Inner Strength 2009 Annual Report In a difficult year, we have reinforced the underpinnings of our company to ensure that we emerge even stronger. Three core strengths underscore our confidence in our ability to deliver long-term shareholder value. They are: Our Growth Strategy to become the leading global provider of specialty metals, processes and supply chain services to higher growth end-use markets; Our Financial Strength as evidenced by a conservatively financed balance sheet and strong cash position; and Our People who bring a wide range of experience and depth in metals distribution as well as target end-use markets. In this year’s Report, we provide a detailed perspective on the actions we’re taking to leverage these strengths as the economic recovery gains momentum. Corporate Profile Founded in 1890, A. M. Castle & Co. is a global distributor of specialty metal and plastic products and supply chain services, principally serving the producer durable equipment sector, oil and gas, commercial aircraft, heavy equipment, industrial goods, construction equipment, retail, marine and automotive sectors of the global economy. Its customer base includes many Fortune 500 companies as well as thousands of medium and smaller-sized firms spread across a variety of industries. Within its metals business, it specializes in the distribution of alloy and stainless steels; nickel alloys; aluminum and carbon. Through its subsidiary, Total Plastics, Inc., the Company also distributes a broad range of value-added industrial plastics. Together, Castle operates over 56 locations throughout North America, Europe and Asia. Its common stock is traded on the New York Stock Exchange under the ticker symbol “CAS”. The Year in Brief (amounts in thousands, except ratios and per share data) % For Fiscal Years Ended December 31, 2009 2008 Change Operating Results Net sales $812,638 $1,501,036 -46% EBITDA, as reported (15,436) 36,308 -143% EBITDA, as adjusted (14,079)* 95,168* -115% Net (loss) income, as reported (26,903) (17,082) -57% Net (loss) income, as adjusted (25,546)* 41,778* -161% Diluted (loss) earnings per share, as reported (1.18) (0.76) -55% Diluted (loss) earnings per share, as adjusted (1.12)* 1.84* -161% Balance Sheet Total assets 558,001 679,034 -18% Total debt 89,184 117,053 -24% Total equity 318,208 347,300 -8% Weighted average dilutive shares outstanding 22,862 22,528 Selected Ratios Current ratio 2.6 2.1 Debt-to-capital ratio 21.9% 25.2% * Excludes non-cash charge of $1,357 or $0.06 per share and $58,860 or $2.60 per share, for impairment of the carrying value of goodwill in the years 2009 and 2008, respectively. The non-GAAP financial information should be considered supplemental to, and not as a substitute for, or superior to, financial measures calculated in accordance with GAAP. However, we believe that non-GAAP reporting, giving effect to the adjustments shown in the footnote, provide meaningful information and therefore we use it to supplement our GAAP guidance. Management often uses this information to assess and measure the performance of the Company. We have chosen to provide this supplemental information to investors, analysts and other interested parties to enable them to perform additional analyses of operating results, to illustrate the results of operations giving effect to the non-GAAP adjustments and to provide an additional measure of performance. The Company believes that the use and presentation of EBITDA, which is defined by the Company as income before provision for income taxes (2009: $(16,264); 2008: $20,690) plus depreciation and amortization (2009: $21,291; 2008: $23,327), and interest expense (2009: $6,603; 2008: $10,214), less interest income (2009: $163; 2008: $841), is widely used by the investment community for evaluation purposes and provides the investors, analysts and other interested parties with additional information in analyzing the Company’s operating results. The Company recorded a non-cash goodwill impairment charge in the fourth quarter of 2009 and the fourth quarter of 2008 relating to its Metals segment. The Company believes that excluding this charge will provide investors with a basis to compare the Company’s core operating results in different periods without this variability. Net Sales Net (Loss) Income, EBITDA, as adjusted Debt-to-Capital Year End Stock Price dollars in millions as adjusted dollars in millions in percent in dollars dollars in millions A. M. Castle & Co. 2009 Annual Report 1 To Our Shareholders Maintaining Financial Strength in a Recessionary Recent economic data indicates that a recovery in the Environment industrial sector is underway. U.S. industrial production rose In 2009, we experienced a recessionary environment that at annualized rates of 5.2% and 7.0% in the third and fourth was deeper than any in recent history. The recession was quarters of 2009, respectively, the first quarterly gains since global in scope, reaching every end-use market, and leaving early in 2008. Additionally, the Purchasing Manufacturers’ no industrial distributor untouched. While many companies Index crossed the 50 threshold in late summer, the point at were well in the grip of recession throughout 2008, the late which manufacturing is considered to be expanding, and cycle nature of many of our markets shielded us until later remained above that level through the balance of the year. in that year; so much so that we still reported record volume We also saw an increasing rate of sales at our plastics business, and sales in 2008. Business declined very significantly and Total Plastics, Inc., (TPI) and our commodity-oriented joint rapidly during the last quarter of 2008 and through the first venture, Kreher Steel Co., both of which we regard as half of 2009, at which point we began to see improved earlier indicators of the general business cycle than the activity, albeit at a very low rate of recovery. balance of our business. In this difficult operating environment, our top priorities were In the past, we have demonstrated an ability to generate to ensure that we had adequate liquidity and a strong balance significant earnings as business conditions improve. While sheet by bringing inventories, operating costs and capital we cannot gauge the timing or the magnitude of this recovery, commitments in line with these vastly changed business we can assure you that we are determined to emerge from conditions. As a result of our efforts, we ended the year this cycle positioned to maximize the leverage inherent in our with a strong cash position and a conservatively financed business model. In the middle section of this report, you’ll balance sheet, which position us well for future growth. find more information on the competitive strengths which we believe will enable us to deliver increasing shareholder value as the economic recovery gains momentum. 2 A. M. Castle & Co. 2009 Annual Report Michael H. Goldberg John McCartney President and Chief Executive Officer Chairman of the Board 2009 Operating Results Consolidated gross margin was 24.8% for 2009 compared Consolidated net sales were $812.6 million in 2009, 45.9% to 25.1% a year ago, reflecting an intensely competitive lower than last year’s record $1.5 billion. Metals segment marketplace. Historically, our margins ranged from 25% at sales, which account for 89% of total reported revenues, the bottom of the cycle to 29% at the peak. As our inventory declined 47.6% to $726.2 million. Volume, or average levels and market conditions normalize, we would expect total tons sold per day, was 43.5% lower than in 2008, our reported gross margins to recover. reflecting both significantly reduced demand and accelerated de-stocking throughout the entire supply chain. This is in Consolidated operating expenses were $238.4 million and line with the Metals Service Center Industry’s data, which $372.9 million in 2009 and 2008, respectively. Excluding reported members’ shipments down 42% for comparable the impact of goodwill impairment of $1.4 million in 2009 products. Pricing overall was lower in 2009 than 2008 but, and $58.9 million in 2008, consolidated operating considering the degree and speed of reduced demand in expenses declined by 24.5% to $237.1 million in 2009 the supply chain, it could have been worse. A favorable from $314.1 million in 2008, primarily reflecting a reduction change in our sales mix toward higher priced aluminum, in our workforce of approximately 25% from 2008 peak nickel and stainless products somewhat mitigated lower levels. We also implemented across the board cutbacks price levels. in our payroll, hours worked and benefits. Revenues at our Plastics segment, TPI, which comprises the We ended the year with a net loss of $25.5 million, or remaining 11% of total reported revenues, were $86.4 million, $1.12 per diluted share, compared to net earnings of compared with $116.2 million in 2008. Like our metals $41.8 million, or $1.84 per diluted share, excluding the business, TPI was adversely affected by the recession, impact of $1.4 million and $58.9 million of goodwill particularly in the marine sector. Revenue stabilized in the impairment charges for 2009 and 2008, respectively. second quarter and toward the end of the year, we saw While we are disappointed with these results, we believe meaningful sales increases relative to the first half of 2009. we are on a path to recovery. A. M. Castle & Co. 2009 Annual Report 3 While we cannot gauge the timing or the magnitude of this recovery, we can assure you that we are determined to emerge from this cycle positioned to maximize the leverage inherent in our business model. Turning to our balance sheet, we reduced out total debt from Key Accomplishments of 2009 $117.1 million at the end of 2008 to $89.2 million at 2009 The most significant strategic accomplishment in 2009 was year end.