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)
|
March
13, 2006
|
|
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
Monday, March 13, 2006 the Company disseminated a press release, attached as
Exhibit A, announcing the Company’s operational results for the year ending
December 31, 2005.
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 December 31, 2005 and
December 31, 2004 and the year end (12 months) ended December 31, 2005 and
December 31, 2004.
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.
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
March
13, 2006
|
 |
A.
M. CASTLE & CO.
|
3400
North Wolf Road
Franklin
Park, Illinois 60131
(847)
455-7111
(847)
455-6930 (Fax)
|
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
MONDAY,
MARCH 13, 2006
A.
M. Castle & Co. Reports 2005 Year End Results;
Announces
Record Sales and Earnings
FRANKLIN
PARK, IL, March 13th
- A. M. Castle & Co. (AMEX: CAS), one
of
North America’s leading metals and plastics distributors, today reported its
financial results for the fourth quarter and full year ended December 31,
2005.
For
the
fourth quarter, net sales were $227.3 million, a level 15% higher than
the prior
year. Net earnings for the quarter increased 273% to $7.1 million, or $0.39
per
diluted share as compared to $0.12 per diluted share in the prior year.
For
the
year, net sales were $959.0 million, a 26% increase over 2004. Net earnings
rose
190% to $41.9 million, or $2.33 per diluted share, as compared to $14.5
million,
or $0.82 per diluted share, in 2004. Fourth quarter and full year 2005
earnings
include a $3.0 million (after-tax), or $0.16 per diluted share, refinancing
charge that was previously announced.
All
previously reported quarters for 2004 and 2005 have been restated to reflect
the
Company’s fourth quarter 2005 adoption of FAS 123R - “Accounting for Stock-Based
Compensation”. Refer to Table “A” attached to this release for more
detail.
“Throughout
2005, we experienced strong demand for our products across our metal end-user
markets,” stated G. Thomas McKane, Chairman of the Board. Metals sales of $851.3
million in 2005 rose 27% over last year on a nominal basis or, approximately
6%
excluding the impact of material price increases. “We continue to see healthy
demand for our metals products, especially those used in aerospace, oil
and gas,
and heavy construction and mining equipment,” McKane added.
The
Company’s plastics business achieved record sales of $107.7 million, nearly a
20% increase over 2004. Excluding the effect of material price increases,
2005
full year plastics sales rose 2%. “We experienced some softness in our
point-of-purchase display markets during the third quarter of 2005,” stated
McKane, “However, underlying demand is sound and we continue to view our
plastics business as a growth engine for the future. We have successfully
grown
this segment to $108 million in 2005 from a $55 million business in 2001,
achieving a compound growth rate in excess of 18% per year,” he
noted.
Commenting
further, Larry A. Boik, CFO, noted, “Not only are we pleased with our 2005
operating results, but also with our successful completion of the previously
announced long-term debt refinancing. Although we incurred a significant
one-time charge to earnings in the fourth quarter of 2005, we reduced our
annual
interest expense by $1.9 million and extended maturities, substantially
reducing
our annual debt service cash outlays.” The Company’s debt-to-capital ratio as of
December 31, 2005 was 30.8%, a significant improvement from 43.7% at the
end of
2004. Return-on-stockholders’ equity was 32.1%. “Our current cash position and
revitalized balance sheet provide the financial flexibility needed to grow
the
business,” Boik added.
As
part
of the year-end audit of the Company’s financial statements, significant
adjustments were recorded. These audit adjustments, in management’s opinion,
indicate a material weakness as that term is defined in Section 404 of
the
Sarbanes-Oxley Act of 2002.
On
January 30, 2006, the Company announced the hiring of Michael Goldberg
as
President and C.E.O. of A. M. Castle & Co. Mr. McKane will continue to serve
as Chairman. “The entire Board of Directors is excited to have Mike leading the
Company in its next phase of development,” said McKane.
Also
on
January 30th,
the
Company announced a cash dividend of $0.06 per share that was paid on February
27, 2006 to shareholders of record on February 13, 2006.
Webcast
Information
Shareholders
and other interested parties are invited to listen to A. M. Castle’s conference
call hosted by McKane, Goldberg and Boik scheduled for 11:00 a.m. (EDT)
today,
Monday, March 13, 2006. Those interested may access the call at the Company’s
website, http://www.amcastle.com,
and it
will also 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, debt extinguishment expense, 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 per
U.S.
Securities and Exchange Commission requirements.
|
CONSOLIDATED
STATEMENTS OF INCOME
|
For
the Three
|
For
the
|
|||||||||||
|
(Dollars
in thousands, except per share data)
|
Months
Ended
|
Year
Ended
|
|||||||||||
|
Unaudited
|
Dec
31
|
Dec
31
|
|||||||||||
|
2005
|
2004
|
2005
|
2004
|
||||||||||
|
Net
sales
|
$
|
227,257
|
$
|
197,803
|
$
|
958,978
|
$
|
760,997
|
|||||
|
Cost
of material sold
|
(157,968
|
)
|
(145,049
|
)
|
(670,674
|
)
|
(543,426
|
)
|
|||||
|
Gross
margin
|
69,289
|
52,754
|
288,304
|
217,571
|
|||||||||
|
Plant
and delivery expense
|
(26,792
|
)
|
(24,561
|
)
|
(108,427
|
)
|
(95,229
|
)
|
|||||
|
Sales,
general, and administrative expense
|
(23,340
|
)
|
(21,422
|
)
|
(92,848
|
)
|
(82,142
|
)
|
|||||
|
Depreciation
and amortization expense
|
(2,588
|
)
|
(2,015
|
)
|
(9,340
|
)
|
(8,751
|
)
|
|||||
|
Total
operating expense
|
(52,720
|
)
|
(47,998
|
)
|
(210,615
|
)
|
(186,122
|
)
|
|||||
|
Operating
income
|
16,569
|
4,756
|
77,689
|
31,449
|
|||||||||
|
Interest
expense, net
|
(1,473
|
)
|
(2,261
|
)
|
(7,348
|
)
|
(8,968
|
)
|
|||||
|
Discount
on sale of accounts receivable
|
-
|
(285
|
)
|
(1,127
|
)
|
(969
|
)
|
||||||
|
Extinguishment
of debt
|
(4,904
|
)
|
-
|
(4,904
|
)
|
-
|
|||||||
|
Income
before income tax and equity earnings of joint venture
|
10,192
|
2,210
|
64,310
|
21,512
|
|||||||||
|
Income
tax expense
|
(3,857
|
)
|
(2,084
|
)
|
(25,745
|
)
|
(11,294
|
)
|
|||||
|
Income
before equity in unconsolidated subsidiaries
|
6,335
|
126
|
38,565
|
10,218
|
|||||||||
|
Equity
in earnings of joint venture
|
960
|
2,002
|
4,302
|
5,199
|
|||||||||
|
Net
income
|
7,295
|
2,128
|
42,867
|
5,417
|
|||||||||
|
Preferred
dividends
|
(241
|
)
|
(239
|
)
|
(961
|
)
|
(957
|
)
|
|||||
|
Net
income applicable to common stock
|
$
|
7,054
|
$
|
1,889
|
$
|
41,906
|
$
|
14,460
|
|||||
|
Basic
earnings per share
|
$
|
0.43
|
$
|
0.12
|
$
|
2.61
|
$
|
0.92
|
|||||
|
Diluted
earnings per share
|
$
|
0.39
|
$
|
0.12
|
$
|
2.33
|
$
|
0.82
|
|||||
|
EBITDA
*
|
$
|
20,117
|
$
|
8,773
|
$
|
91,331
|
$
|
45,399
|
|||||
|
*Earnings
before interest, discount on sale of accounts receivable, taxes,
depreciation and amortization, and
debt extinguishment
expense
|
|
Reconciliation
of EBITDA to net income:
|
For
the Three
|
For
the Twelve
|
|||||||||||
|
Months
Ended
|
Months
Ended
|
||||||||||||
|
Dec
31
|
Dec
31
|
||||||||||||
|
2005
|
2004
|
2005
|
2004
|
||||||||||
|
Net
income
|
$
|
7,295
|
$
|
2,128
|
$
|
42,867
|
$
|
15,417
|
|||||
|
Depreciation
and amortization
|
2,588
|
2,015
|
9,340
|
8,751
|
|||||||||
|
Interest,
net
|
1,473
|
2,261
|
7,348
|
8,968
|
|||||||||
|
Discount
on accounts receivable sold
|
-
|
285
|
1,127
|
969
|
|||||||||
|
Debt
extinguishment
|
4,904
|
-
|
4,904
|
-
|
|||||||||
|
Provision
from income taxes
|
3,857
|
2,084
|
25,745
|
11,294
|
|||||||||
|
EBITDA
|
$
|
20,117
|
$
|
8,773
|
$
|
91,331
|
$
|
45,399
|
|||||
The
following table shows the quarterly earnings impact of the Company's early
adoption of FAS 123R - "Accounting for Stock-Based Compensation".
Table
“A”
(Dollars
in thousands, except per share data)
|
Restated
|
As
Previously Reported
|
||||||||||||
|
Net
Income applicable to common stock
|
EPS*
|
Net
Income applicable to common stock
|
EPS*
|
||||||||||
|
2005
|
|||||||||||||
|
Q1
|
$
|
11,530
|
$
|
0.65
|
$
|
11,878
|
$
|
0.70
|
|||||
|
Q2
|
13,245
|
0.73
|
12,742
|
0.72
|
|||||||||
|
Q3
|
10,077
|
0.56
|
10,044
|
0.56
|
|||||||||
|
2004
|
|||||||||||||
|
Q1
|
1,624
|
0.10
|
2,062
|
0.13
|
|||||||||
|
Q2
|
5,329
|
0.30
|
5,758
|
0.35
|
|||||||||
|
Q3
|
5,618
|
0.32
|
5,847
|
0.36
|
|||||||||
|
Q4
|
1,889
|
0.12
|
2,249
|
0.15
|
|||||||||
*
diluted
|
CONSOLIDATED
BALANCE SHEETS
|
As
of
|
||||||
|
(Dollars
in thousands)
|
Dec
31
|
Dec
31
|
|||||
|
Unaudited
|
2005
|
2004
|
|||||
|
ASSETS
|
|||||||
|
Current
assets
|
|||||||
|
Cash
and cash equivalents
|
$
|
37,392
|
$
|
3,106
|
|||
|
Accounts
receivable, less allowances of $1,763 in 2005 and $1,760 in
2004
|
107,064
|
80,323
|
|||||
|
Inventories
(principally on last-in, first-out basis)
|
|||||||
|
(latest
cost higher by approximately $97,524 in 2005 and $92,500 in
2004
|
125,818
|
135,588
|
|||||
|
Other
current assets
|
6,351
|
8,489
|
|||||
|
Total
current assets
|
276,625
|
227,506
|
|||||
|
Investment
in joint venture
|
10,850
|
8,463
|
|||||
|
Goodwill
|
32,292
|
32,201
|
|||||
|
Pension
asset
|
41,946
|
42,262
|
|||||
|
Other
assets
|
4,112
|
7,586
|
|||||
|
Property,
plant and equipment, at cost
|
|||||||
|
Land
|
4,772
|
4,771
|
|||||
|
Building
|
45,890
|
45,514
|
|||||
|
Machinery
and equipment
|
127,048
|
124,641
|
|||||
|
177,710
|
174,926
|
||||||
|
Less
- accumulated depreciation
|
(113,288
|
)
|
(109,928
|
)
|
|||
|
64,422
|
64,998
|
||||||
|
Total
assets
|
$
|
430,247
|
$
|
383,016
|
|||
|
LIABILITIES
AND STOCKHOLDERS' EQUITY
|
|||||||
|
Current
liabilities
|
|||||||
|
Accounts
payable
|
$
|
103,246
|
$
|
93,342
|
|||
|
Accrued
liabilities
|
26,828
|
23,560
|
|||||
|
Current
and deferred income taxes
|
9,606
|
3,653
|
|||||
|
Current
portion of long-term debt
|
6,233
|
11,607
|
|||||
|
Total
current liabilities
|
145,913
|
132,162
|
|||||
|
Long-term
debt, less current portion
|
73,827
|
89,771
|
|||||
|
Deferred
income taxes
|
21,903
|
19,668
|
|||||
|
Deferred
gain on sale-leaseback assets
|
5,967
|
6,465
|
|||||
|
Postretirement
benefits obligation
|
3,174
|
2,905
|
|||||
|
Minority
interest
|
-
|
1,644
|
|||||
|
Commitments
and contingencies
|
|||||||
|
Stockholders'
equity
|
|||||||
|
Preferred
stock, no 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
16,583,456 in 2005 and 15,806,366 in 2004
|
164
|
159
|
|||||
|
Additional
paid in capital
|
60,918
|
45,052
|
|||||
|
Retained
earnings
|
114,488
|
72,582
|
|||||
|
Accumulated
other comprehensive income
|
2,370
|
1,616
|
|||||
|
Other
- deferred compensation
|
-
|
(2
|
)
|
||||
|
Treasury
stock, at cost - 571,828 shares at December 31, 2005 and 62,065
shares at
December 31, 2004
|
(9,716
|
)
|
(245
|
)
|
|||
|
Total
stockholders' equity
|
179,463
|
130,401
|
|||||
|
Total
liabilities and stockholders' equity
|
$
|
430,247
|
$
|
383,016
|
|||