Texas Pacific Land Corp. (NYSE:TPL)

The analysis of the quarterly financial data reveals several key trends in the company's operational efficiency metrics over the observed periods.

Receivables Turnover

The receivables turnover ratio shows a fluctuating pattern, starting at 7.79 in March 2020 and then decreasing to as low as 4.49 in September 2022. After this low point, there is a modest recovery with the ratio reaching around 5.6 by September 2024. This indicates periods of slower collection of receivables followed by some improvement, suggesting variability in how quickly the company collects cash from its customers over time.

Average Receivable Collection Period

This metric complements the receivables turnover ratio, indicating the average time in days to collect receivables. It increased from 47 days in March 2020 to a peak of 81 days in September 2022, suggesting collections took longer during this period. Following this peak, the collection period decreased somewhat, stabilizing around 65 days by the latter periods in 2024. This pattern aligns with the fluctuations observed in the receivables turnover ratio and indicates periods of extended credit terms or delays in collections.

Payables Turnover

The payables turnover ratio shows considerable volatility. It begins at 25.56 in March 2020, dips to around 20 in mid-2022, spikes sharply to 40.66 in June 2022, and then declines again to approximately 16.93 by June 2024. This spike suggests a brief period of accelerated payment to suppliers, followed by a return to slower payables processing. Overall, the trend suggests that the company varied its payment pace to suppliers significantly over the examined timeframe.

Average Payables Payment Period

The average payable payment period generally ranges between 13 to 19 days, with a notable drop to 9 days in March 2022. Later periods show a gradual increase, reaching 22 days by June 2024. This indicates that, on average, the company started taking longer to pay its suppliers over time, which aligns with the decreasing payables turnover ratio after mid-2022.

Working Capital Turnover

The working capital turnover ratio shows a decline from 1.43 in March 2020 to lows around 0.69 in December 2023. However, it shows some recovery to 1.05 by September 2024. This trend suggests a relative decrease in how efficiently the company is using its working capital to generate sales during the earlier part of the period, with some improvement near the end of the timeline.

In summary, the company experienced fluctuating efficiency in managing both receivables and payables, with periods of slower receivables collection and variability in supplier payment timing. Working capital efficiency declined through most of the observed period but showed signs of recovery near the end. These patterns may reflect changing business conditions, adjustments in credit policies, or shifts in supplier negotiations over time.

The revenue figures exhibit notable seasonal fluctuations with quarterly variations over the examined period. Initial revenues in early 2019 were relatively strong, followed by a pronounced dip in the second quarter of the same year. Revenues generally increase in the fourth quarter of most years, peaking near year-end, particularly evident in late 2021 and 2022. The data from 2023 to mid-2024 indicate moderate stability with slight upward trends toward the mid-year quarters.

Accounts receivable and accrued receivables, net, demonstrate a somewhat correlated pattern with revenues but exhibit distinct variability. Starting in early 2019 with a moderate level, they decline through mid-2020, then increase significantly through 2022, reaching peaks in the first half of 2022. A decline follows in late 2022 and early 2023, with occasional rebounds during the subsequent quarters. The periods of rising receivables tend to coincide with elevated or increasing revenue, suggesting a relationship between sales growth and collections outstanding.

Receivables turnover ratios indicate shifts in the efficiency of collections or credit policies. The turnover ratio was highest in the earlier reported quarters (2019) with values above 7, reflecting rapid collection cycles. Subsequent quarters show a decline to turnover rates between approximately 4.5 and 5.0 during 2020 and 2021, indicating slower collections or increased credit terms. From 2022 onward, turnover ratios fluctuate, with intermittent improvements reaching above 6 in certain quarters of 2023, followed by modest declines. This suggests dynamic receivables management possibly responding to changing credit conditions or sales terms.

Revenue Trends

Revenues show clear quarterly seasonality, with dips commonly seen in mid-year quarters and peaks mostly in the fourth quarter. A general upward trajectory is noted over the multi-year span, particularly in 2021 and 2022.

Accounts Receivable Patterns

The level of accounts receivable correlates with revenue movements but shows distinct cycles, peaking significantly in 2022, which may reflect extended credit terms or slower collections during that period.

Receivables Turnover Efficiency

Turnover ratios decreased from high levels in 2019 to lower and more variable values in subsequent years, signaling a slowdown in receivables collection or changes in credit policies. Fluctuations in 2023 indicate attempts to optimize collection performance.

Overall Observations

Revenue growth alongside increasing accounts receivable suggests expansion but also potential collection challenges. Receivables turnover variations highlight shifts in operational efficiency related to credit and collections. Seasonal revenue patterns and correlated receivables movements suggest consistent business cycles impacting financial flows.

Revenue Trends

Revenues exhibit notable fluctuations over the observed quarters but demonstrate an overall upward trajectory from 2019 through 2024. Starting at approximately $191 million in Q1 2019, revenues declined significantly in mid-2019, dropping below $100 million by Q2 and Q3 2019. Following this dip, there was a gradual recovery into late 2019 and early 2020, although revenues again fell in mid-2020 to levels near $54 million. From late 2020 onwards, a consistent upward trend is evident, with revenues rising steadily through 2021 and peaking around $191 million in Q1 2022. Despite some volatility and occasional declines—particularly in late 2022 and parts of 2023—revenues maintain a generally high level above $150 million. By mid-2024, revenues stabilize around $172-174 million, indicating a recovery and sustained high performance relative to earlier quarters.

Accounts Payable and Accrued Expenses

The accounts payable and accrued expenses amount present a variable pattern without a clear directional trend. Starting from roughly $9.7 million in Q1 2019, this balance generally increases and decreases across quarters without direct correlation to revenue movements. Peaks are observed in Q2 2022 (around $29 million) and again in Q3 2024, reaching over $40 million—a significant increase compared to prior periods. There are also intermittent drops, such as the decline in late 2020 to approximately $12.5 million and in late 2021 where values hover near $18 million. This volatility may reflect fluctuating payment cycles or changes in operational scale.

Payables Turnover Ratio

The payables turnover ratio, available from early 2020 onward, shows varied efficiency in managing payables relative to cost of goods or operating expenses. Initial values in early 2020 range from about 18.7 to 25.5, indicating moderate turnover speed. The ratio spikes sharply in early 2022, reaching 40.66, which suggests unusually rapid payment cycles during that period. After this peak, the ratio fluctuates between approximately 20 and 28 for most quarters, indicating moderately stable turnover rates, but dips to lower values around 16.9 in late 2024 suggest a slowdown in payment velocities more recently. These changes imply variations in payment policies or supplier negotiations much influenced by operational or market conditions.

Overall Insights

The financial data suggests a company experiencing cyclical revenue patterns with significant rebounds after downturns, alongside fluctuating payment obligations and turnover efficiency. Revenue growth in the latter half of the period likely reflects successful revenue-driving activities or improved market conditions, while the variability in accounts payable and turnover ratios points to dynamic working capital management. The sharp payables turnover ratio spike in early 2022 warrants further examination as it may indicate either a one-time operational adjustment or altered supplier payment terms. Recent reductions in turnover ratio coupled with increased payables could highlight emerging liquidity considerations.

Working Capital

Working capital showed an overall upward trajectory from March 31, 2019, to June 30, 2024. Starting at approximately 224 million US dollars, it increased with some fluctuations, peaking at over 973 million US dollars by June 30, 2024. A notable decline occurred at the end of the period, with working capital dropping to around 652 million US dollars by September 30, 2024, after a consistent rise throughout the earlier years.

Revenues

Revenues exhibited considerable volatility over the quarters. Initially, revenues were around 191 million US dollars at the beginning of 2019 but fell sharply in the second quarter of that year. Following this drop, revenues showed recovery and growth, reaching a high near 191 million US dollars again in September 2022. However, after that peak, revenues experienced a decline and fluctuated around 160 to 174 million US dollars with no clear upward or downward trend toward mid-2024.

Working Capital Turnover Ratio

The working capital turnover ratio began to be reported in March 2020, starting slightly above 1.4 and increasing to a maximum of 1.54 in June 2020, indicating efficient use of working capital during that period. Following this peak, the ratio generally declined, reaching lows around 0.69 to 0.74 between June and September 2024, suggesting a decreasing efficiency in generating revenues relative to working capital. Interestingly, by September 2024, the ratio rose abruptly back to 1.05, potentially indicating a temporary improvement in turnover efficiency.

General Observations

The data suggest that while the company's working capital generally increased over the observed period, revenue growth was less consistent and more volatile. The declining working capital turnover ratio after mid-2020 implies that increases in working capital were not consistently matched by proportional revenue growth, potentially indicating less efficient capital utilization. The late period fluctuations in both revenues and turnover ratio may reflect market or operational changes affecting the company's financial dynamics.

The receivables turnover ratio exhibits variability over the observed periods, ranging generally between approximately 4.5 and 8.2. Starting from a high of 7.79 in March 2020, it declines to a low near 4.49 by September 2022, indicating a decrease in the frequency of receivables collection during that interval. Subsequently, there is a moderate recovery, with the ratio increasing to around 5.6 by September 2024, suggesting some improvement in collection efficiency.

The average receivable collection period inversely reflects the trends in the receivables turnover ratio. Initially, it stands at 47 days in March 2020, increases to a peak of approximately 81 days by September 2022, indicating a lengthening in the time taken to collect receivables. Following this peak, the collection period gradually shortens to around 65 days by September 2024, demonstrating enhanced payment speed from customers after the prior elongation.

Receivables Turnover

From early 2020 onwards, the ratio shows a declining trend until late 2022, indicating potentially slower collection or increased credit sales relative to receivables turnover.

The subsequent slight uptick through 2023 and into mid-2024 signals an improvement in turnover efficiency, though it remains below the initial high values observed.

Average Receivable Collection Period

The upward movement from 47 to 81 days suggests that customers were taking longer to pay during the identified period, negatively impacting cash flow.

The reduction to 65 days towards mid-2024 reflects better receivable management or improved customer payment behavior in recent quarters.

Overall, the data indicates a period of worsening receivables management or payment delays from early 2020 to late 2022, followed by a phase of gradual recovery in the collection efficiency of receivables into mid-2024. Continuous monitoring would be advisable to assess whether the recent improvements sustain or further enhance working capital performance.

The payables turnover ratio and the average payables payment period demonstrate notable fluctuations over the observed quarterly periods, reflecting variations in payment efficiency and credit management.

Payables Turnover Ratio

The ratio data commences from December 31, 2019, displaying an initial value of 25.56, followed by a decline to 18.72 in the next quarter, and then a recovery to 23.62 by September 30, 2020. Throughout 2020 and into early 2021, the ratio generally hovers in the low to mid-20s range, indicating stable payables management during that period.

Starting in March 31, 2022, a peak of 40.66 is observed, signifying a substantial acceleration in payables turnover, which may suggest faster payments or a decrease in accounts payable balances. However, this peak is followed by a sharp decrease to approximately 20.3 by June 30, 2022, and the ratio then fluctuates between 16.93 and 28.27 in subsequent quarters, reflecting intermittent changes in payment practices or supplier terms.

Average Payables Payment Period

This metric inversely correlates with the payables turnover ratio, starting at 14 days on December 31, 2019. It increases to a peak of 19 days by June 30, 2020, indicating slower payments, then recovers to around 15 to 17 days through the remainder of 2020 and 2021.

A marked reduction to 9 days on March 31, 2022, aligns with the aforementioned spike in payables turnover ratio, suggesting accelerated payment cycles during this quarter. Subsequently, the payment period expands again, ranging mostly between 13 and 18 days through 2023 and into mid-2024, with the latest quarter showing a lengthening to 22 days, the highest since mid-2020.

Overall, the data suggests variability in payables management, with periods of rapid payment and tighter control alternating with phases of extended payment terms. These fluctuations may reflect strategic adjustments to cash flow, supplier negotiations, or operational cash requirements over the quarters analyzed.