A.M. Castle & Co., Oak Brook, Ill., reported net sales of $136.1 million in the third quarter, an 8.1 percent decline compared with the same month the prior year. The specialty metals distributor reported a net loss of $12.2 million, nearly double the $6.7 million loss reported in the same quarter of 2018.
For the first three quarters, net sales were down 2.4 percent to $433.6 million. The company reported a net loss of $28.5 million, 40.3 percent behind the first nine months of 2018.
"As expected, market conditions continued to deteriorate in the third quarter of 2019, most acutely in our North American industrial end markets, which showed both demand and pricing softness," said Castle Chairman and CEO Steve Scheinkman. "Tons sold in the quarter decreased substantially compared to the third quarter of last year, primarily due to challenges in the carbon flat-roll business in Mexico. Despite this, we are very pleased to have maintained a relatively stable material gross margin in our core specialty products, which we believe is a result of a disciplined focus on highly-accretive sales, particularly those including our value-added service offerings."
During the quarter, Castle exited a piece of its carbon flat-roll business in one of its Mexican operations. "In keeping with the philosophy to excel in our highly accretive core product lines to the exclusion of low-margin, working capital intensive opportunities," said President Marec Edgar.
To date, the company has sold approximately 40 percent of the inventory at the operation, with the expectation that the remainder will be sold by early 2020.
"We continue to realize the favorable impacts of our new global supply organization, which has
performed exceedingly well in reducing our aged inventories, improving our overall stock levels throughout the business, and providing real-time facilitation of our branches in moving higher cost inventory as certain markets softened. This has allowed us to avoid an overstocked position relative to the market and restock at lower replacement costs. Moreover, although we faced reduced demand and a downward pricing environment in the quarter, we improved our price per ton sold compared to both the second quarter of 2019 and the third quarter of 2018," Edgar said.