Analysis of Solvency Ratios
Quarterly Data
Solvency ratios also known as long-term debt ratios measure a company ability to meet long-term obligations.
Solvency Ratios (Summary)
Steel Dynamics Inc., solvency ratios (quarterly data)
Based on: 10-Q (reporting date: 2022-09-30), 10-Q (reporting date: 2022-06-30), 10-Q (reporting date: 2022-03-31), 10-K (reporting date: 2021-12-31), 10-Q (reporting date: 2021-09-30), 10-Q (reporting date: 2021-06-30), 10-Q (reporting date: 2021-03-31), 10-K (reporting date: 2020-12-31), 10-Q (reporting date: 2020-09-30), 10-Q (reporting date: 2020-06-30), 10-Q (reporting date: 2020-03-31), 10-K (reporting date: 2019-12-31), 10-Q (reporting date: 2019-09-30), 10-Q (reporting date: 2019-06-30), 10-Q (reporting date: 2019-03-31), 10-K (reporting date: 2018-12-31), 10-Q (reporting date: 2018-09-30), 10-Q (reporting date: 2018-06-30), 10-Q (reporting date: 2018-03-31).
- Debt to Equity
- The debt to equity ratio shows a general declining trend from March 2018 through September 2022. Starting at 0.68 in early 2018, the ratio decreases gradually with minor fluctuations, reaching 0.38 by the third quarter of 2022. This decline indicates a steady reduction in leverage relative to equity over the observed period.
- Debt to Capital
- This ratio also follows a downward trajectory, beginning at 0.41 in March 2018 and dropping to 0.28 by September 2022. The movements are relatively smooth, with slight variations around the midpoint of the timeline. The trend reflects a decreasing reliance on debt within the company’s capital structure.
- Debt to Assets
- The debt to assets ratio modestly decreases from 0.34 at the start of 2018 to 0.22 in late 2022. The reduction is gradual but consistent, indicating improved asset funding via equity rather than debt. Minor stability periods occur but do not offset the overall decline in debt utilization relative to assets.
- Financial Leverage
- Financial leverage ratios remain somewhat stable around the 2.0 mark in the initial years, with a slight increase towards late 2020 and early 2021 (peaking approximately at 2.14). Post-2021, a noticeable decline in leverage is evident, falling to 1.76 by the third quarter of 2022. This decrease reflects a gradual reduction in total asset financing through debt relative to equity.
- Interest Coverage
- The interest coverage ratio exhibits a strong increasing trend over the period analyzed. Starting at 8.01 in March 2018, the ratio improves substantially with some fluctuations, peaking dramatically in the first three quarters of 2022 (over 70 times coverage). This substantial rise indicates enhanced ability to meet interest obligations, likely driven by increased earnings or reduced interest expenses, signifying an improving financial health and lower risk from debt servicing.
Debt Ratios
Coverage Ratios
Debt to Equity
Steel Dynamics Inc., debt to equity calculation (quarterly data)
| Sep 30, 2022 | Jun 30, 2022 | Mar 31, 2022 | Dec 31, 2021 | Sep 30, 2021 | Jun 30, 2021 | Mar 31, 2021 | Dec 31, 2020 | Sep 30, 2020 | Jun 30, 2020 | Mar 31, 2020 | Dec 31, 2019 | Sep 30, 2019 | Jun 30, 2019 | Mar 31, 2019 | Dec 31, 2018 | Sep 30, 2018 | Jun 30, 2018 | Mar 31, 2018 | |||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | |||||||||||||||||||||||||
| Current maturities of long-term debt | 22,951) | 37,130) | 68,390) | 97,174) | 55,056) | 93,505) | 81,226) | 86,894) | 82,229) | 73,926) | 70,106) | 89,356) | 82,150) | 72,131) | 80,958) | 24,234) | 14,776) | 18,266) | 9,646) | ||||||
| Long-term debt, excluding current maturities | 3,012,120) | 3,011,116) | 3,010,109) | 3,008,702) | 3,019,175) | 3,016,486) | 3,016,200) | 3,015,782) | 2,636,615) | 2,636,722) | 2,646,012) | 2,644,988) | 2,355,243) | 2,355,917) | 2,354,427) | 2,352,489) | 2,351,979) | 2,352,127) | 2,353,703) | ||||||
| Total debt | 3,035,071) | 3,048,246) | 3,078,499) | 3,105,876) | 3,074,231) | 3,109,991) | 3,097,426) | 3,102,676) | 2,718,844) | 2,710,648) | 2,716,118) | 2,734,344) | 2,437,393) | 2,428,048) | 2,435,385) | 2,376,723) | 2,366,755) | 2,370,393) | 2,363,349) | ||||||
| Total Steel Dynamics, Inc. equity | 7,971,156) | 7,588,348) | 6,964,354) | 6,304,641) | 5,607,926) | 5,020,114) | 4,728,792) | 4,345,164) | 4,201,183) | 4,145,250) | 4,113,526) | 4,075,834) | 4,056,641) | 4,064,490) | 4,008,111) | 3,935,071) | 4,033,768) | 3,746,981) | 3,470,719) | ||||||
| Solvency Ratio | |||||||||||||||||||||||||
| Debt to equity1 | 0.38 | 0.40 | 0.44 | 0.49 | 0.55 | 0.62 | 0.66 | 0.71 | 0.65 | 0.65 | 0.66 | 0.67 | 0.60 | 0.60 | 0.61 | 0.60 | 0.59 | 0.63 | 0.68 | ||||||
| Benchmarks | |||||||||||||||||||||||||
| Debt to Equity, Competitors2 | |||||||||||||||||||||||||
| Freeport-McMoRan Inc. | 0.71 | 0.74 | 0.65 | 0.68 | 0.72 | 0.81 | 0.90 | — | — | — | — | — | — | — | — | — | — | — | — | ||||||
Based on: 10-Q (reporting date: 2022-09-30), 10-Q (reporting date: 2022-06-30), 10-Q (reporting date: 2022-03-31), 10-K (reporting date: 2021-12-31), 10-Q (reporting date: 2021-09-30), 10-Q (reporting date: 2021-06-30), 10-Q (reporting date: 2021-03-31), 10-K (reporting date: 2020-12-31), 10-Q (reporting date: 2020-09-30), 10-Q (reporting date: 2020-06-30), 10-Q (reporting date: 2020-03-31), 10-K (reporting date: 2019-12-31), 10-Q (reporting date: 2019-09-30), 10-Q (reporting date: 2019-06-30), 10-Q (reporting date: 2019-03-31), 10-K (reporting date: 2018-12-31), 10-Q (reporting date: 2018-09-30), 10-Q (reporting date: 2018-06-30), 10-Q (reporting date: 2018-03-31).
1 Q3 2022 Calculation
Debt to equity = Total debt ÷ Total Steel Dynamics, Inc. equity
= 3,035,071 ÷ 7,971,156 = 0.38
2 Click competitor name to see calculations.
The analysis of the quarterly financial data reveals several key trends in the company's capital structure over the observed periods.
- Total Debt
- The total debt level remained relatively stable from the first quarter of 2018 through mid-2019, fluctuating slightly around the 2.36 to 2.44 billion USD range. Starting in late 2019, there was a noticeable increase, peaking around 3.1 billion USD by late 2020 and early 2021. Following this peak, total debt showed a gradual decline but remained above 3 billion USD through the third quarter of 2022.
- Total Equity
- Total equity demonstrated consistent growth throughout the entire period. Beginning at approximately 3.47 billion USD in early 2018, equity increased steadily quarter over quarter without significant interruptions. This growth became more pronounced from 2020 onward, accelerating to nearly 8 billion USD by the third quarter of 2022.
- Debt to Equity Ratio
- The debt to equity ratio initially showed a decreasing trend from early 2018, moving from 0.68 down to about 0.59 by the third quarter of 2018, indicating a reduction in leverage relative to equity growth. It then fluctuated moderately around 0.6 to 0.67 through 2019 and 2020. Starting in early 2021, the ratio began a steady decline, reaching 0.38 by the third quarter of 2022. This indicates that the company steadily reduced its leverage relative to equity during this later period, favoring equity growth over debt accumulation.
Overall, the data suggests a strategic emphasis on strengthening the equity base while maintaining or modestly reducing total debt in recent periods. The declining debt to equity ratio in the most recent years reflects a more conservative capitalization approach, potentially positioning the company for greater financial stability and flexibility.
Debt to Capital
Steel Dynamics Inc., debt to capital calculation (quarterly data)
| Sep 30, 2022 | Jun 30, 2022 | Mar 31, 2022 | Dec 31, 2021 | Sep 30, 2021 | Jun 30, 2021 | Mar 31, 2021 | Dec 31, 2020 | Sep 30, 2020 | Jun 30, 2020 | Mar 31, 2020 | Dec 31, 2019 | Sep 30, 2019 | Jun 30, 2019 | Mar 31, 2019 | Dec 31, 2018 | Sep 30, 2018 | Jun 30, 2018 | Mar 31, 2018 | |||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | |||||||||||||||||||||||||
| Current maturities of long-term debt | 22,951) | 37,130) | 68,390) | 97,174) | 55,056) | 93,505) | 81,226) | 86,894) | 82,229) | 73,926) | 70,106) | 89,356) | 82,150) | 72,131) | 80,958) | 24,234) | 14,776) | 18,266) | 9,646) | ||||||
| Long-term debt, excluding current maturities | 3,012,120) | 3,011,116) | 3,010,109) | 3,008,702) | 3,019,175) | 3,016,486) | 3,016,200) | 3,015,782) | 2,636,615) | 2,636,722) | 2,646,012) | 2,644,988) | 2,355,243) | 2,355,917) | 2,354,427) | 2,352,489) | 2,351,979) | 2,352,127) | 2,353,703) | ||||||
| Total debt | 3,035,071) | 3,048,246) | 3,078,499) | 3,105,876) | 3,074,231) | 3,109,991) | 3,097,426) | 3,102,676) | 2,718,844) | 2,710,648) | 2,716,118) | 2,734,344) | 2,437,393) | 2,428,048) | 2,435,385) | 2,376,723) | 2,366,755) | 2,370,393) | 2,363,349) | ||||||
| Total Steel Dynamics, Inc. equity | 7,971,156) | 7,588,348) | 6,964,354) | 6,304,641) | 5,607,926) | 5,020,114) | 4,728,792) | 4,345,164) | 4,201,183) | 4,145,250) | 4,113,526) | 4,075,834) | 4,056,641) | 4,064,490) | 4,008,111) | 3,935,071) | 4,033,768) | 3,746,981) | 3,470,719) | ||||||
| Total capital | 11,006,227) | 10,636,594) | 10,042,853) | 9,410,517) | 8,682,157) | 8,130,105) | 7,826,218) | 7,447,840) | 6,920,027) | 6,855,898) | 6,829,644) | 6,810,178) | 6,494,034) | 6,492,538) | 6,443,496) | 6,311,794) | 6,400,523) | 6,117,374) | 5,834,068) | ||||||
| Solvency Ratio | |||||||||||||||||||||||||
| Debt to capital1 | 0.28 | 0.29 | 0.31 | 0.33 | 0.35 | 0.38 | 0.40 | 0.42 | 0.39 | 0.40 | 0.40 | 0.40 | 0.38 | 0.37 | 0.38 | 0.38 | 0.37 | 0.39 | 0.41 | ||||||
| Benchmarks | |||||||||||||||||||||||||
| Debt to Capital, Competitors2 | |||||||||||||||||||||||||
| Freeport-McMoRan Inc. | 0.42 | 0.43 | 0.39 | 0.40 | 0.42 | 0.45 | 0.47 | — | — | — | — | — | — | — | — | — | — | — | — | ||||||
Based on: 10-Q (reporting date: 2022-09-30), 10-Q (reporting date: 2022-06-30), 10-Q (reporting date: 2022-03-31), 10-K (reporting date: 2021-12-31), 10-Q (reporting date: 2021-09-30), 10-Q (reporting date: 2021-06-30), 10-Q (reporting date: 2021-03-31), 10-K (reporting date: 2020-12-31), 10-Q (reporting date: 2020-09-30), 10-Q (reporting date: 2020-06-30), 10-Q (reporting date: 2020-03-31), 10-K (reporting date: 2019-12-31), 10-Q (reporting date: 2019-09-30), 10-Q (reporting date: 2019-06-30), 10-Q (reporting date: 2019-03-31), 10-K (reporting date: 2018-12-31), 10-Q (reporting date: 2018-09-30), 10-Q (reporting date: 2018-06-30), 10-Q (reporting date: 2018-03-31).
1 Q3 2022 Calculation
Debt to capital = Total debt ÷ Total capital
= 3,035,071 ÷ 11,006,227 = 0.28
2 Click competitor name to see calculations.
- Total Debt
- The total debt level remained relatively stable from March 2018 through September 2019, fluctuating slightly around 2.36 to 2.44 billion US dollars. A notable increase occurred in December 2019, with debt rising to approximately 2.73 billion US dollars. Following this peak, the debt level held steady around 2.7 to 3.1 billion US dollars through the end of 2020 and 2021. From March 2022 onward, a gradual decrease in total debt is observed, declining from about 3.08 billion to 3.03 billion US dollars in September 2022.
- Total Capital
- Total capital demonstrated a consistent upward trend throughout the observed periods. Starting at approximately 5.83 billion US dollars in March 2018, total capital increased steadily each quarter, reaching over 11 billion US dollars by September 2022. This growth reflects a continuous expansion of the company's capital base over the analyzed timeframe.
- Debt to Capital Ratio
- The debt to capital ratio exhibited a general downward trend over the study period. Initially, the ratio decreased from 0.41 in March 2018 to a low near 0.37 in September 2018, followed by minor fluctuations around the 0.38 to 0.40 range until the end of 2020. In 2021, the ratio began a more pronounced decline, moving from 0.42 in December 2020 down to 0.35 by September 2021. This downward momentum continued into 2022, reaching 0.28 by September 2022. This pattern indicates an improving capital structure with a relatively lower reliance on debt financing over time.
- Insights
- Overall, the data suggests that while total debt levels experienced some increases and remained in the 2.7 to 3.1 billion range in recent years, the company significantly increased its total capital. Consequently, the debt to capital ratio steadily decreased, reflecting a strengthening financial position and a shift towards greater equity or other forms of capital relative to debt. This trend points to an enhanced ability to manage financial leverage and potentially lower financial risk.
Debt to Assets
Steel Dynamics Inc., debt to assets calculation (quarterly data)
| Sep 30, 2022 | Jun 30, 2022 | Mar 31, 2022 | Dec 31, 2021 | Sep 30, 2021 | Jun 30, 2021 | Mar 31, 2021 | Dec 31, 2020 | Sep 30, 2020 | Jun 30, 2020 | Mar 31, 2020 | Dec 31, 2019 | Sep 30, 2019 | Jun 30, 2019 | Mar 31, 2019 | Dec 31, 2018 | Sep 30, 2018 | Jun 30, 2018 | Mar 31, 2018 | |||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | |||||||||||||||||||||||||
| Current maturities of long-term debt | 22,951) | 37,130) | 68,390) | 97,174) | 55,056) | 93,505) | 81,226) | 86,894) | 82,229) | 73,926) | 70,106) | 89,356) | 82,150) | 72,131) | 80,958) | 24,234) | 14,776) | 18,266) | 9,646) | ||||||
| Long-term debt, excluding current maturities | 3,012,120) | 3,011,116) | 3,010,109) | 3,008,702) | 3,019,175) | 3,016,486) | 3,016,200) | 3,015,782) | 2,636,615) | 2,636,722) | 2,646,012) | 2,644,988) | 2,355,243) | 2,355,917) | 2,354,427) | 2,352,489) | 2,351,979) | 2,352,127) | 2,353,703) | ||||||
| Total debt | 3,035,071) | 3,048,246) | 3,078,499) | 3,105,876) | 3,074,231) | 3,109,991) | 3,097,426) | 3,102,676) | 2,718,844) | 2,710,648) | 2,716,118) | 2,734,344) | 2,437,393) | 2,428,048) | 2,435,385) | 2,376,723) | 2,366,755) | 2,370,393) | 2,363,349) | ||||||
| Total assets | 14,047,698) | 13,711,214) | 13,056,637) | 12,531,234) | 11,535,985) | 10,687,331) | 10,127,896) | 9,265,562) | 8,617,556) | 8,468,341) | 8,344,923) | 8,275,765) | 7,943,247) | 7,857,914) | 7,857,233) | 7,703,563) | 7,798,368) | 7,504,521) | 6,972,813) | ||||||
| Solvency Ratio | |||||||||||||||||||||||||
| Debt to assets1 | 0.22 | 0.22 | 0.24 | 0.25 | 0.27 | 0.29 | 0.31 | 0.33 | 0.32 | 0.32 | 0.33 | 0.33 | 0.31 | 0.31 | 0.31 | 0.31 | 0.30 | 0.32 | 0.34 | ||||||
| Benchmarks | |||||||||||||||||||||||||
| Debt to Assets, Competitors2 | |||||||||||||||||||||||||
| Freeport-McMoRan Inc. | 0.21 | 0.22 | 0.20 | 0.20 | 0.21 | 0.21 | 0.22 | — | — | — | — | — | — | — | — | — | — | — | — | ||||||
Based on: 10-Q (reporting date: 2022-09-30), 10-Q (reporting date: 2022-06-30), 10-Q (reporting date: 2022-03-31), 10-K (reporting date: 2021-12-31), 10-Q (reporting date: 2021-09-30), 10-Q (reporting date: 2021-06-30), 10-Q (reporting date: 2021-03-31), 10-K (reporting date: 2020-12-31), 10-Q (reporting date: 2020-09-30), 10-Q (reporting date: 2020-06-30), 10-Q (reporting date: 2020-03-31), 10-K (reporting date: 2019-12-31), 10-Q (reporting date: 2019-09-30), 10-Q (reporting date: 2019-06-30), 10-Q (reporting date: 2019-03-31), 10-K (reporting date: 2018-12-31), 10-Q (reporting date: 2018-09-30), 10-Q (reporting date: 2018-06-30), 10-Q (reporting date: 2018-03-31).
1 Q3 2022 Calculation
Debt to assets = Total debt ÷ Total assets
= 3,035,071 ÷ 14,047,698 = 0.22
2 Click competitor name to see calculations.
The analysis of the quarterly financial data reveals several notable trends in the company’s financial position over the observed periods.
- Total Debt
- The total debt remained relatively stable from March 2018 through September 2019, fluctuating slightly around the range of approximately 2,360,000 to 2,740,000 thousand US dollars. Starting December 2019, a rise in total debt is observed, reaching a peak near the end of 2020 at over 3,100,000 thousand US dollars. However, from that peak onwards, the total debt shows a mild decreasing trend into late 2022, settling slightly above 3,000,000 thousand US dollars.
- Total Assets
- Total assets demonstrated a consistent and significant upward trajectory throughout the analyzed period. Beginning at approximately 6,970,000 thousand US dollars in early 2018, total assets increased steadily each quarter, surpassing 14,000,000 thousand US dollars by September 2022. This growth indicates substantial asset accumulation over time, with heightened acceleration noticeable in the later periods especially from 2020 onward.
- Debt to Assets Ratio
- The ratio of debt to assets decreased steadily during the entire period, moving from 0.34 in early 2018 down to 0.22 by mid-2022. Despite increases in total debt especially between late 2019 and 2020, the faster growth of total assets caused a decline in leverage ratio. This pattern indicates an improvement in the company’s capital structure, reflecting relatively lower financial risk due to debt proportionally decreasing against asset base growth.
In summary, while the company increased its borrowings moderately in the middle of the timeline, the substantial and continuous growth in assets outpaced debt growth. Consequently, the leverage as measured by the debt to asset ratio improved significantly, suggesting an overall strengthening of the financial position and potentially enhanced creditworthiness over the periods analyzed.
Financial Leverage
Steel Dynamics Inc., financial leverage calculation (quarterly data)
| Sep 30, 2022 | Jun 30, 2022 | Mar 31, 2022 | Dec 31, 2021 | Sep 30, 2021 | Jun 30, 2021 | Mar 31, 2021 | Dec 31, 2020 | Sep 30, 2020 | Jun 30, 2020 | Mar 31, 2020 | Dec 31, 2019 | Sep 30, 2019 | Jun 30, 2019 | Mar 31, 2019 | Dec 31, 2018 | Sep 30, 2018 | Jun 30, 2018 | Mar 31, 2018 | |||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | |||||||||||||||||||||||||
| Total assets | 14,047,698) | 13,711,214) | 13,056,637) | 12,531,234) | 11,535,985) | 10,687,331) | 10,127,896) | 9,265,562) | 8,617,556) | 8,468,341) | 8,344,923) | 8,275,765) | 7,943,247) | 7,857,914) | 7,857,233) | 7,703,563) | 7,798,368) | 7,504,521) | 6,972,813) | ||||||
| Total Steel Dynamics, Inc. equity | 7,971,156) | 7,588,348) | 6,964,354) | 6,304,641) | 5,607,926) | 5,020,114) | 4,728,792) | 4,345,164) | 4,201,183) | 4,145,250) | 4,113,526) | 4,075,834) | 4,056,641) | 4,064,490) | 4,008,111) | 3,935,071) | 4,033,768) | 3,746,981) | 3,470,719) | ||||||
| Solvency Ratio | |||||||||||||||||||||||||
| Financial leverage1 | 1.76 | 1.81 | 1.87 | 1.99 | 2.06 | 2.13 | 2.14 | 2.13 | 2.05 | 2.04 | 2.03 | 2.03 | 1.96 | 1.93 | 1.96 | 1.96 | 1.93 | 2.00 | 2.01 | ||||||
| Benchmarks | |||||||||||||||||||||||||
| Financial Leverage, Competitors2 | |||||||||||||||||||||||||
| Freeport-McMoRan Inc. | 3.34 | 3.37 | 3.28 | 3.44 | 3.51 | 3.78 | 4.00 | — | — | — | — | — | — | — | — | — | — | — | — | ||||||
Based on: 10-Q (reporting date: 2022-09-30), 10-Q (reporting date: 2022-06-30), 10-Q (reporting date: 2022-03-31), 10-K (reporting date: 2021-12-31), 10-Q (reporting date: 2021-09-30), 10-Q (reporting date: 2021-06-30), 10-Q (reporting date: 2021-03-31), 10-K (reporting date: 2020-12-31), 10-Q (reporting date: 2020-09-30), 10-Q (reporting date: 2020-06-30), 10-Q (reporting date: 2020-03-31), 10-K (reporting date: 2019-12-31), 10-Q (reporting date: 2019-09-30), 10-Q (reporting date: 2019-06-30), 10-Q (reporting date: 2019-03-31), 10-K (reporting date: 2018-12-31), 10-Q (reporting date: 2018-09-30), 10-Q (reporting date: 2018-06-30), 10-Q (reporting date: 2018-03-31).
1 Q3 2022 Calculation
Financial leverage = Total assets ÷ Total Steel Dynamics, Inc. equity
= 14,047,698 ÷ 7,971,156 = 1.76
2 Click competitor name to see calculations.
The analysis of the quarterly financial data reveals several notable trends in the company's asset base, equity, and financial leverage ratios over the observed periods.
- Total Assets
- The total assets have demonstrated a consistent upward trend from March 31, 2018, through September 30, 2022. Starting at approximately $6.97 billion, the total assets increased steadily each quarter, reaching about $14.05 billion by the last reported period. The growth rate appeared somewhat stable but accelerated particularly from early 2021 onward, indicating significant asset accumulation or capital investments during that phase.
- Total Equity
- Total equity also showed a continuous upward trajectory, rising from roughly $3.47 billion in March 2018 to around $7.97 billion in September 2022. The equity growth closely parallels the asset growth, with equity more than doubling over the observed period. There was a marked acceleration in equity increases beginning in early 2021, suggesting robust retained earnings or additional capital infusions during this timeframe.
- Financial Leverage Ratio
- The financial leverage ratio, calculated as total assets divided by equity, exhibited a declining trend after remaining relatively stable between 1.93 and 2.14 from 2018 to 2020. Starting in late 2020 and continuing through September 2022, the ratio decreased steadily from 2.13 down to 1.76, indicating a reduction in the use of debt relative to equity over time. This declining leverage suggests a strengthening equity base or a reduction in liabilities, reflecting a potentially more conservative financial structure and lower financial risk.
Overall, the data indicate significant growth in both assets and equity, with a gradual improvement in the company's leverage position. The decreasing financial leverage ratio in the context of increasing assets and equity suggests enhanced financial stability and a strategic shift toward a more balanced capital structure.
Interest Coverage
Steel Dynamics Inc., interest coverage calculation (quarterly data)
| Sep 30, 2022 | Jun 30, 2022 | Mar 31, 2022 | Dec 31, 2021 | Sep 30, 2021 | Jun 30, 2021 | Mar 31, 2021 | Dec 31, 2020 | Sep 30, 2020 | Jun 30, 2020 | Mar 31, 2020 | Dec 31, 2019 | Sep 30, 2019 | Jun 30, 2019 | Mar 31, 2019 | Dec 31, 2018 | Sep 30, 2018 | Jun 30, 2018 | Mar 31, 2018 | |||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | |||||||||||||||||||||||||
| Net income attributable to Steel Dynamics, Inc. | 914,325) | 1,209,554) | 1,103,931) | 1,090,505) | 990,763) | 702,291) | 430,507) | 187,843) | 100,143) | 75,496) | 187,340) | 121,425) | 151,048) | 194,302) | 204,328) | 270,004) | 398,375) | 362,449) | 227,551) | ||||||
| Add: Net income attributable to noncontrolling interest | 4,150) | 5,098) | 3,423) | 5,192) | 9,396) | 9,912) | 8,248) | 9,107) | 4,134) | 3,269) | 3,496) | 2,294) | 1,560) | 2,444) | 499) | (152) | (469) | 123) | (2,076) | ||||||
| Add: Income tax expense | 289,997) | 381,765) | 350,376) | 313,151) | 302,406) | 218,595) | 128,104) | 23,867) | 29,083) | 24,280) | 57,420) | 26,344) | 48,643) | 60,214) | 62,236) | 71,433) | 109,209) | 112,838) | 70,489) | ||||||
| Add: Interest expense, net of capitalized interest | 25,347) | 25,667) | 16,669) | 12,338) | 12,704) | 14,898) | 17,269) | 20,206) | 18,950) | 27,702) | 28,019) | 32,322) | 31,339) | 32,321) | 31,122) | 31,652) | 31,560) | 31,512) | 31,896) | ||||||
| Earnings before interest and tax (EBIT) | 1,233,819) | 1,622,084) | 1,474,399) | 1,421,186) | 1,315,269) | 945,696) | 584,128) | 241,023) | 152,310) | 130,747) | 276,275) | 182,385) | 232,590) | 289,281) | 298,185) | 372,937) | 538,675) | 506,922) | 327,860) | ||||||
| Solvency Ratio | |||||||||||||||||||||||||
| Interest coverage1 | 71.87 | 86.57 | 91.09 | 74.57 | 47.42 | 26.96 | 13.17 | 8.44 | 6.93 | 6.89 | 7.91 | 7.89 | 9.44 | 11.84 | 13.64 | 13.79 | 12.31 | 9.98 | 8.01 | ||||||
| Benchmarks | |||||||||||||||||||||||||
| Interest Coverage, Competitors2 | |||||||||||||||||||||||||
| Freeport-McMoRan Inc. | 13.11 | 15.65 | 16.40 | 13.73 | 11.72 | 9.52 | 7.19 | — | — | — | — | — | — | — | — | — | — | — | — | ||||||
Based on: 10-Q (reporting date: 2022-09-30), 10-Q (reporting date: 2022-06-30), 10-Q (reporting date: 2022-03-31), 10-K (reporting date: 2021-12-31), 10-Q (reporting date: 2021-09-30), 10-Q (reporting date: 2021-06-30), 10-Q (reporting date: 2021-03-31), 10-K (reporting date: 2020-12-31), 10-Q (reporting date: 2020-09-30), 10-Q (reporting date: 2020-06-30), 10-Q (reporting date: 2020-03-31), 10-K (reporting date: 2019-12-31), 10-Q (reporting date: 2019-09-30), 10-Q (reporting date: 2019-06-30), 10-Q (reporting date: 2019-03-31), 10-K (reporting date: 2018-12-31), 10-Q (reporting date: 2018-09-30), 10-Q (reporting date: 2018-06-30), 10-Q (reporting date: 2018-03-31).
1 Q3 2022 Calculation
Interest coverage
= (EBITQ3 2022
+ EBITQ2 2022
+ EBITQ1 2022
+ EBITQ4 2021)
÷ (Interest expenseQ3 2022
+ Interest expenseQ2 2022
+ Interest expenseQ1 2022
+ Interest expenseQ4 2021)
= (1,233,819 + 1,622,084 + 1,474,399 + 1,421,186)
÷ (25,347 + 25,667 + 16,669 + 12,338)
= 71.87
2 Click competitor name to see calculations.
- Earnings before interest and tax (EBIT)
- The EBIT values exhibit notable fluctuations throughout the periods. Initially, there is a strong upward trend from March 2018 to September 2018, peaking near the end of that quarter. This is followed by a decline towards the end of 2019. Starting in early 2020, EBIT declines sharply, hitting a low point around mid-2020. Subsequently, there is a pronounced recovery beginning in late 2020 and extending through 2021, with EBIT reaching the highest values recorded within the dataset by the end of 2021. However, the gains diminish somewhat in 2022, culminating in a decrease in the latest quarter measured.
- Interest expense, net of capitalized interest
- The interest expense remains relatively stable from 2018 through early 2019, with values around the low 30,000 US$ thousand range. Starting in 2020, there is a decline, reaching the lowest values in late 2020 and early 2021. From mid-2021 onward, interest expense shows a gradual upward trend, although it remains below the levels observed in the earliest periods, ending slightly higher in late 2022.
- Interest coverage
- The interest coverage ratio shows an overall strengthening trend throughout the period analyzed. The ratio increases steadily from 2018 into early 2019, then experiences a noticeable dip towards late 2019 and mid-2020, mirroring the reduction in EBIT observed at the same time. From late 2020 onwards, the interest coverage ratio improves dramatically, reaching an exceptionally high level by the end of 2021, indicating much stronger EBIT relative to interest costs. Despite a slight decrease in 2022, the ratio remains substantially elevated compared to earlier years, reflecting improved ability to meet interest obligations from operating earnings.