Transcript Presentation Design for Road Show Presentations

NASPD
June 12, 2004
Jim Cowan
Maverick EVP/COO
Maverick Overview
Market capitalization
$1.0 billion
Sales Revenue
$1.3 billion
Headquarters
St. Louis, MO
Company founded
1977
Employees
2,500
Largest oil country tubular goods (OCTG) producer and one of the largest conduit
producers in North America

1.7 million tons of tubular products capacity

Largest buyer of hot rolled steel in North America
Geographically diverse production facilities

24 mills in 10 North American locations
Maverick’s operations are segmented into energy and industrial products
* Based on closing stock price on April 16, 2004
2
Summary of Products
Energy
Products
67% of
1Q2004
Revenues
65% of
1Q2004
EBITDA
Industrial
Products
33% of
1Q2004
Revenues
 OCTG
Used in completions of newly drilled wells
 Line pipe
Used to gather, transmit and disperse oil and
natural gas
 Coiled tubing
Used in well servicing, flowline and umbilical
applications
 HSS
Structural tubing used in construction and
other applications
 Conduit
Sheathing for wiring in non-residential
construction
35% of
1Q2004
EBITDA
3
Maverick Locations
Calgary
Ferndale
Conduit
Elyria
Conduit
Hickman
4 facilities
First Quarter 2004
Counce
Conroe
REVENUES
Cedar Springs
Conduit
Industrial
Houston
33%
Energy
67%
3 facilities
Coiled Tubing
Coupling
Manufacturer
4
CHINA
Riding the Dragon’s Tail
CHINA
is a major player
Bright spot of the global economy
 GDP grew more than 9% in 2003
 Averaging 9.7% in past 24 years
World’s largest recipient of foreign direct investment
 $53.7 billion in 2002
World’s 2nd largest economy measured by purchasing power
Second largest foreign currency reserves
 $400 billion by end of 2003
World’s 4th largest trading nation
 over $700 billion in 2003
Full integration of China into WTO provides further stimulus to
internationalize industry and markets.
6
CHINA
GDP Growth
15
percent GDP
13
12
10
10
10
9
9
8
7
8
7
9
8
5
0
93 94 95 96 97 98 99 '00 '01 '02 '03 '04
Actual
Source: U.S. Commerce
Forecast
CHINA
growth everywhere
China’s economy is between 8-10 times the size that it was at the
beginning of reform in 1978.
Domestic demand as growth engine – exports are less than 30% of
overall production.
Less than 50% of GDP now state-controlled and only an extremely
small number of goods are price controlled.
Dramatic expansion in the private sector – aggressive
entrepreneurialism has produced 2.5 million firms, providing bulk of
employment, tax and overall national growth.
China’s growth has been powered by latent demand, the
entrepreneurial energy unleashed by the country’s unprecedented
reforms, and inherent inefficiencies
Emerging large and consuming middle class - growing fast

+300 million with significant discretionary spending power by 2010
8
CHINA
a hungry dragon
China has become the world’s largest consumer of copper,
consuming 22,000 tons and importing more than 7,000 tons
every day
China has become the world’s largest producer of steel,
outpacing both Japan and the USA, importing 408,000 tons of
iron ore every day
China is now importing 1,750,000 barrels of oil every day


signing up LNG deals with Australia, Indonesia, and Iran
pipelines being built from Kazakhstan and planned from Siberia
9
CHINA
capital flow continues
China is attracting external capital as the global epicenter for
manufacturing, largely because of its’ low labor costs.

Investment exceeds $50 billion US annually
Investments in processing, assembly, redistribution and value
added businesses in China continue to increase relative to
Southeast Asia, India and Latin America.
Foreign and Chinese manufacturers are building out global
supply channels from China.
Chinese consumers and raw material users are influencing
global pricing in many industries.
10
CHINA
Export and Import Growth
U.S. Billion $
500
400
300
200
100
0
93
94
95
96
97
98
Export
Source: U.S. Commerce
99
'00 '01 '02 '03
Import
OIL Consumption
million barrels/day
20
15
10
5
0
93
94
95
96
U.S.
Source: U.S. EIA
97
Japan
98
99
China
'00 '01 '02 '03
Russia
CHINA
Oil Consumption
million barrels/day
6
4
2
0
93
94
95
96
97
Japan
Source: U.S. EIA
98
China
99
'00
Russia
'01 '02 '03
China
Steel Consumption
400
million tonnes
374
300
200
100
205
135
232
256
276
167
0
'00
'01
'02
Actual
Source: Steel Dynamics
'03
'04
Forecast
'05
'10
China vs USA
Steel Consumption
million tonnes
400
300
200
100
0
'00
'01
'02
China A
Source: Steel Dynamics
'03
China F
'04
'10
'05
USA A
USA F
STEEL COSTS
Steel costs have risen sharply




Rise in the cost of scrap metal, coke, pig iron &
other raw materials are pushing steel costs higher
Base price has risen $180 to $240 per ton since
the first of the year
Base prices are set to rise
Unprecedented steel surcharges
 $125 per ton April 2004
Anticipate steel cost to be volatile throughout
2004
16
95
Q3
-9
Q1 5
-9
Q3 6
-9
6
Q1
-9
Q3 7
-9
7
Q1
-9
Q3 8
-9
Q1 8
-9
9
Q3
-9
Q1 9
-0
Q3 0
-0
0
Q1
-0
Q3 1
-0
1
Q1
-0
Q3 2
-0
Q1 2
-0
3
Q3
-0
Q1 3
-0
4
Q1
-
Global operating rate
100
95
Source: Steel Dynamics
450
400
90
350
300
85
250
200
80
150
Global operating rate
$ / metric tonne
$ per metric tonne
Steel
550
500
J0
0
A0
0
J0
0
O0
0
J0
1
A0
1
J0
1
O0
1
J0
2
A0
2
J0
2
O0
2
J0
3
A0
3
J0
3
O0
3
J0
4
A0
4
J0
4
O0
4
Oil Rigs Running
300
$40.00
250
$35.00
200
$30.00
150
$25.00
100
$20.00
50
$15.00
Oil Rigs Running
Spot Oil Prices
$ per barrel
Oil
$9.50
1100
$8.50
1000
$7.50
900
$6.50
800
$5.50
700
$4.50
600
$3.50
500
$2.50
400
$1.50
Gas Rigs Running
Spot Gas Prices
$ per mcf
1200
J0
0
A0
0
J0
0
O0
0
J0
1
A0
1
J0
1
O0
1
J0
2
A0
2
J0
2
O0
2
J0
3
A0
3
J0
3
O0
3
J0
4
A0
4
J0
4
O0
4
Gas Rigs Running
Natural Gas
SUMMARY
Tight steel supplies and higher prices will be
prevalent for the foreseeable future
Anticipate drilling activity to increase 7% for 2004 in
U.S., 5% in Canada
Energy prices will stabilize but remain elevated
The 21st century is the “Chinese” century

Figure out how this impacts your business!
20