Expand Energy Corp. (NASDAQ:EXE)

The financial data reveals notable trends in key performance indicators over the four-year period ending December 31, 2024. A detailed analysis of these trends is presented below.

Net Operating Profit After Taxes (NOPAT)

The NOPAT shows a significant declining trend from US$6,263 million in 2021 to a negative figure of US$723 million in 2024. The most substantial drop occurs between 2021 and 2022, falling to US$3,737 million, followed by continuous decreases in the subsequent years. This decline indicates deterioration in the company’s core profitability and operational efficiency over the period.

Cost of Capital

The cost of capital experienced a slight increase from 8.77% in 2021 to 9.09% in 2023, before decreasing marginally to 8.81% in 2024. This moderate fluctuation suggests minor changes in the risk profile or market conditions affecting the company's capital costs, remaining within a relatively narrow band during the period.

Invested Capital

Invested capital increased markedly from US$7,990 million in 2021 to US$22,822 million in 2024. This substantial growth, especially between 2023 and 2024 where the capital nearly doubled, indicates significant investment and expansion activities, possibly reflecting acquisition of assets or considerable capital expenditure, which may have implications for future profitability and risk.

Economic Profit

Economic profit declined sharply from US$5,562 million in 2021 to a negative US$2,733 million in 2024. Despite positive economic profit in the first three years, the consistent decrease mirrors the downward trend in NOPAT and is indicative of the company generating returns below its cost of capital in the final year. This negative economic profit suggests value destruction and challenges in covering the capital charge.

In summary, the company demonstrates a contraction in profitability with both NOPAT and economic profit declining substantially over the period, culminating in negative values in 2024. The slight variation in the cost of capital contrasts with a sharp increase in invested capital, suggesting that larger investments have not yet translated into improved financial returns. Overall, the trends indicate operational and financial pressures contributing to diminished value creation by the end of the analyzed period.

The financial data reveals a downward trend in the profitability indicators over the four-year period.

Net Income (Loss)

The net income shows a consistent decline from US$ 6,328 million at the end of 2021 to US$ -714 million by the end of 2024. This represents a significant deterioration in profitability, moving from a strong positive net income to a negative result, indicating losses in the latest period.

Net Operating Profit After Taxes (NOPAT)

Similarly, NOPAT also declines steadily from US$ 6,263 million in 2021 to US$ -723 million in 2024. The trend mirrors net income, demonstrating a substantial decrease in operational profitability after accounting for taxes. The transition into negative territory further highlights operational difficulties by the end of the period.

Overall, both key profit metrics exhibit a marked deterioration, signaling challenges in maintaining profitability and operational effectiveness over the time span analyzed. The consistent yearly declines suggest possible adverse factors influencing earnings and operations, culminating in losses by the fourth year.

Income Tax Expense (Benefit)

The income tax expense shows significant volatility over the analyzed periods. Initially, there is a benefit recorded in 2021 with a negative value of -106 million USD, which sharply increases in magnitude to -1285 million USD in 2022, indicating a substantial tax benefit or credit during that year. However, this trend reverses in 2023, where the figure shifts to a positive tax expense of 698 million USD, suggesting a considerable tax liability incurred that year. In 2024, the amount again reverses to a tax benefit of -127 million USD, though less pronounced than in 2022. This pattern reflects substantial fluctuations in taxable income, tax adjustments, or changes in tax policy affecting the company’s tax position annually.

Cash Operating Taxes

The cash operating taxes demonstrate a generally rising trend from 2021 to 2023, starting at 18 million USD in 2021 and increasing to 82 million USD in 2022, then reaching a peak at 293 million USD in 2023. This steady increase may indicate growing profitability or changes in tax payments related to operating activities. However, in 2024, there is a sharp decline to 24 million USD, which could reflect a reduction in taxable income, tax credits applied, or operational changes affecting tax payments. Overall, the cash tax payments show a pattern of growth followed by a significant drop.

The financial data for the four-year period reveals notable fluctuations and significant growth in the company's capital structure components.

Total Reported Debt & Leases

This item shows considerable variability. Initially, debt increased substantially from 2,316 million USD at the end of 2021 to 3,212 million USD in 2022. Subsequently, it decreased to 2,127 million USD in 2023 before surging dramatically to 5,825 million USD by the end of 2024. The sharp rise in 2024 represents a notable increase, more than doubling the 2023 figure, which may indicate aggressive financing or capital expenditure efforts during that year.

Stockholders’ Equity

Equity displays a consistent upward trajectory across the four years. Starting at 5,671 million USD in 2021, it rose to 9,124 million USD in 2022, further to 10,729 million USD in 2023, and reached 17,565 million USD in 2024. This steady increase suggests ongoing profitability, retained earnings growth, or equity financing activities contributing to a strengthening balance sheet position.

Invested Capital

Invested capital also shows an upward trend, increasing from 7,990 million USD in 2021 to 10,988 million USD in 2022, then to 11,924 million USD in 2023, and substantially rising to 22,822 million USD in 2024. The steep increase in 2024 aligns with the spike in total debt and equity, indicating expanded asset investment or acquisitions funded by a combination of debt and equity.

Overall, the company has significantly expanded its financial base over the period, with substantial increases in both equity and debt, particularly evident in 2024. The growth in invested capital aligns with these financing changes, suggesting intensified investment activity. The pattern of debt fluctuations coupled with steady equity growth implies a strategic approach to capital structure management, balancing debt leverage with equity enhancement.

Economic Profit

The economic profit shows a declining trend over the four-year period. It decreased significantly from 5,562 million US dollars at the end of 2021 to 2,757 million in 2022, and further declined to 1,849 million in 2023. By the end of 2024, economic profit turned negative, reaching -2,733 million US dollars, indicating the company is operating at an economic loss in that year.

Invested Capital

The invested capital demonstrates a consistent increase throughout the period. Starting at 7,990 million US dollars in 2021, it rose to 10,988 million in 2022 and then to 11,924 million in 2023. A marked increase is observed in 2024, with invested capital reaching 22,822 million US dollars, nearly doubling compared to the previous year.

Economic Spread Ratio

The economic spread ratio exhibits a declining pattern. Initially, it stood at a strong 69.61% in 2021, then sharply dropped to 25.09% in 2022, and further declined to 15.5% in 2023. By 2024, this ratio turned negative, reaching -11.98%, which aligns with the negative economic profit and suggests that returns on invested capital decreased below the cost of capital.

Summary

The data indicates that while the company has substantially increased its invested capital, its economic profitability has deteriorated over the same period. The transition from high positive economic profit and spread ratio in 2021 to negative values by 2024 suggests diminishing efficiency in capital deployment and potential challenges in generating returns above the capital cost. The significant capital investment in 2024 did not translate into economic gains, highlighting a critical area for strategic review and potential operational reassessment.

Economic Profit

The economic profit showed a steep decline over the observed period. Starting from a high value of 5,562 million US dollars at the end of 2021, it dropped by roughly 50% to 2,757 million in 2022, then further decreased to 1,849 million in 2023. By the end of 2024, the economic profit turned negative, recording a loss of 2,733 million dollars. This trend indicates a deterioration in the company's profitability and value generation over these years.

Revenues

Revenues experienced significant volatility throughout the period. Initially, revenues were 7,301 million US dollars in 2021, which nearly doubled to 14,123 million in 2022. However, this sharp increase was not sustained as revenues dropped substantially to 6,047 million in 2023, and further declined to 4,259 million by the end of 2024. This pattern suggests instability in the company’s sales or market demand.

Economic Profit Margin

The economic profit margin followed a similarly unstable path. It began at a very strong 76.17% in 2021, reflective of efficient profit generation relative to revenue. In 2022, the margin fell dramatically to 19.52%, then somewhat recovered to 30.57% in 2023, but fell sharply to a negative 64.18% by 2024. The negative margin in the final year reinforces the conclusion of unprofitability, indicating the company was generating a loss on its economic activities during that period.

Summary Insights

Overall, the data reveals a period of significant financial instability and decline. Following a peak in both economic profit and margin in 2021, the company saw profits and margins erode rapidly despite fluctuations in revenue. The large drop in revenues after 2022 compounded the decline in economic profit, culminating in a financial loss by 2024. This downward trajectory indicates challenges in maintaining profitability and suggests potential operational or market issues affecting performance.