Marriott International Inc. (NASDAQ:MAR)

The analysis of the provided financial data reveals several key trends and variations in the performance and capital efficiency over the five-year period ending December 31, 2019.

Net Operating Profit After Taxes (NOPAT)

The NOPAT exhibits a generally upward trend from 2015 to 2018, increasing from $1,097 million to a peak of $2,260 million. However, in 2019, there is a noticeable decline to $1,577 million. This pattern suggests strong profit growth initially, with a significant drop in the last recorded year, indicating potential operational or market challenges.

Cost of Capital

The cost of capital remains relatively stable over the period, fluctuating narrowly between 14.28% and 15.31%. The peak cost occurs in 2017 at 15.31%, after which it gradually declines to 14.29% in 2019. This stability indicates consistent capital cost conditions with slight improvements in later years.

Invested Capital

The invested capital shows an extraordinary increase from $758 million in 2015 to $16,537 million in 2016, suggesting a significant acquisition, investment, or restructuring event. After this spike, invested capital decreases gradually over the following years to $13,992 million in 2019. The initial sharp increase followed by a downward adjustment indicates an atypical capital structure change impacting the company's asset base.

Economic Profit

The economic profit, reflecting the value created above the cost of capital, starts at a strong positive of $989 million in 2015 but plunges to negative values in 2016 and 2017, recording -$1,339 million and -$716 million respectively. There is a modest recovery to $89 million in 2018, yet it reverts to a negative figure of -$423 million in 2019. This volatility and persistence of negative economic profits for most of the period suggest challenges in generating returns exceeding the capital costs despite operational profit growth.

Overall, the financial indicators show that while the company experienced significant operational profit growth until 2018, the substantial increase in invested capital starting 2016 impacted economic profit negatively, indicating that the returns on the increased capital base were insufficient to cover the cost of capital in most years. The decline in NOPAT in 2019 coupled with a negative economic profit highlights areas requiring attention to restore value creation.

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 shows considerable fluctuation over the five-year period. It started positively at 989 million USD at the end of 2015 but sharply declined to a negative 1,339 million USD in 2016. Although there was a slight improvement in 2017, the profit remained negative at 716 million USD below zero. A modest positive shift occurred in 2018, reaching 89 million USD, yet this gain was not sustained as the value fell back to a negative 423 million USD in 2019. Overall, the trend indicates volatile and generally unfavorable economic profit outcomes after 2015.

Invested Capital

Invested capital experienced a significant increase from 758 million USD in 2015 to 16,537 million USD in 2016, which is a notable expansion. After this peak in 2016, the capital slightly decreased over the following years, reaching 14,229 million USD in 2017, 14,627 million USD in 2018, and 13,992 million USD in 2019. Despite this slight decline after the initial surge, the invested capital remained substantially higher than the 2015 level throughout the subsequent years, indicating greater resource commitment overall.

Economic Spread Ratio

The economic spread ratio exhibits a significant downturn following 2015. Beginning at a strong positive rate of 130.52%, the ratio dropped sharply to a negative 8.09% in 2016 and further deteriorated to negative 5.03% in 2017. A marginal recovery to 0.61% occurred in 2018, suggesting a minor improvement in economic value creation relative to capital; however, this was again reversed in 2019 when the ratio decreased to negative 3.02%. The pattern reflects an environment where the returns on invested capital have generally been insufficient to generate positive economic value after 2015.

The financial data reveals notable fluctuations in the economic profit and the economic profit margin over the five-year period from 2015 to 2019. Despite growth in adjusted revenues, these profitability metrics demonstrate periods of loss and recovery, indicating volatility in the company's economic returns relative to its revenues.

Economic Profit

The economic profit exhibited significant variability. In 2015, the company reported a positive economic profit of 989 million US dollars. However, in 2016 and 2017, economic profit experienced substantial declines resulting in negative values of -1,339 million and -716 million US dollars respectively, indicating periods of economic loss. A positive turnaround was observed in 2018, with economic profit rising to 89 million US dollars, suggesting a recovery phase. Yet, in 2019, the economic profit again dropped to -423 million US dollars, reflecting renewed challenges in generating positive economic returns.

Adjusted Revenues

Revenue figures showed an overall upward trend, increasing from 14,486 million US dollars in 2015 to 21,101 million US dollars in 2019. The revenue growth was consistent through 2017, reaching a peak of 22,894 million US dollars. A slight decline occurred in 2018, with revenues decreasing to 20,904 million US dollars, and then a minor rebound in 2019. The growth in revenues over this period suggests successful top-line expansion strategies despite fluctuations in profitability.

Economic Profit Margin

The economic profit margin mirrored the volatility of economic profit, with a positive margin of 6.83% in 2015. This margin sharply declined into negative territory in 2016 (-7.84%) and remained negative in 2017 (-3.13%). A moderate recovery brought the margin slightly above zero to 0.43% in 2018, before again falling to -2.00% in 2019. These movements indicate challenges in maintaining efficient profitability relative to revenues, with intermittent performance improvements.

Overall, the company demonstrated consistent revenue growth during the period, but struggled to convert this into stable and positive economic profit margins. The periods of negative economic profit and margin suggest cost or capital inefficiencies impacting value creation. The recovery indicators in 2018 were short-lived, with profitability metrics declining again in 2019. This pattern underscores the need for focus on operational efficiency and cost management to enhance sustained economic profitability amid revenue growth.