Micron Technology Inc. (NASDAQ:MU)

The analysis of the annual current and deferred income tax expenses over the six-year period reveals several notable trends and fluctuations.

Current Income Tax Expense

The current income tax expense exhibits considerable variability throughout the periods. It starts at 357 million US dollars in 2019, decreases substantially to 170 million in 2020, then rises sharply to 413 million in 2021. The upward trend continues, reaching a peak of 594 million in 2022, followed by a notable drop to 184 million in 2023, and another significant increase to 416 million in 2024. These fluctuations suggest changes in taxable income or tax regulations affecting the current tax liabilities in these years.

Deferred Income Tax Expense

The deferred income tax expense shows a more volatile pattern compared to the current expense. Beginning at 336 million US dollars in 2019, it falls to 110 million in 2020, turns negative at -19 million in 2021, rises sharply to 294 million in 2022, falls slightly below zero again at -7 million in 2023, and then increases to 35 million in 2024. The presence of negative deferred tax expense values indicates reversals or adjustments in deferred tax assets or liabilities, reflecting changes in timing differences between accounting and taxable income.

Income Tax Provision (Total)

The total income tax provision, which is the sum of current and deferred expenses, follows a somewhat stable yet fluctuating trend. Starting at 693 million US dollars in 2019, it significantly drops to 280 million in 2020, increases moderately to 394 million in 2021, then peaks notably at 888 million in 2022. A sharp decline to 177 million takes place in 2023 before a recovery to 451 million in 2024. This pattern underscores the combined effect of both current and deferred tax changes and suggests varying profitability or tax environment impacts year over year.

Overall, the data indicate that both components of income tax expense—current and deferred—have experienced substantial fluctuations, influenced likely by changes in earnings, tax law, and deferred tax asset/liability adjustments. The most striking observations are the elevated tax provisions in 2022 and the considerable reductions in 2020 and 2023, which should be the focus of further investigation to understand the underlying causes and their impact on financial performance.

U.S. Federal Income Tax Statutory Rate

The statutory tax rate for U.S. federal income remained constant at 21% throughout the entire period from 2019 to 2024, indicating no changes in the baseline tax legislation affecting the company.

U.S. Tax on Foreign Operations

This rate exhibited significant fluctuations over the years, starting at 4.6% in 2019, dropping sharply to 0.5% in 2020, then rebounding to a range between 3.4% and 0.6% in subsequent years, with 0.6% recorded in 2024. This suggests variability in the tax burden associated with foreign income, possibly reflecting changes in foreign operations or tax planning strategies.

Change in Valuation Allowance

The change in valuation allowance showed volatility, with positive changes in 2019 (0.6%) and 2020 (0.7%), a notable negative adjustment in 2021 (-0.9%), an increase again in 2022 (2.5%), a return to negative in 2023 (-0.9%), and a sharp positive spike in 2024 (4.8%). This pattern implies periodic reassessments of deferred tax assets that reflect evolving expectations about the company’s future taxable income.

Change in Unrecognized Tax Benefits

This metric increased markedly from 0.8% in 2019 to a peak of 3.8% in 2021, followed by a decrease to -0.5% in 2023 before rising again to 3.3% in 2024. The fluctuations indicate varying levels of tax positions and disputes, with periods of increased recognition and some reversals.

Foreign Tax Rate Differential

The foreign tax rate differential was negative and worsening from -14.1% in 2019 to -22.8% in 2023, meaning the foreign tax rates were generally substantially lower than the U.S. statutory rate, which potentially reduced the overall tax burden. However, in 2024, this trend sharply reversed to a positive 17.2%, indicating a significant change in either foreign tax rates or allocation.

Research and Development Tax Credits

R&D tax credits were consistently negative, contributing to reductions in the effective tax rate for most years. They ranged from -1.7% in 2019 to a peak negative effect of -6.1% in 2024, although there was a positive value of 0.8% in 2023, suggesting some variability in credit utilization or eligibility over time.

State Taxes, Net of Federal Benefit

The impact of state taxes net of federal benefits was relatively minor and inconsistent, with negative values in 2019 (-1.4%) and 2020 (-0.8%), a slight negative in 2021 (-0.9%), missing data for 2022, a small positive in 2023 (0.7%), and negative again in 2024 (-1%). This oscillation indicates modest and variable state tax influences on the overall tax rate.

Debt Premium Deductions

Debt premium deductions were only recorded as a negative effect of -2.1% in 2021, with no data available for other years, suggesting a one-time or infrequent utilization of this tax adjustment.

Other

The 'Other' category consistently contributed negative percentages to the tax rate, with increasing magnitude from -0.1% in 2019 to -3.4% in 2024. This trend indicates an increasing impact of miscellaneous tax-related adjustments over time.

Effective Income Tax Rate Before the Tax Act

The effective tax rate before considering the Tax Act showed variability, starting at 9.7% in 2019, slightly declining to 6.3% in 2021, then fluctuating around 9.3% in 2022, experiencing a notable drop to -3.1% in 2023, and rising sharply to 36.4% in 2024. This volatility reflects the influence of numerous factors affecting tax expense beyond statutory rates, including credits, allowances, and foreign taxation.

Repatriation Tax Related to the Tax Act

A small repatriation tax effect of 0.1% was recorded only in 2019, with no subsequent effects noted, suggesting a limited and one-time impact from this specific tax legislation.

Effective Income Tax Rate

The overall effective income tax rate mirrors the trend before the Tax Act, maintaining stability around 9.8% in 2019 and 9.4% in 2020, decreasing to 6.3% in 2021, rising again to 9.3% in 2022, turning negative to -3.1% in 2023, and experiencing a substantial increase to 36.4% in 2024. The negative rate in 2023 indicates a tax benefit or credit situation reducing tax expense below zero, while the sharp increase in 2024 may be due to significant taxable events or adjustments leading to a high tax burden.

Net Operating Loss and Tax Credit Carryforwards

This item shows a general decline from US$1,045 million in 2019 to US$783 million in 2021, followed by an increase reaching US$1,112 million in 2023. The figure slightly decreased to US$1,050 million in 2024, reflecting fluctuations but an overall recovery trend after 2021.

Accrued Salaries, Wages, and Benefits

Values increased from US$122 million in 2019 to a peak of US$206 million in 2021, then sharply decreased to US$39 million in 2023, followed by a rebound to US$182 million in 2024. This indicates volatility in workforce-related liabilities across the periods.

Operating Lease Liabilities

This liability emerged in 2020 at US$114 million and generally increased through 2024, reaching US$175 million, suggesting growth in lease obligations over time.

Inventories

Inventory data is available only from 2022, showing a decreasing trend from US$77 million to US$4 million by 2024, indicating significant inventory reduction during this period.

Property, Plant, and Equipment (PPE)

PPE values fluctuate with incomplete data. The recorded value in 2019 was US$80 million, dropping to US$37 million in 2021 with some increases and decreases in other years. Negative related figures indicate impairment or depreciation impacts, reaching as low as -US$194 million in 2024.

Other Assets and Liabilities

The "Other" category assets showed variability, starting at US$110 million in 2019, peaking at US$142 million in 2022, then declining to US$59 million in 2024. The negative counterpart fluctuated as well, indicating adjustments or write-downs in related asset components.

Gross Deferred Tax Assets and Valuation Allowance

Gross deferred tax assets decreased from US$1,357 million in 2019 to US$1,250 million in 2021, then steadily increased to US$1,470 million by 2024. Conversely, the valuation allowance grew in magnitude from -US$277 million to -US$593 million over the period, suggesting increasing concerns over the realizability of these tax assets.

Deferred Tax Assets, Net of Valuation Allowance

Net deferred tax assets declined overall from US$1,080 million in 2019 to US$877 million in 2024, reflecting the growing valuation allowance impact negating increases in gross deferred tax assets.

Right-of-Use Assets

Right-of-use assets have shown consistent negative values starting from -US$95 million in 2020 and worsening to -US$152 million in 2024, consistent with increasing operating lease liabilities.

Product and Process Technology

The recorded values for this intangible asset declined markedly from -US$138 million in 2019 to nearly zero by 2021, with no data reported beyond that year, indicating possible full amortization or write-off.

Deferred Tax Liabilities

Deferred tax liabilities have fluctuated, increasing from -US$247 million in 2019 to -US$416 million in 2024, suggesting rising tax obligations associated with temporary differences.

Net Deferred Tax Assets (Liabilities)

Overall net deferred tax positions decreased from US$833 million in 2019 to US$461 million in 2024, highlighting a decline in net deferred tax benefits over time.

Deferred Tax Assets

The deferred tax assets demonstrate a general downward trend over the six-year period. Starting at $837 million in 2019, the value decreased to $707 million in 2020, followed by a slight recovery to $782 million in 2021. Thereafter, it declined again to $702 million in 2022, marginally increased to $756 million in 2023, and then significantly dropped to $520 million in 2024. This pattern indicates volatility with an overall reduction of approximately 38% from the beginning to the end of the period.

Deferred Tax Liabilities (included in Other noncurrent liabilities)

The deferred tax liabilities show an increasing trajectory with some fluctuations. From a low base of $4 million in 2019, liabilities rose slightly to $9 million in 2020 and $10 million in 2021. The increase accelerated to $13 million in 2022 and then surged dramatically to $117 million in 2023, before decreasing to $59 million in 2024. Despite the decline in the final year, liabilities remain substantially higher than in the initial years, indicating a noteworthy buildup of deferred tax liabilities over the period.

Overall Insights

The contrasting trends between deferred tax assets and liabilities suggest a shift in the company's tax-related financial position. The decline in deferred tax assets coupled with a significant rise in deferred tax liabilities could imply changes in tax strategies, timing differences, or adjustments in asset valuation. The spike in liabilities particularly in 2023 warrants further examination to understand underlying causes and potential impact on future tax expenses and cash flows.

Total Assets

Total assets exhibit a generally increasing trend over the analyzed periods. Reported total assets increased steadily from approximately $48.9 billion in 2019 to about $69.4 billion in 2024. Similarly, adjusted total assets follow a nearly identical upward trajectory, rising from around $48.1 billion to $68.9 billion over the same period. This consistent growth suggests expansion or accumulation of company resources and investments over time.

Total Liabilities

Total liabilities also show an increasing pattern across the periods. Reported total liabilities increased from roughly $12.0 billion in 2019 to approximately $24.3 billion in 2024. Adjusted total liabilities closely mirror reported figures, rising from about $12.0 billion to $24.2 billion. The rate of growth in liabilities is notable, especially between 2022 and 2024, indicating greater obligations possibly due to increased borrowing or accrued expenses.

Total Shareholders' Equity

Reported shareholders' equity rose from about $35.9 billion in 2019 to a peak near $49.9 billion in 2022, followed by a decline to approximately $45.1 billion by 2024. Adjusted shareholders’ equity exhibits the same pattern, increasing to about $49.2 billion in 2022 and then decreasing to $44.7 billion in 2024. This pattern suggests an expansion in equity until 2022, followed by some erosion possibly linked to net income losses or other equity adjustments in subsequent years.

Net Income (Loss) Attributable to Micron

The net income demonstrates significant volatility. Initially, the reported net income declines sharply from $6.3 billion in 2019 to $2.7 billion in 2020, then recovers to peak at $8.7 billion in 2022. However, the company experienced a substantial loss in 2023, with net income dropping to -$5.8 billion, followed by partial recovery to a modest profit of $0.8 billion in 2024. Adjusted net income data is consistent with reported results, showing similar declines and recoveries over the period. These fluctuations in profitability may reflect changes in market conditions, operational efficiency, or extraordinary items impacting earnings.

Summary of Financial Position and Performance Trends

Overall, the company expanded its asset base and liabilities substantially over the six-year timeframe. While equity generally increased until 2022, it declined thereafter, likely influenced by the considerable net loss in 2023. Profitability has been inconsistent, with notable earnings volatility, including a significant loss followed by a modest rebound. These patterns indicate periods of growth and contraction, suggesting a dynamic operating environment and the need for careful management of financial risks and returns.

The financial data indicates significant variability across profitability, efficiency, and leverage metrics over the six annual periods analyzed.

Profitability Margins

The reported net profit margin declined markedly from 26.97% in 2019 to a low of -37.54% in 2023, followed by a slight recovery to 3.1% in 2024. The adjusted net profit margin exhibited a similar pattern, starting at 28.41% in 2019, dipping to -37.58% in 2023, and then improving marginally to 3.24% in 2024. This suggests a considerable downturn in profitability around the 2023 period, with only partial recovery thereafter.

Total Asset Turnover

Both reported and adjusted total asset turnover ratios were relatively stable from 2019 through 2022, fluctuating mildly between 0.40 and 0.49. However, in 2023, there was a substantial decrease to 0.24, indicating reduced efficiency in asset utilization. A moderate improvement to 0.36 in 2024 suggests some rebound in asset use efficiency but still below earlier levels.

Financial Leverage

The reported financial leverage ratio demonstrated a gradual increase from 1.36 in 2019 to 1.54 in 2024. Adjusted financial leverage followed the same trend. The increase, particularly noticeable from 2022 onward, could indicate an increased reliance on debt or other liabilities relative to equity.

Return on Equity (ROE)

ROE showed volatility, starting at 17.59% in 2019, declining sharply to 6.89% in 2020, rebounding to 17.41% by 2022, before a steep fall to -13.22% in 2023. A marginal recovery to 1.72% in 2024 was observed. Adjusted ROE followed a similar trajectory with comparable values, signaling a significant impact on shareholder returns during 2023 with limited improvement afterward.

Return on Assets (ROA)

ROA trends mirrored those of ROE and profit margins, declining from 12.91% in 2019 to negative 9.08% in 2023, followed by a slight recovery to 1.12% in 2024. The adjusted ROA figures similarly reflected these movements. This pattern indicates a notable drop in overall asset profitability during the 2023 period and modest recovery in the subsequent year.

In summary, the data exhibits a pronounced deterioration in profitability and asset efficiency during 2023, accompanied by increased financial leverage. Although partial recovery is noted in 2024, most financial ratios remain below earlier peaks observed between 2019 and 2022. The persistent negative margins and returns in 2023 highlight a challenging period for financial performance, with efforts towards stabilization apparent but not yet fully restoring prior strength.

Reported Net Income (Loss) Attributable to Micron

The reported net income exhibited significant fluctuations over the observed periods. Starting from a high of 6,313 million US dollars in 2019, it sharply declined to 2,687 million in 2020, followed by a notable recovery to 5,861 million in 2021 and further increase to 8,687 million in 2022. However, a substantial loss of -5,833 million occurred in 2023, reversing the prior positive trend. In the most recent period of 2024, the income rebounded modestly to a positive 778 million.

Adjusted Net Income (Loss) Attributable to Micron

The adjusted net income, which accounts for annual reported and deferred income tax adjustments, largely parallels the trend of the reported net income with only marginal differences in absolute values. It started at 6,649 million in 2019, decreased to 2,797 million in 2020, then climbed to 5,842 million in 2021 and 8,981 million in 2022. Similarly, an adjusted net loss of -5,840 million was recorded in 2023, followed by a partial recovery to 813 million in 2024. The pattern confirms the consistency in adjustments applied to the net income figures.

Reported Net Profit Margin

The reported net profit margin followed a fluctuating trajectory consistent with net income trends. It began at a relatively strong margin of 26.97% in 2019, declined markedly to 12.54% in 2020, and rebounded to 21.16% in 2021 before reaching its peak at 28.24% in 2022. The margin then collapsed to a significant negative value of -37.54% in 2023, indicating operational or financial difficulties, before partially recovering to 3.1% in 2024.

Adjusted Net Profit Margin

The adjusted net profit margin closely tracked the reported net profit margin throughout the periods, with minimal deviations. Starting at 28.41% in 2019, it decreased to 13.05% in 2020, then reached 21.09% in 2021 and 29.2% in 2022. The margin also turned strongly negative to -37.58% in 2023 and somewhat improved to 3.24% in 2024. This parallelism highlights the minimal impact of tax adjustments on overall profitability percentages.

Summary of Trends

Overall, the financial performance reflected by both reported and adjusted net income and profit margins showed strong growth from 2019 through 2022, indicating a period of increasing profitability. The abrupt and considerable negative swing in 2023 represents a substantial deviation, signaling either a significant one-time event or broader operational challenges. The partial recovery in 2024 suggests some stabilization but still at levels well below the peak performance years. The close alignment between reported and adjusted figures indicates that tax effects did not materially alter the trend or magnitude of net income and profitability metrics during these years.

Total Assets

Over the six-year period, reported total assets exhibited a consistent upward trajectory, increasing from 48,887 million US dollars in 2019 to 69,416 million US dollars in 2024. Adjusted total assets followed a similar pattern, growing from 48,050 million US dollars in 2019 to 68,896 million US dollars in 2024. This steady growth in both reported and adjusted total assets suggests sustained investment in asset base expansion, with the adjusted figures closely mirroring the reported ones throughout the timeframe.

Total Asset Turnover

Both reported and adjusted total asset turnover ratios demonstrate a general pattern of volatility with a notable decline in recent years. Starting at 0.48 (reported) and 0.49 (adjusted) in 2019, the ratios decreased to as low as 0.24 by 2023, indicating a significant reduction in asset efficiency or revenue generation per unit of assets during this period. However, there is a partial recovery in 2024, rising to 0.36 in both reported and adjusted terms. This rebound suggests improvements in the utilization of assets or revenue growth relative to asset base expansion in the most recent year.

Comparative Insights

The close alignment between reported and adjusted figures for both total assets and total asset turnover suggests that adjustments related to deferred income tax and other tax considerations have a minimal impact on the overall asset and efficiency metrics. The primary trend to note is the steady asset growth combined with fluctuating efficiency, showing potential challenges in optimizing asset use especially evident around 2022 and 2023, followed by some recovery in 2024.

Total Assets

The reported total assets display a consistent upward trend over the six-year period, increasing from 48,887 million USD in 2019 to 69,416 million USD in 2024. Adjusted total assets follow a similar pattern, rising from 48,050 million USD to 68,896 million USD over the same span. Both reported and adjusted figures show steady growth, although a slight decrease is observed between 2022 and 2023 before assets increase again in 2024. This suggests an overall expansion in asset base with minor fluctuations.

Shareholders’ Equity

Reported total shareholders’ equity grows from 35,881 million USD in 2019 to a peak of 49,907 million USD in 2022, followed by a notable decline to 44,120 million USD in 2023 before a modest recovery to 45,131 million USD in 2024. Adjusted shareholders’ equity mirrors this trend closely, increasing steadily up to 49,218 million USD in 2022, then decreasing to 43,481 million USD in 2023 and increasing slightly to 44,670 million USD in 2024. The interim decline after 2022 indicates some reduction in equity value which may be related to external or operational factors affecting equity maintenance.

Financial Leverage

The reported financial leverage ratio remains relatively stable between 2019 and 2022, fluctuating marginally around 1.33 to 1.38. However, from 2022 onwards, an increase is observed, reaching 1.54 in 2024. Adjusted financial leverage ratios align with the reported figures exactly, confirming the consistency of leverage adjustments. The rising leverage ratio after 2022 reflects increased reliance on liabilities relative to equity, possibly indicating greater financial risk or strategic leveraging to support growth or operations in recent years.

Summary of Trends

Overall, asset growth is consistent and significant over the period, suggesting expansion efforts and asset accumulation. Shareholders’ equity shows strong growth until 2022, followed by a decrease and partial recovery, which could indicate challenges in equity preservation or capital restructuring. The increase in leverage ratio after 2022 implies a shift towards higher financial leverage, potentially to finance growth or respond to market conditions. The close alignment between reported and adjusted figures suggests that the adjustments for income tax effects have minimal impact on the overall financial structure and trends observed.

The financial data shows notable fluctuations across the six-year period for net income and shareholders’ equity, as well as in the return on equity (ROE) metrics.

Net Income (Loss) Attributable to Micron

Reported net income saw a significant decline from $6,313 million in 2019 to $2,687 million in 2020, followed by a recovery to $5,861 million in 2021. The upward trajectory continued, reaching a peak of $8,687 million in 2022. However, a sharp reversal occurred in 2023, with reported net income turning negative at -$5,833 million, before slightly improving to a positive $778 million in 2024. Adjusted net income follows a similar pattern, closely mirroring the reported figures but with slightly higher positive amounts in most years. This suggests that the adjustments made for deferred income taxes have some smoothing effect but do not substantially alter the trend.

Total Micron Shareholders’ Equity

Reported shareholders’ equity exhibits a steady growth from $35,881 million in 2019 to a peak of $49,907 million in 2022, implying a strengthening equity base over the early period. A decline occurs in 2023 to $44,120 million, followed by a minor rebound to $45,131 million in 2024. Adjusted equity values are consistently slightly lower but show an identical trend pattern, indicating that tax adjustments moderately reduce equity but do not change the overall trajectory.

Return on Equity (ROE)

Both reported and adjusted ROE percentages align closely, confirming consistency in profitability as measured relative to shareholder equity. ROE started at a high of 17.59%-18.97% in 2019, dropped sharply in 2020 to around 7%, then recovered to approximately 13-18% range in 2021 and 2022. A marked negative ROE appears in 2023 (-13.22% reported; -13.43% adjusted), reflecting the substantial net loss and decrease in equity. ROE improves slightly but remains low in 2024, signaling challenges in profitability despite a return to positive net income.

Overall, the financial performance indicates a volatile period, with robust growth and profitability through 2022, followed by a significant downturn in 2023, likely driven by extraordinary or adverse conditions. The adjusted figures for net income and equity consistently remain close to reported numbers, suggesting that deferred tax effects are not distorting the underlying financial results materially. The negative ROE in 2023 highlights financial stress, but the modest improvement in 2024 suggests initial signs of stabilization or recovery.

The financial data reveals notable fluctuations in the company's profitability and asset base over the analyzed periods. The reported net income attributable to the company displayed a sharp decline from a peak of $6,313 million in 2019 to $2,687 million in 2020, followed by a recovery to $8,687 million in 2022. However, there was a significant loss recorded in 2023 amounting to -$5,833 million, with a partial rebound to $778 million in 2024. The adjusted net income figures exhibit a similar trend, suggesting that adjustments for deferred taxes and other items had limited effect on the overall income volatility. Adjusted net income values closely track the reported figures, indicating consistency between reported and adjusted profitability metrics.

Regarding the company's asset base, both reported and adjusted total assets increased steadily from 2019 through 2022, rising from approximately $48 billion to nearly $66 billion. In 2023, there was a slight decline in total assets, followed by another increase in 2024, reaching approximately $69 billion. The adjusted total assets mirror the reported totals closely, confirming the reliability of the asset valuation with adjustment considerations accounted for.

The return on assets (ROA) demonstrates a pattern consistent with net income trends. Reported ROA decreased significantly from 12.91% in 2019 to 5.01% in 2020, rebounded to 13.11% in 2022, then fell sharply to a negative 9.08% in 2023 before recovering slightly to 1.12% in 2024. Adjusted ROA follows a parallel trajectory, with slightly higher values than the reported figures during positive ROA periods and marginally more negative in 2023. This indicates that after considering deferred tax adjustments, the company's efficiency in generating income from assets shows very similar performance patterns.

In summary, the data indicates the company experienced considerable income volatility, with a pronounced net loss in 2023 that affected profitability and returns despite a growing asset base over most periods. Adjustments related to deferred income taxes did not substantially alter the overall financial trends, underscoring the robustness of the reported figures. The recent partial recovery in income and ROA in 2024 suggests some stabilization after the downturn, although profitability remains significantly below earlier peak levels.