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First-quarter report and outlook: service centers carry momentum into 2nd quarter: with almost all reporting strong sales and earnings in the first quarter, service center executives appear optimistic about the metals market's mid-year prospects. Following is a roundup of industry companies' first-quarter conference calls with analysts and investors.

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A.M. Castle

Starts 2006 Strong

A.M. Castle & Co., Franklin Park, Ill., started off 2006 on a great note with record first-quarter sales and earnings, reported President and CEO Michael Goldberg. "Our markets are strong. Our balance sheet is in excellent shape. We are well positioned to grow both organically and through acquisitions," he told analysts and investors during last month's conference call.

The company reported net income for the first quarter totaling over $16.0 million, up 36.4 percent from a year earlier on net sales of $279.2 million, a 13.4 percent increase, of which about 4 percent was due to the rising price of materials sold and the remaining 9 percent due to increased volume, company officials said.

The company's quarterly metal sales of $250.6 million showed a 13.9 percent gain from a year earlier--or a 10 percent gain with the impact of pricing factored out. Goldberg said sales might have been restricted by the tight supply of aluminum and nickel-based products, which are used in key A.M. Castle markets such as oil and gas exploration, power generation and aerospace. Approximately one-third of A.M. Castle's business comes from aerospace and oil and gas customers. Sales of carbon alloy bar and plate products to the mining and construction equipment markets were also very strong in the quarter, he added.

Revenues from A.M. Castle's plastics business increased 9 percent vs. a year earlier. Its small Mexican distribution business--aimed at leveraging relationships with U.S. customers who have facilities in Mexico--reported a 36 percent increase in sales.

Goldberg said A.M. Castle's inventories are generally where the company wants them to be, though some products remain in tight supply. "We would love to get more aluminum or nickel products, but lead times are very long (exceeding a year for some nickel-based alloys), so we are somewhat restricted. But otherwise our inventories are in good shape."

Looking ahead to the second quarter, Goldberg is very optimistic. "We don't anticipate any significant softening in our key markets. Pricing, as always, remains volatile and seasonal factors typically impact the second half of the year, but we still see the fundamentals of the business remaining good."

Discussing growth opportunities, Goldberg noted that A.M. Castle's new Birmingham, Ala., facility is on schedule and expected to be fully operational by midsummer. "This will enable us to capture more of the durable goods market that continues to expand in the Southeastern United States," he says.

In addition, A.M. Castle is actively pursuing acquisitions in both metals and plastics, Goldberg said. "Our focus is to look for companies that are a good fit for us, companies that operate in some of the same markets or sell some of the products we sell. In other words, we would like strategic acquisitions that fit our long-term growth goals and provide appropriate synergies."

Metals USA

Sales Trending Upward

Metals USA posted first-quarter sales figures almost identical to the same quarter in 2005--though that's about the only similarity between the two time periods.

"The market in the last three months was substantially different from a year ago. In the first quarter of 2005, we found prices strong at the beginning but weakening throughout the period, and continuing to trend downward until the...

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