UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
8-K/A
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
12,
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
This
item has been
amended to show the correct comparison dates of December 2006 to December
2005
in the EBITDA reconciliation.
On
Thursday, March 8, 2007 the Company disseminated a press release, attached
as
Exhibit A, announcing the Company’s operational results for the period ending
December 31, 2006.
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, 2006 and December 31, 2005 and the Year ended December 31, 2006
and
December 31, 2005.
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
|
(e)
|
On
Tuesday,
March 6, 2007, the Board of Directors of A. M. Castle & Co. amended
the compensation arrangements with its Chief Operating Officer,
Mr.
Michael H. Goldberg in the following manner:
|
|
|
1)
|
Base
compensation was amended to $500,000.00 per annum.
|
|
|
2)
|
The
short
term incentive payout for Mr. Goldberg was increased to 60%
based upon the
Company achieving targeted performance under the Company’s Management
Short Term Compensation Plan. Mr. Goldberg could receive 130%
of base pay
upon the Company’s meeting the maximum target goal.
|
|
|
3)
|
Mr.
Goldberg
was awarded 8,700 shares under the Company’s Long Term Incentive
Compensation Plan. Mr. Goldberg will receive those shares at
the end of
the performance period which commences January 1, 2007 and
ends December
31, 2009 provided the Company’s performance meets the targets set under
the Plan. The maximum payout could reach 17,400 shares if the
maximum goal
is reached or could be 0 shares if the targeted performance
is not
met.
|
|
All
other aspects
of Mr. Goldberg’s compensation remain the same as stated in the 8-K filed
January 26, 2006.
Item
9.01.
Financial Statements and Exhibits
99.1
Press Release
March 8, 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/
Lawrence
A. Boik
|
|
|
Vice
President and Chief Financial Officer
|
|
|
|
|
|
Date
|
03/12/07 |
A. M. CASTLE &
CO. 3400
North Wolf RoadFranklin
Park,
Illinois 60131
(847)
455-7111
For
Further
Information:
|
—————AT
THE COMPANY—————
|
—————AT
ASHTON PARTNERS————
|
|
|
Larry
A.
Boik
Vice
President-Finance & CFO
|
Analyst
Contacts:
|
|
|
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
THURSDAY,
MARCH 8, 2007
A.
M.
Castle & Co. Reports 2006 Fourth Quarter and Year End Results;
Announces
Third Consecutive Year of Record Sales and Earnings
FRANKLIN
PARK, IL, March 8th - 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 financial results for the
fourth
quarter and full year ended December 31, 2006.
For
the fourth
quarter, consolidated net sales including the acquisition of Transtar Metals,
which was completed on September 5, 2006, were $322.0 million, an increase
of
$94.7 million or 41.7% from the fourth quarter of 2005. Net earnings for
the
quarter were $9.0 million, or $0.47 per diluted share, as compared to $3.1
million or $0.18 per diluted share in the prior year.
For
the year,
consolidated net sales including Transtar were $1,177.6 million, an increase
of
$218.6 million or 22.8% over 2005. Net earnings were $54.2 million, or $2.89
per
diluted share, as compared to $37.9 million or $2.11 per diluted share in
2005.
Both fourth quarter and full year 2005 earnings include a $3.0 million
(after-tax), or $0.16 per diluted share, debt refinancing charge.
“2006
marked several major milestones in the
company’s 116-year history, which have positioned us for the next stage of
development - growing A. M. Castle into a global specialty metals brand,” stated
Michael Goldberg, President and CEO of A. M. Castle. “Our revenues surpassed the
$1 billion threshold for the first time, while earnings grew 30% to a record
$54.2 million.”
“Our
long-term strategy is to increase our
focus on higher-margin specialty products and complementary value-added services
and expand our presence in targeted growth markets on a global basis. We
took
the first step in our new strategy with the acquisition of Transtar Metals,
a
leading global aluminum distributor to the aerospace and defense industry.
Transtar significantly broadened our global participation in the aerospace
industry, which now accounts for approximately 30% of our total revenue,” stated
Goldberg.
Goldberg
further commented, “Contributing to
our 2006 revenue performance were the strong sales of nickel alloy products.
Nickel alloy tonnage for the fourth quarter was up nearly 21% over the fourth
quarter of 2005 and was 26% higher on a full year comparative basis. The
greatest demand for our specialty metals products, including nickel alloys,
aluminum, stainless steels and thick carbon plate, were largely into higher
growth industries such as aerospace, oil and gas and heavy equipment.”
Metal
segment sales were $295.1 million in the
fourth quarter, an increase of $94.5 million or 47.1% versus the fourth quarter
of 2005. Of this increase, 4.5% was attributable to volume, 12.5% to price
increases and the balance to the acquisition of Transtar.
Plastic
segment sales were $26.9 million in the
quarter, an increase of $0.2 million or 0.8% versus the fourth quarter of
last
year.
For
the full year, Metal segment sales were
$1,062.6 million, an increase of $211.3 million or 24.8% versus 2005. Of
this
increase, 6.5% was attributable to volume, 8.6% to price increases and the
balance to the Transtar acquisition.
Plastic
segment sales for fiscal year 2006 were
$115.0 million, an increase of $7.3 million or 6.8% versus last year. Volume
accounted for 3.8% of this increase and the remainder was due to price
increases.
“In
addition to our 2006 sales growth, we
focused on our operations which resulted in improved inventory turnover and
operating margin of 7.9% of sales. We were able to successfully manage the
intricacies of our customers’ supply-chain networks in an environment of
relatively high demand, tight supply and volatile material prices,” commented
Mike Goldberg. “The Transtar acquisition, which was the largest in our company’s
history, affords us opportunities to further enhance our operating leverage
in
2007 through both top-line sales growth and material procurement initiatives.
We
have already integrated key members of our Castle Metals team with the Transtar
team to manage the cross-selling effort of our combined product offerings
and
enhance our supplier partnerships on a global scale. Through these efforts
and a
realignment of leadership and certain operations within the company, we have
formed the nucleus of an aerospace and defense group within our Metals segment
that is focused on servicing the supply chain needs of that industry. This
is a
cornerstone of our long-term strategy to become the foremost provider of
specialty products and services and specialized supply chain solutions for
targeted industries,” Goldberg ended.
The
company reported continued improvement in
inventory turnover. Days sales in inventory (DSI) were 116.7 days in 2006
versus
119.3 days in 2005.
“Looking
to 2007, we believe most of the
markets we serve will remain strong, supporting further sales growth, but
they
may exhibit a slower rate of growth than what we enjoyed in recent years.
We
have targeted further improvements in our inventory turnover for 2007 and
remain
steadfast in reducing our debt-to-capital ratio from 51.2% at December 31,
2006
to the low 40’s range by year end 2007. In summary, 2007 is already showing
signs of being another promising year for our company, and I am excited about
the opportunities that lie ahead,” Goldberg concluded.
Also
on February 22, 2007, the Company
announced a cash dividend of $0.06 per share to be paid on March 16, 2007
to
shareholders of record at close of business on March 2, 2007. The Company
will
be holding its annual shareholders’ meeting at 10:00 am (CST) on April 26, 2007
at it’s corporate headquarters in Franklin Park, IL.
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 and twelve month periods ended December 31, 2006. 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 11084285.
About
A. M.
Castle & Co.
Founded
in 1890, A.
M. Castle & Co. is a specialty metal and plastic products and services
distributor, 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, debt
extinguishment expense, and interest expense (including discount on accounts
receivable sold and loss on extinguishment of debt), 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 Year
|
|||||||||||
|
(Dollars
in thousands, except per share data)
|
Months
Ended
|
Ended
|
|||||||||||
|
Unaudited
|
Dec
31,
|
Dec
31,
|
|||||||||||
|
2006
|
2005
|
2006
|
2005
|
||||||||||
|
Net
sales
|
$
|
321,991
|
$
|
227,257
|
$
|
1,177,600
|
$
|
958,978
|
|||||
|
Costs
and expenses:
|
|||||||||||||
|
Cost
of materials (exclusive of depreciation)
|
233,099
|
164,480
|
839,235
|
677,186
|
|||||||||
|
Warehouse,
processing and delivery expense
|
34,484
|
26,792
|
123,204
|
108,427
|
|||||||||
|
Sales,
general, and administrative expense
|
32,601
|
23,340
|
109,406
|
92,848
|
|||||||||
|
Depreciation
and amortization expense
|
4,968
|
2,588
|
13,290
|
9,340
|
|||||||||
|
Total
operating expense
|
305,152
|
217,200
|
1,085,135
|
887,801
|
|||||||||
|
Operating
income
|
16,839
|
10,057
|
92,465
|
71,177
|
|||||||||
|
Interest
expense, net
|
(4,353
|
)
|
(1,473
|
)
|
(8,302
|
)
|
(7,348
|
)
|
|||||
|
Discount
on sale of accounts receivable
|
(1,127
|
)
|
|||||||||||
|
Loss
on extinguishment of debt
|
-
|
(4,904
|
)
|
-
|
(4,904
|
)
|
|||||||
|
Income
before income taxes and equity earnings of joint venture
|
12,486
|
3,680
|
84,163
|
57,798
|
|||||||||
|
Income
taxes
|
(4,219
|
)
|
(1,303
|
)
|
(33,330
|
)
|
(23,191
|
)
|
|||||
|
Net
income before equity in earnings of joint venture
|
8,267
|
2,377
|
50,833
|
34,607
|
|||||||||
|
Equity
in earnings of joint venture
|
954
|
960
|
4,286
|
4,302
|
|||||||||
|
Net
income
|
9,221
|
3,337
|
55,119
|
38,909
|
|||||||||
|
Preferred
dividends
|
(242
|
)
|
(241
|
)
|
(963
|
)
|
(961
|
)
|
|||||
|
Net
income applicable to common stock
|
$
|
8,979
|
$
|
3,096
|
$
|
54,156
|
$
|
37,948
|
|||||
|
Diluted
earnings per share
|
$
|
0.47
|
$
|
0.18
|
$
|
2.89
|
$
|
2.11
|
|||||
|
EBITDA
*
|
$
|
22,761
|
$
|
13,605
|
$
|
110,041
|
$
|
84,819
|
|||||
|
*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 Year
|
|||||||||||
|
|
Months Ended
|
Ended
|
|||||||||||
|
|
Dec
31,
|
Dec
31,
|
|||||||||||
|
2006
|
2005
|
2006
|
2005
|
||||||||||
|
Net
income
|
$
|
9,221
|
$
|
3,337
|
$
|
55,119
|
$
|
38,909
|
|||||
|
Depreciation
and amortization expense
|
4,968
|
2,588
|
13,290
|
9,340
|
|||||||||
|
Interest
expense, net
|
4,353
|
1,473
|
8,302
|
7,348
|
|||||||||
|
Loss
on extinguishment of debt
|
-
|
4,904
|
-
|
4,904
|
|||||||||
|
Discount
on sale of accounts receivable
|
-
|
-
|
-
|
1,127
|
|||||||||
|
Provision
for income taxes
|
4,219
|
1,303
|
33,330
|
23,191
|
|||||||||
|
EBITDA
|
$
|
22,761
|
$
|
13,605
|
$
|
110,041
|
$
|
84,819
|
|||||
|
CONSOLIDATED
BALANCE SHEETS
|
|||||||
|
(Dollars
in thousands)
|
|||||||
|
Unaudited
|
December
31,
|
||||||
|
2006
|
2005
|
||||||
|
ASSETS
|
|||||||
|
Current
assets
|
|||||||
|
Cash
and cash equivalents
|
$ |
9,526
|
$ |
37,392
|
|||
|
Accounts
receivable, less allowances of $3,112 at December 31, 2006
|
|||||||
|
and
$1,763 at December 31, 2005
|
160,999
|
107,064
|
|||||
|
Inventories
(principally on last-in, first-out basis)
|
|||||||
|
(latest
cost higher by $128,104 at December 31, 2006 and $104,036
|
|||||||
|
at
December 31, 2005)
|
202,394
|
119,306
|
|||||
|
Other
current assets
|
18,743
|
6,351
|
|||||
|
Total
current assets
|
391,662
|
270,113
|
|||||
|
Investment
in joint venture
|
13,577
|
10,850
|
|||||
|
Goodwill
|
101,783
|
32,222
|
|||||
|
Intangible
assets
|
66,169
|
70
|
|||||
|
Prepaid
pension cost
|
5,681
|
41,946
|
|||||
|
Other
assets
|
5,850
|
4,112
|
|||||
|
Property,
plant and equipment, at cost
|
|||||||
|
Land
|
5,221
|
4,772
|
|||||
|
Building
|
49,017
|
45,890
|
|||||
|
Machinery
and equipment
|
141,090
|
127,048
|
|||||
|
195,328
|
177,710
|
||||||
|
Less
- accumulated depreciation
|
(124,930
|
)
|
(113,288
|
)
|
|||
|
70,398
|
64,422
|
||||||
|
Total
assets
|
$ |
655,120
|
$ |
423,735
|
|||
|
LIABILITIES
AND STOCKHOLDERS' EQUITY
|
|||||||
|
Current
liabilities
|
|||||||
|
Accounts
payable
|
$ |
117,561
|
$ |
103,246
|
|||
|
Accrued
liabilities
|
30,152
|
21,535
|
|||||
|
Current
and deferred income taxes
|
17,270
|
7,052
|
|||||
|
Short-term
debt
|
123,261
|
-
|
|||||
|
Current
portion of long-term debt
|
12,834
|
6,233
|
|||||
|
Total
current liabilities
|
301,078
|
138,066
|
|||||
|
Long-term
debt, less current portion
|
90,051
|
73,827
|
|||||
|
Deferred
income taxes
|
31,782
|
21,903
|
|||||
|
Deferred
gain on sale of assets
|
5,666
|
5,967
|
|||||
|
Pension
and postretirement benefit obligations
|
10,636
|
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 17,047,591 at December 31, 2006
|
|||||||
|
and
16,605,714 at December 31, 2005
|
170
|
166
|
|||||
|
Additional
paid-in capital
|
69,775
|
60,916
|
|||||
|
Retained
earnings
|
160,625
|
110,530
|
|||||
|
Accumulated
other comprehensive (loss) income
|
(18,504
|
)
|
2,370
|
||||
|
Other
- deferred compensation
|
(1,392
|
)
|
-
|
||||
|
Treasury
stock, at cost - 399,614 shares at December 31, 2006
|
|||||||
|
and
546,065 shares at December 31, 2005
|
(6,006
|
)
|
(9,716
|
)
|
|||
|
Total
stockholders' equity
|
215,907
|
175,505
|
|||||
|
Total
liabilities and stockholders' equity
|
$ |
655,120
|
$ |
423,735
|
|||
|
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
|||||||
|
(Dollars
in thousands)
|
For
the Year
|
||||||
|
Unaudited
|
Ended
Dec 31,
|
||||||
|
2006
|
2005
|
||||||
|
Cash
flows from operating activities:
|
|||||||
|
Net
income
|
$ |
55,119
|
$ |
38,909
|
|||
|
Adjustments
to reconcile net income to net cash
|
|||||||
|
from operating activities:
|
|||||||
|
Depreciation
and amortization
|
13,290
|
9,340
|
|||||
|
Other
non-cash items
|
2,925
|
(3,392
|
)
|
||||
|
Increase (decrease) from changes, net of acquisitions, in:
|
|||||||
|
Working
capital
|
(60,353
|
)
|
12,832
|
||||
|
Other
assets and liabilities
|
15,680
|
189
|
|||||
|
Net
cash from operating activities
|
26,661
|
57,878
|
|||||
|
Cash
flows from investing activities:
|
|||||||
|
Investments
and
acquisitions, net of cash acquired
|
(175,583
|
)
|
(236
|
)
|
|||
|
Capital
expenditures
|
(12,935
|
)
|
(8,685
|
)
|
|||
|
Other
|
1,747
|
4,413
|
|||||
|
Net
cash from investing activities
|
(186,771
|
)
|
(4,508
|
)
|
|||
|
Cash
flows from financing activities:
|
|||||||
|
Increased
(decreased) borrowings
|
133,087
|
(21,271
|
)
|
||||
|
Dividends
paid
on common shares
|
(4,061
|
)
|
0
|
||||
|
Preferred
stock
dividends
|
(963
|
)
|
(961
|
)
|
|||
|
Exercise
of
stock options and other
|
4,026
|
3,020
|
|||||
|
Net
cash from financing activities
|
132,089
|
(19,212
|
)
|
||||
|
Effect
of exchange rate changes on cash and cash equivalents
|
155
|
128
|
|||||
|
Net
(decrease) increase in cash and cash equivalents
|
(27,866
|
)
|
34,286
|
||||
|
Cash
and cash equivalents - beginning of year
|
$ |
37,392
|
$ |
3,106
|
|||
|
Cash
and cash equivalents - end of year
|
$
|
9,526
|
$ |
37,392
|
|||