commercial metals Q3 08_Presentation
Upcoming SlideShare
Loading in...5
×
 

commercial metals Q3 08_Presentation

on

  • 755 views

 

Statistics

Views

Total Views
755
Slideshare-icon Views on SlideShare
755
Embed Views
0

Actions

Likes
0
Downloads
1
Comments
0

0 Embeds 0

No embeds

Accessibility

Upload Details

Uploaded via as Adobe PDF

Usage Rights

© All Rights Reserved

Report content

Flagged as inappropriate Flag as inappropriate
Flag as inappropriate

Select your reason for flagging this presentation as inappropriate.

Cancel
  • Full Name Full Name Comment goes here.
    Are you sure you want to
    Your message goes here
    Processing…
Post Comment
Edit your comment

    commercial metals Q3 08_Presentation commercial metals Q3 08_Presentation Presentation Transcript

    • CMC – Business Model Vertical Integration Product Diversification Global Geographic Dispersion 3rd Quarter 2008 2 3rd Quarter 2008 Current Market Conditions & Outlook Current Market Conditions & Outlook Expected 4th Quarter Earnings Range - $0.90 to Global Demand Unabated (in Order of Strength): $1.00 – Zero LIFO Expense – Middle East / North Africa – Russia Unusual Year – Central / Eastern Europe / South America – No Signs of Seasonal Correction – Southeast Asia – North America – Impact Beijing Olympics and Earthquake in China – China – Demand Continues to Outstrip Supply Steel Input Cost (Scrap, Iron Ore, Alloys, Electrodes, – Low Inventory Levels in Most Markets Energy) Underwriting Steel Finished Good Prices Longer-Term Issues Shredded / Other Ferrous Grades – Signs of – Inflation Pullback – Credit Squeeze 3 4 3rd Quarter 2008 3rd Quarter 2008 1
    • North America North America Ferrous Scrap Upward Volatility Working its Way Backlogs Overall at Good Levels Through Best Markets are Highway; Worst are Retail – Immediate Benefit to Recycling Imports Continue to be Reduced in Long Products – Four to Six Week Benefit Delay for Mills and Will Stay Low Through at Least the Fall – Three to Four Month Pain for Fabricators Same Factors at Play – Better International Service Centers Continue to Match Purchases Pricing; Weak Dollar; Strong Freight Rates with Consumption – China to U.S. Gulf $80/MT Copper Tube Results Remain Steady on Commercial Market – S.E. Asia to U.S. Gulf $110/MT Nonferrous Prices High, but Volume Hurt by – Black Sea (Turkey) to U.S. Gulf $80/MT Weak Residential Markets and Lower Manufacturing Output Raw Material Markets Remain Extremely Positive 5 6 with Record Backlogs 3rd Quarter 2008 3rd Quarter 2008 Europe / Middle East Asia / Pacific Demand in Arab States Extraordinary (20 Million MT China Rebar Production and Consumption Balanced Rebars Consumed) China’s Determination to Cut Exports Taking Effect – China’s Withdrawal from Exporting Billets Led to More to Come? Increase in Global Billet Margins Earthquake Tragedy is Spurring Call for Stricter Building Turkish Output Staying Local; Lower Imports to U.S. Codes with Consequent Demand on Steel All Manner of Regulatory Schemes Being With Lower Supply, Prices Rising in S.E. Asia; Billets Developed to Keep Scrap, Iron Ore, Finished Goods Again in Demand in Home Markets – Russia, India, Taiwan, Saudi Credit Woes Temporarily Infect Vietnam Steel Products Arabia Being Re-Exported Poland has Good Internal Demand and Good Good Strength in Indonesia / Malaysia / Singapore / Geography Thailand Croatia – Progress Being Made: Workforce Australian Economy in Good Shape Reduction; Developing Outlets for Product India Imposes Steel Export Taxes 7 8 Inflation Remains a Concern for Most Asian Economies. 3rd Quarter 2008 3rd Quarter 2008 2
    • CMC Steel Arizona Project Review Mesa, Arizona Arizona Micro Mill – $165 Million – 281,000 Tons of Rebar – Expected Commissioning August 2009 Polish Wire Rod Block – $40 Million – Additional 100,000 Tons of Rod/Rebar/Coils – Expected Commissioning End of 2008 Polish Flexible Section Mill – $170 Million – 650,000 MT – Increased Product Range; Higher Quality Wire Rod / Larger Sizes – Expected Commissioning Early 2010 Polish Downstream Expanding in Wire Mesh SAP Implementation – Poland Went Live April 2008 9 10 3rd Quarter 2008 3rd Quarter 2008 SAP Benefits Expected Return on Investment is 25%+ Platform for Future Growth with Ability to Rapidly Integrate Acquisitions Entire Corporation Will be on a Single System with Identical Functionality Total Visibility Across the Entire Corporation; Real Time Information for Decisions; Faster, More Accurate Processings; Better Controls Largest Benefit Areas – Reduced Inventory – Production Scheduling by Optimal Demand Planning and Location Statistics – Coordinated Transportation and Logistic Admin – Improved Maintenance Through Preventive Strategies – Leverage Global Purchasing 11 3rd Quarter 2008 3
    • Quarterly Net Sales Return on Beginning Equity ($ in Millions) 2,911 $3,000 2,403 50.0 2,337 2,346 43.3 2,203 $2,500 39.6 40.0 $2,000 29.1 26.0 30.0 $1,500 20.0 $1,000 12.3 10.7 9.4 5.7 10.0 3.8 $500 $0 0.0 1999 2000 2001 2002 2003 2004 2005 2006 2007 3Q07 4Q07 1Q08 2Q08 3Q08 Discontinued Operations 13 14 3rd Quarter 2008 3rd Quarter 2008 Quarterly Earnings Per Share LIFO Earnings Analysis ($ in Millions) 143 $1.25 140 $150 119 99 $125 107 0.86 0.82 92 $1.00 $100 78 78 66 $75 0.57 $0.75 $50 0.51 $25 0.34 $0.50 $0 -$25 $0.25 -$50 -$75 $0.00 -$100 3Q07 4Q07 1Q08 2Q08 3Q08 3Q06 4Q06 1Q07 2Q07 3Q07 4Q07 1Q08 2Q08 3Q08 Earnings Before LIFO Expense 15 16 LIFO Expense/Income 3rd Quarter 2008 3rd Quarter 2008 4
    • Dividend Payout Per Share LIFO Expense (Income) Pre-Tax by Fiscal Year (Thousands) 3rd Qtr. 1st Qtr. 2nd Qtr. 3rd Qtr. 4th Qtr. 0.48 2007 2007 2008 2008 2008 $0.50 Americas 10,276 (9,292) 1,832 4,969 15,187 Recycling $0.40 0.33 Americas 15,805 (135) (3,863) 18,193 55,327 Mills $0.30 Americas 2,911 (3,124) 4,307 35,160 57,023 0.17 Fab & Dist. $0.20 0.12 International 1,963 3,743 (6,538) 632 (385) 0.09 0.08 Fab & Dist. 0.07 $0.10 30,955 (8,808) (4,262) 58,954 127,152 Total $0.00 2002 2003 2004 2005 2006 2007 Annual Rate 17 18 3rd Quarter 2008 3rd Quarter 2008 Adjusted Operating Profit Investments by Segment ($ in Millions) 3rd Qtr. 2008 3rd Qtr. 2007 494 Sisak & Other Acq. 500 Mills – AZ & Poland 12% 30% 450 21% SAP 400 CapEx 17% 350 23% 13% 38% 300 206 250 37% 200 26% 131 110 (17)% 150 52 50 100 50 0 Americas Fab Americas International Fab International Americas 2003 2004 2005 2006 2007 Projected & Distribution Mills & Distribution Recycling Mills 2008 19 20 Note: Excludes Acquisitions, Except for 2008 3rd Quarter 2008 3rd Quarter 2008 5
    • Adjusted Operating Profit Average Selling Prices ($ in Millions) Americas Americas Recycling Recycling $465 475 3.40 $3.20 450 425 50.4 $60 2.90 400 375 $50 350 2.40 325 CU & AL $ Pound 30.9 Ferrous $ Tons 300 $40 275 1.90 250 $30 225 200 1.40 $20 175 $1.03 150 $10 125 0.90 100 75 $0 3Q07 3Q08 50 0.40 May-05 Nov-05 May-06 Nov-06 May-07 Nov-07 May-08 Ferrous Aluminum Copper 21 22 Source: CMC 3rd Quarter 2008 3rd Quarter 2008 Quarterly Scrap Shipments Adjusted Operating Profit (Tons 000’s) ($ in Millions) Americas Americas Recycling Mills $100 889 880 1,000 $80 67.0 800 $60 600 34.0 400 $40 200 $20 0 3Q07 3Q08 $0 Ferrous Nonferrous 3Q07 3Q08 23 24 3rd Quarter 2008 3rd Quarter 2008 6
    • Americas Steel Mills Americas Steel Mills Average Selling Prices Product Mix Americas Americas (Tons 000’s) ($ per Ton) Mills Mills 673 CMC-TX CMC-AL CMC-SC CMC-AR 630 613 800 594 548 700 $950 828 600 $850 824 783 500 328 309 364 331 373 $750 748 400 $650 300 $550 200 220 285 266 300 282 $450 100 $350 0 3Q07 4Q07 1Q08 2Q08 3Q08 l v g t r r b n p b c c r r 7 8 y y Ju Oc Ap Ap Ma Ma No De De Au Fe Fe Ju Se Ma Ma n -0 n -0 Ja Ja Merchant Shapes, Billets & Rebar 25 26 Structurals 3rd Quarter 2008 3rd Quarter 2008 Americas Steel Mill Margins Electric Rates by Quarter 3rd Quarter Comparisons Americas Americas Mills Mills FY FY CMC-TX CMC-AL CMC-SC CMC-AR 2008 2007 Change 7.00 Avg. Selling Price $718 $575 143 Cents/KWH 6.00 Cost of Scrap Utilized $399 $267 132 5.00 Metal Margin $319 $308 11 4.00 Tons Shipped* 673 613 60 Billet Tons Shipped* 96 88 8 3.00 3Q06 4Q06 1Q07 2Q07 3Q07 4Q07 1Q08 2Q08 3Q08 *Tons in thousands 27 28 3rd Quarter 2008 3rd Quarter 2008 7
    • Natural Gas Rates by Quarter Percentage of Manufactured Cost Per Ton Average of Mills in Texas / Alabama / South Carolina Americas Americas Mills Mills CMC-TX CMC-AL CMC-SC CMC-AR Year Year 20.00 Ended Ended YTD 8/31/07 8/31/01 17.00 05/31/08 14.00 Material (Scrap) $/MCF 59% 51% 35% Supplies 11.00 11% 11% 15% (Electrodes/Alloys) 8.00 Utilities (Electricity/Gas) 8% 9% 13% 5.00 Maintenance 5% 7% 8% 2.00 Labor 4% 5% 8% 3Q06 4Q06 1Q07 2Q07 3Q07 4Q07 1Q08 2Q08 3Q08 Depreciation 2% 3% 6% Other 11% 14% 15% 29 30 3rd Quarter 2008 3rd Quarter 2008 Copper Tube Manufacturing Copper Tube Manufacturing Average Prices Pounds Shipped Americas Americas (in Millions) Mills Mills 6.00 CY Avg – 4.71 5.00 LY Avg – 3.89 Selling 24 20.3 4.00 21 P r ic e P e r P o u n d 16.7 18 3.00 14.5 13.9 13.5 Cost 13.3 15 CY Avg – 3.59 11.7 11.5 LY Avg – 3.02 10.4 12 2.00 9 1.00 6 3 0.00 0 3Q06 4Q06 1Q07 2Q07 3Q07 4Q07 1Q08 2Q08 3Q08 l t r r b r r n b p y y g c Ja c v Ju Oc 07 08 Ap Ap Ma Ma De De Fe Fe Ju Ma Ma Se Au No n- n- Ja 31 32 3rd Quarter 2008 3rd Quarter 2008 8
    • Adjusted Operating Profit Shipments (Tons 000’s) ($ in Millions) Americas Americas Fabrication Fabrication & Distribution & Distribution 600 23.3 $30 452 500 429 428 395 $20 376 400 (22.3) $10 300 $0 200 -$10 100 -$20 0 -$30 3Q07 4Q07 1Q08 2Q08 3Q08 3Q07 3Q08 Posts Deck Structurals Joist Rebar 33 34 3rd Quarter 2008 3rd Quarter 2008 CMCZ (Poland) Average Selling Prices* Adjusted Operating Profit International ($ in Millions) Americas Fabrication Mills & Distribution 3rd Quarter $50 2008 2007 38.8 36.3 $40 Rebar $919 $834 $30 Joist $1,307 $1,199 Deck $1,295 N/A $20 Structural $2,843 $2,348 $10 Fence Post $807 $716 $0 3Q07 3Q08 *Excludes Stock and Buyout Sales 35 36 3rd Quarter 2008 3rd Quarter 2008 9
    • CMCS (Croatia) CMCZ Mill Margins Adjusted Operating Profit 3rd Quarter FY Comparisons International ($ in Millions) International Mills Mills 2008 2007 Avg. Selling Price (PLN) 1,708 1,663 $10 Cost of Scrap Utilized (PLN) 1,039 960 Metal Margin (PLN) 669 703 $5 Rebar Tons Shipped* 135 131 (4.5) (6.4) (5.6) $0 Wire Rod Tons Shipped* 122 138 Billet Tons Shipped* 82 107 -$5 Total Tons Shipped* 339 376 % Domestic 57% 54% -$10 1Q08 2Q08 3Q08 37 38 *Tons in thousands 3rd Quarter 2008 3rd Quarter 2008 CMCS Mill Stats Adjusted Operating Profit 3rd Quarter FY 2008 ($ in Millions) International International Fabrication Mills & Distribution $50 Tons Melted 12,100 40.3 Tons Rolled 22,100 $40 Tons Shipped 19,300 $30 21.7 Welded Tons Shipped 11,000 $20 Drawn Tons Shipped 800 $10 Seamless Tons Shipped 7,500 $0 % Domestic 24% 3Q07 3Q08 LIFO Expense (Income): 2.0 (0.4) 39 40 3rd Quarter 2008 3rd Quarter 2008 10
    • Investor Information Forward-Looking Statements This written and verbal presentation may contain forward-looking Non-GAAP Financial Measures statements regarding the outlook for the Company's financial results including net earnings, product pricing and demand, production rates, and Regulation G 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,” This written and verbal presentation may use financial “anticipates,” “believe,” “ought,” “should,” “likely,” “appears,” “projected,” statement measures considered non-GAAP financial measures “forecast,” “outlook,” “will” or other words or phrases of similar impact. There is inherent risk and uncertainty in any forward-looking statements. by the Securities and Exchange Commission (SEC). Variances will occur and some could be materially different from In compliance with the SEC’s Regulation G, we have management's current opinion. Developments that could impact the Company's expectations include construction activity, difficulties or delays provided on our web site at in the execution of construction contracts resulting in cost overruns or contract disputes, metals pricing over which the Company exerts little www.cmc.com 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 a reconciliation to the most comparable GAAP measure and production capacity or utilization, the ability to integrate acquisitions into other information that may be of interest to investors. 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. 41 42 3rd Quarter 2008 3rd Quarter 2008 11