Good day, ladies and gentlemen. And welcome to the Nucor Corporation, Third Quarter of 2021 Earnings 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 these forward-looking statements may be found in Nucor's latest 10-K and subsequent filed 10-Q, which are available on the SEC's and Nucor's website. The forward-looking statements made in this conference can speak only as of this date. 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 third quarter earnings call. Joining me today on the call are the members of Nucor's executive team, including Jim Frias, our Chief Financial Officer; Dave Sumoski, our Chief Operating Officer; Al Behr, responsible for Plate and Structural Products; Doug Jellison responsible for Raw Materials and Logistics; Greg Murphy, responsible for our Business Services and our General Counsel, Dan Needham, responsible for Bar and Rebar Fabrication Products; Rex Query, responsible for sheet and tubular products; MariaEmily Slate, responsible for our Enterprise Commercial Strategy; and Chad Utermark, responsible for Engineered Bar in Fabricated Construction Products. Nucor continues to deliver strong results in our safety performance as we work towards our goal of becoming the world's safest steel company. Our performance in 2021 is slightly ahead of last year, which was the safest year in Nucor's history. Our team is committed to identifying and eliminating those risks which could lead to injury. Our most important value is the safety, health, and well-being of our entire Nucor family. During the third quarter, we once again achieved record results with earnings per share of $7.28. Our third quarter performance surpasses our previous record of $5.04 set in the second quarter of this year and nearly matches our full-year earnings record of $7.42 that we set back in 2018. I would like to congratulate the entire Nucor team for delivering the phenomenal results we have seen so far this year, while staying focused on our safety goals. I'm incredibly proud of our team and what we're accomplishing together. Since our founding 56 years ago, sustainability has been at the core of Nucor's business model. More than ever before, we see opportunities to advance our continued success by partnering with customers to help them meet their own growth and sustainability objectives. Our recent launch of Econiq, which is a new line of net zero carbon emission steel products, gives our customers confidence and the trust that the products that they are purchasing from Nucor will not only help them meet their sustainability goals but provide a differentiated value proposition for them for the future. Our use of recycled scrap-based EAF technology enables us to operate at 70% below the current GHG intensity for the global steel industry. Econiq will further advance our leadership position by applying credits from 100% renewable electricity and high-quality carbon offsets to negate any remaining scope 2 emissions from our steelmaking process. We're delighted that General Motors will be the first customer for Econiq. With our first shipments slated for early 2022, Econiq is going to be a key piece of GM's vision of a net zero emissions future. As GM continues to work towards reducing carbon emissions throughout their supply chain and through electrification of their model lineups, we also look forward to deploying Econiq more broadly to help customers from across numerous other steel consuming end markets meet their goals and develop more sustainable products. And while I'm on the topic of sustainability, our new corporate sustainability report can be found on nucor.com along with our first TCFD aligned report and updated SASB aligned report from our Steel Mill segment. We hope you will find all this information informative and useful. The third quarter was a very eventful one for Nucor strategically, as we announced and closed on several investments that will help us continue to advance our Company's mission to grow the core, expand beyond, and live our culture. We announced our plan to build a state-of-the-art sheet mill in the Midwest on September 20th, with 3 million tonnes of annual capacity. This mill will be located to serve the country's largest steel consuming regions, the Midwest and the Northeast. These are regions where Nucor is currently underrepresented. With coil width of up to 84 inches, a tandem cold mill, and initially two galvanizing lines, the new sheet mill will position Nucor to grow its market share in value-added products such as automotive and appliance sectors. The mills product mix will be approximately two-thirds cold-rolled and one-third galvanized. The U.S. steel market is undergoing a structural transformation driven by the dual imperatives of economic efficiency and sustainability. Our mill will be state-of-the-art and have a significantly lower carbon footprint than nearby competitors. With our financial strength and multi-decade track record of innovation and execution, Nucor is uniquely positioned to continue leading this acceleration of steel market transformation. Our investment in this greenfield sheet mill represents a continuation of Nucor's balanced approach to capital allocation by investing in projects and acquisitions expected to generate returns that substantially exceed our cost of capital, while also continuing to return at least 40% of our net income to stockholders through a combination of dividends and share repurchases. Jim will discuss this further in his opening remarks. Also, we recently announced our plans to expand out west. We will build a new melt shop at one of our existing bar mills in the Western United States. This facility will have the capacity of 600,000 tons annually adding melt capacity positions to Nucor to build on our market leadership position in the region, which is experiencing both population growth and the infrastructure investment that typically accompanies it. Our bar mill group is where our steelmaking started over 50 years ago, and it continues to generate very attractive returns on capital. In addition to prudently investing to grow our core steel businesses, we are executing on our opportunities to expand beyond. During the quarter, we acquired Cornerstone's insulated metal panels business as well as Hannibal Industries, a steel racking manufacturer. We're now able to offer a broad range of insulated metal panel products and racking solutions. Each of these businesses is aimed squarely at serving fast-growing markets, such as warehouses and data centers. Our strategic investments will continue to be aimed at positioning Nucor to serve attractive, growing, end-use markets as the economy evolves to rely more on renewable power and Internet-based services. We are excited to welcome our newest team members to the Nucor family. As you can see, we are adding capabilities to increase our presence in attractive markets and extend our Company's long record of growth and value creation. Nucor's position to provide the sustainable steel and steel products needed to build a 21st Century green economy; a key requirement of that economy is modern, resilient, and sustainable infrastructure. Republicans and Democrats agree that the bipartisan infrastructure bill is urgently needed, and we hope Congress can find a path forward to get this bill passed. In order to ensure the safety of our citizens, the health of our economy, and future opportunities for American workers, we cannot afford to have Congress miss this opportunity. Before I turn the call over to Jim, let me take a moment to congratulate our team. You all should be very proud of the safety and financial results achieved in the first nine months of the year. We can only benefit from these strong market conditions if our facilities are running safely, responsibly, and reliably. Once again, thank you to each of you for what you do to help Nucor win. Nucor will continue to invest in our future and provide our customers a differentiated value proposition while offering the most diverse set of capabilities of any steelmaker. Thank you all for what you do. And as we approach the end of the year, let's continue to make 2021 our safest and most profitable year in Nucor's history. Now, Jim Frias will provide more details about our performance in the third quarter.

Thanks, Leon. We are proud to report our third quarter of 2021 earnings of $7.28 per diluted share, establishing a new quarterly earnings record. This quarter's results also compare favorably with year-ago third quarter earnings of $0.63 per diluted share. We are benefiting from strong demand and profitability across Nucor's diverse portfolio of products and capabilities. Nucor's product breadth continues to be a powerful driver of value creation for both Nucor customers and shareholders. Due to higher-than-expected inventory profit eliminations, third quarter earnings were slightly below our guidance range of $7.30 per diluted share to $7.40 per diluted share. Year-to-date earnings of $15.34 per diluted share are more than double 2018's record annual earnings of $7.42 per diluted share. We are extremely proud of our team's strong performance during the current upcycle and through all the pandemic-related challenges we have experienced this year and last. Our confidence in Nucor's competitive positioning has never been greater. As we look to execute on further opportunities in the months and years ahead, our results reflect strong returns from consistent reinvestment in our operations over the years and outstanding execution by our team. Five significant organic growth investment projects representing approximately $1 billion in aggregate capital investment completed startup and full product commissioning over the 2019 to 2020 period: the rolling mill modernization at our Marion, Ohio rebar mill, the hot band galvanizing line at our Kentucky sheet mill, the specialty cold rolling mill at our Arkansas sheet mill, the rebar micromill in Missouri, and the rebar micromill in Florida. Each of these projects are delivering life-to-date profitability well above their original projections. During this past quarter, these projects together generated EBITDA exceeding $180 million. The two completed sheet mill capability expansion projects merit additional comments. Just two years after beginning operations in September of 2019, the Gulf and Kentucky hot-band galvanizing lines' cumulative EBITDA exceeds the project’s $200 million investment. At 72 inches wide, this line is the widest hot rolling galvanizing line in North America, and is uniquely positioned to serve value-added markets, such as automotive, solar tubing, grain storage, colbert, and cooling towers. The facility ran at 112% of design capacity in the third quarter of 2021. Next, the Hickman Arkansas specialty cold mill continues to be another great success story. After beginning operations in mid-2019, the Specialty Cold Mill's cumulative EBITDA already exceeds half of the project's capital investment. This facility also ran at 112% of rated capacity in the third quarter of 2021. Further, our specialty cold mill team is still very early in the process of developing unique product capabilities and applications leveraging Hickman's flexible cold rolling mill to produce the high-strength, lightweight products that are increasingly demanded by OEM customers. To our teammates at these locations and across Nucor, congratulations and thank you for your outstanding work. As most of you are aware, two more major capital projects also totaling approximately $1 billion are on schedule to begin startup during the fourth quarter. These investments will expand further Nucor's product capabilities into the sheet market. They are the expansion and modernization of a Gallatin sheet mill's hot-band production capability and the Generation 3 flexible galvanizing line at the Hickman Sheet Mill. Gallatin will begin a 25-day production outage on November 23rd for final equipment installation. After that, the startup and commissioning will commence. At Hickman, commissioning of the flexible galvanizing line is underway with prime production expected in December. Looking into 2022, our team constructing the $1.7 billion Brandenburg, Kentucky state-of-the-art plate mill is on track for startup late next year. Project-to-date capital spending totaled about $570 million. Located in the middle of the largest U.S. plate consuming region and able to produce 97% of plate products consumed domestically, this mill positions Nucor to support domestic production of wind towers while securing a market leadership position in plate. Turning to cash flow and the balance sheet. Cash provided by operating activities for the first nine months of 2021 was approximately $3.6 billion. Nucor's free cash flow or cash provided by operations minus capital spending of $1.2 billion was about $2.4 billion. For full year 2021, we now estimate capital spending of approximately $1.7 billion. At the close of the third quarter, our cash short-term investments and restricted cash holdings totaled $2.3 billion. This is a decline of about $900 million from the second quarter level. During the third quarter, Nucor funded significant uses of cash totaling approximately $3.6 billion, including acquisitions of $1.3 billion, capital spending of $505 million, share repurchases of $858 million, and cash dividends of $120 million, and a net working capital expansion on inventory, receivables, payables, and accruals totaling $766 million. These uses were funded primarily from Nucor's ongoing strong cash generated from operations, cash and short-term investments drawdown plus the receipt of $197 million from the issuance of green bonds tied to the Brandenburg project. At the close of the third quarter, total long-term debt including current portion was approximately $5.6 billion. Gross debt as a percentage of total capital was approximately 29%, while net debt was about 17% of total capital. Financial strength continues to be a critical underpinning of Nucor's ability to grow long-term earnings power and provide attractive cash returns to shareholders. We remain committed to returning capital through cash dividends and share repurchases, a minimum of 40% of our net income over time. For the first nine months of 2021, cash returned to shareholders totaled $2.1 billion. That represents approximately 47% of Nucor's net income for this period. The year-to-date capital returns consisted of dividends of $367 million and almost $1.8 billion of share repurchases. During the third quarter, we repurchased 8.2 million shares at an average cost of approximately $105 per share. Year-to-date repurchases totaled 20.35 million shares at an average cost of just over $87 per share. Over the first nine months of 2021, Nucor shares outstanding have decreased by about 5.5%. As we approach year-end, Nucor's Board will consider a dividend increase for 2022. We have paid and increased our regular quarterly dividend every year since dividends were instituted in 1973. We expect the Board's deliberations will consider both the effects of our recent repurchases and the sustainable earnings power we see in our businesses. Since the end of 2017, Nucor's capital allocation framework has helped us achieve significant value creation for our investors. Issued and outstanding shares have been reduced by more than 10%, moving from 318 million shares at the end of 2017 to approximately 286 million shares at the end of the third quarter. Over that same period, we have grown our steel bar production capacity by about 13% to 9.6 million tons. We have also added about 1 million tons of value-added processing capability to our business. Additionally, our steel products capacity has also grown by more than 1 million tons. Today, we have significant projects under construction that will grow our sheet and plate capacity to more than 4 million and 1 million tons respectively further increasing our earnings power for decades to come. We are having a remarkable year in 2021, but it should not be missed that Nucor's ability to generate higher earnings per share is continuing to grow. Turning to the outlook for the fourth quarter of 2021, we are encouraged by ongoing robust demand conditions in most of the end markets served by Nucor. In fact, order backlogs at most of our businesses suggest strength well into 2022. At the same time, customer inventories remain relatively lean. Logistical challenges throughout the economy continue to represent a risk factor. However, the moderating influence this is having on current demand may prolong the duration of this favorable economic cycle. We believe earnings in the fourth quarter of 2021 are likely to be at or near the record level achieved in the third quarter. Compared to the third quarter, we expect earnings growth at our steel mills and steel product segments. The Raw Materials segments' performance will be challenged by margin pressures in our DOI business. We are encouraged by our first 9 months of 2021 performance and we see great opportunities in our future. We are committed to delivering increasing long-term value for our shareholders. Living our culture means driving performance. Thank you for your interest in our Company. Operator, we are now ready for questions.

Thank you. We'll pause for a moment to allow everyone an opportunity to ask questions. We'll take our first question from a participant with Deutsche Bank. Please go ahead.

Yes. Hi. Good afternoon. Thanks for taking my questions. My first question is on the cost inflation. Can you talk about what you're seeing on the cost side other than scrap, mainly natural gas for your DRA and steel mills? Also, would be helpful if you could remind us what percentage of your annual gas requirement is covered by production from your own natural gas wells, or the fixed-price contracts that you have and how much is exposed to the spot pricing. Thank you.

Thank you for the question. Let me provide a broad overview and invite Jim to add some details. We're currently evaluating all costs across the segment and their impact on Nucor’s bottom-line performance, including energy, scrap, labor, and domestically sourced goods and services. While we are monitoring supply chain constraints, most of our products are sourced domestically, which has somewhat insulated us from some of those challenges. However, when we consider labor and the logistics of moving trucks and materials, as well as barge operations, those costs are certainly affecting us. We're also closely observing energy costs. We have natural gas wells that we haven't been drilling lately, but with market prices rising, it's crucial for us to assess the sustainability of this trend. We need to evaluate how long we believe this situation will persist and how optimistic we are about the future as we plan ahead. Jim, do you have anything to add?

Yeah. Thanks, Leon. We have an active risk management team that looks at commercial risk over price risk, especially related to energy and natural gas. And we do have hedges in place to cover our gas consumption that cover about 40% of our total gas consumption as a Company going out into 2023 right now. So, we're seeing some inflation obviously with gas costs, but a lot of it's being offset by the hedges that we have in place.

Okay. Thanks for the color. My second question is on shipments. Mill volumes were down 4% quarter-on-quarter. Can you provide some color on what led to the quarter-on-quarter decline versus your previous guidance for an improvement? And how should we look about shipments for the fourth quarter given the planned shutdown at Gallatin for the expansion and also the normal seasonality that you'll see?

Yeah. Let me be clear. We didn't miss our guidance because of shipments. We were down 4%, but largely from a shipment perspective, that was because of the outages we took across our Sheet Mill Group. We approximately took about a week down at each of our sheet mills and that equated to the shipments roughly that we were down. And as we think about performance, and again, think about the quarter's perspective, we think a better measure of how Nucor's performed against that is our operating cash flows. Year-to-date, we've generated $3.6 billion worth of cash in that time period. However, in the third quarter alone, we generated $1.8 billion of that. So nearly half of the overall year's earnings were accrued or accounted for in the last three months. So, in terms of our performance, the demand drivers driving our business remain robust. The piece that we underestimated was the intercompany eliminations. With that, I'll turn it to Jim to let him take you through a little more detail around that and how we accrued that or accounted for that.

Thank you, Leon. First, I’d like to share some data on the intercompany eliminations for each quarter this year. In the first quarter, we had about $183.6 million, followed by $148.7 million in the second quarter, and an increase to $268 million in the third quarter. Let's discuss the reasons for this significant jump. Typically, our normal intercompany steel inventory, specifically for finished steel products sold to a downstream business, remains around 1.3 million tons, fluctuating occasionally. This year, due to strong demand, it decreased, reaching 1.076 million tons by the end of the second quarter, down more than 200,000 tons from the usual level. In the third quarter, that inventory slightly increased to 1.14 million tons, up approximately 60,000 tons, primarily in September, which we did not anticipate. The margins on that inventory were substantial, leading to a pre-tax earnings miss of about $64 million, approximately $0.16 per share. We view this as a one-time occurrence linked to an operational issue rather than something to highlight. It’s an intercompany accounting situation related to our vertical integration. We consider the fact that over 20% of our steel is consumed by in-house customers as a strategic advantage for our business. In the quarter, and particularly in September, the inventory needed was somewhat limited, prompting an increase in September that isn’t easily measured until the books are closed at the end of the quarter. That was the situation we faced.

Thank you for that. It was very clear, and congratulations on a great quarter. Thank you.

Thank you.

Thank you.

We'll take our next question from Martin Englert with Seaport Research Partners. Please go ahead.

Hi, good afternoon, everyone.

Good afternoon, Martin.

Given the increasing EAF Flat Rolled capacity that we're seeing in the North American market. Can you touch on your metallic strategy for prime scrap and substitutes briefly, maybe more so is there anything that you are undertaking on that technology or metallurgical front with scraps or increasing imports of substitutes?

Yeah, I'll kick us off, Martin, then I'll turn it to Doug Jellison to give us some more details that are EVP of Raw Materials. It's something that goes back a long way for Nucor. That was a focus many, many years ago to begin to control more of our iron units and the build-out obviously in Trinidad and then subsequently what we had built in our DRI facility in Louisiana gave us a significant amount of material that we could internally control and offset some of the different areas, whether it's pig iron and certainly with the DRI, we produced to balance that approach out. Over the years, we had some challenges as we started up that were well documented on many of these calls. The performance of the team in Louisiana has been exceptional since their big outage in November or the 4th quarter of '19. Their reliability has come up significantly. But Doug, I want you to speak more specifically about how we look at Prime with those balances for Nucor in our mix and some of the things that we're looking at moving forward.

Thanks, Leon. Good question. I think I'll start with just putting some a little bit of detail around the capabilities that we have. I think sometimes we lose sight of this. We have about 4.3 million tons of capacity in our recycling yards, which is primarily obsolete. We have what we call the Industrial group that controls about a little over a million tons of prime scrap a year, which is about a sixfold increase over the last five or six years. And we see that continuing to grow in there. We have the GRI facilities that we talked about with about 4.5 million tons of capacity and then all that's tied together with our brokerage group that manages the use of all of that, our national purchases and our international purchases. So, we have a very robust set of capabilities that we can move and react in many different markets. As we see the growth of our steelmaking capacity, we'll be able to take products and use them at the best place to get the best value for. So, places that might be using DRI now we may shift them to other places, backfill that with different rigs from different sources. As far as new technologies, we're looking at things all the time. We're constantly improving our recycling yards to produce a better grade of shred. We are constantly recovering more non-ferrous materials and increasing the value that way and then just a broad scope of new technologies here, around the world, wherever it is. So, we're pretty comfortable with where we are and pretty aggressive in what we're doing.

Do you think that what you've undertaken previously and what's ongoing is enough to maintain the historical average prime scrap spread relative to obsolete grades or do you think that there's a risk that that moves higher?

Martin, there's certainly going to be increased pressure on Prime without a doubt. As Nucor and others move up the value chain as we make more demanding applications. But at the end of the day, and correct me if I'm wrong, roughly about 25% of our mix and our sheet mills is Prime scrap. So, it's not a commodity that we are involved with at 40%, 50%, or 60% of the mix that we need. So, with what Doug mentioned, the David Joseph Company, we've been building relationships in this market and it's again a commodity-driven product where we're going to pay what is required, but what's the governor we believe the DRI actually keeps a level set between prime and obsolete grades, but will that increase? Yes, we do think it will increase. However, we feel incredibly good and well-positioned with what we've done, what we are currently doing in the mix that is in our mills today and what Doug mentioned, rationalizing that because we generate the DRI. It offsets other usage; but some of the mills that are using DRI today don't need that for the end-use customer requirements. We're going to shift those mixes. So again, as we build this new sheet mill, we feel very well positioned to be able to get the mix that we need to make the grades that we want as we move into the highest applications and automotive and the other markets.

Thank you for the detailed information; it's quite helpful. I'm interested in knowing if, several years ago when you were working on the Louisiana DRI, there was any discussion about potentially adding another slag blast furnace. I understand that this idea may have been set aside, especially with the current focus on ESG, but would you consider it in the context of hydrogen?

Actually, Martin, I think the timing is reversed and we actually looked at building two blast furnaces at the Louisiana site first and then shifted to the DRI. I would tell you at this point there is zero chance Nucor is going to build a blast furnace. However, to your comment around hydrogen, whether it's here to sequestration that we're evaluating, whether it's hydrogen reforming, and its cost impact to the business. We have a team that’s under Doug Jellison’s group, technically that are following and tracking dozens of technologies and some that we're going to invest in, some we're going to explore further. But we're going to stay very close to making sure that Nucor is on the cutting edge of steelmaking moving to a more sustainable future. And again, a big part of that for us was our launch of Econiq, offering net-zero steel today to our customers, particularly in automotive and the relationship with General Motors being the first customer. Since that announcement, the interest in inquiry and demand for that product and that family of products has been significant.

Do you get any type of premium for that product line versus?

Yes. Yes.

Yeah, you do. Okay. Very interesting. Thank you for all the color and detail. Very helpful. Congratulations to you and the team on the quarter and look forward to next quarter.

Thanks very much, Martin. Appreciate it.

We'll take our next question from Michael Glick with JPMorgan. Please go ahead.

Just on the growth capital, following your recent acquisitions, mill analysis, and other organic projects, how should we think about your appetite for incremental, organic, or inorganic growth projects going forward?

Let me start with the broader perspective, and Jim, feel free to chime in. As we consider Nucor as a growth company, we are committed to continuing our expansion. Our mission statement, which I have mentioned multiple times, is straightforward: to grow the core, expand beyond, and uphold our culture. We are actively pursuing organic growth opportunities such as our recent announcement about building a sheet mill in the Midwest. We are also eager to complete the Brandenburg project, which is set to come online late next year. We will keep exploring similar initiatives and consider options that remove us from standard deviations, thereby allowing us to differentiate ourselves in the market. The acquisition of the insulated metal panel building business has positioned us as a market leader in more than half of the insulated panel market today, which is a growth area. When we look at the Hannibal project in the racking industry, the digital and green economies will rely heavily on steel. These sectors are seeing growth that is not tied to typical steel cyclicality. There is a considerable demand for data storage and cold storage solutions, contributing to our forward momentum. Nucor will maintain its focus on these areas. While I cannot provide extensive details, I can assure you that we have several ongoing initiatives aimed at facilitating Nucor's growth through a careful, market-oriented strategy, where our culture supports returns significantly above our cost of capital.

And then just on the fabrication business, obviously, really strong this quarter. Could you talk a bit about how that book is shaping up in terms of the backlog from a volume and pricing perspective versus called prior peaks?

Yeah, I certainly will. Actually, I'll ask Chad Utermark, who's over our Fabrication products to share some detail there.

Thank you, Leon. Michael, as we look forward to in the non-res construction arena, we see a really strong 2022. And why is that? Leon touched on it, but it starts with this digitization economy that's happening. It's firing on all cylinders, creating significant demand for distribution centers, warehouses, and server storage facilities. We're also seeing growth in manufacturing and expansion in plants. And as we probably all read overall, the U.S. consumer is in a very healthy place. When you take that backdrop and then look at our backlogs across our industry-leading breadth of steel products, our quoting activity has been and continues to be very robust across all the steel product groups and we have very strong backlogs in most of our downstream businesses, and in some cases, all-time record backlogs. As far as pricing, obviously, that's a market-driven phenomenon, but we continue to see pricing move up through 2021, and we're in a very healthy spot, really excited about 2022 and beyond in our downstream businesses.

Thanks, Chad.

We'll take our next question from Carlos de Alba with Morgan Stanley. Please go ahead.

Thank you very much, everyone. Can you provide insights on the mix of your scrap usage? Specifically, how has it evolved in terms of the ratio of prime to obsolete scrap? I would appreciate any comments on prime, obsolete, and DRI as well. Additionally, regarding lead times, we are observing that industry data indicates a decrease in lead times over the last few months. However, your insights have been quite positive about end-market conditions and the outlook for the fourth quarter and beyond. Can you help clarify the discrepancies between the industry reported data and your experience in your business?

Sure, Carlos. I'll start by addressing your latter question about current market conditions, and then Doug can follow up on your initial question about Prime and other grades. Nucor has the broadest product range of any steel company in North America, allowing us to serve various end-use markets such as automotive, agriculture, heavy equipment, renewable energy, the digital economy, and HVAC construction. This diverse offering gives us unique insights into market trends. As Chad mentioned, approximately half of our products go into the construction sector, which is seeing strong demand that we expect will continue well into 2022. We do not anticipate any slowdown in that area. However, we are experiencing some slowness in two specific markets. The first is automotive, which is dealing with well-known chip shortages that present both challenges and unique opportunities. Currently, automotive accounts for 1.5 to 1.6 million tons, or 78% of our overall mix, and we aim to double that in the next two to three years. Once the chip shortage is resolved, we believe there's significant pent-up demand and consumer disposable income that will positively impact the auto industry—and in turn, companies like Nucor that supply into it. We see some elasticity in our demand, but we view the current situation more as a rebound from supply chain issues rather than a decrease in demand. The second market experiencing some slowdown is construction. Despite overall strong demand, some job sites are facing challenges due to difficulties experienced by their end customers in obtaining necessary materials from overseas, including chemicals and parts. These delays are caused by issues related to shipping and transportation. Nevertheless, we anticipate a very strong fourth quarter, potentially surpassing our Q3 record, although we will have to wait for the actual results to confirm this. Now, Doug, could you address the initial question regarding prime?

Yes. If you look across all of our steel mills, about 19% of our mix is prime rigs and scrap, and about 15% DRI. Did I cover the question?

Yeah. Maybe just the neck of the rest is obsolete, right? Or different grades of obsolete.

There's 10% in there and the balance is obsolete.

Excellent. Thank you very much. Good luck in the quarter. Thank you.

We'll take our next question from Tristan Glasser with Exane, BNP Paribas. Please go ahead.

Yes. Hi. Thank you for taking my questions. The first one on working capital, was there any one-off impact in the $1.2 billion due soon in Q3, I don't know maybe related to the growth projects and some lower off-takes from OEM you mentioned over the weakness or was it all a price FX? And also, if you can, what you could expect in Q4 is still use of cash or do you think you'd be able to release some cash there?

Tristan, let me clarify the initial part of your question about working capital. Were you looking for insights on the Q3 performance? I'm not sure I fully understood what you were asking.

This is Jim Frias. Thank you for clarifying the question. It really wasn't much of an inventory building; I talked about the intercompany inventories. They only went up by tens of thousands of tons and scrap didn't go up much, finished goods, so it was really a valuation issue. The value of inventories went up significantly in our portfolio, as well as the evaluation of receivables; they both went up. Besides price per ton, we're still collecting receivables in 30 days essentially and the value of each ton that customer owed us for went up. And so, we used about $1.2 billion between inventory receivables net of payables in cash in Q3. So, as we think about Q4, we think there could be some margin expansion, but not at the same rate that we've achieved in the third quarter. So, we think working capital's use of cash should be down dramatically. We're not going to forecast a number but it won't be nearly at that $1.2 billion level.

That's really helpful. And maybe a second question on lower-carbon steel, would be interested to know given the visibility you have on the CO2 savings, you're going to be able to generate. How much tonnage of Econiq you maybe see for next year and 2023? Do you see this commercial opportunity as a way to boost your margins or rather to gain market share and notably in the automotive market?

Yes, to both pieces of your question. Yes, there is value added. Nucor's capability to be able to do this provides a differentiated value proposition as announced, and again, we're so excited about the partnership with General Motors, but we're also excited about the other interest in the companies that we're working with beyond, not just within the auto sector in other companies, but much wider. So, the market acceptance for that is going to be significant and it's also going to be quick. But the other piece of that is we think about volumes. I'm not going to state exactly what our volumes are. What I would tell you is when we say at that scale, we're not talking insignificant tonnages, we're talking very significant tonnages that Nucor is going to supply into the Econiq family. And so, yeah, just stay tuned because that's going to ramp up very quickly.

Thank you.

We will take our next question from Andreas Hauser with UBS, please go ahead.

Thank you very much. Just a follow-up question on the ultra. You guys obviously want to capture more market share. How is it looking so far in the second half of the year? We've been hearing that also producers have been shifting more orders to electric arc furnace producers. And, obviously, one of your peers confirmed they were certainly seeing that. Are you seeing that as well here in the second half of the year that you're capturing market share in the ultra-market?

Yes, definitely. While I won't provide specific numbers, I want to emphasize that the opportunity is increasing rapidly. Our team has done an excellent job building relationships with major OEMs in this country, and we are enthusiastic about the chance to serve that market. Ultimately, our Econiq family will play a crucial role in helping automakers achieve their net-zero targets by supplying them with net-zero steel. For them to reach their sustainability goals, they need to begin with net-zero steel, and we believe we offer a unique value proposition in this area that sets us apart from other producers. Our market share is growing, and a key aspect of our new mills strategy is to advance further along the value chain. The new mill we are constructing is distinct from our previous setups, as it will deliver superior quality and advanced high-strength steel capabilities with the lowest carbon footprint globally. We are very excited about this and the relationships we have developed at Nucor. We are proud to be the only EAF producer to earn the GM Supplier of the Year award, achieving this recognition three years in a row. This success reflects the hard work and dedication of the Nucor team, and the relationships we've built are yielding positive results.

Thank you. That's very clear. And maybe just a second question on the second half of this year. So obviously, we are a little bit in maintenance shutdown season at the moment. Have you guys been restocking ahead of any maintenance shutdowns to ensure your volume stays stable into the fourth quarter?

Yeah. I'll switch over to Rex Query who is our EVP of Sheet and Tubular. Rex, maybe just him a little bit of color as we think about that broadly and then specifically as we think about the startup of our Gallatin project.

Appreciate the question, Andreas. I would start on a broader sense with Nucor having five sheet mills. It's common practice for us as we have outages at various plants and we'll look at the needs from a customer standpoint, and we're able to support a plant that may have an extended outage going on. So that's pretty common practice, not unusual for us. We'll shift supply between our plants to accommodate that. Probably the outage that's getting the most notoriety right now is with the expansion of Gallatin, which is progressing well, we're excited about it and we're going to be concluding that soon and that's going to conclude with the largest outage we have coming up in December; a 25-day outage. We've been prepping for that for months already ahead of time. So, we have already had and will continue to have coils in stock so that we can continue to shift from the pickle galvanization line through there, but also, we'll take care of customers from some of our other plants. So, you'll see a minimal impact on the volume and the total sheet side based on that, due to our prior prep ahead of time. Thank you.

No, thank you. Thank you for taking my question. I appreciate the answers. Thank you very much.

Thank you.

We'll take our next question from David Gagliano with BMO Capital Markets.

Hi, thanks for taking my questions. I just wanted to ask about 2022 and potentially even some insights on 2023 capital spending at this point.

This is Jim Frias. We don't yet have our final budget. However, I can provide some details about the larger projects that are concluding this year and the next. For Brandenburg, we expect capital spending in the fourth quarter to be around 250 million to 270 million. Next year, we anticipate spending between 800 million and 900 million. For the galvanizing line in Arkansas, we estimated spending approximately five to six million in the fourth quarter, with another five million expected in the first quarter of next year due to carryover expenses from the timing of bill payments. Gallatin will likely spend in the high $80 million range in the fourth quarter, with carryover expenses likely in the low-to-mid $20 million range for next year. These are the main items. While we don't have a formal budget yet, we will present our capital plan to the Board for approval in December. Therefore, it wouldn't be appropriate to provide a total number for next year, but I don't expect it to be significantly different from our current spending levels.

I have a couple of follow-up questions. What do you estimate for annual sustaining capital expenditures? Additionally, regarding the new mill that is set to start in 2024 or 2025, when do you expect the majority of the capital will be allocated for that?

I'll cover the first part, Leon, and then you or Dave can discuss the new mill's capital expenditures ramp-up. We estimate maintenance capital expenditures to be around $500 million per year, which covers the first part.

Maybe just a little bit of color or maybe more than you asked for, David, but as we think about the new mill, the next step for us is to finalize site selection, which we anticipate by year's end. Really, as we think about Capex ramp up, we don't see much of anything materially in 2022; the start of that will be probably midyear of 2023, well into '24 and maybe early '25.

Okay, that's helpful. Thank you very much.

Thank you, David.

Ladies and gentlemen, our final question will come from Andrew Cosgrove with Bloomberg Intelligence. Please go ahead.

Hi, thanks for taking my question. Just a quick one on section 232. I was curious if there's been any talk in Washington about positively replacing 232 with some sort of carbon border adjustment at some point in the future, given the fact that obviously the U.S. has a clear advantage with respect to low carbon produced Steel. And that would obviously be advantageous for U.S. producers to protect against imports going forward. So was curious if there's been any talk about that and what you guys’ thoughts are.

Yes. Look, you've framed the issue very well and it is certainly a concern. Look, what I would tell you is absolutely there's been conversations. We're going to continue to work with the administration in Washington. Secretary Ormando and Katherine Tai, the USTR, have done a great job; they know the market, they know the industry very, very well and again, I think a piece of this Andrew is already in the works now with what's being conducted with Europe. We think that's going to move away, obviously from 232 and what the final outcome looks like whether it's a tariff rate quarter. But we'll wait and see, but as you mentioned, as we think about the environmental advantage, there is a huge piece of recognizing both in Congress as well as the American consumer, that when we think about a green economy, as we think about renewable, it should be very important to the members of the House to see that those renewable energy projects are not built with the dirtier steels from overseas but are built with the most sustainable, cleanest steel and steel companies found here in the United States, like Nucor and other EAF producers, there is a significant advantage. And so, if that happens, Nucor has also provided our commentary and analysis on what an order adjustment tax must include because it is not apples-to-apples and that's Steel product. And so, again, we're going to be very vocal. We're going to continue to advocate, but we do have a high regard for Secretary Ormando and Katherine Tai understanding there's issues in the nuances and again, I can't tell you when but 232 will go away at some point, but it is a vehicle to bring other nations to the negotiating table to negotiate a better trade arrangement.

Okay. Great. Thank you. And then just the last one would just be if you could just quickly just chat row briefly about the cadence of the start-up at Gallatin when we should expect the additional 1.4 million tons to hit approximately the ramp-up schedule?

Yeah, I'll turn that over to Rex Query again, our EVP of sheets.

Andrew, just to reiterate, as we mentioned, after the outage will begin, the startup will begin on a bottle basis, late this year, latter half of December. Startup will continue into the first quarter, and then we'll be producing products through the mill sometime into the first quarter. I would tell you we focused in total on the tonnage through that mill. The additional tonnage would be somewhere around 1.4 million tonnes as you mentioned. We've targeted somewhere close to the million-ton mark. I would tell you that's likely to be somewhere in 800,000 to 1 million tonnes through that plant next year.

Great. Thanks, gentlemen. Have a great one. Congratulations on the quarter.

Thank you, Andrew. Thank you.

Ladies and gentlemen, this concludes today's question-and-answer session. I would like to turn the conference back to Leon Topalian for any additional or closing remarks.

As we conclude our call today, I'd like to thank our Nucor teammates for their continued focus on the safety, health, and well-being of the entire Nucor family to our customers. Thank you for the trust that you placed in the Nucor team with every order, we will work hard each day to earn your business and provide you with the products and solutions that enable you to achieve your goals and finally, to our shareholders, we take seriously the stewardship of the valuable shareholder capital you entrust our Company with. Nucor is extremely excited about our future and the returns we will continue to generate. Thank you and have a great day.

Ladies and gentlemen, this concludes today's conference. We appreciate your participation. You may now disconnect.