Good day, everyone. Welcome to the Nucor Corporation Third Quarter of 2020 Earnings Conference Call. As a reminder, today's call is being recorded. Later we will conduct a question-and-answer session and instructions will come at that time. Certain statements made during this conference call will be forward-looking statements that involve risks and uncertainties. The words we expect, believe, anticipate and variations of such words and similar expressions are intended to identify those forward-looking statements, which are based on management's current expectations and information that is currently available. Although Nucor believes they are based on reasonable assumptions, there can be no assurance that future events will not affect their accuracy. More information about the risks and uncertainties relating to the forward-looking statements may be found in the Nucor's latest 10-K and subsequently filed 10-Qs, which are available on the SEC's and Nucor’s website. The forward-looking statements made in this conference call speak only as of this date and Nucor does not assume any obligation to update them, either as a result of new information, future events or otherwise. And now for opening remarks and introductions, I would like to turn the call over to Mr. Leon Topalian, President and Chief Executive Officer of Nucor Corporation. Please go ahead.

Good afternoon, and thank you for joining us for our third quarter earnings call. 2020 continues to present all of us with challenges, from the pandemic, social unrest, and the economic struggles many people are facing, to the wildfires and hurricanes that have impacted our country these last few months. But we have also seen how these challenges have brought people together to care for the safety, health, and wellbeing of one another. I want to thank my Nucor teammates for their continued efforts to take care of our Nucor family and the communities where we live and work. Joining me today on the call are the members of the Nucor executive team, including Jim Frias, our Chief Financial Officer; Al Behr, responsible for Plate and Structural Products; Craig Feldman, responsible for Raw Materials; Ray Napolitan, responsible for Engineered Bar Products as well as Nucor's digital initiatives; MaryEmily Slate, responsible for Sheet and Tubular Products; Dave Sumoski, responsible for Bar, Rebar Fabrication, and Construction Services; and Chad Utermark, responsible for Fabricated Construction Products. With regard to our safety performance, our team has had another great quarter. We are on pace to have the safest year in our history, and I want to thank every one of our team members for their hard work and commitment. At the start of the year, I set the challenge for us to become the safest steel company in the world. And my deepest thanks go out to every member of our team for your continued focus on safety and our most important value. You have remained focused despite the tumultuous year. 15 Nucor divisions have gone more than one year without a recordable injury. I want to thank each of you for your continued effort, focus, and commitment to ensuring that we take care of the most important value and responsibility we have, the health and safety of our entire team and family. Turning to our financial performance in the third quarter. Business conditions in most of the markets we serve improved as the quarter progressed, resulting in a rebound in demand for bars, beam, and sheet products. Increased demand was reflected in our capacity utilization rate, which for our steel mills, improved to 83% from 68% in the second quarter. Better market conditions, combined with continued strong execution by our team, enabled us to outperform the expectations we had at the beginning of the quarter. Looking at the business conditions in different end-use markets during the quarter, non-residential construction demand continued to be resilient and, in fact, is growing for us in areas like our joist and deck businesses, where orders, quotes, and backlogs are all up year-over-year. More broadly, while third-party data tracking construction starts and backlogs have been volatile, indicators that look out further by tracking project inquiries have turned positive in recent weeks. Much of the activity continues to be in data centers and distribution centers, where we've had incredibly strong capability and relationships with owners, developers, fabricators, and designers. We expect that these two areas will remain strong for the foreseeable future. We recently launched a construction solutions team to better service our customers throughout the construction segment and bring together the breadth of Nucor's products for a more coordinated approach to the marketplace. In the automotive sector, we experienced a strong rebounding third quarter related to automotive demand. Further, we are expecting strong automotive production rates in Q4 that could match or exceed the year-ago period. OEMs are focusing on rebuilding inventories to meet the continued strong demand. For reference, current days on-hand inventory levels are at nearly 10-year lows. We have heard some analysts suggest that consumers are allocating money they would normally spend on travel to upgrade their cars and vehicles. We are pleased with our team's performance in this market and are expecting continued profitable share growth as we move forward. Moving on to oil and gas end-use markets. There's been no appreciable change here, with both rig counts and underlying commodity prices still being low. However, renewable power and energy transmission are showing strong growth despite effects from the pandemic. Through late September, steelmaking segment orders related to the renewable power sector have already exceeded 2019 by 15%. We are excited about the opportunities for our company in the renewables market, and we participate in that market through a broad variety of products, including plate, tubular, beams, fabricated rebar, sheet, piling, and fasteners. The breadth of our product offering and the investments we are making in highly differentiated capabilities present meaningful growth opportunities for us. Several of our capital investment projects that started operating in recent months are producing excellent results. The ramp-up of our rebar micromill in Missouri continues to outperform our expectations. We generated positive EBITDA through the quarter in Sedalia. Congratulations to the entire Nucor Sedalia team for their excellent performance. Our Kankakee, Illinois bar mill will complete commissioning of the new MBQ rolling mill in Q4. We expect to achieve positive cash flow from this project in Q1 of next year. While the commissioning schedule was slightly extended due to COVID-related disruptions, customer acceptance of the new products has been extremely strong. This new capability at Kankakee will allow us to provide our customers with a full range of MBQ, light shapes, and structural angles and channels out of one location in the heart of the Midwestern market. Our new state-of-the-art cold mill in Hickman, Arkansas continues to ramp up production and to diversify its product mix. Since commissioning, the cold mill has added 24 new customers, which has helped the team rapidly grow production and shipments. In fact, third quarter cold-rolled shipments surpassed our volumes for the first quarter, which was, of course, pre-COVID. Product development continues to be a focus, including the first trial runs of our third-generation advanced high-strength steels. Construction of the Gen three flexible galvanizing line at Nucor Arkansas continued to progress throughout the quarter. Equipment installation began in the third quarter, and the team anticipates a start-up in the second half of 2021. Our other major investment projects remain on track. Start-up of our rebar micromill in Florida is expected to happen late this year. And the Gallatin expansion start-up is anticipated for the second half of next year, with a plate mill in Brandenburg, Kentucky to follow in late 2022. And before I leave the topic, I also want to give a shout-out to our team in Marion, Ohio. We don't talk about it as much; perhaps it's because it's a modernization and not an expansion. But the team at Nucor Steel Marion completed a project to fully modernize our Marion bar mill in the middle of last year. They did so safely, on time, and within budget. These investments lowered our costs and our environmental footprint there, and Marion's profitability is up almost 200% over last year. So again, congrats to the entire team there. While we are always looking for high-return growth projects like these, we are not overlooking opportunities to improve our performance by proactively managing our existing asset base. Over the last couple of years, we've had to make some difficult decisions to restructure parts of our metal buildings group to better align our production capabilities with the needs of the market. While every team member who has been impacted has had the opportunity to remain with the Nucor family, these decisions are not made lightly or without considerable deliberation. I want to thank our teammates for their dedication and service to Nucor as we have navigated these difficult changes. We recognize our shared responsibility to effectively steward shareholder capital and deliver world-class returns on those investments today and tomorrow. It is worth noting that Nucor buildings group has generated strong operating profits during both 2019 and 2020, even as our teammates there adjusted to these changes in their business as well as the pandemic. With the election less than two weeks away, we believe that no matter who sits in the White House or holds a majority in Congress next year, our leaders in Washington must understand the need to move forward with a significant infrastructure spending bill that includes strong buy American provisions. We believe that a long-term commitment to modernizing our nation's crumbling infrastructure is long overdue. And we will continue to remind our elected officials of this when the new Congress convenes in 2021. Real progress on this front would not only boost the economy and create hundreds of thousands of much-needed jobs in the short term; it would also be an investment benefiting future generations of Americans. We are also encouraging the current Congress to pass reauthorization of the Water Resources Development Act before they adjourn. The Florida legislation funds critical waterway construction projects that are an important market for us and improve the waterway transportation system we use to ship our products. Before turning it over to Jim, I just want to say how much I appreciate everyone on the Nucor team working safely and for your focus on serving our customers during these most challenging times. The Nucor team's passion and dedication are getting noticed by existing as well as new customers. Let's keep it up and never lose sight of the importance of valuing every individual in the contribution they make to our collective success.

Thanks, Leon. Nucor's third quarter earnings of $0.63 per diluted share exceeded our guidance range of $0.50 to $0.55 per diluted share. Results for the month of September exceeded our forecast at almost every business across our diversified portfolio. Third quarter results included $6.6 million of losses on assets related to our Duferdofin-Nucor joint venture in Italy and a $16.4 million restructuring charge related to the further realignment of our metal buildings business that Leon mentioned. We expect this will be the final restructuring charge associated with that initiative. The combined negative impact of these actions on our third quarter earnings was approximately $0.06 per diluted share. These charges were not included in our guidance estimates. Excluding these special charges as well as pre-operating and start-up costs, earnings would have been $0.75 per diluted share. Cash provided by operating activities for the nine months of 2020 was $2.2 billion. This exceeded the sum of our year-to-date capital spending of approximately $1.2 billion and cash returned to our shareholders via dividends and stock repurchases totaling $408 million. Nucor's through-the-cycle earnings and cash flow benefit from our highly variable low-cost structure. Working capital reductions generally provided a countercyclical benefit to Nucor in downturns like the current one, enhancing our cash flow and liquidity. Year-to-date, cash flow generated from contraction in inventory, receivables, and payables was $643 million. As I previously noted, we made significant progress in reducing inventory volumes during the second quarter. I'm pleased to say that during the third quarter, we were able to respond to increased order flow and production without increasing our inventory levels. Our investment in scrap, WIP, and finished goods inventories is basically flat or slightly down from prior quarter levels on a tons basis. On the financing front, during the quarter, we took advantage of the opportunity to work with Meade County, Kentucky to issue $163 million of tax-exempt industrial revenue bonds to provide partial funding for our new plate mill under construction in Brandenburg, Kentucky. The bonds are designated green bonds as proceeds will be used for pollution prevention and control facilities. The bonds will mature in July 2060. This is Nucor's longest tenor bond ever issued at 40 years and our first green bond issuance. Concurrent with this capital raise, Standard & Poor's and Moody's both reaffirmed Nucor's credit ratings of A- and Baa1, respectively, while also maintaining their stable outlooks. We continue to hold the highest credit ratings of any steel producer headquartered in North America. At the close of the third quarter, our cash and short-term investments totaled approximately $3.3 billion. Nucor's liquidity also includes our undrawn $1.5 billion unsecured revolving credit facility, which does not mature until April of 2023. Total long-term debt, including the current portion, was approximately $5.5 billion. Our debt-to-total-capital ratio net of cash and short-term investments was approximately 13.5% at the quarter end. Our next significant debt maturity is not until September of 2022, $600 million of unsecured notes, with a coupon rate of 4.125%. The flexibility provided by Nucor's low-cost operating model and financial strength continues to be a critical underpinning to our company's ability to grow long-term earnings power and reward our shareholders with attractive returns on capital. Our team has been working on nine significant organic growth projects, representing a total investment of about $4 billion. We expect to complete commissioning on six of these projects by the end of this year. The remaining projects are the expansion and modernization of our Kentucky sheet mill, the addition of our Generation three flexible galvanizing line at our Arkansas sheet mill, and our Kentucky plate mill. At the close of the third quarter of 2020, remaining capital expenditures for these growth initiatives are estimated to be approximately $2.1 billion. We expect about $300 million of that investment to occur in the current quarter, with the balance occurring in 2021 and 2022. We expect that our total capital spending for the full year 2020 will be in the area of $1.7 billion. Turning to the outlook. We expect Nucor's fourth quarter earnings to be improved over our third quarter results. Most notably, our sheet and plate mills will benefit from recent price increases. 2020 has been a challenging year in many respects, but it has served to heighten our already strong confidence in Nucor's future. Our teammates continue to capitalize on Nucor's advanced cost position, flexible production capability, and financial strength to build long-term value for our customers and shareholders. Thank you for your interest in our company. We are now happy to take your questions.

Good afternoon. Seth Rosenfeld. Thank you for taking our questions today. If I can start out with a question on capital allocation. And then I have a follow-up, please, on plate. But in terms of capital allocation, the restart of both Gallatin and Brandenburg last quarter obviously locks a great deal of CapEx for the next few years. Can you please just touch on how we should think about what comes next after these projects? Should we be expecting CapEx to gradually roll off? Or behind the scenes, is there a series of additional projects under development right now that we should expect to be approved as the natural CapEx budget starts to decline going forward? And tied to that, can you please confirm if there's been any indication for the 2021 CapEx budget at this stage? I'll start there, please.

Okay. Certainly, Seth. Thank you for the question. I'll start, and then Jim maybe you can jump into some specifics. Seth, as you think about the question and I'll frame it in the context, as we think about nearly $4 billion worth of capital projects that are either online or coming online, I couldn't be more excited about the EBITDA and the returns and the long-term shareholder value that those investments are going to create. But the longest of those is the Brandenburg, Kentucky plate mill, which again, in our mind is going to truly change the framework in getting Nucor market leadership position in plate in the heart of the largest plate-consuming region in the United States. But I couldn't be more excited as well as we think about the long-term. One of the effects of COVID as well is it's really narrowed the window of view and scope for people to think month-to-month, quarter-to-quarter. But these investments are truly for the long-term, the next five, 10, 15, 20 years of returns for our company, so I couldn't be more excited as we think about what is next, not high and every Executive Vice President on this team are focused on those things that are next. With regard to 2021, I'll let Jim kind of jump in here and talk about what we're seeing in trends and just give you a generalization of what we're seeing and what we anticipate as we move forward. Jim?

Yes, Seth, your question is challenging. As Leon mentioned, we are excited because we have the financial strength to execute our plans despite COVID and other potential challenges. We are looking ahead to 2023 and 2024 rather than focusing solely on getting through 2022. Although we're not ready to discuss specific plans yet, rest assured that they are at the forefront of our minds. We approach our business with a long-term perspective. This year's capital expenditures are in the low $7 billion range. While we haven't received formal approval from the Board for next year, we expect it to be around $2 billion, and we will provide a formal number in January during our year-end earnings call. We've generated significant free cash flow, amounting to $4.4 billion from 2017 through the nine months ending in September 2020. Yes, there will be more investments, and while we aren't prepared to discuss those yet, we are actively working on them.

Great. Thank you. And if I can ask a slightly shorter-term question on the outlook for the plate market, please. Obviously, plate has been a very weak area across the U.S. sector over recent months, particularly compared to sheet in recent weeks. We've seen recently a number of price hikes from yourself and your peers in the plate market. Can you walk us through how they are being accepted by customers? And also, any confidence you have with regards to the ability of plate to return to historical metal spreads or return to historical relationship versus hot-rolled coil prices? Thank you.

Certainly. Yes. Thanks, Seth. So I'm going to let Al Behr, our EVP of Plate and Structural Products, kick it off and maybe add something at the end. Al?

Okay. Thanks, Seth. In terms of the outlook for plate, we're optimistic. Our outlook for fourth quarter has improved over Q3. Our backlog ending Q3 was much stronger than it was Q2. The price increases that we had through the quarter had stuck and have been supported by the market. We've collected 100% of those announced price increases. As a matter of fact, we went out earlier this week with another price increase on plate. So we see several bits of improvements within the market in key segments and are optimistic about our Q4 outlook.

Okay. Thank you very much.

We'll move on to Andreas Bokkenheuser with UBS.

Hi. Thank you very much. Just two questions from me. Number one, can you comment on your scrap market or scrap price expectations here as we get into year-end? It kind of looks like prices could be trading sideways into November. Is that your expectation as well? And maybe how do you think about scrap over the next couple of months after that? That would be the first question, please.

Okay. Yes. Andreas, I'll ask Craig Feldman, who's in charge of our Raw Materials, to kick this off, Craig?

Sure. Yes. Thanks, yes, for the question. You're right, we do see it, I would say, fairly stable in the near term. November, I would say it's generally pretty flat. Beyond that, we could see some of the normal seasonality into December and into the first of next year. But generally speaking, we see it pretty stable, so I think your assessment was spot on.

Okay. Looking ahead to 2021 and possibly 2022, how do you view your product offerings? Are you planning to introduce new products to markets that were previously dominated by integrated producers? The reason I ask is that we're noticing ongoing R&D among EAFs aiming to deliver improved products and capture market share from integrated producers. Will this trend continue into 2021 and 2022? Additionally, as integrated producers prepare to restart next year, is that something you're considering? Thank you.

Okay, Andreas. I'll start and then ask MaryEmily Slate, our EVP of Sheet and Tubular, to provide additional details. To address your question about our unique value proposition, Nucor's investments focus more on capability than capacity. For instance, our investment in the Generation 3 galvanizing line in Hickman, Arkansas, will make us the first Electric Arc Furnace (EAF) producer capable of manufacturing material at 2,000 megapascals for the automotive sector. Looking ahead, our investment strategy is all about developing new and innovative products alongside enhancing our capabilities. For example, our Nucor-Yamato team in Blytheville, Arkansas, has recently modernized by installing a tandem mill in their NYS II line, which is our largest and heaviest jumbo section line. Although we are the market leader in beams in North America, we have not been complacent. We've invested substantial funds to expand and innovate. The tandem mill project at NYS will enable us to produce the heaviest jumbo section beams in North America. Regarding the sheet segment, I will let MaryEmily speak because I am thrilled about our progress as we venture into automotive and the opportunities we see there. MaryEmily?

Absolutely. Thank you, Andreas. We are excited about this. We are so extremely pleased about how we are able to expand our product offerings with both the cold mill at Hickman, the specialty cold mill, that can produce every grade that we currently produce, plus takes us into those ultra-high-strength steel and advanced high-strength steel, not only steels that are made today but, as Leon mentioned, steels that will be designed for the future that will really support the CAFE standards to help lightweight our vehicles. The galvanizing line at Hickman, as it comes up later next year, with the Gen 3 offerings, it will be the only EAF steel that's able to do Gen 3 at this time. And so that really gives us the flexibility in this broadening of our product offerings.

Just two other quick comments, Andreas. One is around Gallatin. And as we think about the expansion in Gallatin, much of their markets that they're targeting with their hot band today is currently served by the integrated producers. And so, we see a huge opportunity with the expansion in Gallatin to move some of our products into ag and automotive that we've not been in before and historically, again, have been supplied through the integrators. The other point I’d add is, when you think about the largest investment in Nucor's history is going to be Brandenburg, Kentucky, the plate mill will be able to produce 3/8 of an inch all the way up to 14 inches thick, out to 168 inches wide. That is not an offering today that we can produce, and there's only really one other producer that can go that heavy and wide. So our capability to serve our customers in those end-use markets is something that Nucor is supremely focused on.

Leon, can I add one more thing? We just received the GM Supplier of the Year award. And we're the only EAF producer that has received that award, and this is the second year in a row. And if you think about our opportunities here, automotive is the largest sheet user in the United States. They use about 33% of the sheet market. And we have grown our footprint there, but we have a tremendous amount of opportunity to grow. I think we're about 7% now, and we've got a lot of opportunity. And these extensions are going to allow us to do that.

Andreas, this is Jim. You asked the question about integrated restarts. And they're going to do what they think is best for the business, and we respect that. But we think we've got an advantaged business model. The proof is our financial performance and our financial strength. And so, we're not really concerned about that way, one way or the other. We believe we have great opportunities to grow our business in places where integrators are competing with us today.

That’s very clear. I appreciate the in-depth answer. Thank you very much.

Yes. Hey. Good afternoon, guys.

Good afternoon, Timna.

I wanted to follow up on that last question. Given that there will be fewer alternatives for exposed automotive applications if the proposed merger is approved, is it too late for Nucor to expand into more exposed automotive alternatives? Is that something you would consider? Additionally, I know we're hearing a lot about the business in Europe, but do you have many customers in the U.S. who prefer to buy greener steel?

Yes. Let me begin with the first part of your question. And no, it's not too late. And in fact, the investments in Hickman, the things that Nucor Decatur, Nucor Berkeley have done are already supplying all the 14 major OEMs in this country Tier 1 supply. So we can produce today exposed automotive. As we move forward, and we've certainly heard this from many of our automotive customers, they want Nucor to have a more significant footprint and presence in automotive. As we stated, not on the last call, but I think the one before, our focus is to balance our portfolio and offering. Today, we're about 1.5 million, 1.6 million tons a year that go into the automotive sector. We think around that 2.5 million to 3 million tons is about the right balance for us. And so we have a lot of room to grow, and we'll see how that moves and unfolds as we move forward. The other investment with our partners in JFE in Mexico and building that galvanizing line is to purely run automotive steels. And so again, Nucor is well positioned to expand that. And I forgot your second question. What was your second part of your question, Timna?

Just, if you're seeing a similar appetite for greener steel, like what we've heard in Europe?

Yeah. Look, at the end of the day, without a doubt, as I've taken over as CEO, I've spent a lot of time on the road and have laid with COVID. But prior to COVID in a lot of Zoom calls with different investors, the ESG question and responsibility is something that Nucor takes incredibly seriously. We are seeing it in our customer base. And one of the things that you're going to see Nucor unfold in the coming months is a very proactive approach in telling our story. We have an amazing story to tell. As you all know, Nucor is the largest recycler of any product in North America. We recycle over 20 million tons of scrap. And 100% of what Nucor produces is recyclable. And so as you – again, as we move forward, we have an amazing story to tell. We're going to be much more deliberate and proactive in telling that story and sharing it. Again, when you think about the carbon footprint of an EAF producer, with 70% of Nucor's inputted steel being recycled, we have a unique value proposition in that regard. And again, we're going to do some very proactive things to tell that story.

Okay. Cool. I wanted to, if I could, also just ask one question – one other question on the guidance. So the – it was interesting. We've seen things a little bit more sideways in terms of pricing and – for bar, structural, and plate and some volumes in plate be a little lower. So the guidance implies that the sheet business profitability will offset some of that seasonality and some of that more sideways move. Is that the way we're taking it? Or is there less seasonality this year? Just wondering if you could give us a little more color on what's embedded in that guidance.

Hey, Timna, this is Jim. Let me take it. If Leon wants to add something, he can. The way our contract customer's pricing works, there's a lag, and then we get the benefit of pricing. And so we didn't get very much benefit in Q3 from pricing momentum that began in that quarter. We'll get most of it in the fourth quarter. So – and then again, Al touched on this earlier, Al Behr, about the price moves we've recently made in plate. They've been accepted by the market. So those things together are going to drive better price realization in those two businesses. And it's separate from market demand. Market demand, we expect to be somewhat stable other than some seasonality. But Al touched on something that's important. We finished Q3 with a stronger backlog than we finished Q2 in plate. The same thing is true in sheet; our backlogs were much higher at the end of Q3 than they were at the end of Q2.

Okay. Thanks, guys.

Excellent. Good afternoon.

Good afternoon. How are you?

I am doing well. Thank you. How are you? Maybe if we could talk a little bit about DRI. You mentioned it in your outlook comments in your release that, that business is getting better. I would think, certainly, the increasing price of pig iron is helping that. But maybe just give us a high-level view on how some of your operational changes have perhaps brought some greater output outcomes?

Yeah. Absolutely. So I'll let Craig Feldman, EVP of our Raw Materials, kick off because we've got some good news regarding the performance of what our teams in both Trinidad and Louisiana have done. But Craig, why don't you provide a little more detail?

Yeah. Absolutely, Phil. Really pleased with the performance. As you remember, second half of last year, we had a pretty significant outage at Louisiana and made some significant improvements in that operation. It couldn't have gone better, to be honest with you. The improvements we've made really allowed us to set some new records in reliability at Louisiana. We went 62 days straddled in the second and third quarters of this year in terms of uninterrupted production. So I'm very, very pleased there. With regard to Trinidad, similarly, the team has done a remarkable job just improving reliability and yield. In fact, I just heard the other day that some of the DRI performance metrics were released and we are at the top of the list in terms of the quality of output from Trinidad as well. So I'm very, very pleased with the progress to date. The one remaining project that we have will be finished in Q1 of next year, and that's the material handling operation, our material handling yard, that will be completed. We should get some operational efficiencies through the beginning of next year on that as well. No doubt and you referenced it in terms of the pressure or the price increases that will certainly give us a little bit of a tailwind as we finish out this year and into next year. Certainly, high iron ore prices are still there. But certainly, the projections for a normalization of iron ore prices, everything we read and look at for iron ore prices, could give us a little bit of a tailwind as well. So overall, very, very positive, I'm very, very pleased. And I want to give a shout out to both of the plants for their performance, focus on reliability and very optimistic about where we're at.

Thanks, Craig.

And Leon, are you all seeing any signs of stabilization or any green shoots in the oil and gas side? Clearly, it's been weak and continues to be. But any push for expedites or early intentions on CapEx plans from your customers next year? Just any insights there would be helpful?

Yes, Phil, I believe the optimism in that end market is somewhat diminished at the moment. I anticipate that Q4 will be particularly challenging in that sector, and I don't expect a significant recovery. There may be some positive developments as we move into 2021, but that remains uncertain. Nucor is prepared to serve that market, although it represents only about 8% to 9% of our overall business. One crucial factor will be the rollout of a vaccine and its impact on travel and transportation, particularly regarding the airline and cruise industries. We are monitoring the situation closely, but currently, I think the outlook will remain relatively flat.

And if I could sneak in one more. Do you think the Gallatin expansion on the primary sheet-making front is still a mid-2021 start-up? Is that still your intention as of right now?

Yes, it is. It is. And I think Jim touched on this in the last call. As we entered Q2, we put a pause on a couple of our bigger projects. And when I say pause, it didn't stop the work that was already in place or the engineering. Like in Brandenburg, it was already happening. So in the case of Brandenburg, for example, that few months didn't delay the start-up at all. While Gallatin has certainly had some pressure, we still feel very confident that, that team has done a really good job of keeping that schedule. And mid-next year is still the target.

Thank you.

Thank you.

I wanted to quickly follow up on the Arkansas AHSS capacity that is coming online. My notes indicate that it will be 500,000 tons, so I wanted to confirm that. Additionally, I would like to know how quickly you believe the market, particularly your automotive customers, will absorb this product. Are they eager to take it all right away, or will it be a gradual process over several years? Thank you.

Thanks, Alex. I'll let MaryEmily start this out.

Thank you, Alex. Our current production capacity is 500,000 tons per year. We are operating continuously and reached record production levels in September, with expectations to do the same in October as we are close to our capacity limits. The backlog looks strong heading into the fourth quarter, and we have successfully secured contracts for the upcoming year, projecting that about 50% to 60% will be contracted for next year. By the end of the year, the galvanizing line will be operational, and some of that production will support it.

Okay. Thanks. And just a follow-up, if I may. I mean, is that being used on the exposed side?

Not at this point, no. But the line in Hickman, Arkansas is more focused on internal parts with strength requirements, so that you can take weight out of the steel but add strength. So there, right now, we don't have any projection to do any exposed material off of that line.

Thank you.

Thank you.

Thank you for taking the follow-up. If I may, I had two questions on just cash expectations from end of the year. First, can you comment on expected cash tax deferral benefit for the remainder of this year? I think the prior guidance was for $350 million in the full year. Is there any update on that for the cash tax deferral? And then secondly, please, on working capital. Can you just talk through any expectations for seasonal working capital release in Q4? Obviously, demand conditions have been sort of volatile this year. What should we expect for the remainder of 2020?

Great questions. First, on the cash benefits to taxes related to our significant capital spending that we're in the midst of, we still believe it's just over $700 million over 3 years between 2020, 2021, and 2022. This year's number is going to be in the $170-ish million range for that portion because of the timing of when some projects are going to finish. And some of it's going to fall into next year and then year after that. And then what was the last part of your question? I had lost track. I'm sorry, Seth.

Working capital…

Oh, yes, working capital, you're going to have higher prices in sheet and plate. That's going to use some working capital receivables. And because of the risk of supply, we'll probably bump up our scrap inventories in pig iron, in particular, which has a long lead time to obtain in the fourth quarter. So you could see some growth in working capital on the balance sheet. It won't be material, maybe between 100,000 or 200,000 tons of pig iron. And I'm hoping it's a big number on receivables because it will still be 30 days, but I want to give as much pricing as we can in the fourth quarter.

That's clear. Thank you very much.

Thanks. MaryEmily, did I hear you right in that you said the specialty cold mill is running essentially full out right now?

Yes, yes. They aren't running completely full, about 90%.

Phil, as a reminder, that mill has the capability to make regular cold mill as well as advanced high-strength steels. And so the mix is more towards the more commercial-grade cold rolls today.

Absolutely.

And so MaryEmily maybe could touch on that further because I don't know the details the way you do, I'm sorry.

Yes. Absolutely. Phil. That's a great question because right now, we've been really pleased with the quality and the performance. But what we are running are the lower and the normal cold-rolled CQ grades. We've also done all of our trials on the advanced high-strength steels, and we've been very successful. So we're completely pleased with what we're seeing off that line. We've even been able to run some Gen 3 trials that the steel will be ready when that galv line comes up and is ready to run. So as we go forward, that mix will change and move into higher end-type cold-rolled products.

Has that project itself moved out of start-up? Are you making cash on that asset right now?

Yes. Yes, we are and expect for the year to be cash-positive.

And then lastly, Jim, regarding the overall start-up costs, you mentioned around $22 million in the release. What is included in those pre-operating and start-up costs? Additionally, when do you expect the projects within that category to start generating returns? Well, there's several projects in there. But the biggest single item is at Nucor Steel, Florida. It's in the $9 million range. And then there was $4 million in Gallatin and $3 million at Brandenburg. And then the others will be spread across other smaller projects. In the fourth quarter, we think it's going to be in the neighborhood of $24 million to $25 million, and Florida will peak at just over $10.5 million. We expect Gallatin to be in the just under $4 million range and Brandenburg to be $4.5 million and again, dollars in smaller levels at other projects. So as we go into next year, it's too early to tell. But Florida should start falling off, but obviously, we could have some ramp-up at Gallatin and Brandenburg. So if I had to make a guess, and it's purely a guess, next year is not going to be materially different. Maybe just a little bit higher depending on how quickly you ramp up start-up costs at both Brandenburg and Gallatin.

Understood. Thanks for all the color.

And we will now take our final question from Tyler Kenyon of Cowen.

Hi. Good afternoon. Hope everyone is doing well. Thanks for squeezing in here. Jim, I just had a question for you just on the CapEx. In the $1.7 billion budget just for 2020 here, how much of the $4 billion of major capital projects, how much of that spend will have been spent by year-end and maybe how we should think about that as a component of your earlier comments for 2021 being roughly $2 billion in total CapEx?

I don't have an exact number at my fingertips, but I would ballpark it that we probably spent $2 billion of the $4 billion through the end of this year, somewhere in that range.

Okay. And then just on the 2021 commentary, around 2021?

In 2021, we still don't have a final budget. The total figure is estimated at $2 billion. We will be ready to provide a more detailed breakdown of that amount across major projects. I understand a significant portion is carry-forward, but this also includes carry-forward on projects that aren't part of the $4 billion total. We are consistently managing numerous midsize projects given the scale of our business. Our base capital expenditures range from $400 million to $500 million annually to adequately support the operations.

Thanks very much.

Okay, you’re welcome.

And ladies and gentlemen, that does conclude today's Q&A session. I would like to turn the conference back to Leon Topalian for any closing remarks.

Thank you. Before concluding our call today, I want to express our appreciation to our shareholders. We value your investment in our company, and we take the obligation seriously that comes with it. I would also like to thank our customers. We're excited about the capabilities we're building to better serve you today, and most importantly, for tomorrow. Thank you for the trust and confidence you place in the Nucor team each day to supply your needs. Before I conclude, I want to impress upon everyone listening today just how confident I am that we're going to come out of this challenging year a safer, stronger, more diverse and inclusive and more profitable Nucor. Thank you for your interest in our company.

And once again, ladies and gentlemen, that does conclude today's conference. We appreciate your participation. You may now disconnect.