Steel Dynamics Inc. (NASDAQ:STLD)

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.