Abiomed Inc. (NASDAQ:ABMD)

Over the period analyzed, several key financial metrics exhibited notable trends.

Net Operating Profit After Taxes (NOPAT)

NOPAT demonstrated a substantial increase from 2017 through 2021, rising from approximately $79.9 million to roughly $260.0 million. This represents more than a threefold increase over this five-year span. However, in 2022, NOPAT experienced a significant decline, dropping to about $140.8 million, which is nearly a 46% decrease compared to the previous year.

Invested Capital

The invested capital consistently grew throughout the observed period, beginning at approximately $226.7 million in 2017 and reaching a peak of around $737.9 million in 2021. Although there was a marginal decrease in 2022, bringing the invested capital down to approximately $693.4 million, the overall trend reflects a more than threefold increase over six years.

Return on Invested Capital (ROIC)

ROIC exhibited a peak value in 2018 at 58.41%, indicating highly efficient use of capital that year. After that peak, ROIC gradually declined, dropping to 35.23% by 2021, and further declined sharply to 20.31% in 2022. This decreasing trend suggests a reduction in the profitability relative to the invested capital despite the general increase in capital investment.

In summary, while invested capital consistently increased, profitability as measured by both NOPAT and ROIC peaked during earlier years and declined in recent periods, particularly in 2022. The divergence between rising capital investment and falling ROIC indicates diminishing returns on additional investments during the latter years of the period.

Operating Profit Margin (OPM)

The operating profit margin exhibited an overall upward trend from 2017 to 2021, increasing from 20.92% to a peak of 34.4% in 2021. However, in 2022, there was a notable decline to 18.62%, marking the lowest value in the period under review after a peak in 2019 and 2021.

Turnover of Capital (TO)

The turnover of capital ratio showed a fluctuating downward trend between 2017 and 2021. It decreased from 1.97 in 2017 to a low of 1.16 in 2021, indicating a reduction in the efficiency of capital use over those years. In 2022, a slight recovery occurred, with the ratio rising to 1.49.

1 – Effective Cash Tax Rate (CTR)

This metric stayed relatively high and stable from 2017 through 2021, ranging from approximately 85% to nearly 97%, indicating that the effective tax burden remained substantial. There was a decline in 2022 to 73.15%, suggesting a reduction in the effective cash tax rate for that year.

Return on Invested Capital (ROIC)

The return on invested capital demonstrated a strong upward trend from 2017 (35.24%) to 2018 (58.41%), followed by a gradual decline in subsequent years, reaching 20.31% in 2022. The 2022 value is the lowest in the period analyzed, indicating reduced profitability relative to invested capital.

Net Operating Profit Before Taxes (NOPBT)

The net operating profit before taxes exhibited a general upward trend from 2017 to 2021, increasing from 93.5 million USD to a peak of approximately 293.3 million USD. However, there was a significant decline in 2022, with NOPBT falling to about 192.5 million USD, indicating a 34% decrease from the previous year.

Adjusted Revenue

Adjusted revenue showed consistent growth throughout the entire period. It rose steadily each year from 447.0 million USD in 2017 to 1,033.8 million USD in 2022. This represents an overall increase of over 130% during the six-year span, with the most notable annual increase occurring in the final reported year.

Operating Profit Margin (OPM)

The operating profit margin increased from 20.92% in 2017 to a high of 34.47% in 2019, reflecting improved operational efficiency and profitability. In 2020, the margin declined slightly to 30.9%, then rebounded marginally to 34.4% in 2021. However, in 2022 there was a pronounced decline to 18.62%, aligning with the decreased net operating profit before taxes despite higher revenue. This suggests rising costs or operational challenges impacted profitability in that year.

Overall Analysis

The data indicate strong revenue growth over the entire period, accompanied by improved profit margins and increasing operating profits up to 2021. The sharp decline in both operating profit margin and NOPBT in 2022, despite record revenue, suggests a deterioration in cost control or increased expenses, leading to reduced operational profitability. Further analysis into expense categories or market conditions in 2022 would be necessary to identify the underlying causes of this decline.

Adjusted Revenue

The adjusted revenue demonstrates a consistent and significant upward trajectory over the six-year period. Starting at approximately $447 million in 2017, the revenue increased steadily each year, reaching over $1.03 billion by 2022. This growth indicates strong sales performance and an expanding business scale.

Invested Capital

Invested capital rose markedly from $227 million in 2017 to a peak near $738 million in 2021 before slightly declining to $693 million in 2022. This suggests substantial capital infusion and investment in assets or operations during this period, especially notable in the years 2019 to 2021. The slight decrease in 2022 may indicate asset divestment or capital restructuring.

Turnover of Capital (TO)

The turnover of capital ratio shows a declining trend from 1.97 in 2017 to a low of 1.16 in 2021, followed by a modest recovery to 1.49 in 2022. This decline signals that despite growing revenue and increasing invested capital, the efficiency with which the company utilizes its capital to generate revenue decreased, reaching its lowest efficiency in 2021. The slight improvement in 2022 may reflect enhanced capital management or improved operational efficiency.

Overall Insights

While the company exhibits strong revenue growth and significant capital investment over the period, the decreasing turnover of capital highlights a reduction in capital utilization efficiency. Management may need to address this to ensure that high invested capital levels translate into proportionate revenue increases. The recent recovery in capital turnover ratio in 2022 could indicate initial positive effects of corrective measures or improved asset deployment.

Cash Operating Taxes

Cash operating taxes exhibited a fluctuating but generally increasing trend over the reviewed period. Starting at $13,626 thousand in 2017, there was a sharp decrease in 2018 to $5,738 thousand, followed by a significant rise to $12,089 thousand in 2019. From 2019 onward, the tax payments increased more consistently, reaching $20,943 thousand in 2020, $33,340 thousand in 2021, and peaking at $51,674 thousand in 2022.

Net Operating Profit Before Taxes (NOPBT)

The net operating profit before taxes demonstrated overall growth during the first five years, rising from $93,514 thousand in 2017 to a peak of $293,322 thousand in 2021. However, in 2022, there was a notable decline to $192,485 thousand, representing a substantial reduction from the previous year. Despite this decrease, the 2022 value remained significantly higher than the initial years.

Effective Cash Tax Rate (CTR)

The effective cash tax rate showed considerable variability across the years. It started at 14.57% in 2017 and dropped sharply to a low of 3.46% in 2018, maintaining a relatively low rate through 2019 and 2020 at 4.55% and 8.03%, respectively. Subsequently, the rate increased steadily to 11.37% in 2021 and then surged markedly to 26.85% in 2022, the highest in the period analyzed.

Summary and Insights

The data reflect an overall growth trajectory in profits before taxes until 2021, followed by a considerable decline in 2022. Cash operating taxes, after an initial dip in 2018, have shown strong upward momentum, particularly in the last two years. The effective cash tax rate has been highly volatile but is prominently elevated in 2022, which correlates with the increased absolute cash tax payments despite lower operating profits that year. This could suggest changes in tax policy, profitability composition, or deferred tax impacts affecting cash taxes paid. The divergence between profit trends and tax rate escalation in 2022 warrants further examination to understand tax strategy and operational factors influencing this outcome.