commercial metals 02B17177-ACA5-462A-9122-CCAB85854156_1stQ2009_2
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commercial metals 02B17177-ACA5-462A-9122-CCAB85854156_1stQ2009_2 commercial metals 02B17177-ACA5-462A-9122-CCAB85854156_1stQ2009_2 Document Transcript

  • CMC – Business Model Vertical Integration Product Diversification 1st Quarter 2009 Global Geographic Dispersion CMC 1st Quarter 2009 Current Market Conditions & Outlook North America Ferrous Scrap Prices – After Falling to Global Liquidity Crisis has Paralyzed the Steel $125 GT Recovering to $230-240 Markets Ferrous Scrap Price Stabilization Near Term Markets Lack Confidence that Bottom is in Sight as Winter Limits Supply Inventory Destocking Universal as Cash December Slow With Year-End Balance Regains Cache Sheet Cleanup CMC Production Cutbacks – 69% in First Rebar Fabrication Backlogs Refilling at 60% Quarter; Heading Lower in the Second Quarter Rate Sharp Ferrous Scrap Declines Abated; Some Large Rebar Jobs Still Scarce Upward Stability Merchant Products Hit Harder than Rebar Largest Commercial Exposures – Unwarranted as Service Centers Buy on Needs Only; Contract Cancellations, Market Claims, Price Use Mills as JIT Warehouses Renegotiations; May Lead to Unexpected Inventory Positions CMC 1st Quarter 2009 CMC 1st Quarter 2009 1
  • North America Europe / Middle East Rebar Imports Continue Downward Trend Widespread Reports of Mill Production – Only 21,000 MT Imported in November (Turkey/Mexico) Cutbacks; Weakness into 2009 – Only 80,000 MT / Month Average YTD 2008 Middle East Rebar Positions Being Sold Off; – Compare with 144,000 MT / Month in 2007 Billets Remain the Overhang – Future Deliveries from Turkey - 40,000 MT (January); 20,000 MT (February) Polish Economy Remains Strong Relative to – Houston Warehouse (Inbesa) Inventories – 49,500 MT at Neighbors; Still Awaiting Boost from 1,200 MT Daily Volume Latest Turkish Offers $480-490 MT CFR Houston; Infrastructure Spending Few Takers Numerous Governments Announcing Stimulus – Long Lead Times Packages – Must Commit to Larger Quantities – Price Volatility Fears – Credit / Working Capital Constraints Collapse of Freight Rates (90-98% Off Highs) Not Enough Incentive; U.S. $ Weaker Infrastructure Stimulus Spending Favorable But Lacking in Details; Will Not Impact Until Later in 2009 CMC 1st Quarter 2009 CMC 1st Quarter 2009 China China Using All Means at its Disposal to Maintain Growth Steel Mills Cut Back Production 30-50% Target Remains 8-9% GDP in 2009 Long Products Demand and Prices Improving Fiscal Stimulus Slightly; Flat Products Remain Weak – Announced Higher Building Standards for Schools After November Finished Steel Exports Decline Earthquake Disaster 28% from November 2007 – US $590 Billion Infrastructure Spending YTD Export Decline Only 3%; Bullish Pricing – Focus Major Infrastructure Projects – Rail, Ports, Highways – Continued Emphasis on Public Housing in 1H Overcame Additional Export Taxes – Lowering Taxes (Including Income Taxes?) Pressure to Cutback – AD Threats; Iron Ore – Reducing Export Taxes Negotiations; Pollution; Consolidation Monetary – Rapidly Cutting Interest Rates, Latest by 1.08% (11/27/08) – Providing More Export Subsidies – Currency Now Depreciating to US $ (6.83-6.85) CMC 1st Quarter 2009 CMC 1st Quarter 2009 2
  • China Project Review Arizona Micro Mill Steel Mills Starting to Buy Imported Scrap – Full Scale Construction Began in August When Required Permits Received – Expected Commissioning Date – 9/9/09 – $155 Million Total Cost; FY 2009 Expected Spending $105 Million Spot Iron Ore Prices Now $70-73 MT – 280,000 Tons of Rebar (Bottom Mid November at $65/MT) Polish Flexible Section Mill – Construction Underway Chinese Mills Buying Only on Spot Markets; – $190 Million Total Cost ; FY 2009 Expected Spending $180 Million – 650,000 MT No One Buys at Benchmark (Contract) Prices – Increased Product Range; Higher Quality Wire Rod / Larger Sizes – Expected Commissioning January 2010 Large Inventory of Iron Ore at Ports – Permanent Financing Already in Place (60-70 Million MT); Likely to Take One Croatian Melt Shop and Caster Upgrade – Quick Payback; Aim is Cost Reduction and Yield Improvement to Two Quarters to be Significantly Reduced – “Previously Owned” but Massively More Efficient Furnace Purchased – Will Allow Current Furnace to Become LMS – Caster Improvements Will Allow Production of Round Billets; Better Yields and Possible Outside Sales – Commissioning End of FY 2009 – $55 Million Total Cost SAP – Fourth Rollout (2 Domestic Mills; 3 Recycling Yards) on 1/1/09 – By End of FY 2009, 70% of Earnings Power of CMC on SAP – Benefit Realization Begins in FY 2010 CMC 1st Quarter 2009 CMC 1st Quarter 2009 CMC Steel Arizona Update CMC Steel Arizona Update Cooling Bed Passline Mill Pulpit CMC 1st Quarter 2009 CMC 1st Quarter 2009 3
  • CMC Steel Arizona Update Financial Statistics CMC 1st Quarter 2009 Quarterly Net Sales Return on Beginning Equity ($ in Millions) 3,227 50.0 $3,500 43.3 39.6 2,911 $3,000 40.0 2,430 2,337 29.1 2,203 $2,500 26.0 30.0 $2,000 15.0 20.0 $1,500 10.7 9.4 5.7 $1,000 10.0 3.8 $500 0.0 2000 2001 2002 2003 2004 2005 2006 2007 2008 $0 1Q08 2Q08 3Q08 4Q08 1Q09 Discontinued Operations CMC 1st Quarter 2009 CMC 1st Quarter 2009 4
  • LIFO Earnings Analysis Quarterly Earnings Per Diluted Share ($ in Millions) $1.25 $200 155 143 $150 119 62 $1.00 99 92 78 78 $100 66 0.57 0.55 $0.75 0.51 0.54 $50 0.34 $0.50 $0 -$50 $0.25 -$100 $0.00 -$150 1Q08 2Q08 3Q08 4Q08 1Q09 1Q07 2Q07 3Q07 4Q07 1Q08 2Q08 3Q08 4Q08 1Q09 Earnings Before LIFO Expense LIFO Expense/Income Earnings Before LIFO Income CMC 1st Quarter 2009 CMC 1st Quarter 2009 LIFO Expense (Income) Pre-Tax Dividend Payout Per Share by Fiscal Year 1st Qtr. 2nd Qtr. 3rd Qtr. 4th Qtr. 1st Qtr. $0.60 (Thousands) 2008 2008 2008 2008 2009 0.48 0.45 $0.50 Americas 1,832 4,969 15,187 (5,094) (24,729) Recycling $0.40 0.33 Americas (3,863) 18,193 55,327 40,152 (75,259) Mills $0.30 Americas 0.17 4,307 35,160 57,023 100,945 (7,425) Fab & Dist. $0.20 0.12 0.09 0.08 International (6,538) 632 (385) 3,893 (6,201) $0.10 Fab & Dist. $0.00 (4,262) 58,954 127,152 139,896 (113,614) Total 2003 2004 2005 2006 2007 2008 Annual Rate CMC 1st Quarter 2009 CMC 1st Quarter 2009 5
  • Capital Expenditures Adjusted Operating Profit by Segment 1st Qtr. 2008 1st Qtr. 2009 ($ in Millions) (11)% 600 10% (18)% 18% 425 500 43% 21% 355 12% 400 300 206 76% 49% 200 131 110 52 100 0 Americas Fab Americas International Fab International Americas 2004 2005 2006 2007 2008 Projected & Distribution Mills & Distribution Recycling Mills 2009 CMC 1st Quarter 2009 CMC 1st Quarter 2009 Americas Recycling Americas Recycling Adjusted Operating Profit Average Selling Prices ($ in Millions) ($ in Millions) 475 3.40 450 425 2.90 400 $75 375 53 50 350 2.40 325 $50 CU & AL $ Pound Ferrous $ Tons 300 26 275 17 1.90 250 $25 225 (28) $1.46 200 1.40 175 $0 150 125 0.90 $107 100 -$25 $0.58 75 1Q08 2Q08 3Q08 4Q08 1Q09 50 0.40 Nov-05 May-06 Nov-06 May-07 Nov-07 May-08 Nov-08 -$50 Ferrous Aluminum Copper Source: CMC CMC 1st Quarter 2009 CMC 1st Quarter 2009 6
  • Americas Recycling Americas Mills Quarterly 000’s) Shipments (Tons Scrap Adjusted Operating Profit ($ in Millions) (Tons 000’s) ($ in Millions) $140 118.7 900 871 1,000 $120 833 787 $100 800 563 69.2 $80 600 55.3 49.2 $60 400 34.0 $40 200 $20 0 1Q08 2Q08 3Q08 4Q08 1Q09 $0 Ferrous Nonferrous 1Q08 2Q08 3Q08 4Q08 1Q09 CMC 1st Quarter 2009 CMC 1st Quarter 2009 Americas Mills Americas Steel Mills Product Mix Average Selling Prices (Tons 000’s) ($ per Ton) 673 CMC TX CMC AL CMC SC CMC AR 631 630 800 594 700 $950 432 600 $850 837 500 309 364 373 346 734 $750 723 400 196 $650 300 $550 537 200 285 266 300 285 236 $450 100 $350 0 1Q08 2Q08 3Q08 4Q08 1Q09 l l v v g g r t t n b n p p c r 8 y Ju Ju Oc Oc Ap Ma No No De Au Au Fe Ju Ju Se Se Ma n -0 Ja Merchant Shapes, Billets & Rebar Structurals CMC 1st Quarter 2009 CMC 1st Quarter 2009 7
  • Americas Mills Americas Mills Americas Steel Mill Margins Electric Rates by Quarter 1st Quarter Comparisons FY FY CMC-TX CMC-AL CMC-SC CMC-AR 2009 2008 Change 10.00 Avg. Selling Price $796 $585 211 9.00 Cents/KWH 8.00 Cost of Scrap Utilized $336 $246 90 7.00 Metal Margin $460 $339 121 6.00 5.00 Tons Shipped* 432 594 (162) 4.00 Billet Tons Shipped* 39 90 (51) 3.00 1Q07 2Q07 3Q07 4Q07 1Q08 2Q08 3Q08 4Q08 1Q09 *Tons in thousands CMC 1st Quarter 2009 CMC 1st Quarter 2009 Americas Mills Americas Mills Natural Gas Rates by Quarter Percentage of Manufactured Cost per Ton Average of Mills in Texas / Alabama / South Carolina CMC-TX CMC-AL CMC-SC CMC-AR 20.00 Year Year Ended Ended YTD 17.00 8/31/08 8/31/07 11/30/08 $/MCF 14.00 Material (Scrap) 52% 60% 35% 11.00 Supplies (Electrodes/Alloys) 12% 10% 15% 8.00 Utilities (Electricity/Gas) 7% 8% 13% 5.00 Maintenance 8% 5% 8% 2.00 Labor 5% 4% 8% 1Q07 2Q07 3Q07 4Q07 1Q08 2Q08 3Q08 4Q08 1Q09 Depreciation 3% 2% 6% Other 13% 11% 15% CMC 1st Quarter 2009 CMC 1st Quarter 2009 8
  • Americas Mills Americas Mills Copper Tube Manufacturing Copper Tube Manufacturing Average Prices Pounds Shipped (in Millions) 24 6.00 21 CY Avg – 3.77 LY Avg – 4.34 5.00 16.7 18 Selling 14.5 13.9 4.00 13.3 15 12.8 11.7 11.5 P r ic e P e r P o u n d 10.8 10.4 12 3.00 Cost 9 CY Avg – 2.94 LY Avg – 3.38 2.00 6 3 1.00 0 1Q07 2Q07 3Q07 4Q07 1Q08 2Q08 3Q08 4Q08 1Q09 0.00 l l t t r n b n r p p y g g Ja c v v Ju Ju Oc Oc 08 Ap Ma De Fe Ju Ju Ma Au No Au No Se Se n- CMC 1st Quarter 2009 CMC 1st Quarter 2009 Americas Fabrication & Distribution Americas Fabrication & Distribution Adjusted Operating Profit Shipments ($ in Millions) ($ in Millions) (Tons 000’s) 66.6 $75 600 470 452 427 500 428 $50 376 400 30.4 300 $25 200 (7.6) (22.3) (68.0) $0 100 0 1Q08 2Q08 3Q08 4Q08 1Q09 -$25 1Q08 2Q08 3Q08 4Q08 1Q09 Posts Deck Structurals Joist Rebar CMC 1st Quarter 2009 CMC 1st Quarter 2009 9
  • Americas Fabrication & Distribution International Mills Average Selling Prices* CMCZ (Poland) Adjusted Operating Profit ($ in Millions) ($ in Millions) 1st Quarter 63.0 $70 2009 2008 $60 Rebar $1,117 $849 39.1 $50 Joist $1,505 $1,296 $40 Deck $1,564 $1,297 $30 16.1 Structural $3,362 $2,246 $20 3.9 Fence Post $1,131 $730 $10 (8.1) $0 *Excludes Stock and Buyout Sales -$10 1Q08 2Q08 3Q08 4Q08 1Q09 CMC 1st Quarter 2009 CMC 1st Quarter 2009 International Mills International Mills CMCS (Croatia) Adjusted Operating Profit CMCZ (Poland) Mill Margins ($ in Millions) 1st Quarter Comparisons ($ in Millions) 2009 2008 Avg. Selling Price (PLN) 1,714 1,489 $10 Cost of Scrap Utilized (PLN) 947 866 $5 Metal Margin (PLN) 767 623 (8.5) (5.9) Rebar Tons Shipped* 152 137 (4.5) (6.4) (8.6) $0 Wire Rod Tons Shipped* 108 98 Billet Tons Shipped* 35 33 -$5 Total Tons Shipped* 295 268 % Domestic 69% 73% -$10 1Q08 2Q08 3Q08 4Q08 1Q09 *Tons in thousands CMC 1st Quarter 2009 CMC 1st Quarter 2009 10
  • International Mills International Fabrication & Distribution CMCS (Croatia) Adjusted Operating Profit ($ in Millions) 1st Quarter Comparisons ($ in Millions) $50 2009 2008 40.3 Tons Melted 19,567 1,900 35.7 $40 Tons Rolled 18,081 4,900 26.6 $30 21.7 Tons Shipped 17,743 9,400 14.9 $20 Welded Tons Shipped 4,914 3,700 $10 Drawn Tons Shipped 771 700 $0 Seamless Tons Shipped 12,058 5,000 1Q08 2Q08 3Q08 4Q08 1Q09 % Domestic 11% 26% *Tons in thousands CMC 1st Quarter 2009 CMC 1st Quarter 2009 Investor Information Forward-Looking Statements This written and verbal presentation may contain forward-looking forward- looking statements regarding the outlook for the Company's financial results Non-GAAP Financial Measures including net earnings, economic conditions, credit availability, product pricing and Regulation G and demand, production rates, inventory levels, and general market conditions. These forward-looking statements generally can be identified by phrases such as the company or its management “expect,” “anticipates,” “believe,” “ought,” This written and verbal presentation may use financial “should,” “likely,” “appears,” “projected,” “forecast,” “outlook,” “will” or other statement measures considered non-GAAP financial measures words or phrases of similar impact. There is inherent risk and uncertainty in any forward-looking statements. Variances will occur and some could be materially by the Securities and Exchange Commission (SEC). different from management's current opinion. Developments that could impact In compliance with the SEC’s Regulation G, we have the Company's expectations include the success or failure of government efforts to stimulate the economy including restoring credit availability and confidence in provided on our web site at a recovery, construction activity, difficulties or delays in the execution of www.cmc.com construction contracts resulting in cost overruns or contract disputes, metals pricing over which the Company exerts little influence, interest rate changes, increased capacity and product availability from competing steel minimills and other steel suppliers including import quantities and pricing, court decisions, a reconciliation to the most comparable GAAP measure and industry consolidation or changes in production capacity or utilization, the other information that may be of interest to investors. ability to integrate acquisitions into operations; global factors including political and military uncertainties, currency fluctuations, energy and supply prices and decisions by governments impacting the level of steel imports and pace of overall economic activity, particularly China. CMC 1st Quarter 2009 CMC 1st Quarter 2009 11
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