Welcome!

News Feed Item

A. M. Castle & Co. Announces Plan To Reduce Costs And Improve Operating Performance

-- Restructuring actions expected to result in $33 million of annual operating profit improvement, including approximately $21 million of structural operating cost reductions and $12 million of gross margin enhancements

OAK BROOK, Ill., Jan. 16, 2013 /PRNewswire/ -- A. M. Castle & Co. (NYSE: CAS), a global distributor of specialty metal and plastic products, value-added services and supply chain solutions, today announced restructuring actions, including an organizational restructuring, warehouse realignments and performance improvement programs. The measures are expected to improve annualized operating profit by $33 million once fully implemented in 2013 and will position the company for greater sales and earnings growth.

"This broad, performance-enhancing plan will enable us to better serve Castle Metals' customers by organizing our operations around them and their needs," said Scott Dolan, president and CEO. "Our goals are to simplify how we do business, optimize inventory levels, reduce waste, and improve on-time performance, which we expect will help us increase revenue while reducing costs. It is a critical step in improving our operating results, positioning Castle for greater long-term growth and creating increased value for our shareholders."

The company's restructuring program for its metals business comprises streamlining its commercial unit and sales force structure, realigning its branch fulfillment network, and implementing a continuous improvement program across the enterprise.

Organizational Restructuring

The organizational restructuring will eliminate the current decentralized commercial unit structure. Instead of three independent commercial units that include sales, operations, procurement and other support functions, Castle will centralize the support functions, and dedicate three vertical sales teams. Those sales teams will each be led by a vice president and will provide specialized expertise to customers in Castle Metals' Aerospace, Oil & Gas, and Industrial markets.

The vertical market sales structure will better position the company to develop topline revenue growth by focusing on customers and their global metals needs, while eliminating the redundancies of the commercial unit structure. Castle Metals will create a new position of Chief Commercial Officer, who will oversee the vertical sales team, leveraging best practices across industries and executing the go-to-market strategy for the company as a whole. The company is implementing several changes to its 2013 compensation programs to align with the new operating plans, including a new sales incentive plan.

The company is centralizing the management of its fulfillment operations. Functional groups for procurement, operations, human resources, finance and information technology from the former Commercial Units will be consolidated to provide centralized operational support for the vertical sales teams.

Facility Realignment

As part of its branch fulfillment network realignment, Castle Metals plans to consolidate five warehouse facilities into the existing network. The company currently operates 30 metals segment branches in North America, Europe and Asia, which include warehousing, sales, product processing and other operations. Castle Metals will maintain local sales offices to continue serving customers seamlessly in the markets in which it plans to close warehouses.

Performance Improvement

Performance improvement efforts will include implementing a continuous performance improvement program focused on direct and indirect sourcing, transportation, strategic pricing initiatives, back office functions, and optimizing inventory investment.

The restructuring actions are expected to generate $20 million of operating profit improvement in calendar year 2013 excluding related charges.  The total pre-tax charge associated with these actions is expected to be approximately $10 million, which will be incurred in 2013, resulting in $10 million of operating profit improvement for 2013. These actions result in $33 million of annualized ongoing operating profit improvement. The restructuring will reduce the Company's workforce by about 10 percent.

In implementing its restructuring plan, the company aims to achieve the following results:

  • Improve operating margins, with a goal of 10%+ operating profit during normal market conditions.
  • Reduce operating expenses as a percentage of sales to less than 20 percent by the end of 2014.
  • Reduce Days Sales Inventory (DSI) to less than 150 by 2013 and 120 by 2014.
  • Continue to improve on-time delivery performance.

"We believe that the operating and financial targets that we have established are achievable, and we believe that the three end-markets we target offer attractive long-term growth potential. By delivering value-add solutions to our customers, we plan to grow our share of business with them. Our entire organization will be focused on implementing this plan," Dolan said.

Dolan added, "In terms of sales activity and recent market trends, we experienced softness in demand that was greater than anticipated during the fourth quarter, as well as lower activity levels due to extended seasonal shutdowns.  In addition, the monthly Purchasing Managers Index (PMI) trends for the fourth quarter were consistent with third quarter levels, including a November 2012 reading that was below the 50.0 expansion level."

Dolan concluded, "We are forecasting that the overall business conditions we experienced in the fourth quarter will continue, and we believe strongly that the actions we are taking will position the Company to operate successfully through all market cycles."

Conference Call Thursday, January 17

The company will be hosting a conference call with securities analysts at 11:00 a.m. EST on Thursday, January 17, to review the restructuring plan.  A live broadcast and a complete replay of this call can be accessed through a link on the investor relations page of the company's website at http://www.amcastle.com/investors/default.aspx. If you are unable to connect to the Internet, you can access the call via telephone at 866-362-4666 (outside the U.S. by calling 617-597-5313) using access code 72033221.

A. M. Castle's presentation and supplemental slides which provide additional information regarding today's announcements will be available on A. M. Castle's investor relations website prior to the live broadcast. An archived version of the conference call webcast will be available for replay for 20 days by calling 888-286-8010 or 617-801-6888 (international) and citing code 92693731.

About A. M. Castle & Co.

Founded in 1890, A. M. Castle & Co. is a global distributor of specialty metal and plastic products and supply chain services, principally serving the producer durable equipment, oil and gas, commercial aircraft, heavy equipment, industrial goods, construction equipment, retail, marine and automotive sectors of the global 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 metals business, it specializes in the distribution of alloy and stainless steels; nickel alloys; aluminum and carbon.  Through its wholly-owned subsidiary, Total Plastics, Inc., the Company also distributes a broad range of value-added industrial plastics.  Together, Castle and its affiliated companies operate out of more than 60 locations throughout North America, Europe and Asia.  Its common stock is traded on the New York Stock Exchange under the ticker symbol "CAS".

Regulation G Disclosure

This release includes the non-GAAP financial measure of adjusted operating profit. Estimated restructuring and related charges associated with the actions described in this release were excluded from the calculation of the Company's projected operating profit improvement for calendar year 2013.  The non-GAAP financial information should be considered supplemental to, and not as a substitute for, or superior to, financial measures calculated in accordance with GAAP.  However, we believe that non-GAAP reporting, giving effect to the adjustments noted in this release, provides meaningful information and therefore we use it to supplement our GAAP guidance. Management often uses this information to assess and measure the performance of our business. We have chosen to provide this supplemental information to investors, analysts and other interested parties to enable them to perform additional analyses of operating results, to illustrate the results of operations giving effect to adjustments noted in this release, and to assist with period-over-period comparisons of such operations. The exclusion of the charges indicated herein from the non-GAAP financial measures presented does not indicate an expectation by the Company that similar charges will not be incurred in subsequent periods.

Cautionary Statement on Risks Associated with Forward Looking Statements

Information provided and statements contained in this release that are not purely historical are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended ("Securities Act"), Section 21E of the Securities Exchange Act of 1934, as amended ("Exchange Act"), and the Private Securities Litigation Reform Act of 1995.  Such forward-looking statements only speak as of the date of this release and the company assumes no obligation to update the information included in this release.  Such forward-looking statements include, but are not limited to, statements concerning our possible or assumed future results of operations, and our expectations and estimates relating to restructuring activities, including restructuring charges and timing of cash payments related thereto, and operational flexibility, savings, and efficiencies from such restructuring actions.  These statements often include words such as "believe," "expect," "anticipate," "intend," "aim," "plan," or similar expressions.  These statements are not guarantees of performance or results, and they involve risks, uncertainties, and assumptions.  Although we believe that these forward-looking statements are based on reasonable assumptions, there are many factors that could affect our actual financial results or results of operations and could cause actual results to differ materially from those in the forward-looking statements.  For a further description of these risk factors, see the risk factors identified in our filings with the Securities and Exchange Commission, including our Annual Report on Form 10-K for the fiscal year ended December 31, 2011 and quarterly reports for fiscal 2012.  All future written and oral forward-looking statements by us or persons acting on our behalf are expressly qualified in their entirety by the cautionary statements contained or referred to above.  Except for our ongoing obligations to disclose material information as required by the federal securities laws, we do not have any obligations or intention to release publicly any revisions to any forward-looking statements to reflect events or circumstances in the future or to reflect the occurrence of unanticipated events.

AT THE COMPANY

AT EDELMAN

Scott F. Stephens

Analyst Contact:

Vice President-Finance & CFO

Geoffrey Mogilner

(847) 349-2577

(312) 233-1271

Email: [email protected]

Email: [email protected]



Traded: NYSE (CAS)

Media Contact:

Member: S&P SmallCap 600 Index

Alex Jeffrey


(312) 240-2724


Email: [email protected]

SOURCE A. M. Castle & Co.

More Stories By PR Newswire

Copyright © 2007 PR Newswire. All rights reserved. Republication or redistribution of PRNewswire content is expressly prohibited without the prior written consent of PRNewswire. PRNewswire shall not be liable for any errors or delays in the content, or for any actions taken in reliance thereon.

Latest Stories
One of the biggest challenges with adopting a DevOps mentality is: new applications are easily adapted to cloud-native, microservice-based, or containerized architectures - they can be built for them - but old applications need complex refactoring. On the other hand, these new technologies can require relearning or adapting new, oftentimes more complex, methodologies and tools to be ready for production. In his general session at @DevOpsSummit at 20th Cloud Expo, Chris Brown, Solutions Marketi...
DevOps at Cloud Expo – being held October 31 - November 2, 2017, at the Santa Clara Convention Center in Santa Clara, CA – announces that its Call for Papers is open. Born out of proven success in agile development, cloud computing, and process automation, DevOps is a macro trend you cannot afford to miss. From showcase success stories from early adopters and web-scale businesses, DevOps is expanding to organizations of all sizes, including the world's largest enterprises – and delivering real r...
As cloud adoption continues to transform business, today's global enterprises are challenged with managing a growing amount of information living outside of the data center. The rapid adoption of IoT and increasingly mobile workforce are exacerbating the problem. Ensuring secure data sharing and efficient backup poses capacity and bandwidth considerations as well as policy and regulatory compliance issues.
In his opening keynote at 20th Cloud Expo, Michael Maximilien, Research Scientist, Architect, and Engineer at IBM, will motivate why realizing the full potential of the cloud and social data requires artificial intelligence. By mixing Cloud Foundry and the rich set of Watson services, IBM's Bluemix is the best cloud operating system for enterprises today, providing rapid development and deployment of applications that can take advantage of the rich catalog of Watson services to help drive insigh...
The 21st International Cloud Expo has announced that its Call for Papers is open. Cloud Expo, to be held October 31 - November 2, 2017, at the Santa Clara Convention Center in Santa Clara, CA, brings together Cloud Computing, Big Data, Internet of Things, DevOps, Digital Transformation, Machine Learning and WebRTC to one location. With cloud computing driving a higher percentage of enterprise IT budgets every year, it becomes increasingly important to plant your flag in this fast-expanding busin...
SYS-CON Events announced today that Cloud Academy will exhibit at SYS-CON's 20th International Cloud Expo®, which will take place on June 6-8, 2017, at the Javits Center in New York City, NY. Cloud Academy is the industry’s most innovative, vendor-neutral cloud technology training platform. Cloud Academy provides continuous learning solutions for individuals and enterprise teams for Amazon Web Services, Microsoft Azure, Google Cloud Platform, and the most popular cloud computing technologies. Ge...
SYS-CON Events announced today that Progress, a global leader in application development, has been named “Bronze Sponsor” of SYS-CON's 20th International Cloud Expo®, which will take place on June 6-8, 2017, at the Javits Center in New York City, NY. Enterprises today are rapidly adopting the cloud, while continuing to retain business-critical/sensitive data inside the firewall. This is creating two separate data silos – one inside the firewall and the other outside the firewall. Cloud ISVs ofte...
SYS-CON Events announced today that Interoute has been named “Bronze Sponsor” of SYS-CON's 20th International Cloud Expo®, which will take place on June 6-8, 2017, at the Javits Center in New York City, NY. Interoute is the owner operator of Europe's largest network and a global cloud services platform, which encompasses over 70,000 km of lit fiber, 15 data centers, 17 virtual data centers and 33 colocation centers, with connections to 195 additional partner data centers. Our full-service Unifie...
With major technology companies and startups seriously embracing Cloud strategies, now is the perfect time to attend @CloudExpo | @ThingsExpo, June 6-8, 2017, at the Javits Center in New York City, NY and October 31 - November 2, 2017, Santa Clara Convention Center, CA. Learn what is going on, contribute to the discussions, and ensure that your enterprise is on the right path to Digital Transformation.
For financial firms, the cloud is going to increasingly become a crucial part of dealing with customers over the next five years and beyond, particularly with the growing use and acceptance of virtual currencies. There are new data storage paradigms on the horizon that will deliver secure solutions for storing and moving sensitive financial data around the world without touching terrestrial networks. In his session at 20th Cloud Expo, Cliff Beek, President of Cloud Constellation Corporation, ...
While presenting own advanced Robo-Advisory Platform, Michał Różański, Managing Partner at EARP and CEO at Empirica, will illustrate the most important issues of building tailored FinTech software in his session at 20th Cloud Expo. He will share experiences we have gained for over 6 years of developing solutions for financial institutions and FinTech companies, including robo-advisors. We welcome all FinTech innovators interested in how properly implemented technology can move their businesses f...
Most DevOps journeys involve several phases of maturity. Research shows that the inflection point where organizations begin to see maximum value is when they implement tight integration deploying their code to their infrastructure. Success at this level is the last barrier to at-will deployment. Storage, for instance, is more capable than where we read and write data. In his session at @DevOpsSummit at 20th Cloud Expo, Josh Atwell, a Developer Advocate for NetApp, will discuss the role and value...
Amazon started as an online bookseller 20 years ago. Since then, it has evolved into a technology juggernaut that has disrupted multiple markets and industries and touches many aspects of our lives. It is a relentless technology and business model innovator driving disruption throughout numerous ecosystems. Amazon’s AWS revenues alone are approaching $16B a year making it one of the largest IT companies in the world. With dominant offerings in Cloud, IoT, eCommerce, Big Data, AI, Digital Assis...
Internet of @ThingsExpo, taking place October 31 - November 2, 2017, at the Santa Clara Convention Center in Santa Clara, CA, is co-located with the 21st International Cloud Expo and will feature technical sessions from a rock star conference faculty and the leading industry players in the world. @ThingsExpo Silicon Valley Call for Papers is now open.
Regardless of what business you’re in, it’s increasingly a software-driven business. Consumers’ rising expectations for connected digital and physical experiences are driving what some are calling the "Customer Experience Challenge.” In his session at @DevOpsSummit at 20th Cloud Expo, Marco Morales, Director of Global Solutions at CollabNet, will discuss how organizations are increasingly adopting a discipline of Value Stream Mapping to ensure that the software they are producing is poised to ...