Marriott International Inc. (NASDAQ:MAR)

The financial data indicates several notable trends over the five-year period ending in 2019.

Net Operating Profit After Taxes (NOPAT)

The NOPAT experienced a fluctuating but generally increasing trend until 2018, rising from $1,097 million in 2015 to a peak of $2,260 million in 2018. However, in 2019, NOPAT declined to $1,577 million, showing a reversal from the previous upward trajectory.

Cost of Capital

The cost of capital maintained relatively stable levels throughout the period, fluctuating narrowly between approximately 14.0% and 15.0%. It peaked in 2017 at 15.03% but decreased slightly thereafter, ending at 14.03% in 2019.

Invested Capital

Invested capital displayed dramatic volatility. In 2015, it was notably low at $758 million but surged significantly to $16,537 million in 2016. It then decreased over the following years to $13,992 million by 2019. This sharp increase followed by a gradual decrease suggests major capital investments or acquisitions around 2016, followed by divestments or capital adjustments.

Economic Profit

Economic profit showed considerable fluctuations and was predominantly negative after 2015. In 2015, economic profit was strongly positive at $991 million, but then fell sharply into negative territory at -$1,295 million in 2016 and remained negative in 2017 and 2019, with only a marginal positive value of $129 million in 2018. This pattern indicates challenges in generating returns above the cost of capital during most of the period, particularly post-2015 despite the variations in NOPAT and invested capital.

Overall, although operating profits improved through 2018, the combination of volatile invested capital and persistent negative economic profit in several years suggests the company faced difficulties in achieving value creation above its capital costs. The sharp increase in invested capital in 2016, coupled with negative economic profit in subsequent years, points to potential inefficiencies or underperformance related to those investments.

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.

The analysis of financial indicators over the period ending in December 2015 through December 2019 reveals notable fluctuations and trends in economic profitability and capital investment.

Economic Profit

The economic profit exhibited significant volatility during this period. In 2015, the company achieved a positive economic profit of 991 million US dollars. However, this was followed by substantial declines in the subsequent years, with economic profit turning negative in 2016 (-1295 million), and remaining negative in 2017 (-675 million). There was a brief recovery in 2018 where economic profit became positive again but only reached 129 million US dollars. The year 2019 saw a reversal back into negative territory with an economic loss of 386 million US dollars. This pattern indicates inconsistency in generating returns above the cost of capital over the review period.

Invested Capital

The invested capital increased dramatically from 758 million US dollars in 2015 to a peak of 16,537 million US dollars in 2016. Following this sharp rise, invested capital gradually declined, reaching 14,229 million in 2017, 14,627 million in 2018, and further decreasing to 13,992 million in 2019. This trend reflects a significant expansion of capital base initially, followed by a modest reduction toward the end of the period, suggesting potential divestitures or write-downs after rapid growth.

Economic Spread Ratio

The economic spread ratio mirrored the trends observed in economic profit. It was notably high at 130.78% in 2015, correlating with strong economic profit that year. However, the ratio plunged into negative figures in 2016 (-7.83%) and 2017 (-4.75%), reflecting a failure to achieve returns above the cost of capital. In 2018, a marginally positive spread ratio of 0.88% was observed, but it slipped back into negative territory at -2.76% in 2019. This ratio underscores the challenges the company faced in sustaining value creation through returns on invested capital.

Overall, the data indicates a period of significant capital investment growth followed by declining profitability and returns relative to the cost of capital. The fluctuations in economic profit and spread ratio highlight operational and financial challenges in consistently generating economic value from invested capital during these years.

Adjusted Revenues

The adjusted revenues exhibited a generally increasing trend from 2015 to 2019, rising from approximately $14,486 million to $21,101 million. The revenues grew steadily each year until reaching a peak in 2017 at $22,894 million, followed by a slight decrease in 2018 to $20,904 million. The revenue figure then stabilized in 2019, showing a marginal increase compared to the previous year.

Economic Profit

The economic profit showed significant volatility over the five-year period. There was a strong positive value in 2015 at $991 million, which sharply declined to a negative $1,295 million in 2016. The loss narrowed slightly to negative $675 million in 2017, followed by a recovery to a positive $129 million in 2018, then declined again to a negative $386 million in 2019. This pattern indicates inconsistent profitability, with no sustained positive economic profit beyond 2015.

Economic Profit Margin

The economic profit margin followed a pattern similar to economic profit, starting at a high of 6.84% in 2015 and declining to negative percentages in the subsequent years. It reached its lowest point of -7.59% in 2016, improving gradually to -2.95% in 2017, then slightly turning positive at 0.62% in 2018. In 2019, the margin turned negative again to -1.83%. These fluctuations illustrate challenges in maintaining economic profitability relative to revenue over the period.

Overall Insights

While revenues showed a positive growth trend with some stabilization in later years, the company struggled to translate this top-line growth into consistent economic profit. The volatility in both economic profit and its margin suggests issues with cost management, competitive pressures, or other factors affecting profitability. The temporary recovery in 2018 indicates potential improvements, but the return to negative values in 2019 points to ongoing challenges in generating sustainable economic returns.