Stock Analysis on Net

Steel Dynamics Inc. (NASDAQ:STLD)

This company has been moved to the archive! The financial data has not been updated since October 26, 2022.

Economic Value Added (EVA)

Microsoft Excel

EVA is registered trademark of Stern Stewart.

Economic value added or economic profit is the difference between revenues and costs,where costs include not only expenses, but also cost of capital.


Economic Profit

Steel Dynamics Inc., economic profit calculation

US$ in thousands

Microsoft Excel
12 months ended: Dec 31, 2021 Dec 31, 2020 Dec 31, 2019 Dec 31, 2018 Dec 31, 2017
Net operating profit after taxes (NOPAT)1 3,611,424 696,079 827,375 1,420,457 755,373
Cost of capital2 15.08% 13.95% 13.30% 15.04% 15.48%
Invested capital3 8,550,168 6,781,124 6,721,821 6,403,131 5,964,900
 
Economic profit4 2,322,108 (249,780) (66,397) 457,316 (168,077)

Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).

1 NOPAT. See details »

2 Cost of capital. See details »

3 Invested capital. See details »

4 2021 Calculation
Economic profit = NOPAT – Cost of capital × Invested capital
= 3,611,42415.08% × 8,550,168 = 2,322,108

Item Description The company
Economic profit Economic profit is a measure of corporate performance computed by taking the spread between the return on invested capital and the cost of capital, and multiplying by the invested capital. Steel Dynamics Inc. economic profit decreased from 2019 to 2020 but then increased from 2020 to 2021 exceeding 2019 level.

Net Operating Profit after Taxes (NOPAT)

Steel Dynamics Inc., NOPAT calculation

US$ in thousands

Microsoft Excel
12 months ended: Dec 31, 2021 Dec 31, 2020 Dec 31, 2019 Dec 31, 2018 Dec 31, 2017
Net income attributable to Steel Dynamics, Inc. 3,214,066 550,822 671,103 1,258,379 812,741
Deferred income tax expense (benefit)1 318,617 45,736 48,331 59,243 (139,948)
Increase (decrease) in allowances for credit losses2 (2,048) 1,822 (1,628) 2,459 623
Increase (decrease) in equity equivalents3 316,569 47,558 46,703 61,702 (139,325)
Interest expense, net of capitalized interest 57,209 94,877 127,104 126,620 134,399
Interest expense, operating lease liability4 3,603 3,468 2,987 3,697 2,374
Adjusted interest expense, net of capitalized interest 60,812 98,345 130,091 130,317 136,773
Tax benefit of interest expense, net of capitalized interest5 (12,770) (20,652) (27,319) (27,367) (47,870)
Adjusted interest expense, net of capitalized interest, after taxes6 48,041 77,693 102,772 102,950 88,902
Net income (loss) attributable to noncontrolling interest 32,748 20,006 6,797 (2,574) (6,945)
Net operating profit after taxes (NOPAT) 3,611,424 696,079 827,375 1,420,457 755,373

Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).

1 Elimination of deferred tax expense. See details »

2 Addition of increase (decrease) in allowances for credit losses.

3 Addition of increase (decrease) in equity equivalents to net income attributable to Steel Dynamics, Inc..

4 2021 Calculation
Interest expense on capitalized operating leases = Operating lease liability × Discount rate
= 100,074 × 3.60% = 3,603

5 2021 Calculation
Tax benefit of interest expense, net of capitalized interest = Adjusted interest expense, net of capitalized interest × Statutory income tax rate
= 60,812 × 21.00% = 12,770

6 Addition of after taxes interest expense to net income attributable to Steel Dynamics, Inc..

Item Description The company
NOPAT Net operating profit after taxes is income from operations, but after removement of taxes calculated on cash basis that are relevant to operating income. Steel Dynamics Inc. NOPAT decreased from 2019 to 2020 but then increased from 2020 to 2021 exceeding 2019 level.

Cash Operating Taxes

Steel Dynamics Inc., cash operating taxes calculation

US$ in thousands

Microsoft Excel
12 months ended: Dec 31, 2021 Dec 31, 2020 Dec 31, 2019 Dec 31, 2018 Dec 31, 2017
Income tax expense 962,256 134,650 197,437 363,969 129,439
Less: Deferred income tax expense (benefit) 318,617 45,736 48,331 59,243 (139,948)
Add: Tax savings from interest expense, net of capitalized interest 12,770 20,652 27,319 27,367 47,870
Cash operating taxes 656,409 109,566 176,425 332,093 317,257

Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).

Item Description The company
Cash operating taxes Cash operating taxes are estimated by adjusting income tax expense for changes in deferred taxes and tax benefit from the interest deduction. Steel Dynamics Inc. cash operating taxes decreased from 2019 to 2020 but then increased from 2020 to 2021 exceeding 2019 level.

Invested Capital

Steel Dynamics Inc., invested capital calculation (financing approach)

US$ in thousands

Microsoft Excel
Dec 31, 2021 Dec 31, 2020 Dec 31, 2019 Dec 31, 2018 Dec 31, 2017
Current maturities of long-term debt 97,174 86,894 89,356 24,234 28,795
Long-term debt, excluding current maturities 3,008,702 3,015,782 2,644,988 2,352,489 2,353,145
Operating lease liability1 100,074 90,316 75,429 73,061 47,100
Total reported debt & leases 3,205,950 3,192,992 2,809,773 2,449,784 2,429,040
Total Steel Dynamics, Inc. equity 6,304,641 4,345,164 4,075,834 3,935,071 3,351,574
Net deferred tax (assets) liabilities2 854,905 536,288 484,169 435,838 305,949
Allowances for credit losses3 6,161 8,209 15,867 17,495 15,036
Equity equivalents4 861,066 544,497 500,036 453,333 320,985
Accumulated other comprehensive (income) loss, net of tax5 2,091 (1,902) 7 (301)
Redeemable noncontrolling interests 211,414 158,614 143,614 111,240 111,240
Noncontrolling interests (195,884) (155,552) (154,593) (159,082) (156,506)
Adjusted total Steel Dynamics, Inc. equity 7,183,328 4,890,821 4,564,898 4,340,261 3,627,293
Construction in progress6 (1,839,110) (1,302,689) (390,676) (158,131) (91,433)
Trading securities7 (262,174) (228,783)
Invested capital 8,550,168 6,781,124 6,721,821 6,403,131 5,964,900

Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).

1 Addition of capitalized operating leases.

2 Elimination of deferred taxes from assets and liabilities. See details »

3 Addition of allowance for doubtful accounts receivable.

4 Addition of equity equivalents to total Steel Dynamics, Inc. equity.

5 Removal of accumulated other comprehensive income.

6 Subtraction of construction in progress.

7 Subtraction of trading securities.

Item Description The company
Invested capital Capital is an approximation of the economic book value of all cash invested in going-concern business activities. Steel Dynamics Inc. invested capital increased from 2019 to 2020 and from 2020 to 2021.

Cost of Capital

Steel Dynamics Inc., cost of capital calculations

Capital (fair value)1 Weights Cost of capital
Equity2 13,501,895 13,501,895 ÷ 16,901,969 = 0.80 0.80 × 18.25% = 14.58%
Long-term debt, including current maturities3 3,300,000 3,300,000 ÷ 16,901,969 = 0.20 0.20 × 3.12% × (1 – 21.00%) = 0.48%
Operating lease liability4 100,074 100,074 ÷ 16,901,969 = 0.01 0.01 × 3.60% × (1 – 21.00%) = 0.02%
Total: 16,901,969 1.00 15.08%

Based on: 10-K (reporting date: 2021-12-31).

1 US$ in thousands

2 Equity. See details »

3 Long-term debt, including current maturities. See details »

4 Operating lease liability. See details »

Capital (fair value)1 Weights Cost of capital
Equity2 9,286,334 9,286,334 ÷ 12,776,650 = 0.73 0.73 × 18.25% = 13.27%
Long-term debt, including current maturities3 3,400,000 3,400,000 ÷ 12,776,650 = 0.27 0.27 × 3.14% × (1 – 21.00%) = 0.66%
Operating lease liability4 90,316 90,316 ÷ 12,776,650 = 0.01 0.01 × 3.84% × (1 – 21.00%) = 0.02%
Total: 12,776,650 1.00 13.95%

Based on: 10-K (reporting date: 2020-12-31).

1 US$ in thousands

2 Equity. See details »

3 Long-term debt, including current maturities. See details »

4 Operating lease liability. See details »

Capital (fair value)1 Weights Cost of capital
Equity2 5,742,479 5,742,479 ÷ 8,617,908 = 0.67 0.67 × 18.25% = 12.16%
Long-term debt, including current maturities3 2,800,000 2,800,000 ÷ 8,617,908 = 0.32 0.32 × 4.31% × (1 – 21.00%) = 1.11%
Operating lease liability4 75,429 75,429 ÷ 8,617,908 = 0.01 0.01 × 3.96% × (1 – 21.00%) = 0.03%
Total: 8,617,908 1.00 13.30%

Based on: 10-K (reporting date: 2019-12-31).

1 US$ in thousands

2 Equity. See details »

3 Long-term debt, including current maturities. See details »

4 Operating lease liability. See details »

Capital (fair value)1 Weights Cost of capital
Equity2 8,504,794 8,504,794 ÷ 10,977,855 = 0.77 0.77 × 18.25% = 14.14%
Long-term debt, including current maturities3 2,400,000 2,400,000 ÷ 10,977,855 = 0.22 0.22 × 5.06% × (1 – 21.00%) = 0.87%
Operating lease liability4 73,061 73,061 ÷ 10,977,855 = 0.01 0.01 × 5.06% × (1 – 21.00%) = 0.03%
Total: 10,977,855 1.00 15.04%

Based on: 10-K (reporting date: 2018-12-31).

1 US$ in thousands

2 Equity. See details »

3 Long-term debt, including current maturities. See details »

4 Operating lease liability. See details »

Capital (fair value)1 Weights Cost of capital
Equity2 11,215,751 11,215,751 ÷ 13,762,850 = 0.81 0.81 × 18.25% = 14.88%
Long-term debt, including current maturities3 2,500,000 2,500,000 ÷ 13,762,850 = 0.18 0.18 × 5.04% × (1 – 35.00%) = 0.60%
Operating lease liability4 47,100 47,100 ÷ 13,762,850 = 0.00 0.00 × 5.04% × (1 – 35.00%) = 0.01%
Total: 13,762,850 1.00 15.48%

Based on: 10-K (reporting date: 2017-12-31).

1 US$ in thousands

2 Equity. See details »

3 Long-term debt, including current maturities. See details »

4 Operating lease liability. See details »


Economic Spread Ratio

Steel Dynamics Inc., economic spread ratio calculation, comparison to benchmarks

Microsoft Excel
Dec 31, 2021 Dec 31, 2020 Dec 31, 2019 Dec 31, 2018 Dec 31, 2017
Selected Financial Data (US$ in thousands)
Economic profit1 2,322,108 (249,780) (66,397) 457,316 (168,077)
Invested capital2 8,550,168 6,781,124 6,721,821 6,403,131 5,964,900
Performance Ratio
Economic spread ratio3 27.16% -3.68% -0.99% 7.14% -2.82%
Benchmarks
Economic Spread Ratio, Competitors4
Freeport-McMoRan Inc. -2.97% -14.50% -14.98%

Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).

1 Economic profit. See details »

2 Invested capital. See details »

3 2021 Calculation
Economic spread ratio = 100 × Economic profit ÷ Invested capital
= 100 × 2,322,108 ÷ 8,550,168 = 27.16%

4 Click competitor name to see calculations.

Performance ratio Description The company
Economic spread ratio The ratio of economic profit to invested capital, also equal to the difference between return on invested capital (ROIC) and cost of capital. Steel Dynamics Inc. economic spread ratio deteriorated from 2019 to 2020 but then improved from 2020 to 2021 exceeding 2019 level.

Economic Profit Margin

Steel Dynamics Inc., economic profit margin calculation, comparison to benchmarks

Microsoft Excel
Dec 31, 2021 Dec 31, 2020 Dec 31, 2019 Dec 31, 2018 Dec 31, 2017
Selected Financial Data (US$ in thousands)
Economic profit1 2,322,108 (249,780) (66,397) 457,316 (168,077)
Net sales 18,408,850 9,601,482 10,464,991 11,821,839 9,538,797
Performance Ratio
Economic profit margin2 12.61% -2.60% -0.63% 3.87% -1.76%
Benchmarks
Economic Profit Margin, Competitors3
Freeport-McMoRan Inc. -4.53% -32.74% -29.29%

Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).

1 Economic profit. See details »

2 2021 Calculation
Economic profit margin = 100 × Economic profit ÷ Net sales
= 100 × 2,322,108 ÷ 18,408,850 = 12.61%

3 Click competitor name to see calculations.

Performance ratio Description The company
Economic profit margin The ratio of economic profit to sales. It is the company profit margin covering income efficiency and asset management. Economic profit margin is not biased in favor of capital-intensive business models, because any added capital is a cost to the economic profit margin. Steel Dynamics Inc. economic profit margin deteriorated from 2019 to 2020 but then improved from 2020 to 2021 exceeding 2019 level.