Analysis of Solvency Ratios
Solvency ratios also known as long-term debt ratios measure a company ability to meet long-term obligations.
Solvency Ratios (Summary)
Steel Dynamics Inc., solvency ratios
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).
- Debt Ratios Trend
- The debt to equity ratio showed a general downward trend over the analyzed period, decreasing from 0.71 in 2017 to 0.49 in 2021, indicating a reduction in reliance on debt financing relative to equity. When operating lease liabilities are included, the ratio follows a similar decreasing trajectory, dropping from 0.71 to 0.51 by 2021. The debt to capital ratio also decreased from 0.42 in 2017 to 0.33 in 2021, with a comparable trend when including operating lease liabilities, suggesting a modest decline in overall debt within the company’s capital structure.
- Similarly, the debt to assets ratio declined from 0.35 in 2017 to 0.25 in 2021, reflecting a reduction in the proportion of assets financed through debt. Including operating lease liabilities slightly elevated the ratio values but maintained the downward trend, ending at 0.26 in 2021.
- Financial Leverage
- Financial leverage modestly fluctuated during the period, starting at 2.05 in 2017 and slightly decreasing to 1.99 by 2021 after peaking at 2.13 in 2020. This indicates a relatively stable leverage position, with a minor reduction toward the end of the period, suggesting the company has maintained consistent capital structure management.
- Interest and Fixed Charge Coverage
- The interest coverage ratio experienced significant volatility. After an initial increase from 7.96 in 2017 to 13.79 in 2018, it decreased back to near 7.89 in 2019 and 8.44 in 2020, followed by a striking surge to 74.57 in 2021. This dramatic increase suggests a substantial improvement in the company’s ability to meet interest obligations from operating earnings, possibly due to reduced interest expenses or increased earnings before interest and taxes.
- The fixed charge coverage ratio mirrored this pattern, rising from 7.1 in 2017 to 11.97 in 2018, then decreasing to 6.95 and 7.07 in 2019 and 2020 respectively, before markedly increasing to 53.81 in 2021. This indicates a similar substantial enhancement in coverage of fixed financial obligations.
- Overall Insights
- The overall trends reveal a strengthening in the financial position through declines in leverage ratios and improvements in coverage ratios, particularly noticeable in 2021. The decreases in debt-related ratios point to a conservative capital structure approach, reducing dependency on debt financing. Meanwhile, the significant improvement in interest and fixed charge coverage ratios in 2021 indicates enhanced profitability or decreased fixed expenses, contributing to better financial resilience.
Debt Ratios
Coverage Ratios
Debt to Equity
Steel Dynamics Inc., debt to equity calculation, comparison to benchmarks
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| 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) | |
| Total debt | 3,105,876) | 3,102,676) | 2,734,344) | 2,376,723) | 2,381,940) | |
| Total Steel Dynamics, Inc. equity | 6,304,641) | 4,345,164) | 4,075,834) | 3,935,071) | 3,351,574) | |
| Solvency Ratio | ||||||
| Debt to equity1 | 0.49 | 0.71 | 0.67 | 0.60 | 0.71 | |
| Benchmarks | ||||||
| Debt to Equity, Competitors2 | ||||||
| Freeport-McMoRan Inc. | 0.68 | 0.95 | — | — | — | |
| Debt to Equity, Industry | ||||||
| Materials | 0.55 | 0.56 | — | — | — | |
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 2021 Calculation
Debt to equity = Total debt ÷ Total Steel Dynamics, Inc. equity
= 3,105,876 ÷ 6,304,641 = 0.49
2 Click competitor name to see calculations.
- Total debt
- Over the five-year period, total debt showed an overall increasing trend. Starting from approximately US$2.38 billion in 2017, it slightly decreased by 2018 but subsequently rose each year to reach around US$3.11 billion by 2021. The most notable increases occurred between 2018 and 2019, and then from 2019 to 2020. From 2020 to 2021, total debt remained nearly stable.
- Total equity
- Total equity exhibited a steady upward trend throughout the same period. Beginning at roughly US$3.35 billion in 2017, it increased continuously each year, reaching approximately US$6.30 billion in 2021. The growth accelerated noticeably between 2020 and 2021, representing the largest single-year increase in equity during the timeframe analyzed.
- Debt to equity ratio
- The debt-to-equity ratio fluctuated moderately year to year but indicated an overall declining trend by the end of the period. It started at 0.71 in 2017, decreased to a low of 0.6 in 2018, then oscillated between 0.67 and 0.71 in the next two years, before dropping significantly to 0.49 in 2021. This decline suggests a strengthening equity base relative to debt, despite the increase in absolute debt levels.
- Summary
- The data reveals that while total debt increased in absolute terms, the company notably expanded its equity base more rapidly. This led to a substantial reduction in the debt-to-equity ratio by 2021, reflecting improved financial leverage and potentially reduced financial risk. The large increase in equity in the final year suggests capital growth possibly from retained earnings, new equity issuance, or other capital augmentation strategies.
Debt to Equity (including Operating Lease Liability)
Steel Dynamics Inc., debt to equity (including operating lease liability) calculation, comparison to benchmarks
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| 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) | |
| Total debt | 3,105,876) | 3,102,676) | 2,734,344) | 2,376,723) | 2,381,940) | |
| Lease obligations under operating leases (included in Accrued liabilities) | 17,822) | 17,702) | 17,532) | —) | —) | |
| Lease obligations under operating leases (included in Other liabilities, noncurrent) | 82,252) | 72,614) | 57,897) | —) | —) | |
| Total debt (including operating lease liability) | 3,205,950) | 3,192,992) | 2,809,773) | 2,376,723) | 2,381,940) | |
| Total Steel Dynamics, Inc. equity | 6,304,641) | 4,345,164) | 4,075,834) | 3,935,071) | 3,351,574) | |
| Solvency Ratio | ||||||
| Debt to equity (including operating lease liability)1 | 0.51 | 0.73 | 0.69 | 0.60 | 0.71 | |
| Benchmarks | ||||||
| Debt to Equity (including Operating Lease Liability), Competitors2 | ||||||
| Freeport-McMoRan Inc. | 0.70 | 0.98 | — | — | — | |
| Debt to Equity (including Operating Lease Liability), Industry | ||||||
| Materials | 0.60 | 0.61 | — | — | — | |
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 2021 Calculation
Debt to equity (including operating lease liability) = Total debt (including operating lease liability) ÷ Total Steel Dynamics, Inc. equity
= 3,205,950 ÷ 6,304,641 = 0.51
2 Click competitor name to see calculations.
The data reveals several key financial trends over the five-year period ending in 2021. A consistent increase in total debt is observed from 2017 to 2021, rising from approximately $2.38 billion to about $3.21 billion. This upward trajectory indicates an increasing reliance on borrowing or lease liabilities.
Total equity shows steady growth throughout the period, increasing from approximately $3.35 billion in 2017 to $6.30 billion in 2021. The most notable jump occurs between 2020 and 2021, where equity rises sharply, suggesting significant retention of earnings, capital infusion, or revaluation of assets during this final year.
The debt to equity ratio exhibits some fluctuation but generally trended downward by the end of the period. Starting at 0.71 in 2017, the ratio decreased to 0.51 in 2021. This decline in the ratio, especially in 2021, indicates improved financial leverage with comparatively more equity backing the debt. Despite the rise in debt levels, the proportionate increase in equity is higher, reducing financial risk.
- Total Debt
- Shows an increasing trend year over year, rising by approximately 35% from 2017 to 2021.
- Total Equity
- Exhibits steady growth, with a particularly strong increase in 2021 of about 45% compared to 2020.
- Debt to Equity Ratio
- Fluctuates in a narrow range but ends significantly lower in 2021, indicating reduced leverage and stronger equity position.
Overall, the company appears to be growing its equity base at a faster rate than its debt, improving its capital structure and potentially reducing financial risk despite increased absolute debt levels.
Debt to Capital
Steel Dynamics Inc., debt to capital calculation, comparison to benchmarks
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| 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) | |
| Total debt | 3,105,876) | 3,102,676) | 2,734,344) | 2,376,723) | 2,381,940) | |
| Total Steel Dynamics, Inc. equity | 6,304,641) | 4,345,164) | 4,075,834) | 3,935,071) | 3,351,574) | |
| Total capital | 9,410,517) | 7,447,840) | 6,810,178) | 6,311,794) | 5,733,514) | |
| Solvency Ratio | ||||||
| Debt to capital1 | 0.33 | 0.42 | 0.40 | 0.38 | 0.42 | |
| Benchmarks | ||||||
| Debt to Capital, Competitors2 | ||||||
| Freeport-McMoRan Inc. | 0.40 | 0.49 | — | — | — | |
| Debt to Capital, Industry | ||||||
| Materials | 0.36 | 0.36 | — | — | — | |
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 2021 Calculation
Debt to capital = Total debt ÷ Total capital
= 3,105,876 ÷ 9,410,517 = 0.33
2 Click competitor name to see calculations.
- Total debt
- The total debt increased progressively from 2,381,940 thousand US dollars in 2017 to 3,105,876 thousand US dollars in 2021. Notably, the growth accelerated between 2018 and 2020, with debt rising approximately 30% during that period, before stabilizing in 2021.
- Total capital
- Total capital exhibited consistent growth throughout the period, rising from 5,733,514 thousand US dollars in 2017 to 9,410,517 thousand US dollars in 2021. The most significant jump occurred between 2020 and 2021, indicating an expansion in the company’s capital base by roughly 26% in a single year.
- Debt to capital ratio
- The debt-to-capital ratio showed variability, decreasing from 0.42 in 2017 to 0.38 in 2018, then rising slightly to 0.40 in 2019 and further to 0.42 in 2020. However, in 2021, this ratio dropped significantly to 0.33, reflecting a lower reliance on debt relative to total capital despite the absolute increase in debt.
- Summary of trends
- Overall, the data indicate a growth phase characterized by an expanding capital structure and a moderate rise in debt levels until 2020. The substantial increase in total capital in 2021, coupled with a reduction in the debt-to-capital ratio, suggests a strategic shift towards a stronger equity position or alternative financing sources. This shift could imply improved financial flexibility or reduced financial risk.
Debt to Capital (including Operating Lease Liability)
Steel Dynamics Inc., debt to capital (including operating lease liability) calculation, comparison to benchmarks
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| 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) | |
| Total debt | 3,105,876) | 3,102,676) | 2,734,344) | 2,376,723) | 2,381,940) | |
| Lease obligations under operating leases (included in Accrued liabilities) | 17,822) | 17,702) | 17,532) | —) | —) | |
| Lease obligations under operating leases (included in Other liabilities, noncurrent) | 82,252) | 72,614) | 57,897) | —) | —) | |
| Total debt (including operating lease liability) | 3,205,950) | 3,192,992) | 2,809,773) | 2,376,723) | 2,381,940) | |
| Total Steel Dynamics, Inc. equity | 6,304,641) | 4,345,164) | 4,075,834) | 3,935,071) | 3,351,574) | |
| Total capital (including operating lease liability) | 9,510,591) | 7,538,156) | 6,885,607) | 6,311,794) | 5,733,514) | |
| Solvency Ratio | ||||||
| Debt to capital (including operating lease liability)1 | 0.34 | 0.42 | 0.41 | 0.38 | 0.42 | |
| Benchmarks | ||||||
| Debt to Capital (including Operating Lease Liability), Competitors2 | ||||||
| Freeport-McMoRan Inc. | 0.41 | 0.49 | — | — | — | |
| Debt to Capital (including Operating Lease Liability), Industry | ||||||
| Materials | 0.38 | 0.38 | — | — | — | |
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 2021 Calculation
Debt to capital (including operating lease liability) = Total debt (including operating lease liability) ÷ Total capital (including operating lease liability)
= 3,205,950 ÷ 9,510,591 = 0.34
2 Click competitor name to see calculations.
- Total debt (including operating lease liability)
- The total debt increased steadily from 2,381,940 thousand US dollars in 2017 to 3,205,950 thousand US dollars in 2021. Notably, there was a sharp rise between 2018 and 2019, followed by a more gradual increase through 2020 and 2021.
- Total capital (including operating lease liability)
- Total capital demonstrated consistent growth across the entire period, rising from 5,733,514 thousand US dollars in 2017 to 9,510,591 thousand US dollars in 2021. The increase was particularly pronounced in 2021, indicating significant capital expansion in that year compared to prior years.
- Debt to capital (including operating lease liability)
- The debt to capital ratio showed some fluctuation but an overall declining trend from 0.42 in 2017 to 0.34 in 2021. This suggests an improvement in the company’s capital structure over time, with the proportion of debt relative to total capital decreasing, particularly in the final year.
Debt to Assets
Steel Dynamics Inc., debt to assets calculation, comparison to benchmarks
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| 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) | |
| Total debt | 3,105,876) | 3,102,676) | 2,734,344) | 2,376,723) | 2,381,940) | |
| Total assets | 12,531,234) | 9,265,562) | 8,275,765) | 7,703,563) | 6,855,732) | |
| Solvency Ratio | ||||||
| Debt to assets1 | 0.25 | 0.33 | 0.33 | 0.31 | 0.35 | |
| Benchmarks | ||||||
| Debt to Assets, Competitors2 | ||||||
| Freeport-McMoRan Inc. | 0.20 | 0.23 | — | — | — | |
| Debt to Assets, Industry | ||||||
| Materials | 0.22 | 0.23 | — | — | — | |
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 2021 Calculation
Debt to assets = Total debt ÷ Total assets
= 3,105,876 ÷ 12,531,234 = 0.25
2 Click competitor name to see calculations.
- Total Debt
- The total debt showed an increasing trend from 2017 through 2021. Starting at approximately 2.38 billion US dollars in 2017, it remained relatively stable in 2018 but increased notably in 2019 and continued rising through 2020 and 2021, reaching around 3.11 billion US dollars. This indicates a progressive accumulation of debt over the five-year period, with the most significant increments occurring after 2018.
- Total Assets
- Total assets exhibited consistent growth across the entire period from 2017 to 2021. Beginning at approximately 6.86 billion US dollars in 2017, assets rose steadily each year, accelerating more substantially in 2021 to reach over 12.53 billion US dollars. This represents a strong expansion in asset base, with a significant increase especially evident in the final year observed, suggesting either substantial investments or acquisitions.
- Debt to Assets Ratio
- The debt-to-assets ratio decreased over the period, moving from 0.35 in 2017 to 0.25 in 2021. After a slight dip to 0.31 in 2018, the ratio stabilized around 0.33 for 2019 and 2020 before declining notably in 2021. This trend indicates that while total debt increased, the growth in total assets outpaced the rise in debt, resulting in a lower relative leverage. The decreasing ratio suggests an improved balance sheet with potentially reduced financial risk from leverage.
Debt to Assets (including Operating Lease Liability)
Steel Dynamics Inc., debt to assets (including operating lease liability) calculation, comparison to benchmarks
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| 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) | |
| Total debt | 3,105,876) | 3,102,676) | 2,734,344) | 2,376,723) | 2,381,940) | |
| Lease obligations under operating leases (included in Accrued liabilities) | 17,822) | 17,702) | 17,532) | —) | —) | |
| Lease obligations under operating leases (included in Other liabilities, noncurrent) | 82,252) | 72,614) | 57,897) | —) | —) | |
| Total debt (including operating lease liability) | 3,205,950) | 3,192,992) | 2,809,773) | 2,376,723) | 2,381,940) | |
| Total assets | 12,531,234) | 9,265,562) | 8,275,765) | 7,703,563) | 6,855,732) | |
| Solvency Ratio | ||||||
| Debt to assets (including operating lease liability)1 | 0.26 | 0.34 | 0.34 | 0.31 | 0.35 | |
| Benchmarks | ||||||
| Debt to Assets (including Operating Lease Liability), Competitors2 | ||||||
| Freeport-McMoRan Inc. | 0.20 | 0.24 | — | — | — | |
| Debt to Assets (including Operating Lease Liability), Industry | ||||||
| Materials | 0.24 | 0.25 | — | — | — | |
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 2021 Calculation
Debt to assets (including operating lease liability) = Total debt (including operating lease liability) ÷ Total assets
= 3,205,950 ÷ 12,531,234 = 0.26
2 Click competitor name to see calculations.
The data reveals key trends in debt, assets, and leverage over a five-year period from 2017 to 2021.
- Total Debt (including operating lease liability)
- The total debt amount shows an overall increasing trend from 2,381,940 thousand US dollars in 2017 to 3,205,950 thousand US dollars in 2021. The increase is particularly notable from 2018 to 2020, with debt rising steadily each year, then stabilizing from 2020 to 2021.
- Total Assets
- Total assets exhibit consistent growth throughout the period, rising from 6,855,732 thousand US dollars in 2017 to 12,531,234 thousand US dollars in 2021. The most significant asset growth occurs between 2020 and 2021, evidencing substantial expansion of asset base in the most recent year.
- Debt to Assets Ratio (including operating lease liability)
- This ratio declines overall from 0.35 in 2017 to 0.26 in 2021, indicating a lowered reliance on debt relative to the asset base over time. Notably, the ratio decreased from 0.31 in 2018 to 0.26 in 2021 despite increases in absolute debt, driven by the more rapid growth of total assets. The ratio remained stable at 0.34 during 2019 and 2020 before declining sharply in 2021.
In summary, the company’s financial structure shows increasing total assets outpacing total debt growth, resulting in a reduced leverage ratio. This pattern suggests improved capitalization and possibly a stronger financial position by the end of 2021.
Financial Leverage
Steel Dynamics Inc., financial leverage calculation, comparison to benchmarks
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Total assets | 12,531,234) | 9,265,562) | 8,275,765) | 7,703,563) | 6,855,732) | |
| Total Steel Dynamics, Inc. equity | 6,304,641) | 4,345,164) | 4,075,834) | 3,935,071) | 3,351,574) | |
| Solvency Ratio | ||||||
| Financial leverage1 | 1.99 | 2.13 | 2.03 | 1.96 | 2.05 | |
| Benchmarks | ||||||
| Financial Leverage, Competitors2 | ||||||
| Freeport-McMoRan Inc. | 3.44 | 4.14 | — | — | — | |
| Financial Leverage, Industry | ||||||
| Materials | 2.49 | 2.47 | — | — | — | |
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 2021 Calculation
Financial leverage = Total assets ÷ Total Steel Dynamics, Inc. equity
= 12,531,234 ÷ 6,304,641 = 1.99
2 Click competitor name to see calculations.
- Total Assets
- The total assets demonstrated a consistent upward trajectory over the five-year period. Starting at approximately 6.86 billion USD at the end of 2017, the assets rose steadily each year, reaching about 12.53 billion USD by the end of 2021. This substantial growth suggests ongoing expansion or acquisition activities and an overall strengthening of the asset base.
- Total Equity
- Equity also showed a positive growth trend, increasing from roughly 3.35 billion USD in 2017 to approximately 6.30 billion USD in 2021. The increase was gradual in the initial years, with a noticeable acceleration between 2020 and 2021. This indicates strengthening shareholder value and possibly retained earnings or additional capital infusion enhancing the equity position.
- Financial Leverage
- The financial leverage ratio fluctuated within a narrow range between 1.96 and 2.13 over the observed period. It decreased slightly from 2.05 in 2017 to 1.96 in 2018, rising again to a peak of 2.13 in 2020 before declining to 1.99 in 2021. These variations suggest moderate changes in the relative proportion of debt to equity, with the company maintaining a generally stable leverage profile, implying consistent risk exposure related to its capital structure.
Interest Coverage
Steel Dynamics Inc., interest coverage calculation, comparison to benchmarks
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Net income attributable to Steel Dynamics, Inc. | 3,214,066) | 550,822) | 671,103) | 1,258,379) | 812,741) | |
| Add: Net income attributable to noncontrolling interest | 32,748) | 20,006) | 6,797) | (2,574) | (6,945) | |
| Add: Income tax expense | 962,256) | 134,650) | 197,437) | 363,969) | 129,439) | |
| Add: Interest expense, net of capitalized interest | 57,209) | 94,877) | 127,104) | 126,620) | 134,399) | |
| Earnings before interest and tax (EBIT) | 4,266,279) | 800,355) | 1,002,441) | 1,746,394) | 1,069,634) | |
| Solvency Ratio | ||||||
| Interest coverage1 | 74.57 | 8.44 | 7.89 | 13.79 | 7.96 | |
| Benchmarks | ||||||
| Interest Coverage, Competitors2 | ||||||
| Freeport-McMoRan Inc. | 13.73 | 4.03 | — | — | — | |
| Interest Coverage, Industry | ||||||
| Materials | 15.36 | 8.03 | — | — | — | |
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 2021 Calculation
Interest coverage = EBIT ÷ Interest expense
= 4,266,279 ÷ 57,209 = 74.57
2 Click competitor name to see calculations.
- Earnings before interest and tax (EBIT)
- The company's EBIT displayed significant variability over the period analyzed. Starting at approximately $1.07 billion in 2017, it increased markedly to around $1.75 billion in 2018, representing strong growth. However, EBIT declined substantially in the subsequent years, falling to about $1.00 billion in 2019 and decreasing further to approximately $800 million in 2020. A notable recovery occurred in 2021, with EBIT surging to approximately $4.27 billion, indicating an exceptional improvement in operating profitability that year.
- Interest expense, net of capitalized interest
- Interest expense showed a declining trend over the period. Beginning at roughly $134 million in 2017, it slightly decreased to around $127 million in 2018 and remained relatively stable through 2019. A more pronounced reduction was observed in 2020, with interest expense falling to about $95 million, followed by a further decline to approximately $57 million in 2021. This downward trajectory suggests effective interest cost management or a reduction in debt obligations.
- Interest coverage
- The interest coverage ratio, which indicates the company's ability to service interest payments from operational earnings, varied considerably during the period. The ratio was 7.96 in 2017, growing significantly to 13.79 in 2018, reflecting improved capacity to cover interest. It dropped to 7.89 in 2019, followed by a slight increase to 8.44 in 2020. A remarkable increase to 74.57 was recorded in 2021, correlating with the surge in EBIT and reduction in interest expense. This exceptionally high ratio in the final year highlights a substantial strengthening of financial health regarding interest obligations.
Fixed Charge Coverage
Steel Dynamics Inc., fixed charge coverage calculation, comparison to benchmarks
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Net income attributable to Steel Dynamics, Inc. | 3,214,066) | 550,822) | 671,103) | 1,258,379) | 812,741) | |
| Add: Net income attributable to noncontrolling interest | 32,748) | 20,006) | 6,797) | (2,574) | (6,945) | |
| Add: Income tax expense | 962,256) | 134,650) | 197,437) | 363,969) | 129,439) | |
| Add: Interest expense, net of capitalized interest | 57,209) | 94,877) | 127,104) | 126,620) | 134,399) | |
| Earnings before interest and tax (EBIT) | 4,266,279) | 800,355) | 1,002,441) | 1,746,394) | 1,069,634) | |
| Add: Operating lease expense | 22,500) | 21,300) | 20,100) | 21,100) | 18,900) | |
| Earnings before fixed charges and tax | 4,288,779) | 821,655) | 1,022,541) | 1,767,494) | 1,088,534) | |
| Interest expense, net of capitalized interest | 57,209) | 94,877) | 127,104) | 126,620) | 134,399) | |
| Operating lease expense | 22,500) | 21,300) | 20,100) | 21,100) | 18,900) | |
| Fixed charges | 79,709) | 116,177) | 147,204) | 147,720) | 153,299) | |
| Solvency Ratio | ||||||
| Fixed charge coverage1 | 53.81 | 7.07 | 6.95 | 11.97 | 7.10 | |
| Benchmarks | ||||||
| Fixed Charge Coverage, Competitors2 | ||||||
| Freeport-McMoRan Inc. | 11.86 | 3.53 | — | — | — | |
| Fixed Charge Coverage, Industry | ||||||
| Materials | 8.75 | 4.84 | — | — | — | |
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 2021 Calculation
Fixed charge coverage = Earnings before fixed charges and tax ÷ Fixed charges
= 4,288,779 ÷ 79,709 = 53.81
2 Click competitor name to see calculations.
The financial data reveals several noteworthy trends over the five-year period ending December 31, 2021.
- Earnings before Fixed Charges and Tax
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This metric exhibits considerable volatility. Starting at approximately 1.09 billion US dollars in 2017, earnings increased sharply in 2018 to nearly 1.77 billion. However, a decline followed in 2019 and 2020, reaching a low of about 822 million. Thereafter, there was a substantial recovery in 2021, with earnings surging to approximately 4.29 billion, the highest in the observed period.
- Fixed Charges
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Fixed charges have shown a steady decreasing trend throughout the period. Beginning at around 153 million US dollars in 2017, fixed charges declined gradually each year, reaching roughly 80 million by 2021. This reduction suggests improved management or restructuring of financial obligations tied to fixed costs.
- Fixed Charge Coverage Ratio
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The fixed charge coverage ratio fluctuated significantly over the period. It rose from 7.1 in 2017 to nearly 12 in 2018, indicating improved capacity to cover fixed charges with earnings. The ratio then dropped below 7 in 2019, and held steady around 7 in 2020. A remarkable increase occurred in 2021, with the ratio soaring to above 53, reflecting exceptional earnings relative to fixed charges in that year. This suggests a greatly enhanced ability to meet fixed financial commitments from operational earnings.