Analysis of Property, Plant and Equipment
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- Common-Size Balance Sheet: Liabilities and Stockholders’ Equity
- Analysis of Long-term (Investment) Activity Ratios
- Analysis of Geographic Areas
- Common Stock Valuation Ratios
- Enterprise Value (EV)
- Price to FCFE (P/FCFE)
- Present Value of Free Cash Flow to Equity (FCFE)
- Return on Assets (ROA) since 2005
- Total Asset Turnover since 2005
- Price to Sales (P/S) since 2005
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Property, Plant and Equipment Disclosure
Edwards Lifesciences Corp., balance sheet: property, plant and equipment
US$ in thousands
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).
- Land
- Values increased steadily from $39.1 million in 2017 to $116.5 million in 2021, more than doubling over the five-year period. The sharp rise between 2017 and 2018 was particularly pronounced, followed by moderate growth in subsequent years.
- Buildings and leasehold improvements
- There was consistent growth each year, starting at $436.8 million in 2017 and reaching $1.01 billion by 2021. The most significant increases occurred between 2019 and 2020, where the value rose by approximately 42%, indicating accelerated investment in this category.
- Machinery and equipment
- Values demonstrated a steady upward trend from $393.4 million in 2017 to $613.4 million in 2021. The growth was relatively smooth, with annual increments reflecting ongoing capital expenditure in machinery and equipment assets.
- Equipment with customers
- This category remained relatively stable but showed some fluctuations. From $41 million in 2017, it slightly decreased to $39.2 million in 2021, with a notable dip in 2019 to $35.6 million before partially recovering.
- Software
- Software asset values peaked at $93.4 million in 2017, followed by a gradual decline with minor fluctuations, ending at $88.2 million in 2021. The trend suggests limited new investments or amortization impacting the net value over time.
- Construction in progress
- There was a substantial increase from $88.2 million in 2017 to $333.8 million in 2021, illustrating an ongoing accumulation of assets under development. The growth was particularly strong between 2017 and 2020, indicating a phase of active expansion and capital projects.
- Property, plant, and equipment, cost
- Total gross property, plant, and equipment cost grew significantly from $1.09 billion in 2017 to $2.20 billion in 2021, effectively doubling over five years. This reflects a consistent investment strategy to expand and upgrade physical assets.
- Accumulated depreciation
- Accumulated depreciation increased in magnitude from -$412.2 million in 2017 to -$654.6 million in 2021, indicating ongoing asset usage and aging. The growth in depreciation outpaced the absolute increase in gross assets, which is typical as assets age and are depreciated over time.
- Property, plant, and equipment, net
- The net book value of property, plant, and equipment showed strong growth, increasing from $679.7 million in 2017 to $1.55 billion in 2021. This growth reflects both continued investment outweighing depreciation and successful management of asset lifecycles, with a compound increase of over 120% in net asset value.
Asset Age Ratios (Summary)
Edwards Lifesciences Corp., asset age ratios
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).
- Average age ratio
- The average age ratio demonstrates a consistent downward trend from 39.15% in 2017 to 31.4% in 2021. This indicates a gradual reduction in the relative age of the property, plant, and equipment assets over the observed period, suggesting either acquisition of newer assets or disposal of older ones.
- Estimated total useful life
- There is an overall increase in the estimated total useful life from 14 years in 2017 to a peak of 19 years in 2020, followed by a decrease to 16 years in 2021. This pattern suggests adjustments in asset lifespan estimates possibly due to changes in asset composition or re-evaluations of asset longevity assumptions.
- Estimated age, time elapsed since purchase
- The estimated age of the assets remained relatively stable around 6 years from 2017 through 2020, then decreased slightly to 5 years in 2021. This slight reduction may imply recent additions of newer assets within the total asset base.
- Estimated remaining life
- The estimated remaining life of assets shows a rising trend from 9 years in 2017, reaching 13 years in 2020, before declining to 11 years in 2021. This aligns with the changes seen in the total useful life and the relatively stable asset age, reflecting shifts in anticipated asset service periods over time.
Average Age
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).
2021 Calculations
1 Average age = 100 × Accumulated depreciation ÷ (Property, plant, and equipment, cost – Land)
= 100 × ÷ ( – ) =
- Property, Plant, and Equipment Cost
- The cost of property, plant, and equipment exhibited a consistent upward trend over the period analyzed. Starting from approximately $1.09 billion in 2017, the cost increased steadily each year, reaching about $2.20 billion by the end of 2021. This indicates significant ongoing investments or acquisitions in fixed assets over the five-year span.
- Accumulated Depreciation
- Accumulated depreciation also rose consistently, from $412.2 million in 2017 to $654.6 million in 2021. The growth in accumulated depreciation aligns with the increasing cost base of property, plant, and equipment, reflecting ongoing usage and wear of assets. The increasing depreciation suggests that the asset base is aging but is also being supplemented with new additions.
- Land Value
- Land value showed fluctuation but with a general upward movement. It rose notably from $39.1 million in 2017 to $90.7 million in 2018, then saw smaller increments in subsequent years, ending at $116.5 million in 2021. This increase is likely due to acquisitions or revaluations of land assets, highlighting an expansion in land holdings or appreciation in land values.
- Average Age Ratio
- The average age ratio declined from 39.15% in 2017 to 31.4% in 2021, indicating a relative decrease in the average age of the asset base. This suggests that the company has been adding newer assets at a rate faster than asset aging, which may reflect modernization efforts or expansion in facilities.
- Summary of Trends and Insights
- The data illustrates a growing and concurrently modernizing property, plant, and equipment portfolio. The increasing asset cost base paired with rising accumulated depreciation and a decreasing average age ratio indicates active investment in new assets while the aging of older assets continues at a slower pace relative to additions. The notable increase in land value supports the notion of strategic asset acquisition. Overall, the financial data reflects deliberate capital expenditure and asset management strategies focused on growth and renewal.
Estimated Total Useful Life
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).
2021 Calculations
1 Estimated total useful life = (Property, plant, and equipment, cost – Land) ÷ Depreciation expense for property, plant, and equipment
= ( – ) ÷ =
- Property, plant, and equipment, cost
- The cost of property, plant, and equipment demonstrated a consistent upward trend over the five-year period. Beginning at approximately $1.09 billion in 2017, the value increased each year, reaching about $2.20 billion by the end of 2021. This steady growth indicates ongoing investments in fixed assets, which may reflect expansion activities or capacity enhancements.
- Land
- The value of land exhibited significant growth from 2017 to 2018, more than doubling from around $39.1 million to $90.7 million. Thereafter, the land value continued to increase moderately, reaching $116.5 million by the end of 2021. This pattern may suggest acquisitions of land parcels or revaluations during the early years, followed by more stable holdings in subsequent periods.
- Depreciation expense for property, plant, and equipment
- Depreciation expense increased steadily throughout the period, rising from $74.1 million in 2017 to $127 million in 2021. The growth in depreciation expense aligns with the expanding base of property, plant, and equipment assets, reflecting a higher allocation of cost as these assets are utilized. The increment in annual depreciation suggests either additions of depreciable assets or changes in depreciation methods or estimates.
- Estimated total useful life
- The estimated total useful life of the property, plant, and equipment fluctuated moderately between 14 and 19 years over the period. Starting at 14 years in 2017, the useful life increased to 16 years in 2018, rising to 17 and 19 years in 2019 and 2020 respectively, before dropping back to 16 years in 2021. These variations indicate adjustments in the company's assumptions regarding asset longevity, potentially reflecting changes in asset composition or reassessments of asset durability.
Estimated Age, Time Elapsed since Purchase
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).
2021 Calculations
1 Time elapsed since purchase = Accumulated depreciation ÷ Depreciation expense for property, plant, and equipment
= ÷ =
- Accumulated Depreciation
- The accumulated depreciation shows a consistent upward trend from 2017 to 2021. Starting at 412.2 million USD in 2017, it increased steadily each year to reach 654.6 million USD by the end of 2021. This indicates a continuous allocation of depreciation expense over the years, reflecting ongoing usage and aging of property, plant, and equipment assets.
- Depreciation Expense for Property, Plant, and Equipment
- Depreciation expense also demonstrates an increasing trend across the five-year period. Beginning at 74.1 million USD in 2017, the expense rose gradually with a slight increase to 74.9 million USD in 2018, followed by more significant increments in the subsequent years, reaching 127 million USD in 2021. The growth in annual depreciation expense suggests either acquisitions of new assets, changes in depreciation methods or rates, or revaluation of asset bases.
- Time Elapsed Since Purchase
- The time elapsed since purchase remained constant at six years from 2017 through 2020, then decreased to five years in 2021. This reduction could be indicative of newer asset additions or replacements in 2021, thus lowering the average age of the asset pool. It aligns with the increase in depreciation expense during that year.
- Overall Analysis
- The data reveals a pattern of steady accumulation of depreciation aligned with growing depreciation expenses, implying consistent investment in property, plant, and equipment along with routine usage and aging. The stable average asset age for four years followed by a decrease in the last year suggests the introduction of newer assets, possibly due to capital expenditures. This combination points toward asset base renewal or expansion contributing to higher expenses and a shift in asset age profile.
Estimated Remaining Life
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).
2021 Calculations
1 Estimated remaining life = (Property, plant, and equipment, net – Land) ÷ Depreciation expense for property, plant, and equipment
= ( – ) ÷ =
- Property, Plant, and Equipment, Net
- The net value of property, plant, and equipment increased consistently over the five-year period. Starting at $679,700 thousand at the end of 2017, it rose steadily to reach $1,546,600 thousand by the end of 2021. This indicates ongoing capital investment and expansion of tangible fixed assets.
- Land
- The value of land fluctuated but showed an overall upward trend. From $39,100 thousand in 2017, it surged significantly to $90,700 thousand in 2018. Following this spike, the value experienced minor variations but generally increased, ending at $116,500 thousand in 2021. This suggests acquisitions or revaluations of land assets during the period.
- Depreciation Expense for Property, Plant, and Equipment
- Depreciation expense displayed a consistent upward trajectory, rising from $74,100 thousand in 2017 to $127,000 thousand in 2021. This growth in depreciation expense correlates with the increase in property, plant, and equipment assets, reflecting higher costs allocated due to asset additions and aging.
- Estimated Remaining Life
- The estimated remaining life of the assets showed some variability, beginning at 9 years in 2017, increasing to 13 years by 2020, then decreasing slightly to 11 years in 2021. This pattern may indicate a mix of asset retirements and new acquisitions, affecting the overall average useful life of the fixed asset base.