CMC Financial Information about 2008

7/30/2019 CMC Financial Information about 2008

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1

4 t h Quarter 20084 th Quarter 2008

Vertical Integration

Product Diversification

Global Geographic Dispersion

CMC Business Model

4 th Quarter 2008

Current Market Conditions & Outlook

Global Liquidity Crisis has Paralyzed the Steel Markets

Vicious Downward Spiral of Confidence

Insufficient Funding Leads to Order Delays orPostponements and Inevitable Claims

Campaigns Talk Down the Economy; PsychologicalRecession Sets in

Supply (Inventories) Exceed Apparent (or Willing)Demand

Reduction in Material Purchasing Leads to Lower Prices

Customers Holdback Looking for the Bottom

Supply Exceeds Current Orders; Prices Lower

Cycle Repeats Itself

4 th Quarter 2008


Up and Down Supply Chain Watchword isInventory Reduction and JIT

Lack of Demand Leaves no Viable Pricing

Mechanism for Ferrous Scrap

No Price Will Clear the Market, so PricesFreefall

Scrap Backup at Dealer Level IncludingNonferrous

Ferrous Export Market Weak


2/12

2

4 th Quarter 2008


Market Conditions Difficult for Earnings Projection

Expected 1st Quarter Earnings Range - $0.35 to $0.45

Rapidly Falling Prices and Inventory Levels will Result inSignificant LIFO Income; Anticipating Minimum $50 MillionPre-Tax for Quarter

Material Flow Between CMC Vertical Units Will beEmphasized

Recycling Scaling Back Flow into Plants

Americas Mills Volumes Down, But Margin Holds Americas Fab Find Relief From Margin Compression

Polish Results Drop as Finished Good Prices Drop Fasterthan Scrap; Billet Exports End

International Marketing OK; Working Off Backlog

4 th Quarter 2008

North America

Restricting Recycling Flows Will Bring LowerPrices, Lower Utilization

Mill Backlogs in Usual 40-50 Day Range, ButHeavily Weighted Towards Highway Work

Service Centers Living Hand to Mouth; MerchantTons Off

Our Mills Will Take Downtime for Inventory Control

Fabrication Will do Better in Falling Market, ButBacklog is not Being Replaced as Quickly asShipments

Many Small Jobs (200-700 tons) Being Bid, ButLarger Jobs Scarce

4 th Quarter 2008

North America

Strong U.S. Dollar and Declining Freight RatesDo Not Attract Imports

Customers Do Not Want to be Exposed andCommitted to Import Lead Times in Falling

Market Nonferrous Exports to China Nonexistent in

Current Market; Turn to European Outlets

Domestic OTCG Imports Still Good

Copper Tube Hurt by Rapid Price Declines

Raw Material Markets Still Strong

4 th Quarter 2008

Europe / Middle East

Bank Contagion Roils Region

Polish Economy Still Strong, But PriceDeclines Squeeze Margins

Good News is European Inventories are Low

Arab States Have Significant Tonnage on theGround or in Transit

Turkish Import Offers to U.S. Find No Buyers

Croatian Volume Building; Production is Key


3/12

3

4 th Quarter 2008

Asia / Pacif ic

Chinese Have the Foreign Reserves and theCentral Control to Maintain 8-9% GDP

China Initiatives Include

Lowering Taxes and Interest Rates

Increasing Export Subsidies

Increasing Public Housing Spending

Fund Major Infrastructure Work

Curtail Steel Production

Other Asian Markets Quiet; No TurnaroundUntil Chinese New Year

Australian Market Still Exhibiting Strength

4 th Quarter 2008

Project Review

Arizona Micro Mill All Required Permits Received in August Expected Commissioning Date September 2009 $155 Million Cost 280,000 Tons of Rebar

Polish Wire Rod Block First Bars Produced in October Will Significantly Upgrade Wire Rod and Coiled Rebar Offerings $40 Million Total Cost 40-50,000 Additional Tons of Production in Fiscal 2009

Polish Flexible Section Mill Ground Broken; Construction Underway $190 Million

650,000 MT Increased Product Range; Higher Quality Wire Rod / Larger Sizes Expected Commissioning January 2010

SAP Third Wave Rollout Now Complete First Rebar Fab Plants Now Running SAP Next Rollout Two Domestic Mills and First Recycling Plants

4 th Quarter 2008

CMC Steel Ar izonaMesa, Arizona

Melt ShopMelt Shop

4 th Quarter 2008


Roughing MillFoundation

Roughing MillFoundation


4/124

4 th Quarter 2008


Fab ShopFab ShopCooling BedCooling Bed

4 th Quarter 2008

Liquidity

$500 Million 10 Year Bond 7.3% Completed inAugust

$400 Million Commercial Paper Program

$200 Million Domestic A/R SecuritizationAgreement

$340 Million International A/R Sales Programs

Unsecured Bank Credit Lines

Favorable Debt Covenants

4 th Quarter 2008

What Will Break the Cycle?

Government Intervention Programs Mustbe Shown Effective

Get the Election Over With

Possible Capital / Infrastructure Stimulus Restore Confidence

Statistics


5/125

4 th Quarter 2008

$0

$500

$1,000

$1,500

$2,000

$2,500

$3,000

$3,500

4Q07 1Q08 2Q08 3Q08 4Q08

($ in Millions)

Quarterly Net Sales

Discontinued Operations

2,4032,203

2,337

2,9113,227

4 th Quarter 2008

10.7

5.79.4

3.8

26.0

43.339.6

29.1

15.0

0.0

10.0

20.0

30.0

40.0

50.0

2000 2001 2002 2003 2004 2005 2006 2007 2008

Return on Beginning Equity

4 th Quarter 2008

0.86

0.57

0.34

0.51 0.55

$0.00

$0.25

$0.50

$0.75

$1.00

$1.25

4Q07 1Q08 2Q08 3Q08 4Q08

Quarterly Earnings Per Diluted Share

4 th Quarter 2008

-$150

-$100

-$50

$0

$50

$100

$150

$200

4Q06 1Q07 2Q07 3Q07 4Q07 1Q08 2Q08 3Q08 4Q08

($ in Millions)

LIFO Expense/Income

LIFO Earnings Analysis

Earnings Before LIFO Expense

140

9278

119 99

66 78

143155


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4 th Quarter 2008

LIFO Expense (Income) Pre-Tax

(8,808)

3,743

(3,124)

(135)

(9,292)

4th Qtr.2007

(4,262)

(6,538)

4,307

(3,863)

1,832

1st Qtr.2008

58,954

632

35,160

18,193

4,969

2nd Qtr.2008

127,152

(385)

57,023

55,327

15,187

3rd Qtr.2008

139,896

3,893

100,945

40,152

(5,094)

4th Qtr.2008

InternationalFab & Dist.

Total

AmericasFab & Dist.

AmericasMills

AmericasRecycling

(Thousands)

4 th Quarter 2008

0.07 0.08 0.090.12

0.17

0.33

0.45

$0.00

$0.10

$0.20

$0.30

$0.40

$0.50

$0.60

2002 2003 2004 2005 2006 2007 2008

Dividend Payout Per Shareby Fiscal Year

4 th Quarter 2008

0

100

200

300

400

500

600

2004 2005 2006 2007 2008 Projected

2009

52

110 131

($ in Millions)

206

355

Capital Expenditures

450

4 th Quarter 2008

AmericasRecycling

4th Qtr. 2007

Adjusted Operating Profitby Segment

International Fab& Distribution

AmericasMills

Americas Fab& Distribution

InternationalMills

38%

45%

(52)%

41%41%

28%

4th Qtr. 2008

36%

20% 19%19%

12% 13%


7/127

4 th Quarter 2008

33.8

52.9

$0

$10

$20

$30

$40

$50

$60

4Q07 4Q08

($ in Millions)AmericasRecycling

Adjusted Operating Profit

4 th Quarter 2008

50

100

150

200

250

300

350

400

450

500

Aug-05 Feb-06 Aug-06 Feb-07 Aug-07 Feb-08 Aug-08

Ferrous$Tons

0.40

0.90

1.40

1.90

2.40

2.90

3.40

CU&A

L$Pound

F er ro us Alu min um C op pe r

$2.82

$465

$1.02

Source: CMC

Average Selling Prices

AmericasRecycling

4 th Quarter 2008

0

200

400

600

8001,000

4Q07 4Q08

Ferrous Nonferrous

(Tons 000s)

Quarterly Scrap Shipments

AmericasRecycling

861794

4 th Quarter 2008

64.0

49.2

$0

$20

$40

$60

$80

$100

4Q07 4Q08

Adjusted Operating Profit($ in Millions)

AmericasMills


8/128

4 th Quarter 2008

0

100

200

300

400

500

600

700

800

4Q07 1Q08 2Q08 3Q08 4Q08

RebarMerchant Shapes, Billets &Structurals

(Tons 000s)

548

328

220

Americas Steel Mills

Product MixAmericasMills

594

309

285

630

364

266

673

373

300

631

346

285

4 th Quarter 2008

$350$450

$550

$650

$750

$850

$950

Mar

Apr

May Ju

nJu

l

Aug

Sep O

ctN

ovD

ec

Jan-08 Fe

bM

arApr

May Ju

nJu

l

Aug

CMC TX CMC AL CMC SC CMC AR

884

863878

858

($ per Ton)

Americas Steel Mills

Average Selling PricesAmericasMills

4 th Quarter 2008

*Tons in thousands

ChangeFY

2007FY

2008

18102120Billet Tons Shipped*

83548631Tons Shipped*

38$352$390Metal Margin

209$239$448Cost of Scrap Utilized

247$591$838Avg. Selling Price

Americas Steel Mill Margins4th Quarter Comparisons

AmericasMills

4 th Quarter 2008

3.004.005.006.007.008.009.00

10.00

4Q06 1Q07 2Q07 3Q07 4Q07 1Q08 2Q08 3Q08 4Q08

CM C-T X CM C-AL CM C-SC CM C-AR

Cents/KWH

Electric Rates by Quarter

AmericasMills


9/129

4 th Quarter 2008

2.00

5.00

8.00

11.00

14.00

17.00

20.00

4Q06 1Q07 2Q07 3Q07 4Q07 1Q08 2Q08 3Q08 4Q08

CMC-TX CMC-AL CMC-SC CMC-AR

$/MCF

Natural Gas Rates by Quarter

AmericasMills

4 th Quarter 2008

Percentage of Manufactured Cost Per Ton

Average of Mills in Texas / Alabama / South Carolina

15%11%Other

6%2%Depreciation

8%4%Labor8%5%

Maintenance

13%8%Utilities (Electricity/Gas)

15%10%Supplies(Electrodes/Alloys)

35%60%Material (Scrap)

YearEnded8/31/01

YearEnded8/31/08

AmericasMills

4 th Quarter 2008

0.00

1.00

2.00

3.00

4.00

5.00

6.00

Mar

AprMa

yJu

n Jul

Aug

Sep

Oct

Nov

Dec

Jan-08Fe

bMa

rAp

rMa

yJu

n Jul

Aug

P

rice

P

er

P

ou

n

d

CostCost

LY Avg 4.06

LY Avg 3.09

CY Avg 4.34

CY Avg 3.38

SellingSelling

Copper Tube ManufacturingAverage Prices

AmericasMills

4 th Quarter 2008

13.5

10.411.5

16.7

13.9

11.7

14.513.3 12.8

0

3

6

9

12

15

18

21

24

4 Q0 6 1 Q0 7 2 Q07 3 Q07 4 Q07 1 Q0 8 2Q 08 3 Q0 8 4 Q0 8

(in Millions)

Copper Tube ManufacturingPounds Shipped

AmericasMills


10/1210

4 th Quarter 2008

36.1

(67.0)

-$70-$60

-$50

-$40-$30

-$20-$10

$0

$10$20

$30$40

$50

($ in Millions)AmericasFabrication& Distribution


4Q07 4Q08

4 th Quarter 2008

0

100

200

300

400

500

600

4Q07 1Q08 2Q08 3Q08 4Q08

Rebar Structurals Posts Deck

(Tons 000s)

Joist

429

Shipments

AmericasFabrication& Distribution

428376

452 470

4 th Quarter 2008

$1,012

$2,996

$1,491

$1,352

$983

2008

4th Quarter

$736

$2,306

NA

$1,223

$876

2007

Joist

Structural

Fence Post

Deck

Rebar

Average Selling Prices*

AmericasFabrication& Distribution

*Excludes Stock and Buyout Sales

4 th Quarter 2008

21.7

63.0

$0

$20

$40

$60

$80

4Q07 4Q08

($ in Millions)InternationalMills

CMCZ (Poland)Adjusted Operating Profit


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4 th Quarter 2008

-$10

-$5

$0

$5

$10

1Q08 2Q08 3Q08 4Q08

($ in Millions)

CMCS (Croatia)Adjusted Operating Loss

InternationalMills

(4.5) (6.4) (8.5) (5.9)

4 th Quarter 2008

68%37%% Domestic

309424Total Tons Shipped*56177Billet Tons Shipped*

99125Wire Rod Tons Shipped*

154122Rebar Tons Shipped*

727740Metal Margin (PLN)

8931,351Cost of Scrap Utilized (PLN)

1,6202,091Avg. Selling Price (PLN)

20072008

*Tons in thousands

CMCZ Mill Margins4th Quarter FY Comparisons

InternationalMills

4 th Quarter 2008

8,508Seamless Tons Shipped

27%% Domestic

624Drawn Tons Shipped

10,425Welded Tons Shipped

19,557Tons Shipped

21,161Tons Rolled

17,596Tons Melted

CMCS Mill Stats4th Quarter FY 2008

InternationalMills

4 th Quarter 2008

24.3

35.7

$0

$10

$20

$30

$40

$50

4Q07 4Q08

($ in Millions)

LIFOExpense: 3.7 3.9

InternationalFabrication& Distribution



12/1212

4 th Quarter 2008

This written and verbal presentation may use financialstatement measures considered non-GAAP financial measures

by the Securities and Exchange Commission (SEC).In compliance with the SECs Regulation G, we have

provided on our web site at

a reconciliation to the most comparable GAAP measure andother information that may be of interest to investors.

www.cmc.comwww.cmc.com

Non-GAAP Financial Measuresand Regulation G

Investor Information

4 th Quarter 2008

Forward-Looking StatementsThis writ ten and verbal presentation may contain forward-lookingstatements regarding th e outlook for the Company's financial resultsincluding net earnings, product pricing and demand, production rates,interest rat es, inventory levels, impact of acquisitions and general marketconditions. These forward-looking statement s generally can be ident ified byphrases such as the company or its management expect, anticipates,bel ieve, ought, should, l ikely, appears, projected, forecast,outlook, wi l l or other words or phrases of s imi lar impact. There isinherent risk and uncertaint y in any forw ard-looking statements. Varianceswill occur and some could be materially different f rom management'scurrent opinion. Developments that could impact t he Company'sexpectations include solvency of financial institutions and t heir ability orwill ingness to lend, extent of governm ent intervent ion and its effect oncapital markets, construction activit y, difficulties or delays in the executionof construction contracts resulting in cost overruns or contract disputes,metals pricing over which the Company exerts litt le influence, interest rat e

changes, increased capacity and product availability from competing steelminimills and other steel suppliers including import quantities and pricing,court decisions, industry consolidation or changes in production capacity orutil ization, the ability t o integrate acquisitions into operations; globalfactors including political and military uncertaint ies, credit availability,currency fluctuations, energy and supply prices and decisions bygovernments impacting t he level of steel imports and pace of overalleconomic activity, part icularly China.

CMC Financial Information about 2008

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