Align Technology Inc. (NASDAQ:ALGN)

Current Income Tax Expense

The current income tax expense has shown an overall upward trend from 2018 to 2022. Starting at $68,109 thousand in 2018, it increased to $114,061 thousand in 2019, then decreased slightly to $93,552 thousand in 2020. However, it rose significantly to $228,429 thousand in 2021 and further increased to $279,208 thousand in 2022. This pattern indicates growing current tax liabilities in recent years, particularly from 2020 onwards.

Deferred Income Tax Expense

The deferred income tax expense exhibits considerable volatility over the five-year period. It was a negative $10,386 thousand in 2018, decreasing to a smaller negative amount of $1,714 thousand in 2019. In 2020, there was a substantial shift to a large negative deferred tax figure of $-1,490,491 thousand, indicating a significant deferred tax benefit. In 2021, this reversed to a positive deferred tax expense of $11,974 thousand, before reverting back to a negative $41,724 thousand in 2022. The large fluctuation reflects considerable changes in deferred tax assets or liabilities, likely due to shifts in temporary differences or tax rate changes during this period.

Provision for Income Taxes

The overall provision for income taxes follows a pattern influenced primarily by the deferred tax component. It increased from $57,723 thousand in 2018 to $112,347 thousand in 2019. In 2020, there was a sharp transition to a large tax benefit of $-1,396,939 thousand, driven by the significant deferred tax benefit noted earlier. Following this, the provision rose dramatically to $240,403 thousand in 2021 and slightly decreased to $237,484 thousand in 2022. This indicates that after 2020, the company recognized substantial income tax expenses associated with current and deferred taxes, reflecting either increased taxable income or changes in tax regulations.

The data reveals several key trends in the tax-related financial metrics over the five-year period ending December 31, 2022.

U.S. Federal Statutory Income Tax Rate

The federal statutory tax rate remained consistent at 21% throughout the entire period, indicating no changes in the fundamental federal tax legislation affecting the company.

State Income Taxes, Net of Federal Tax Benefit

This rate showed a gradual increase from 1.3% in 2018 to 3.7% in 2022. The consistent upward trend suggests either increased profitability in states with higher tax rates or changes in state tax policies or company operations that increased state tax exposure.

U.S. Tax on Foreign Earnings

The tax rate on foreign earnings decreased significantly from 4.1% in 2018 to 1.9% in 2019, with a missing value in 2020, then increased again to 2.7% in 2021 and sharply rose to 5.6% in 2022. This volatility may reflect changes in foreign earnings composition, tax policy shifts, or foreign tax credit adjustments.

Impact of Differences in Foreign Tax Rates

This measure reversed direction over time. Initially negative at -6.7% in 2018 and -5.1% in 2019, it turned positive in 2020 at 5.6%, dropped to -2.0% in 2021, and increased again to 3.3% in 2022. The fluctuations indicate varying effects of foreign tax rate differentials on the overall tax rate.

Stock-Based Compensation

The impact of stock-based compensation on the tax rate was negative or near zero until 2019, shifted to a small positive impact in 2020 (1.1%), reverted to a minor negative effect in 2021 (-0.3%), and became more positive in 2022 (2.1%). This variability suggests changes in the composition or magnitude of stock compensation expenses affecting taxable income.

Impact of Intra-Entity Intellectual Property Rights Transfer

A significant negative impact of -395.6% is reported in 2020, with no related data in other years. This extreme value likely represents a one-time tax adjustment or reorganization related to intellectual property rights transfer, dramatically influencing the effective tax rate in that year.

Settlement on Audits

This item appears sporadically, with a minor negative impact (-1.4%) in 2020 and a slight positive reversal (1.9%) in 2022, indicating occasional adjustments due to tax audit settlements.

Change in Valuation Allowance

The valuation allowance impact was minimal in 2020 (0.1%) but increased to 1.1% in 2021 and further to 1.7% in 2022, suggesting a growing recognition of deferred tax assets or adjustment in tax loss carryforwards.

Other Items Not Individually Material

This category fluctuated modestly, starting negative (-3.9%) in 2018, turning positive (0.8%) in 2019, and varying slightly in subsequent years, indicating minor tax effects scattered across other factors.

Effective Tax Rate

The effective tax rate exhibited a wide range, starting at 12.4% in 2018, increasing to 20.0% in 2019, experiencing an extreme negative anomaly in 2020 at -368.6% attributable to the intra-entity IP transfer adjustment, then recovering to 23.7% in 2021 and rising sharply to 39.6% in 2022. The rise in 2022 reflects the combined effects of increased state taxes, higher tax on foreign earnings, and other positive tax adjustments, leading to a considerably higher tax burden relative to federal statutory rates.

Overall, the data indicates relative stability in federal tax rates with notable volatility and one-time adjustments impacting the effective tax rate, particularly in 2020 due to intra-entity intellectual property transfer. The increasing state tax rate and growing valuation allowance impacts contribute to upward pressure on total tax rate in the latest periods.

The analysis of the financial data over the period from 2018 to 2022 reveals several notable trends and changes across various financial items.

Net Operating Loss and Capital Loss Carryforwards

This item exhibits a fluctuating trend, initially decreasing from 25,410 thousand USD in 2018 to 18,182 thousand USD in 2019, before rising to 20,728 thousand USD in 2020. It then sharply declined to 11,069 thousand USD in 2021, followed by a moderate increase to 15,380 thousand USD in 2022. Overall, the balance shows variability with a net downward tendency from the start to the end of the period.

Reserves and Accruals

The reserves and accruals showed a general upward trend from 24,769 thousand USD in 2018 to a peak of 47,641 thousand USD in 2021. However, in 2022, there was a decline to 32,759 thousand USD, reflecting some reversal after consistent growth.

Stock-based Compensation

Stock-based compensation steadily increased over the entire period, starting at 8,571 thousand USD in 2018 and reaching 19,469 thousand USD in 2022. This represents a significant rise, more than doubling over five years, indicating increased reliance on equity-based incentives.

Deferred Revenue

Deferred revenue exhibits a strong upward trend throughout the years. From 14,285 thousand USD in 2018, it grew substantially each year to reach 117,039 thousand USD by 2022. This consistent increase, including a notable jump between 2020 and 2021, suggests growth in advance payments or contract liabilities.

Capitalized Research & Development

This item only appears in 2022 with a value of 54,293 thousand USD, indicating a possible change in accounting treatment or capitalization policy for R&D expenses in this year.

Amortizable Tax Basis in Intangibles

Available only from 2020 onward, this figure decreased gradually from 1,468,159 thousand USD in 2020 to 1,350,434 thousand USD in 2022. The decline may be due to amortization expenses or asset impairments related to intangible assets.

Other Items

Values listed under 'Other' show fluctuation over time. The first 'Other' category increased significantly in 2021 and 2022, while the second 'Other' category displays a consistent negative value which is lessening in magnitude over the years, suggesting varying miscellaneous income or expenses impacting the financials.

Deferred Tax Assets Before Valuation Allowance

This item rose markedly from 74,308 thousand USD in 2018 to over 1.6 million thousand USD by 2022. The large increase, particularly between 2019 and 2020, indicates substantial growth in recognized deferred tax assets.

Valuation Allowance

The valuation allowance, representing reductions in deferred tax assets, increased negatively from -251 thousand USD in 2018 to -23,286 thousand USD in 2022. This indicates a growing allowance against deferred tax assets, possibly reflecting increased uncertainty about their realizability.

Deferred Tax Assets

Deferred tax assets show a significant increase from 74,057 thousand USD in 2018 to approximately 1.58 million thousand USD in 2022. The increase is aligned with the rise in deferred tax assets before valuation allowance, partially offset by the growing valuation allowance.

Depreciation and Amortization

This expense fluctuated but remained negative throughout, with a peak expense of -23,817 thousand USD in 2019 and a general decline to -11,407 thousand USD in 2022. The decreasing magnitude over time may reflect changes in asset base or amortization schedules.

Acquisition-Related Intangibles

Data available from 2020 shows decreasing negative balances from -35,689 thousand USD in 2020 to -26,008 thousand USD in 2022, indicating amortization or impairment of intangibles acquired through business combinations.

Unremitted Foreign Earnings

Reported only in 2018 with a negative value of -612 thousand USD and absent thereafter, suggesting possible repatriation or changes in foreign earnings status.

Deferred Tax Liabilities

The deferred tax liabilities increased in negative value from -9,834 thousand USD in 2018 to a peak of -52,139 thousand USD in 2020, then gradually decreased in absolute terms to -40,853 thousand USD by 2022. This reflects volatility in deferred tax obligations over the years.

Net Deferred Tax Assets (Liabilities)

The net deferred tax assets position grew substantially from 64,223 thousand USD in 2018 to over 1.54 million thousand USD in 2022. This growth is primarily driven by increases in deferred tax assets far exceeding changes in deferred tax liabilities.

In summary, the company exhibits strong growth in deferred tax assets and deferred revenue, alongside increasing stock-based compensation expenses. Trends in amortization and acquisition-related intangibles indicate ongoing management of intangible assets, while fluctuations in reserves, accruals, and valuation allowances suggest variances in provisions and tax asset realizability assessments. The emergence of capitalized R&D in 2022 marks a notable change in accounting treatment or investment strategy.

Deferred Tax Assets

The deferred tax assets demonstrate a significant and steady increase over the period analyzed. Starting at approximately 64.7 million USD at the end of 2018, the value remained relatively stable through 2019. However, from 2019 to 2020, there was an extraordinary surge to around 1.55 billion USD, maintaining a similar elevated level through 2021 and 2022. This substantial growth suggests the recognition of significant future tax benefits potentially related to timing differences or carryforwards.

Deferred Tax Liabilities

Deferred tax liabilities show a markedly different trend, beginning with nominal amounts of 466 thousand USD in 2018 and decreasing to 90 thousand USD by the end of 2019. Thereafter, they rose sharply in 2020 to approximately 35.7 million USD but declined somewhat in the subsequent years, ending at roughly 29.9 million USD in 2022. Despite this increase from 2019, the liabilities remain considerably lower in magnitude compared to deferred tax assets throughout the period.

Overall Observations

The contrasting magnitude and movements between deferred tax assets and liabilities indicate a position where future taxable benefits significantly outweigh future tax obligations. The notable jump in deferred tax assets starting in 2020 may reflect changes in tax regulations, new tax loss carryforwards, or adjustments in accounting estimates. Meanwhile, the relatively stable and much smaller deferred tax liabilities suggest limited growth in future taxable temporary differences.

The financial data shows notable variations and trends over the five-year period from 2018 to 2022. Both reported and adjusted figures are provided for total assets, total liabilities, stockholders’ equity, and net income, allowing for a comparative analysis of the company's financial position and performance under different accounting considerations.

Total Assets

The reported total assets increased significantly from approximately 2.05 billion USD in 2018 to nearly 5.95 billion USD in 2021, followed by stabilization around 5.95 billion USD in 2022. Adjusted total assets show a steadier increase from about 1.99 billion USD in 2018 to approximately 4.41 billion USD in 2021, but then declined slightly to about 4.38 billion USD in 2022. This suggests that the adjustments related to income tax impact the asset valuation, particularly noticeable from 2020 onward, where the gap between reported and adjusted totals widens.

Total Liabilities

Reported total liabilities rose steadily over the period, from roughly 800 million USD in 2018 to approximately 2.35 billion USD in 2022. Adjusted total liabilities closely follow the reported figures but are marginally lower each year, increasing from about 799 million USD in 2018 to nearly 2.32 billion USD in 2022. The growth trajectory in liabilities indicates a consistent increase in the company's obligations, with the adjustment reflecting relatively minor changes.

Stockholders’ Equity

Reported stockholders’ equity expanded substantially from about 1.25 billion USD in 2018 to a peak of approximately 3.62 billion USD in 2021, before slightly decreasing to about 3.60 billion USD in 2022. Adjusted equity figures show a more moderate increase from around 1.19 billion USD in 2018 to roughly 2.12 billion USD in 2021, then a decrease to nearly 2.06 billion USD in 2022. The adjustments reduce equity values significantly, especially noticeable in 2020 and beyond, indicating the impact of deferred and annual income tax adjustments on retained earnings or other equity components.

Net Income

Reported net income reveals considerable volatility over the five years. It rises steadily from around 400 million USD in 2018 to a peak of approximately 1.78 billion USD in 2020, then sharply declines to about 772 million USD in 2021 and further down to approximately 362 million USD in 2022. Adjusted net income follows a similar pattern but exhibits less pronounced fluctuations, peaking at roughly 784 million USD in 2021 and declining to about 320 million USD in 2022. The adjustments significantly moderate the exceptionally high reported net income in 2020, suggesting that tax-related adjustments had a major effect during that period.

Overall, the data demonstrates robust growth in total assets and equity through 2020 and 2021, accompanied by an increase in liabilities consistent with expansion. However, the adjusted figures show more conservative growth and reduced profitability, underscoring the material impact of deferred and annual income tax adjustments on the financial statements. The sharp decline in net income following 2020, particularly visible in reported numbers, suggests fluctuating operational or fiscal factors affecting profitability. The adjustment process appears to smooth these effects, resulting in less volatile but consistently lower profitability and equity figures.

Net Profit Margin

The reported net profit margin exhibits considerable volatility over the observed period. It starts at 20.35% in 2018, slightly declines to 18.4% in 2019, then peaks sharply at 71.84% in 2020 before dropping significantly to 19.53% in 2021 and further down to 9.68% in 2022. In contrast, the adjusted net profit margin demonstrates a generally decreasing trend, beginning at 19.82% in 2018 and declining consistently to 8.56% by 2022, with a minor fluctuation around 2021.

Total Asset Turnover

The reported total asset turnover ratio is steady at 0.96 for 2018 and 2019, then decreases substantially to 0.51 in 2020, followed by a slight recovery to 0.67 in 2021, and a slight decline to 0.63 in 2022. The adjusted total asset turnover shows a similar pattern but with less pronounced declines. It remains stable at 0.99 in 2018 and 2019, dips to 0.75 in 2020, rebounds to 0.9 in 2021, and then decreases slightly to 0.85 in 2022, indicating improved asset utilization after adjustments.

Financial Leverage

The reported financial leverage ratio presents moderate fluctuations. It rises from 1.64 in 2018 to 1.86 in 2019, then falls to 1.49 in 2020, and rises again to approximately 1.64 and 1.65 in 2021 and 2022 respectively. The adjusted financial leverage shows a steady upward trend throughout the entire period, increasing from 1.67 in 2018 to 2.12 in 2022, suggesting a growing reliance on debt or liabilities when adjustments are considered.

Return on Equity (ROE)

The reported ROE follows a variable pattern, starting at 31.94% in 2018, slightly increasing to 32.89% in 2019, then surging to 54.92% in 2020 before sharply declining to 21.31% in 2021 and 10.04% in 2022. The adjusted ROE, which accounts for deferred income taxes, shows more moderated fluctuations, with an increase from 32.8% in 2018 to 34.4% in 2019, a considerable decrease to 16.62% in 2020, a recovery to 36.99% in 2021, and another decline to 15.53% in 2022.

Return on Assets (ROA)

The reported ROA decreases steadily over the period, from 19.5% in 2018 to 6.08% in 2022, with an exception of a spike to 36.77% in 2020 before it falls back significantly. The adjusted ROA displays a similar trend, starting at 19.61% in 2018, peaking at 18.1% in 2019, plunging to 8.71% in 2020, rebounding to 17.78% in 2021, and declining again to 7.31% in 2022. This indicates that operational efficiency measured against assets is relatively volatile, with notable decreases in later years.

Overall Observations

The data suggests substantial volatility and some pronounced fluctuations in profitability and efficiency metrics during the period, especially around 2020. Adjusted figures generally present a more conservative and smoothed view compared to reported numbers, likely reflecting the impact of deferred income tax adjustments. Financial leverage after adjustments shows a clear upward trend, suggesting increased financial risk over time. Both returns on equity and assets demonstrate sensitivity to accounting adjustments and economic conditions, with sharper declines observable in the latest reported year, potentially signaling weakening performance or changing operating dynamics.

Reported Net Income

The reported net income exhibited a general upward trend from 2018 to 2020, increasing substantially from 400,235 thousand USD in 2018 to a peak of 1,775,888 thousand USD in 2020. However, a notable decline occurred thereafter, with net income decreasing to 772,020 thousand USD in 2021 and further declining to 361,573 thousand USD in 2022.

Adjusted Net Income

The adjusted net income followed a somewhat different trajectory. It rose modestly from 389,849 thousand USD in 2018 to 441,062 thousand USD in 2019, then sharply declined to 285,397 thousand USD in 2020. Subsequently, it increased to 783,994 thousand USD in 2021 before decreasing again to 319,849 thousand USD in 2022. This pattern suggests volatility in adjusted earnings over the period analyzed.

Reported Net Profit Margin

The reported net profit margin showed a rising trend from 20.35% in 2018 to a peak of 71.84% in 2020, coinciding with the highest reported net income. This was followed by a steep decline to 19.53% in 2021 and a further decrease to 9.68% in 2022, signifying a reduction in profitability after the 2020 peak.

Adjusted Net Profit Margin

Adjusted net profit margin values were more stable but reflected a less pronounced peak in 2021 at 19.83%. Starting at 19.82% in 2018, the margin declined to 11.55% in 2020, rebounded in 2021, and then fell sharply to 8.56% in 2022. This indicates fluctuating profitability when adjustments for taxes are considered, with a notable contraction in margin during the last year observed.

Overall Analysis

The data highlights significant volatility in both reported and adjusted financial measures over the five-year span. The year 2020 stands out with exceptionally high reported net income and net profit margin, which may be attributed to non-recurring items or exceptional events. In contrast, adjusted figures suggest more moderate earnings with less extreme fluctuations. The consistent decline in both reported and adjusted profitability margins in 2022 signals potential challenges impacting the company’s earnings quality and operational efficiency in the most recent year. The divergence between reported and adjusted figures suggests the importance of considering tax adjustments to gain a clearer understanding of the company’s underlying financial performance.

The analysis of the annual reported and deferred income tax adjusted financial data reveals distinct patterns in the asset base and asset turnover ratios over the five-year period from 2018 to 2022.

Total Assets:

Reported total assets exhibited a consistent upward trajectory, increasing from approximately $2.05 billion in 2018 to nearly $5.95 billion by 2021, before plateauing in 2022 at around $5.95 billion. Adjusted total assets also followed an increasing trend but showed a notable divergence starting in 2020. The adjusted asset base rose from approximately $1.99 billion in 2018 to about $4.41 billion in 2021, then slightly decreased to approximately $4.38 billion in 2022. This suggests that adjustments related to deferred income tax and other factors had a moderating effect on the asset values reported in later years.

Total Asset Turnover:

Reported total asset turnover was steady at 0.96 in both 2018 and 2019, indicating stable efficiency in asset utilization. However, it experienced a sharp decline to 0.51 in 2020, followed by a partial recovery to 0.67 in 2021, and a slight decrease to 0.63 in 2022. This pattern points to a significant reduction in revenue generation relative to asset size during 2020, possibly due to adverse operational conditions or investments that had not yet translated into proportional revenue.

The adjusted total asset turnover ratio shows a similar trend but with consistently higher ratios compared to the reported figures. Starting at 0.99 in 2018 and 2019, it declined to 0.75 in 2020, then increased to 0.90 in 2021, before decreasing slightly to 0.85 in 2022. The higher adjusted turnover ratios suggest that removing the effect of deferred taxes and related adjustments provides a more favorable view of the company's asset efficiency.

Overall Insights:

The period 2018 to 2019 was characterized by robust and stable asset growth and asset turnover rates. The year 2020 marked a pronounced shift, with a large increase in assets accompanied by a substantial drop in asset turnover, reflecting potential challenges in effectively utilizing the enlarged asset base or market disruptions. The partial recovery in turnover ratios in 2021 and 2022 indicates improving operational efficiency or revenue growth relative to assets, although the turnover did not return to pre-2020 levels. The disparity between reported and adjusted figures underscores the importance of considering deferred tax effects and other adjustments for a clearer understanding of asset performance and efficiency.

Over the analyzed period, total assets reported showed a consistent and significant increase from 2,052,458 thousand US dollars in 2018 to 5,947,947 thousand US dollars in 2022. This upward trend reflects substantial asset growth, particularly notable between 2019 and 2021. When adjusted for deferred income tax effects, total assets also increased from 1,987,769 thousand US dollars in 2018 to 4,376,201 thousand US dollars in 2022, albeit with a less steep growth trajectory starting from 2020 compared to the reported figures, indicating the impact of tax-related adjustments on asset valuation.

Stockholders’ equity followed a similar growth pattern but with some divergence between reported and adjusted values. Reported equity expanded markedly from 1,252,891 thousand US dollars in 2018 to 3,601,358 thousand US dollars in 2022, with a pronounced jump in 2020. Adjusted equity, which accounts for deferred tax considerations, increased at a more moderate pace, rising from 1,188,668 thousand US dollars in 2018 to 2,059,478 thousand US dollars in 2022. The widening gap between reported and adjusted equity over time suggests growing deferred tax liabilities or timing differences affecting equity recognition.

Financial leverage ratios further illustrate changes in the company's capital structure. The reported leverage ratio initially increased from 1.64 in 2018 to 1.86 in 2019, then decreased notably to 1.49 in 2020 before rising again to 1.65 by 2022. In contrast, the adjusted financial leverage ratio demonstrated a more consistent upward trend, beginning at 1.67 in 2018 and steadily climbing to 2.12 in 2022. This contrast implies that while reported data suggests a period of deleveraging around 2020, adjusted figures indicate increased reliance on debt or liabilities relative to equity over the full period, possibly reflecting the influence of deferred tax adjustments on equity measurements.

Overall, the data reveals strong asset growth accompanied by rising financial leverage when adjusted for deferred taxes. The divergence between reported and adjusted equity underscores the significance of tax-related adjustments, which appear to have impacted equity values and leverage trends meaningfully. These patterns highlight the importance of considering deferred tax effects in evaluating the company’s financial position and capital structure developments over the specified timeframe.

Net Income Trends

The reported net income demonstrates an initial increase from 400,235 thousand US dollars in 2018 to a peak of 1,775,888 thousand US dollars in 2020, followed by a marked decline to 361,573 thousand US dollars by 2022. The adjusted net income similarly rises sharply from 389,849 thousand US dollars in 2018 to 285,397 thousand US dollars in 2020 but shows less volatility in the subsequent years, decreasing to 319,849 thousand US dollars in 2022. The adjusted figures display a smoother trend compared to the reported values, indicating the impact of adjustments on reported earnings.

Stockholders’ Equity Analysis

Reported stockholders’ equity exhibits steady growth from approximately 1,252,891 thousand US dollars in 2018 to a high of 3,623,714 thousand US dollars in 2021, before a slight reduction to 3,601,358 thousand US dollars in 2022. Adjusted stockholders’ equity, however, shows a more moderate increase, moving from 1,188,668 thousand US dollars in 2018 to 2,119,571 thousand US dollars in 2021 and then declining slightly to 2,059,478 thousand US dollars in 2022. The divergence between reported and adjusted values widens notably from 2019 onwards, reflecting possible reclassifications or adjustments related to tax or other accounting treatments.

Return on Equity (ROE) Dynamics

The reported ROE follows a fluctuating pattern, increasing from 31.94% in 2018 to a peak of 54.92% in 2020, then decreasing sharply to 10.04% in 2022. This volatility aligns with the large swings in reported net income relative to equity. Adjusted ROE shows less extreme variation, starting at 32.8% in 2018, dropping significantly to 16.62% in 2020, rebounding to 36.99% in 2021, and then declining again to 15.53% in 2022. The adjusted ROE values suggest that after factoring in income tax adjustments, profitability relative to equity is more stabilized but has experienced a downward trend in recent years.

Overall Observations

The data reveals that the years 2019 and 2020 were marked by significant increases in net income and equity, especially in reported terms; however, these gains were not sustained, with declines evident in 2021 and 2022. Adjusted metrics provide a more consistent and moderated reflection of the company’s financial performance, indicating the effect of income tax adjustments and possibly deferred items. The pronounced differences between reported and adjusted numbers highlight the importance of considering adjusted figures for assessing underlying profitability and equity trends without the distortions induced by tax-related reporting adjustments. This scenario suggests challenges in maintaining earnings growth and return on equity in the most recent years.

Reported and Adjusted Net Income Trends

The reported net income shows significant volatility over the analyzed periods. It grew steadily from $400,235 thousand in 2018 to a peak of $1,775,888 thousand in 2020, followed by a sharp decline to $772,020 thousand in 2021 and a further decrease to $361,573 thousand in 2022. The adjusted net income follows a somewhat similar pattern but with less extreme fluctuations, reaching a peak of $441,062 thousand in 2019, dipping to $285,397 thousand in 2020, then rising again to $783,994 thousand in 2021 before decreasing to $319,849 thousand in 2022.

Reported and Adjusted Total Assets Trends

Reported total assets increased significantly from approximately $2.05 billion in 2018 to nearly $5.95 billion by 2021 and remained almost steady into 2022. In contrast, adjusted total assets demonstrate a more moderate growth, rising from about $1.99 billion in 2018 to $4.41 billion in 2021, then slightly declining to $4.38 billion in 2022. The disparity between reported and adjusted assets grows particularly pronounced from 2020 onwards, reflecting adjustments that reduce the asset base compared to the reported figures.

Return on Assets (ROA) Analysis

Reported ROA exhibits a peak of 36.77% in 2020, highlighting exceptionally strong profitability relative to reported asset levels during that year. However, it declines sharply in subsequent years, falling to 12.99% in 2021 and further down to 6.08% in 2022. Adjusted ROA shows a less volatile pattern with a peak of 19.61% in 2018, fluctuating moderately to 17.78% in 2021 before decreasing to 7.31% in 2022. The divergence between reported and adjusted ROA is most notable in 2020 when reported ROA far exceeds its adjusted counterpart, likely driven by the elevated net income relative to the adjusted asset base.

Overall Observations

The data indicate that profitability, as measured by net income and ROA, experienced significant peaks and troughs, with the highest profitability seen in 2020 by reported metrics and in earlier years by adjusted metrics. The adjustment process consistently reduces both net income and total assets, yielding a more conservative profitability assessment. Asset growth under the reported basis is more pronounced than under the adjusted basis, suggesting that deferred tax adjustments or other factors materially impact the financial position. The decreasing trend in ROA in the most recent years, under both reported and adjusted measures, may signal challenges in maintaining profitability relative to asset size.