Good day, everyone, and welcome to the Nucor Corporation Fourth 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 can 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. 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 fourth quarter earnings call. We hope everyone on the call is having a good start to the year and staying safe and healthy. The last 12 months have been incredibly challenging on so many different levels. The pandemic has impacted businesses and markets and taken a tremendous toll on so many who have cared for and lost loved ones during this time. The distractions we have faced as a nation and as a company are significant. Yet the Nucor team has never lost its way in delivering the safest year in our history. Let me repeat that again. 2020 was the safest year in the history of our company. I'm extremely grateful for the hard work, dedication, and ownership of our nearly 27,000 team members who made this result possible. While there is still a great deal of work ahead of us in our journey to become the world's safest steel company, I'm more convinced than ever that this team will accomplish our goal. To our Nucor teammates, thank you. I'm proud of you all. Well done. Now let's make 2021 our safest year ever. Joining me today on the call are the members of Nucor's executive team including Jim Frias, our Chief Financial Officer, Dave Sumoski, Chief Operating Officer, Al Behr, responsible for Plate and Structural Products, Craig Feldman, responsible for Raw Materials, Doug Jellison, responsible for DJJ and Logistics, Greg Murphy, responsible for Business Services and General Counsel; Ray Napolitan, responsible for Engineered Bar Products, Rex Query, responsible for Sheet and Tubular Products, MaryEmily Slate, responsible for our Commercial Strategy, Chad Utermark, responsible for Fabricated Construction Products and Dan Needham, who will be joining our Charlotte team on February 1st and be responsible for Bar Products. At the end of the year, we welcomed several changes to our executive team. Dave Sumoski was promoted to Chief Operating Officer. Dave has been with Nucor since 1995 and has led multiple steel product groups and strategic initiatives, most recently combining our domestic rebar steel mill and fabrication businesses. Dave is uniquely positioned to help Nucor continue to build lasting partnerships while executing our enterprise-wide strategy. MaryEmily Slate has taken on a new role as Executive Vice President for Commercial. This is the first time we've had an EVP-level leader in this role with Nucor. The purpose is to enhance our ability to focus on our key markets and to better connect with our customers. Meeting the future needs of our customers, while maintaining and maximizing the benefits of the broad and diversified offering of Nucor will be a vital function of MaryEmily's team as we move forward. I'd also like to welcome four new team members to our executive team, Rex Query, Doug Jellison, Greg Murphy, and Dan Needham. Each of these executive management team promotions will enhance our ability to serve our customers and our shareholders. Business conditions remain strong in the fourth quarter with improving pricing and healthy volumes across our diverse product portfolio. Notably, utilization rates of our sheet mills and plate mills continued a sharp upturn in the fourth quarter. While we were pleased with our operating performance and cash flow for the period, our earnings were impacted by non-cash charges, which were more than offset by tax benefits recognized in the quarter. The most substantial of these were related to our agreement exit from the duferdofin Nucor joint-venture and the impairment charge writing down the value of our Castrip operations, both of which impacted our steel mill segment earnings. The capabilities of our new state-of-the-art cold mill and the generation free galvanizing line we have under construction in Nucor Arkansas have diminished our utilization of Castrip. We do plan on continuing to fully support existing customers, as well as the technology to further improve Castrip's product offerings for Castrip licensees. The non-cash charge that we recorded upon exiting the Duferdofin Nucor joint venture was actually more than offset by a tax benefit related to our investment. So it did not hurt our net income for the quarter. Jim Frias will elaborate more in his opening remarks. Turning now to comment on 2020 as a whole. The year ended up much stronger than anyone would have anticipated when the pandemic first took hold of our global economy in March of last year. Our team and our business model proved to be incredibly resilient, and we were able to take advantage of this stronger than expected recovery because of the Nucor team doing an excellent job keeping our mills running reliably and safely throughout the volatility that characterized 2020. This allowed us to reliably fulfill our customer's requirements. Our focus remains on continuing to deliver a differentiated value proposition to meet and exceed our customers' needs. Looking at specific end-use markets, construction remained strong throughout the pandemic, and automotive was quick to recover in the second half of the year after shutting down in the second quarter. Together, these two markets accounted for nearly two-thirds of steel consumption. We are aware of certain leading indicators signaling a downturn in non-residential construction activity, but so far, we don't see much evidence of that. Our company is well positioned in attractive sub-segments of the non-residential construction market. There are areas of strength, most notably warehouses and data centers, that may not be fully reflected in the ABI and other indicators. We have worked to build relationships in these sub-segments that are bright spots, ensuring that we are providing the best solutions across steelmaking and steel products to serve those customers. We are cautiously optimistic that a significant infrastructure spending bill will be passed by Congress and signed by the new President this year. After years of talk, this must get done. We are still driving on roads and bridges designed and built during the Eisenhower administration. This is not sustainable. We would not be surprised if a funding bill focused in part on green infrastructure spending, including renewable power generation and transmission. Nucor is well-positioned to meet our country's needs for environmentally friendly steel and steel products. With roughly 50% of our steel use in the construction sector, there is arguably no company more poised and ready to meet the needs of rebuilding our country than Nucor. In the automotive market, we believe demand should continue its rebound. We think 2021 light vehicle production in North America will be around 16 million vehicles. Having wrapped up the fall contract season, we feel good about our prospects for continuing share gains in the automotive market. The investments we've made at our sheet mills in Arkansas and in Kentucky to expand our production of value-added products are paying off. Demand from the oil and gas sector continues to be weak, even as oil prices have been rising along with many other commodities. I think that significant continued improvement in the market is going to depend on how quickly vaccines can get out to a large number of people and how long it takes for commuting and travel patterns to approach pre-pandemic levels. Strong demand growth from the renewable energy sector has partially offset the weakness in oil. Our sales to the renewable power sector have been very strong this year with steelmaking segment orders related to these markets growing by double digits compared to the 2019 total. The renewable power market is one Nucor is targeting, and many of our steel and steel products are essential to its continued build-out. We rely primarily on recycled steel to make these products, and they themselves are 100% recyclable. This fact positions us well as a supplier of choice as we see sustainability and product transparency becoming a more important factor in product sourcing decisions in the renewable power sector and in most other end-use markets. We're also seeing signs that other unused markets will rebound from this past year's depressed levels including heavy-duty trucks, heavy equipment in agriculture. Turning to our strategic growth projects, we continue to make excellent progress on them during the fourth quarter. Our new rebar micro mill in Frostproof, Florida started up operations on schedule in December. Congratulations to the entire Nucor Steel Florida team for getting this new steel mill up and running on time and for doing it safely. This past October, we celebrated the groundbreaking of our new steel plate mill in Kentucky. Our Nucor Steel Brandenburg team has done a great job keeping the project on schedule throughout this year, and we are moving at full speed to bring the state-of-the-art plate mill to market during the fourth quarter of 2022. We're also making great progress on our expansion project at our Gallatin sheet mill. The expansion project is expected to start up in the second half of this year. With regard to some of our facilities that are in operation, I'm pleased to report the new pickle galvanizing line in Gallatin had an excellent first full year of operation despite the pandemic, shipping 39% more times than we projected when we approved the project. Year one profitability was also ahead of plan. Gallatin's entry into the value-added coated sheet market has proven very timely, with the strong flat-rolled market conditions that emerged in the second half of 2020 and are continuing into Q1 2021. We have experienced very strong customer acceptance of Gallatin's coated product as we further develop target markets that include automotive, solar, tubing, roll forming, grain storage, culvert, and cooling towers. Also, the new cold mill and Nucor Steel Arkansas has gotten off to a strong start with shipments almost 30% ahead of our initial plan for the mill. Strong customer acceptance rates following trials that were conducted throughout 2020 mean that the new mill is now booked out for this year at 85% of its nameplate capacity for contract customers. We are looking forward to running our first prime coil off our new Generation 3 galvanizing line at Arkansas later this year. This is slightly behind our original schedule, due primarily to the slowdown in capital expenditures we instituted around the beginning of the pandemic. Our new rebar micro mill in Sedalia has also exceeded our expectations. The team there generated a solid operating profit during the most recent quarter, and its full rebar product continues to be well received by our customers. At our galvanizing line joint venture with JFE in Mexico, we are back up running after a government-mandated shutdown and beginning to ship coils to automotive customers. Congratulations to the team there. Our Kankakee, Illinois bar mill completed commissioning of its new MBQ rolling mill in December. While the timeline of this project was slightly extended due to COVID-related disruptions, customer acceptance of the new products has been extremely strong. We expect to achieve positive cash flow from this investment in Q1. Construction on upgrades to Kankakee's melt shop, including a new caster ladle stir station, will begin in earnest in February, with final commissioning of this equipment expected in Q4 of this year. This investment will significantly improve the energy efficiency of the Kankakee mill. Before I turn the call over to Jim, let me give a shout-out to our teammates at Louisiana DRI operations. As many of you are aware, we took some downtime at Louisiana in 2019 and have invested approximately $200 million to enhance operational reliability there. It has really paid off. In 2020, the Nucor Steel Louisiana team set new records for production, shipping, and operating hours. Most importantly, our team there accomplished all of this while operating safely for more than 450 consecutive days. Later this quarter, we will finish our work improving Louisiana's ore yard. With that let me turn the call over to Jim to provide more details about our financial performance and outlook for the first part of 2021. Jim?

Thanks, Leon. Fourth-quarter earnings of $1.30 per diluted share exceeded our guidance range of $1.15 to $1.20 per diluted share. As detailed in our news release, results for the just completed quarter included a number of non-operational items that were not included in our guidance. After tax effects, again for the items not included in our guidance, the total impact was to decrease net income by just under $34 million, or approximately $0.11 per diluted share. Earnings significantly exceed our guidance as the pace of margin expansion at our steel mills surpassed our expectations. Conditions improved for many of our businesses throughout the quarter and now are the strongest they've been in some years. As Leon mentioned, and as detailed in our news release, we were able to claim tax deductions related to our investment in the Duferdofin Nucor joint venture that more than offset the related loss on assets we recorded in the fourth quarter. Cash provided by operating activities for the full year 2020 was $2.7 billion. Nucor's free cash flow, or cash provided by operations minus capital spending, was $1.2 billion in 2020, comfortably exceeding cash dividends paid to the stockholders of $492 million. Over the last three years, Nucor has generated $3.9 billion of free cash flow, even as we reinvested $4 billion in our businesses. As mentioned on previous calls, we have intensified our focus on maintaining appropriate working capital levels and reducing the asset base we require to generate strong profitability. I am happy to report that even as steel market demand and pricing has rebounded strongly in recent months, our tons of raw material inventory are actually down by more than 6% from the prior year-end. At the close of the fourth quarter, our cash, short-term investments, and restricted cash holdings totaled just under $3.2 billion. Nucor's liquidity also includes our undrawn $1.5 billion unsecured revolving credit facility, which matures in April 2023. Total long-term debt including the current portion was approximately $5.3 billion. Gross debt as a percent of total capital was 32%, while net debt represented 13% of total capital. 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 return capital to our shareholders. Dividends and share repurchases totaled $531 million, or 74% of net income during 2020. And with the dividend increase announced in December, Nucor has increased its base dividend for 48 consecutive years, every year since we first began paying dividends in 1973. Speaking of growing long-term earnings power, let me take a moment to provide a brief rundown on where we stand on some of our organic growth projects. Three projects started operations in 2019: a new specialty cold rolling mill at our Arkansas sheet mill, a rolling mill modernization at our Ohio rebar mill, and a hot band galvanizing line at our Kentucky sheet mill. Another four projects started production during 2020: our rebar micro mill in Missouri, our Illinois merchant bar rolling mill, our joint venture sheet steel galvanizing line in Mexico, and our Florida rebar micro mill. The remaining three projects are the expansion and modernization of our Kentucky sheet mill, our Generation 3 flexible galvanizing line at our Arkansas sheet mill, and our Kentucky plate mill. At the close of 2020, remaining capital expenditures for these three are approximately $1.9 billion, with the Kentucky plate mill project representing about three-fourths of that total. We expect that Nucor's total capital spending for 2021 will be in the area of $2 billion. Approximately 80% of the 2021 spending is to improve product capabilities and reduce costs. Turning to the outlook for the first quarter of 2021. As Leon indicated, we are encouraged by a number of positive factors impacting our markets. We expect earnings in the first quarter of 2021 to be significantly higher than our reported results for the fourth quarter of 2020. The expected performance of the steel mills segment in the first quarter of 2021 is the primary driver for this increase as our sheet, plate, bar, and structural mills are all forecasting increased profitability. Our downstream steel product segment's performance in the first quarter is expected to decrease compared to the fourth quarter of 2020, due to typical seasonal patterns, and some margin compression due to a lag between rising steel input costs and increased selling prices. The raw material segment's performance in the first quarter is expected to be significantly improved due to higher raw materials selling prices. Thank you for your interest in our company. Leon?

Thank you, Jim. And we'd be now happy to take any of your questions.

Thank you. Our first question will come from Seth Rosenfeld with Exane BNP.

Good afternoon. Thank you for taking our questions today. If I can kick off with a question specifically on your raw material segments. Obviously, very strong performance this last quarter. I'm wondering if you can touch on a little bit your own expectations for scrap prices as we look ahead to 2021? That would have been a very strong last couple of months. What are your expectations going into the February settlement and longer term, given the growth and domestic EAF capacity, where you see domestic scrap prices settling out? And as a follow-up, please, you touched on earlier some of the work within your DRI business in Louisiana which easily paying off? Can you give us a little bit of color on the level of profitability of Louisiana and your broader DRI business? And how should we think about that progressing going forward? Is there more upside? Or do we already have a pretty strong level at Q4? Thank you.

Okay. I'll just start with the back half of your question regarding the DRI. While we don't specifically call out the individual divisions, profitability. What I would tell you is the results that I shared with you in my opening remarks regarding Louisiana's performance and reliability, their uptime. Again, their incredible safety records and the things that they've continued to be able to improve and their reliability is going to yield stronger financial performance. What I'd like to do now is maybe invite Craig Feldman. Craig to share just a little bit of backdrop around scrap. What we're seeing some of the metallic spread as well as how we think about prime scrap as we move forward. So Craig, why don't you jump in, and then I'll maybe close at the end.

Surely. Thank you. And Seth, thanks for the question. Yes, the question about the longer-term view on scrap, our crystal ball probably isn't significantly better than yours. Let me just share a few thoughts with you though. We certainly do anticipate a near-term correction in the month of February, which I guess, is not all that surprising, given the nearly $200 increase that we've seen in the last 90 days or so. In fact, we've already seen some international scrap prices, notably Turkey fall here, just really in the recent days, so we certainly see some moderate corrections from the January levels, especially on obsolete grades, which are highly elastic. And workflows have really been pretty good recently. Prime scrap grades are also likely to moderate a bit, but we don't believe they will fall as much as the obsolete grades. February pricing would likely be down $30 to $50 a ton, depending on both the grade and the region. But we'd certainly characterize that as a fairly normal correction, given the size of the recent run-up in prices. Just a couple of other things. And Leon alluded to this in his opening remarks. But there are some other factors at work here too. The overall commodity price environment is pretty darn solid. I don't think Leon mentioned this, but a relatively weak dollar really helped put a floor under that and really sustain the general commodity environment. The other thing I would point to is there are some seasonal factors. The month of February is typically a pretty weak month for scrap pricing overall. And meanwhile, March typically sees higher prices. And we track this pretty closely with some heat maps, as you might imagine. Historical scrap prices in the calendar month of February are either flat or down around 70% of the time, and then we're going back to the last 20 years or so. March is the exact opposite of that, with prices rising or flat around 70% of the time. So, we certainly could see some exceptions to those trends. But we believe that this year will follow that more typical seasonal pattern, if you will. So bottom line, our near-term view on scrap pricing has some downward pressure and is likely to stabilize after that. And if I may, one final comment on this. Just an observation with regard to scrap and steel pricing. And this may not be fully apparent or intuitive to most folks. But scrap prices follow steel pricing, and not the other way around. Again, steel demand and steel pricing lead scrap demand and scrap price. As Jim and Leon alluded to in their opening remarks, our view is pretty darn optimistic right now. So hopefully that gives you some color.

Great. Thank you very much.

Thanks, Seth.

Moving on, we'll go to David Gagliano with BMO Capital Markets.

Hi, thanks for taking my question. I just have really this one. I was wondering if you could talk a little bit more about the spending plans beyond their $2 billion in 2021, given the timing of the remaining capital spending on Kentucky plate. I know, it's early, but can you just give us a bit of a sense as to what your thoughts are with regards to 2022 on the capital fund side?

Yes. This is Jim, I'll take a shot at that. I had some things in my opening comments regarding capital spending. And I'm trying to find that to make sure I repeated in exactly the same fashion. When we think about 2021 spending, roughly $900 million will be on the plate mill, roughly $250 million of it is going to be on Gallatin. And roughly another $100 billion could be galvanizing line in Arkansas. We have about $1.9 billion over almost three projects going forward. So you can then extrapolate on that. What's left beyond 2021 and those projects at 1.9 minus to 900 and 250. And that tells you what's going to carry over roughly into 2022. Beyond that, we're always working on possible capital projects across our portfolio. And it's way premature for us to talk about what new major capital projects could be at first. But there's always ideas that are being worked on across the company.

Okay. Can you remind us again, is maintenance CapEx again is what do you think?

There's no exact number, but we think it's been in the range of $400 million to $500 million. And it's never pure maintenance. As we said in our comments, a significant portion of this year's CapEx dropped to 80% can be categorized as creating some incremental value by reducing costs to broadening our value add product mix.

Okay. Well, thank you.

And moving on, we'll go to Timna Tanners with Bank of America Securities.

Hey, good afternoon, everyone.

Good afternoon, Timna. How are you?

Good. Thanks. I wanted to ask for more details regarding the flat-rolled segments, focusing on volume and pricing. Not to dwell on the past, but your average realized selling price in the fourth quarter increased by about $80 per ton. The spot increase we calculated was approximately three times that amount. I'm trying to figure out the correct way to calculate the average realized selling price for your flat-rolled products, especially with the sharp increase expected in the first quarter. Additionally, could you remind us of the flat-rolled segment's capability? I noticed your volume was just under $2.3 million, which is less than the first quarter, and given the high prices, I expected volumes to be maximized. Could you explain the segment’s capabilities and how we should think about pricing moving forward? That would be great.

Sure. I'll start off. And MaryEmily, if you got some comments regarding kind of how we look forward in terms of the contract versus spot market. But look, at the end of the day to now I'll begin kind of a little broader. And so as we think about the supply-demand picture, the demand side, really again, all product groups are incredibly strong. We're at or near historic levels of backlogs in almost every product group that we have, including our downstream groups as well, order activity and entry rates remain very robust and continue to be strong. I think a further strengthening sign of that or supportive that, as we talk to our customers, they're experiencing very similar things with their customers; incredibly strong backlogs, order entry rates again at the customer level. So as we look forward and I think, Jim framed as well as in his opening remarks, as we look at our sheet groups, but really all product groups in particular, if we look at Q1, we see a significant improvement as we move forward. MaryEmily, do you want to share just a little bit about how we're looking at 2021. And now that we've completed the contract here.

Absolutely. Thank you for the question, Timna. In the fourth quarter we actually were still working on contracts for 2020. As we've talked before, there is a lag in contract pricing. It's usually done on a monthly or quarterly basis. We're really well positioned. You saw that increase in the fourth quarter, but we're really well positioned going into 2021 with a healthy contract versus spot mix. I think one area to note is that almost 20% of our sheet capacity is dedicated to internal downstream customers, including Vulcraft building systems and Nucor tubular. Each of these businesses is growing, doing very well, and projecting very good years. Our backlog right now is at close to historic highs and it's about 50% better than this time last year. So as I stated, that 20% is for internal downstream customers, and then we also have about 50% to 55% of our capacity locked up with external customer contracts. The pricing follows the market on a monthly or quarterly basis. Does that answer your question?

I was on mute. So I guess, but I mean, in the first quarter, you also had strong internal sales from what I could tell, in fact, if anything your tubular products were higher in the first quarter than the second quarter. So I'm just trying to figure that out. I understand that you have contract business, and I don't expect you to detail it and tell your customers on the line all that. But if you only achieved a third of the spot price increase in the last quarter, then that would have suggested that you have contract tons that are absorbing more than half of your quarter-a-quarter move just back in the envelope. So I'm just wondering, do we expect the similar contract percentages of fixed versus variable or lagged variable into the future? Is anything changed in your contract structure? And is it possible to regain the volumes you did in the first quarter or the fourth quarter a better run rate?

Timna, real quick, first off, I think it's important to remember, these contracts are not fixed price contracts. There are things that slowly been. And so, again, that exact write-down as you described on the back of the envelope, we're not bringing that on this call. But at the end of the day, there's a lag effect on the way up and as well on the way down. And so, our expectation, as we move forward, yes, there is obviously more opportunity, because the price increases that we've passed and certainly the movements that you've seen in the indices like CRU, we think are going to move forward and stay strong. In terms of the volume, our steel mills are operating at incredibly high utilization rates at capacity. Until that, we see continuing and again, I think their production levels will stay very high.

Yes. Timna, some details on capacity utilization. We marked our capacity at 2,942,000 tons for the fourth quarter, and we actually produced 2,902,000 tons. So we completed 98.65% utilization rates. Now, the reason the shipments are so different compared to the first quarter, we may have had some extra inventory at the end of 2019, that helps us boost our shipments. We do have more downstream processing now with more galvanizing lines. So the WIP inventory in our system is probably a little higher. When we think about the WIP that's sitting at Gallatin that would have just gone straight to have been shipped in the past. So there's other factors that come into play in terms of timing of the shipment versus production. But we would expect to have a strong shipping of the first quarter as well as a strong production month.

Thank you. I have time for another question. I wanted to get your broader perspective on the scrap market. We've discussed the short-term dynamics, which are clear. However, during Steel Dynamics' call, they seemed quite optimistic about scrap availability, despite the new capacity that will be consuming more scrap in the coming years. In contrast, Cliffs mentioned potential shortages of scrap. I'd like to know Nucor's viewpoint on this. You have the DRI capability that should enhance your vertical integration with iron units. Do you foresee any issues regarding scrap availability? Would it make sense for you to increase your position in the market? I would appreciate your insights.

Yes. Maybe I'll kick us off. And Jim or Craig jump in as far as you get some other points. As we look out for the long term, as the mix continues to shift from integrated mills to EAFs and getting about 70%, and we are still making capacity today in the United States, the EAF sector is the main on prime scrap is going to stay very tight. That's going to increase. And as we've pointed out on previous calls, because we need more prime, the automakers are going to make more units, because the steel mills needs that scrap. So the high metallic, the quality of metallics side of things and controlling our own downstream input to that. For us, it's really very strategic. And so, I don't think we're at the point where we're going to increase that. But the things that we're doing every day to continue to maximize that investments in Louisiana and continuing some of those investments in the ore yard to increase the efficiency and increase the yield and throughput there will be areas of that. But again, as we move forward, I do see more EAF based mills come online, and the demand as we move up the value chain even for ourselves in automotive is going to put continued pressure on the prime market. Craig, anything you'd like to add to that?

Yes, I do have some thoughts on this, and you mentioned some important points. Timna, you're correct that there has been extensive discussion around this topic, and it’s something we have been considering for years. We agree that high-quality metallics will become tighter in the future, and even obsolete grades are expected to tighten as we transition from integrated to electric arc furnace (EAF) processes. I want to elaborate on what we have been doing to prepare for this and our overall raw material strategy. The key elements of this strategy are our flexibility and optionality, which hinge on three main components that provide us access to and influence over our total raw material needs. First, we have our DRI plants, which have a capacity for approximately 4 million tons of high-quality material. These two plants can efficiently serve all of our DRI-consuming mills located along the river or the East Coast. The team in Louisiana has made significant strides in enhancing production and reliability. Additionally, the new iron team in Trinidad has a strong history of low-cost production and high-quality reliability in DRI production, which often gets overlooked. The second component is the David Joseph Company (DJJ) recycling operations, which have a ferrous processing capacity of 4 to 5 million tons per year. These operations are well-placed to support our own mills, with most of the approximately 65 DJJ sites focusing on scrap production within a freight-efficient distance from our mills. We continue to expand DJJ’s processing capabilities through strategic acquisitions, including a few new shredders over the past 18 months. Lastly, the DJJ brokerage and trading team offers excellent coverage of both domestic and international markets for third-party supplies, which we believe gives us a significant advantage. The DJJ brokerage team has a deep understanding of its supply base and access to scrap substitutes globally. Recently, they successfully navigated supply tightness by leveraging long-standing relationships with key suppliers and exploring new regions that we hadn’t accessed in a while. In summary, we foresee that the metallics market may tighten. However, the flexibility and options presented by our DRI scrap processing assets of around 8 to 9 million tons a year, combined with our third-party relationships, provide us with substantial access and influence over our material supplies. Our own assets are expected to cover about a third of our total metallics demand. Therefore, we are confident in our ability to economically and efficiently secure the metallics we need moving forward. While market fluctuations are inevitable, our strategies are firmly established, positioning us well to navigate the landscape. I hope this provides some additional insights.

Yes. I know, for sure. Thanks, guys.

Moving on, we'll go to Carlos de Alba with Morgan Stanley.

Thank you very much. Good afternoon. So two questions, if I may. Just first one, how do you see the stability in your downstream businesses throughout the year? Do you expect the bottom in the first quarter? You highlighted, obviously a sequential decline there. But you can see the bottom in the coming months and then improvements as we move into the second quarter? And then the other question is regarding working capital. Again, any comments that you can provide us there in terms of the evolution of working capital throughout the year? That will be useful. Thank you.

Thank you for your question, Carlos. I'll start with the first part. Chad, feel free to add your thoughts if I miss anything. As I mentioned earlier, 2020 was a very challenging year. However, both Nucor and our downstream businesses achieved record profitability in three product groups, putting us in a strong position. Moving forward, we have order entry rates and backlogs at historic highs. Although we anticipate some compression, the recent price increases in metal margins are expected to continue growing. Most businesses, particularly on the downstream side, may experience some compression, but this comes after nearly record profitability. We believe our strong performance will continue. Regarding working capital, I am proud of our executive leadership team. At the start of the pandemic last February, we implemented measures with our leadership across all mills and operations to maintain strict control over our working inventory and the balance between scrap and finished goods. This discipline will continue. We are well-positioned concerning supply, and we feel optimistic about the cycle profitability of all our businesses. Chad, do you want to add anything about the product segment?

Yes, thanks, Leon, and Carlos, thanks for that question. I want to echo what was said by Leon and Jim about the forward look that we see a non-residential construction and for most of our downstream businesses. We are very excited as we enter 2021. I know there are some sources out there that are indicating non-res may not be as strong as perhaps we see it is or even looking into the future. We derive our business outlook from numerous sources, but we do put a heavy emphasis on our customer input and our internal order entry data points. We're excited as many of our downstream businesses have very strong backlogs and in some cases, we have all-time record backlogs as we head into 2021. I also want to add that we monitor our recent quoting activity. I can tell you in a lot of our businesses over the last four, five, six, seven weeks, we've seen activity rise. I want to repeat something Jim Frias has said in his opening comments, while we respect and do monitor the industry trade group data, we offer that some of the rising non-res construction arenas may not be fully reflected in that architectural data. So our strong relationships with key customers and our breadth of product that we offer to the market. I guess, I would just summarize by saying, we're excited as we head into 2021. There will be some compression in some of our downstream businesses with rising steel costs, but those prices are being passed on in the marketplace and are being accepted and we look forward to the coming months. Thanks, Leon.

Carlos, this is Jim Frias. I just wanted two ideas. One, on the site of commercial discipline. Leon touched on how the team got together and was very thoughtful about managing working capital and resolve the crisis. We also were very thoughtful about the volatility downward in pricing that we were seeing last summer and not getting caught up in that and taking too much business out of books at below market pricing. And so that discipline is positioned us well as we go into 2021. We do not have a lot of low-priced backlog work through. So yes, with the extreme movement in steel price and we've seen in the last 90 days, there is some minor compression in downstream business, but it's can be minor. So that's the first point. And then back to your question on working capital. We think volumes of working capital to think about on a tons basis will be similar. Scrap prices will be roughly flat. We think inventory values will be relatively flat. But receivable values will go up because steel mill pricing on average selling price will be higher in Q1 than they were in Q4. So when you estimate what you think average prices are going up to take that time, the amount of times we ship. That should be the working capital for one month because we basically collect receivables in about 30 days. And that's pretty much it. So thank you for the question.

Thank you very much.

Next, we'll hear from Tyler Kenyon with Cowen & Company.

Thanks very much. Good afternoon. Just first question here on the wind down of Duferdofin JV. Was there an operating headwinds from that JV in 2020? And was that flowing through the steel mill segment? Just curious as to how large that may have been?

So, when you say an operating wind down, I mean, were we incurring operating losses at the joint venture?

Correct? And was that flowing through the steel mill segment?

Yes. It was incurring operating losses that were not very material, but they were generating losses, and it was flowing through the steel mill segment.

Okay. And then just maybe your outlook just for startup costs as we move into the New Year, and maybe in comparison to 2020, which I believe are over 100 million?

Yes. We did 28 million in the fourth quarter in both 2019 and 2020, roughly flat, just over 100. We're going to start off with the first quarter preoperative startup being about $42 million. It's probably going to be on average higher than the last year; it might be in the range of 120. We don't really give a one-year outlook. But I would think that that 40 million pace is probably going to be the right range. We're going to have a few areas winding down for both Gallatin and Brandenburg will be ramping up. So we'll get core of the updates as we go. But right now, $42 million in Q1. And there's another part of your question I wanted to speak to that I lost track of. Does that probably I didn't answer?

No, that was helpful. I just want to ask one more question about the CapEx. Jim, you mentioned roughly 2 billion for 2021. If I add up all the spending this year on the major projects, like the plate mill, Gallatin expansion, and Galvan in Arkansas, it comes to about 1.25 billion. Assuming around 400 million to 500 million for maintenance-related spending, the remaining amount is roughly 300 million to 350 million. I'm curious about what kind of projects those might be. It sounds like it could be additional growth. How should we be thinking about that remaining amount as we move into 2022?

One of the projects at our NYS plant involved a roughing mill that had been in service since the early days of NYS II, which produces larger sections. It was nearing the end of its useful life, so we needed to replace it. When we did the replacement, we chose to install something more robust.

That actually, I think you're doing great, might invite out there. Why don't you just quickly share and share with Tyler the tremendous work that the NYS team has done and bring that project online and really expanding the capability of what ranges they can run? Again, that investment wasn't just maintenance replacements. So I wanted to make a few comments.

Yes. I'm happy to do it. And thanks, Alex. I want to make sure we address your question because that was a 2020 project. Were you asking about 2021 or 2020?

He was asking about both. He wanted to know what was in the bucket for 2020 and then what's going to be in 2021. So I'll talk about 2021, if you could sort of give them what it was for 2020 and maybe what the projects capabilities are?

That was about $145 million at our Arkansas B mill for the modernization of one of the rolling mills. This is just one example of the many capital projects we undertake that don’t always receive significant media attention. While new mills tend to capture a lot of press, we continuously upgrade and enhance the capabilities of our existing mills. This particular upgrade has resulted in improvements in quality, safety, flexibility, and agility, allowing for smoother transitions between different sections. It demonstrates that our mills, despite being around for 30 years, are not outdated. They are continually updated and are state-of-the-art, enabling us to maintain competitiveness in the future. We are excited about this, as it will help ensure we keep our leadership position and compete effectively for many more years.

Yes. And I would just add, Tyler. There are projects of the similar nature. Next year, we are doing some investing in our process gas business, adding process gas plants at Gallatin and Brandenburg. Those are, I think, in the $40 million, $50 million range each. Then there's another project that is being worked on that and our team has asked us to keep silence as they're still negotiating some things. But it's in the mid-100 million range, 150 million range kind of a project. We'll talk more about that in future once some things are finalized in terms of negotiations.

Thanks very much.

And next, we'll hear from Alex Hacking with Citi.

Yes, good afternoon, and thanks for the call. I have a couple of questions. The first one is just on the cadence of the ramp-up. Like Gallatin, obviously, with flat-rolled markets, so there's a lot of interest in exactly how much tonnage Gallatin can contribute in the second half of the year. Any color there would appreciate. And then secondly, just following up on Timna's question around metallics. If we go back 12, 18 months ago, there's quite a bit of chat in the marketplace about some of the North American integrated mills might be interested in selling pig iron. Haven't really heard much about that recently. Obviously, some of the structure there has changed on the integrated side. But from where you sit, is that something that seems like it could be possible at some point? And with that help ease up some of the potential tightness in prime scrap? Thanks.

Thank you for your questions, Alex. I will address the second part of your question regarding metallics. First, I’ll ask Dave Sumoski to respond to your initial question. Regarding the domestic supply of pig iron, we are definitely considering it. However, this depends on whether those producers can resume operations and offer pig iron at a competitive price. We would certainly be interested in purchasing domestically if that becomes viable, but it poses some challenges. Recently, several competitors have mentioned the possibility of restarting production, and we'll observe how that situation develops. Nonetheless, it is important that the price is competitive. Currently, I'm uncertain if they can achieve that cost. Dave, would you like to expand on the first part of this inquiry?

Yes, sure. Alex, our Gallatin mill, what the expansion will be and we'll produce about 3 million tons a year, which is about 1.4 million ton add. The startup is in the fourth quarter. It's hard to imagine that there'd be any material tonnage coming out of Gallatin this year, but the startup at the beginning of next year, well, startup at the end of this year goes smoothly, we'll be able to run that rate sometime in the first quarter.

Perfect. Thanks so much.

Next, we'll hear from Chris Terry with Deutsche Bank.

Hi, Leon, and Jim and team. Thanks for taking my questions. I just had two questions. I just wanted to flesh out one final thing on the CapEx. I know you talked about this a bit on the call, but just looking at 2020 the gardens 1.7 billion has been about 1.5 billion. 2021 the 2 billion I think is unchanged. Just want to check, is that catch up from 2020? Is that now not in play, because that was sort of unallocated project that you're talking about or should we expect that to then be added back in 2022?

Yes, that's a great question, Chris. When we estimate capital expenditures, we consider the input from the business units. Sometimes, they tend to be a bit conservative to ensure they project the highest potential spending for any given year. That's why we experienced the shortfall. There will be some carryover of unspent funds from this year into next year. I would also expect the same to apply to their predictions for 2021, which means there may be carryover at the end of 2021 as well. Overall, I still believe that total spending should be around $2 billion for 2021, even with that carryover effect.

Okay. So you are going to say what your 22 number expectation is?

No, I cannot. I cannot know.

Okay. And just another quick one, maybe for you, Jim. Just the tax rate, the cash tax, and the P&L tax for 2021 and maybe further out, if you can, maybe into 2022?

Yes. A normalized tax rate is expected to be around 24% for book purposes. However, for cash purposes, we received significant tax benefits this year and paid very little tax in the first half of the year. We plan to seek a refund of about $140 million, though that number isn't final yet; we expect it to be in that range when we file our tax return in August, thanks to the excellent work of our tax team this year. I want to highlight Deb Douglas, our International Tax Manager, who identified the opportunity to utilize the worker's stock deduction, allowing us to capture substantial value after our exit decision. The entire tax team, including managers like John Taylor and Amy Cathell, did a fantastic job on the necessary year-end work to determine those figures. We anticipate cash benefits extending beyond this year due to the accelerated depreciation of our major projects, which we estimate will total $535 million over three years. Next year's cash benefit should be around $240 million, and the following year, once we finalize Brandenburg, we expect it to exceed $330 million. Our book rate should remain normalized around that 24%, encompassing federal and state rates, assuming no tax increases during that period.

Thanks, Jim.

And that does conclude our question and answer session. I'd like to turn it back to Mr. Leon Topalian for any closing comments.

Thank you. I'd like to conclude by once again, thanking my Nucor team for your focus and commitment to living our culture as we work through a very challenging year. As you look back and reflect on 2020, allow you to know that you've displayed the very best of the Nucor culture by working safely, being innovative, as we adjusted our operations, relying on teamwork and taking care of our customers and serving each and every one of them. Both a pandemic and the protests for racial justice caused us to rethink how we define safety. We started to think more broadly about what safety means to one another and how inclusive that is as a team. I'm proud of the steps we took in 2020 to commit ourselves to becoming an even more inclusive and diverse company, where every team member feels this strong sense of belonging and ownership. I've said many times during this pandemic, we will not just emerge from this crisis, but I believe we have seen the results that are already showing to be true. Thank you for your interest in our company.

Thank you. And that does conclude today's conference. We'd like to thank everyone for their participation. You may now disconnect.