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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

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Presentation Transcript
slide1

NASPD

June 12, 2004

Jim Cowan

Maverick EVP/COO

maverick overview
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
Summary of Products

Energy

Products

Used in completions of newly drilled wells

Used to gather, transmit and disperse oil and natural gas

Used in well servicing, flowline and umbilical applications

  • OCTG
  • Line pipe
  • Coiled tubing

67% of 1Q2004 Revenues

65% of 1Q2004 EBITDA

Industrial

Products

Structural tubing used in construction and other applications

Sheathing for wiring in non-residential construction

  • HSS
  • Conduit

33% of 1Q2004Revenues

35% of 1Q2004 EBITDA

3

slide4

Calgary

Ferndale

Conduit

Elyria

Conduit

Hickman4 facilities

Counce

Conroe

Cedar Springs

Conduit

Houston3 facilities

Coiled TubingCoupling Manufacturer

Maverick Locations

First Quarter 2004

REVENUES

Industrial

33%

Energy

67%

4

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CHINA

Riding the Dragon’s Tail

china is a major player
CHINAis 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
CHINA GDP Growth

Source: U.S. Commerce

china growth everywhere
CHINAgrowth 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
CHINAa 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
CHINAcapital 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
CHINA Export and Import Growth

Source: U.S. Commerce

oil consumption
OIL Consumption

Source: U.S. EIA

china oil consumption
CHINA Oil Consumption

Source: U.S. EIA

china steel consumption
China Steel Consumption

Source: Steel Dynamics

china vs usa steel consumption
China vs USA Steel Consumption

Source: Steel Dynamics

steel costs
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

steel
Steel

Source: Steel Dynamics

summary
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!

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