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
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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 | ||||
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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 | ||||
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