KLA Corp. (NASDAQ:KLAC)

The analysis of the financial indicators over the six-year period reveals several notable trends and insights concerning the company's operational efficiency and capital utilization.

Net Operating Profit After Taxes (NOPAT)

This metric has shown significant growth from 1,310,622 thousand USD in 2020 to 3,852,307 thousand USD by 2025. The increase is marked especially between 2020 and 2022, with a steady rise thereafter. This suggests improving operational profitability and effective management of tax impacts over time.

Cost of Capital

There is a gradual increase in the cost of capital, moving from 16.02% in 2020 to 17.06% in 2025. This upward trend may indicate rising risk perceptions or increased costs of financing, which could put pressure on net returns in future periods.

Invested Capital

Invested capital has consistently increased from 6,592,642 thousand USD in 2020 to 9,244,891 thousand USD in 2025. The consistent upward trend reflects ongoing investments or capital expenditures in the company, signifying expansion or resource augmentation to support operations and growth.

Economic Profit

Economic profit, which represents residual income after covering the cost of capital, shows a strong upward trend overall, rising from 254,193 thousand USD in 2020 to 2,275,503 thousand USD in 2025. The most notable improvement appears between 2020 and 2022, with a peak in 2022, followed by some fluctuation but maintained at high levels through 2025. This indicates the company is generating value over and above its cost of capital, evidencing operational and financial efficiency.

In summary, the company demonstrates robust growth in operational profit and economic profit despite a slightly increasing cost of capital. The expanding invested capital base underlines continuous investment efforts aligned with growth objectives. The ability to maintain strong economic profit suggests effective capital allocation and ongoing value creation for shareholders.

The financial performance over the reviewed periods demonstrates notable fluctuations and growth patterns in key profitability metrics.

Net Income Attributable to KLA

The net income shows a strong upward trajectory from 1,216,785 thousand US dollars in mid-2020 to 3,381,277 thousand US dollars by mid-2023, indicating a substantial increase in profitability over the initial years. However, there is a decline in mid-2024 to 2,761,896 thousand US dollars, suggesting a temporary setback or increased expenses during this period. This is followed by a significant recovery and peak at 4,061,643 thousand US dollars in mid-2025, marking the highest profit level recorded in these periods.

Net Operating Profit After Taxes (NOPAT)

NOPAT trends closely follow the net income pattern, starting at 1,310,622 thousand US dollars in mid-2020 and rising steadily to 3,464,285 thousand US dollars by mid-2023. There is a minor decline to 3,284,868 thousand US dollars in mid-2024, aligning with the net income dip and possibly indicating operational challenges or market factors impacting earnings. By mid-2025, NOPAT recovers to 3,852,307 thousand US dollars, reflecting improved operational efficiency and profitability.

Overall, the data indicates robust growth in profitability over the five-year span with a minor interruption around mid-2024. The subsequent recovery in the latest period suggests resilience and effectiveness in addressing prior challenges.

The financial data reveals notable fluctuations in the taxation-related expenses over the analyzed periods.

Provision for Income Taxes

This item exhibits a generally increasing trend with some volatility. Starting from approximately 101.7 million USD in mid-2020, the provision saw a significant rise to 283.1 million USD by mid-2021. However, it then decreased to 167.2 million USD in mid-2022 before sharply increasing again to 401.8 million USD in mid-2023. The upward momentum continued, reaching 428.1 million USD in mid-2024 and further increasing to 582.8 million USD by mid-2025. Overall, there is a clear upward trajectory with a notable dip in the middle of the period.

Cash Operating Taxes

Cash operating taxes show a consistent and marked upward trend over the time horizon. Beginning at 224.5 million USD in mid-2020, the figure rose steadily to 360.2 million USD in mid-2021 and further climbed to 553.4 million USD by mid-2022. This increase continued substantially, reaching 805.2 million USD in mid-2023. A temporary decrease occurred in mid-2024 to 600.4 million USD, after which the amount surged again to a peak of 854.9 million USD by mid-2025. Despite the single-year decline in mid-2024, the overall pattern is one of significant growth in cash operating tax payments.

In summary, both provision for income taxes and cash operating taxes show increasing trends over the five-year period, indicative of either growth in taxable income, changes in tax rates, or adjustments in tax accounting. The volatility in the provision for income taxes suggests variability in anticipated tax expenses, while the cash operating taxes generally increase, reflecting the actual cash outflows related to tax payments with a minor temporary decline. These trends highlight growing fiscal obligations and possibly evolving tax strategies or financial conditions during the period analyzed.

The annual financial data reveals several notable trends in the company's capital structure from 2020 to the projected figures in 2025.

Total Reported Debt & Leases

The total reported debt and leases showed some volatility over the period analyzed. Initially, the debt level was approximately $3.57 billion in mid-2020, slightly decreasing to around $3.55 billion in mid-2021. Subsequently, there was a marked increase, with debt nearly doubling to about $6.77 billion by mid-2022. This peak was followed by a decline to approximately $6.06 billion in mid-2023. The debt rose again to an estimated $6.82 billion in mid-2024 before decreasing to roughly $6.09 billion by mid-2025. Overall, the company's debt levels experienced significant fluctuations, suggesting adjustments in financing strategy or capital needs during this period.

Total KLA Stockholders’ Equity

Stockholders’ equity grew from approximately $2.67 billion in mid-2020 to a peak near $3.38 billion in mid-2021. However, it then sharply declined to about $1.40 billion by mid-2022. This sudden drop contrasts with a recovery trend starting in mid-2023, when equity climbed back to nearly $2.92 billion, rising further to approximately $3.37 billion in mid-2024 and ultimately reaching an estimated $4.69 billion in mid-2025. This pattern indicates a strong rebound in equity after a significant contraction, possibly due to operational results, capital injections, or asset revaluations during this timeframe.

Invested Capital

Invested capital shows a consistent upward trend throughout the period examined. Starting at about $6.59 billion in mid-2020, it increased steadily each year to reach an estimated $9.24 billion by mid-2025. This gradual rise suggests ongoing investments in the business's productive assets, reflecting growth initiatives or expansion strategies employed by the company.

In summary, while invested capital demonstrated steady growth, the capital structure evidenced by debt and equity components experienced significant variability. The fluctuations in debt and equity, particularly the sharp decline and subsequent recovery in stockholders’ equity, signal dynamic financial management possibly responding to external conditions or strategic shifts. The overall increase in invested capital alongside these changes implies that the company is actively managing its financial resources to support its operations and growth outlook over the medium term.

The financial data reveals notable trends in economic profit, invested capital, and the economic spread ratio over a five-year period.

Economic Profit

The economic profit exhibits significant growth from 2020 to 2022, increasing from approximately $254 million to over $2.1 billion. However, a slight decline occurs in 2023 and continues in 2024, falling to approximately $1.79 billion. In 2025, the economic profit rebounds to around $2.28 billion. This pattern indicates periods of strong economic gains followed by a temporary dip and a subsequent recovery.

Invested Capital

Invested capital shows a steady upward trend throughout the period. Beginning at about $6.59 billion in 2020, it gradually increases each year, reaching approximately $9.24 billion by 2025. This continuous growth suggests ongoing investment in the company's assets and operations.

Economic Spread Ratio

The economic spread ratio, which can be interpreted as a measure of profitability relative to invested capital, sees a marked rise from 3.86% in 2020 to a peak of 26.34% in 2022. After this peak, the ratio decreases in 2023 to 24.06% and further to 20.19% in 2024. In 2025, the ratio improves again to 24.61%. This fluctuation parallels the economic profit trend and indicates changes in the efficiency or profitability of the invested capital over time.

Overall, the data suggests that while the company has steadily increased its capital investment, the returns on this investment, as reflected by economic profit and economic spread ratio, have experienced variability. The recovery in the latest year implies potential improvements in operational performance or market conditions, following a period of reduced profitability.

Economic Profit

The economic profit demonstrates significant growth from 2020 to 2022, increasing from approximately 254 million to over 2.1 billion USD. This marks a substantial improvement in profitability within the first three years. A slight decrease appears in 2023 and 2024, with values dropping to about 2.05 billion and 1.79 billion USD respectively. However, by 2025, economic profit rebounds strongly to approximately 2.28 billion USD, indicating a recovery and resumed growth trajectory.

Adjusted Revenues

Adjusted revenues show a consistent upward trend over the entire period. Starting from around 5.9 billion USD in 2020, revenues increase steadily each year, reaching just over 12 billion USD by 2025. This progression reflects expanding business operations or improved sales performance, despite a slight dip in revenues observed in 2024 compared to 2023.

Economic Profit Margin

The economic profit margin, expressed as a percentage, follows a similar growth pattern to economic profit in the initial years. It rises sharply from 4.32% in 2020 to a peak of 22.27% in 2022, reflecting improved profitability relative to revenues. Subsequently, the margin experiences a decline to 19.11% and then 17.32% in 2023 and 2024 respectively, indicating some margin compression. In 2025, it recovers slightly to 18.83%, suggesting a partial restoration of profit efficiency.

Overall Trends and Insights

The data indicates robust financial growth characterized by increasing adjusted revenues and significant gains in economic profit and its margin through the initial years. While a modest downturn in profitability and margin occurs during 2023 and 2024, the upward movement in 2025 reveals resilience and an ability to rebound. The slight revenue decrease in 2024 does not correspond proportionally with economic profit, suggesting increased operational challenges or cost pressures during that period. The overall financial performance remains strong, highlighted by high profitability margins and sustained revenue growth over the five-year horizon.