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)
Debt Ratios
Coverage Ratios
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).
The solvency profile exhibits a general trend of strengthening, characterized by a significant reduction in leverage and a substantial increase in debt-servicing capacity by the end of the observed period. While ratios remained relatively stable between 2017 and 2020, a sharp improvement in financial stability occurred in 2021.
- Leverage and Capital Structure
- Debt to equity, debt to capital, and debt to assets ratios followed a similar trajectory, remaining consistent for several years before declining markedly in 2021. The debt to equity ratio fluctuated between 0.60 and 0.71 from 2017 to 2020, before dropping to 0.49 in 2021. Similarly, the debt to assets ratio decreased from 0.35 in 2017 to 0.25 in 2021, indicating a reduced reliance on borrowed funds to finance assets.
- Impact of Lease Liabilities
- The inclusion of operating lease liabilities results in a marginal increase across all leverage metrics. This delta is consistently minimal, suggesting that operating lease obligations represent a small fraction of the total capital structure compared to traditional debt.
- Financial Leverage
- Financial leverage remained remarkably stable over the five-year period, fluctuating within a narrow range between 1.96 and 2.13. This stability indicates a consistent approach to the overall multiplier effect of debt on equity throughout the period.
- Coverage Ratios
- A dramatic expansion in coverage ratios is observed in 2021. Interest coverage rose from a range of 7.89 to 13.79 in previous years to 74.57 in 2021. Fixed charge coverage mirrored this trend, surging to 53.81 in 2021 from a prior peak of 11.97 in 2018. These figures indicate an extraordinary increase in the ability to meet fixed financial obligations, likely driven by a significant increase in operating income relative to interest expenses.
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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 | — | — | — | — | |
| Debt to Equity, Industry | ||||||
| Materials | 0.55 | — | — | — | — | |
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.
The solvency profile from 2017 to 2021 demonstrates a strengthening of the balance sheet, characterized by a substantial increase in equity that outpaced the growth of total debt. Although the company expanded its debt obligations over the period, the simultaneous and more aggressive growth of the equity base resulted in a significantly lower leverage ratio by the end of the analyzed timeframe.
- Total Debt Trends
- Total debt remained relatively stable between 2017 and 2018 before entering a period of growth. Debt obligations increased from 2,381,940 thousand US$ in 2017 to 3,105,876 thousand US$ by 2021, representing an overall increase of approximately 30%. The most significant annual increments occurred between 2019 and 2020.
- Equity Growth Analysis
- Total equity exhibited consistent and accelerating growth throughout the period. Equity rose from 3,351,574 thousand US$ in 2017 to 6,304,641 thousand US$ in 2021. A notable surge is observed in 2021, where equity increased by nearly 45% over the previous year's balance, significantly enhancing the company's net asset position.
- Debt to Equity Ratio Evolution
- The debt to equity ratio experienced moderate fluctuations between 0.60 and 0.71 from 2017 through 2020, indicating a stable leverage strategy during those years. A sharp decline to 0.49 was recorded in 2021, marking the lowest leverage point in the five-year period. This trend reflects a shift toward a more conservative financial structure with a reduced reliance on debt relative to shareholder equity.
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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 | — | — | — | — | |
| Debt to Equity (including Operating Lease Liability), Industry | ||||||
| Materials | 0.60 | — | — | — | — | |
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 solvency profile demonstrates a strengthening capital structure over the five-year period ending December 31, 2021. While total liabilities increased over the duration, the growth in equity significantly outpaced the accumulation of debt, resulting in a reduction of overall financial leverage by the end of the period.
- Total Debt Trends
- Total debt, inclusive of operating lease liabilities, exhibited a general upward trajectory from 2018 to 2021. After remaining relatively stable between 2017 and 2018, debt levels rose from US$ 2,381,940 thousand to US$ 3,205,950 thousand by the end of 2021. This represents a cumulative increase of approximately 34% over the five-year window, with the most rapid growth occurring between 2018 and 2020.
- Total Equity Growth
- Equity showed consistent and accelerating growth throughout the analyzed period. Total equity increased from US$ 3,351,574 thousand in 2017 to US$ 6,304,641 thousand in 2021. A significant surge is observed between 2020 and 2021, where equity grew by approximately US$ 1.96 billion, indicating a substantial increase in the organization's net asset base.
- Debt to Equity Ratio Interpretation
- The debt to equity ratio fluctuated between 0.60 and 0.73 from 2017 through 2020, reflecting a period of moderate leverage. The ratio peaked at 0.73 in 2020, coinciding with the period of steepest debt accumulation. However, a sharp decline to 0.51 is observed in 2021, marking the lowest leverage level in the five-year series. This improvement is primarily driven by the aggressive expansion of total equity rather than a reduction in absolute debt levels.
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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 | — | — | — | — | |
| Debt to Capital, Industry | ||||||
| Materials | 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.
The analysis of solvency indicators from 2017 to 2021 demonstrates a trend of capital expansion that outpaces the growth of total liabilities. While nominal debt levels increased over the five-year period, the overall solvency profile strengthened by the end of the term due to a significant increase in the total capital base.
- Total Debt Trends
- Total debt remained relatively stable between 2017 and 2018, followed by a period of growth from 2019 through 2020, where levels rose from approximately 2.73 billion to 3.10 billion. Debt levels plateaued between 2020 and 2021, showing minimal fluctuation in the final year.
- Total Capital Growth
- A consistent upward trajectory in total capital is observed throughout the analyzed period. Capital increased from 5.73 billion in 2017 to 9.41 billion in 2021. The most pronounced expansion occurred between 2020 and 2021, reflecting a substantial increase in the total resource base.
- Debt to Capital Ratio Analysis
- The debt to capital ratio fluctuated within a narrow range between 0.38 and 0.42 from 2017 to 2020. However, a notable decline to 0.33 was recorded in 2021. This reduction indicates a shift toward a more conservative capital structure, as the growth in total capital significantly exceeded the growth in debt, thereby improving the company's long-term solvency position.
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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 | — | — | — | — | |
| Debt to Capital (including Operating Lease Liability), Industry | ||||||
| Materials | 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.
The solvency profile from 2017 to 2021 reflects a strategic expansion of the capital base that has outpaced the accumulation of debt, resulting in an overall improvement in the leverage position by the end of the period.
- Total Debt Progression
- Total debt, inclusive of operating lease liabilities, exhibited a general upward trajectory over the analyzed period. After remaining relatively stable between 2017 and 2018, debt levels rose from approximately $2.38 billion to $3.21 billion by the end of 2021, representing a total increase of 34.6% over the five-year window.
- Total Capital Growth
- The total capital base demonstrated consistent and accelerating growth throughout the period. Capital increased from $5.73 billion in 2017 to $9.51 billion in 2021, an expansion of approximately 65.8%. The most significant growth occurred between 2020 and 2021, during which capital increased by approximately $1.97 billion.
- Debt to Capital Ratio Analysis
- The debt to capital ratio remained relatively range-bound between 0.38 and 0.42 from 2017 through 2020. However, a significant contraction to 0.34 was observed in 2021. This downward shift indicates that the growth in total capital substantially exceeded the growth in total debt during the final year, thereby reducing the proportion of debt within the total capital structure and improving the overall solvency metric.
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Debt to Assets
Steel Dynamics Inc., debt to assets calculation, comparison to benchmarks
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ 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 | — | — | — | — | |
| Debt to Assets, Industry | ||||||
| Materials | 0.22 | — | — | — | — | |
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.
The solvency profile demonstrates a general trend toward improved financial stability between 2017 and 2021. While absolute debt levels increased over the period, the growth of the asset base outpaced the accumulation of debt, resulting in a lower overall leverage ratio by the end of the analyzed timeframe.
- Total Debt Evolution
- Total debt remained relatively stable between 2017 and 2018, followed by a period of growth from 2019 through 2020. Debt levels rose from 2.38 billion in 2017 to 3.11 billion by 2021. The increase was most pronounced between 2018 and 2020, while the value remained nearly flat between 2020 and 2021.
- Asset Base Expansion
- Total assets exhibited consistent and accelerating growth throughout the five-year period. Assets increased from 6.86 billion in 2017 to 12.53 billion in 2021. A significant expansion is observed in the final year, where assets grew by approximately 3.27 billion, indicating a substantial increase in the company's resource base.
- Debt to Assets Ratio Trends
- The debt to assets ratio showed relative stability between 2018 and 2020, fluctuating within a narrow band of 0.31 to 0.33. A notable improvement in solvency occurred on December 31, 2021, when the ratio dropped to 0.25. This decline indicates that a smaller proportion of the company's assets were financed through debt by the end of the period, reflecting a strengthened balance sheet and reduced solvency risk.
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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 | — | — | — | — | |
| Debt to Assets (including Operating Lease Liability), Industry | ||||||
| Materials | 0.24 | — | — | — | — | |
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 analysis of solvency indicators from 2017 to 2021 reveals a strategic expansion of the asset base that has effectively lowered the overall leverage of the organization.
- Total Debt Trends
- Total debt, including operating lease liabilities, exhibited a gradual upward trajectory over the analyzed period. After remaining relatively stable between 2017 and 2018 at approximately $2.38 billion, obligations increased to $3.21 billion by the end of 2021. The most pronounced period of debt accumulation occurred between 2018 and 2020.
- Total Asset Growth
- Asset growth was consistent and significant throughout the five-year window. Total assets rose from $6.86 billion in 2017 to $12.53 billion in 2021. A substantial acceleration in asset acquisition is observed between 2020 and 2021, where the asset base increased by approximately $3.27 billion in a single year.
- Debt to Assets Ratio Analysis
- The debt to assets ratio fluctuated within a narrow range between 0.31 and 0.35 from 2017 through 2020, indicating a stable leverage profile. However, a significant reduction to 0.26 was recorded in 2021. This improvement in solvency is a direct result of asset growth far outpacing the marginal increase in total debt during the final year, thereby reducing the proportion of the company's assets financed through debt and lease liabilities.
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Financial Leverage
Steel Dynamics Inc., financial leverage calculation, comparison to benchmarks
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ 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 | — | — | — | — | |
| Financial Leverage, Industry | ||||||
| Materials | 2.49 | — | — | — | — | |
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.
Between 2017 and 2021, a consistent expansion of the balance sheet is observed, characterized by steady growth in both total assets and total equity. This growth culminated in a significant increase during the 2021 fiscal year, while the overall capital structure remained stable.
- Total Asset Expansion
- Total assets increased from US$ 6,855,732 thousand in 2017 to US$ 12,531,234 thousand in 2021. The most pronounced growth occurred between 2020 and 2021, where assets rose by approximately 35%.
- Equity Growth
- Total equity followed a similar upward trajectory, growing from US$ 3,351,574 thousand in 2017 to US$ 6,304,641 thousand in 2021. The equity base expanded significantly in the final year of the period, mirroring the growth seen in total assets.
- Financial Leverage Stability
- The financial leverage ratio exhibited minimal volatility over the five-year period, ranging from a low of 1.96 in 2018 to a high of 2.13 in 2020. By December 31, 2021, the ratio settled at 1.99, indicating that the company maintained a consistent proportion of debt and equity relative to its total assets despite substantial growth in its operational scale.
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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 | — | — | — | — | |
| Interest Coverage, Industry | ||||||
| Materials | 15.36 | — | — | — | — | |
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
Interest coverage = EBIT ÷ Interest expense
= 4,266,279 ÷ 57,209 = 74.57
2 Click competitor name to see calculations.
The solvency profile regarding interest coverage demonstrates a significant strengthening between 2017 and 2021, characterized by a substantial increase in the capacity to service debt obligations. The period is marked by volatility in operating earnings, which was eventually offset by a consistent reduction in net interest expenses, culminating in a peak solvency position at the end of the period.
- Earnings Before Interest and Tax (EBIT) Trends
- Operating earnings exhibited fluctuation from 2017 through 2020, peaking in 2018 at approximately 1.75 billion USD before declining to a period low of 800.36 million USD in 2020. However, a sharp recovery occurred in 2021, with EBIT increasing to 4.27 billion USD, representing a more than fivefold increase from the previous year.
- Net Interest Expense Analysis
- Interest obligations showed a general downward trend over the analyzed period. Expenses decreased from 134.40 million USD in 2017 to 57.21 million USD in 2021. This steady decline indicates either a reduction in total debt load or a transition to lower-cost financing, which reduced the fixed financial burden.
- Interest Coverage Ratio Dynamics
- The interest coverage ratio remained robust throughout the period, never falling below 7.89. After fluctuating between 7.89 and 13.79 from 2017 to 2020, the ratio expanded exponentially to 74.57 in 2021. This surge is the direct result of the simultaneous increase in operating profitability and the reduction in interest expenses, signifying an exceptionally low risk of default on interest payments.
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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 | — | — | — | — | |
| Fixed Charge Coverage, Industry | ||||||
| Materials | 8.75 | — | — | — | — | |
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 analysis of fixed charge coverage from 2017 to 2021 indicates a significant strengthening of the solvency position, culminating in an exceptional ability to meet fixed obligations by the end of the observed period.
- Earnings Before Fixed Charges and Tax
- Earnings exhibited volatility between 2017 and 2020, peaking in 2018 at 1,767,494 thousand USD before declining to a period low of 821,655 thousand USD in 2020. A substantial recovery occurred in 2021, with earnings rising sharply to 4,288,779 thousand USD, marking a significant expansion in the capital available to cover fixed costs.
- Fixed Charges Trend
- A consistent downward trend is observed in fixed charges. Obligations decreased from 153,299 thousand USD in 2017 to 79,709 thousand USD in 2021. This steady reduction in fixed financial burdens has contributed to the overall improvement in the solvency profile.
- Fixed Charge Coverage Ratio
- The coverage ratio remained relatively stable between 2017 and 2020, fluctuating between a minimum of 6.95 and a maximum of 11.97. In 2021, the ratio experienced an exponential increase to 53.81. This surge was driven by the simultaneous impact of record-high earnings and the lowest level of fixed charges in the five-year period, indicating an extremely high margin of safety for meeting fixed financial commitments.
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