UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q



ý☒			Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For Quarterly Period Ended ~~September~~June 30, ~~2017~~2020



¨☐			Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period from to

Commission File Number: 1-5415

A. M. Castle & Co.

(Exact name of registrant as specified in its charter)

Maryland

36-0879160

(State or other jurisdiction of incorporation of organization)

(I.R.S. Employer Identification No.)

1420 Kensington Road, Suite 220,

Oak Brook, ~~Illinois~~

Illinois

60523

(Address of principal executive offices)

(Zip Code)

Registrant’s telephone, including area code (847) 455-7111

(Former name, former address and former fiscal year, if changed since last report) None

Securities registered pursuant to Section 12(b) of the Act: None

Securities registered pursuant to Section 12(g) of the Act:


Title of each class	Trading symbol(s)	Name of each exchange on which registered
Common Stock, Par Value $0.01 Per Share	CTAM	OCTQX Best Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yesý ☒No¨☐

Indicate by check mark whether the registrant has submitted electronically ~~and posted on its corporate Web site, if any,~~ every Interactive Data File required to be submitted ~~and posted~~ pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit ~~and post~~ such files).

Yesý ☒No¨☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer

¨☐

Accelerated filer

☐

Non-accelerated filer

¨☒

~~(Do not check if a smaller reporting company)~~

Smaller reporting company

ý☒

Emerging growth company

¨☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨☐

Table of Contents

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes¨ ☐Noý☒

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Section 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court.

Yes☒No☐

The number of shares outstanding of the registrant’s common stock as of ~~November 10, 2017~~August 12, 2020 was ~~3,734,109~~73,910,334 shares.

Table of Contents

A. M. Castle & Co.

Table of Contents



			Page
Part I. Financial Information
Item 1.		Financial Statements (unaudited):
		Condensed Consolidated Balance Sheets	3
		Condensed Consolidated Statements of Operations and Comprehensive ~~(Loss~~Loss~~) Income~~	4
		Condensed Consolidated Statements of Cash Flows	65
		Condensed Consolidated Statements of Stockholders' Equity (Deficit)	6
		Notes to Condensed Consolidated Financial Statements	8
Item 2.		Management's Discussion and Analysis of Financial Condition and Results of Operations	3223
Item 3.		Quantitative and Qualitative Disclosures About Market Risk	38
Item 4.		Controls and Procedures	4438

Part II. Other Information
Item 1.		Legal Proceedings	4539
Item 1A.		Risk Factors	4539
Item 2.		Unregistered Sales of Equity Securities and Use of Proceeds	5440
Item 3.		Defaults Upon Senior Securities	5441
Item 4.		Mine Safety Disclosures	41
Item 5.		Other Information	41
Item 6.		Exhibits	5441

~~Exhibit Index~~Signature		55

~~Signature~~	5642

Table of Contents

Part I. FINANCIAL INFORMATION

Item 1. Financial Statements (unaudited)

Amounts in thousands, except par value and per share data


A.M. Castle & Co. Condensed Consolidated Balance Sheets	A.M. Castle & Co. Condensed Consolidated Balance Sheets							A.M. Castle & Co. Condensed Consolidated Balance Sheets
	Successor				Predecessor				As of
	September 30, 2017				December 31, 2016				June 30, 2020		December 31, 2019
ASSETS								ASSETS
Current assets:								Current assets:
Cash and cash equivalents	$	11,116			$	35,624		Cash and cash equivalents	$	26,374	$	6,433
Accounts receivable, less allowances of $422 and $1,945, respectively	76,802				64,385
Accounts receivable, less allowances of $1,912 and $1,766, respectively								Accounts receivable, less allowances of $1,912 and $1,766, respectively	55,018		74,697
Inventories	154,321				146,603			Inventories	149,568		144,411
Prepaid expenses and other current assets	16,223				10,141			Prepaid expenses and other current assets	8,729		9,668
Income tax receivable	388				433			Income tax receivable	2,472		1,995
Total current assets	258,850				257,186			Total current assets	242,161		237,204
Goodwill and intangible assets, net	8,175				4,101
Goodwill and intangible assets								Goodwill and intangible assets	8,176		8,176
Prepaid pension cost	9,518				8,501			Prepaid pension cost	6,910		5,758
Deferred income taxes	—				381			Deferred income taxes	1,490		1,534
Operating right-of-use assets								Operating right-of-use assets	30,216		29,423
Other noncurrent assets	823				9,449			Other noncurrent assets	422		792
Property, plant and equipment:								Property, plant and equipment:
Land	5,940				2,070			Land	5,577		5,579
Buildings	22,017				37,341			Buildings	20,880		20,950
Machinery and equipment	29,693				125,836			Machinery and equipment	40,385		41,054
Property, plant and equipment, at cost	57,650				165,247			Property, plant and equipment, at cost	66,842		67,583
Accumulated depreciation	(502		)		(115,537		)	Accumulated depreciation	(22,027)		(20,144)
Property, plant and equipment, net	57,148				49,710			Property, plant and equipment, net	44,815		47,439
Total assets	$	334,514			$	329,328		Total assets	$	334,190	$	330,326
LIABILITIES AND STOCKHOLDERS’ (EQUITY) DEFICIT
LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)								LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)
Current liabilities:								Current liabilities:
Accounts payable	$	47,170			$	33,083		Accounts payable	$	48,848	$	41,745
Accrued and other current liabilities	14,586				19,854			Accrued and other current liabilities	8,569		11,188
Operating lease liabilities								Operating lease liabilities	5,877		6,537
Income tax payable	—				209			Income tax payable	592		573
Short-term borrowings	3,581				—			Short-term borrowings	—		2,888
Current portion of finance leases								Current portion of finance leases	654		596
Current portion of long-term debt	118				137			Current portion of long-term debt	4,444		—
Total current liabilities	65,455				53,283			Total current liabilities	68,984		63,527
Long-term debt, less current portion	244,347				286,459			Long-term debt, less current portion	214,967		263,523
Deferred income taxes	1,785				—			Deferred income taxes	2,188		3,775
Build-to-suit liability	9,973				12,305
Finance leases, less current portion								Finance leases, less current portion	8,060		8,208
Other noncurrent liabilities	3,931				5,978			Other noncurrent liabilities	3,260		2,894
Pension and postretirement benefit obligations	6,395				6,430			Pension and postretirement benefit obligations	6,606		6,709
Commitments and contingencies (Note 15)
Noncurrent operating lease liabilities								Noncurrent operating lease liabilities	24,399		22,760
Commitments and contingencies (see Note 12)								Commitments and contingencies (see Note 12)
Stockholders’ equity (deficit):								Stockholders’ equity (deficit):
Predecessor preferred stock, $0.01 par value—9,988 shares authorized (including 400 Series B Junior Preferred, $0.00 par value); no shares issued and outstanding at December 31, 2016	—				—
Predecessor common stock, $0.01 par value—60,000 shares authorized; 32,768 shares issued and 32,566 outstanding at December 31, 2016	—				327
Successor common stock, $0.01 par value—200,000 Class A shares authorized with 3,734 shares issued and outstanding at September 30, 2017	20			—	—
Predecessor additional paid-in capital	—				244,825
Successor additional paid-in capital	5,791			—	—
Common stock, $0.01 par value—400,000 Class A shares authorized with 74,079 shares issued and 73,911 shares outstanding at June 30, 2020, and 3,818 shares issued and 3,650 shares outstanding at December 31, 2019								Common stock, $0.01 par value—400,000 Class A shares authorized with 74,079 shares issued and 73,911 shares outstanding at June 30, 2020, and 3,818 shares issued and 3,650 shares outstanding at December 31, 2019	741		38
Additional paid-in capital								Additional paid-in capital	123,510		61,461
Accumulated deficit	(821		)		(253,291		)	Accumulated deficit	(103,835)		(88,741)
Accumulated other comprehensive loss	(2,362		)		(25,939		)	Accumulated other comprehensive loss	(14,236)		(13,374)
Treasury stock, at cost—no shares at September 30, 2017 and 202 shares at December 31, 2016	—				(1,049		)
Treasury stock, at cost — 168 shares at June 30, 2020 and 168 shares at December 31, 2019								Treasury stock, at cost — 168 shares at June 30, 2020 and 168 shares at December 31, 2019	(454)		(454)
Total stockholders’ equity (deficit)	2,628				(35,127		)	Total stockholders’ equity (deficit)	5,726		(41,070)
Total liabilities and stockholders’ equity (deficit)	$	334,514			$	329,328
									$	334,190	$	330,326

The accompanying notes are an integral part of these financial statements.

A.M. Castle & Co.
Condensed Consolidated Statements of Operations
and Comprehensive (Loss) Income
Successor Predecessor
September 1, 2017 Through September 30, 2017 July 1, 2017
Through
August 31, 2017 Three Months
Ended
September 30, 2016

Net sales $ 41,725
$ 81,518
$ 124,893
Costs and expenses:
Cost of materials (exclusive of depreciation and amortization) 31,482
63,406
92,406
Warehouse, processing and delivery expense 5,972
12,277
19,561
Sales, general and administrative expense 4,846
10,048
16,820
Restructuring expense —
398
912
Depreciation and amortization expense 502
2,391
3,845
Total costs and expenses 42,802
88,520
133,544
Operating loss (1,077 ) (7,002 ) (8,651 )
Interest expense, net 1,408
2,602
8,743
Financial restructuring expense —
424
—
Unrealized gain on embedded debt conversion option —
—
(6,285 )
Other (income) expense, net (2,078 ) (823 ) 6,250
Reorganization items, net 128
(80,033 ) —
(Loss) income from continuing operations before income taxes and equity in losses of joint venture (535 ) 70,828
(17,359 )
Income tax expense (benefit) 286
(1,395 ) 903
(Loss) income from continuing operations before equity in losses of joint venture (821 ) 72,223
(18,262 )
Equity in losses of joint venture —
—
(36 )
(Loss) income from continuing operations (821 ) 72,223
(18,298 )
Loss from discontinued operations, net of income taxes —
—
(1,688 )
Net (loss) income $ (821 ) $ 72,223
$ (19,986 )

Basic and diluted earnings (loss) per common share:
Continuing operations $ (0.41 ) $ 2.27
$ (0.57 )
Discontinued operations —
—
(0.05 )
Net basic and diluted (loss) earnings per common share $ (0.41 ) $ 2.27
$ (0.62 )

Comprehensive (loss) income:
Net (loss) income $ (821 ) $ 72,223
$ (19,986 )
Change in unrecognized pension and postretirement benefit costs, net of tax —
9,369
456
Foreign currency translation adjustments, net of tax (2,362 ) 17,827
2,967
Comprehensive (loss) income $ (3,183 ) $ 99,419
$ (16,563 )

Table of Contents


A.M. Castle & Co. Condensed Consolidated Statements of Operations and Comprehensive Loss
	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2020		2019		2020		2019
Net sales	$	84,712	$	147,930	$	211,322	$	297,457
Costs and expenses:
Cost of materials (exclusive of depreciation)	60,900		109,941		153,196		220,899
Warehouse, processing and delivery expense	14,154		20,541		32,190		40,818
Sales, general and administrative expense	12,086		16,477		28,300		32,979
Depreciation expense	2,038		2,130		4,114		4,251
Total costs and expenses	89,178		149,089		217,800		298,947
Operating loss	(4,466)		(1,159)		(6,478)		(1,490)
Interest expense, net	5,093		9,850		15,069		19,299
Unrealized gain on embedded debt conversion option	(2,010)		—		(2,010)		—
Other (income) expense, net	(2,048)		(2,480)		(1,852)		(4,082)
Loss before income taxes	(5,501)		(8,529)		(17,685)		(16,707)
Income tax benefit	(1,448)		(225)		(2,591)		(400)
Net loss	$	(4,053)	$	(8,304)	$	(15,094)	$	(16,307)

Basic and diluted loss per common share	$	(0.06)	$	(3.77)	$	(0.38)	$	(7.58)

Comprehensive loss:
Net loss	$	(4,053)	$	(8,304)	$	(15,094)	$	(16,307)
Change in unrecognized pension and postretirement benefit costs, net of tax	25		23		50		46
Foreign currency translation adjustments, net of tax	36		(279)		(912)		(743)
Comprehensive loss	$	(3,992)	$	(8,560)	$	(15,956)	$	(17,004)

The accompanying notes are an integral part of these financial statements.

A.M. Castle & Co.
Condensed Consolidated Statements of Operations
and Comprehensive (Loss) Income Continued
Successor Predecessor
September 1, 2017 Through September 30, 2017 January 1, 2017
Through
August 31, 2017 Nine Months
Ended
September 30, 2016

Net sales $ 41,725
$ 353,926
$ 419,433
Costs and expenses:
Cost of materials (exclusive of depreciation and amortization) 31,482
266,495
323,808
Warehouse, processing and delivery expense 5,972
50,314
63,772
Sales, general and administrative expense 4,846
39,139
51,486
Restructuring expense —
566
14,674
Depreciation and amortization expense 502
10,150
12,498
Total costs and expenses 42,802
366,664
466,238
Operating loss (1,077 ) (12,738 ) (46,805 )
Interest expense, net 1,408
23,402
28,711
Financial restructuring expense —
7,024
—
Unrealized loss (gain) on embedded debt conversion option —
146
(7,569 )
Debt restructuring loss, net —
—
6,562
Other (income) expense, net (2,078 ) (3,582 ) 4,587
Reorganization items, net 128
(74,531 ) —
(Loss) income from continuing operations before income taxes and equity in losses of joint venture (535 ) 34,803
(79,096 )
Income tax expense (benefit) 286
(1,387 ) 1,099
(Loss) income from continuing operations before equity in losses of joint venture (821 ) 36,190
(80,195 )
Equity in losses of joint venture —
—
(4,177 )
(Loss) income from continuing operations (821 ) 36,190
(84,372 )
Income from discontinued operations, net of income taxes —
—
6,246
Net (loss) income $ (821 ) $ 36,190
$ (78,126 )

Basic and diluted earnings (loss) per common share:
Continuing operations $ (0.41 ) $ 1.12
$ (3.02 )
Discontinued operations —
—
0.22
Net basic and diluted (loss) income per common share $ (0.41 ) $ 1.12
$ (2.80 )

Comprehensive (loss) income:
Net (loss) income $ (821 ) $ 36,190
$ (78,126 )
Change in unrecognized pension and postretirement benefit costs, net of tax —
9,797
1,368
Foreign currency translation adjustments, net of tax (2,362 ) 16,142
(497 )
Comprehensive (loss) income $ (3,183 ) $ 62,129
$ (77,255 )

Table of Contents


A.M. Castle & Co. Condensed Consolidated Statements of Cash Flows
	Six Months Ended
	June 30,
	2020		2019
Operating activities:
Net loss	$	(15,094)	$	(16,307)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation	4,114		4,251
Amortization of deferred financing costs and debt discount	4,265		5,394
Loss on sale of property, plant and equipment	26		154
Unrealized foreign currency loss (gain)	881		(748)
Unrealized gain on embedded debt conversion option	(2,010)		—
Noncash interest paid in kind	6,165		7,788
Noncash rent expense	139		414
Noncash compensation expense	579		1,191
Deferred income taxes	(1,560)		(1,836)

Changes in assets and liabilities:
Accounts receivable	19,340		(13,354)
Inventories	(5,630)		3,213
Prepaid expenses and other current assets	915		3,764
Other noncurrent assets	699		(13)
Prepaid pension costs	(1,102)		(377)
Accounts payable	6,957		5,573
Income tax payable and receivable	(459)		(770)
Accrued and other current liabilities	(2,550)		(3,546)


Pension and postretirement benefit obligations and other noncurrent liabilities	263		(89)
Net cash provided by (used in) operating activities	15,938		(5,298)
Investing activities:
Capital expenditures	(1,399)		(2,627)
Proceeds from sale of property, plant and equipment	50		21

Net cash used in investing activities	(1,349)		(2,606)
Financing activities:
Proceeds from long-term debt including credit facilities	19,536		3,500
Repayments of long-term debt including credit facilities	(8,500)		—
(Repayments of) proceeds from short-term borrowings, net	(2,852)		2,528
Principal paid on financing leases	(88)		(301)

Payments of debt restructuring costs	(2,752)		—
Net cash provided by financing activities	5,344		5,727
Effect of exchange rate changes on cash and cash equivalents	8		43
Net change in cash and cash equivalents	19,941		(2,134)
Cash and cash equivalents - beginning of year	6,433		8,668
Cash and cash equivalents - end of period	$	26,374	$	6,534

The accompanying notes are an integral part of these financial statements.

Table of Contents



A.M. Castle & Co. Consolidated Statements of Stockholders' Equity (Deficit)
	Common Shares	Treasury Shares	Common Stock		Treasury Stock		Additional Paid-in Capital		Accumulated Deficit		Accumulated Other Comprehensive Loss		Total
Balance as of March 31, 2019	3,803	(168)	$	38	$	(454)	$	57,247	$	(58,229)	$	(14,789)	$	(16,187)

Net loss	—	—	—		—		—		(8,304)		—		(8,304)
Foreign currency translation, net of tax	—	—	—		—		—		—		(279)		(279)
Change in unrecognized pension and postretirement benefit costs, $0 tax effect	—	—	—		—		—		—		23		23
Reclassification to equity of interest paid in kind attributable to conversion option, net of $320 tax effect	—	—	—		—		912		—		—		912
Share-based compensation	—	—	—		—		371		—		—		371
Vesting of restricted shares and other	15	—	—		—		26		—		—		26
Balance as of June 30, 2019	3,818	(168)	$	38	$	(454)	$	58,556	$	(66,533)	$	(15,045)	$	(23,438)

Balance as of March 31, 2020	74,079	(168)	$	741	$	(454)	$	86,670	$	(99,782)	$	(14,297)	$	(27,122)
Net loss	—	—	—		—		—		(4,053)		—		(4,053)
Foreign currency translation, net of tax	—	—	—		—		—		—		36		36
Change in unrecognized pension and postretirement benefit costs, net of $0 tax effect	—	—	—		—		—		—		25		25
Reclassification to equity of interest paid in kind attributable to conversion option, net of $109 tax effect	—	—	—		—		305		—		—		305
Reclassification of conversion option to equity, net of $0 tax effect (Note 8)	—	—	—		—		36,952		—		—		36,952
Conversion of debt (Note 6)	—	—	—		—		(639)		—		—		(639)
Share-based compensation	—	—	—		—		222		—		—		222

Balance as of June 30, 2020	74,079	(168)	$	741	$	(454)	$	123,510	$	(103,835)	$	(14,236)	$	5,726

Table of Contents

A.M. Castle & Co.
Condensed Consolidated Statements of Cash Flows
Successor Predecessor
September 1, 2017 Through September 30, 2017
January 1, 2017
Through
August 31, 2017

Nine Months
Ended
September 30, 2016

Operating activities:
Net (loss) income $ (821 ) $ 36,190
$ (78,126 )
Less: Income from discontinued operations, net of income taxes —
—
6,246
(Loss) income from continuing operations (821 ) 36,190
(84,372 )
Adjustments to reconcile (loss) income from continuing operations to net cash used in operating activities of continuing operations:
Depreciation and amortization 502
10,150
12,498
Amortization of deferred gain (9 ) (56 ) (92 )
Amortization of deferred financing costs and debt discount 73
3,810
4,258
Debt restructuring loss, net —
—
6,562
Loss from lease termination —
—
4,452
Unrealized loss (gain) on embedded debt conversion option —
146
(7,569 )
Noncash reorganization items, net —
(87,107 ) —
Loss on sale of property, plant and equipment —
7
1,720
Unrealized gain on commodity hedges —
—
(813 )
Unrealized foreign currency transaction (gain) loss (1,292 ) (4,439 ) 2,484
Equity in losses of joint venture —
—
4,141
Noncash interest paid in kind 951
—
—
Share-based compensation expense 215
630
916
Deferred income taxes —
(953 ) 113
Other, net 75
593
679
Changes in assets and liabilities:
Accounts receivable (3,658 ) (6,061 ) (5,128 )
Inventories (784 ) (2,703 ) 34,780
Prepaid expenses and other current assets (3,050 ) (3,100 ) (301 )
Other noncurrent assets 567
1,664
(302 )
Prepaid pension costs (168 ) (849 ) (406 )
Accounts payable 235
8,602
6,026
Income tax payable and receivable 174
(340 ) 198
Accrued and other current liabilities 523
(6,002 ) 8,604
Pension and postretirement benefit obligations and other noncurrent liabilities (93 ) (471 ) 865
Net cash used in operating activities of continuing operations (6,560 ) (50,289 ) (10,687 )
Net cash used in operating activities of discontinued operations —
—
(6,907 )
Net cash used in operating activities (6,560 ) (50,289 ) (17,594 )
Investing activities:
Proceeds from sale of investment in joint venture —
—
31,550
Capital expenditures (924 ) (2,850 ) (2,431 )
Proceeds from sale of property, plant and equipment 5
619
2,829
Proceeds from release of cash collateralization of letters of credit —
7,492
—
Net cash (used in) from investing activities of continuing operations (919 ) 5,261
31,948

A.M. Castle & Co.
Condensed Consolidated Statements of Cash Flows
Successor Predecessor
September 1, 2017 Through September 30, 2017
January 1, 2017
Through
August 31, 2017

Nine Months
Ended
September 30, 2016

Net cash from investing activities of discontinued operations —
—
53,570
Net cash (used in) from investing activities (919 ) 5,261
85,518
Financing activities:
Proceeds from long-term debt including credit facilities 8,677
195,026
581,052
Repayments of long-term debt including credit facilities (25 ) (175,414 ) (640,415 )
Short-term borrowings (repayments), net (216 ) 3,797
—
Payments of debt restructuring costs —
—
(8,677 )
Payments of debt issue costs —
(1,831 ) —
Payments of build-to-suit liability —
(3,000 ) (687 )
Net cash from (used in) financing activities 8,436
18,578
(68,727 )
Effect of exchange rate changes on cash and cash equivalents 95
890
(292 )
Net change in cash and cash equivalents 1,052
(25,560 ) (1,095 )
Cash and cash equivalents - beginning of period 10,064
35,624
11,100
Cash and cash equivalents - end of period $ 11,116
$ 10,064
$ 10,005



A.M. Castle & Co. Consolidated Statements of Stockholders' Equity (Deficit)
	Common Shares	Treasury Shares	Common Stock		Treasury Stock		Additional Paid-in Capital		Accumulated Deficit		Accumulated Other Comprehensive Loss		Total
Balance as of December 31, 2018	3,803	—	$	38	$	—	$	55,421	$	(50,472)	$	(14,348)	$	(9,361)
Cumulative effect from adoption of the new lease standard (Leases: Topic 842)	—	—	—		—		—		246		—		246
Net loss	—	—	—		—		—		(16,307)		—		(16,307)
Foreign currency translation, net of tax	—	—	—		—		—		—		(743)		(743)
Change in unrecognized pension and postretirement benefit costs, $0 tax effect	—	—	—		—		—		—		46		46
Reclassification to equity of interest paid in kind attributable to conversion option, net of $635 tax effect	—	—	—		—		1,808		—		—		1,808
Share-based compensation	—	—	—		—		772		—		—		772
Vesting of restricted shares and other	15	(168)	—		(454)		555		—		—		101
Balance as of June 30, 2019	3,818	(168)	$	38	$	(454)	$	58,556	$	(66,533)	$	(15,045)	$	(23,438)

Balance as of December 31, 2019	3,818	(168)	$	38	$	(454)	$	61,461	$	(88,741)	$	(13,374)	$	(41,070)
Net loss	—	—	—		—		—		(15,094)		—		(15,094)
Foreign currency translation, net of tax	—	—	—		—		—		—		(912)		(912)
Change in unrecognized pension and postretirement benefit costs, $0 tax effect	—	—	—		—		—		—		50		50
Reclassification to equity of interest paid in kind attributable to conversion option, net of $109 tax effect	—	—	—		—		305		—		—		305
Reclassification of conversion option to equity, net of $0 tax effect (Note 8)	—	—	—		—		36,952		—		—		36,952
Conversion of debt (Note 6)	70,261	—	703		—		24,606		—		—		25,309
Share-based compensation	—	—	—		—		436		—		—		436
Vesting of restricted shares and other	—	—	—		—		(250)		—		—		(250)
Balance as of June 30, 2020	74,079	(168)	$	741	$	(454)	$	123,510	$	(103,835)	$	(14,236)	$	5,726

The accompanying notes are an integral part of these financial statements.

Table of Contents

A. M. Castle & Co.

Notes to Condensed Consolidated Financial Statements

Unaudited - Amounts in thousands except per share data and percentages

(1) Basis of Presentation

As previously disclosed, on June 18, 2017 (the "Petition Date"), A. M. Castle & Co. (the "Company") and four of its subsidiaries (together with the Company, the "Debtors") filed voluntary petitions for reorganization under chapter 11 of the United States Bankruptcy Code (the "Bankruptcy Code") with the United States Bankruptcy Court for the District of Delaware in Wilmington, Delaware (the "Bankruptcy Court"). The four subsidiaries in the chapter 11 cases were Keystone Tube Company, LLC, HY-Alloy Steels Company, Keystone Service, Inc. and Total Plastics, Inc. Also on June 18, 2017, the Debtors filed the Debtors' Prepackaged Joint Chapter 11 Plan of Reorganization with the Bankruptcy Court and on July 25, 2017, the Debtors filed the Debtors' Amended Prepackaged Joint Chapter 11 Plan of Reorganization (the "Plan") with the Bankruptcy Court. On August 2, 2017, the Bankruptcy Court entered an order (the "Confirmation Order") confirming the Plan. On August 31, 2017 (the "Effective Date"), the Plan became effective pursuant to its terms and the Debtors emerged from their chapter 11 cases. Refer to ~~Note 2 - Bankruptcy Related Disclosures.~~

The condensed consolidated financial statements included herein have been prepared to reflect the application of FASB Accounting Standards Codification ("ASC") No. 852, "Reorganizations" and ASC 805, "Business Combinations". Accordingly, the Company adopted fresh-start accounting upon emergence from their Chapter 11 Cases and became a new entity for financial reporting purposes as of September 1, 2017. For accounting purposes all emergence related transactions of the Predecessor including the impact of the issuance of the Successor common stock, the entry into a new asset-based revolving credit facility and new senior secured convertible notes, and the accelerated debt obligations of the Company that were satisfied pursuant to the terms of the Plan, were recorded as of August 31, 2017. Accordingly, the Condensed Consolidated Financial Statements for the Successor are not comparable to the consolidated financial statements for the Predecessor.

Also in connection with the adoption of fresh-start accounting, the Company elected to make an accounting policy change related to the accounting for stock-based compensation. The Predecessor estimated the level of forfeitures expected to occur at the time of each grant and recorded compensation expense only for those stock-based awards that it ultimately expected would vest. The estimate was based on the Company's historical rates of forfeitures and was updated periodically. The Successor has elected to no longer estimate the number of stock-based awards expected to vest but rather, will account for forfeitures as they occur.

The Condensed Consolidated Financial Statements of A.M. Castle & Co. and its consolidated subsidiaries (collectively, the "Company") included herein and the notes thereto have been prepared by the Company, without audit, pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”), and accounting principles generally accepted in the United States of America (“GAAP”). This report contains Condensed Consolidated Financial Statements of the Company as of September 30, 2017 (Successor), for the three-month and nine-month periods ended September 30, 2016 (Predecessor), for the period from July 1, 2017 to August 31, 2017 (Predecessor), for the period from January 1, 2017 to August 31, 2017 (Predecessor), and for the period from September 1, 2017 to September 30, 2017 (Successor). The Condensed Consolidated Balance Sheet at December 31, ~~2016 (Predecessor)~~2019 is derived from the audited financial statements at that date. Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to the rules and regulations of the SEC. In the opinion of the Company's management, the unaudited statements included herein contain all adjustments (consisting of only normal recurring adjustments) necessary for a fair presentation of financial results for the interim period. These Condensed Consolidated Financial Statements should be read in conjunction with the ~~consolidated financial statements~~Consolidated Financial Statements and the ~~notes~~Notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2016.~~2019. The ~~2017~~ ~~interim~~operating results for the three and six months ended June 30, 2020, as reported herein, may not necessarily be indicative of the Company’s operating results for the full year.

(2) New Accounting Standards

Standards Updates Adopted

In August 2018, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2018-13, “Fair Value Measurement (Topic 820): Disclosure Framework – Changes to the Disclosure Requirements for Fair Value Measurement.” ASU No. 2018-13 amends Fair Value Measurement (Topic 820) to add, remove, and modify fair value measurement disclosure requirements. The ASU’s changes to disclosures aim to improve the effectiveness of Topic 820's disclosure requirements under the aforementioned FASB disclosure framework project. The Company adopted the disclosure requirements of ASU No. 2018-13 in the first quarter of 2020. The Company determined the adoption of the disclosure requirements had no impact on its fair value disclosures herein.

In December 2019, the FASB issued ASU 2019-12, “Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes.” ASU 2019-12 amends ASC 740 to simplify the accounting for income taxes by removing certain exceptions for investments, intraperiod allocations and interim calculations, and adding guidance to reduce complexity in the accounting standard under the FASB’s simplification initiative. ASU 2019-12 is effective for public entities for fiscal years beginning after December 15, 2020. Upon adoption, the amendments in ASU 2019-12 should be applied on a prospective basis to all periods presented. Early adoption is permitted. The Company adopted the new guidance under ASU 2019-12 in the first quarter of 2020 and removed the exception for intraperiod allocations from its interim period tax provision calculation, accordingly.

On March 2, 2020, the SEC issued Final Rule Release No. 33-10762, "Financial Disclosures About Guarantors and Issuers of Guaranteed Securities and Affiliates Whose Securities Collateralize a Registrant’s Securities" (the “final rule”). The final rule simplifies the disclosure requirements related to certain registered securities under SEC Regulation S-X, Rules 3-10 and 3-16, which currently require separate financial statements for (1) subsidiary issuers and guarantors of registered debt securities unless certain exceptions are met and (2) affiliates that collateralize registered securities offerings if the affiliates’ securities are a substantial portion of the collateral. Under the final rule, alternative financial disclosures or narrative disclosures (referred to collectively as “Alternative Disclosures”) may be provided in lieu of separate financial statements of the guarantors or affiliates. The amendments in the final rule are generally effective for filings on or after January 4, 2021, with early application permitted. The Company has elected to adopt the amendments of the final rule for the quarter ended March 31, 2020 and accordingly, has elected to present the alternative disclosures of the guarantors of its registered securities in Part I Item 2, Management's Discussion and Analysis, of this Form 10-Q.

Standards Updates Issued Not Yet Effective

In June 2016, the FASB issued ASU No. 2016-13, “Measurement of Credit Losses on Financial Instruments.” ASU 2016-13 adds a current expected credit loss (“CECL”) impairment model to U.S. GAAP that is based on expected losses rather than incurred losses. Modified retrospective adoption is required with any cumulative-effect adjustment recorded to retained earnings as of the beginning of the period of adoption. ASU 2016-13 is effective for smaller

Table of Contents

reporting companies for fiscal years beginning after December 15, 2022, including interim periods within the year of adoption. Early adoption is permitted. The Company will adopt the guidance and disclosure requirements of ASU 2016-13 in fiscal year 2023.

In August 2018, the FASB issued ASU No. 2018-14, “Compensation – Retirement Benefits – Defined Benefit Plans - General (Topic 715-20): Disclosure Framework – Changes to the Disclosure Requirements for Defined Benefit Plan.” ASU No. 2018-14 amends Compensation - Retirement Benefits (Topic 715) to add or remove certain disclosure requirements related to defined benefit pension and other postretirement plans. The ASU’s changes to disclosures aim to improve the effectiveness of Topic 715's disclosure requirements under the FASB’s disclosure framework project. ASU No. 2018-14 is effective for public entities for fiscal years beginning after December 15, 2020. ASU No. 2018-14 does not impact the interim disclosure requirements of Topic 715. Early adoption is permitted. The Company will adopt the disclosure requirements of this new guidance in fiscal year 2021.

In March 2020, the FASB issued ASU 2020-04, “Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting.” The purpose of ASU 2020-04 is to provide optional guidance for a limited time to ease the potential burden in accounting for, or recognizing the effects of, reference rate reform on financial reporting. In response to concerns about structural risks of interbank offered rates, and, in particular, the risk of cessation of the London Interbank Offered Rate (LIBOR), reference rate reform refers to a global initiative to identify alternative reference rates that are more observable or transaction-based and less susceptible to manipulation. ASU 2020-04 is effective for all entities as of March 12, 2020 through December 31, 2022. An entity may elect to apply the amendments for contract modifications by topic or industry subtopic as of any date from the beginning of an interim period that includes or is subsequent to March 12, 2020, or prospectively from a date within an interim period that includes or is subsequent to March 12, 2020, up to the date that the financial statements are available to be issued. Once elected for a topic or an industry subtopic, the amendments in ASU 2020-04 must be applied prospectively for all eligible contract modifications for that topic or industry subtopic. The Company is currently assessing the accounting and financial impact of reference rate reform and will consider applying the optional guidance of ASU 2020-04 accordingly.

(3) Revenue

The Company recognizes revenue from the sale of products when the earnings process is complete and when the title and risk and rewards of ownership have passed to the customer, which is primarily at the time of shipment. Revenue recognized other than at the time of shipment represented less than 1% of the Company’s ~~operations for~~consolidated net sales in the ~~full year.~~

~~(2) Bankruptcy Related Disclosures~~

~~Chapter 11 Bankruptcy Filing~~

~~On the Petition Date, the Debtors filed voluntary chapter 11 petitions for reorganization under the Bankruptcy Code with the Bankruptcy Court pursuant~~three and six months ended June 30, 2020 and June 30, 2019, respectively. Customer payment terms are established prior to the time of shipment. Provisions for allowances related to sales discounts and rebates are recorded based on terms of ~~a Restructuring Support Agreement (as defined below)~~the sale in the period that ~~contemplated~~ the ~~reorganization~~sale is recorded. The Company utilizes historical information and the current sales trends of the ~~Debtors pursuant~~Company's business to estimate such provisions. The provisions related to discounts and rebates due to customers are recorded as a ~~prepackaged plan of reorganization. The chapter 11 cases were consolidated for procedural purposes only and were administered jointly under the caption~~ ~~In re Keystone Tube Company, LLC., et al.~~ ~~(Case No. 17-11330). No trustee was appointed~~reduction within net sales in the ~~chapter 11 cases,~~Company’s Condensed Consolidated Statements of Operations and ~~during the~~

pendency of the chapter 11 cases, the Debtors continued to operate their business as “debtors-in-possession” subject to the supervision and orders of the Bankruptcy Court in accordance with the Bankruptcy Code.

The filing of the bankruptcy petitions constituted a default or event of default that accelerated the Company’s obligations under (i) the Credit Facilities Agreement (as defined below) and the 11.00% Senior Secured Term Loan Credit Facilities due 2018 issued pursuant thereto (the "Credit Facilities"), (ii) the Indenture dated February 8, 2016 (the "Senior Notes Indenture") and the 12.75% Senior Secured Notes due 2018 issued pursuant thereto (the "12.75% Secured Notes"), and (iii) the Indenture dated May 19, 2016 (the "Convertible Notes Indenture") and the 5.25% Convertible Senior Secured Notes due 2019 issued pursuant thereto (the "5.25% Convertible Notes"). The Credit Facilities Agreement, the Senior Notes Indenture, and the Convertible Notes Indenture provide that, as a result of the filing of the bankruptcy petitions, all outstanding indebtedness due thereunder shall be immediately due and payable. Any efforts to enforce such payment obligations under the Credit Facilities Agreement, the Senior Notes Indenture, and the Convertible Notes Indenture were automatically stayed as a result of the bankruptcy petitions, and the creditors’ rights of enforcement in respect of the Credit Facilities Agreement, the Senior Notes Indenture, and the Convertible Notes Indenture are subject to the applicable provisions of the Restructuring Support Agreement (as defined below) and the Bankruptcy Code.

Prior to the Petition Date, on June 16, 2017, the Debtors entered into a Commitment Agreement with certain of their creditors (the "Commitment Parties"). The Commitment Parties are the holders (or the investment advisors or managers for the holders) of the Credit Facility term loans made to the Company under a Credit and Guaranty Agreement, dated December 8, 2016, by and among the Company, Highbridge International Capital Management, LLC, Corre Partners Management, LLC, Whitebox Credit Partners, L.P., WFF Cayman II Limited, and SGF, LLC and Cantor Fitzgerald Securities, among others (as amended, the “Credit Facilities Agreement").

The Commitment Agreement was entered into pursuant to a Restructuring Support Agreement dated April 6, 2017, as amended, by and among the Debtors and certain of their creditors, including the Commitment Parties (the "RSA"). The RSA provides for a consensual restructuring of the debt and equity of the Company, which the Company seeks to effect by means of the Plan.Comprehensive Loss.

The Company ~~continued its operations without interruption during~~records revenue from shipping and handling charges in net sales. Costs incurred in connection with shipping and handling the ~~pendency~~Company’s products, which are related to third-party carriers or performed by Company personnel, are included in warehouse, processing and delivery expenses. In the three months ended June 30, 2020 and June 30, 2019, shipping and handling costs included in warehouse, processing and delivery expenses were $4,841 and $6,160, respectively. In the six months ended June 30, 2020 and June 30, 2019, shipping and handling costs included in warehouse, processing and delivery expenses were $10,448 and $12,296, respectively. As a practical expedient under Accounting Standards Codification No. 606, "Revenue from Contracts with Customers (Topic 606)" ("ASC 606"), the Company has elected to account for shipping and handling activities as fulfillment costs and not a promised good or service. As a result, there is no change to the Company's accounting for revenue from shipping and handling charges under ASC 606.

The Company maintains an allowance for doubtful accounts related to the potential inability of customers to make required payments. The allowance for doubtful accounts is maintained at a level considered appropriate based on historical experience and specific identification of customer receivable balances for which collection is unlikely. The provision for doubtful accounts is recorded in sales, general and administrative expense in the Company’s Condensed Consolidated Statements of Operations and Comprehensive Loss. Estimates of doubtful accounts are based on historical write-off experience as a percentage of net sales and judgments about the probable effects of economic conditions on certain customers. The Company considered the economic impact of the ~~chapter 11 cases and reorganization process. To maintain and continue ordinary course operations without interruption,~~novel coronavirus ("COVID-19") pandemic on the collectibility of customer accounts receivable. Although the Company ~~received approval~~has detected some slowing in payments from customers due to the financial uncertainties resulting from the ~~Bankruptcy Court~~COVID-19 pandemic,

Table of ~~a variety of “first day” motions seeking certain relief and authorizing the Company~~Contents

it determined that no additional allowance for doubtful accounts specific to ~~maintain its operations and pay trade claims in the ordinary course.~~

~~Plan of Reorganization and Emergence from Chapter 11~~

~~Pursuant to the terms of the RSA, on the Petition Date, the Debtors filed the Plan with the Bankruptcy Court.~~

~~The Plan allowed general unsecured claims and claims that are unimpaired under the Plan to be paid in full in cash.~~

On August 2, 2017, the Bankruptcy Court entered the Confirmation Order approving and confirming the Plan. On the Effective Date, the Plan became effective pursuant to the terms described above and the Debtors emerged from their Chapter 11 Cases.

~~Key components of the Plan, which became effective on August 31, 2017, include:~~

Entry into a new senior secured exit financing facility in the form of an asset-based revolving credit facility (the "New ABL Facility") with PNC Bank, National Association, as lender and as administrative and collateral agent (the “Agent”), and the other lenders party thereto. The New ABL Agreement provides for a $125,000 senior secured, revolving credit facility for the Company. The proceeds of the advances under the New ABL Facility may only be used to (i) pay certain fees and expenses to the Agent and the lenders under the New ABL Facility, (ii) provide for Borrowers' working capital needs and reimburse drawings under letters of credit, (iii) repay the obligations under the Debtor-in-Possession Revolving Credit and Security Agreement datedcustomer accounts receivable impacted by COVID-19 was required as of June ~~10, 2017 ("DIP Facility"), by~~30, 2020. The full impact of the COVID-19 pandemic is unknown and ~~among~~rapidly evolving. The Company will continue to analyze any financial and commercial impacts of the COVID-19 pandemic, including any adverse impact the COVID-19 pandemic may have on the collectibility of customer accounts receivable.

The Company also maintains an allowance for credit memos for estimated credit memos to be issued against current sales. Estimates of allowance for credit memos are based upon the application of a historical issuance lag period to the average credit memos issued each month.

Accounts receivable allowance for doubtful accounts and credit memos activity is as follows:


	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2020		2019		2020		2019
Balance, beginning of period	$	1,979	$	1,507	$	1,766	$	1,364
Add Provision charged to expense^(a)	—		195		222		387
Recoveries	—		—		—		11
Less Charges against allowance	(67)		(1)		(76)		(61)
Balance, end of period	$	1,912	$	1,701	$	1,912	$	1,701

^(a) Includes the net amount of credit memos reserved and issued.

The Company operates primarily in North America. Net sales are attributed to countries based on the location of the Company’s subsidiary that is selling direct to the customer. Net sales exclude assessed taxes such as sales and excise tax. Company-wide geographic data is as follows:


	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2020		2019		2020		2019
Net sales
United States	$	59,615	$	93,891	$	145,052	$	189,023
Canada	5,027		11,708		15,050		23,548
Mexico	6,758		12,865		17,880		25,521
France	4,997		13,527		16,709		28,625
China	5,847		11,167		10,672		21,578
All other countries	2,468		4,772		5,959		9,162
Total	$	84,712	$	147,930	$	211,322	$	297,457

The Company does not incur significant incremental costs when obtaining customer contracts and any costs that are incurred are generally not recoverable from its customers. Substantially all of the Company's customer contracts are for a duration of less than one year and individual customer purchase orders for contractual customers are fulfilled within one year of the purchase order date. As a practical expedient under ASC 606, the Company has elected to continue to recognize incremental costs of obtaining a contract, if any, as an expense when incurred if the ~~lenders party thereto,~~amortization period of the asset would have been one year or less. The Company does not have any costs to obtain a contract that are capitalized under ASC 606.

(4) Loss Per Share

Diluted loss per common share is computed by dividing net loss by the weighted average number of shares of the common stock of A.M. Castle & Co. outstanding plus outstanding common stock equivalents. Common stock equivalents consist of restricted stock awards and ~~PNC Bank, National Association,~~other share-based payment awards, and ~~certain other existing indebtedness, and (iv) provide for~~shares that may be issued upon conversion of the ~~Borrowers' capital expenditure needs, in accordance with the New ABL Facility.~~

◦

On the Effective Date, in connection with its entering into the New ABL Agreement, the Company borrowed an aggregate amount equal to $78,797, proceeds from which, along with proceeds of the New Money Notes of $38,002, were used to pay down allCompany’s outstanding ~~indebtedness, accrued interest, and related fees of the Company under the Credit Facilities Agreement and the borrowings outstanding under the DIP Facility.~~

Entry into an Indenture (the “Second Lien Notes Indenture”) with Wilmington Savings Fund Society, FSB (“WSFS, FSB”), as trustee and collateral agent (“Indenture Agent”) and, pursuant thereto, issued approximately$162,502 in aggregate original principal amount of its 5.00% / 7.00% Convertible Senior Secured Paid-in-Kind ("PIK") Toggle Notes due 2022 (the ~~“Second Lien~~“5.00%/7.00% Convertible Notes”)~~, excluding restricted notes issued under the A.M. Castle & Co. 2017 Management Incentive Plan (See~~ ~~Note 11 - Share Based Compensation, for full description).~~

~~The Second Lien Notes were issued as follows:~~


◦	~~$111,875 in aggregate principal Second Lien Notes issued to holders of Prepetition Second Lien Secured Claims in partial satisfaction of their claims;~~


◦	~~$3,125 in aggregate principal Second Lien Notes issued to holders of Prepetition Third Lien Secured Claims in partial satisfaction of their claims; and~~


◦	~~$47,502 in aggregate principal Second Lien Notes issued to the Commitment Parties pursuant to the Commitment Agreement (the "New Money Notes").~~

~~As a result of these Plan actions, all of the outstanding indebtedness of the 12.75% Secured Notes and 5.25% Convertible Notes was discharged and canceled.~~

~~Issuance of an aggregate of 2,000 shares of new common stock, as follows:~~


◦	~~1,300 shares issued to holders of Prepetition Second Lien Secured Claims in partial satisfaction of their claims;~~


◦	~~300 shares issued to holders of Prepetition Third Lien Secured Claims in partial satisfaction of their claims; and~~


◦	~~400 shares issued to participating holders of the Company's outstanding common stock as of August 2, 2017.~~

~~Payment in full of all general unsecured claims and claims that were unimpaired under the Plan in cash in the ordinary course of business.~~

~~Cash payment of~~ ~~$6,646~~ ~~to holders of Prepetition Second Lien Secured Claims.~~

~~Cash payment of a put option fee of $2,000 to the Commitment Parties pursuant to the Commitment Agreement.~~

All agreements, instruments, and other documents evidencing, relating to or connected with any equity interests of the Company (which include warrants to purchase the Company’s prior common stock and unvested/unexercised awards under any existing pre-Effective Date management incentive compensation plans) were canceled without recovery.

All prior director, officer and employee incentive plans, as well as the awards issued thereunder, were canceled. The new A.M. Castle & Co. 2017 Management Incentive Plan, under which persons eligible to receive awards include directors, officers and employees of the Company and its subsidiaries, became effective.

~~Reporting During Bankruptcy~~

During the pendency of the Company's Chapter 11 Cases, expenses and income directly associated with the chapter 11 proceedings were reported separately in reorganization items, net in the Company’s Condensed Consolidated Statements of Operations and Comprehensive Loss. Reorganization items, net also include adjustments to reflect the carrying value of liabilities subject to compromise ("LSTC") at their estimated allowed claim amounts, as such adjustments were determined. In addition, effective as of the Petition Date and during the pendency of the Company's Chapter 11 Cases, the Company discontinued recording interest expense on outstanding prepetition debt classified as LSTC. Upon the Company's emergence from its Chapter 11 Cases, the Company settled and extinguished or reinstated liabilities that were subject to compromise.

~~Fresh-Start Accounting~~

~~Under ASC No. 852,~~ ~~Reorganizations~~, fresh-start accounting is required upon emergence from Chapter 11 if (i) the reorganization value of the assets of the emerging entity immediately before the date of confirmation is less than the total of all post-petition liabilities and allowed claims; and (ii) holders of existing voting shares immediately before confirmation receive less than 50% of the voting shares of the emerging entity. The Company qualified for and adopted fresh-start accounting as of the Effective Date. Adopting fresh-start accounting results in a new reporting entity with

no beginning retained earnings or deficits. The cancellation of all existing common shares outstanding on the Effective Date and issuance of new shares of the reorganized entity resulted in a change of control of the Company under ASC No. 852.

Adoption of fresh-start accounting resulted in the Company becoming a new entity for financial reporting purposes and the recording of the Company’s assets and liabilities at their fair value as of the Effective Date, with the excess of reorganization value over net asset values recorded as goodwill, in conformity with ASC No. 805, ~~Business Combinations~~. The estimated fair values of the Company’s assets and liabilities as of that date differed from the recorded values of its assets and liabilities as reflected in its historical consolidated financial statements. In addition, the Company’s adoption of fresh-start accounting affected its results of operations following the fresh-start reporting date, as the Company had a new basis in its assets and liabilities. The Company also adopted one new accounting policy in connection with its adoption of fresh-start accounting (see ~~Note 1 - Basis of Presentation)~~. Consequently, the Company’s financial statements on or after the Effective Date are not comparable with the financial statements prior to that date and the historical financial statements before the Effective Date are not reliable indicators of its financial condition and results of operations for any period after it adopted fresh-start accounting.

~~Reorganization Value~~

Reorganization value is the value attributed to an entity emerging from bankruptcy, as well as the expected net realizable value of those assets that will be disposed before emergence occurs. This value is viewed as the value of the entity before considering liabilities and approximates the amount a willing buyer would pay for the assets of the entity immediately after emergence. Fresh-start accounting requires that the reporting entity allocate the reorganization value to its assets and liabilities in relation to their fair values upon emergence from Chapter 11, with the excess of reorganization value over net asset values recorded as goodwill. The Company’s valuation of the reorganized Company, which was included in the Disclosure Statement related to the Plan, estimated the enterprise value of the Company to be in a range between $234 million and $264 million. The Company estimated the enterprise value of the Successor Company to be $244 million. The estimated enterprise value and the equity value are highly dependent on the achievement of the future financial results contemplated in the projections that were set forth in the Plan. The estimates and assumptions made in the valuation are inherently subject to significant uncertainties. The primary assumptions for which there is a reasonable possibility of the occurrence of a variation that would have significantly affected the reorganization value include the assumptions regarding revenue growth, operating expenses, the amount and timing of capital expenditures and the discount rate utilized.

~~In order to determine the reorganization value, the Company estimated the enterprise value of the Successor utilizing the discounted cash flow analysis.~~

To estimate the fair value utilizing the discounted cash flow analysis, the Company established an estimate of future cash flows for the period from August 31, 2017 to December 31, 2021 and discounted the estimated future cash flows to the present value, adding the present value of the terminal value of cash flows beyond December 31, 2021. The expected cash flows for the period August 31, 2017 to December 31, 2021 were derived from earnings forecasts and assumptions regarding growth and margin projections and adjusted for other cash flows including capital expenditures and charges to working capital, as applicable, and expressed as a multiple of Earnings before Interest, Taxes, Depreciation and Amortization ("EBITDA"). The discount rate of 11.1% was estimated based on an after-tax weighted average cost of capital reflecting the rate of return that would be expected by a market participant.

~~The following table reconciles the Company's enterprise value to the estimated fair value of the Successor's equity as of the Effective Date:~~

Enterprise value $ 244,000
Less: fair value of debt (238,340 )
Equity value $ 5,660

The fair value of the convertible notes portion of the debt was determined based on market information and a review of prices and terms available for similar debt instruments that do not contain a conversion feature, as well as other factors related to the callable nature of the convertible notes. Given the nature and the variable interest rates, the fair value of borrowings under the asset-based lending facility approximated carrying value as of the Effective Date.

~~The following table reconciles the Company's enterprise value to the reorganization value of the Successor's assets:~~

Enterprise value $ 244,000
Current liabilities 64,992
Noncurrent liabilities 23,479
Reorganization value of Successor assets $ 328,648

~~The total of all postpetition liabilities and allowed claims immediately prior to confirmation of the Plan was approximately~~ ~~$404 million~~.

~~Fresh-Start Balance Sheet~~

The following fresh-start balance sheet as of the Effective Date, August 31, 2017, illustrates the financial effects on the Company of the implementation of the Plan and the adoption of fresh-start reporting. This fresh-start balance sheet reflects the effect of the completion of the transactions included in the Plan, including the issuance of successor equity and the settlement of prepetition indebtedness.

Reorganization adjustments, shown in column 2 of the following schedule, represent amounts recorded on the Effective Date for the implementation of the Plan, including the settlement of liabilities subject to comprise and related payments, the issuance of new debt and new shares of common stock, repayment of the debtor-in-possession revolving credit facility and cancellation of Predecessor common stock.

Fresh-start adjustments, as shown in column 3 of the following schedule, represent amounts recorded on the Effective Date as a result of the adoption of fresh-start accounting, which resulted in the Company becoming a new entity for financial reporting purposes. The Company’s assets and liabilities have been recorded at estimated fair value as of the fresh-start reporting date or Effective Date.

As of August 31, 2017
Predecessor Reorganization Adjustments Fresh-Start Adjustments Successor
ASSETS
Current assets:
Cash and cash equivalents $ 20,443
$ (10,379 ) (a) $ —
$ 10,064
Accounts receivable, net 73,056
—
—
73,056
Inventories 153,785
—
—
153,785
Prepaid expenses and other current assets 14,217
—
—
14,217
Income tax receivable 588
—
—
588
Total current assets 262,089
(10,379 ) —
251,710
Intangible assets, net 24
—
8,151
(j) 8,175
Prepaid pension cost 9,350
—
—
9,350
Deferred income taxes 1,381
—
—
1,381
Other noncurrent assets 1,364
—
—
1,364
Property, plant and equipment: —
Land 2,073
—
3,867
(i) 5,940
Buildings 37,498
—
(15,518 ) (i) 21,980
Machinery and equipment 129,324
—
(100,576 ) (i) 28,748
Property, plant and equipment, at cost 168,895
—
(112,227 ) 56,668
Accumulated depreciation (122,087 ) —
122,087
—
Property, plant and equipment, net 46,808
—
9,860
56,668
Total assets $ 321,016
$ (10,379 ) $ 18,011
$ 328,648
LIABILITIES AND STOCKHOLDERS’ EARNINGS (DEFICIT)
Current liabilities:
Accounts payable $ 47,063
$ —
$ —
$ 47,063
Accrued and other current liabilities 12,145
1,961
(b) —
14,106
Short-term borrowings 3,797
—
—
3,797
Current portion of long-term debt 109,213
(109,187 ) (c) —
26
Total current liabilities 172,218
(107,226 ) —
64,992
Long-term debt, less current portion —
234,517
(d) —
234,517
Deferred income taxes —
—
3,159
(m) 3,159
Build-to-suit liability 9,898
—
—
9,898
Other noncurrent liabilities 5,711
—
(1,715 ) (k) 3,996
Pension and postretirement benefit obligations 6,426
—
—
6,426
Liabilities subject to compromise 211,363
(211,363 ) (e) —
—
Commitments and contingencies

Stockholders’ earnings (deficit):
Predecessor common stock 327
(327 ) (f) —
—
Successor common stock —
20
(g) —
20
Predecessor additional paid-in capital 245,546
(1,883 ) (f) (243,663 ) (l) —
Successor additional paid-in capital —
5,640
(g) —
5,640
Retained (deficit) earnings (302,833 ) 69,165
(h) 233,668
(l) —
Accumulated other comprehensive loss (26,562 ) —
26,562
(l) —
Treasury stock, at cost (1,078 ) 1,078
(f) —
—
Total stockholders’ earnings (deficit) (84,600 ) 73,693
16,567
5,660
Total liabilities and stockholders’ earnings (deficit) $ 321,016
$ (10,379 ) $ 18,011
$ 328,648

~~Reorganization Adjustments~~

The unaudited consolidated financial information gives effect to the following Reorganization Adjustments, the Plan and the implementation of the transactions contemplated by the Plan. These adjustments give effect to the terms of the Plan and certain underlying assumptions, which include, but are not limited to, the following:


a.	~~Represents net cash outflows occurring upon the Plan becoming effective on August 31, 2017 as follows:~~

Cash received from initial draw on New ABL Facility $ 78,797
Repayment of Debtor-In-Possession financing borrowings, including interest and fees (66,932 )
Cash received from issuance of New Money Notes 38,002
Payment of put option fee (2,000 )
Repayment of prepetition First Lien Notes, including interest and fees (49,415 )
Payment of cash recovery to prepetition Second Lien Noteholders (6,646 )
Payment related to key employee incentive plan (1,229 )
Professional fees paid upon emergence (956 )
Net cash paid upon emergence $ (10,379 )


b.	~~Represents the accrual of success fees earned upon emergence of $2,416 net of payment of accrued interest on the prepetition First Lien Notes of $455.~~


c.	Represents repayment of the Debtor-In-Possession financing balance of $66,599 and the repayment of the prepetition First Lien Notes principal balance of $48,000, net of the write-off of unamortized original issue discount and deferred issuance costs related to the prepetition First Lien Notes of $5,412.


d.	~~Represents the fair value of the Second Lien Notes Indenture issued upon emergence of $155,720 and the initial draw on New ABL Facility of $78,797.~~


e.	~~Liabilities subject to compromise were satisfied as follows:~~

12.75% Senior Secured Notes due December 15, 2018 $ 177,019
5.25% Convertible Notes due December 30, 2019 22,323
Accrued interest payable 12,021
Liabilities subject to compromise 211,363
Cash payment to prepetition Second Lien Noteholders (6,646 )
Fair value of Second Lien Notes (including conversion option) issued to prepetition Second and Third Lien Noteholders (110,200 )
New equity issued to prepetition Second and Third Lien Noteholders (4,528 )
Gain on settlement of liabilities subject to compromise $ 89,989


f.	~~Represents the cancellation of the Predecessor common stock, warrants and treasury stock.~~


g.	~~Represents the issuance of 2,000 common shares of the Successor company in accordance with the Plan.~~


h.	~~The cumulative effect on retained earnings of the reorganization adjustments discussed above is as follows:~~

Gain on settlement of liabilities subject to compromise $ 89,989
Write off of original issue discount and deferred financing costs (5,412 )
Backstop and other fees related to the repayment of old debt and issuance of new debt (10,811 )
Success fees and key employee incentive plan payments (4,601 )
Net impact to retained earnings (accumulated deficit) $ 69,165

~~Fresh-Start Adjustments~~

Represents the adjustments made to increase the carrying value of property, plant and equipment to their estimated fair value. The Company’s overall range of useful lives from an accounting policy perspective did not change. However, when the fair value of each asset was adjusted, a new remaining useful life was assigned to each asset, and the new value will be depreciated over that time period, which may be different from the remaining depreciable life of that asset at the end of the Predecessor period. Estimated fair value was determined as follows:

The cost approach was utilized to estimate the fair value of personal property as well as buildings and land improvements. This approach considers the amount required to construct or purchase a new asset of equal utility at current market prices, with adjustments in value for physical deterioration.

The sales comparison approach was utilized to estimate fair value of owned real property. The sales comparison approach relies upon recent sales, offerings of similar assets or a specific inflationary adjustment to original purchase price to arrive at a probable selling price.


j.	An adjustment of $8,151 was made to record the estimated fair value of the Successor trade name of $5,500 and write off $24 of Predecessor intangible assets, and to record goodwill of $2,675, representing the excess of the reorganization value of the assets over the fair value of identifiable assets, as follows:

Reorganization value of assets $ 328,648
Less: fair value of:
Total current assets (251,710 )
Property, plant and equipment (56,668 )
Successor trade name (5,500 )
Other noncurrent assets (12,095 )
Goodwill $ 2,675

~~The fair value of the Successor's customer relationships was determined to be nil.~~


k.	~~Represents the elimination of deferred rent and deferred gains of $2,105, adjusting these balances to zero fair value, net of a liability for unfavorable contracts of $390.~~


l.	~~Represents the cumulative impact of fresh-start adjustments as discussed above and the elimination of Predecessor retained deficit and other comprehensive loss.~~


m.	~~Represents the recording of a tax liability related to indefinite lived trade names and land.~~

~~Contractual Interest~~

Effective June 18, 2017, the Company discontinued recording interest expense on outstanding prepetition debt classified as LSTC. The table below shows contractual interest amounts for debt classified as LSTC calculated in accordance with the respective agreements without giving effect to any penalties as a result of the default on such agreements, which are amounts due under the contractual terms of the outstanding debt. Interest expense reported in the Condensed Consolidated Statement of Operations for the periods after the Effective Date does not include $4,089 and $4,880, per the table below, in contractual interest on prepetition debt classified as LSTC, which was stayed by the Bankruptcy Court effective on the Petition Date.

Predecessor

July 1, 2017
Through
August 31, 2017

June 18, 2017
Through
August 31, 2017
12.75% Senior Secured Notes due December 15, 2018 $ 3,887
$ 4,639
5.25% Convertible Notes due December 30, 2019 202
241
Total Contractual Interest $ 4,089
$ 4,880

~~Reorganization Items, Net~~

During the pendency of the Company's Chapter 11 Cases, expenses and income directly associated with the chapter 11 proceedings were reported separately in reorganization items, net in the Company’s Condensed Consolidated Statements of Operations and Comprehensive Loss. Reorganization items, net also include adjustments to reflect the carrying value of LSTC at their estimated allowed claim amounts, as such adjustments were determined. The following table presents reorganization items incurred in the the periods after the Effective Date, as reported in the accompanying Condensed Consolidated Statement of Operations:

Successor Predecessor
September 1, 2017 Through September 30, 2017
July 1, 2017
Through
August 31, 2017

June 18, 2017
Through
August 31, 2017
Gain on extinguishment of debt —
(89,989 ) (89,989 )
Gain on fresh-start revaluation —
(16,566 ) (16,566 )
Write-off of unamortized debt issuance costs and discounts —
5,412
10,262
Prepayment penalties and debt-related fees —
13,191
13,191
Professional fees 128
6,690
7,342
Key employee incentive plan —
1,229
1,229
Reorganization items, net $ 128
$ (80,033 ) $ (74,531 )

For the period from June 18, 2017 through August 31, 2017, the cash reorganization items included approximately $8,571 of professional fees and employee incentives and $3,673 of debt issuance and repayment costs. Cash reorganization items included approximately $128 for professional fees for the period from September 1, 2017 through September 30, 2017 (Successor). The cash outflow is included in net cash provided by operating activities in our Condensed Consolidated Statements of Cash Flows for the periods presented.

~~(3) New Accounting Standards~~

~~Standards Updates Adopted~~

Effective January 1, 2017, the Company adopted FASB ASU No. 2016-09, "Improvements to Employee Share-Based Payment Accounting," which simplifies several aspects of the accounting for employee share-based payment transactions. Under ASU No. 2016-09, a company recognizes all excess tax benefits and tax deficiencies as income tax expense or benefit in the income statement, eliminating the notion of the additional paid-in capital pool and significantly reducing the complexity and cost of accounting for excess tax benefits and tax deficiencies. This aspect of the guidance is required to be applied prospectively. For interim reporting purposes, excess tax benefits and tax deficiencies are considered discrete items in the reporting period in which they occur and are not included in the estimate of an entity’s annual effective tax rate. ASU No. 2016-09 further eliminates the requirement to defer recognition of an excess tax benefit until the benefit is realized through a reduction to taxes payable. Upon adoption, the Company elected to continue to estimate forfeitures expected to occur to determine the amount of compensation cost to be recognized in each period. The adoption of ASU No. 2016-09 did not have a material impact on the Company's consolidated financial statements. As described in ~~Note 1 - Basis of Presentation, upon emergence from bankruptcy, the Company elected to account for forfeitures as they occur, which did not have a material impact on the condensed consolidated financial statements.~~

~~Standards Updates Issued Not Yet Effective~~

In March 2017, the FASB issued ASU No. 2017-07, "Compensation – Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost." Under the new guidance, employers must present the service cost component of the net periodic benefit cost in the same income statement line item(s) as other employee compensation costs arising from services rendered during the period. In addition, only the service cost component will be eligible for capitalization in assets. The other components of net periodic benefit cost must be reported separately from the line item(s) that includes the service cost component and outside of any subtotal of operating income, if one is presented. Employers will have to disclose the line(s) used to present the other components of net periodic benefit cost, if the components are not presented separately in the income statement. The guidance on the income statement presentation of the components of net periodic benefit cost must be applied retrospectively, while the guidance limiting the capitalization of net periodic benefit cost in assets to the service cost

component must be applied prospectively. For public business entities, the guidance is effective for fiscal years beginning after December 15, 2017, and interim periods within those years. Early adoption is permitted as of the beginning of an annual period for which interim financial statements have not been issued. The Company is currently evaluating the impact the adoption of ASU No. 2017-07 will have on its consolidated financial statements.

In January 2017, the FASB issued ASU 2017-04, "Intangibles – Goodwill and Other (Topic 350)", which simplifies the subsequent measurement of goodwill by eliminating step two from the goodwill impairment test. ASU 2017-04 is effective for annual and interim impairment tests beginning January 1, 2020 for the Company and is required to be adopted using a prospective approach. Early adoption is allowed for annual goodwill impairment tests performed on testing dates after January 1, 2017. The Company does not expect the adoption of this ASU to have a material impact on its consolidated financial statements and related disclosures.

In August 2016, the FASB issued ASU No. 2016-15, "Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments," to reduce the existing diversity in practice related to how certain cash receipts and cash payments are presented and classified in the statement of cash flows under Topic 230. The amendments in ASU No. 2016-15 address eight specific cash flow issues and apply to all entities that are required to present a statement of cash flows under Topic 230. The provisions of ASU No. 2016-15 must be applied retrospectively to all periods presented with limited exceptions. For public companies, the amendments in ASU No. 2016-15 are effective for fiscal years beginning after December 15, 2017, and interim periods within those years. Early adoption is permitted, including adoption in an interim period. The Company does not expect the adoption of ASU No. 2016-15 to have a material impact on its consolidated financial statements.

In February 2016, the FASB issued ASU No. 2016-02, "Leases (Topic 842)," which requires that lessees recognize assets and liabilities for leases with lease terms greater than twelve months in the statement of financial position. ASU No. 2016-02 also requires additional disclosures to help users of financial statements better understand the amount, timing and uncertainty of cash flows arising from leases. The provisions of ASU No. 2016-02 are to be applied using a modified retrospective approach, and are effective for fiscal years beginning after December 15, 2018, including interim reporting periods within that reporting period. Early adoption is permitted. The Company is currently evaluating the impact that the adoption of ASU No. 2016-02 will have on its consolidated financial statements, but the Company expects that most existing operating lease commitments will be recognized as operating lease obligations and right-of-use assets as a result of adoption.

In May 2014, the FASB issued ASU No. 2014-09, "Revenue from Contracts with Customers (Topic 606)" and has subsequently issued several supplemental and/or clarifying ASUs (collectively, "ASC 606"). The underlying principle of ASC 606 is that a business or other organization will recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects what it expects in exchange for the goods or services. The standard also requires more detailed disclosures and provides additional guidance for transactions that were not addressed completely in prior accounting guidance. Adoption of ASC 606 is required for annual and interim periods beginning after December 15, 2017. The Company plans to adopt ASC 606 on January 1, 2018 using the modified retrospective transition method with the cumulative effect of initial adoption, if any, recognized in opening retained earnings or accumulated deficit on the adoption date. Almost all of the Company’s purchase orders, contracts or purchase agreements do not contain performance obligations other than delivery of the agreed upon product, with title transfer generally occurring at the time of shipment. Thus, the Company generally recognizes revenue upon shipment of the product. While the Company is still in the process of completing an analysis of all of its revenue generating activities and the contracts which might impact its revenue generating activities in light of the new standard, the Company does not believe that any of its revenue streams will be materially affected by the adoption of ASC 606, and therefore it does not expect its Consolidated Statements of Operations will be materially affected. The Company is currently in the process of evaluating additional disclosures which may be required upon the adoption of ASC 606.

~~(4) Discontinued Operation~~

On March 15, 2016, the Company completed the sale of substantially all the assets of its wholly-owned subsidiary, Total Plastics, Inc. ("TPI") for $55,070 in cash, subject to customary working capital adjustments. Under the terms of the sale, $1,500 of the purchase price was placed into escrow pending adjustment based upon the final calculation of the working capital at closing. The Company and the buyer agreed to the final working capital adjustment during the third quarter of 2016, which resulted in the full escrowed amount being returned to the buyer. The sale ultimately resulted in pre-tax and after-tax gains of $2,003 and $1,306, respectively, for the year ended December 31, 2016.

~~Summarized results of the discontinued operation for the nine months ended September 30, 2016 were as follows:~~

Predecessor
Three Months Ended September 30, 2016 Nine Months Ended September 30, 2016
Net sales $ —
$ 29,680
Cost of materials —
21,027
Operating costs and expenses —
7,288
Interest expense^(a)
—
333
Income from discontinued operations before income taxes —
1,032
Income tax expense benefit ^(b)
—
(3,908 )
(Loss) gain on sale of discontinued operations, net of income taxes (1,688 ) 1,306
Income from discontinued operations, net of income taxes $ (1,688 ) $ 6,246

^(a)~~Interest expense was allocated to the discontinued operation based on the debt that was required to be paid as a result of the sale of TPI.~~

^(b) ~~Income tax benefit for the nine months ended September 30, 2016 includes $4,207 reversal of valuation allowance resulting from the sale of TPI.~~

~~(5) Earnings (Loss) Per Share~~

Diluted earnings (loss) per common share is computed by dividing income (loss) by the weighted average number of shares of common stock outstanding plus outstanding common stock equivalents. Common stock equivalents consist of employee and director stock options (Predecessor), restricted stock awards (Predecessor and Successor), other share-based payment awards (Predecessor), and contingently issuable shares related to the Company’s 5.25% Convertible Notes (Predecessor), and the Company's ~~Second Lien~~outstanding 3.00% / 5.00% Convertible Senior Secured PIK Toggle Notes ~~(Successor)~~due 2024 (the “3.00%/5.00% Convertible Notes”), which are included in the calculation of weighted average shares outstanding using the ~~treasury stock method, if dilutive.~~if-converted method. Refer to Note 86 - Debt, for further description of the ~~New~~5.00%/7.00% Convertible Notes and ~~Second Lien~~the 3.00%/5.00% Convertible Notes.

Table of Contents

The following ~~tables are reconciliations~~table is a reconciliation of the basic and diluted ~~earnings (loss)~~loss per common share calculations:

Successor Predecessor
September 1, 2017 Through September 30, 2017 July 1, 2017
Through
August 31, 2017 Three Months
Ended
September 30, 2016

Numerator:
(Loss) income from continuing operations $ (821 ) $ 72,223
$ (18,298 )
Income from discontinued operations, net of income taxes —
—
(1,688 )
Net (loss) income $ (821 ) $ 72,223
$ (19,986 )
Denominator:
Weighted average common shares outstanding 2,000
31,790
32,260
Effect of dilutive securities:
Outstanding common stock equivalents —
—
—
Denominator for diluted earnings (loss) per common share 2,000
31,790
32,260

Basic earnings (loss) per common share:
Continuing operations $ (0.41 ) $ 2.27
$ (0.57 )
Discontinued operations —
—
(0.05 )
Net basic (loss) earnings per common share $ (0.41 ) $ 2.27
$ (0.62 )

Diluted earnings (loss) per common share:
Continuing operations $ (0.41 ) $ 2.27
$ (0.57 )
Discontinued operations —
—
(0.05 )
Net diluted (loss) earnings per common share $ (0.41 ) $ 2.27
$ (0.62 )
Excluded outstanding share-based awards having an anti-dilutive effect 1,734
—
2,326
Excluded "in the money" portion of 5.25% Convertible Notes (Predecessor) having an anti-dilutive effect —
—
—
Excluded "in the money" portion of Second Lien Notes (Successor) having an anti-dilutive effect —
—
—

Successor Predecessor
September 1, 2017 Through September 30, 2017 January 1, 2017
Through
August 31, 2017 Nine Months
Ended
September 30, 2016

Numerator:
Loss from continuing operations $ (821 ) $ 36,190
$ (84,372 )
Income from discontinued operations, net of income taxes —
—
6,246
Net loss $ (821 ) $ 36,190
$ (78,126 )
Denominator:
Weighted average common shares outstanding 2,000
32,174
27,909
Effect of dilutive securities:
Outstanding common stock equivalents —
—
—
Denominator for diluted earnings (loss) per common share 2,000
32,174
27,909

Basic earnings (loss) per common share:
Continuing operations $ (0.41 ) $ 1.12
$ (3.02 )
Discontinued operations —
—
0.22
Net basic (loss) earnings per common share $ (0.41 ) $ 1.12
$ (2.80 )

Diluted earnings (loss) per common share:
Continuing operations $ (0.41 ) $ 1.12
$ (3.02 )
Discontinued operations —
—
0.22
Net diluted (loss) earnings per common share $ (0.41 ) $ 1.12
$ (2.80 )
Excluded outstanding share-based awards having an anti-dilutive effect 1,734
—
2,326
Excluded "in the money" portion of 5.25% Convertible Notes (Predecessor) having an anti-dilutive effect —
—
—
Excluded "in the money" portion of Second Lien Notes (Successor) having an anti-dilutive effect —
—
—


	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2020		2019		2020		2019
Numerator:
Net loss	$	(4,053)	$	(8,304)	$	(15,094)	$	(16,307)
Denominator:
Weighted average common shares outstanding	72,503		2,203		39,376		2,150
Effect of dilutive securities:
Outstanding common stock equivalents	—		—		—		—
Denominator for diluted loss per common share	72,503		2,203		39,376		2,150

Basic loss per common share	$	(0.06)	$	(3.77)	$	(0.38)	$	(7.58)
Diluted loss per common share	$	(0.06)	$	(3.77)	$	(0.38)	$	(7.58)
Excluded outstanding share-based awards having an anti-dilutive effect	1,407		1,437		1,132		1,518

The ~~Second Lien~~computation of diluted loss per common share does not include common shares issuable upon conversion of the Company’s 5.00%/7.00% Convertible Notes ~~(Successor)~~or 3.00%/5.00% Convertible Notes, as they were anti-dilutive under the if-converted method.

The 5.00%/7.00% Convertible Notes are ~~dilutive to~~convertible into shares of the ~~extent~~Company’s common stock at any time at the ~~Company generates net income and the average stock price during the period is greater than $3.77 per share, which is the~~initial conversion price of ~~the Second Lien Notes.~~$3.77 per share. The ~~Second Lien~~3.00%/5.00% Convertible Notes are ~~only dilutive for the “in the money” portion~~convertible into shares of ~~the Second Lien Notes that could be settled with~~ the Company’s common ~~stock.~~stock at any time at the initial conversion price of $0.46 per share. In future periods, absent a fundamental change ~~(as defined~~as described in ~~the Second Lien Convertible Notes indenture)~~Note 6 - Debt, the outstanding ~~Second Lien~~5.00%/7.00% Convertible Notes and 3.00%/5.00% Convertible Notes could increase diluted average shares outstanding by a maximum of approximately ~~43,700~~212,400 shares.

~~(6) Joint Venture~~(5) Goodwill and Intangible Asset

~~Kreher Steel Company, LLC ("Kreher"), a national distributor~~As of both June 30, 2020 and ~~processor of carbon and alloy steel bar products headquartered in Melrose Park, Illinois, was a 50% owned joint venture of the Company. In June 2016,~~December 31, 2019, the Company ~~received~~had goodwill with a carrying value of $2,676, none of which is tax deductible. There were 0 changes in the amount of goodwill recognized in the six months ended June 30, 2020. The Company's other intangible asset is comprised of an ~~offer from its joint venture partner~~indefinite-lived trade name, which is not subject to ~~purchase its ownership share in Kreher for an amount that was less than the current~~amortization. The gross carrying value of the ~~Company's investment in Kreher.~~ trade name intangible asset was $5,500 at both June 30, 2020 and December 31, 2019.

The Company ~~determined that the offer to purchase~~tests both its ownership share in Kreher at a purchase price lower than the carrying value indicated that it may not be able to recover the full carrying amount of its investment, and therefore recognized a $4,636 other-than-temporary impairment charge in the second quarter of 2016 to reduce the carrying amount of the investment to the negotiated purchase price. Prior to receiving the purchase offer, the Company had no previous indicators that its investment in Kreher had incurred a loss in value that was other-than-temporary.

In August 2016, the Company completed the sale of its ownership share in Kreher to its joint venture partner for aggregate cash proceeds of $31,550, which resulted in a loss on disposal of $5, including selling expenses.

~~The following information summarizes financial data for Kreher for the three months and nine months ended September 30, 2016:~~

Predecessor
Three Months Ended September 30, 2016 Nine Months Ended September 30, 2016
Net sales $ 17,737
$ 79,007
Cost of materials 15,359
67,115
(Loss) income before taxes (234 ) 267
Net income (62 ) 928

~~(7) Goodwill and Intangible Assets~~

~~Goodwill~~

~~In connection with the Company’s adoption of fresh-start accounting on the Effective Date, the Company recorded $2,675 of~~ goodwill ~~representing the excess of reorganization value over the fair value of identifiable tangible~~ and intangible ~~assets. The goodwill will not be tax deductible. The Company will test goodwill~~asset for impairment ~~at the reporting unit level~~ on an annual basis and more often if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying value.

~~Intangible assets, net~~

~~Intangible assets, net consisted~~ As a result of the ~~following:~~

Successor Predecessor
September 30, 2017 December 31, 2016

Gross
Carrying
Amount

Accumulated
Amortization

Gross
Carrying
Amount

Accumulated
Amortization
Intangible assets subject to amortization:
Customer relationships $ —
$ —
$ 67,317
$ 63,216
Intangible assets not subject to amortization:
Trade name 5,500
—
—
—
Total intangible assets $ 5,500
$ —
$ 67,317
$ 63,216

~~In connection with~~recent outbreak of the ~~Company’s adoption~~COVID-19 pandemic, which has spread across the globe to many countries in which the Company does business and is impacting worldwide economic activity, the Company has determined that the potential impact on its business, including, but not limited to, a potential decrease in revenue, supply chain disruptions and/or facility closures, represented a triggering event requiring an interim impairment test of ~~fresh-start accounting~~its goodwill and indefinite-lived trade name assets. Based on the ~~Effective Date,~~results of these interim impairment tests, the Company determined its one reporting unit's goodwill and indefinite-lived trade name asset were not impaired as of June 30, 2020.

While the Company considered the impact the COVID-19 pandemic may have on its future cash flows when preparing its interim goodwill and intangible asset impairment tests, the full extent of the impact that the COVID-19 pandemic will have on the Company's business, operations and financial condition is currently unknown. The Company will continue to assess its goodwill and intangible asset for impairment as events and circumstances change. Any further deterioration in the Company's forecasted revenue, gross material margin, and/or costs and expenses, or an ~~insignificant~~increase in the Company's assumed discount rate, could result in an impairment of a portion or all of its goodwill or a portion or all of its intangible asset. The amount of ~~intangible assets and related accumulated amortization of the Predecessor were eliminated. Also~~such impairment would be recognized as ~~part of fresh-start accounting, the Company recorded an adjustment of $5,500 representing the fair value of the intangible assets of the Successor (refer to Refer to~~ ~~Note 2 - Bankruptcy Related Disclosures).~~ The intangible assets of the Successor are comprised of infinite-lived trade name, which is not subject to amortization. The fair value of the Successor trade name intangible asset was determined based on the relief from royalty method, which estimates the savings that the owner of the asset would realize rather than paying a ~~royalty to use the asset, using forecasted net sales attributable to the trade name and applying a royalty rate, assumed to be 0.1% to those net sales.~~

~~The Company recorded amortization~~noncash expense $1,022 and $1,533 for the period July 1, 2017 through August 31, 2017 and the three months ended September 30, 2016, respectively. Amortization expense was $4,088 and $4,593 for the period January 1, 2017 through August 31, 2017 and the nine months ended September 30, 2016, respectively. The was no amortization expense recorded in the period ~~September 1, 2017 through September 30, 2017.~~the goodwill and/or intangible asset is impaired.

Table of Contents

~~(8)~~(6) Debt

Long-term debt consisted of the following:

Successor Predecessor
September 30,
2017 December 31,
2016
LONG-TERM DEBT
7.0% Convertible Notes due December 15, 2017 $ —
$ 41
11.0% Senior Secured Term Loan Credit Facilities due September 14, 2018 —
99,500
12.75% Senior Secured Notes due December 15, 2018 —
177,019
5.25% Convertible Notes due December 30, 2019 —
22,323
5.00% / 7.00% Convertible Notes due August 31, 2022 165,896
—
Floating rate ABL Credit Facility due February 28, 2022 87,297
—
Other, primarily capital leases 316
96
Plus: derivative liability for embedded conversion feature 61,608
403
Less: unvested restricted Second Lien Notes^(a)
(2,334 ) —
Less: unamortized discount (68,318 ) (7,587 )
Less: unamortized debt issuance costs —
(5,199 )
Total long-term debt 244,465
286,596
Less: current portion 118
137
Total long-term portion $ 244,347
$ 286,459


	As of
	June 30, 2020		December 31, 2019
LONG-TERM DEBT
Floating rate Revolving A Credit Facility due February 28, 2022	$	96,400	$	102,000
12.00% Revolving B Credit Facility due February 28, 2022^(a)	27,376		25,788
3.00% / 5.00% Convertible Senior Secured PIK Toggle Notes due August 31, 2024^(b)	96,364		—
5.00% / 7.00% Convertible Senior Secured PIK Toggle Notes due August 31, 2022^(c)	3,823		193,660
1.00% Paycheck Protection Program Term Note due April 28, 2022	10,000		—
France Term Loan	6,721		—
Total principal balance of long-term debt	240,684		321,448

Less: unvested restricted 3.00% / 5.00% Convertible Senior Secured PIK Toggle Notes due August 31, 2024^(d)	(159)		—
Less: unvested restricted 5.00% / 7.00% Convertible Senior Secured PIK Toggle Notes due August 31, 2022^(d)	—		(323)
Less: unamortized discount	(20,892)		(57,313)
Less: unamortized debt issuance costs	(222)		(289)
Total long-term debt	219,411		263,523
Less: current portion of long-term debt	4,444		—
Total long-term portion	$	214,967	$	263,523

^(a)Included in balance is interest paid in kind of $5,876 as of June 30, 2020 and $4,288 as of December 31, 2019.

^(b) Included in balance is interest paid in kind of $1,229 as of June 30, 2020.

^(c)Included in balance is interest paid in kind of $131 as of June 30, 2020 and $28,991 as of December 31, 2019.

^(d)Represents the unvested portion of ~~$2,400~~restricted 3.00% / 5.00% Convertible Senior Secured PIK Toggle Notes due August 31, 2024 issued to certain members of management and the unvested portion of restricted ~~Second Lien~~5.00% / 7.00% Convertible Senior Secured PIK Toggle Notes due August 31, 2022 issued to certain members of management (see Note 119 - Share-based ~~compensation)~~compensation).

Credit Facilities ~~Agreement~~

On August 31, 2017, the Effective Date, by operation of the Plan, all outstanding indebtedness, accrued interest, and related fees of the Debtors under the Credit Facilities Agreement, amounting to $49,400, was paid in full with the proceeds of borrowings under the New ABL Facility and the issuance of Second Lien Notes under the Second Lien Notes Indenture.

~~12.75% Senior Secured Notes~~

~~On the Effective Date, by operation of the Plan, all outstanding indebtedness of the Debtors under the Company's 12.75% Secured Notes and the Senior Notes Indenture, was discharged and canceled.~~

~~5.25% Convertible Senior Secured Notes~~

On the Effective Date, by operation of the Plan, all outstanding indebtedness of the Debtors under the Company's 5.25% Convertible Notes and the Convertible Notes Indenture, was discharged and canceled.

~~New ABL Credit Facility~~

~~Pursuant to the Plan, on the Effective Date, the Successor~~Company entered into the ~~New~~Revolving Credit and Security Agreement with PNC Bank, National Association ("PNC") as lender and as administrative and collateral agent (the “Agent”), and other lenders party thereto (the "Original ABL ~~Facility~~Credit Agreement"). The Original ABL Credit Agreement provided for a $125,000 senior secured, revolving credit facility (the "Revolving A Credit Facility") under which the Company and ~~four~~4 of its subsidiaries each are borrowers (collectively, in such capacity, the “Borrowers”). The obligations of the Borrowers have been guaranteed by the subsidiaries of the Company named therein as guarantors.

On June 1, 2018, the Company entered into an Amendment No. 1 to Original ABL Credit Agreement (the “Credit Agreement Amendment No. 1”) by and among the Company, the Borrowers and guarantors party thereto and the Agent and the other lenders party thereto, which amended the Original ABL Credit Agreement to provide for additional borrowing capacity. On March 27, 2020, the Company entered into an Amendment No. 2 to the Original ABL Credit Agreement (the "Credit Agreement Amendment No. 2") by and among the Company, the Borrowers and guarantors party thereto and the Agent and the other lenders party thereto, which amended the Original ABL Credit Agreement (as amended by the Credit Agreement Amendment No. 1 and Credit Agreement No. 2, the “ABL Credit Agreement”) to permit the Exchange Offer (defined below) to proceed.

The ~~New~~ ABL ~~Facility~~Credit Agreement provides for an additional $25,000 last out Revolving B Credit Facility (the "Revolving B Credit Facility" and together with the Revolving A Credit Facility, the "Credit Facility"). The Credit Facility was made available in part by way of a ~~$125,000 senior secured, revolving credit facility for~~participation in the ~~Company.~~ Revolving B Credit Facility by certain of the Company’s stockholders. Borrowings under the Credit Facility will mature on February 28, 2022.

Table of Contents

Subject to certain exceptions and permitted encumbrances, the obligations under the ~~New~~ ABL ~~Facility~~Credit Agreement are secured by a first priority security interest in substantially all of the assets of each of the Borrowers and certain subsidiaries of ~~their foreign subsidiaries.~~the Company that are named as guarantors. The proceeds of the advances under the ~~New~~ ABL ~~Facility~~Credit Agreement may only be used to (i) pay certain fees and expenses to the Agent and the lenders under the ~~New~~ ABL ~~Facility,~~Credit Agreement, (ii) provide for the Borrowers' working capital needs and reimburse drawings under letters of credit, (iii) repay the obligations under the Debtor-in-Possession Revolving Credit and Security Agreement dated as of July 10, 2017, by and among the Company, the lenders party thereto, and PNC, ~~Bank, National Association,~~ and certain other existing indebtedness, and (iv) provide for the Borrowers' capital expenditure needs, in accordance with the ~~New~~ ABL ~~Facility.~~

Credit Agreement.

The Company may prepay its obligations under the ~~New~~ ABL ~~Facility~~Credit Agreement at any time without premium or penalty, and must apply the net proceeds of material sales of collateral in prepayment of such obligations. Payments made must be applied to the Company's obligations under the Revolving A Credit Facility, if any, prior to its obligations under the Revolving B Credit Facility. In connection with an early termination or permanent reduction of the Revolving A Credit Facility prior to March 27, 2021, a 0.50% fee shall be due and, for the period from March 28, 2021 through September 27, 2021, a 0.25% fee shall be due, in each case in the amount of such commitment reduction, subject to reduction as set forth in the ABL Credit Agreement. Indebtedness for borrowings under the ~~New~~ ABL ~~Facility~~Credit Agreement is subject to acceleration upon the occurrence of specified defaults or events of default, including (i) failure to pay principal or interest, (ii) the inaccuracy of any representation or warranty of a loan party, (iii) failure by a loan party to perform certain covenants, (iv) defaults under indebtedness owed to third parties, (v) certain liability producing events relating to ERISA, (vi) the invalidity or impairment of the Agent’s lien on its collateral or of any applicable guarantee, and (vii) certain adverse bankruptcy-related and other events.

Interest on indebtedness under the Revolving A Credit Facility accrues at a variable rate based on a grid with the highest interest rate being the applicable ~~Prime or~~ LIBOR-based rate plus a margin of 3.0%, as set forth in the ~~New~~ ABL ~~Facility.~~Credit Agreement. Interest on indebtedness under the Revolving B Credit Facility accrues at a rate of 12.0% per annum, which will be paid in kind unless the Company elects to pay such interest in cash and the Revolving B payment conditions specified in the ABL Credit Agreement are satisfied. Additionally, the Company must pay a monthly ~~Facility Fee~~facility fee equal to the product of (i) 0.25% per annum (or, if the average daily revolving facility usage is less than 50% of the maximum revolving advance amount, 0.375% per annum) multiplied by (ii) the amount by which the maximum revolving advance amount exceeds such average daily revolving facility usage for such month.

The weighted average interest rate on outstanding borrowings under the Revolving A Credit Facility for the ~~period September 1, 2017 through September~~three and six months ended June 30, ~~2017~~2020 was ~~3.85%~~3.52% and 4.11%, respectively, and 5.72% and 5.65% for the three and six months ended June 30, 2019, respectively. The weighted average ~~Facility Fee~~facility fee for ~~the~~each such period was 0.25%. The Company pays certain customary recurring fees with respect to the ABL Credit Agreement. Interest expense related to the Revolving B Credit ~~Facility.~~Facility of $806 and $1,588 was paid in kind in the three and six months ended June 30, 2020. Interest expense related to the Revolving B Credit Facility of $715 and $1,401 was paid in kind in the three and six months ended June 30, 2019, respectively.

The ~~New~~ ABL ~~Facility~~Credit Agreement includes negative covenants customary for an asset-based revolving loan. Such covenants include limitations on the ability of the Borrowers to, among other things, (i) effect mergers and consolidations, (ii) sell assets, (iii) create or suffer to exist any lien, (iv) make certain investments, (v) incur debt and (vi) transact with affiliates. In addition, the ~~New~~ ABL ~~Facility~~Credit Agreement includes customary affirmative covenants for an asset-based revolving loan, including covenants regarding the delivery of financial statements, reports and notices to the Agent. The ~~New~~ ABL ~~Facility~~Credit Agreement also contains customary representations and warranties and event of default provisions for a secured term loan.

The Company's ~~New~~ ABL ~~Facility~~Credit Agreement contains a springing financial maintenance covenant requiring the Company to maintain a Fixed Charge Coverage Ratio of 1.0 to 1.0 in any ~~covenant testing period~~Covenant Testing Period (as defined in the ABL Credit Agreement) when the Company's cash liquidity (as defined in the ~~New~~ ABL ~~Facility~~Credit Agreement) is less than $12,500. The Company was not in a Covenant Testing Period as of and for the ~~greater~~three and six months ended June 30, 2020.

Unamortized debt issuance costs of ~~i) 10%~~$222 associated with the ABL Credit Agreement were recorded as a reduction in long-term debt as of June 30, 2020.

Convertible Senior Secured Notes

On March 27, 2020, the Company completed an exchange offer and consent solicitation (the “Exchange Offer”) to issue its 3.00%/5.00% Convertible Notes and shares of its common stock in exchange for its 5.00%/7.00%

Table of Contents

Convertible Notes, including any accrued and unpaid interest on the 5.00%/7.00% Convertible Notes as of the date in which the Exchange Offer was completed. Pursuant to the terms of the Exchange Offer, $190,200 in aggregate principal amount of the 5.00%/7.00% Convertible Notes were tendered and accepted and in exchange, the Company issued $95,135 in aggregate principal amount of its 3.00%/5.00% Convertible Notes and 70,261 shares of its common stock. The 3.00%/5.00% Convertible Notes are guaranteed on a senior basis by all current and future domestic subsidiaries (other than those designated as "unrestricted subsidiaries") of the Company (the "Guarantors"). An aggregate principal amount of 5.00%/7.00% Convertible Notes in the amount of $3,693 were not tendered and remained outstanding at the date of Exchange Offer.

The 3.00%/5.00% Convertible Notes have substantially the same terms that the 5.00%/7.00% Convertible Notes had prior to the completion of the Exchange Offer except for the following primary differences: (i) the 3.00%/5.00% Convertible Notes are not exempt from the registration requirements of the Securities Act of 1933, as amended, and have the benefit of registration rights to the holders of the 3.00%/5.00% Convertible Notes, (ii) the interest on the 3.00%/5.00% Convertible Notes accrues at the rate of 3.00% per annum if paid in cash and at the rate of 5.00% per annum if paid in kind, compared to interest on the 5.00%/7.00% Convertible Notes, which accrues at the rate of 5.00% per annum if paid in cash and at the rate of 7.00% per annum if paid in kind, and (iii) the 3.00%/5.00% Convertible Notes have a maturity date of August 31, 2024, compared to the 5.00%/7.00% Convertible Notes, which have a maturity date of August 31, 2022.

In conjunction with the Exchange Offer, on March 27, 2020, the Company, the guarantors of the 5.00%/7.00% Convertible Notes and the trustee for the 5.00%/7.00% Convertible Notes entered into a supplemental indenture to the indenture governing the 5.00%/7.00% Convertible Notes (the “5.00%/7.00% Convertible Notes Indenture”) to provide for, among other things, the elimination or amendment of substantially all of the restrictive covenants, the release of all collateral securing the Company’s obligations under the 5.00%/7.00% Convertible Notes Indenture, and the modification of certain of the events of default and various other provisions contained in the 5.00%/7.00% Convertible Notes Indenture (the "Supplemental Indenture").

Also on March 27, 2020, PNC (in its capacity as “First Lien Agent”), the trustee for the 5.00%/7.00% Convertible Notes and the Company and certain of its subsidiaries executed an intercreditor agreement (the “New Intercreditor Agreement”) providing for the lien priority of the first lien facility over the 3.00%/5.00% Convertible Notes. The terms and conditions of the New ~~ABL Facility's maximum borrowing capacity (as defined in the New ABL Facility Agreement) and ii) $9.0 million. The Company is not in a covenant testing period as of September 30, 2017.~~

~~Second Lien Notes~~

~~Pursuant~~Intercreditor Agreement are substantially consistent with those applicable to the ~~Plan, on~~intercreditor agreement between the ~~Effective Date,~~First Lien Agent and the trustee for the 5.00%/7.00% Convertible Notes prior to the completion of the Exchange Offer (the “5.00%/7.00% Convertible Notes Intercreditor Agreement”). PNC and the trustee for the 5.00%/7.00% Convertible Notes also entered into an amendment of the 5.00%/7.00% Convertible Notes Intercreditor Agreement to, among other things, remove certain limitations and rights of the 5.00%/7.00% Convertible Notes with respect to the first lien facility.

The 3.00%/5.00% Convertible Notes were issued pursuant to an indenture (the “3.00%/5.00% Convertible Notes Indenture”), which the Company and the Guarantors entered into ~~a Second Lien Notes Indenture~~ with Wilmington Savings Fund Society, FSB, as trustee and collateral agent (“("Indenture ~~Agent”~~Agent") and, pursuant thereto, issued approximately $164,902 in aggregate original principal amount of its Second Lien Notes, including $2,400 of restricted Second Lien Notes issued to certain members of management (see ~~Note 11 - Share-based compensation~~)., on March 27, 2020. The ~~fair value of the Second Lien Notes as of the Effective Date was estimated to be $158,026, resulting in an implied discount upon issuance of $6,876.~~

~~The Second Lien~~3.00%/5.00% Convertible Notes are, ~~five year senior obligations of the Company and certain of its subsidiaries,~~ secured by a lien on all or substantially all of the assets of the Company, its domestic subsidiaries and certain of its foreign subsidiaries, which lien the Indenture Agent has agreed will be junior to the lien of the Agent under the ~~New~~ ABL ~~Facility.~~Credit Agreement.

~~As further described below, the Second Lien~~The 3.00%/5.00% Convertible Notes are convertible into shares of the Company’s common stock at any time at the ~~option~~initial conversion price of $0.46 per share, which rate is subject to adjustment as set forth in the 3.00%/5.00% Convertible Notes Indenture. Under the 3.00%/5.00% Convertible Notes Indenture, upon the conversion of the ~~holder. The Company determined that upon issuance and as of September 30, 2017,~~3.00%/5.00% Convertible Notes in connection with a Fundamental Change (as defined in the ~~conversion option is not clearly and closely related to the economic characteristics~~3.00%/5.00% Convertible Notes Indenture), for each $1.00 principal amount of the ~~Second Lien~~3.00%/5.00% Convertible Notes ~~nor does it meet the criteria to be considered indexed to~~, that number of shares of the Company’s common ~~stock. As~~stock issuable upon conversion shall equal the greater of (a) $1.00 divided by the then applicable conversion price or (b) $1.00 divided by the price paid per share of the Company's common stock in connection with such Fundamental Change calculated in accordance with the 3.00%/5.00% Convertible Notes Indenture, subject to other provisions of the 3.00%/5.00% Convertible Notes Indenture. Subject to certain exceptions, under the 3.00%/5.00% Convertible Notes Indenture a ~~result,~~“Fundamental Change” includes, but is not limited to, the following: (i) the acquisition of more than 50% of the voting power of the Company’s common equity by a “person” or “group” within the meaning of Section 13(d) of the Securities Exchange Act of 1934, as amended; (ii) the consummation of any recapitalization, reclassification, share exchange, consolidation or merger of the Company ~~concluded that~~pursuant to which the embedded conversion option must be bifurcated from the Second Lien Notes, separately valued, and accounted for as a derivative liability that partially settled the Second Lien Notes. The initial value allocated to the derivative liability at the Effective Date was $61,608, with a corresponding discount recorded to the Second Lien Notes. During each reporting period, the derivative liability, which is classified in long-term debt,Company’s common stock will be ~~marked to fair value through earnings. The change~~converted into cash, securities or other property; (iii) the “Continuing Directors” (as defined in the ~~fair value~~3.00%/5.00% Convertible Notes Indenture) cease to constitute at

Table of Contents

least a majority of the ~~derivative liability was not significant between~~board of directors; and (iv) the ~~Effective Date and September 30, 2017.~~approval of any plan or proposal for the liquidation or dissolution of the Company by the Company’s stockholders.

The ~~Second Lien~~5.00%/7.00% Convertible Notes are convertible into shares of the Company’s common stock at any time at the initial conversion price of $3.77 per share, which rate is subject to adjustment as set forth in the ~~Second Lien Notes~~Supplemental Indenture. ~~The value of shares~~Under the Supplemental Indenture, the conversion of the ~~Company’s common stock for purposes~~5.00%/7.00% Convertible Notes in connection with a Fundamental Change (as defined in the Supplemental Indenture) is substantially the same as under the 3.00%/5.00% Convertible Notes Indenture, other than the applicable conversion price.

Under the Second Lien Notes Indenture, in a conversion of the Second Lien Notes in connection with a “Fundamental Change” (as defined in the Second Lien Notes Indenture), for each $1.00 principal amount of the Second Lien Notes,

~~that number~~ The value of shares of the Company’s common stock ~~issuable~~for purposes of the settlement of the conversion right, if the Company elects to settle in cash, will be calculated as provided in the 3.00%/5.00% Convertible Notes Indenture or Supplemental Indenture, as applicable, using a 20 trading day observation period.

As discussed previously, the 3.00%/5.00% Convertible Notes are convertible into common stock at the option of the holder. As of March 27, 2020, the date of the Exchange Offer, the Company determined that the conversion option was not clearly and closely related to the economic characteristics of the 3.00%/5.00% Convertible Notes, nor did the conversion option meet the own equity scope exception as the Company did not have sufficient authorized and unissued common stock shares to satisfy the maximum number of common stock shares that could be required to be issued upon conversion. As a result, the Company concluded that the embedded conversion option must be bifurcated from the 3.00%/5.00% Convertible Notes, separately valued, and accounted for as a derivative liability, which was classified in long term debt and marked to fair value through earnings.

On June 30, 2020, the Company filed articles of amendment to increase the number of shares of common stock authorized (see Note 8 - Stockholders' Equity). As a result of this increase, the number of the Company's common stock shares available for issuance upon conversion ~~shall equal the greater of (a) $1.00 divided by the then applicable conversion price and (b) $1.00 divided by the stock price with respect to such Fundamental Change, subject to other provisions~~ of the ~~Second Lien~~3.00%/5.00% Convertible Notes ~~Indenture. Subject~~ is sufficient to ~~certain exceptions, under~~allow the ~~Second Lien Notes Indenture~~conversion option to be share-settled in full. The Company has concluded that as of June 30, 2020 the conversion option qualifies for equity classification and the bifurcated derivative liability will no longer need to be accounted for as a ~~“Fundamental Change” includes, but is not limited to,~~separate derivative on a prospective basis from the ~~following:~~date of reassessment. As of June 30, 2020, the ~~acquisition of more than 50%~~fair value of the ~~voting power~~conversion option of $36,952 was classified to equity as additional paid-in capital. The remaining debt discount that arose at the ~~Company’s common equity by a “person” or “group” within~~date of debt issuance from the ~~meaning of Section 13(d) of the Securities Exchange Act of 1934, as amended, the consummation of any recapitalization, reclassification, share exchange, consolidation or merger of the Company pursuant~~original bifurcation will continue to ~~which the Company’s common stock will~~ be converted into cash, securities or other property, the “Continuing Directors” (as defined in the Second Lien Notes Indenture) cease to constitute at least a majority of the board of directors, and the approval of any plan or proposal for the liquidation or dissolution of the Company by the Company’s stockholders.amortized through interest expense.

The ~~Second Lien~~3.00%/5.00% Convertible Notes are fully and unconditionally guaranteed, jointly and severally, by certain subsidiaries of the Company. The ~~Second Lien~~3.00%/5.00% Convertible Notes and the related guarantees are secured by a lien on substantially all of the Company’s and the guarantors’ assets, subject to certain exceptions pursuant to certain collateral documents pursuant to the ~~Second Lien~~3.00%/5.00% Convertible Notes Indenture. The terms of the ~~Second Lien~~3.00%/5.00% Convertible Notes contain numerous covenants imposing financial and operating restrictions on the ~~Company’s~~Company's business. These covenants place restrictions on the Company’s ability and the ability of its subsidiaries to, among other things, pay dividends, redeem stock or make other distributions or restricted payments; incur indebtedness or issue certain stock; make certain investments; create liens; agree to certain payment restrictions affecting certain subsidiaries; sell or otherwise transfer or dispose assets; enter into transactions with affiliates; and enter into sale and leaseback transactions.

~~The Second Lien~~Neither the 3.00%/5.00% Convertible Notes nor the 5.00%/7.00% Convertible Notes may ~~not~~ be redeemed by the Company in whole or in part at any time ~~subject~~prior to maturity, except the Company may be required to make an offer to purchase the 3.00%/5.00% Convertible Notes using the proceeds of certain ~~exceptions provided under~~material asset sales involving the ~~Second Lien~~Company or one of its restricted subsidiaries, as described more particularly in the 3.00%/5.00% Convertible Notes Indenture. In addition, if a Fundamental Change (as defined in the 3.00%/5.00% Convertible Notes Indenture and the Supplemental Indenture, as applicable) occurs at any time, each holder of any ~~Second Lien~~3.00%/5.00% Convertible Notes or 5.00%/7.00% Convertible Notes has the right to require the Company to repurchase such holder’s ~~Second Lien Notes~~notes for cash at a repurchase price equal to 100% of the principal amount thereof, together with accrued and unpaid interest thereon, subject to certain exceptions.

The Company must use the ~~excess~~net proceeds of material sales of collateral, which proceeds are not used for other permissible purposes, to make an offer of repurchase to holders of the ~~Second Lien~~3.00%/5.00% Convertible Notes. Indebtedness for borrowings under the ~~New Credit Agreement~~3.00%/5.00% Convertible Notes Indenture and the Supplemental Indenture is subject to acceleration upon the occurrence of specified defaults or events of default as set forth under each such indenture, including failure to pay principal or interest, the inaccuracy of any representation or warranty of any

Table of Contents

obligor, ~~under the Second Lien Notes,~~ failure by an obligor ~~under the Second Lien Notes~~ to perform certain covenants, the invalidity or impairment of the ~~Indenture~~ Agent’s lien on its collateral under the 3.00%/5.00% Convertible Notes Indenture, the invalidity or impairment of any applicable guarantee, and certain adverse bankruptcy-related and other events.

Upon satisfaction of certain conditions more particularly described in the 3.00%/5.00% Convertible Notes Indenture, including the deposit in trust of cash or securities sufficient to pay the principal of and interest and any premium on the 3.00%/5.00% Convertible Notes, the Company may effect a covenant defeasance of certain of the covenants imposing financial and operating restrictions on the Company’s business. In addition, and subject to certain exceptions as more particularly described in the 3.00%/5.00% Convertible Notes Indenture, the Company may amend, supplement or waive provisions of the 3.00%/5.00% Convertible Notes Indenture with the consent of holders representing a majority in aggregate principal amount of the 3.00%/5.00% Convertible Notes, and may in effect release collateral from the liens securing the 3.00%/5.00% Convertible Notes with the consent of holders representing 66.67% in aggregate principal amount of the 3.00%/5.00% Convertible Notes.

Interest on the ~~Second Lien~~3.00%/5.00% Convertible Notes accrues at the rate of ~~5.00%, except that the Company may, in circumstances where the payment on interest~~3.00% per annum if paid in cash ~~would cause a condition~~and at the rate of ~~default under~~5.00% per annum if paid in kind, payable quarterly beginning with the ~~New ABL Facility, pay~~quarter ending June 30, 2020. Interest on the 5.00%/7.00% Convertible Notes continues to accrue at the rate of 5.00% per annum if paid in cash and at the rate of 7.00% per annum if paid in ~~kind. Currently,~~kind, payable quarterly. Pursuant to the terms of both the 3.00%/5.00% Convertible Notes Indenture and the Supplemental Indenture, the Company is currently paying interest on both the ~~Second Lien~~3.00%/5.00% Convertible Notes and the 5.00%/7.00% Convertible Notes in ~~kind as per~~kind. Interest expense related to the ~~Second Lien~~5.00%/7.00% Convertible Notes ~~Indenture, interest on the Second Lien Notes in the first 12 months is required to be~~of $66 and $3,348 was paid in kind in the three and six months ended June 30, 2020 respectively. Interest expense related to the 5.00%/7.00% Convertible Notes of $3,221 and $6,387 was paid in kind in the three and the six months ended June 30, 2019, respectively. Interest expense related to the 3.00%/5.00% Convertible Notes of $1,229 was paid in kind in both the three and six months ended June 30, 2020.

The Company determined that the Exchange Offer was considered to be a troubled debt restructuring within the scope of ASC No. 470-60, "Debt-Troubled Debt Restructurings". Accordingly, for the three and six months ended June 30, 2020, the Company has expensed legal and other direct costs incurred in conjunction with the Exchange Offer in the amount of $639 and $1,376, respectively, in selling, general and administrative expenses in the Condensed Consolidated Statements of Operations and Comprehensive Loss and recognized additional legal and other direct costs incurred also in the amount $639 and $1,376 as a decrease to additional paid-in capital for the three and six months ended June 30, 2020, respectively.

Other long-term debt

The Company qualified under the “alternative size standard” for a forgivable loan under the Paycheck Protection Program (“PPP”) administered by the Small Business Association (SBA) pursuant to the Coronavirus Aid, Relief, and Economic Security Act, also known as the CARES Act. On April 28, 2020, the Company entered into an unsecured PPP loan in the aggregate principal amount of $10,000, which is to be used only for payroll expenses, rent, utilities, mortgage interest, and interest on other pre-existing indebtedness (the "PPP Loan"). After taking into account, among other things, the disruptions to the Company’s business activities caused by the COVID-19 pandemic, the completed Exchange Offer, its available, committed primary sources of liquidity, and its lack of access to alternative sources of liquidity, current economic conditions made this loan request necessary and appropriate to support the Company’s ongoing U.S. operations and mitigate potentially significant detriment to the Company’s business. The PPP Loan, which is evidenced by a Paycheck Protection Program Term Note, matures on April 28, 2022 and bears interest at a fixed rate of ~~7.00%.~~1.0% per annum, with the first six months of interest deferred. The PPP Loan is payable in 17 monthly payments commencing on November 16, 2020 and may be prepaid at any time prior to maturity with no prepayment penalties.

~~Short-term borrowings~~Under the terms of the CARES Act and the Paycheck Protection Program Flexibility Act passed on June 5, 2020 (the "PPPFA"), the PPP Loan, and interest accrued thereon, is forgivable, partially or in full, subject to certain conditions, including the extent to which the PPP Loan proceeds are used for permissible purposes within the 24 week period following loan disbursement (which period was extended by the PPPFA from the 8 week period originally allowed by the CARES Act). The Company believes it has used the PPP Loan proceeds for permissible purposes only and intends to apply for forgiveness of the PPP Loan in accordance with the terms of the PPP, the CARES Act and the PPPFA. As of June 30, 2020, the Company has recorded the amount of the PPP Loan due within one year in the current portion of long-term debt and the remainder in long-term debt on the Condensed Consolidated Balance Sheets.

~~In July 2017,~~On June 24, 2020, the Company's French subsidiary entered into a €6,000 term loan (the "France Term Loan"). The France Term Loan, which is fully guaranteed by the French government, is part of a relief program related to the

Table of Contents

COVID-19 pandemic. Similar to the PPP Loan, economic conditions resulting from the COVID-19 pandemic made this France Term Loan necessary and appropriate to support the Company’s ongoing operations in France and mitigate potentially significant detriment to the Company’s business in France. The France Term Loan, which is evidenced by a term note with HSBC Bank, matures on June 24, 2021 and bears 0 interest. However, in connection with the government guarantee of the France Term Loan, the Company must pay a commission to the French government of 0.5% per annum of the principal loan balance. Under the terms of the France Term Loan, the Company has the option to extend the maturity of the loan for a period of up to five years. As of June 30, 2020, the Company has the intent and ability to extend the maturity of the France Term Loan beyond twelve months and has therefore included the entire outstanding principal balance of the France Term Loan in long-term debt at the Condensed Consolidated Balance Sheets.

Short-term borrowings

The Company's French subsidiary is party to a local credit facility under which it may borrow against 100% of the eligible accounts receivable factored, with recourse, up to 6,500 Euros. The French subsidiary is charged a factoring fee of 0.16% of the gross amount of accounts receivable factored. Local currency borrowings on the French subsidiary's credit facility are charged interest at the daily 3-months Euribor rate plus a 1.0% margin and U.S dollar borrowings on the credit facility are 3-months LIBOR plus a 1.0% margin. The French subsidiary utilizes the local credit facility to support its operating cash needs. As of ~~September~~June 30, ~~2017,~~2020, the French subsidiary ~~has~~had 0 borrowings ~~of $3,581~~ under the local credit ~~facility.~~facility and had borrowings under the local credit facility of $2,888 as of December 31, 2019. The Company records borrowings under the local credit facility as short-term borrowings in the Condensed Consolidated Balance Sheets.

~~(9)~~

(7) Fair Value Measurements

The three-tier value hierarchy used by the Company, ~~utilizes,~~ which prioritizes the inputs used in the valuation methodologies, is:

Level 1—Valuations based on quoted prices for identical assets and liabilities in active markets.

Level 2—Valuations based on observable inputs other than quoted prices included in Level 1, such as quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable market data.

Level 3—Valuations based on unobservable inputs reflecting our own assumptions, consistent with reasonably available assumptions made by other market participants.

The fair value of cash, accounts receivable ~~cash collateralized letters of credit~~ and accounts payable approximate their carrying values. The fair value of cash equivalents are determined using the fair value hierarchy described above. ~~Cash equivalents consisting of money market funds are valued based on quoted prices in active markets and as a result are classified as Level 1.~~

The Company’s pension plan asset portfolio as of ~~September~~June 30, ~~2017~~2020 and December 31, ~~2016~~2019 is primarily invested in fixed income securities, which generally fall within Level 2 of the fair value hierarchy. Fixed income securities are valued based on evaluated prices provided to the trustee of the pension plan by independent pricing services. Such prices may be determined by various factors which include, but are not limited to, market quotations, yields, maturities, call features, ratings, institutional size trading in similar groups of securities and developments related to specific securities.

Fair Value Measurements of Debt

As of ~~September~~June 30, ~~2017,~~2020, the fair value of the Company's ~~Second Lien~~3.00%/5.00% Convertible Notes, ~~(including~~including the ~~bifurcated embedded~~ conversion ~~option) approximates its carrying~~option, was estimated to be $109,640, compared to a face value of ~~$156,852.~~$96,364. As of June 30, 2020, the fair value of the Company's 5.00%/7.00% Convertible Notes, including the conversion option, was estimated to be $3,350 compared to a face value of $3,823. As of December 31, 2019, the fair value of the Company's 5.00%/7.00% Convertible Notes, including the conversion option, was estimated to be $136,085 compared to a face value of $193,660. The fair value of the ~~Second Lien~~3.00%/5.00% Convertible Notes ~~which falls within Level 3~~as of June 30, 2020 and the ~~fair value hierarchy,~~5.00%/7.00% Convertible Notes as of December 31, 2019 was determined using a binomial lattice model using assumptions based on market information and historical data, and a review of prices and terms available for similar debt instruments that do not contain a conversion feature, as well as other factors related to the callable nature of the ~~Second Lien Notes. Given the nature and the variable interest rates,~~3.00%/5.00% Convertible Notes, which is a Level 3 input as defined by the fair value hierarchy. The fair value of ~~borrowings under~~ the ~~New ABL Facility and the French subsidiary's foreign line of credit approximated their carrying value~~5.00%/7.00% Convertible Notes as of ~~September~~June 30, ~~2017.~~2020 was estimated based on a model that discounted future

Table of Contents

principal and interest payments at interest rates available to the Company at the end of the period for similar debt of the same maturity, which is a Level 2 input as defined by the fair value hierarchy.

The following valuation assumptions were used in determining the fair value of the ~~Second Lien~~3.00%/5.00% Convertible Notes, including the conversion option, as of ~~September~~June 30, ~~2017:~~

2020:



Risk-free interest rate	~~1.70~~0.24	%
Credit ~~spreads~~spread	~~13.96~~9.47	%
PIK premium spread	2.00	%
Volatility	50.00	%

~~Fair Value Measurements~~As of ~~Embedded Conversion Option~~

June 30, 2020, the fair value of the Company's Revolving B Credit Facility was estimated to be $26,707 compared to a face value of $27,376. As of December 31, 2019, the fair value of the Company's Revolving B Credit Facility was estimated to be $25,082 compared to a face value of $25,788. Also as of June 30, 2020, the fair value of the Company's PPP Loan was estimated to be $8,571 compared to a face value of $10,000 and the fair value of the Company's France Term Loan was estimated to be $3,271 compared to a face value of $6,721. The fair value of the Revolving B Credit Facility, the PPP Loan and the France Term Loan was estimated based on a model that discounted future principal and interest payments at interest rates available to the Company at the end of the period for similar debt of the same maturity, which is a Level 2 input as defined by the fair value hierarchy.

Given the short-term nature and/or the variable interest rates, the fair value of borrowings under the Revolving A Credit Facility approximated the carrying value as of June 30, 2020.

Fair Value Measurement of Embedded Conversion Feature

On June 30, 2020, the Company filed articles of amendment to increase the number of shares of common stock authorized (see Note 8 - Stockholders' Equity). As a result of this increase, the number the Company's common stock shares available for issuance upon conversion of the 3.00%/5.00% Convertible Notes is sufficient to allow the conversion option to be share-settled in full. The Company has concluded that as of June 30, 2020, the conversion option qualifies for equity classification and the bifurcated derivative liability will no longer need to be accounted for as a separate derivative on a prospective basis from the ~~embedded~~date of reassessment. As of June 30, 2020, the fair value of the conversion option of $36,952 was classified to equity as additional paid-in capital. There was 0 tax impact of the ~~Second Lien Notes was estimated~~reclassification of the conversion option to ~~be $61,608 as of September 30, 2017.~~ equity. The estimated fair value of the derivative liability for the embedded conversion ~~option~~feature of the ~~Second Lien~~3.00%/5.00% Convertible Notes, which falls within Level 3 of the fair value hierarchy, is measured on a recurring basis using a binomial lattice model using the ~~Company's historical volatility over~~same assumptions as the ~~term corresponding to~~3.00%/5.00% Convertible Notes. The following reconciliation represents the ~~remaining contractual term of the Second Lien Notes and observed spreads of similar debt instruments that do not include a conversion feature. The~~ change in ~~the~~ fair value of the ~~Level 3 derivative liability between~~embedded conversion feature of the ~~Effective Date and September~~3.00%/5.00% Convertible Notes for the six months ended June 30, ~~2017 was not significant.~~2020. Prior to the reclassification of the embedded conversion feature to additional paid-in capital on June 30, 2020, the Company recognized a gain of $2,010 on the mark-to-fair value adjustment on the embedded debt conversion option.



Fair value as of December 31, 2019	$	—
Fair value at issuance date	38,962
Mark-to-fair value adjustment on embedded conversion feature	(2,010)
Reclassification of embedded conversion feature to additional paid-in capital	(36,952)
Fair value as of June 30, 2020	$	—

~~(10)~~

(8) Stockholders’ Equity ~~(Deficit)~~

Authorized Shares of Common Stock

On June 30, 2020, the Company's shareholders approved a proposal to amend the Company's charter to authorize an increase in the Company's authorized shares of common stock. Subsequent to this approval, also on June 30, 2020, the Company filed articles of amendment with the Secretary of State of the State of Maryland, which amended its Articles of Amendment and Restatement effective on such date to increase the Company's authorized common stock shares from 200,000 shares of common stock at $0.01 par value per share to 400,000 shares of common stock at $0.01 par value per share. The Company has concluded that as of June 30, 2020 the conversion

Table of Contents

option qualifies for equity classification and the bifurcated derivative liability will no longer need to be accounted for as a separate derivative on a prospective basis from the date of reassessment. As of June 30, 2020, the fair value of the conversion option of $36,952 was classified to equity as additional paid-in capital.

Exchange Offer

The Company issued 70,261 shares of its common stock on March 27, 2020 in connection with the Exchange Offer (see Note 6 - Debt). The issuance of these shares was recorded using the fair value of the Company's common stock on the date the shares were issued and resulted in an increase in the par value of common stock and additional paid-in capital of $703 and $24,606, respectively. The shares were issued in exchange for 5.00%/7.00% Convertible Notes, and, as such, the Company received no cash proceeds as part of the exchange.

Accumulated Other Comprehensive Loss

The components of accumulated other comprehensive loss are as follows:


	As of
	June 30, 2020		December 31, 2019
Unrecognized pension and postretirement benefit costs, net of tax	$	(7,021)	$	(7,071)
Foreign currency translation losses, net of tax	(7,215)		(6,303)
Total accumulated other comprehensive loss	$	(14,236)	$	(13,374)

Successor Predecessor
September 30,
2017 December 31,
2016
Unrecognized pension and postretirement benefit costs, net of tax $ —
$ (9,797 )
Foreign currency translation losses, net of tax (2,362 ) (16,142 )
Total accumulated other comprehensive loss $ (2,362 ) $ (25,939 )

Changes in accumulated other comprehensive loss by component ~~for periods September 1, 2017 through September 30, 2017 and July 1, 2017 through August 31, 2017 and~~in the three months ended ~~September~~June 30, ~~2016~~2020 and June 30, 2019 are as follows:


	Defined Benefit Pension and Postretirement Items						Foreign Currency Items						Total

	Three Months Ended						Three Months Ended						Three Months Ended
	June 30,						June 30,						June 30,
	2020		2019		2020		2019		2020		2019
Beginning Balance	$	(7,046)	$	(9,130)	$	(7,251)	$	(5,659)	$	(14,297)	$	(14,789)
Other comprehensive loss before reclassifications, net of tax	—		—		36		(279)		36		(279)
Amounts reclassified from accumulated other comprehensive loss, net of tax ^(a)	25		23		—		—		25		23
Net current period other comprehensive income (loss)	25		23		36		(279)		61		(256)
Ending Balance	$	(7,021)	$	(9,107)	$	(7,215)	$	(5,938)	$	(14,236)	$	(15,045)

Defined Benefit Pension and Postretirement Items Foreign Currency Items Total

Successor Predecessor Successor Predecessor Successor Predecessor
September 1, 2017 Through September 30, 2017
July 1, 2017
Through
August 31, 2017

Three Months
Ended
September 30, 2016
September 1, 2017 Through September 30, 2017
July 1, 2017
Through
August 31, 2017

Three Months
Ended
September 30, 2016
September 1, 2017 Through September 30, 2017
July 1, 2017
Through
August 31, 2017

Three Months
Ended
September 30, 2016

Beginning Balance $ —
$ (9,369 ) $ (16,273 ) $ —
$ (17,827 ) $ (20,100 ) $ —
$ (27,196 ) $ (36,373 )
Other comprehensive loss before reclassifications, net of tax —
—
—
(2,362 ) 2,070
2,967
(2,362 ) 2,070
2,967
Amounts reclassified from accumulated other comprehensive loss, net of tax ^(a)
—
(1,436 ) 456
—
—
—
—
(1,436 ) 456
Net current period other comprehensive income (loss) —
(1,436 ) 456
(2,362 ) 2,070
2,967
(2,362 ) 634
3,423
Adjustment for fresh-start accounting^(b)
—
10,805
—
—
15,757
—
—
26,562
—
Ending Balance $ —
$ —
$ (15,817 ) $ (2,362 ) $ —
$ (17,133 ) $ (2,362 ) $ —
$ (32,950 )

^(a)See reclassifications from accumulated other comprehensive loss table below for details of reclassification from accumulated other comprehensive loss ~~for the periods September 1, 2017 through September 30, 2017, July 1, 2017 through August 31, 2017 and~~in the three ~~month period~~months ended ~~September~~June 30, ~~2016.~~2020 and June 30, 2019.

^(b)~~In connection with the application of fresh-start accounting, Predecessor accumulated comprehensive loss was eliminated (Refer to~~ ~~Note 2 - Bankruptcy Related Disclosures~~).

~~Changes~~Changes in accumulated other comprehensive loss by component ~~for~~in the ~~periods September 1, 2017 through September 30, 2017 and January 1, 2017 through August 31, 2017 and for the nine~~six months ended ~~September~~June 30, ~~2016~~2020 and June 30, 2019 are as follows:


	Defined Benefit Pension and Postretirement Items										Foreign Currency Items										Total												Defined Benefit Pension and Postretirement Items													Foreign Currency Items									Total

	Successor		Predecessor								Successor				Predecessor						Successor				Predecessor								Six Months Ended													Six Months Ended									Six Months Ended
	September 1, 2017 Through September 30, 2017		January 1, 2017 Through August 31, 2017				Nine Months Ended September 30, 2016				September 1, 2017 Through September 30, 2017				January 1, 2017 Through August 31, 2017		Nine Months Ended September 30, 2016				September 1, 2017 Through September 30, 2017				January 1, 2017 Through August 31, 2017				Nine Months Ended September 30, 2016				June 30,													June 30,									June 30,
																				2020								2019						2020					2019					2020			2019
Beginning Balance	$	—			$	(9,797	)		$	(17,185			)	$		—			$	(16,142			)	$		(16,636	)				$	—			$	(25,939	)	$	(33,821	)	Beginning Balance	$	(7,071)		$	(9,153)		$	(6,303)		$	(5,195)		$	(13,374)	$	(14,348)
Other comprehensive income (loss) before reclassifications, net of tax	—		—				—				(2,362		)		385		(497		)		(2,362		)		385				(497		)
Other comprehensive loss before reclassifications, net of tax																																Other comprehensive loss before reclassifications, net of tax	—					—					(912)			(743)			(912)			(743)
Amounts reclassified from accumulated other comprehensive loss, net of tax ^(a)	—		(1,008		)		1,368				—				—		—				—				(1,008		)		1,368			Amounts reclassified from accumulated other comprehensive loss, net of tax ^(a)	50					46					—			—			50			46
Net current period other comprehensive income (loss)	—		(1,008		)		1,368				(2,362		)		385		(497		)		(2,362		)		(623		)		871			Net current period other comprehensive income (loss)	50					46					(912)			(743)			(862)			(697)
Adjustment for fresh-start accounting^(b)	—		10,805				—				—				15,757		—				—				26,562				—
Ending Balance	$	—	$	—			$	(15,817	)		$	(2,362	)		$	—	$	(17,133	)		$	(2,362	)		$	—			$	(32,950	)	Ending Balance	$	(7,021)				$	(9,107)				$	(7,215)		$	(5,938)		$	(14,236)		$	(15,045)

^(a)See reclassifications from accumulated other comprehensive loss table below for details of reclassification from accumulated other comprehensive loss ~~for~~in the ~~periods September 1, 2017 through September~~six months ended June 30, ~~2017, January 1, 2017 through August 31, 2017~~2020 and ~~the nine month period ended September~~June 30, ~~2016.~~2019.

^(b)~~In connection with the application~~

Table of ~~fresh-start accounting, Predecessor accumulated comprehensive loss was eliminated (Refer to~~ ~~Note 2 - Bankruptcy Related Disclosures~~).Contents

Reclassifications from accumulated other comprehensive loss are as follows:


	Successor		Predecessor							Three Months Ended									Six Months Ended
	September 1, 2017 Through September 30, 2017		July 1, 2017 Through August 31, 2017			Three Months Ended September 30, 2016				June 30,									June 30,
									2020			2019			2020			2019
Unrecognized pension and postretirement benefit items:										Unrecognized pension and postretirement benefit items:
Prior service cost^(b)	$	—	$	(33	)	$	(50	)
Actuarial gain (loss) ^(b)	—		1,326			(406		)
Prior service cost^(a)									Prior service cost^(a)	$	13		$	13		$	26		$	26
Actuarial loss ^(a)									Actuarial loss ^(a)	12			10			24			20
Total before tax	—		1,293			(456		)	Total before tax	25			23			50			46
Tax effect	—		143			—			Tax effect	—			—			—			—
Total reclassifications for the period, net of tax	$	—	$	1,436		$	(456	)	Total reclassifications for the period, net of tax	$	25		$	23		$	50		$	46

^(b)(a)These accumulated other comprehensive loss components are included in the computation of net periodic pension and postretirement benefit cost included in ~~sales, general and administrative expense.~~other income, net.

Successor Predecessor
September 1, 2017 Through September 30, 2017 January 1, 2017
Through
August 31, 2017 Nine Months
Ended
September 30, 2016

Unrecognized pension and postretirement benefit items:
Prior service cost^(b)
$ —
$ (133 ) $ (150 )
Actuarial gain (loss) ^(b)
—
998
(1,218 )
Total before tax —
865
(1,368 )
Tax effect —
143
—
Total reclassifications for the period, net of tax $ —
$ 1,008
$ (1,368 )

^(b)~~These accumulated other comprehensive loss components are included in the computation of net periodic pension and postretirement benefit cost included in sales, general and administrative expense.~~

~~(11)~~(9) Share-based Compensation

~~On the Effective Date, pursuant to the operation of the Plan, the A.M. Castle & Co. 2017 Management Incentive Plan (the “MIP”) became effective.~~Restricted Shares

The ~~board~~Company's Board of ~~directors of the Company~~Directors (the ~~“Board”~~"Board") ~~or a committee thereof (either, in such capacity, the “Administrator”) will administer the MIP. The Administrator~~ has broad authority under the MIP, among other things, to: (i) select participants; (ii) determine the terms and conditions, not inconsistent with the MIP, of any award granted under the MIP; (iii) determine the number of shares of the Company’s common stock to be covered by each award granted under the MIP; and (iv) determine the fair market value of awards granted under the MIP.

Persons eligible to receive awards under the MIP include officers, directors and employees of the Company and its subsidiaries. The types of awards that may be granted under the MIP include stock options, stock appreciation rights, restricted stock, restricted stock units, performance units, performance shares and other forms of cash or stock based awards.

~~The maximum number of shares of the Company’s common stock that may be~~ issued or transferred pursuant to awards under the MIP (including shares initially convertible as a result of conversion of Second Lien Notes issued pursuant to the MIP) is 3,952, which number may be increased with the approval of the Company’s shareholders. If any outstanding award granted under the MIP expires or is terminated or canceled without having been exercised or settled in full, or if shares of the Company’s common stock acquired pursuant to an award subject to forfeiture are forfeited, the shares of the Company’s common stock allocable to the terminated portion of such award or such forfeited shares will revert to the MIP and will be available for grant under the MIP as determined by the Administrator, subject to certain restrictions.

As is customary in management incentive plans of this nature, in the event of any change in the outstanding shares of the Company’s common stock by reason of a stock split, stock dividend or other non-recurring dividends or distributions, recapitalization, merger, consolidation, spin-off, combination, repurchase or exchange of stock, reorganization, liquidation, dissolution or other similar corporate transaction, an equitable adjustment will be made in order to prevent dilution or enlargement of the benefits or potential benefits intended to be made available under the MIP. Such adjustment may include an adjustment to the maximum number and kind of shares of stock or other securities or other equity interests as to which awards may be granted under the MIP, the number and kind of shares of stock or other securities or other equity interests subject to outstanding awards and the exercise price thereof, if applicable.

~~On the Effective Date, all unvested and/or unexercised equity awards under any existing pre-Effective Date management incentive compensation plans were extinguished without recovery.~~

~~2017 Management Incentive Plan Award~~

Pursuant to the Plan, on September 1, 2017, 1,734 shares, together with an aggregate original principal amount of $2,400 of Second Lien Notes (the "Restricted Notes") convertible into an additional 638 shares of new common stock as of the Effective Date, were issued as awards of restricted shares of the Company's common stock ("Restricted Shares") and restricted 5.00%/7.00% Convertible Notes (the "Restricted ~~Shares"~~5.00%/7.00% Convertible Notes") ~~under the MIP~~ to certain officers of the ~~Company.~~

Company, as well as Restricted Shares to certain members of the Board. On March 27, 2020, in conjunction with the Exchange Offer, the Company issued restricted 3.00%/5.00% Convertible Notes (the "Restricted 3.00%/5.00% Convertible Notes") and Restricted Shares in exchange for all of the outstanding Restricted 5.00%/7.00% Convertible Notes, including any accrued and unpaid interest on the Restricted 5.00%/7.00% Convertible Notes as of the date in which the Exchange Offer was completed (the "Restricted Note Exchange"). Pursuant to the Restricted Note Exchange, $1,613 in aggregate principal amount of the Restricted 5.00%/7.00% Convertible Notes were tendered and accepted and in exchange, the Company issued $793 in aggregate principal amount of Restricted 3.00%/5.00% Convertible Notes and 586 shares of Restricted Shares. The Restricted 3.00%/5.00% Convertible Notes outstanding were convertible into an additional 1,740 shares of the Company's common stock as of June 30, 2020.

The Restricted Shares ~~and Restricted Notes~~granted to certain officers of the Company on September 1, 2017 cliff vest ~~on August 31, 2020,~~three years from the date of grant, subject to the conditions set forth in the MIP. ~~The~~As they relate to the first tranche of Restricted 5.00%/7.00% Convertible Notes, the Restricted 3.00%/5.00% Convertible Notes and Restricted Shares ~~grant date fair value of $3.14 per share was based on the value~~issued as a result of the ~~common stock~~Restricted Note Exchange cliff vest three years from the original date of grant, September 31, 2017. As they relate to the second tranche of Restricted 5.00%/7.00% Convertible Notes, which were made available as lapsed incentive awards and awarded to certain officers of the ~~Successor company~~Company on March 25, 2020, the Restricted 3.00%/5.00% Convertible Notes, and Restricted Shares issued as ~~calculated~~a result of the Restricted Note Exchange cliff vest on ~~the Effective date pursuant to the Plan.~~August 31, 2024.

~~The following table summarizes~~A summary of the activity ~~relating to~~of the Company's Restricted Shares as of June 30, 2020 and in the six months then ended follows:



	Shares	Weighted-Average Grant Date Fair Value
Outstanding at January 1, 2020	1,429	$	3.13
Issued upon exchange of Restricted 5.00%/7.00% Convertible Notes	586	0.38
Forfeited	—	—
Vested	(607)	3.14
Outstanding at June 30, 2020	1,408	1.98
Expected to vest after June 30, 2020	1,408	1.98

Performance Share Units

The Board has granted performance share units ("PSUs") as awards under the MIP to non-executive senior level managers and other select personnel. The PSUs contain a performance-based condition tied to the enterprise value of the Company. Each PSU that vests entitles the participant to receive, at the discretion of the Company's Board,

Table of Contents

one share of the Company's common stock or cash equal to the fair market value of one share of the Company's common stock. Vesting occurs upon achievement of a defined enterprise value of the Company, with 50% vesting upon achievement of the defined enterprise value between the performance period September 30, 2020 and September 30, 2022, and the remaining 50% vesting upon the achievement of the defined enterprise value as a result of a specified transaction, as defined in the PSU agreement, on or before September 30, 2022.

As of June 30, 2020, there were 783 PSUs outstanding.

Share-Based Compensation Expense

Compensation expense recognized related to the PSUs is based on management’s expectation of future performance compared to the pre-established performance goals. If the performance goals are not expected to be met, 0 compensation expense is recognized and any previously recognized compensation expense is reversed. As of June 30, 2020, 0 compensation expense was recognized for these awards to date as the threshold for expense recognition for the ~~period September 1, 2017 through September 30, 2017 (Successor):~~performance-based condition had not been met.

Number of Shares
Weighted-Average
Grant Date
Fair Value
Unvested at September 1, 2017 (Successor) $ —
$ —
Granted 1,734
3.14
Forfeited —
—
Vested —
—
Unvested at September 30, 2017 (Successor) $ 1,734
3.14
Expected to vest after September 30, 2017 (Successor) $ 1,734
3.14

As of ~~September~~June 30, ~~2017,~~2020, the unrecognized share-based compensation expense related to unvested Restricted Shares was ~~$5,294 and the remaining unrecognized compensation cost is expected to be recognized over a weighted-average period of approximately 2.9 years. As discussed in~~ ~~Note 1 - Basis of Presentation, the Successor has elected to account for forfeitures as they occur.~~

As of September 30, 2017, the unrecognized share-based compensation expense related to the aggregate original principal amount of $2,400 of Second Lien Notes issued to certain officers of the Company was $2,236$202 and is expected to be recognized over a weighted-average period of approximately ~~2.9~~0.7 years. Forfeitures are accounted for as they occur.

As of June 30, 2020, the unrecognized share-based compensation expense related to the outstanding Restricted 3.00%/5.00% Convertible Notes was $159 and is expected to be recognized over a weighted-average period of approximately 1.7 years. The Company will recognize this compensation expense on a straight-line basis over the ~~three-year~~remaining vesting period using the fair value of the Restricted 3.00%/5.00% Convertible Notes at the ~~issue date, $2,300.~~Restricted Note Exchange date.

~~(12)~~(10) Employee Benefit Plans

Components of the net periodic pension and postretirement benefit ~~cost~~credit are as follows:

Successor Predecessor
September 1, 2017 Through September 30, 2017 July 1, 2017
Through
August 31, 2017 Three Months
Ended
September 30, 2016

Service cost $ 38
$ 71
$ 112
Interest cost 397
806
1,312
Expected return on assets (692 ) (1,356 ) (2,035 )
Amortization of prior service cost —
33
50
Amortization of actuarial loss —
110
406
Net periodic pension and postretirement benefit (credit) cost $ (257 ) $ (336 ) $ (155 )
Contributions paid $ 213
$ —
$ —


	Successor			Predecessor							Three Months Ended														Six Months Ended
	September 1, 2017 Through September 30, 2017			January 1, 2017 Through August 31, 2017			Nine Months Ended September 30, 2016				June 30,														June 30,
										2020					2019					2020					2019
Service cost	$	38			$	282			$	336	Service cost		$	112				$	106				$	224			$	212
Interest cost	397			3,227			3,936			Interest cost	1,015					1,322					2,029				2,644
Expected return on assets	(692		)	(5,425		)	(6,105		)	Expected return on assets	(1,681)					(1,531)					(3,362)				(3,062)
Amortization of prior service cost	—			133			150			Amortization of prior service cost	13					13					26				26
Amortization of actuarial loss	—			438			1,218			Amortization of actuarial loss	12					10					24				20
Net periodic pension and postretirement benefit (credit) cost	$	(257	)	$	(1,345	)	$	(465	)
Net periodic pension and postretirement benefit credit										Net periodic pension and postretirement benefit credit	$	(529)				$	(80)				$	(1,059)			$	(160)
Contributions paid	$	213		$	356		$	—		Contributions paid	$	—				$	—				$	—			$	—

The Company anticipates making no0 additional cash contributions to its pension plans in the remainder of ~~2017.~~2020.

~~Employee retirement contracts and collective bargaining agreements were honored by~~The Company was party to a multi-employer pension plan from which the Company ~~after emergence~~determined to withdraw. At June 30, 2020, the total estimated liability to withdraw from the ~~Chapter 11 cases on the Effective Date.~~

~~Upon the adoption of fresh-start accounting, the Company remeasured its obligations under its defined benefit pension and other postretirement plans.~~plan was $3,064. The ~~re-measurement increased the Company's defined benefit pension and other postretirement benefit obligations by approximately $4,274 and was driven primarily by a change in the discount rate.~~

~~(13) Restructuring Activity~~

In April 2015, the Company announced a restructuring plan consisting of workforce reductions and the consolidation of facilities in locations deemed to have redundant operations. In the three months and nine months ended September 30, 2016, the Company incurred costscurrent liability associated with the April 2015 restructuring plan which consisted of employee termination and related benefits, moving costs, professional fees and losses on the disposal of fixed assets. In addition, the Company recorded charges of $452 for inventory moved from consolidated plants that was subsequently identified to be scrapped. The inventory charge is reported in cost of materials in the Condensed Consolidated Statement of Operations and Comprehensive Loss for the nine months ended September 30, 2016.

In the first quarter of 2016, the Company closed its Houston and Edmonton facilities and sold all the equipment at these facilities to an unrelated third party. Restructuring activities associated with the strategic decision to close these facilities included employee termination and related benefits, lease termination costs, moving costs associated with exitCompany's withdrawal from the ~~closed facilities, and professional fees at the closed facilities.~~

~~As a result~~multi-employer pension plan of ~~its restructuring activities, the Company incurred the following restructuring expenses:~~

Successor Predecessor
September 1, 2017 Through September 30, 2017 July 1, 2017
Through
August 31, 2017 Three Months
Ended
September 30, 2016

Employee termination and related benefits $ —
$ 140
$ 267
Moving costs associated with plant consolidations —
212
52
Professional fees —
46
593
Total $ —
$ 398
$ 912

Successor Predecessor
September 1, 2017 Through September 30, 2017 January 1, 2017
Through
August 31, 2017 Nine Months
Ended
September 30, 2016

Employee termination and related benefits $ —
$ 185
$ 945
Lease termination costs —
—
6,706
Moving costs associated with plant consolidations —
305
4,447
Professional fees —
76
1,323
Loss on disposal of fixed assets —
—
1,253
Total $ —
$ 566
$ 14,674

~~Restructuring reserve activity for the periods January 1, 2017 through August 31, 2017 and September 1, 2017 through September 30, 2017 is summarized below:~~

Predecessor
Period Activity
Balance January 1, 2017 Charges (gains) Cash receipts (payments) Non-cash activity Balance August 31, 2017
Employee termination and related benefits $ 3,627
$ 185
$ (261 ) $ —
$ 3,551
Lease termination costs 823
—
(496 ) 374
701
Moving costs associated with plant consolidations —
305
(305 ) —
—
Professional fees —
76
(76 ) —
—
Total $ 4,450
$ 566
$ (1,138 ) $ 374
$ 4,252

Successor
Period Activity
Balance September 1, 2017 Charges (gains) Cash receipts (payments) Non-cash activity Balance September 30, 2017
Employee termination and related benefits ^(a)
$ 3,551
$ —
$ (20 ) $ —
$ 3,531
Lease termination costs^(b)
701
—
(16 ) —
685
Total $ 4,252
$ —
$ (36 ) $ —
$ 4,216

^(a)~~As of September 30, 2017 (Successor), the short-term portion of employee termination and related benefits of $340~~$240 is included in accrued and other current liabilities in the Condensed Consolidated Balance ~~Sheet~~Sheets and the long-term liability ~~associated with the Company's withdrawal from a multi-employer pension plan~~ of ~~$3,191~~$2,824 is included in other noncurrent liabilities in the Condensed Consolidated Balance ~~Sheet.~~Sheets.

^(b)Payments on certain of the lease obligations are scheduled to continue until 2020. Market conditions and the Company’s ability to sublease these properties could affect the ultimate charge related to the lease obligations. Any potential recoveries or additional charges could affect amounts reported in the consolidated financial statements of future periods. As of September 30, 2017 (Successor), the short-term portion of the lease termination costs of $304 is included in accrued and other current liabilities and the long-term portion of the lease termination costs of $381 is included in other noncurrent liabilities in the Condensed Consolidated Balance Sheet.

~~(14)~~(11) Income Taxes

The Company's tax provision for interim periods is determined using an estimate of its annual effective tax rate, adjusted for discrete items. The Company’s effective tax rate is expressed as income tax ~~expense, which includes tax expense on the Company’s share of joint venture earnings in the three months and nine months ended September 30, 2016 (Predecessor),~~benefit as a percentage of loss ~~from continuing operations~~ beforeincome ~~taxes and equity in earnings~~taxes.

On March 27, 2020, the U.S. federal government signed into law the CARES Act, to provide economic relief to U.S. companies impacted by the COVID-19 pandemic. Pursuant to the provisions of ~~joint venture.~~

~~For~~ the ~~period September 1, 2017 through September 30, 2017 (Successor),~~CARES Act, the Company ~~recorded~~will carryback its net operating losses from 2019 to offset taxable net income ~~tax expense~~realized in 2018.

Table of ~~$286 on pre-tax loss from continuing operations of $535, for an effective tax rate of (53.5)%.~~Contents

~~For~~In the ~~period July 1, 2017 through August 31, 2017 (Predecessor),~~three months ended June 30, 2020, the Company recorded income tax benefit of ~~$1,395~~$1,448 on ~~pre-tax~~a loss before income ~~from continuing operations~~taxes of ~~$70,828,~~$5,501, for an effective tax rate of ~~(1.97)%~~26.3%. ~~For~~In the three months ended ~~September~~June 30, 2016 (Predecessor), the Company recorded income tax expense of $903 on pre-tax loss from continuing operations before equity in earnings of joint venture of $17,359, for an effective tax rate of (5.2)%.

~~For the period January 1, 2017 through August 31, 2017 (Predecessor),~~2019, the Company recorded income tax benefit of ~~$1,387~~$225 on ~~pre-tax~~a loss before income ~~from continuing operations~~taxes of ~~$34,803,~~$8,529, for an effective tax rate of ~~(4.0)%~~2.6%. ~~For~~

In the ~~nine~~six months ended ~~September~~June 30, ~~2016,~~2020, the Company recorded income tax ~~expense~~benefit of ~~$1,099~~$2,591 on ~~pre-tax~~a loss ~~from continuing operations~~ before ~~equity in earnings~~income taxes of ~~joint venture of $79,096,~~$17,685, for an effective tax rate of ~~(1.4)%~~14.7%. In the six months ended June 30, 2019, the Company recorded income tax benefit of $400 on a loss before income taxes of $16,707, for an effective tax rate of 2.4%.

~~The Company's U.S. statutory rate is 35%.~~ The most significant factors impacting the ~~effective~~effective tax rate ~~for~~in the three months ended June 30, 2020 were (i) the recording of the period ~~September 1, 2017 through September 30, 2017 (Successor) were~~expense associated with the quasi territorial tax regime called the Global Intangible Low Taxed Income Inclusion (“GILTI”), (ii) the foreign rate differential, and ~~release of~~(iii) changes in valuation allowances in ~~jurisdictions that have become profitable. The most significant factors~~the United States and Canada. Also impacting the effective tax rate ~~for~~in the ~~period January 1, 2017 through August 31, 2017 (Predecessor) and the nine~~six months ended ~~September~~June 30, ~~2016 (Predecessor) were losses~~2020 was the increase in ~~jurisdictions that the Company is not able to benefit~~net operating loss carrybacks due to ~~uncertainty as to~~ the ~~realization of those losses, release of valuation allowances in jurisdictions that have become profitable, and the impact of intraperiod allocations.~~CARES Act.

The Company's U.S. federal corporate income tax rate is 21%.

~~(15)~~

(12) Commitments and Contingent Liabilities

~~The~~From time to time, the Company is party to a variety of legal proceedings, claims, and inquiries, including proceedings or inquiries by governmental authorities, which arise from the operation of its business. These proceedings, claims, and inquiries are incidental to and occur in the normal course of the Company's business affairs. The majority of these proceedings, claims, and inquiries relate to commercial disputes with customers, suppliers, and others; employment and employee benefits-related disputes; product quality disputes with vendors and/or customers; and environmental, health and safety claims. ItAlthough the outcome of these proceedings is ~~the opinion of~~inherently difficult to predict, management believes that the ~~currently expected~~amount of any judgment, settlement or other outcome of these proceedings, claims and inquiries, after taking into account recorded accruals and the availability and limits of our insurance coverage, will not have a material adverse effect on the Company’s consolidated results of operations, financial condition or cash ~~flows~~flows.

(13) Subsequent Event

On July 20, 2020, the Company's China subsidiary entered into a $3,000 local banking line of credit with the ~~Company.~~Bank of Communication Shanghai (the "China Credit Facility"). The China Credit Facility has an initial maturity date of January 20, 2021 and accrues interest at a rate of 3.6% per annum.

Table of Contents

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Disclosure Regarding Forward-Looking Statements

~~Information provided and~~Certain statements contained in this report ~~that are not purely historical are~~or in other materials we have filed or will file with the Securities and Exchange Commission (the “SEC”) constitute forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (“Securities Act”), Section 21E of the Securities Exchange Act of 1934, as amended (“Exchange Act”), and the Private Securities Litigation Reform Act of 1995. Such forward-looking statements ~~only speak as of the date of this report and the Company assumes no obligation to update the information included in this report. Such forward-looking statements include information~~reflect our expectations, estimates or projections concerning our possible or assumed future results of operations, including, but not limited to, descriptions of our business strategy, and the ~~cost savings and other~~ benefits ~~that~~ we expect to achieve from our ~~restructuring.~~working capital management initiative. These statements are often ~~include~~identified by the use of words such as “believe,” “expect,” “anticipate,” “may,” “could,” “estimate,” “likely,” “will,” “intend,” “predict,” “plan,” "should," or other similar expressions. ~~These~~Forward-looking statements are not guarantees of performance or results and ~~they~~ involve a number of risks ~~uncertainties,~~ and ~~assumptions.~~uncertainties. Although we believe that these forward-looking statements are based on reasonable assumptions and estimates, there are many factors that could ~~affect~~cause our ~~actual financial results or results of operations and could cause~~ actual results to differ materially from those ~~in the forward-looking statements.~~projected. These factors include ~~our ability to effectively manage our operational initiatives and implemented restructuring activities,~~ the impact of volatility of metals prices, the cyclical and seasonal aspects of our business, our ability to effectively manage inventory levels, ~~and~~ the impact of our substantial level of indebtedness, the impact of the novel Coronavirus (COVID-19) pandemic on our financial results and business, as well as those risk factors identified in our Annual Report on Form 10-K for the fiscal year ended December 31, ~~2016 and this Quarterly~~2019, our Annual Report on Form 10-K/A for the fiscal year ended December 31, 2019, Part II Item 1A of our quarterly report on Form 10-Q for the ~~third~~ quarter ended ~~September 30, 2017 in~~March 31, 2020, and Part II Item 1A ~~"Risk Factors".~~of this quarterly report on Form 10-Q for the quarter ended June 30, 2020. All future written and oral forward-looking statements by us or persons acting on our behalf are expressly qualified in their entirety by the cautionary statements contained or referred to ~~above.~~in this section. Any forward-looking statement speaks only as of the date made. Except as required by ~~the federal securities~~applicable laws, we ~~do not have any obligations or intention~~undertake no obligation to ~~release publicly any revisions to~~update any forward-looking statements to reflect events or circumstances in the future, to reflect the occurrence of unanticipated events or for any other reason.

The following discussion should be read in conjunction with the Company’s Condensed Consolidated Financial Statements and related notes thereto in Item 11. “Financial Statements (unaudited)”.

Overview

A. M. Castle & Co., together with its subsidiaries (the ~~“Company”~~“Company,” “we” or “us”), is a global distributor of specialty metals ~~distribution company~~and supply chain services, principally serving ~~customers on a~~the producer durable equipment, commercial and military aircraft, heavy equipment, industrial goods, and construction equipment sectors of the global ~~basis. The Company has operations in the United States, Canada, Mexico, France, the United Kingdom, Spain, China and Singapore.~~economy. The Company provides a broad range of product inventories as well as value-added processing and supply chain services to a wide array of customers, ~~principally within the producer durable equipment, aerospace, heavy industrial equipment, industrial goods, construction equipment, oil and gas, and retail sectors of the global economy. Particular~~with a particular focus ~~is placed~~ on the aerospace and defense, power generation, mining, heavy industrial equipment, and general manufacturing industries, as well as general engineering applications.

~~Recent Developments~~Authorization of Additional Shares of Common Stock

~~Emergence~~At the Company's annual meeting of stockholders held on June 30, 2020, the Company’s stockholders approved a proposal to amend the Company’s charter to authorize an increase in the Company’s authorized shares of capital stock and common stock from ~~Chapter 11~~200,000 shares to 400,000 shares. On June 30, 2020, the Company filed articles of amendment with the Secretary of State of the State of Maryland, which amended its articles of amendment and restatement effective on such date.

Impact of Coronavirus (COVID-19) Pandemic

In the second quarter of 2020, the Company experienced a significant decline in demand as many of the industries the Company serves have been rapidly and materially impacted economically by the novel coronavirus 2019 ("COVID-19") pandemic. The global health crisis caused by the COVID-19 pandemic resulted in a decline in orders from and shipments to customers as well as slower-than-normal payments from customers and disruptions at certain of the Company's suppliers. The Company anticipates the recovery in economic activity will depend on the rate, pace, and effectiveness of the efforts deployed by various national, state, and local governments to contain the COVID-19 pandemic and the rate and pace at which its customers and suppliers return their own businesses to pre-pandemic levels. In the short-term, the Company expects COVID-19 to continue to have an unfavorable impact on its financial results and business.

To date, the Company has taken actions to maintain operations through the pandemic and its network as a whole has remained operational, albeit at varying levels of volume aligned to customer orders and forecasts. The

Table of Contents

Company has prepared and regularly updates business continuity plans for ongoing operations and has taken steps to adjust its business to match the deteriorating economic conditions, including the implementation of enhanced measures through its global supply and branch management teams to ensure the Company is efficiently utilizing inventory on hand and inbound, as well as its internal processing capabilities.

The Company continues to implement temporary and long-term cost-cutting initiatives to align to current demand and to be prepared for any market recovery once this pandemic has passed, including staff reductions, reduction in employee hours and/or salaries, furloughs, temporary layoffs, deferral of periodic salary increases and/or incentive pay, and/or a combination of these actions, at each of its locations. In an effort to protect the health and safety of its employees, the Company has adopted sanitization, social distancing and other behavioral best practices at its locations, including remote work arrangements, reducing the number of people in the Company's branch locations at any one time, and suspending non-essential employee travel. At the outset of the COVID-19 pandemic, the Company established a COVID-19 response team to closely monitor the local, regional, and national situations that impact the Company's various branches, monitor and advise on COVID-19 exposures and potential exposures within the Company's workspaces, direct and implement health and safety plans and business continuity plans, and establish pandemic-related guidelines and policies to best protect the Castle team and its business, including responsible return-to-work or restart plans. Variables that the Company is taking into consideration as some branches and the Corporate office begin to return to normal operations include local case trends, testing availability, number of employees and the workstation layout, productivity and engagement concerns, and most importantly, guidance and requirements from local, state, and federal government, medical and scientific authorities.

In an effort to bolster its liquidity position and mitigate potentially significant detriment to its business, the Company has and will continue to pursue a variety of government-sponsored support programs, such as tax deferrals, employment-related subsidies, government-backed loans and other government relief available in the U.S. and in other countries in which it operates. Actual relief under each of these measures varies in terms of timing and availability as governments continue to define, implement, extend and/or fund their relief programs.

The Company qualified under the “alternative size standard” for a forgivable loan under the Paycheck Protection Program (“PPP”) administered by the Small Business Association (SBA) pursuant to the CARES Act. On April 28, 2020, the Company entered into an unsecured PPP loan in the aggregate principal amount of $10.0 million, which is to be used only for payroll expenses, rent, utilities, mortgage interest, and interest on other pre-existing indebtedness (the "PPP Loan"). After taking into account, among other things, the disruptions to the Company’s business activities caused by the COVID-19 pandemic, the completed exchange offer and consent solicitation (the “Exchange Offer”) to issue its 3.00% / 5.00% Convertible Senior Secured Paid-in-Kind ("PIK") Toggle Notes due 2024 (the “3.00% / 5.00% Convertible Notes”) and shares of its common stock in exchange for its 5.00% / 7.00% Convertible Senior Secured PIK Toggle Notes due 2022 (the “5.00% / 7.00% Convertible Notes”), its available, committed primary sources of liquidity, and its lack of access to alternative sources of liquidity, current economic conditions made this loan request necessary and appropriate to support the Company’s ongoing U.S. operations and mitigate potentially significant detriment to the Company’s business. Under the terms of the CARES Act and the Paycheck Protection Program Flexibility Act passed on June 5, 2020 (the "PPPFA"), the PPP Loan, and interest accrued thereon, is forgivable, partially or in full, subject to certain conditions, including the extent to which the PPP Loan proceeds are used for permissible purposes within the 24 week period following loan disbursement (which period was extended by the PPPFA from the 8 week period originally allowed by the CARES Act). The Company believes it has used the PPP Loan proceeds for permissible purposes only and intends to apply for forgiveness of the PPP Loan in accordance with the terms of the PPP, the CARES Act and the PPPFA.

On June 24, 2020, the Company's French subsidiary entered into a €6,000 term loan (the "France Term Loan"). The France Term Loan, which is fully guaranteed by the French government, is part of a relief program related to the COVID-19 pandemic. Similar to the PPP Loan, economic conditions resulting from the COVID-19 pandemic made this France Term Loan necessary and appropriate to support the Company’s ongoing operations in France and mitigate potentially significant detriment to the Company’s business in France. The France Term Loan, which is evidenced by a term note with HSBC Bank, matures on June 24, 2021 and bears no interest. However, in connection with the government guarantee of the France Term Loan, the Company must pay a commission to the French government of 0.5% per annum of the principal loan balance. Under the terms of the France Term Loan, the Company has the option to extend the maturity of the loan for a period of up to five years. As of June 30, 2020, the Company has the intent and ability to extend the maturity of the France Term Loan beyond twelve months and has therefore included the entire outstanding principal balance of the France Term Loan in long-term debt at the Condensed Consolidated Balance Sheets.

Table of Contents

The Company considers itself and has been identified as an “essential” business, as defined by the various local, state and national orders and as supported by the directives of the Company’s customers many of whom are explicitly deemed “essential” businesses themselves, and therefore has generally continued to operate during the pandemic. The Company will continue to actively monitor the situation and may take further actions altering the Company's business operations that we determine are in the best interests of the Company's employees, customers, business partners, suppliers, and shareholders, or as required by federal, state, or local authorities. It is not clear what the potential effects any such alterations or modifications may have on the Company's business, including the effects on the Company's customers, employees, and prospects, or on the Company's financial results for the remainder of fiscal 2020.

Results of Operations

The following tables set forth certain statement of operations data in each period indicated:



	Three Months Ended June 30,
	2020						2019						Favorable/ (Unfavorable)
(Dollar amounts in millions)	$		% of Net Sales		$		% of Net Sales		Three Month $ Change		Three Month % Change

Net sales	$	84.7	100.0	%	$	147.9	100.0	%	$	(63.2)	(42.7)	%
Cost of materials (exclusive of depreciation)	60.9		71.9	%	109.9		74.3	%	49.0		44.6	%
Operating costs and expenses	28.3		33.4	%	39.1		26.5	%	10.8		27.6	%
Operating loss	$	(4.5)	(5.3)	%	$	(1.2)	(0.8)	%	$	(3.3)	n/m


	Six Months Ended June 30,
	2020						2019						Favorable/ (Unfavorable)
(Dollar amounts in millions)	$		% of Net Sales		$		% of Net Sales		Six Month $ Change		Six Month % Change

Net sales	$	211.3	100.0	%	$	297.5	100.0	%	$	(86.2)	(29.0)	%
Cost of materials (exclusive of depreciation)	153.2		72.5	%	220.9		74.3	%	67.7		30.6	%
Operating costs and expenses	64.6		30.6	%	78.1		26.2	%	13.5		17.3	%
Operating loss	$	(6.5)	(3.1)	%	$	(1.5)	(0.5)	%	$	(5.0)	n/m

Net Sales

Net sales of $84.7 million in the three months ended June 30, 2020 decreased $63.2 million, or 42.7%, compared to $147.9 million in the three months ended June 30, 2019. Net sales of $211.3 million in the six months ended June 30, 2020 decreased $86.2 million, or 29.0%, compared to $297.5 million in the six months ended June 30, 2019. The decrease in net sales in both the three and six months ended June 30, 2020 compared to the same periods in the prior year was driven primarily by the macroeconomic impacts of the COVID-19 pandemic, which worsened already soft industrial end markets and further weakened demand for global aerospace products. The weakening of demand within the aerospace market is largely attributable to the impact of the COVID-19 pandemic on global air travel and the grounding of the Boeing 737 MAX, for which some of the Company's locations have customers that supply content. Tons sold per day for the Company's products decreased by 40.2% in the three months ended June 30, 2020 compared to the same quarter in the prior year and 30.4% in the six months ended June 30, 2020 compared to the six months ended June 30, 2019.

In the six months ended June 30, 2020, the decrease in tons sold per day was partially offset by a 1.7% increase in overall selling prices compared to the three months ended June 30, 2019, which resulted from favorable selling prices realized on the Company's aluminum and stainless product lines in the first quarter of 2020 prior to the impact of the COVID-19 pandemic. In the three months ended June 30, 2020, overall average selling prices of the Company's product mix sold decreased 4.4% compared to the three months ended June 30, 2019 as the macroeconomic impact of the COVID-19 pandemic resulted in a decrease in demand and availability of supply led to increased price competition for all of the Company's core products.

Table of Contents

The Company realized a favorable sales mix in both the second quarter and first half of 2020 compared to the second quarter and first half of the prior year as a result of its strategic focus on more highly accretive sales, particularly those including higher margin, value added service offerings, as well as a shift in sales volume towards higher priced aluminum and stainless products.

The Company expects that the unfavorable financial and business impacts of the COVID-19 pandemic that were realized in the first half of 2020 will continue into the second half of 2020 as the Company's customers and suppliers continue to maintain reduced purchasing forecasts and output. In turn, the Company's expects the decrease in demand and availability and increase in competition in the markets that the Company serves to continue into the second half of 2020, although not at as detrimental levels as those experienced in the three and six months ended June 30, 2020. Although the Company began to see some markets begin to recover in the late second quarter of 2020, given the above factors and the uncertainties surrounding the COVID-19 pandemic the Company believes it will continue to have a decrease in sales volume and pricing of the Company's products in the latter half of 2020.

Cost of Materials

Cost of materials (exclusive of depreciation) was $60.9 million in the three months ended June 30, 2020 compared to $109.9 million in the three months ended June 30, 2019. The $49.0 million, or 44.6%, decrease in the second quarter of 2020 compared to the second quarter of 2019 is primarily due to the decrease in net sales volume compared to the same period last year. Cost of materials (exclusive of depreciation) was 71.9% of net sales in the three months ended June 30, 2020 compared to 74.3% of net sales in the three months ended June 30, 2019.

Cost of materials (exclusive of depreciation) was $153.2 million in the six months ended June 30, 2020 compared to $220.9 million in the six months ended June 30, 2019, and decrease of $67.7 million, or 30.6%. Cost of materials (exclusive of depreciation) was 72.5% of net sales in the six months ended June 30, 2020 compared to 74.3% of net sales in the six months ended June 30, 2019.

The Company's focus on selectively pursuing higher margin sales that are more accretive to the business, particularly those including the Company's value added service offerings, resulted in favorable product mix towards sales of products with higher gross material margins (calculated as net sales less cost of materials divided by net sales) in both the second quarter and first half of 2020, compared to the same periods last year. The Company expects its margins will remain relatively stable for the remainder of 2020 as its improved inventory management offsets the headwinds produced by reduced demand, a downward pricing environment and the unfavorable impacts of the COVID-19 pandemic on the overall global economy.

Operating Costs and Expenses and Operating Loss

In response to the unfavorable global economic conditions resulting from the COVID-19 pandemic, the Company began early in the second quarter of 2020 to take steps to align its operating costs and expenses with a decrease in customer and supplier forecasts and output. The steps taken by management have included reductions in discretionary spending, staff reductions, reductions in employee work hours and/or salaries, furloughs, temporary layoffs, deferral of periodic salary increases and/or incentive pay, or a combination of these actions at each of its branches and at its corporate offices. In addition, for the safety of its employees, the Company has suspended non-essential employee travel. The cost-cutting measures taken by the Company have resulted in a significant decrease in operating costs and expenses in the three and six months ended June 30, 2020 compared to the same periods last year. The Company expects to continue to implement the temporary and long-term cost cutting initiatives it has taken to align to the current demand and to be prepared for any market recovery once the pandemic has passed.

Table of Contents



	Three Months Ended June 30,						Favorable/(Unfavorable)
(Dollar amounts in millions)	2020		2019		Three Month $ Change		Three Month % Change
Warehouse, processing and delivery expense	$	14.2	$	20.5	$	6.3	30.7	%
Sales, general and administrative expense	12.1		16.5		4.4		26.7	%
Depreciation expense	2.0		2.1		0.1		4.8	%
Total operating costs and expenses	$	28.3	$	39.1	$	10.8	27.6	%

Operating costs and expenses decreased by $10.8 million, or 27.6%, from $39.1 million in the three months ended June 30, 2019 to $28.3 million in the three months ended June 30, 2020, primarily as a result of the following:

•Warehouse, processing and delivery expense decreased by $6.3 million primarily due to a lower payroll and benefits costs and lower warehouse and freight costs in the three months ended June 30, 2020 compared to the same period last year. The 30.7% decrease was driven by cost cutting measures taken by the Company in response to the COVID-19 pandemic, as well as lower sales volume.

•Sales, general and administrative expense decreased by $4.4 million primarily the result of lower payroll and benefits costs, as well as other reductions in employee expenses and discretionary spending in the three months ended June 30, 2020 compared to three months ended June 30, 2019 driven mainly by the cost cutting measures taken by the Company in response to the COVID-19 pandemic, including staff reductions, reductions in employee work hours and/or salaries, furloughs, temporary layoffs, deferral of periodic salary increases and/or incentive pay, or a combination of these actions. The decreases were partially offset by legal and other direct fees associated with the Exchange Offer in the amount of $0.6 million.


	Six Months Ended June 30,						Favorable/(Unfavorable)
(Dollar amounts in millions)	2020		2019		Three Month $ Change		Three Month % Change
Warehouse, processing and delivery expense	$	32.2	$	40.8	$	8.6	21.1	%
Sales, general and administrative expense	28.3		33.0		4.7		14.2	%
Depreciation expense	4.1		4.3		0.2		4.7	%
Total operating costs and expenses	$	64.6	$	78.1	$	13.5	17.3	%

Operating costs and expenses decreased by $13.5 million, or 17.3%, from $78.1 million in the six months ended June 30, 2019 to $64.6 million in the six months ended June 30, 2020, primarily as a result of the following:

•Warehouse, processing and delivery expense decreased by $8.6 million primarily due to a lower payroll and benefits costs and lower warehouse and freight costs in the six months ended June 30, 2020 compared to the six months ended June 30, 2019. The 21.1% decrease was driven by cost cutting measures taken by the Company in the second quarter of 2020 in response to the COVID-19 pandemic, as well as lower sales volume.

•Sales, general and administrative expense decreased by $4.7 million primarily the result of lower payroll and benefits costs in the six months ended June 30, 2020 compared to six months ended June 30, 2019 driven mainly by the cost cutting measures taken by the Company in response to the COVID-19 pandemic, including staff reductions, reductions in employee work hours and/or salaries, furloughs, temporary layoffs, deferral of periodic salary increases and/or incentive pay, or a combination of these actions. The decreases were partially offset by legal and other direct fees associated with the Exchange Offer in the amount of $1.3 million.

In the first and second quarters of 2020, the Company performed an interim impairment test of its goodwill and intangible assets. Based on these tests, the Company determined its one reporting unit's goodwill and indefinite-lived trade name assets were not impaired as of both March 31, 2020 and June 30, 2020. While the Company considered the impact the COVID-19 pandemic may have on it future cash flows when preparing its interim goodwill impairment test, the full extent of the impact that the COVID-19 pandemic will have on the Company's business, operations and financial condition is currently unknown. The Company will continue to assess its goodwill and intangible asset for impairment as events and circumstances change. Any further deterioration in the Company's forecasted revenue, gross material margin, and/or costs and expenses, or an increase in the Company's assumed

Table of Contents

discount rate, could result in an impairment of a portion or all of its goodwill or a portion or all of its intangible asset. The amount of such impairment would be recognized as a noncash expense in the period the goodwill and/or intangible asset is impaired. With all other assumptions being held constant, a 50 basis point increase in the assumed discount rate as of June 30, 2020 would result in an impairment of both the Company's goodwill and intangible asset.

Operating loss in the three months ended June 30, 2020 was $4.5 million, compared to $1.2 million in the three months ended June 30, 2019. Operating loss in the six months ended June 30, 2020 was $6.5 million, compared to $1.5 million in the six months ended June 30, 2019.

Other Income and Expense, Income Taxes and Net Loss

Interest expense, net was $5.1 million in the three months ended June 30, 2020, compared to $9.9 million in the three months ended June 30, 2019. Interest expense includes the interest cost component of the net periodic benefit cost of the Company's pension and post retirement benefits of $1.0 million in the three months ended June 30, 2020 and $1.3 million in the three months ended June 30, 2019. As a result of the Exchange Offer, the Company reduced the aggregate principal amount of its long-term debt by $94.5 million and expects to reduce its annual interest expense by over $10.0 million. The decrease in interest expense in the three months ended June 30, 2020 compared to the three months ended June 30, 2019 is primarily due to a decrease in the overall non-cash interest expense on outstanding convertible debt as a result of the Exchange Offer of $1.9 million, a decrease in non-cash amortization of the outstanding convertible debt of $2.0 million, and a decrease in interest expense on the Company's revolving credit facility of $0.6 million as a result of both a lower revolving credit facility borrowings and a lower effective interest rate on revolving credit facility borrowings in the three and six months ended June 30, 2020 compared to the three and six months ended June 30, 2019.

Interest expense, net was $15.1 million in the six months ended June 30, 2020, compared to $19.3 million in the six months ended June 30, 2019. Interest expense includes the interest cost component of the net periodic benefit cost of the Company's pension and post retirement benefits of $2.0 million in the six months ended June 30, 2020 and $2.6 million in the six months ended June 30, 2019. The decrease in interest expense net in the six months ended June 30, 2020 compared to the six months ended June 30, 2019 is primarily due to the decrease in interest expense in the three months ended June 30, 2020 compared to the three months ended June 30, 2019 described above.

The unrealized gain on embedded conversion option of $2.0 million in both the three and six months ended June 30, 2020 is the result of the mark-to-market adjustment associated with the bifurcated embedded derivative liability of the Company's 3.00% / 5.00% Convertible Notes. As of June 30, 2020 the conversion option qualifies for equity classification and the bifurcated derivative liability will no longer need to be accounted for as a separate derivative on a prospective basis from the date of reassessment. Any remaining debt discount that arose at the date of debt issuance from the original bifurcation will continue to be amortized through interest expense.

Other income, net was $2.0 million in the three months ended June 30, 2020, compared to other income, net of $2.5 million in the three months ended June 30, 2019. Included in other income, net in the three months ended June 30, 2020 and the three months ended June 30, 2019 was net pension benefit of $1.7 million and $1.5 million, respectively. The remaining other income, net for the comparative periods is the result of foreign currency transaction gains and losses. The Company recorded a net foreign currency gain of $0.4 million in the three months ended June 30, 2020, of which $0.7 million was attributable to unrealized losses on foreign currency transactions, which was more than offset by a $1.1 million unrealized gain on intercompany loan, compared to a net foreign currency gain of $1.0 million in the three months ended June 30, 2019, $0.2 million of which was attributable to unrealized gains on foreign currency transactions and $0.8 million to an unrealized gain on intercompany loan.

Other income, net was $1.9 million in the six months ended June 30, 2020, compared to other income, net of $4.1 million in the six months ended June 30, 2019. Included in other income, net in the six months ended June 30, 2020 and the six months ended June 30, 2019 was net pension benefit of $3.4 million and $3.1 million, respectively. The remaining other income, net for the comparative periods is the result of foreign currency transaction gains and losses. The Company recorded a net foreign currency loss of $1.3 million in the six months ended June 30, 2020, of which $0.4 million is attributable to unrealized losses on foreign currency transactions and $0.9 million is an unrealized loss on intercompany loan, compared to a foreign currency gain of $1.0 million in the six months ended June 30, 2019, virtually all of which was attributable to a unrealized gain on intercompany loan.

Loss before income taxes was $5.5 million in the three months ended June 30, 2020, compared to $8.5 million in the three months ended June 30, 2019. The decrease in the loss before income taxes in the three months ended

Table of Contents

June 30, 2020 compared to the same period in the prior year was primarily due to a $4.8 million decrease in interest expense and a $2.0 million unrealized gain on the embedded debt conversion derivative liability recognized in the three months ended June 30, 2020, which was partially offset by an increase in the Company's operating loss in the three months ended June 30, 2020 and the net unfavorable impact of foreign currency in the three months ended June 30, 2020, compared to the same period last year.

Loss before income taxes was $17.7 million in the six months ended June 30, 2020, compared to $16.7 million in the six months ended June 30, 2019. The increase in the loss before income taxes in the six months ended June 30, 2020 compared to the same period in the prior year was primarily due to an increase in operating loss and the unfavorable impact of foreign currency in the six months ended June 30, 2020 compared to the six months ended June 30, 2019, partially offset by lower interest expense in the six months ended June 30, 2020 and the impact of the unrealized gain on the embedded debt conversion derivative liability recognized in the second quarter of 2020.

The Company recorded an income tax benefit of $1.4 million in the three months ended June 30, 2020, compared to an income tax benefit of $0.2 million in the three months ended June 30, 2019 and income tax benefit of $2.6 million in the six months ended June 30, 2020, compared to an income tax benefit of $0.4 million in the six months ended June 30, 2019. The Company’s effective tax rate is expressed as income tax expense as a percentage of loss beforeincome taxes. The effective tax rate in the three months ended June 30, 2020 was 26.3% as compared to 2.6% in the three months ended June 30, 2019 and 14.7% in the six months ended June 30, 2020 as compared to 2.4% in the six months ended June 30, 2019. The change in the effective tax rate between periods resulted from changes in the geographic mix and timing of income or losses, the inclusion of foreign earnings under Internal Revenue Code ("IRC") Section 951A, the impact of the foreign income tax rate differential and, for the six month periods, the increase in the Company's net operating loss carrybacks due to the CARES Act, which was recognized in the six months ended June 30, 2020.

Net loss was $4.1 million in the three months ended June 30, 2020, compared to $8.3 million in the three months ended June 30, 2019, and $15.1 million in the six months ended June 30, 2020, compared to $16.3 million in the six months ended June 30, 2019.

Liquidity and Capital Resources

Liquidity

Cash and cash equivalents increased (decreased) as follows:


	Six Months Ended
	June 30,
(Dollar amounts in millions)	2020		2019
Net cash provided by (used in) operating activities	$	15.9	$	(5.3)
Net cash used in investing activities	(1.3)		(2.6)
Net cash provided by financing activities	5.3		5.7
Effect of exchange rate changes on cash and cash equivalents	—		0.1
Net change in cash and cash equivalents	$	19.9	$	(2.1)

The Company’s principal sources of liquidity are cash provided by operations and proceeds from borrowings under its revolving credit facilities. Given the economic uncertainty and disruptions resulting from the COVID-19 pandemic, the Company will continue to focus on maintaining liquidity to fund its normal operations and appropriately aligning its working capital with the changing economic conditions. In the second quarter of 2020, the average receivable days outstanding increased from levels in previous quarters, which the Company believes reflects some slowing in payments from customers due to the financial uncertainties resulting from the COVID-19 pandemic. The Company has fewer accounts receivables as of June 30, 2020 as a result of the decrease in demand resulting from the COVID-19 pandemic, which has decreased its borrowing base collateral attributable to accounts receivable under its revolving credit facility and, in the near term, could result in less cash provided by operations. Further decreases in the Company's accounts receivable could result in further reductions in its borrowing base collateral and therefore, the maximum amount it could borrow under its revolving credit facility could decrease accordingly. The decrease in demand has also resulted in an increase in inventory and average days sales in inventory in the second quarter compared to the previous quarter. The Company is focused on maintaining liquidity by purchasing a sufficient level of inventory to meet customer demand while not carrying excess inventory and lowering overall stock levels throughout the business. However, if the Company is unable to sufficiently manage its inventory levels and it begins to carry excess inventory, its liquidity could be unfavorably impacted. Conversely, a decrease in the

Table of Contents

Company's inventory could result in a reduction in its borrowing base collateral attributable to inventory and therefore, the maximum amount it could borrow under its revolving credit facility could decrease accordingly.

Although the Company is not currently aware of any such circumstances, a prolonged economic downturn as a result of COVID-19 could have a significant unfavorable impact on its suppliers' ability to deliver products and services and its customers' ability to purchase goods and services and pay their accounts receivable timely, if at all, which could have a significant adverse effect on the Company's operations, financial condition and liquidity. With the benefit of the various government-sponsored support programs such as tax deferrals, employment-related subsidies, government-backed loans and other government relief available in the U.S. and in other countries in which it operates, including the PPP Loan received in April 2020 and the France Term Loan received in June 2020, coupled with temporary and long-term cost-cutting initiatives implemented by the Company, the Company expects it will be able to maintain adequate liquidity and working capital to continue its normal operations over the next 12 months (see Item 2 - Management’s Discussion and Analysis of Financial Condition and Results of Operations - Impact of Coronavirus (COVID-19) Pandemic). However, given the current uncertain economic conditions, there can be no assurance that the Company will be able to achieve its strategic initiatives or obtain additional funding on favorable terms in the future, which could have a significant adverse effect on its operations, financial condition and liquidity.

Specific components of the change in working capital (defined as current assets less current liabilities), are highlighted below:

•A decrease in accounts receivable at June 30, 2020 compared to December 31, 2019 resulted in a cash flow source of $19.3 million in the six months ended June 30, 2020, compared to a cash flow use of $13.4 million in the six months ended June 30, 2019. Average receivable days outstanding was 58.8 days in the six months ended June 30, 2020 compared to 54.5 days for the six months ended June 30, 2019, which, the Company believes, reflects some slowing in payments from customers due to the financial uncertainties resulting from the COVID-19 pandemic. Although the Company expects slowness of payments from customers to continue, the Company considered the economic impact of the COVID-19 pandemic on the collectibility of customer accounts receivable and determined that no specific additional allowance for doubtful accounts was required as of June 30, 2020. The full impact of the COVID-19 pandemic is unknown and rapidly evolving. The Company will continue to analyze any financial and commercial impacts of the COVID-19 pandemic, including any adverse impact the COVID-19 pandemic may have on the collectibility of customer accounts receivable as well as the impact the level of accounts receivable may have on its borrowing capacity under the ABL Credit Agreement.

•Higher inventory levels at June 30, 2020 compared to December 31, 2019 resulted in a cash flow use of $5.6 million in the six months ended June 30, 2020 compared to lower inventory levels at June 30, 2019 compared to December 31, 2018, which resulted in a cash flow source of $3.2 million in the six months ended June 30, 2019. Average days sales in inventory was 152.1 days for the six months ended June 30, 2020 compared to 133.0 days for the six months ended June 30, 2019. The increase in average days sales in inventory is primarily due to the impact of the COVID-19 pandemic, which caused a significant decrease in sales volume beginning in March 2020 offset somewhat by the Company's improved inventory management. As the Company expects the markets to remain soft due to the impacts of the COVID-19 pandemic, it will continue to focus on managing inventory levels, primarily by reducing aged inventories, lowering overall stock levels throughout the business and the real-time facilitation of its branches in selling higher-priced inventory. The Company will continue to monitor the impact its inventory levels may have on its borrowing capacity under the ABL Credit Agreement.

•An increase in total accounts payable and accrued and other current liabilities compared to December 31, 2019 resulted in a $4.4 million cash flow source in the six months ended June 30, 2020 compared to a cash flow source of $2.0 million in the six months ended June 30, 2019. Accounts payable days outstanding was 50.6 days for the six months ended June 30, 2020 compared to 42.5 days for the same period last year. The improving financial condition of the Company prior to the impact of the COVID-19 pandemic, particularly the recent completion of the Exchange Offer (defined below), had resulted in improved credit terms with certain of its suppliers, including an extension of net payment dates and/or credit limits. Additionally, as the Company continues to align its cash flows in response to the economic impacts and uncertainties caused by the COVID-19 pandemic, it expects some variability in the timing of payments to vendors to continue.

Table of Contents

Working capital and the balances of its significant components are as follows:


	As of
(Dollar amounts in millions)	June 30, 2020		December 31, 2019		Working Capital Increase (Decrease)
Working capital	$	173.2	$	173.7	$	(0.5)
Cash and cash equivalents	26.4		6.4		20.0
Accounts receivable	55.0		74.7		(19.7)
Inventories	149.6		144.4		5.2
Accounts payable	48.8		41.7		(7.1)
Accrued and other current liabilities	8.6		11.2		2.6
Operating lease liabilities	5.9		6.5		0.6

Approximately $15.8 million of the Company’s consolidated cash and cash equivalents balance of $26.4 million at June 30, 2020 resided in the United States.

The decrease in net cash used in investing activities to $1.3 million during the six months ended June 30, 2020 from $2.6 million during the six months ended June 30, 2019 is due to a decrease in cash paid for capital expenditures, primarily purchases of warehouse equipment. In response to the COVID-19 pandemic, the Company lowered its expected capital expenditures to approximately $3.0 million to $4.0 million for the full-year 2020. Depending on the severity and duration of the pandemic, the Company will continue to assess its capital expenditures for the remainder of 2020 and may lower its expected capital expenditures further.

During the six months ended June 30, 2020, net cash provided by financing activities of $5.3 million was attributable to net proceeds from long term borrowings made by the Company, which were partially offset by net repayments of short-term borrowings under the Company's foreign line of credit in France and payments of debt restructuring costs. In the six months ended June 30, 2020, the Company entered into two new long-term debt agreements (PPP Loan and France Term Loan, discussed below), the proceeds of which were partially offset by net repayments under its revolving credit facilities.During the six months ended June 30, 2019, the net cash from financing activities of $5.7 million was primarily attributable to proceeds from borrowings under the Company's revolving credit facilities, as well as net proceeds from short-term borrowings.

Capital Resources

The Company's various credit arrangements are with well-established, global lenders. The Company does not expect the COVID-19 pandemic will have a significant impact on the ability of these lenders to continue to lend cash to the Company pursuant to the credit arrangements that the Company has with these lenders.

On ~~June 18,~~August 31, 2017, the Company entered into the Revolving Credit and Security Agreement with PNC Bank, National Association ("PNC") as lender and as administrative and collateral agent (the “Agent”), and other lenders party thereto (the "Original ABL Credit Agreement"). The Original ABL Credit Agreement provided for a $125.0 million senior secured, revolving credit facility (the "Revolving A Credit Facility"), under which the Company and four of its subsidiaries ~~filed voluntary petitions for reorganization under chapter 11 of~~each are borrowers (collectively, in such capacity, the ~~United States Bankruptcy Code (the "Bankruptcy Code") with the United States Bankruptcy Court for the District of Delaware in Wilmington, Delaware (the "Bankruptcy Court"~~“Borrowers”). The four subsidiaries in the chapter 11 cases are Keystone Tube Company, LLC, HY-Alloy Steels Company, Keystone Service, Inc. and Total Plastics, Inc. Also on June 18, 2017, the Debtors filed the Debtors' Prepackaged Joint Chapter 11 Plan of Reorganization with the Bankruptcy Court and on July 25, 2017, the Debtors filed the Debtors' Amended Prepackaged Joint Chapter 11 Plan of Reorganization (the "Plan") with the Bankruptcy Court. On August 2, 2017, the Bankruptcy Court entered an order (the "Confirmation Order") confirming the the Plan. On August 31, 2017 (the "Effective Date"), the Plan became effective pursuant to its terms and the Debtors emerged from their chapter 11 cases.

~~On the Effective Date, by operation of the Plan, among other things:~~

The Company issued an aggregate of 3,734 shares of its new common stock consisting of 1,300 shares issued to holders of Prepetition Second Lien Secured Claims (as defined by the Plan) in partial satisfaction of their claims; 300 shares issued to holders of Prepetition Third Lien Secured Claims (as defined by the Amended Plan) in partial satisfaction of their claims; 400 shares issued to participating holders of the Company's outstanding common stock as of August 2, 2017 in partial satisfaction of their interests; and 1,734 shares restricted shares, together with an aggregate original principal amount of $2.4 million of Second Lien Notes convertible into an additional 637 shares of new common stock as of the Effective Date, issued as awards under the A.M. Castle & Co. 2017 Management Incentive Plan to certain officers of the Company.

All agreements, instruments, and other documents evidencing, related to or connected with any equity interests of the Company (which include the Company's prior common stock, par value $0.01 per share, warrants to purchase such common stock, and awards under management equity plans adopted before the Effective Date) were extinguished without recovery.

All outstanding indebtedness, accrued interest, and related fees of the Debtors under that certain Credit and Guaranty Agreement, dated December 8, 2016, by and among the Company, Highbridge International Capital Management, LLC, Corre Partners Management, LLC, Whitebox Credit Partners, L.P., WFF Cayman II Limited, and SGF, LLC and Cantor Fitzgerald Securities, among others (as amended, the “Former Credit Agreement”), amounting to $49.4 million, was paid in full with the proceeds of borrowings under the New Credit Agreement and the issuance of Second Lien Notes under the Second Lien Indenture (defined below).

All outstanding indebtedness of the Debtors under the Company’s 12.75% Senior Secured Notes due 2018 and the Indenture dated February 8, 2016, by and between the Company, as issuer, its guarantors, and U.S. Bank National Association, as trustee, and all outstanding indebtedness of the Debtors under the Company’s 5.25% Convertible Senior Secured Notes due 2019 and the Indenture dated May 19, 2016, by and between the Company, as issuer, its guarantors, and U.S. Bank National Association, as trustee, was discharged and canceled in exchange for Second Lien Notes and new common stock in the Company.

~~The A.M. Castle & Co. 2017 Management Incentive Plan became effective.~~

All of the existing members of the Board were deemed to have resigned and were replaced the new Board of the Company consisting of five members, four of whom are new to the Board. A sixth member was appointed to the Board, effective immediately, on October 6, 2017.

~~Pursuant to the Plan, on the Effective Date, the Debtors entered into a New ABL Facility.~~

The obligations of the Borrowers have been guaranteed by the subsidiaries of the Company named therein as guarantors. On June 1, 2018, the Company entered into an Amendment No. 1 to ABL Credit Agreement (the “Credit Agreement Amendment No. 1”) by and among the Company, the Borrowers and guarantors party thereto and the Agent and the other lenders party thereto, which amended the Original ABL Credit Agreement to provide for additional borrowing capacity. On March 27, 2020, the Company entered into an Amendment No. 2 to the Original ABL Credit Agreement (the "Credit Agreement Amendment No. 2) by and among the Company, the Borrowers and guarantors party thereto and the Agent and other lenders party thereto, which amended the Original ABL Credit Agreement (as amended by the Credit Agreement Amendment No. 1 and Credit Agreement Amendment No. 2, the "ABL Credit Agreement") to permit the Exchange Offer (defined below) to proceed. The ~~New~~ ABL ~~Facility~~Credit Agreement provides for an additional $25.0 million last out Revolving B Credit Facility (the "Revolving B Credit Facility" and together with the Revolving A Credit Facility, the "Credit Facility") made available in part by way of a ~~$125.0 million senior secured, revolving credit facility for~~participation in the ~~Company.~~ Revolving B Credit Facility by certain of the Company’s stockholders. Borrowings under the Credit Facility will mature on February 28, 2022.

Table of Contents

Credit Agreement, (ii) provide for the Borrowers' working capital needs and reimburse drawings under letters of credit, (iii) repay the obligations under the Debtor-in-Possession Revolving Credit and Security Agreement dated as of ~~June~~July 10, 2017, by and among the Company, the lenders party thereto, and PNC, ~~Bank, National Association,~~ and certain other existing indebtedness, and (iv) provide for the Borrowers' capital expenditure needs, in accordance with the ~~New~~ ABL ~~Facility.~~Credit Agreement.

OnThe Company may prepay its obligations under the ~~Effective Date,~~ABL Credit Agreement at any time without premium or penalty, and must apply the net proceeds of material sales of collateral in prepayment of such obligations. Payments made must be applied to the Company's obligations under the Revolving A Credit Facility, if any, prior to its obligations under the Revolving B Credit Facility. In connection with an early termination or permanent reduction of the Revolving A Credit Facility prior to March 27, 2021, a 0.50% fee shall be due and, for the period from March 28, 2021 through September 27, 2021, a 0.25% fee shall be due, in each case in the amount of such commitment reduction, subject to reduction as set forth in the ABL Credit Agreement. Indebtedness for borrowings under the ABL Credit Agreement is subject to acceleration upon the occurrence of specified defaults or events of default, including (i) failure to pay principal or interest, (ii) the inaccuracy of any representation or warranty of a loan party, (iii) failure by a loan party to perform certain covenants, (iv) defaults under indebtedness owed to third parties, (v) certain liability producing events relating to ERISA, (vi) the invalidity or impairment of the Agent’s lien on its ~~entering into~~collateral or of any applicable guarantee, and certain adverse bankruptcy-related and (vii) certain adverse bankruptcy-related and other events.

Interest on indebtedness under the ~~New~~Revolving A Credit Facility accrues at a variable rate based on a grid with the highest interest rate being the applicable LIBOR-based rate plus a margin of 3.0%, as set forth in the ABL Credit Agreement. Interest on indebtedness under the Revolving B Credit Facility accrues at a rate of 12.0% per annum, which will be paid-in-kind unless the Company ~~borrowed an aggregate amount~~elects to pay such interest in cash and the Revolving B payment conditions specified in the ABL Credit Agreement are satisfied. Additionally, the Company must pay a monthly facility fee equal to ~~$78.8~~the product of (i) 0.25% per annum (or, if the average daily revolving facility usage is less than 50% of the maximum revolving advance amount of the Credit Facility, 0.375% per annum) multiplied by (ii) the amount by which the maximum advance amount of the Credit Facility exceeds such average daily Credit Facility usage for such month.

Under the ABL Credit Agreement, the maximum borrowing capacity of the Revolving A Credit Facility is based on the Company's borrowing base calculation. As of June 30, 2020, the weighted average advance rates used in the borrowing base calculation are 85.0% on eligible accounts receivable and 70.0% on eligible inventory.

The Company's ABL Credit Agreement contains certain covenants and restrictions customary to an asset-based revolving loan. Pursuant to the terms of the ABL Credit Agreement, the PPP Loan and the France Term Loan shall be excluded for all purposes from any covenant calculations.

The Company's ABL Credit Agreement contains a springing financial maintenance covenant requiring the Company to maintain a Fixed Charge Coverage Ratio of 1.0 to 1.0 in any Covenant Testing Period (as defined in the ABL Credit Agreement) when the Company's cash liquidity (as defined in the ABL Credit Agreement) is less than $12.5 million for five consecutive days. The Company was not in a Covenant Testing Period as of ~~which $49.4 million was used to pay down outstanding indebtedness, accrued interest,~~ and ~~related fees~~for the three and six months ended June 30, 2020.

Additionally, upon the occurrence and during the continuation of an event of default or upon the failure of the Company to maintain cash liquidity (as defined in the ABL Credit Agreement, inclusive of certain cash balances and the additional unrestricted borrowing capacity shown below) in excess of $12.5 million, the lender has the right to take full dominion of the Company’s cash collections and apply these proceeds to outstanding loans under the ~~Former~~ABL Credit ~~Agreement.~~

~~Pursuant~~Agreement (“Cash Dominion”). A prolonged economic downturn due to the ~~Plan,~~COVID-19 pandemic could result in the Company's cash liquidity decreasing to a level that would cause Cash Dominion to occur and/or the Company to enter into a Covenant Testing Period. The extent to which the COVID-19 pandemic will impact the Company's liquidity is currently unknown. Based on the ~~Effective Date,~~Company's current cash projections, taking into consideration the benefit of the various government-sponsored support programs such as tax deferrals, employment-related subsidies, government-backed loans and other government relief available in the U.S. and in other countries in which it operates, including the PPP Loan received in April 2020, coupled with temporary and long-term cost-cutting initiatives implemented by the Company, it does not anticipate that Cash Dominion will occur, or that it will be in a Covenant Testing Period during the next 12 months.

On April 28, 2020, the Company entered into the ~~Second Lien~~PPP Loan, which provides additional cash to be used for payroll costs, interest on mortgages, rent and utilities. The Company plans to apply for forgiveness of the PPP Loan in accordance with the terms of the PPP and the CARES Act; however, the Company cannot completely assure at this

Table of Contents

time that such loan forgiveness will occur. On June 24, 2020, the Company's French subsidiary entered into the France Term Loan, which is fully guaranteed by the French government, and provides additional capital to support the Company’s ongoing operations in France.

Considerable uncertainty exists with regards to the ultimate duration and severity of the COVID-19 pandemic as well as the full extent of the impact that the COVID-19 pandemic will have on the Company's business, operations and financial condition. However, with the benefit of the various government-sponsored support programs such as tax deferrals, employment-related subsidies, government-backed loans and other government relief available in the U.S. and in other countries in which it operates, including the PPP Loan received in April 2020 and the France Term Loan received in June 2020, coupled with the temporary and long-term cost-cutting initiatives implemented by the Company, the Company believes that its existing cash balances, together with cash generated from operations and proceeds from its various revolving credit facilities, will be sufficient to fund its normal business operations and service its debt over the next twelve months from the issuance of this report.

The Company's ability to borrow funds is dependent on its ability to maintain an adequate borrowing base. Accordingly, if the Company does not generate sufficient cash flow from operations to fund its working capital needs and planned capital expenditures, and its availability is depleted, it may need to take further actions, such as reducing or delaying capital investments, strategic investments or other actions. A prolonged economic downturn due to the COVID-19 pandemic could unfavorably impact the Company's ability to fund its working capital needs through operating cash flows, which could result in a reduction in its borrowing base. Although the extent to which the COVID-19 pandemic will impact the Company's operating cash flows and borrowing base is currently unknown, the Company anticipates it will be able to maintain an adequate borrowing base to support ongoing availability under its ABL Credit Agreement.

Additional unrestricted borrowing capacity under the Revolving A Credit Facility as of June 30, 2020 was as follows (in millions):


Maximum borrowing capacity	$	125.0
Collateral reserves	(19.7)
Letters of credit and other reserves	(2.5)

Current maximum borrowing capacity	102.8
Current borrowings	(96.4)
Additional unrestricted borrowing capacity^(a)	$	6.4
^(a) Subject to the cash dominion threshold noted above

On March 27, 2020, the Company completed the Exchange Offer to issue its the 3.00%/5.00% Convertible Notes ~~Indenture~~ and ~~pursuant thereto, issued approximately $164.9~~shares of its common stock in exchange for its 5.00%/7.00% Convertible Notes, including any accrued and unpaid interest on the 5.00%/7.00% Convertible Notes as of the date in which the Exchange Offer was completed. Pursuant to the terms of the Exchange Offer, $190.2 million in aggregate ~~original~~principal amount of the 5.00%/7.00% Convertible Notes were tendered and accepted and in exchange, the Company issued $95.1 million in aggregate principal amount of its 3.00%/5.00% Convertible Notes and 70,261 shares of its common stock. An aggregate principal amount of 5.00%/7.00% Convertible ~~Senior Secured PIK Toggle~~ Notes ~~due 2022.~~in the amount of $3.7 million were not tendered and remained outstanding at the date of Exchange Offer. As a result of the Exchange Offer, the Company reduced the aggregate principal amount of its long-term debt by $94.5 million and expects to reduce its annual interest expense by over $10.0 million.

The ~~Second Lien~~3.00%/5.00% Convertible Notes ~~are five-year senior obligations of~~were issued pursuant to an indenture (the “3.00%/5.00% Convertible Notes Indenture”), which the Company and ~~certain of its subsidiaries,~~the Guarantors (defined below) entered into with Wilmington Savings Fund Society, FSB, as trustee and collateral agent ("Indenture Agent"), on March 27, 2020. The 3.00%/5.00% Convertible Notes are, secured by a lien on all or substantially all of the assets of the Company, its domestic subsidiaries and certain of its foreign subsidiaries, which lien the Indenture Agent has agreed will be junior to the lien of the Agent under the ~~New~~ ABL ~~Facility.~~

~~Financial Reporting Under Reorganization~~

~~Refer to~~ ~~Note 2 - Bankruptcy Related Disclosures,~~ of the Company's Condensed Consolidating Financial Statements for further discussion of financial reporting implications related to the Company's Chapter 11 Cases, and emergence therefrom, including a detail of liabilities subject to compromise and reorganization items, net.

~~Presentation of Predecessor and Successor~~Credit Agreement.

The ~~Company adopted fresh-start reporting as of~~3.00%/5.00% Convertible Notes have substantially the ~~Effective Date. As a result of~~same terms that the ~~application of fresh-start reporting, the Company's financial statements for periods~~5.00%/7.00% Convertible Notes had prior to the ~~Effective Date~~completion of the Exchange Offer, except for the following primary differences: (i) the 3.00%/5.00% Convertible Notes are not ~~comparable to those for periods subsequent~~exempt from the registration requirements of the Securities Act and have the benefit of registration rights to the Effective Date. References in this report to “Successor” refer to the Company on or after the Effective Date. References to “Predecessor” refer to the Company prior to the Effective Date. Operating results for the Successor and Predecessor periods are not necessarily indicativeholders of the ~~results~~3.00%/5.00% Convertible Notes, (ii) the interest on the 3.00%/5.00% Convertible Notes accrues at the rate of 3.00% per annum if paid in cash and at the rate of 5.00% per annum if paid in kind, compared to ~~be expected for~~interest on the 5.00%/7.00% Convertible Notes, which accrues at the rate of 5.00% per annum

Table of Contents

if paid in cash and at the rate of 7.00% per annum if paid in kind, and (iii) the 3.00%/5.00% Convertible Notes have a full fiscal year. References such as the “Company,” “we,” “our” and “us” refer to A.M. Castle & Co. and its consolidated subsidiaries, whether Predecessor and/or Successor, as appropriate.

~~In the following discussion and analysis~~maturity date of the results of operations and liquidity, the Company compares certain financial information for the three and nine months ended September 30, 2017 to the three and nine months ended September 30, 2016. However, the Company believes that in certain instances, combining the financial results when discussing the Predecessor and Successor periods within the three and nine months ended September 30, 2017 is useful for management and investors to assess the Company's ongoing financial and operational performance and trends.

~~Results of Operations: Periods September 1, 2017 through September 30, 2017 and July 1, 2017 through~~ August 31, ~~2017 Compared to Three Months Ended September 30, 2016~~

The following table sets forth certain statement of operations data for the periods September 1, 2017 through September 30, 2017 and July 1, 2017 through August 31, 2017 and the three months ended September 30, 2016.

Successor Predecessor
September 1, 2017 Through September 30, 2017
July 1, 2017 Through
August 31, 2017

Three Months Ended
September 30, 2016
Favorable/(Unfavorable)
(Dollar amounts in millions) $ % of Net Sales $ % of Net Sales $ % of Net Sales Three Month $ Change Three Month % Change

Net sales $ 41.7
100.0 % $ 81.5
100.0 % $ 124.9
100.0 % $ (1.7 ) (1.4 )%
Cost of materials (exclusive of depreciation and amortization) 31.5
75.5 % 63.4
77.8 % 92.4
74.0 % (2.5 ) (2.7 )%
Operating costs and expenses^(a)
11.3
27.1 % 25.1
30.8 % 41.1
32.9 % 4.7
11.4 %
Operating loss $ (1.1 ) (2.6 )% $ (7.0 ) (8.6 )% $ (8.6 ) (6.9 )% $ 0.5
5.8 %

^(a) ~~Operating costs and expenses include restructuring expenses of $0.4 million for the period July 1, 2017 through August 31, 2017 and $0.9 million for the three months ended September 30, 2016.~~

~~Net Sales~~

~~Net sales of $41.7 million in the period September 1, 2017 through September 30, 2017 and $81.5 million in the period July 1, 2017 through August 31, 2017 were a decrease of $1.7 million, or 1.4%,~~2024, compared to the ~~three months ended September 30, 2016. Although~~5.00%/7.00% Convertible Notes, which have a maturity date of August 31, 2022.

In conjunction with the Exchange Offer, on March 27, 2020, the Company, ~~experienced~~the guarantors of the 5.00%/7.00% Convertible Notes and the trustee for the 5.00%/7.00% Convertible Notes entered into a ~~7.3% increase in tons sold per day to customers compared~~supplemental indenture to the ~~same period in~~indenture governing the prior year, with the largest sales volume increases in alloy bar and SBQ bar, the favorable impact of the increase in sales volumes was more than offset by and overall decrease in average selling prices and an overall unfavorable change in product mix.

Average selling prices overall decreased 6.6% in the three months ended September 30, 2017 compared to the three months ended September 30, 2016, driven mainly by decreases in the price per ton sold of aluminum and a slight decrease in the price per ton of stainless. The average price per ton sold of all other product categories increased compared to the prior year quarter.

~~Cost of Materials~~

Cost of materials (exclusive of depreciation and amortization) were $31.5 million in the period September 1, 2017 through September 30, 2017 and $63.4 million in the period July 1, 2017 through August 31, 2017 compared to $92.4 million in the three months ended September 30, 2016. The $2.5 million, or 2.7%, decrease between the three month periods is largely due to the slight decrease in sales volumes in the three months ended September 30, 2017.

Cost of materials (exclusive of depreciation and amortization) was 77.0% of net sales in the three months ended September 30, 2017 compared to 74.0% of net sales in the three months ended September 30, 2016.

~~Operating Costs and Expenses and Operating Loss~~

~~Operating costs and expenses for the periods September 1, 2017 through September 30, 2017 and July 1, 2017 through August 31, 2017 and the three months ended September 30, 2016 were as follows:~~

Successor Predecessor Favorable/(Unfavorable)
September 1, 2017 Through September 30, 2017 July 1, 2017
Through
August 31, 2017 Three Months
Ended
September 30, 2016 Three Month $ Change Three Month % Change
(Dollar amounts in millions)

Warehouse, processing and delivery expense $ 6.0
$ 12.3
$ 19.6
$ 1.3
6.6 %
Sales, general and administrative expense 4.8
10.0
16.8
2.0
11.9 %
Restructuring expense —
0.4
0.9
0.5
55.6 %
Depreciation and amortization expense 0.5
2.4
3.8
0.9
23.7 %
Total operating costs and expenses $ 11.3
$ 25.1
$ 41.1
$ 4.7
11.4 %

Operating costs and expenses decreased by $4.7 million from $41.1 million in the three months ended September 30, 2016 to $11.3 million in the period September 1, 2017 through September 30, 2017 and $25.1 million in the period July 1, 2017 through August 31, 2017.

~~Warehouse, processing and delivery expense decreased by $1.3 million mainly as a result of lower payroll and benefits costs and lower facility costs offset by higher freight costs;~~

Sales, general and administrative expense decreased by $2.0 million mainly as a result of lower payroll and benefits costs due to lower company-wide employee headcount, bad debt expense and outside consulting services;

Depreciation and amortization expense decreased by $0.9 million due to lower depreciation expense in the period September 1, 2017 through September 30, 2017 from a lower depreciable base of property, plant and equipment as a result of fresh-start accounting and no amortization of intangible assets.

Operating loss in the period September 1, 2017 through September 30, 2017 was $1.1 million and $7.0 million, including $0.4 million of restructuring expense, in the period July 1, 2017 through August 31, 2017 compared to operating loss of $8.6 million, including $0.9 million of restructuring expense, in the three months ended September 30, 2016.

~~Other Income and Expense, Income Taxes and Net Loss~~

Interest expense was $1.4 million in the period September 1, 2017 through September 30, 2017 and $2.6 million in the period July 1, 2017 through August 31, 2017, compared to $8.7 million in the three months ended September 30, 2016. Effective on the bankruptcy Petition Date, the Company discontinued recording interest expense on outstanding prepetition debt classified as LTSC. As a result, interest expense for the period July 1, 2017 through the Effective Date, August 31, 2017, excludes approximately $4.1 million of contractual interest expense associated with the 12.75% Senior Secured Notes due December 15, 2018 and 5.25%5.00%/7.00% Convertible Notes due December 30, 2019. Following the Plan from becoming effective on August 31, 2017, the Company has significantly reduced its debt and contractual interest burden from what it had been in the prepetition periods.

Financial restructuring expense of $0.4 million in the period July 1, 2017 through August 31, 2017 was mostly comprised of legal and other professional fees incurred prior to filing the chapter 11 bankruptcy petitions in connection with the financial restructuring of the debt and equity of the Company.

~~Unrealized gain on the embedded conversion option associated with the 5.25%~~(the “5.00%/7.00% Convertible Notes ~~due December 30, 2019 was $6.3 million in~~Indenture”) to provide for, among other things, the three months ended September 30, 2016. Because of the chapter 11 bankruptcy proceedings, the fair value of the derivative liability for the embedded conversion feature of the 5.25% Convertible Notes due December 30, 2019 was estimated to be $0 as of the Petition Date, and the carrying value of the embedded conversion feature was written off to reorganization items, net in the second quarter of 2017. Therefore, there was no unrealized gainelimination or loss on the embedded conversion option in the period July 1, 2017 through August 31, 2017 There was no unrealized gain or loss on the embedded conversion option associated with the Second Lien Notes for the period September 1, 2017 through September 30, 2017 as there was no change in the fair value of the conversion option between September 30, 2017 and the Effective Date.

Other (income) expense, net, comprised mostly of foreign currency transaction gains or losses, was a gain of $2.1 million in the period September 1, 2017 through September 30, 2017 and a gain of $0.8 million in the period July 1, 2017 through August 31, 2017, compared to $6.3 million loss in the three months ended September 30, 2016. These gains or losses are primarily related to unhedged intercompany financing arrangements.

Reorganization items, net in the period July 1, 2017 through August 31, 2017 was a gain of $80.0 million and relates to expenses and income directly associated with the chapter 11 proceedings and incurred during the pendency of the Company's Chapter 11 Cases. The balance in the period July 1, 2017 through August 31, 2017 is comprised of a gain on extinguishment of debt of $90.0 million and a gain on fresh-start revaluation of $16.6 million. Offsetting these gains are $5.4 million related to the write-off of unamortized debt issuance costs and discounts related to the 12.75% Senior Secured Notes due 2018 and the 5.25% Convertible Notes due 2019, prepayment penalties and debt related fees of $13.2 million, professional fees of $6.7 million and key employee incentive plan expense of $1.2 million. (Refer to ~~Note 2 - Bankruptcy Relates Disclosuresto the Condensed Consolidated Financial Statements~~.)

The Company recorded income tax expense of $0.3 million in the Successor period September 1, 2017 through September 30, 2017 and income tax benefit of $1.4 million in the Predecessor period July 1, 2017 through August 31, 2017. Income tax expense was $0.9 million in the three months ended September 30, 2016. The Company’s effective tax rate is expressed as income tax expense, which includes income tax expense (benefit) on the Company’s share of joint venture losses in the three months ended September 30, 2016, as a percentage of loss from continuing operations beforeincome taxes and equity in losses of joint venture. The effective tax rate for the periods September 1, 2017 through September 30, 2017 and July 1, 2017 through August 31, 2017 was (53.5)% and (1.97)%, respectively. The effective tax rate for the three months ended September 30, 2016 was (5.2)%. The change in the effective tax rate between periods resulted from changes in the geographic mix and timing of income (losses), the inability to benefit from current year losses due to valuation allowance positions in the U.S., and the impact of intraperiod allocations.

In August 2016, the Company completed the sale of its interest in its joint venture for aggregate cash proceeds of $31.6 million. Equity in losses of joint venture in the three months ended September 30, 2016 was less than $0.1 million (refer to ~~Note 6 - Joint Venture~~ ~~to the Condensed Consolidated Financial Statements).~~

Loss from continuing operations was $0.8 million in the period September 1, 2017 through September 30, 2017. The Company had income from continuing operations of $72.2 million in the period July 1, 2017 through August 31, 2017 due mainly to the gain from reorganization items, net, of $80.0 million in that period. Loss from continuing operations was $18.3 million for the three months ended September 30, 2016. Loss from discontinued operations, net of income taxes, was $1.7 million for the three months ended September 30, 2016, which resulted from the settlement of the final working capital adjustment related to the saleamendment of substantially all ~~the assets~~ of the ~~Company's wholly owned subsidiary, Total Plastic, Inc. ("TPI").~~

~~Net loss was $0.8 million in~~restrictive covenants, the period September 1, 2017 through September 30, 2017. Net income of $72.2 million in the period July 1, 2017 through August 31, 2017 includes the gain from reorganization items, net, of $80.0 million. Net loss in the three months ended September 30, 2016, which includes loss from discontinued operations, net of income taxes of $1.7 million, was $20.0 million.

~~Results of Operations: Periods September 1, 2017 through September 30, 2017 and January 1, 2017 through August 31, 2017 Compared to Nine Months Ended September 30, 2016~~

The following table sets forth certain statement of operations data for the periods September 1, 2017 through September 30, 2017 and January 1, 2017 through August 31, 2017 and for the nine months ended September 30, 2016. Included in the operating results below for the nine months ended September 30, 2016 is the salerelease of all ~~inventory and subsequent closure of the Company's Houston and Edmonton facilities which occurred in the first quarter of 2016.~~

Successor Predecessor
September 1, 2017 Through September 30, 2017
January 1, 2017 Through
August 31, 2017

Nine Months Ended
September 30, 2016
Favorable/(Unfavorable)
(Dollar amounts in millions)
$ % of Net Sales $ % of Net Sales $ % of Net Sales Nine Month $ Change Nine Month % Change
Net sales $ 41.7
100.0 % $ 353.9
100.0 % $ 419.4
100.0 % $ (23.8 ) (5.7 )%
Cost of materials (exclusive of depreciation and amortization)^(a)
31.5
75.5 % 266.5
75.3 % 323.8
77.2 % 25.8
8.0 %
Operating costs and expenses^(b)
11.3
27.1 % 100.2
28.3 % 142.4
34.0 % 30.9
21.7 %
Operating loss $ (1.1 ) (2.6 )% $ (12.8 ) (3.6 )% $ (46.8 ) (11.2 )% $ 32.9
70.3 %

^(a) ~~Cost of materials includes $0.5 million of inventory scrapping expenses associated with restructuring activity for the nine months ended September 30, 2016.~~

^(b) Operating costs and expenses include $0.6 million of restructuring expenses for the period January 1, 2017 through August 31, 2017 and $14.7 million of restructuring expenses for the nine months ended September 30, 2016.

~~Net Sales~~

Net sales of $41.7 million for the period September 1, 2017 through September 30, 2017 and $353.9 million for the period January 1, 2017 through August 31, 2017 were a decrease of $23.8 million, or 5.7%, compared to the same period last year. Net sales for the nine months ended September 30, 2016 included the Company's $27.1 million sale of all its inventory at its Houston and Edmonton facilities to an unrelated third party. The sale of this inventory, which was sold at a zero gross margin (calculated as net sales, less cost of materials), was the result of a strategic decision to lower the Company's exposure to oil and gas market fluctuations. Including that sale of inventory, net sales for the nine months ended September 30, 2016 from the Houston and Edmonton locations, which were closed in February 2016, were $33.0 million. Despite the closure of these two locations, the Company posted an 8.1% increase in tons sold per day to customers compared to the nine months ended September 30, 2016. Excluding the tons sold from the Houston and Edmonton locations in the nine months ended September 30, 2016, tons sold per day increased 9.6%. Products with the most notable improvements in sales volumes were alloy bar and carbon and alloy plate. Offsetting the positive impact of the increase in sales volumes was an overall 5.4% decrease in average selling prices.

Average selling prices for many of the Company's products continue to trend up and were higher in the nine months ended September 30, 2017 compared to the same period last year, but decreases in average selling prices of aluminum and a slight decrease in the average selling price of stainless resulted in the overall 5.4% decrease in average selling prices.

~~Cost of Materials~~

Cost of materials (exclusive of depreciation and amortization) were $31.5 million in the period September 1, 2017 through September 30, 2017 and $266.5 million in the period January 1, 2017 through August 31, 2017 compared to $323.8 million during the nine months ended September 30, 2016. The $25.8 million, or 8.0%, decrease between the nine month periods is mainly due to the $27.1 million of cost of materials recognized on the sale of all inventory at the Company's Houston and Edmonton facilities in the nine months ended September 30, 2016, as discussed above.

Cost of materials (exclusive of depreciation and amortization) was 75.3% as a percent of net sales in the nine months ended September 30, 2017, compared to 77.2% as a percent of net sales for the comparative prior year period. While the percentage for the nine months ended September 30, 2016 was impacted by the $27.1 million sale of the inventory at the Houston and Edmonton locations, the decrease in the percentage also reflects improved inventory management and better matching of sales prices with inventory replacement cost.

~~Operating Costs and Expenses and Operating Loss~~

~~Operating costs and expenses for the nine months ended September 30, 2017 and 2016 were as follows:~~

Successor Predecessor Favorable/(Unfavorable)
September 1, 2017 Through September 30, 2017 January 1, 2017
Through
August 31, 2017 Nine Months
Ended
September 30, 2016 Three Month $ Change Three Month % Change
(Dollar amounts in millions)

Warehouse, processing and delivery expense $ 6.0
$ 50.2
$ 63.7
$ 7.5
11.8 %
Sales, general and administrative expense 4.8
39.2
51.5
7.5
14.6 %
Restructuring expense —
0.6
14.7
14.1
95.9 %
Depreciation and amortization expense 0.5
10.2
12.5
1.8
14.4 %
Total operating costs and expenses $ 11.3
$ 100.2
$ 142.4
$ 30.9
21.7 %

~~Operating costs and expenses decreased by $30.9 million from $142.4 million during the nine months ended September 30, 2016~~to~~$11.3 million in the period September 1, 2017 through September 30, 2017 and $100.2 million in the period January 1, 2017 through August 31, 2017.~~

Warehouse, processing and delivery expense decreased by $7.5 million primarily as a result of lower payroll, benefit, and facility costs resulting from plant consolidations and the closure of the Houston and Edmonton facilities in the first quarter of 2016;

~~Sales, general and administrative expense decreased by $7.5 million mainly as a result of lower payroll, benefit, and outside services costs;~~

Restructuring expense was $0.6 million in the period January 1, 2017 through August 31, 2017, while restructuring expense was $14.7 million in the nine months ended September 30, 2016, which consisted mainly of lease termination charges associated with the closure of the Company's Houston and Edmonton facilities, as well as moving expenses associated with plant consolidations related to the April 2015 restructuring plan; and

Depreciation and amortization expense decreased by $1.8 million due to lower depreciation expense resulting from plant consolidations and closures and equipment sales occurring in the first quarter of 2016, as well as lower depreciation expense in the period September 1, 2017 through September 30, 2017 from a lower depreciable base of property, plant and equipment as a result of fresh-start accounting and no amortization of intangible assets.

Operating loss in the period September 1, 2017 through September 30, 2017 was $1.1 million and $12.8 million, including $0.6 million of restructuring expense, in the period January 1, 2017 through August 31, 2017 compared to an operating loss of $46.8 million, including restructuring charges of $14.7 million, in the nine months ended September 30, 2016.

~~Other Income and Expense, Income Taxes and Net Loss~~

Interest expense was $1.4 million in the period September 1, 2017 through September 30, 2017 and $23.4 million in the period January 1, 2017 through August 31, 2017 compared to $28.7 million in the nine months ended September 30, 2016. Effective on the bankruptcy Petition Date, the Company discontinued recording interest expense on outstanding prepetition debt classified as LTSC. As a result, interest expense for the period January 1, 2017 through the Effective Date, August 31, 2017, excludes approximately $4.9 million of contractual interest expense associated with the 12.75% Senior Secured Notes due December 15, 2018 and 5.25% Convertible Notes due December 30, 2019. Following the Plan becoming effective on August 31, 2017, the Company has significantly reduced its debt and contractual interest burden from what it had been in the comparable prepetition periods.

Financial restructuring expense of $7.0 million in the January 1, 2017 through August 31, 2017 was comprised of legal and other professional fees incurred prior to filing the chapter 11 bankruptcy petitions in connection with the financial restructuring of the debt and equity of the Company.

Unrealized loss on the embedded conversion option associated with the 5.25% Convertible Notes due December 30, 2019 was an unrealized loss of $0.1 million in the period January 1, 2017 through August 31, 2017 and a gain of $7.6 million in the nine months ended September 30, 2016. Because of the chapter 11 bankruptcy proceedings, the fair

value of the derivative liability for the embedded conversion feature of the 5.25% Convertible Notes due December 30, 2019 was estimated to be $0 as of the Petition Date, and the carrying value of the embedded conversion feature was written off to reorganization items, net in the second quarter of 2017. There was no unrealized gain or loss on the embedded conversion option associated with the Second Lien Notes for the period September 1, 2017 through September 30, 2017 as there was no change in the fair value of the conversion option between September 30, 2017 and the Effective Date.

~~The debt restructuring loss of $6.6 million in the nine months ended September 30, 2016 reflects $7.1 million of eligible holder consent fees and related legal and other direct costs~~ ~~incurred in conjunction with the private exchange offer and consent solicitation to certain eligible holders to exchange~~ 12.75% Senior Secured Notes due 2018 for the Company’s 12.75% Senior Secured Notes due 2016. Those charges were partly offset by a $0.5 million gain that resulted from the exchange of the Company's 7.0% Convertible Notes due 2017 for 5.25% Convertible Notes due 2019, and the subsequent conversion of a portion of the 5.25% Convertible Notes due 2019 to equity.

Other (income) expense, net, comprised mostly of foreign currency transaction gains or losses, was gain of $2.1 million in the period September 1, 2017 through September 30, 2017 and a gain of $3.6 million in the period January 1, 2017 through August 31, 2017 compared to a $4.6 million loss for the same period in the prior year. These gains and losses are primarily related to unhedged intercompany financing arrangements.

Reorganization items, net for the period January 1, 2017 through August 31, 2017 was a gain of $74.5 million and relates to expenses and income directly associated with the chapter 11 proceedings and incurred during the pendency of the Company's Chapter 11 Cases. The balance for the period January 1, 2017 through August 31, 2017 is comprised of a gain on extinguishment of debt of $90.0 million and a gain on fresh-start revaluation of $16.6 million. Offsetting these gains are $10.3 million related to the write-off of debt issuance costs and discounts related to the 12.75% Senior Secured Notes due 2018 and the 5.25% Convertible Notes due 2019, prepayment penalties and debt related fees of $13.2 million, professional fees of $7.3 million and key employee incentive plan expense of $1.2 million. (Refer to ~~Note 2 - Bankruptcy Relates Disclosuresto the Condensed Consolidated Financial Statements~~.)

The Company recorded income tax expense of $0.3 million in the Successor period September 1, 2017 through September 30, 2017 and income tax benefit of $1.39 million in the Predecessor period January 1, 2017 through August 31, 2017. Income tax expense was $1.1 million in the nine months ended September 30, 2016. The Company’s effective tax rate is expressed as income tax expense, which includes tax expense (benefit) on the Company’s share of joint venture losses in the nine months ended September 30, 2016, as a percentage of loss from continuing operations beforeincome taxes and equity in losses of joint venture. The effective tax rate for the period September 1, 2017 through September 30, 2017 and January 1, 2017 through August 31, 2017 was (53.5)% and (4.0)%, respectively, and (1.4)% for the nine months ended September 30, 2017. The change in the effective tax rate between periods resulted from changes in the geographic mix and timing of income (losses), the inability to benefit from current year losses due to valuation allowance positions in the U.S., and the impact of intraperiod allocations.

Equity in losses of joint venture was $4.2 million in the nine months ended September 30, 2016. Included in the equity in losses of joint venture was an impairment charge of $4.6 million related to the write-down of the Company's investment in joint venture to fair value. In August 2016, the Company completed the sale of its joint venture for aggregate cash proceeds of $31.6 million.

Loss from continuing operations was $0.8 million in the period September 1, 2017 through September 30, 2017. Income from continuing operations of $36.2 million in the period January 1, 2017 through August 31, 2017 includes the gain of $74.5 million for reorganization items, net. Loss from continuing operations was $84.4 million in the nine months ended September 30, 2016. Income from discontinued operations, net of income taxes, was $6.2 million for the nine months ended September 30, 2016, which includes an after-tax gain on the sale of TPI of $1.3 million and an income tax benefit of $4.2 million from the reversal of an income tax valuation allowance.

Net loss was $0.8 million in the period September 1, 2017 through September 30, 2017. Net income was $36.2 million in the period January 1, 2017 through August 31, 2017, which includes includes the gain of $74.5 million for reorganization items, net. Net loss was $78.1 million for nine months ended September 30, 2016, which includes income from discontinued operations, net of income taxes, of $6.2 million.

~~Liquidity and Capital Resources~~

~~Cash and cash equivalents increased (decreased) as follows:~~

Successor Predecessor
September 1, 2017 Through September 30, 2017
January 1, 2017
Through
August 31, 2017

Nine Months
Ended
September 30, 2016
(Dollar amounts in millions)

Net cash used in operating activities $ (6.6 ) $ (50.3 ) $ (17.6 )
Net cash (used in) from investing activities (0.9 ) 5.3
85.5
Net cash from (used in) financing activities 8.4
18.6
(68.7 )
Effect of exchange rate changes on cash and cash equivalents 0.1
0.9
(0.3 )
Net change in cash and cash equivalents $ 1.1
$ (25.6 ) $ (1.1 )

The Company’s principal sources of liquidity currently are cash provided by operations and borrowings under the New ABL Facility that was entered into on the Effective Date. The New ABL Facility provides for a $125.0 million senior secured, revolving credit facility for the Company. On the Effective Date, in connection with its entering into the New ABL Facility, the Company borrowed an aggregate amount equal to $78.8 million, of which $49.4 million was used to pay down outstanding indebtedness, accrued interest, and related fees of the Company under the former Credit Facilities Agreement.

~~Specific components of the change in working capital (defined as current assets less current liabilities), are highlighted below:~~

Higher accounts receivable at both September 30, 2017 (Successor) and August 31, 2017 (Predecessor) compared to year-end 2016 (Predecessor) resulted in $3.7 million and $6.1 million of cash flow use, respectively, compared to $5.1 million of cash flow use for the same period last year. Average receivable days outstanding was 52.2 days for the nine months ended September 30, 2017 compared to 53.8 days for the nine months ended September 30, 2016.

Higher inventory levels at both September 30, 2017 (Successor) and August 31, 2017 (Predecessor) compared to year-end 2016 (Predecessor) used $0.8 million and $2.7 million of cash, respectively, while lower inventory levels at September 30, 2016 compared to year-end 2015 were a $34.8 million cash flow source for the nine months ended September 30, 2016. The majority of the cash flow source from inventory in the nine months ended September 30, 2016 was the result of the Houston and Edmonton inventory sale discussed above. Average days sales in inventory was 140.1 days for the nine months ended September 30, 2017 compared to 172.7 days for the nine months ended September 30, 2016, which resulted primarily from improved inventory management.

Increases in accounts payable and accrued and other current liabilities were a $0.8 million and $2.6 million cash flow source, respectively, compared to a $14.6 million cash flow source for the same period last year. Accounts payable days outstanding was 40.7 days for the nine months ended September 30, 2017 compared to 44.5 days for the same period last year.

~~Working capital and the balances of its significant components are as follows:~~

Successor Predecessor
(Dollar amounts in millions)

September 30,
2017 December 31,
2016 Working Capital Increase (Decrease)
Working capital $ 193.4
$ 203.9
$ (10.5 )
Cash and cash equivalents 11.1
35.6
(24.5 )
Accounts receivable 76.8
64.4
12.4
Inventories 154.3
146.6
7.7
Accounts payable 47.2
33.1
(14.1 )
Accrued and other current liabilities 14.6
19.9
5.3

~~Approximately $4.8 million of the Company’s consolidated cash and cash equivalents balance of $11.1 million at September 30, 2017 resided in the United States.~~

Net cash used in investing activities of $0.9 million during the period September 1, 2017 through September 30, 2017 is mostly attributable to cash paid for capital expenditures. Net cash from investing activities of $5.3 million in the period January 1, 2017 through August 31, 2017 is attributable mainly due to $7.5 million reduction in the cash collateralization requirements of outstanding letters of credit offset by cash paid for capital expenditures of $2.9 million in the period. Management expects capital expenditures to range from $6.0 million to $7.0 million for the full-year 2017. Net cash from investing activities of $85.5 million during the same period last year is mostly attributable to cash proceeds from the sale of TPI and the sale of the Company's 50% ownership in its joint venture. Cash paid for capital expenditures for the nine months ended September 30, 2016 was $2.4 million.

During the period January 1, 2017 through August 31, 2017, net cash from financing activities of $18.6 million was mainly attributable to proceeds and repayments of debt in connection with the Company's bankruptcy proceedings and included the initial borrowings and subsequent repayment of the DIP facility, borrowings under the New ABL Facility, cash proceeds from the issuance of the Second Lien Notes and repayment of the prepetition First Lien Notes, as well as proceeds from short-term borrowings under the Company's foreign line of credit. Offsetting these net cash proceeds were a payment of $3.0 million made in connection with the Company's build-to-suit liability associated with its warehouse in Janesville, WI. During the nine months ended September 30, 2016, all available proceeds from the sale of TPI were used to pay down the Company's long-term debt, which along with the $8.7 million payment of debt restructuring costs, resulted in net cash used in financing activities of $68.7 million.

In December 2016, the Company entered into the Credit Facilities with certain financial institutions (the "Financial Institutions") in order to replace and repay outstanding borrowings and support the continuance of letters of credit under the Company's senior secured asset-based revolving credit facility. The Credit Facilities were in the form of senior secured first lien term loan facilities in an aggregate principal amount of $112.0 million. The Credit Facilities consisted of a $75.0 million initial term loan facility funded at closing and a $37.0 million Delayed Draw Facility. Under the Delayed Draw Facility, $24.5 million was drawn in December 2016 and $12.5 million was expected to be available in June 2017 or thereafter. On May 4, 2017, the Company entered into an amendment to the Credit Facilities Agreement, whereby the Financial Institutions agreed to accelerate the Company's access to the Delayed Draw Facility that was expected to be available in June 2017 or thereafter. The $12.5 million was drawn by the Company in May 2017 to finance additional investments in inventory and to service customers' needs.

~~The filing of the bankruptcy petitions constituted a default or event of default that accelerated~~collateral securing the Company’s obligations under ~~(i)~~ the ~~Credit Facilities Agreement, (ii) the Senior Notes Indenture and the 12.75% Secured Notes issued pursuant thereto, and (iii) the~~5.00%/7.00% Convertible Notes Indenture, and the ~~5.25% Convertible Notes issued pursuant thereto. The Credit Facilities Agreement, the Senior Notes Indenture, and the Convertible Notes Indenture provide that, as a result~~modification of certain of the filing of the bankruptcy petitions, all outstanding indebtedness due thereunder shall be immediately due and payable. Any efforts to enforce such payment obligations under the Credit Facilities Agreement, the Senior Notes Indenture, and the Convertible Notes Indenture were automatically stayed as a result of the bankruptcy petitions, and the creditors’ rights of enforcement in respect of the Credit Facilities Agreement, the Senior Notes Indenture, and the Convertible Notes Indenture are subject to the applicable provisions of the Restructuring Support Agreement and the Bankruptcy Code.

~~As fully discussed at~~ ~~Note 2 - Bankruptcy Related Disclosures~~, to the Condensed Consolidated Financial Statements, on the August 31, 2017 Effective Date, the Company's bankruptcy Plan became effective pursuant to its terms and the Debtors emerged from their chapter 11 cases. By operation of the Plan, all outstanding indebtedness, accrued interest, and related fees of the Debtors under the Credit Facilities, amounting to $49.4 million, was paid in full with the proceeds of borrowings under the New ABL Facility and the issuance of Second Lien Notes under the Second Lien Indenture. Also, on the Effective Date and by operation of the Plan, all outstanding indebtedness of the Debtors under (i) the Company's Senior Notes Indenture and the 12.75% Secured Notes issued pursuant thereto, and (ii) the Company's Convertible Notes Indenture and the 5.25% Convertible Notes issues pursuant thereto, were discharged and canceled.

The New ABL Facility provides for a $125.0 million senior secured, revolving credit facility for the Company. Subject to certain exceptions and permitted encumbrances, the obligations under the New ABL Facility are secured by a first priority security interest in substantially all of the assets of each of the Borrowers and certain of their foreign subsidiaries. The proceeds of the advances under the New ABL Facility may only be used to (i) pay certain fees and expenses to the Agent and the lenders under the New ABL Facility, (ii) provide for Borrowers' working capital needs and reimburse drawings under letters of credit, (iii) repay the obligations under the Debtor-in-Possession Revolving Credit and Security Agreement dated as of June 10, 2017, by and among the Company, the lenders party thereto, and PNC Bank, National Association, and certain other existing indebtedness, and (iv) provide for the Borrowers' capital expenditure needs, in accordance with the New ABL Facility.

The Company may prepay its obligations under the New ABL Facility at any time without premium or penalty, and must apply the net proceeds of material sales of collateral in prepayment of such obligations. Interest on indebtedness accrues based on the applicable Prime or LIBOR-based rate plus a margin, as set forth in the New ABL Facility. Additionally, the Company must pay a monthly Facility Fee equal to the product of (i) 0.25% per annum (or, if the average daily revolving facility usage is less than 50% of the maximum revolving advance amount, 0.375% per annum) multiplied by (ii) the amount by which the maximum revolving advance amount exceeds such average daily revolving facility usage for such month.

Under the New ABL Facility, the maximum borrowing capacity of the facility is based on the Company's borrowing base calculation. The weighted average advance rates used in the borrowing base calculation are 87.3% on eligible accounts receivable and 69.2% on eligible inventory.

The Company's New ABL Facility contains certain covenants and restrictions customary to an asset-based revolving loan. Indebtedness for borrowings under the New ABL Facility is subject to acceleration upon the occurrence of specified defaults or events of default including failure to pay principal or interest, the inaccuracy of any representation or warranty of a loan party, failure by a loan party to perform certain covenants, defaults under indebtedness owed to third parties, certain liability producing events relating to ERISA, the invalidity or impairment of the Agent’s lien on its collateral or of any applicable guarantee, and ~~certain adverse bankruptcy-related and~~various other ~~events.~~

The Company's New ABL Facility contains a springing financial maintenance covenant requiring the Company to maintain a Fixed Charge Coverage Ratio of 1.0 to 1.0 in any covenant testing period when the Company's cash liquidity (as definedprovisions contained in the ~~New ABL Facility Agreement) is less than the greater of i) 10% of the New ABL Facility's maximum borrowing~~5.00%/7.00% Convertible Notes Indenture.

Also on March 27, 2020, PNC (in its capacity ~~(as defined in the New ABL Facility Agreement) and ii) $9.0 million. The Company is not in a covenant testing period~~ as ~~of September 30, 2017.~~

Additionally, upon the occurrence and during the continuation of an event of default or upon the failure of the Company to maintain cash liquidity (as defined in the New ABL Facility Facilities Agreement) in excess of the greater of $10.0 million or 12.5% of the New ABL Facility's maximum borrowing capacity (as defined in the New ABL Facility Facilities Agreement)“First Lien Agent”), the ~~lender has~~trustee for the ~~right to take full dominion of the Company’s cash collections~~5.00%/7.00% Convertible Notes and apply these proceeds to outstanding loans under the New ABL Facility Facilities Agreement (“Cash Dominion”). Based on the Company's cash projections, it does not anticipate that Cash Dominion will occur during the next 12 months.

~~Additional unrestricted borrowing capacity under the New ABL Facility at September 30, 2017 was as follows (in millions):~~

Maximum borrowing capacity $ 125.0
Letters of credit and other reserves (1.7 )
Availability reserve (5.0 )
Current maximum borrowing capacity 118.3
Current borrowings (87.3 )
Additional unrestricted borrowing capacity $ 31.0

~~The New ABL Facility matures on February 28, 2022.~~

~~The Second Lien Notes are five-year senior obligations of~~ the Company and certain of its subsidiaries ~~secured~~executed an intercreditor agreement (the “New Intercreditor Agreement”) providing for the lien priority of the first lien facility over the 3.00%/5.00% Convertible Notes. The terms and conditions of the New Intercreditor Agreement are substantially consistent with those applicable to the intercreditor agreement between the First Lien Agent and the trustee for the 5.00%/7.00% Convertible Notes prior to the completion of the Exchange Offer (the “5.00%/7.00% Convertible Notes Intercreditor Agreement”). PNC and the trustee for the 5.00%/7.00% Convertible Notes also entered into an amendment of the 5.00%/7.00% Convertible Notes Intercreditor Agreement to, among other things, remove certain limitations and rights of the 5.00%/7.00% Convertible Notes with respect to the first lien facility.

The 3.00%/5.00% Convertible Notes are convertible into shares of the Company’s common stock at any time at the initial conversion price of $0.46 per share, which rate is subject to adjustment as set forth in the 3.00%/5.00% Convertible Notes Indenture. Under the 3.00%/5.00% Convertible Notes Indenture, upon the conversion of the 3.00%/5.00% Convertible Notes in connection with a Fundamental Change (as defined in the 3.00%/5.00% Convertible Notes Indenture), for each $1.00 principal amount of the 3.00%/5.00% Convertible Notes, that number of shares of the Company’s common stock issuable upon conversion shall equal the greater of (a) $1.00 divided by the then applicable conversion price or (b) $1.00 divided by the price paid per share of the Company's common stock in connection with such Fundamental Change calculated in accordance with the 3.00%/5.00% Convertible Notes Indenture, subject to other provisions of the 3.00%/5.00% Convertible Notes Indenture. Subject to certain exceptions, under the 3.00%/5.00% Convertible Notes Indenture a “Fundamental Change” includes, but is not limited to, the following: (i) the acquisition of more than 50% of the voting power of the Company’s common equity by a ~~lien on all~~“person” or ~~substantially all~~“group” within the meaning of Section 13(d) of the ~~assets~~Securities Exchange Act of 1934, as amended; (ii) the consummation of any recapitalization, reclassification, share exchange, consolidation or merger of the Company ~~its domestic subsidiaries and certain of its foreign subsidiaries,~~pursuant to which ~~lien~~ the ~~Indenture Agent has agreed~~Company’s common stock will be ~~junior~~converted into cash, securities or other property; (iii) the “Continuing Directors” (as defined in the 3.00%/5.00% Convertible Notes Indenture) cease to ~~the lien~~constitute at least a majority of the ~~Agent under~~board of directors; and (iv) the ~~New ABL Facility.~~approval of any plan or proposal for the liquidation or dissolution of the Company by the Company’s stockholders.

Upon conversion of the ~~settlement of~~3.00%/5.00% Convertible Notes and/or the ~~conversion right will be calculated as provided in the Second Lien~~5.00%/7.00% Convertible Notes, ~~Indenture, using a 20 trading day observation period. Upon conversion,~~ the Company will pay and/or deliver, as the case may be, cash, shares of the Company’s common stock or a combination of cash and shares of the Company’s common stock, at the Company’s election, together with cash in lieu of fractional shares. The value of shares of the Company’s common stock for purposes of the settlement of the conversion right, if the Company elects to settle in cash, will be calculated as provided in the 3.00%/5.00% Convertible Notes Indenture or Supplemental Indenture, as applicable, using a 20 trading day observation period.

As discussed previously, the 3.00%/5.00% Convertible Notes are convertible into common stock at the option of the holder. The Company determined that the conversion option is not clearly and closely related to the economic characteristics of the 3.00%/5.00% Convertible Notes, nor does the conversion option meet the own equity scope exception as the Company does not currently have sufficient authorized and unissued common stock shares to satisfy the maximum number of common stock shares that could be required to be issued upon conversion. The initial value allocated to the derivative liability was $38,962, with a corresponding reduction in the carrying value of the 3.00%/5.00% Convertible Notes.

Table of Contents

As a result of the Company's filing articles of amendment to increase the number of shares of common stock authorized, the number of the Company's common stock shares available for issuance upon conversion of the 3.00%/5.00% Convertible Notes is sufficient to allow the conversion option to be share-settled in full. The Company has concluded that as of June 30, 2020 the conversion option qualifies for equity classification and the bifurcated derivative liability will no longer need to be accounted for as a separate derivative on a prospective basis from the date of reassessment. As of June 30, 2020, the fair value of the conversion option of $36,952, was classified to equity as additional paid-in capital. There was no tax impact of the reclassification of the conversion option to equity. Any remaining debt discount that arose at the date of debt issuance from the original bifurcation will continue to be amortized through interest expense.

The terms of the ~~Second Lien~~3.00%/5.00% Convertible Notes contain numerous covenants imposing financial and operating restrictions on the ~~Company’s~~Company's business. These covenants place restrictions on the Company’s ability and the ability of its subsidiaries to, among other things, pay dividends, redeem stock or make other distributions or restricted payments; incur indebtedness or issue certain stock; make certain investments; create liens; agree to certain payment restrictions

affecting certain subsidiaries; sell or otherwise transfer or dispose assets; enter into transactions with affiliates; and enter into sale and leaseback transactions.

The Company must use the net proceeds of material sales of collateral, which proceeds are not used for other permissible purposes, to make an offer of repurchase to holders of the Second Lien Convertible Notes. Indebtedness for borrowings under the ~~New Credit Agreement~~3.00%/5.00% Convertible Notes Indenture and the Supplemental Indenture is subject to acceleration upon the occurrence of specified defaults or events of default as set forth under each such indenture, including failure to pay principal or interest, the inaccuracy of any representation or warranty of any obligor, ~~under the Second Lien Convertible Notes,~~ failure by an obligor ~~under the Second Lien Convertible Notes~~ to perform certain covenants, the invalidity or impairment of the ~~Indenture~~ Agent’s lien on its collateral under the 3.00%/5.00% Convertible Notes Indenture, the invalidity or impairment of any applicable guarantee, and certain adverse bankruptcy-related and other events. Although the full extent that the COVID-19 pandemic will have on the Company's business, operations and financial condition is currently unknown, it does not anticipate that any specified defaults or events of default as set forth in the indenture will occur during the next 12 months.

Upon satisfaction of certain conditions more particularly described in the 3.00%/5.00% Convertible Notes Indenture, including the deposit in trust of cash or securities sufficient to pay the principal of and interest and any premium on the 3.00%/5.00% Convertible Notes, the Company may effect a covenant defeasance of certain of the covenants imposing financial and operating restrictions on the Company’s business. In addition, and subject to certain exceptions as more particularly described in the 3.00%/5.00% Convertible Notes Indenture, the Company may amend, supplement or waive provisions of the 3.00%/5.00% Convertible Notes Indenture with the consent of holders representing a majority in aggregate principal amount of the 3.00%/5.00% Convertible Notes, and may in effect release collateral from the liens securing the 3.00%/5.00% Convertible Notes with the consent of holders representing 66-2/3% in aggregate principal amount of the 3.00%/5.00% Convertible Notes.

Summarized Parent and Guarantor Financial Information

As discussed above, the 3.00%/5.00% Convertible Notes issued by A.M. Castle and Co. (the "Parent") are unconditionally guaranteed on a joint and several basis by all current and future domestic subsidiaries of the Parent (other than those designated as ~~per~~unrestricted subsidiaries) and the ~~Second Lien Notes Indenture, interest~~parent’s subsidiaries in Canada and Mexico (collectively, the “Guarantors”). Each guarantor is 100% owned by the Parent.

Table of Contents

The guarantees of the Guarantors are subject to release in limited circumstances, only upon the occurrence of certain customary conditions. There are no significant restrictions on the ~~Second Lien Notes~~ability of the parent company or any guarantor to obtain funds from its subsidiaries by dividend or loan.

On March 31, 2020, the Company early adopted the guidance of the SEC Final Rule Release No. 33-10762, "Financial Disclosures About Guarantors and Issuers of Guaranteed Securities and Affiliates Whose Securities Collateralize a Registrant's Securities" (the "final rule") and has elected to present the summarized financial information of Parent and Guarantors (together, the "Obligors") as of and for the six months ended June 30, 2020 and as of and for the year ended December 31, 2019 (see Note 2 - New Accounting Standards, to the notes to the condensed consolidated financial statements for further information on the final rule).

The summarized financial information of the Obligors after elimination of (i) intercompany transactions and balances among the Parent and the Guarantors and (ii) equity in earnings from and investments in any subsidiary that is a Non-Guarantor follows:


	Obligors
(in millions)	As of and for the Six Months Ended June 30, 2020		As of and for the Year Ended December 31, 2019
Total current assets	$	189.2	$	192.4
Total non-current assets ⁽¹⁾	133.2		134.4
Total current liabilities	60.8		54.9
Total non-current liabilities ⁽¹⁾	257.9		313.0
Net sales	178.0		453.1
Total costs and expenses	185.7		467.1
Operating loss	7.7		14.0

Net loss	15.8		38.5

⁽¹⁾ Included in non-current assets are $12.1 million and $12.2 million of non-current intercompany receivables due to the ~~first 12 months is required~~Obligors from the Non-Guarantors as of June 30, 2020 and December 31, 2019, respectively. Excluded from non-current liabilities are $7.5 million and $8.6 million of non-current intercompany payables due to ~~be paid in kind at a rate~~the Non-Guarantors from the Obligors as of ~~7.00%.~~June 30, 2020 and December 31, 2019, respectively.

Other Credit Facilities

In July 2017, the Company's French subsidiary entered into a local credit facility under which it may borrow against 100% of the eligible accounts receivable factored, with recourse, up to 6.5 million Euros, subject to factoring fees and floating Euribor or LIBOR interest rates, plus a 1.0% margin. The French subsidiary utilizes the local credit facility to support its operating cash needs. As of ~~September~~June 30, ~~2017,~~2020, the French subsidiary ~~has~~had no borrowings ~~of $3.6 million~~ under the local credit ~~facility.~~facility and had borrowings under the local credit facility of $2.9 million as of December 31, 2019. The Company records borrowings under the local credit facility as short-term borrowings at the Condensed Consolidated Balance Sheets.

On July 20, 2020, the Company's Chinese subsidiary entered into a $3.0 million local banking line of credit with the Bank of Communication Shanghai (the "China Credit Facility"). The China Credit Facility has an initial maturity date of January 20, 2021 and accrues interest at a rate of 3.6% per annum.

Interest expense in the six months ended June 30, 2020 and the six months ended June 30, 2019 was $15.1 million and $19.3 million, respectively, of which $1.4 million and $1.7 million, respectively, was cash interest.

As of ~~September~~June 30, ~~2017,~~2020, the Company had ~~$1.7~~$2.5 million of irrevocable letters of credit outstanding.

For additional information regarding the terms of the ~~New~~ ABL ~~Facility,~~Credit Agreement, the ~~Second Lien~~3.00%/5.00% Convertible Notes, the 5.00%/7.00% Convertible Notes and the ~~French~~Company's foreign credit facility, refer to Note 86 -Debt to the Notes to the Condensed Consolidated Financial Statements.

Critical Accounting Policies

The preparation of our financial statements requires us to make estimates, judgments and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Part II, Item 7

Table of Contents

of the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2019 includes a summary of the critical accounting policies we believe are the most important to aid in understanding our financial results. There have been no changes to those critical accounting policies that have had a material impact on our reported amounts of assets, liabilities, revenues or expenses during the six months ended June 30, 2020.

Table of Contents

Item 3. Quantitative and Qualitative Disclosures about Market Risk

Not applicable. As a smaller reporting company, the Company is not required to provide the information required by this item.

Item 4. Controls and Procedures

(a) Evaluation of Disclosure Controls and Procedures

A review and evaluation was performed by the Company’s management, including the Chairman and Chief Executive Officer (“CEO”) and ~~Chief Financial Officer~~Executive Vice President, Finance and Administration (“CFO”), of the effectiveness of the design and operation of the Company’s disclosure controls and procedures (as defined in Rule 13a-15(e) of the Securities Exchange Act of ~~1934).~~1934, as amended (the "Exchange Act")) as of the end of the period covered by this Quarterly Report on Form 10-Q. Based upon that review and evaluation, the CEO and CFO have concluded that the Company’s disclosure controls and procedures were effective as of ~~the end of the period covered by this report.~~June 30, 2020.

(b) Changes in Internal Control over Financial Reporting

There ~~were~~have been no changes in the Company’s internal control over financial reporting ~~identified~~(as defined in ~~connection with the evaluation required by Rules~~Rule 13a-15 and 15d-15 under the Exchange ~~Act~~Act) that occurred during the three months ended ~~September~~June 30, ~~2017~~2020 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

Table of Contents

Part II. OTHER INFORMATION

Item 1. Legal Proceedings

Item 1A. Risk Factors

~~The following information updates, and supercedes,~~Other than the ~~information previously~~updated risk factor described below, there have been no material changes to the risk factors disclosed under the caption “Risk Factors” in Part I, Item 1A ~~“Risk Factors”~~ of ~~our~~both the Company's Annual Report on Form 10-K for the fiscal year ended December 31, ~~2016, which was~~2019, filed with the ~~Securities~~SEC on February 27, 2020 and ~~Exchange Commission~~Form 10-K/A for the fiscal year ended December 31, 2019, filed with the SEC on ~~April 7, 2017~~March 19, 2020, and ~~in our~~Part II Item 1A of the Company's Quarterly Report on Form 10-Q for the quarter ended ~~June 30, 2016, which was~~March 31, 2020, filed with the ~~Securities and Exchange Commission~~SEC on ~~August 9, 2017.~~May 15, 2020.

Our ~~substantial level~~business and operations, and the operations of ~~indebtedness~~our suppliers and customers, have been, and for an indefinite period of time may continue to be, adversely affected by the recent novel coronavirus (or COVID-19) pandemic.

We may face risks related to the ongoing outbreak of the Novel Coronavirus Disease 2019 (COVID-19), which has been declared a “pandemic” by the World Health Organization and a national public health emergency by governments throughout the world as the disease has spread across the globe and is substantially and materially impacting worldwide economic activity. The full impact of COVID-19 and the associated pandemic is unknown and rapidly evolving. Health epidemics or outbreaks of communicable diseases such as COVID-19 could result in widespread or localized health crises that could adversely affect general commercial activity and the economies and financial markets of many countries or localities in which the Company operates, sells, or purchases good and services. A public health epidemic, including COVID-19, poses the risk that we or our employees, contractors, suppliers, customers, transportation providers, and other business partners may be prevented or impaired from conducting ordinary course business activities for an indefinite period of time, either at specific branches or on a broader scale, including due to shutdowns necessitated for the health and well-being of our employees, the employees of our business partners, or shutdowns that may be requested or mandated by governmental authorities. Directives to “de-densify” worksites, “Shelter in Place,” “Safe at Home,” quarantine or similar orders or mandates that restrict workforce and/or require closures of “non-essential” businesses have been implemented by government authorities to one degree or another starting with China in January 2020 and quickly spreading in the following months through Europe, North America and most locations throughout the world. Such orders or mandates have been lifted in many geographies, but there is a continuing threat that such measures may again be required as the spread of the disease has also accelerated in certain geographies. Although the Company has already been adversely impacted by the COVID-19 pandemic, the situation is very fluid and subject to rapid change; the full extent of the impact that the COVID-19 pandemic may have on the Company's business, operations and financial condition is currently unknown.

While we have fortunately had only a few reported positive cases of COVID-19 among our workforce, and while our branches have as a whole generally remained operational at varying levels of volume, there can be no assurances that we will not have to close any branch or multiple branches for indefinite periods of time due to concerns over the health and well-being of our employees, due to further developments in government directives or due to continued drop in demand from our customers or disruptions from our suppliers. While we have implemented policies and practices to protect our employees at each of our locations, including sanitizing and cleaning protocols, requiring face coverings and other personal protective equipment, social distancing and other behavioral best practices, remote work, staggered and spaced shifts, separating workspaces by distance and/or physical barriers, and suspending non-essential employee travel and visitors to our locations throughout the world, there can be no assurances that these efforts will be successful to prevent a contamination from impacting or potentially closing any of our branches or corporate offices for a time. While each of our operations has prepared and regularly updates customized business continuity and return to work plans to address COVID-19 concerns, in an effort to ensure that

Table of Contents

we are protecting our employees, continuing to operate our business and service our customers’ needs, and mitigating the potential impacts of COVID-19 or other similar epidemics, there is no guarantee that such plans will anticipate or fully mitigate the various impacts the pandemic, much of which is still entirely uncertain. While it is not possible at this time to estimate the scope and severity of the impact that COVID-19 could have on our branches, the continued spread of COVID-19, the measures taken by the governments of countries affected, actions taken to protect employees, actions taken to continue operations, and the impact of the pandemic on various business activities in affected countries could adversely affect our financial condition, results of operations and ~~prevent us from fulfilling~~cash flows.

In April 2020, we applied for and received a $10.0 million PPP Loan (see Item 2 - Management’s Discussion and Analysis of Financial Condition and Results of Operations - Impact of Coronavirus (COVID-19) Pandemic). After taking into account, among other things, the disruptions to our ~~obligations under our debt instruments.~~

We have substantial debt service obligations. As of September 30, 2017, we had approximately $256.8 million of total debt outstanding, excluding capital lease obligations of $0.3 million, all of which is secured. The debt outstanding, in order of priority, was comprised of $87.3 million of borrowings against our new Revolving Credit and Security Agreement (the “New ABL Facility”), $165.9 million aggregate principal amount of 5.00% / 7.00% Convertible Senior Secured Paid In Kind (PIK) Toggle Notes due 2022 (the “Second Lien Notes”), including $2.3 million of restricted Second Lien Notes issued to certain members of management (“MIP Notes”), and short-term borrowings of approximately $3.6 million under a local credit facility, entered intobusiness activities caused by the ~~Company’s French subsidiary under which it may borrow against 100%~~COVID-19 pandemic, our completed Exchange Offer, available, committed primary sources of ~~the eligible accounts receivable factored, with recourse, up~~liquidity, and our lack of access to ~~6.5~~alternative sources of liquidity, we believed and certified that current economic conditions made this loan request necessary and appropriate to support our ongoing U.S. operations and mitigate potentially significant detriment to our business. Recipients of loans in excess of $2.0 million ~~Euros (the “Foreign Line of Credit”).~~

~~Our substantial level of indebtedness could have significant effects on~~will be audited and, despite our ~~business, including the following:~~

~~it may be more difficult for us~~good-faith belief that given our circumstances we then satisfied and continue to satisfy ~~our financial obligations;~~

~~our ability~~all eligible requirements for the PPP Loan, the federal government may disagree and determine that we were ineligible to ~~obtain additional financing~~have applied for ~~working capital, capital expenditures, strategic acquisitions or general corporate purposes may be impaired;~~

~~we must use a substantial portion of our cash flow from operations to pay interest on our indebtedness, which will reduce~~and received the ~~funds available to use for operations and other purposes, including potentially accretive acquisitions;~~

~~our ability to fund a change of control offer under our debt instruments may be limited;~~

~~our substantial level of indebtedness could place us at a competitive disadvantage compared to our competitors that may have proportionately less debt;~~

~~our flexibility in planning for, or reacting to, changes in our business and the industry in which we operate may be limited; and~~

~~our substantial level of indebtedness may make us more vulnerable to economic downturns and adverse developments in our business.~~

We expect to obtain the funds to pay our expenses and to satisfy our debt obligations from our operations and available resources under the New ABL Facility. Our ability to meet our expenses and make these principal and interest payments as they come due, therefore, depends on our future performance, which will be affected by financial, business, economic and other factors, many of which we cannot control. Our business may not generate sufficient cash flow from operations in the future, and our anticipated revenue and cash flow may not be realized, either or both of which could result in our being unable to repay indebtedness or to fund other liquidity needs. If we do not have enough funds,PPP Loan. In such event, we may be required to ~~refinance all or part of our then existing debt, sell assets or borrow more funds, which we may not be able to accomplish on terms acceptable to us, or at all. In addition,~~repay the ~~terms of existing or future debt agreements may~~

~~restrict us from pursuing any of these alternatives which could have an adverse effect on our financial condition or liquidity.~~

We may not be able to generate sufficient cash to service all of our existing debt service obligations, and may be forced to take other actions to satisfy our obligations under our debt agreements, which may not be successful.

Our total outstanding debt under our New ABL Facility, the Second Lien Notes, including MIP Notes, and the Foreign Line of Credit has an aggregate principal amount of $256.8 million as of September 30, 2017. Our ability to make scheduled payments on or to refinance our debt obligations depends on our future financial condition and operating performance, which are subject to prevailing economic and competitive conditions and to certain financial, business and other factors beyond our control. Therefore, we may not be able to maintain or realize a level of cash flows from operating activities sufficient to permit us to pay the principal, premium, if any, and interest on our indebtedness.

If our cash flows and capital resources are insufficient to fund our debt service obligations, we may be forced to reduce or delay investments, capital expenditures or potentially accretive acquisitions, sell assets, seek additional capital or restructure or refinance our indebtedness. Our ability to restructure or refinance our debt will depend on the condition of the capital markets and our financial condition at such time. Any refinancing of our debt could be at higher interest rates and may require us to comply with more onerous borrowing covenants, which could further restrict our business operations. The terms of existing or future debt instruments may restrict us from adopting some of these alternatives. In addition, any failure to make payments of principal and interest on our outstanding indebtedness on a timely basis would likely resultPPP Loan in a reduction of our credit rating, which could harm our ability to incur additional indebtedness or the terms thereof. These alternative measures may not be successful and may not permit us to meet our scheduled debt service obligations which could have an adverse effect on our financial condition or liquidity.

Our debt instruments impose significant operating and financial restrictions, which may prevent us from pursuing certain business opportunities and taking certain actions and our failure to comply with the covenants contained in our debt instruments could result in an event of default that could adversely affect our operating results.

~~Our debt agreements impose, and future debt agreements may impose, operating and financial restrictions on us. These restrictions limit or prohibit, among other things, our ability to:~~

~~incur additional indebtedness, or issue disqualified capital stock;~~

~~pay dividends, redeem subordinated debt or make other restricted payments;~~

~~make certain investments or acquisitions;~~

~~grant or permit certain liens on our assets;~~

~~enter into certain transactions with affiliates;~~

~~merge, consolidate or transfer substantially all of our assets;~~

~~incur dividend or other payment restrictions affecting certain of our subsidiaries;~~

~~transfer, sell or acquire assets; and~~

~~change the business we conduct.~~

These covenants could adversely affect our ability to finance our future operations or capital needs, withstand a future downturn in our business or the economy in general, engage in business activities, including future opportunities that may be in our interest, and plan for or react to market conditions or otherwise execute our business strategies. A breach of any of these covenants could result in a default in respect of the related indebtedness. If a default occurs, in certain circumstances, the relevant lenders or holders of such indebtedness could elect to declare the indebtedness, together with accrued interest and other fees, to be immediately due and payable and proceed against any collateral securing that indebtedness. If the maturity of our indebtedness is accelerated, we may not have sufficient cash resources to satisfy our debt obligations and may not be able to continue our operations as planned.

~~Our future operating results are impacted by the volatility of the prices of metals, which could cause our results to be adversely affected.~~

The prices we pay for metal raw materials and the prices we charge for products may fluctuate depending on many factors, including general economic conditions (both domestic and international), competition, production levels, import duties and other trade restrictions and currency fluctuations. To the extent metal prices decline, we would generally expect lower sales, pricing and possibly lower operating income. Depending on the timing of the price changes and to the extent we are not able to pass on to our customers any increases in our metal raw materials prices, our operating results may be adversely affected. In addition, because we maintain substantial inventories of metals in order to meet short lead-times and the just-in-time delivery requirements of our customers, a reduction in our selling prices could result in lower profitability or, in some cases, losses, either of which could adversely impact our ability to remain in compliance with certain provisions of our debt instruments, as well as result in us incurring impairment charges.

~~The Company’s actual financial results may vary materially from the projections that it filed with the bankruptcy court in connection the confirmation of the Company’s plan of reorganization.~~

~~In connection with the disclosure statement the Company filed with the bankruptcy court, and the hearing to consider confirmation of~~ its plan of reorganization, the Company prepared projected financial information to demonstrate to the bankruptcy court the feasibility of the plan of reorganization and its ability to continue operations upon its emergence from bankruptcy. Those projections were prepared solely for the purpose of the bankruptcy proceedings and have not been, and will not be, updated on an ongoing basis and should not be relied upon by investors. At the time they were prepared, the projections reflected numerous assumptions concerning the Company’s anticipated future performance and with respect to prevailing and anticipated market and economic conditions that were and remain beyond our control and that may not materialize. Projections are inherently subject to substantial and numerous uncertainties and to a wide variety of significant business, economic and competitive risks and the assumptions underlying the projections and/or valuation estimates may prove to be wrong in material respects. Actual results will likely vary significantly from those contemplated by the projections. As a result, investors should not rely on these projections.

The Company’s financial condition and results of operations for periods after the effective date of the Company’s plan of reorganization are not comparable to the financial condition and results of operations for periods prior to the effective date of the Company’s plan of reorganization and historical financial information may not be indicative of the Company’s future financial performance.

On August 31, 2017, the effective date of the Company’s plan of reorganization, the Company adopted fresh-start reporting as a result of the bankruptcy reorganization as prescribed in accordance with GAAP and the provisions of Financial Accounting Standards Board Accounting Standards Codification 852, Reorganizations. As required by fresh-start reporting, the Company’s assets and liabilities were recorded at fair value by allocating the reorganization value determined in connection with the plan of reorganization. Accordingly, the Company’s financial condition and results of operations from and after the effective date of the Company’s plan of reorganization are not comparable, in various material respects, to the financial condition and results of operations prior to the effective date of the Company’s plan of reorganization. Further, as a result of the implementation of the Company’s plan of reorganization and the transactions contemplated thereby, the Company’s historical financial information may not be indicative of its future financial performance.

~~Our common stock is now traded on the OTCQB® Venture Market (the “OTCQB”), which could have an adverse impact on the market price and liquidity of our common stock~~entirety and could ~~involve additional risks compared to being listed on a national securities exchange.~~

The Company’s Common Stock is presently traded on the OTC Markets under the ticker “CTAM”. The trading of our common stock in the OTC market rather than a national securities exchange may negatively impact the trading price of our common stock and the levels of liquidity available to our shareholders. Securities traded in the OTC market generally have less liquidity due to factors such as the reduced number of investors that will consider investing in the securities, the reduced number of market makers in the securities, and the reduced number of securities analysts that follow such securities. As a result, holders of shares of our common stock may find it difficult to resell their shares at prices quoted in the market or at all.

Furthermore, because of the limited market and generally low volume of trading in our common stock that could occur, the share price of our common stock could be more likely to be affected by broad market fluctuations, general market conditions, fluctuations in our operating results, changes in the markets perception of our business, and announcements made by us, our competitors, or parties with whom we have business relationships.

~~Because our common stock trades on the OTC market, in some cases, we may~~ be subject to additional compliance requirements under applicable state laws in the issuance of our securities. The lack of liquidity in our common stock may also make it difficult for us to issue additional securities for financing or other purposes, or to otherwise arrange for any financing we may need in the future. Accordingly, we urge that extreme caution be exercised with respect to existing and future investments in our common stock

Holders of our Second Lien Notes can require us to repurchase their Second Lien Notes following a fundamental change, which includes, among other things, the acquisition of more than 50% of our outstanding voting power by a person or group. We may not have sufficient funds to satisfy such cash obligations.

As of September 30, 2017, we had approximately $256.8 million of aggregate principal amount outstanding under the Second Lien Notes. Interest on the Second Lien Notes accrues at the rate of 5.00%, except that the Company may, in certain circumstances, pay at the rate of 7.00% in kind. Interest on the Second Lien Notes in the first 12 months is required to be paid in kind at a rate of 7.00%. Upon the occurrence of a fundamental change (as defined in the indenture for the Second Lien Notes), which includes the acquisition of more than 50% of our outstanding voting power by a person or group, we may be required to repurchase some or all of the Second Lien Notes for cash at a repurchase price equal to 100% of the principal amount of the Second Lien Notes being repurchased, plus any accrued and unpaid interest up to but excluding the relevant fundamental change repurchase date. We may not have sufficient funds to satisfy such cash obligations and, in such circumstances, may not be able to arrange the necessary financing on favorable terms or at all. In addition, our ability to satisfy such cash obligations will be restricted pursuant to covenants contained in the indenture for the Second Lien Notes and will be permitted to be paid only in limited circumstances. We may also be limited in our ability to satisfy such cash obligations by applicable law or the terms of other instruments governing our indebtedness. Our inability to make any cash payments that may be required to satisfy the obligations described above would trigger an event of default under the Second Lien Notes, which in turn could constitute an event of default under our other outstanding indebtedness, thereby potentially resulting in the acceleration of certain of such indebtedness, the prepayment of which could further restrict our ability to satisfy such cash obligations.

~~The conversion of our Second Lien Notes into common stock will dilute the ownership interest of our existing shareholders.~~

Any issuance by us of our common stock upon conversion of our Second Lien Notes will dilute the ownership interest of our existing shareholders. In addition, any such issuance of common stock could have a dilutive effect on our net income per share to the extent that the average stock price during the period is greater than the conversion prices and exercise prices of the Second Lien Notes. Furthermore, any sales in the public market of our common stock issuable upon conversion of the Second Lien Notes could adversely affect prevailing market prices of our common stock.

~~We service industries that are highly cyclical, and any downturn in our customers’ industries could reduce our revenue and profitability.~~

Many of our products are sold to customers in industries that experience significant fluctuations in demand based on economic conditions, energy prices, consumer demand, availability of adequate credit and financing, customer inventory levels, changes in governmental policies and other factors beyond our control. As a result of this volatility in the industries we serve, when one or more of our customers’ industries experiences a decline, we may have difficulty increasing or maintaining our level of sales or profitability if we are not able to divert sales of our products to customers in other industries. Historically, we have made a strategic decision to focus sales resources on certain industries, specifically the aerospace, oil and gas, heavy equipment, machine tools and general industrial equipment industries. A downturn in these industries has had, and may in the future continue to have, an adverse effect on our operating results. We are also particularly sensitive to market trends in the manufacturing sectors of the North American economy. In 2015, the downturn in the oil and gas sector had a significant impact on our financial results as sales to customers which operate in that market were significantly lower than they had been previously. In February 2016, we announced the sale of all inventory from our Houston and Edmonton facilities that primarily serviced the oil and gas sector. With this sale and the subsequent closure of the Houston and Edmonton facilities, we significantly lowered our exposure to oil-related market fluctuations. Going forward, we will be primarily focused on two key industries, aerospace and industrial.

A portion of our sales, particularly in the aerospace industry, are related to contracts awarded to our customers under various U.S. Government defense-related programs. Significant changes in defense spending, or in government priorities and requirements could impact the funding, or the timing of funding, of those defense programs, which could negatively impact our results of operations and financial condition. The level of U.S. spending for defense, alternative energy and other programs to which such funding is allocated, is subject to periodic congressional appropriation actions,

~~including the sequestration of appropriations in fiscal years 2013 and after, under the Budget Control Act of 2011, and is subject to change at any time.~~

~~Our industry is highly competitive, which may force us to lower our prices and may have an adverse effect on our operating results.~~

The principal markets that we serve are highly competitive. Competition is based principally on price, service, quality, processing capabilities, inventory availability and timely delivery. We compete in a highly fragmented industry. Competition in the various markets in which we participate comes from a large number of value-added metals processors and service centers on a regional and local basis, some of which have greater financial resources than we do and some of which have more established brand names in the local markets we serve. We also compete to a lesser extent with primary metals producers who typically sell to very large customers requiring shipments of large volumes of metal. Increased competition could force us to lower our prices or to offer increased services at a higher cost to us, which could have an adverse effect on our operating results.

~~Our operating results are subject to the seasonal nature of our customers’ businesses.~~

A portion of our customers experience seasonal slowdowns. Historically, our revenues in the months of July, November and December have been lower than in other months because of a reduced number of shipping days and holiday or vacation closures for some customers. Dependent on market and economic conditions, our sales in the first two quarters of the year, therefore, can be higher than in the third and fourth quarters due to this seasonality. As a result, analysts and investors may inaccurately estimate the effects of seasonality on our operating results in one or more future quarters and, consequently, our operating results may fall below expectations.

~~An additional impairment or restructuring charge could have an adverse effect on our operating results.~~

We continue to evaluate opportunities to reduce costs and improve operating performance. These actions could result in restructuring and related charges, including but not limited to asset impairments, employee termination costs, charges for pension benefits, and pension curtailments, which could be significant and could adversely affect our financial condition and results of operations.

We have a significant amount of long-lived assets. We review the recoverability of long-lived assets whenever significant events or changes occur which might impair the recovery of recorded costs, making certain assumptions regarding future operating performance. The results of these calculations may be affected by the current demand and any decline in market conditions for our products, as well as interest rates and general economic conditions. If impairment is determined to exist, we will incur impairment losses, which may have an adverse effect on our operating results.

~~Our ability to use our net operating loss carryforwards ("NOLs") may be limited.~~

We have incurred substantial losses since 2008. We may not generate future taxable income so that we can use our available net operating loss carryforwards, or NOLs, as an offset. As of September 30, 2017, we had U.S. federal NOLs of $213.5 million. The U.S. federal NOLs will expire in various years beginning with 2031. Due to the our bankruptcy proceedings, a portion of these NOLs will be reduced relative to cancellation of indebtedness. Additionally, we have determined that an ownership shift of greater than fifty percent occurred in 2015, 2016 and 2017. As such, it is expected that a significant portion of the pre-ownership shift NOLs will be subject to a Section 382 limitation that will act to prevent the Company from utilizing all of its losses against future taxable income. We may experience ownership changes in the future as a result of subsequent shifts in our stock ownership that we cannot predict or control that could result in further limitations being placed on our ability to utilize our federal NOLs. As of September 30, 2017, we have a full valuation allowance against our federal and state NOLs as we have concluded, based on all available evidence, that it is more likely than not that we will not utilize these federal and state NOLs prior to their respective expiration.

~~Disruptions or shortages in the supply of raw materials could adversely affect our operating results and our ability to meet our customers’ demands.~~

Our business requires materials that are sourced from third party suppliers. If, for any reason, our primary suppliers of metals should curtail or discontinue their delivery of raw materials to us at competitive prices and in a timely manner, our operating results could suffer. Unforeseen disruptions in our supply bases could materially impact our ability to deliver products to customers. The number of available suppliers could be reduced by factors such as industry consolidation and bankruptcies affecting metals producers, or suppliers may be unwilling or unable to meet our demand due to industry supply conditions. If we are unable to obtain sufficient amounts of raw materials from our traditional suppliers, we may not be able to obtain such raw materials from alternative sources at competitive prices to meet our delivery schedules, which could have an adverse impact on our operating results. To the extent we have quoted prices

to customers and accepted orders for products prior to purchasing necessary raw materials, or have existing contracts, we may be unable to raise the price of products to cover all or part of the increased cost of the raw materials to our customers.

In some cases the availability of raw materials requires long lead times. As a result, we may experience delays or shortages in the supply of raw materials. If we are unable to obtain adequate and timely deliveries of required raw materials, we may be unable to timely supply customers with sufficient quantities of products. This could cause us to lose sales, incur additional costs, or suffer harm to our reputation, all of which may adversely affect our operating results.

Increases in freight and energy prices would increase our operating costs and we may be unable to pass these increases on to our customers in the form of higher prices, which may adversely affect our operating results.

We use energy to process and transport our products. The prices for and availability of energy resources are subject to volatile market conditions, which are affected by political, economic and regulatory factors beyond our control. Our operating costs increase if energy costs, including electricity, diesel fuel and natural gas, rise. During periods of higher freight and energy costs, we may not be able to recover our operating cost increases through price increases without reducing demand for our products. In addition, we typically do not hedge our exposure to higher freight or energy prices.

~~We operate in international markets, which expose us to a number of risks.~~

Although a majority of our business activity takes place in the United States, we serve and operate in certain international markets, which exposes us to political, economic and currency related risks, including the following:

~~potential for adverse change in the local political or social climate or in government policies, laws and regulations;~~

~~difficulty staffing and managing geographically diverse operations and the application of foreign labor regulations;~~

~~restrictions on imports and exports or sources of supply;~~

~~currency exchange rate risk; and~~

~~changes in duties and taxes.~~

In addition to the United States, we operate in Canada, Mexico, France, the United Kingdom, Singapore, and China. An act of war or terrorism or major pandemic event could disrupt international shipping schedules, cause additional delays in importing or exporting products into or out of any of these countries, including the United States, or increase the costs required to do so. In addition, acts of crime or violence in these international markets could adversely affect our operating results. Fluctuations in the value of the U.S. dollar versus foreign currencies could reduce the value of these assets as reported in our financial statements, which could reduce our stockholders’ equity. If we do not adequately anticipate and respond to these risks and the other risks inherent in international operations, it could have a material adverse impact on our operating results.

Political and economic uncertainty arising from the outcome of the recent referendum on the membership of the United Kingdom in the European Union could adversely impact our financial condition and operating results.

On June 23, 2016, the United Kingdom voted to leave the European Union (the “EU”), which triggered short-term financial volatility, including a decline in the value of the British pound in comparison to both the U.S. dollar and the euro. Before the United Kingdom leaves the EU, a process of negotiation is required to determine the future terms of the United Kingdom’s relationship with the EU. The uncertainty before, during and after the period of negotiation could have a negative economic impact and result in further volatility in the markets for several years. Such ongoing uncertainty may result in various economic and financial consequences for businesses operating in the United Kingdom, the EU and beyond.

During the period September 1, 2017 through September 30, 2017, approximately 0.3% of our consolidated net sales were attributable to operations in the United Kingdom, and approximately 9.3% of our consolidated net sales were attributable to operations in Europe overall. The Company and its various subsidiaries hold financial assets and liabilities denominated in British pounds, including cash and cash equivalents, accounts receivable, and accounts payable, and

~~the future impacts of the United Kingdom’s exit from the EU could have a materially adverse impact on our financial condition and operating results.~~

~~A portion of our workforce is represented by collective bargaining units, which may lead to work stoppages.~~

As of September 30, 2017, approximately 21% of our U.S. employees were represented by the United Steelworkers of America (“USW”) under collective bargaining agreements, including hourly warehouse employees at our distribution centers in Cleveland, Ohio and Hammond, Indiana. As these agreements expire, there can be no assurance that we will succeed in concluding collective bargaining agreements with the USW to replace those that expire. Although we believe that our labor relations have generally been satisfactory, we cannot predict how stable our relationships with the USW will be or whether we will be able to meet the USW requirements without impacting our operating results and financial condition. The USW may also limit our flexibility in dealing with our workforce. Work stoppages and instability in our relationship with the USW could negatively impact the timely processing and shipment of our products, which could strain relationships with customers or suppliers and adversely affect our operating results. On October 1, 2014, we entered into a four-year collective bargaining agreement with the USW, which covers approximately 104 employees at our largest facility in Cleveland, Ohio. This agreement is scheduled to expire in September 2018, and our goal is to engage in early negotiations in the spring of 2018 to secure another four-year agreement and avoid disruption to the business. Approximately 25 employees at our Hammond, Indiana facility are covered by a separate collective bargaining agreement with the USW that was renegotiated in August 2016 and expires in August 2020.

~~We rely upon our suppliers as to the specifications of the metals we purchase from them.~~

We rely on mill or supplier certifications that attest to the physical and chemical specifications of the metals received from our suppliers for resale and generally, consistent with industry practice, do not undertake independent testing of such metals. We rely on our customers to notify us of any product that does not conform to the specifications certified by the supplier or ordered by the customer. Although our primary sources of products have been domestic suppliers, we have and will continue to purchase product from foreign suppliers when we believe it is appropriate. In the event that metal purchased from domestic suppliers is deemed to not meet quality specifications as set forth in the mill or supplier certifications or customer specifications, we generally have recourse against these suppliers for both the cost of the products purchased and possible claims from our customers. However, such recourse will not compensate us for the damage to our reputation that may arise from sub-standard products and possible losses of customers. Moreover, there is a greater level of risk that similar recourse will not be available to us in the event of claims by our customers related to products from foreign suppliers that do not meet the specifications set forth in the mill or supplier certifications. In such circumstances, we may be at greater risk of loss for claims for which we do not carry, or do not carry sufficient, insurance.

~~Our business could be adversely affected by a disruption to our primary distribution hubs.~~

Our largest facilities, in Cleveland, Ohio, and Hammond, Indiana, as well as our facility in Janesville, Wisconsin, serve as primary distribution centers that ship product to our other facilities as well as external customers. Our business could be adversely impacted by a major disruption at any of these facilities due to unforeseen developments occurring in or around the facility, such as:

~~damage to or inoperability of our warehouse or related systems;~~

~~a prolonged power or telecommunication failure;~~

~~a natural disaster, environmental or public health issue, or an act of war or terrorism on-site.~~

~~A prolonged disruption of the services and capabilities of these or other of our facilities could adversely impact our operating results.~~

Damage to or a disruption in our information technology systems could impact our ability to conduct business and could subject us to liability for failure to comply with privacy and information security laws.

Difficulties associated with the design and implementation of our enterprise resource planning (“ERP”) or other information technology systems could adversely affect our business, our customer service and our operating results.

We rely primarily on one information technology system to provide inventory availability to our sales and operating personnel, improve customer service through better order and product reference data and monitor operating results. Difficulties associated with upgrades or integration with new systems could lead to business interruption that could harm our reputation, increase our operating costs and decrease profitability. In addition, any significant disruption relating to our current information technology systems, whether resulting from such things as fire, flood, tornado and

other natural disasters, power loss, network failures, loss of data, security breaches and computer viruses, or otherwise, may have an adverse effect on our business, our operating results and our ability to report our financial performance in a timely manner.

The success of our business depends on the security of our networks and, in part, on the security of the network infrastructures of our third-party vendors. In connection with conducting our business in the ordinary course, we store and transmit limited amounts of customer, vendor, and employee information, including account or credit card information, and other personally identifiable information. Unauthorized or inappropriate access to, or use of, our networks, computer systems or services, whether intentional, unintentional or as a result of criminal activity, could potentially jeopardize the security of this confidential information. A number of other companies have publicly disclosed breaches of their security, some of which have involved sophisticated and highly targeted attacks on portions of their networks. Because the techniques used to obtain unauthorized access, disable or degrade service, or sabotage systems change frequently and often are not recognized until launched against a target, we may be unable to anticipate these techniques or to implement adequate preventative measures. If an actual or perceived breach of our security occurs, the perception of the effectiveness of our security measures could be harmed and we could lose employees, customers, or vendors. A party that is able to circumvent our security measures could misappropriate our proprietary information or the information of our customers, vendors, or employees, cause interruption in our operations, or damage our computers or those of our customers or vendors which could expose us to claims from such persons or from regulators, financial institutions or others with whom we do business, any of which could have an adverse impact on our financial condition and results of operations.

We may need to expend significant resources to protect against security breaches or to address problems caused by breaches. Security breaches, including any breach related to us or the parties with which we have commercial relationships, could damage our reputation and expose us to a risk of loss, litigation, and possible liability. We cannot give assurance that the security measures we take will be effective in preventing these types of activities. We also cannot give assurance that the security measures of our third-party vendors, including network providers, providers of customer and vendor support services, and other vendors, will be adequate. In addition to potential legal liability, these activities may adversely impact our reputation or our revenues and may interfere with our ability to provide our products and services, all of which could adversely impact our business.

~~Ownership of our stock is concentrated, which may limit stockholders’ ability to influence corporate matters.~~

Following our bankruptcy, the Company’s ownership is concentrated among a small group of institutional investors and/or hedge funds and the Company’s management team. Certain directors, their affiliates, and/or any other concentrated ownership interests may have the voting power to substantially affect or control the outcome of matters requiring a stockholder vote including the election of directors and the approval of significant corporate matters. Such a concentration of control could adversely affect the market price of our common stock or prevent a change in control or other business combinations that might be beneficial to us.

~~We could be vulnerable to interest rate fluctuations on our indebtedness, which could hurt our operating results.~~

We are exposed to various interest rate risks that arise in the normal course of business. Market risk arises from changes in interest rates. We currently finance our operations with both fixed rate and variable rate borrowings, and the market value of our $165.9 million of fixed rate borrowings may be impacted by changes in interest rates. In addition, if in the future interest rates subsequently increase significantly, it could significantly increase the interest expense on our variable rate borrowings which could have an adverse effect on our operating results and liquidity.

~~Commodity hedging transactions may expose us to loss or limit our potential gains.~~

We have entered into certain fixed price sales contracts with customers which expose us to risks associated with fluctuations in commodity prices. As part of our risk management program, we may use financial instruments from time-to-time to mitigate all or portions of these risks, including commodity futures, forwards or other derivative instruments. While intended to reduce the effects of the commodity price fluctuations, these transactions may limit our potential gains or expose us to losses. Also, should our counterparties to such transactions fail to honor their obligations due to financial distress, we would be exposed to potential losses or the inability to recover anticipated gains from these transactions.

~~We may face risks associated with current or future litigation and claims.~~

From time to time, we are involved in a variety of lawsuits, claims and other proceedings relating to the conduct of our business. These suits concern issues including contract disputes, employment actions, employee benefits, taxes,

environmental, health and safety, personal injury and product liability matters. Due to the uncertainties of litigation, we can give no assurance that we will prevail on all claims made against us in the lawsuits that we currently face or that additional claims will not be made against us in the future. While it is not feasible to predict the outcome of all pending lawsuits and claims, we do not believe that the disposition of any such pending matters is likely to have a materially adverse effect on our financial condition or liquidity, although the resolution in any reporting period of one of more of these matters could have an adverse effect on our operating results for that period. Also, we can give no assurance that any other lawsuits or claims brought in the future will not have an adverse effect on our financial condition, liquidity or operating results.

~~We could incur substantial costs in order to comply with, or to address any violations under, environmental and employee health and safety laws, which could adversely affect our operating results.~~

Our operations are subject to various environmental statutes and regulations, including laws and regulations governing materials we use and our facilities. In addition, certain of our operations are subject to international, federal, state and local environmental laws and regulations that impose limitations on the discharge of pollutants into the air and water and establish standards for the treatment, storage and disposal of solid and hazardous wastes. Our operations are also subject to various employee safety and health laws and regulations, including those concerning occupational injury and illness, employee exposure to hazardous materials and employee complaints. Certain of our facilities are located in industrial areas, have a history of heavy industrial use and have been in operation for many years and, over time, we and other predecessor operators of these facilities have generated, used, handled and disposed of hazardous and other regulated wastes. Currently unknown cleanup obligations at these facilities, or at off-site locations at which materials from our operations were disposed, could result in future expenditures that cannot be currently quantified, butpenalties, which could have a material adverse effect on our liquidity and financial ~~condition, liquidity or operating results.~~condition.

~~Potential environmental legislative~~While we have and ~~regulatory actions could impose significant costs on~~continue to pursue government relief programs in addition to the PPP loan and the France Term Loan (including tax deferrals, subsidies, loans, etc.) and have and continue to implement a number of temporary and long-term cost-cutting initiatives to align our operations ~~of our customers and suppliers, which could have a material adverse impact on our results of operations, financial condition and cash flows.~~

~~Climate change regulation or some form of legislation aimed at reducing greenhouse gas (‘‘GHG’’) emissions is currently being considered in the United States~~to current customer demand as well as ~~elsewhere globally. As~~be prepared for any market recovery once this pandemic has passed, including staff reductions, reduction in employee hours and/or salaries, furloughs, temporary layoffs, or a ~~metals distributor,~~combination of these actions, at each of our locations there can be no assurances that such actions will be sufficient to stave off the economic impacts of the pandemic or that further such actions will not be warranted. We have seen a significant reduction in customer forecasts and orders as a result of the pandemic and there can be no assurances that we will not see further degradation in customer business in the short-term and it is uncertain how quickly customer forecasts and business will improve following this pandemic.

Our principal sources of liquidity are cash provided by operations doand proceeds from borrowings under its revolving credit facilities. In the second quarter of 2020, the average receivable days outstanding increased from levels in previous quarters, which the Company believes reflects some slowing in payments from customers due to the financial uncertainties resulting from the COVID-19 pandemic. We also have fewer accounts receivables as of June 30, 2020 as a result of the decrease in demand resulting from the COVID-19 pandemic, which has decreased our borrowing base collateral attributable to accounts receivable under our revolving credit facility and, in the near term, could result in less cash provided by operations. Further decreases in our accounts receivable could result in further reductions in our borrowing base collateral and therefore, the maximum amount we could borrow under our revolving credit facility could decrease accordingly. The decrease in demand has also resulted in an increase in inventory and average days sales in inventory in the second quarter compared to the previous quarter. We are focused on maintaining liquidity by purchasing a sufficient level of inventory to meet customer demand while not ~~emit significant amounts~~carrying excess inventory and lowering overall stock levels throughout the business. However, if we are unable to sufficiently manage our inventory levels and we begin to carry excess inventory, our liquidity could be unfavorably impacted. Conversely, a decrease in our inventory could result in a reduction in our borrowing base collateral attributable to inventory and therefore, the maximum amount we could borrow under our revolving credit facility could decrease accordingly.

The full extent to which COVID-19 impacts our business both in the short-term and long-term will depend on the severity, location and duration of ~~GHG. However,~~ the ~~manufacturing processes~~spread of ~~many~~COVID-19 as well as new outbreaks of COVID-19 which could result as some communities begin to reopen. The extent of the impact will further depend on, among other things, the rate, pace, and effectiveness of the actions undertaken by local and world governments and health officials to contain the virus or treat its effects, the nature of government public health guidelines and the public’s adherence to those guidelines, the impact of government economic relief on the US economy, unemployment levels, the success of businesses reopening, the timing for proven treatments and vaccines for COVID-19, consumer confidence and the rate, pace and effectiveness of the actions undertaken by the leadership and employees of our Company, as well as those of our suppliers, ~~and~~ customers ~~are energy intensive and generate carbon dioxide~~ and other ~~GHG emissions. Any adopted future climate change and GHG regulations may impose significant costs on the operations of our customers and suppliers and indirectly impact our operations.~~business partners, to return businesses to pre-pandemic levels.

~~Until the timing, scope and extent of any future regulation becomes known, we cannot predict the effect on our results of operations, financial condition and cash flows.~~

~~We have various mechanisms in place that may prevent a change in control that stockholders may otherwise consider favorable.~~

In August 2013, we elected by resolution of the Board of Directors to become subject to Section 3-803 of the Maryland General Corporation Law (the “MGCL”). As a result of this election, the Board of Directors was classified into three separate classes of directors, with each class generally serving three-year terms. Only one class of directors will be elected at each annual meeting of our stockholders, with the other classes continuing for the remainder of their respective three-year terms. The provision for a classified board could prevent a party who acquires control of a majority of our outstanding voting stock from obtaining control of our Board of Directors until the second annual stockholders meeting following the date the acquiring party obtains the controlling interest. The classified board provision could discourage a potential acquirer from making a tender offer or otherwise attempting to obtain control of us and could increase the likelihood that incumbent directors will retain their positions.

In addition, our charter and by-laws and the MGCL include provisions that may be deemed to have anti-takeover effects and may delay, defer or prevent a takeover attempt that stockholders might consider to be in their best interests. For example, the MGCL, our charter and bylaws require the approval of the holders of two-thirds of the votes entitled to be cast on the matter to amend our charter (unless our Board of Directors has unanimously approved the amendment, in which case the approval of the holders of a majority of such votes is required), and contain certain advance notice procedures for nominating candidates for election to our Board of Directors.

Furthermore, we are subject to the anti-takeover provisions of the MGCL that prohibit us from engaging in a “business combination” with an “interested stockholder” for a period of five years after the date of the transaction in which the person first becomes an “interested stockholder,” unless the business combination or stockholder interest is approved in a prescribed manner. The application of these and certain other provisions of our charter or the MGCL could have

~~the effect of delaying or preventing a change of control, which could adversely affect the market price of our common stock.~~

The provisions of our debt instruments also contain limitations on our ability to enter into change of control transactions. In addition, the repurchase rights in our Second Lien Notes triggered by the occurrence of a fundamental change (as defined in the indenture for the Second Lien Notes), and the additional shares of our common stock by which the conversion rate is increased in connection with certain fundamental change transactions, as described in the indenture for the Second Lien Notes, could discourage a potential acquirer.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

~~On the Effective Date, by operation~~None.

Table of ~~the Plan, the Company issued an aggregate of 3,734,385 shares of its new common stock, as follows:~~Contents

1,300 shares were issued to the holders of Prepetition Second Lien Secured Claims (as defined by the Plan) in partial satisfaction of their claims, pursuant to an exemption from the registration requirements of the Securities Act of 1933, as amended (the “Securities Act”) under Section 4(a)(2) of such act and Regulation D promulgated thereunder;

300 shares were issued to the holders of Prepetition Third Lien Secured Claims (as defined by the Amended Plan) in partial satisfaction of their claims, pursuant to an exemption from the registration requirements of the Securities Act under Section 4(a)(2) of such act and Regulation D promulgated thereunder;

400 shares were issued to participating holders of the Company’s outstanding common stock as of August 2, 2017 in partial satisfaction of their interests, pursuant to an exemption from the registration requirements of the Securities Act under Section 1145 of the Bankruptcy Code; and

1,734 shares of restricted stock, together with an aggregate original principal amount of $2,400 of Second Lien Notes convertible into an additional 637 shares of new common stock as of the Effective Date, were issued as awards under the MIP to certain officers of the Company, pursuant to an exemption from the registration requirements of the Securities Act under Section 4(a)(2) of such act, and Regulation D promulgated thereunder.

Item 3. Defaults Upon Senior Securities

~~Information required by this~~ None.

Item ~~3 has been previously disclosed in the Company's Current Report on Form 8-K filed on September 6, 2017.~~4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

None.

Item 6. Exhibits

~~Exhibits required to be filed as part of this Report on Form 10-Q are listed in the Exhibit Index, which is incorporated by reference herein.~~

~~Exhibit Index~~

The following exhibits are filed ~~herewith~~with this Quarterly Report on Form 10-Q or incorporated herein by reference:



Exhibit No.			Description
~~2.1~~3.1			Debtors' Amended Prepackaged Joint Chapter 11 Plan of Reorganization dated July 25, 2017. Incorporated by reference to Exhibit 2.1 to the Company's Current Report on Form 8-K filed with the SEC on August 3, 2017. Commission File No. 1-05415
~~3.1~~	Articles of Restatement of the Company filed with the State Department of Assessments and Taxation of Maryland on August 31, 2017. Incorporated by reference to Exhibit 3.1 to the Company’s Registration Statement on Form 8-A filed with the SEC on August 31, 2017. Commission File No. 1-05415
~~3.2~~	~~Amended and Restated Bylaws~~Amendment of A.M. Castle & Co.~~, as adopted on August 31, 2017. Incorporated by reference to Exhibit 3.2 to the Company's Registration Statement on Form 8-A filed with the SEC on August 31, 2017. Commission File No. 1-05415~~
10.1*10.1			~~Revolving Credit and Security Agreement~~Paycheck Protection Program Term Note, dated ~~August 31, 2017~~April 28, 2020, between ~~the Company~~A.M. Castle & Co. and ~~certain of its subsidiaries,~~ PNC Bank, National Association as lender and as administrative and collateral agent, and the other lenders party thereto. Incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K filed with the SEC on September 6, 2017. Commission File No. 1-05415
10.2*22.1			~~Indenture dated August 31, 2017, between the Company, certain~~List of ~~its subsidiaries, WSFS, FSB, as Trustee~~Issuer and ~~Collateral Agent. Incorporated by reference to Exhibit 10.2 to the Company's Current Report on Form 8-K filed with the SEC on September 6, 2017. Commission File No. 1-05415~~Guarantor Subsidiaries.
10.3*31.1			Intercreditor Agreement dated August 31, 2017, between PNC Bank, National Association and Wilmington Savings Fund Society, FSB, and acknowledged by the Company and certain of its subsidiaries. Incorporated by reference to Exhibit 10.3 to the Company's Current Report on Form 8-K filed with the SEC on September 6, 2017. Commission File No. 1-05415
10.4*	~~2017 Management Incentive Plan of the Company~~
10.5*	Form of Award Agreement under the 2017 Management Incentive Plan of the Company. Incorporated by reference to Exhibit 10.4 to the Company's Current Report on Form 8-K filed with the SEC on September 6, 2017. Commission File No. 1-05415
~~10.6~~	Debtor-in-Possession Revolving Credit and Security Agreement, dated as of July 10, 2017, by and among A.M. Castle & Co., Total Plastics, Inc., HY-Alloy Steels Company, Keystone Tube Company, LLC, and Keystone Service, Inc., as Borrowers, PNC Bank, National Association, as Lender and as Administrative and Collateral Agent, and such other Lenders which may be party thereto, and the Commitment Parties thereto. Incorporated by reference to Exhibit 99.1 to the Company's Current Report on Form 8-K filed with the SEC on July 13, 2017. Commission File No. 1-05415
~~31.1~~	CEO Certification Pursuant to Section 302 of the Sarbanes Oxley Act of 2002
31.2			CFO Certification Pursuant to Section 302 of the Sarbanes Oxley Act of 2002
32.1			CEO and CFO Certification Pursuant to Section 906 of the Sarbanes Oxley Act of 2002
~~101.INS~~101			~~XBRL Instance Document~~The following financial statements from the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2020, formatted in Inline XBRL: (i) Condensed Consolidated Statements of Operations and Comprehensive Loss, (ii) Condensed Consolidated Balance Sheets, (iii) Condensed Consolidated Statements of Cash Flows, (v) Condensed Consolidated Statements of Stockholders’ Deficit, and (vi) Notes to the Condensed Consolidated Financial Statements.
~~101.SCH~~104			Cover Page Interactive Data File (formatted as Inline XBRL ~~Taxonomy Extension Schema Document~~and contained in Exhibit 101)
~~101.CAL~~			~~XBRL Taxonomy Calculation Linkbase Document~~
~~101.DEF~~		~~XBRL Taxonomy Extension Definition Linkbase Document~~
~~101.LAB~~	~~XBRL Taxonomy Label Linkbase Document~~
~~101.PRE~~	~~XBRL Taxonomy Presentation Linkbase Document~~

*	~~This agreement is considered a compensatory plan or arrangement.~~

Table of Contents

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.



	A. M. Castle & Co.
			(Registrant)
Date:	~~November~~August 14, ~~2017~~2020	By:	/s/ ~~Patrick R. Anderson~~Edward M. Quinn
			~~Patrick R. Anderson, Executive~~Edward M. Quinn, Vice President, Controller and Chief ~~Financial~~Accounting Officer ~~& Treasurer~~
			(~~Principal Financial Officer &~~ Principal Accounting Officer)
	~~(Mr. Anderson has been authorized to sign on behalf of the Registrant.)~~



Enterprise value	$	244,000
Less: fair value of debt	(238,340		)
Equity value	$	5,660



Enterprise value	$	244,000
Current liabilities	64,992
Noncurrent liabilities	23,479
Reorganization value of Successor assets	$	328,648



	As of August 31, 2017
	Predecessor			Reorganization Adjustments				Fresh-Start Adjustments				Successor
ASSETS
Current assets:
Cash and cash equivalents	$	20,443		$	(10,379	)	(a)	$	—			$	10,064
Accounts receivable, net	73,056			—				—				73,056
Inventories	153,785			—				—				153,785
Prepaid expenses and other current assets	14,217			—				—				14,217
Income tax receivable	588			—				—				588
Total current assets	262,089			(10,379		)		—				251,710
Intangible assets, net	24			—				8,151			(j)	8,175
Prepaid pension cost	9,350			—				—				9,350
Deferred income taxes	1,381			—				—				1,381
Other noncurrent assets	1,364			—				—				1,364
Property, plant and equipment:												—
Land	2,073			—				3,867			(i)	5,940
Buildings	37,498			—				(15,518		)	(i)	21,980
Machinery and equipment	129,324			—				(100,576		)	(i)	28,748
Property, plant and equipment, at cost	168,895			—				(112,227		)		56,668
Accumulated depreciation	(122,087		)	—				122,087				—
Property, plant and equipment, net	46,808			—				9,860				56,668
Total assets	$	321,016		$	(10,379	)		$	18,011			$	328,648
LIABILITIES AND STOCKHOLDERS’ EARNINGS (DEFICIT)
Current liabilities:
Accounts payable	$	47,063		$	—			$	—			$	47,063
Accrued and other current liabilities	12,145			1,961			(b)	—				14,106
Short-term borrowings	3,797			—				—				3,797
Current portion of long-term debt	109,213			(109,187		)	(c)	—				26
Total current liabilities	172,218			(107,226		)		—				64,992
Long-term debt, less current portion	—			234,517			(d)	—				234,517
Deferred income taxes	—			—				3,159			(m)	3,159
Build-to-suit liability	9,898			—				—				9,898
Other noncurrent liabilities	5,711			—				(1,715		)	(k)	3,996
Pension and postretirement benefit obligations	6,426			—				—				6,426
Liabilities subject to compromise	211,363			(211,363		)	(e)	—				—
Commitments and contingencies
Stockholders’ earnings (deficit):
Predecessor common stock	327			(327		)	(f)	—				—
Successor common stock	—			20			(g)	—				20
Predecessor additional paid-in capital	245,546			(1,883		)	(f)	(243,663		)	(l)	—
Successor additional paid-in capital	—			5,640			(g)	—				5,640
Retained (deficit) earnings	(302,833		)	69,165			(h)	233,668			(l)	—
Accumulated other comprehensive loss	(26,562		)	—				26,562			(l)	—
Treasury stock, at cost	(1,078		)	1,078			(f)	—				—
Total stockholders’ earnings (deficit)	(84,600		)	73,693				16,567				5,660
Total liabilities and stockholders’ earnings (deficit)	$	321,016		$	(10,379	)		$	18,011			$	328,648



Cash received from initial draw on New ABL Facility	$	78,797
Repayment of Debtor-In-Possession financing borrowings, including interest and fees	(66,932		)
Cash received from issuance of New Money Notes	38,002
Payment of put option fee	(2,000		)
Repayment of prepetition First Lien Notes, including interest and fees	(49,415		)
Payment of cash recovery to prepetition Second Lien Noteholders	(6,646		)
Payment related to key employee incentive plan	(1,229		)
Professional fees paid upon emergence	(956		)
Net cash paid upon emergence	$	(10,379	)



12.75% Senior Secured Notes due December 15, 2018	$	177,019
5.25% Convertible Notes due December 30, 2019	22,323
Accrued interest payable	12,021
Liabilities subject to compromise	211,363
Cash payment to prepetition Second Lien Noteholders	(6,646		)
Fair value of Second Lien Notes (including conversion option) issued to prepetition Second and Third Lien Noteholders	(110,200		)
New equity issued to prepetition Second and Third Lien Noteholders	(4,528		)
Gain on settlement of liabilities subject to compromise	$	89,989



Gain on settlement of liabilities subject to compromise	$	89,989
Write off of original issue discount and deferred financing costs	(5,412		)
Backstop and other fees related to the repayment of old debt and issuance of new debt	(10,811		)
Success fees and key employee incentive plan payments	(4,601		)
Net impact to retained earnings (accumulated deficit)	$	69,165



Reorganization value of assets	$	328,648
Less: fair value of:
Total current assets	(251,710		)
Property, plant and equipment	(56,668		)
Successor trade name	(5,500		)
Other noncurrent assets	(12,095		)
Goodwill	$	2,675



	Predecessor
	July 1, 2017 Through August 31, 2017		June 18, 2017 Through August 31, 2017
12.75% Senior Secured Notes due December 15, 2018	$	3,887	$	4,639
5.25% Convertible Notes due December 30, 2019	202		241
Total Contractual Interest	$	4,089	$	4,880



	Predecessor
	Three Months Ended September 30, 2016			Nine Months Ended September 30, 2016
Net sales	$	—		$	29,680
Cost of materials	—			21,027
Operating costs and expenses	—			7,288
Interest expense^(a)	—			333
Income from discontinued operations before income taxes	—			1,032
Income tax expense benefit ^(b)	—			(3,908		)
(Loss) gain on sale of discontinued operations, net of income taxes	(1,688		)	1,306
Income from discontinued operations, net of income taxes	$	(1,688	)	$	6,246



	Successor				Predecessor
	September 30, 2017				December 31, 2016
	Gross Carrying Amount		Accumulated Amortization		Gross Carrying Amount		Accumulated Amortization
Intangible assets subject to amortization:
Customer relationships	$	—	$	—	$	67,317	$	63,216
Intangible assets not subject to amortization:
Trade name	5,500		—		—		—
Total intangible assets	$	5,500	$	—	$	67,317	$	63,216



	Number of Shares		Weighted-Average Grant Date Fair Value
Unvested at September 1, 2017 (Successor)	$	—	$	—
Granted	1,734		3.14
Forfeited	—		—
Vested	—		—
Unvested at September 30, 2017 (Successor)	$	1,734	3.14
Expected to vest after September 30, 2017 (Successor)	$	1,734	3.14



	Predecessor
			Period Activity
	Balance January 1, 2017		Charges (gains)		Cash receipts (payments)			Non-cash activity		Balance August 31, 2017
Employee termination and related benefits	$	3,627	$	185	$	(261	)	$	—	$	3,551
Lease termination costs	823		—		(496		)	374		701
Moving costs associated with plant consolidations	—		305		(305		)	—		—
Professional fees	—		76		(76		)	—		—
Total	$	4,450	$	566	$	(1,138	)	$	374	$	4,252



	Successor
			Period Activity
	Balance September 1, 2017		Charges (gains)		Cash receipts (payments)			Non-cash activity		Balance September 30, 2017
Employee termination and related benefits ^(a)	$	3,551	$	—	$	(20	)	$	—	$	3,531
Lease termination costs^(b)	701		—		(16		)	—		685
Total	$	4,252	$	—	$	(36	)	$	—	$	4,216