A. M. Castle & Co. Announces Continued Strong Sales and Earnings Performance

Declares a Quarterly Cash Dividend 


FRANKLIN PARK, Ill., Oct. 31  /PRNewswire-FirstCall/ -- A. M. Castle & Co. (AMEX:CAS), a global distributor of specialty metal and plastic products and services announced today continued strong customer demand and record sales and earnings performance for the quarter ended September 30, 2006.

Consolidated net sales for the third quarter ended September 30, 2006 were $300.8 million, an increase of $66.3 million, or 28.2% from the third quarter of 2005.  Year-to-date consolidated net sales were $855.6 million, an increase of $123.9 million, or 16.9% from the same period of 2005.

"We continue to experience strong demand for our products and services," stated Michael Goldberg, President and CEO of A. M. Castle.  "Of the 28% increase in our third quarter revenues, 8% was attributable to volume, 12% to price increases and 8% to our acquisition of Transtar.  Sales of nickel alloy products were particularly robust, with tonnage in that product family growing 60% compared to the third quarter of last year, reflecting the strong oil and gas market.  Year-to-date revenues were 17% ahead of last year, of which 7% was attributable to volume, 7% to price and 3% to Transtar," Goldberg continued.

On September 5, 2006 the Company announced its acquisition of Transtar Metals, a leading distributor of high-performance alloys to the aerospace and defense industries world-wide.  Under the terms of the agreement signed August 12, 2006, the closing purchase price was $173.3 million subject to final adjustments, including the assumption of $1.0 million of foreign debt and $0.6 million of capital leases.  The purchase was funded with approximately $30.0 million of available cash and $142.0 million of debt financing.

Transtar Metals has eight operations strategically located in aerospace hubs in the U.S., the United Kingdom and France.  Additionally, Transtar maintains a sales presence throughout Europe and the Far East.  International sales are over one-third of Transtar's total revenue stream.  "We are very pleased with our acquisition of Transtar and our people are working together extremely well.  The aerospace business continues to be strong," commented Goldberg.

Net income applicable to common stock for the third quarter was $15.3 million, or $0.82 per diluted share, compared to $10.1 million, or $0.56 per diluted share in the third quarter of 2005.  Year-to-date net income applicable to common stock was $45.2 million, or $2.45 per diluted share, compared to $34.9 million, or $1.93 per diluted share for the same period of 2005.

In its Metals segment the Company reported 30% sales growth for the third quarter and 18% on a year-to-date basis.  The Transtar acquisition contributed 8% of that growth for the third quarter and 3% year-to-date.  Increased volume was 9% and 8% for the third quarter and year-to-date, respectively.  Material price increases accounted for the remainder of the sales growth.

Plastic segment sales increased 11% compared to the third quarter of 2005, and 9% on a year-to-date basis.  Sales growth, excluding material price increases in this segment was 9% and 3% for the third quarter and year-to-date comparable periods, respectively.

"We will continue to look to invest in certain markets which we believe have higher growth potential and where we can leverage our expertise in specialty products," stated Goldberg.  "Our acquisition of Transtar Metals is the cornerstone of our long-term strategic growth initiative in this regard. Including Transtar, we have about 30% of our total Company revenues aligned with the global aerospace and defense industry.  It is our intent to invest in other industries that are in line with our strategic goals over the next few years, but we are very mindful of our balance sheet," concluded Goldberg.

Larry Boik, Vice President and CFO of the Company commented, "Our balance sheet and cash position allowed us to move forward with the strategic acquisition of Transtar.  The future cash earnings of the business will be used to reduce our debt and to provide similar flexibility to fund future strategic growth opportunities as they arise.  We will remain diligent in managing the balance sheet through the business cycles as we execute our growth strategy."

On October 26, 2006 the Company's Board of Directors approved a quarterly cash dividend of 6 cents per share, payable on November 27, 2006 to shareholders of record at the close of business on November 10, 2006.

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

  Net sales                          $300,809  $234,551  $855,610  $731,721
  Cost of material sold               214,792   163,956   606,136   512,705
    Gross material margin              86,017    70,595   249,474   219,016

  Plant and delivery expense           30,117    27,920    88,720    81,635
  Sales, general, and administrative
   expense                             26,847    23,405    76,805    69,509
  Depreciation and amortization
   expense                              3,225     2,205     8,323     6,752
  Total operating expense              60,189    53,530   173,848   157,896

  Operating income                     25,828    17,065    75,626    61,120

  Interest expense, net                (1,903)   (1,765)   (3,949)   (5,875)
  Discount on sale of accounts
   receivable                             -        (127)      -      (1,127)

  Income before income taxes and
   equity earnings of joint venture    23,925    15,173    71,677    54,118

  Income taxes                         (9,470)   (5,673)  (29,110)  (21,888)
  Income before equity in earnings
   of joint venture                    14,455     9,500    42,567    32,230

  Equity in earnings of joint venture   1,037       817     3,332     3,342
  Net income                           15,492    10,317    45,899    35,572

  Preferred dividends                    (235)     (240)     (720)     (720)
  Net income applicable to common
   stock                              $15,257   $10,077   $45,179   $34,852

  Diluted earnings per share            $0.82     $0.56     $2.45     $1.93

  EBITDA *                            $30,090   $20,087   $87,281   $71,214

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



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

  Net income                          $15,492   $10,317   $45,899   $35,572
  Depreciation and amortization         3,225     2,205     8,323     6,752
  Interest, net                         1,903     1,765     3,949     5,875
  Discount on accounts receivable s       -         127       -       1,127
  Provision from income taxes           9,470     5,673    29,110    21,888
  EBITDA                              $30,090   $20,087   $87,281   $71,214



  CONSOLIDATED BALANCE SHEETS
  (Dollars in thousands)                                    As of
  Unaudited                                      Sept 30,            Dec 31,
                                                   2006               2005
  ASSETS
  Current assets
    Cash and cash equivalents                     $9,756            $37,392
    Accounts receivable, less
     allowances of $3,263 at September 30,
     2006 and $1,763 at December 31, 2005        182,023            107,064
    Inventories (principally on last-in,
     first-out basis)                            216,216            119,306
     (latest cost higher by $121,865 at
     September 30, 2006 and $104,036 at
     December 31, 2005)
    Other current assets                          13,996              6,351
        Total current assets                     421,991            270,113
  Investment in joint venture                     13,000             10,850
  Goodwill                                        99,208             32,222
  Intangible assets                               68,520                 70
  Prepaid pension cost                            39,082             41,946
  Other assets                                     6,462              4,112
  Property, plant and equipment, at cost
    Land                                           5,224              4,772
    Buildings                                     48,641             45,890
    Machinery and equipment                      138,458            127,048
                                                 192,323            177,710
    Less - accumulated depreciation             (121,080)          (113,288)
                                                  71,243             64,422
  Total assets                                  $719,506           $423,735

  LIABILITIES AND STOCKHOLDERS' EQUITY
  Current liabilities
    Accounts payable                            $144,298           $103,246
    Accrued liabilities                           32,972             21,535
    Current and deferred income taxes             10,863              7,052
    Short-term debt                              129,223                -
    Current portion of long-term debt             12,527              6,233
      Total current liabilities                  329,883            138,066
  Long-term debt, less current portion            97,718             73,827
  Deferred income taxes                           48,618             21,903
  Deferred gain on sale of assets                  5,907              5,967
  Pension and postretirement benefit
   obligations                                     9,181              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 17,013,371 at September 30,
     2006 and 16,605,714 at December 31, 2005        170                166
    Additional paid-in capital                    67,772             60,916
    Retained earnings                            152,670            110,530
    Accumulated other comprehensive
     income                                        3,281              2,370
    Treasury stock, at cost - 411,235 shares
     at September 30, 2006 and 546,065 shares
     at December 31, 2005                         (6,933)            (9,716)
         Total stockholders' equity              228,199            175,505
  Total liabilities and stockholders' equity    $719,506           $423,735



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

  Cash flows from operating activities:
    Net income                                    $45,899           $35,572
  Adjustments to reconcile net income
   to net cash from operating activities:
    Depreciation and amortization                   8,323             6,752
    Amortization of deferred gain                    (559)             (639)
    Equity in earnings from joint venture          (3,332)           (3,342)
    Stock compensation expense                      2,911             2,607
    Deferred tax provision                          4,730               241
    Excess tax benefits from stock-based
     payment arrangements                          (1,210)              -
  Increase (decrease) from changes,
   net of acquisitions, in:
    Accounts receivable                           (40,380)          (35,776)
    Inventories                                   (36,020)           18,205
    Prepaid pension costs                           2,865               987
    Other current assets                           (2,115)              316
    Accounts payable                               20,423            (8,182)
    Accrued liabilities                             3,849             4,401
    Income tax payable                             (9,946)            5,265
    Postretirement benefit obligations
     and other liabilities                         (1,585)              308
  Net cash (used in) from operating activities     (6,147)           26,715

  Cash flows from investing activities:
    Investments and acquisitions, net
     of cash acquired                            (175,795)             (236)
    Dividends from joint venture                    1,231             1,705
    Capital expenditures                          (10,170)           (4,784)
    Collection of note receivable                     -               2,639
  Net cash used in investing activities          (184,734)             (676)

  Cash flows from financing activities:
    Proceeds from issuance of short-term debt     128,943               -
    Proceeds from issuance of long-term debt       30,574             4,000
    Repayments of long-term debt                     (680)          (21,542)
    Preferred stock dividend                         (720)             (720)
    Dividends paid                                 (3,039)              -
    Exercise of stock options and other             6,525               597
    Excess tax benefits from stock-based
     payment arrangements                           1,210               -
  Net cash from (used in) financing activities    162,813           (17,665)

    Effect of exchange rate changes on
     cash and cash equivalents                        432               476

  Net (decrease) increase in cash and
   cash equivalents                               (27,636)            8,850

    Cash and cash equivalents -
     beginning of year                            $37,392            $3,106
    Cash and cash equivalents - end of period      $9,756           $11,956


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  

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