CHICAGO A.M. Castle & Co. has been trimming inventory, closing branches and implementing layoffs as part of a widespread cost-cutting effort that executives first outlined in January (amm.com, Jan. 17).
"(We have) made significant progress toward our goals to improve our operating efficiency ... and reduce our costs," president and chief executive officer Scott J. Dolan said during an earnings conference call.
"We continued to focus on inventory-reduction efforts during the first quarter of 2013," Dolan said. The companys inventory declined by more than $33 million on a replacement-cost basis in the first quarter.
"We are targeting an additional decline of $25 million during the second quarter," vice president and chief financial officer Scott F. Stephens said. In addition, the company could make $30 million to $40 million in inventory cuts in the second half. "Markets cycle up and down, but all things being equal, we think 120 days is the right level of inventory to run the business," he said.
Castle held 173 days of inventory in the first quarter of 2013, down 15.2 percent from 204 days at the end of 2012, and the companys goal is to get to 150 days inventory by the end of the year.
In addition, the Oak Brook, Ill.-based company has consolidated facilities ahead of schedule, Dolan said. "During the first quarter, we began the transition of our distribution fulfillment realignment for all five of the branches that will be closed before the end of the second quarter."
Of the planned 10-percent work-force reductions announced in January, about 50 jobs were cut during first quarter, Stephens said, and the company expects to lay off an additional 100 to 150 people during the second quarter.
"The actions were taking to grow revenue, reduce costs and optimize inventory position the company well in a flat demand environment and very well in a recovering market," Dolan said, noting that the market is unlikely to improve until later in 2013 or 2014.