Hewlett Packard Enterprise Co. (NYSE:HPE)

Over the observed period, the company's land assets have exhibited a consistent decline, decreasing from 294 million USD in 2018 to 66 million USD in 2023. This suggests a significant reduction in land holdings or a divestiture of land assets.

Buildings and leasehold improvements have also experienced a downward trend overall, dropping from 2103 million USD in 2018 to a low of 1503 million USD in 2022, with a slight rebound to 1521 million USD in 2023. This pattern indicates a general contraction in investment or depreciation in building-related assets with some recent stabilization.

In contrast, machinery and equipment, including those held for lease, have demonstrated a more stable to slightly increasing pattern. Starting at 9419 million USD in 2018, values slightly increased to 10382 million USD by 2023, with minor fluctuations. This points to ongoing investment or replacement activities in this asset category.

The gross property, plant, and equipment (PP&E) totals reflect a relatively stable base, fluctuating modestly between 11562 million and 11901 million USD over the six-year span, ending at 11969 million USD in 2023. This stability indicates that reductions in some asset categories are balanced by increases or stability in others, such as machinery and equipment.

Accumulated depreciation presents an interesting dynamic. Starting at -5678 million USD in 2018, it increased in magnitude to -5974 million USD by 2020, followed by a slight decrease to -5522 million USD in 2022, and then returned to a higher absolute value of -5980 million USD in 2023. This pattern may suggest periods of accelerated depreciation, asset disposals, or changes in depreciation policies.

As a result of these factors, the net property, plant, and equipment figures have gradually declined from 6138 million USD in 2018 to a low of 5613 million USD in 2021 but have since recovered to 5989 million USD by 2023. The net decrease over the period is moderate, implying ongoing asset utilization and maintenance alongside disposals or write-downs.

Summary of Trends

Land assets have significantly decreased over the years.

Buildings and leasehold improvements show an overall decline with slight recent recovery.

Machinery and equipment show steady growth, contributing to gross PP&E stability.

Gross PP&E remains relatively stable with minor fluctuations.

Accumulated depreciation fluctuates, reflecting complex asset life management.

Net PP&E trends downward until 2021, followed by a partial recovery by 2023.

Average Age Ratio

The average age ratio exhibited a gradual increase from 49.28% in 2018 to a peak of 51.9% in 2020, suggesting an aging asset base during this period. This ratio then slightly declined to 51.79% in 2021 and further decreased to 49.16% in 2022, before marginally rising again to 50.24% in 2023. Overall, the average age ratio has remained relatively stable, fluctuating around the 50% mark, indicating a consistent proportion of asset aging without significant turnover or major asset refreshes over the six-year span.

Estimated Total Useful Life

The estimated total useful life of the property, plant, and equipment remained constant at five years throughout the entire period. This consistency reflects a stable asset depreciation policy or a standard asset classification without adjustments based on asset condition or technological changes.

Estimated Age (Time Elapsed Since Purchase)

The estimated age of the assets increased from two years in 2018 to three years in 2019 and then remained stable at three years for all subsequent years through 2023. This plateau suggests limited acquisition of new assets or a balance between new investments and disposals, resulting in an asset base effectively aging as a cohort.

Estimated Remaining Life

The estimated remaining life held steady at three years across all six years analyzed. This consistency aligns with the fixed total useful life of five years minus the stable age of three years, indicating no significant changes in asset replacement strategies or revaluation of asset longevity assumptions.

Accumulated Depreciation

The accumulated depreciation exhibits a general upward trend from 2018 to 2023, increasing from 5,678 million US dollars in 2018 to 5,980 million US dollars in 2023. There was a slight dip observed in 2022, where the value decreased to 5,522 million US dollars before rising again in 2023. This pattern indicates ongoing asset usage with some possible asset disposals or revaluations occurring around 2022.

Gross Property, Plant, and Equipment

The gross value of property, plant, and equipment remained relatively stable over the period, fluctuating within a narrow range. Starting at 11,816 million US dollars in 2018, it experienced minor declines, reaching a low of 11,306 million US dollars in 2022 before increasing to 11,969 million US dollars in 2023. This suggests periods of limited asset additions or disposals, with a slight refresh of assets or acquisitions in the latest year.

Land

Land values have exhibited a consistent downward trend throughout the period, decreasing from 294 million US dollars in 2018 to 66 million US dollars in 2023. This represents a significant reduction, suggesting possible sales of land assets or downward revaluation over time.

Average Age Ratio

The average age ratio of the property, plant, and equipment portfolio remained relatively stable, fluctuating between 49.16% and 51.9% over the six-year period. The ratio peaked in 2020 at 51.9%, dipped slightly in 2022 to 49.16%, and rose again in 2023 to 50.24%. This indicates a consistently mature asset base with moderate replacement or upgrade activity.

Gross Property, Plant and Equipment

The gross value of property, plant, and equipment remained relatively stable from 2018 to 2023, starting at $11,816 million and showing minor fluctuations throughout the period. Notably, there was a slight decline from 2018 to 2022, with the lowest value recorded in 2022 at $11,306 million, followed by a rebound to $11,969 million in 2023. This pattern suggests modest investment activity or possible disposals balanced with acquisitions or capital expenditures.

Land

The value of land assets exhibited a consistent decrease over the six-year period. Beginning at $294 million in 2018, the value declined sharply by 2019 to $241 million and continued to diminish progressively each year, reaching $66 million by 2023. This trend may reflect divestitures, revaluation, or impairment of land holdings, indicating a strategic reduction or realignment of land assets.

Depreciation Expense

Depreciation expense remained steady at approximately $2,300 million in 2018 and 2019, followed by a slight reduction to $2,200 million from 2020 through 2022. In 2023, depreciation expense returned to $2,300 million. The stability in depreciation expense, paired with the estimated total useful life maintained consistently at five years, suggests a relatively constant asset base and depreciation policy without significant changes in asset vintage or depreciation methods.

Estimated Total Useful Life

The estimated total useful life for property, plant, and equipment was constant at five years throughout the period. This uniformity indicates a consistent approach to asset lifespan assumptions, contributing to the predictable depreciation expense observed.

The analysis of property, plant, and equipment related financial data over the period from 2018 to 2023 reveals several noteworthy trends and financial dynamics.

Accumulated Depreciation

The accumulated depreciation exhibits a generally increasing trend from 2018 through 2023, starting at US$ 5,678 million in 2018 and reaching US$ 5,980 million in 2023. However, a decline is noted in 2022 where the value decreased to US$ 5,522 million from US$ 5,949 million in 2021 before rising again in 2023. This dip suggests either disposals or revaluations affecting the accumulated depreciation balance during that year.

Depreciation Expense

Depreciation expense remains relatively stable over the observed period. It starts at US$ 2,300 million in 2018, slightly decreases to US$ 2,200 million during 2020 to 2022, and returns to US$ 2,300 million in 2023. This stability indicates consistent yearly depreciation charges, reflecting either a stable asset base or depreciation policies maintained over time.

Time Elapsed Since Purchase

The elapsed time since asset acquisition increases from 2 years in 2018 to 3 years for all subsequent years. This constancy from 2019 onward could imply an averaging or grouping method for asset age reporting or a steady asset replacement cycle resulting in an average asset age remaining constant.

Overall, the accumulated depreciation's temporary decline in 2022 followed by recovery in 2023 suggests some asset portfolio changes or accounting adjustments that year. Meanwhile, depreciation expense stability and consistent asset aging indicate steady asset utilization and accounting practices across the periods analyzed.

Property, Plant and Equipment, Net

The net value of property, plant, and equipment demonstrated a gradual decline from 2018 to 2021, decreasing from $6,138 million to $5,613 million. However, a reversal of this trend occurred in the subsequent years, with an increase to $5,784 million in 2022 and further to $5,989 million in 2023. This indicates a recent phase of investment or capital additions following a period of asset base reduction or depreciation impact.

Land

The land asset value consistently decreased throughout the entire period, from $294 million in 2018 to $66 million in 2023. This steady decline suggests possible asset sales, revaluation, or impairment affecting land holdings over these years, potentially impacting overall fixed assets composition.

Depreciation Expense

The annual depreciation expense remained relatively stable across all years, holding at approximately $2,300 million in 2018, 2019, and 2023, with a slight dip to $2,200 million between 2020 and 2022. This stability in depreciation expense, despite fluctuations in asset net book values, may reflect consistent depreciation policies or stable asset base aging.

Estimated Remaining Life

The estimated remaining life of the property, plant, and equipment consistently stood at 3 years throughout the period, indicating a fixed depreciation horizon or standard asset life expectation used in the company’s accounting approach.

Overall Analysis

The overall trend in property, plant, and equipment net values indicates a phase of asset base contraction over the initial four years, followed by renewed growth in the last two years analyzed. The consistent estimated remaining life and steady depreciation expense suggest a uniform approach to asset management and depreciation. The significant decline in land value contrasts with the recent increase in net PPE, suggesting a strategic reallocation or shift in the asset portfolio composition.