KLA Corp. (NASDAQ:KLAC)

The financial performance, as measured by economic profit, demonstrates a generally positive trend over the observed period. Net operating profit after taxes (NOPAT) increased significantly from 2020 to 2022, plateaued in 2023, experienced a slight decrease in 2024, and then increased again in 2025. Invested capital consistently increased throughout the period, while the cost of capital fluctuated modestly. These factors combined to produce a fluctuating, but overall increasing, economic profit.

NOPAT Trend

NOPAT exhibited substantial growth between 2020 and 2022, rising from US$1,310,622 thousand to US$3,432,493 thousand. A minor decline to US$3,284,868 thousand occurred in 2024 before recovering to US$3,852,307 thousand in 2025. This suggests a period of strong operational improvement followed by a temporary setback and subsequent recovery.

Cost of Capital Trend

The cost of capital showed a slight increasing trend overall, moving from 18.80% in 2020 to 20.05% in 2025. There were minor fluctuations within this period, peaking at 19.60% in 2021 and 19.74% in 2024. The relatively stable cost of capital indicates consistent market expectations regarding the risk profile of the invested capital.

Invested Capital Trend

Invested capital consistently increased throughout the period, starting at US$6,592,642 thousand in 2020 and reaching US$9,244,891 thousand in 2025. This continuous growth suggests ongoing investment in the business and expansion of operations.

Economic Profit Trend

Economic profit increased significantly from US$71,334 thousand in 2020 to US$1,900,494 thousand in 2022. It then decreased to US$1,804,661 thousand in 2023 and US$1,531,883 thousand in 2024, before rising again to US$1,998,437 thousand in 2025. The pattern mirrors the NOPAT trend, indicating that economic profit is heavily influenced by changes in operational profitability. Despite fluctuations, economic profit demonstrates a clear upward trajectory over the six-year period.

The observed increases in both NOPAT and invested capital suggest successful business expansion and improved operational efficiency. The increasing economic profit indicates that the company is generating returns exceeding its cost of capital, creating value for its investors. The slight dip in economic profit in 2024 warrants further investigation to understand the underlying causes and ensure it does not represent a sustained trend.

The financial performance over the reviewed periods demonstrates notable fluctuations and growth patterns in key profitability metrics.

Net Income Attributable to KLA

The net income shows a strong upward trajectory from 1,216,785 thousand US dollars in mid-2020 to 3,381,277 thousand US dollars by mid-2023, indicating a substantial increase in profitability over the initial years. However, there is a decline in mid-2024 to 2,761,896 thousand US dollars, suggesting a temporary setback or increased expenses during this period. This is followed by a significant recovery and peak at 4,061,643 thousand US dollars in mid-2025, marking the highest profit level recorded in these periods.

Net Operating Profit After Taxes (NOPAT)

NOPAT trends closely follow the net income pattern, starting at 1,310,622 thousand US dollars in mid-2020 and rising steadily to 3,464,285 thousand US dollars by mid-2023. There is a minor decline to 3,284,868 thousand US dollars in mid-2024, aligning with the net income dip and possibly indicating operational challenges or market factors impacting earnings. By mid-2025, NOPAT recovers to 3,852,307 thousand US dollars, reflecting improved operational efficiency and profitability.

Overall, the data indicates robust growth in profitability over the five-year span with a minor interruption around mid-2024. The subsequent recovery in the latest period suggests resilience and effectiveness in addressing prior challenges.

The financial data reveals notable fluctuations in the taxation-related expenses over the analyzed periods.

Provision for Income Taxes

This item exhibits a generally increasing trend with some volatility. Starting from approximately 101.7 million USD in mid-2020, the provision saw a significant rise to 283.1 million USD by mid-2021. However, it then decreased to 167.2 million USD in mid-2022 before sharply increasing again to 401.8 million USD in mid-2023. The upward momentum continued, reaching 428.1 million USD in mid-2024 and further increasing to 582.8 million USD by mid-2025. Overall, there is a clear upward trajectory with a notable dip in the middle of the period.

Cash Operating Taxes

Cash operating taxes show a consistent and marked upward trend over the time horizon. Beginning at 224.5 million USD in mid-2020, the figure rose steadily to 360.2 million USD in mid-2021 and further climbed to 553.4 million USD by mid-2022. This increase continued substantially, reaching 805.2 million USD in mid-2023. A temporary decrease occurred in mid-2024 to 600.4 million USD, after which the amount surged again to a peak of 854.9 million USD by mid-2025. Despite the single-year decline in mid-2024, the overall pattern is one of significant growth in cash operating tax payments.

In summary, both provision for income taxes and cash operating taxes show increasing trends over the five-year period, indicative of either growth in taxable income, changes in tax rates, or adjustments in tax accounting. The volatility in the provision for income taxes suggests variability in anticipated tax expenses, while the cash operating taxes generally increase, reflecting the actual cash outflows related to tax payments with a minor temporary decline. These trends highlight growing fiscal obligations and possibly evolving tax strategies or financial conditions during the period analyzed.

The annual financial data reveals several notable trends in the company's capital structure from 2020 to the projected figures in 2025.

Total Reported Debt & Leases

The total reported debt and leases showed some volatility over the period analyzed. Initially, the debt level was approximately $3.57 billion in mid-2020, slightly decreasing to around $3.55 billion in mid-2021. Subsequently, there was a marked increase, with debt nearly doubling to about $6.77 billion by mid-2022. This peak was followed by a decline to approximately $6.06 billion in mid-2023. The debt rose again to an estimated $6.82 billion in mid-2024 before decreasing to roughly $6.09 billion by mid-2025. Overall, the company's debt levels experienced significant fluctuations, suggesting adjustments in financing strategy or capital needs during this period.

Total KLA Stockholders’ Equity

Stockholders’ equity grew from approximately $2.67 billion in mid-2020 to a peak near $3.38 billion in mid-2021. However, it then sharply declined to about $1.40 billion by mid-2022. This sudden drop contrasts with a recovery trend starting in mid-2023, when equity climbed back to nearly $2.92 billion, rising further to approximately $3.37 billion in mid-2024 and ultimately reaching an estimated $4.69 billion in mid-2025. This pattern indicates a strong rebound in equity after a significant contraction, possibly due to operational results, capital injections, or asset revaluations during this timeframe.

Invested Capital

Invested capital shows a consistent upward trend throughout the period examined. Starting at about $6.59 billion in mid-2020, it increased steadily each year to reach an estimated $9.24 billion by mid-2025. This gradual rise suggests ongoing investments in the business's productive assets, reflecting growth initiatives or expansion strategies employed by the company.

In summary, while invested capital demonstrated steady growth, the capital structure evidenced by debt and equity components experienced significant variability. The fluctuations in debt and equity, particularly the sharp decline and subsequent recovery in stockholders’ equity, signal dynamic financial management possibly responding to external conditions or strategic shifts. The overall increase in invested capital alongside these changes implies that the company is actively managing its financial resources to support its operations and growth outlook over the medium term.

The financial performance, as indicated by economic value added metrics, demonstrates a significant upward trend followed by a period of stabilization and renewed growth. Economic profit increased substantially from 2020 to 2022, then experienced a slight decline in 2023 before recovering and continuing to grow in the subsequent two years. Invested capital consistently increased throughout the observed period, reflecting ongoing investment in the business. The economic spread ratio, a key indicator of profitability relative to capital employed, exhibits a corresponding pattern of growth, stabilization, and then further improvement.

Economic Profit

Economic profit began at US$71.334 million in 2020 and rose dramatically to US$1.900 billion in 2022. A modest decrease to US$1.805 billion was noted in 2023, followed by a decline to US$1.532 billion in 2024. However, economic profit rebounded strongly in 2025, reaching US$1.998 billion. This suggests a period of exceptional growth, a temporary softening, and then a return to strong performance.

Invested Capital

Invested capital showed a consistent upward trajectory throughout the period, increasing from US$6.593 billion in 2020 to US$9.245 billion in 2025. The rate of increase appeared relatively stable, indicating a consistent level of investment activity. This continuous growth in invested capital provides the base for the increasing economic profit.

Economic Spread Ratio

The economic spread ratio increased from 1.08% in 2020 to a peak of 23.53% in 2022, demonstrating a substantial improvement in the return generated on invested capital. A decrease to 21.17% occurred in 2023, followed by a further decline to 17.25% in 2024. The ratio then increased again in 2025, reaching 21.62%. This pattern mirrors the fluctuations in economic profit, indicating a strong correlation between profitability and the efficiency of capital utilization. The ratio’s movement suggests the company’s ability to generate returns above its cost of capital has varied, but remains at a healthy level.

Overall, the observed trends suggest a business that has experienced significant growth in profitability and invested capital. While a temporary dip in performance occurred in 2023 and 2024, the subsequent recovery in 2025 indicates resilience and a continued ability to generate economic value.

The economic profit margin demonstrates a significant upward trend from 2020 to 2022, followed by a stabilization and slight increase through 2025. Economic profit itself exhibits substantial growth over the period, directly influencing the margin’s trajectory.

Economic Profit Margin

In 2020, the economic profit margin was 1.21%. This figure increased dramatically to 11.87% in 2021, and continued its ascent to 19.90% in 2022. A moderate decrease to 16.81% was observed in 2023. The margin then experienced a slight decline to 14.80% in 2024 before recovering to 16.53% in 2025.

Economic Profit

Economic profit began at US$71,334 thousand in 2020. It rose substantially to US$821,106 thousand in 2021 and further increased to US$1,900,494 thousand in 2022. A slight decrease to US$1,804,661 thousand occurred in 2023, followed by a decrease to US$1,531,883 thousand in 2024. The final year analyzed, 2025, shows a recovery with economic profit reaching US$1,998,437 thousand.

Adjusted Revenues

Adjusted revenues increased consistently from US$5,884,690 thousand in 2020 to US$6,920,382 thousand in 2021, US$9,551,504 thousand in 2022, and US$10,733,739 thousand in 2023. A slight decrease to US$10,349,482 thousand was noted in 2024, with a subsequent increase to US$12,087,609 thousand in 2025. The growth in adjusted revenues supports the overall increase in economic profit, although the margin fluctuations suggest that profit growth outpaced revenue growth at certain points.

The period between 2022 and 2024 shows a relative stabilization in the economic profit margin, despite continued growth in adjusted revenues. This suggests potential changes in cost structures or operational efficiencies that impacted profitability during those years. The recovery in both economic profit and margin in 2025 indicates a potential return to improved profitability relative to revenue.