Expand Energy Corp. (NASDAQ:EXE)

The financial data reveals several notable trends regarding key performance indicators over the four-year period analyzed.

Net operating profit after taxes (NOPAT)

The NOPAT has exhibited a declining trend throughout the period. Starting at a substantial level of 6,263 million US dollars in 2021, it fell sharply to 3,737 million in 2022. This downward trajectory continued with a further reduction to 2,933 million in 2023 and culminated in a negative figure of -723 million in 2024. The decline indicates a significant deterioration in operating profitability, with the company moving from strong profits to an operating loss by the final year.

Invested capital

Invested capital has consistently increased each year, rising from 7,990 million US dollars in 2021 to 10,988 million in 2022, then to 11,924 million in 2023, and experiencing a substantial jump to 22,822 million in 2024. This indicates a marked increase in the level of capital deployed in the business, more than doubling over the four-year span. The sharp increase in 2024 suggests substantial investments or capital expenditures were made in that year.

Return on invested capital (ROIC)

The ROIC shows a declining rate of return on the invested capital over the years. It started at a very strong 78.38% in 2021, decreased significantly to 34.01% in 2022, then further dropped to 24.59% in 2023. By 2024, the ROIC turned negative at -3.17%, reflecting not only the impaired profitability but also the impact of the increased invested capital that did not generate positive returns. This negative ROIC implies that the company destroyed value in 2024.

Overall, the data points to a challenging financial environment with substantial profit erosion and diminishing efficiency in capital deployment. Despite growing the invested capital base, the company was unable to maintain profitability levels, resulting in negative returns by the end of the period under review.

Operating Profit Margin (OPM)

The operating profit margin exhibits significant volatility over the analyzed years. Beginning with a high margin of 86.02% in 2021, it sharply declined to 27.04% in 2022, then recovered to 53.35% in 2023, before dropping to a negative margin of -16.42% in 2024. This fluctuation indicates instability in operational profitability, culminating in an operational loss in the final year.

Turnover of Capital (TO)

The turnover of capital shows a downward trend overall. It increased from 0.91 in 2021 to a peak of 1.29 in 2022, implying improved efficiency in capital use during that period. Subsequently, it decreased considerably to 0.51 in 2023 and further to 0.19 in 2024, suggesting a reduction in asset efficiency or utilization over the last two years.

Effective Cash Tax Rate (CTR)

The effective cash tax rate, expressed as 1 – CTR, remains consistently high and close to 100% throughout the period, with minor fluctuations. It began at 99.71% in 2021, slightly decreased to 97.85% in 2022, then to 90.91% in 2023, before returning to a full 100% in 2024. This implies the company has been consistently paying close to its full statutory tax obligations, with minimal variance.

Return on Invested Capital (ROIC)

The return on invested capital reveals a steep decline, indicating worsening profitability concerning invested capital. Starting at 78.38% in 2021, it fell dramatically to 34.01% in 2022, continued declining to 24.59% in 2023, and turned negative, at -3.17%, in 2024. This negative return in the final year signals that the capital invested is not generating profits, reflecting potential operational difficulties or inefficiencies.

Net Operating Profit Before Taxes (NOPBT)

The net operating profit before taxes demonstrated a significant decline over the four-year period. Starting from a robust figure of 6280 million USD in 2021, there was a sharp decrease to 3819 million USD in 2022, followed by a further decline to 3226 million USD in 2023. In 2024, the company reported a negative NOPBT of -699 million USD, indicating an operating loss.

Revenues

Revenues exhibited considerable volatility during the observed timeline. There was a substantial increase from 7301 million USD in 2021 to 14123 million USD in 2022, nearly doubling the revenue. However, this was followed by a pronounced drop to 6047 million USD in 2023, and a continued decrease to 4259 million USD in 2024. The revenue trajectory suggests challenges in maintaining sales levels after the peak in 2022.

Operating Profit Margin (OPM)

The operating profit margin reflected a downward trend consistent with the profit and revenue patterns. The margin dropped from a very high 86.02% in 2021 to 27.04% in 2022, indicating a considerable reduction in operational efficiency or increased costs relative to revenue. In 2023, the margin recovered somewhat to 53.35%, but this improvement was not sustained, as it fell sharply to -16.42% in 2024, signaling an operating loss relative to revenue.

Overall Financial Performance Trends

The data highlight a period of instability and declining profitability. Despite a peak in revenue in 2022, profit margins and net operating profit have eroded significantly, culminating in an operating loss in 2024. These trends may reflect operational challenges, shifting market conditions, or increased expense burdens. The significant reduction in revenues following the 2022 peak and corresponding margin deterioration are notable concerns for the company’s financial health.

The analysis of the annual financial data reveals distinct fluctuations in the company's financial performance over the four-year period.

Revenues

Revenues exhibited substantial volatility. There was a significant increase from 7,301 million USD in 2021 to 14,123 million USD in 2022, nearly doubling in size. However, this upward trend reversed sharply in the subsequent years, with revenues declining to 6,047 million USD in 2023 and further decreasing to 4,259 million USD in 2024. This indicates considerable instability in revenue generation following the peak in 2022.

Invested Capital

Invested capital showed a persistent increase throughout the period. Starting at 7,990 million USD in 2021, the figure rose to 10,988 million USD in 2022 and continued to grow to 11,924 million USD in 2023. This growth accelerated markedly in 2024, reaching 22,822 million USD. The data reflects an ongoing and accelerating commitment of resources over time.

Turnover of Capital (TO)

The turnover of capital, a ratio indicating efficiency in using invested capital to generate revenues, initially improved from 0.91 in 2021 to 1.29 in 2022, coinciding with strong revenue growth. However, this ratio deteriorated sharply in the following years, dropping to 0.51 in 2023 and further plummeting to 0.19 in 2024. This decline suggests a decreasing efficiency in utilizing invested capital, despite the rising capital base.

Overall, the data indicates that while the company increased its invested capital significantly over the analyzed period, especially in 2024, this was not matched by proportional revenue growth. In fact, revenues fell dramatically after peaking in 2022, leading to a reduced turnover of capital and highlighting a decline in capital efficiency. The contrasting trends between the rising invested capital and declining revenues raise concerns about asset utilization and operational effectiveness in the recent years.

The financial data indicates notable fluctuations in several key metrics over the analyzed periods.

Cash Operating Taxes

The amount of cash paid for operating taxes experienced significant volatility. Starting from US$18 million in 2021, it saw a sharp increase to US$82 million in 2022, followed by a substantial surge to US$293 million in 2023. However, there was a steep decline in 2024, with cash operating taxes dropping to US$24 million.

Net Operating Profit Before Taxes (NOPBT)

There was a marked downward trend in net operating profit before taxes during the period. The NOPBT decreased from a high of US$6,280 million in 2021 to US$3,819 million in 2022, continuing downward to US$3,226 million in 2023. The trend culminated in a negative figure of US$699 million in 2024, reflecting an operating loss before taxes in the latest period.

Effective Cash Tax Rate (CTR)

The effective cash tax rate showed a consistent upward trajectory from 2021 through 2023. The CTR rose from a very low 0.29% in 2021 to 2.15% in 2022, and then sharply increased to 9.09% in 2023. Data for 2024 is not available, which limits the ability to assess current tax efficiency or cash tax burden relative to operating profits for the most recent year.

Overall, the data reveals a period of expanding tax payments through 2023 in conjunction with declining profitability, which turned into losses by 2024. The increasing effective cash tax rate alongside diminishing operating profits could signify worsening operational efficiency or changes in tax policies affecting cash taxes paid. The substantial reduction in cash operating taxes in 2024, despite a negative NOPBT, may reflect either tax relief measures or adjustments to taxable income. The presence of missing tax rate data for 2024 limits a complete assessment of tax-related performance in the final year.