morgan stanley basic materials conference february 17, 2009
TRANSCRIPT
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Morgan Stanley Basic Materials Conference February 17, 2009
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NUCOR = LONG-TERM PROFITABLE GROWTH
• Nucor’s Growth Record
• Nucor’s Position of Strength for Future Growth
• Nucor’s Multi-Pronged Growth Strategy
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NUCOR’S GROWTH RECORD
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0
200
400
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1,000
1,200
1,400
1,600
1,800
2,000
1966
1968
1970
1972
1974
1976
1978
1980
1982
1984
1986
1988
1990
1992
1994
1996
1998
2000
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2004
2006
2008
LONG-TERM PROFITABLE GROWTH Net Income 1966-2008 (millions of dollars)
20+% CAGR
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0
200
400
600
800
1,000
1,200
1,400
1,600
1,800
2,000
2000 2001 2002 2003 2004 2005 2006 2007 2008
LONG-TERM PROFITABLE GROWTH Net Income 2000-2008 (millions of dollars)
25% CAGR
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LONG-TERM PROFITABLE GROWTH2004-2008 Return On Equity (average annual ROE %)
33.6%32.5%32.2%
26.8%
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25
30
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Commercial Metals U.S. Steel Steel Dynamics Nucor
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LONG-TERM PROFITABLE GROWTH Cash Dividends Paid 2000-2008 (millions of dollars)
0
100
200
300
400
500
600
700
800
2000 2001 2002 2003 2004 2005 2006 2007 2008
Base Supplemental
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NUCOR’S POSITION OF STRENGTH For Future Growth
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NUCOR’S POSITION OF STRENGTH
• Financial Strength
• Variable Cost Structure
• Diversified Product Mix
• Market Leadership Positions
• OUR PEOPLE!!!
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• Q4-2008 balance sheet: Debt of $3.3 billion; Debt = 28% Of Total Capital; Weighted average coupon rate on debt < 6%; $3.1 billion of our debt matures in 2012 & beyond (approx. $2.2 billion after 2017); No commercial paper borrowings; Cash & short-term investments of $2.4 billion
• Debt Rated “A+” By S&P And “A1” By Moody’s – Highest North American Metals/Mining Debt Ratings.
• Simple Capital Structure – and no off-balance sheet financing arrangements
• Superior Financial Flexibility – very successful work raising $4.3 billion of long-term capital in late 2007 and first half 2008. In November 2007, issued $1.3 billion of long-term debt (weighted average coupon rate of 5.78%). In May-June 2008, issued equity of $2 billion ($74/share) and long-term debt of $1.0 billion (weighted average coupon rate of 5.78%).
Financial Strength
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2000 2001 2002 2003 2004 2005 2006 2007 2008
Financial Strength Cash From Operations 2000-2008 (millions of dollars)
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Variable Cost Structure
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AMM Shredded - Chicago AMM #1 Busheling - Chicago
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Diversified Product Mix2008 Sales Tons
PRODUCT DIVERSIFICATION REDUCES EARNINGS VOLATILITY!!!
Nucor is North America’s Most Diversified Steel Producer
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Diversified Product MixSteel Production Capacity (tons)
Hot Rolled Sheet(Cold Rolled Sheet 4.1 million)
(Galvanized 1.5 million)
10.8 million
Bars 8.9 million
Structural 3.7 million
Plate 2.8 million
Total Steel 26.2 million
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Diversified Product MixSteel Products Production Capacity (tons)
Steel Joists 715,000
Steel Deck 530,000
Cold Finished Bars 860,000
Steel Buildings 465,000
Rebar Fabrication 1,563,000
Mesh 233,000
Metal Grating 90,000
Fasteners 75,000
Total Steel Products 4.5 million
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Market Leadership in North America
Position
Largest Structural Producer
Largest Bar Producer
Largest Rebar Producer
Largest Cold Finished Bar Producer
Largest Steel Joist Producer
Largest Steel Deck Producer
Largest Rebar Fabrication, Distribution, & Placement Company
2nd Largest Plate Producer
3rd Largest Metal Buildings Producer
4th Largest Sheet Producer
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It Starts With Our Culture
• LONG-TERM FOCUS
• COMMITMENT TO EMPLOYEES – Relationships Based on Trust
• SAFETY FIRST!!!
• TEAMWORK
• PAY FOR PERFORMANCE
• CONTINUAL IMPROVEMENT
• DECENTRALIZED STRUCTURE
• Nucor has been PROFITABLE EVERY YEAR SINCE 1966 – and No Layoff Practice Followed Over This Time Period
• Nucor’s Employees Take Ownership Of Taking Care Of Our Customers & Shareholders!!!
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Nucor’s Multi-Pronged Growth Strategy
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NUCOR’S FOCUS: PROFITABLE GROWTH
NUCOR’S 4 PRONGED GROWTH STRATEGY
1. OPTIMIZE EXISTING OPERATIONS
2. GREENFIELD GROWTH
– New Technologies
– Marketplace Niches
3. INTERNATIONAL GROWTH through JOINT VENTURES
4. PURSUE STRATEGIC ACQUISITIONS
Nucor’s Position
of
STRENGTH
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NUCOR’S FOCUS: PROFITABLE GROWTH
MULTIPLE GROWTH PLATFORMS
1. CORE BUSINESS
2. UPSTREAM – David J. Joseph scrap business; Nucor Steel Louisiana pig iron project
3. DOWNSTREAM – Harris Steel rebar fabrication; metal buildings
4. INTERNATIONAL – Nucor Europe & Nucor Mexico
5. TECHNOLOGY – Castrip®
Nucor’s Multi-
Pronged Growth Strategy
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Growth Platform – Core Business
• Memphis SBQ Mill
• Decatur Galvanizing Facility
• Sheet Mill Group’s Growing Value-Added
Product Portfolio (interstitial-free steels, dual-phase
steels, complex-phase steels)
• North Carolina Plate Mill Heat Treating
Facility
• Arizona Rolling Mill For Straight-Length
Rebar, Coiled Rebar, & Coiled Wire Rod
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61 ScrapProcessing Facilities
Growth Platform – Scrap
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Growth Platform – Rebar Fabrication
Harris “RPG”Reinforcing Steel Fabrication Plants
23 Canadian Facilities 23 U.S. Facilities
Rebar: Mills & Fab. Facilities
Nucor Rebar Producing Mills
10 U.S. Facilities
Ambassador Steel 21 U.S. FacilitiesHawaii
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Growth Platform – International Duferdofin-Nucor beams & long products joint venture
San Giovanni
San Zeno
Pallanzeno
Italy
SicilyGiammoro
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Growth Platform – Castrip® Castrip® Energy & Emissions Comparison (ladle through hot band) (ladle through hot band)
0.00
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0.25
GG
E (
t C
O2
equ
iv/t
).02
.12
.22
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0.60
0.80
1.00
1.20
1.40
1.60
1.80
2.00
En
erg
y C
on
sum
ed (
GJ
/t)
.2
1.0
1.7
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“If, during the bad times, we had failed to look past the short-term consideration of this quarter’s earnings, would we have gone on to compile such a record of sustained growth and profitability? I’m certain we would not.”
“If management had thought of our employees as nothing but “headcount” — a term that seems far more appropriate to cattle than to people – would they be as motivated and productive as they are today? Again, the answer is clearly no.”
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Nucor’s Best Years Are Ahead Of Us
• Nucor’s facilities
• Nucor’s capabilities
• Nucor’s financial strength
• Nucor’s strategies
• And, the single most important asset behind Nucor’s success – Nucor’s EMPLOYEES – THE RIGHT PEOPLE!!!
• NUCOR’S BEST YEARS ARE STILL AHEAD OF US!!!
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QUESTIONS