ONEOK Inc. (NYSE:OKE)

The data exhibits a consistent decline in the value of goodwill and intangible assets over the observed five-year period.

Goodwill

Goodwill remained relatively stable between 2018 and 2019, with values of approximately 681,100 and 680,996 thousand US dollars respectively. However, there was a significant reduction in 2020 to 527,592 thousand US dollars, which then remained steady through 2021 and 2022.

Gross intangible assets

Gross intangible assets showed a slight decrease from 411,650 thousand US dollars in 2018 to 414,345 thousand US dollars in 2019, followed by a noticeable decline in 2020 to 381,435 thousand US dollars. This lower level persisted in the subsequent years of 2021 and 2022.

Accumulated amortization

Accumulated amortization increased steadily throughout the period, from -125,608 thousand US dollars in 2018 to -156,160 thousand US dollars in 2022. This indicates a consistent recognition of amortization expense over time.

Net intangible assets

The net intangible assets demonstrated a declining trend over the five years, decreasing from 286,042 thousand US dollars in 2018 to 225,275 thousand US dollars in 2022. This steady reduction reflects the combined effects of declining gross intangible assets and increasing accumulated amortization.

Goodwill and intangible assets (combined)

The total of goodwill and intangible assets followed a decreasing trajectory, starting at 967,142 thousand US dollars in 2018 and falling to 752,867 thousand US dollars by 2022. The largest drop took place between 2019 and 2020, with values stabilizing somewhat thereafter.

Overall, the data reveals that the company experienced an impairment or disposal event related to goodwill around 2020, which significantly lowered its carrying value. Concurrently, intangible assets also declined while amortization expenses progressively increased, resulting in a continuous decrease in net intangible assets. This pattern suggests a conservative approach to asset valuation and a normal amortization schedule over the years.

Total Assets

The reported total assets show a consistent upward trend over the five-year period, increasing from approximately $18.2 billion in 2018 to $24.4 billion in 2022. The adjusted total assets, which exclude goodwill, follow a similar pattern, rising from about $17.6 billion in 2018 to $23.9 billion in 2022. This steady increase suggests ongoing asset growth and investment by the company.

Shareholders’ Equity

The reported shareholders’ equity demonstrates a declining trend from 2018 to 2021, decreasing from roughly $6.6 billion to $6.0 billion, before recovering to approximately $6.5 billion in 2022. The adjusted shareholders’ equity similarly declines from about $5.9 billion in 2018 to $5.5 billion in 2021, then increases to nearly $6.0 billion in 2022. This movement indicates some erosion of equity in the earlier years, followed by a partial rebound in the most recent period.

Net Income

The reported net income attributable to the company experiences fluctuations, rising from $1.15 billion in 2018 to a peak of $1.28 billion in 2019, then dropping sharply to around $613 million in 2020, before recovering to $1.5 billion in 2021 and further to $1.72 billion in 2022. The adjusted net income follows a similar pattern but shows a less severe decline in 2020, with an adjusted figure of about $766 million compared to the reported $613 million. The recovery post-2020 indicates improved profitability following a significant dip, possibly reflecting operational or market challenges during 2020.

Overall Insights

The company exhibits steady growth in asset base over the reported periods, with adjustments for goodwill maintaining consistent trends. Shareholders’ equity, both reported and adjusted, reflects some volatility, with a decline until 2021 and an uptick in 2022, signaling potential changes in capital structure or retained earnings. Net income volatility, especially the drop in 2020, highlights a challenging financial environment during that year, but the subsequent recovery in 2021 and 2022 underscores a positive earnings trajectory. Adjustments for goodwill impact the net income figures in 2020, suggesting that goodwill impairments or similar accounting considerations affected reported profitability during that period.

Net Profit Margin

The reported net profit margin shows a fluctuating pattern over the period, starting at 9.15% in 2018 and peaking at 12.58% in 2019, followed by a decrease to 7.17% in 2020. It then rose to 9.07% in 2021 before declining again to 7.69% in 2022. The adjusted figures follow a very similar trend with a notable adjustment in 2020 where the margin is higher at 8.97% compared to the reported 7.17%, indicating possible non-recurring items affecting that year's profit margin.

Total Asset Turnover

The total asset turnover initially decreased from 0.69 in 2018 to a low of 0.37 in 2020, reflecting a reduction in asset efficiency during these years. From 2021 onward, there is a substantial recovery, with the ratio increasing to 0.7 and further to 0.92 by 2022. Adjusted turnover ratios are consistently slightly higher, indicating goodwill adjustments affect asset base valuation, enhancing turnover metrics in all years.

Financial Leverage

Financial leverage shows a clear upward trend from 2.77 in 2018 to a peak of 3.93 in 2021, followed by a slight reduction to 3.75 in 2022. Adjusted financial leverage ratios are consistently higher than reported, rising from 2.98 in 2018 to 4.21 in 2021 before reducing to 4.0 in 2022. This suggests the company increased its use of debt or financial obligations relative to equity over the period, with goodwill adjustments impacting the leverage calculations by inflating asset or equity figures.

Return on Equity (ROE)

ROE exhibits considerable variation, starting at 17.5% in 2018, increasing to 20.54% in 2019, then sharply dropping to 10.14% in 2020. In 2021 and 2022, it rebounds strongly to 24.93% and 26.52% respectively. Adjusted ROE figures are higher throughout, e.g., 13.89% in 2020 versus 10.14% reported, reflecting adjustments that likely exclude goodwill impairments or other non-operational losses. The rebound in the last two years indicates improved profitability and efficiency in equity utilization.

Return on Assets (ROA)

ROA declines from 6.32% in 2018 to a low of 2.66% in 2020, indicating reduced asset profitability during that year. It subsequently increases to 6.35% in 2021 and further to 7.06% in 2022. Adjusted ROA follows a similar course but remains slightly higher, suggesting that goodwill adjustments positively impact asset profitability metrics. The recovery from 2020 reflects improved operational performance or asset management.

The financial data reveals several important trends in the company's profitability over the five-year period ending December 31, 2022. Both reported and adjusted net income attributable to the company exhibited fluctuations that suggest variability in operational performance or external factors affecting earnings.

Net Income Trends

The reported net income increased moderately from 2018 to 2019, rising from approximately 1.15 billion USD to nearly 1.28 billion USD. However, there was a significant decline in 2020, with net income dropping to about 613 million USD, indicating a challenging year. This was followed by a strong recovery in 2021 and further growth in 2022, reaching over 1.72 billion USD, the highest in the given timeframe.

The adjusted net income values closely mirror the reported figures except in 2020, where the adjusted net income is higher at approximately 766 million USD. This adjustment suggests the presence of one or more non-recurring items or impairments affecting reported earnings in that year, which when excluded, present a less severe decline in profitability.

Net Profit Margin Analysis

Reported net profit margin showed a similar pattern, increasing from 9.15% in 2018 to a peak of 12.58% in 2019, then falling sharply to 7.17% in 2020. It partially recovered to 9.07% in 2021 before declining again to 7.69% in 2022. This indicates fluctuating efficiency or profitability relative to revenue during this period.

The adjusted net profit margin is identical to the reported margin in all years except 2020, where it is higher (8.97% compared to 7.17%). This reinforces the impact of adjustments made to net income in 2020, implying that excluding certain items improved the margin measure significantly that year.

Overall, the data reflects a period of volatility with a notable dip in 2020 followed by recovery. The adjustments to net income and margin in 2020 highlight the presence of unusual or non-recurring events during that year. Profitability ratios suggest the company maintained generally solid margins before and after the downturn, but the decline in 2022 margin to below 8% may warrant further investigation into recent operational effectiveness or market conditions.

Total Assets

Total assets exhibited a consistent upward trend from 2018 through 2022. Reported total assets increased steadily each year, starting at approximately $18.23 billion in 2018 and reaching nearly $24.38 billion by the end of 2022. Adjusted total assets, which exclude goodwill, followed a similar trajectory and also showed annual increases, rising from roughly $17.55 billion in 2018 to about $23.85 billion in 2022. The magnitude of growth in both reported and adjusted assets indicates ongoing asset base expansion over the five-year period.

Total Asset Turnover

The total asset turnover ratios, both reported and adjusted, reveal notable fluctuations across the years. Initially, the ratio declined between 2018 and 2020, with reported turnover dropping from 0.69 to 0.37 and adjusted turnover from 0.72 to 0.38, indicating diminished efficiency in generating revenue from assets during this period. However, from 2020 onward, there was a marked recovery and improvement in asset turnover, culminating in higher ratios in 2021 and 2022 compared to the starting point in 2018. By 2022, reported total asset turnover increased to 0.92 and adjusted turnover to 0.94, representing enhanced asset utilization and operational performance in the later years.

Comparative Insights

The closeness of reported and adjusted figures throughout the timeframe suggests that goodwill has a relatively limited impact on total assets and asset turnover metrics. Both sets of data exhibit parallel trends, reinforcing the reliability of the observed patterns. The initial decline in asset turnover ratios alongside increasing asset values in the earlier years may imply that asset growth outpaced revenue generation initially. The subsequent reversal and increase in turnover indicate improvements in the company's ability to leverage its expanded asset base more efficiently in the latter years.

Total Assets

Total assets demonstrate a consistent upward trend over the observed period. Reported total assets increased from approximately $18.2 billion in 2018 to $24.4 billion in 2022. Similarly, adjusted total assets, which exclude goodwill, also rose steadily from around $17.6 billion in 2018 to $23.9 billion in 2022. The adjustment for goodwill results in lower asset values each year; however, both reported and adjusted figures show growth, suggesting expansion or acquisition activity contributing to asset base increases.

Shareholders' Equity

Reported shareholders' equity exhibits a declining trend from $6.58 billion in 2018 to a low near $6.0 billion between 2020 and 2021, before recovering somewhat to $6.49 billion in 2022. Adjusted shareholders' equity follows a similar pattern, decreasing from approximately $5.9 billion in 2018 to $5.49 billion in 2021, then improving to about $5.97 billion in 2022. The consistent adjustment for goodwill reduces equity figures, but the trend over time indicates a period of contraction followed by partial recovery in equity capital.

Financial Leverage

Financial leverage ratios, which measure the relationship between debt and equity, reveal an increasing reliance on debt financing over the period. Reported financial leverage rose from 2.77 in 2018 to a peak of 3.93 in 2021 before moderating to 3.75 in 2022. Adjusted financial leverage, accounting for goodwill, follows a similar trajectory, climbing from 2.98 in 2018 to 4.21 in 2021 and then decreasing to 4.0 in 2022. The higher adjusted leverage values indicate that when goodwill is excluded, the company's leverage appears more pronounced, reflecting potentially higher financial risk.

Overall Analysis

The data indicates the company has expanded its asset base consistently over the five-year period, but has experienced a general decline in shareholders' equity until 2021, followed by early signs of recovery in 2022. The increasing financial leverage ratios point to growing use of debt relative to equity, which could be associated with financing the asset growth. Excluding goodwill, the adjusted figures reveal a higher financial leverage, suggesting that intangible assets impact the capital structure's apparent strength. The slight reduction in leverage in 2022 may indicate early efforts to strengthen the equity position or reduce debt levels.

The financial data over the five-year period exhibits several notable trends in income, equity, and return on equity (ROE) metrics.

Net Income

Both reported and adjusted net income attributable to the company demonstrated a general upward trajectory from 2018 to 2022, except for a marked decline in 2020. Reported net income decreased substantially from approximately 1,278 million US dollars in 2019 to about 613 million US dollars in 2020, reflecting a significant 52% reduction. Adjusted net income, which accounts for goodwill adjustments, also declined but to a lesser extent, falling to approximately 766 million US dollars in 2020. From 2020 onwards, there was a strong recovery, with figures rising to nearly 1,500 million in 2021 and further increasing to over 1,720 million in 2022. This indicates resilience and a substantial rebound following the dip in 2020.

Shareholders’ Equity

Reported total shareholders’ equity showed a downward trend from approximately 6,580 million US dollars in 2018 to roughly 6,015 million in 2021, before increasing again to around 6,494 million in 2022. During the same period, adjusted shareholders’ equity (net of goodwill) exhibited a consistent decline from about 5,898 million US dollars in 2018 to a low of approximately 5,488 million in 2021, followed by an increase to nearly 5,966 million in 2022. This pattern demonstrates some fluctuation with a general decrease over the years, indicating challenges in maintaining equity levels, partially offset by a recovery in the last reported year.

Return on Equity (ROE)

ROE, both reported and adjusted, showed volatility but an overall improving trend across the period. Reported ROE was 17.5% in 2018, increased to over 20% in 2019, dropped sharply to just over 10% in 2020, but then surged to nearly 25% in 2021 and further to over 26% in 2022. Adjusted ROE followed a similar pattern with slightly higher values, starting at 19.53% in 2018, rising to 23.06% in 2019, declining to 13.89% in 2020, and then climbing to 27.33% in 2021 and 28.87% in 2022. The marked drop in 2020 ROE aligns with the decrease in net income and reflects the impact on profitability relative to equity. The subsequent strong recovery indicates improved financial performance and efficient equity utilization in the final two years.

In summary, the period under review saw a significant earnings decline in 2020, likely tied to broader market or operational challenges, followed by a robust recovery through 2022. Shareholders' equity experienced modest erosion until 2021 before recovering, while profitability measures, as captured by ROE, highlighted the company's ability to restore and enhance returns after the downturn. The adjusted metrics, accounting for goodwill, consistently present a slightly more conservative yet similar narrative in terms of trends and magnitudes.

Net Income Trends

The reported net income attributable to the company exhibited variability over the observed period. It increased from approximately $1.15 billion in 2018 to about $1.28 billion in 2019, followed by a significant decline to around $613 million in 2020. Subsequently, net income rebounded sharply to nearly $1.5 billion in 2021 and rose further to approximately $1.72 billion by the end of 2022.

The adjusted net income followed a similar trajectory, except for 2020, where the adjusted figure of approximately $766 million was noticeably higher than the reported net income. This suggests adjustments during that year that positively impacted the net income figure.

Asset Base Variations

Reported total assets demonstrated a consistent upward trend across the five years, increasing from about $18.23 billion in 2018 to approximately $24.38 billion in 2022.

Adjusted total assets also increased steadily but were consistently lower than reported assets every year. The gap between reported and adjusted assets persisted, reflecting the exclusion of certain components such as goodwill in the adjusted figures. The adjusted asset base grew from approximately $17.55 billion in 2018 to about $23.85 billion in 2022.

Return on Assets (ROA) Patterns

Reported ROA experienced fluctuations, starting at 6.32% in 2018, slightly decreasing to 5.86% in 2019, then dropping significantly to 2.66% in 2020. It recovered to 6.35% in 2021 and further improved to 7.06% in 2022.

Adjusted ROA figures were generally higher than reported ROA each year. The trend mirrored reported ROA, with a decrease from 6.56% in 2018 to 3.4% in 2020, followed by an increase to 6.49% in 2021 and 7.22% in 2022. The adjusted ROA indicates a slightly more favorable performance when goodwill is excluded.

General Insights

The data reveals that both net income and ROA were adversely affected in 2020, likely due to external or company-specific challenges during that period. The subsequent strong recovery in 2021 and 2022 signifies resilience and improved operational efficiency.

The differences between reported and adjusted measures suggest that goodwill or other intangible assets notably influence the financial metrics. Adjusted figures provide a perspective excluding these factors, often showing stronger performance ratios.

The steady growth in the asset base indicates ongoing investment or acquisition activity, supporting increased net income generation and improved returns in the latter years.