Hubbell Inc. (NYSE:HUBB)

The analysis of the property, plant, and equipment data over the five-year period reveals several notable trends and fluctuations in the various asset categories and their net values.

Land

The value of land decreased steadily from $42,200 thousand at the end of 2018 to a low of $28,100 thousand in 2021, before slightly increasing to $29,800 thousand in 2022. This overall decline suggests possible disposals or revaluations impacting the land holdings during the period.

Buildings and improvements

Values for buildings and improvements were relatively stable between 2018 and 2020, oscillating around the $277,300 to $285,300 thousand range. However, there was a substantial decline in 2021 to $209,700 thousand, followed by a marginal increase to $212,100 thousand in 2022. This pronounced dip may indicate disposals, impairments, or changes in valuation methods during 2021.

Machinery, tools, and equipment

This category showed growth from 2018 ($863,500 thousand) through 2020 ($924,400 thousand), reflecting possible capital investments or acquisitions. The value then decreased significantly in 2021 to $846,600 thousand but recovered to $905,700 thousand in 2022. The fluctuations likely represent a mix of asset purchases, retirements, and write-downs impacting the machinery and equipment base.

Construction-in-progress

There was a general upward trend in construction-in-progress, starting from $46,200 thousand in 2018, declining briefly in 2019 to $35,300 thousand, and then increasing consistently to reach $99,000 thousand by the end of 2022. This increase suggests considerable ongoing capital projects or expansions under development in recent years.

Gross property, plant, and equipment

The aggregate gross PPE value increased from $1,229,200 thousand in 2018 to a peak of $1,301,700 thousand in 2020. However, it decreased sharply in 2021 to $1,153,900 thousand before rising again in 2022 to $1,246,600 thousand. These movements appear consistent with the patterns observed in individual asset categories, reflecting cycles of investment, disposals, or revaluation.

Accumulated depreciation

The accumulated depreciation, presented as a negative value, increased in magnitude from -$727,100 thousand in 2018 to -$782,500 thousand in 2020, indicating ongoing depreciation expenses and asset aging. In 2021, the accumulated depreciation decreased significantly in absolute terms to -$694,400 thousand, then increased again to -$718,600 thousand in 2022. The 2021 reduction could be due to asset disposals or adjustments in depreciation estimates.

Net property, plant, and equipment

Net PPE values remained relatively stable around the $500,000 thousand mark from 2018 through 2020, peaking at $519,200 thousand in 2020. There was a notable decline to $459,500 thousand in 2021, consistent with the reduction in gross PPE and accumulated depreciation changes. In 2022, net PPE rebounded to $528,000 thousand, the highest value in the period, suggesting renewed capital investment and asset base strengthening.

Average Age Ratio

The average age ratio displays a relatively stable pattern over the observed period, fluctuating slightly between 61.26% and 61.88% from 2018 to 2021. A noticeable decline occurs in 2022, where the ratio decreases to 59.06%, indicating a potentially younger asset base or increased asset turnover in that year.

Estimated Total Useful Life

The estimated total useful life of the equipment shows minor variability. It is reported as 18 years for most years, with a one-year dip to 17 in 2019 and an increase to 19 in 2022. This suggests minor reassessments of the asset life, possibly reflecting changes in maintenance practices, technology, or asset quality.

Estimated Age (Time Elapsed Since Purchase)

The estimated age of the assets remains constant at 11 years throughout the period, indicating no significant acquisition of assets with different ages or changes in asset aging assumptions during the years analyzed.

Estimated Remaining Life

The estimated remaining life remains steady at 7 years from 2018 to 2021, with an increase to 8 years in 2022. This increment corresponds logically with the increased total useful life estimate in 2022, implying an expectation of longer service duration or improved condition of the equipment as of the last reporting date.

Gross Property, Plant, and Equipment

The gross value of property, plant, and equipment experienced a general increase from 2018 to 2020, rising from $1,229,200 thousand to $1,301,700 thousand. However, there was a notable decline in 2021 to $1,153,900 thousand, followed by a rebound in 2022 to $1,246,600 thousand. This pattern indicates fluctuations potentially related to asset acquisitions or disposals during these years.

Accumulated Depreciation

Accumulated depreciation showed an increasing trend from 2018 through 2020, growing from $727,100 thousand to $782,500 thousand, which aligns with the increasing gross asset base during that period. A significant drop occurred in 2021 to $694,400 thousand, contrary to typical accumulation trends, and then it partially recovered to $718,600 thousand in 2022. This decline in depreciation could suggest asset disposals, changes in depreciation policies, or impairments.

Land

The recorded value of land steadily decreased from $42,200 thousand in 2018 to $28,100 thousand in 2021, with a slight increase to $29,800 thousand in 2022. This steady decline over several years might reflect land sales or revaluation adjustments, with the minor resurgence in 2022 indicating limited new land acquisitions or valuation changes.

Average Age Ratio

The average age ratio of the property, plant, and equipment remained relatively stable between 61.26% and 61.88% from 2018 through 2021, suggesting a consistent asset age profile during this period. In 2022, the ratio declined to 59.06%, indicating a relatively younger asset base, possibly due to recent investments or replacement of older assets with newer ones.

Overall Insight

The data collectively suggests that the company experienced growth in its gross property, plant, and equipment until 2020, followed by asset reductions in 2021 and partial recovery in 2022. The unusual drop in accumulated depreciation in 2021 contrasts with typical depreciation accumulation and points to significant asset write-offs or disposals. The declining land values over the years further support the possibility of asset sales. The reduction in the average age ratio in 2022 may indicate a strategic renewal of the asset base, potentially aiming to improve efficiency or capacity.

Gross Property, Plant, and Equipment

The gross property, plant, and equipment (PPE) values show a fluctuating trend over the five-year period. Starting at $1,229,200 thousand at the end of 2018, the value increased modestly in 2019 and 2020, reaching a peak of $1,301,700 thousand. However, a notable decline occurred in 2021, lowering the value to $1,153,900 thousand. In 2022, the gross PPE rebounded to $1,246,600 thousand, nearly returning to earlier levels. This pattern suggests periods of asset acquisition and disposal or revaluation, with a significant reduction observed in 2021.

Land

The recorded value of land assets demonstrates a consistent downward trend from 2018 through 2021, starting at $42,200 thousand in 2018 and dropping to $28,100 thousand by the end of 2021. In 2022, there was a slight recovery to $29,800 thousand. The persistent decline followed by a marginal increase may reflect land sales, reclassification, or adjustments in valuation, indicating a possible strategic shift or disposal of land assets during this timeframe.

Depreciation Expense

Depreciation expense rose steadily from $66,100 thousand in 2018 to a peak of $71,500 thousand in 2020. Following this peak, the expense declined in 2021 and 2022, settling at $63,400 thousand in the latest year reported. This trajectory aligns with the changes in gross PPE values, where increased asset additions until 2020 led to higher depreciation, while asset reductions after 2020 likely contributed to lower depreciation charges subsequently.

Estimated Total Useful Life

The estimated total useful life of the property, plant, and equipment remained relatively stable, fluctuating slightly between 17 and 19 years across the years. This stability suggests consistent asset life assumptions used in depreciation calculations, with a minor increase noted in 2022 which may indicate revisions in asset longevity expectations or changes in the asset composition.

Accumulated depreciation

Accumulated depreciation shows an overall increasing trend from 2018 to 2020, rising from 727,100 thousand USD to 782,500 thousand USD. However, there is a notable decrease in 2021 to 694,400 thousand USD, followed by a slight increase in 2022 to 718,600 thousand USD. This fluctuation suggests possible asset disposals or adjustments affecting the accumulated depreciation balance after 2020.

Depreciation expense

Depreciation expense increased steadily from 66,100 thousand USD in 2018 to a peak of 71,500 thousand USD in 2020. After this peak, there is a decline to 61,700 thousand USD in 2021, with a slight recovery to 63,400 thousand USD in 2022. The decrease after 2020 may indicate changes in asset composition, reduced capital expenditures, or adjustments in depreciation methods.

Time elapsed since purchase

The time elapsed since purchase remains constant at 11 years throughout the reported periods. This stability suggests that the depreciation analysis is based on assets with a fixed expected useful life or that the method of calculating asset age has not changed during these years.

Net Property, Plant, and Equipment

The net value of property, plant, and equipment shows a general fluctuation over the five-year period. Starting at $502.1 million in 2018, it slightly increased to $505.2 million in 2019 and further to $519.2 million in 2020. However, there was a notable decline in 2021 to $459.5 million, followed by a rebound to $528.0 million in 2022, marking the highest value in the given timeframe.

Land

The recorded value of land assets demonstrates a downward trend from 2018 to 2021. The amount decreased from $42.2 million in 2018 to $28.1 million in 2021, indicating a significant reduction over the four years. In 2022, there was a modest increase to $29.8 million, partially offsetting the prior reductions but still reflecting an overall decline compared to 2018.

Depreciation Expense

Depreciation expenses experienced initial growth from $66.1 million in 2018 to $71.5 million in 2020, suggesting increased asset usage or capitalization. In 2021, depreciation expense declined sharply to $61.7 million, aligning with the drop in net property, plant, and equipment. In 2022, it marginally increased to $63.4 million but remained below the peak level observed in 2020.

Estimated Remaining Life

The estimated remaining life of the property, plant, and equipment remained stable at 7 years from 2018 through 2021, then increased slightly to 8 years in 2022. This suggests a revision in asset longevity assumptions, potentially influenced by asset additions or changes in asset utilization policies.

Overall Insights

The data reflects strategic asset management with periods of investment and divestment. The increase in net assets in 2022 after a dip in 2021 may indicate renewed capital expenditure or asset acquisition. The decline and subsequent slight recovery in land value could suggest land sales or revaluation activities. Depreciation trends correlate with changes in asset base size and possibly operational adjustments. The extension of the estimated remaining life in the latest period may lead to lower future depreciation expenses, influencing earnings and asset valuation.