3 rd Quarter CMC Business Model. Current Market Conditions & Outlook. Current Market Conditions & Outlook

Transcription

1 CMC Business Model Vertical Integration Product Diversification Global Geographic Dispersion 2 Current Market Conditions & Outlook Current Market Conditions & Outlook 3 Global Demand Unabated (in Order of Strength): Middle East / North Africa Russia Central / Eastern Europe / South America Southeast Asia North America China Steel Input Cost (Scrap, Iron Ore, Alloys, Electrodes, Energy) Underwriting Steel Finished Good Prices Shredded / Other Ferrous Grades Signs of Pullback 4 Expected 4 th Quarter Earnings Range -.90 to $1.00 Zero LIFO Expense Unusual Year No Signs of Seasonal Correction Impact Beijing Olympics and Earthquake in China Demand Continues to Outstrip Supply Low Inventory Levels in Most Markets Longer-Term Issues Inflation Credit Squeeze 1

2 North America North America Backlogs Overall at Good Levels Best Markets are Highway; Worst are Retail Imports Continue to be Reduced in Long Products and Will Stay Low Through at Least the Fall Same Factors at Play Better Pricing; Weak Dollar; Strong Freight Rates China to U.S. Gulf $80/MT S.E. Asia to U.S. Gulf $110/MT Ferrous Scrap Upward Volatility Working its Way Through Immediate Benefit to Recycling Four to Six Week Benefit Delay for Three to Four Month Pain for Fabricators Service Centers Continue to Match Purchases with Consumption Copper Tube Results Remain Steady on Commercial Market Black Sea (Turkey) to U.S. Gulf $80/MT Nonferrous Prices High, but Volume Hurt by Weak Residential Markets and Lower Manufacturing Output 5 6 Raw Material Markets Remain Extremely Positive with Record Backlogs Europe / Middle East Asia / Pacific Demand in Arab States Extraordinary (20 Million MT Rebars Consumed) China s Withdrawal from Exporting Billets Led to Increase in Global Billet Margins Turkish Output Staying Local; Lower Imports to U.S. China Rebar Production and Consumption Balanced China s Determination to Cut Exports Taking Effect More to Come? Earthquake Tragedy is Spurring Call for Stricter Building Codes with Consequent Demand on Steel 7 All Manner of Regulatory Schemes Being Developed to Keep Scrap, Iron Ore, Finished Goods in Home Markets Russia, India, Taiwan, Saudi Arabia Poland has Good Internal Demand and Good Geography Croatia Progress Being Made: Workforce Reduction; Developing Outlets for Product 8 With Lower Supply, Prices Rising in S.E. Asia; Billets Again in Demand Credit Woes Temporarily Infect Vietnam Steel Products Being Re-Exported Good Strength in Indonesia / Malaysia / Singapore / Thailand Australian Economy in Good Shape India Imposes Steel Export Taxes Inflation Remains a Concern for Most Asian Economies. 2

3 9 Project Review 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 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 10 CMC Steel Arizona Mesa, Arizona 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 11 Production Scheduling by Optimal Demand Planning and Location Coordinated Transportation and Logistic Admin Improved Maintenance Through Preventive Strategies Leverage Global Purchasing Statistics 3

4 Quarterly Net Sales Return on Beginning Equity $3,000 $2,500 $2,000 $1,500 2,346 2,403 2,203 2,337 2, $1,000 $ Q07 4Q07 1Q08 2Q08 3Q Discontinued Operations 14 Quarterly Earnings Per Share LIFO Earnings Analysis $1.25 $ Q07 4Q07 1Q08 2Q08 3Q08 $150 $125 $100 $75 $50 $25 -$25 -$50 -$75 -$ Q06 4Q06 1Q07 2Q07 3Q07 4Q07 1Q08 2Q08 3Q Earnings Before LIFO Expense LIFO Expense/Income 4

5 LIFO Expense (Income) Pre-Tax (Thousands) Dividend Payout Per Share by Fiscal Year 3 rd Qtr th Qtr st Qtr. 2 nd Qtr. 3 rd Qtr Recycling Fab & Dist. Fab & Dist. Total 10,276 15,805 2,911 1,963 30,955 (9,292) (135) (3,124) 3,743 (8,808) 1,832 (3,863) 4,307 (6,538) (4,262) 4,969 18,193 35, ,954 15,187 55,327 57,023 (385) 127, Annual Rate Investments by Segment Sisak & Other Acq. AZ & Poland SAP CapEx Projected Note: Excludes Acquisitions, Except for rd Qtr % 12% 21% 30% Recycling 37% 17% Fab (17)% 3 rd Qtr. 23% 26% 38% Fab 5

6 Recycling $ $50 $ $30 $20 $10 3Q07 3Q08 Recycling Ferrous $ Tons Average Selling Prices May-05 Nov-05 May-06 Nov-06 May-07 Nov-07 May-08 $465 $3.20 CU & AL $ Pound $1.03 Ferrous Aluminum Copper Source: CMC Recycling Quarterly Scrap Shipments (Tons 000 s) $100 1, $80 $60 $ Q07 Ferrous 3Q08 Nonferrous $20 3Q07 3Q

7 Steel Product Mix (Tons 000 s) Steel Average Selling Prices ($ per Ton) Q07 4Q07 1Q08 2Q08 3Q $950 $850 $750 $650 $550 $450 $350 CMC-TX CMC-AL CMC-SC CMC-AR Dec Jan-07 Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan-08 Feb Mar Apr May Merchant Shapes, Billets & Structurals Rebar Steel Mill Margins 3 rd Quarter Comparisons Avg. Selling Price Cost of Scrap Utilized Metal Margin Tons Shipped* Billet Tons Shipped* *Tons in thousands FY $718 $399 $ FY 2007 $575 $267 $ Change Electric Rates by Quarter Cents/KWH CMC-TX CMC-AL CMC-SC CMC-AR Q06 4Q06 1Q07 2Q07 3Q07 4Q07 1Q08 2Q08 3Q08 7

8 Natural Gas Rates by Quarter Percentage of Manufactured Cost Per Ton 29 $/MCF CMC-TX CMC-AL CMC-SC CMC-AR 3Q06 4Q06 1Q07 2Q07 3Q07 4Q07 1Q08 2Q08 3Q08 30 Average of in Texas / Alabama / South Carolina Material (Scrap) Supplies (Electrodes/Alloys) Utilities (Electricity/Gas) Maintenance Labor Depreciation Other YTD 05/31/08 59% 11% 8% 5% 4% 2% 11% Year Ended 8/31/07 51% 11% 9% 7% 5% 3% 14% Year Ended 8/31/01 35% 15% 13% 8% 8% 6% 15% Copper Tube Manufacturing Average Prices 6.00 Copper Tube Manufacturing Pounds Shipped (in Millions) Price Per Pound LY Avg 3.89 LY Avg 3.02 Selling Cost CY Avg 4.71 CY Avg Dec Jan-07 Feb Mar Apr May Jun Jul Aug Sep Oct Nov D ec Jan-08 Feb Mar Apr May Q06 4Q06 1Q07 2Q07 3Q07 4Q07 1Q08 2Q08 3Q08 8

9 Fabrication $ $20 $10 (22.3) -$10 -$20 -$30 3Q07 3Q08 Fabrication Shipments (Tons 000 s) Q07 4Q07 1Q08 2Q08 3Q Rebar Structurals Posts Deck Joist Fabrication Average Selling Prices* 3rd Quarter 2007 Rebar $919 $834 Joist Deck $1,307 $1,295 $1,199 N/A Structural Fence Post $2,843 $807 $2,348 $716 CMCZ (Poland) $ $40 $30 $20 $10 3Q07 3Q08 35 *Excludes Stock and Buyout Sales 36 9

10 CMCS (Croatia) $10 CMCZ Mill Margins 3 rd Quarter FY Comparisons Avg. Selling Price (PLN) Cost of Scrap Utilized (PLN) 1,708 1, , $5 Metal Margin (PLN) (4.5) (6.4) (5.6) Rebar Tons Shipped* Wire Rod Tons Shipped* $5 Billet Tons Shipped* Total Tons Shipped* $10 1Q08 2Q08 3Q08 38 % Domestic *Tons in thousands 57% 54% CMCS Mill Stats 3 rd Quarter FY Tons Melted Tons Rolled 12,100 22,100 Fabrication $50 $ Tons Shipped Welded Tons Shipped Drawn Tons Shipped Seamless Tons Shipped % Domestic 19,300 11, ,500 24% $30 $20 $ Q07 3Q08 LIFO Expense (Income): 2.0 (0.4)

11 Investor Information Forward-Looking Statements 41 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. 42 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. 11