Analysis of Debt
Total Debt (Carrying Amount)
Steel Dynamics Inc., balance sheet: debt
US$ in thousands
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).
The total long-term debt carrying amount demonstrates a steady upward trajectory over the five-year period from 2017 to 2021. Following a period of relative stability between 2017 and 2018, the organization experienced significant expansions in its debt obligations, particularly during the 2019 and 2020 fiscal years, before stabilizing in 2021.
- Total Debt Accumulation
- Total long-term debt, including current maturities, increased from 2,381,940 thousand US dollars in 2017 to 3,105,876 thousand US dollars by the end of 2021. This represents an overall increase of approximately 30.4% over the period. The most pronounced growth occurred between 2018 and 2020, where the total carrying amount rose from 2,376,723 thousand US dollars to 3,102,676 thousand US dollars.
- Non-Current Debt Profile
- Debt excluding current maturities mirrors the general upward trend of the total debt. Obligations remained flat between 2017 and 2018 at approximately 2.35 billion US dollars, followed by a sharp increase to 2,644,988 thousand US dollars in 2019 and further growth to 3,015,782 thousand US dollars in 2020. The balance remained nearly constant into 2021, ending at 3,008,702 thousand US dollars.
- Current Maturity Trends
- A notable shift in the short-term debt profile is observed starting in 2019. Current maturities of long-term debt rose from 24,234 thousand US dollars in 2018 to 89,356 thousand US dollars in 2019, an increase of approximately 268%. This elevated level of short-term obligations persisted through 2021, reaching 97,174 thousand US dollars, indicating a higher volume of debt coming due within the immediate twelve-month cycle compared to the 2017-2018 period.
AI Ask an analyst for more
Hi, I’m an AI-powered financial analyst at Stock Analysis on Net.
Without a user account, I tend to respond rather slowly.
How can I help you?
Total Debt (Fair Value)
| Dec 31, 2021 | |
|---|---|
| Selected Financial Data (US$ in thousands) | |
| Total long-term debt, including current maturities (fair value) | 3,300,000) |
| Financial Ratio | |
| Debt, fair value to carrying amount ratio | 1.06 |
Based on: 10-K (reporting date: 2021-12-31).
Weighted-average Interest Rate on Debt
Weighted-average interest rate on long-term debt: 3.12%
| Interest rate | Debt amount1 | Interest rate × Debt amount | Weighted-average interest rate2 |
|---|---|---|---|
| 2.80% | 400,000) | 11,200) | |
| 2.40% | 400,000) | 9,600) | |
| 5.00% | 400,000) | 20,000) | |
| 1.65% | 350,000) | 5,775) | |
| 3.45% | 600,000) | 20,700) | |
| 3.25% | 500,000) | 16,250) | |
| 3.25% | 400,000) | 13,000) | |
| 4.70% | 10,400) | 489) | |
| 1.60% | 94,400) | 1,510) | |
| Total | 3,154,800) | 98,524) | |
| 3.12% | |||
Based on: 10-K (reporting date: 2021-12-31).
1 US$ in thousands
2 Weighted-average interest rate = 100 × 98,524 ÷ 3,154,800 = 3.12%
Interest Costs Incurred
Steel Dynamics Inc., interest costs incurred
US$ in thousands
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).
Analysis of interest costs incurred between 2017 and 2021 reveals a general downward trajectory in total borrowing costs, coupled with a significant shift in the accounting treatment of these costs between immediate expensing and capitalization.
- Total Interest Costs Incurred
- Aggregate interest costs demonstrated a steady decline over the five-year period, falling from US$ 136.1 million in 2017 to US$ 107.7 million in 2021. While costs remained relatively stable through 2019, a more pronounced reduction occurred in 2020 and 2021, resulting in an overall decrease of approximately 20.8%.
- Interest Expense Trends
- Interest recognized as an expense in the income statement experienced a sharp contraction. From a high of US$ 134.4 million in 2017, the expense decreased to US$ 57.2 million by 2021. This represents a substantial decline of 57.5%, which may indicate a reduction in total outstanding debt or a lower weighted average cost of capital.
- Capitalized Interest on Construction in Progress
- In contrast to the declining expense trend, interest capitalized into assets grew exponentially. This figure rose from US$ 1.7 million in 2017 to US$ 50.5 million in 2021. The most aggressive growth occurred between 2019 and 2021, indicating a significant increase in investment toward long-term capital projects and construction assets.
- Allocation Shift
- A notable divergence is observed in the allocation of interest costs. In 2017, capitalized interest represented only 1.2% of total interest costs incurred. By 2021, this proportion increased to approximately 46.9%. This shift suggests that a larger share of the company's borrowing costs is being deferred and added to the cost basis of assets rather than impacting the immediate bottom line as an operating expense.
AI Ask an analyst for more
Hi, I’m an AI-powered financial analyst at Stock Analysis on Net.
Without a user account, I tend to respond rather slowly.
How can I help you?
Adjusted Interest Coverage Ratio
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).
2021 Calculations
1 Interest coverage ratio (without capitalized interest) = EBIT ÷ Interest expense, net of capitalized interest
= 4,266,279 ÷ 57,209 = 74.57
2 Adjusted interest coverage ratio (with capitalized interest) = EBIT ÷ Interest costs incurred
= 4,266,279 ÷ 107,709 = 39.61
The solvency profile exhibits significant volatility between 2017 and 2020, followed by a substantial expansion in interest coverage capabilities in 2021. While both metrics tracked similar trajectories for the majority of the observed period, the inclusion of capitalized interest consistently reduced the reported coverage capacity.
- Interest coverage ratio (without capitalized interest)
- This metric experienced a peak of 13.79 in 2018 before retreating to levels near 8.0 in 2019 and 2020. A sharp increase is observed in 2021, where the ratio reached 74.57, indicating a drastic improvement in the ability to service interest obligations from operating profits.
- Adjusted interest coverage ratio (with capitalized interest)
- The adjusted ratio followed a similar upward trend to 13.48 in 2018 but exhibited a more pronounced decline through 2020, reaching a period low of 6.74. Similar to the non-adjusted metric, a surge occurred in 2021, with the ratio rising to 39.61.
- Comparative Analysis and Capitalization Impact
- A persistent gap exists between the two ratios, as the adjusted coverage is consistently lower. This divergence widened significantly in 2021; while the non-adjusted ratio reached 74.57, the adjusted ratio was only 39.61. This suggests that the capitalization of interest played a more substantial role in the financial structure during 2021, effectively reducing the available coverage margin compared to the non-adjusted figure.
AI Ask an analyst for more
Hi, I’m an AI-powered financial analyst at Stock Analysis on Net.
Without a user account, I tend to respond rather slowly.
How can I help you?