commercial metals Hodges_09/08
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commercial metals Hodges_09/08 commercial metals Hodges_09/08 Presentation Transcript

  • Hodges Capital Investment Forum September 4, 2008
  • CMC Stock Performance Hodges Capital Investment Forum September 2008 CMC 4th Quarter 2007
  • Thoughts on the Current Pounding of Steel Equities Fear That Financial Institutions Don’t Know the Bottom They Will Overcorrect and Damage the Economy The Fed is Paralyzed Between Stagnant Growth and Inflation Concerns The Highest Profile Commodity, Oil, Has Retreated and is Being Interpreted as the End of the Cyclical Cycle All Other Cyclicals are Being Brought Down in Conjunction In an Election Year, the Economy is Being Talked Down Steel Fundamentals Will Prevail; Law of Supply and Demand Not Repealed Hodges Capital All Investors are from Missouri – Show Me Investment Forum September 2008 CMC 4th Quarter 2007
  • CMC – Business Model Vertical Integration Product Diversification Global Geographic Dispersion Hodges Capital Investment Forum September 2008 CMC 4th Quarter 2007
  • CMC – A Global Steel and Metals Company Over 14,000 Employees Worldwide in 14 Different Countries Steel Minimills Steel Fabrication Plants Steel Joist & Deck Plants CMC Manufactures, Heat Treating Plants Recycles, Markets Steel Fence Post Mfg. Plants and Distributes Steel Steel Service Centers and Metal Products and Related Materials Construction-Related Product and Services Through Warehouses a Network of Over 200 Copper Tube Minimill Locations Worldwide Metal Recycling Facilities Marketing and Distribution Offices Hodges Capital Strategic Investments Investment Forum September 2008 CMC 4th Quarter 2007
  • CMC – Five Operating Segments CMC AMERICAS (1) Recycling • All Recycling Facilities Including 7 Shredders Locations Throughout the Sunbelt; Significant Regional Processor of Ferrous and Nonferrous (2) Mills • 4 Steel Minimills (Long Products) • Copper Tube Mill (3) Fabrication & Distribution • Downstream Rebar Fab, Joist & Deck, Construction-Related Products, Structural Fab, Fence Posts, Heat Treating • Steel Import/Export Business CMC INTERNATIONAL (4) Mills (Poland & Croatia) • Includes Captive Recycling Facilities and Two Shredders • Main Products: Rebar, Wire Rod, Merchants (Poland); Pipe & Tube (Croatia) (5) Fabrication & Distribution Hodges Capital • International Downstream Operations Investment Forum • International Marketing and Distribution September 2008 CMC 4th Quarter 2007
  • CMC – Strategy Global Reach with a Regional Focus Longer Term, 50% of Revenues from Outside U.S.A. (Currently 60% U.S.; 40% Non-U.S.) Focus on Growth Markets / Regions Geographic Diversification Product Line Diversification Hodges Capital Investment Forum September 2008 CMC 4th Quarter 2007
  • United States End-Use Markets 30% Public Infrastructure Heavy 15% Commercial 15% Service Centers Light 10% Commercial 5% Agriculture 5% Residential OEM’s and 20% Hodges Capital Other Investment Forum September 2008 CMC 4th Quarter 2007
  • Current Market Conditions Seasonal Factors Clouding the Outlook – Increased U.S. Scrap Flow Lowering Prices – European Holidays – Middle East Temperatures and Holy Month – Asian Monsoon Season – China Olympics Rebar Pricing Hierarchy, Highest to Lowest – North Africa / Middle East (20 Million Ton Rebar Consumption) – Russia – Central / Eastern Europe / South America – Southeast Asia – North America (U.S. 10 Million Ton Rebar Consumption) Steel Input Costs (Scrap, Iron Ore, Alloys, Electrodes, Energy) Underwrite Steel Finished Good Prices Hodges Capital Investment Forum September 2008 CMC 4th Quarter 2007
  • Current Market Conditions Domestic Backlogs at Decent But Lower Volume Levels; Pricing Higher Infrastructure, Heavy Commercial Still Solid; Service Centers Steady; Light Commercial (Retail, Joists) and Residential Weakest World Prices Supported by Demand; Domestic Prices Supported by Lack of Supply of Imports Raw Materials Markets (Coke, Iron Ore, Ferroalloys, Minerals) Extremely Positive All Means of Regulatory Schemes Arising in World Markets in Attempts to Keep Product at Home – Russia, India, Taiwan, Saudi Arabia, Hodges Capital Vietnam Investment Forum September 2008 CMC 4th Quarter 2007
  • Investor Information Non-GAAP Financial Measures and Regulation G This written and verbal presentation may use financial statement measures considered non-GAAP financial measures by the Securities and Exchange Commission (SEC). In compliance with the SEC’s Regulation G, we have provided on our web site at www.cmc.com a reconciliation to the most comparable GAAP measure and other information that may be of interest to investors. Hodges Capital Investment Forum September 2008 CMC 4th Quarter 2007
  • Forward-Looking Statements This written and verbal presentation may contain forward-looking statements regarding the outlook for the Company's financial results including net earnings, product pricing and demand, production rates, inventory levels, impact of acquisitions, credit conditions 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,” “should,” “likely,” “appears,” “projected,” “forecast,” “outlook,” “will” or other 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 different from management's current opinion. Developments that could impact the Company's expectations include construction activity, difficulties or delays in the execution of 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, industry consolidation or changes in production capacity or utilization, the ability to integrate acquisitions into operations; global factors including political and military uncertainties, credit availability, currency fluctuations, energy and supply prices and decisions by governments impacting the level of steel imports and pace of overall economic activity, particularly China. Hodges Capital Investment Forum September 2008 CMC 4th Quarter 2007
  • Background Info Hodges Capital Investment Forum September 2008 CMC 4th Quarter 2007
  • CMC – Core Values Integrity & Honesty Respect for the Individual (The CMC Way) Conservatism in Business Conduct (Doing it the Right Way) Highest Ethical, Moral & Legal Standards Hodges Capital Investment Forum September 2008 CMC 4th Quarter 2007
  • CMC – People Safety 2007 – Americas Minimills • #1 CMC Steel Arkansas • #2 CMC Steel Alabama • #3 CMC Steel South Carolina • #5 CMC Steel Texas Safety Committee “Achievement of a Consistent Safety Performance at all CMC Locations” Hodges Capital Investment Forum September 2008 CMC 4th Quarter 2007
  • United States End-Use Markets % Market Uses Product 30% Public Infrastructure Roads; Bridges Rebar High Rise; Industrial; Rebar; 15% Heavy Commercial Utility; Education; Merchant Healthcare 15% Service Centers Service Centers Merchant Strip Shopping; 10% Light Commercial Joist; Rebar Parking; Stand Alone Retail 5% Agriculture Fencing; Stakes T-Posts Single/Multi Family; 5% Residential Rebar Condo 20% OEM’s and Other Various Merchant Hodges Capital Investment Forum September 2008 CMC 4th Quarter 2007
  • Financial Performance Growth Net Earnings Net Sales ($ Millions) ($ Billions) 9 400 8 350 7 300 6 250 5 200 4 150 3 100 2 50 1 0 0 '03 '04 '05 '06 '07 '03 '04 '05 '06 '07
  • Financial Performance Earnings Per Share $3.50 $3.50 $3.00 $3.00 $2.50 $2.50 $2.00 $2.00 $1.50 $1.50 $1.00 $1.00 $0.50 $0.50 $0.00 $0.00 2003 2004 2005 2006 2007 Hodges Capital Investment Forum September 2008 CMC 4th Quarter 2007
  • Financial Performance Quarterly Earnings Per Share $1.25 $1.25 $1.00 $1.00 $0.75 $0.75 $0.50 $0.50 $0.25 $0.25 $0.00 $0.00 3Q07 4Q07 1Q08 2Q08 3Q08 Hodges Capital Investment Forum September 2008 CMC 4th Quarter 2007
  • Financial Performance Dividend Payout Per Share (by Fiscal Year) 0.48 $0.50 $0.45 $0.40 $0.35 $0.30 $0.25 $0.20 $0.15 $0.10 $0.05 $0.00 2003 2004 2005 2006 2007 Current Annual Hodges Capital Rate Investment Forum September 2008 CMC 4th Quarter 2007
  • Financial Performance 5 Year Cumulative Total Return (Fiscal Years) Comparison Among CMC, the S&P 500 Index and the S&P Steel Index CMC $650 CMC S&P 500 S&P Stl Ind $550 S&P Stl Ind $450 $350 $250 S&P 500 $150 $50 2002 2003 2004 2005 2006 2007 2002 2007 Commercial Metals Company $100.00 $648.86 S&P 500 $100.00 $176.25 S&P Steel Industry Group $100.00 $561.57
  • Investments ($ in Millions) Sisak & Other Acq. 300 Mills – AZ & Poland SAP 250 206 CapEx 200 131 150 110 100 52 50 50 0 2003 2004 2005 2006 2007 Hodges Capital Investment Forum Note: Excludes Acquisitions September 2008 CMC 4th Quarter 2007
  • Adjusted Operating Profit by Segment 9% 9% 17% 11% 30% 18% 17% YTD 15% 20% 23% 2006 2007 2008 38% 40% 44% 26% (17)% Americas Fab Americas International Fab International Americas & Distribution Mills Recycling & Distribution Mills Note: 2008 for nine months YTD 5/31/2008