A. M. Castle & Co. Announces Continued Strong Sales and Earnings Performance and Declares a Quarterly Cash Dividend

FRANKLIN PARK, Ill., Aug. 1  /PRNewswire-FirstCall/ -- A. M. CASTLE & CO. (AMEX:CAS), a leading North American distributor of highly engineered metals and plastics, announced today continued strong demand and record sales and earnings performance for the second quarter and first-half of 2006.

Consolidated net sales for the second quarter ended June 30, 2006 were $275.6 million, an increase of $25.6 million or 9.8% from the second quarter of 2005.  For the first half of 2006, net sales totaled $554.8 million, a $57.6 million or 11.6% increase from the same period of 2005.

"Excluding material price increases, we achieved 5% sales growth in the second quarter and 7% sales growth for the first half of the year," stated Michael Goldberg, President and CEO of A. M. Castle & Co.

Net income applicable to common stock for the second quarter was $14.1 million, or $0.76 per diluted share, compared to $13.2 million, or $0.73 per diluted share, in the second quarter of 2005.  For the first half of 2006, net income applicable to common stock, was $29.9 million, or $1.62 per diluted share, compared to $24.8 million, or $1.37 per diluted share for the first half of 2005.

"We continue to experience strong demand in the markets we serve, particularly aerospace, oil and gas, and mining and heavy industrial equipment sectors.  Also contributing to our record results was a moderate increase in metals prices during the second quarter," added Goldberg.  "We remain optimistic about customer demand requirements for the second half of 2006. However, we want to remind our shareholders that typical seasonal patterns would suggest that second half sales will generally fall below those of the first half, assuming no further movement in material prices," Goldberg concluded.

The Company reported 10% sales growth in its Metals business for the second quarter and 12% sales growth on a year-to-date basis.  Metals prices for the Company's current product mix were 5% higher than both the second quarter of 2005 and the comparative six-months.

Plastics sales increased 7% compared to the second quarter of last year and increased 8% year-to-date.  Plastics prices were 5% higher than the second quarter of 2005 and 7% higher than the first half of last year.

"We continue to explore various growth opportunities in both our Metals and Plastics segments," stated Goldberg.  "Our excellent balance sheet has us well-positioned for both organic growth and potential strategic acquisitions that complement and enhance our existing product offerings, as well as expand our geographic reach," added Goldberg.  The Company's debt to capital ratio at quarter end was 27.3%.

Larry Boik, Vice President and CFO of the Company, commented, "Our new Alabama facility shipped its first customer orders in early July."  The Birmingham facility was announced previously as part of the Company's planned expansion of its Metals business into the Southern U.S. manufacturing region. "Our business systems replacement initiative is also progressing well.  We completed the conversion of our financial systems during the second quarter and have started work on our core business applications.  The project remains on track to be completed in late 2007 to early 2008 at a total cost of $4.0 million to $6.0 million," added Boik.  "Our capital expenditures through June reflect the purchase of the Alabama facility and our investment in new technology as we expand our business market reach and capabilities for the future," Boik concluded.

On July 27, 2006, the Company's Board of Directors approved a quarterly cash dividend of 6 cents per share, payable on August 28, 2006 to shareholders of record at the close of business on August 11th.

In closing, Mr. Goldberg invites interested parties to listen to its conference call scheduled for 11:00 a.m. (EDT) today, Tuesday, August 1, 2006. A rebroadcast of the call will be available for 14 days following the call on the Company's web site at http://www.amcastle.com/ .

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, 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
  (Dollars in thousands, except per    For the Three        For the Six
   share data)                          Months Ended        Months Ended
  Unaudited                               June 30,            June 30,
                                       2006      2005      2006      2005

  Net sales                          $275,607  $250,967  $554,800  $497,170
  Cost of material sold               195,244   175,449   391,343   348,749
    Gross material margin              80,363    75,518   163,457   148,421

  Plant and delivery expense           28,981    27,347    58,605    53,715
  Sales, general, and administrative
   expense                             25,071    22,617    49,957    46,104
  Depreciation and amortization
   expense                              2,654     2,274     5,097     4,547
  Total operating expense              56,706    52,238   113,659   104,366

  Operating income                     23,657    23,280    49,798    44,055

  Interest expense, net                  (958)   (2,027)   (2,046)   (4,110)
  Discount on sale of accounts
   receivable                             -        (464)      -      (1,000)

  Income before income taxes and
   equity earnings of joint venture    22,699    20,789    47,752    38,945

  Income taxes                         (9,397)   (8,320)  (19,639)  (16,215)
  Income before equity in earnings
   of joint venture                    13,302    12,469    28,113    22,730

  Equity in earnings of joint
   venture                              1,056     1,016     2,295     2,525
  Net income                           14,358    13,485    30,408    25,255

  Preferred dividends                    (243)     (240)     (485)     (480)
  Net income applicable to common
   stock                              $14,115   $13,245   $29,923   $24,775

  Basic earnings per share              $0.83     $0.83     $1.78     $1.56
  Diluted earnings per share            $0.76     $0.73     $1.62     $1.37

  EBITDA *                            $27,367   $26,570   $57,190   $51,127

  *Earnings before interest, discount on sale of accounts receivable, taxes,
   depreciation and amortization

  Reconciliation of EBITDA to net
   income:                              For the Three        For the Six
                                         Months Ended        Months Ended
                                           June 30,            June 30,
                                        2006      2005      2006      2005

  Net income                          $14,358   $13,485   $30,408   $25,255
  Depreciation and amortization         2,654     2,274     5,097     4,547
  Interest, net                           958     2,027     2,046     4,110
  Discount on accounts receivable
   sold                                   -         464       -       1,000
  Provision from income taxes           9,397     8,320    19,639    16,215
  EBITDA                              $27,367   $26,570   $57,190   $51,127



  CONSOLIDATED BALANCE SHEETS
  (Dollars in thousands)                                    As of
  Unaudited                                      June 30,            Dec 31,
                                                   2006               2005
  ASSETS
  Current assets
    Cash and cash equivalents                    $42,982            $37,392
    Accounts receivable, less
     allowances of $2,040 at June 30,
     2006 and $1,763 at December 31, 2005        128,946            107,064
    Inventories (principally on last-in,
     first-out basis)
      (latest cost higher by $114,014
       at June 30, 2006 and  $104,036
       at December 31, 2005)                     139,604            119,306
    Other current assets                           7,378              6,351
         Total current assets                    318,910            270,113
  Investment in joint venture                     12,358             10,850
  Goodwill                                        32,250             32,222
  Prepaid pension cost                            40,037             41,946
  Other assets                                     4,923              4,182
  Property, plant and equipment, at cost
    Land                                           5,203              4,772
    Building                                      48,468             45,890
    Machinery and equipment                      132,207            127,048
                                                 185,878            177,710
    Less - accumulated depreciation             (118,627)          (113,288)
                                                  67,251             64,422
  Total assets                                  $475,729           $423,735

  LIABILITIES AND STOCKHOLDERS' EQUITY
  Current liabilities
    Accounts payable                            $123,397           $103,246
    Accrued liabilities                           22,997             21,535
    Current and deferred income taxes              1,497              7,052
    Current portion of long-term debt              6,233              6,233
         Total current liabilities               154,124            138,066
  Long-term debt, less current portion            73,569             73,827
  Deferred income taxes                           20,784             21,903
  Deferred gain on sale of assets                  5,672              5,967
  Pension and postretirement benefit
   obligations                                     8,949              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 16,980,004 at June 30,
       2006 and 16,605,714 at December 31,
       2005                                          170                166
      Additional paid-in capital                  66,000             60,916
      Retained earnings                          138,434            110,530
      Accumulated other comprehensive
       income                                      3,473              2,370
      Treasury stock, at cost -
       411,235 shares at June 30, 2006
       and 546,065 shares at December 31,
       2005                                       (6,685)            (9,716)
         Total stockholders' equity              212,631            175,505
  Total liabilities and stockholders'
   equity                                       $475,729           $423,735



  CONSOLIDATED STATEMENTS OF CASH FLOWS
  (Dollars in thousands)                             For the Six Months
  Unaudited                                            Ended June 30,
                                                   2006              2005

  Cash flows from operating activities:
    Net income                                   $30,408           $25,255
  Adjustments to reconcile net income
   to net cash from operating activities:
    Depreciation and amortization                  5,097             4,547
    Amortization of deferred gain                   (295)             (427)
    Equity in earnings from joint
     venture                                      (2,295)           (2,525)
    Stock compensation expense                     1,945             1,497
    Deferred tax provision (benefit)                  (1)            1,586
    Excess tax benefits from stock-based
     payment arrangements                           (811)              -
   Increase (decrease) from changes in:
    Accounts receivable                          (21,644)          (22,121)
    Inventories                                  (20,089)            5,711
    Prepaid pension costs                          1,909             1,124
    Other current assets                          (1,118)              (96)
    Accounts payable                              20,210            (6,456)
    Accrued liabilities                            1,471             2,180
    Income tax payable                            (6,588)            4,213
    Postretirement benefit obligations
     and other liabilities                          (273)              148
  Net cash from operating activities               7,926            14,636

  Cash flows from investing activities:
    Dividends from joint venture                     825             1,334
    Capital expenditures                          (7,804)           (2,204)
  Net cash from investing activities              (6,979)             (870)

  Cash flows from financing activities:
    Repayments of long-term debt                    (258)          (11,346)
    Preferred stock dividend                        (485)             (480)
    Dividends paid                                (2,018)              -
    Exercise of stock options and other            6,174               177
    Excess tax benefits from stock-based
     payment arrangements                            811               -
  Net cash from financing activities               4,224           (11,649)

    Effect of exchange rate changes on
     cash and cash equivalents                       419                42

  Net increase in cash and cash
   equivalents                                     5,590             2,159

    Cash and cash equivalents -
     beginning of year                           $37,392            $3,106
    Cash and cash equivalents - end of
     period                                      $42,982            $5,265


DATASOURCE: A. M. Castle & Co.



CONTACT:  Larry A. Boik, Vice President-Finance & CFO of A. M. Castle &

Co., [phone], or  ; or Analysts, Katie Pyra of

Ashton Partners, [phone], or  



Web site:  http://www.amcastle.com/ 

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