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Castle Cuts Loss; Moves Ahead on Restructuring

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A.M. Castle slashed its operating loss in the first quarter as it continues to restructure the company. The Oak Brook, Ill.-based specialty metals distributor reported a net loss of $2.3 million, a 10-fold improvement from both the prior quarter and the first quarter of 2016.

Net sales in first-quarter 2017 totaled $135.9 million, a decrease of $27.9 million compared with the same quarter of 2016. The company’s 2016 first quarter included the sale of inventory at its Houston and Edmonton facilities. Despite the closure of these two locations, the company posted a 5.7 percent increase in tons sold per day compared with first-quarter 2016.

Castle also achieved a positive adjusted EBITDA of $1.7 million in the quarter. Gross material margins of 25.7 percent were up from 14.3 percent in the fourth quarter and 18.4 percent in the same period in 2016.

“We are pleased to report A.M. Castle achieved positive adjusted EBITDA from continuing operations during the first quarter for the first time in over three years. We believe the positive financial results demonstrate the potential for A.M. Castle and our financial restructuring plan announced April 7,” said President and CEO Steve Scheinkman.

Castle also announced the latest development in its restructuring, a proposed prepackaged joint Chapter 11 plan of reorganization. The company was soliciting votes from stakeholders in support of the plan. It had the support of 92 percent of its debtholders before the solicitation. The plan is expected to take 45-60 days to complete and will result in a 70 percent reduction in cash interest expense.

“We believe completing our comprehensive financial restructuring via the plan will limit disruption to the business and minimize certain costs and unfavorable tax results. Further, the plan contemplates that the company will continue to operate in the ordinary course of its business, including timely shipments to customers and payments to vendors,” Scheinkman said.