ONEOK Inc. (NYSE:OKE)

The analysis of the financial ratios over the five-year period reveals several notable trends in the company's financial performance and cost structure.

Revenue Composition

The proportion of commodity sales as a percentage of total revenues generally increased, rising from 90.49% in 2018 to 93.7% in 2022, with a slight dip in 2020. Conversely, services as a share of revenues declined overall, peaking at 15.07% in 2020 before decreasing to 6.3% in 2022. This trend indicates a growing reliance on commodity sales relative to services.

Cost of Sales and Fuel

The cost of sales and fuel fluctuated considerably, decreasing to a low of 59.82% of revenues in 2020 but then sharply increasing to 80% in 2022. This volatility likely affected the profitability margins during the period.

Profitability Margins

Net margin exhibited a peak in 2020 at 40.18%, followed by a decline to 20% by 2022. Operating income also followed a similar downward trajectory, decreasing from 18.83% in 2019 to 12.54% in 2022, which, combined with the rising costs, suggests pressure on operating efficiency and profitability in recent years.

Operating Expenses

Operations and maintenance expenses as a percentage of revenues showed a declining trend, moving from -6.38% in 2018 down to -4.28% in 2022, indicating improved cost management in this area. Depreciation and amortization, however, increased notably in 2020 to -6.77% before decreasing in subsequent years, which may reflect asset base changes or impairments.

Impairments

Impairment charges were recorded only in 2020, amounting to -7.11% of revenues, significantly impacting profitability that year. Similarly, impairment of equity investments was noted in 2020 at -0.44%, suggesting a challenging year for asset valuation.

Other Operating Items

General taxes remained relatively stable, averaging around -1% of revenues. Other operating income (expense), net, was negligible except for a notable positive uptick to 0.47% in 2022, which may have provided some support to operating results that year.

Investment Income and Expenses

Equity in net earnings from investments showed variability but generally decreased after 2020, dropping to 0.66% in 2022. Interest expense, net of capitalized interest, peaked in 2020 at -8.35%, then decreased to -3.02% in 2022, indicating possible refinancing or debt reduction efforts.

Income Before Taxes and Net Income

Income before income taxes declined notably in 2020 to 9.39% from higher levels in prior years, then modestly recovered but remained below earlier peaks. Income taxes as a percentage of revenues varied but remained relatively consistent. Net income followed the pattern of income before taxes, with a significant drop in 2020 to 7.17% and a subsequent partial recovery.

Net Income Available to Common Shareholders

Net income available to common shareholders closely mirrored net income trends, with a low point in 2020 and marginal improvement in later years, indicating challenges in profitability that are yet to be fully resolved.

Overall, the data indicate that the company experienced a pronounced dip in profitability in 2020 attributable to increased impairment charges, elevated cost of sales, and heightened interest expenses. Subsequent years show efforts toward cost control, especially in operations and maintenance and interest expenses, as well as gradual recovery in profitability, though margins have not returned to the peaks observed prior to 2020. The growing share of commodity sales relative to services may suggest a strategic focus or market-driven shift in revenue streams.