Analysis of Reportable Segments
Texas Pacific Land Corp. operates in 2 segments: Land and Resource Management and Water Services and Operations.
Segment Profit Margin
Texas Pacific Land Corp., profit margin by reportable segment
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Land and Resource Management | 70.98% | 72.00% | 65.20% | 65.58% | 71.11% |
| Water Services and Operations | 49.60% | 50.68% | 46.78% | 44.75% | 47.47% |
Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).
An analysis of segment profit margins reveals a period of fluctuation between 2019 and 2023, with both business segments exhibiting a similar trajectory of contraction followed by recovery. A notable trend is the simultaneous dip in margins during the 2020-2021 period, succeeded by a peak in 2022.
- Land and Resource Management
- This segment maintains a significantly higher profit margin relative to water services. After starting at 71.11% in 2019, the margin experienced a decline to a low of 65.20% in 2021. A recovery occurred in 2022, reaching a five-year peak of 72.00%, before stabilizing slightly at 70.98% by the end of 2023.
- Water Services and Operations
- The profit margins for this segment are more moderate but show a consistent upward trend following a 2020 low. The margin decreased from 47.47% in 2019 to 44.75% in 2020, subsequently climbing for two consecutive years to peak at 50.68% in 2022. A marginal decrease to 49.60% was observed in 2023.
- Comparative Performance
- A persistent gap in profitability exists between the two segments, with Land and Resource Management consistently operating at a margin approximately 20 to 25 percentage points higher than Water Services and Operations. Both segments demonstrated resilience by returning to or exceeding their 2019 profitability levels by the 2022-2023 period.
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Segment Profit Margin: Land and Resource Management
Texas Pacific Land Corp.; Land and Resource Management; segment profit margin calculation
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | |||||
| Net income | 306,706) | 365,041) | 208,897) | 127,977) | 258,366) |
| Revenues | 432,105) | 506,975) | 320,387) | 195,132) | 363,328) |
| Segment Profitability Ratio | |||||
| Segment profit margin1 | 70.98% | 72.00% | 65.20% | 65.58% | 71.11% |
Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).
1 2023 Calculation
Segment profit margin = 100 × Net income ÷ Revenues
= 100 × 306,706 ÷ 432,105 = 70.98%
An analysis of the Land and Resource Management segment reveals a pattern of volatility in absolute revenue and net income, coupled with a consistently high and resilient profit margin. While the segment faced a significant contraction in 2020, it demonstrated a strong recovery trajectory through 2022, followed by a moderate correction in 2023.
- Revenue and Net Income Performance
- Revenues experienced a sharp decline from US$ 363.3 million in 2019 to US$ 195.1 million in 2020. A subsequent growth trend saw revenues peak at US$ 507.0 million in 2022 before decreasing to US$ 432.1 million in 2023. Net income mirrored this trend, dropping to US$ 128.0 million in 2020 and reaching a peak of US$ 365.0 million in 2022.
- Segment Profit Margin Stability
- The profit margin remained robust throughout the analyzed period, consistently staying above 65%. A minor compression occurred between 2020 and 2021, with margins dipping to 65.58% and 65.20% respectively. Efficiency rebounded strongly in 2022, reaching a period high of 72.00%, and remained elevated at 70.98% in 2023.
- Operational Efficiency Insights
- The data indicates a high degree of operational leverage, as the segment maintained substantial profitability despite significant swings in top-line revenue. The narrow range of the profit margin (approximately 6.8 percentage points between the low and high) suggests a stable cost structure and a strong ability to convert revenue into net income regardless of the volume of activity.
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Segment Profit Margin: Water Services and Operations
Texas Pacific Land Corp.; Water Services and Operations; segment profit margin calculation
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | |||||
| Net income | 98,939) | 81,321) | 61,083) | 48,072) | 60,362) |
| Revenues | 199,490) | 160,447) | 130,571) | 107,422) | 127,168) |
| Segment Profitability Ratio | |||||
| Segment profit margin1 | 49.60% | 50.68% | 46.78% | 44.75% | 47.47% |
Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).
1 2023 Calculation
Segment profit margin = 100 × Net income ÷ Revenues
= 100 × 98,939 ÷ 199,490 = 49.60%
The Water Services and Operations segment demonstrates a robust growth trajectory in both revenue and net income from 2019 through 2023, characterized by high and remarkably stable profit margins.
- Revenue Trends
- Revenues experienced a temporary contraction in 2020, decreasing to 107,422 thousand US dollars from 127,168 thousand US dollars in 2019. Following this decline, a consistent upward trend was observed over the next three years, with revenues climbing to 199,490 thousand US dollars by December 31, 2023. This represents a significant expansion in the segment's top-line performance since the 2020 trough.
- Net Income Performance
- Net income followed a pattern closely aligned with revenue, falling to 48,072 thousand US dollars in 2020. Subsequent years showed steady growth, with income rising to 61,083 thousand US dollars in 2021, 81,321 thousand US dollars in 2022, and peaking at 98,939 thousand US dollars in 2023. The increase from 2020 to 2023 reflects more than a doubling of net earnings within the segment.
- Profit Margin Stability
- The segment profit margin remained consistently high, fluctuating within a tight range between 44.75% and 50.68%. A dip to 44.75% was noted in 2020, coinciding with the decline in total revenue. The margin then recovered and peaked at 50.68% in 2022 before slightly normalizing to 49.60% in 2023. This stability suggests a high level of operational efficiency and a strong ability to scale expenses in proportion to revenue growth.
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Segment Return on Assets (Segment ROA)
Texas Pacific Land Corp., ROA by reportable segment
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Land and Resource Management | 31.45% | 49.65% | 32.88% | 27.82% | 55.23% |
| Water Services and Operations | 54.58% | 57.17% | 47.45% | 43.08% | 46.28% |
Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).
The analysis of segment return on assets from 2019 to 2023 reveals diverging performance trajectories between the two reportable segments, characterized by high volatility in land management and steady growth in water operations.
- Land and Resource Management
- This segment exhibits significant fluctuations in asset efficiency. A sharp contraction occurred between 2019 and 2020, with the return on assets dropping from 55.23% to 27.82%. Although a recovery trend followed, peaking at 49.65% in 2022, the return declined again to 31.45% by the end of 2023. This pattern indicates a high degree of volatility and sensitivity to external economic factors.
- Water Services and Operations
- This segment demonstrates greater resilience and a consistent upward trajectory. Following a slight dip to 43.08% in 2020, the return on assets increased steadily, reaching a peak of 57.17% in 2022. The return remained robust in 2023 at 54.58%, reflecting a sustainable improvement in asset utilization over the five-year period.
A comparative assessment indicates that the Water Services and Operations segment has become the more reliable driver of asset productivity. While the Land and Resource Management segment recorded the highest individual return in 2019, the Water Services and Operations segment has maintained a more stable and higher average return from 2020 through 2023.
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Segment ROA: Land and Resource Management
Texas Pacific Land Corp.; Land and Resource Management; segment ROA calculation
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | |||||
| Net income | 306,706) | 365,041) | 208,897) | 127,977) | 258,366) |
| Assets | 975,136) | 735,193) | 635,338) | 460,053) | 467,758) |
| Segment Profitability Ratio | |||||
| Segment ROA1 | 31.45% | 49.65% | 32.88% | 27.82% | 55.23% |
Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).
1 2023 Calculation
Segment ROA = 100 × Net income ÷ Assets
= 100 × 306,706 ÷ 975,136 = 31.45%
The financial performance of the Land and Resource Management segment between 2019 and 2023 is characterized by significant volatility in profitability and a consistent, accelerating expansion of the asset base. While net income experienced a sharp contraction in 2020 followed by a strong recovery through 2022, the Return on Assets (ROA) has remained inconsistent, reflecting a decoupling between asset growth and earnings stability.
- Net Income Trends
- Earnings exhibited substantial fluctuation over the five-year period. A significant decline occurred in 2020, where net income dropped to 127,977 thousand US$, approximately 50% lower than the 258,366 thousand US$ reported in 2019. A recovery phase followed, with earnings peaking in 2022 at 365,041 thousand US$ before retreating to 306,706 thousand US$ in 2023.
- Asset Base Expansion
- The segment's assets demonstrated a strong upward trajectory, particularly after 2020. From a base of 460,053 thousand US$ in 2020, assets grew to 975,136 thousand US$ by the end of 2023. This represents more than a doubling of the asset base within three years, indicating aggressive growth or significant capital appreciation within the segment.
- Segment ROA Analysis
- The Return on Assets has been subject to high variance, reflecting the interplay between fluctuating income and a growing asset denominator. The ROA peaked in 2019 at 55.23% and reached a low of 27.82% in 2020. Although a strong rebound to 49.65% was achieved in 2022, the ROA declined to 31.45% in 2023. This most recent decline is primarily attributed to the substantial increase in assets, which grew by approximately 33% in 2023, outweighing the relative stability of the net income.
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Segment ROA: Water Services and Operations
Texas Pacific Land Corp.; Water Services and Operations; segment ROA calculation
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | |||||
| Net income | 98,939) | 81,321) | 61,083) | 48,072) | 60,362) |
| Assets | 181,262) | 142,234) | 128,726) | 111,582) | 130,418) |
| Segment Profitability Ratio | |||||
| Segment ROA1 | 54.58% | 57.17% | 47.45% | 43.08% | 46.28% |
Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).
1 2023 Calculation
Segment ROA = 100 × Net income ÷ Assets
= 100 × 98,939 ÷ 181,262 = 54.58%
The Water Services and Operations segment demonstrates a strong trajectory of growth and operational efficiency between 2019 and 2023, characterized by a substantial increase in net income and a strategic expansion of the asset base.
- Net Income Performance
- Net income experienced a temporary contraction in 2020, falling to $48.1 million, but subsequently entered a period of sustained growth. By December 31, 2023, net income reached $98.9 million, representing a total increase of approximately 64% over the five-year period.
- Asset Base Evolution
- Assets exhibited a pattern similar to net income, with a decrease to $111.6 million in 2020 followed by a consistent upward trend. A notable expansion occurred in 2023, with assets increasing to $181.3 million, suggesting significant investment in the segment's infrastructure or operational capacity.
- Return on Assets (ROA) Analysis
- The segment maintained a high ROA throughout the period, with values ranging from a low of 43.08% in 2020 to a peak of 57.17% in 2022. Although the ROA declined slightly to 54.58% in 2023, it remains significantly higher than the 2019 starting point of 46.28%. This indicates a high level of asset productivity and the ability to scale profitability effectively as the asset base expands.
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Segment Asset Turnover
Texas Pacific Land Corp., asset turnover by reportable segment
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Land and Resource Management | 0.44 | 0.69 | 0.50 | 0.42 | 0.78 |
| Water Services and Operations | 1.10 | 1.13 | 1.01 | 0.96 | 0.98 |
Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).
The asset turnover ratios for the reportable segments exhibit divergent performance patterns between 2019 and 2023, characterized by high volatility in land management and relative stability in water operations.
- Land and Resource Management
- This segment demonstrates significant fluctuations in asset utilization efficiency. A substantial decline occurred between 2019 and 2020, where the ratio dropped from 0.78 to 0.42. While a recovery trend followed, peaking at 0.69 in 2022, the ratio experienced another sharp contraction to 0.44 by the end of 2023. The lack of a consistent trajectory suggests that revenue generation in this segment is subject to periodic instability relative to its asset base.
- Water Services and Operations
- In contrast, the Water Services and Operations segment maintains a highly stable and efficient asset turnover profile. The ratio remained consistent near 0.98 in 2019 and 2020, before entering a period of steady growth to reach a peak of 1.13 in 2022. The period ended with a marginal decrease to 1.10 in 2023, indicating a sustained ability to generate revenue from its assets with minimal variance over the five-year period.
- Comparative Segment Efficiency
- A comparative analysis reveals that the Water Services and Operations segment consistently outperforms the Land and Resource Management segment in terms of asset productivity. The water services segment maintained a ratio near or above 1.0 for the majority of the period, whereas the land management segment remained well below 1.0 throughout the entire timeframe, highlighting a fundamental difference in the capital intensity or revenue velocity of the two operations.
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Segment Asset Turnover: Land and Resource Management
Texas Pacific Land Corp.; Land and Resource Management; segment asset turnover calculation
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | |||||
| Revenues | 432,105) | 506,975) | 320,387) | 195,132) | 363,328) |
| Assets | 975,136) | 735,193) | 635,338) | 460,053) | 467,758) |
| Segment Activity Ratio | |||||
| Segment asset turnover1 | 0.44 | 0.69 | 0.50 | 0.42 | 0.78 |
Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).
1 2023 Calculation
Segment asset turnover = Revenues ÷ Assets
= 432,105 ÷ 975,136 = 0.44
The Land and Resource Management segment demonstrates a period of significant volatility in revenue generation contrasted by a consistent and accelerating expansion of the asset base. This divergence has resulted in fluctuating asset turnover ratios, indicating inconsistent efficiency in utilizing assets to generate top-line growth over the five-year period.
- Revenue Trends
- Revenues exhibited substantial instability, characterized by a sharp decline in 2020 to 195,132 thousand US dollars from 363,328 thousand US dollars in 2019. A recovery phase followed, with revenues peaking in 2022 at 506,975 thousand US dollars before contracting to 432,105 thousand US dollars by the end of 2023.
- Asset Base Expansion
- The asset base maintained a steady upward trajectory starting in 2021. Assets grew from 460,053 thousand US dollars in 2020 to 975,136 thousand US dollars in 2023, representing a total increase of approximately 112% over the period. The most significant growth occurred between 2022 and 2023, where assets increased by approximately 240 million US dollars.
- Asset Turnover Performance
- The segment asset turnover ratio reflects the impact of volatile revenues against a growing asset base. A peak efficiency of 0.78 was recorded in 2019, which collapsed to 0.42 in 2020 due to the revenue downturn. Although the ratio recovered to 0.69 in 2022, it fell sharply to 0.44 in 2023. This most recent decline is attributed to the simultaneous occurrence of decreasing revenues and a substantial increase in total assets, suggesting a decrease in the productivity of the segment's capital employment.
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Segment Asset Turnover: Water Services and Operations
Texas Pacific Land Corp.; Water Services and Operations; segment asset turnover calculation
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | |||||
| Revenues | 199,490) | 160,447) | 130,571) | 107,422) | 127,168) |
| Assets | 181,262) | 142,234) | 128,726) | 111,582) | 130,418) |
| Segment Activity Ratio | |||||
| Segment asset turnover1 | 1.10 | 1.13 | 1.01 | 0.96 | 0.98 |
Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).
1 2023 Calculation
Segment asset turnover = Revenues ÷ Assets
= 199,490 ÷ 181,262 = 1.10
The Water Services and Operations segment exhibits a pattern of recovery and expansion across the analyzed period, characterized by a significant increase in both top-line revenue and the supporting asset base following a brief downturn in 2020.
- Revenue Growth Trends
- Revenues experienced a contraction in 2020, falling to 107.4 million US dollars from 127.2 million US dollars in 2019. However, a sustained upward trajectory followed, with revenues climbing to 199.5 million US dollars by December 31, 2023, reflecting robust growth in the segment's earning capacity.
- Asset Base Development
- The asset base mirrored the revenue trend, dipping to 111.6 million US dollars in 2020 before steadily increasing to 181.3 million US dollars by the end of 2023. The expansion of the asset base indicates a strategic scaling of operations to support increased revenue demand.
- Asset Utilization Efficiency
- The segment asset turnover ratio remained relatively stable between 2019 and 2021, fluctuating between 0.96 and 1.01. A marked improvement in efficiency occurred in 2022, as the ratio rose to 1.13, followed by a slight moderation to 1.10 in 2023. This overall increase demonstrates an improved ability to generate revenue per dollar of invested assets compared to the baseline in 2019.
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Segment Capital Expenditures to Depreciation
Texas Pacific Land Corp., capital expenditures to depreciation by reportable segment
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Land and Resource Management | 0.08 | 0.18 | 1.96 | 0.10 | 1.33 |
| Water Services and Operations | 1.30 | 1.41 | 0.85 | 0.38 | 3.97 |
Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).
The capital expenditure to depreciation ratios for the reportable segments demonstrate significant volatility and divergent investment patterns from 2019 through 2023. Both segments experienced a substantial decline in the ratio during 2020, indicating a temporary contraction in capital reinvestment relative to asset depreciation across the organization.
- Land and Resource Management
- The ratio for this segment is characterized by extreme fluctuations. Following a value of 1.33 in 2019, the ratio plummeted to 0.10 in 2020, surged to a peak of 1.96 in 2021, and subsequently declined sharply to 0.18 in 2022 and 0.08 in 2023. This pattern indicates inconsistent capital allocation and a current trend where depreciation significantly outpaces new capital expenditures.
- Water Services and Operations
- This segment exhibits a more consistent recovery trajectory following the 2020 trough. From a high of 3.97 in 2019, the ratio fell to 0.38 in 2020 but steadily climbed to 0.85 in 2021 and 1.41 in 2022, settling at 1.30 in 2023. The maintenance of a ratio above 1.0 in the most recent two years suggests a sustained commitment to expanding or renewing the asset base within this operational area.
A comparative analysis reveals that while the Land and Resource Management segment has shifted toward minimal capital reinvestment relative to its depreciation, the Water Services and Operations segment has stabilized its investment levels, consistently reinvesting more than the amount of depreciation recorded since 2022.
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Segment Capital Expenditures to Depreciation: Land and Resource Management
Texas Pacific Land Corp.; Land and Resource Management; segment capital expenditures to depreciation calculation
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | |||||
| Capital expenditures | 241) | 393) | 4,688) | 152) | 1,603) |
| Depreciation, depletion and amortization | 3,073) | 2,234) | 2,397) | 1,514) | 1,201) |
| Segment Financial Ratio | |||||
| Segment capital expenditures to depreciation1 | 0.08 | 0.18 | 1.96 | 0.10 | 1.33 |
Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).
1 2023 Calculation
Segment capital expenditures to depreciation = Capital expenditures ÷ Depreciation, depletion and amortization
= 241 ÷ 3,073 = 0.08
The Land and Resource Management segment exhibits a pattern of inconsistent capital reinvestment relative to asset depletion. While depreciation, depletion, and amortization costs have generally increased over the five-year period, capital expenditures have fluctuated significantly, resulting in a volatile reinvestment ratio.
- Capital Expenditure Volatility
- Capital expenditures demonstrate high variability, peaking in 2021 at 4.688 million USD before declining sharply to 241 thousand USD by 2023. This erratic spending pattern suggests a project-based investment approach rather than a steady, linear maintenance schedule.
- Depreciation and Amortization Trends
- Depreciation, depletion, and amortization expenses show a consistent upward trajectory, rising from 1.201 million USD in 2019 to 3.073 million USD in 2023. This growth indicates an expanding base of depreciable assets or an increased rate of resource consumption over the observed period.
- Reinvestment Ratio Analysis
- The ratio of capital expenditures to depreciation fluctuated between a peak of 1.96 in 2021 and a minimum of 0.08 in 2023. A ratio below 1.00 suggests that the segment is consuming its asset base faster than it is replacing it through new capital investment. The trend since 2021 reveals a significant contraction in reinvestment, with the 2023 ratio representing the lowest level of asset replacement relative to depreciation in the five-year series.
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Segment Capital Expenditures to Depreciation: Water Services and Operations
Texas Pacific Land Corp.; Water Services and Operations; segment capital expenditures to depreciation calculation
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | |||||
| Capital expenditures | 15,190) | 18,574) | 11,727) | 4,934) | 30,606) |
| Depreciation, depletion and amortization | 11,684) | 13,142) | 13,860) | 12,881) | 7,705) |
| Segment Financial Ratio | |||||
| Segment capital expenditures to depreciation1 | 1.30 | 1.41 | 0.85 | 0.38 | 3.97 |
Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).
1 2023 Calculation
Segment capital expenditures to depreciation = Capital expenditures ÷ Depreciation, depletion and amortization
= 15,190 ÷ 11,684 = 1.30
The Water Services and Operations segment exhibited significant volatility in its investment patterns between 2019 and 2023, characterized by an initial period of aggressive spending followed by a sharp contraction and a subsequent gradual recovery.
- Capital Expenditure Trends
- Capital expenditures peaked in 2019 at 30,606 thousand US$, before experiencing a severe decline to 4,934 thousand US$ in 2020. Following this trough, spending increased steadily, reaching 18,574 thousand US$ in 2022, before moderating slightly to 15,190 thousand US$ in 2023.
- Depreciation, Depletion, and Amortization Patterns
- Depreciation expenses followed a contrasting trajectory to capital spending in the early period. Costs rose from 7,705 thousand US$ in 2019 to a peak of 13,860 thousand US$ in 2021. Since 2021, these costs have trended downward, ending at 11,684 thousand US$ in 2023.
- Segment Capital Expenditures to Depreciation Ratio
- The ratio of capital expenditures to depreciation indicates a shift from aggressive expansion to maintenance and back to growth. The 3.97 ratio in 2019 suggests investment far exceeded asset depletion. This plummeted to 0.38 in 2020, indicating that capital spending was insufficient to cover the depreciation of existing assets. From 2021 onward, the ratio recovered, surpassing the 1.0 threshold in 2022 (1.41) and 2023 (1.30), signaling a return to a strategy where investment exceeds the rate of asset wear and tear.
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Revenues
Texas Pacific Land Corp., revenues by reportable segment
US$ in thousands
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Land and Resource Management | 432,105) | 506,975) | 320,387) | 195,132) | 363,328) |
| Water Services and Operations | 199,490) | 160,447) | 130,571) | 107,422) | 127,168) |
| Total | 631,595) | 667,422) | 450,958) | 302,554) | 490,496) |
Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).
Total revenues exhibited significant volatility between 2019 and 2023, characterized by a sharp contraction in 2020 followed by a strong recovery that peaked in 2022. While total revenue experienced a slight decline in 2023, the five-year trajectory indicates an overall increase in scale, with total revenue rising from $490.5 million in 2019 to $631.6 million in 2023.
- Land and Resource Management Revenue
- This segment is the primary driver of total revenue but demonstrates substantial volatility. A significant decline was observed in 2020, where revenues dropped from $363.3 million to $195.1 million. This was followed by a period of rapid growth, reaching a peak of $507.0 million in 2022 before moderating to $432.1 million in 2023. The fluctuations in this segment correlate closely with the overall movement of the company's total revenue.
- Water Services and Operations Revenue
- A more stable and consistent growth pattern is observed within the water services segment. After a modest dip in 2020 to $107.4 million, the segment maintained an uninterrupted upward trend, growing to $130.6 million in 2021, $160.4 million in 2022, and reaching $199.5 million by 2023. This represents a steady expansion of the segment's operational scale.
- Revenue Diversification and Mix
- There is a visible shift in the revenue composition over the analyzed period. Water services transitioned from contributing approximately 25.9% of total revenue in 2019 to approximately 31.6% in 2023. This increase in the proportion of revenue derived from water services suggests a diversification of income streams, reducing the company's relative dependence on the more volatile Land and Resource Management segment.
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Net income
Texas Pacific Land Corp., net income by reportable segment
US$ in thousands
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Land and Resource Management | 306,706) | 365,041) | 208,897) | 127,977) | 258,366) |
| Water Services and Operations | 98,939) | 81,321) | 61,083) | 48,072) | 60,362) |
| Total | 405,645) | 446,362) | 269,980) | 176,049) | 318,728) |
Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).
Total net income across reportable segments exhibited significant volatility between 2019 and 2023, characterized by a sharp contraction in 2020 followed by a strong recovery phase and a subsequent moderate correction in 2023. Despite the fluctuations, the overall net income at the end of the period remains substantially higher than the 2019 baseline.
- Land and Resource Management Performance
- This segment serves as the primary driver of total profitability but demonstrates high sensitivity to market fluctuations. A significant decrease was observed in 2020, where income fell to $127,977 thousand from $258,366 thousand in 2019. A robust recovery followed, leading to a peak of $365,041 thousand in 2022. By 2023, a moderate decline to $306,706 thousand occurred, though the figure remains well above the 2019 and 2020 levels.
- Water Services and Operations Performance
- This segment exhibits a more stable and consistent growth trajectory compared to land management. Following a dip to $48,072 thousand in 2020, the segment achieved uninterrupted year-over-year growth for three consecutive years, reaching $98,939 thousand by December 31, 2023. This steady upward trend suggests a diversifying revenue stream that provides a hedge against the volatility seen in the land segment.
- Aggregate Income Trends
- Total net income reached a five-year low in 2020 at $176,049 thousand, representing a decline of approximately 44.7% from 2019. The subsequent recovery led to a peak of $446,362 thousand in 2022. The final reported value of $405,645 thousand in 2023 indicates a slight cooling of growth, yet represents a 27.2% increase over the initial 2019 total.
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Capital expenditures
Texas Pacific Land Corp., capital expenditures by reportable segment
US$ in thousands
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Land and Resource Management | 241) | 393) | 4,688) | 152) | 1,603) |
| Water Services and Operations | 15,190) | 18,574) | 11,727) | 4,934) | 30,606) |
| Total | 15,431) | 18,967) | 16,415) | 5,086) | 32,209) |
Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).
Capital expenditures across the reportable segments exhibit significant volatility over the five-year period from 2019 to 2023. The overall spending pattern is characterized by a sharp contraction in 2020, followed by a recovery and subsequent stabilization at levels lower than those seen in 2019.
- Water Services and Operations Expenditure
- This segment represents the primary driver of capital allocation. A substantial reduction in spending occurred between 2019 and 2020, with expenditures falling from 30,606 thousand dollars to 4,934 thousand dollars. A recovery trend followed, with spending increasing to 11,727 thousand dollars in 2021 and peaking at 18,574 thousand dollars in 2022, before moderating to 15,190 thousand dollars in 2023.
- Land and Resource Management Expenditure
- Capital outlays for this segment are significantly lower in magnitude and exhibit erratic fluctuations. After a drop to 152 thousand dollars in 2020, expenditures surged to a five-year peak of 4,688 thousand dollars in 2021. This was followed by a sharp decline in 2022 and 2023, with the period ending at 241 thousand dollars.
- Aggregate Capital Trends
- Total expenditures decreased by approximately 84% between 2019 and 2020, reaching a period low of 5,086 thousand dollars. A rebound occurred over the following two years, with total spending reaching 18,967 thousand dollars in 2022. The final year of the analysis shows a slight downward adjustment to 15,431 thousand dollars, indicating a stabilized but lower investment baseline compared to the initial 2019 figures.
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Depreciation, depletion and amortization
Texas Pacific Land Corp., depreciation, depletion and amortization by reportable segment
US$ in thousands
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Land and Resource Management | 3,073) | 2,234) | 2,397) | 1,514) | 1,201) |
| Water Services and Operations | 11,684) | 13,142) | 13,860) | 12,881) | 7,705) |
| Total | 14,757) | 15,376) | 16,257) | 14,395) | 8,906) |
Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).
Total depreciation, depletion, and amortization (DD&A) expenses experienced significant growth between 2019 and 2021, followed by a period of gradual decline. The total expenditure rose from 8,906 thousand US dollars in 2019 to a peak of 16,257 thousand US dollars in 2021, representing an overall increase of approximately 82% during that window. Subsequently, expenses contracted slightly to 14,757 thousand US dollars by the end of 2023.
- Land and Resource Management
- A consistent upward trend is observed in this segment, with expenses increasing from 1,201 thousand US dollars in 2019 to 3,073 thousand US dollars in 2023. This represents a total increase of 156% over the five-year period. While a minor dip occurred in 2022, the significant rise in 2023 suggests an expansion of the asset base or a shift in the amortization schedule for this segment.
- Water Services and Operations
- This segment constitutes the primary driver of total DD&A. A sharp increase occurred between 2019 and 2020, where expenses rose from 7,705 thousand US dollars to 12,881 thousand US dollars. After peaking in 2021 at 13,860 thousand US dollars, the segment entered a downward trend, decreasing to 11,684 thousand US dollars by 2023. This pattern may indicate a period of heavy capital investment followed by a phase of asset maturity or reduced capital expenditure.
- Segmental Composition and Distribution
- There is a observable shift in the distribution of DD&A costs across the reportable segments. In 2019, Water Services and Operations accounted for approximately 86.5% of the total DD&A. By 2023, this share decreased to 79.1%, while the contribution from Land and Resource Management grew from 13.5% to 20.9%. This indicates that while Water Services remains the dominant cost center, Land and Resource Management is becoming a larger relative component of the total depreciation and amortization burden.
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Assets
Texas Pacific Land Corp., assets by reportable segment
US$ in thousands
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Land and Resource Management | 975,136) | 735,193) | 635,338) | 460,053) | 467,758) |
| Water Services and Operations | 181,262) | 142,234) | 128,726) | 111,582) | 130,418) |
| Total | 1,156,398) | 877,427) | 764,064) | 571,635) | 598,176) |
Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).
Total assets across reportable segments exhibited a consistent growth trajectory following a minor contraction in 2020. Between December 31, 2019, and December 31, 2023, total assets increased from $598.2 million to $1.16 billion, representing a period of significant expansion characterized by accelerating growth in the final three years of the analyzed timeframe.
- Land and Resource Management Asset Trends
- This segment serves as the primary driver of overall asset growth. Following a marginal decrease in 2020, assets in this segment rose from $460.1 million to $975.1 million by the end of 2023. The most substantial acceleration occurred between 2022 and 2023, during which assets increased by approximately 32.7%.
- Water Services and Operations Asset Trends
- Assets within the water services segment mirrored the general trend of the portfolio, experiencing a dip in 2020 to $111.6 million before entering a phase of steady recovery and growth. By December 31, 2023, assets in this segment reached $181.3 million, reflecting a total increase of 38.9% compared to 2019 levels.
- Segment Concentration and Composition
- A trend of increasing asset concentration within the Land and Resource Management segment is observed. This segment accounted for approximately 78.2% of total reportable assets in 2019, and this proportion increased to approximately 84.3% by the end of 2023, indicating that land-based resource expansion outpaced the growth of water operations.
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