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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
Net Operating Profit after Taxes (NOPAT)
Cash Operating Taxes
Invested Capital
Cost of Capital
Economic Spread Ratio
Economic Profit Margin

Steel Dynamics Inc., economic profit calculation

US$ in thousands

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	14.71%	13.61%	12.99%	14.69%	15.11%
Invested capital³	8,550,168)	6,781,124)	6,721,821)	6,403,131)	5,964,900)

Economic profit⁴	2,353,490)	(227,134)	(45,817)	480,108)	(145,743)

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
= 3,611,424 – 14.71% × 8,550,168 = 2,353,490

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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.

Steel Dynamics Inc., NOPAT calculation

US$ in thousands

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..

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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.

Steel Dynamics Inc., cash operating taxes calculation

US$ in thousands

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).

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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.

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

US$ in thousands

	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.

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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.

Steel Dynamics Inc., cost of capital calculations

Dec 31, 2021

	Capital (fair value)¹	Weights					Cost of capital
Equity²	13,501,895)	13,501,895)	÷	16,901,969)	=	0.80	0.80	×	17.79%	=	14.21%
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					14.71%

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 »

Dec 31, 2020

	Capital (fair value)¹	Weights					Cost of capital
Equity²	9,286,334)	9,286,334)	÷	12,776,650)	=	0.73	0.73	×	17.79%	=	12.93%
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					13.61%

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 »

Dec 31, 2019

	Capital (fair value)¹	Weights					Cost of capital
Equity²	5,742,479)	5,742,479)	÷	8,617,908)	=	0.67	0.67	×	17.79%	=	11.86%
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					12.99%

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 »

Dec 31, 2018

	Capital (fair value)¹	Weights					Cost of capital
Equity²	8,504,794)	8,504,794)	÷	10,977,855)	=	0.77	0.77	×	17.79%	=	13.79%
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					14.69%

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 »

Dec 31, 2017

	Capital (fair value)¹	Weights					Cost of capital
Equity²	11,215,751)	11,215,751)	÷	13,762,850)	=	0.81	0.81	×	17.79%	=	14.50%
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					15.11%

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 »

Steel Dynamics Inc., economic spread ratio 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)
Economic profit¹	2,353,490)	(227,134)	(45,817)	480,108)	(145,743)
Invested capital²	8,550,168)	6,781,124)	6,721,821)	6,403,131)	5,964,900)
Performance Ratio
Economic spread ratio³	27.53%	-3.35%	-0.68%	7.50%	-2.44%
Benchmarks
Economic Spread Ratio, Competitors⁴
Freeport-McMoRan Inc.	-2.38%	-13.95%	-14.55%	—	—
Newmont Corp.	-7.61%	0.48%	3.66%	—	—

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 × 2,353,490 ÷ 8,550,168 = 27.53%

⁴ Click competitor name to see calculations.

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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.

Steel Dynamics Inc., economic profit margin 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)
Economic profit¹	2,353,490)	(227,134)	(45,817)	480,108)	(145,743)
Net sales	18,408,850)	9,601,482)	10,464,991)	11,821,839)	9,538,797)
Performance Ratio
Economic profit margin²	12.78%	-2.37%	-0.44%	4.06%	-1.53%
Benchmarks
Economic Profit Margin, Competitors³
Freeport-McMoRan Inc.	-3.63%	-31.49%	-28.44%	—	—
Newmont Corp.	-17.17%	1.23%	10.87%	—	—

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 × 2,353,490 ÷ 18,408,850 = 12.78%

³ Click competitor name to see calculations.

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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.

Steel Dynamics Inc. (NASDAQ:STLD)

Economic Value Added (EVA)

Economic Profit

Net Operating Profit after Taxes (NOPAT)

Cash Operating Taxes

Invested Capital

Cost of Capital

Economic Spread Ratio

Economic Profit Margin