compensation
|
(1,086 | ) | (1,392 | ) | ||||
|
Treasury stock, at cost - 233,077 shares at September 30,
2007
|
||||||||
|
and 362,114 shares at December 31,
2006
|
(3,487 | ) | (6,006 | ) | ||||
|
Total stockholders' equity
|
364,406
|
215,907
|
||||||
|
Total
liabilities and stockholders' equity
|
$ |
708,605
|
$ |
655,120
|
||||
|
CONSOLIDATED
STATEMENTS OF CASH FLOWS
|
||||||||
|
(Dollars
in thousands)
|
||||||||
|
Unaudited
|
||||||||
|
YTD
Sep
|
YTD
Sep
|
|||||||
|
2007
|
2006
|
|||||||
|
Cash
flows from operating activities:
|
||||||||
|
Net
income
|
$ |
45,107
|
$ |
45,899
|
||||
|
Depreciation
and amortization
|
14,776
|
8,323
|
||||||
|
Adjustments
for other non-cash items
|
(3,174 | ) |
3,771
|
|||||
|
Cash
flows from earnings
|
56,709
|
57,993
|
||||||
|
Change
in working capital and other:
|
||||||||
|
Accounts
receivable
|
(20,830 | ) | (40,380 | ) | ||||
|
Inventories
|
(23,248 | ) | (36,020 | ) | ||||
|
Accounts
payable and accruals
|
1,378
|
24,272
|
||||||
|
Income
taxes payable
|
2,096
|
(9,946 | ) | |||||
|
Other
|
8,508
|
(835 | ) | |||||
|
Cash
flows from changes in working capital
|
(32,096 | ) | (62,909 | ) | ||||
|
Cash flows from operating activities
|
24,613
|
(4,916 | ) | |||||
|
Cash
flows from investing activities:
|
||||||||
|
Investments
and acquisitions, net of cash acquired
|
(280 | ) | (175,795 | ) | ||||
|
Capital
expenditures
|
(13,150 | ) | (10,170 | ) | ||||
|
Other
|
23
|
-
|
||||||
|
Cash
used in investing activities
|
(13,407 | ) | (185,965 | ) | ||||
|
Cash
flows from financing activities:
|
||||||||
|
Funding
from, payments of long/short term debt
|
(91,993 | ) |
158,837
|
|||||
|
Proceeds
from issuance of common stock and other
|
93,790
|
7,735
|
||||||
|
Common
and preferred stock dividends
|
(3,723 | ) | (3,759 | ) | ||||
|
Cash
provided by financing activities
|
(1,926 | ) |
162,813
|
|||||
|
Effect
of exchange rate changes on cash
|
272
|
432
|
||||||
|
Net
increase in cash
|
9,552
|
(27,636 | ) | |||||
|
Cash
- beginning of year
|
$ |
9,526
|
$ |
37,392
|
||||
|
Cash
- end of period
|
$ |
19,078
|
$ |
9,756
|
||||
|
Ending
Debt, Net of Cash Position
|
$ |
115,379
|
$ |
229,712
|
||||
|
Debt-to-Total
Capital
|
27.0 | % | 51.2 | % | ||||