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: April 28, 2015
(Date of earliest event reported)

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.)

1420 Kensington Road, Suite 220
 Oak Brook, IL 60523
(Address of principal executive offices)

Registrant's telephone number including area code: (847) 455-7111

Not Applicable
(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.

In accordance with General Instruction B.2 to Form 8-K, the following information shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such a filing.

The information regarding the results of operations and financial condition of A. M. Castle & Co. (the “Company”) for the first quarter ended March 31, 2015, responsive to this Item 2.02, and contained in Exhibit 99.1 filed herewith, is incorporated by reference herein.

Item 2.05    Costs Associated with Exit or Disposal Activities.

On April 28, 2015, the Company announced that the Board of Directors (the "Board") approved the acceleration of certain profitability and liquidity improvement activities designed to right-size the business for the current market environment, reduce costs, and improve operating performance. The initial improvement actions include consolidation of up to ten facilities by first quarter 2016 and significant headcount reductions. The Company expects to complete the initial improvement activities by the end of the first quarter of 2016.

Based on current information, the Company expects the total gross pre-tax charge associated with the improvement actions to be approximately $49 to $64 million. Of this total, approximately $12.1 to $21.4 million is expected to be cash and be incurred by early 2016, including up to $6 million which, if realized, is payable in approximately level installments over 20 years. This gross total includes approximately $2.1 to $4.4 million of employee severance and retention-related benefits, approximately $8.5 million of facility-related expenses for lease terminations and moving costs, up to $6 million of other costs, professional fees of approximately $1.5 to $2.5 million, and a net non-cash charge for other assets of $12.8 to $14.5 million. The Company estimates it will received $28 to $32 million of cash proceeds from the sale of facilities and other assets.

The improvement actions are detailed in the Company’s April 28, 2015 press release, a copy of which is attached as Exhibit 99.1.

Item 5.02     Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

Effective April 28, 2015, Mr. A. Jeffrey Zappone, a Senior Managing Director of Conway MacKenzie Management Services, LLC (“Conway”), will no longer serve as the Company's Interim Chief Operating Officer. Conway will remain engaged with the Company on a limited and as-needed basis moving forward to support implementation of the plan described herein.

Item 7.01     Regulation FD Disclosure.

In accordance with General Instruction B.2 to Form 8-K, the following information shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such a filing.

The Company will present via live web cast its 2015 first quarter financial results on Tuesday, April 28, 2015, at 11:00 a.m. ET.  Copies of the slides containing financial and operating information to be used as part of the web cast are attached as Exhibit 99.2 to this Current Report and are incorporated by reference herein.


2



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 a link on the investor relations page of the Company's website at http://www.amcastle.com/investors/default.aspx or by calling (800) 774-6070 or (630) 691-2753 and citing code 7608998#.

An archived version of the conference call webcast will be available for replay at the link above approximately three hours following its conclusion, and will remain available until the next earnings conference call.

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits.

Exhibit Number
 
Description
99.1
 
Press Release, dated April 28, 2015.
99.2
 
Slide Presentation for First Quarter 2015 Financial Results webcast to be held on April 28, 2015.

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, and the cost savings and other benefits that we expect to achieve from our facility closures and organizational changes. 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, including our ability to effectively manage our operational initiatives, the impact of volatility of metals and plastics prices, the cyclical and seasonal aspects of our business, our ability to effectively manage inventory levels and the impact of our substantial level of indebtedness, as well as 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, 2014. 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.


3



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.
 
 
 
 
 
 
 
By:
/s/ Marec E. Edgar
April 28, 2015
 
 
Marec E. Edgar
 
 
 
Vice President, General Counsel & Secretary
 
 
 
 
 



4




EXHIBIT INDEX

Exhibit No.
 
Description
 
Page No.
99.1
 
Press Release, dated April 28, 2015.
 
EX-1-
99.2
 
Slide Presentation for First Quarter 2015 Financial Results webcast to be held on April 28, 2015.

 
EX-9-


5


EXHIBIT 99.1

 A. M. CASTLE & CO.
1420 Kensington Road
Suite 220
Oak Brook, IL 60523
 P: (847) 455-7111
F: (847) 241-8171
 
 
For Further Information:
- At ALPHA IR -
 
Analyst Contact:
 
Chris Hodges or Monica Gupta
 
(312) 445-2870
 
Email: CAS@alpha-ir.com
 
 
 
Traded: NYSE (CAS)
 
Member: S&P SmallCap 600 Index
 
 
 
FOR IMMEDIATE RELEASE
TUESDAY, APRIL 28, 2015
 
A. M. CASTLE & CO. REPORTS FIRST QUARTER 2015 RESULTS

New management announces plan focused on enhancing customer experience and improving financial position;
Business right-sized to enhance liquidity and accelerate return to profitability


OAK BROOK, IL, APRIL 28th - A. M. Castle & Co. (NYSE: CAS) (“the Company” or "Castle"), a global distributor of specialty metal and plastic products, value-added services and supply chain solutions, today reported financial results for the three months ended March 31, 2015.

Newly appointed President and CEO Steve Scheinkman commented, “A. M. Castle was founded 125 years ago and has been a key leader in the metal service center industry throughout that time. The Company is built on its key pillars of market leadership, customer focus, competitive cost, and people. Having served in the industry for 27 years, including as President of Castle’s aerospace business, I am well aware of the Company’s strong capability to provide metal and plastic products, services and processing capabilities at the highest levels of quality and customer satisfaction on a global basis. It is for this reason that I was very excited to accept the position as President and CEO. While only rejoining Castle less than two weeks ago, I have a clear vision of how to proceed to empower our employees and utilize the expertise and creativity of our team to provide complete and customized solutions that position Castle as the go-to integral growth partner to all levels of the supply chain.”

Regarding the Company’s plan going forward, Scheinkman commented, “Castle’s financial results over the past several quarters clearly demonstrate that changes are necessary in how we operate in order to achieve profitability and ensure that we properly manage our assets. Our plan has two essential thrusts - (i) improve the value proposition we provide our customers by increasing customer intimacy, service and support, and (ii) improve the financial position of the Company through better balance sheet management and a reduced, more efficient cost structure.

Scheinkman continued, “Regarding the first thrust, we will be improving the value proposition by driving more resources, capabilities, responsibility and accountability down to our branches so they may be closer to our customers, and more responsive to the customer’s evolving needs. While we plan to accomplish this with fewer branches, each will have more complete product lines and capabilities for value added services to our customers. We will continue to offer our full product line throughout our current geographic coverage and maintain the highest level of quality, service and safety that we are known for. Regarding the second thrust, we plan to generate cash by more efficiently managing our inventory, selling some of our real estate and other non-core assets, and ultimately driving to profitability. In order to return Castle to profitability, we will take immediate action to reduce our cost structure.


EX-1-


Regarding Conway MacKenzie, Scheinkman noted, “Prior to my arrival, the management team began a rigorous analysis, with the assistance of Conway MacKenzie, to evaluate the Company’s current facility and resource footprint to determine how to best optimize its operational performance and reduce costs. I would like to thank Conway MacKenzie for their excellent work. We will be implementing a facility consolidation and down-sizing based on their recommendations that will significantly reduce our cost structure and pave the way to improved cash flow and financial performance. We will be phasing out Conway MacKenzie’s consulting assignment and Jeff Zappone will no longer need to serve as the Company’s Interim Chief Operating Officer. During this phase out period, Conway MacKenzie will continue to provide assistance in an as required supporting role as we implement our plan.”

Scheinkman continued, “I believe that our balanced and complementary strategy of continuously improving customer focus while simultaneously improving the Company’s financial position will enable us to both strengthen Castle today while positioning us to return to long term, profitable growth.”

Highlights of the Plan Framework

Consolidation of up to 10 facilities by first quarter 2016 into geographically overlapping facilities
Strategic delayering through headcount reductions via efficiency gains and consolidation of facilities
Cost savings to begin in the middle of second quarter 2015
Measured against annualized first quarter 2015 run rate revenue and upon full implementation of these initial activities, the Company anticipates approximately $48 million of annualized cost improvement; additional cost savings are in the process of being evaluated
Cash flows from consolidation and downsizing:
Sales of facilities expected to generate approximately $28 million estimated to be realized by first quarter 2016
Cash costs of $12.1 - $21.4 million expected to be incurred through the first quarter of 2016 including up to $6 million of cost which if incurred, is payable in approximately level installments over a 20 year period
Net non-cash charge of $12.8 million - $14.5 million
New facility footprint and organizational changes based on local accountability with a focus on inventory management intended to reduce days sales in inventory (DSI) to be in line with industry averages
All facility consolidation activities substantially completed by the end of the first quarter 2016

Scheinkman added, “I have led successful turnarounds in the past and I am confident that we are implementing the right strategy now to strengthen Castle and position the Company for long term success. I really appreciate the strong support from the Castle Board, Executive Team and talented employees throughout our organization as we implement our strategy to continuously enhance the value we deliver to our customers while improving the Company’s financial position and long term opportunities for growth and sustainable profitability.”

Brian Anderson, Chairman of the Board of Castle, added, “The Board of Directors strongly supports Steve and his team. We are optimistic that we now have the right leadership and the right plan in place to drive the future success of Castle.”

First Quarter 2015 Results:

Consolidated net sales were $222.2 million for first quarter 2015 compared to $253.4 million in first quarter 2014. The Company reported a first quarter 2015 net loss of $20.7 million, or a loss of $0.88 per diluted share, compared to a net loss of $16.0 million, or a loss of $0.69 per diluted share, in the prior year quarter. Adjusted non-GAAP net loss for first quarter 2015 was $21.8 million compared to adjusted non-GAAP net loss of $15.7 million in first quarter 2014. The Company reported first quarter 2015 EBITDA loss of $4.6 million, compared to EBITDA of $0.4 million in first quarter 2014. First quarter 2015 results were negatively impacted by $6.2 million foreign currency transaction losses and first quarter 2014 results included $0.7 million of foreign currency transaction losses. Adjusted EBITDA net loss for first quarter 2015 was $5.7 million compared with adjusted EBITDA of $0.9 million in first quarter 2014.

“Our cost structure and inventory investment are clearly too high in light of the conditions in the market,” said Pat Anderson, Interim CFO. “Going forward, we expect to see improvement in our quarterly operating expense performance. Successful execution of the plan developed by the management team is expected to result in improved liquidity and profitability thereby expanding our available options regarding our capital structure and long-term financing.”


EX-2-


Net sales from the Metals segment during first quarter 2015 were $188.5 million, which was 13.9% lower than first quarter 2014 and 4.0% lower than the fourth quarter 2014. Average selling price per ton sold was down 1.5% from the first quarter 2014 and down 2.2% from the fourth quarter 2014. Tons sold were down 12.0% compared to first quarter 2014 and down 3.3% compared to fourth quarter 2014. In the Plastics segment, first quarter 2015 net sales were $33.7 million which was 1.9% lower compared to first quarter 2014 and flat compared to fourth quarter 2014.

Gross margins were 24.4% in first quarter 2015 compared to 25.6% in first quarter 2014. Gross margins included provisions for excess inventory of $1.3 million and LIFO income of $0.5 million in first quarter 2015 compared to LIFO income of $1.2 million in first quarter 2014. Metals segment gross margins were 23.6% in the first quarter 2015 compared to 24.9% in the prior year period. Aerospace and industrial product margins remained stable, but were not enough to overcome the weakness seen in oil & gas product margins.

Including a $5.6 million gain on sale of the Company's Blaine, MN facility, operating expenses were $59.8 million in first quarter 2015 compared to $72.2 million in first quarter 2014 and $69.4 million in fourth quarter 2014.

Net cash used in operations was $2.8 million during the first quarter, compared to net cash used in operations of $2.9 million during first quarter 2014. The Company had $62.0 million of borrowings outstanding under its revolving credit facility at March 31, 2015 and $38.1 million of additional unrestricted borrowing capacity available under the terms of the revolving credit facility. There were $59.2 million borrowings under the revolving credit facility at December 31, 2014. The Company’s net debt-to-capital ratio was 68.2% at March 31, 2015 compared to 65.5% at December 31, 2014. Total debt outstanding, net of unamortized discount, was $314.0 million at March 31, 2015 and $310.1 million at December 31, 2014. Refer to the ‘Total Debt’ table below for details related to the Company’s outstanding debt obligations.

Webcast Information
Management will hold a conference call at 11:00 a.m. ET today to review the Company's results for the first quarter and year ended March 31, 2015 and discuss business conditions and outlook. 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 a link on the investor relations page of the Company’s website at http://www.amcastle.com/investors/default.aspx or by calling (800) 774-6070 or (630) 691-2753 and citing code 7608 998#. A supplemental presentation accompanying the webcast can also be accessed at the link provided at the investor relations page of the Company's website.

An archived version of the conference call webcast will be available for replay at the link above approximately three hours following its conclusion, and will remain available until the next earnings conference call.

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, oil and gas, commercial aircraft, heavy equipment, industrial goods, construction equipment, retail, marine and automotive 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. Within its metals business, it specializes in the distribution of alloy and stainless steels; nickel alloys; aluminum and carbon. Through its wholly-owned subsidiary, Total Plastics, Inc., the Company also distributes a broad range of value-added industrial plastics. Together, Castle and its affiliated companies operate out of 47 service centers located 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 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 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 analyses 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.


EX-3-


In addition, 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 investors, analysts and other interested parties with additional information in analyzing the Company’s operating results. Adjusted non-GAAP net income and adjusted EBITDA, which are defined as reported net income and EBITDA adjusted for non-cash items and items which are not considered by management to be indicative of the underlying results, 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 income and adjusted EBITDA to evaluate the performance of the business.

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, and the cost savings and other benefits that we expect to achieve from our facility closures and organizational changes. 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, including our ability to effectively manage our operational initiatives, the impact of volatility of metals and plastics prices, the cyclical and seasonal aspects of our business, our ability to effectively manage inventory levels and the impact of our substantial level of indebtedness, as well as 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, 2014. 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.


EX-4-



CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
 
For the Three Months Ended
(Dollars in thousands, except per share data)
 
Unaudited
 
March 31,
 
 
2015
 
2014
Net sales
 
$
222,228

 
$
253,410

Costs and expenses:
 
 
 
 
Cost of materials (exclusive of depreciation and amortization)
 
168,111

 
188,531

Warehouse, processing and delivery expense
 
27,031

 
35,381

Sales, general, and administrative expense
 
25,535

 
29,624

Restructuring activity, net
 
831

 
739

Depreciation and amortization expense
 
6,355

 
6,457

Operating loss
 
(5,635
)
 
(7,322
)
Interest expense, net
 
(10,546
)
 
(9,952
)
Other expense, net
 
(6,225
)
 
(682
)
Loss before income taxes and equity in earnings of joint venture
 
(22,406
)
 
(17,956
)
Income taxes
 
825

 
51

Loss before equity in earnings of joint venture
 
(21,581
)
 
(17,905
)
Equity in earnings of joint venture
 
875

 
1,907

Net loss
 
$
(20,706
)
 
$
(15,998
)
Basic loss per share
 
$
(0.88
)
 
$
(0.69
)
Diluted loss per share
 
$
(0.88
)
 
$
(0.69
)
EBITDA (a)
 
$
(4,630
)
 
$
360

(a) Earnings (loss) before interest, taxes, and depreciation and amortization. See reconciliation to net loss below. 
 
 
 
 
 
 
 
 
 
 
Reconciliation of EBITDA and of Adjusted EBITDA to Net Loss:
 
For the Three Months Ended
 
(Dollars in thousands)
 
March 31,
Unaudited
 
2015
 
2014
Net loss
 
$
(20,706
)
 
$
(15,998
)
Depreciation and amortization expense
 
6,355

 
6,457

Interest expense, net
 
10,546

 
9,952

Income taxes
 
(825
)
 
(51
)
EBITDA
 
(4,630
)
 
360

Non-GAAP net loss adjustments (b)
 
(1,070
)
 
531

Adjusted EBITDA
 
$
(5,700
)
 
$
891

(b) Non-GAAP net loss adjustments relate to restructuring activity, foreign exchange losses on intercompany loans, unrealized gains on commodity hedges and gain on sale of property, plant and equipment for both periods presented. Refer to 'Reconciliation of Adjusted Non-GAAP Net Loss to Reported Net Loss' table for additional details on these amounts. Unrealized foreign exchange losses on intercompany loans were not included in Adjusted EBITDA in prior year period presented as the amount was not significant; had losses been included, Adjusted EBITDA would have been $1,453 for the three-month period ended March 31, 2014.

EX-5-


CONDENSED CONSOLIDATED BALANCE SHEETS
As of
(In thousands, except par value data)
March 31,
 
December 31,
Unaudited
2015
 
2014
ASSETS
 
 
 
Current assets
 
 
 
Cash and cash equivalents
$
13,366

 
$
8,454

Accounts receivable, less allowances of $3,161 and $3,375
129,204

 
131,003

Inventories, principally on last-in first-out basis (replacement cost higher by $129,279 and $129,779)
243,331

 
236,932

Prepaid expenses and other current assets
13,156

 
9,458

Deferred income taxes
752

 
685

Income tax receivable
2,264

 
2,886

Total current assets
402,073

 
389,418

Investment in joint venture
38,003

 
37,443

Goodwill
12,973

 
12,973

Intangible assets, net
52,695

 
56,555

Prepaid pension cost
7,494

 
7,092

Other assets
10,502

 
11,660

Property, plant and equipment:
 
 
 
Land
3,594

 
4,466

Buildings
50,528

 
52,821

Machinery and equipment
182,817

 
183,923

Property, plant and equipment, at cost
236,939

 
241,210

Less - accumulated depreciation
(168,403
)
 
(168,375
)
Property, plant and equipment, net
68,536

 
72,835

Total assets
$
592,276

 
$
587,976

LIABILITIES AND STOCKHOLDERS' EQUITY
 

 
 

Current liabilities
 

 
 

Accounts payable
$
85,998

 
$
68,782

Accrued and other liabilities
36,034

 
27,670

Income taxes payable
505

 
328

Current portion of long-term debt
734

 
737

Total current liabilities
123,271

 
97,517

Long-term debt, less current portion
313,239

 
309,377

Deferred income taxes
6,585

 
8,360

Other non-current liabilities
3,393

 
3,655

Pension and postretirement benefit obligations
18,775

 
18,747

Commitments and contingencies
 

 
 

Stockholders' equity
 

 
 

Preferred stock, $0.01 par value—9,988 shares authorized (including 400 Series B Junior Preferred $0.00 par value shares); no shares issued and outstanding at March 31, 2015 and December 31, 2014

 

Common stock, $0.01 par value—60,000 shares authorized and 23,700 shares issued and 23,572 outstanding at March 31, 2015 and 23,630 shares issued and 23,559 outstanding at December 31, 2014
236

 
236

Additional paid-in capital
226,853

 
225,953

(Accumulated deficit) retained earnings
(50,130
)
 
(29,424
)
Accumulated other comprehensive loss
(48,857
)
 
(45,565
)
Treasury stock, at cost—128 shares at March 31, 2015 and 71 shares at December 31, 2014
(1,089
)
 
(880
)
Total stockholders' equity
127,013

 
150,320

Total liabilities and stockholders' equity
$
592,276

 
$
587,976


EX-6-


CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Three Months Ended
(Dollars in thousands)
March 31,
Unaudited
2015
 
2014
Operating activities:
 
 
 
Net loss
$
(20,706
)
 
$
(15,998
)
Adjustments to reconcile net loss to net cash used in operating activities:
 
 
 
Depreciation and amortization
6,355

 
6,457

Amortization of deferred financing costs and debt discount
2,167

 
1,927

Gain on sale of property, plant and equipment
(5,622
)
 

Unrealized gains on commodity hedges
(102
)
 
(208
)
Unrealized foreign currency transaction losses
3,823

 

Equity in earnings of joint venture
(875
)
 
(1,907
)
Dividends from joint venture
315

 
607

Deferred tax expense (benefit)
(1,538
)
 
571

Other, net
711

 
243

Increase (decrease) from changes in:
 
 
 
Accounts receivable
(874
)
 
(17,930
)
Inventories
(10,819
)
 
904

Prepaid expenses and other current assets
(3,921
)
 
(1,365
)
Other assets
(242
)
 
1,972

Prepaid pension costs
620

 
173

Accounts payable
18,668

 
18,423

Income taxes payable and receivable
643

 
(1,454
)
Accrued liabilities
8,775

 
4,818

Postretirement benefit obligations and other liabilities
(158
)
 
(102
)
Net cash used in operating activities
(2,780
)
 
(2,869
)
Investing activities:
 
 
 
Capital expenditures
(2,061
)
 
(2,012
)
Proceeds from sale of property, plant and equipment
7,541

 
46

Net cash from (used in) investing activities
5,480

 
(1,966
)
Financing activities:
 
 
 
Proceeds from long-term debt
206,900

 
11,506

Repayments of long-term debt
(204,357
)
 
(11,605
)
Other, net

 
45

Net cash from (used in) financing activities
2,543

 
(54
)
Effect of exchange rate changes on cash and cash equivalents
(331
)
 
(232
)
Net change in cash and cash equivalents
4,912

 
(5,121
)
Cash and cash equivalents—beginning of year
8,454

 
30,829

Cash and cash equivalents—end of year
$
13,366

 
$
25,708




EX-7-


Reconciliation of Adjusted Non-GAAP Net Loss to Reported Net Loss:
For the Three Months Ended
(Dollars in thousands, except per share data)
Unaudited
March 31,
 
2015
 
2014
Net loss, as reported
$
(20,706
)
 
$
(15,998
)
Restructuring activity (a)
831

 
739

Foreign exchange losses on intercompany loans(b)
3,823

 

Unrealized gains on commodity hedges
(102
)
 
(208
)
Gain on sale of property, plant and equipment
(5,622
)
 

Tax effect of adjustments

 
(203
)
Adjusted non-GAAP net loss
$
(21,776
)
 
$
(15,670
)
Adjusted non-GAAP basic loss per share
$
(0.93
)
 
$
(0.67
)
Adjusted non-GAAP diluted loss per share
$
(0.93
)
 
$
(0.67
)
(a) Restructuring activity includes costs associated with the costs recorded to the restructuring activity line item within the condensed consolidated statements of operations and comprehensive loss for both periods presented.
(b) Unrealized foreign exchange losses on intercompany loans were not included in the prior year period presented as an adjustment to GAAP results as the amount was not significant; had the losses been included, Adjusted non-GAAP net loss, adjusted non-GAAP loss per share and adjusted non-GAAP diluted loss per share would have been $(15,108), $(0.65), and $(0.65), respectively, for the three-month period ended March 31, 2014.

Total Debt:
As of
(Dollars in thousands)
March 31,
 
December 31,
Unaudited
2015
 
2014
LONG-TERM DEBT
 
 
 
12.75% Senior Secured Notes due December 15, 2016
$
210,000

 
$
210,000

7.0% Convertible Notes due December 15, 2017
57,500

 
57,500

Revolving Credit Facility due December 10, 2019
62,000

 
59,200

Other, primarily capital leases
993

 
1,257

Total long-term debt
330,493

 
327,957

Less:  unamortized discount
(16,520
)
 
(17,843
)
Less:  current portion
(734
)
 
(737
)
Total long-term portion
313,239

 
309,377

TOTAL DEBT
$
313,973

 
$
310,114


Reconciliation of Total Debt to Net Debt and Net Debt-to-Capital:
As of
(Dollars in thousands)
March 31,
 
December 31,
Unaudited
2015
 
2014
Total Debt
$
313,973

 
$
310,114

Less: Cash and Cash Equivalents
(13,366
)
 
(8,454
)
NET DEBT
$
300,607

 
$
301,660

 
 
 
 
Stockholders' Equity
$
127,013

 
$
150,320

Total Debt
313,973

 
310,114

CAPITAL
$
440,986

 
$
460,434

 
 
 
 
NET DEBT-TO-CAPITAL
68.2
%
 
65.5
%

EX-8-


A.M. Castle & Co. ® A. M. Castle & Co. NYSE: CAS April 28, 2015 A. M. Castle & Co. Supplement: Q1 2015 Earnings Conference Call EX-9- EXHIBIT 99.2 1


 
A. M. Castle & Co. ® 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, and the cost savings and other benefits that we expect to achieve from our facility closures and organizational changes.  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, including our ability to effectively manage our operational initiatives, the impact of volatility of metals and plastics prices, the cyclical and seasonal aspects of our business, our ability to effectively manage inventory levels and the impact of our substantial level of indebtedness, as well as 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, 2014.  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. EX-10- 2


 
A. M. Castle & Co. ® This presentation includes non-GAAP financial measures to assist the reader in understanding our business. 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 U.S. GAAP (“GAAP”). However, we believe that non-GAAP reporting, giving effect to the adjustments shown in the reconciliation contained in the appendix to this presentation, 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 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 income before provision/benefit 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. 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. Adjusted non-GAAP net income and adjusted EBITDA, which are defined as reported net income and EBITDA adjusted for non-cash items and items which are not considered by management to be indicative of the underlying results, 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 income and adjusted EBITDA to evaluate the performance of the business. The financial information herein contains information generated from audited financial statements and unaudited information and has been prepared by management in good faith and based on data currently available to the Company. Regulation G & Other Cautionary Notes EX-11- 3


 
A. M. Castle & Co. ® Key Metrics EX-12- 4 1 Non-GAAP information. Refer to reconciliation in the Appendix. Q1'15 Metals Segment Sales Price and Volume Trends % Change from Q1'14 % Change from Q4'14 Average Selling price per Ton Sold (1.5)% (2.2)% Tons Sold (12.0)% (3.3)% Gross Material Margin and Adjusted Operating Expense Margin Comparisons Q1'15 Q1'14 Q4'14 Gross Material Margin 1 24.4% 25.6% 21.4% Adjusted Operating Expense Margin 1 26.5% 28.2% 29.7%


 
A. M. Castle & Co. ® Selected Results SELECTED CONSOLIDATED RESULTS (Unaudited - $ in thousands, except per share data) Three Months Ended March 31, 2015 2014 Net Sales $ 222,228 $ 253,410 Metals $ 188,540 $ 219,063 Plastics $ 33,688 $ 34,347 Gross Material Margins1 24.4 % 25.6 % Operating Expenses $ 59,752 $ 72,201 Operating Expenses as a % of Net Sales 26.9 % 28.5 % Operating Loss $ (5,635) $ (7,322) Operating Loss as a % of Net Sales (2.5)% (2.9)% Interest Expense, Net $ 10,546 $ 9,952 EBITDA2 $ (4,630) $ 360 EBITDA as a % of Net Sales (2.1)% 0.1 % Net Loss, as Reported $ (20,706) $ (15,998) Net Loss per diluted share, as Reported $ (0.88) $ (0.69) Adjusted Non-GAAP Net Loss3 $ (21,776) $ (15,670) Adjusted Non-GAAP Diluted Loss Per Share $ (0.93) $ (0.67) 1 Non-GAAP information. Refer to calculation in the Appendix. 2 Earnings (loss) before interest, taxes and depreciation and amortization. Non-GAAP information. Refer to reconciliation in the Appendix. 3 Non-GAAP net loss adjustments relate to restructuring activity, foreign exchange losses on intercompany loans, gain on sale of property, plant and equipment, and unrealized gains on commodity hedges for both periods presented. All amounts are net of tax. Refer to reconciliation in the Appendix. EX-13- 5


 
A. M. Castle & Co. ® Liquidity and Balance Sheet SELECTED CONSOLIDATED RESULTS (Unaudited - $ in thousands) Three Months Ended March 31, 2015 2014 Net Cash Used in Operations $ (2,780) $ (2,869) Cash Paid for CapEx $ 2,061 $ 2,012 Avg Days Sales in Inventory 201 164 Avg Receivables Days Outstanding 53 49 NET DEBT TO TOTAL CAPITAL As of (Unaudited - $ in thousands) March 31, December 31, 2015 2014 Total Debt (net of unamortized discounts)1 $ 313,973 $ 310,114 Cash and Cash Equivalents 13,366 8,454 Total Debt less Cash and Cash Equivalents (“Net Debt”) $ 300,607 $ 301,660 Stockholders’ Equity 127,013 150,320 Total Debt plus Stockholders’ Equity (“Total Capital”) $ 440,986 $ 460,434 Net Debt to Total Capital 68.2% 65.5% 1 There were $62.0 million and $59.2 million of cash borrowings outstanding under the revolving credit facility as of March 31, 2015 and December 31, 2014, respectively. EX-14- 6


 
A. M. Castle & Co. ® APPENDIX EX-15- 7


 
A. M. Castle & Co. ® SEC Regulation G Non-GAAP Reconciliation Reconciliation of Adjusted Non-GAAP Net Loss to Reported Net Loss Three Months Ended March 31, (Unaudited - $ in thousands, except per share data) 2015 2014 Net Loss, as Reported $ (20,706) $ (15,998) Restructuring Activity1 831 739 Foreign Exchange Losses on Intercompany Loans2 3,823 — Unrealized Gains on Commodity Hedges (102) (208) Gain on Sale of Property, Plant and Equipment (5,622) — Tax Effect of Adjustments — (203) Adjusted Non-GAAP Net Loss $ (21,776) $ (15,670) Adjusted Non-GAAP Basic Loss Per Share $ (0.93) $ (0.67) Adjusted Non-GAAP Diluted Loss Per Share $ (0.93) $ (0.67) Reconciliation of EBITDA and of Adjusted EBITDA to Net Loss Three Months Ended March 31, (Unaudited - $ in thousands) 2015 2014 Net Loss, as Reported $ (20,706) $ (15,998) Depreciation and Amortization Expense 6,355 6,457 Interest Expense, Net 10,546 9,952 Income Taxes (825) (51) EBITDA (4,630) 360 Non-GAAP Net Loss Adjustments3 (1,070) 531 Adjusted EBITDA $ (5,700) $ 891 3 Non-GAAP net loss adjustments relate to restructuring activity, foreign exchange losses on intercompany loans, gain on sale of property, plant and equipment, and unrealized gains on commodity hedges for both periods presented. Refer to 'Reconciliation of Adjusted Non-GAAP Net Loss to Reported Net Loss' table above for additional information on these amounts. Unrealized foreign exchange losses on intercompany loans were not included in Adjusted EBITDA in prior year period presented as the amount was not significant; had losses been included, Adjusted EBITDA would have been $1,453 for the three-month period ended March 31, 2014. EX-16- 8 1 Restructuring activity includes costs associated with the costs recorded to the restructuring activity line item within the condensed consolidated statements of operations and comprehensive loss for both periods presented. 2 Unrealized foreign exchange losses on intercompany loans were not included in the prior year period presented as an adjustment to GAAP results as the amount was not significant; had the losses been included, Adjusted non-GAAP net, Adjusted non-GAAP loss per share and adjusted non-GAAP diluted loss per share would have been $(15,108), $(0.65), and $(0.65), respectively, for the three-month period ended March 31, 2014.


 
A. M. Castle & Co. ® SEC Regulation G Non-GAAP Reconciliation Reconciliation of Adjusted Operating Three Months Ended Expenses to Operating Expenses March 31, (Unaudited - $ in thousands) 2015 2014 Operating Expenses $ 59,752 $ 72,201 Restructuring Activity in Operating Expenses (831) (739) Adjusted Operating Expenses $ 58,921 $ 71,462 Adjusted Operating Expense Margin - calculated as Adjusted Operating Expenses divided by Net Sales 26.5% 28.2% Gross Material Margin Calculation Three Months Ended (Unaudited - $ in thousands) March 31, 2015 2014 Net Sales $ 222,228 $ 253,410 Cost of Materials - exclusive of depreciation and amortization (168,111) (188,531) Gross Profit $ 54,117 $ 64,879 Gross Material Margin - calculated as Gross Profit divided by Net Sales 24.4% 25.6% EX-17- 9


 
A.M. Castle & Co. ® A. M. Castle & Co. NYSE: CAS Thank You EX-18- 10