Expand Energy Corp. (NASDAQ:EXE)

The analysis of the financial ratios over the four-year period reveals a distinct downward trend in the company's efficiency metrics.

Net Fixed Asset Turnover

The net fixed asset turnover ratio increased from 0.83 in 2021 to 1.26 in 2022, indicating an initial improvement in the utilization of fixed assets to generate revenue. However, in the subsequent years, it sharply declined to 0.60 in 2023 and further dropped to 0.18 in 2024. This suggests a significant reduction in how effectively the fixed assets are being used over time.

Net Fixed Asset Turnover (Including Operating Lease, Right-of-Use Asset)

This ratio follows a similar pattern to the net fixed asset turnover, starting at 0.83 in 2021, peaking slightly lower at 1.25 in 2022, and then decreasing to 0.59 in 2023 and 0.17 in 2024. The close values to the standard net fixed asset turnover indicate that operating leases and right-of-use assets have a consistent but limited impact on turnover efficiency over the period.

Total Asset Turnover

The total asset turnover ratio shows a comparable trend, increasing from 0.66 in 2021 to 0.91 in 2022, reflecting a short-term improvement in overall asset usage. Following this peak, it dips considerably to 0.42 in 2023 and further to 0.15 in 2024, pointing to a broad-based decline in the company’s asset efficiency across all asset classes.

Equity Turnover

Equity turnover also exhibits a similar trajectory. It rose from 1.29 in 2021 to 1.55 in 2022, suggesting enhanced usage of shareholders' equity to generate sales. Thereafter, it experienced a pronounced decline to 0.56 in 2023 and then to 0.24 in 2024, signaling diminishing returns from equity investment in the recent years.

Overall, while the first year showed improvement in asset and equity utilization ratios, a marked deterioration in turnover ratios is observed from 2023 onwards, indicating potential challenges in operational efficiency or changes in asset structure that have negatively impacted the company’s ability to generate revenues relative to its asset and equity bases over the most recent two years.

Revenues

Revenues exhibited significant volatility over the four-year period. Initially, there was a substantial increase from 7,301 million US dollars in 2021 to 14,123 million US dollars in 2022. However, this growth was not sustained, as revenues sharply declined to 6,047 million US dollars in 2023 and further decreased to 4,259 million US dollars in 2024. The pattern suggests considerable fluctuations in sales or market demand during the period under review.

Property and Equipment, Net

Net property and equipment showed an upward trend overall, with an increase from 8,802 million US dollars in 2021 to 24,282 million US dollars by the end of 2024. The asset base grew steadily in the first three years, rising to 11,187 million US dollars in 2022 and 10,097 million US dollars in 2023, before surging significantly in 2024. This pattern may indicate substantial capital investments or asset acquisitions particularly in the last year, suggesting expansion or modernization efforts.

Net Fixed Asset Turnover

The net fixed asset turnover ratio demonstrated a declining trend throughout the period. It increased from 0.83 in 2021 to 1.26 in 2022, reflecting improved efficiency in generating revenue from fixed assets at that time. However, the ratio declined sharply to 0.60 in 2023 and further plummeted to 0.18 in 2024. This deterioration implies that revenue growth did not keep pace with the expansion of fixed assets, indicating reduced asset utilization or operational inefficiencies by 2024.

Overall Analysis

The data reveals a scenario of contrasting dynamics between revenue performance and fixed asset growth. While the company substantially increased its investment in property and equipment, the corresponding revenues failed to maintain a positive trajectory after 2022, leading to a marked decrease in asset turnover ratios. Such trends raise concerns regarding the efficiency of capital deployment and the sustainability of revenue generation in the later years of the period examined.

Revenues

Revenues exhibited a significant increase from 2021 to 2022, nearly doubling from 7,301 million US dollars to 14,123 million US dollars. However, in the subsequent years, there was a marked decline, with revenues dropping to 6,047 million US dollars in 2023 and further decreasing to 4,259 million US dollars in 2024. This trend suggests volatility in revenue generation, with a sharp peak followed by a pronounced downturn.

Property and Equipment, Net

The net value of property and equipment, including operating lease right-of-use assets, showed a steady upward trend from 2021 through 2024. Starting at 8,840 million US dollars in 2021, it increased to 11,306 million in 2022 and slightly decreased to 10,196 million in 2023 before sharply rising to 24,427 million in 2024. This significant increase in 2024 might indicate substantial investment in fixed assets or revaluation activities during that year.

Net Fixed Asset Turnover

The net fixed asset turnover ratio demonstrates a decreasing efficiency in the utilization of fixed assets over the period analyzed. It rose from 0.83 in 2021 to a peak of 1.25 in 2022, suggesting improved efficiency that year. However, it sharply declined thereafter, dropping to 0.59 in 2023 and further plummeting to 0.17 in 2024. This indicates that despite the large increase in fixed assets by 2024, the revenue generated per unit of fixed assets has diminished significantly, pointing to underutilization or asset inefficiency.

Revenues

Revenues experienced a significant increase from 7,301 million US dollars in 2021 to 14,123 million US dollars in 2022, effectively nearly doubling. However, in the subsequent years, revenues showed a sharp downward trend, decreasing to 6,047 million US dollars in 2023 and further declining to 4,259 million US dollars in 2024.

Total assets

Total assets increased steadily from 11,009 million US dollars at the end of 2021 to 15,468 million US dollars in 2022, before declining somewhat to 14,376 million US dollars in 2023. By 2024, total assets grew substantially to 27,894 million US dollars, indicating a strong asset base expansion in the most recent period.

Total asset turnover

The total asset turnover ratio, which measures efficiency in using assets to generate revenues, initially improved from 0.66 in 2021 to 0.91 in 2022. After this peak, it dropped sharply to 0.42 in 2023, then declined further to 0.15 in 2024. This decline in asset turnover reflects an increasing inefficiency or reduced effectiveness in leveraging assets to produce revenues, especially notable in 2023 and 2024 despite the rising asset base.

Revenues

The revenues exhibited significant volatility over the four-year period. Starting at US$7,301 million in 2021, revenues almost doubled in 2022, reaching US$14,123 million. However, this upward trend reversed sharply in the following years, with revenues declining to US$6,047 million in 2023 and further decreasing to US$4,259 million in 2024. This implies a peak in 2022 followed by a consistent reduction, which may indicate market challenges, operational issues, or strategic shifts affecting revenue generation.

Stockholders’ equity

Stockholders’ equity showed a steady and substantial increase throughout the period. Beginning at US$5,671 million in 2021, it rose to US$9,124 million in 2022 and further climbed to US$10,729 million in 2023. The most notable growth occurred between 2023 and 2024, when equity surged to US$17,565 million. This indicates that the company's net worth strengthened considerably, reflecting retained earnings, capital injections, or revaluation gains despite the decline in revenues.

Equity turnover ratio

The equity turnover ratio, which measures the efficiency in using stockholders’ equity to generate revenues, decreased significantly over the period. It increased from 1.29 in 2021 to 1.55 in 2022, consistent with the revenue growth in that year. However, it then declined sharply to 0.56 in 2023 and further decreased to 0.24 in 2024. This diminishing ratio suggests that the company became less efficient in generating revenues from its equity base after 2022, possibly due to the substantial equity growth outpacing revenue generation.

Overall analysis

The data indicates that while the company experienced a peak in revenues in 2022, it faced a significant downturn in subsequent years. In contrast, stockholders’ equity steadily increased, particularly between 2023 and 2024. The sharp decline in the equity turnover ratio reflects declining operational efficiency or revenue generation relative to the growing equity base. This disparity between rising equity and falling revenues warrants further investigation into the company’s strategic decisions, operational effectiveness, and market conditions during the later periods.