DexCom Inc. (NASDAQ:DXCM)

The analysis of the financial data on property, plant, and equipment over the examined periods reveals significant growth and investment activity across multiple asset categories.

Land

Values for land are available only from 2020 onwards, showing stability initially at 15,600 thousand US dollars in 2020 and 2021, followed by a notable increase to 26,900 thousand US dollars in 2022. This suggests a recent acquisition or revaluation occurring in 2022.

Building

There is a clear upward trend in the building asset category, starting at 6,000 thousand US dollars in 2018, peaking at 49,200 thousand in 2020, then maintaining a high level around 49,100 and further increasing to 54,300 thousand by 2022. This indicates ongoing investments or enhancements in building infrastructure.

Furniture and fixtures

This category shows consistent growth from 9,000 thousand US dollars in 2018 to 32,600 thousand in 2022. The most marked increase occurs between 2020 and 2021, suggesting a period of significant outfitting or refurbishment activities.

Computer software and hardware

Assets here increased steadily from 29,200 thousand in 2018 to 35,700 thousand in 2020, surged to 52,700 thousand in 2021, then slightly declined to 48,800 thousand in 2022. This pattern may reflect accelerated investment in technology followed by some disposals or write-downs.

Machinery and equipment

This category shows the most substantial growth, expanding from 80,700 thousand US dollars in 2018 to 449,200 thousand in 2022. The increases each year suggest heavy capital expenditures on machinery and equipment, supporting likely expansion or modernization efforts.

Leasehold improvements

Leasehold improvements also show a persistent upward trend from 80,700 thousand in 2018 to 264,400 thousand in 2022, indicative of escalating investments in leased property modifications.

Construction in progress

There is a progressive increase from 57,300 thousand in 2018 to 542,600 thousand in 2022, signaling ongoing large-scale projects or phased capital works in progress which may materialize in future asset base growth.

Property and equipment, cost

The total cost of property and equipment more than quintupled over the period, increasing from 262,900 thousand in 2018 to 1,418,800 thousand in 2022. This underscores significant capital expenditure activities, aligned with the trends across individual asset categories.

Accumulated depreciation and amortization

Accumulated depreciation shows a corresponding increase in absolute terms from -79,800 thousand in 2018 to -363,200 thousand in 2022. This reflects aging assets and the wear and tear associated with the expanding asset base.

Property and equipment, net

The net value of property and equipment demonstrates robust growth, nearly sixfold, from 183,100 thousand in 2018 to 1,055,600 thousand in 2022. This indicates that despite rising depreciation, asset additions outpace valuations lost through depreciation, resulting in a healthy expansion of net property and equipment.

Overall, the data indicates a phase of aggressive capital investments across all asset categories, reflecting expansion, modernization, and project development that have significantly expanded the company's property and equipment base over the five-year period.

Average Age Ratio

The average age ratio exhibited a decreasing trend from 30.35% in 2018 to a low of 22.75% in 2021, indicating a relative reduction in the age of property, plant, and equipment assets compared to their total useful life. However, in 2022, this ratio increased to 26.09%, reflecting a slight aging of the asset base during that year.

Estimated Total Useful Life

The estimated total useful life of the assets remained constant at 9 years for 2018 and 2019, followed by an increase to 10 years in 2020, peaking at 11 years in 2021, before decreasing back to 10 years in 2022. This suggests revisions in asset life assessments, possibly due to changes in asset composition or updated estimates regarding longevity.

Estimated Age, Time Elapsed Since Purchase

The estimated age of the assets started at 3 years in 2018, decreased to 2 years for the period 2019 through 2021, and then returned to 3 years in 2022. This represents a period during which newer assets were likely added or older assets were disposed of, followed by a slight aging in the final reported year.

Estimated Remaining Life

The estimated remaining life of the assets exhibited an upward trend from 6 years in 2018 to 8 years in both 2020 and 2021. In 2019, the remaining life was 7 years, and it declined to 7 years in 2022. This pattern reflects adjustments in useful life expectations and the relative age of the asset base, indicating a rejuvenated asset profile during the middle years followed by a modest decrease in remaining life thereafter.

Property and Equipment Cost

There is a consistent and substantial increase in the cost of property and equipment over the analyzed periods. Starting at US$262.9 million in 2018, the cost more than quintupled to approximately US$1.42 billion by the end of 2022. This significant growth suggests considerable investment in fixed assets over the five-year span.

Accumulated Depreciation and Amortization

Accumulated depreciation and amortization also showed a steady upward trend, increasing from US$79.8 million in 2018 to US$363.2 million at the end of 2022. The rise in accumulated depreciation is consistent with the increasing asset base, indicating ongoing usage and aging of the property and equipment assets.

Land

Data for land is unavailable for the years 2018 and 2019. From 2020 onward, land values are reported, starting at US$15.6 million in 2020 and remaining constant through 2021, then increasing to US$26.9 million in 2022. This increase may reflect new land acquisitions or revaluation activities.

Average Age Ratio

The average age ratio declined from 30.35% in 2018 to a low of 22.75% in 2021, suggesting that the asset base was becoming relatively newer during this period. However, there was an increase to 26.09% in 2022, indicating some aging of the asset pool in the most recent year. This pattern aligns with substantial additions to property and equipment cost, which initially lowered the average age, followed by asset aging over time.

Property and Equipment Cost

The property and equipment cost demonstrates a consistent and significant increase over the analyzed period. Starting at $262.9 million at the end of 2018, it rose sharply to $1.419 billion by the end of 2022. This upward trend suggests substantial investment in fixed assets, likely reflecting expansion or modernization efforts.

Land

Data on land acquisition begins in 2020, with an initial recorded value of $15.6 million. This value remained stable in 2021 but increased to $26.9 million by 2022, indicating an accumulation of land assets, which may be for new facilities or strategic holdings.

Depreciation Expense Related to Property and Equipment

The depreciation expense shows a steady year-over-year increase, rising from $28.6 million in 2018 to $144.1 million in 2022. This pattern aligns with the growing property and equipment base, reflecting both the aging of existing assets and the addition of new assets contributing to higher overall depreciation.

Estimated Total Useful Life

The estimated useful life of property and equipment displays minor fluctuations between 9 and 11 years, with a slight increase in 2021 and a decrease back to 10 years in 2022. These adjustments may indicate changes in asset composition or recalibrations of depreciation schedules.

Accumulated Depreciation and Amortization

The accumulated depreciation and amortization have exhibited a consistent and substantial increase over the five-year period. Starting at $79.8 million at the end of 2018, the figure rose steadily each year, reaching $363.2 million by the end of 2022. This indicates a growing base of depreciable assets or increasing depreciation on existing assets, reflecting ongoing capital expenditure or asset aging.

Depreciation Expense Related to Property and Equipment

Depreciation expense has followed a similar upward trend, increasing from $28.6 million in 2018 to $144.1 million in 2022. The yearly increments indicate accelerating depreciation charges, which may be attributable to additions of new assets, changes in depreciation methods or rates, or reduced asset residual values over time. The growth in depreciation expense suggests that the company has been expanding its property and equipment or assets are reaching more accelerated depreciation phases.

Time Elapsed Since Purchase

The average time elapsed since purchase of assets has remained relatively stable, fluctuating between two and three years across the period. This stability suggests a consistent asset replacement or acquisition cycle, maintaining the average age of the asset base without significant elongation or shortening.

Overall Analysis

The data illustrates a clear pattern of increasing depreciation, both in accumulated terms and annual expense, which reflects an expanding or aging asset base that is being systematically depreciated. The steady average asset age implies disciplined asset management practices, with acquisitions and disposals balanced to maintain a consistent asset life cycle. These trends may impact future cash flows through depreciation-related tax effects and capital expenditure budgeting.

Property and Equipment, Net

The net value of property and equipment demonstrates a consistent upward trend over the analyzed period. It increased from $183.1 million at the end of 2018 to $1.056 billion by the end of 2022. This growth reflects ongoing investment in physical assets, possibly indicating expansion or upgrades in operational capacity.

Land

Data for land is only available from the end of 2020 onwards. The value held steady at $15.6 million for two years, then rose to $26.9 million by the end of 2022. This suggests acquisitions or revaluation activities related to land assets during the latter years of the period.

Depreciation Expense Related to Property and Equipment

The annual depreciation expense increased significantly from $28.6 million in 2018 to $144.1 million in 2022. This rise aligns with the growth in net property and equipment, reflecting higher depreciation charges due to increased asset bases. The sharpest incremental increases occurred between 2021 and 2022, indicating accelerated asset utilization or acquisitions.

Estimated Remaining Life

The estimated remaining useful life of property and equipment was relatively stable around 7 to 8 years from 2018 to 2022. It started at 6 years in 2018, increased to 8 years by 2020 and 2021, and slightly decreased to 7 years in 2022. This stability suggests consistent asset management and replacement policies without significant changes to asset aging profiles.