Estée Lauder Cos. Inc. (NYSE:EL)

The analysis of property, plant, and equipment data shows notable trends over the six-year period ending June 30, 2023.

Land

The value of land exhibits a fluctuating upward trajectory, starting at $30 million in 2018, dipping slightly in 2019, then rising steadily to reach $70 million by 2023. This represents a significant increase, more than doubling over the period.

Buildings and improvements

Buildings and improvements display considerable volatility. The value increased from $237 million in 2018 to $400 million in 2020, then sharply declined to $256 million in 2021. Subsequently, there was a strong recovery, with values rising dramatically to $843 million in 2023, the highest point recorded during the period.

Machinery and equipment

A consistent upward trend is observed, starting at $719 million in 2018 and increasing each year to reach $1,071 million in 2023, reflecting steady investment and growth in machinery and equipment assets.

Computer hardware and software

Values in this category steadily increase from $1,193 million in 2018 to $1,651 million in 2023, showing ongoing investment in technology-related assets with a moderate acceleration in growth between 2021 and 2023.

Furniture and fixtures

This category shows gradual growth, rising from $104 million in 2018 to $136 million in 2023. The increases are relatively minor but consistent, indicating maintenance and modest expansion of these assets.

Leasehold improvements

Leasehold improvements hold relatively stable values, starting at $2,152 million in 2018, experiencing slight fluctuations but generally hovering around the $2,300 million mark, ending at $2,310 million in 2023. This stability suggests limited new investments or disposals in this category.

Construction in progress

This item appears starting in 2021 with $647 million, increasing to $759 million in 2022 and $827 million in 2023. The appearance and growth in this category indicate active ongoing projects and capital expenditures under development within the recent years.

Property, plant and equipment, gross

The gross property, plant, and equipment value consistently rises from $4,435 million in 2018 to $6,908 million in 2023, reflecting overall asset growth and significant capital investments made during the period.

Accumulated depreciation and amortization

The accumulated depreciation and amortization figures show a steady increase in magnitude from -$2,612 million in 2018 to -$3,729 million in 2023, indicating systematic allocation of asset costs over their useful lives, aligned with asset value growth.

Property, plant and equipment, net

Net property, plant, and equipment, representing gross assets less accumulated depreciation, generally increases from $1,823 million in 2018 to $3,179 million in 2023. This shows sustained net asset growth with a slight dip in 2020, likely connected to fluctuations in asset acquisition or disposals during that year.

Overall, the data suggests robust investment in property, plant, and equipment over the analyzed period, with particular acceleration in buildings and improvements and ongoing construction activities. The steady growth in machinery, equipment, and technology assets along with controlled depreciation contribute to a strengthening net asset base.

Average Age Ratio

The average age ratio demonstrates a fluctuating trend over the observed period, beginning at 59.3% in mid-2018 and slightly decreasing to 54.53% by mid-2023. A minor dip in 2019 to 57.54% is followed by a peak in 2020 at 60.36%, maintaining near 60% in 2021, and then declining steadily through 2022 and 2023. This gradual decrease from 2021 onwards suggests a relative reduction in the aged portion of the property, plant, and equipment assets.

Estimated Total Useful Life

The estimated total useful life of the assets has shown a consistent upward trend, increasing from 9 years in 2018 to 12 years in 2023. This progression indicates either an extension of asset lifespans due to improved maintenance, asset replacements with longer-lived assets, or changes in asset categorization or accounting policy.

Estimated Age, Time Elapsed Since Purchase

The estimated age has remained constant at 6 years throughout the entire period from 2018 to 2023. This stability suggests that the average acquisition horizon of the plant and equipment assets has not changed materially despite other changes in useful life assumptions.

Estimated Remaining Life

The estimated remaining life for the assets remained steady at 4 years between 2018 and 2021, after which it increased to 5 years in 2022 and remained there through 2023. This change aligns with the increase in the total useful life and indicates optimism about the future usability and longevity of the assets.

Accumulated depreciation and amortization

There is a consistent upward trend in accumulated depreciation and amortization from 2018 through 2023. The value increased from 2,612 million USD in 2018 to 3,729 million USD in 2023, reflecting ongoing asset usage and aging in the company's property, plant, and equipment over the six-year period.

Property, plant and equipment, gross

The gross value of property, plant, and equipment shows a steady increase each year, rising from 4,435 million USD in 2018 to 6,908 million USD in 2023. This growth indicates ongoing investments and expansions in tangible fixed assets, with a particularly notable increase between 2022 and 2023.

Land

Land holdings remain relatively stable with slight fluctuations. The value decreased marginally from 30 million USD in 2018 to 29 million USD in 2019, then rose to 70 million USD by 2023. The sharp increase in 2023 may suggest recent acquisitions or revaluation of land assets.

Average age ratio

The average age ratio, representing the proportion of accumulated depreciation relative to gross property, plant, and equipment, exhibits a gradual decline from 59.3% in 2018 to 54.53% in 2023. This suggests that the asset base is becoming relatively newer over time, despite steady depreciation, likely due to the net effect of substantial asset additions.

Gross Property, Plant, and Equipment

The gross value of property, plant, and equipment exhibited a consistent upward trend over the six-year period. Starting at $4,435 million in mid-2018, there was a steady increase each year, reaching $6,908 million by mid-2023. This represents an overall growth of approximately 56%, indicating ongoing investment in fixed assets.

Land

The value of land fluctuated modestly but showed an overall increase. Beginning at $30 million in mid-2018, it decreased slightly to $29 million in 2019, then gradually rose with some variability to $70 million by mid-2023. The value more than doubled over the period, possibly reflecting acquisitions or revaluations of land holdings.

Depreciation and Amortization of Property, Plant, and Equipment

Depreciation and amortization expenses increased steadily from $469 million in mid-2018 to $577 million in mid-2023. The steady rise, roughly 23%, aligns with the growth in gross property, plant, and equipment, suggesting consistent application of depreciation policies amidst expanding asset bases.

Estimated Total Useful Life

The estimated total useful life extended gradually from 9 years in mid-2018 to 12 years in mid-2023. This lengthening may indicate a shift towards longer depreciation periods, possibly reflecting changes in asset composition, improved asset durability, or revised accounting estimates.

Accumulated Depreciation and Amortization

The accumulated depreciation and amortization amount exhibits a consistent upward trend from US$2,612 million in June 2018 to US$3,729 million in June 2023. This increase reflects the ongoing recognition of depreciation expenses over time, suggesting steady asset utilization and aging of property, plant, and equipment.

Depreciation and Amortization Expense

Annual depreciation and amortization expenses also show a gradual increase over the period, rising from US$469 million in 2018 to US$577 million in 2023. The growth in yearly expense indicates sustained capital investment activities or possibly adjustments in asset valuations, leading to higher periodic depreciation charges.

Time Elapsed Since Purchase

The average time elapsed since purchase remains constant at 6 years throughout the reported years. This stability suggests a consistent asset acquisition and replacement cycle without significant extensions or reductions in asset age profiles.

Overall Analysis

The data reveals a steady and predictable pattern of asset depreciation and amortization expenses, coupled with a stable asset age profile. The increasing accumulated depreciation aligns with the incremental annual depreciation expenses, confirming ongoing asset consumption in line with usage and accounting policies. This pattern may indicate prudent asset management and regular reinvestment strategies maintaining the operational base of property, plant, and equipment.

Property, Plant and Equipment, Net

The net value of property, plant, and equipment exhibited a consistent upward trend from 2018 through 2023. Starting at $1,823 million in 2018, the value rose steadily each year, reaching $3,179 million by 2023. This represents a significant increase, reflecting continuous investment or asset acquisition in this category over the six-year period.

Land

The value attributed to land showed minor fluctuations but an overall increasing trajectory. Beginning at $30 million in 2018, there was a slight dip in 2019 to $29 million, followed by a rise to $33 million in 2020. A more substantial increase occurred in 2021 to $55 million. After a slight decrease in 2022 to $53 million, the figure rose again to $70 million in 2023. This pattern suggests periodic acquisitions or revaluations of land assets.

Depreciation and Amortization of Property, Plant and Equipment

Depreciation and amortization expenses steadily increased each year, starting from $469 million in 2018 and reaching $577 million in 2023. This upward trend aligns with the growth in the asset base, reflecting higher cumulative depreciation charges consistent with the increased net value of fixed assets.

Estimated Remaining Life

The estimated remaining life of property, plant, and equipment remained stable at 4 years from 2018 through 2021. In 2022 and 2023, an adjustment was noted, with the estimated remaining life increasing to 5 years. This change could indicate a reassessment of asset longevity or possibly the acquisition of assets with longer useful lives in the later years.

Overall Analysis

The data indicate a clear expansion in the company's investment in property, plant, and equipment over this period. Both the net value and depreciation figures increased in tandem, which is typical as asset bases grow. The increase in estimated remaining life towards the end of the period suggests strategic asset management possibly intending to optimize depreciation schedules. Land values showed more variability but ultimately rose, suggesting strategic land acquisitions or revaluations contributing to the company's fixed asset portfolio growth.