CAS Simplify China A Shares Plus Income ETF

A.M. Castle & Co. Sees Increasing Revenues Restructuring Initiative Completed FRANKLIN PARK, Ill., Feb. 24 /PRNewswire-FirstCall/ -- A.M. CASTLE & CO. , a North American distributor of highly engineered metals and plastics, today announced its operating results for the quarter and year ended December 31, 2003. In making the announcement G. Thomas McKane, Chairman and CEO, stated that the fourth quarter of 2003 marked a key milestone at Castle. First, the restructuring of the Company has been completed and second, the Company is beginning to experience meaningful, top line growth. For the year, the Company reported sales of $543.0 million, up $4.9 million, or 0.9% from $538.1 million in 2002. Net losses from continuing operations totalled $17.9 million compared with losses of $9.3 million in the prior year. Assuming a 40% income tax rate, in 2003, the Company incurred after-tax special charges and impairment costs totalling $6.9 million relating primarily to the sale or closure of four non-performing businesses. An after- tax inventory adjustment -- LIFO loss less Inventory Revaluation - (LIFO charge) was made which totalled $1.5 million in 2003 compared with $0.8 million in 2002. Exclusive of special charges, impairment costs and LIFO charges, net losses from continuing operations totalled $9.5 million for the current year compared with $8.5 million in 2002. The Company reported fourth quarter sales of $132.5 million, a level 6.6% ahead of prior year results. Net losses from continuing operations totalling $5.1 million included an $0.8 million after-tax impairment charge and a $1.3 million LIFO charge. Exclusive of special charges, impairments and LIFO charges, net losses from continuing operations totalled $3.0 million comparedto $4.4 million in the same period of 2002. There were additional charges for facility relocation, reserve adjustments relating to the sale of its U.K. business in 2002 and other expense and inventory reserves totalling $0.8 million after-tax which, in management's judgement, are unlikely to reoccur in future periods. "The restructuring, impairment and LIFO charges belie the underlying improvements in the Company's operations," said McKane. "EBITDA (earnings before interest, taxes, depreciation and amortization) exclusive of special charges, impairment costs and LIFO charges, totalled $1.3 million in the fourth quarter of 2003 versus breakeven EBITDA levels in the prior year. For the second half of 2003, EBITDA, excluding special charges, impairment costs and LIFO charges, totalled $2.3 million versus $0.2 million in the second half of 2002, a positive turnaround of $2.1 million." Commenting further on the Company's fourth quarter results, Mr. McKane said, "Sales in the quarter were 6.6% above prior year levels. On a rate per working day basis, the increase was 8.4%. The metals business grew 5.1% for the quarter versus the prior year's fourth quarter, and 6.8% on a per working day basis. The order trend strengthened throughout the period, culminating in a very strong December and that strength continues into January and February. Sales for the first quarter 2004 are expected to show mid-single digit real increases as compared to the prior year. Our plastics business grew nearly 18% during the fourth quarter of 2003. New market penetration in both New York and Florida added significantly to the growth." In discussing the LIFO charges, Edward F. Culliton, Vice President and CFO, stated, "We knew that reducing inventories during thedeflationary period of 2002 and 2003 could result in unfavorable LIFO charges as we liquidated higher cost inventory. However, management and the Board believed this was the right move for the Company. Our inventories were too high relative to our sales volume. The inventory reduction, most of which focused on excess and slow moving items, is part of an overall improved inventory management program which has contributed to a $43.3 million reduction in our debt levels since December 2000." Over the last two years the Company has sold Castle U.K., Energy Alloys (a joint venture), Keystone Honing, Laser Precision (a joint venture) and closed its Keystone Services chrome plating operation. "These moves, in addition to the restructuring of the balance sheet in the fourth quarter of 2002, were costly and difficult," stated McKane, "but they eliminated operations which drained both cash and earnings, and added businesses which provide growth platforms for the future. We consider the restructuring phase to be behind us." Looking ahead, the Company sees markets that are recovering driving expectations for high single digit growth in its core bar, plate and tubing product lines. Aerospace markets continue to be sluggish, but there is a modest optimism for later in the year. Plastics are expected to grow double digits for the year. In the metals markets, which account for almost 90% of the Company's sales, deflation turned to inflation in the last 60 days of 2003. Bar, plate and tubing lines,and all nickel alloys have experienced mill price increases in the range of 5 to 8% and in some cases more over the last four months and are expected to increase further in the second quarter. Plastics' pricing has remained relatively stable. There will be a lag between material cost increases and selling price increases, which vary by product line and by customer. The full impact will not be realized until the second quarter and the second half is still uncertain. However, the impact of price isexpected to further enhance the real growth expectations. "Sales are running ahead of our 2003 daily levels by rates in the high teens," said Mr. McKane. "Factoring out price increases, real growth is still in the double-digit range. With the lower expense base and higher productivity we've built into our business over the last three years, we expect to report first quarter results that show significant year-over-year increases in EBITDA and a return to profitability for the first time in a year and a half." McKane also announced that the Company has reached agreement to acquire the remaining interest in its Castle de Mexico joint venture. "We are excited about the Mexican joint venture," said Stephen V. Hooks, newly appointed Chief Operating Office of Castle Metals. "Durable goods manufacturing in Mexico is a growth market and Castle de Mexico gives Castle the vehicle to serve U.S. manufacturing customers who migrate a portion of their operations to Mexico." The Mexican operations will be consolidated effective January 2004. In closing, Mr. McKane stated that the Company expects to mail its annual report and 10-K to shareholders around March 15, 2004 and invited interested parties to listen to its conference call scheduled for 11:00 (EST) today, Tuesday, February 24, 2004. Connection is available at http://www.amcastle.com/ and will be available for 14 days following the call. Founded in 1890, A. M. Castle & Co. provides highly engineered materials and value added services to a widerange of companies within 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 wide spectrum of industries. Within its core metals business, it specializes in the distribution of carbon, alloy and stainless steels; nickel alloy; aluminum; titanium; copper and brass. Through its subsidiary, Total Plastics, Inc., the Company also distributes a broad range of value- added industrial plastics. Together, Castle operates over 40 locations throughout North America. Its common stock is traded on the American and Chicago Stock Exchange under the ticker symbol "CAS". 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 and Exchange Commission. CONSOLIDATED STATEMENTS OF OPERATIONS (Amounts in thousands, except per share data) (Unaudited) For the Three For the Twelve Months Ended Months Ended December 31, December 31, 2003 2002 2003 2002 Net sales $132,520 $124,289 $543,031 $538,143 Cost of material sold (96,527) (87,527) (384,459) (377,997) Special charges (100) - (1,624) - Gross material margin 35,893 36,762 156,948 160,146 Plant and delivery expense (21,142) (21,049) (87,055) (87,902) Sales, general, and administrative expense (15,936) (16,999) (68,339) (67,720) Depreciation and amortization expense (2,139) (2,457) (8,839) (8,895) Impairment and other operating expenses (532) - (6,456) - Total other operating expense (39,749) (40,505) (170,689) (164,517) Operating loss (3,856) (3,743) (13,741) (4,371) Equity earnings (loss) of joint ventures 216 26 137 446 Impairment to joint venture investment and advances (623) - (3,453) - Interest expense, net (2,362) (2,122) (9,709) (7,459) Discount on sale of accounts receivable (283) (2,490) (1,157) (3,429) Loss from continuing operations before income taxes (6,908) (8,329) (27,923) (14,813) Income taxes Federal 2,742 2,576 9,550 4,623 State (935) 611 496 917 1,807 3,187 10,0465,540 Net loss from continuing operations (5,101) (5,142) (17,877) (9,273) Discontinued operations: Loss from discontinued operations; net of income tax - - - (26) Loss on disposal of subsidiary, net of tax (172) (23) (172) (752) Net loss (5,273) (5,165) (18,049) (10,051) Preferred Dividends (243) (103) (961) (103) Net loss applicable to common stock $(5,516) $(5,268) $(19,010) $(10,154) Basic & diluted earnings per share from: Continuing operations $(0.34) $(0.34) $(1.19) $(0.63) Discontinued operations (0.01) (0.00) (0.01) (0.05) Total $(0.35) $(0.34) $(1.20) $(0.68) CONSOLIDATED BALANCE SHEETS (Amounts in thousands except per share data) Dec. 31, Dec. 31, 2003 2002 ASSETS Current assets Cash and equivalents $2,455 $918 Accounts receivable, net 54,232 34,273 Inventories (principally on last-in first-out basis) 117,270 131,704 Income tax receivable 660 9,897 Assets held for sale 1,067 - Advances to joint ventures and other current assets 7,184 7,930 Total current assets 182,868 184,722 Investment in joint ventures 5,492 7,278 Goodwill 31,643 31,947 Pension assets 42,075 40,359 Advances to joint ventures and other assets 8,688 6,754 Property, plant and equipment, at cost Land 4,767 6,025 Building 45,346 53,322 Machinery and equipment 118,447 125,376 168,560 184,723 Less - accumulated depreciation (100,386) (103,188) 68,174 81,535 Total assets $338,940 $352,595 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities Accounts payable $67,601 $64,192 Accrued liabilities and deferred gains 19,145 16,092 Current and deferred income taxes 4,852 4,351 Current portion of long-term debt 8,248 3,546 Total current liabilities 99,846 88,181 Long-term debt, less current portion $100,034 $108,801 Deferred income taxes 13,963 21,101 Deferred gain on sale of assets 7,304 - Minority interest 1,456 1,352 Post retirement benefits obligations 2,683 2,236 Stockholders' equity Preferred stock 11,239 11,239 Common stock 159 158 Additional paid in capital 35,009 35,017 Earnings reinvested in the business 66,486 85,490 Accumulated other comprehensive income (loss) 1,042 (555) Other - deferred compensation (36) (195) Treasury stock, at cost (245) (230) Total stockholders' equity 113,654 130,924 Total liabilities and stockholders' equity $338,940 $352,595 CONSOLIDATED STATEMENT OF CASH FLOWS (Dollars in thousands) For the twelve months (Unaudited) December 31, 2003 2002 Cash flows from operating activities: Net loss $18,049 $10,051 Net loss from discontinued operations 172 778 Depreciation 8,840 8,895 Amortization of deferred gain (593) - Equity loss (earnings) from joint ventures (137) (446) Decrease in deferred taxes and income tax receivable 1,992 5,873 Non-cash pension income (1,953) (2,988) Other (2,524) (5,036) Cash from operating activities before working capital changes (12,252) (2,975) Asset impairment and special charges 11,333 - Net change in accounts receivable sold (12,866) (14,134) Other increase in working capital 12,351 13,323 Net cash from operating activities - continuing operations (1,434) (3,786) Net cash from operating activities - discontinued operations - (1,194) Net cashfrom operating activities (1,434) (4,980) Cash flows from investing activities: Investments and acquisitions - (842) Proceeds from disposition of subsidiary - 2,486 Advances to joint ventures (289) (1,882) Capital expenditures (4,770) 774 Proceeds from sale of assets 14,002 - Net cash from investing activities - continuing operations 8,943 536 Net cash from investing activities - discontinued operations - 98 Net cash from investing activities 8,943 634 Cash flows from financing activities Long-term borrowings, net (5,182) (8,166) Effect of exchange rate changes on cash 171 59 Preferred dividends paid (961) (103) Net proceeds from preferred stock issuance - 11,239 Other - (503) Net cash from financing activities - continuing operations (5,972) (2,526) Net cash from financing activities - discontinued operations - 937 Net cash from financing activities (5,972) 3,463 Net (decrease) increase in cash 1,537 (883) Cash - beginning of year $918 $1,801 Cash - end of period $2,455 $918 DATASOURCE: A.M. Castle & Co. CONTACT: Edward Culliton, VP, Finance & Chief Financial Officer of A. M. Castle & Co., +1-847-349-2508, ; Analysts, Peter Seltzberg, +1-212-455-8457, , General Information, George Zagoudis, +1-312-640-6663, , both of Financial Relations Board Web site: http://www.amcastle.com/

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