NXP Semiconductors N.V. (NASDAQ:NXPI)

Net Operating Profit After Taxes (NOPAT)

NOPAT displayed a fluctuating pattern over the five-year period. Starting at 1,630 million USD in 2017, it increased substantially to 2,196 million USD in 2018. A sharp decline followed in 2019, with NOPAT falling to 303 million USD and further dropping to 40 million USD in 2020. The most recent figure for 2021 shows a significant recovery to 2,126 million USD, approaching the 2018 peak.

Cost of Capital

The cost of capital remained relatively stable across the period, ranging narrowly between 15.25% and 16.31%. It started at 16.23% in 2017, decreased slightly in 2018, and experienced minor fluctuations in subsequent years, finishing at 15.7% in 2021. This consistency suggests stable financing conditions or risk perceptions by investors.

Invested Capital

Invested capital showed a gradual downward trend from 2017 to 2020, decreasing from 20,519 million USD to 16,335 million USD. In 2021, there was a slight increase to 16,745 million USD, but the level remained below the initial 2017 figure. This decline may indicate asset divestitures, efficiency improvements, or reduced capital expenditures during the observed time frame.

Economic Profit

Economic profit was negative throughout the entire period, indicating that the company generated returns below its cost of capital. Although the negative value improved somewhat from a low of -1,701 million USD in 2017 to -550 million USD in 2018, it deteriorated significantly in 2019 (-2,334 million USD) and 2020 (-2,624 million USD). The latest available data for 2021 show an improvement to -503 million USD, suggesting a positive shift yet still reflecting value destruction relative to the cost of capital.

Summary

The financial data indicates a volatile profitability scenario marked by a sharp dip in operating profits in 2019 and 2020, followed by substantial recovery in 2021. Despite stable cost of capital, invested capital steadily declined before stabilizing slightly in the final year. The persistent negative economic profit underscores ongoing challenges in covering capital costs, although improvements in 2021 hint at potential value creation moving forward. Overall, the trend reflects episodic operational difficulties with recent signs of financial performance recovery.

The financial data reveals notable fluctuations in both net income attributable to stockholders and net operating profit after taxes (NOPAT) over the five-year period.

Net Income Attributable to Stockholders

From 2017 to 2018, net income remained relatively stable, showing a slight decline from 2215 million US dollars to 2208 million US dollars. In 2019, a significant drop occurred, with net income decreasing sharply to 243 million US dollars. This downward trend continued into 2020, reaching a low of 52 million US dollars. However, in 2021, there was a strong recovery, with net income rising substantially to 1871 million US dollars, approaching earlier peak levels.

Net Operating Profit After Taxes (NOPAT)

NOPAT showed a somewhat parallel trend to net income. It increased from 1630 million US dollars in 2017 to 2196 million US dollars in 2018. In 2019, NOPAT declined considerably to 303 million US dollars and further dropped to 40 million US dollars in 2020, highlighting a period of operational challenges. A notable rebound occurred in 2021, with NOPAT climbing to 2126 million US dollars, indicating significant operational improvement.

Overall, the data indicates a period of stability in the initial years, followed by a marked deterioration in financial performance in 2019 and 2020. The pronounced recovery in 2021 for both net income and NOPAT suggests a recovery phase, possibly driven by operational enhancements or favorable market conditions. The volatility observed could be indicative of external disruptions or internal restructuring efforts during the observed timeframe.

The financial data for income tax expense (benefit) and cash operating taxes over the five-year period reveals notable fluctuations and trends.

Income Tax Expense (Benefit)

The income tax expense (benefit) displays significant variability. Starting with a benefit of $483 million in 2017, the company experienced a positive tax expense of $176 million in 2018, followed by a smaller expense of $20 million in 2019. In 2020, the tax expense reverted to a benefit of $83 million, before increasing sharply to an expense of $272 million in 2021. This volatility indicates fluctuations in taxable income or changes in tax strategies and could reflect variations in profitability or one-time tax adjustments across the years.

Cash Operating Taxes

Cash operating taxes show a relatively stable trend from 2017 to 2021, with values ranging from $275 million to $445 million. There was an increase from $386 million in 2017 to a peak of $445 million in 2018, followed by a decline to $275 million in 2019. The tax paid then rose again to $355 million in 2020 and $384 million in 2021. This pattern suggests that while the accounting income tax expense experienced fluctuations, the actual cash taxes paid remained consistently substantial, with some variability potentially influenced by operational results or tax payment timing.

Total reported debt & leases

There is a noticeable upward trend in total reported debt and leases from 2017 to 2021. The figure increased steadily from $6,683 million in 2017 to $7,846 million in 2020, followed by a significant jump to $10,809 million in 2021. This represents a substantial rise in the company's leverage, particularly in the last reported year.

Stockholders’ equity

Stockholders’ equity shows a consistent decline over the five-year period. Starting at $13,527 million in 2017, equity decreased each year, reaching $6,528 million in 2021. This reduction suggests a diminishing net asset base, possibly impacted by accumulated losses, dividends, or repurchases, which may be cause for deeper examination into retained earnings and other equity changes.

Invested capital

Invested capital decreased from $20,519 million in 2017 to $16,335 million in 2020, indicating a reduction in the company’s total funds invested in operations. However, 2021 saw a slight increase to $16,745 million, which could reflect either asset acquisition or other forms of reinvestment. Despite the modest recovery, the overall trend indicates contraction in invested capital over the period analyzed.

The data exhibits significant fluctuations and patterns in the company's economic profitability, capital investment, and economic spread across the observed periods.

Economic Profit

The economic profit demonstrates high volatility from 2017 through 2021. Initially, there is a considerable loss of -1701 million US dollars in 2017, which improves substantially to -550 million in 2018. However, the trend reverses sharply in 2019 and 2020 with deeper losses of -2334 million and -2624 million, respectively. In 2021, economic profit improves again, reducing the loss to -503 million. This pattern suggests challenges in sustaining profitability, with notable recoveries after significant downturns.

Invested Capital

Invested capital exhibits a declining trend from 2017 to 2020, starting at 20519 million US dollars and decreasing annually to 16335 million by the end of 2020. In 2021, the invested capital shows a minor rebound to 16745 million. The overall reduction may indicate divestments, asset sales, or reprioritization of capital allocation, while the slight increase in 2021 could signal renewed investment or stabilization.

Economic Spread Ratio

The economic spread ratio remains negative throughout the analyzed years, reflecting that the company's returns on invested capital were consistently below its cost of capital. The ratio improves from -8.29% in 2017 to -3.06% in 2018, but worsens sharply in 2019 and 2020, dropping to -13.77% and -16.06%, respectively. By 2021, the spread improves again to -3%, though still negative. These variations denote difficulties in generating adequate returns relative to capital costs, with some recovery toward the end of the period.

Overall, the company faced consistent economic challenges, as evidenced by persistent negative economic profits and spread ratios, despite some periods of recovery. The invested capital trend suggests a reduction in asset base over several years, with a tentative increase in the final year observed. The cyclical nature of economic profit and spread improvements after steep declines could indicate responses to external market pressures or internal strategic adjustments aimed at enhancing capital efficiency and profitability.

Revenue Trends

The revenue shows variability over the analyzed periods. There was a slight increase from 9,256 million USD in 2017 to 9,407 million USD in 2018, followed by a decline in 2019 and 2020, with revenue decreasing to 8,877 million USD and 8,612 million USD respectively. However, a significant recovery is noted in 2021, with revenue rising sharply to 11,063 million USD, the highest observed in the data set.

Economic Profit Trends

The economic profit consistently remained negative throughout the periods, indicating that the company did not generate value over and above its cost of capital during these years. Although there was an improvement from -1,701 million USD in 2017 to -550 million USD in 2018, economic profit sharply declined to -2,334 million USD in 2019 and further to -2,624 million USD in 2020. A partial recovery occurred in 2021, with economic profit improving markedly to -503 million USD, yet still negative.

Economic Profit Margin Trends

The economic profit margin, calculated as economic profit relative to revenue, mirrored the trend in economic profit. The margin improved from -18.38% in 2017 to -5.85% in 2018, indicating a reduction in economic losses relative to revenue. However, there was a considerable deterioration in 2019 and 2020 with margins of -26.29% and -30.47% respectively, reflecting a worsening underlying economic profitability. In 2021, a significant improvement occurred, improving the margin to -4.54%, which aligns with the recovery observed in both revenue and economic profit.

Overall Insights

Over the five-year period, the company experienced volatility in its financial performance. Initial improvements in economic profit and margin in 2018 were followed by substantial declines in 2019 and 2020, coinciding with decreasing revenue. The rebound in 2021, with growth in revenue and improvement in economic profit and margin, suggests partial recovery in financial health. Nonetheless, the persistent negative economic profit implies ongoing challenges in generating returns above the cost of capital.