Micron Technology Inc. (NASDAQ:MU)

Net Operating Profit After Taxes (NOPAT)

NOPAT experienced significant volatility over the observed periods. An initial peak was observed at 6,650 million US dollars in 2019, followed by a sharp decline to 2,891 million in 2020. The figure rebounded to 5,967 million in 2021 and further increased to a high of 9,071 million in 2022. However, a substantial downturn occurred in 2023 with a negative result of -5,885 million US dollars before recovering modestly to 857 million in 2024.

Cost of Capital

The cost of capital remained relatively stable, fluctuating narrowly between 16.46% and 17.16% throughout the six years. This stability indicates little change in the company’s weighted average cost of capital or the market’s perception of risk associated with invested capital during this period.

Invested Capital

Invested capital showed a consistent upward trend from 38,774 million US dollars in 2019 to 53,327 million in 2024. This steady growth suggests ongoing investment in assets or business expansion despite fluctuations in profitability and economic profit.

Economic Profit

Economic profit reflected notable instability, moving from a positive 142 million US dollars in 2019 to a deep negative position of -4,150 million in 2020. Some improvement occurred in the following years, with a less negative figure of -1,986 million in 2021 and a brief return to positive territory of 148 million in 2022. The most dramatic decline was observed in 2023, with economic profit plunging to -14,686 million, followed by a slight recovery to -8,219 million in 2024. These swings indicate that despite growth in invested capital, the returns did not consistently exceed the cost of capital, leading to substantial losses in economic profit especially in recent years.

Summary

The overall analysis highlights substantial volatility in operational profitability and economic returns over the examined years. While invested capital steadily increased, the company faced challenges in maintaining positive economic profit and consistent NOPAT growth. The cost of capital remained stable, suggesting external risk factors were relatively unchanged, implying internal inefficiencies or market conditions likely influenced the fluctuating profitability. The significant negative economic profit in 2023 points to a period of financial strain, while the modest recovery in 2024 suggests initial signs of stabilization. Continued monitoring of operational efficiency and capital utilization will be essential for improved financial performance going forward.

Net Income (Loss) Attributable to Micron

The net income attributable to the company displayed considerable volatility over the six-year period. Starting at $6,313 million in 2019, it declined sharply to $2,687 million in 2020. This was followed by a recovery in 2021, reaching $5,861 million, and a further increase to $8,687 million in 2022, marking the peak in the observed timeframe. However, this positive trend did not persist, as the net income turned negative in 2023 with a loss of $5,833 million. In 2024, the company managed to return to profitability with a net income of $778 million, albeit significantly lower than the previous highs.

Net Operating Profit After Taxes (NOPAT)

The NOPAT figures closely mirrored the trends observed in net income, indicating a strong correlation between operating profitability and net results. The value started at $6,650 million in 2019, dropped to $2,891 million in 2020, then increased in 2021 and 2022 to $5,967 million and $9,071 million, respectively. The peak in 2022 was followed by a significant decline in 2023 to a negative NOPAT of $5,885 million. In 2024, there was a slight recovery to a positive NOPAT of $857 million, yet this remains a fraction of the 2022 peak.

General Observations

The financial data reveal a pattern of cyclical fluctuations with a notable peak in 2022 across key profitability metrics. The sharp reversals to negative values in 2023 suggest the occurrence of adverse events or operational challenges during that year. Although partial recovery is evident in 2024, profitability has not returned to prior peak levels. These variations underscore the company's exposure to volatile operating conditions affecting its financial performance.

Income Tax Provision

The income tax provision exhibits a fluctuating pattern over the analyzed periods. Initially, it significantly decreased from 693 million US dollars in August 2019 to 280 million in September 2020. This was followed by a moderate increase to 394 million in September 2021 and a substantial rise to 888 million in September 2022. Subsequently, there was a notable decline to 177 million in August 2023, with a subsequent increase to 451 million by August 2024. This variability may suggest changes in profitability, tax rates, or adjustments related to deferred tax assets or liabilities.

Cash Operating Taxes

The cash operating taxes demonstrated a similar but not identical trend to the income tax provision. It decreased from 345 million US dollars in August 2019 to 189 million in September 2020. A pronounced increase followed, with cash operating taxes rising to 446 million in September 2021 and further to 618 million in September 2022. Thereafter, there was a steep decline to 172 million in August 2023, followed by an increase to 428 million in August 2024. The alignment of cash operating taxes with the income tax provision suggests consistency in tax-related cash outflows, although the variations indicate potential timing differences or changes in tax payments relative to the tax provision.

The financial data over the six-year period demonstrates several notable trends in the company’s capital structure and financing strategy.

Total reported debt & leases

The total reported debt and leases have generally increased from 6,415 million USD in 2019 to 14,078 million USD in 2024. This represents more than a doubling of debt levels over the period. A modest rise is observed annually until 2022, followed by a substantial jump between 2022 and 2023, indicating potential increased leverage or investment activities financed through debt.

Total Micron shareholders’ equity

Shareholders’ equity shows a steady upward trend from 35,881 million USD in 2019 to a peak of 49,907 million USD in 2022. However, a decline occurs in 2023 down to 44,120 million USD, after which equity slightly recovers to 45,131 million USD in 2024. This fluctuation suggests possible changes in retained earnings or other comprehensive income and potentially some equity adjustments during 2023.

Invested capital

Invested capital consistently increased from 38,774 million USD in 2019 to 53,327 million USD in 2024. The growth is relatively steady with a notable acceleration from 2020 to 2022, followed by a plateau and slight decrease in the last year. This trend signifies continued investment in fixed and working capital assets, maintaining a high level of capital employed in the business despite recent minor declines.

Overall, the data reveals a financial strategy focused on expanding capital investment and taking on more debt, especially after 2022, with equity levels reflecting some volatility. The rise in debt outpaces the growth of equity in the latest periods, indicating increased leverage. The relatively stable invested capital suggests sustained operational scale with potential recalibration in capital structure.

Economic Profit

The economic profit demonstrates significant volatility over the observed periods. It starts with a positive value of 142 million USD in 2019 but declines sharply into negative territory in 2020, registering -4,150 million USD. Although there is a partial recovery in 2022 to 148 million USD, the economic profit plunges again in 2023 and remains substantially negative in 2024 at -8,219 million USD. This indicates persistent difficulties in generating returns above the cost of capital in recent years.

Invested Capital

The invested capital shows a consistent upward trend throughout the given time frame. It increases from 38,774 million USD in 2019 to a peak of 53,467 million USD in 2023, followed by a slight decline to 53,327 million USD in 2024. This steady growth suggests ongoing investment in the company's assets or operations, indicating expansion or increased capital deployment.

Economic Spread Ratio

The economic spread ratio mirrors the volatility observed in economic profit, reflecting the firm's return relative to its cost of capital. It starts positive at 0.37% in 2019, then turns deeply negative in 2020 (-9.81%) and remains negative in subsequent years with fluctuations, including a minor positive value in 2022 (0.28%). In 2023 and 2024, the spread further deepens negatively to -27.47% and -15.41%, respectively, signaling a significant erosion in economic value creation during this period.

Revenue Trends

The revenue figures exhibit noticeable fluctuations over the analyzed periods. Initially, revenue decreased from approximately 23.4 billion US dollars in 2019 to around 21.4 billion in 2020. This was followed by a recovery and growth phase, with revenues increasing to approximately 27.7 billion in 2021 and further to about 30.8 billion in 2022. However, there was a significant decline to 15.5 billion in 2023 before rebounding to 25.1 billion in 2024. These fluctuations suggest periods of volatility, with a substantial dip in 2023 before partial recovery.

Economic Profit Analysis

The economic profit displays pronounced volatility and negative results in the majority of the assessed periods. The profit started positively at 142 million US dollars in 2019, then sharply declined to a large negative value of approximately -4.15 billion in 2020. Although the loss narrowed to about -2 billion in 2021, a modest positive figure of 148 million was observed in 2022. This temporary improvement was followed by a steep decline back into high negative territory with approximately -14.7 billion in 2023 and -8.2 billion in 2024. This inconsistent pattern indicates recurring challenges in generating economic profit consistently.

Economic Profit Margin

The economic profit margin mirrors the economic profit trend, highlighting issues in profitability relative to revenue. It started with a small positive margin of 0.61% in 2019, then drastically turned negative to -19.36% in 2020 and further to -7.17% in 2021. A slight recovery was noted with a positive but marginal 0.48% in 2022. Subsequent years saw an extreme negative margin of -94.5% in 2023 and -32.73% in 2024, confirming substantial inefficiencies and losses relative to revenue during these periods.

Overall Insights

The data reflects a volatile financial performance characterized by unstable revenue patterns and significant economic losses, particularly post-2019. Despite occasional improvements in revenue and economic profit metrics, the general trend suggests difficulties in sustaining profitability. The steep negative shifts in economic profit and associated margins in 2023 and 2024 indicate intensified financial challenges that could be attributed to operational inefficiencies, market conditions, or other external factors influencing the company’s economic value creation.