Back to top

Analyst Blog

Shares of specialty metal and plastic products distributor A. M. Castle & Co. (CAS - Snapshot Report) fell as much as around 13% after it predicted a loss for third-quarter 2013. It expects results for the quarter to come below the adjusted results logged in the previous quarter. The stock eventually closed at $14.75 in the trading session following the announcement, shedding roughly 10%.
 
The Illinois-based company sees a net loss of roughly 28 cents to 32 cents per share for the third quarter, wider than the current Zacks Consensus Estimate of a loss of 4 cents. Moreover, A. M. Castle expects EBITDA in the band of $4 million to $5 million for the quarter. Both adjusted loss and EBITDA are expected to be comparable to preliminary estimates.
 
Third quarter results are expected to be hamstrung by sustained weakness across key end markets. Revenues are expected to come below the company’s expectations given challenging industry conditions and late cycle nature of its end markets. Weak selling prices are also expected to hurt top and bottom lines in the third quarter. A. M. Castle envisions sales of $250 million to $255 million for the third quarter. 
 
A. M. Castle said that it will remain committed to improve cost efficiencies. The company anticipates cost savings associated with restructuring actions executed during the first half of this year to be in sync with expectations. A. M. Castle further noted that it will remain focused on improving its commercial and sales execution so that its business should perform better amid soft market conditions and be well placed for the future.
 
A. M. Castle, which has annual sales of roughly $1.3 billion, caters to a bevy of end markets including oil and gas, commercial aircraft, heavy equipment, industrial goods, automotive and construction equipment globally. The company specializes in the distribution of alloy and stainless steels, nickel alloys, aluminum and carbon and operate through 50 locations across North America, Europe and Asia.
 
A. M. Castle, which carries a Zacks Rank #4 (Sell), will report its third quarter results on Oct 29. 
 
Other companies in the basic materials sector with favorable Zacks Rank are Companhia Siderurgica Nacional (SID - Analyst Report), Shiloh Industries Inc. and Kobe Steel Ltd. . While Companhia Siderurgica and Shiloh Industries maintain a Zacks Rank #1 (Strong Buy), Kobe Steel holds a Zacks Rank #2 (Buy).

Please login to Zacks.com or register to post a comment.