UNITED
STATES
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)
|
May
1, 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 Condition
On
Tuesday, May 1, 2007 the Company disseminated a press release, attached
as
Exhibit A, announcing the Company’s operational results for the period ending
March 31, 2007.
As
part
of the press release there is a bridge of the non-GAAP financial measurement
of
EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization)
to
reported net income. It is shown below the disclosure of the GAAP figures
for
Operating income, Net income and Diluted earnings per share. This reconciliation
of EBITDA to Net income is for the Three Months ended March 31, 2007
and March
31, 2006.
The
Company believes, however, that EBITDA is an important term and concept
because
of its use by the professional investment community, including the
Company’s
primary lenders. The Company believes the use of this Term is necessary
to a
proper understanding of the changes in the Company’s earnings.
Item
5.02 Departure of Directors or Certain Officers; Election of Directors;
Appointment
of Certain Officers; Compensatory Arrangements of Certain
Officers
(b) On
Thursday, April 26, 2007, Mr. G. Thomas McKane and Mr. John W. Puth
retired from
the Board of Directors of A. M. Castle & Co.
Item
5.03 Amendments to Articles of Incorporation or Bylaws; Change in
Fiscal
Year
On
Thursday, April 26, 2007, the registrant amended its by-laws to decrease
the
size of its board to ten (10). A copy of the amendment is attached
as Exhibit
3.
Item
9.01. Financial Statements and Exhibits
99.1
Press Release May 1, 2007
Exhibits:
Exhibit
A
- Press Release
Exhibit
3
- Amendment to By-Laws
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/
Lawrence A. Boik
|
|
Vice
President and Chief Financial Officer
|
|
|
|
Date
|
May 1, 2007 |
A. M. CASTLE & CO. 3400
North Wolf Road
Franklin
Park, Illinois
60131
(847)
4
55-7111
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:
AMEX, CSE (CAS)
Member:
S&P SmallCap 600 Index
FOR
IMMEDIATE RELEASE
TUESDAY,
MAY 1, 2007
A.
M. Castle & Co. Reports Strong First Quarter Results;
Announces
Strategic Investment in Oracle ERP Platform
FRANKLIN
PARK, IL, May 1st - A. M. Castle & Co. (AMEX:
CAS), a global distributor of specialty metal
and
plastic products, value-added services and supply chain solutions,
today
reported record sales and continued strong financial results for the
first
quarter ended March 31, 2007.
For
the
first quarter, consolidated net sales were a record $375.4 million,
an increase
of $96.2 million or 34.4% from the first quarter of 2006. Net income
for the
quarter was $15.6 million, or $0.81 per diluted share, as compared
to $15.8
million or $0.86 per diluted share in the prior year. First quarter
2007 net
income included a $0.9 million after-tax charge ($0.04 per diluted
share) for
the write-off of the Company’s prior investment in information technology
systems. During the quarter, the Company signed an agreement to purchase
Oracle’s ERP system in support of its strategic growth initiative.
“As
we
embark on our bold new direction to become the foremost provider of
specialty
products, services and specialized supply-chain solutions for targeted
industries, we have carefully considered the infrastructure required
to
successfully execute the strategy,” commented Michael Goldberg, President and
CEO of A. M. Castle. “The existing systems in our metals business lack the
flexibility and functionality needed to support our customers growing
requirements on a global scale. The acquisition of Transtar also increased
our
need for a technology upgrade. Our selection of Oracle, which is at
the
forefront of global technology solutions, exemplifies our commitment
to the
strategy,”
Goldberg added. The Company expects to invest $10 to $12 million for
the system
implementation across its metals segment, which is expected to be completed
in
late 2008.
Metal
segment sales were $346.6 million
in the first quarter, an increase of $95.9 million, or 38.3%, versus
the first
quarter of 2006. Of the 38.3% increase, the acquisition of Transtar
Metals
(which was completed on September 5, 2006), contributed 29.0% of the
increase in
sales and 14.4% was attributable to increased material pricing, offset
by a 5.1%
decline in volume for the balance of the business. “Excluding Transtar, volumes
were off from the corresponding quarter last year, but we should remember
from
an overall tons sold perspective, the first half of 2006 represented
the
strongest period of the cycle so far,” stated Goldberg. “In the first quarter of
this year, our average daily tons sold, excluding Transtar, were up
slightly
versus each of the prior three quarters. In addition, our mix continues
to
change with an increasing proportion of non-ferrous metal product sales
driven
by strong specialty metal markets. We continued to experience strong
demand for
specialty metal grade products in the aerospace and oil and gas markets.
The
balance of the business remains healthy, but is just softer than the
exceptional
first quarter we experienced last year,” indicated Goldberg. The Company
reported record high pricing for nickel during the first quarter of
2007, and
experienced price increases in nearly all other metal products compared
to the
first quarter of 2006.
Plastic
segment sales
were $28.8 million in the quarter, an increase of $0.2 million versus
the first
quarter of last year. Pricing and volume were essentially flat versus
the same
period last year.
The
Company reported stronger operating cash flows in the first quarter
of 2007 as
compared to the prior year’s quarter. “From a historical perspective, our first
quarter has the highest cash funding requirements of the year,” stated Larry
Boik, Vice President and CFO of A.M. Castle. “Given the historical cash trends,
we were pleased to bring our debt-to-capital ratio down to 49.4%, which
is a
improvement versus 51.2% at year-end 2006.”
“Overall
business conditions remain
good,” stated Goldberg. “In particular, the aerospace and oil and gas markets
remain very strong and the Transtar acquisition has proven to be a
sound
investment and a solid strategic long-term fit for the Company. Pricing
has been
firm with surcharges for nickel and scrap being at all time highs.
Also
on April 26, 2007, the Company
announced a cash dividend of $0.06 per share to be paid on May 28,
2007 to
shareholders of record at close of business on May 14, 2007.
Webcast
Information
Management
will hold a conference call at 11:00 a.m. ET today to review the Company's
results for the three month period ended March 31, 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 11088867.
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 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 65 locations throughout North America and Europe. 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, 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
|
||||||
|
(Dollars
in Thousands, except per share data)
|
Months
Ended
|
||||||
|
Unaudited
|
2007
|
2006
|
|||||
|
Net
sales
|
$375,351
|
$279,193
|
|||||
|
Costs
and expenses:
|
|||||||
|
Cost
of materials (exclusive of depreciation)
|
269,450
|
196,100
|
|||||
|
Warehouse,
processing and delivery expense
|
35,570
|
29,625
|
|||||
|
Sales,
general, and administrative expense
|
36,394
|
24,885
|
|||||
|
Depreciation
and amortization expense
|
4,896
|
2,444
|
|||||
|
Operating
income
|
29,041
|
26,139
|
|||||
|
Interest
expense, net
|
(4,261
|
)
|
(1,087
|
)
|
|||
|
Income
before income taxes and equity earnings of joint venture
|
24,780
|
25,052
|
|||||
|
Income
taxes
|
(9,877
|
)
|
(10,242
|
)
|
|||
|
Net
income before equity in earnings of joint venture
|
14,903
|
14,810
|
|||||
|
Equity
in earnings of joint venture
|
932
|
1,239
|
|||||
|
Net
income
|
15,835
|
16,049
|
|||||
|
Preferred
stock dividends
|
(243
|
)
|
(242
|
)
|
|||
|
Net
income applicable to common stock
|
$
|
15,592
|
$
|
15,807
|
|||
|
Diluted
earnings per share
|
$
|
0.81
|
$
|
0.86
|
|||
|
EBITDA
*
|
$
|
34,869
|
$
|
29,822
|
|||
|
*Earnings
before interest, taxes, and depreciation and
amortization
|
|
||||||
|
Reconciliation
of EBITDA to net income:
|
For
the Three
|
||||||
|
|
Months
Ended
|
||||||
|
March
31
|
|||||||
|
2007
|
2006
|
||||||
|
Net
income
|
$
|
15,835
|
$
|
16,049
|
|||
|
Depreciation
and amortization expense
|
4,896
|
2,444
|
|||||
|
Interest
expense, net
|
4,261
|
1,087
|
|||||
|
Income
taxes
|
9,877
|
10,242
|
|||||
|
EBITDA
|
$
|
34,869
|
$
|
29,822
|
|||
|
CONSOLIDATED
BALANCE SHEETS
|
As
of
|
||||||
|
(Dollars
in Thousands)
|
March
31,
|
Dec
31,
|
|||||
|
Unaudited
|
2007
|
2006
|
|||||
|
ASSETS
|
|||||||
|
Current
assets
|
|||||||
|
Cash
and cash equivalents
|
$
|
11,453
|
$
|
9,526
|
|||
|
Accounts
receivable, less allowances of $3,268 at March 31, 2007 and
$3,112
at
December 31,
2006
|
189,934
|
160,999
|
|||||
|
Inventories
(principally on last-in, first-out basis) (latest cost higher
by $142,984
at March 31, 2007 and $128,404 at
December 31, 2006)
|
237,525
|
202,394
|
|||||
|
Other
current assets
|
10,360
|
18,743
|
|||||
|
Total
current assets
|
449,272
|
391,662
|
|||||
|
Investment
in joint venture
|
14,152
|
13,577
|
|||||
|
Goodwill
|
101,790
|
101,783
|
|||||
|
Intangible
assets
|
64,490
|
66,169
|
|||||
|
Prepaid
pension cost
|
5,657
|
5,681
|
|||||
|
Other
assets
|
5,955
|
5,850
|
|||||
|
Property,
plant and equipment, at cost
|
|||||||
|
Land
|
5,222
|
5,221
|
|||||
|
Building
|
48,927
|
49,017
|
|||||
|
Machinery
and equipment
|
144,348
|
141,090
|
|||||
|
198,497
|
195,328
|
||||||
|
Less
- accumulated depreciation
|
(127,494
|
)
|
(124,930
|
)
|
|||
|
71,003
|
70,398
|
||||||
|
Total
assets
|
$
|
712,319
|
$
|
655,120
|
|||
|
LIABILITIES
AND STOCKHOLDERS' EQUITY
|
|||||||
|
Current
liabilities
|
|||||||
|
Accounts
payable
|
$
|
152,822
|
$
|
117,561
|
|||
|
Accrued
liabilities
|
30,825
|
30,152
|
|||||
|
Income
taxes payable
|
2,748
|
931
|
|||||
|
Deferred
income taxes - current
|
15,746
|
16,339
|
|||||
|
Short-term
debt
|
125,749
|
123,261
|
|||||
|
Current
portion of long-term debt
|
12,844
|
12,834
|
|||||
|
Total
current liabilities
|
340,734
|
301,078
|
|||||
|
Long-term
debt, less current portion
|
88,338
|
90,051
|
|||||
|
Deferred
income taxes
|
34,341
|
31,782
|
|||||
|
Deferred
gain on sale of assets
|
5,419
|
5,666
|
|||||
|
Pension
and postretirement benefit obligations
|
10,948
|
10,636
|
|||||
|
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
17,085,091 at March 31, 2007 and
17,085,091 at
December 31, 2006
|
170
|
170
|
|||||
|
Additional
paid-in capital
|
70,994
|
69,775
|
|||||
|
Retained
earnings
|
175,194
|
160,625
|
|||||
|
Accumulated
other comprehensive loss
|
(17,895
|
)
|
(18,504
|
)
|
|||
|
Deferred
unearned compensation
|
(1,157
|
)
|
(1,392
|
)
|
|||
|
Treasury
stock, at cost - 362,114 shares at March 31, 2007 and 362,114
shares
at
December 31, 2006
|
(6,006
|
)
|
(6,006
|
)
|
|||
|
Total
stockholders' equity
|
232,539
|
215,907
|
|||||
|
Total
liabilities and stockholders' equity
|
$
|
712,319
|
$
|
655,120
|
|||
|
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOW
|
For
the Three Months
|
||||||
|
(Dollars
in Thousands)
|
Ended
Mar 31,
|
||||||
|
Unaudited
|
2007
|
2006
|
|||||
|
Cash
flows from operating activities:
|
|||||||
|
Net
income
|
$
|
15,835
|
$
|
16,049
|
|||
|
Adjustments
to reconcile net income to net cash
from
operating activities:
|
|||||||
|
Depreciation
and amortization
|
4,896
|
2,444
|
|||||
|
Other
non-cash items
|
3,288
|
(1,763
|
)
|
||||
|
Increase
(decrease) from changes, net of acquisitions, in:
|
|||||||
|
Working
capital
|
(20,581
|
)
|
(17,390
|
)
|
|||
|
Other
assets and liabilities
|
1,048
|
1,278
|
|||||
|
Net
cash from operating activities
|
4,486
|
618
|
|||||
|
Cash
flows from investing activities:
|
|||||||
|
Capital
expenditures
|
(2,179
|
)
|
(4,999
|
)
|
|||
|
Other
|
367
|
354
|
|||||
|
Net
cash used in investing activities
|
(1,812
|
)
|
(4,645
|
)
|
|||
|
Cash
flows from financing activities:
|
|||||||
|
Increased
(decreased) borrowings
|
797
|
(129
|
)
|
||||
|
Dividends
paid on common shares
|
(1,023
|
)
|
(1,004
|
)
|
|||
|
Preferred
stock dividends
|
(243
|
)
|
(242
|
)
|
|||
|
Exercise
of stock options and other
|
(21
|
)
|
647
|
||||
|
Net
cash used in financing activities
|
(490
|
)
|
(728
|
)
|
|||
|
Effect
of exchange rate changes on cash and cash equivalents
|
(257
|
)
|
67
|
||||
|
Net
(decrease) increase in cash and cash equivalents
|
1,927
|
(4,688
|
)
|
||||
|
Cash
and cash equivalents - beginning of year
|
$
|
9,526
|
$
|
37,392
|
|||
|
Cash
and cash equivalents - end of year
|
$
|
11,453
|
$
|
32,704
|
|||
Exhibit
3
NOW
THEREFORE BE IT RESOLVED, that Article III of Section 1 of the By-Laws
of this
Corporation shall be amended to read as follows:
“Section
1. Beginning at such time as the corporation has more than one stockholder,
the
number of directors which shall constitute the whole Board of Directors
shall be
10. At any regular meeting or at any special meeting called for that
purpose, a
majority of the entire Board of Directors may increase or decrease
the number of
directors, provided that the number thereof shall never be less than
the minimum
number required by the Maryland General Corporation Law, and further
provided
that the tenure of office of a director shall not be affected by any
decrease in
the number of directors. The directors shall be elected at the annual
meeting of
stockholders, except as provided in Section 2 of this Article III,
and each
director elected shall hold office until his successor is elected and
qualifies.
Directors need not be stockholder."