Marriott International Inc. (NASDAQ:MAR)

Net operating profit after taxes (NOPAT)

The NOPAT shows a fluctuating trend over the analyzed period. It initially decreased slightly from 1097 million US dollars in 2015 to 1039 million US dollars in 2016. This was followed by a significant increase to 1463 million in 2017 and a further substantial rise to 2260 million in 2018. However, there was a notable decline in 2019, where NOPAT dropped to 1577 million US dollars.

Invested capital

Invested capital experienced a sharp increase from 758 million US dollars in 2015 to 16537 million in 2016. Subsequently, it showed a decreasing trend over the next years, declining to 14229 million in 2017, then slightly increasing to 14627 million in 2018, and decreasing again to 13992 million US dollars in 2019.

Return on invested capital (ROIC)

ROIC demonstrated considerable volatility across the periods. A very high value of 144.8% was recorded in 2015, which drastically decreased to 6.29% in 2016. This was followed by a recovery trend, with ROIC rising to 10.28% in 2017 and reaching 15.45% in 2018. However, a decline is observed in 2019 to 11.27%.

Overall analysis

The company experienced significant fluctuations in profitability and capital deployment efficiency during the period under review. The extreme spike in ROIC in 2015 was associated with very low invested capital that year, likely causing this unusually high ratio. The sharp increase in invested capital in 2016 contributed to a decrease in ROIC despite relatively stable NOPAT compared to 2015. Subsequent years saw improvement in both NOPAT and ROIC until 2018, indicating better utilization of invested capital and enhanced operational outcomes. The drop in 2019 in both NOPAT and ROIC suggests some challenges affecting profitability and capital efficiency in that year. Overall, the data reflects volatile operational performance and investment activity over the period with notable peaks and troughs.

Operating Profit Margin (OPM)

The operating profit margin exhibited fluctuations over the observed period. It started at 9.75% in 2015, decreased to a low of 8.35% in 2016, then rose significantly, peaking at 13.81% in 2018 before declining to 10.21% in 2019. This pattern suggests that while operational efficiency improved notably in 2017 and 2018, it slightly deteriorated in the final year analyzed.

Turnover of Capital (TO)

The turnover of capital showed a pronounced drop from 19.12 in 2015 to 1.03 in 2016, indicating a significant reduction in the efficiency of capital usage or asset turnover after 2015. Subsequently, this ratio experienced modest increases, reaching 1.61 in 2017, then slight decreases and increases in 2018 and 2019 respectively, settling at 1.51 in the final year. Overall, the turnover remained substantially lower than the initial 2015 value.

1 – Effective Cash Tax Rate (CTR)

This measure showed variability without a clear trend across the years. It began at 77.71% in 2015, decreased to 72.9% in 2016, dropped further to 46.38% in 2017 indicating a significant reduction in effective cash tax, then rose sharply to 78.32% in 2018, before declining again to 73.2% in 2019. These fluctuations may reflect changes in tax planning, tax laws, or taxable income.

Return on Invested Capital (ROIC)

Return on invested capital demonstrated extreme volatility. It was exceptionally high at 144.8% in 2015, but then plunged drastically to 6.29% in 2016. Following this, ROIC improved gradually to 10.28% in 2017 and further to 15.45% in 2018, before decreasing to 11.27% in 2019. Despite the recovery after 2016, the returns remained considerably lower than the initial 2015 level, indicating either an extraordinary event in 2015 or changes affecting invested capital profitability.

Net Operating Profit Before Taxes (NOPBT)

The net operating profit before taxes showed a notable increase from 2015 to 2017, rising from 1,412 million US dollars to 3,154 million US dollars. However, from 2017 onwards, there was a declining trend, with NOPBT decreasing to 2,886 million in 2018 and further dropping to 2,155 million in 2019. This indicates a peak in profitability in 2017 followed by a downturn in the subsequent years.

Adjusted Revenues

Adjusted revenues increased steadily from 2015 to 2017, going from 14,486 million US dollars to 22,894 million US dollars. In 2018, adjusted revenues decreased slightly to 20,904 million, and then stabilized in 2019 at 21,101 million. Although revenue growth was strong up to 2017, the data suggests a contraction and subsequent plateau in revenue during the last two years observed.

Operating Profit Margin (OPM)

The operating profit margin exhibited fluctuations over the period. Starting at 9.75% in 2015, it declined to 8.35% in 2016. This was followed by a significant increase in 2017 to 13.78%, with a similar level maintained in 2018 at 13.81%. In 2019, the margin fell to 10.21%. The margin's peak in 2017 and 2018 corresponds with the highest net operating profit before taxes, indicating improved operational efficiency during those years, before a decline in 2019.

Summary of Trends

The data reveals a period of strong growth in profitability and revenues up to 2017, with peak operating efficiency reflected in the high profit margins. Following this peak, both profitability and margins decreased, while revenues showed a mild contraction and stabilization. These trends suggest that the company experienced a favorable operating environment leading up to 2017, followed by challenges that affected profitability despite relatively stable revenue levels in the later years.

The financial data reveals several key trends related to revenues, invested capital, and capital turnover over the five-year period ending in 2019.

Adjusted Revenues

There was a steady increase in adjusted revenues from 2015 to 2017, with figures rising from approximately 14.5 billion US dollars in 2015 to nearly 22.9 billion US dollars in 2017. However, revenues declined somewhat in 2018 to 20.9 billion US dollars, then stabilized with a slight increase to 21.1 billion US dollars in 2019. Overall, the adjusted revenues showed strong growth initially followed by a mild correction and stabilization in the later years.

Invested Capital

Invested capital experienced a significant surge from 2015 to 2016, jumping from under 1 billion US dollars to over 16.5 billion US dollars. After the dramatic increase, the invested capital decreased slightly in the subsequent years, reaching 14.2 billion US dollars in 2017, 14.6 billion in 2018, and 14.0 billion in 2019. This indicates a large capital investment or acquisition around 2016, followed by a relatively stable capital base with minor reductions.

Turnover of Capital (TO)

The turnover ratio exhibited a sharp decline from a very high level of 19.12 in 2015 to just above 1.0 in 2016, coinciding with the spike in invested capital. Following this drop, the turnover ratio showed moderate improvement in the following years, reaching 1.61 in 2017, 1.43 in 2018, and 1.51 in 2019. This pattern suggests that the efficiency of capital utilization was considerably high in 2015, dropped substantially after the capital increase in 2016, and then gradually improved but remained far below the initial level.

In summary, the data highlights a major change around 2016 characterized by a large increase in invested capital, which diminished capital turnover and initially buoyed revenue growth. Revenues grew significantly before declining slightly and then leveling off, while invested capital remained relatively stable after the initial increase. The turnover ratio's recovery indicates some improvement in capital efficiency post-2016, though it did not return to early-period levels.

Net Operating Profit Before Taxes (NOPBT)

From 2015 to 2017, there was a marked increase in NOPBT, rising from 1,412 million US dollars to a peak of 3,154 million US dollars. This was followed by a decline in the subsequent years, dropping to 2,886 million in 2018 and further to 2,155 million in 2019. The initial growth indicates a period of improved operating performance, while the decline after 2017 suggests a reduction in profitability before taxes.

Cash Operating Taxes

Cash operating taxes fluctuated considerably over the period. After increasing from 315 million in 2015 to 386 million in 2016, there was a sharp rise to 1,691 million in 2017, likely linked to the significant jump in pre-tax profits that year. This was followed by a decrease to 626 million in 2018 and a smaller decline to 577 million in 2019. The changes mirror the profitability trends but with more pronounced volatility.

Effective Cash Tax Rate (CTR)

The effective cash tax rate exhibited notable variability over the five-year span. Starting at 22.29% in 2015, the rate increased to 27.1% in 2016 and then surged dramatically to 53.62% in 2017, concurrent with the peak in taxes paid and profit before tax. After this peak, the tax rate decreased to 21.68% in 2018 and slightly increased again to 26.8% in 2019. This pattern suggests changes in tax policy, tax planning strategies, or the composition of taxable income affecting the overall tax burden despite fluctuations in profitability.

Summary

The financial data reveals a period of growing profitability culminating in 2017, which then diminishes over the next two years. Cash operating taxes and the effective cash tax rate both experienced significant fluctuations, especially in 2017, indicating the impact of underlying factors such as changes in tax legislation, profit mix, or one-time tax adjustments. The decline in profit before tax after 2017, coupled with a lower effective tax rate in 2018, may reflect operational or market challenges and adjustments in tax circumstances.