Common-Size Income Statement
Steel Dynamics Inc., common-size consolidated income statement
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 financial data reveals several noteworthy trends in profitability and cost management over the analyzed period.
- Sales Composition
- The proportion of sales to unrelated parties remained consistently high, near 99.8% throughout the years, indicating a stable external customer base. Correspondingly, related party sales were minimal, fluctuating around or below 0.2% of net sales.
- Cost of Goods Sold (COGS) and Gross Profit
- COGS as a percentage of net sales showed variability, initially decreasing from -83.41% in 2017 to -80.35% in 2018, then increasing sharply to above -85% in 2019 and 2020 before a significant reduction to -70.87% in 2021. This decline in 2021 suggests improved production efficiency or cost controls. Consequently, gross profit mirrored these trends, rising from 16.59% in 2017 to a peak of 29.13% in 2021 after a dip around 2019 and 2020, indicating enhanced profitability at the gross margin level in the most recent year.
- Operating Expenses
- Selling, general and administrative expenses (SG&A) remained relatively stable, decreasing slightly from -4.14% in 2017 to -3.5% by 2021, suggesting disciplined cost management. Profit sharing costs fluctuated but increased notably in 2021 to -2.11%, a substantial rise compared to prior years, which may have impacted net profitability. Amortization of intangible assets remained a minor but consistent expense, gradually decreasing to -0.16% by 2021. An asset impairment charge appeared only in 2020 at -0.2%, impacting profitability that year.
- Operating Income and Profitability Metrics
- Operating income as a percent of net sales showed an initial increase from 11.18% in 2017 to 14.57% in 2018, followed by declines to below 10% in 2019 and 2020. A substantial increase to 23.36% in 2021 reflects significant operational improvements or favorable market conditions. Interest expense declined consistently over the years, reducing financial costs from -1.41% to -0.31%, supporting improved net earnings. Other income/expense fluctuated without a clear pattern, showing a small positive impact early on and negative impacts in 2020 and 2021.
- Income Before Taxes and Net Income
- Income before income taxes aligned with operating income trends, peaking in 2018, dipping through 2020, then sharply rising in 2021. Income tax expense varied, peaking at -5.23% in 2021, which reflects higher pre-tax profitability and possibly changes in tax strategy or rates. Net income attributable to the company followed these patterns, rising from 8.52% in 2017 to a high of 17.46% in 2021 after lows in 2019 and 2020. This confirms a strong recovery and significant profitability improvement in the last reported year.
- Noncontrolling Interests
- Net income attributable to noncontrolling interests remained negligible and stable, indicating that most net income changes stem from company operations rather than minority interests.