01—Abstract
Summary
Summary of the 10-K filed February 28, 2022. Cited figures are marked; the original filing is the authoritative source.
Steel Dynamics, Inc. (STLD) reported record 2021 results in its 10-K filed February 28, 2022.
Net sales were $18.41 billiona, up 92% from $9.60 billion in 2020. Operating income was $4.30 billion, compared with $847.1 million in 2020, and net income attributable to Steel Dynamics, Inc. was $3.21 billion, or $15.56 per diluted share, versus $2.59 in 2020. Management attributed the results to strong domestic steel demand, historically low customer inventories and significantly higher steel selling prices, which drove meaningful metal spread expansion across the steel, metals recycling and steel fabrication segments.
Steel operations generated $4.36 billionb of operating income, the bulk of the company's profit, while metals recycling produced $182.0 million and steel fabrication $365.3 million. Cash flow from operations was $2.20 billion, and the company repurchased $1.1 billion of its common stock, about 8% of outstanding shares, while cash and equivalents ended the year at $1.24 billion. Total debt was steady at $3.1 billion, and the debt-to-capitalization ratio fell to 33.0% from 41.6%.
Capital investment totaled $1.0 billionc, mainly for the Southwest-Sinton Flat Roll Division, which was nearing completion, with remaining operations expected to start in early 2022. Key risks highlighted in the filing include global steelmaking overcapacity and steel imports, volatility in scrap and energy costs, cyclicality of end markets, COVID-19 effects on demand and supply chains, environmental regulation including greenhouse gas rules, and the start-up risks of the new Sinton mill. The filing also notes that the company's senior unsecured revolver provides $1.2 billion of availability with no borrowings outstanding at year-end.
02—Key points
Key Highlights
- Record 2021 net sales of $18.41 billion, up from $9.60 billion in 2020
- Operating income of $4.30 billion versus $847.1 million in 2020; steel operations contributed $4.36 billion
- Net income attributable to Steel Dynamics of $3.21 billion, or $15.56 diluted EPS, compared with $2.59 in 2020
- Cash flow from operations of $2.20 billion and year-end cash and equivalents of $1.24 billion
- Repurchased $1.1 billion of common stock in 2021, representing 8% of outstanding shares; $383.4 million remains under the 2021 program
- Long-term debt to capitalization fell to 33.0% from 41.6%, with total debt steady at $3.1 billion
- Southwest-Sinton Flat Roll Division (approximately 3.0 million tons of capacity) nearing completion, with remaining operations expected to start in early 2022
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2021, Steel Dynamics kept $0.18.
- Revenue$18.41B100.0%
- Cost of revenue−$13.05B70.9%
- Gross profit$5.36B29.1%
- Operating costs−$1.06B5.8%
- Operating income$4.30B23.4%
- Interest, other & tax−$1.05B5.7%
- Net income$3.25B17.6%
Where FY2021 revenue went
$18.41B- Cost of revenue: $13.05B, 71% of revenue
- Net income: $3.25B, 18% of revenue
- SG&A: $644.0M, 3.5% of revenue
- Other operating costs: $417.3M, 2.3% of revenue
- Interest, other & tax: $1.05B, 5.7% of revenue
Kept 18% as net income
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2021filed February 28, 2022Financial Statements
FY2021 against FY2020
| Line item | FY2021FY2020 | Change |
|---|---|---|
| Revenue | $18.41B$9.60B | +91.7% |
| Cost of Revenue | $13.05B$8.17B | +59.8% |
| Gross Profit | $5.36B$1.43B | +273.8% |
| SG&A Expenses | $643.98M— | — |
| Operating Income | $4.30B$847.14M | +407.7% |
| Interest Expense | $57.21M$94.88M | −39.7% |
| Net Income | $3.25B$550.82M | +489.4% |
| EPS (Basic) | $15.67$2.61 | +500.4% |
| EPS (Diluted) | $15.56$2.59 | +500.8% |
| Shares Outstanding (Basic) | 205.12M211.14M | −2.9% |
| Shares Outstanding (Diluted) | 206.62M212.34M | −2.7% |
05—Questions
Frequently Asked Questions
What drove Steel Dynamics' record 2021 earnings?
Strong domestic steel demand from the automotive, construction and industrial sectors, combined with historically low customer inventories, drove significantly higher steel selling prices. Metal spread expanded in steel operations, metals recycling and steel fabrication, and steel operating income rose to $4.36 billion from $889.5 million in 2020.
How much capital did the company invest, and what is the main project?
The company invested $1.0 billion in property, plant and equipment in 2021, compared with $1.2 billion in 2020. Of the 2021 amount, $831.0 million related to the Southwest-Sinton Flat Roll Division, a new electric arc furnace flat roll steel mill in Sinton, Texas.
How strong is the company's liquidity and balance sheet?
Total liquidity at December 31, 2021 was $2.43 billion, including $1.24 billion of cash and equivalents and $1.19 billion of unsecured revolver availability. The revolver had no borrowings outstanding, and the company was in compliance with its covenants, with an interest coverage ratio of 45.04:1.00 and a debt-to-capitalization ratio of 0.33:1.00.
What are the main risks to future results?
The filing cites global steelmaking overcapacity and steel imports, volatile scrap and energy prices, cyclical end markets, COVID-19 impacts, environmental and greenhouse gas regulation, cybersecurity threats, equipment downtime, and start-up risks at the new Southwest-Sinton mill. It also notes that metal spreads could compress if selling prices fall while scrap costs stay high.
06—Continue