Slide 1: Schedule 14A Definitive Additional Materials
UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 SCHEDULE 14A (Rule 14a-101) INFORMATION REQUIRED IN PROXY STATEMENT SCHEDULE 14A INFORMATION Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934 (Amendment No. ) Filed by the Registrant x Filed by a
Slide 2: Change You Can Count On
Change You Can Count On January 10, 2012
Slide 3: Cautionary Statements
Cautionary Statements Thiswritten andverbalpresentationmaycontainforward-lookingstatementsregardingthe outlookfor the Company’s financial results, including net earnings (loss), operating profit (loss), economic conditions, credit availability, product pricing and demand, currency valuation, product
Slide 4: Important Additional Information
Important Additional Information CMC’s stockholders are strongly advised to carefully read CMC’s solicitation/recommendation statement on Schedule 14D-9, which was filed with the U.S. Securities and Exchange Commission (the “SEC”) on December 19, 2011, and any amendments or supplements thereto. CMC’
Slide 5: Agenda
Agenda • CMC: Global, Low-Cost, Vertically Integrated • The CMC Growth Story • Why Our Team is the Right Team • Why We Rejected Icahn’s Bargain Basement Offer • Conclusion 1
Slide 6: CMC: Global, Low-Cost, Vertically Integrated
CMC: Global, Low-Cost, Vertically Integrated
Slide 7: We Are a Global, Low-Cost, Vertically Integrated Steel Producer
We Are a Global, Low-Cost, Vertically Integrated Steel Producer FY 2011 Revenue: $7.9 Billion vs. $6.3 Billion FY 2010 3.7 M tons Captive Scrap Recycling 1.5 M tons Fabricating 4.7 M tons Steelmaking Capacity 1.9 M tons Processing & Distribution CMC Recycles, Manufactures, Markets and Distributes St
Slide 8: We Operate a Highly Integrated Global Manufacturing Platform
We Operate a Highly Integrated Global ManufacturingPlatform ~40% of Recycling product is supplied to Mills Recycling Mills Fabrication Mills supplies ~80% of Fabrication’s raw materials Sourcing of low Efficient high Competitive cost raw materials productivity mills market sourcing Electric Arc Furn
Slide 9: Marketing & Distribution is an Integral Part of Our Business
Marketing& Distribution is an IntegralPart of Our Business Our Marketing & Distribution business allows us to leverage our global partners and develop a deep knowledge of the supply chain and end use markets Raw Materials Semi-finished Finished Distribution “Marketing/Distributiondivisionis an under
Slide 10: Vertical Integration is Important for Electric Arc Furnace Steel Producers
Vertical Integration is Important for Electric Arc Furnace Steel Producers “CMC’s vertically integrated business model enables the company to capture profits from every step of the value chain in a normal demand environment…” Brian Yu, Citi, October 17, 2011 Fabrication, Marketing and Company Raw Ma
Slide 11: We have a Leading North American Position
We have a Leading North American Position North America Long Steel Net tons (millions) • We are a leading supplier of rebar 4.4 4.0 and other products to the domestic non-residential construction industry 1.3 • Our mills are some of the lowest cost producers in North America Gerdau Nucor Steel CMC D
Slide 12: Complemented by Enhanced International Presence
Complemented by Enhanced International Presence Poland Steel Production (Long Products) • Our international operations, begun Net tons (millions) over 80 years ago, represent 45% of our total revenues¹ • We are the largest long products producerin Poland,well-positioned to capitalize on the country’
Slide 13: The CMC Growth Story
_ The CMC Growth Story =
Slide 14: Executing Our Plan: The Board's Near-Term Priorities
Executing Our Plan: The Board’s Near-Term Priorities The Board is focused on positioning CMC to fully capture the benefits of the anticipated recovery • Leverage Strategic Investments – World-class, low-cost micromill in Arizona – Market-leading platform in Poland • Optimize Product Mix Across the P
Slide 15: The Board has Put the Right Team on the Field
The Board has Put the Right Team on the Field “Both CEO and CFOwere … external hires and are strong additions to CMC’s management team” Kuni Chen, CRT Capital, June 7, 2011 Joe AlvaradoPresident & Chief Executive Officer – Formerly President of U.S. Tubular Products, a division of U.S. Steel – Previ
Slide 16: We Have Taken and Continue to Take Decisive Action
We Have Taken a –nd Continue to Take – Decisive Action “We view the recent restructuring efforts by the new CEO and CFO positively.” Michael Gambardella, JP Morgan, October 31, 2011 Announced closure of Sisak facility in Croatia Commissioned new Arizona mill hit name Announced closure IT headcount m
Slide 17: These Actions have Already Begun to Yield Positive Results
These Actions have Already Begun to Yield Positive Results “The decision to exit Sisak is positive and consistent with our view that new management will take aggressive action to streamline the Company, reduce costs, and exit noncore businesses” Kuni Chen, CRT Capital, July 7, 2011 Expected Recent A
Slide 18: We Continue to Strategically Invest in Our North American Businesses
We Continue to Strategically Invest in Our North American Businesses • In 2008/9 we invested $155mm in a state of the art, ultra low-cost micro mill in Arizona – The mill is globally cost competitive and is well positioned to benefit from recovery in construction in the Southwestern U.S. • In 2010/1
Slide 19: While Actively Developing Our Most Attractive International Opportunities
While Actively Developing Our Most Attractive International Opportunities 1 • We are the largest long products steel producer in Poland – Minimill capacity 1.9 million tons – Main products are rebar, wire rod and merchants – Goal is 70% domestic and 30% export sales – We continue to evolve the mix i
Slide 20: Management's Strategy is Bearing Fruit Ahead of a Cyclical Recovery
Management’s Strategy is Bearing Fruit Ahead of a Cyclical Recovery $ 8,075 $ 7,863 $ 7,427 $ 7,123 $ 6,659 $ 6,277 $ 5,873 $ 5,538 $ 5,361 $ 291 $ 293 $ 280 $ 227 $ 157 $ 133 $ 78 $ 40 $ 44 Q1 FY10 Q2 FY10 Q3 FY10 Q4 FY10 Q1 FY11 Q2 FY11 Q3 FY11 Q4 FY11 Q1 FY12 LTM Revenue from Continuing Operation
Slide 21: Our Strategy is Delivering Shareholder Value in Advance of a Cyclical Recovery
Our Strategy is Delivering Shareholder Value in Advance of a Cyclical Recovery • Reported $107.7 million in net income for 1Q12 • Generated $38 million cash from operations in 1Q12 • Declared our regular dividend for the 189th straight quarter in January 2012 • Substantially completed our plan to wi
Slide 22: Our Performance Compares Favorably to That of Our Competitors
Our Performance Compares Favorably to That of Our Competitors Most Recent Quarter EPS Excluding One-Time Items CMC Nucor Schnitzer SteelDynamics 1Q FY12 4Q FY11 1Q FY12 4Q FY11 Note: Median company guidance for fiscal year end based on range provided in companies’ press releases and only includes co
Slide 23: Wall Street Analysts Recognize Our Superior Growth Prospects
Wall Street Analysts Recognize Our Superior Growth Prospects 2011A-2013E Median Wall Street Estimated EBITDA CAGR 43.8% 43.8% 34.6% 26.3% 16.5% 11.2% Schnitzer Steel Dynamics Nucor U.S. Steel AK Steel CMC Note: Financials calendarized to August 31 year end. Median Wall Street Estimates from IBES as
Slide 24: Why Our Team is the Right Team
Why Our Team is the Right Team
Slide 25: Our Board is Independent & Highly Qualified
Our Board is Independent & Highly Qualified Of our ten continuing directors: • 5 have been appointed in the last two years • 9 have financial or operational experience in metals and/or construction industries • 9 have CEO or CFO-level experience • All but the CEO are independent • All have experienc
Slide 26: We Have Added Highly Qualified Independent Directors Since 2010
We Have Added 4 Highly Qualified Independent Directors Since 2010 Rhys Best Richard Kelson Joined: 2010 Joined: 2010 • Former Chairman of the Board • Chairman, President and CEO of Directors, President and CEO of ServCo, LLC of Lone Star Technologies, Inc. • Former EVP and CFO of Alcoa, • Chairman o
Slide 27: Our Nominees Are The Right Team to Lead CMC
Our Nominees Are The Right Team to Lead CMC Harold L. AdamsDirector (Independent) • Mr. Adams served as the Chairman, President and CEO of an international architecture firm • Extensive experience in the construction industry • Prior experience on several other public company boards Joseph Alvarado
Slide 28: Icahn Has Stated Publicly That He Will Direct His Deputies to Advance His Self-Interested Agenda
Icahn Has Stated Publicly That He Will Direct His Deputies to Advance His Self-Interested Agenda George Hebard • Currently a Managing Director at Icahn Capital • Firststartedworkingfor CarlIcahnin 1998 Steve Mongillo • Until earlier this year, a Director of American Railcar Industries, an Icahn-cont
Slide 29: We Believe That Icahn's Nominees Cannot Be Seated Under Federal Law
We Believe That Icahn’s Nominees Cannot Be Seated Under Federal Law Under Section 8 of the Clayton Act: • Individuals (directly or through their agents) are prohibited from simultaneously serving on the boards of companies which compete with each other • Icahn owns or controls PSC Metals, which comp
Slide 30: Our Slate of Nominees is Superior
Our Slate of Nominees is Superior CMC Nominees Icahn Nominees Adams Alvarado Massaro Unger Mongillo Hebard Public Board Experience¹ CEO-Level Experience Relevant Industry Experience Independent 26 1 Excludes companies controlled by Icahn or companies in which Icahn had a significant interest
Slide 31: Why We Rejected Icahn's Bargain Basement Offer
Why We Rejected Icahn’s Bargain Basement Offer
Slide 32: An opportunistic bid from Icahn
“An opportunistic bid from Icahn” Brian Yu, Citi, November 28, 2011 • $15.00 per share in cash – A significantdiscountof 17.1%to CMC’s52-weekhighof $18.09 – No premiumto CMC’s share price of $15.03 as recently as May 19, 2011 – A minisculepremiumof 3.9%to CMC’sone-yearaveragepriceof $14.43 • If succ
Slide 33: Icahn is Trying to Get a Bargain at the Expense of CMC's Other Shareholders
Icahn is Trying to Get a Bargain at the Expense of CMC’s Other Shareholders “[We] acquired the Shares in the belief that the Shares were undervalued at current levels [$14.34]” Schedule 13D filed by the Icahn Group on July 28, 2011 “Why would you want to pay full price for something? The whole idea
Slide 34: Icahn's Offer was Timed to Create the Illusion of a Meaningful Premium
Icahn’s Offer was Timed to Create the Illusion of a Meaningful Premium $19.00 $17.00 $15.00 Offer Price 3.9% $15.00 Premium 1 Year Average $14.43 Icahn’s Proposal came $13.00 after a 15% dip in CMC’s stock, to create the illusion of a $11.00 $11.45 meaningful premium $9.00 $7.00 Nov-2009 Mar-2010 Ju
Slide 35: Icahn's Offer Is Very Low, Based on the Implied Multiple of EBITDA
Icahn’s Offer Is Very Low, Based on the Implied Multiple of EBITDA “Once the cycle in this industry rebounds, Commercial Metals will not only benefit from increased EBITDA, but also might get a higher valuation multiple on its EBITDA” Kenneth Squire, Barron’s, August 15, 2011 2013E EV/EBITDA 7.2 x 6
Slide 36: CMC's Financial Performance is Closely Related to Non-Residential Construction
CMC’s Financial Performance is Closely Related to Non-Residential Construction 32% $650 $ 633 16% 17% $527 15% $637 11% $564 $ 409 $ 543 $299 $279 $291 6% 2% $78 (2)% (1)% (5)% (17)% 2004 2005 2006 2007 2008 2009 2010 2011 2012E 2013E 2014E 1 Source: U.S. Census Bureau 2 Source: McGraw-Hill Construc
Slide 37: During Periods of Non-Residential Construction Growth, CMC has Historically Outperformed
During Periods of Non-Residential Construction Growth, CMC has Historically Outperformed “[T]he most important catalysts we see for the shares outside of company specific events and earnings are forward looking indicators for construction activity (most notably ABI) and overall U.S. and global econo
Slide 38: Now is Precisely the Wrong Time to Sell CMC
Now is Precisely the Wrong Time to Sell CMC Construction Activity is Expected to Grow Significantly S 34 Source: McGraw-Hill Construction Research and Analytics, November 28, 2011
Slide 39: Conclusion
(TTS Nes Commercial Metals ———————S Company = — Conclusion
Slide 40: CMC has the Right Team for Shareholders – Change You Can Count On
CMC has the Right Team for Shareholders – Change You Can Count On We believe: • CMC is executing on a plan that is already delivering value to shareholders – The Board has put in place the right executive management team, with demonstrated experience – CMC is poised to capture further value in an up
Slide 41: Appendix
(TTS Nes Commercial Metals ———————S Company = Appendix
Slide 42: Regulation G Reconciliation Annual
Regulation G ReconciliationAnnual - Fiscal Year 2004 2005 2006 2007 2008 2009 2010 2011 Net earnings (loss) $ 132 $ 286 $ 356 $ 355 $ 232 $ 21 $ (205) $ (130) Net earnings (loss) (4) 13 2 25 (36) (21) (106) (149) from discontinued operations Net earnings (loss) $ 136 $ 273 $ 354 $ 330 $ 268 $ 42 $ (
Slide 43: Regulation G Reconciliation Quarterly
Regulation G ReconciliationQuarterly - Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Fiscal Quarter 2009 2009 2009 2009 2010 2010 2010 2010 2011 2011 2011 2011 2012 Net earnings (loss) $ 62 $ (35) $ (13) $ 7 $ (31) $ (173) $ (9) $8 $ 1 $ (46) $ 36 $ (120) $ 108 Net earnings (loss) from 6 (7) (4) (17) (8) (
Slide 44: Regulation G Reconciliation LTM
Regulation G ReconciliationLTM - LTM as of Fiscal Quarter Q1 2010 Q2 2010 Q3 2010 Q4 2010 Q1 2011 Q2 2011 Q3 2011 Q4 2011 Q1 2012 Net earnings (loss) $(72) $(210) $(206) $(205) $(173) $(46) $(1) $(130) $(23) Net earnings (loss) from (35) (109) (115) (106) (112) (43) (41) (149) (152) Discontinued Ope
Slide 45: Regulation G Reconciliation EPS
Regulation G ReconciliationEPS - ($ per diluted share) 1Q Fiscal Year 2012 Reported net earnings $0.93 Net earnings (loss) from discontinued operations (0.14) Net earnings from continuing operations $1.07 Tax benefit¹ 0.87 Net earnings from continuing operations excluding tax benefit $0.20 Note: The
Slide 46: Corporate Office and Investor Relations
CORPORATE OFFICE 6565 N. MacArthur Blvd Suite 800 Irving, TX 75039 Phone: (214) 689.4300 INVESTOR RELATIONS Phone: (972) 308.5349 Fax: (214) 689.4326 IR@cmc.com MACKENZIE PARTNERS, INC. 105 Madison Ave New York, NY 10016 Phone: (212) 929-5500 proxy@mackenziepartners.com tenderoffer@mackenziepartners