CAS Simplify China A Shares Plus Income ETF

A. M. Castle & Co. Announces Significantly Improved Results for Second Quarter and First Half of 2004 FRANKLIN PARK, Ill., Aug. 3 /PRNewswire-FirstCall/ -- A. M. Castle & Co. (AMEX:CAS), a North American distributor of highly engineered metals and plastics, announced today significantly improved sales and earnings for the three and six month periods ending June 30, 2004. For the quarter ended June 30, 2004, Castle sales totalled $188.2 million, up 41% from $133.9 million a year ago. Net income applicable to common stock totalled $5.8 million, or 36 cents per share, compared with a loss of $9.3 million, or 59 cents per share, in the second quarter of 2003. Results for both the second quarter and first half of 2003 include $10.3 million of pre-tax costs for impairments and special charges which, net of their tax benefits, increased prior period losses by $6.3 million, or 40 cents per share. Excluding the impact of those charges, the net loss for second quarter of last year totalled $3.0 million, or 19 cents per share. For the first six months of 2004, Castle reported sales of $363.9 million, a 32% increase over prior year sales of $275.6 million, and net income of $7.8 million, or 50 cents per share, compared with a loss of $10.9 million, or 69 cents per share in 2003. Excluding impairment and special charges, the net loss for the first half of last year was $4.6 million, or 29 cents per share. In making the announcement, G. Thomas McKane, Chairman and CEO, cited stronger demand from its customers, higher material price levels and improved operating efficiency as the key factors driving the Company's results. "In the metals portion of our business," said Mr. McKane, "year-over-year tons sold were up 13% and 15% in the second quarter and first half, respectively. This increase was driven by strong demand from virtually all the markets that Castle serves. The aerospace and the gas and oil markets, which started the year slowly, began to show improvement towards the end of the second quarter. In response to improved market demand for metals, coupled with raw material shortages, mill prices have increased sharply. On a year-over-year basis, average metal prices rose 22% for the quarter and 15% for the first six months of the year with wide variations among our various product groups." Volumes also increased significantly in the Company's plastics business which accounts for approximately 12% of its sales. With virtually no price increases, sales were up 35% for the quarter and 33% for the first six months of the year. "Both our metals and plastics business are making strong contributions to our success," said McKane. In this environment, the dollar value of each order handled increases significantly with the result that activity driven expenses do not increase nearly as rapidly as tons, sales and gross profit. This creates strong upside operating leverage in an improving market environment. "The key measure of this leverage," Mr. McKane stated, "is our earnings before interest, taxes, depreciation and amortization (EBITDA). For the second quarter of 2004, EBITDA totalled a near record $14.7 million, up from $458K (exclusive of impairments and special charges) in the same period last year. This represents a return on incremental sales volume of 26%. For the first half, EBITDA totalled $23.5 million, compared with $3.2 million (exclusive of impairments and special charges) in the first six months of 2003, for a 23% return on the increase in total sales. It is important to point out that there is very little inventory inflation profit in our operating results as a substantial majority of Castle's inventories are accounted for on a last-in, first-out (LIFO) basis." In discussing the outlook for the second half of the year, Mr. McKane stated that the industry traditionally experiences a seasonal slowdown during the months of July and August, when many of its customers have annual vacation and maintenance shutdowns, and again late in the fourth quarter during the Thanksgiving and Christmas holiday periods. "Our current expectation," McKane said, "is that while the number and length of these shutdowns may not be nearly as extensive as they were from 2000 through 2003, we will still see some seasonal slowdown in demand." Mr. McKane also noted that the raw materials required for metal production remains in short supply worldwide and that mill lead times continue to be extended. "In this environment," he said, "material tends to be in short supply indicating that mill pricing is likely to remain strong." He added that, as an important customer to its major suppliers, Castle is competitively positioned to continue to meet its customers' material requirements. In closing, Mr. McKane invited interested parties to listen to its conference call scheduled for 11:00 a.m. (EDT) today, Tuesday, August 3, 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 wide range 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; 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 60 locations throughout North America. Its common stock is traded on the American and Chicago Stock Exchange under the ticker symbol "CAS". This release contains 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 to provide the reader with additional information in analyzing the Company's operating results. A reconciliation of EBITDA to net income is provided per SEC requirements. 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. COMPARATIVE STATEMENTS OF OPERATIONS (Amounts in thousands, except per share data) (Unaudited) For the Three For the Six Months Ended Months Ended June 30, June 30, 2004 2003 2004 2003 Net sales $188,221 $133,947 $363,854 $275,593 Cost of material sold (131,865) (93,539) (256,346) (191,983) Special charges - (1,524) - (1,524) Gross material margin 56,356 38,884 107,508 82,086 Plant and delivery expense (23,405) (22,263) (47,001) (44,613) Sales, general, and administrative expense (19,315) (17,643) (38,771) (35,679) Depreciation and amortization expense (2,244) (2,313) (4,491) (4,617) Impairment and other operating expenses - (5,924) - (5,924) Total other operating expense (44,964) (48,143) (90,263) (90,833) Operating income (loss) 11,392 (9,259) 17,245 (8,747) Equity earnings (loss) of joint ventures 1,104 (44) 1,739 (81) Impairment to joint venture investment and advances - (2,830) - (2,830) Interest expense, net (2,218) (2,452) (4,532) (4,895) Discount on sale of accounts receivable (234) (250) (517) (579) Income (loss) from continuing operations before income tax 10,044 (14,835) 13,935 (17,132) Income tax (provision) benefit Federal (3,238) 4,761 (4,470) 5,524 State (808) 1,043 (1,162) 1,170 (4,046) 5,804 (5,632) 6,694 Net income (loss) from continuing operations 5,998 (9,031) 8,303 (10,438) Preferred dividends (240) (240) (480) (477) Net income (loss) applicable to common stock $5,758 $(9,271) $7,823 $(10,915) Basic earnings (loss) per share $0.36 $(0.59) $0.50 $(0.69) Diluted earnings (loss) per share $0.35 (0.59) $0.47 (0.69) EBITDA* $14,740 $(9,820) $23,475 $(7,041) *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, 2004 2003 2004 2003 Net income (loss) from operations $5,998 $(9,031) $8,303 $(10,438) Depreciation and amortization 2,244 2,313 4,491 4,617 Interest, net 2,218 2,452 4,532 4,895 Discount on accounts receivable sold 234 250 517 579 Provision (benefit) from income taxes 4,046 (5,804) 5,632 (6,694) EBITDA $14,740 $(9,820) $23,475 $(7,041) COMPARATIVE BALANCE SHEETS (Amounts in thousands except per share data) UNAUDITED Jun. 30 Dec. 31 Jun. 30 2004 2003 2003 ASSETS Current assets Cash and equivalents $4,503 $2,455 $1,672 Accounts receivable, net 91,714 54,232 42,219 Inventories (principally on last-in first-out basis) 105,224 117,270 127,658 Income tax receivable 408 660 - Assets held for sale 1,059 1,067 - Other current assets 8,658 7,184 7,800 Total current assets 211,566 182,868 179,349 Investment in joint ventures 5,973 5,492 7,224 Goodwill 31,925 31,643 31,720 Pension assets 42,169 42,075 41,109 Advances to joint ventures and other assets 7,464 8,688 5,534 Property, plant and equipment, at cost Land 4,767 4,767 6,031 Building 47,130 45,346 51,826 Machinery and equipment 119,883 118,447 119,302 171,780 168,560 177,159 Less - accumulated depreciation (105,133) (100,386) (102,062) 66,647 68,174 75,097 Total assets $365,744 $338,940 $340,033 LIABILITIES AND STOCKHOLDER'S EQUITY Current liabilities Accounts payable $87,299 $67,601 $61,722 Accrued liabilities and deferred gains 21,652 19,145 19,810 Current and deferred income taxes 2,377 4,852 4,037 Current portion of long-term debt 13,057 8,248 11,230 Total current liabilities 124,385 99,846 96,799 Long-term debt, less current portion 89,187 100,034 100,358 Deferred income taxes 20,147 13,963 17,753 Deferred gain on sale of assets 6,902 7,304 - Minority interest 1,262 1,456 1,404 Post retirement benefits obligations 2,758 2,683 2,292 Stockholders' equity Preferred stock 11,239 11,239 11,239 Common stock 159 159 159 Additional paid in capital 35,009 35,009 35,017 Earnings reinvested in the business 74,300 66,480 74,581 Accumulated other comprehensive income (loss) 663 1,042 732 Other - deferred compensation (22) (30) (71) Treasury stock, at cost (245) (245) (230) Total stockholders' equity 121,103 113,654 121,427 Total liabilities and stockholders' equity $365,744 $338,940 $340,033 CONDENSED STATEMENT OF CASH FLOWS (Dollars in thousands) For the Six Months (Unaudited) June 30, 2004 2003 Cash flows from operating activities: Net income/(loss) $8,303 $(10,438) Depreciation and amortization 4,491 4,617 Amortization of deferred gain on sale of assets (402) - Equity loss (earnings) from joint ventures (1,739) 81 Deferred taxes and income tax receivable 6,454 6,466 Non-cash pension income and post- retirement benefits 105 (480) Other 1,010 (1,694) Cash from operating activities before working capital changes 18,222 (1,448) Asset impairment and special charges - 10,278 Net change in accounts receivable sold (5,000) 1,800 Other; Increase in working capital (688) (5,822) Net cash from operating activities 12,534 4,808 Cash flows from investing activities: Investments and acquisitions (1,744) - Advances to joint ventures - (233) Capital expenditures (2,372) (1,727) Net cash from investing activities (4,116) (1,960) Cash flows from financing activities Long-term debt reductions (5,826) (1,737) Preferred dividends paid (480) (477) Other (94) - Net cash from financing activities (6,400) (2,214) Effect of exchange rate changes on cash 30 120 Net increase in cash 2,048 754 Cash - beginning of year $2,455 $918 Cash - end of period $4,503 $1,672 Supplemental cash disclosure - cash (paid) received during the period: Interest ($4,569) ($4,634) Income taxes ($1,448) $12,813 DATASOURCE: A. M. Castle & Co. CONTACT: Edward Culliton, VP, Finance & Chief Financial Officer of A. M. Castle & Co., +1-847-349-2508, or ; or Analysts, John McNamara, +1-212-445-8435, or , or General Information, George Zagoudis, +1-312-640-6663, or , both of Financial Relations Board Web site: http://www.amcastle.com/

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