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Acquisition Acquisition –– Butler Manufacturing CompanyButler Manufacturing CompanyPresentation to InvestorsPresentation to Investors
Kirby Adams, CEO & Managing Director16 February 2004
16 February 2004 2
Acquisition CostAcquisition Cost
Cash offer of US$22.50 per share
260204Headline Acquisition cost
7660Net debt at 31 December 2003
183144Equity value ($22.50)
A$ MillionUS$ MillionTransaction Value
AUD:USD exchange rate of 0.785
16 February 2004 3
Implementing BlueScope Steel’s StrategyImplementing BlueScope Steel’s Strategy
Acquisition of Butler Manufacturing Company– Pre-eminent global designer/supplier of Pre-Engineered Buildings (PEBs)– Number One positions in North America and China– Worldwide brand recognition
An Attractive Opportunity at the Right Time
16 February 2004 4
What is a PEB?What is a PEB?
Fully designed and engineered building Comprising steel structural frame and roofing systems, typically with steel walling
Butler is THE PEB companyDesign, Engineering, Manufacturing, Sales & Marketing
16 February 2004 5
Why PEBs? Speed, Cost Effectiveness, Broad ApplicationWhy PEBs? Speed, Cost Effectiveness, Broad Application
Example: 110,000m2 facility, erected in 28 working days
Wal*Mart Stores Distribution Centre (Arkansas)
1 July 9 2 July 23
3 July 30 4 August 6
16 February 2004 6
Impact on BlueScope SteelImpact on BlueScope Steel
Revenue up nearly 20%
Downstream Revenue proportion up 7%
Employees up 39%
Gearing up 8%– Investment Grade Balance Sheet Maintained
16 February 2004 7
Butler Consolidated Financial OverviewButler Consolidated Financial Overview
2.4%3.4%6.0%7.2%EBITDA Margin (%)19.028.052.466.9Normalised EBITDA
(0.3)9.134.351.3Normalised EBIT
(2.7%)(6.7%)(6.0%)% change in sales796.2818.4877.1933.5Net sales
2003200220012000US$ Millions
2003 Revenue by Business
North American Buildings
China
Vistawall
17%
56%
27%
Normalised results reflect exclusion of divested European operations, changes to employee benefits, other non-recurring charges, impairment costs and sale expenses
22%
43%35%
North American Buildings
China
Vistawall
2003 Gross Profit by Business
16 February 2004 8
Business Unit PerformanceBusiness Unit Performance
#2 Robust business
#1 Strong, growing business
#1Turnaround
Summary
11.6
217
2003
10.1
220
2002
10.0
138
2003
8.0
98
2002
(17.0)
460
2003
3.3
522
2002 200120012001
Acquired 1984In operation 8 yearsEstablished 1901History
16.84.120.4Normalised EBIT
23262610Net Sales
VistawallChinaNorth American Buildings
US$ Million
Notes1. North American Buildings includes BUCON and Real Estate2. Normalised results reflect exclusion of divested European operations, changes to employee
benefits, other non-recurring charges, impairment costs and sale expenses3. Does not take into account inter-company eliminations or corporate costs
16 February 2004 9
North American Buildings Group Profile (1)North American Buildings Group Profile (1)
• Core business capability - design, manufacturing and marketing of pre-engineered steel buildings and component systems
• Non-residential building market focus – industrial, commercial, retail segments– Manufacturing, Distribution Centres, Warehouses, Showrooms
• #1 in PEBs in North America (~18% market share)
• Strong engineering & design capability
• Strong, well recognised brands
• Butler Builders – key competitive advantage– Leading builder network– 1100 Builders
16 February 2004 10
North American Buildings Group Profile (2)North American Buildings Group Profile (2)
RetailWarehouseManufacturing
CommunityShowroomRecreation
16 February 2004 11
China Profile (1)China Profile (1)
• Core business capability – design, manufacture and market pre-engineered steel building systems
• #1 in PEBs in China
• Strong, well recognised brands
• Strong revenue and profit growth – 41% and 25% growth from 2002 to 2003
• Customers include major multi-nationals and leading Chinese firms
• 50 independent Butler dealers throughout China
16 February 2004 12
China Profile (2)
Caterpillar
Xuzhou Shanghai
Yan Feng Automotive Trim Co
China Profile (2)
Other China customers:• 3M• Energizer• Motorola• Nike• Orient Home• Carrefour
Allied Signal Automotive
Shanghai
Customer base includes• Major Multinationals• Leading Chinese firms
High quality PEBs• Also incorporating
Vistawall systems
16 February 2004 13
Our Asian PEB business Our Asian PEB business –– SmartBuildSmartBuild™™
BlueScope Lysaght® rollformed structural framing and roofing/cladding
16 February 2004 14
Vistawall Profile (1)Vistawall Profile (1)
• Core business capability - Design, manufacturing and marketing of extruded aluminium and glass roof, wall, door & window systems for non-residential buildings
• #2 in this market
• Strong, well recognised brands– Vistawall, Naturalite, Moduline, Skywall
• Market focus is office and retail
• Range includes storefront framing systems, entrance doors, curtain walls, skylights and translucent roof/wall systems
• 2 Manufacturing facilities, 4 Distribution centres and 16 Service centres – Serving 2,000 independent distributors and installers
16 February 2004 15
VistawallVistawall Profile (2)Profile (2)
Vistawall
Storefronts and Doors
Vistawall
Engineered Wall Systems
Naturalite
Engineered Skylights
Moduline
Windows
16 February 2004 16
Butler acquisition Butler acquisition –– Good DealGood Deal
Acquisition cost US$204m (A$260m)
Less than 8% of Enterprise Value
Strategic fit
Value creation opportunitiesRight Timing
Bolt-on Acquisition
16 February 2004 17
Strategic FitStrategic Fit
Butler Shanghai
Lysaght Australia (Lyndhurst)• Consistent with our Strategy– Downstream, Value Added– Branded Products– Building and Construction– Solutions
• Continuing Asian growth
• Within our geographic footprint
• Compatible culture
Operations we know, understand and can grow/improve
Strategic fit
16 February 2004 18
Strategic fit Strategic fit –– Adding revenue and margin and Adding revenue and margin and reducing riskreducing risk
SlabSlab
Hot Rolled Coil, Plate
Cold Rolled
Painted Painted
Roll-forming Roll-
forming
Metallic Coated
PEB/Solutions
Metallic Coated
PEB/Solutions
CURRENT FUTURE
Hot Rolled Coil, Plate
Cold Rolled
Vietnam
Vietnam
Australia & NZ Brownfields
Australia & NZ Brownfields
Butler
Indonesia
Thailand
16 February 2004 19
Strategic fit Strategic fit -- Contributing to our goal of moving downstream Contributing to our goal of moving downstream --A$1.0 Billion of Downstream ValueA$1.0 Billion of Downstream Value--Added SalesAdded Sales
BlueScope Steel Revenue (incl Butler in proforma 02/03)
2002/2003 Proforma 2002/2003 (includingButler)
Metal Coated Coil,Painted Coil,
Rollformed Components
CRCHRC
Slab
55%
A$5.3B
A$6.3B
Butler*
62%
* Using Butler’s revenue for the 12 months to 30 June, 2003 (translated at an AUD:USD exchange rate of 0.785)
16 February 2004 20
Strategic Fit Strategic Fit -- Both BlueScope Steel & Butler have strong brandsBoth BlueScope Steel & Butler have strong brands
MR-24® Roof System
Butlerib® II Wall System
Butler Thermawall™
Widespan™ Structural System
TextureWall™ Panel System
Snap-It™ Architectural Roof System
16 February 2004 21
Strategic Fit Strategic Fit -- Butler has a complementary fit with Butler has a complementary fit with BlueScope Steel’s FootprintBlueScope Steel’s Footprint
BlueScope Steel Butler
16 February 2004 22
Strategic fit Strategic fit –– Complementary BlueScope Steel and Complementary BlueScope Steel and Butler businesses in ChinaButler businesses in China
BlueScope Steel Lysaght manufacturing facilitiesLysaght sales officesCoated/painted steel sales offices
ButlerPEB manufacturing facilitiesDistrict sales offices(and regional sales managers for 27 regions)
16 February 2004 23
Right TimingRight TimingRight Timing
• Available due to Butler’s financial constraints
• Bottom of USA building and economic cycle
• Paid at current market share price
• Exchange rate
• Market benchmarks
An attractive opportunity at the right time
16 February 2004 24
Right Timing Right Timing -- Leading indicators of industrial Leading indicators of industrial production suggest upturn in USAproduction suggest upturn in USA
OECD Leading Indicator & Industrial Production
-10
-5
0
5
10
Nov-98 Nov-99 Nov-00 Nov-01 Nov-02 Nov-03
6 M
onth
Ann
ualis
ed %
Cha
nge
Leading Indicator
Industrial Production
-12-10
-8-6-4-20246
81012
Nov-98 Nov-99 Nov-00 Nov-01 Nov-02 Nov-03
6 M
onth
Ann
ualis
ed %
Cha
nge
US
Europe
Japan
U.S. rose sharply in November 2003, up 11.7%.
OECD Leading Indicators USA, Europe, Japan
16 February 2004 25
Right TimingRight Timing –– PEB market improvement PEB market improvement potentialpotential
USA GDP Growth vs PEB Market Size
1988 1990 1992 1994 1996 1998 2000 2002 2004 f 2006 f 2008 f0
2,000
4,000
6,000
8,000
10,000
12,000
0.5
1.0
1.5
US Real GDP: 1980–2008f(US$B At 1996 Prices)
No GDP growth
PEB market decline
PEB Market Size(US$ Billion)
GDP Growth
PEB Market
Source: FW Dodge, MBMA, Butler, EIU
16 February 2004 26
Value creation opportunitiesValue creation opportunitiesValue
Creation
• Significant opportunity for value creation via leveraging– BlueScope Steel and Butler strengths, capabilities and market positioning
• Initial regional focus for value creation – North America Business Transformation and Turnaround
– China Immediate Scale and Significant Growth
– South East Asia Growth Opportunities
– Australasia Growth Opportunities
16 February 2004 27
Management Structure and AccountabilitiesManagement Structure and Accountabilities
• BlueScope Steel Executive Leadership Team– Extensive North American experience
• North America - Lance Hockridge– President Industrial Markets including North Star BHP Steel and Castrip™
• China / South East Asia - Mike Courtnall– President Asian Building and Manufacturing Markets
– Additional information following deal closure
16 February 2004 28
Value Creation via margin improvement potentialValue Creation via margin improvement potential
0.830.26Enterprise value / Net Sales
744204Enterprise value
898796Net Sales
22%14%3 year average gross margin (2001-03)
2003 Comparables
NCI Building Systems
Butler Manufacturing
US$ Million
16 February 2004 29
Value creation – China, SE Asia and Australasia
Butler China• Growing profitably
• Provides immediate scale
• Synergy from combining Lysaght and Butler capabilities
• Creates absolute leader in China in PEBs and steel building components
• Resource for growth
SE Asia and Australasia• Leverage Butler capabilities - Accelerate BlueScope Steel’s PEBs growth
16 February 2004 30
Financial OutcomesFinancial Outcomes
• Expected EPS outcome– FY05 Breakeven– FY06 Accretive
• 100% debt funding
• Increase in gearing by 8%
• Preserving our capacity to simultaneously– Reward shareholders– Grow
16 February 2004 31
SummarySummary
• Strong strategic fit
• Right Timing
• Value creation and growth opportunities
OECD Leading Indicator & Industrial Production
-10
-5
0
5
10
Nov-98 Nov-99 Nov-00 Nov-01 Nov-02 Nov-03
6 M
onth
Ann
ualis
ed %
Cha
nge
Leading Indicator
Industrial Production
Acquisition Acquisition –– Butler Manufacturing Company, USButler Manufacturing Company, USPresentation to InvestorsPresentation to Investors
Kirby Adams, CEO & Managing Director16 February 2004
