Marriott International Inc. (NASDAQ:MAR)

The analysis of the provided financial data reveals several notable trends in the company's performance over the five-year period from 2015 to 2019.

Net Operating Profit After Taxes (NOPAT)

The NOPAT experienced fluctuations, starting at $1,097 million in 2015, declining slightly to $1,039 million in 2016, followed by a significant increase to $1,463 million in 2017. The upward momentum continued strongly in 2018, reaching a peak of $2,260 million. However, in 2019, NOPAT decreased notably to $1,577 million, indicating some volatility in operating profitability.

Cost of Capital

The cost of capital remained relatively stable throughout the period, fluctuating marginally between 14.28% and 15.31%. The highest cost was observed in 2017 at 15.31%, while the lowest was 14.28% in 2015. This stability suggests consistent expectations regarding the cost of financing.

Invested Capital

Invested capital showed substantial variation. It surged dramatically from $758 million in 2015 to $16,537 million in 2016, representing a significant increase in capital commitment. Thereafter, it declined gradually each year to $14,229 million in 2017, $14,627 million in 2018, and $13,992 million in 2019, indicating a retraction or optimization of invested resources following the earlier expansion.

Economic Profit

Economic profit displayed notable volatility, starting at a positive $989 million in 2015 before turning negative to -$1,338 million in 2016. While there was some recovery in 2017, the economic profit remained negative at -$715 million, improved slightly to a positive $90 million in 2018, but then declined again to -$422 million in 2019. This pattern suggests challenges in generating returns above the cost of capital despite changes in operating profits and invested capital.

Overall, the company showed an increase in operating profit and invested capital in earlier years, but struggled to consistently generate economic profit above the cost of capital, particularly from 2016 onwards. The fluctuations in economic profit highlight a need to enhance capital efficiency and profitability relative to the cost of funding.

The financial data reflects the company's net income and net operating profit after taxes (NOPAT) over the five-year period from 2015 to 2019.

Net Income

Net income displayed fluctuations during the analyzed period. It began at 859 million US dollars in 2015, experienced a slight decrease to 780 million in 2016, then increased significantly to 1,372 million in 2017. The upward trend continued with a peak at 1,907 million in 2018 before declining to 1,273 million in 2019. This pattern suggests variability in profitability, with a notable peak in 2018 followed by a reduction in the subsequent year.

Net Operating Profit After Taxes (NOPAT)

The NOPAT figures followed a somewhat similar pattern, starting at 1,097 million US dollars in 2015 and slightly decreasing to 1,039 million in 2016. In 2017, NOPAT increased sharply to 1,463 million and continued its upward trajectory to reach the highest value of 2,260 million in 2018. However, in 2019, NOPAT saw a decrease to 1,577 million. The larger magnitude of changes in NOPAT compared to net income indicates that operating profitability experienced more pronounced fluctuations, with a strong peak in 2018.

Overall, the data reveals a pattern of growth in both net income and NOPAT leading up to 2018, followed by a decline in 2019. The significant increase in 2018 suggests a particularly strong operational and financial performance that year, which was not sustained in 2019. This trend may prompt further examination of underlying factors affecting profitability, including operating efficiency, market conditions, or extraordinary items impacting net income.

Provision for Income Taxes

The provision for income taxes exhibits significant fluctuation over the five-year period. It started at 396 million USD in 2015, increased slightly to 404 million USD in 2016, then surged sharply to 1,464 million USD in 2017. Following this peak, it decreased substantially to 438 million USD in 2018 and further to 326 million USD in 2019. This volatility suggests irregularities potentially related to changes in taxable income, tax strategies, or one-time tax events within the observed period.

Cash Operating Taxes

Cash operating taxes show an upward trend from 315 million USD in 2015 to a peak of 1,691 million USD in 2017. After this peak, cash taxes declined considerably to 626 million USD in 2018 and then decreased slightly to 577 million USD in 2019. The large increase in 2017 followed by a sharp reduction indicates a potential timing difference between accrued tax provisions and actual cash taxes paid, or a resolution of prior period tax liabilities.

Overall Insights

Both provision for income taxes and cash operating taxes demonstrate pronounced variability, especially in 2017, where both metrics reached their highest values within the period. The 2017 spike may reflect extraordinary tax circumstances, such as adjustments for deferred tax liabilities, changes in tax legislation, or significant shifts in pre-tax income figures. The subsequent decreases in 2018 and 2019 suggest normalization or rectification following the exceptional activity in 2017.

Total Reported Debt & Leases

The total reported debt and leases shows a consistent upward trend throughout the period from 2015 to 2019. The amount more than doubled from approximately $4.9 billion in 2015 to roughly $12 billion in 2019. This indicates a significant increase in the company’s leverage and financial obligations over these years.

Shareholders’ Equity (Deficit)

Shareholders’ equity exhibits notable volatility over the period. It started with a deficit of about $3.6 billion in 2015, turned positive to reach a peak of approximately $5.4 billion in 2016, and then gradually declined in subsequent years to a much smaller positive value of around $0.7 billion by the end of 2019. The sharp swing from deficit to surplus and the subsequent erosion suggests fluctuations in net assets, possibly driven by operational performance, capital changes, or valuation adjustments.

Invested Capital

Invested capital experienced substantial growth from 2015 to 2016, jumping from $758 million to over $16.5 billion, reflecting a major change in asset base or capital structure. After this significant increase, the invested capital decreases slightly over the following years, stabilizing near $14 billion by 2019. This pattern indicates a period of considerable investment or acquisition activity followed by a phase of relative stabilization or modest divestment.

Overall Insights

The data suggests an overall increase in leverage with rising debt levels and fluctuating equity, which may point to increased financial risk or strategic financing decisions. The large increase in invested capital followed by a moderate decline could reflect business expansion efforts followed by optimization or consolidation. The reduction in shareholders’ equity after peaking might warrant further investigation into profitability, asset impairments, or dividend policies affecting retained earnings.

Economic Profit

The economic profit demonstrated significant volatility over the period analyzed. It started at a positive value of 989 million USD in 2015, then dropped sharply to negative 1,338 million USD in 2016. Although there was a partial recovery in 2018 with a positive economic profit of 90 million USD, the figure was negative in the following years, ending at negative 422 million USD in 2019. This trend indicates fluctuating profitability with overall challenges in sustaining positive economic profit after 2015.

Invested Capital

There was a considerable increase in invested capital from 758 million USD in 2015 to a peak of 16,537 million USD in 2016. This high level of invested capital was slightly reduced in subsequent years but remained substantial, with values around 14,000 to 15,000 million USD from 2017 to 2019. This pattern suggests a significant expansion or acquisition event in 2016, followed by a stabilization phase with marginal decreases.

Economic Spread Ratio

The economic spread ratio was markedly positive at 130.52% in 2015, indicating a strong return on invested capital over cost. However, it turned negative in 2016 and remained negative in most subsequent years, with values of -8.09%, -5.03%, a brief positive upturn to 0.61% in 2018, and again negative at -3.02% in 2019. The ratio's decline corresponds with the economic profit trend, reflecting reduced efficiency in generating returns over capital costs after 2015.

The financial data reveals fluctuations in Marriott International Inc.'s economic performance and revenue over the five-year period ending December 31, 2019. A detailed analysis follows:

Economic Profit

The economic profit shows significant volatility across the period. In 2015, a positive economic profit of $989 million was recorded, indicating value creation. However, this was followed by a sharp decline into negative territory in 2016 and 2017, with economic losses of $1,338 million and $715 million, respectively. A moderate recovery occurred in 2018, with economic profit turning positive again at $90 million, before declining once more in 2019 to a loss of $422 million. This pattern suggests challenges in sustaining profitability beyond 2015, with intermittent improvement in 2018 that was not maintained.

Adjusted Revenues

Adjusted revenues increased consistently from 2015 to 2017, rising from $14.486 billion to $22.894 billion. However, revenues declined slightly in the next two years, dropping to approximately $20.9 billion in 2018 and marginally increasing to $21.1 billion in 2019. The overall trend indicates growth in the earlier years followed by stabilization or slight decline in revenue in the later years of the period under review.

Economic Profit Margin

The economic profit margin aligns with the trends in economic profit, starting with a positive 6.83% in 2015, then turning sharply negative over the next two years at -7.84% in 2016 and -3.12% in 2017. The margin improved significantly in 2018 to a small positive 0.43%, before declining again to -2% in 2019. This margin behavior reflects the company’s struggle to maintain profitable returns relative to its invested capital, with the margin mirroring the fluctuations observed in economic profit.

In summary, the company experienced robust growth in revenues from 2015 through 2017, yet profitability faced considerable pressure, as evidenced by negative economic profit and profit margins in most years except 2015 and 2018. The fluctuation in economic profit and margin suggests operational or cost management challenges affecting the firm’s ability to convert revenue growth into sustainable economic value.