A. M. Castle & Co (NYSE: CAS) Completes Restructuring Plan On Time And Budget


The restructuring plan that A. M. Castle & Co (NYSE: CAS) has been executing on since early last year is almost complete. According to CEO, Steve Scheinkman, the restructuring plan has been completed within the budget and time that they projected. Among other things, A. M. Castle’s turnaround plan involved reducing operating expenses and streaming the business structure and in so doing the company divested itself of certain assets.

M. Castle & Co (NYSE: CAS)’s restructuring plan was announced in April 2015 and from that time the company set out to trim costs at its branch network and improve its capital structure. Toward unlocking funds and improving internal efficiency, A. M. Castle sold its subsidiary called Total Plastics and also dropped the majority of its energy-themed inventory. Additionally, the company closed its Houston and Edmond facilities.

Strengthening the balance sheet

M. Castle & Co (NYSE:CAS) used the proceeds from the asset divestitures to pay down its debt and improve its capital position. In some cases, the company renegotiated with its lenders to extend the maturity of certain notes. The idea to push back debt maturity is aimed at further strengthening the company’s capital structure.

In notes maturity adjustment, the company agreed with the holders of notes that were set to mature in December 2016 to take on new notes that mature two years later in 2018. Additionally, the company agreed with holders of notes maturing in December 2017 to take on convertible notes that mature in December 2019.

The notes renegotiation should allow CAS to have in place a more flexible balance sheet.

What transpired in 1Q2016 for A. M. Castle & Co (NYSE:CAS)?

In addition to updating on the completion of its restructuring plan, A. M. also reported its 1Q2016 results and the numbers weren’t pretty. For example, adjusted net sales in the quarter fell nearly 28% YoY to $163.8 million. Sharp decrease in sales was caused by a 27.6% drop in volume sales and a decrease in the average selling price (ASP) of the company’s products.

As a result of net sales contraction, A. M. Castle & Co (NYSE: CAS) logged a massive loss of $44.8 million or $1.90 per share from continuing operations. That compared to a loss of $15.7 or $0.67 from continuing operations in the corresponding quarter of 2015.


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