UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-K

☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

~~For the fiscal year ended December 31, 2019~~

For the fiscal year ended December 31, 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 or organization)

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

1420 Kensington Road, Suite 220,

Oak Brook,

Illinois

60523

(Address of principal executive offices)

(Zip Code)


Maryland	36-0879160

(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

1420 Kensington Road, Suite 220, Oak Brook, Illinois	60523

(Address of principal executive offices)	(Zip Code)

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

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			OTCQX Best Market

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

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No ☒

~~Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act.~~

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act. Yes ☐ No ☒

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. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ☒

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 ☒ Smaller Reporting Company ☒ Emerging growth company ☐~~

Large Accelerated Filer	☐	Accelerated Filer	☐
Non-Accelerated Filer	☒	Smaller Reporting Company	☒
		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. ☐

Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

The aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was last sold as of June 28, 2019 (the last business day of the registrant’s most recently completed second fiscal quarter) was $1,584,996.

~~Indicate~~The byaggregate ~~check~~market ~~mark~~value ~~whether~~of the ~~registrant~~voting ~~has~~and ~~filed~~non-voting ~~all~~common ~~documents~~equity ~~and~~held ~~reports~~by ~~required~~non-affiliates tocomputed ~~be filed~~ by ~~Section~~reference ~~12,~~to 13the orprice ~~15(d)~~at ofwhich the ~~Securities~~common ~~Exchange~~equity ~~Act~~was oflast ~~1934~~sold ~~subsequent~~as toof June 30, 2020 (the ~~distribution~~last business day of ~~securities~~the ~~under~~registrant’s amost ~~plan~~recently ~~confirmed~~completed bysecond afiscal ~~court~~quarter) was $3,131,690.

~~☒ Yes ☐ No~~

~~The~~Indicate ~~number~~by ofcheck ~~shares~~mark ~~outstanding~~whether of the registrant’s ~~common~~has ~~stock~~filed onall ~~February~~documents and reports required to be filed by Section 2412, ~~2020~~13 ~~was~~or ~~3,649,658~~15(d) of ~~shares~~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 on March 3, 2021 was 7,255,144 shares.

DOCUMENTS INCORPORATED BY REFERENCE

Documents Incorporated by Reference						Applicable Part of Form 10-K
This Annual Report on Form 10-K incorporates by reference portions of the registrant’s Definitive Proxy Statement for its 2020 Annual Meeting of Stockholders. In the event the registrant does not file a Proxy Statement for its 2020 Annual Meeting of Stockholders with the United States Securities and Exchange Commission within 120 days after the end of the registrant’s 2019 fiscal year, this information will be included in an amendment to this Annual Report on Form 10-K.						Part III


Documents Incorporated by Reference		Applicable Part of Form 10-K
None		N/A

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Disclosure Regarding Forward-Looking Statements

Information provided and statements contained in this report that are not purely historical are 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 concerning our possible or assumed future results of operations, including descriptions of our business strategy, and the benefits that we expect to achieve from our working capital management initiative.. These statements often include words such as “believe,” “expect,” “anticipate,” “intend,” “predict,” “plan,” “should,” or similar expressions. These statements are not guarantees of performance or results, and they involve risks, uncertainties, and assumptions. Although we believe that these forward-looking statements are based on reasonable assumptions, there are many factors that could affect our actual financial results or results of operations and could cause actual results to differ materially from those in the forward-looking statements, including those risk factors identified in Item 1A “Risk Factors” of this report. 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. Except as required by the federal securities laws, we do not have any obligations or intention to release publicly any revisions to any forward-looking statements to reflect events or circumstances in the future, to reflect the occurrence of unanticipated events or for any other reason.

INDUSTRY AND MARKET DATA

In this report, we rely on and refer to information and statistics regarding the metal service center industry and general manufacturing markets. We obtained this information and these statistics from sources other than us, such as the Metals Service Center Institute, which we have supplemented where necessary with information from publicly available sources and our own internal estimates. Although we have not independently verified such information, we have used these sources and estimates and believe them to be reliable.

PART I

ITEM 1 — Business

In this Annual Report on Form 10-K, “the Company,” “we” or “our” refer to A. M. Castle & Co., a Maryland corporation, and its subsidiaries included in the consolidated financial statements, except as otherwise indicated or as the context otherwise requires.

Company Overview

A.M. Castle & Co. (the "“Company"”) is a global distributor of specialty metals and supply chain services, principally serving the producer durable equipment, commercial and military aircraft, heavy equipment, industrial goods, and construction equipment sectors of the global economy. Its customer base includes many Fortune 500 companies as well as thousands of medium- and smaller-sized firms spread across a variety of industries. 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.

The Company’s corporate headquarters is located in Oak Brook, Illinois. As of December 31, ~~2019~~2020, the Company operates out of 1921 service centers located throughout North America (1516), Europe (2) and Asia (23). The Company'’s service centers hold inventory and process and distribute products to both local and export markets.

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Industry and Markets

Service centers operate as supply chain intermediaries between primary producers, which deal in bulk quantities in order to achieve economies of scale, and end-users in a variety of industries that require specialized products in significantly smaller quantities and forms. Service centers also manage the differences in lead times that exist in the supply chain. While original equipment manufacturers (“OEM”) and other customers often demand delivery within hours, the lead time required by primary producers can range from several months to over a year for certain specialty metals. Service centers provide value to customers by aggregating purchasing, providing warehousing and distribution services to meet specific customer needs, including demanding delivery times and precise metal specifications, and by providing value-added metals processing services.

The principal markets served by the Company are highly competitive. The Company is focused on two key global end markets, aerospace and industrial. Competition within these markets is based on service, quality, processing capabilities, inventory availability, timely delivery, ability to provide supply chain solutions, and price. The Company competes in a highly fragmented industry. Competition in the various markets in which the Company participates comes from a large number of value-added metals processors and service centers on a local, regional, and global basis, some of which have greater financial resources, and some of which have more established brand names in certain local, regional, and global markets served by the Company.

competes in a highly fragmented industry. Competition in the various markets in which the Company participates comes from a large number of value-added metals processors and service centers on a local, regional, and global basis, some of which have greater financial resources, and some of which have more established brand names in certain local, regional, and global markets served by the Company.

The Company also competes to a lesser extent with primary metals producers who typically sell to larger customers requiring shipments of large volumes of metal with limited or no value-added processing.

In order to capture scale efficiencies and remain competitive, many primary metal producers are consolidating their operations and focusing on their core production activities. These producers have increasingly outsourced metals distribution, inventory management, and value-added metals processing services to metals service centers. This process of outsourcing allows the primary metal producers to work with a relatively small number of intermediaries rather than many end customers. As a result, metals service centers, including the Company, are now providing an expanding range of services for their customers, including metal purchasing, processing, and supply chain solutions.

The Company’s marketing strategy focuses on distributing highly-engineered specialty grades and alloys of metals as well as providing specialized processing services designed to meet very precise specifications. Core products include alloy and stainless steels, nickel alloys, aluminum, titanium, and carbon. Inventories of these products may assume many forms such as plate, sheet, extrusions, round bar, hexagonal bar, square and flat bar, tubing, and coil. Depending on the size of the facility and the nature of the markets it serves, the Company'’s service centers are equipped as needed with bar saws, plate saws, oxygen and plasma arc flame cutting machinery, trepanning machinery, boring machinery, honing equipment, water-jet cutting equipment, stress relieving and annealing furnaces, leveling and surface grinding equipment, CNC machinery, and sheet shearing equipment. Various specialized fabrications are also performed for customers internally or through pre-qualified subcontractors that thermally process, turn, polish, cut-to-length, and straighten alloy and carbon bar, among other things.

Procurement

The Company purchases metals from many producers. Material is purchased in large lots and stocked at its service centers until sold, usually in smaller quantities and typically with some value-added processing services performed. The Company’s ability to provide timely delivery of a wide variety of specialty metals products, along with its processing capabilities and supply chain management solutions, allows customers to lower their own inventory investment by reducing their need to order the large quantities required by producers and their need to perform additional material processing services. Some of the Company’s purchases are covered by long-term contracts and commitments, which generally have corresponding customer sales agreements.

Thousands of customers from a wide array of industries are serviced primarily through the Company’s own sales organization. Orders are primarily filled with materials shipped from Company stock. The materials required to fill the balance of sales are obtained from other sources, such as purchases from other distributors or direct mill shipments to customers. Deliveries are made principally by third party logistics providers using their fleets, which display Company-branding. Otherwise, common carrier delivery is used in areas not serviced directly by such third party logistics providers. The Company’s broad network of locations provides same or next-day delivery to most of their markets, and two-day delivery to substantially all of the remaining target markets.3

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Thousands of customers from a wide array of industries are serviced primarily through the Company’s own sales organization. Orders are primarily filled with materials shipped from Company stock. The materials required to fill the balance of sales are obtained from other sources, such as purchases from other distributors or direct mill shipments to customers. Deliveries are made principally by third party logistics providers using their fleets, some of which display Company-branding. Otherwise, common carrier delivery is used in areas not serviced directly by such third party logistics providers. The Company’s broad network of locations provides same or next-day delivery to most of their markets, and two-day delivery to substantially all of the remaining target markets.

Customers

The Company’s customer base is broadly diversified and therefore, the Company does not have dependence upon any single customer, or a few customers. The customer base includes many Fortune 500 companies as well as thousands of medium- and smaller-sized firms.

Employees

As of December 31, ~~2019~~2020, the Company had ~~873~~681 full-time employees. Of these full-time employees, ~~103~~80 were represented by the United Steelworkers of America ("“USW"”) under collective bargaining agreements. Effective May 15, 2018, we entered into a four-year collective bargaining agreement with the USW, which covers approximately 8359 employees at our largest facility in Cleveland, Ohio. Approximately 2021 employees at our Hammond, Indiana facility are covered by a separate collective bargaining agreement with the USW that was renegotiated effective September 1, ~~2016~~2020, and expires on ~~August~~ March 31, ~~2020~~2024. The Company ~~expects to begin negotiations to renew the collective bargaining agreement with the USW for employees at the Hammond, Indiana facility in early 2020. The Company~~ believes its relationships with its employees and their representative unions are good.

Access to SEC Filings

The Company makes available free of charge on or through its Web site at www.castlemetals.com the Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and all amendments to those reports as soon as reasonably practicable after such material is electronically filed with or furnished to the U.S. Securities and Exchange Commission (the “SEC”). Information on our Web site does not constitute part of this Annual Report on Form 10-K.

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Information About Our Executive Officers

The following selected information for each of our current executive officers (as defined by regulations of the SEC) was prepared as of March 4, 2021.


Name and Title	Age	Business Experience
Marec E. Edgar President & Chief Executive Officer	45	Mr. Edgar was promoted to the position of President and Chief Executive Officer, and was appointed a member of the board of directors effective January 1, 2020. Mr. Edgar began his employment with the registrant in April 2014, as Vice President and General Counsel. In May 2015, he was appointed to the position of Executive Vice President, General Counsel, Secretary & Chief Administrative Officer. In November 2018, he was promoted to the position of President.
Edward M. Quinn Vice President, Controller & Chief Accounting Officer	49	Mr. Quinn began his employment with the registrant in December 2017 as Vice President, Controller and Chief Accounting Officer. Prior to joining the Company, Mr. Quinn served as Director, Transaction & Regulatory Advisory Services at SolomonEdwardsGroup LLC, a strategic consulting firm, from April 2015 to December 2017. Before that, Mr. Quinn served as a Senior Manager for Deloitte Financial Advisory Services from 2001 to 2015.
Jeremy T. Steele Senior Vice President, General Counsel & Secretary	48	Mr. Steele began his employment with the registrant in May 2019 as Senior Vice President, General Counsel and Secretary. Prior to joining the Company, Mr. Steele served as President of Stenograph, LLC, a court reporting and captioning technology subsidiary of The Heico Companies, LLC, from 2017 to 2018. Before that, from 2011 to 2017, Mr. Steele served in increasing roles of responsibility in the Legal Department of The Heico Companies, LLC, a holding company of diversified industrial manufacturing and service companies, including General Counsel of Heico’s Pettibone Division and Heico’s Deputy General Counsel and Director of Corporate Compliance.
Mark D. Zundel Executive Vice President, Global Supply & Aerospace	47	Mr. Zundel was appointed Executive Vice President of Global Supply and Aerospace in November 2018. Mr. Zundel began his employment with the registrant in December 1995 as Vice President of Sales. In March 2009 he was appointed to Regional Commercial Manager, in April 2010 he was appointed to Director of Merchandising, in September 2013 he was appointed Director of Sourcing Commodity, in September 2015 he was appointed Vice President of Strategic Sourcing, and in June 2017, he was appointed to Senior Vice President of Commercial Sales.

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ITEM 1A — Risk Factors

(Dollar amounts in millions, except per share data)

Our business, financial condition, results of operations, and cash flows are subject to various risks, many of which are not exclusively within our control, that may cause actual performance to differ materially from historical or projected future performance. You should consider carefully the risks and uncertainties described below, in addition to other information contained in this Annual Report on Form 10-K, including our consolidated financial statements and related notes. Any of the following risks, as well as other risks and uncertainties not currently known to us or that we currently consider to be immaterial, could materially and adversely affect our business, financial condition, results of operations, or cash flows.

Capital Resources

Our substantial level of indebtedness could adversely affect our financial condition and prevent us from fulfilling our obligations under our debt instruments.

We have substantial debt service obligations. As of December 31, ~~2019~~2020, we had $~~324~~238.37 million of total debt outstanding, all of which is secured. The debt outstanding, in order of priority, was comprised of $~~127~~115.86 million of borrowings under our Revolving Credit and Security Agreement (as amended, the “ABL Credit Agreement”), $~~193~~98.78 million aggregate principal amount of 53.00% / 75.00% Convertible Senior Secured Paid In Kind (“PIK”) Toggle Notes due ~~2022~~2024 (the “~~Second~~3.00%/5.00% ~~Lien~~Convertible Notes”), including $20.31 million of restricted ~~Second~~3.00%/5.00% ~~Lien~~Convertible Notes issued to certain members of management (“MIP Notes”), $4.0 million aggregate principal amount of 5.00% / 7.00% Convertible Senior Secured Paid In Kind (PIK) Toggle Notes due 2022 (the “5.00%/7.00% Convertible Notes”, and together with the 3.00%/5.00% Convertible Notes, the “Convertible Notes”), and short-term borrowings of approximately $23.90 million under a local credit ~~facility~~facilities (see Note 2 - Debt). We also have a Paycheck Protection Program Term Note due April 28, 2022, in the amount of $10.0 million (the “PPP Loan”) and our French subsidiary’s term loan in the amount of $7.4 million (the “France Term Loan”). Our debt instruments currently limit our ability to pay in cash the interest accruing on our ~~Second~~Convertible ~~Lien~~ Notes, so the amount of ~~Second~~Convertible ~~Lien~~ Notes outstanding continues to increase quarterly as interest is paid in kind. The ABL Credit Agreement and the ~~Second~~Convertible ~~Lien~~ Notes are secured by collateral security interests in substantially all of our assets and are guaranteed by certain of our subsidiaries.

Our substantial level of indebtedness could have significant effects on our business, including the following:

•● it may be more difficult for us to satisfy our financial obligations;

•● our ability to obtain additional financing 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 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 or could affect our ability to secure favorable contracts with certain customers or suppliers;

•● 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.~~ 6

~~The~~Table ABL Credit Agreement provides for a $125.0 million senior secured, revolving credit facility ("Revolving A Credit Facility") and 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"). We expect to obtain the funds to pay our expenses and to satisfy our debt obligations from our operations and available resources under the Credit 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, 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 Contents

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

The ABL Credit Agreement provides for $125.0 million senior secured, revolving credit facility (the “Revolving A Credit Facility”) as well as a subordinated $25.0 million Revolving B (Priority) senior secured, revolving credit facility (the “Revolving B (Priority) Credit Facility”), and a subordinated $21.5 million Revolving B senior secured, revolving credit facility (the “Revolving B Credit Facility” and together with the Revolving A Credit Facility and the Revolving B (Priority) Credit Facility, the “Credit Facilities”). We expect to obtain the funds to pay our expenses and to satisfy our debt obligations from our operations and available resources under the Credit Facilities. 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, 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, 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 ABL Credit Agreement, the ~~Second~~Convertible ~~Lien~~ Notes, including MIP Notes, the PPP Loan, our France Term Loan and our local credit ~~facility~~facilities ~~has~~have an aggregate principal amount outstanding of $~~324~~238.37 million as of December 31, ~~2019~~2020. 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. 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;~~ 7

~~•enter~~Table ~~into~~of ~~certain transactions with affiliates;~~ Contents

~~•merge,~~● ~~consolidate~~grant or ~~transfer~~permit ~~substantially~~certain ~~all~~liens ofon our assets;

~~•create~~● orenter ~~permit~~into ~~restrictions on dividends, loans, asset transfers or other distributions to us from~~ certain oftransactions ~~our~~with ~~subsidiaries~~affiliates;

~~•transfer~~● merge, ~~sell~~consolidate or ~~acquire~~transfer ~~assets;~~substantially ~~and~~all of our assets;

~~•change~~● ~~the~~create ~~business~~or wepermit ~~conduct.~~restrictions on dividends, loans, asset transfers or other distributions to us from 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 or expand 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 and supply of metals, which could cause our results to be adversely affected.~~COVID-19

~~The~~Our ~~availability~~business and ~~prices~~operations, ~~we pay for metal raw materials~~ and the ~~prices~~operations weof ~~charge~~our ~~for~~suppliers ~~products~~and ~~may~~customers, ~~fluctuate~~have ~~depending on many factors~~been, ~~including~~and ~~general~~for ~~economic~~an ~~conditions~~indefinite ~~(both~~period ~~domestic~~of ~~and~~time ~~international),~~may ~~competition,~~continue ~~production~~to ~~levels~~be, ~~import~~adversely ~~tariffs,~~affected ~~duties,~~by ~~and~~the ~~other~~novel ~~trade~~coronavirus ~~restrictions,~~(or ~~geo~~COVID-~~political~~19) ~~health~~pandemic, and ~~safety~~could ~~issues,and~~be ~~currency~~impacted ~~fluctuations.~~in To the ~~extent~~future ~~metal~~by ~~prices~~other ~~decline~~pandemics, weknown ~~would~~or ~~generally expect lower sales, pricing and~~ unknown.

6We may face risks related to the ongoing outbreak of the Novel Coronavirus Disease 2019 (COVID-19), which was declared a “pandemic” by the World Health Organization and a national public health emergency by governments throughout the world as the disease spread across the globe and continues to substantially and materially impact worldwide economic activity. The continuing impact of COVID-19 and the associated pandemic is unknown and continues to evolve. 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 from time to time be prevented or impaired from conducting ordinary course business activities for indefinite periods 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 original COVID-19 virus, or variants thereof, have continued to spread in certain geographies. While vaccines are now available and being administered in certain geographies, the quantities are limited and are generally reserved at this time for healthcare workers, first responders, long-term care facility staff and residents, people 65 years or older, other individuals with significant health concerns, and essential workers. 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 yet have on

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.8

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

~~The~~the Company’'s ~~Common~~business, ~~Stock~~operations is traded on the OTCQX 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~~financial ~~levels~~condition ofis ~~liquidity~~currently ~~available to our stockholders~~unknown. ~~Securities~~Future ~~traded~~pandemics incould ~~the OTC market generally~~ have ~~less liquidity due to factors such as the reduced number of investors that will consider investing in the securities~~similar, ~~the~~or ~~reduced~~more ~~number of market makers in the securities~~severe, ~~and~~impacts ~~the~~to ~~reduced number of securities analysts that follow such securities. As a result, holders of shares of~~ our ~~common~~business ~~stock~~and ~~may find it difficult to resell their shares at prices quoted in the market or at all~~operations.

While our branches have as a whole generally remained operational at varying levels of volume throughout the pandemic, there can be no assurances that from time to time 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 arrangements, staggered and spaced work 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 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 vaccines are expected to be more widely available in the coming months, there can be no assurances as to how quickly the vaccines will be made available in sufficient quantities to mitigate the continuing economic effects of the pandemic and there can be no assurances that the vaccines will eradicate COVID-19 and any variants. While it is not possible at this time to estimate the scope and severity of the impact that COVID-19 could yet have on our branches, the continued spread of COVID-19 (including any variants), the measures taken by the governments of countries affected, the availability and efficacy of the COVID-19 vaccinations, 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 cash flows.

In April 2020, we applied for and received a $10.0 million PPP Loan (see Item 8 - Management’s Discussion and Analysis of Financial Condition and Results of Operations - Impact of Coronavirus (COVID-19) Pandemic). At that time, after taking into account, among other things, the disruptions to our business activities caused by the COVID-19 pandemic, our completed exchange offer to issue our 3.00%/5.00% Convertible Notes and shares of our common stock in exchange for our 5.00%/7.00% Convertible Notes, our available, committed primary sources of liquidity, and our lack of access to alternative sources of liquidity, we believed and certified that economic conditions at that time 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 will be audited and, despite our good-faith belief that given our circumstances we then satisfied and continue to satisfy all eligible requirements for the PPP Loan as well as all conditions for loan forgiveness. The federal government may disagree and determine that we were ineligible to have applied for and received the PPP Loan and/or ineligible for loan forgiveness either in full and/or in part. In such event, we may be required to repay the PPP Loan in its entirety and could be subject to additional penalties, which could have a material adverse effect on our liquidity and financial condition.

While we have and 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 to current customer demand as well 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 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. Although we have seen recent improvements, we saw a significant reduction in customer forecasts and orders in 2020 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- or long-term and it is uncertain how quickly customer forecasts and business will improve following this pandemic.

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Our principal sources of liquidity are cash provided by operations and proceeds from borrowings under the Credit Facilities. Starting in the second quarter of 2020, and continuing into the second half of 2020, the average receivable days outstanding increased from levels in previous quarters, which we believe reflects some slowing in payments from customers due to the financial uncertainties resulting from the COVID-19 pandemic. We also have a lower accounts receivable balance as of December 31, 2020 (as compared to previous years) 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 Credit Facilities 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 Credit Facilities could decrease accordingly. The decrease in demand has also resulted in an increase in inventory and average days sales in inventory in 2021 compared to previous years. We are 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 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 continuing severity, location and duration of the spread of COVID-19 (and any variants) as well as resurgent outbreaks of COVID-19 which could result as communities reopen, the short- and long-term efficacy of the vaccines, and the speed at which vaccinations are available and administered. 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, customers and other business partners, to return businesses to pre-pandemic levels.

Capitalization

Our public reporting obligations have been suspended, which could have an adverse impact on the market price and liquidity of our common stock and we filed documents with the SEC to terminate registration of our common stock with the SEC.

Effective as of December 29, 2020, we effected a 1-for-10 reverse stock split (the “Reverse Split”), combining each 10 shares of our common stock into one whole share of common stock and paying cash in lieu of any fractional shares that otherwise would have resulted from the Reverse Split. As the Reverse Split resulted in a reduction in the number of stockholders of record to fewer than 300, on January 6, 2021 we filed with the SEC a Certification and Notice of Termination of Registration Under Section 12(g) of the Securities Exchange Act of 1934 on Form 15, deregistering our common stock under the Securities Exchange Act of 1934. As a result of this “going private” transaction, our obligation to file periodic reports and other information with the SEC, including our quarterly and annual reports, has been suspended.

Prior to the Reverse Split and the “going private” transaction, our common stock was traded on the OTCQX® Best Market (the “OTCQX”) under the ticker “CTAM.” It is anticipated that the trading of our common stock will shift to the OTC Pink Open Market, a centralized electronic quotation service for over-the-counter securities. OTC Pink is the baseline tier of the OTC Markets and has no financial standards or reporting requirements, and companies in this tier choose the level of information they provide to investors and may have current, limited, or no public disclosure. However, OTC Pink is not a stock exchange, and we do not have the ability to control whether our shares are quoted on OTC Pink. Trading opportunities in OTC Pink will be dependent upon whether any broker-dealers commit to continue making a market for our common stock. Accordingly, we cannot guarantee that our common stock will continue to be quoted on OTC Pink. In addition, any prices at which our

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shares are quoted on the OTC Pink, if at all, may be more or less than the price of our common stock prior to deregistration. In addition, the spread between the bid and asked prices of our common stock on the OTC Pink may be wider than before deregistration and the liquidity of our shares may be lower. There can be no assurances that there will be any OTC Pink quotations for our common stock or that, if such quotations continue, they will continue for any length of time. There can be no assurances that any trading market for our common stock, at the OTC or otherwise, will continue.

Even if trading on the OTC Pink continues, 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 stockholders. 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.

After the deregistration of our common stock and suspension of our duty to file periodic reports and other information with the SEC, information regarding the Company (including our financial results) that has previously been available to the general public and our stockholders will no longer be readily available (subject in all respects to a continuing stockholder’s right, if any, to certain information regarding the Company under Maryland law). The lack of publicly available information about the Company could result in a reduction of our profile with key stakeholders such as lenders, vendors, customers, investors, and employees. The limited or absences of any trading market, and the limited or absence of public information about our operations and results of operations, may result in a decline in the price of our common stock and may result in reduced liquidity for our common stock.

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 OTCQX, 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.~~

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

The Company’s ownership is concentrated among a small group of institutional investors 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.

The lender under our Credit ~~Facility~~Facilities and/or the holders of our ~~Second~~Convertible ~~Lien~~ Notes can require us to repay our debt obligations following a change of control. We may not have sufficient funds to satisfy such cash obligations.

As of December 31, ~~2019~~2020, we had $~~127~~115.85 million of borrowings under our Credit ~~Facility~~Facilities and $~~193~~102.7 million of aggregate principal amount outstanding under the ~~Second~~Convertible ~~Lien~~ Notes, including $20.31 million of MIP Notes. Upon the occurrence of a change in control (as defined in the ABL Credit Agreement) or a fundamental change (as defined in the indenture for the ~~Second~~Convertible ~~Lien~~ Notes), which in either case includes the acquisition of more than 50% of our outstanding voting power by a person or group, we may be required to repay all borrowings under the Credit ~~Facility~~Facilities and/or repurchase some or all of the ~~Second~~Convertible ~~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. 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.

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~~Holders~~Table of our Second Lien Notes may convert their Second Lien Notes into common stock at any time or in connection with a fundamental change. The conversion of our Second Lien Notes into common stock will dilute the ownership interest of our existing stockholders.Contents

~~Pursuant~~price equal to 100% of the ~~terms~~principal amount of the ~~Second~~Convertible ~~Lien~~ Notes being ~~Indenture~~repurchased, weplus ~~may~~any ~~elect~~accrued toand ~~settle~~unpaid ~~any~~interest. ~~election~~We may not have sufficient funds to ~~convert~~satisfy ~~Second~~such ~~Lien~~cash ~~Notes~~obligations and, in ~~cash~~such circumstances, ~~common~~may ~~stock~~not orbe aable ~~combination~~to ofarrange ~~both,~~the ~~however,~~necessary ~~our~~financing ~~debt~~on ~~instruments~~favorable ~~currently~~terms ~~limit~~or at all. In addition, our ability to ~~pay~~satisfy such cash inobligations ~~respect~~will ofbe ~~the~~restricted ~~Second~~pursuant ~~Lien~~to ~~Notes.~~covenants ~~Any~~contained ~~issuance~~in bythe usindenture offor ~~our~~the ~~common~~Convertible ~~stock~~Notes and ~~upon~~will ~~conversion~~be ofpermitted ~~our~~to ~~Second~~be ~~Lien~~paid ~~Notes~~only ~~will~~in ~~dilute~~limited ~~the~~circumstances. ~~ownership~~We ~~interest~~may ofalso ~~our~~be ~~existing~~limited ~~stockholders.~~in Inour ~~addition,~~ability ~~any~~to satisfy such ~~issuance~~cash ofobligations ~~common~~by ~~stock~~applicable ~~could~~law ~~have~~or athe ~~dilutive~~terms ~~effect~~of onother ~~our~~instruments ~~net~~governing ~~income~~our ~~per~~indebtedness. ~~share~~Our inability to ~~the~~make ~~extent~~any cash payments that ~~the~~may ~~average~~be ~~stock~~required ~~price~~to ~~during~~satisfy the ~~period~~obligations isdescribed ~~greater~~above ~~than~~would trigger an event of default under the ~~conversion~~Convertible, ~~prices~~which ~~and~~in ~~exercise~~turn ~~prices~~could constitute an event of ~~the~~default ~~Second~~under ~~Lien~~our ~~Notes.~~other ~~Furthermore~~outstanding indebtedness, ~~any~~thereby ~~sales~~potentially resulting in the ~~public~~acceleration ~~market~~ of ~~our~~certain ~~common~~of ~~stock~~such ~~issuable~~indebtedness, ~~upon~~the ~~conversion~~prepayment of ~~the~~which ~~Second Lien Notes~~ could ~~adversely~~further ~~affect~~restrict ~~prevailing~~our ~~market~~ability ~~prices~~to ofsatisfy ~~our~~such ~~common~~cash ~~stock~~obligations.

Holders of our Convertible Notes may convert their Convertible Notes into common stock at any time or in connection with a fundamental change. The conversion of our Convertible Notes into common stock will dilute the ownership interest of our existing stockholders.

Pursuant to the terms of the Convertible Notes Indenture, we may elect to settle any election to convert Convertible Notes in cash, common stock or a combination of both, however, our debt instruments currently limit our ability to pay cash in respect of the Convertible Notes. Any issuance by us of our common stock upon conversion of our Convertible Notes will dilute the ownership interest of our existing stockholders. 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 Convertible Notes. Furthermore, any sales in the public market of our common stock issuable upon conversion of the Convertible Notes could adversely affect prevailing market prices of our common stock.

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

We are subject to the anti-takeover provisions of the Maryland General Corporation Law (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~~Convertible ~~Lien~~ Notes triggered by the occurrence of a fundamental change (as defined in the indenture for the ~~Second~~Convertible ~~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~~Convertible ~~Lien~~ Notes, could discourage a potential acquirer.

Our Business

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

The availability and 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 tariffs, duties, and other trade restrictions, new or ongoing health and safety issues, 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

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our ability to remain in compliance with certain provisions of our debt instruments, as well as result in us incurring impairment charges.

We service industries that are highly cyclical and impacted by international regulatory concerns, 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/or regulations and other factors beyond our control, such as acts of war or terrorism, natural disasters or public health issues or pandemics, such as that experienced with the COVID-19 pandemic. 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, 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 and the two primary global markets which we serve, aerospace and industrial.

For example, ~~two~~in ~~recent~~October 2018 and March of 2019, two commercial aircraft accidents led to the grounding ~~of the Boeing 737 Max aircraft in March 2019~~ by the Federal Aviation Administration (“FAA”) and other ~~international~~ regulatory bodies of the Boeing 737 MAX aircraft. While our overall participation on the 737 MAX program is relatively limited both through direct sales and through our customer base, certain of our aerospace customers have significant content on the aircraft. The continued grounding of the ~~aircraft~~Boeing ~~has~~737 MAX by the FAA and other regulators, which started in March of 2019, caused deliveries of that aircraft to be ~~lower~~extremely ~~than~~limited ~~expected~~ in fiscal year ~~2019~~2020, and has therefore impacted our customers, in some cases significantly. On November 18, 2020, the FAA approved the Boeing 737 MAX to return to commercial service and in some cases the aircraft resumed flying before the end of 2020, although a widespread return to service is not expected until 2021. Based on information currently available, we believe ~~when~~ the ~~aircraft~~missed ~~returns~~deliveries toresulting ~~service~~from ~~these~~the ~~missed~~prolonged ~~deliveries~~grounding of the aircraft will be fulfilled in future periods~~. Additionally~~, ~~because~~although at a slower rate than previously estimated. Because Boeing sources large quantities of metal directly from mills for certain of its programs, including the 737 MAX, there could be impacts on our suppliers and market availability of certain products as a result of excesses or shortages. InAs ~~2019, we do not believe the grounding had a negative impact on our sales demand or pricing. Further, as~~ stated above, our direct exposure to the 737 MAX is relatively limited, and therefore, we do not expect it to have a significant direct impact on sales demand or pricing of our products in ~~2020~~2021. However, we cannot exclude the possibility that ~~these~~a ~~impacts~~further prolonged grounding of the Boeing 737 MAX could affect our aerospace end markets more broadly than the specific 737 MAX program, and thus could negatively impact our profitability and/or cash flow.

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, aerospace and industrial, 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.

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An impairment or additional 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 settlement and/or 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.

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, including those resulting from competition, political instability, acts of war or terrorism, natural disasters, and public health issues or pandemics (such as COVID-19), among other things, could materially impact our ability to deliver products to customers. The sourcing of certain metals may be highly competitive due to limited supplies and availability. 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.

Our ability to use our net operating loss carryforwards ("“NOLs"”) is limited.

We have incurred substantial losses since 2008. As of December 31, ~~2019~~2020, we had United States (“U.S.”) federal net operating loss carryforwards, or NOLs, of $1224.3 million. The U.S. federal NOLs will expire in various years beginning with 2034. These U.S. federal NOLs reflect the attribute reduction for the cancellation of indebtedness resulting from our bankruptcy proceedings in 2017, as well as the write-off of the statutorily limited losses, which the Company will never be able to utilize due to Internal Revenue Code (“IRC”) section 382 limitations. We have determined that an ownership shift of greater than fifty percent occurred in 2015, 2016 and 2017 and as such, a significant portion of the pre-ownership shift NOLs are subject to an annual utilization limitation under IRC section 382 that will act to prevent the Company from utilizing most 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. In addition, we may not generate future taxable income so that we can use our available NOLs as an offset. As of December 31, 2020, we have a full valuation allowance against our federal and state NOLs that we do not expect to utilize under IRC section 382 as we have concluded, based

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~~beginning~~Table ~~with 2034. These U.S. federal NOLs reflect the attribute reduction for the cancellation~~ of indebtedness resulting from our bankruptcy proceedings in 2017, as well as the write-off of the statutorily limited losses, which the Company will never be able to utilize due to Internal Revenue Code (“IRC”) section 382 limitations. We have determined that an ownership shift of greater than fifty percent occurred in 2015, 2016 and 2017 and as such, a significant portion of the pre-ownership shift NOLs are subject to an annual utilization limitation under IRC section 382 that will act to prevent the Company from utilizing most 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. In addition, we may not generate future taxable income so that we can use our available NOLs as an offset. As of December 31, 2019, we have a full valuation allowance against our federal and state NOLs that we do not expect to utilize under IRC section 382 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.Contents

~~Changes~~on inall ~~United~~available ~~States~~evidence, ~~tax~~that ~~laws~~it ~~could~~is ~~have~~more alikely ~~material~~than ~~adverse~~not ~~effect~~that onwe ~~our~~will ~~business,~~not ~~cash~~utilize ~~flow,~~these ~~results~~federal ofand ~~operations~~state orNOLs ~~financial~~prior ~~condition~~to their respective expiration.

Legislative or regulatory measures by the U.S or non-U.S. governments, rules and interpretations under the current tax law, further changes in corporate tax rates, the realizability of the deferred tax assets and/or liabilities relating to our U.S. operations, the taxation of foreign earnings, and the deductibility of expenses (such as executive compensation) contained in tax legislation could have a material impact on the value of our deferred tax assets and/or liabilities, could result in significant charges in the current or future taxable years, and could increase our future U.S. tax expense. Furthermore, changes to the taxation of undistributed foreign earnings could change our future intentions regarding the reinvestment of such earnings. The foregoing items could have a material adverse effect on our business, cash flow, results of operations or financial condition.

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:

•● currency exchange risk;

•● changes in tariffs, duties and taxes;

•● limitations on the repatriation of earnings;

•● restrictions on imports and exports or sources of supply;

•● transportation delays or interruptions;

•● political, social and economic instability and disruptions;

•● acts of terrorism or war, natural disasters and other public health issues or pandemics;

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

•● difficulty in staffing and managing geographically diverse operations and the application of foreign labor regulations.

In addition to the United States, we operate in Canada, Mexico, France, Singapore, and China. An act of war, terrorism, public health issues or a 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 consolidated 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.

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 consolidated 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.

The imposition of tariffs or duties on imported metals could significantly increase the price of the metals we purchase from international suppliers and/or result in shortages in the supply of raw materials.

Though we source the majority of our products domestically in the countries in which we operate, we do source some products from international suppliers. The imposition of tariffs or duties on imported metals, other similar measures imposed by the U.S. government, and retaliatory/corresponding measure by other countries, has a pervasive impact on the metals market in which we operate. For example, we may be unable to pass through the higher costs to our customers for the metals we buy internationally, which could adversely impact our competitiveness, financial condition and operating results. Similarly, further decreases in imports could cause a disruption or shortage in the availability of the raw materials that we buy, which could limit our ability to meet customer'’s demand or to purchase material at competitive prices. 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.

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

As of December 31, ~~2019~~2020, approximately 18% of our U.S. employees were represented by the 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. Effective May 15, 2018, we entered into a four-year collective bargaining agreement with the USW, which covers approximately 8359 employees at our largest facility in Cleveland, Ohio. Approximately 2021 employees at our Hammond, Indiana facility are covered by a separate collective bargaining agreement with the USW that was renegotiated effective September 1, ~~2016~~2020 and expires on ~~August~~ March 31, ~~2020~~2024. ~~We plan to begin negotiations in to renew the collective bargaining agreement with the USW for employees at the Hammond, Indiana facility in early 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 all 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), Hammond (Indiana), and 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;

11● a prolonged power or telecommunication failure;

•● a ~~prolonged~~natural ~~power~~disaster, environmental or ~~telecommunication~~public ~~failure;~~health issue or pandemic, or an act of war or terrorism on-site.

•a natural disaster, environmental or public health issue or pandemic, 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.

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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.

General Risk Factors

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 fair market value of our $~~219~~149.49 million of fixed rate borrowings outstanding as of December 31, 2020 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.

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, but which could have a material adverse effect on our financial condition, liquidity or operating results.

Potential environmental legislative and regulatory actions could impose significant costs on the operations of our customers and suppliers, which could have a material adverse impact on our results of operations, financial condition and cash flows.

As a metals distributor, our operations do not emit significant amounts of greenhouse gas ("“GHG"”). However, the manufacturing processes of many of our suppliers and customers are energy intensive and generate carbon dioxide and other GHG emissions. Any adopted future climate change and GHG legislative or regulatory measures may impose significant costs on the operations of our customers and suppliers and indirectly impact our operations. Until the timing, scope and extent of any future legislation and regulation becomes known, we cannot predict the effect on our results of operations, financial condition and cash flows.

Our business could be negatively impacted by cyber and other security threats or disruptions.

We face various cyber and other security threats, including attempts to gain unauthorized access to our sensitive information and computer networks. Unauthorized or inappropriate access to, or use of, our computer networks or systems may be intentional, unintentional or a result of criminal activity. Such unauthorized or inappropriate access may lead to the corruption of data, which could cause interruption in our operations or damage our computer systems or those of our customers or vendors. A party that is able to circumvent our security measures could also gain unauthorized access to confidential, proprietary, personal or other sensitive information or capabilities, which may belong to third parties, our employees or us.

The occurrence of such threats, attacks or incidents exposes us to risk of loss and possible claims brought by our customers, employees or other parties with whom we have commercial relationships, as well as actions by government regulators. In addition to potential legal liability, these activities may interfere with our ability to provide our products and services. Further, a perception that our security measures are ineffective against security incidents could damage our reputation, and we could lose employees, customers or vendors. Any of these occurrences could have an adverse impact on our financial condition and results of operations.

Thus, the success of our business depends on the security of our computer networks and systems and, in part, on the security of the computer networks and systems of our third-party vendors. Although we utilize various procedures and controls to monitor and mitigate the risk of these threats, there can be no assurance that these procedures and controls will be sufficient. Because the techniques used to obtain unauthorized access, disable or degrade service, or sabotage systems change frequently, we may be unable to anticipate these techniques or to implement adequate preventative measures. We also cannot give assurance that the security measures of our third-party vendors, including network and system providers, providers of customer and vendor support services and other vendors will be adequate. Thus, we may need to expend significant resources to protect against security breaches or to address problems caused by such breaches.

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or to implement adequate preventative measures. We also cannot give assurance that the security measures of our third-party vendors, including network and system providers, providers of customer and vendor support services and other vendors will be adequate. Thus, we may need to expend significant resources to protect against security breaches or to address problems caused by such breaches.

ITEM 1B — Unresolved Staff Comments

None.

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ITEM 2 — Properties

The Company’s corporate headquarters are located in Oak Brook, Illinois. All properties and equipment are sufficient for the Company’s current level of activities. As of December 31, ~~2019~~2020, distribution centers and sales offices are maintained at each of the following locations, most of which are leased, except as indicated:

Locations	ApproximateFloor Area inSquare Feet
North America
Bedford Heights, Ohio	374,400	(1)
Charlotte, North Carolina	116,500	(1)
Fairless Hills, Pennsylvania	71,600	(1)
Grand Prairie, Texas	78,000	(1)
Hammond, Indiana (H-A Industries)	252,595
Janesville, Wisconsin	208,000
Kennesaw, Georgia	87,500
Mexicali, Mexico	160,220
Mississauga, Ontario	57,000
Paramount, California	155,568
Queretaro, Mexico	32,291
Santa Cantarina, Nuevo Leon, Mexico	97,692
Selkirk, Manitoba	50,000	(1)
Stockton, California	60,000
Wichita, Kansas	68,900
Europe
Tarbes, France	36,705
Montoir de Bretagne, France	38,940
Asia
Shanghai, China	45,700
Singapore	39,578
Sales Offices
Bilbao, Spain	(Intentionally left blank)
Sub-Total	2,031,189
Headquarters
Oak Brook, Illinois	39,361	(2)
GRAND TOTAL	2,070,550

(1)Represents owned facility.


	Approximate
	Floor Area in
Locations	Square Feet
North America
Bedford Heights, Ohio	374,400	(1)
Charlotte, North Carolina	116,600	(1)
Chihuahua, Mexico	30,000
Fairless Hills, Pennsylvania	71,600	(1)
Grand Prairie, Texas	78,000	(1)
Hammond, Indiana (H-A Industries)	252,595
Janesville, Wisconsin	208,000
Kennesaw, Georgia	69,100
Mexicali, Mexico	160,220
Mississauga, Ontario	57,000
Paramount, California	155,568
Queretaro, Mexico	32,291
Santa Cantarina, Nuevo Leon, Mexico	97,692
Selkirk, Manitoba	50,000	(1)
Stockton, California	60,000
Wichita, Kansas	120,119
Europe
Tarbes, France	36,705
Montoir de Bretagne, France	38,940
Asia
Chengdu, China	20,796
Shanghai, China	45,700
Singapore	41,000
Sales Offices
Bilbao, Spain	(Intentionally left blank)
Sub-Total	2,116,326

Headquarters
Oak Brook, Illinois	39,361	(2)
GRAND TOTAL	2,155,687

(21)~~The~~ ~~Company’s~~Represents ~~principal~~owned ~~executive office does not include a distribution center~~facility.

14(2) The Company’s principal executive office does not include a distribution center.

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ITEM 3 — Legal Proceedings

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. Although the outcome of these proceedings is inherently difficult to predict, management believes that the 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.

ITEM 4 — Mine Safety Disclosures

Not applicable.

~~Information About Our Executive Officers~~

~~The following selected information for each of our current executive officers (as defined by regulations of the SEC) was prepared as of February 27, 2020.~~

Name and Title	Age	Business Experience
Marec E. EdgarPresident & Chief Executive Officer	44	Mr. Edgar was promoted to the position of President and Chief Executive Officer, and was appointed a member of the board of directors effective January 1, 2020. Mr. Edgar began his employment with the registrant in April 2014, as Vice President and General Counsel. In May 2015, he was appointed to the position of Executive Vice President, General Counsel, Secretary & Chief Administrative Officer. In November 2018, he was promoted to the position of President.
Patrick R. AndersonExecutive Vice President, Finance & Administration	48	Mr. Anderson was appointed to the position of Executive Vice President, Finance & Administration in December 2018. He began his employment with the registrant in 2007 as Vice President, Corporate Controller and Chief Accounting Officer. In September 2014, he was appointed to the position of Interim Vice President, Chief Financial Officer and Treasurer, and in May 2015 was appointed to the position of Executive Vice President, Chief Financial Officer & Treasurer.
Edward M. QuinnVice President, Controller & Chief Accounting Officer	48	Mr. Quinn began his employment with the registrant in December 2017 as Vice President, Controller and Chief Accounting Officer.
Jeremy T. Steele Senior Vice President, General Counsel & Secretary	47	Mr. Steele began his employment with the registrant in May 2019 as Senior Vice President, General Counsel and Secretary.
Mark D. ZundelExecutive Vice President, Global Supply & Aerospace	46	Mr. Zundel was appointed Executive Vice President of Global Supply and Aerospace in November 2018. Mr. Zundel began his employment with the registrant in December 1995 as Vice President of Sales. In March 2009 he was appointed to Regional Commercial Manager, in April 2010 he was appointed to Director of Merchandising, in September 2013 he was appointed Director of Sourcing Commodity, in September 2015 he was appointed Vice President of Strategic Sourcing, and in June 2017, he was appointed to Senior Vice President of Commercial Sales.

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PART II

ITEM 5 — Market for the Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

~~The~~On December 28, 2020, the Company' filed articles of amendment to effect a reverse stock split of the Company’s outstanding shares of common stock, ispursuant ~~traded~~to onSection 2-309(e) of the ~~OTCQX~~Maryland ~~tier~~General Corporation Law, whereby each 10 shares of common stock issued and outstanding as of December 29, 2020 was combined into one whole share of common stock. No fractional shares of common stock were issued as a result of the ~~OTC~~Reverse ~~Markets~~Split. ~~Group~~In lieu of issuing any fractional shares to any stockholder as a result of the Reverse Split, ~~Inc~~the Company made, to any stockholder that would otherwise hold a fractional share after giving effect to the Reverse Split, a cash payment in an amount equal to $0.70 multiplied ~~("OTCQX")~~by ~~under~~the number of pre-split shares held by such stockholder with respect to which a fractional share would have been issued. Stockholders of record who owned fewer than 10 shares of common stock prior to the ~~symbol~~Reverse ~~"CTAM"~~Split were cashed out and are no longer stockholders of the Company.

AsPrior ofto ~~December~~the ~~31,~~Reverse ~~2019~~Split, ~~there~~the ~~were~~Company’s ~~approximately 335 stockholders of record of our~~ common stock, ~~which~~was ~~excludes~~traded ~~stockholders~~on ~~whose~~the ~~shares~~OTCQX ~~were~~tier ~~held~~of inthe ~~nominee~~OTC orMarkets ~~street~~Group, Inc. ~~name~~under bythe ~~brokers~~symbol “CTAM.”

As permitted by the Exchange Act, following determination by the Company that the number of stockholders of record of the Company’s common stock was fewer than 300, following the Reverse Split on January 6, 2021, the Company consummated a “going private” transaction by filing a Form 15 with the SEC. The Form 15 notified the SEC of the withdrawal of the Company’s common stock from registration under Section 12(g) of the Exchange Act in accordance with Rule 12g-4(a)(1) under the Exchange Act. As a result, the Company’s obligation to file periodic reports, including its quarterly and annual reports, has been suspended. The deregistration is expected to become effective 90 days after filing of the Form 15, which will be after the filing of this Annual Report on Form 10-K.

As of December 31, 2020, there were approximately 101 stockholders of record of our common stock, which excludes stockholders whose shares were held in nominee or street name by brokers.

See Part III, Item 12, “Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters”, for information regarding common stock authorized for issuance under equity compensation plans.

ITEM 7 — Management’s Discussion and Analysis of Financial Condition and Results of Operations

Information regarding the business and markets of A.M. Castle & Co. and its subsidiaries (the “Company”) is included in Item 1 “Business” of this annual report on Form 10-K. All references to numbers of shares and per share data has been adjusted to reflect the Reverse Stock Split that occurred on December 29, 2020.

The following discussion should be read in conjunction with the Company’s consolidated financial statements and related notes thereto in Item 8 “Financial Statements and Supplementary Data”. The following discussion and analysis of our financial condition and results of operations contain forward-looking statements and includes numerous risks and uncertainties, including those described under Item 1A "“Risk Factors"” and "“Disclosure Regarding Forward-Looking Statements"” of this Annual Report on Form 10-K. Actual results may differ materially from those contained in any forward-looking statements.

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EXECUTIVE OVERVIEW

Financial Results Summary

The Company’s strategy is to become a leading global provider of specialty metals products and services and supply chain solutions to targeted global industries.

During the year ended December 31, ~~2019~~2020:

•● Net sales decreased by 334.82%, compared to the prior year. The decrease in net sales in the current year was driven by a significant decrease in average tons sold per day, ~~which~~and ~~more~~to ~~than~~a ~~offset~~lesser andegree ~~increase~~a decrease in commodities pricing on the Company'’s products ~~and a favorable sales mix~~.

•● Operating loss ~~improved~~was ~~from a loss of~~ $1623.7 million in the year ended December 31, ~~2018~~2020, compared to an operating loss of $10.1 million in the year ended December 31, 2019.

•● Cash flows from operations generated $1020.85 million in cash in the year ended December 31, ~~2019~~2020, driven primarily by collections of accounts receivable and improved inventory management, compared to cash flow ~~used~~generated infrom operations of $2310.8 million in the year ended December 31, ~~2018~~2019.

•● Improved gross material margin to 2526.29%, ~~which~~compared ~~includes~~to a gross material margin of 25.2% (including a non-recurring non-cash inventory charge of $1.3 million,) in the ~~year ended December 31, 2019, compared to a gross material margin of 24.9% in the~~ prior year. (Gross material margin is a non-U.S. GAAP measure calculated as net sales less cost of materials divided by net sales).

Recent Market and Pricing Trends

~~Although~~As ~~metals~~expected, ~~prices~~demand ~~declined~~and ~~more~~pricing ~~than~~headwinds ~~expected~~ in the industrial market from the second half of ~~the~~2019 ~~year,~~continued ~~particularly~~into in2020 ~~the~~and ~~North~~were ~~American~~further ~~industrial~~worsened ~~end~~by ~~markets,~~the ~~overall~~macroeconomic ~~pricing~~impacts ~~within~~of the ~~metals~~COVID-19 ~~market~~pandemic, ~~continued~~resulting toin ~~have~~ a ~~positive~~decrease ~~impact~~in onvolumes ~~the~~and ~~Company's~~average selling prices ~~throughout~~for ~~2019. To~~ the ~~extent~~majority ~~that~~of the Company's ~~can~~core ~~pass~~industrial ~~through~~products, ~~higher~~namely ~~material~~alloy ~~costs to its contractual customers~~bar, wecarbon ~~expect~~and ~~higher~~alloy ~~selling~~flat ~~prices~~products, ~~within~~and ~~the~~SBQ ~~metals~~bar. ~~market~~In ~~to continue to have an overall favorable impact on~~ the Company'’s ~~operating~~other ~~results.~~primary Ifmarket, ~~higher material costs are not passed through to its contractual customers~~aerospace, the ~~Company~~favorable ~~fails~~demand toand ~~avoid~~pricing anmomentum ~~overstocked~~for ~~position~~aluminum ~~relative~~and tostainless ~~the~~products ~~market~~experienced ~~and~~in ~~restock~~the atfirst ~~lower~~quarter ~~replacement~~of ~~costs,~~2020 orwas ifrapidly ~~prices~~and ~~begin~~dramatically toreduced ~~decrease~~by ~~within~~ the ~~metals~~COVID-19 ~~market~~pandemic, ~~the~~which ~~Company's~~effectively ~~operating~~grounded ~~results~~global ~~will~~air ~~be adversely impacted~~travel.

The current metals pricing environment is challenging as a decrease in demand and availability in supply has led to increased price competition for all of the Company’s core products. In ~~many~~challenging ~~cases~~market conditions such as these, the Company has strategically focused on more highly accretive sales, particularly those including higher margin, value added service offerings. Despite macro headwinds in pricing, in the year ended December 31, 2020, the Company achieved gross material margin of ~~its~~26.9%, ~~products~~compared to a gross material margin of 25.2% (including a non-recurring non-cash inventory charge of $1.3 million) in the prior year. To the extent that the Company can pass through higher material costs to its contractual customers, we expect higher selling prices within the metals market to continue to have aan ~~more~~overall ~~significant~~favorable impact on the Company'’s ~~operating~~gross ~~results~~material ~~than~~margin. ~~demand~~If ~~because~~higher ofmaterial costs are not passed through to its contractual customers, the ~~following~~Company ~~reasons~~fails to avoid an overstocked position relative to the market and restock at lower replacement costs, ~~among~~or ~~others:~~ if prices begin to decrease within the metals market, the Company’s gross material margin may be adversely impacted.

•Changes in volume resulting from changes in demand typically result in corresponding changes to the Company’s variable costs. However, as pricing changes occur, variable expenses are not directly impacted. 22

~~•If~~Table ~~surcharges~~of ~~are not passed through to the customer or are passed through without a mark-up, the Company’s profitability will be adversely impacted.~~Contents

In ~~total,~~many ~~demand for the Company's products softened considerably in 2019~~cases, ~~compared to~~ the ~~prior~~pricing ~~year, as tons sold per day decreased compared to the prior year for the majority~~ of ~~the~~its products ~~the~~can ~~Company~~have ~~sells,~~a ~~with~~more ~~the~~significant ~~exception~~impact ofon ~~aluminum. The increase in aluminum demand was primarily~~ the ~~result of strength in the aerospace market, a trend the~~ Company’s ~~expects~~operating toresults ~~continue~~than ~~despite~~demand ~~uncertainties~~because ~~around the return to service~~ of the ~~Boeing~~following ~~737 MAX. The Company expects demand for its other core products~~reasons, ~~namely~~among alloy bar, carbon and alloy flat products and SBQ bar, to remain soft in the near term, primarily due to continued weakness in the Industrial end markets. The Company believes that its disciplined focus on highly-accretive sales, particularly those including its value-added service offerings, will allow it to maintain relatively stable gross material margins despite the softening of demand, particularly in the North American industrial end markets. others:

18● Changes in volume resulting from changes in demand typically result in corresponding changes to the Company’s variable costs. However, as pricing changes occur, variable expenses are not directly impacted.

~~The~~● ~~demand~~If ~~for~~surcharges ~~the~~are ~~Company's~~not ~~products~~passed ~~may~~through ~~change from time~~ to ~~time based on, among other things, general economic conditions, industry capacity, and~~ the ~~cyclical~~customer nature of the industries in which the Company's customers operate. The pricing environment, leading to increased competitiveness within the market, can also have a significant impact on demand. An increase or ~~decrease~~are inpassed ~~the~~through ~~demand~~without ~~for the Company's products has~~ a ~~significant impact on the Company's operating results. When volume increases~~mark-up, the Company'’s ~~sales~~profitability ~~dollars~~will ~~generally~~be ~~increase,~~adversely ~~which leads to more dollars earned from normal operations~~impacted. Similarly, a decrease in demand results in lower sales dollars which, once costs and expenses are factored in, leads to less dollars earned from normal operations. Although the lower demand also decreases the cost of materials and operating costs, including warehouse, delivery, selling, general and administrative expenses, the decrease in these costs and expenses is often less than the decrease in sales dollars due to fixed costs, resulting in lower operating margins. Management believes that with the Company's new global supply organization, which is focused on reducing aged inventories, improving overall stock levels throughout the Company, and providing real-time facilitation of the Company's branches in selling higher cost inventory, as well as its focus to excel in its highly accretive core product lines to the exclusion of low-margin, working capital intensive opportunities, it is in a better position to react quickly to variability in end-market demand and to manage the impact that demand variability might have on operating margins.

~~Industry~~In ~~data~~total, ~~provided~~demand byfor the ~~Metals~~Company’s ~~Service~~products ~~Center~~decreased ~~Institute~~considerably ~~("MSCI")~~in ~~indicates~~2020, ~~that~~compared ~~overall~~to ~~2019~~the ~~U.S.~~prior year, ~~steel~~driven ~~service~~primarily ~~center~~by ~~shipment~~the ~~volumes~~macroeconomic ~~decreased~~impacts 7%of ~~compared~~the toCOVID-19 ~~2018 levels. According to MSCI data~~pandemic, ~~industry~~which ~~sales~~worsened ~~volumes~~already ofsoft ~~products~~industrial ~~consistent~~end ~~with~~markets ~~the~~and ~~Company's~~substantially ~~product~~deteriorated ~~mix~~global ~~decreased~~demand ~~11%~~for inaerospace ~~2019~~products. ~~compared~~The toweakening ~~2018.~~of Ofdemand within the ~~U.S.~~aerospace ~~steel~~market ~~service~~is ~~center~~largely ~~products~~attributable ~~tracked~~to by the ~~MSCI,~~impact ~~shipment volumes for all~~ of the ~~products~~COVID-19 ~~decreased~~pandemic inon ~~2019~~global ~~compared~~air totravel ~~2018~~and ~~with~~the ~~carbon~~grounding ~~bars,~~of ~~carbon~~the ~~plate,~~Boeing ~~and~~737 ~~carbon~~MAX, ~~pipe~~for ~~and~~which ~~tube~~some ~~having~~of the ~~most~~Company's ~~significant~~customers ~~decreases~~supply content.

~~Despite~~Industry ~~the~~data ~~decrease~~provided inby ~~sales volume due to~~ the ~~softening~~Metals ofService ~~the~~Center ~~industrial~~Institute ~~end~~(“MSCI”) ~~market,~~indicates ~~the~~that ~~Company's~~overall ~~gross~~2020 ~~material~~U.S. ~~margin,~~steel ~~calculated~~service ascenter ~~net~~shipment ~~sales~~volumes ~~less~~decreased ~~cost~~11% ofcompared ~~materials~~to ~~(exclusive~~2019 ~~of depreciation) divided by net sales, was 25~~levels.2% inAccording ~~the~~to ~~year~~MSCI ~~ended December 31~~data, ~~2019,~~industry ~~compared~~sales tovolumes ~~a gross material margin~~ of ~~24.9%~~products inconsistent with the ~~prior year. The~~ Company’s ~~believes~~product ~~the~~mix ~~slight~~decreased ~~improvement~~12% in ~~gross~~2020 ~~material~~compared ~~margin~~to ~~while~~2019. inOf ~~challenging~~the ~~market~~U.S. ~~conditions~~steel isservice acenter ~~result~~products oftracked aby ~~focus~~the ~~on highly accretive sales~~MSCI, ~~particularly~~shipment ~~sales~~volumes ~~including~~for ~~higher~~all ~~margin~~of ~~value~~the ~~added~~products ~~service~~decreased ~~offerings. The Company expects its margins will remain stable~~ in 2020 ascompared ~~its~~to ~~improved~~2019 ~~inventory~~with ~~management~~carbon ~~offsets~~bars, ~~the~~stainless ~~headwinds~~steel ~~produced~~and byaluminum ~~reduced~~having ~~demand~~the ~~and~~most asignificant ~~downward pricing environment~~decreases.

The demand for the Company’s products may change from time to time based on, among other things, general economic conditions, industry capacity, and the cyclical nature of the industries in which the Company’s customers operate. The pricing environment, leading to increased competitiveness within the market, can also have a significant impact on demand. An increase or decrease in the demand for the Company’s products has a significant impact on the Company’s operating results. When volume increases, the Company’s sales dollars generally increase, which leads to more dollars earned from normal operations. Similarly, a decrease in demand results in lower sales dollars which, once costs and expenses are factored in, leads to less dollars earned from normal operations. Although the lower demand also decreases the cost of materials and operating costs, including warehouse, delivery, selling, general and administrative expenses, the decrease in these costs and expenses is often less than the decrease in sales dollars due to fixed costs, resulting in lower operating margins. Management believes that with the Company’s new global supply organization, which is focused on reducing aged inventories, improving overall stock levels throughout the Company, and providing real-time facilitation of the Company’s branches in selling higher cost inventory, as well as its focus to excel in its highly accretive core product lines to the exclusion of low-margin, working capital intensive opportunities, it is in a better position to react quickly to variability in end-market demand and to manage the impact that demand variability might have on operating margins.

Current Business Outlook

~~The~~Although there were intermittent signs of recovery in the second half of 2020, the Company isexperienced ~~principally~~significantly ~~focused~~lower ondemand ~~two~~for ~~key~~its products in 2020 as many of the industries the Company serves continue to be impacted economically, some significantly, by the COVID-19 pandemic. The global ~~markets~~health crisis caused by the COVID-19 pandemic continues to result in a decline in orders from and shipments to customers compared to pre-pandemic levels, ~~aerospace~~as well as slower-than-normal payments from customers and ~~industrial~~disruptions at certain of the Company's suppliers. In addition, the pricing environment for the Company's products continues to be extremely competitive with lower average price per ton sold in the year ended December 31, 2020 compared to the prior year. The Company anticipates the recovery in economic activity to pre-pandemic levels will be slower than originally expected as its customers and suppliers struggle to return their own businesses to pre-pandemic levels. The Company expects COVID-19 to continue to have an unfavorable impact on its financial results and business into 2021.

The aerospace market continues to be strong with defense and commercial spending driving the demand for the Company's aluminum, stainless, and titanium products. The Company expects the aerospace market to remain robust, particularly where the Company has long-term contracts with subcontractors who support platforms that are anticipated to grow. However, the Company does anticipate continued pressure on transactional pricing resulting from competition in the market. 23

~~The~~Table ~~industrial end markets the Company serves are expected to remain extremely competitive in the near term with some demand and pricing headwinds from the second half~~ of 2019 continuing into 2020. Given the Company's lower cost structure, which is the result of its restructuring activities, it does see an opportunity to continue to grow market share by continuing to improve its conversion rate on transactional business on a competitive basis at still accretive net margins. Contents

~~Uncertainty~~To ~~around~~date, the ~~imposition~~Company ofhas ~~tariffs~~taken oractions ~~duties~~to onmaintain ~~the~~operations ~~import~~through ~~of steel or aluminum, as well as~~ the ~~ongoing~~pandemic ~~negotiation of trade deals between the U.S. government~~ and ~~foreign~~its ~~nations,~~network isas ~~expected to contribute to~~ a ~~competitive~~whole ~~pricing~~has ~~environment~~remained ~~in 2020. Particular to the aerospace end market~~operational, ~~uncertainty~~albeit ~~regarding~~at ~~the~~varying ~~return~~levels ~~to service~~ of ~~the~~volume ~~Boeing~~aligned ~~737 MAX could lead~~ to ~~additional~~customer ~~competition~~orders inand ~~the pricing of aluminum~~forecasts. ~~Largely~~The ~~favorable~~Company ~~commodity~~has ~~pricing~~prepared isand ~~expected~~regularly toupdates ~~continue~~business incontinuity ~~the~~plans ~~near-term,~~for ~~although~~ongoing ~~the~~operations ~~Company~~and ~~also~~has ~~expects~~taken ~~U.S.~~steps ~~mill pricing~~ to ~~increase,~~adjust ~~resulting in higher material costs. However, given~~ its ~~long-standing~~business ~~relationships~~to ~~with~~match ~~domestic steel mills,~~ the ~~Company~~deteriorating ~~also~~economic ~~believes~~conditions, itincluding isthe ~~currently~~implementation ~~well-positioned to take advantage~~ of anenhanced ~~increasing~~measures ~~pricing~~through ~~environment~~its ~~expected~~global tosupply ~~result from the tariffs~~ and ~~may~~branch ~~have~~management ateams ~~competitive~~to ~~price~~ensure ~~advantage~~the ~~relative~~Company tois ~~other~~efficiently ~~U.S.-based~~utilizing ~~steel~~inventory ~~service~~on ~~centers~~hand ~~that~~and ~~are~~inbound, ~~more~~as ~~reliant~~well onas ~~imported~~its ~~steel~~internal ~~and~~processing ~~aluminum products~~capabilities.

Given the expectation that the recovery to pre-pandemic levels may be longer than originally expected, the Company has implemented a long-term, permanently sustainable cost structure that does not rely on temporary cost reduction measures as significantly as during the early stages of the pandemic. The Company believes the permanent cost-cutting measures it implemented not only align the Company with current demand, but also better prepare it for any market recovery once this pandemic has passed. Permanent cost-cutting measures, which are estimated to reduce the Company's operating expenses by approximately $15.0 to $16.0 million on an annualized basis, primarily included staff reductions through layoffs, which were implemented in conjunction with the elimination of most of the temporary cost measures taken previously, including the temporary reduction in employee hours and/or salaries, deferral of periodic salary increases and/or incentive pay, and/or a combination of these actions. In an effort to protect the health and safety of its employees, the Company has adopted face covering requirements, 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 and corporate 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, the availability and efficacy of vaccinations, 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, economic conditions at that time 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

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permissible purposes only and intends to apply for forgiveness of the full amount 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 €6.0 million 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 December 31, 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 Consolidated Balance Sheets.

The Company will continue to actively monitor the situation as it relates to the COVID-19 pandemic 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 fiscal 2021 or beyond.

RESULTS OF OPERATIONS

Our discussion of comparative period results is based upon the following components of the Company’s Consolidated Statements of Operations and Comprehensive Loss.

Net Sales —The Company derives its sales from the processing and delivery of metals. Pricing is established with each customer order and includes charges for the material, processing activities and delivery. The pricing varies by product line and type of processing. From time to time, the Company may enter into fixed price arrangements with customers while simultaneously obtaining similar agreements with its suppliers.

Cost of Materials — Cost of materials consists of the costs that the Company pays suppliers for metals and related inbound and transfer freight charges, excluding depreciation, which is included in operating costs and expenses discussed below.

Operating Costs and Expenses — Operating costs and expenses primarily consist of:

•● Warehouse, processing and delivery expenses, including occupancy costs, compensation and employee benefits for warehouse personnel, processing, shipping and handling costs;

•● Sales expenses, including compensation and employee benefits for sales personnel;

•● General and administrative expenses, including compensation for executive officers and general management, expenses for professional services primarily related to accounting and legal advisory services, bad debt expense, data communication and computer hardware and maintenance;

•● Depreciation for all property, plant and equipment.

~~Year ended December 31, 2019 compared to the year ended December 31, 2018~~25

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Year ended December 31, 2020 compared to the year ended December 31, 2019

The following table sets forth certain statement of operations data in each year indicated:

	Year Ended December 31,
	2019						2018						Favorable/(Unfavorable)
(Dollar amounts in millions)	$		% of Net Sales		$		% of Net Sales		Year-over-Year $ Change		Year-over-Year % Change
Net sales	$	559.6	100.0	%	$	582.0	100.0	%	$	(22.4)	(3.8)	%
Cost of materials (exclusive of depreciation)	418.8		74.8	%	437.1		75.1	%	18.3		4.2	%
Operating costs and expenses	150.9		27.0	%	161.7		27.8	%	10.8		6.7	%
Operating loss	$	(10.1)	(1.8)	%	$	(16.7)	(2.9)	%	$	6.6	(39.5)	%


									Favorable/
	Year Ended December 31,								(Unfavorable)
	2020				2019				Year-over-		Year-over-
			% of Net				% of Net		Year		Year
(Dollar amounts in millions)	$		Sales		$		Sales		$Change		% Change

Net sales	$	368.3	100.0	%	$	559.6	100.0	%	$	(191.3)	(34.2)	%
Cost of materials (exclusive of depreciation)		269.1	73.1	%		418.8	74.8	%		149.7	35.7	%
Operating costs and expenses		122.8	33.3	%		150.9	27.0	%		28.1	18.6	%
Operating loss	$	(23.7)	(6.4)	%	$	(10.1)	(1.8)	%	$	(13.5)	20.2	%

Net Sales

Net sales of $~~559~~368.63 million in the year ended December 31, ~~2019~~2020 were a decrease of $22191.43 million, or 334.82%, compared to $~~582~~559.06 million in the year ended December 31, ~~2018~~2019. The decrease in net sales in the ~~current~~ year ended December 31, 2020 compared to the prior year was driven primarily by athe ~~decrease~~macroeconomic inimpacts ~~tons~~of ~~sold~~the ~~per~~COVID-19 ~~day~~pandemic, ~~partially~~which ~~offset~~worsened byalready ansoft ~~increase~~industrial inend ~~selling~~markets ~~prices~~ and afurther ~~favorable~~weakened ~~sales~~demand ~~mix.~~for ~~Tons~~global ~~sold~~aerospace ~~per~~products. ~~day~~The ~~decreased~~weakening ~~19.1%~~of indemand within the ~~year~~aerospace ~~ended~~market ~~December~~is ~~31,~~largely ~~2019~~attributable ~~compared~~ to the ~~prior~~impact ~~year~~of ~~driven~~the ~~primarily~~COVID-19 bypandemic ~~decreased~~on ~~sales~~global ~~volumes~~air oftravel ~~carbon~~and ~~flat~~the ~~roll,~~grounding ~~alloy~~of ~~bar,~~the ~~SBQ~~Boeing ~~bar,~~737 ~~and stainless~~MAX, ~~partially~~for ~~offset~~which bysome anof ~~increase~~the inCompany's ~~told~~locations ~~sold~~have ~~per~~customers ~~day~~that ofsupply ~~aluminum products~~content. InTons ~~the~~sold ~~third~~per ~~quarter~~day offor ~~2019,~~ the Company's ~~made~~products ~~the~~decreased ~~strategic~~by ~~decision~~31.8% toin ~~exit a portion of~~ the ~~carbon~~year ~~flat-roll~~ended ~~market~~December ~~served~~31, by2020, ~~one~~compared ofto ~~its~~the ~~Mexican~~prior ~~operations~~year.

~~Although~~In ~~metals~~the ~~prices~~year ~~declined~~ended ~~more~~December ~~than~~31, ~~expected~~2020, inoverall ~~the~~average ~~second~~selling ~~half~~prices of the ~~year,~~Company's ~~particularly~~product inmix ~~the~~sold ~~North~~decreased ~~American~~3.5% ~~industrial~~compared ~~end~~to ~~markets, overall pricing within~~ the ~~metals~~year ~~market~~ended ~~continued~~December to31, ~~have~~2019. aThe ~~positive~~macroeconomic impact onof the ~~Company's~~COVID-19 ~~selling~~pandemic ~~prices~~has ~~throughout~~resulted ~~2019.~~in ~~Overall,~~a ~~average~~decrease ~~selling~~in ~~prices~~demand and availability of ~~the~~supply, ~~Company's~~which ~~product~~has ~~mix~~led ~~sold~~to increased ~~19.3%~~price incompetition ~~the~~for ~~year~~all ~~ended~~of ~~December~~the ~~31,~~Company's ~~2019,~~core ~~compared~~products. toWith the ~~prior~~exception ~~year~~of ~~with~~aluminum, ~~favorable~~nickel ~~selling~~and ~~prices~~titanium, ~~realized~~which onhad ~~the~~increases ~~majority~~in ofprice ~~the~~per ~~commodities~~ton ~~that~~sold, the ~~Company~~price ~~sells.~~per ~~The~~ton ~~most~~sold ~~favorable~~decreased ~~selling~~for ~~prices~~all ~~were~~of ~~realized~~the onproducts the Company's ~~highest~~sells ~~selling~~in ~~commodities,~~the ~~including~~year ~~carbon~~ended ~~and~~December ~~alloy~~31, ~~plate~~2020, ~~alloy~~compared ~~bar,~~to ~~stainless,~~the ~~SBQ~~year ~~bar,~~ended ~~and~~December ~~aluminum~~31, 2019.

The Company expects a long and slow market recovery to pre-pandemic levels. As a result, the Company believes that the unfavorable financial and business impacts of the pandemic that were experienced in the second through fourth quarters of 2020 will continue into 2021 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 2021.

Cost of Materials

Cost of materials (exclusive of depreciation) was $~~418~~269.81 million in the year ended December 31, ~~2019~~2020 compared to $~~437~~418.18 million in the year ended December 31, ~~2018~~2019. The ~~year ended December 31, 2019 included a one-time~~ $1149.37 million, ~~noncash~~or ~~charge~~35.7%, ~~for~~decrease in the year ~~write-down~~ended ofDecember 31, ~~inventory~~2020 ~~recorded~~compared into the year ~~third~~ended ~~quarter~~December 31, of 2019 inwas ~~conjunction~~primarily ~~with~~due ~~the Company's decision~~ to ~~exit a portion of~~ the ~~carbon~~decrease ~~flat-roll~~in ~~market~~net ~~served~~sales byvolume ~~one~~compared ofto ~~its~~the ~~Mexican operations~~ prior year.

20Cost of materials (exclusive of depreciation) was 73.1% of net sales in the year ended December 31, 2020, compared to 74.8% of net sales in the year ended December 31, 2019. Cost of materials in the year ended December 31, 2019 included a non-recurring non-cash inventory charge of $1.3 million. 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 sales of products with higher gross material margins (calculated as net sales less cost of materials divided by net sales) in the year ended December 31, 2020, compared to the year ended December 31, 2019. The Company expects its margins will remain relatively stable

("Mexican inventory write-down"). The $18.3 million, or 4.2%, decrease in the year ended December 31, 2019 compared to the year ended December 31, 2018 was primarily due to the decrease in net sales volume compared to the prior year, partially offset by the Mexican inventory write-down. 26

~~Cost~~Table of materials (exclusive of depreciation) was 74.8% of net sales in the year ended December 31, 2019, compared to 75.1% of net sales in the year ended December 31, 2018. Ongoing strength in commodity pricing and the Company's focus on selectively pursuing higher margin sales that are 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 the year ended December 31, 2019, compared to the year ended December 31, 2018. Contents

in 2021 as its improved inventory management partially 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

Operating costs and expenses in the year ended December 31, ~~2019~~2020 and in the year ended December 31, ~~2018~~2019 were as follows:

	Year Ended December 31,						Favorable/(Unfavorable)
(Dollar amounts in millions)	2019		2018		Year-over-Year $ Change		Year-over-Year % Change
Warehouse, processing and delivery expense	$	77.6	$	83.6	$	6.0	7.2	%
Sales, general and administrative expense	64.6		68.9		4.3		6.2	%
Depreciation expense	8.8		9.1		0.3		3.3	%
Total operating costs and expenses	$	150.9	$	161.7	$	10.8	6.7	%

Total operating costs and expenses decreased by $10.8 million to $150.9 million in the year ended December 31, 2019 from $161.7 million in the year ended December 31, 2018:


					Favorable/ (Unfavorable)
					Year-over-		Year-over-
	Year Ended December 31,				Year		Year
(Dollar amounts in millions)	2020		2019		$Change		% Change
Warehouse, processing and delivery expense	$	59.5	$	77.6	$	18.1	23.3	%
Sales, general and administrative expense		52.8		64.6		11.8	18.3	%
Depreciation expense		7.9		8.8		0.9	10.2	%
Impairment of goodwill		2.7		—		(2.7)	—
Total operating costs and expenses	$	122.8	$	150.9	$	28.1	18.6	%

•Warehouse, processing and delivery expense decreased by $6.0 million primarily due to lower sales volume in the year ended December 31, 2019, compared to the year ended December 31, 2018, which resulted in a decrease in warehouse and freight costs as well as lower payroll and benefits costs.

~~•Sales,~~Total ~~general~~operating costs and ~~administrative~~expenses ~~expense~~ decreased by $428.31 million ~~primarily due~~ to ~~lower~~$122.8 ~~payroll~~million ~~and benefit costs~~ in the year ended December 31, ~~2019,~~2020 ~~compared~~from ~~to the year ended December 31, 2018~~$150. ~~Also~~9 ~~contributing~~million ~~to the decrease were costs incurred~~ in the year ended December 31, 2018 for professional services related to the review of the Company’s information technology security processes and protocol for potential enhancement, whereas these costs were not as significant in the year ended December 31, 2019. :

~~Operating~~● ~~loss~~Warehouse, inprocessing ~~the~~and ~~year~~delivery ~~ended~~expense ~~December~~decreased ~~31,~~by ~~2019 was~~ $1018.1 million, ~~compared~~primarily due to ~~$16.7~~lower ~~million~~payroll and benefits costs and lower warehouse and freight costs in the year ended December 31, ~~2018~~2020, compared to the year ended December 31, 2019. The 23.3% 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 $11.8 million primarily due to lower payroll and benefit costs, as well as other reductions in employee expenses and discretionary spending in the year ended December 31, 2020, compared to the year ended December 31, 2019. The 18.3% decrease was driven primarily 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, the filing of a registration statement for the registration of additional shares of the Company’s common stock and the Reverse Split of $2.0 million and severance costs of approximately $0.7 million.

●

The Company recorded a non-cash goodwill impairment charge of $2.7 million in the year ended December 31, 2020, reducing the remaining balance of its goodwill to zero as of December 31, 2020.

Operating loss in the year ended December 31, 2020 was $23.7 million, compared to $10.1 million in the year ended December 31, 2019.

Other Income and Expense, Income Taxes and Net Loss

Interest expense, net was $3925.95 million in the year ended December 31, ~~2019~~2020, compared to $3339.29 million in the year ended December 31, ~~2018~~2019. Interest expense includes the interest cost component of the net periodic benefit cost of the Company'’s pension and post-retirement benefits of $54.31 million in the year ended December 31, ~~2019~~2020 and $45.93 million in the year ended December 31, ~~2018~~2019. The ~~increase~~decrease in interest expense in year ended December 31, ~~2019~~2020, compared to the prior year is primarily due to ~~an increase in non-cash amortization of~~ the ~~Convertible~~decrease ~~Senior Secured Paid-~~in~~-Kind~~ ~~("PIK") Toggle Notes due 2022 (~~the ~~“Second~~Company’s ~~Lien~~overall ~~Notes”)~~debt ~~discount.~~levels ~~Also~~after ~~contributing to~~ the ~~increase~~exchange inof ~~interest expense in~~ the ~~year~~majority ~~ended December 31, 2019 is a full 12-months~~ of ~~non-cash interest expense on~~ the ~~Company's~~outstanding ~~$25~~5.000%/7.00% ~~million~~Convertible ~~revolving~~Notes ~~credit~~for ~~facility~~equity ~~entered~~and ~~into~~the in3.00%/5.00% ~~June~~Convertible ~~2018 (see Note 2 - Debt~~Notes, inwhich ~~the~~also ~~Notes~~carried toa ~~the~~lower ~~Consolidated~~interest ~~Financial Statements)~~rate.

Other income, net, was $6.6 million in the year ended December 31, 2019, compared to $8.0 million in the year ended December 31, 2018. Included in other income, net in the year ended December 31, 2019 and December 31, 2018 was net pension benefit of $6.1 million and $7.9 million, respectively. The remaining other income, net for the comparative periods is comprised of foreign currency transaction gains. The Company recorded a foreign currency transaction gain of $0.5 million in the year ended December 31, 2019, compared to a foreign currency transaction gain of $0.1 million in the year ended December 31, 2018. 27

~~The~~Table ~~Company recorded an income tax benefit~~ of $4.9 million in the year ended December 31, 2019, compared to an income tax benefit of $4.8 million in the year ended December 31, 2018. The Company’s effective tax rate is expressed as income tax expense benefit as a percentage of loss before income taxes. The effective tax rate was 11.3% in the year ended December 31, 2019 and 11.4% in the year ended December 31, 2018. The change in the Contents

21The unrealized gain on embedded conversion option of $2.0 million in the year ended December 31, 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 qualified 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.

~~effective~~Other ~~tax~~income, ~~rate~~net, ~~between~~was ~~periods~~$3.5 ~~resulted~~million ~~from~~in ~~changes~~the year ended December 31, 2020, compared to $6.6 million in the year ~~geographic~~ended ~~mix~~December 31, 2019. Included in other income, net in the year ended December 31, 2020 and ~~timing~~December 31, 2019 was net pension benefit of ~~income~~$6.3 ~~(losses)~~million and $6.1 million, respectively. The remaining other income, net for the ~~inability~~comparative toperiods ~~benefit~~is ~~from~~comprised ~~current~~of foreign currency transaction gains. The Company recorded a foreign currency transaction loss of $2.9 million in the year ~~losses~~ended ~~due~~December 31, 2020, compared to ~~valuation~~a ~~allowance~~foreign ~~positions~~currency transaction gain of $0.5 million in the year ~~U.S.~~ended December 31, 2019.

~~Net~~The ~~loss~~Company ~~was~~recorded an income tax benefit of $383.50 million in the year ended December 31, ~~2019~~2020, compared to an income tax benefit of $374.19 million in the year ended December 31, 2019. The Company’s effective tax rate is expressed as income tax expense benefit as a percentage of loss before income taxes. The effective tax rate was 6.9% in the year ended December 31, 2020 and 11.3% in the year ended December 31, ~~2018~~2019. The change in the effective tax rate between periods resulted from changes in the geographic mix and timing of income (losses) and the inability to benefit from current year losses due to valuation allowance positions in the U.S.

22Net loss was $40.7 million in the year ended December 31, 2020, compared to $38.5 million in the year ended December 31, 2019. Net loss in the year ended December 31, 2020 includes the non-cash goodwill impairment charge of $2.7 million, partially offset by the unrealized gain on embedded conversion option of $2.0 million.

Table of Contents

Liquidity and Capital Resources

The Company’s principal sources of liquidity are cash provided by operations and proceeds from borrowings under its 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.

The ongoing duration and severity of the COVID-19 pandemic, as well as the speed of recovery and administration of vaccinations, could have a significant unfavorable impact on the Company's 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. 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.

Cash and cash equivalents at December 31, 2020 were $22.4 million, with approximately $9.0 million of the Company’s consolidated cash and cash equivalents balance residing in the United States.

Cash and cash equivalents increased (decreased) as follows:

	Year Ended December 31,
(Dollar amounts in millions)	2019		2018
Net cash from (used in) operating activities	$	10.8	$	(23.8)
Net cash used in investing activities	(3.6)		(5.6)
Net cash (used in) from financing activities	(9.6)		27.3
Effect of exchange rate changes on cash and cash equivalents	0.1		(0.4)
Net change in cash and cash equivalents	$	(2.2)	$	(2.4)

The Company’s principal sources of liquidity are cash provided by operations and proceeds from borrowings under its revolving credit facilities.


	Year Ended
	December 31,
(Dollar amounts in millions)	2020		2019
Net cash from operating activities	$	20.5	$	10.8
Net cash used in investing activities		(2.8)		(3.6)
Net cash used in financing activities		(2.4)		(9.6)
Effect of exchange rate changes on cash and cash equivalents		0.7		0.1
Net change in cash and cash equivalents	$	16.0	$	(2.2)

Working capital, defined as current assets less current liabilities, and the balances of its significant components were as follows:


	December 31,				Working Capital
(Dollar amounts in millions)	2020		2019		Increase (Decrease)
Working capital	$	147.5	$	173.7	$	(26.2)
Cash and cash equivalents		22.4		6.4		16.0
Accounts receivable		42.6		74.7		(32.1)
Inventories		130.1		144.4		(14.3)
Accounts payable		29.0		41.7		(12.7)
Accrued and other current liabilities		3.3		3.5		(0.2)
Accrued payroll and employee benefits		7.8		7.6		0.2

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

•● A decrease in accounts receivable in the year ended December 31, ~~2019~~2020 resulted in a cash flow source of $532.15 million, compared to ana ~~increase~~decrease in accounts receivable in the year ended December 31, ~~2018~~2019, which resulted in a $65.1 million of cash flow ~~use~~source. The higher accounts receivable balance in the year ended December 31, 2018 is primarily attributable to higher sales in the fourth quarter of 2018, compared to the fourth quarter of 2019. Average receivable days outstanding was 55.7 days in the year ended December 31, 2019 and 55.4 days in the year ended December 31, 2018.

•A decrease in inventory in the year ended December 31, 2019 resulted in a $16.3 million cash flow source, compared to an increase in inventory in the prior year, which resulted in a $7.7 million cash flow use. Average days sales in inventory increased to 134.2 days in the year ended December 31, 2019, compared to 133.5 days in the year ended December 31, 2018 as a result of a decrease in sales offset by improved inventory management, which resulted in an overall decrease in inventory as of December 31, 2019.29

~~•Total~~Table ~~accounts payable, accrued payroll and employee benefits, and accrued and other current liabilities provided a cash flow use~~ of $6.4 million in the year ended December 31, 2019, compared to a cash flow source of $3.7 million in the year ended December 31, 2018. Accounts payable days outstanding were 41.6 days in the year ended December 31, 2019, compared to 41.9 days in the year ended December 31, 2018. Contents

~~Net~~ended ~~cash~~December ~~used~~31, 2019 is primarily attributable to higher sales in ~~investing~~the ~~activities~~fourth quarter of $32019, compared to the fourth quarter of the current year.6 ~~million~~Average ~~and~~receivable $5days outstanding was 58.62 ~~million~~days in the year ended December 31, ~~2019~~2020, ~~and~~compared to 55.7 days in the year ended December 31, ~~2018~~2019. The Company believes the increase in the average receivable days outstanding in 2020 compared to 2019 reflects some slowing in payments from customers due to the financial impacts resulting from the COVID-19 pandemic. The Company has fewer accounts receivables as of December 31, ~~respectively~~2020 as a result of the decrease in demand resulting from the COVID-19 pandemic, ~~was~~which ~~almost~~has ~~entirely~~decreased its borrowing base collateral attributable to accounts receivable under its Credit Facilities and, in the near term, could result ofin less cash ~~paid~~provided ~~for~~by ~~capital~~operations. ~~expenditures~~Further decreases in ~~each~~the ~~period~~Company's accounts receivable could result in further reductions in its borrowing base collateral and therefore, the maximum amount it could borrow under its Credit Facilities could continue to decrease accordingly.

~~Net~~● ~~cash~~A ~~used~~decrease in ~~financing~~inventory ~~activities of $9.6 million~~ in the year ended December 31, ~~2019~~2020 ~~was~~resulted ~~mainly~~in ~~attributable~~a $15.8 million cash flow source, compared to ~~repayments~~a ofdecrease ~~borrowings~~in ~~under~~inventory in the ~~Company's~~prior ~~ABL~~year, ~~Credit~~which ~~Agreement~~resulted ~~(defined~~in ~~below)~~a as$16.3 ~~well~~million ascash ~~repayments~~flow ofsource. ~~short-term~~Average ~~borrowings~~days ~~under~~sales in inventory increased to 191.1 days in the ~~Company's~~year ~~local~~ended ~~credit~~December ~~facilities~~31, 2020, compared to 134. ~~Net~~2 ~~cash~~days ~~from~~in ~~financing~~the ~~activities~~year ended December 31, 2019 as a result of ~~$27.3~~a ~~million~~substantial decrease in sales volume in the year ended December 31, ~~2018~~2020, ~~was~~compared ~~attributable~~to the prior year. The Company is focused on maintaining liquidity by purchasing a sufficient level of inventory to ~~net~~meet ~~proceeds~~customer ~~from~~demand ~~borrowings~~while ~~under~~not carrying excess inventory and lowering overall stock levels throughout the business. However, if the Company's ~~ABL~~is ~~Credit~~unable ~~Agreement~~to ~~(defined~~sufficiently ~~below)~~manage its inventory levels and it begins to carry excess inventory, ~~partially~~its ~~offset~~liquidity bycould ~~payments~~be ofunfavorably $0impacted.9 ~~million~~Conversely, ~~made~~a decrease in ~~connection with~~ the Company's ~~build-to-suit~~inventory ~~liability~~could ~~associated~~result ~~with~~in ~~its~~a ~~warehouse~~reduction in ~~Janesville~~its borrowing base collateral attributable to inventory and therefore, WIthe maximum amount it could borrow under its Credit Facilities could decrease accordingly.

●

Total accounts payable, accrued payroll and employee benefits, and accrued and other current liabilities provided a cash flow use of $13.1 million in the year ended December 31, 2020, compared to a cash flow use of $6.4 million in the year ended December 31, 2019. Accounts payable days outstanding were 61.2 days in the year ended December 31, 2020, compared to 41.6 days in the year ended December 31, 2019. The improving financial condition of the Company prior to the impact of the COVID-19 pandemic, particularly the completion of the Exchange Offer, 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.

Net cash used in investing activities of $2.8 million and $3.6 million in the year ended December 31, 2020 and December 31, 2019, respectively, was almost entirely the result of cash paid for capital expenditures in each period.

Net cash used in financing activities of $2.4 million in the year ended December 31, 2020 was mainly attributable to payments of debt issuance costs of $3.1 million, payments of the Company’s ABL Credit Agreement, offset by borrowings under the PPP Loan and the France Term Loan. Net cash used in financing activities of $9.6 million in the year ended December 31, 2019 was mainly attributable to repayments of borrowings under the Company’s ABL Credit Agreement as well as repayments of short-term borrowings under the Company’s local credit facilities.

Capital Resources

OnThe ~~August 31, 2017, the~~ Company's ~~entered~~various ~~into~~credit ~~the~~arrangements ~~Revolving~~are ~~Credit and Security Agreement~~ with ~~PNC Bank~~well-established, ~~National~~global ~~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~~does ~~four~~not ofexpect ~~its subsidiaries each are borrowers (collectively, in such capacity,~~ the ~~“Borrowers”).~~COVID-19 ~~The~~pandemic ~~obligations~~will ~~of the Borrowers~~ have ~~been~~a ~~guaranteed~~significant byimpact on the ~~subsidiaries~~ability of ~~the~~these ~~Company~~lenders ~~named~~to ~~therein~~continue asto ~~guarantors.~~lend Oncash ~~June~~to ~~1, 2018,~~ the Company ~~entered~~pursuant ~~into an Amendment No. 1~~ to ~~ABL Credit Agreement (~~the ~~“Credit~~credit ~~Agreement~~arrangements ~~Amendment”)~~that ~~by and among~~ the Company, ~~the~~has ~~Borrowers~~with ~~and~~these ~~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, the “ABL Credit Agreement”) to provide for additional borrowing capacity~~. The ABL 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 participation in

2330

~~the~~Table ~~Revolving B Credit Facility by certain~~ of ~~the Company’s stockholders. Borrowings under the Credit Facility will mature on February 28, 2022.~~ Contents

~~Subject~~On toAugust 31, ~~certain~~2017, ~~exceptions~~the Company entered into the Revolving Credit and ~~permitted~~Security ~~encumbrances~~Agreement with PNC Bank, National Association (“PNC”) as lender and as administrative and collateral agent (the ~~obligations~~“Agent”), ~~under~~and other lenders party thereto (the “Original ABL Credit Agreement”). ~~are~~The ~~secured~~Original byABL aCredit ~~first~~Agreement ~~priority~~provided ~~security~~for ~~interest~~a in$125.0 ~~substantially~~million ~~all~~senior ofsecured, revolving credit facility (the ~~assets~~“Revolving ofA ~~each~~Credit ofFacility”), under which the ~~Borrowers~~Company and ~~certain~~four ~~subsidiaries~~ of ~~the~~its ~~Company~~subsidiaries ~~that~~each are ~~named~~borrowers as(collectively, ~~guarantors~~in such capacity, the “Borrowers”). The ~~proceeds~~obligations of the ~~advances~~Borrowers ~~under~~have ~~the~~been ~~ABL~~guaranteed ~~Credit~~by ~~Agreement~~the ~~may~~subsidiaries ~~only~~of bethe ~~used~~Company tonamed ~~(i)~~therein ~~pay~~as ~~certain~~guarantors. ~~fees~~On ~~and~~December ~~expenses~~10, to2020, the ~~Agent~~Company ~~and~~entered ~~the~~into ~~lenders~~an ~~under~~Amendment ~~the~~No. ~~ABL~~3 to Revolving Credit and Security Agreement, (iithe “Amendment No. 3”) ~~provide~~by ~~for~~and among the ~~Borrowers'~~Company, ~~working~~the ~~capital~~other ~~needs~~borrowers and ~~reimburse~~guarantors ~~drawings~~party ~~under~~thereto ~~letters~~and ofPNC ~~credit~~Bank, ~~(iii)~~National ~~repay~~Association as the ~~obligations~~agent ~~under~~and the ~~Debtor-in-Possession~~lenders, ~~Revolving~~which ~~Credit~~amends ~~and~~the ~~Security~~Original ABL Credit Agreement dated as of ~~July~~August 1031, 2017, (as amended to date by ~~and~~Amendment ~~among~~No. ~~the~~1 ~~Company,~~to ~~the~~Revolving ~~lenders~~Credit ~~party~~and ~~thereto~~Security Agreement, ~~and~~dated ~~PNC~~June 1, ~~and~~2018, ~~certain~~Amendment ~~other~~No. ~~existing~~2 ~~indebtedness,~~to ~~and~~Revolving ~~(iv)~~Credit ~~provide~~and ~~for~~Security ~~the~~Agreement, ~~Borrowers'~~dated ~~capital~~March ~~expenditure~~27, ~~needs~~2020, inand ~~accordance~~Amendment ~~with~~No. 3, the “ABL Credit Agreement”) to provide for additional borrowing capacity.

~~The~~Amendment ~~Company~~No. ~~may~~3 ~~prepay~~provided ~~its~~for ~~obligations~~an ~~under~~additional ~~the~~$25.0 ~~ABL~~million ~~Credit~~Revolving ~~Agreement~~B at(Priority) ~~any~~credit ~~time~~facility ~~without premium or penalty, and must apply~~ (the ~~net~~“Revolving ~~proceeds~~B of(Priority) ~~material~~Credit ~~sales~~Facility”), ofwhich ~~collateral~~is insubordinated ~~prepayment~~to ofthe ~~such obligations~~$125. ~~Payments~~0 ~~made~~million ~~must~~senior besecured, ~~applied~~revolving tocredit ~~the~~facility ~~Company's obligations under~~ (the “Revolving A Credit Facility,”) ifand ~~any,~~senior ~~prior~~ to ~~its obligations under~~ the ~~Revolving B Credit Facility~~$21.5 Inmillion ~~connection~~senior ~~with~~secured, anrevolving ~~early~~credit ~~termination~~facility ~~or permanent reduction of~~ (the “Revolving AB Credit Facility”). ~~prior~~As topart ~~June~~of 1,Amendment ~~2020, a 0~~No.~~25%~~ ~~fee~~3, ~~shall be due for~~ the ~~period~~Company ~~from~~and ~~June~~PNC 1,also ~~2019~~agreed ~~through~~to ~~May~~extend ~~31, 2020, in~~ the ~~amount~~maturity of ~~such~~the ~~commitment~~ABL ~~reduction,~~Credit ~~subject~~Agreement to ~~reduction~~February as28, ~~set~~2023, ~~forth~~and into amend the ABL Credit Agreement. ~~Indebtedness~~to ~~for~~(i) ~~borrowings~~reduce ~~under~~ the ~~ABL~~available ~~Credit~~borrowing ~~Agreement~~capacity isunder ~~subject~~its toRevolving ~~acceleration~~B ~~upon~~Credit ~~the~~Facility ~~occurrence~~from of$25.0 ~~specified~~million ~~defaults~~to or$21.5 ~~events~~million ofand ~~default,~~subordinate ~~including~~the ~~(i)~~payment ~~failure~~under tothe ~~pay~~Revolving ~~principal~~B orCredit ~~interest,~~Facility ~~(ii)~~to the ~~inaccuracy~~Revolving ofB ~~any~~(Priority) ~~representation~~Credit ~~or warranty of a loan party~~Facility, (~~iii~~ii) ~~failure~~increase byaccess ato ~~loan~~available ~~party~~borrowings toby ~~perform~~reducing ~~certain~~the ~~covenants,~~liquidity ~~(iv)~~covenant ~~defaults~~test ~~under~~threshold ~~indebtedness~~from ~~owed~~$12.5 million to ~~third~~$8.75 ~~parties~~million, and (viii) ~~certain~~increase ~~liability~~the ~~producing~~interest ~~events~~applicable ~~relating~~ to ~~ERISA, (vi)~~ the ~~invalidity~~Revolving orCredit ~~impairment~~A ofFacility ~~the~~to ~~Agent’s~~LIBOR-base ~~lien~~rate onplus ~~its~~a ~~collateral~~margin or of ~~any applicable guarantee, and certain adverse bankruptcy-related and (vii) certain adverse bankruptcy-related and other events~~4.0%.

~~Interest~~Subject onto ~~indebtedness~~certain ~~under~~exceptions ~~the~~and ~~Revolving~~permitted Aencumbrances, ~~Credit~~the ~~Facility~~obligations ~~accrues~~under atthe aABL ~~variable~~Credit ~~rate~~Agreement ~~based~~are onsecured by a ~~grid~~first ~~with~~priority ~~the~~security ~~highest~~ interest ~~rate~~in ~~being~~substantially ~~the~~all ~~applicable~~of ~~LIBOR-based~~the ~~rate~~assets ~~plus~~of aeach ~~margin~~ of ~~3.0%, as set forth in~~ the ~~ABL~~Borrowers ~~Credit~~and ~~Agreement.~~certain ~~Interest~~subsidiaries onof ~~indebtedness under~~ the ~~Revolving~~Company Bthat ~~Credit~~are ~~Facility~~named ~~accrues~~as atguarantors. aThe ~~rate~~proceeds of ~~12.0%~~the ~~per~~advances ~~annum,~~under ~~which~~the ~~will~~ABL beCredit ~~paid-in-kind~~Agreement ~~unless~~may ~~the~~only ~~Company~~be ~~elects~~used to (i) pay ~~such~~certain ~~interest~~fees inand ~~cash~~expenses ~~and~~to the ~~Revolving~~Agent Band ~~payment~~the ~~conditions~~lenders ~~specified~~under in the ABL Credit Agreement, ~~are~~(ii) provide ~~satisfied.~~for ~~Additionally,~~ the ~~Company~~Borrowers’ ~~must~~working ~~pay~~capital aneeds ~~monthly~~and ~~facility~~reimburse ~~fee~~drawings ~~equal~~under toletters ~~the product~~ of credit, (iiii) repay ~~0.25%~~the ~~per~~obligations ~~annum~~under ~~(or, if~~ the ~~average~~Debtor-in-Possession ~~daily~~Revolving ~~revolving~~Credit ~~facility~~and ~~usage~~Security isAgreement ~~less~~dated ~~than~~as ~~50%~~ of ~~the~~July 10, ~~maximum~~2017, ~~revolving~~by ~~advance~~and ~~amount~~among of the ~~Credit Facility~~Company, ~~0.375%~~the ~~per~~lenders ~~annum)~~party ~~multiplied~~thereto, byand ~~(ii)~~PNC, ~~the~~and ~~amount~~certain byother ~~which~~existing ~~the~~indebtedness, ~~maximum~~and ~~advance~~(iv) provide ~~amount~~for of the ~~Credit~~Borrowers’ ~~Facility~~capital ~~exceeds~~expenditure ~~such~~needs, ~~average~~in ~~daily~~accordance ~~Credit~~with ~~Facility~~the ~~usage~~ABL ~~for~~Credit ~~such month~~Agreement.

~~Under~~The Company may prepay its obligations under the ABL Credit Agreement at any time without premium or penalty, and must apply the ~~maximum~~net ~~borrowing~~proceeds ~~capacity~~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, isif ~~based~~any, onprior to its obligations under the ~~Company's~~Revolving ~~borrowing~~B ~~base~~Credit ~~calculation~~Facility. AsIn connection with an early termination or permanent reduction of ~~December~~the 31Revolving A Credit Facility prior to March 27, ~~2019~~2021, a 0.50% fee shall be due and, for the ~~weighted~~period ~~average~~from ~~advance~~March ~~rates~~28, ~~used~~2021 through September 27, 2021, a 0.25% fee shall be due, in each case in the ~~borrowing~~amount ~~base~~of ~~calculation~~such ~~are~~commitment 85reduction, subject to reduction as set forth in the ABL Credit Agreement.0% 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 ~~eligible~~its ~~accounts~~collateral ~~receivable~~or of any applicable guarantee, and ~~70.4%~~certain onadverse ~~eligible~~bankruptcy-related ~~inventory.~~and (vii) certain adverse bankruptcy-related and other events.

~~The~~Interest ~~Company's~~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 LIBOR-based rate plus a margin of 4.0%, as set forth in the ABL Credit Agreement. ~~contains~~Interest ~~certain~~on ~~covenants~~indebtedness under the Revolving B (Priority) Credit Facility and ~~restrictions~~the ~~customary~~Revolving toB anCredit ~~asset-based~~Facility ~~revolving~~accrues ~~loan~~at a rate of 15.0% and 12.0% per annum, respectively, which will be paid-in-kind unless the Company elects to pay such interest in cash and the Revolving B (Priority) payment conditions or

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 and for the year ended December 31~~, 2019.~~

~~Additionally,~~Table ~~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 ABL Credit Agreement (“Cash Dominion”). Based on the Company's cash projections, it does not anticipate that Cash Dominion will occur, or that it will be in a Covenant Testing Period during the next 12 months. Contents

~~Our~~the ~~ability~~Revolving toB ~~borrow~~payment ~~funds~~conditions isspecified ~~dependent~~in onthe ~~our~~ABL ~~ability~~Credit toAgreement ~~maintain~~are ~~an adequate borrowing base~~satisfied. ~~Accordingly~~Additionally, ifthe weCompany domust ~~not~~pay ~~generate~~a monthly ~~sufficient~~facility ~~cash~~fee ~~flow~~equal ~~from~~to ~~operations~~the toproduct ~~fund~~of ~~our~~(i) 0.25% ~~working~~per ~~capital~~annum ~~needs~~(or, ~~and~~if ~~planned~~the ~~capital~~average ~~expenditures,~~daily ~~and~~revolving ~~our~~facility ~~availability~~usage is ~~depleted,~~less wethan ~~may~~50% ~~need~~of tothe ~~take~~maximum ~~further~~revolving ~~actions,~~advance ~~such~~amount asof ~~reducing~~the orCredit ~~delaying capital investments~~Facility, ~~strategic investments or other actions~~0.375% Weper ~~believe~~annum) ~~that~~multiplied ~~our~~by ~~existing~~(ii) the ~~cash~~amount ~~balances,~~by ~~together~~which ~~with~~the ~~our~~maximum ~~availability~~advance ~~under~~amount of the ~~ABL~~ Credit ~~Agreement,~~Facility ~~will~~exceeds besuch ~~sufficient~~average todaily ~~fund~~Credit ~~our~~Facility ~~normal~~usage ~~business~~for ~~operations over~~ such month.

24Under 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 December 31, 2020, the weighted average advance rates used in the borrowing base calculation are 85.0% on eligible accounts receivable and 68.2% on eligible inventory.

~~the~~The ~~next~~Company’s ~~twelve~~ABL ~~months~~Credit ~~from~~Agreement ~~the~~contains ~~issuance~~certain ofcovenants ~~this~~and ~~report.~~restrictions ~~However,~~customary ~~there~~to ~~can~~an beasset-based norevolving ~~assurance~~loan. ~~that~~Pursuant ~~we will be able~~ to ~~achieve~~the ~~our~~terms ~~strategic~~of ~~initiatives~~the orABL ~~obtain~~Credit ~~additional~~Agreement, ~~funding~~the onPPP ~~favorable~~Loan ~~terms~~and in the ~~future~~France ~~which~~Term ~~could~~Loan ~~have~~shall abe ~~significant~~excluded ~~adverse~~for ~~effect~~all onpurposes ~~our~~from ~~operations~~any covenant calculations.

~~Additional~~The ~~unrestricted~~Company’s ~~borrowing~~ABL ~~capacity~~Credit ~~under~~Agreement contains a springing financial maintenance covenant requiring the ~~Revolving~~Company Ato ~~Credit~~maintain ~~Facility~~a atFixed ~~December~~Charge ~~31,~~Coverage ~~2019~~Ratio ~~was~~of 1.0 to 1.0 in any Covenant Testing Period (as ~~follows~~defined in the ABL Credit Agreement) when the Company’s cash liquidity (as defined in ~~millions~~the ABL Credit Agreement): is less than $8.75 million for five consecutive days. The Company was not in a Covenant Testing Period as of and for the year ended December 31, 2020.

Maximum borrowing capacity	$	125.0
Collateral reserves	(5.2)
Letters of credit and other reserves	(2.4)
Current maximum borrowing capacity	117.4
Current borrowings	(102.0)
Additional unrestricted borrowing capacity	$	15.4

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 $8.75 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 ABL Credit Agreement (“Cash Dominion”). Based on the Company’s cash projections, it does not anticipate that Cash Dominion will occur, or that it will be in a Covenant Testing Period during the next 12 months.

~~Also~~On onApril ~~August 31~~28, ~~2017~~2020, the Company entered into anthe ~~indenture~~PPP ~~(the~~Loan, ~~“Second~~which ~~Lien~~provides ~~Notes~~additional ~~Indenture”)~~cash ~~with~~to ~~Wilmington~~be ~~Savings~~used ~~Fund~~for ~~Society,~~payroll ~~FSB~~costs, asinterest ~~trustee~~on ~~and~~mortgages, ~~collateral~~rent ~~agent (“Indenture Agent”)~~ and, ~~pursuant~~utilities. ~~thereto,~~The ~~issued~~Company ~~approximately~~intends ~~$164,902~~to inapply ~~aggregate~~for ~~principal~~forgiveness ~~amount~~ of ~~Second~~the ~~Lien~~full ~~Notes,~~amount ~~including $2,400~~ of ~~restricted~~the ~~Second~~PPP ~~Lien~~Loan ~~Notes~~in ~~issued~~accordance towith ~~certain~~the ~~members~~terms of the ~~Company's~~PPP, ~~management.~~the ~~The~~CARES ~~Second~~Act ~~Lien~~and ~~Notes~~the ~~are~~PPPFA; ~~five-year~~however, ~~senior obligations of~~ the Company ~~and~~cannot ~~certain~~assure ofat ~~its~~this ~~subsidiaries,~~time ~~secured~~that bythe aPPP ~~lien~~Loan onwill ~~all~~be orfully ~~substantially~~forgiven. ~~all~~On ofJune ~~the~~24, ~~assets~~2020, of the Company,'s ~~its~~French ~~domestic~~subsidiary ~~subsidiaries~~entered ~~and~~into ~~certain~~the ofFrance ~~its~~Term ~~foreign subsidiaries~~Loan, which ~~lien~~is ~~the~~fully ~~Indenture~~guaranteed ~~Agent~~by ~~has~~the ~~agreed~~French ~~will~~government, beand ~~junior~~provides toadditional ~~the~~capital ~~lien~~to ofsupport the ~~Agent~~Company’s ~~under~~ongoing ~~the~~operations ~~ABL~~in ~~Credit Agreement~~France.

~~The~~Considerable ~~Second~~uncertainty ~~Lien~~exists ~~Notes~~with ~~are~~regards ~~convertible~~to ~~into shares of~~ the ~~Company’s~~ultimate ~~common stock at any time at the initial conversion price of $3.77 per share~~duration, ~~which~~severity ~~rate~~and isultimate ~~subject~~recovery tofrom ~~adjustment as set forth in~~ the ~~Second~~impacts ~~Lien Notes Indenture. Under the Second Lien Notes Indenture, upon the conversion~~ of the ~~Second~~COVID-19 ~~Lien~~pandemic ~~Notes~~as inwell ~~connection with a Fundamental Change (~~as ~~defined in~~ the ~~Second~~full ~~Lien~~extent ~~Notes Indenture), for each $1.00 principal amount~~ of the ~~Second~~impact ~~Lien Notes,~~ that ~~number of shares of~~ the ~~Company’s~~COVID-19 ~~common~~pandemic ~~stock~~will ~~issuable~~have ~~upon~~on ~~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~~business, ~~stock~~operations inand ~~connection~~financial ~~with~~condition. ~~such~~However, ~~Fundamental Change calculated in accordance~~ with the ~~Second~~benefit ~~Lien Notes Indenture, subject to other provisions~~ of the ~~Second~~various ~~Lien~~government-sponsored ~~Notes~~support ~~Indenture.~~programs ~~Subject~~such toas ~~certain~~tax ~~exceptions~~deferrals, ~~under~~employment-related ~~the Second Lien Notes Indenture a “Fundamental Change” includes~~subsidies, ~~but~~government-backed isloans ~~not~~and ~~limited~~other ~~to,~~government ~~the~~relief ~~following:~~available ~~(i)~~in the ~~acquisition~~U.S. ofand ~~more~~in ~~than~~other ~~50%~~countries ofin ~~the~~which ~~voting~~it ~~power~~operates, ofincluding the ~~Company’s~~PPP ~~common~~Loan ~~equity~~received byin aApril ~~“person”~~2020 orand ~~“group” within~~ the ~~meaning~~France ofTerm ~~Section~~Loan ~~13(d)~~received ofin ~~the~~June ~~Securities Exchange Act of 1934~~2020, ascoupled ~~amended;~~with ~~(ii)~~ the ~~consummation~~temporary ofand ~~any~~long-term ~~recapitalization,~~cost-cutting ~~reclassification,~~initiatives ~~share~~implemented ~~exchange,~~by ~~consolidation or merger of~~ the Company, ~~pursuant to which~~ the Company’s ~~common~~believes ~~stock~~that ~~will~~its beexisting ~~converted into~~ cash balances, ~~securities~~together orwith ~~other~~cash ~~property;~~generated ~~(iii)~~from ~~the~~operations ~~“Continuing~~and ~~Directors”~~proceeds ~~(as~~from ~~defined~~its invarious ~~the~~revolving ~~Second~~credit ~~Lien~~facilities, ~~Notes~~will ~~Indenture)~~be ~~cease~~sufficient to ~~constitute~~fund atits ~~least~~normal abusiness ~~majority~~operations ofand ~~the~~service ~~board~~its ofdebt ~~directors;~~over ~~and (iv)~~ the ~~approval~~next oftwelve ~~any~~months ~~plan~~from ~~or proposal for~~ the ~~liquidation~~issuance ~~or dissolution~~ of ~~the~~this ~~Company by the Company’s stockholders~~report.

~~Upon~~The ~~conversion,~~Company’s ~~the~~ability ~~Company~~to ~~will~~borrow ~~pay~~funds ~~and/or~~is ~~deliver~~dependent on its ability to maintain an adequate borrowing base. Accordingly, asif the ~~case~~Company ~~may~~does ~~be,~~not generate sufficient cash, ~~shares~~flow offrom ~~the~~operations ~~Company’s~~to ~~common~~fund ~~stock~~its orworking acapital ~~combination~~needs ofand ~~cash~~planned capital expenditures, and ~~shares~~its ofavailability is depleted, the Company’s ~~common~~may ~~stock,~~need atto ~~the~~take ~~Company’s~~further ~~election~~actions, ~~together~~such ~~with~~as ~~cash~~reducing inor ~~lieu~~delaying ofcapital ~~fractional~~investments, ~~shares~~strategic investments or other actions. The ~~value~~Company ofbelieves ~~shares~~that ofits ~~the~~existing ~~Company’s~~cash ~~common~~balances, ~~stock~~together ~~for~~with ~~purposes~~its ofavailability under the ~~settlement~~ABL ofCredit ~~the~~Agreement, ~~conversion~~will ~~right,~~be ifsufficient to fund normal business operations over the ~~Company~~next ~~elects~~twelve months tofrom ~~settle~~the inissuance ~~cash~~of this report. However, ~~will~~there can be ~~calculated~~no asassurance ~~provided~~that in the ~~Second~~Company ~~Lien~~will ~~Notes~~be ~~Indenture,~~able ~~using~~to aachieve 20its ~~trading~~strategic ~~day~~initiatives ~~observation~~or ~~period.~~obtain

The terms of the Second Lien Notes contain numerous covenants imposing financial and operating restrictions on the 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. 32

~~The~~Table ~~Second Lien Notes may not be redeemed by the Company in whole or in part at any time, except the Company may be required to make an offer to purchase Second Lien Notes using the proceeds~~ of certain material asset sales involving the Company or one of its restricted subsidiaries, as described more particularly in the Second Lien Notes Indenture. In addition, if a Fundamental Change occurs at any time, each holder of any Second Lien Notes has the right to require the Company to repurchase such holder’s Second Lien 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.Contents

25additional funding on favorable terms in the future which could have a significant adverse effect on its operations.

~~Indebtedness~~Additional ~~for~~unrestricted ~~borrowings~~borrowing ~~under~~capacity the Second Lien Notes Indenture 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 any obligor under the ~~Second~~Revolving ~~Lien~~A ~~Notes,~~Credit ~~failure~~Facility byat ~~an obligor under the Second Lien Notes to perform certain covenants~~December 31, ~~the~~2020 ~~invalidity~~was oras ~~impairment~~follows of(in ~~the Indenture Agent’s lien on its collateral or of any applicable guarantee, and certain adverse bankruptcy-related and other events.~~millions):

Upon satisfaction of certain conditions more particularly described in the Second Lien Notes Indenture, including the deposit in trust of cash or securities sufficient to pay the principal of and interest and any premium on the Second Lien 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 Second Lien Notes Indenture, the Company may amend, supplement or waive provisions of the Second Lien Notes Indenture with the consent of holders representing a majority in aggregate principal amount of the Second Lien Notes, and may in effect release collateral from the liens securing the Second Lien Notes with the consent of holders representing 66-2/3% in aggregate principal amount of the Second Lien Notes.

Interest on the Second Lien Notes accrues at the rate of 5.00% if paid in cash and at the rate of 7.00% if paid in kind. Pursuant to the terms of the Second Lien Note Indenture, the Company is currently paying interest on the Second Lien Notes in kind.


Maximum borrowing capacity	$	125.0
Collateral reserves		(41.8)
Letters of credit and other reserves		(2.2)
Current maximum borrowing capacity		81.0
Current borrowings		(78.4)
Additional unrestricted borrowing capacity	$	2.6

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 €6.50 million, 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 December 31, 2019, the French subsidiary has borrowings of $2.9 million under its credit facility, which is recorded as short-term borrowings at the Consolidated Balance Sheets.

~~Interest~~On ~~expense~~March 27, ~~net~~2020, the Company completed the Exchange Offer to issue its the 3.00%/5.00% Convertible Notes and 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, $39190.92 million in aggregate principal amount of the ~~year~~5.00%/7.00% ~~ended~~Convertible ~~December~~Notes 31were tendered and accepted and in exchange, ~~2019~~the Company issued $95.1 million in aggregate principal amount of its 3.00%/5.00% Convertible Notes and 7,026 shares of ~~which~~its common stock. An aggregate principal amount of 5.00%/7.00% Convertible Notes in the amount of $273.97 million ~~was~~were ~~non-cash~~not ~~interest~~tendered ~~related~~and toremained ~~long~~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 ~~and~~by $594.35 million ~~was~~and ~~non-cash~~expects to reduce its annual interest ~~related~~expense toby ~~the~~over ~~pension~~$10.0 ~~plan~~million.

AsThe of3.00%/5.00% ~~December~~Convertible ~~31,~~Notes ~~2019~~were issued pursuant to an indenture (the “3.00%/5.00% Convertible Notes Indenture”), which the Company ~~had~~and $2the Guarantors (defined below) entered into with Wilmington Savings Fund Society, FSB, as trustee and collateral agent ("Indenture Agent"), on March 27, 2020.4 ~~million~~The 3.00%/5.00% Convertible Notes are, secured by a lien on all or substantially all of ~~irrevocable~~the ~~letters~~assets of ~~credit~~the ~~outstanding~~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 ABL Credit Agreement.

The ~~Company's~~3.00%/5.00% ~~debt~~Convertible ~~agreements~~Notes ~~impose~~have ~~significant~~substantially ~~operating~~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 and ~~financial~~have ~~restrictions~~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 ~~may~~accrues ~~prevent~~at the ~~Company~~rate ~~from~~of ~~executing~~5.00% ~~certain~~per ~~business~~annum ~~opportunities~~if paid in cash and at the rate of 7.00% per annum if paid in kind, ~~such~~and as(iii) ~~making~~the ~~acquisitions~~3.00%/5.00% orConvertible ~~paying~~Notes ~~dividends~~have a maturity date of August 31, ~~among~~2024, ~~other~~compared ~~things~~to the 5. 00%/7.00% Convertible Notes, which have a maturity date of August 31, 2022.

~~The~~In ~~Company~~conjunction iswith ~~committed~~the toExchange ~~achieving~~Offer, aon ~~strong~~March ~~financial~~27, ~~position~~2020, ~~while~~the ~~maintaining~~Company, ~~sufficient~~the ~~levels~~guarantors of ~~available~~the ~~liquidity,~~5.00%/7.00% ~~managing~~Convertible ~~working~~Notes ~~capital~~ and ~~monitoring~~ the ~~Company’s~~trustee ~~overall~~for ~~capitalization~~the 5. ~~Cash~~00%/7.00% ~~and~~Convertible ~~cash~~Notes ~~equivalents~~entered atinto ~~December~~a ~~31,~~supplemental ~~2019~~indenture ~~were~~to $6the indenture governing the 5.400%/7.00% ~~million,~~Convertible ~~with~~Notes ~~approximately~~(the $1“5.200%/7.00% ~~million~~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 ~~consolidated~~obligations ~~cash~~under the 5.00%/7.00% Convertible Notes Indenture, and ~~cash~~the ~~equivalents balance~~modification ~~residing~~of certain of the events of default and various other provisions contained in the ~~United~~5.00%/7.00% ~~States~~Convertible Notes Indenture.

~~Working~~Also ~~capital~~on March 27, ~~defined~~2020, asPNC ~~current~~(in ~~assets~~its ~~less~~capacity ~~current~~as ~~liabilities~~“First Lien Agent”), the trustee for the 5.00%/7.00% Convertible Notes and the ~~balances~~Company and certain of its ~~significant~~subsidiaries ~~components~~executed ~~were~~an asintercreditor ~~follows:~~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

	December 31,						Working Capital
(Dollar amounts in millions)	2019		2018		Increase (Decrease)
Working capital	$	173.7	$	198.2	$	(24.5)
Inventory	144.4		160.7		(16.3)
Accounts receivable	74.7		79.8		(5.1)
Accounts payable	41.7		42.7		1.0
Accrued and other current liabilities	3.5		5.3		1.8
Accrued payroll and employee benefits	7.6		11.3		3.7
Cash and cash equivalents	6.4		8.7		(2.3)

~~The~~Table ~~Company~~of ~~currently plans that it will have sufficient cash flows from its operations to continue as a going concern.~~Contents

26applicable 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 conversion price of $4.56 per share (after giving effect to an adjustment triggered by the Reverse Split), which rate is subject to further 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 “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 pursuant to which the Company’s common stock will be converted into cash, securities or other property; (iii) the “Continuing Directors” (as defined in the 3.00%/5.00% Convertible Notes Indenture) cease to constitute at least a majority of the board of directors; and (iv) the approval of any plan or proposal for the liquidation or dissolution of the Company by the Company’s stockholders.

The 5.00%/7.00% Convertible Notes are convertible into shares of the Company’s common stock at any time at the conversion price of $37.68 per share (after giving effect to an adjustment triggered by the Reverse Split), which rate is subject to further adjustment as set forth in the Supplemental Indenture. Under the Supplemental Indenture, the conversion of the 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.

Upon conversion of the 3.00%/5.00% Convertible Notes and/or the 5.00%/7.00% Convertible Notes, 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 at the option of the holder, although the Company, at its own election, may pay and/or deliver, as the case may be, cash, shares of common stock, or a combination thereof. 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 at that time 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. 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.

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 concluded that as of June 30, 2020 the conversion option qualified for equity classification and the bifurcated derivative liability no longer needed 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

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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 3.00%/5.00% Convertible Notes contain numerous covenants imposing financial and operating restrictions on the 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.

Neither the 3.00%/5.00% Convertible Notes nor the 5.00%/7.00% Convertible Notes may be redeemed by the Company in whole or in part at any time 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 material asset sales involving the 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 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 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.

Indebtedness for borrowings under the 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, failure by an obligor to perform certain covenants, the invalidity or impairment of the 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.

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, payable quarterly. 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, 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 3.00%/5.00% Convertible Notes and the 5.00%/7.00% Convertible Notes in kind.

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 unrestricted subsidiaries) and the parent’s subsidiaries in Canada and Mexico (collectively, the “Guarantors”). Each guarantor is 100% owned by the Parent.

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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 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 years ended December 31, 2020 and December 31, 2019 (see Note 1 – Basis of Presentation and Significant Accounting Policies, to the notes to the 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
	As of and for the		As of and for the
	Year Ended		Year Ended
(in millions)	December 31, 2020		December 31, 2019
Total current assets	$	150.8	$	192.4
Total non-current assets ⁽¹⁾		125.8		134.4
Total current liabilities		47.9		54.9
Total non-current liabilities ⁽¹⁾		247.9		313.0
Net sales		310.8		453.1
Total costs and expenses		335.5		467.1
Operating loss		24.8		14.0
Net loss		40.7		38.5

⁽¹⁾ Included in non-current assets are $11.5 million and $12.2 million of non-current intercompany receivables due to the Obligors from the Non-Guarantors as of December 31, 2020 and December 31, 2019, respectively. Included in non-current liabilities are $7.8 million and $8.6 million of non-current intercompany payables due to the Non-Guarantors from the Obligors as of December 31, 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 December 31, 2020, the French subsidiary had no borrowings under the local credit 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 Consolidated Balance Sheets.

On July 20, 2020, the Company's Chinese subsidiary entered into a 20.0 million yuan (approximately $3.0 million) local banking line of credit with the Bank of Communication Shanghai (the "China Credit Facility"). The China Credit Facility has a maturity date of March 1, 2021 and accrues interest at a rate of 3.6% per annum. As of December 31, 2020, the Chinese subsidiary had borrowings of approximately $3.0 million outstanding under the China Credit Facility.

Interest expense in the year ended December 31, 2020 and the year ended December 31, 2019 was $25.5 million and $39.9 million, respectively, of which $4.7 million and $6.8 million, respectively, was cash interest.

As of December 31, 2020, the Company had $2.2 million of irrevocable letters of credit outstanding.

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Capital Expenditures

Cash paid for capital expenditures was $42.09 million in the year ended December 31, ~~2019~~2020 and $54.70 million in the year ended December 31, ~~2018~~2019. Expenditures in ~~2019~~2020 ~~include~~were ~~$1.3 million related to IT equipment upgrades and software licenses. The balance of~~ the ~~capital expenditures in 2019 is the~~ result of normal equipment purchases, building improvements, and furniture and fixture upgrades throughout the year. Management believes that capital expenditures will be approximately $63.0 million ~~to $7.5 million~~ in ~~2020~~2021.

Pension Funding

The Company’s funding policy on its defined benefit pension plans is to satisfy the minimum funding requirements of the Employee Retirement Income Security Act (“ERISA”). Future funding requirements are dependent upon various factors outside the Company’s control including, but not limited to, fund asset performance and changes in regulatory or accounting requirements. Based upon factors known and considered as of December 31, ~~2019~~2020, including the funding requirements under ERISA, the Company does not anticipate making significant cash contributions to the pension plans in ~~2020~~2021.

The investment target portfolio allocation for the Company-sponsored pension plans and supplemental pension plan focuses primarily on corporate fixed income securities that match the overall duration and term of the Company’s pension liability structure. Refer to “Retirement Plans” within Critical Accounting Policies and Note 7 – - Employee Benefit Plans to the consolidated financial statements for additional details regarding other plan assumptions.

Off-Balance Sheet Arrangements

As of December 31, ~~2019~~2020, the Company does not have any off-balance sheet arrangements, as defined in Item 303(a)(4)(ii) of Regulation S-K promulgated by the SEC, that have or are reasonably likely to have a current or future effect on our financial condition, changes in our financial condition, revenues, or expenses, results of operations, liquidity, capital expenditures, or capital resources, that are material to investors.

Critical Accounting Policies

The consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America, and include amounts that are based on management’s 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. The following is a description of the Company’s accounting policies that management believes require the most significant judgments and estimates when preparing the Company’s consolidated financial statements:

Income Taxes — The Company accounts for income taxes using the asset and liability method, under which deferred income tax assets and liabilities are recognized based upon anticipated future tax consequences attributable to differences between the financial statement carrying amounts of assets and liabilities and their respective tax bases. The Company regularly reviews deferred tax assets to assess whether it is more-likely-than-not that the deferred tax assets will be realized and, if necessary, establish a valuation allowance for portions of such assets to reduce the carrying value.

For purposes of assessing whether it is more-likely-than-not that deferred tax assets will be realized, the Company considers the following four sources of taxable income for each tax jurisdiction: (a) future reversals of existing taxable temporary differences, (b) projected future earnings, (c) taxable income in carryback years, to the extent that carrybacks are permitted under the tax laws of the applicable jurisdiction, and (d) tax planning strategies, which represent prudent and feasible actions that a company ordinarily might not take, but would take to prevent an operating loss or tax credit carryforward from expiring unused. To the extent that evidence about one or more of these sources of taxable income is sufficient to support a conclusion that a valuation allowance is not necessary, other sources need not be considered. Otherwise, evidence about each of the sources of taxable income is considered in arriving at a conclusion about the need for and amount of a valuation allowance. See Note 8 - Income Taxes in the Notes to the Consolidated Financial Statements, for further information about the Company's valuation allowance assessments.

The Company has incurred significant losses in recent years. The Company’s operations in the United States, Canada and the United Kingdom (prior to ceasing operations in 2019) have generated pre-tax losses for the three-year period ended December 31, 2019. The Company has determined that an ownership shift of greater than fifty percent occurred in 2015, 2016 and 2017 and as such, a significant portion of the pre-ownership shift net operating losses in these jurisdictions are subject to an annual utilization limitation under the Internal Revenue Code section 37

27Table of Contents

~~382~~sources ~~that will act to prevent the Company from utilizing most~~ of ~~its losses against future~~ taxable income~~. As~~ ais ~~result~~considered ofin ~~the~~arriving ~~Company~~at ~~having~~a ~~recorded~~conclusion ~~deferred~~about ~~tax~~the ~~assets~~need infor ~~these jurisdictions as December 31, 2019~~ and ~~December~~amount ~~31, 2018, coupled with the negative evidence~~ of ~~significant cumulative three-year pre-tax losses, the Company has provided~~ a valuation allowance. ~~against~~See ~~the~~Note 8 – ~~full~~Income ~~net~~Taxes ~~deferred tax asset balances recorded~~ in ~~Canada and~~ the ~~United~~Notes to ~~Kingdom and certain of~~ the ~~deferred~~Consolidated ~~income~~Financial ~~tax~~Statements, ~~assets~~for ~~recorded~~further byinformation about the ~~United~~Company’s ~~States~~valuation ~~operations~~allowance ~~at December 31, 2019~~assessments.

The Company has incurred significant losses in recent years. The Company’s operations in the United States and Canada have generated pre-tax losses for the three-year period ended December 31, 2020. The Company has determined that an ownership shift of greater than fifty percent occurred in 2016, 2017 and 2018 and as such, a significant portion of the pre-ownership shift net operating losses in these jurisdictions are subject to an annual utilization limitation under the Internal Revenue Code section 382 that will act to prevent the Company from utilizing most of its losses against future taxable income. As a result of the Company having recorded deferred tax assets in these jurisdictions as December 31, 2020 and December 31, 2019, coupled with the negative evidence of significant cumulative three-year pre-tax losses, the Company has provided a valuation allowance against the full net deferred tax asset balances recorded in Canada and certain of the deferred income tax assets recorded by the United States operations at December 31, 2020.

The Company is subject to taxation in the United States, various states and foreign jurisdictions. Significant judgment is required in determining the worldwide provision for income taxes and recording the related income tax assets and liabilities. It is possible that actual results could differ from the estimates that management has used to determine its consolidated income tax expense.

The Company accounts for uncertainty in income taxes by recognizing the financial statement benefit of a tax position only after determining that the relevant tax authority would more-likely-than-not sustain the position following an audit. For tax positions meeting the more-likely-than-not criteria, the amount recognized in the consolidated financial statements is the largest benefit that has a greater than 50 percent likelihood of being realized upon ultimate settlement with the relevant tax authority.

Retirement Plans — The Company values retirement plan liabilities based on assumptions and valuations established by management. Future valuations are subject to market changes, which are not in the control of the Company and could differ materially from the amounts currently reported. The Company evaluates the discount rate and expected return on assets at least annually and evaluates other assumptions involving demographic factors, such as retirement age, mortality and turnover periodically, and updates them to reflect actual experience and expectations for the future. Actual results in any given year will often differ from actuarial assumptions because of economic and other factors.

Accumulated and projected benefit obligations are expressed as the present value of future cash payments which are discounted using the weighted average of market-observed yields for high quality fixed income securities with maturities that correspond to the payment of benefits. Lower discount rates increase present values and subsequent-year net periodic pension cost; higher discount rates decrease present values and subsequent-year net periodic pension cost. Discount rates used for determining the Company’s projected benefit obligation for its pension plans were 2.9910% - 32.1130% at December 31, ~~2019~~2020 and 42.0099% - 43.0611% at December 31, ~~2018~~2019.

The Company’s pension plan asset portfolio as of December 31, ~~2019~~2020 is primarily invested in fixed income securities with a duration of approximately 11 12 years. The assets generally fall within Level 2 of the fair value hierarchy. In ~~2019~~2020, the pension plan assets realized an investment gain of approximately 1712%. The target investment asset allocation for the pension plans’ funds focuses primarily on corporate fixed income securities that match the overall duration and term of the Company’s pension liability structure. There was a funding surplus of ~~less than 0~~1.20% at December 31, ~~2019~~2020 compared to a funding ~~deficit~~surplus of 2less than 0.32% at December 31, ~~2018~~2019.

To determine the expected long-term rate of return on the pension plans’ assets, current and expected asset allocations are considered, as well as historical and expected returns on various categories of plan assets.

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The Company used the following weighted average discount rates and expected return on plan assets to determine the net periodic pension cost:

	Year Ended December 31,
	2019	2018
Discount rate	4.00% - 4.06%	3.51% - 3.58%
Expected long-term rate of return on plan assets	5.00%	5.00%


	Year Ended December 31,
	2020		2019
Discount rate	2.99% - 3.11	%	4.00% - 4.06	%
Expected long-term rate of return on plan assets	5.00	%	5.00	%

Holding all other assumptions constant, the following table illustrates the sensitivity of changes to the discount rate and long-term rate of return assumptions on the Company’s net periodic pension cost:

(Dollar amounts in millions)			Impact on 2020Expenses - Increase (Decrease)
100 basis point decrease in discount rate			$(0.4)
100 basis point increase in discount rate			(1.0)
100 basis point decrease in expected long-term rate of return on plan assets			(1.5)


	Impact on 2021
	Expenses -
(Dollar amounts in millions)	Increase (Decrease)
100 basis point decrease in discount rate	$	(0.8)
100 basis point increase in discount rate		(1.0)
100 basis point decrease in expected long-term rate of return on plan assets		(1.6)

Inventories — Inventories are stated at the lower of cost or net realizable value. The net realizable value of metals is subject to volatility. During periods when open-market prices decline below net book value, we may need to record a provision to reduce the carrying value of our inventory. We analyze the carrying value of inventory for impairment if circumstances indicate impairment may have occurred. If impairment occurs, the amount of impairment loss is determined by measuring the excess of the carrying value of inventory over the net realizable value of inventory.

The Company maintains an allowance for excess and obsolete inventory. The excess and obsolete inventory allowance is determined through the specific identification of material, adjusted for expected scrap value to be received, based upon product knowledge, estimated future demand, market conditions and an aging analysis of the inventory on hand. Inventory in excess of our estimated usage requirements is written down to its estimated net realizable value. Although the Company believes its estimates of the inventory allowance are reasonable, actual financial results could differ from those estimates due to inherent uncertainty involved in making such estimates. Changes in assumptions around the estimated future demand, selling price, scrap value, a decision to reduce inventories to increase liquidity, or other underlying assumptions could have a significant impact on the carrying value of inventory, future inventory impairment charges, or both.

New Accounting Standards

See Note 1 - Basis of Presentation and Significant Accounting Policies to the Notes to the Consolidated Financial Statements for detailed information on recently issued guidance, whether adopted or to be adopted.

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ITEM 8 — Financial Statements and Supplementary Data

(Amounts in thousands, except par value and per share data)

Consolidated Statements of Operations and Comprehensive Loss
	Year Ended December 31,
	2019		2018
Net sales	$	559,591	$	581,970
Costs and expenses:
Cost of materials (exclusive of depreciation)	418,806		437,052
Warehouse, processing and delivery expense	77,567		83,635
Sales, general and administrative expense	64,557		68,933
Depreciation expense	8,759		9,082
Total costs and expenses	569,689		598,702
Operating loss	(10,098)		(16,732)
Interest expense, net	39,902		33,172
Other income, net	(6,586)		(7,980)
Loss before income taxes	(43,414)		(41,924)
Income tax benefit	(4,899)		(4,779)
Net loss	$	(38,515)	$	(37,145)
Basic and diluted loss per common share	$	(17.62)	$	(18.57)
Comprehensive loss:
Net loss	$	(38,515)	$	(37,145)
Change in unrecognized pension and postretirement benefit costs, net of tax effect of $732 and $(3,060), respectively	2,082		(9,187)
Foreign currency translation adjustments, net of tax	(1,108)		(2,492)
Comprehensive loss	$	(37,541)	$	(48,824)

Consolidated Statements of Operations and Comprehensive Loss



	Year Ended December 31,
	2020		2019
Net sales	$	368,253	$	559,591
Costs and expenses:
Cost of materials (exclusive of depreciation)		269,126		418,806
Warehouse, processing and delivery expense		59,460		77,567
Sales, general and administrative expense		52,813		64,557
Depreciation expense		7,872		8,759
Impairment of goodwill		2,676		—
Total costs and expenses		391,947		569,689
Operating loss		(23,694)		(10,098)
Interest expense, net		25,477		39,902
Unrealized gain on embedded debt conversion option		(2,010)		—
Other (income)/expense, net		(3,487)		(6,586)
Loss before income taxes		(43,674)		(43,414)
Income tax benefit		(3,014)		(4,899)
Net loss	$	(40,660)	$	(38,515)

Basic and diluted loss per common share	$	(7.27)	$	(175.87)

Comprehensive (loss) income:
Net loss	$	(40,660)	$	(38,515)
Change in unrecognized pension and postretirement benefit costs, net of tax effect of $327 and $732, respectively		(931)		2,082
Foreign currency translation adjustments, net of tax		2,543		(1,108)
Comprehensive loss	$	(39,048)	$	(37,541)

Per share data has been adjusted to reflect the Reverse Stock Split that occurred on December 29, 2020.

The accompanying notes are an integral part of these statements.

A.M. Castle & Co.Consolidated Balance Sheets
	December 31,
	2019		2018
Assets
Current assets:
Cash and cash equivalents	$	6,433	$	8,668
Accounts receivable, less allowances of $1,766 and $1,364, respectively	74,697		79,757
Inventories	144,411		160,686
Prepaid expenses and other current assets	9,668		14,344
Income tax receivable	1,995		1,268
Total current assets	237,204		264,723
Goodwill and intangible assets	8,176		8,176
Prepaid pension cost	5,758		1,754
Deferred income taxes	1,534		1,261
Operating right-of-use assets	29,423		—
Other noncurrent assets	792		1,278
Property, plant and equipment:
Land	5,579		5,577
Buildings	20,950		21,218
Machinery and equipment	41,054		38,394
Property, plant and equipment, at cost	67,583		65,189
Accumulated depreciation	(20,144)		(11,989)
Property, plant and equipment, net	47,439		53,200
Total assets	$	330,326	$	330,392
Liabilities and Stockholders’ Deficit
Current liabilities:
Accounts payable	$	41,745	$	42,719
Accrued payroll and employee benefits	7,648		11,307
Accrued and other current liabilities	3,540		5,324
Operating lease liabilities	6,537		—
Income tax payable	573		1,589
Short-term borrowings	2,888		5,498
Current portion of finance leases	596		119
Total current liabilities	63,527		66,556
Long-term debt, less current portion	263,523		245,966
Deferred income taxes	3,775		7,540
Finance leases, less current portion	8,208		61
Build-to-suit liability	—		9,975
Other noncurrent liabilities	2,894		3,334
Pension and postretirement benefit obligations	6,709		6,321
Noncurrent operating lease liabilities	22,760		—
Commitments and contingencies (Note 9)
Stockholders’ deficit:
Common stock, $0.01 par value—200,000 Class A shares authorized with 3,818 shares issued and 3,650 shares outstanding at December 31, 2019, and 3,803 shares issued and outstanding at December 31, 2018	38		38
Additional paid-in capital	61,461		55,421
Accumulated deficit	(88,741)		(50,472)
Accumulated other comprehensive loss	(13,374)		(14,348)
Treasury stock, at cost — 168 shares at December 31, 2019 and no shares at December 31, 2018	(454)		—
Total stockholders’ deficit	(41,070)		(9,361)
Total liabilities and stockholders’ deficit	$	330,326	$	330,392

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A.M. Castle & Co.

Consolidated Balance Sheets


	December 31,
	2020		2019
Assets
Current assets:
Cash and cash equivalents	$	22,444	$	6,433
Accounts receivable, less allowances of $2,128 and $1,766, respectively		42,597		74,697
Inventories		130,093		144,411
Prepaid expenses and other current assets		8,280		9,668
Income tax receivable		—		1,995
Total current assets		203,414		237,204
Goodwill and intangible assets		5,500		8,176
Prepaid pension cost		7,414		5,758
Deferred income taxes		1,435		1,534
Operating right-of-use assets		28,083		29,423
Other noncurrent assets		1,083		792
Property, plant and equipment:
Land		5,580		5,579
Buildings		21,037		20,950
Machinery and equipment		44,537		41,054
Property, plant and equipment, at cost		71,154		67,583
Accumulated depreciation		(28,486)		(20,144)
Property, plant and equipment, net		42,668		47,439
Total assets	$	289,597	$	330,326
Liabilities and Stockholders’ Deficit
Current liabilities:
Accounts payable	$	29,039	$	41,745
Accrued payroll and employee benefits		7,792		7,648
Accrued and other current liabilities		3,290		3,540
Operating lease liabilities		6,585		6,537
Income tax payable		514		573
Short-term borrowings		3,025		2,888
Current portion of finance leases		676		596
Current portion of long-term debt		5,000		—
Total current liabilities		55,921		63,527
Long-term debt, less current portion		210,430		263,523
Deferred income taxes		755		3,775
Finance leases, less current portion		7,727		8,208
Other noncurrent liabilities		3,397		2,894
Pension and postretirement benefit obligations		7,017		6,709
Noncurrent operating lease liabilities		21,530		22,760
Commitments and contingencies (Note 9)
Stockholders’ deficit:
Common stock, $0.01 par value—40,000 Class A shares authorized with 7,408 shares issued and 7,255 shares outstanding at December 31, 2020, and 382 shares issued and 365 shares outstanding at December 31, 2019		74		4
Additional paid-in capital		124,815		61,495
Accumulated deficit		(129,401)		(88,741)
Accumulated other comprehensive loss		(11,762)		(13,374)
Treasury stock, at cost — 153 shares at December 31, 2020 and 17 shares at December 31, 2019		(906)		(454)
Total stockholders’ deficit		(17,180)		(41,070)
Total liabilities and stockholders’ deficit	$	289,597	$	330,326

The accompanying notes are an integral part of these statements.

A.M. Castle & Co.Consolidated Statements of Cash Flows
	Year Ended December 31,
	2019		2018
Operating activities:
Net loss	$	(38,515)	$	(37,145)
Adjustments to reconcile net loss to net cash from (used in) operating activities:
Depreciation	8,759		9,082
Amortization of deferred financing costs and debt discount	11,942		8,160
Noncash interest paid in kind	15,912		13,502
Loss on sale of property, plant & equipment	256		64
Unrealized foreign currency (gain) loss	(771)		580
Deferred income taxes	(5,605)		(7,071)
Noncash rent expense	247		—
Noncash compensation expense	2,862		2,784
Other, net	—		631
Changes in assets and liabilities:
Accounts receivable	5,143		(6,100)
Inventories	16,286		(7,730)
Prepaid expenses and other current assets	3,963		(2,955)
Other noncurrent assets	(428)		740
Prepaid pension costs	(1,190)		(2,717)
Accounts payable	(1,014)		1,370
Accrued payroll and employee benefits	(3,983)		3,453
Income tax payable and receivable	(1,750)		1,624
Accrued and other current liabilities	(1,397)		(1,120)
Postretirement benefit obligations and other noncurrent liabilities	107		(933)
Net cash from (used in) operating activities	10,824		(23,781)
Investing activities:
Capital expenditures	(4,021)		(5,687)
Proceeds from sale of property, plant and equipment	442		77
Net cash used in investing activities	(3,579)		(5,610)
Financing activities:
Repayments of short-term borrowings, net	(2,461)		(115)
Proceeds from long-term debt including credit facilities	3,500		49,954
Repayments of long-term debt including credit facilities	(9,988)		(21,130)
Principal paid on finance leases	(611)		—
Payments of debt issue costs	—		(499)
Payments of build-to-suit liability	—		(897)
Net cash (used in) from financing activities	(9,560)		27,313
Effect of exchange rate changes on cash and cash equivalents	80		(358)
Net change in cash and cash equivalents	(2,235)		(2,436)
Cash and cash equivalents—beginning of year	8,668		11,104
Cash and cash equivalents—end of year	$	6,433	$	8,668

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A.M. Castle & Co.

Consolidated Statements of Cash Flows


	Year Ended December 31,
	2020		2019
Operating activities:
Net loss	$	(40,660)	$	(38,515)
Adjustments to reconcile net loss to net cash from operating activities:
Depreciation		7,872		8,759
Amortization of deferred financing costs and debt discount		6,206		11,942
Noncash interest paid in kind		10,503		15,912
Unrealized gain on debt conversion liability		(2,010)		—
Impairment of goodwill		2,676		—
Loss on sale of property, plant and equipment		169		256
Unrealized foreign currency loss (gain)		711		(771)
Deferred income taxes		(2,543)		(5,605)
Noncash rent expense		243		247
Noncash compensation expense		798		2,862
Other, net		(528)		—
Changes in assets and liabilities:
Accounts receivable		32,526		5,143
Inventories		15,816		16,286
Prepaid expenses and other current assets		1,449		3,963
Other noncurrent assets		765		(428)
Prepaid pension costs		(2,915)		(1,190)
Accounts payable		(12,928)		(1,014)
Accrued payroll and employee benefits		42		(3,983)
Income tax payable and receivable		1,716		(1,750)
Accrued and other current liabilities		(221)		(1,397)
Postretirement benefit obligations and other noncurrent liabilities		810		107
Net cash from operating activities		20,497		10,824
Investing activities:
Capital expenditures		(2,868)		(4,021)
Proceeds from sale of property, plant and equipment		78		442
Net cash used in investing activities		(2,790)		(3,579)
Financing activities:
Proceeds from (repayments of) short-term borrowings, net		73		(2,461)
Proceeds from long-term debt including credit facilities		27,769		3,500
Repayments of long-term debt including credit facilities		(26,501)		(9,988)
Principal paid on finance leases		(637)		(611)
Payments of debt issue costs		(3,077)		—
Net cash used in financing activities		(2,373)		(9,560)
Effect of exchange rate changes on cash and cash equivalents		677		80
Net change in cash and cash equivalents		16,011		(2,235)
Cash and cash equivalents—beginning of year		6,433		8,668
Cash and cash equivalents—end of year	$	22,444	$	6,433

See Note 1 - Basis of Presentation and Significant Accounting Policies to the consolidated financial statements for supplemental cash flow disclosures.

The accompanying notes are an integral part of these statements.

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A.M. Castle & Co.Consolidated Statements of Stockholders' Deficit
	CommonShares	TreasuryShares	CommonStock		TreasuryStock		AdditionalPaid-inCapital		(Accumulated Deficit) RetainedEarnings		Accumulated OtherComprehensiveLoss		Total
Balance at January 1, 2018	3,734	—	$	37	$	—	$	49,944	$	(13,327)	$	(2,669)	$	33,985
Net loss									(37,145)				(37,145)
Foreign currency translation, net of tax											(2,492)		(2,492)
Change in unrecognized pension and postretirement benefit costs, $(3,060) tax effect											(9,187)		(9,187)
Reclassification to equity of interest paid in kind attributable to conversion option, net of $1,208 tax effect (Note 5)							3,430						3,430
Share-based compensation							1,816						1,816
Vesting of restricted shares and other	69		1				231						232
Balance at 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) (Note 1)									246				246
Net loss									(38,515)				(38,515)
Foreign currency translation, net of tax											(1,108)		(1,108)
Change in unrecognized pension and postretirement benefit costs, $732 tax effect											2,082		2,082
Reclassification to equity of interest paid in kind attributable to conversion option, net of $1,086 tax effect (Note 5)							3,547						3,547
Share-based compensation							1,938						1,938
Vesting of restricted shares and other	15	(168)	—		(454)		555						101
Balance at December 31, 2019	3,818	(168)	$	38	$	(454)	$	61,461	$	(88,741)	$	(13,374)	$	(41,070)

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A.M. Castle & Co.

Consolidated Statements of Stockholders’ Deficit


									(Accumulated		Accumulated
							Additional		Deficit)		Other
	Common	Treasury	Common		Treasury		Paid-in		Retained		Comprehensive
	Shares	Shares	Stock		Stock		Capital		Earnings		Loss		Total
Balance at January 1, 2019	380	—	$	4	$	—	$	55,455	$	(50,472)	$	(14,348)	$	(9,361)
Cumulative effect from adoption of the new lease standard (Leases: Topic 842)										246				246
Net loss										(38,515)				(38,515)
Foreign currency translation, net of tax												(1,108)		(1,108)
Change in unrecognized pension and postretirement benefit costs, $732 tax effect												2,082		2,082
Reclassification to equity of interest paid in kind attributable to conversion option, net of $1,086 tax effect (Note 5)								3,547						3,547
Share-based compensation								1,938						1,938
Vesting of restricted shares and other	2	(17)		—		(454)		555						101
Balance at December 31, 2019	382	(17)	$	4	$	(454)	$	61,495	$	(88,741)	$	(13,374)	$	(41,070)
Net loss										(40,660)				(40,660)
Foreign currency translation, net of tax												2,543		2,543
Change in unrecognized pension and postretirement benefit costs, $327 tax effect												(931)		(931)
Reclassification to equity of interest paid in kind attributable to conversion option, net of $281 tax effect (Note 5)								788						788
Reclassification of conversion option to equity, net of $0 tax effect (Note 5)								36,952						36,952
Conversion of debt (Note 2)	7,026			70				25,239						25,309
Share-based compensation								591						591
Vesting of restricted shares and other		(136)		—		(452)		(250)						(702)
Balance at December 31, 2020	7,408	(153)	$	74	$	(906)	$	124,815	$	(129,401)	$	(11,762)	$	(17,180)

The accompanying notes are an integral part of these statements.

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A. M. Castle & Co.

Notes to Consolidated Financial Statements

(Amounts in thousands except par value and per share data)

(1) Basis of Presentation and Significant Accounting Policies

Nature of operations — A.M. Castle & Co. and its subsidiaries (the “Company”) is a specialty metals distribution company serving customers on a global basis. The Company has operations in the United States, Canada, Mexico, France, Spain, China and Singapore. The Company provides a broad range of products and value-added processing and supply chain services to a wide array of customers. The Company'’s customers are principally within the producer durable equipment, aerospace, heavy industrial equipment, industrial goods, construction equipment, and retail sectors of the global economy. 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.

The Company’s corporate headquarters is located in Oak Brook, Illinois. The Company has 1921 operational service centers located throughout North America (1516), Europe (2) and Asia (23).

The Company purchases metals from many producers. Purchases are made in large lots and held in distribution centers until sold, usually in smaller quantities and often with value-added processing services performed. Orders are primarily filled with materials shipped from the Company'’s stock. The materials required to fill the balance of sales are obtained from other sources, such as direct mill shipments to customers or purchases from other distributors. Thousands of customers from a wide array of industries are serviced primarily through the Company’s own sales organization.

~~Basis~~Reverse ofStock presentation — The consolidated financial statements included herein and the notes thereto have been prepared by the Company 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 (“U.S. GAAP”). This report contains consolidated financial statements of the Company as of and for the years ended December 31, 2019 and December 31, 2018.Split

~~The~~On ~~accompanying~~December ~~consolidated~~28, ~~financial~~2020, ~~statements~~the ~~have~~Company ~~been~~filed ~~prepared~~articles onof ~~the~~amendment ~~basis~~to effect a reverse split of the Company’s ~~continuing~~outstanding shares of common stock, pursuant to Section 2-309(e) of the Maryland General Corporation Law, whereby each 10 shares of common stock issued and outstanding as of December 29, 2020 was combined into one whole share of common stock (the “Reverse Split”). No fractional shares of common stock were issued as a ~~going~~result ~~concern~~of ~~for~~the Reverse Stock Split. In lieu of issuing any fractional shares to any stockholder as a ~~reasonable~~result ~~period~~of the Reverse Stock Split, the Company made, to any stockholder that would otherwise hold a fractional share after giving effect to the Reverse Stock Split, a cash payment in an amount equal to $0.70 multiplied by the number of ~~time~~pre-split shares held by such stockholder with respect to which a fractional share would be issued. ~~The~~Stockholders ~~Company's~~of ~~principal~~record ~~source~~who owned less than 10 shares of ~~liquidity~~common isstock ~~cash~~prior ~~flows~~to ~~from~~the ~~operations~~Reverse Split were cashed out and ~~borrowings~~will ~~under~~no ~~its~~longer ~~asset-based~~be ~~revolving~~stockholders ~~credit~~of ~~facilities~~the Company.

~~Use~~All ofreferences ~~estimates — The preparation of the consolidated financial statements in conformity with U.S. GAAP requires management~~ to ~~make~~numbers ~~estimates and assumptions that affect the reported amounts~~ of ~~assets~~shares and ~~liabilities~~per ~~and~~share ~~disclosure~~data of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. The principal areas of estimation reflected in ~~the~~these consolidated financial statements ~~are accounts receivable allowances, inventory reserves, the valuation of goodwill~~ and ~~intangible~~related ~~assets,~~notes ~~the~~have ~~valuation~~been ofretroactively ~~deferred~~adjusted ~~income~~to ~~taxes,~~account ~~the~~for ~~fair value of~~ the ~~Company's~~Reverse ~~Convertible~~Split ~~Senior~~for ~~Secured~~all ~~Paid-in-Kind~~periods ("PIK") Toggle Notes due 2022 (the “Second Lien Notes”) and Revolving B Credit Facility (defined at Note 2 - Debt, in the Notes to the Consolidated Financial Statements), pension and other post-employment benefits, and share-based compensationpresented.

~~Revenue~~Basis ~~recognition~~of presentation — ~~Revenue~~The ~~from~~consolidated ~~the~~financial ~~sale~~statements ofincluded ~~products~~herein isand ~~recognized when control of~~ the ~~product~~notes ~~has~~thereto ~~transferred~~have tobeen ~~the~~prepared ~~customer,~~by ~~which is primarily at~~ the ~~time~~Company ofpursuant ~~shipment~~ to the ~~customer.~~rules and ~~Revenue~~regulations ~~recognized other than at the time~~ of ~~shipment represented less than 1% of~~ the ~~Company’s~~U.S. ~~consolidated~~Securities ~~net sales in both the year ended December 31, 2019~~ and ~~the~~Exchange ~~year~~Commission ~~ended December 31~~(“SEC”), ~~2018. Customer payment terms are established prior to the time of shipment. Provisions for allowances related to sales discounts~~ and ~~rebates~~accounting ~~are~~principles ~~recorded~~generally ~~based~~accepted ~~on terms of the sale~~ in the ~~period~~United ~~that~~States ~~the~~of ~~sale~~America is(“U.S. ~~recorded~~GAAP”). ~~Management~~This ~~utilizes~~report ~~historical~~contains ~~information~~consolidated ~~and~~financial ~~the~~statements ~~current sales trends~~ of the ~~business~~Company toas ~~estimate~~of ~~such~~and ~~provisions.~~for ~~The~~the years ~~provisions~~ended ~~related~~December 31, to2020 ~~discounts~~ and ~~rebates~~December 31, ~~due to customers are recorded as a reduction within net sales~~2019.

~~Revenue~~The ~~from~~accompanying ~~shipping~~consolidated ~~and~~financial ~~handling~~statements ~~charges~~have isbeen ~~recorded~~prepared inon ~~net~~the ~~sales.~~basis ~~Costs~~of ~~incurred in connection with shipping and handling~~ the Company’s ~~products,~~continuing ~~which~~as ~~are~~a ~~related~~going toconcern ~~third-party~~for ~~carriers~~a orreasonable ~~performed~~period byof ~~Company personnel, are included in warehouse, processing and delivery expenses~~time. ~~In the year ended December 31, 2019 and the year ended December 31, 2018, shipping and handling costs included in warehouse, processing and delivery expenses were $23,807 and $26,704, respectively.~~ The Company’s ~~accounts~~principal ~~for~~source ~~shipping~~of ~~and~~liquidity ~~handling~~is ~~activities~~cash asflows ~~fulfillment~~from ~~costs~~operations and ~~not~~borrowings aunder ~~promised~~its ~~good~~asset-based orrevolving ~~service.~~credit facilities.

34Use of estimates — The preparation of the consolidated financial statements in conformity with U.S. GAAP requires management to make estimates 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

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reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. The principal areas of estimation reflected in the consolidated financial statements are accounts receivable allowances, inventory reserves, the valuation of intangible assets, the valuation of deferred income taxes, the fair value of the borrowings under the Company’s Revolving Credit and Security Agreement (as amended, the “ABL Credit Agreement”), the Company’s 3.00% / 5.00% Convertible Senior Secured Paid In Kind (“PIK”) Toggle Notes due 2024 (the “3.00%/5.00% Convertible Notes”), the Company’s 5.00% / 7.00% Convertible Senior Secured Paid In Kind (PIK) Toggle Notes due 2022 (the “5.00%/7.00% Convertible Notes”, and together with the 5.00%/7.00% Convertible Notes, the “Convertible Notes”), and pension and other post-employment benefits.

Revenue recognition — Revenue from the sale of products is recognized when control of the product has transferred to the customer, which is primarily at the time of shipment to the customer. Revenue recognized other than at the time of shipment represented less than 1% of the Company’s consolidated net sales in both the year ended December 31, 2020 and the year ended December 31, 2019. 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 the sale in the period that the sale is recorded. Management utilizes historical information and the current sales trends of the business to estimate such provisions. The provisions related to discounts and rebates due to customers are recorded as a reduction within net sales.

Revenue from shipping and handling charges is recorded in net sales. Costs incurred in connection with shipping and handling the 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 year ended December 31, 2020 and the year ended December 31, 2019, shipping and handling costs included in warehouse, processing and delivery expenses were $19,686 and $23,807, respectively. The Company accounts for shipping and handling activities as fulfillment costs and not a promised good or service.

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 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 increased its allowance for doubtful accounts during the year ended December 31 2020 primarily in response to certain customers that declared bankruptcy due to ongoing financial hardship. The Company continues to consider the economic impact of the novel coronavirus ("COVID-19") pandemic as well as the currently unfavorable economic conditions on the collectability of customer accounts receivable. The Company continues to experience slower than usual payments from customers due to the financial uncertainties resulting from the COVID-19 pandemic and 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 collectability 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.

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Accounts receivable allowance for doubtful accounts and credit memos activity is presented in the table below:

	December 31,
	2019		2018
Balance, beginning of period	$	1,364	$	1,586
Add Provision charged to expense(a)	472		379
Recoveries	19		44
Less Charges against allowance	(89)		(645)
Balance, end of period	$	1,766	$	1,364


	December 31,
	2020		2019
Balance, beginning of period	$	1,766	$	1,364
Add: Provision charged to expense^(a)		1,248		472
Recoveries		12		19
Less: Charges against allowance		(898)		(89)
Balance, end of period	$	2,128	$	1,766

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

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. The Company recognizes incremental costs of obtaining a contract, if any, as an expense when incurred if the 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.

Information regarding the disaggregation of the Company'’s revenue by geographic region can be found at Note 10 — Segment Reporting.

Cost of materials — Cost of materials consists of the costs the Company pays for metals and related inbound and transfer freight charges. It excludes depreciation, which is discussed below.

Operating expenses — Operating costs and expenses primarily consist of:

•● Warehouse, processing and delivery expenses, including occupancy costs, compensation and employee benefits for warehouse personnel, processing, shipping and handling costs;

•● Sales expenses, including compensation and employee benefits for sales personnel;

•● General and administrative expenses, including compensation for executive officers and general management, expenses for professional services primarily attributable to accounting and legal advisory services, bad debt expenses, data communication costs, computer hardware and maintenance expenses and occupancy costs for non-warehouse locations; and

•● Depreciation includes depreciation for all property, plant and equipment.

Cash equivalents — Cash equivalents are highly liquid, short-term investments that have an original maturity of 90 days or less.

Statement of cash flows — Non-cash investing and financing activities and supplemental disclosures of consolidated cash flow information are as follows:

	December 31,
	2019		2018
Non-cash investing and financing activities:
Capital expenditures financed by accounts payable	$	27	$	115
Reclassification of interest paid in kind to additional paid in capital (Note 5)	3,547		3,430
Cash paid during the period for:
Interest	7,075		5,110
Income taxes	1,647		866
Cash received during the period for:
Income tax refunds	952		37

Inventories — Inventories consist primarily of finished goods. All of the Company's operations use the average cost method in determining the cost of inventory.


	December 31,
	2020		2019
Non-cash investing and financing activities:
Capital expenditures financed by accounts payable	$	31	$	27
Reclassification of interest paid in kind to additional paid in capital (Note 5)		788		3,547
Reclassification of debt conversion option from debt to equity, net (Note 5)		36,952		—
Cash paid during the period for:
Interest		4,476		7,075
Income taxes		912		1,647
Cash received during the period for:
Income tax refunds		2,201		952

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Inventories — Inventories consist primarily of finished goods. All of the Company’s operations use the average cost method in determining the cost of inventory.

Excess and obsolete inventory allowance activity is presented in the table below:

	December 31,
	2019		2018
Balance, beginning of period	$	3,274	$	1,680
Adjustments to provision	1,967		3,612
Charges against allowance	(1,085)		(2,018)
Balance, end of period	$	4,156	$	3,274


	December 31,
	2020		2019
Balance, beginning of period	$	4,156	$	3,274
Adjustments to provision		194		1,967
Charges against allowance		(463)		(1,085)
Balance, end of period	$	3,887	$	4,156

Property, plant and equipment — Property, plant and equipment are stated at cost and include assets held under capital leases. Expenditures for major additions and improvements are capitalized, while maintenance and repair costs that do not substantially improve or extend the useful lives of the respective assets are expensed in the period in which they are incurred. When items are disposed, the related costs and accumulated depreciation are removed from the accounts and any gain or loss is reflected in income.

The Company provides for depreciation of plant and equipment sufficient to amortize the cost over their estimated useful lives as follows:

Buildings and building improvements			5 – 40 years
Plant equipment			5 – 20 years
Furniture and fixtures			2 – 10 years
Vehicles and office equipment			3 – 10 years

Leasehold improvements are depreciated over the shorter of their useful lives or the remaining term of the lease. Depreciation is calculated using the straight-line method. Depreciation expense in the year ended December 31, 2019 and the year ended December 31, 2018 was $8,759 and $9,082, respectively.


Buildings and building improvements		5 – 40 years
Plant equipment		5 – 20 years
Furniture and fixtures		2 – 10 years
Vehicles and office equipment		3 – 10 years

Long-lived assets — The Company’s long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset or asset group to future net cash flows (undiscounted and without interest charges) expected to be generated by the asset or asset group. If future net cash flows are less than the carrying value, the asset or asset group may be impaired. If such assets are impaired, the impairment charge is calculated as the amount by which the carrying amount of the assets exceeds the fair value of the assets. Determining whether impairment has occurred typically requires various estimates and assumptions, including determining which undiscounted cash flows are directly related to the potentially impaired

36Leasehold improvements are depreciated over the shorter of their useful lives or the remaining term of the lease. Depreciation is calculated using the straight-line method. Depreciation expense in the years ended December 31, 2020 and 2019 was $7,872 and $8,759, respectively.

Goodwill and intangible assets — As ~~of both~~ December 31, 2019 ~~and December 31~~, ~~2018,~~ the Company had recorded goodwill with a carrying value of $2,676, none of which iswas tax deductible. ~~There~~ ~~was~~As noa ~~change~~result inof the ~~carrying~~COVID-19 ~~value~~pandemic, ofwhich ~~goodwill~~has ~~recognized~~spread inacross the ~~year~~globe ~~ended~~to ~~December~~many ~~31,~~countries ~~2019.~~in ~~The~~which the Company's ~~other~~does ~~intangible~~business ~~asset~~and is ~~comprised~~impacting ofworldwide aneconomic 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 facts and circumstances indicating that it was likely that its goodwill and indefinite- lived trade name, ~~which~~could isbe ~~not~~impaired, ~~subject~~and toperformed ~~amortization~~interim impairment tests. ~~The~~Based ~~gross~~on ~~carrying~~the ~~value~~results of the ~~trade~~Company's ~~name~~interim ~~intangible~~goodwill ~~asset~~impairment ~~was~~test ~~$5,500~~performed atin ~~both~~the ~~December~~third 31quarter of 2020, ~~2019~~the ~~and~~Company ~~December~~determined ~~31,~~its ~~2018~~goodwill was impaired. The Company

The Company tests goodwill for impairment at the reporting unit level on an annual basis at December 1 of each year or more frequently if a significant event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying value. The Company assesses, at least quarterly, whether any events or circumstances have significantly changed which may imply that the carrying amount of its one reporting unit's goodwill is in excess of its fair value. Based on the results of the Company's goodwill impairment testing it has recorded no impairment charges in the year ended December 31, 2019 or since the goodwill was originally recognized. 47

~~The~~Table ~~Company currently has one reporting unit. The determination~~ of the fair value of the reporting unit requires significant estimates and assumptions to be made by management. The fair value of the reporting unit is estimated using a combination of an income approach, which estimates fair value based on a discounted cash flow analysis using historical data, estimates of future cash flows and discount rates based on the view of a market participant, and a market approach, which estimates fair value using market multiples of various financial measures of comparable public companies. In selecting the appropriate assumptions, the Company considers the following: the selection of appropriate peer group companies; control premiums appropriate for acquisitions in the industry in which the Company competes; discount rates; terminal growth rates; long-term projections of future financial performance; and relative weighting of income and market approaches. The long-term projections used in the valuation are developed as part of the Company’s annual long-term planning process. The discount rates used to determine the fair values of the reporting unit is that of a hypothetical market participant which are developed based upon an analysis of comparable companies and include adjustments made to account for any individual reporting unit specific attributes such as, size and industry.Contents

~~The~~recorded ~~Company's~~a ~~intangible asset is comprised of an indefinite~~non-~~lived~~cash ~~trade~~goodwill ~~name, which is not subject to amortization. The indefinite-lived trade name intangible asset is tested for~~ impairment oncharge ~~an annual basis on December 1~~ of ~~each year or more frequently if significant events or changes in circumstances occur which may indicate that the carrying amount of the asset may not be recoverable~~$2,676 asduring ~~measured by comparing carrying value to~~ the ~~estimated~~year ~~future~~ended ~~cash~~December ~~flows generated by its use. An impaired asset is recorded at estimated fair value~~31, ~~determined principally using an income-based approach similar to the relief from royalty method used in the initial valuation of the indefinite-lived intangible asset~~2020, ~~with~~reducing the ~~excess~~remaining ~~amount~~balance of ~~carrying~~its ~~value~~goodwill ~~over~~to ~~the~~zero ~~fair~~as ~~value representing the amount~~ of the impairment. Assumptions used in the income-based approach including projected revenues and assumed royalty rate, long-term growth and discount rates. The Company recorded no impairment charges related to its indefinite-lived trade name intangible assets in the year ended December 31, ~~2019 or since the intangible asset was originally recorded~~2020.

The Company’s intangible asset is comprised of an indefinite-lived trade name, which is not subject to amortization. The gross carrying value of the Company’s trade name intangible asset was $5,500 at both December 31, 2020 and December 31, 2019. The indefinite-lived trade name intangible asset is tested for impairment on an annual basis on December 1 of each year or more frequently if significant events or changes in circumstances occur which may indicate that the carrying amount of the asset may not be recoverable, as measured by comparing carrying value to the estimated future cash flows generated by its use. An impaired asset is recorded at estimated fair value, determined principally using an income-based approach similar to the relief from royalty method used in the initial valuation of the indefinite-lived intangible asset, with the excess amount of carrying value over the fair value representing the amount of the impairment. Assumptions used in the income-based approach including projected revenues and assumed royalty rate, long-term growth and discount rates. The Company recorded no impairment charges related to its indefinite-lived trade name intangible assets in the year ended December 31, 2020 or since the intangible asset was originally recorded.

While the Company considered the impact the COVID-19 pandemic may have on its future cash flows when preparing its interim goodwill and interim and annual 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 indefinite-lived trade name intangible asset for impairment as events and circumstances change.

Leases — The Company has operating and finance leases covering primarily warehouse and office facilities and equipment, with the lapse of time as the basis for all rental payments. The Company determines if an arrangement is a lease at inception.

Operating right-of-use (“ROU”) assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from the lease. ROU assets and lease liabilities are recognized at the lease commencement date based on the estimated present value of lease payments over the lease term. In determining the estimated present value of lease payments, the Company uses its incremental borrowing rate based on the information available at the lease commencement date, with consideration given to the Company’s recent debt issuances as well as publicly available data for instruments with similar characteristics when calculating the Company’s incremental borrowing rates.

The ROU assets also include any lease payments made and are reduced by any lease incentives received. The Company’s lease terms may include options to extend or not terminate the lease when it is reasonably certain that it will exercise any such options. Leases with an initial term of 12 months or less are not recorded on the balance sheet. Lease expense is recognized in operating loss on a straight-line basis over the expected lease term.

Real estate leases of warehouse and office facilities are the most significant leases held by the Company. For these leases, the Company has elected the practical expedient permitted under ASC 842 to account for the lease and non-lease components as a single lease component. As a result, non-lease components, such as common area maintenance charges, are accounted for as a single lease element. The Company’s remaining operating leases are primarily comprised of leases of copiers, vehicles, and other warehouse equipment.

Certain of the Company’s operating lease agreements include variable payments that are passed through by the landlord, such as insurance, taxes, and common area maintenance, payments based on the usage of the asset, and rental payments adjusted periodically for inflation. Pass-through charges, payments due to changes in usage of the asset, and payments due to changes in indexation are included within variable rent expense.

None of the Company’s lease agreements contain significant residual value guarantees, restrictions, or covenants.

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Income taxes — The Company accounts for income taxes under the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements. Under this method, deferred tax assets and liabilities are determined based on the differences between the financial statement and the tax basis of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in income in the period that includes the enactment date.

The Company records valuation allowances against its deferred tax assets when it is more likely than not that the amounts will not be realized. In making such a determination, the Company considers all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax-planning strategies and recent results of operations. In the event the Company determines it would not be able to realize its deferred tax assets, a valuation allowance is recorded, which increases the provision for income taxes in the period in which that determination is made.

During ~~2019~~2020, certain of the Company'’s foreign assets remained pledged as collateral for certain borrowings. This continues to result in a taxable income inclusion in the U.S. of the annual earnings generated by its foreign subsidiaries. As a result of the enactment of H.R.1, “An Act to Provide for Reconciliation Pursuant to Titles II and V of the Concurrent Resolution on the Budget for Fiscal Year 2018” (the “Tax Act”) (also known as “The Tax Cuts and Jobs Act”) and this pledge of foreign assets, there are no remaining undistributed earnings which have not been subject to U.S. income taxation as of December 31, 2020 on which the Company would need to record any additional U.S. deferred tax liability.

37For uncertain tax positions, if any, the Company applies the provisions of relevant authoritative guidance, which requires application of a “more likely than not” threshold to the recognition and derecognition of tax positions. The Company’s ongoing assessments of the more likely than not outcomes of tax authority examinations and related tax positions require significant judgment and can increase or decrease the Company’s effective tax rate as well as impact operating results. As of December 31, 2020, the Company has no uncertain tax positions for which a tax or interest reserve has been recognized.

~~Resolution~~The onCompany ~~the~~recognizes ~~Budget~~interest ~~for~~and ~~Fiscal~~penalties ~~Year~~related ~~2018”~~to ~~(the~~unrecognized ~~“Tax~~tax ~~Act”)~~benefits, ~~(also~~if ~~known~~any, aswithin ~~“The~~income ~~Tax~~tax ~~Cuts~~expense. Accrued ~~and~~interest ~~Jobs Act”)~~ and ~~this~~penalties ~~pledge of foreign assets, there~~ are noincluded ~~remaining~~within ~~undistributed~~income ~~earnings~~tax ~~which~~payable ~~have~~in ~~not~~the ~~been~~Consolidated ~~subject~~Balance ~~to U~~Sheets.S. ~~income~~As ~~taxation as~~ of December 31, ~~2019~~2020, ~~on which~~ the Company ~~would~~has ~~need~~accrued tono ~~record~~interest ~~any~~and ~~additional~~penalties ~~U.S.~~associated ~~deferred~~with unrecognized tax ~~liability~~benefits.

For uncertain tax positions, if any, the Company applies the provisions of relevant authoritative guidance, which requires application of a “more likely than not” threshold to the recognition and derecognition of tax positions. The Company’s ongoing assessments of the more likely than not outcomes of tax authority examinations and related tax positions require significant judgment and can increase or decrease the Company’s effective tax rate as well as impact operating results. As of December 31, 2019, the Company has no uncertain tax positions for which a tax or interest reserve has been recognized.

The Company recognizes interest and penalties related to unrecognized tax benefits, if any, within income tax expense. Accrued interest and penalties are included within income tax payable in the Consolidated Balance Sheets. As of December 31, 2019, the Company has accrued no interest and penalties associated with unrecognized tax benefits.

Insurance plans — The Company is a member of a group captive insurance company (the “Captive”) domiciled in Grand Cayman Island. The Captive reinsures losses related to certain of the Company’s workers’ compensation, automobile and general liability risks that occur subsequent to August 2009. Premiums are based on the Company’s loss experience and are accrued as expenses for the period to which the premium relates. Premiums are credited to the Company’s “loss fund” and earn investment income until claims are actually paid. For claims that were incurred prior to August 2009, the Company is self-insured. Self-insurance amounts are capped, for individual claims and in the aggregate, for each policy year by an insurance company. Self-insurance reserves are based on unpaid, known claims (including related administrative fees assessed by the insurance company for claims processing) and a reserve for incurred but not reported claims based on the Company’s historical claims experience and development.

The Company is self-insured up to a retention amount for medical insurance for its domestic operations. Self-insurance reserves are maintained based on incurred but not paid claims based on a historical lag.

Foreign currency — For the majority of the Company’s operations, the functional currency is the local currency. Assets and liabilities of those operations are translated into U.S. dollars using year-end exchange rates, and income and expenses are translated using the average exchange rates for the reporting period. The currency effects of translating financial statements of the Company’s non-U.S. operations which operate in local currency environments are recorded in accumulated other comprehensive loss, a separate component of stockholders’ deficit. Transaction gains or losses resulting from foreign currency transactions have historically been primarily related to unhedged intercompany financing arrangements between the United States and Canada.

Loss per share — Diluted loss per share is computed by dividing net loss by the weighted average number of shares of common stock plus outstanding common stock equivalents. Common stock equivalents consist of restricted stock awards and contingently issuable shares related to the Company’s Second Lien Notes, which are included in the calculation of weighted average shares outstanding using the if-converted method. Refer to Note 2 - Debt, for further description of the Second Lien Notes. 49

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~~The~~deficit. ~~following~~Transaction ~~table~~gains isor alosses ~~reconciliation~~resulting offrom ~~the~~foreign ~~basic~~currency ~~and~~transactions ~~diluted~~have ~~loss~~historically ~~per~~been ~~common~~primarily ~~share~~related ~~calculations:~~to unhedged intercompany financing arrangements between the United States and Canada.

	December 31,
	2019		2018
Numerator:
Net loss	$	(38,515)	$	(37,145)
Denominator:
Weighted average common shares outstanding	2,186		2,000
Effect of dilutive securities:
Outstanding common stock equivalents	—		—
Denominator for diluted loss per share	2,186		2,000
Net basic loss per common share	$	(17.62)	$	(18.57)
Net diluted loss per common share	$	(17.62)	$	(18.57)
Excluded outstanding share-based awards having an anti-dilutive effect	1,429		1,803

Loss per share — Diluted loss per share is computed by dividing net loss by the weighted average number of shares of common stock plus outstanding common stock equivalents. Common stock equivalents consist of restricted stock awards and contingently issuable shares related to the Company’s Convertible Notes, which are included in the calculation of weighted average shares outstanding using the if-converted method. Refer to Note 2 - Debt, for further description of the Convertible Notes.

The ~~computation~~following table is a reconciliation of the basic and diluted loss per common share ~~does~~calculations, ~~not~~with ~~include common~~ shares ~~issuable upon conversion of the Company’s~~ outstanding ~~Second~~adjusted ~~Lien~~to ~~Notes,~~reflect asto ~~they~~effects ~~were~~of ~~anti-dilutive under~~ the ~~if-converted~~Reverse ~~method.~~Split:

The Second Lien Notes are convertible into shares of the Company's common stock at any time at the initial conversion price of $3.77 per share. In future periods, absent a fundamental change (as defined in the Second Lien Notes Indenture, which is described in Note 2 - Debt), the outstanding Second Lien Notes could increase diluted average shares outstanding by a maximum of approximately 51,400 shares.

Concentrations — The Company’s customer base is well diversified and, therefore, the Company does not have dependence upon any single customer or a few customers. No single customer represented more than 5% of the Company’s total net sales in either the year ended December 31, 2019 or the year ended December 31, 2018. Approximately 64% of the Company’s net sales in the year ended December 31, 2019, and 65% in the year ended December 31, 2018, were from locations in the United States.


	December 31,
	2020		2019
Numerator:
Net loss	$	(40,660)	$	(38,515)
Denominator:
Weighted average common shares outstanding		5,596		219
Effect of dilutive securities:
Outstanding common stock equivalents		—		—
Denominator for diluted loss per share		5,596		219

Net basic loss per common share	$	(7.27)	$	(175.87)

Net diluted loss per common share	$	(7.27)	$	(175.87)
Excluded outstanding share-based awards having an anti-dilutive effect		84		143

The computation of diluted loss per common share does not include common shares issuable upon conversion of the Company’s Convertible Notes, as they were anti-dilutive under the if-converted method.

The 5.00%/7.00% Convertible Notes are convertible into shares of the Company’s common stock at any time at a conversion price of $37.68 per share. The 3.00%/5.00% Convertible Notes are convertible into shares of the Company’s common stock at any time at a conversion price of $4.56 per share. In future periods, absent a fundamental change as described in Note 2 – Debt, the outstanding 5.00%/7.00% Convertible Notes and 3.00%/5.00% Convertible Notes could increase diluted average shares outstanding by a maximum of approximately 21,800 shares.

Concentrations — The Company’s customer base is well diversified and, therefore, the Company does not have dependence upon any single customer or a few customers. No single customer represented more than 5% of the Company’s total net sales in either the year ended December 31, 2020 or the year ended December 31, 2019. Approximately 68% of the Company’s net sales in the year ended December 31, 2020, and 64% in the year ended December 31, 2019, were from locations in the United States.

Share-based compensation — Compensation expense related to restricted share awards made to directors, officers and employees of the Company is recognized on a straight-line basis over the vesting period based on the estimated grant date fair value of the award. The Company accounts for forfeitures as they occur. Compensation expense related to performance share unit awards made to senior level managers and other select personnel 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, no compensation expense is recognized and any previously recognized compensation expense is reversed.

Table of Contents

New Accounting Standards

Recently Adopted Accounting Standards

In ~~February~~August ~~2016~~2018, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. ~~2016~~2018-0213, ~~"Leases~~“Fair Value Measurement (Topic ~~842~~820)",: ~~which~~Disclosure ~~requires~~Framework ~~that~~– ~~lessees~~Changes ~~recognize~~to ~~assets~~the ~~and~~Disclosure ~~liabilities~~Requirements for ~~leases~~Fair ~~with~~Value ~~lease terms greater than 12 months in the statement of financial position~~Measurement.” ASU No. ~~2016~~2018-0213 ~~also~~amends ~~requires~~Fair ~~additional~~Value ~~disclosures~~Measurement to(Topic ~~help~~820) ~~users~~to ofadd, ~~financial statements better understand the amount~~remove, ~~timing~~ and ~~uncertainty~~modify offair ~~cash~~value ~~flows~~measurement ~~arising~~disclosure ~~from leases~~requirements. The ~~provisions of~~ ASU’s ~~No.~~changes ~~2016-02 are~~ to bedisclosures ~~applied~~aim ~~using~~to aimprove ~~modified~~the ~~retrospective~~effectiveness ~~approach,~~of ~~and are effective for fiscal years beginning after December 15, 2018, including interim reporting periods within that reporting period.~~ Topic ~~842~~820's ~~was~~disclosure ~~subsequently~~requirements ~~amended~~under bythe ~~ASU~~aforementioned ~~No.~~FASB ~~2018-01,~~disclosure ~~“Land~~framework ~~Easement Practical Expedient for Transition to Topic 842”; ASU No~~project. ~~2018-10,~~The ~~“Codification~~Company ~~Improvements~~adopted tothe ~~Topic~~disclosure ~~842,~~requirements ~~Leases”;~~of ASU No. 2018-~~11,~~13 ~~“Leases~~in ~~(Topic~~the ~~842):~~first ~~Targeted~~quarter ~~Improvements”~~of ~~(“ASU 2018-11”); and ASU No~~2020. ~~2018-20,~~The ~~“Narrow-Scope~~Company ~~Improvements~~determined ~~for~~the ~~Lessors”~~adoption ~~(collectively, "ASC 842"). ASU 2018-11 provides clarity on separating components~~ of ~~a lease contract and includes an option to not restate comparative periods in transition and elect to use~~ the ~~effective~~disclosure ~~date~~requirements ofhad ~~Topic~~no ~~842~~impact ason ~~the~~its ~~date~~fair ofvalue ~~initial~~disclosures ~~application~~herein.

39In 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, and early adoption is permitted. Upon adoption, the amendments in ASU 2019-12 should be applied on a prospective basis to all periods presented. 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.

~~The~~On ~~Company~~March ~~adopted~~2, ~~ASC~~2020, ~~842~~the ~~effective~~SEC ~~January~~issued 1Final Rule Release No. 33-10762, ~~2019~~"Financial ~~using~~Disclosures ~~the~~About ~~modified~~Guarantors ~~retrospective~~and ~~approach,~~Issuers asof ~~required.~~Guaranteed ~~The~~Securities ~~Company~~and ~~elected~~Affiliates ~~the~~Whose ~~transition~~Securities ~~method~~Collateralize ~~that~~a ~~allows~~Registrant’s itSecurities" to(the ~~apply~~“final rule”). The final rule simplifies the ~~new~~disclosure ~~standard~~requirements ~~only~~related to ~~leases~~certain ~~existing~~registered atsecurities ~~the~~under ~~date~~SEC ofRegulation ~~initial~~S-X, ~~application~~Rules 3-10 and 3-16, ~~January~~which currently require separate financial statements for (1,) ~~2019,~~subsidiary issuers and ~~recognized~~guarantors of registered debt securities unless certain exceptions are met and (2) affiliates that collateralize registered securities offerings if the ~~cumulative~~affiliates’ ~~effect~~securities are a substantial portion of ~~initially~~the ~~applying~~collateral. Under the ~~standard~~final asrule, analternative ~~adjustment~~financial disclosures or narrative disclosures (referred to ~~opening~~collectively ~~retained~~as ~~earnings~~“Alternative ~~for~~Disclosures”) may be provided in lieu of separate financial statements of the ~~fiscal~~guarantors ~~year~~or ~~beginning~~affiliates. The amendments in the final rule are generally effective for filings on or after January 14, ~~2019. Consequently~~2021, ~~financial~~with ~~information~~early application permitted. The Company has ~~not~~elected ~~been~~to ~~updated~~adopt the amendments of the final rule for the quarter ended March 31, 2020 and accordingly, has elected to present the alternative disclosures ~~required~~of ~~under~~ the ~~new~~guarantors ~~standard~~of ~~have~~its ~~not~~registered besecurities ~~provided~~in ~~for~~Part ~~dates~~I ~~and~~Item ~~periods~~7, Management's ~~before~~Discussion ~~January~~and 1Analysis, ~~2019~~of this Form 10-K.

The Company has also elected the package of practical expedients permitted under the transition guidance, which among other things, allows the Company to carryforward the historical lease classification. ASC 842 also provides practical expedients for an entity’s ongoing accounting. The Company has made an accounting policy election to keep leases with an initial term of 12 months or less off the balance sheet and recognize those lease payments in the Consolidated Statements of Operations and Comprehensive Loss on a straight-line basis over the lease term. The Company has also elected the practical expedient to not separate lease and non-lease components for all of its real estate leases.

The adoption of ASC 842 resulted in recognition of additional operating right of use assets and lease liabilities on the Company's Consolidated Balance Sheets as of January 1, 2019 of $35,508 and $35,470, respectively. Additionally, the Company’s build-to-suit financing obligation has been classified as a finance lease liability, resulting in a $246 adjustment to the Company’s beginning accumulated deficit. The adoption of Topic 842 did not have a material effect on the Company's consolidated net loss or liquidity. The Company has reclassified certain prior year presentations to conform to the current period presentation under ASC 842. Refer to Note 4 - Leases, for further information and disclosures related to the adoption of ASC 842.

Recently Issued Account Standards 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 reporting companies for fiscal years beginning after December 15, ~~2019~~2022, including interim periods within the year of adoption. ~~The~~Early ~~Company~~adoption ~~does~~is ~~not expect the application of the CECL impairment model to have a significant impact on the Company's allowance for uncollectible amounts for accounts receivable~~permitted. The Company will adopt the guidance and disclosure requirements of ASU ~~No.~~ 2016-13 in fiscal year ~~2020~~2023.

In August 2018, the FASB issued ASU No. 2018-1314, “~~Fair~~Compensation – ~~Value~~Retirement ~~Measurement~~Benefits – Defined Benefit Plans – General (Topic ~~820~~715-20): Disclosure Framework – Changes to the Disclosure Requirements for ~~Fair~~Defined ~~Value~~Benefit ~~Measurement~~Plan.” ASU No. 2018-1314 amends ~~Fair~~Compensation – ~~Value~~Retirement ~~Measurement~~Benefits (Topic ~~820~~715) to add, or remove, ~~and~~certain ~~modify~~disclosure ~~fair~~requirements ~~value~~related ~~measurement~~to ~~disclosure~~defined ~~requirements~~benefit pension and other postretirement plans. The ASU’s changes to disclosures aim to improve the effectiveness of Topic ~~820'~~715’s disclosure requirements under the ~~aforementioned~~ FASB’s disclosure framework project. ASU No. 2018-1314 is effective for ~~all~~public entities for fiscal years beginning after December 15, ~~2019, including interim periods within the year of adoption~~2020. ~~Early adoption is permitted for any eliminated or modified disclosures prescribed by the~~ ASU. ~~The Company will adopt the disclosure requirements of ASU~~ No. 2018-1314 indoes ~~its~~not ~~Quarterly~~impact ~~Report on Form 10-Q for~~ the ~~three-months~~interim ~~ended~~disclosure ~~March~~requirements ~~31,~~of ~~2020~~Topic ~~and the Company expects it will have no impact on its fair value disclosures therein~~715.

Also 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. 51

InTable 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 is currently assessing the impact of ~~the adoption of the new guidance. The Company expects to adopt the new guidance under ASU 2019-12 in fiscal year 2021.~~ Contents

40Early adoption is permitted. The Company will adopt the disclosure requirements of this new guidance in its consolidated financial statements 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.

(2) Debt

Long-term debt consisted of the following:

	December 31,
	2019		2018
LONG-TERM DEBT
5.00% / 7.00% Second Lien Notes due August 31, 2022(a)	193,660		180,894
Floating rate Revolving A Credit Facility due February 28, 2022	102,000		108,488
12.00% Revolving B Credit Facility due February 28, 2022(b)	25,788		22,875
Less: unvested restricted Second Lien Notes(c)	(323)		(1,378)
Less: unamortized discount	(57,313)		(64,491)
Less: unamortized debt issuance costs	(289)		(422)
Total long-term debt	$	263,523	$	245,966
Less: current portion of long-term debt	—		—
Total long-term portion	$	263,523	$	245,966

(a) Included in balance is interest paid in kind of $28,991 as of December 31, 2019 and $15,992 as of December 31, 2018.


	December 31,
	2020		2019
LONG-TERM DEBT
Floating rate Revolving A Credit Facility due February 28, 2023		78,398		102,000
15.00% Revolving B (Priority) Credit Facility due February 28, 2023^(a)		8,073		—
12.00% Revolving B Credit Facility due February 28, 2023^(b)		29,081		25,788
3.00% / 5.00% Convertible Senior Secured PIK Toggle Notes due August 31, 2024^(c)		98,788		—
5.00% / 7.00% Convertible Senior Secured PIK Toggle Notes due August 31, 2022^(d)		3,958		193,660

Filing Compare · A. M. Castle & Co.