Kinder Morgan Inc. (NYSE:KMI)

The analysis of the Natural Gas Pipelines segment over the five-year period reveals several notable trends in financial performance.

Segment EBDA (Earnings Before Depreciation and Amortization)

The segment EBDA showed a consistent upward trajectory from 2015 to 2019. Beginning at $3,067 million in 2015, it increased steadily each year, reaching $4,661 million by the end of 2019. This represents a significant growth of approximately 52% over the period, indicative of enhanced operational profitability and possibly improved cost management or scale efficiencies within the segment.

Revenues

Revenues exhibited fluctuating behavior during the same time frame. Starting at $8,725 million in 2015, revenues declined to $8,005 million in 2016, then recovered to $9,015 million in 2018 before falling again to $8,170 million in 2019. Overall, revenues in 2019 were slightly lower than at the start of the period, suggesting volatility possibly due to market conditions, pricing pressures, or changes in volume. Despite the inconsistent revenue levels, the increase in segment EBDA indicates improved profitability per revenue dollar.

Segment Profit Margin

The segment profit margin demonstrated a largely positive trend, rising from 35.15% in 2015 to 57.05% in 2019. After increasing sharply from 2015 to 2017, the margin plateaued around 40% until 2018 before making a substantial leap in 2019. This sharp improvement in 2019 margin aligns with the increased segment EBDA and lower revenue, suggesting heightened efficiency, cost reductions, or favorable pricing strategies contributed to a more profitable segment despite declining revenues.

In summary, the Natural Gas Pipelines segment experienced steady growth in operating profitability as evidenced by rising EBDA and profit margins, despite revenue volatility. The pronounced margin expansion in 2019 highlights a significant enhancement in segment efficiency or pricing power, underscoring an overall strengthening of financial performance within the segment over the five-year horizon.

The analysis of the "Products Pipelines" segment data reveals several important trends over the five-year period ending December 31, 2019.

Segment EBDA (Earnings Before Depreciation and Amortization)

Segment EBDA experienced some fluctuations but generally showed a positive trend. Starting at 1,106 million US dollars in 2015, it slightly declined to 1,067 million in 2016. Thereafter, the figure increased notably in 2017 to 1,231 million, then slightly decreased to 1,173 million in 2018, and rose again to 1,225 million in 2019. This indicates an overall resilient earnings performance with growth after a moderate dip in 2016.

Revenues

Revenues displayed a somewhat volatile pattern. Beginning at 1,831 million US dollars in 2015, revenues dropped significantly in 2016 to 1,649 million. Subsequent years saw relatively stable but modest growth, reaching 1,661 million in 2017 and 1,713 million in 2018, before returning to the initial level of 1,831 million in 2019. This suggests a recovery to the 2015 revenue level after a decline in 2016, but without sustained growth beyond that point.

Segment Profit Margin

The profit margin demonstrated an overall increasing trend, albeit with some variability. Starting at 60.4% in 2015, the margin rose to 64.71% in 2016 and peaked at 74.11% in 2017, indicating improved profitability efficiency. However, the margin then decreased to 68.48% in 2018 and 66.9% in 2019, maintaining a level significantly higher than the 2015 baseline. This pattern suggests enhanced cost management or operational improvements that boosted profitability after 2015, despite a slight retreat in the last two years.

In summary, the segment's earnings before depreciation and amortization improved over the period, supported by a generally stable revenue base recovering from a 2016 trough. The segment profit margin increased notably after 2015, indicating better operational efficiency or cost control, although it tapered off slightly towards the end of the period. Together, these trends reflect resilience and an overall strengthening of the segment’s financial performance, with some volatility in revenues and margins requiring continued monitoring.

The financial data for the Terminals segment over the five-year period from 2015 to 2019 reveals several notable trends in segment earnings before depreciation and amortization (EBDA), revenues, and profit margin.

Segment EBDA

The segment EBDA displays a generally upward trajectory, increasing steadily from 878 million US dollars in 2015 to 1506 million US dollars in 2019. This represents a significant growth of approximately 71.5% over the period, with consistent annual increases except for a slight decline between 2017 and 2018.

Revenues

Revenues for the segment show slight but consistent growth year over year, rising from 1879 million US dollars in 2015 to 2034 million US dollars in 2019. The growth rate of revenues is modest compared to the increase in segment EBDA, suggesting improvements in operational efficiency or margin enhancement rather than simply scale expansion.

Segment Profit Margin

The segment profit margin exhibits a strong upward trend, starting at 46.73% in 2015 and rising sharply to 74.04% by 2019. Notably, the margin peaked in 2017 at 62.26% before dipping slightly in 2018 to 58%, then increasing markedly in 2019. This indicates a significant improvement in profitability, surpassing revenue growth, which aligns with the more substantial increase observed in segment EBDA.

Overall, the data indicates that the Terminals segment has strengthened its profitability substantially over the analyzed period. While revenue growth has been steady but moderate, the enhanced profit margin and rising EBDA suggest improved cost management, operational efficiency, or value-added services contributing to better financial performance within the segment.

Segment EBDA

The Segment EBDA exhibited an upward trend from 2015 to 2017, increasing from 658 million USD to 847 million USD. However, this was followed by a decline over the next two years, falling to 681 million USD by the end of 2019. The peak in 2017 suggests favorable operational conditions during that period, while the subsequent decrease indicates challenges or reduced profitability in later years.

Revenues

Revenues displayed a notable decrease from 2015 to 2017, dropping from 1,699 million USD to 1,196 million USD. A slight recovery occurred in 2018 with revenues rising to 1,255 million USD, but this was followed by a minor decline to 1,219 million USD in 2019. Overall, the revenue trend indicates a contraction in sales or volume in the earlier years with some stabilization afterward, though not returning to the initial levels observed in 2015.

Segment Profit Margin

The segment profit margin showed considerable improvement from 38.73% in 2015 to a peak of 70.82% in 2017, indicating enhanced efficiency or better cost control despite declining revenues. After 2017, the margin declined to 55.87% by 2019 but remained significantly higher than the 2015 level. This pattern suggests that while the segment faced reduced profitability pressures in recent years, operational effectiveness remained improved relative to the initial period.

The segment exhibits notable variations in its financial performance over the five-year period.

Segment EBDA (Earnings Before Depreciation, Amortization)

The segment EBDA shows relative stability from 2015 through 2017, remaining close to the range of 181 to 186 million USD. However, there is a significant increase in 2018, with the amount rising sharply to 720 million USD. This peak is followed by a drastic decline in 2019, where the segment EBDA turns negative, reaching -2 million USD, indicating a loss or significant expense that outweighed earnings before depreciation and amortization.

Revenues

Revenues display a slight downward trend between 2015 and 2018, starting at 260 million USD in 2015 and gradually decreasing to 170 million USD by 2018. There is a missing data point for 2019, limiting the ability to evaluate revenue trends beyond 2018.

Segment Profit Margin

The profit margin remains consistently strong and stable between 2015 and 2017, ranging just above 70%. A very pronounced spike occurs in 2018, with the profit margin reaching an exceptionally high 423.53%, which correlates with the significant jump in segment EBDA during the same year. The lack of data for 2019 prevents further margin analysis for that year.

Overall, the financial metrics suggest operational stability in the earlier years, followed by an extraordinary surge in profitability in 2018, driven primarily by a large increase in EBITDA relative to revenues. However, this was not sustained, as indicated by the collapse of EBDA to a slight loss in 2019 and the absence of corresponding revenue and margin data for that year. The volatility witnessed in the later years calls for further investigation into underlying causes or one-time events affecting segment performance.

Segment EBDA

The segment reported a consistent increase in Earnings Before Depreciation and Amortization (EBDA) over the five-year period. Starting at US$3,067 million in 2015, the EBDA grew steadily each year, reaching US$4,661 million by the end of 2019. This reflects a significant upward trend indicating improved operating profitability.

Assets

The asset base demonstrated relative stability with minor fluctuations. Beginning at US$53,704 million in 2015, assets decreased to US$50,428 million in 2016, then showed a slight recovery in 2017 and 2018 before falling again to US$50,310 million in 2019. Overall, the asset level remained close to the US$50 billion mark, indicating limited expansion or contraction in asset holdings over the period.

Segment ROA (Return on Assets)

The Return on Assets displayed a clear upward trend throughout the timeline. It increased from 5.71% in 2015 to 9.26% in 2019, suggesting enhanced efficiency in utilizing assets to generate earnings. Notably, the most significant improvement occurred in 2019, consistent with the marked increase in segment EBDA despite a relatively stable asset base.

Segment EBDA (Earnings Before Depreciation and Amortization)

The segment EBDA displayed a fluctuating yet generally positive trend over the five-year period. It started at $1,106 million in 2015, slightly declined to $1,067 million in 2016, and then rose to a peak of $1,231 million in 2017. Subsequently, it decreased to $1,173 million in 2018 before increasing again to $1,225 million in 2019. Overall, the EBDA showed resilience with minor year-to-year variations but maintained a relatively stable level near $1.2 billion in the latter years.

Assets

The asset base remained relatively stable from 2015 to 2018, fluctuating narrowly between $8,329 million and $8,539 million. However, there was a notable increase in 2019, with assets rising significantly to $9,468 million. This upward movement in 2019 represents a sizable investment or acquisition phase, resulting in expansion of the assets held within the segment.

Segment ROA (Return on Assets)

The segment return on assets exhibited slight variability across the observed periods, starting at 13.07% in 2015. It then experienced a decrease to 12.81% in 2016, followed by a peak of 14.42% in 2017. In the subsequent years, ROA decreased somewhat to 13.92% in 2018 and then fell further to 12.94% in 2019. Despite the fluctuations, the ROA consistently remained around the 13% mark, indicating steady profitability relative to asset base. The peak in 2017 suggests the most efficient asset utilization in the period, while the decline post-2017 may reflect the impact of increased assets and operational factors influencing profitability.

Overall Observations

Throughout the five-year span, the segment maintained relatively stable earnings levels with moderate fluctuations. The substantial asset growth in 2019 did not correspond proportionally with an increase in segment ROA, which declined slightly that year. This could imply that the added assets had not yet translated into proportionate earnings improvements or that the segment faced increased costs or utilization inefficiencies. The return metrics suggest consistent profitability but perhaps a need to optimize the deployment of new assets acquired in 2019.

The data for the Terminals reportable segment over the five-year period reveals notable trends in segment earnings before depreciation and amortization (EBDA), assets, and segment return on assets (ROA).

Segment EBDA

There is a consistent upward trend in the segment EBDA from 2015 to 2019. The EBDA increased from $878 million in 2015 to $1506 million in 2019. This represents a substantial growth of approximately 71.5% over the five years, indicating improved profitability or operational efficiency within the segment.

Assets

The total assets allocated to the segment display a different pattern. Assets initially rose from $9083 million in 2015 to a peak of $9935 million in 2017, followed by a decline each year thereafter, ending at $8890 million in 2019. The decrease after 2017 suggests possible divestitures, asset sales, or depreciation exceeding new investments in the segment.

Segment ROA

The segment return on assets, a measure of profitability relative to asset base, shows a steady upward trend throughout the period. Beginning at 9.67% in 2015, ROA increased annually to reach 16.94% in 2019. This increase, in conjunction with rising EBDA and declining assets, indicates enhanced efficiency and better utilization of the asset base to generate earnings.

Overall, the segment demonstrates strong earnings growth and improved asset profitability, despite a reduction in the asset base after 2017. This pattern suggests a strategic focus on optimizing asset use and operational performance within the terminals segment.

Segment EBITDA

The segment EBITDA experienced an initial growth from 658 million USD in 2015 to a peak of 847 million USD in 2017. Following this peak, a decline is observed, with EBITDA decreasing to 759 million USD in 2018 and further to 681 million USD in 2019. This indicates a reversal of the earlier growth trend and suggests potential challenges or changing conditions affecting earnings before depreciation and amortization.

Assets

Assets consistently decreased year over year from 4706 million USD in 2015 to 3523 million USD in 2019. The decline was steady, with the largest drop occurring between 2015 and 2016. This reduction in asset base could have implications for the segment’s operational capacity or investment levels.

Segment ROA (Return on Assets)

Return on Assets showed an improving trend from 13.98% in 2015 to a high of 21.46% in 2017. Post-2017, ROA decreased slightly but remained relatively stable at around 19.3% in 2018 and 2019. The initial improvement reflects better asset utilization, while the stabilization after 2017 suggests the segment maintained efficiency despite declining asset values and EBITDA.

The financial data for the Kinder Morgan Canada segment reveals several notable trends over the examined periods.

Segment Earnings Before Depreciation and Amortization (EBDA)

From 2015 to 2017, the EBDA remained relatively stable, fluctuating slightly between US$181 million and US$186 million. A significant increase is observed in 2018, where the EBDA surged to US$720 million, indicating a substantial improvement in segment profitability for that year. However, this positive trend did not persist, as the EBDA drastically declined to negative US$2 million in 2019, reflecting a deterioration in earnings performance.

Assets

Reported asset values increased steadily from US$1,434 million in 2015 to US$2,080 million in 2017, demonstrating growth in the segment’s asset base over three years. Asset data for 2018 and 2019 are not provided, limiting the ability to assess subsequent asset trends.

Segment Return on Assets (ROA)

The ROA exhibits a downward trajectory from 12.69% in 2015 to 8.94% in 2017. This decline suggests decreasing efficiency in generating earnings from the asset base over these years. Data for 2018 and 2019 are unavailable, precluding further analysis of this metric for the most recent periods.

Overall, the segment demonstrated stable earnings and asset growth from 2015 through 2017, with improving asset base but declining returns. The spike in EBDA in 2018 indicates a significant positive event or operational performance improvement during that year, followed by a sharp reversal leading to losses in 2019. The incomplete data for asset values and ROA in the latter years limits comprehensive assessment for 2018 and 2019.

Revenues

The reported revenues exhibit a fluctuating pattern over the five-year period. Starting at 8,725 million USD in 2015, revenues decreased to 8,005 million USD in 2016, followed by an increase to 8,618 million USD in 2017 and a further rise to 9,015 million USD in 2018. However, in 2019, revenues declined sharply to 8,170 million USD. Overall, revenues show variability with a peak in 2018 and a notable drop in 2019.

Assets

Assets show a generally declining trend from 2015 through 2019. The asset base decreased from 53,704 million USD in 2015 to 50,310 million USD in 2019. The decline is gradual with minor fluctuations, indicating a slow reduction in asset size over the period under review.

Segment Asset Turnover

The segment asset turnover ratio remains relatively stable throughout the period. It starts at 0.16 in 2015 and maintains this ratio through 2016, slightly improves to 0.17 in 2017 and 2018, before returning to 0.16 in 2019. This stability suggests consistent efficiency in asset utilization within the segment despite fluctuations in revenues and assets.

The revenue figures exhibit a relatively stable pattern over the five-year period, with minor fluctuations. Initially, revenues decreased from 1831 million USD in 2015 to 1649 million USD in 2016, representing a modest decline. Subsequently, there was a slight recovery and stabilization, with revenues increasing to 1661 million USD in 2017, rising further to 1713 million USD in 2018, and returning to the original 1831 million USD level by 2019. This indicates that despite some short-term volatility, the segment managed to maintain overall revenue levels comparable to the starting point.

Assets values show a more variable trend. After a slight reduction from 8464 million USD in 2015 to 8329 million USD in 2016, assets experienced a gradual increase in the following years. By 2017, assets amounted to 8539 million USD, followed by a minor decline to 8429 million USD in 2018. A notable uptick is observed in 2019 with assets reaching 9468 million USD, the highest value in the period. This increase in assets towards the end could signify investments or acquisitions intended to enhance segment capacity or capabilities.

The segment asset turnover ratio, which reflects the efficiency of asset utilization in generating revenues, demonstrates a slightly decreasing trend over the period. It declined from 0.22 in 2015 to 0.20 in 2016, followed by a minor drop to 0.19 in 2017. The ratio rebounded slightly to 0.20 in 2018 but then decreased again to 0.19 in 2019. This pattern suggests a marginal decrease in asset efficiency, meaning that although assets increased—especially in 2019—the corresponding revenue generation did not grow proportionally, implying either underutilization or lower returns on newly deployed assets within the segment.

In summary, the segment's revenues remained mostly steady with slight fluctuations, assets generally increased with a significant rise in the concluding year, and asset turnover ratios indicate a slight decline in efficiency over the analyzed period. The data suggests that while the segment expanded in terms of asset base, it faced challenges in translating this growth into commensurate revenue increases, leading to a modest decrease in operational efficiency.

Revenues

Revenues demonstrated a steady upward trend over the five-year period. Starting at $1,879 million in 2015, revenues increased each year, reaching $2,034 million by 2019. This reflects consistent growth, with the annual increments being relatively moderate but stable, indicating sustained demand or effective pricing strategies in the terminals segment.

Assets

Segment assets showed some fluctuation throughout the period. Assets increased from $9,083 million in 2015 to a peak of $9,935 million in 2017, followed by a decline over the next two years, ending at $8,890 million in 2019. This pattern suggests an initial period of asset accumulation or investment, followed by asset optimization or divestiture in the later years.

Segment Asset Turnover

The segment asset turnover ratio exhibited slight variation but generally followed a positive trajectory. It started at 0.21 in 2015, dipped marginally to 0.20 in the subsequent two years, and then increased to 0.22 in 2018 and 0.23 in 2019. The rising asset turnover ratio towards the end of the period indicates improving efficiency in generating revenues from the asset base, especially considering the decreasing asset values at that time.

The segment's revenues exhibited a declining trend during the period under review. Revenues decreased from US$1,699 million in 2015 to US$1,219 million in 2019, with a notable drop occurring between 2015 and 2016. After 2016, revenues remained relatively stable but did not return to the initial level observed in 2015.

Assets in the segment consistently declined over the five-year span. Starting at US$4,706 million at the end of 2015, total assets decreased steadily each year, reaching US$3,523 million by 2019. This represents a reduction of approximately 25% over the period, indicating significant asset diminution.

The segment asset turnover ratio, which measures the efficiency of asset utilization to generate revenues, followed a fluctuating pattern within a relatively narrow range. The ratio dropped from 0.36 in 2015 to 0.30 in 2016 and remained stable at 0.30 through 2017. Afterwards, it showed a moderate improvement, increasing to 0.32 in 2018 and 0.35 in 2019. By 2019, the ratio was close to its 2015 level.

Summary of Trends

Revenues decreased overall, with a steep decline early in the period followed by a relatively stable pattern.

Assets steadily declined each year, indicating a reduction in the segment's asset base.

The segment asset turnover ratio declined initially but improved in later years, suggesting better efficiency in generating revenues from the asset base towards the end of the period.

The review of the Kinder Morgan Canada segment over the five-year period reveals several notable trends in revenues, assets, and segment asset turnover ratios.

Revenues

The revenue figures demonstrate a generally declining trend from 2015 through 2018. Starting at 260 million US dollars in 2015, revenues decreased slightly to 253 million in 2016 and maintained at a similar level of 256 million in 2017. In 2018, revenues dropped significantly to 170 million US dollars. Data for 2019 is missing, limiting the ability to confirm whether this decline continued.

Assets

Assets show a rising trend over the observed period from 2015 to 2017. The asset base increased from 1,434 million US dollars in 2015 to 1,572 million in 2016 and further to 2,080 million in 2017, indicating ongoing capital investment or increased asset holdings. However, asset data for 2018 and 2019 is unavailable, leaving uncertainty about the subsequent pattern.

Segment Asset Turnover

The segment asset turnover ratio declined progressively over the three reported years, moving from 0.18 in 2015 to 0.16 in 2016 and further down to 0.12 in 2017. This downward trend suggests decreasing efficiency in generating revenues from the asset base during this timeframe. No turnover data is provided beyond 2017.

Overall, the segment experienced shrinking revenues alongside growing assets up to 2017, resulting in a diminished asset turnover ratio. Such a pattern may indicate challenges in effectively leveraging the increased asset investment to drive revenue growth. The absence of data for 2018 and 2019 for assets and turnover limits the ability to assess whether the declining revenue trend persisted or if operational efficiency improved.

Capital expenditures

The capital expenditures exhibit noticeable fluctuations over the five-year period. Beginning at $1,642 million in 2015, there is a sharp decline to $1,227 million in 2016. This is followed by an increase to $1,376 million in 2017, and a further rise to $1,620 million in 2018, approaching the initial 2015 level. However, there is a subsequent decline to $1,377 million in 2019. Overall, capital expenditures demonstrate variability but generally remain within a range between approximately $1,200 million and $1,600 million.

Depreciation, Depletion & Amortization (DD&A)

DD&A shows a relatively stable pattern across the years. Values decrease slightly from $1,046 million in 2015 to $1,041 million in 2016 and continue to decline to $1,011 million in 2017. There is a modest increase to $1,058 million in 2018, followed by another decrease to $1,005 million in 2019. This small range of variation suggests consistent asset base consumption or amortization practices.

Segment capital expenditures to depreciation ratio

This ratio mirrors the capital expenditures trends with a ratio of 1.57 in 2015, which decreases sharply to 1.18 in 2016. It then rises to 1.36 in 2017 and peaks again at 1.53 in 2018 before declining to 1.37 in 2019. The ratio consistently remains above 1, indicating that capital expenditures generally exceed depreciation, which suggests ongoing investments in the segment's asset base to sustain or grow operations.

The financial data for the Products Pipelines segment indicates a clear downward trend in capital expenditures over the five-year period from 2015 to 2019. Capital expenditures decreased significantly from US$524 million in 2015 to a low of US$127 million in 2017, followed by a moderate increase to US$175 million by 2019. This suggests a reduction in investment outlays during the middle years, with a slight rebound towards the end of the period.

Depreciation, depletion, and amortization (DD&A) expenses exhibit a somewhat stable but gradually increasing pattern. Starting at US$206 million in 2015, DD&A rose modestly over the years, reaching US$338 million in 2019. The increase in DD&A outpacing capital expenditures in the later years could signify aging assets and increased expense recognition relative to new investments.

The ratio of segment capital expenditures to depreciation corroborates these observations, showing a notable decline from 2.54 in 2015 to 0.52 in 2019. This decrease in the ratio implies that capital investment relative to the rate of asset depreciation has diminished substantially, indicating potential underinvestment in the asset base relative to the consumption or aging of existing assets.

Capital Expenditures Trend

Substantial decline from 2015 to 2017, slight recovery by 2019.

DD&A Trend

Gradual increase, reaching the highest recorded value in 2019, suggesting asset aging.

Capital Expenditures to Depreciation Ratio

Continuous decline over the period, reflecting reduced reinvestment compared to asset depreciation.

Overall, the trends imply a scaling back of investments in new assets or capacity alongside increasing charges for asset wear and tear, a dynamic which could impact the long-term sustainability of the segment's operational infrastructure if the pattern continues.

The data reveals a downward trend in capital expenditures within the segment over the five-year period. Starting at 847 million US dollars in 2015, capital expenditures peaked at 983 million in 2016 before decreasing significantly to 888 million in 2017, then sharply declining to 380 million in 2018 and further to 347 million in 2019. This decline suggests a scaling back of investment or maintenance spending in the later years.

In contrast, depreciation, depletion, and amortization (DD&A) expenses have gradually increased over the same period. Beginning at 433 million US dollars in 2015, DD&A rose modestly each year, reaching 494 million by the end of 2019. This steady increase could reflect aging assets or a shift toward recognizing higher amortization expenses.

The ratio of segment capital expenditures to depreciation shows a clear downward trajectory, indicative of capital expenditures falling relative to the depreciation expense. This ratio started at 1.96 in 2015, rose to a high of 2.26 in 2016, signaling strong investment relative to asset consumption at that time. However, the ratio then declined sharply to 1.88 in 2017 and continued to decrease substantially to 0.79 in 2018 and 0.7 in 2019. This trend highlights that capital spending has become significantly lower compared to the ongoing depreciation expense, which may suggest a reduction in asset growth or replacement during the latter years.

Overall, the data points to a shift from a period of relatively higher investment in the early years toward reduced capital expenditures while maintaining or slightly increasing asset consumption as reflected in rising depreciation costs. This pattern could have implications for asset base renewal and future capacity within the segment.

Capital Expenditures

The capital expenditures demonstrate a notable decrease from US$725 million at the end of 2015 to US$276 million in 2016, representing a significant reduction. Subsequently, there is a moderate recovery to US$436 million in 2017, followed by a slight decline and stabilization around the US$350-400 million range in the years 2018 and 2019. Overall, the trend indicates a reduction in capital spending from the peak in 2015, with stabilization in the subsequent years at a lower level.

Depreciation, Depletion, and Amortization (DD&A)

DD&A values exhibit relative stability across the observed period, starting at US$556 million in 2015, decreasing to US$446 million in 2016, then increasing gradually to US$548 million by the end of 2019. This pattern suggests that while capital expenditures fluctuated, the related depreciation expenses maintained a generally consistent upward trend following the initial dip in 2016.

Segment Capital Expenditures to Depreciation Ratio

The ratio of capital expenditures to depreciation decreases substantially from 1.3 in 2015 to 0.62 in 2016, indicating that capital investment fell below the level of depreciation expense, possibly signaling reduced asset base expansion or maintenance investments during that period. The ratio then experiences a gradual recovery to 0.88 in 2017 and remains below 1 for the following years, ending at 0.64 in 2019. This consistent ratio below 1 after 2015 highlights a period where capital expenditures did not keep pace with asset depreciation, potentially indicating a diminishing asset base or deferred investments in this segment.

The analysis of the provided financial data reveals distinct trends in capital expenditures and depreciation for the reported segment over the four-year period ending in 2018, with 2019 data for capital expenditures not reported.

Capital Expenditures

Capital expenditures show a fluctuating pattern, starting at 142 million USD in 2015, decreasing to 124 million USD in 2016, then more than doubling to 338 million USD in 2017. In 2018, capital expenditures remain high at 332 million USD, indicating significant investment activity during these two years. The absence of data for 2019 prevents trend analysis for that year.

Depreciation, Depletion & Amortization (DD&A)

DD&A remains relatively stable between 2015 and 2017, fluctuating slightly between 44 and 46 million USD. However, in 2018, DD&A decreases noticeably to 29 million USD, which may reflect changes in asset base or depreciation methods.

Segment Capital Expenditures to Depreciation Ratio

This ratio exhibits a pronounced upward trend, starting at 3.09 in 2015 and slightly decreasing to 2.82 in 2016. Thereafter, it rises sharply to 7.35 in 2017 and peaks at 11.45 in 2018. The increasing ratio suggests that capital expenditures have been growing at a much faster rate than depreciation, possibly indicating expansion or asset acquisition exceeding the amount of asset consumption or disposal.

Overall, the data reveals a strategic increase in capital investment during 2017 and 2018, while the decrease in DD&A in 2018, coupled with rising capital expenditures relative to depreciation, suggests an asset growth phase or recent acquisitions with expected longer useful lives. The absence of 2019 capital expenditure data limits further trend analysis beyond 2018.