Marriott International Inc. (NASDAQ:MAR)

The financial data reveals several important trends for the analyzed periods from 2015 to 2019. A close examination of net operating profit after taxes (NOPAT), cost of capital, invested capital, and economic profit offers insights into the company’s financial performance and efficiency over time.

Net operating profit after taxes (NOPAT)

NOPAT experienced fluctuations throughout the period under review. Starting at 1,097 million US dollars in 2015, it decreased slightly in 2016 to 1,039 million. It then increased significantly in 2017 to 1,463 million and peaked in 2018 at 2,260 million. However, in 2019, NOPAT declined sharply to 1,577 million. This pattern suggests a peak operational efficiency or profitable environment in 2018, with a notable contraction in 2019.

Cost of capital

The cost of capital remained relatively stable, fluctuating within a narrow band between approximately 14% and 15.24%. It was slightly higher in 2017 at 15.24% but generally hovered around 14% during other years. This consistent cost indicates steady expectations of return by investors or lenders and stable market conditions related to financial risks and capital costs.

Invested capital

Invested capital shows an unusual and significant jump from 758 million US dollars in 2015 to 16,537 million in 2016. After this dramatic increase, the amount gradually decreased but remained at elevated levels compared to 2015, with 14,229 million in 2017, 14,627 million in 2018, and 13,992 million in 2019. This surge likely reflects a major investment or acquisition occurring between 2015 and 2016, which then stabilized at a higher capital base in subsequent years.

Economic profit

Economic profit experienced a significant decline after 2015. It was robust in 2015 at 990 million, but sharply reversed to a negative value of -1,328 million in 2016. Although it improved slightly in 2017, remaining negative at -706 million, the margin narrowed further in 2018 to a small positive economic profit of 99 million. Finally, in 2019, economic profit again turned negative at -414 million. This trend indicates challenges in generating returns above the cost of capital, especially following the large increase in invested capital in 2016.

In summary, the company’s profitability as measured by NOPAT showed volatility but reached its highest level in 2018 before falling in 2019. The cost of capital remained stable, while invested capital surged dramatically in 2016 and stayed elevated afterward. Despite positive operating profits, economic profit was negative for most years after 2015, suggesting that the returns did not consistently exceed the cost of invested capital. This points to potential inefficiencies or challenges in capital deployment and value creation after the significant capital increase starting in 2016.

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 examined period. It started at a positive value of 990 million USD in 2015 but declined sharply to a negative figure of -1,328 million USD in 2016. This negative trend persisted in 2017 with a loss of 706 million USD, followed by a slight recovery to 99 million USD in 2018. However, the economic profit declined again to -414 million USD in 2019, indicating inconsistent profitability and challenges in generating value over the five-year span.

Invested Capital

The invested capital exhibited a notable surge from 758 million USD in 2015 to 16,537 million USD in 2016, which is an exceptionally large increase. After that spike, the invested capital slightly decreased and stabilized around the 14,000 to 15,000 million USD range for the subsequent years ending in 2019 (14,229 million in 2017, 14,627 million in 2018, and 13,992 million in 2019). This pattern suggests a significant capital infusion or acquisition activity in 2016 followed by a relatively stable capital base in the following years.

Economic Spread Ratio

The economic spread ratio, reflecting the difference between the return on invested capital and the cost of capital, mirrored the trend seen in economic profit. It started at a high positive value of 130.58% in 2015, sharply dropped to -8.03% in 2016, and continued negative at -4.96% in 2017. There was a slight positive rebound to 0.67% in 2018, but it again returned to a negative level of -2.96% in 2019. This indicates that the company, after a strong position in 2015, largely struggled to generate returns exceeding its cost of capital during this period.

Summary

The data collectively reflects a period of significant change for the company, with a dramatic increase in invested capital in 2016 accompanied by a decline in economic profit and economic spread ratio. Despite some improvement in 2018, the economic profit and spread remained negative or near zero in most years after 2015. This suggests challenges in efficiently utilizing the increased capital to create economic value consistently. The fluctuations highlight potential issues in operational performance or capital management that have impacted profitability and value generation.

The analysis of the financial data reveals several key trends over the five-year period.

Economic Profit

The economic profit started at a significant positive value of 990 million USD at the end of 2015. However, this figure declined sharply in 2016 to -1328 million USD, representing a notable shift to a loss position. Although there was some recovery in 2018 with a positive economic profit of 99 million USD, the overall trend indicates volatility and difficulty in sustaining positive economic profit, as the figure again declined to -414 million USD by the end of 2019.

Adjusted Revenues

The adjusted revenues showed a generally increasing trend over the period, starting at 14,486 million USD in 2015 and increasing to 21,101 million USD by 2019. Notably, revenues peaked at 22,894 million USD in 2017 before experiencing a slight decline in 2018 to 20,904 million USD, followed by a minor increase in 2019. This pattern suggests growth with some fluctuations rather than steady continuous growth.

Economic Profit Margin

The economic profit margin mirrored the economic profit trend, starting at a positive 6.83% in 2015 and turning negative in 2016 at -7.78%. It showed some improvement in 2018 to a marginal positive margin of 0.47%, yet the margin again declined to -1.96% in 2019. This data reflects challenges in generating returns above the cost of capital consistently throughout the period.

Overall, while adjusted revenues exhibited growth, the economic profit and corresponding margin demonstrated considerable volatility, highlighting challenges in profitability and value creation during the reviewed years.