Profile: Commercial Metals Company (CMC.N)

Commercial Metals Company, incorporated in 1946, recycles, manufactures, fabricates and distributes steel and metal products, and related materials and services through a network of locations located throughout the United States and internationally. As of August 31, 2009, the Company’s businesses were classified in two operating divisions: the CMC Americas Division and the CMC International Division. As of August 31, 2009, the Company’s business was organized into five segments: Americas Recycling, Americas Mills, Americas Fabrication and Distribution, all operating as part of CMC Americas, with CMC International consisting of two segments, International Mills, and International Fabrication and Distribution. Effective December 1, 2009, the CMC Americas Division operates utilizing three segments: Americas Recycling, Americas Mills and Americas Fabrication. The two segments within the CMC International Division will be known as International Mills (comprised of all mills, recycling and fabrication operations located outside of the United States) and International Marketing and Distribution, which includes all marketing and distribution operations located outside the Americas, as well as CMC Cometals, located in Fort Lee, New Jersey, United States.

Americas Recycling

The Americas Recycling segment processes scrap metals for use as a raw material by manufacturers of new metal products. This segment operates 42 scrap metal processing facilities with 20 locations in Texas, seven in Florida, four in South Carolina, two in each of Alabama and Missouri, and one each in Arkansas, Georgia, Kansas, Louisiana, North Carolina, Oklahoma and Tennessee. During the fiscal year ended August 31, 2009 (fiscal 2009), its scrap metal recycling segment’s plants processed and shipped approximately 2,033,000 tons of scrap metal. It shipped approximately 203,000 tons of nonferrous scrap metals, primarily aluminum, copper and stainless steel. With the exception of precious metals, its scrap metal recycling plants recycle and process practically all types of metal. In addition, one scrap metal recycling facility operated by its Americas Mills segment processed 304,000 tons of primarily ferrous scrap metal for consumption at the adjoining Americas Mills facility, during fiscal 2009. The Company sells scrap metals to steel mills and foundries, aluminum sheet and ingot manufacturers, brass and bronze ingot makers, copper refineries and mills, secondary lead smelters, specialty steel mills, high-temperature alloy manufacturers and other consumers.

Americas Mills

The Company conducts its Americas Mills operations through a network of five steel mills, referred to as minimills, that produce one or more of reinforcing bar, angles, flats, rounds, small beams, fence-post sections and other shapes; a copper tube minimill, and one scrap metal shredder processing facility that directly supports the adjoining steel minimill. The Company operates four steel minimills which are located in Texas, Alabama, South Carolina and Arkansas, and one micro mill located in Arizona. The Company’s Texas minimill manufactures a line of bar size products, including reinforcing bar, angles, rounds, channels, flats, and special sections used primarily in building highways, reinforcing concrete structures and manufacturing. It sells primarily to the construction, service center, energy, petrochemical and original equipment manufacturing industries. The Texas minimill primarily ships its products to customers located in Texas, Louisiana, Arkansas, Oklahoma and New Mexico. It also ships products to approximately 22 other states and to Mexico. Its Texas minimill melted 746,000 tons, during 2009.

The Alabama minimill recorded melt shop production of 342,000 tons and rolled 235,000 tons. The minimill primarily manufactures products that are larger in size. Such larger size products include mid-size structural steel products, including angles, channels, beams of up to eight inches and special bar quality rounds and flats. Its Alabama minimill sells primarily to service centers, as well as to the construction, manufacturing, and fabricating industries. The Alabama minimill primarily ships its products to customers located in Alabama, Georgia, Tennessee, North and South Carolina, and Mississippi. Its South Carolina minimill manufactures a line of bar size products, which primarily include steel reinforcing bar. The minimill also manufactures angles, rounds, squares, fence post sections and flats. The South Carolina minimill ships its products to customers located in the Southeast and mid-Atlantic areas, which include the states from Florida through southern New England. During 2009, the minimill melted 511,000 tons and rolled 481,000 tons.

Americas fabrication and distribution

The Company’s Americas fabrication group operates 74 facilities that are engaged in the various aspects of steel fabrication. Most of the facilities engage in general fabrication of reinforcing and structural steel with eight locations specializing in fabricating joists, special beams and decking for floor and ceiling support and four facilities fabricating only steel fence post. During 2009, the Company shipped 1,424,000 tons of fabricated steel. Fabricated steel products are used primarily in the construction of commercial and non-commercial buildings, hospitals, convention centers, industrial plants, power plants, highways, bridges, arenas, stadiums and dams. It sells fabricated steel in response to a bid solicitation from a construction contractor or the project owner.

The Company sells and rents construction related products and equipment to concrete installers and other construction businesses. Its subsidiary, AHT, Inc. operates plants in Chicora, Pennsylvania, Struthers, Ohio and Pell City Alabama that heat treat steel products for special applications. It also operates a warehousing and distribution operation known as CMC Impact Metals. Its Americas division distribution business consists of its CMC Dallas Trading operation. CMC Dallas Trading markets and distributes steel semi-finished, long and flat products into the Americas, which it purchases from a base of international and domestic sources.

International Mills

The Company’s subsidiary, CMC International AG owns two steel minimills: CMC Zawiercie S.A. (CMCZ) with operations at Zawiercie, Poland and CMC Sisak d.o.o. (CMCS) with operations at Sisak, Croatia. These two mills constitute the International Mills segment. CMCZ has annual melting capacity of approximately 1,900,000 tons with annual rolling capacity of approximately 1,300,000 tons. During fiscal 2009, the facility melted 1,269,000 tons of steel; rolled 997,000 tons, and shipped 1,258,000 tons. Principal products manufactured include rebar and wire rod, as well as smaller quantities of merchant bar. CMCZ is a manufacturer of rebar and wire rod in Central Europe selling rebar primarily to fabricators, distributors and construction companies. Principal customers for wire rod are meshmakers, endusers and distributors. CMCS has an annual capacity of approximately 116,000 short tons of steel pipe.

International fabrication and distribution

The Company’s international distribution operations buy and sell primary and secondary metals, fabricated metals and other industrial products. It purchases steel products, industrial minerals, ores, metal concentrates and ferroalloys from producers in domestic and foreign markets. The Company sells its products to customers, primarily manufacturers, in the steel, nonferrous metals, metal fabrication, chemical, refractory and transportation businesses.