commercial metals 5B64BB2A-7598-444D-BF4A-E335EDF33026_Overview_0109

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commercial metals 5B64BB2A-7598-444D-BF4A-E335EDF33026_Overview_0109

  1. 1. CMC A Global Steel and Metals Company Over 15,000 Employees Worldwide in 14 Different Countries Metal Recycling Facilities Steel Minimills CMC Recycles, Steel Fabrication Plants Manufactures, Markets Steel Joist & Deck Plants and Distributes Steel Heat Treating Plants and Metal Products and Steel Fence Post Mfg. Plants Related Materials and Steel Service Centers Services Through a Network of Over 250 Construction-Related Product Warehouses Locations Worldwide Copper Tube Minimill Pipe & Tube Mill Marketing and Distribution Offices 6565 N. MacArthur Blvd. Suite 800 Irving, TX 75039 Strategic Investments Tel 214. 689.4300 Fax 214. 689.5886 www.cmc.com 2 CMC Overview January 2009 Effective 9/1/2007 CMC – Business Model • Locations Throughout the Sunbelt • Poland -- Main Products are • Significant Regional Processor Vertical Integration Rebar & Wire Rod; Mega Shredder of Ferrous and Nonferrous on Site; Captive Scrap Branches • Strategic Mill Support Product Diversification • Croatia Tubular Products Global Geographic Dispersion • Domestic Steel Minimills • Offices in 13 Countries (Long Products) • Physical Operations and Strategic Investments • Copper Tube Minimill ―11% Investment in Czech Mill ―Australian Service Centers ―Belgian Pickling & Oiling 24% Joint Venture • Downstream Operations: Rebar and • Consultants/Agents in 20 Countries Structural Fab, Joist, Deck, CRP, • Rebar Fab; 2 Locations; More Underway Domestic Steel Import, Fence Posts, • Wire Mesh; 2 locations in Poland 3 Heat Treating, Other CMC Overview January 2009
  2. 2. How is CMC Different? Conservative Accounting Conservative Company with a Strong, Fast Depreciation Rates Experienced Management Team No Significant Post-Retirement Benefits High Correlation Between Hedging Strategy and Underlying Assets 31 Consecutive Years of Profitability Build Markets, then Build Manufacturing/ No Speculation or Position Taking Processing Operations No Esoteric Financial Instruments Vertically Integrated: Scrap Processing and Steel Very Cautionary Bad Debt Reserves / Use of Fabrication are Hedges for the Steel and Copper Tubing Mills Credit Insurance Marketing and Distribution – Consistently Profitable LIFO Inventory Valuation People Development Investment Grade Long-Term Debt and Commercial Paper 5 6 CMC Overview January 2009 CMC Overview January 2009 Financial Objectives CMC’s Peer Group Profitability Peer Companies Plus Private & International Players » Net Income Return on Beginning Equity 10 - 14% Bayou Steel (Arcelor) Corus » Operating Profit ROA > 16% Gerdau AmeriSteel David J. Joseph (Nucor) Leverage Mueller Industries Duferco Nucor Corporation Glencore » Long-Term Debt/Total Capitalization 30 - 40% Oregon Steel Mills, Inc. Mittal Coverage Quanex Corporation Omnisource (Steel Dynamics) Schnitzer Steel Industries Sims (Metal Management) » EBITDA/Interest > 6x Steel Dynamics Stemcor Wolverine Tube Inc 7 8 CMC Overview January 2009 CMC Overview January 2009
  3. 3. Liquidity Operating Profit by Segment FY 2007 FY 2008 FY 2006 $400 MM Commercial Paper Program $200 MM A/R Securitization Agreement 9% 24% 17% 11% 9% Unsecured Bank Credit Lines 18% 19% 17% 20% Weighted Average Long-Term Interest 15% 29% Rate on Public Debt – 6.73% 41% 44% 40% (13)% Americas Fab Americas International Fab International Americas & Distribution Mills & Distribution Recycling Mills 9 10 CMC Overview January 2009 CMC Overview January 2009 Stock Repurchases Consolidated Net Sales ($ in Millions) ($ in Billions) $200 172 $180 $12 10.4 $160 $140 $10 8.3 $120 7.2 79 $8 $100 77 6.3 59 $80 $6 4.6 42 $60 $40 15 $4 7 5 7 $20 $0 $2 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 $0 2004 2005 2006 2007 2008 11 12 CMC Overview January 2009 CMC Overview January 2009
  4. 4. Capital Expenditures Dividends Per Share ($ in Millions) $400 355 $0.50 0.45 $0.45 $350 $0.40 $300 0.33 $0.35 206 $250 $0.30 $0.25 $200 0.171 131 $0.20 $150 110 0.115 $0.15 0.085 0.08 0.07 $100 52 $0.10 $0.05 $50 $0.00 2002 2003 2004 2005 2006 2007 2008 $0 2004 2005 2006 2007 2008 Note: Excludes Acquisitions 13 14 CMC Overview January 2009 CMC Overview January 2009 LIFO Reserve United States End-Use Markets ($ in Millions) 562 Public 600 30% Infrastructure 550 Heavy 500 15% Commercial 450 400 15% Service Centers 350 Light 241 300 10% Commercial 189 250 200 5% Agriculture 111 92 150 5% Residential 100 17 8 8 3 6 50 20% OEM’s and Other 0 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 At August 31 15 16 CMC Overview January 2009 CMC Overview January 2009
  5. 5. Americas Mills and Fabrication & Distribution Locations Americas Mills Net Sales ($ in Billions) $2.4 2.0 $2.0 1.6 1.5 $1.6 1.3 1.1 $1.2 Steel Manufacturing $0.8 Copper Tube Manufacturing Steel Fabrication $0.4 Steel Joist & Deck Plants Fence Post Manufacturing $0.0 Construction-Related Products Warehousing 2004 2005 2006 2007 2008 Heat Treating Castellated & Cellular Beam Fabricator Distribution 17 CMC Overview January 2009 Copper Tube Manufacturing Shipments Copper Tube Manufacturing (in Millions of Pounds) Copper Tube Minimill: Melt Scrap/Cast/Extrude/Draw 100 Located in New Market, Virginia 68.4 80 66.6 65.7 Markets: More than 44 States 52.5 52.3 80 Million Pound Capacity 60 Water Tubing for Plumbing, Air Conditioning and 40 Refrigeration 20 Value-Added Products – Line Sets 0 2004 2005 2006 2007 2008 19 20 CMC Overview January 2009 CMC Overview January 2009
  6. 6. Americas Steel Mill Shipments Americas Steel Mill Shipments by Region Fiscal 2008 (Tons 000’s) CMC-TX CMC-AL CMC-AR CMC-SC 2,528 2,800 2,492 2,401 2,600 2,284 2,266 2,250 2,171 2,400 20% 2,200 1,903 1,853 2,000 1,685 1,800 1,600 1,400 1,200 1,000 34% 800 600 400 200 0 46% 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 21 22 CMC Overview January 2009 CMC Overview January 2009 CMC Steel Minimills Americas Steel Mill Facilities Capacity (Tons 000’s) CMC Steel Alabama CMC Steel Arkansas Melting Rolling 28” CMC Steel Alabama: Birmingham, AL 700 575 (mid-size structural products) 90 NT 72 MVA Melt MELT DC Fce Xfrmr Capacity: CMC Steel Arkansas: Magnolia, AR 0 150 (posts, rebar, flats, angles, squares) 90 tph 21 MVA CMC Steel South Carolina: Cayce, SC 750 800 Xfrmr LMS (full line bar size products) Ind Stir CMC Steel Texas: Seguin, TX 1,000 1,000 14 stand in-line continuous Rail slitting & re-rolling; (full line bar size products) mill with quick change billet rolling capability on 9 stands 12 stand in-line mill MILL CMC Zawiercie: Zawiercie, Poland 1,870 1,100 (12 passes continuous; 120 tph reheat furnace capacity (rebar and wire rod) 14 passes using 3 hi) In-line straightening & stacking 40 tph reheat furnace In-line bundling CMC Sisak: Sisak, Croatia 80 330 2000 fpm finishing speed (pipe and tube) Total 4,400 3,955 23 24 CMC Overview January 2009 CMC Overview January 2009
  7. 7. Americas Steel Mill Facilities CMCZ Steel Mill Facility CMC Steel South Carolina CMC Steel Texas #1 Furnace #2 Furnace 22” 24” 22” 22” Melt 100NT 120 NT 80 MVA Melt Melt Capacity: 80 MVA Melt MELT 135 NT 135 NT AC Fce AC Fce 105 MVA 105 MVA Xfrmr Capacity: Capacity: MELT Xfrmr Capacity: 105 tph AC Fce AC Fce Xfrmr Xfrmr 117 mtph 84 mtph 130 tph 21.5 MVA 25 MVA 60 MVA 60 MVA Xfrmr LMS Xfrmr LMS Ind Stir Xfrmr Xfrmr Ind Stir LMS Porous Plug LMS Porous Plug Stirring Stirring 17 stand in-line continuous 17 stand in-line continuous Bar Mill Wire Rod Mill mill (7 stand cantilever mill (all conventional) 18 stand in-line continuous Dual strand double rod rougher) with quick change MILL mill with quick change with quick change on all 17 stands capability block 17 stand mill plus MILL capability on 6 stands; 160 tph capacity; 3,300 fpm finishing and 150 tph reheat furnace capacity 8 strand wire rod block; 120 metric tph reheat furnace capacity; In-line straightening/stacking/bundling 3,000 fpm finishing speed 100 metric tph reheat furnace capacity 16 meters per second finishing speed; Profile gauge In-line bundling Maximum speed 55 meters per second In-line stacking and bundling Profile gauge 25 26 CMC Overview January 2009 CMC Overview January 2009 CMC Steel Alabama CMC Steel Arkansas Medium Section Mill USA’s Leading Fence Post Provider Continuous Cost / Productivity/Quality Modern, Efficient Rail Reroller Improvements – Posts/Rebar/Bed Angles/Earth Bar New Reheat Furnace in 2008 Low Cost Producer of Posts Growth in South Central U.S.A. Roll Billets Into Niche Products FY 2008 – Tons Melted 676,000 – Flats/Angles/Rounds – Tons Rolled 430,000 FY 2008 – Tons Shipped 647,000 – Tons Rolled 147,000 – Tons Shipped 142,000 27 28 CMC Overview January 2009 CMC Overview January 2009
  8. 8. CMC Steel South Carolina CMC Steel Texas Low Cost Producer Growth in Southeast U.S.A. Flexible, High Productivity Bar Mill State-of-the-Art, Quick Change, High Broad Product Range Productivity Bar Mill – Rebar, Merchant Bar, and SBQ FY 2008 Strong Customer Base – Tons Melted 723,000 – Tons Rolled 732,000 Trucking Fleet Backhauls Scrap – Tons Shipped 711,000 Growth in Southwest U.S.A. FY 2008 – Tons Melted 997,000 – Tons Rolled 792,000 – Tons Shipped 1,028,000 29 30 CMC Overview January 2009 CMC Overview January 2009 CMC Steel Mill Products Inter-Segment Dealings PRODUCTS CMC Steel AL CMC Steel AR CMC Steel SC CMC Steel TX CMCZ Rebar #3–6 #3–18 #3–18 8.0 – 40.0 mm Ferrous Scrap Purchased by Americas Steel Mills from Americas Recycling 35% Rounds 1/2” – 1” 1/2” – 3” 1/2” – 3-1/2” 12.0 – 75.0 mm SBQ & MBQ Ferrous Scrap Processed by Texas Shredder 13% Flats 3” – 12” 1-1/2” – 3” 1-1/2” – 6” 2” – 6” 25.0 – 120.0 mm Steel Produced by Americas Steel Mills and Sold to Squares 1/2” – 2” 1/2” – 3-1/2” 10.0 – 52.0 mm Americas Fabrication & Distribution Segment 37% Angles 3” – 7” 1” – 2” 1” – 4” 1” – 4” 25.0 – 50.0 mm Steel Purchased by Americas Fabrication & Distribution Channels 3” – 8” 3” – 6” 3” – 6” Segment from Americas Steel Mills 46% Fence Post All sizes .95#, 1.25#, 1.33# Special Earth bar; Rail anchors; Sections jail bars; concrete Other form bar; As % of Total Requirement sign posts Wire Rod 5.5 – 13.5 mm Coiled Rebar 6.0 – 12.0 mm 32 CMC Overview January 2009
  9. 9. Americas Steel Mill Customers Americas Steel Mill Competitors CMC Steel AL CMC Steel AR CMC Steel SC CMC Steel TX Fabricators Farm Co-Ops/ Fabricators Fabricators CMC Steel AL CMC Steel AR CMC Steel SC CMC Steel TX Distributors Chicago Heights Service Centers Lumber Yards Contractors Contractors Bayou Steel Bayou Steel Border Steel Steel Mobile Home Service Centers Service Centers Service Centers Gerdau Jersey Shore Gerdau Gerdau Mfg. AmeriSteel Steel AmeriSteel AmeriSteel Tower Mfg. Manufacturers Other OEM’s Forge Shops Nucor Corp. W. Silver Inc. Nucor Corp. Nucor Corp. Trailer Mfg. Sucker Rod Mfg. Steel Dynamics Steel Dynamics Cold Drawers Other OEM’s Other OEM’s Fabricators 33 34 CMC Overview January 2009 CMC Overview January 2009 CMC Zawiercie CMC Sisak Established 1948; Acquired September 2007 Second Largest Steel Producer in Poland Manufactures Seamless, Welded and Cold Processed Pipe Minimill Capacity 1.1 Million Tons 1,250 Employees Goal is 70% Domestic and 30% Export Sales 330,000 MT Rolling Capacity – 187,000 Welded Tubes Main Products are Rebar, Wire Rod, and Merchants – 77,000 Heavy Walled Seamless Pipe – 39,000 Medium Section Seamless Pipe New Wire Rod Block October 2008 – 27,000 Cold Drawn Tubes Mega Shredder and Fab Shop in 2006 – Melt Shop – 77,000 Blooms Turnaround; Manufacturing at Less Than 20% of Capacity at FY 2008 Acquisition – Tons Melted 1,502,000 FY 2008 – Tons Melted 34,000 – Tons Rolled 1,100,000 – Tons Rolled 67,000 – Tons Shipped 1,434,000 – Tons Shipped 57,000 35 36 CMC Overview January 2009 CMC Overview January 2009
  10. 10. Americas Mills and Recycling Tons Capacity Americas Recycling Locations (000’s) Ferrous 3,000 Nonferrous 525 Steel Minimills Copper Tube Mill Total 3,525 Recycling Locations Recycling Shredders 37 38 CMC Overview January 2009 CMC Overview January 2009 International Mills and International International Fabrication & Distribution Fabrication & Distribution Locations Strategy Provide Niche Value-Added Physical Operations in Special Situations Marketing and Distribution Emphasized – Warehouses in Australia – Steel Minimill Steel Service Centers in Australia (Processing) – Pipe & Tube Mill Scrap Processing Partnering with Suppliers and Customers Processing Pickling and Oiling Steel Coils in Belgium Distribution – Steel Fabrication Czech Marketing and Trading Agreement – Wire Mesh Physical Marketers, Not Screen Traders Representative Offices Agents Consistently Profitable Investments and Joint Ventures 39 40 CMC Overview January 2009 CMC Overview January 2009
  11. 11. International Fabrication & Distribution Segment Locations International Fabrication & Distribution Segment Strategic Investments Domestic – CMC Commonwealth Metals (Fort Lee, NJ) – CMC Cometals (Fort Lee, NJ) International Trinecke (Czech Republic) – Australia Europickling (Belgium) – China – Germany – Hong Kong – India – Poland – Russia – Singapore – Switzerland – United Kingdom 41 42 CMC Overview January 2009 CMC Overview January 2009 International Fabrication & Distribution International Fabrication & Distribution Services Provided Products and Services Aluminum, Brass and Copper Semis • • • Integrity Hedging Insurance Industrial Products for Steel, Refractory, • • • Market Knowledge Foreign Exchange Customs Clearance Foundry Industries • • • Multiple Suppliers Production Monitoring Warehousing/JIT and Inspection New Steel, Long and Flat Products • • Competitive Bids Technical Support • L/C Arrangement • • Foreign Language Steel and Aluminum Re-Rolling Stock Financing • Capability Re-Packaging/ • Claim Settlement Processing, Heat Treating, Pickle and Oil Port Loading/Discharge • Contract Documentation • Marine and Inland Transportation 43 44 CMC Overview January 2009 CMC Overview January 2009
  12. 12. Stock Performance Graph International Fabrication & Distribution Synergies Within CMC Fiscal Years $700 CMC $650 CMC Sales of Rails / Alloys / Complementary Steel $600 S&P 500 S&P Stl Ind and Copper Finished Goods to Domestic Mills $550 S&P Stl Ind $500 Personnel Seconded to CMCZ $450 $400 $350 Import for Domestic Fab Stock $300 $250 Market Intelligence $200 S&P 500 $150 – World Metal Prices – Local $100 $50 – World Metal Prices – Import 2002 2003 2004 2005 2006 2007 2008 – Local Political/Economic Conditions – Freight Markets 2003 2008 – Competitor Moves Commercial Metals Company $100.00 $556.39 S&P 500 $100.00 $139.75 – M&A Opportunities S&P Steel Industry Group $100.00 $534.21 – Joint China Strategy 45 46 CMC Overview January 2009 CMC Overview January 2009 Our Core Competencies Acquisition Criteria We Know How to Treat Our Employees, Maintain Investment Grade Rating Customers and Suppliers Return on Capital Criteria Met We Know How to Make Steel Accretive to Shareholders Within One Year We Know How to Fabricate Steel Within Our Current Scope of Competency We Know How to Process Scrap Product Line Extension We Know How to Market Worldwide Geographic Expansion – Buy End-Use Market Attractive – Sell International Assets Can Be Attractive – Transport – Finance Preference for Non-Union But Not an Absolute We Do it the RIGHT Way! Greenfield Option 47 48 CMC Overview January 2009 CMC Overview January 2009
  13. 13. There is More to Come There is More to Come Sustainability Sustainability Macro Factors Macro Factors – Industry Consolidation Has Brought: – Historical Trend Has Developing Economies » Financially Stronger Companies with More Metal Intensive Longer-Term Outlooks » Industrialization is a Continuing Story » Pricing Power Pendulum Swinging Towards Producers » Economic Development Drives Steel/Metals Consumption » Greater Supply Discipline in Response to Demand Changes – Global Infrastructure » More Control Over Raw Material Inputs » Diversification of Sources of Earnings Power 49 50 CMC Overview January 2009 CMC Overview January 2009 There is More to Come Metal Consumption is the Driving Factor for Metal Pricing Sustainability Est. 2006 Population (in Millions) 700 1,400 Japan Commercial Metals’ Factors Steel C onsumption K G Per C apita 600 1,200 – Diversification Limits Down Cycle Risk 500 1,000 Germany USA – Favorable Geography – Capital Assets in Sunbelt 400 800 Growth Areas and Central European Expansion Australia 300 600 Corridor China France Thailand 200 400 – Supply Chain Balance – Control Sufficient Scrap UK Mexico 100 Capacity to Meet Mill Demand Which Has Sufficient 200 India Capacity to Meet Downstream Value-Added 0 0 Operations’ Demand USA UK C h in a In d ia A u s tra lia Japan F ra n c e G e rm a n y T h a ila n d M e x ic o 0 10 20 30 40 US$ GDP Per Capita – Vibrant End-Use Markets – Long Products for Consumption Curve Construction, Service Centers, Agriculture, Non- Auto OEM’s Source: IISI, World Bank, CMC Estimates GDP is 2006, Steel Consumption Estimated 2005 51 52 CMC Overview January 2009 CMC Overview January 2009
  14. 14. There is More to Come Why CMC Outperforms Sustainability Commercial Metals’ Factors (Continued) People – Profit Opportunities Long Cycle – Spot in Markets Recycling, Mid-Range in Mills, Longer Term in Fabricators/Distribution Sourcing – Market Upheavals Create Profit Opportunities for Worldwide Reach of Marketing & Distribution – Proven Track Record – 31 Years of Annual Profitability; Only One Quarterly Loss Over That Span 53 54 CMC Overview January 2009 CMC Overview January 2009 Investor Information Forward Looking Statements Non-GAAP Financial Measures and Regulation G 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, interest rates, inventory levels, impact of acquisitions and general market conditions. These forward-looking statements generally can be identified by phrases such as the company or its management “expect,” “anticipates,” This written and verbal presentation may use financial statement “believe,” “ought,” “should,” “likely,” “appears,” “projected,” “forecast,” “outlook,” measures considered non-GAAP financial measures by the Securities “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 and Exchange Commission (SEC). different from management's current opinion. Developments that could impact the In compliance with the SEC’s Regulation G, we have Company's expectations include solvency of financial institutions and their ability or willingness to lend, extent of government intervention and its effect on capital markets, provided on our web site at construction activity, difficulties or delays in the execution of construction contracts resulting in cost overruns or contract disputes, metals pricing over which the Company www.cmc.com 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 a reconciliation to the most comparable GAAP measure and other political and military uncertainties, credit availability, currency fluctuations, energy and information that may be of interest to investors. supply prices and decisions by governments impacting the level of steel imports and pace of overall economic activity, particularly China. 55 56 CMC Overview January 2009 CMC Overview January 2009

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