NXP Semiconductors N.V. (NASDAQ:NXPI)

Current Taxes

The current tax expense exhibited fluctuations over the five-year period. It increased from $314 million in 2017 to a peak of $387 million in 2018, followed by a significant decline in 2019 to $195 million. Subsequently, it rose again to $266 million in 2020 and slightly increased further to $292 million in 2021. This pattern indicates variability in the company’s taxable income or changes in tax rates affecting the current tax obligations.

Deferred Taxes

The deferred tax expense consistently remained negative throughout the period, indicating deferred tax benefits. The benefit decreased substantially from -$797 million in 2017 to -$211 million in 2018 and then showed a slight reduction to -$175 million in 2019. In 2020, there was a notable increase in deferred tax benefit to -$349 million, but this sharply declined to just -$20 million in 2021. This trend suggests significant fluctuations in timing differences between book and tax income, possibly due to changes in temporary differences or tax planning strategies.

Income Tax Expense (Benefit)

The overall income tax expense, which includes both current and deferred taxes, showed high volatility. It transitioned from a substantial tax benefit of -$483 million in 2017 to a tax expense of $176 million in 2018. The tax expense then decreased sharply to $20 million in 2019 and moved again into a tax benefit of -$83 million in 2020. In 2021, the income tax expense increased to $272 million. This variability reflects the combined effects of changes in current taxes and deferred tax adjustments, indicating an unstable tax position with significant shifting between tax expenses and benefits year over year.

Statutory income tax rate in the Netherlands

The statutory income tax rate remained constant at 25% throughout the observed period from 2017 to 2021, indicating no changes in the official tax legislation affecting the company in its home jurisdiction.

Rate differential between the local statutory rates and the statutory rate of the Netherlands

This metric showed significant fluctuations over the years, with a slight negative difference of -4.5% in 2017, shifting to minor positive values in 2018 and 2019. A dramatic spike to 2175% was observed in 2020, followed by a return to a small negative differential of -1.9% in 2021. Such volatility suggests extraordinary items or adjustments in 2020 that heavily impacted the tax differential.

Net change in valuation allowance

The net change in valuation allowance was relatively stable and low between 2017 and 2019 (ranging from 0.4% to 20.2%), but exhibited an extreme increase to 3500% in 2020. This was subsequently reversed partially in 2021 to -0.9%, signaling a one-time significant valuation event or reassessment occurring in 2020 impacting deferred tax assets or liabilities.

Non-deductible expenses/losses

This category rose steadily from 2.2% in 2017 to a high of 17.8% in 2019, followed by an extraordinary peak at 6100% in 2020, before stabilizing at 2.5% in 2021. The 2020 figure again suggests the presence of a large non-recurring charge or reclassification affecting taxable income.

Sale of non-deductible goodwill

Data is incomplete for this item across the years, with a notable occurrence at 3.8% in 2017 and 1000% in 2020, indicating a significant sale or adjustment related to goodwill that was deemed non-deductible in those years.

Netherlands tax incentives

Tax incentives in the Netherlands improved consistently from -7.5% in 2017 to a more favorable -23.2% in 2019, but there was an extreme negative change to -4800% in 2020, followed by a slight improvement to -3.2% in 2021. This decline in 2020 could reflect either the cessation or reassessment of tax incentives impacting the firm’s effective tax rate.

Foreign tax incentives

Foreign tax incentives steadily increased in magnitude from -4.7% in 2017 to a substantial -40.5% in 2019, then sharply to -11700% in 2020, before rising again to -7.5% in 2021. The data indicates an abnormal impact in 2020 on foreign tax incentives, which might be linked to changes in foreign operations or tax legislation.

Changes in estimates of prior years’ income taxes

This item showed moderate fluctuations, remaining negative throughout the period, with the most notable deterioration in 2020 at -1300%. This suggests large adjustments or restatements of prior years’ income taxes occurred particularly in 2020, affecting the overall tax expense.

Withholding taxes

Withholding taxes started with no data until 2019, when it was small but positive at 1.8%, then sharply dropped to -3100% in 2020, before improving slightly to -0.4% in 2021. This pattern points to irregular withholding tax events, refunds, or penalties that heavily influenced the tax figures in 2020.

Other differences

Other differences showed wide variability, with a very large negative figure in 2017 (-42.9%), followed by smaller negative or positive values in subsequent years, with minimal impact in 2021 (-0.1%). This indicates miscellaneous tax adjustments influencing the effective tax rate to a lesser extent apart from 2017.

Effective tax rate

The effective tax rate demonstrated extraordinary volatility over the period. It was negative at -27.8% in 2017, shifted to a positive but low rate of 7.4% and 6.9% in 2018 and 2019, dramatically dropped to -8300% in 2020, and then recovered to 12.5% in 2021. This extreme fluctuation, especially the negative spike in 2020, evidences significant one-off tax impacts or accounting adjustments, which could be linked to the exceptional fluctuations seen in valuation allowances, non-deductible expenses, and tax incentives.

The financial data reflects a variety of trends across several key balance sheet items over the five-year period ending December 31, 2021.

Operating loss and tax credit carry forwards

There is a consistent downward trend from US$621 million in 2017 to US$317 million in 2021, indicating a reduction over time which could imply usage of these tax benefits or expiration of carry forward amounts.

Disallowed interest and tax incentive carry forwards

This item decreases steadily from US$156 million in 2017 to US$19 million in 2021, signaling diminishing disallowed tax benefits or incentives over the years.

Other accrued liabilities

This shows variability, starting at US$100 million in 2017, dropping to US$83 million in 2018, then rising to US$147 million by 2021. The increase in later years suggests growing short-term obligations or accrued expenses.

Pensions

Pension liabilities fluctuate modestly, dipping from US$93 million in 2017 to US$83 million in 2018, then increasing to US$121 million in 2020 before falling to US$104 million in 2021, indicating some volatility in pension-related obligations.

Other non-current liabilities

Recorded only from 2019 onward, these liabilities show a slight increase from US$53 million in 2019 to US$60 million in 2021, suggesting stable but incremental non-current liabilities.

Share-based compensation

There is a steady decrease from US$25 million in 2017 to US$9 million in 2021, possibly indicating a reduction in share-based payment expenses or changes in compensation structure.

Restructuring liabilities

Amounts decline from US$16 million in 2017 to US$5 million in 2019, spike to US$15 million in 2020, and then fall again to US$6 million in 2021, reflecting episodic restructuring activities.

Receivables

Receivables show fluctuations, increasing from US$71 million in 2017 to US$89 million in 2021, with a low of US$55 million in 2020. The rebound post-2020 could suggest improved sales collection or higher sales volume.

Inventories

Inventory levels rise from US$3 million in 2017 to US$8 million in 2020 before decreasing to US$5 million in 2021, hinting at inventory buildup followed by some liquidation or decreased purchases.

Other current assets/liabilities

Data is sparse, with values only in 2017 and 2018 at US$2 million; subsequent years do not report values, limiting analysis for this item.

Deferred tax assets

These assets decline steadily from US$1,087 million in 2017 to US$756 million in 2021, signifying a reduction in deferred tax benefits.

Valuation allowance

The valuation allowance increases in negative magnitude from -US$140 million in 2017 to -US$227 million in 2020 before partially recovering to -US$161 million in 2021. This suggests fluctuating adjustments to deferred tax asset realizability.

Deferred tax assets, net of valuation allowance

Net deferred tax assets decline over time from US$947 million in 2017 to US$595 million in 2021, consistent with the reduction in gross deferred tax assets and valuation allowance changes.

Identified intangible assets, net

There is a clear trend of decreasing negative balances from -US$1,161 million in 2017 to -US$20 million in 2021. This marked improvement may reflect amortization or impairment recoveries.

Undistributed earnings of foreign subsidiaries

These negative amounts decrease in magnitude from -US$109 million in 2017 to -US$38 million in 2021, suggesting improved retained earnings or repatriation effects.

Property, plant and equipment, net

Net values become less negative, shifting from -US$54 million in 2017 to -US$7 million in 2021, indicating asset disposals, depreciation, or revaluations.

Goodwill

Goodwill is recorded from 2018 with an increasing negative balance from -US$39 million to -US$83 million in 2021, implying goodwill impairment or increased acquisition-related adjustments.

Other current and non-current assets

These assets, reported from 2019, show increasing negative balances from -US$52 million to -US$63 million in 2021, indicating asset write-downs or reclassifications.

Deferred tax liabilities

Deferred tax liabilities decrease markedly from -US$1,324 million in 2017 to -US$211 million in 2021, reflecting reduction in tax obligations arising from temporary differences.

Net deferred tax position

The figure moves from a net liability position of -US$377 million in 2017 to a net asset position of US$384 million in 2021, highlighting a significant improvement in the deferred tax position over time.

Deferred Tax Assets

The value of deferred tax assets exhibited a decreasing trend from 2017 to 2019, declining from 324 million USD in 2017 to 293 million USD in 2018 and remaining flat at 293 million USD in 2019. Subsequently, a significant increase occurred in 2020, with the figure rising sharply to 477 million USD. In 2021, this value experienced a slight decrease to 441 million USD, though it remained well above the levels observed before 2020.

Deferred Tax Liabilities

Deferred tax liabilities showed a consistent and pronounced decline over the five-year period. Starting at 701 million USD in 2017, the liabilities decreased markedly each subsequent year, reaching 450 million USD in 2018, 282 million USD in 2019, 85 million USD in 2020, and further diminishing to 57 million USD in 2021. This trend indicates a substantial reduction in deferred tax liabilities throughout the period.

Overall Observations

Over the timeframe analyzed, deferred tax assets shifted from a period of stability and slight decline to a notable increase, while deferred tax liabilities steadily decreased each year. The opposing trajectories suggest an improvement in the net deferred tax position, potentially reflecting changes in tax planning, asset utilization, or timing differences recognized for tax purposes. The marked decline in deferred tax liabilities could imply reduced future tax obligations or adjustments in timing differences, whereas the rise in deferred tax assets may indicate increased future tax benefits.

The data reveals noteworthy trends in the financial position and performance over the five-year period examined.

Total Assets

Both reported and adjusted total assets show a general decline from 2017 through 2020, decreasing from approximately 24,000 million USD to just below 20,000 million USD. In 2021, a slight reversal occurs with total assets increasing to over 20,400 million USD (adjusted), indicating stabilization or early signs of growth after a period of contraction.

Total Liabilities

Reported and adjusted liabilities generally remain stable or moderately fluctuate between 2017 and 2020, ranging roughly from 9,600 to 10,600 million USD (adjusted). However, in 2021, there is a pronounced increase in total liabilities to about 14,000 million USD (adjusted), a significant jump suggesting increased borrowing or obligations during the latest year.

Stockholders’ Equity

A continual decline in stockholders’ equity is evident over the period. Adjusted equity decreases from approximately 13,900 million USD in 2017 to just over 6,100 million USD in 2021. This reduction reflects erosion in net asset value, which could be influenced by net losses, dividend payouts exceeding earnings, or treasury stock transactions.

Net Income Attributable to Stockholders

The reported net income shows high volatility. It remains relatively strong in 2017 and 2018, above 2,000 million USD, then drops sharply to marginal positive values in 2019 and 2020. A recovery is observed in 2021 with reported earnings climbing back to 1,851 million USD (adjusted). The adjusted net income exhibits a similar pattern but indicates a net loss in 2020 (-297 million USD), highlighting a particularly weak performance that year before the rebound in 2021.

Overall, the data suggests a period of financial contraction and increased leverage through 2020 with a partial recovery in 2021. The declining equity amid rising liabilities in the final year points to potential increased financial risk or strategic investment fueling growth. The net income trajectory indicates operating difficulties around 2019-2020, with improvement subsequently, possibly reflecting market conditions or internal restructuring effects.

Net Profit Margin Trends

Reported net profit margin demonstrated a generally high performance in 2017 and 2018, with values of 23.93% and 23.47% respectively, before sharply declining to 2.74% in 2019 and further to 0.6% in 2020. It then rebounded significantly to 16.91% in 2021. The adjusted net profit margin followed a similar pattern but showed more volatility, falling from 15.32% in 2017 to a low of -3.45% in 2020, then recovering to 16.73% in 2021. This suggests significant impact from non-recurring items or tax adjustments in the interim years, with a notable recovery in profitability by 2021.

Total Asset Turnover Trends

Both reported and adjusted total asset turnover ratios remained relatively stable from 2017 through 2020, fluctuating narrowly between 0.38 and 0.45. In 2021, there was a marked improvement, with reported turnover increasing to 0.53 and adjusted turnover to 0.54. This improvement indicates enhanced efficiency in the use of assets to generate sales in the latest reporting period compared to previous years.

Financial Leverage Trends

Financial leverage ratios showed a consistent upward trend over the entire period. Reported leverage rose from 1.78 in 2017 to a substantial 3.2 in 2021, while adjusted leverage similarly increased from 1.71 to 3.32. This rising leverage indicates greater reliance on debt financing or other liabilities over time, potentially increasing financial risk but also possibly amplifying returns in recent years.

Return on Equity (ROE) Trends

Reported ROE exhibited strong results in 2017 and 2018 (16.37% and 21.02%), followed by a steep decline in 2019 (2.57%) and 2020 (0.58%), with a significant rebound to 28.66% in 2021. Adjusted ROE mirrored this trend but showed a negative value in 2020 (-3.47%), highlighting the impact of adjustments during this period. The strong recovery in 2021 suggests improved profitability and efficient use of shareholders' equity after a period of subdued performance.

Return on Assets (ROA) Trends

Reported ROA followed a similar trajectory to other profitability ratios, with high levels in 2017 (9.21%) and 2018 (10.26%), a sharp drop in 2019 (1.21%) and 2020 (0.26%), and recovery in 2021 (8.97%). Adjusted ROA, while generally lower, shows a comparable pattern but includes a negative return in 2020 (-1.53%). The alignment of both reported and adjusted ROA trends indicates reduced asset profitability during 2019 and 2020, with marked recovery in 2021.

General Insights

The financial data reflects a challenging period for profitability and returns during 2019 and 2020, possibly due to external adverse conditions or operational setbacks. The subsequent recovery in 2021 across all key metrics—net profit margin, asset turnover, leverage, ROE, and ROA—suggests successful strategic or operational adjustments. The increase in financial leverage over the entire period indicates a shift toward more debt financing, which may have contributed to the amplified returns observed in the latest year but also suggests higher financial risk.

Reported Net Income Attributable to Stockholders

The reported net income remained relatively stable in 2017 and 2018 at approximately 2.2 billion US dollars, followed by a sharp decline in 2019 to 243 million US dollars. This downward trend continued in 2020 with a further decrease to 52 million US dollars. However, there was a significant recovery in 2021, with net income rising to 1.871 billion US dollars.

Adjusted Net Income Attributable to Stockholders

The adjusted net income shows a similar pattern to the reported figures, with 1.418 billion US dollars in 2017 increasing to 1.997 billion US dollars in 2018. In 2019, the adjusted net income fell dramatically to 68 million US dollars, followed by a negative figure of -297 million US dollars in 2020, indicating an adjusted net loss. A strong rebound occurred in 2021, with adjusted net income increasing to 1.851 billion US dollars.

Reported Net Profit Margin

The reported net profit margin was stable and robust in 2017 and 2018, at approximately 24% and 23.5% respectively. This margin declined steeply in 2019 to 2.74%, further dropping to 0.6% in 2020, reflecting minimal profitability. In 2021, the margin improved significantly to 16.91%, indicating a recovery in profitability though still below earlier peak levels.

Adjusted Net Profit Margin

The adjusted net profit margin presents a trajectory consistent with reported margins but shows wider fluctuations. It increased from 15.32% in 2017 to 21.23% in 2018, then sharply fell to 0.77% in 2019. The margin turned negative at -3.45% in 2020, indicating adjusted operational challenges or one-time adjustments impacting profitability. In 2021, the margin rebounded strongly to 16.73%, closely aligning with the reported margin recovery.

The analysis of the financial data over the five-year period reveals several noteworthy trends in the company's asset base and efficiency metrics.

Asset Levels

Both reported and adjusted total assets exhibit a declining trend from 2017 through 2020, with reported total assets decreasing from 24,049 million USD to 19,847 million USD, and adjusted total assets declining from 23,725 million USD to 19,370 million USD over the same period. In 2021, there is a noticeable rebound with reported total assets increasing to 20,864 million USD and adjusted total assets rising to 20,423 million USD, indicating a recovery or expansion in the asset base.

Total Asset Turnover

The reported total asset turnover ratio shows an improvement overall, increasing from 0.38 in 2017 to 0.53 in 2021. This suggests enhanced efficiency in generating revenue from the asset base. Similarly, the adjusted total asset turnover ratio follows the same upward trend, rising from 0.39 in 2017 to 0.54 in 2021. Both metrics display relative stability between 2018 and 2020, with minor fluctuations, but a marked increase in 2021.

Comparison Between Reported and Adjusted Figures

The adjusted total assets are consistently slightly below the reported figures, reflecting the impact of deferred income tax adjustments. Correspondingly, adjusted total asset turnover ratios tend to be marginally higher than reported ratios, possibly due to the lower adjusted asset base used in the calculation. The close alignment of these paired measures over time indicates consistency in the adjustments applied and their limited effect on overall trend interpretation.

Overall, the data indicates a period of contraction in asset size up to 2020 followed by a recovery in 2021, coupled with steadily improving asset utilization efficiency throughout the period. This suggests the company has been managing its assets more effectively to generate revenue, particularly in the later years.

The financial data presents a clear evolution in the company's asset base, equity position, and leverage ratios over the five-year period from 2017 to 2021. Observing the total assets, both reported and adjusted figures demonstrate a declining trend from 2017 through 2020, followed by a modest recovery in 2021. Specifically, reported total assets decreased from US$ 24,049 million in 2017 to US$ 19,847 million in 2020, then slightly increased to US$ 20,864 million in 2021. Adjusted total assets mirrored this pattern, starting at US$ 23,725 million in 2017, declining to US$ 19,370 million in 2020, and then moderately rising to US$ 20,423 million in the final year.

In contrast, the stockholders’ equity figures reveal a persistent downward trend throughout the period. Reported equity decreased sharply from US$ 13,527 million in 2017 to US$ 6,528 million in 2021, effectively halving over the five years. Adjusted equity shows a similar trajectory, dropping from US$ 13,904 million in 2017 to US$ 6,144 million in 2021. The steady decline in equity indicates potential erosion of the company’s net worth during this timeframe, which may have implications for financial stability and investor confidence.

The financial leverage ratios—calculated as the ratio of total assets to equity—demonstrate a general upward trend, implying increased reliance on debt or liabilities relative to equity. The reported financial leverage rose from 1.78 in 2017 to 3.20 in 2021, with a notable acceleration especially in the last year. The adjusted financial leverage follows a comparable pattern, increasing from 1.71 to 3.32 over the same period. This rise suggests that the company's capital structure has become more leveraged, which could intensify financial risk but also potentially enhance return on equity.

Overall, the data indicates a contraction in the asset base and net equity alongside an increase in leverage. The declining equity amid relatively stable asset values points to increased liabilities or financial obligations. The company’s careful monitoring of deferred and reported tax impacts reflected in adjusted figures does not alter the fundamental trends. The pronounced increase in leverage in 2021 may warrant further scrutiny to assess risk management and sustainability of the capital structure going forward.

The financial data reveals significant fluctuations in both reported and adjusted income figures over the analyzed periods, alongside notable movements in equity and return on equity (ROE) metrics.

Net Income Trends

The reported net income attributable to stockholders experienced a sharp decline from 2017 to 2020, decreasing from $2,215 million in 2017 to as low as $52 million in 2020. However, there was a substantial recovery in 2021, with reported net income rising to $1,871 million. Similarly, the adjusted net income followed a comparable downward trajectory, moving from $1,418 million in 2017 to a negative $297 million in 2020, before rebounding to $1,851 million in 2021. The adjusted figures indicate more pronounced volatility, including a negative net income in 2020, suggesting adjustments may have highlighted underlying operational or non-recurring challenges during that year.

Stockholders’ Equity

Both the reported and adjusted stockholders’ equity values declined consistently over the five-year period. Reported equity diminished from $13,527 million in 2017 to $6,528 million in 2021, marking more than a 50% reduction. The adjusted equity mirrored this downward trend, from $13,904 million in 2017 to $6,144 million in 2021. This persistent decrease in equity potentially reflects distributive actions such as dividends or share repurchases, combined with the impact of losses or reduced retained earnings during some periods.

Return on Equity (ROE)

The reported ROE displayed significant variation, ranging from a high of 21.02% in 2018 to a low of 0.58% in 2020, before rebounding sharply to 28.66% in 2021. The adjusted ROE exhibited a similar pattern but with greater volatility, evidenced by a decline into negative territory at -3.47% in 2020, followed by a recovery to 30.13% in 2021. This indicates that the company’s profitability relative to equity was severely impacted in 2020 but improved markedly the following year, with adjustments amplifying the visibility of operational challenges during the downturn.

Overall, the data indicates a period of financial instability and challenges especially concentrated around 2019 and 2020, with a strong recovery in 2021. Equity levels steadily contracted throughout the period, potentially signaling strategic financial management responses to income fluctuations. The volatility in ROE underscores sensitivity of profitability to the deteriorating and subsequently recovering earnings, emphasizing the importance of the adjustments in reflecting the company's financial performance more accurately.

The reported net income attributable to stockholders exhibited significant volatility over the analyzed period. Starting at $2,215 million in 2017, the figure remained nearly constant in 2018 before plunging sharply to $243 million in 2019 and further dropping to $52 million in 2020. However, a strong recovery occurred in 2021, with net income rising to $1,871 million. This pattern indicates substantial fluctuations in profitability, with a notable downturn during 2019 and 2020 followed by a rebound.

Adjusted net income displays a somewhat similar trajectory but with more pronounced negative values, especially in 2020 where the figure declined to -$297 million. The adjusted figures started at $1,418 million in 2017, increased in 2018 to $1,997 million, then sharply declined to $68 million in 2019 and turned negative in 2020 before recovering to $1,851 million in 2021. This adjusted data suggests the presence of significant one-time or non-recurring charges impacting the 2019 and 2020 periods, which were excluded in the adjusted view but nonetheless negatively affected underlying profitability.

Total assets, both reported and adjusted, showed a gradual declining trend from 2017 through 2020 before seeing a modest increase in 2021. Reported total assets decreased from $24,049 million in 2017 to $19,847 million in 2020, then increased to $20,864 million in 2021. Adjusted total assets followed a similar pattern, moving from $23,725 million in 2017 down to $19,370 million in 2020 with a slight recovery to $20,423 million in 2021. This decline over several years could indicate asset divestitures, depreciation outpacing asset additions, or a strategic downsizing, with the rebound in 2021 suggesting renewed investment or asset growth.

Return on assets (ROA), both reported and adjusted, mirrors the trend observed in net income and assets. Reported ROA started at 9.21% in 2017, increased to 10.26% in 2018, then sharply fell to 1.21% in 2019 and further to 0.26% in 2020 before recovering to 8.97% in 2021. Adjusted ROA similarly declined from 5.98% in 2017 to -1.53% in 2020, showing a deeper negative performance, and then improved markedly to 9.06% in 2021. The notable negative adjusted ROA in 2020 highlights that after accounting for non-recurring adjustments, the company's asset efficiency was impaired during that year.

Overall, the data presents a narrative of strong performance in the earlier years, followed by a pronounced downturn in 2019 and 2020, characterized by dramatic declines in profitability and asset returns. This was coupled with a reduction in asset base. The significant recovery in 2021 across income, assets, and profitability metrics reflects a substantial operational improvement or normalization after the adverse period. The adjusted figures accentuate the impact of extraordinary items affecting certain years, especially 2020, which suggests that the company encountered material but likely non-recurring challenges during that timeframe.