Analysis of Property, Plant and Equipment
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Carrier Global Corp. pages available for free this week:
- Balance Sheet: Liabilities and Stockholders’ Equity
- Analysis of Profitability Ratios
- Analysis of Reportable Segments
- Common Stock Valuation Ratios
- Enterprise Value to EBITDA (EV/EBITDA)
- Capital Asset Pricing Model (CAPM)
- Dividend Discount Model (DDM)
- Operating Profit Margin since 2020
- Return on Assets (ROA) since 2020
- Price to Earnings (P/E) since 2020
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Property, Plant and Equipment Disclosure
Carrier Global Corp., balance sheet: property, plant and equipment
US$ in millions
Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).
- Land
- The value of land has shown a consistent upward trend over the three years, increasing from $109 million in 2020 to $126 million in 2022. This indicates ongoing investments or revaluations leading to an accumulation of land assets.
- Buildings and improvements
- Buildings and improvements experienced a decline from $1,160 million in 2020 to $1,084 million in 2021, followed by a significant recovery to $1,251 million in 2022. The initial decrease might suggest disposals or depreciation outpacing additions, while the subsequent increase indicates renewed capital expenditure or asset revaluation.
- Machinery, tools and equipment
- This category showed a slight decline from $2,138 million in 2020 to $2,093 million in 2021, then increased substantially to $2,409 million in 2022. The pattern suggests a period of limited investment or disposals in 2021, followed by considerable acquisition or asset enhancement in 2022.
- Rental assets
- Rental assets decreased from $416 million in 2020 to $381 million in 2021 and then showed a minor increase to $390 million in 2022. This modest fluctuation indicates relatively stable rental asset management, with slight adjustments possibly reflecting utilization changes or minor asset turnover.
- Other assets, including assets under construction
- This category displayed consistent growth from $261 million in 2020 to $347 million in 2022. The steady increase suggests ongoing capital projects and accumulation of assets that are in the process of completion or non-core asset additions.
- Fixed assets, gross
- The gross fixed assets show a declining trend from $4,084 million in 2020 to $3,976 million in 2021, followed by a significant rise to $4,523 million in 2022. This pattern reflects overall fluctuations in asset acquisition and disposals, with a net increase over the three-year period driven primarily by higher investments or capitalized costs in 2022.
- Accumulated depreciation
- Accumulated depreciation decreased in absolute value from -$2,274 million in 2020 to -$2,150 million in 2021, before increasing again to -$2,282 million in 2022. The reduction in 2021 may indicate asset disposals reducing the depreciation base, while the increase in 2022 corresponds to higher depreciation expenses or an expanded asset base.
- Fixed assets, net
- Net fixed assets rose marginally from $1,810 million in 2020 to $1,826 million in 2021 and then saw a notable increase to $2,241 million in 2022. This indicates an overall growth in net asset value, driven by higher gross asset investments surpassing accumulated depreciation trends, suggesting strengthening in the company's property, plant, and equipment base.
Asset Age Ratios (Summary)
Carrier Global Corp., asset age ratios
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|
| Average age ratio | ||||
| Estimated total useful life (years) | ||||
| Estimated age, time elapsed since purchase (years) | ||||
| Estimated remaining life (years) |
Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).
The analysis of the property, plant, and equipment data reveals several notable trends over the three-year period.
- Average age ratio
- The average age ratio decreased steadily from 57.21% in 2020 to 55.67% in 2021, and further to 51.9% in 2022. This downward trend indicates that the assets are relatively younger as a proportion of their estimated useful life, which could suggest recent investments or asset replacements.
- Estimated total useful life
- The estimated total useful life of the assets remained stable at 17 years in 2020 and 2022, with a slight dip to 16 years in 2021. This stability implies consistent assumptions regarding asset longevity without significant revisions in asset lifespan estimates during this timeframe.
- Estimated age, time elapsed since purchase
- The estimated age of the assets decreased from 10 years in 2020 to 9 years in both 2021 and 2022. This is somewhat unusual as assets typically age by one year annually; the decrease suggests asset retirements, disposals, or the addition of newer assets influencing the average.
- Estimated remaining life
- The estimated remaining life held steady at 7 years in 2020 and 2021 but increased to 8 years in 2022. This increase aligns with the reduction in average asset age ratio and indicates an overall extension or refreshment of asset life expectations.
Overall, the data portrays a scenario of asset renewal or replacement, as evidenced by the declining average age ratio and estimated asset age, alongside an increase in estimated remaining life. The company appears to be maintaining or enhancing its asset base to potentially support ongoing or future operational demands.
Average Age
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||
| Accumulated depreciation | ||||
| Fixed assets, gross | ||||
| Land | ||||
| Asset Age Ratio | ||||
| Average age1 | ||||
Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).
2022 Calculations
1 Average age = 100 × Accumulated depreciation ÷ (Fixed assets, gross – Land)
= 100 × ÷ ( – ) =
- Fixed Assets, Gross
- The gross value of fixed assets experienced a decline from US$4,084 million in 2020 to US$3,976 million in 2021, followed by a significant increase to US$4,523 million in 2022. This suggests a notable investment or acquisition of property, plant, and equipment during 2022, reversing the previous downward trend.
- Accumulated Depreciation
- Accumulated depreciation decreased from US$2,274 million in 2020 to US$2,150 million in 2021, then increased again to US$2,282 million in 2022. The initial decline could indicate asset disposals or write-offs, while the subsequent increase aligns with the addition of new assets, reflecting ongoing usage and aging of the asset base.
- Land
- The recorded value of land showed steady growth over the period, rising from US$109 million in 2020 to US$114 million in 2021, and further to US$126 million in 2022. This consistent upward trend indicates potential strategic acquisitions of land or revaluation adjustments contributing to the asset base expansion.
- Average Age Ratio
- The average age ratio of property, plant, and equipment declined from 57.21% in 2020 to 55.67% in 2021, and then further to 51.9% in 2022. This decreasing trend denotes a rejuvenation of the asset base, likely driven by investment in newer assets, which reduces the overall average age and could indicate a modernization effort or asset replacement strategy.
Estimated Total Useful Life
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||
| Fixed assets, gross | ||||
| Land | ||||
| Depreciation expense | ||||
| Asset Age Ratio (Years) | ||||
| Estimated total useful life1 | ||||
Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).
2022 Calculations
1 Estimated total useful life = (Fixed assets, gross – Land) ÷ Depreciation expense
= ( – ) ÷ =
The data reveals several trends regarding the property, plant, and equipment (PPE) of the entity over a three-year period from the end of 2020 through the end of 2022.
- Fixed Assets, Gross
- The gross value of fixed assets shows a decline from 4,084 million USD in 2020 to 3,976 million USD in 2021, followed by a significant increase to 4,523 million USD in 2022. This indicates a slight reduction in asset base during the first year, which reversed with notable capital additions or revaluations in the subsequent year.
- Land
- The value of land assets exhibits a steady upward trend, rising from 109 million USD in 2020 to 114 million USD in 2021, and further to 126 million USD in 2022. This consistent increase suggests ongoing acquisitions or appreciation in land value as part of the asset portfolio.
- Depreciation Expense
- Depreciation expense increased gradually from 234 million USD in 2020 to 238 million USD in 2021, and then more noticeably to 256 million USD in 2022. This rising trend in depreciation expenses may reflect asset additions with shorter useful lives or changes in asset composition affecting amortization patterns.
- Estimated Total Useful Life
- The estimated total useful life of the assets showed slight variation, decreasing from 17 years in 2020 to 16 years in 2021, before returning to 17 years in 2022. This minor fluctuation could be related to adjustments in asset mix, acquisition policies, or reestimation of asset longevity based on usage or technological factors.
Overall, the data suggests a dynamic asset base with investment activities reflected in the increase of gross fixed assets and land values, coupled with gradually increasing depreciation expenses. The estimated useful life remained relatively stable, indicating consistent depreciation policies or asset management approaches over the period analyzed.
Estimated Age, Time Elapsed since Purchase
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||
| Accumulated depreciation | ||||
| Depreciation expense | ||||
| Asset Age Ratio (Years) | ||||
| Time elapsed since purchase1 | ||||
Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).
2022 Calculations
1 Time elapsed since purchase = Accumulated depreciation ÷ Depreciation expense
= ÷ =
- Accumulated Depreciation
- The accumulated depreciation shows a fluctuating trend over the three-year period. It decreased from 2,274 million USD in 2020 to 2,150 million USD in 2021, followed by an increase to 2,282 million USD in 2022. This indicates a temporary reduction in cumulative depreciation in 2021 before resuming growth in 2022, potentially reflecting asset disposals, revaluation, or changes in depreciation policies.
- Depreciation Expense
- The annual depreciation expense consistently increased each year, from 234 million USD in 2020 to 238 million USD in 2021, and reaching 256 million USD in 2022. This gradual rise suggests either an increase in depreciable assets or adjustments in depreciation methods or rates, contributing to higher expenses recognized annually.
- Time Elapsed Since Purchase
- The time elapsed since purchase remains relatively stable, with a value of 10 years in 2020 and 9 years in both 2021 and 2022. This slight decrease likely corresponds to asset turnover dynamics, including acquisitions of newer assets or disposal of older ones, maintaining an average asset age around nine years in recent periods.
Estimated Remaining Life
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||
| Fixed assets, net | ||||
| Land | ||||
| Depreciation expense | ||||
| Asset Age Ratio (Years) | ||||
| Estimated remaining life1 | ||||
Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).
2022 Calculations
1 Estimated remaining life = (Fixed assets, net – Land) ÷ Depreciation expense
= ( – ) ÷ =
- Fixed assets, net
- The net value of fixed assets displayed a modest increase from 1810 million USD in 2020 to 1826 million USD in 2021, followed by a more substantial rise to 2241 million USD in 2022. This indicates an overall upward trend in the company's investment or capital retention in fixed assets over the period.
- Land
- The value attributed to land assets showed a steady growth, increasing from 109 million USD at the end of 2020 to 114 million USD in 2021, and further to 126 million USD by the close of 2022. This consistent rise suggests either acquisitions or revaluation contributing positively to this asset category.
- Depreciation expense
- Depreciation expense exhibited a gradual increase over the three years reviewed. The expense rose from 234 million USD in 2020 to 238 million USD in 2021, and then to 256 million USD in 2022. This upward movement aligns with the growth in fixed assets and potentially reflects the aging asset base and additions to the asset portfolio.
- Estimated remaining life
- The estimated remaining life of the assets remained stable at 7 years during 2020 and 2021 before increasing to 8 years in 2022. The extension in estimated remaining life in 2022 could be indicative of asset renewals, enhancements, or changes in the depreciation policy that lengthened asset usability projections.