March 16, 2016
Castle Confident Restructuring Will Reverse Losses
Executives at A.M. Castle & Co., Oak Brook, Ill., say they have completed a difficult restructuring process and have positioned the company for long-term growth. During its quarterly conference call, Castle reported a net loss of $209.8 million on sales of $770.8 million for 2015. That compares to a loss of $119.4 million on sales of $979.8 million in 2014. Last year’s results were affected by various restructuring costs and inventory write-downs.
Additionally, the company announced that it has found a buyer for its Total Plastics, Inc., subsidiary, and that it has completed the sale of its energy-related inventory and the closure of its Houston and Edmonton facilities. Details of the Total Plastics sale agreement were not disclosed. Changes at Castle also include the consolidation of seven facilities, the reconfiguration of management for a greater focus on branch accountability and customer responsiveness, and the restructuring of more than $200 million in debt.
“We have substantially completed the initiatives promised by the new Castle management team 11 months ago when I took the reins as CEO,” said President and CEO Steve Scheinkman. “With the proceeds from these sales, we will reduce our debt and improve our capital structure. In addition, the closure of our facilities in Houston and Edmonton substantially reduces our exposure to the energy markets. While our restructuring activities created a temporary headwind at certain branches, we believe our market position in the aerospace and industrial channels will allow us to grow our business. We are now excited to be able to turn our attention to commercial activities to return to profitability.”
In the fourth quarter, Castle reported a net loss of $119.7 million on sales of $164.2 million. That compares to a fourth-quarter 2014 loss of $29.7 million on sales of $231.5 million. Net sales from Castle’s Metals segment during the fourth quarter totaled $132.5 million, 33 percent lower than in fourth-quarter 2014 and 12 percent lower than in the previous quarter, though the average selling price per ton sold was up modestly compared to both prior periods. Fourth-quarter 2015 benefited from a favorable product mix, which offset the effect of the lower volume shipped.
“The operational restructuring plan announced in April 2015 and put in place throughout the year is now complete,” said Pat Anderson, executive vice president and CFO. “We believe our lower cost structure and improved capital structure as the result of our recent strategic refinancing will support improved cash flow, operating margin and EBITDA performance going forward.”
Scheinkman concluded: “2015 was a year of significant change for Castle...allowing us to be more competitive in the core Metals markets we serve even in this challenging market environment. Our goal is to become even more responsive to the needs of our customers, while continuing to fine-tune our cost structure on a branch-by-branch basis. Most importantly, we believe we are now positioned take advantage of opportunities that will be available as market cycles begin to turn.”