General Steel Holdings Inc · OTC:GSIH
General Steel — Investor Presentation (May 2011)
33 slides from General Steel's investor presentation, May 17, 2011
Slide 1: General Steel Holdings Inc. Investor Presentation
GENERAL STEEL HOLDINGS INC, Investor Presentation (NYSE: GSI)
Slide 2: Disclaimer and forward-looking statements
The material presented is a presentation of general background information about General Steel Holdings, Inc. as of the date of the presentation. It is information in summary form and does not purport to be complete. It is not intended to be felied upon as advice to potential investors. This present
Slide 3: Agenda
I. Company Overview ; Il. Growth Strategy and Market Opportunity Ill. Products and Operating Subsidiaries IV. Financial Highlights
Slide 4: Ticker Symbol and key figures
Ticker Symbol NYSE: GSI Price (as of 5/11/2011) $2.13 Market Cap. $116.8m Fiscal Year End December 31 First Quarter 2011 Revenue $710.5m First Quarter 2011 Gross Profit $28.3m First Quarter 2011 Net Income $2.6m First Quarter 2011 Net Income Per Share $0.05 5-Year Revenue CAGR(2005-2010) 84%
Slide 5: About General Steel
About General Steel BHRSRER General Steel Holdings, Inc. is a leading China-based integrated steel producer Founded in 1988 One of the largest private-owned steel producers in China with annual crude steel capacity of over 7 million metric tons Operates throu company ‘aw materials tradi ive subsidia
Slide 6: Investment Highlights
Investment Highlights SHEE Well positioned in a large, growing market fueled by multiple catalysts (Creu Management Agreement with Shaanxi Steel Group and Shaanxi i) Group increases capacity, improves efficiency and provides numerous other henefit Infrastructure an steel in China Poised to benefit f
Slide 7: Management team
Name Title Experience Zuosheng CEO& = Founded the Company in 1988 (Henry) Yu Chairman * Bachelors degree from Institute of Business Management for Officers * “Senior Economist’ from the Committee of Science and Technology of Tianjin City = MBA from the Graduate School of Tianjin Party University = M
Slide 8: Growth through organic growth, joint ventures and acquisitions
Through a combination of organic growth, joint ventures and strategic acquisitions, GSI has become one of China’s largest private steel producers Robust Revenue Growth USS, milion 2005 2006 2007 2008 2009. 2010 2011 a ‘Signed Unified Management Agreement with Shaanxi Stee! Group and Shaanxi Coal Gro
Slide 9: Agenda: Growth Strategy and Market Opportunity
|. Company Overview Il. Growth Strategy and Market Opportunity Ill. Products and Operating Subsidiaries IV. Financial Highlights
Slide 10: Growth Strategy
Growth Strategy anGRER Expand Capacity Organically ai h Acqui = Add new production lines = Pursue strategic acquisitions of steel producers in conjunction with Chinese government's push for industry consolidation Improve Operational Efficiencies to Drive Margin Expansion = Replace older, less effici
Slide 11: Expanding Production Capacity
Expanding Production Capacity Increase Crude Steel Production Capacity and Manufacturing Efficiency = Replaced older, energy-inefficient blast furnaces with new and state-of-the-art blast furnaces to improve manufacturing efficiency and yields at Longmen JV « Unified Management Agreement to operate
Slide 12: Raw Materials Sourcing
Raw Materials Sourcing Current Raw Materials Procurement: Cost Advantage Iron Ore Coke = 50% imported, purchased at market price = 100% sourced locally, purchased at = 35% domestic, purchased at market price market price = 15% from Daxigou mine owned by Longmen JV * Favorable purchasing terms throug
Slide 13: Acquisition scenarios: manufacturing capacity and raw materials
Ht OF a Scenario A: Acquire Manufacturing Capacity Continue industry consolidation through strategic acquisitions of steel producers Targets include both State-Owned Enterprises and privately-owned facilities Focus on facilities that meet the government's stringent industry standards Platform aligns
Slide 14: Industry Overview
Industry Overview SRaRER 2010 steel production in China was a record 626.7 million metric tons (44.3% of global output), with consumption estimated to be approximately 596 million tons (42% of global output) fi Highly fragmented industry, with approximately 800 mills in operation nationwide, includi
Slide 15: Industry consolidation in China
* Central government initiatives aimed at improving industry efficiency through national consolidation effort * Smaller, less efficient mills will be considered obsolete and targeted for shutdown or acquisition * Limitations on new capacity development force larger steel producers to increase capaci
Slide 16: Operational Philosophy Supports Industry Consolidation
Operational Philosophy Supports Industry Consolidation Interests Central Government = Sustainable industry development * Efficiency improvement * Pollution reduction / improved profitability = Elimination of backward capacity = Prudent management practices Provincial Government * Local economic deve
Slide 17: Agenda: Products and Operating Subsidiaries
I. Company Overview Il. Growth Strategy and Market Opportunity Ill. Products and Operating Subsidiaries | IV. Financial Highlights 7
Slide 18: Products
Products BHARER Hot-Rolled Rebar High Speed Carbon and Spiral-Weld Wire Silicon Steel Steel Pipe Sheets Specialty market Energy market Construction Construction applications: applications including including the and and i production of transportation infrastructure infrastructure P small of oil, nat
Slide 19: Longmen Joint Venture
Longmen Joint Venture SRaGEE See STEEL HOLST Fully-integrated operation enables cost-efficient production 60% controlling interest - acquired stake for US$39m in June 2007 Largest rebar producer in Shaanxi province. a key area for development of Western China with approximately 70% of the market sha
Slide 20: Geographic Advantage
Geographic Advantage Year-over-Year Increases in GDP » Under the PRC government's “Go West” initiative and Wiiton 12th Five-Year Plan, significant capital is being Tow allocated toward the development of China’s Western reaion. »GSI's Longmen JV subsidiary is the dominant supplier of rebar in the Sh
Slide 21: Longmen JV Unified Management Agreement
Longmen JV Unified Management Agreement SRBER imeline ¥ Full-scale Production May 2011 April 29, ¥ Unified Management Agreement Signing 2011 Ceremony * Shaanxi Coal Group is the parent company of Shaanxi Steel Group. Key Implications = Confirms operating model of 3 million metric tons OF annual enul
Slide 22: Unified Management Agreement with Shaanxi Steel Group
General Steel and Shaanxi Steel Group Will Jointly Ae iting Treatment Manage the Production of Crude Steel at Longmen ae Key ee a JV & gmen JV Unified Management Agreement SRaEZEE = Joint management term: 20 years GSI Condensed * Pre-tax profit sharing (for the first 2 years) 1 Total Sales Shaanxi 6
Slide 23: Growth Catalysts and Competitive Advantages
Nea 12th Five-Year Plan rm Growth Catalysts and Competitive Advantages = Significant development of China's Western region = Huge spending in high-speed railway building ="Go West’ tax incentive = 80 billion RMB on construction of hydroprojects, 3x increase over 11!" Five-Year Plan * JV headquarters
Slide 24: Other Subsidiaries
Other Subsidiaries an Gen I Steel (China) Tianjin municipality Capacity 400,000 metric tons Hot-rolled carbon sheet ‘Additional Founded in 1989 as one of the first Chinese non- Information _| SOE steel companies; Strong sales and distribution network Baotou Steel Inner Mongolia J Owmersnip | 80% own
Slide 25: Other Subsidiaries (cont'd)
Other Subsidiaries (cont’d) Guangdong Province 400,000 metic tons Rebar for construction use Additional State-of-the-art production line; Informati Close to deepwater port Announced in September 2010 | suey | 2-3 million metric tons of iron ore per year Raw Materials | iron ore and other raw materia
Slide 26: Agenda: Financial Highlights
I. Company Overview Il. Growth Strategy and Market Opportunity Ill. Products and Operating Subsidiaries IV. Financial Highlights
Slide 27: Q1 2011 Financial Highlights
Q1 2011 Financial Highlights = Q1 2011 net income of $2.6 million vs. net loss of $(5.5) million in Q1 2010. * Revenue of $710.5 million (+57% y/y) = Gross Margin of 4.0% (+272 bps y/y) * Crude Steel Capacity of 7 million mt (+75% y/y) Growth Driver: Capacity Expansion at Longmen JV = Began testrunn
Slide 28: Improving Gross Margin
Improving Gross Margin 3.4% aye 40% — 2.0% 0.0% ~ r T 1 2010 Q1 2010 Q2 2010 Q3 2010 Q4* 2011Q1 Average Selling Prices of Rebar 606 400 200 > 2010 O1 2010 4 201101 ~* Gross profit inthe fourth quarter 2010 adjusted for a cost deduction of a $27.1 million compensation payment from Shaanxi Steel Group
Slide 29: Financial results summary
230 Ended 331M ned S1M0 Shipment Volume (kmt) 3,955 3.834 3.2% 1,189 1,035, 14.8% Total Revenues $1.9 billion $17 billion 13% $710.5 million | $453.0 million 51% Gross Profit $71.9 million | $88.6 million (18.8%) $28.3 millon | $5.7 million 396% Net Income (Loss)* (7.7) million | $(25.2) million (68
Slide 30: Revenue Growth and Production Volume Growth
Revenue Growti Production Volume Growti Metric Tons (ram) 50 2005-2006 «20072008 2009 210s aorta 4 30 20 10 00 205 = 20082007 2008) 200901 art Ot
Slide 31: Balance sheet
AS OF Mar. 31, 2011 Dec. 31, 2010 Cash and Restricted Cash $292,286 $263,068 Accounts Receivable $24,947 $17,594 Notes Receivable $117,804 $49,147 inventories $521,066) $475,879 Advances on Inventory Purchases $41,482 $30,764 Total Current Assets $1,395,262 $1,154,591 Property Plant and Equipment $6
Slide 32: Key Takeaways
Key Takeaways v Industry leader poised to capture additional market share in China’s fast-growing steel industry v Expanding capacity and improving operational efficiency to capture sizeable growth opportunity in Western C! Y Poised to benefit from changing government policy lustry consolidation y D
Slide 33: Thank You!
Thank You! BFA EEK TF Ae GENERAL STS HOLDINGS INC.
General Steel Holdings — Investor Presentation (May 2011) on 6ix