2 nd Quarter CMC Business Model. Overview. North America. Vertical Integration. Product Diversification Global Geographic Dispersion

Transcription

1 CMC Business Model Vertical Integration 2 nd Quarter 2009 Product Diversification Global Geographic Dispersion Current Market Conditions & Outlook Overview Current Market Conditions & Outlook North America Deterioration of Global Steel Markets Complete as C & E Europe and Australia Weaken End Users are in Paralysis with Lack of Liquidity Lack of Confidence in Pricing, in Counter Parties, in Stimulus Effectiveness Destocking Continues Amid Already Weak Demand Seasonal Construction Pickup will be Modest Largest Commercial Exposures Continue to be Unwarranted Contract Cancellations, Market Claims, All Leading to Unexpected Inventory Positions Ferrous Scrap Cannot Find Direction; Shredded Rose to $240 NT in January and Now is $185 Even if Further Weakness, Bottom Expected at $150 NT Ferrous Volumes Did Increase Each Month of the Quarter Rebar Fabrication Backlogs Refilling at 50% Rate Large Jobs Lacking; Volume is Small Jobs Competitively Bid Merchants Still Hit Hardest

2 Current Market Conditions & Outlook North America Current Market Conditions & Outlook Europe/Middle East Rebar Imports Down From Last Year, But Sequentially Trending Up Through March 22 Total Actual / License 167 K MT vs. 334 K MT in Down 50% from, But Up 140% from 4th Qtr All from Mexico and Turkey Latest Offering Prices for Imported Rebar From Turkey - $410 MT / CFR From Mexico - $ MT / Railcar Houston Inbessa Warehouse (Houston) 50K Rebar Inventory 1.3 K Shipping Daily Infrastructure Stimulus Spending a Positive, But No Impact Until Late 2009 Same Line, Same Verse as U.S. Volumes and Pricing Dropping, No Liquidity Less Inclined to Spend Way Out Instead Concentrate on Salvaging Banks Polish Winter Harsh and Government Not Releasing Infrastructure Spending Weak Local Currencies Adding to Crisis Without Traditional Outlet for Exports Considering Options to Down Scale New Polish Flexible Mill Expect Polish Mill to Produce at 60% Capacity Rebar / Billets Still in Abundance in MENA Middle East Overhang Will Take to Mid-Summer to Clear Current Market Conditions & Outlook China Current Market Conditions & Outlook China Stimulus More Targeted to Infrastructure than U.S. Includes Some Prepayments on Projects to Spur Development Government Targeting 8% GDP Some Rollbacks of VAT on Higher End Exports Since Mid-July, Currency Remains in Range to U.S. of False Start in Inventory Buildup Prior to Chinese New Year Now Smaller Mills are Forced to Scale Back Production With 17% VAT, Chinese Prices Highest in World Flood of CIS Material Entering Japan Not Exporting Scrap in Usual Quantities; Shortage in SE Asia Region; Billet Pricing Reported at $423 MT Iron Ore Current Guess 30% Down From Brazil; 40% From Australia; Current Pricing in Mid 60 s; No One Buying at Benchmark; 60+ Million Tons of Iron Ore Still in Inventory China Main Buyer of Copper Cathode/Copper Scrap. Stock Piling? Copper at $1.80/lb. is this Sustainable? Commodity Prices Rising as U.S. Dollar Weakens

3 Effective 9/1/2007 Effective 9/1/ CMC AMERICAS TODAY 177 LOCATIONS Steel Mills (1 coming soon in AZ) 40 CRP Distributors Fence Post Approximately 10,000 employees Locations Throughout the Sunbelt Significant Regional Processor of Ferrous and Nonferrous Strategic Mill Support Approximately 4,000 employees Poland Main Products are Rebar & Wire Rod; Mega Shredder on Site; Captive Scrap Branches Croatia Tubular Products Rebar Fab/Coating/Post-Tension Structural Fab/ Castellated Beam Joist & Deck Recycling CMC Dallas Trading CMC Howell Metal CMC Impact Metals Domestic Steel Minimills (Long Products) Copper Tube Minimill Downstream Operations: Rebar and Structural Fab, Joist, Deck, CRP, Domestic Steel Import, Fence Posts, Heat Treating, Other Offices in 13 Countries Physical Operations and Strategic Investments 11% Investment in Czech Mill Australian Service Centers Belgian Pickling & Oiling 24% Joint Venture Consultants/Agents in 20 Countries Rebar Fab; 2 Locations; More Underway Wire Mesh; 2 locations in Poland 300+ Employees at CMC Corporate Headquarters in Irving, Texas MEXICO Sept 3, CMC AMERICAS Current Market Conditions CMC AMERICAS Current Market Conditions Recycling in Last Steps of Recovery from October Seizure February Tons Shipped Highest Since September Had First Bulk Export Shipment (China) in Years Nonferrous Export Markets (Copper) Excellent; Challenge No Flow of Material In Domestic Mills All About Location and Product Our Birmingham, Alabama Mill the Safest Steel Mill in U.S. for Continues a Seven Year Tradition of Safety First Steel Mills Will Operate Between 50% to 60% Capacity in the 3rd Qtr. Rebar and Southwest Stronger Merchants and Either Coast Weaker Metal Spreads Strong CMC Arizona Scheduled to be Commissioned 9/9/09 Fabrication Highway and Infrastructure is Only Saving Grace Still Strong in Texas Region Both Coasts Badly in Need of Help Structural and Construction Services Profitable Structural Finding Niche Project Work; Construction Services Following Rebar Joist Weakest Fabrication Market as Commercial, Industrial, all forms of Private Non-Res have ground to a halt Steel Import and Distribution Hit the Hardest; Severely Falling Prices Tests the Liquidity and Ethics of Our Customers and Not All Pass Overall a Lot of Competition Chasing Dwindling Bidding; Scaling the Businesses to Match Lower Demand

4 CMC Steel Arizona Update CMC Steel Arizona Update LMS looking up Melt Shop Complex Baghouse CMC Steel Arizona Update We Took Our Hits During the Quarter Cooling Bed EAF Pulpit $61 Million in Inventory Valuation Adjustments $16 Million in Contractual Disputes $15 Million in Increased Bad Debt Expense $7 Million in Severance $5 Million in Impairment Charges Odd Tax Rate a Function of Permanent Differences Having Outsized Effect at Lower PBT Lower Tax Rate Jurisdictions (Foreign) Incurring Losses Profits Earned in States With Taxes Furnace

5 Balance Sheet Strength, Liquidity, Cash Flow Retired $180 Million in Borrowings This Quarter $100 Million Long-Term Debt in February $80 Million on A/R Securitization Program No Significant Debt Maturities Until 2013 Continue to Build Cash Balances as Working Capital Reverses $400 Million Revolver and $200 Million A/R Program Available International A/R Sale Programs Utilized Less This Quarter Debt Covenant Tests Met with Headroom Financial Statistics Quarterly Net Sales Return on Beginning Equity $3,500 $3,000 $2,500 $2,000 $1,500 $1,000 $500 3,227 2,911 2,337 2,430 1, Discontinued Operations

6 Quarterly Earnings Per Diluted Share LIFO Earnings Analysis $1.25 $ (0.32) $200 $150 $100 $50 -$50 -$100 -$ Q07 3Q07 4Q07 1Q08 Earnings Before LIFO Expense LIFO Expense/Income (After Tax) Earnings Before LIFO Income LIFO Expense (Income) Pre-Tax Dividend Payout Per Share by Fiscal Year (Thousands) Americas Recycling Americas Mills Americas Fab & Dist. International Fab & Dist. 2 nd Qtr. 4,969 18,193 35, rd Qtr. 15,187 55,327 57,023 (385) 4 th Qtr. (5,094) 40, ,945 3,893 1 st Qtr (24,729) (75,259) (7,425) (6,201) 2 nd Qtr (8,569) (52,553) (46,720) (16,342) Total 58, , ,896 (113,614) (124,184) Annual Rate

7 Capital Expenditures Adjusted Operating Profit by Segment (7)% 2 nd Qtr. 9% 20% 25% 2 nd Qtr (137)% (67)% 96% (204)% % 413% Projected 2009 Americas Recycling Americas Mills Americas Fab & Distribution International Mills International Fab & Distribution Americas Recycling Adjusted Operating Profit (Loss) $ $50 26 $25 (28) (36) -$25 -$50 Americas Recycling Average Selling Prices Ferrous $ Tons Feb-06 Aug-06 Feb-07 Aug-07 Feb-08 Aug-08 Feb-09 Source: CMC Ferrous Aluminum Copper CU & AL $ Pound $1.36 $174.45

8 Americas Recycling Quarterly (Tons 000 s) Scrap Shipments (Tons 000 s) Americas Mills Adjusted Operating Profit 1, $140 $120 $100 $80 $60 $ Ferrous Nonferrous $20 2Q08 3Q08 4Q08 1Q09 2Q09 Americas Mills Product Mix (Tons 000 s) Americas Steel Mills Average Selling Prices ($ per Ton) $950 $850 $750 $650 $550 $450 $350 CMC TX CMC AL CMC SC CMC AR Sep Oct Nov Dec Jan-08 Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan-09 Feb Merchant Shapes, Billets & Structurals Rebar

9 Americas Mills Americas Steel Mill Margins 2 nd Quarter Comparisons Americas Mills Electric Rates by Quarter Avg. Selling Price Cost of Scrap Utilized Metal Margin Tons Shipped* Billet Tons Shipped* *Tons in thousands FY 2009 $676 $206 $ FY $657 $292 $ Change 19 (86) 125 (239) (80) Cents/KWH CMC-TX CMC-AL CMC-SC CMC-AR 2Q07 3Q07 4Q07 1Q08 Americas Mills Natural Gas Rates by Quarter $/MCF CMC-TX CMC-AL CMC-SC CMC-AR Q07 3Q07 4Q07 1Q08 Americas Mills Percentage of Manufactured Cost per Ton Average of Mills in Texas / Alabama / South Carolina Material (Scrap) Supplies (Electrodes/Alloys) Utilities (Electricity/Gas) Maintenance Labor Depreciation Other YTD 2/28/09 47% 13% 8% 8% 6% 4% 14% Year Ended 8/31/08 60% 10% 8% 5% 4% 2% 11% Year Ended 8/31/07 35% 15% 13% 8% 8% 6% 15%

10 Americas Mills Copper Tube Manufacturing Average Prices Americas Mills Copper Tube Manufacturing Pounds Shipped (in Millions) Price Per Pound Sep LY Avg 4.34 LY Avg 3.38 Oct Nov Dec Jan-08 Feb Mar Apr Selling Cost May Jun Jul Aug Sep CY Avg 3.11 CY Avg 2.16 Oct Nov Dec Jan-09 Feb Q07 3Q07 4Q07 1Q08 Americas Fabrication & Distribution Adjusted Operating Profit (Loss) Americas Fabrication & Distribution Shipments (Tons 000 s) $75 $ $ (7.6) (22.3) (68.0) $25 0 Rebar Structurals Posts Deck Joist

11 Americas Fabrication & Distribution Average Selling Prices* International Mills CMCZ (Poland) Adjusted Operating Profit (Loss) 2 nd Quarter 2009 Rebar $1,059 $871 Joist Deck $1,551 $1,616 $1,310 $1,226 Structural Fence Post $3,294 $984 $2,662 $742 *Excludes Stock and Buyout Sales $70 $60 $50 $40 $30 $20 $10 -$10 -$ (8.1) (11.2) International Mills CMCS (Croatia) Adjusted Operating Profit (Loss) ($ in ($ Millions) in Millions) International Mills CMCZ (Poland) Mill Margins 2 nd Quarter Comparisons $10 $5 Avg. Selling Price (PLN) Cost of Scrap Utilized (PLN) Metal Margin (PLN) , , (6.4) (8.5) (5.9) (8.6) (13.1) Rebar Tons Shipped* Wire Rod Tons Shipped* $5 Billet Tons Shipped* Total Tons Shipped* $10 % Domestic *Tons in thousands 66% 59%

12 International Mills CMCS (Croatia) 2 nd Quarter Comparisons International Fabrication & Distribution Adjusted Operating Profit (Loss) Tons Melted Tons Rolled Tons Shipped Welded Tons Shipped Drawn Tons Shipped Seamless Tons Shipped % Domestic ,603 13,356 15,025 2, ,586 9% 2,619 12,054 9,187 7, ,426 45% $50 $40 $30 $20 $10 -$10 -$ (11.8) Investor Information Forward-Looking Statements 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 a reconciliation to the most comparable GAAP measure and other information that may be of interest to investors. This written and verbal presentation may contain forward-looking forwardlooking statements regarding the outlook for the Company's financial results including net earnings, economic conditions, credit availability, product pricing 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, 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 the success or failure of government efforts to stimulate the economy including restoring credit availability and confidence in a recovery, 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, currency fluctuations, energy and supply prices and decisions by governments impacting the level of steel imports and pace of overall economic activity, particularly China.

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