01—Abstract
Summary
Summary of the 10-K filed February 28, 2023. Cited figures are marked; the original filing is the authoritative source.
Steel Dynamics, Inc. reported record 2022 results, with net sales of $22.26 billiona (up from $18.41 billion in 2021), operating income of $5.09 billion, net income of $3.88 billion, and cash flow from operations of $4.46 billion.
Diluted earnings per share attributable to Steel Dynamics, Inc. were $20.92b, compared with $15.56 in 2021. Steel fabrication operations drove much of the growth, with net sales of $4.26 billion and operating income of $2.42 billion, while steel operations operating income fell 29% to $3.10 billion, reflecting metal spread compression and start-up costs at the Sinton flat roll mill. Metals recycling operating income declined 36% to $117.3 million.
The company ended 2022 with total liquidity of $3.45 billionc, total debt of $3.1 billion, and a long-term debt to capitalization ratio of 27.7%, down from 32.9% in 2021. It repurchased $1.8 billion of common stock during 2022 and paid cash dividends of $237.2 million, while capital expenditures were $908.9 million. Management also announced a planned $2.5 billion aluminum flat roll mill in Columbus, Mississippi, expected to begin operations in 2025, funded from available cash and operating cash flow.
The filing notes risks tied to global steel overcapacity and imports, scrap price volatility, cyclical end markets, and execution on the aluminum project and Sinton ramp-up. The company's senior unsecured revolver ($1.2 billiond, undrawn at year-end) carries an interest coverage covenant of at least 2.50:1.00, which was 54.42:1.00 at December 31, 2022.
02—Key points
Key Highlights
- Record 2022 net sales of $22.26 billion and net income of $3.88 billion; diluted EPS of $20.92 versus $15.56 in 2021
- Steel fabrication operations posted record operating income of $2.42 billion on net sales of $4.26 billion, up 141%
- Steel operations operating income declined 29% to $3.10 billion due to metal spread compression and Sinton start-up costs of $439 million
- Metals recycling operating income fell 36% to $117.3 million amid lower ferrous scrap prices and shipments
- Total liquidity of $3.45 billion at December 31, 2022, including $1.63 billion cash and $1.19 billion unsecured revolver availability
- Repurchased $1.8 billion of common stock in 2022 and declared $1.36 per share in dividends; November 2022 authorization of $1.5 billion with $1.3 billion remaining
- Planned $2.5 billion aluminum flat roll mill in Columbus, Mississippi, expected to begin operations in 2025
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2022, Steel Dynamics kept $0.17.
- Revenue$22.26B100.0%
- Cost of revenue−$16.14B72.5%
- Gross profit$6.12B27.5%
- Operating costs−$1.03B4.6%
- Operating income$5.09B22.9%
- Interest, other & tax−$1.21B5.4%
- Net income$3.88B17.4%
Where FY2022 revenue went
$22.26B- Cost of revenue: $16.14B, 73% of revenue
- Net income: $3.88B, 17% of revenue
- SG&A: $545.6M, 2.5% of revenue
- Other operating costs: $480.4M, 2.2% of revenue
- Interest, other & tax: $1.21B, 5.4% of revenue
Kept 17% as net income
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2022filed February 28, 2023Financial Statements
FY2022 against FY2021
| Line item | FY2022FY2021 | Change |
|---|---|---|
| Revenue | $22.26B$18.41B | +20.9% |
| Cost of Revenue | $16.14B$13.05B | +23.7% |
| Gross Profit | $6.12B$5.36B | +14.1% |
| SG&A Expenses | $545.62M$643.98M | −15.3% |
| Operating Income | $5.09B$4.30B | +18.4% |
| Interest Expense | $91.54M$57.21M | +60.0% |
| Net Income | $3.88B$3.25B | +19.5% |
| EPS (Basic) | $21.06$15.67 | +34.4% |
| EPS (Diluted) | $20.92$15.56 | +34.4% |
| Shares Outstanding (Basic) | 183.39M205.12M | −10.6% |
| Shares Outstanding (Diluted) | 184.62M206.62M | −10.6% |
05—Questions
Frequently Asked Questions
How profitable was Steel Dynamics in 2022 compared with 2021?
Net sales rose to $22.26 billion from $18.41 billion, operating income rose 18% to $5.09 billion from $4.30 billion, and net income attributable to Steel Dynamics increased to $3.86 billion from $3.21 billion. Diluted EPS was $20.92 versus $15.56.
Which segment drove the 2022 results?
The steel fabrication operations segment drove much of the growth, with record operating income of $2.42 billion versus $365.3 million in 2021, on record shipments and higher selling prices. Steel operations remained the largest segment by sales at $15.10 billion but its operating income fell 29% to $3.10 billion.
How is the company's balance sheet and liquidity position?
At December 31, 2022, the company had cash and equivalents of $1.63 billion, short-term investments of $628.2 million, and $1.19 billion of unsecured revolver availability. Total debt was $3.1 billion, and the long-term debt to capitalization ratio was 27.7%, down from 32.9% in 2021.
What are the main risks highlighted in the filing?
Key risks include global steelmaking overcapacity and steel imports pressuring prices, volatility in scrap metal prices and availability, cyclical demand from end markets, cybersecurity threats, start-up inefficiencies at the Sinton Flat Roll Division, and execution risk on the new aluminum flat roll mill.
What capital allocation actions did the company take?
The company repurchased $1.8 billion of common stock during 2022, paid $237.2 million in cash dividends, and invested $908.9 million in property, plant and equipment. It also committed to a $2.5 billion aluminum flat roll mill project expected to be funded from cash and operating cash flow.
06—Continue