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'Managing margins in a very competitive environment': in their first-quarter financial reports to analysts and shareholders, service center executives reported continued positive results, though in a market where tough competitive pressures threaten profitability.

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A.M. Castle & Co.

Strong First Quarter Results; Strategic Investment in Oracle

A. M. Castle & Co., Franklin Park, Ill., a global distributor of specialty metal and plastic products, reported record sales and continued strong financial results for the first quarter ended March 31 during last month's conference call with analysts and investors.

For the first quarter, consolidated net sales hit a record $375.4 million, an increase of $96.2 million or 34.4 percent from the first quarter of 2006. Net income for the quarter was $15.6 million, as compared to $15.8 million in the prior year. First quarter 2007 net income included a $0.9 million after-tax charge for the write-off of the company's prior investment in information technology systems. During the quarter, the company signed an agreement to purchase Oracle's ERP system in support of its strategic growth initiative.

"As we embark on our bold new direction to become the foremost provider of specialty products, services and specialized supply-chain solutions for targeted industries, we have carefully considered the infrastructure required to successfully execute the strategy," said Michael Goldberg, president and CEO of A. M. Castle. "The existing systems in our metals business lack the flexibility and functionality needed to support our customers growing requirements on a global scale.

"The acquisition of Transtar also increased our need for a technology upgrade. Our selection of Oracle, which is at the forefront of global technology solutions, exemplifies our commitment to the strategy," Goldberg added. The company plans to invest $10 million to $12 million for the system implementation across its metals segment, to be completed in late 2008.

Metal segment sales were $346.6 million in the first quarter, an increase of $95.9 million, or 38.3 percent vs. the first quarter of 2006. Of the 38.3 percent sales increase, the acquisition of Transtar Metals (which was completed on Sept. 5, 2006) contributed 29.0 percent, while 14.4 percent was attributable to increased material pricing, offset by a 5.1 percent decline in volume for the balance of the business.

"Excluding Transtar, volumes were off from the corresponding quarter last year, but we should remember from an overall tons-sold perspective, the first half of 2006 represented the strongest period of the cycle so far," said Goldberg. "In the first quarter of this year, our average daily tons...

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