Expedia Group Inc. (NASDAQ:EXPE)

The financial data presents the annual cash flow activities of the company over a five-year period from 2017 to 2021. Analysis of the net cash provided by (used in) operating activities and free cash flow to the firm highlights notable fluctuations and trends that may reflect broader business and economic conditions impacting the company.

Net Cash Provided by (Used in) Operating Activities

From 2017 through 2019, there is a consistent upward trend in net cash generated from operating activities, increasing from $1,799 million in 2017 to $2,767 million in 2019. This indicates improving operational efficiency and cash generation over these three years.

In 2020, there is a significant and sharp reversal, with the figure turning negative to -$3,834 million, marking a substantial decline. This suggests the company faced severe operational challenges, likely due to external factors adversely affecting cash inflows.

However, the data for 2021 shows a strong recovery, with net cash provided returning to a positive value of $3,748 million, surpassing pre-2020 levels. This rebound points to a marked improvement in operational cash flows and likely reflects a recovery phase.

Free Cash Flow to the Firm (FCFF)

Free cash flow to the firm follows a similar directional pattern as operating cash flow. It increased modestly from $1,234 million in 2017 to $1,723 million in 2019, consistent with enhanced cash generation capabilities.

In 2020, FCFF experienced a dramatic decline to -$4,360 million, even more pronounced than the operating cash flow drop. This indicates not only a reduction in cash from operations but also possibly increased capital expenditures or other cash uses contributing to the free cash flow deficit.

By 2021, FCFF rebounded to $3,345 million, demonstrating robust recovery of the company’s ability to generate free cash after investments, surpassing the levels prior to the decline in 2020.

Overall, the data depicts a scenario of stable and improving cash generation from 2017 to 2019, followed by a sharp decline in 2020, likely driven by extraordinary circumstances. The subsequent strong recovery in 2021 indicates the company successfully navigated the challenging period and restored its cash flow generating capabilities. The patterns suggest resilience in operations and a capacity to return to positive cash flow after a significant downturn.

The analysis of the provided annual financial data reveals several key trends and fluctuations in the company's financial metrics over the period from 2017 to 2021.

Effective Income Tax Rate (EITR) (%)

The effective income tax rate exhibited moderate variability throughout the observed years. Starting at 10.89% in 2017, it increased notably to 17.94% in 2018 and further to 26.19% in 2019. This was followed by a significant decrease to 13.42% in 2020, before rising again to 21% in 2021. The fluctuations suggest varying tax impacts possibly influenced by changes in taxable income, tax regulations, or one-time adjustments affecting the overall effective tax burden annually.

Cash Paid for Interest, Net of Tax (US$ in millions)

Cash paid for interest, net of tax, demonstrated variability over the period with an initial increase from $145 million in 2017 to $161 million in 2018. It then declined substantially to $116 million in 2019, followed by a sharp rise to $271 million in 2020, remaining relatively stable at $270 million in 2021. This pattern indicates periods of changing leverage or refinancing activities, affecting interest expense levels. The spike in 2020 and 2021 may be related to increased borrowing or higher interest rates impacting financing costs during those years.

Enterprise Value (EV)

The enterprise value displayed an overall increasing trend from 2017 to 2021. Starting at $18,262 million in 2017, it rose to $21,786 million in 2018, then experienced a slight decline to $19,078 million in 2019. Following that, there was a significant increase to $27,651 million in 2020, culminating in a further rise to $33,864 million by the end of 2021. This pattern suggests strong growth in the overall valuation of the company, particularly notable after 2019.

Free Cash Flow to the Firm (FCFF)

Free cash flow to the firm showed volatility over the years. Initially, it was relatively stable, with $1,234 million in 2017 and a slight increase to $1,258 million in 2018. It then increased significantly to $1,723 million in 2019. However, a sharp reversal occurred in 2020, when FCFF plummeted to a negative $4,360 million, indicating a substantial outflow or operational challenge during this period. Recovery was apparent in 2021, with FCFF rebounding strongly to $3,345 million, suggesting a restoration of cash-generating capabilities.

EV/FCFF Ratio

The ratio of enterprise value to free cash flow to the firm reflects valuation relative to operational cash flow. This ratio increased from 14.8 in 2017 to a peak of 17.32 in 2018, indicating that EV grew faster than FCFF during that period. It then declined to 11.07 in 2019, implying improved cash flow relative to enterprise value. The ratio was not available for 2020, likely due to the negative FCFF making the calculation non-meaningful. In 2021, as FCFF recovered, the ratio settled at 10.12, the lowest in the observed periods, which could indicate a potentially more attractive valuation relative to cash flow generation at that time.

Summary

Overall, the data reveals a company experiencing growth in enterprise value over five years, with cash flow generation showing signs of stress particularly in 2020, possibly due to extraordinary circumstances impacting operations. The recovery in 2021 indicates resilience and improved financial health. The declining EV/FCFF ratio towards the end suggests a potentially more efficient or undervalued position relative to free cash flow, assuming other conditions remain stable.