California Steel Industries, Inc. Presented by: Ricardo Bernardes - PowerPoint PPT Presentation

California Steel Industries, Inc. Presented by: Ricardo Bernardes Chief Financial Officer Fontana, California November 2007

Safe Harbor Statement So me o f the sta te me nts in this pre se nta tio n c o nstitute “fo rwa rd-lo o king sta te me nts” within the me a ning o f the Priva te Se c uritie s L itig a tio n Re fo rm Ac t o f 1995. All sta te me nts o the r tha n tho se o f histo ric a l fa c ts inc lude d he re in, inc luding tho se re la te d to the c o mpa ny’ s fina nc ia l o utlo o k, g o a ls, b usine ss stra te g y, pro je c te d pla ns a nd o b je c tive s o f ma na g e me nt fo r future o pe ra tio ns, ne w o rde r tre nds a nd liq uidity a re fo rwa rd-lo o king sta te me nts. Suc h “fo rwa rd-lo o king sta te me nts” invo lve unkno wn risks a nd unc e rta intie s tha t ma y c a use the a c tua l re sults, pe rfo rma nc e o r a c hie ve me nts o f the c o mpa ny to b e ma te ria lly diffe re nt fro m a ny future re sults, pe rfo rma nc e o r a c hie ve me nts, e xpre sse d o r implie d b y suc h fo rwa rd-lo o king sta te me nts. F a c to rs suc h a s g e ne ra l e c o no mic a nd b usine ss c o nditio ns, a va ila b ility o f re q uire d c a pita l, c o ntinue d g o ve rnme nt suppo rt a nd funding fo r ke y spa c e a nd de fe nse pro g ra ms, fina nc ia l c o nditio n o f ma jo r c usto me rs, pro duc t pe rfo rma nc e , ma rke t a c c e pta nc e o f pro duc ts, se rvic e s a nd te c hno lo g ie s, a nd de pe nde nc e upo n lo ng - te rm c o ntra c ts with c o mme rc ia l a nd g o ve rnme nt c usto me rs ma y impa c t the c o mpa ny’ s re ve nue s, e xpe nse s, pro fit a nd c a sh flo w fro m pe rio d to pe rio d. F o r a mo re de ta ile d disc ussio n o f the se fa c to rs, ple a se se e the c o mpa ny’ s mo st re c e nt filing s with the Se c uritie s E xc ha ng e Co mmissio n. Ca lifo rnia Ste e l I ndustrie s, I nc . a ssume s no o b lig a tio n to upda te a ny suc h fo rwa rd-lo o king info rma tio n. 1

Today’s Agenda � 12:00 - 12:15 - We lc o me a nd I ntro duc tio ns � 12:15 - 1:15 - L unc h / Pre se nta tio n a nd Q & A � 1:15 - 1:30 - Bre a k � 1:30 - 2:45 - Pla nt to ur � 2:45 - 3:00 - Clo sing 2

Company Overview

Experienced Management and Committed Stockholders Cr e dit R ating: Baa3 / BB Cr e dit R ating: Baa3 / BBB � E sta b lishe d in 1984 � E a c h sto c kho lde r a ppo ints two Bo a rd me mb e rs � Pre side nt & CE O a nd Cha irma n a ppo intme nts a lte rna te b e twe e n sto c kho lde rs � Ma na g e d a s a n inde pe nde nt c o mpa ny 4

Company Overview Califor nia Ste e l Industr ie s, Inc . ("CSI") is the L e ading Pr oduc e r of F lat R olle d Ste e l Pr oduc ts on the We st Coast with E ithe r the #1 or #2 Mar ke t Position CSI (1) $1,358,762 (1) Ne t Sa le s $1,358,762 (1) Ne t Sa le s E BI T DA $213,820 E BI T DA $213,820 T o ns Shippe d (000s) 1,930 T o ns Shippe d (000s) 1,930 E mplo ye e s 931 E mplo ye e s 931 Hot-R olle d Cold-R olle d Galvanize d E R W Pipe Ne t Sa le s $460,283 Ne t Sa le s $107,460 Ne t Sa le s $571,537 Ne t Sa le s $202,817 Ne t Sa le s $460,283 Ne t Sa le s $107,460 Ne t Sa le s $571,537 Ne t Sa le s $202,817 % o f T o tal 40 % % o f T o ta l 9% % o f T o ta l 39% % o f T o ta l 12% % o f T o tal 40 % % o f T o ta l 9% % o f T o ta l 39% % o f T o ta l 12% Ma rke t Sha re (2) Ma rke t Sha re (2) Ma rke t Sha re (2) Ma rke t Sha re (2) 55% 30% 45% 25% Ma rke t Sha re (2) Ma rke t Sha re (2) Ma rke t Sha re (2) Ma rke t Sha re (2) 55% 30% 45% 25% Ma rke t Po sitio n 1 Ma rke t Po sitio n 2 Ma rke t Po sitio n 1 Ma rke t Po sitio n 3 Ma rke t Po sitio n 1 Ma rke t Po sitio n 2 Ma rke t Po sitio n 1 Ma rke t Po sitio n 3 (1) 2006; I nc lude s sc ra p sa le s a nd o the r. (2) Ma na g e me nt e stima te s – b a se d o n to ns so ld. 5

Slab-Based Business Model CSI is Unique in that it doe s not Pr oduc e R aw Ste e l, But Inste ad Pur c hase s Slab fr om the Wor ld's Highe st Quality and L owe st Cost Pr oduc e r s and F ur the r Pr oc e sse s the Slab into its Pr oduc ts CSI’s Ope r ations T ra ditio na l Ste e l Mill Ope ra tio n Slabs: 7.8” to 9” thickness Pe lle ts Ste e lma king F a c ility Bla st F urna c e I ro n Ore Sla b Ca ste r Hot Strip Rolling Mill Sinte r Ca ste r Hot Rolled L ime sto ne Continuous Pickling Line Pickled & Oiled Mo lte n Ste e l Co a l Mo lte n I ro n 5 Stand Cold Reduction Mill Full Hard Co ke #1 & #2 Galvanizing Lines Galvanized Hydrogen Annealing & Cold Rolled Temper Rolling Sla b s ERW Pipe Ho t Strip Ro lling Re he a t F urna c e ERW Pipe Mill Our Busine ss mo de l pro vide s lo we r fixe d c o st struc ture and gre ate r pro duc tio n fle xibility than c o mpe tito rs 6

Stable Operating Margins T he Histor ic ally Str ong Cor r e la tion Be twe e n Our Ave r age Sale s Pr ic e and Our Ave r age Slab Consumption Cost has Allowe d CSI to Maintain Consiste nt Ope r ating Mar gins $800 Av e ra g e Sa le s Pric e Av e ra g e Sla b Co nsumptio n Co st $700 Ma rg i n $600 $500 $400 $300 $200 $100 $0 1999 2000 2001 2002 2003 2004 2005 2006 2007 Fo re c a st 7

Non-Union Work Force Manhour s pe r T on 2.02 2,000 � T e a m b a se d e nviro nme nt 1,800 1.69 Avera g e Num b er o f E m plo yees 1,600 � No le g a c y c o sts – pe nsio n o r b e ne fit Ma nho urs Per T o n 1,400 1.44 1.42 T o ns B illed (000s) � I 1,200 nc re a sing wo rke r pro duc tivity pe r to n 1.30 1.30 1.29 1,000 1.18 1.18 1.14 1.12 1.09 � Outsta nding Sa fe ty Pro g ra m 1.02 1.04 1.00 800 600 400 200 936 933 918 928 920 942 968 961 959 956 930 921 930 943 931 0 R e c or dable Injur y R ate by Company 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 Re sults fo r the F irst S e me ste r 2007 (Rate pe r 200,000 manho urs wo rke d) 16.160 S o urc e : Ame ric an I ro n & S te e l I nstitute 14.303 13.457 12.547 11.999 10.195 9.402 6.732 4.714 4.484 4.070 GROUP A - Co mpa nie s with mo re tha n 5,000 e mplo ye e s re pre se nting 2.955 2.764 2.669 36% o f 2007 ra w ste e l pro duc tio n. 2.372 1.749 GROUP B - Co mpa nie s with 1,000 to 5,000 e mplo ye e s re pre se nting 9% 1.395 1.422 0.985 o f 2007 ra w ste e l pro duc tio n. 0.198 GROUP C - Co mpa nie s with le ss tha n 1,000 e mplo ye e s re pre se nting 2% o f 2007 ra w ste e l pro duc tio n. A B A C C C B C B A B C B B C C C C C C 8

Long-Standing Customer Relationships � CSI ’ s re la tio nships with 90% o f its to p 30 c usto me rs e xte nd b e yo nd 10 ye a rs � Ove r 150 a c tive c usto me rs in a wide ra ng e o f industrie s � CSI ’ s la rg e st c usto me r a c c o unts fo r 6% o f sa le s � T o p 10 c usto me rs re pre se nt le ss tha n 43% o f to ta l sa le s Custome r Base Composition T ub ing & Spira l We ld Mfg 33% Se rvic e Ce nte rs Othe r 39% 7% OE M/ Co nstruc tio n 21% Co nstruc tio n 23% 9

Re-Heat Furnace Executive Summary � E nviro nme nta l � Co mb ina tio n o f e ffic ie nt b urne rs a nd b e st a va ila b le c o ntro l te c hno lo g y will a llo w us to pro duc e 3 millio n to ns/ yr while g e ne ra lly re duc ing e missio ns. 3 millio n to ns/ yr while g e ne ra lly re duc ing e missio ns. � I nve stme nt � Ca pe x a pro x: US$ 70MM � # 5 re he a t F urna c e wo uld b ring CSI a ro und $5 millio n/ yr c o st re duc tio n $5 millio n/ yr c o st re duc tio n. � Ma rke t � CSI will inc re a se sa le s to tra ditio na l c usto me rs, witho ut pric e disc o unt, b y utilizing impro ve d se rvic e q ua lity. � Co nside ring ra pidly c ha ng ing b usine ss c o nditio ns, CSI ne e ds F L E XI BI L I T Y Othe r Co nside ra tio n � By c o nse rva tive a ssumptio n, pa yb a c k o f # 5 re he a t furna c e wo uld b e a ro und 3 ye a rs a nd sho w po sitive NPV. � $70 millio n inve stme nt wo uld b e the le a st e xpe nsive wa y to a dd 1 millio n to ns o f HSM c a pa c ity in the We st Co a st ma rke t 10

Disciplined Financial Policy ($ in millions) 2002 2003 2004 2005 2006 Ca sh a nd Ca sh Eq uiva le nts $ 2.9 $ 42.6 $ 0.8 $ 104.3 $ 5.6 L o ng Te rm De b t Re vo lving Cre dit Fa c ility $ - $ - $ 4.0 $ - $ - 8.50% Se nio r No te s Due s 2009 150.0 150.0 - - - - - 150.0 150.0 150.0 6.125% Se nio r No te s Due 2014 To ta l De b t $ 150.0 $ 150.0 $ 154.0 $ 150.0 $ 150.0 Cla ss C Preferre d Sto c k 30.0 30.0 30.0 30.0 - 217.2 210.8 303.1 295.3 349.8 Sto c kho lde rs' Eq uity $ 397.2 $ 390.8 $ 487.1 $ 475.3 $ 499.8 To ta l Ca pita liza tio n 11

Operating Performance Highlights 2005 2006 $ in millio ns 2002 2003 2004 Bille d To ns (000s of ne t tons) 2,014 1,885 2,106 1,814 1,930 Net Sa le s $754.4 $763.6 $1,257.0 $1,234.4 $1,358.8 EBITDA $101.1 $48.6 $224.0 $118.8 $213.8 Inte re st Expe nse, net $14.1 $13.1 $10.7 $11.3 $5.2 Net Inc ome $35.0 $4.5 $109.3 $43.4 $109.0 Ca pita l Expenditures $20.8 $16.5 $23.0 $43.0 $33.2 12