EQT Corp. (NYSE:EQT)

Debt Ratios

Over the five-year period, the debt to equity ratio exhibited a gradual increase from 0.45 in 2017 to 0.55 in 2021, indicating a moderate rise in leverage relative to equity. When including operating lease liabilities, this ratio followed a similar trajectory, slightly higher but closely aligned with the standard debt to equity figures.

The debt to capital ratio also showed a steady upward trend, moving from 0.31 in 2017 to 0.35 in 2021, representing a consistent increase in the proportion of debt in the company's capital structure. Including operating lease liabilities caused a marginal increase in this ratio but with the same general trend.

The debt to assets ratio presented a moderate increase from 0.20 in 2017 to a peak of 0.28 in 2019, before decreasing to 0.25 in 2021. The inclusion of operating lease liabilities slightly raised these values but did not affect the overall trend pattern. This suggests a relative stability or slight improvement in asset financing over the latter years.

Financial Leverage

Financial leverage decreased from 2.22 in 2017 to a low of 1.89 in 2018, then fluctuated mildly, increasing again to 2.15 by 2021. This pattern indicates an initial reduction in leverage followed by a gradual increase towards prior levels, which may reflect evolving capital structure decisions.

Interest and Fixed Charge Coverage

Interest coverage ratios displayed significant volatility with a pronounced negative trend starting in 2018. The ratio dropped from a positive 2.18 in 2017 to sharply negative values in subsequent years, reaching -4.14 by 2021. This sharp decline indicates the company's income available to cover interest expenses deteriorated substantially, signaling higher risk or operational difficulties related to debt servicing.

Fixed charge coverage ratios mirrored the interest coverage pattern, transitioning from 1.87 in 2017 to increasingly negative values, ending at -3.83 in 2021. This further highlights challenges in meeting fixed financial obligations and suggests diminishing financial stability in covering fixed charges.

Overall Assessment

The data reveals a gradual increase in leverage ratios over the period, implying a strategic shift toward greater use of debt financing. Meanwhile, the deterioration in coverage ratios points toward growing difficulties in servicing this debt, raising concerns about the company’s financial health and risk exposure. Although debt to assets experienced some normalization after 2019, the consistent increase in debt to equity and debt to capital highlights increased reliance on borrowed funds over shareholders’ equity. The sharp decline in interest and fixed charge coverage ratios suggests that increased leverage may be impacting profitability and cash flow adequacy to meet financial obligations.

Total debt

The total debt shows a general downward trend from 2017 to 2020, decreasing from approximately 5,997 million US dollars to 4,925 million US dollars. However, in 2021 there is a reversal of this trend, with total debt increasing again to around 5,485 million US dollars. This suggests a period of debt reduction followed by renewed borrowing or increased liabilities in the most recent year.

Common shareholders’ equity

Common shareholders’ equity exhibits a continuous decline over the first four years, dropping from roughly 13,320 million US dollars in 2017 to about 9,255 million US dollars in 2020. In 2021, equity shows a modest recovery, rising to approximately 10,030 million US dollars. This pattern indicates a weakening in equity base during the earlier years with some recovery in the latest period.

Debt to equity ratio

The debt to equity ratio increases steadily over the entire period. Starting at 0.45 in 2017, it rises to 0.55 by 2021. This reflects a growing proportion of debt relative to equity, consistent with the observed decline in equity and fluctuations in total debt. A higher ratio in 2021 indicates a more leveraged capital structure compared to prior years.

Total Debt (including Operating Lease Liability)

The total debt exhibited a declining trend from 2017 through 2020, starting at approximately $5.997 billion in 2017 and decreasing annually to about $4.975 billion in 2020. However, in 2021, the debt level reversed this downward trend and increased to approximately $5.538 billion.

Common Shareholders’ Equity

Common shareholders' equity consistently decreased from 2017 to 2020, beginning around $13.320 billion and dropping progressively each year to reach about $9.255 billion by the end of 2020. In 2021, equity showed a modest recovery, rising to roughly $10.030 billion.

Debt to Equity Ratio (Including Operating Lease Liability)

The debt to equity ratio increased from 0.45 in 2017 to 0.55 in 2019, indicating a rising proportion of debt relative to equity. After a slight decline to 0.54 in 2020, the ratio returned to 0.55 in 2021. This pattern reflects relative stability in leverage following an initial increase during the period.

Total Debt

The total debt shows a generally decreasing trend from 2017 to 2020, dropping from $5,997,329 thousand to $4,925,466 thousand. However, in 2021, there was an increase to $5,485,002 thousand, indicating a reversal of the previous downward trend in debt levels.

Total Capital

Total capital consistently declined from 2017 through 2020, falling from $19,316,947 thousand to $14,180,706 thousand. In 2021, total capital rose to $15,514,529 thousand, interrupting the prior trend of reduction and suggesting possible capital infusion or asset growth during that year.

Debt to Capital Ratio

The debt to capital ratio exhibits a gradual increase from 0.31 in 2017 to 0.33 in 2018, and further to 0.35 in 2019, where it then stabilizes, remaining at 0.35 through 2020 and 2021. Despite fluctuations in absolute debt and capital amounts, the leverage ratio has maintained a relatively steady level since 2019.

Total Debt (including operating lease liability)

The total debt shows a declining trend from 2017 through 2020, decreasing from approximately $6.0 billion to $5.0 billion. However, in 2021, there is a reversal of this trend as total debt increases to around $5.5 billion. This indicates a temporary increase in leverage after a period of deleveraging.

Total Capital (including operating lease liability)

Total capital demonstrates a consistent downward trajectory from 2017 to 2020, falling from about $19.3 billion to $14.2 billion. In 2021, there is a notable uptick, with total capital growing to approximately $15.6 billion. This suggests a partial recovery in the company’s capital base after consecutive years of reduction.

Debt to Capital Ratio (including operating lease liability)

The debt to capital ratio shows a gradual increase over the five-year period. Starting at 0.31 in 2017, it rises steadily to 0.36 by the end of 2021. This increasing ratio indicates a growing proportion of debt relative to total capital, reflecting a higher leverage level over time.

Overall Analysis

Between 2017 and 2020, the company appears to have been focusing on reducing its debt and capital base, possibly reflecting deleveraging or asset reduction strategies. The interruption of these trends in 2021, with increases in both total debt and total capital, suggests a strategic adjustment, potentially linked to investment or financing activities. The steady increase in the debt to capital ratio reflects a gradually rising reliance on debt financing relative to the company’s total capital structure.

The financial data displays several notable trends over the five-year period ending December 31, 2021.

Total Debt

Total debt decreased from 5,997,329 thousand US dollars at the end of 2017 to a low of 4,925,466 thousand US dollars by the end of 2020. However, there was an increase in total debt in 2021, reaching 5,485,002 thousand US dollars. Overall, total debt showed a general downward trend from 2017 through 2020, followed by a moderate rise in the final year.

Total Assets

Total assets exhibited a significant declining trend from 29,522,604 thousand US dollars in 2017 to 18,113,469 thousand US dollars in 2020. In 2021, total assets rebounded to 21,607,388 thousand US dollars, indicating some recovery after several years of reduction. The data suggest a contraction of asset base over the first four years, with a partial recovery thereafter.

Debt to Assets Ratio

The debt to assets ratio increased sharply from 0.20 in 2017 to 0.28 in 2019, reflecting rising leverage relative to the shrinking asset base. This ratio remained relatively stable at around 0.27 during 2020, before declining slightly to 0.25 in 2021 due to the increase in total assets combined with a moderate rise in total debt. Overall, the leverage peaked in 2019 and moderated thereafter.

In summary, the entity experienced a contraction in both total debt and assets through 2020, with assets declining more sharply, leading to increased leverage ratios. The year 2021 marks a turning point where assets increased and leverage slightly decreased despite a rise in total debt, indicating improved financial stability or asset growth relative to liabilities.

Total Debt (including operating lease liability)

The total debt shows a general decline from 2017 to 2020, starting at approximately $5.997 billion in 2017 and decreasing to about $4.975 billion in 2020. However, in 2021, there is a reversal of this trend with debt increasing to around $5.538 billion. Overall, debt decreased over the first four years but rose significantly in the last year observed.

Total Assets

Total assets exhibit a marked downward trend from 2017 through 2020, declining from roughly $29.5 billion in 2017 to $18.1 billion in 2020. Unlike total debt, total assets show an increase in 2021, rising to about $21.6 billion. This indicates a period of asset reduction followed by a partial recovery in the final year.

Debt to Assets Ratio (including operating lease liability)

The debt to assets ratio increases from 0.20 in 2017 to 0.28 in 2019, suggesting a rising proportion of debt relative to assets despite both declining in absolute terms. The ratio slightly decreases to 0.27 in 2020 and further to 0.26 in 2021, implying a modest improvement in the balance between debt and assets in the most recent years.

Total assets

The total assets show a declining trend from 2017 through 2020, decreasing from approximately 29.5 billion to 18.1 billion US dollars. However, there is a notable increase in 2021, with total assets rising to about 21.6 billion US dollars, indicating a recovery or growth phase after several years of reduction.

Common shareholders’ equity

Common shareholders’ equity follows a similar downward trajectory over the initial four years, dropping from about 13.3 billion US dollars in 2017 to approximately 9.3 billion in 2020. In 2021, equity shows a modest increase to just over 10 billion US dollars, suggesting some improvement in the company’s net worth after a period of decline.

Financial leverage

The financial leverage ratio decreased from 2.22 in 2017 to a low of 1.89 in 2018, then gradually increased over the subsequent years, reaching 2.15 in 2021. This pattern indicates a reduction in leverage in 2018 followed by a steady rise, implying that the company may have increased its use of debt relative to equity over the latter part of the period.

Earnings before interest and tax (EBIT)

The EBIT values display a significant downward trend over the five-year period. In 2017, the company reported a positive EBIT of approximately $366.6 million. However, from 2018 onwards, EBIT figures turned negative and progressively worsened, reaching about -$2.85 billion in 2018. Although there was some improvement in 2019 and 2020, with EBIT increasing to roughly -$1.40 billion and -$0.99 billion respectively, the figure declined again in 2021 to nearly -$1.28 billion. This pattern suggests persistent operational challenges and a sustained inability to generate operating profits during the latter years.

Interest expense

Interest expenses have generally increased throughout the period under review. Beginning at approximately $168.0 million in 2017, interest expenses rose to about $229.0 million by 2018. A slight decrease occurred in 2019 to nearly $199.9 million, but thereafter, the interest costs resumed an upward trajectory, reaching roughly $271.2 million in 2020 and $308.9 million in 2021. This increase in interest costs may indicate higher debt levels or increased borrowing expenses over time.

Interest coverage ratio

The interest coverage ratio, which measures the ability to meet interest obligations from operating earnings, deteriorated markedly throughout the period. Starting at a healthy ratio of 2.18 in 2017, the ratio became negative in 2018 (-12.44) and remained negative in subsequent years, although with a marginal improvement trend. Ratios of -6.99 in 2019, -3.67 in 2020 and -4.14 in 2021 indicate that EBIT was insufficient to cover interest expenses, reflecting significant financial stress and potential risk in fulfilling debt obligations from operational earnings.

Earnings Before Fixed Charges and Tax

The earnings before fixed charges and tax experienced a significant decline from 2017 to 2021. Initially, there was a positive figure of approximately 427 million US dollars in 2017, which shifted dramatically to a negative value in the following years. The losses peaked in 2018 at about -2.73 billion US dollars, followed by somewhat smaller but still substantial negative values in subsequent years, indicating persistent operational challenges or adverse market conditions affecting profitability.

Fixed Charges

Fixed charges showed an increasing trend over the analyzed periods. Starting from roughly 229 million US dollars in 2017, these charges rose steadily each year, reaching approximately 329 million US dollars by 2021. The consistent increase suggests growing financial obligations, possibly due to higher interest expenses, lease commitments, or other fixed financial liabilities.

Fixed Charge Coverage Ratio

The fixed charge coverage ratio displayed a marked deterioration throughout the period. In 2017, the ratio was positive at 1.87, indicating that earnings were sufficient to cover fixed charges nearly twice over. However, from 2018 onwards, the ratio turned negative and worsened each year, ranging from -7.89 in 2018 to -3.83 in 2021. This negative coverage implies that earnings were insufficient to meet fixed fixed financial obligations, signaling financial stress and potential liquidity concerns.

Summary

The overall trend points to deteriorating financial health over the five-year span. Decreasing earnings before fixed charges and tax coupled with rising fixed charges resulted in a consistently negative fixed charge coverage ratio after 2017. This pattern suggests challenges in maintaining operational profitability and covering fixed financial commitments, which could have implications for the company’s financial stability and require strategic financial management to improve cash flows and reduce fixed charge burdens.