Regeneron Pharmaceuticals Inc. (NASDAQ:REGN)

Inventory Turnover

The inventory turnover ratio showed significant variability over the observed periods. Starting at 0.58 in 2020, it nearly doubled to 1.25 in 2021, indicating improved inventory management or increased sales relative to inventory. However, it declined to 0.65 in 2022 and remained relatively stable thereafter, ending at 0.64 in 2024. This suggests challenges in maintaining the higher turnover achieved in 2021.

Receivables Turnover

Receivables turnover increased from 2.07 in 2020 to 2.66 in 2021, reflecting faster collection of receivables. The ratio then decreased to 2.28 in 2022 and stabilized around 2.3 through 2024. Overall, the collection efficiency improved initially but then moderated, maintaining a level above the 2020 baseline.

Payables Turnover

This ratio rose sharply from 2.36 in 2020 to 4.32 in 2021, indicating faster payment to suppliers during that year. Subsequently, it dropped to 2.65 in 2022 and fluctuated mildly to 2.99 in 2023 and 2.5 in 2024. This pattern suggests an initial acceleration in payables turnover followed by a return to a more moderate pace.

Working Capital Turnover

Working capital turnover improved from 1.2 in 2020 to 1.59 in 2021, showing more efficient use of working capital in generating sales. However, from 2022 onward, the ratio declined, reaching a low of 0.82 in 2023 before a slight recovery to 0.97 in 2024. This indicates a weakening in working capital efficiency after 2021.

Average Inventory Processing Period

The average inventory processing period halved from 625 days in 2020 to 292 days in 2021, indicating a much faster turnover. It then increased again to 562 days in 2022, decreasing slightly in 2023 but rising again to 572 days in 2024. This reflects volatility and difficulty in sustaining improved inventory processing times.

Average Receivable Collection Period

The receivable collection period shortened significantly from 177 days in 2020 to 137 days in 2021, aligning with improvements in receivables turnover. It then lengthened moderately to around 160 days from 2022 through 2024, indicating a slight relaxation in collection efficiency after the initial improvement.

Operating Cycle

The operating cycle, representing the time taken from inventory purchase to cash collection, contracted sharply from 802 days in 2020 to 429 days in 2021. However, it lengthened to over 700 days in subsequent years, indicating a regression toward longer operating cycles and possibly reduced operational efficiency post-2021.

Average Payables Payment Period

The period for paying suppliers decreased from 155 days in 2020 to 84 days in 2021, suggesting faster payments. This duration increased during 2022 and later years, reaching 146 days in 2024. These changes coincide with the fluctuations observed in payables turnover, illustrating variability in payment timing strategies.

Cash Conversion Cycle

The cash conversion cycle saw a significant shortening from 647 days in 2020 to 345 days in 2021, reflecting improved liquidity management. Subsequently, the cycle lengthened again to over 550 days in 2022 through 2024, indicative of reduced efficiency in converting investments back into cash after the initial gains in 2021.

Cost of Revenues

The cost of revenues exhibited considerable fluctuation over the five-year period. It more than doubled from 1,119,900 thousand USD in 2020 to 2,437,500 thousand USD in 2021, indicating a significant rise in expenses associated with producing goods or services. This was followed by a sharp decline to 1,560,400 thousand USD in 2022. Subsequently, the cost of revenues showed a gradual increase in 2023 and 2024, reaching 1,975,000 thousand USD. The initial spike in 2021 and subsequent moderation likely reflect changes in production volume, sales mix, or input costs during these periods.

Inventories

Inventories exhibited a steady upward trend throughout the period. Starting at 1,916,600 thousand USD in 2020, inventories increased moderately by 2021 to 1,951,300 thousand USD. From 2021 onward, there was a more noticeable increase year-over-year, culminating at 3,087,300 thousand USD in 2024. This consistent build-up of inventory suggests an accumulation of stock, which could be due to expectations of future demand growth, increased production, or slower sales.

Inventory Turnover

The inventory turnover ratio demonstrated significant volatility and an overall declining trend after peaking in 2021. In 2020, the ratio was relatively low at 0.58, rising sharply to 1.25 in 2021, indicating that inventory was being converted to sales more rapidly that year. However, this ratio sharply dropped to 0.65 in 2022 and remained relatively stable but low through 2023 and 2024 (0.70 and 0.64, respectively). The decrease in turnover after 2021 suggests inventories were increasing faster than sales, leading to slower inventory movement.

Overall Insights

The financial data indicate that after a peak in costs and inventory efficiency in 2021, there was a period of adjustment with decreased cost of revenues and significant inventory accumulation from 2022 forward. The reduced inventory turnover ratio emphasizes slower inventory liquidation or possibly overstocking. These trends might raise concerns about inventory management efficiency and cost controls, meriting further operational analysis for optimization.

The annual financial data reveals distinct trends in revenues, accounts receivable, and receivables turnover over the five-year period.

Revenues

Revenues increased significantly from 8,497,100 thousand US dollars in 2020 to 16,071,700 thousand US dollars in 2021, nearly doubling within one year. However, in 2022, revenues declined to 12,172,900 thousand US dollars, representing a notable contraction. Following this decrease, revenues demonstrated a recovery trend by increasing in 2023 to 13,117,200 thousand US dollars, and further rising in 2024 to 14,202,000 thousand US dollars. Overall, revenues exhibit a pattern of rapid growth, a correction phase, and then moderate growth through the latter years.

Accounts Receivable, Net

Accounts receivable showed a growth trajectory throughout the period. Starting at 4,114,700 thousand US dollars in 2020, it rose to 6,036,500 thousand US dollars in 2021, followed by a slight decline to 5,328,700 thousand US dollars in 2022. Post-2022, accounts receivable increased steadily each year, reaching 5,667,300 thousand US dollars in 2023 and 6,211,900 thousand US dollars in 2024. This suggests ongoing growth in credit extended to customers, aligned generally with revenue fluctuations but displaying less volatility.

Receivables Turnover

The receivables turnover ratio improved from 2.07 in 2020 to 2.66 in 2021, implying more effective collection or faster turnover of receivables in the year of peak revenue. However, from 2021 onward, the ratio declined to 2.28 in 2022 and stabilized around 2.3 in subsequent years (2.31 in 2023 and 2.29 in 2024). This decline and stabilization indicate a reduction in the speed at which the company converts receivables into cash, reflecting the revenue dip and subsequent moderate recovery phase.

Cost of Revenues

The cost of revenues exhibited significant volatility over the five-year period. Starting at approximately $1.12 billion in 2020, it nearly doubled to $2.44 billion in 2021. Subsequently, there was a pronounced decline in 2022 to around $1.56 billion, followed by a gradual increase in 2023 and 2024, reaching about $1.97 billion. This pattern suggests fluctuating production or procurement costs, possibly influenced by changes in sales volume, input prices, or operational adjustments.

Accounts Payable

Accounts payable consistently increased throughout the period, rising from $475.5 million in 2020 to $789.5 million in 2024. The steady upward trajectory reflects either increased purchasing activity or extended payment terms, indicating a growing reliance on supplier credit or expansion in operational scale.

Payables Turnover Ratio

The payables turnover ratio showed considerable variation. It increased sharply from 2.36 in 2020 to a peak of 4.32 in 2021, indicating faster payment to suppliers during that year. After 2021, the ratio declined to 2.65 in 2022, recovered modestly to 2.99 in 2023, and decreased again to 2.5 in 2024. This fluctuation suggests varying management of payment cycles, perhaps influenced by changes in liquidity or negotiation strategies with suppliers.

Working Capital

There is a consistent upward trend in working capital from 2020 through 2023, increasing from approximately 7.08 billion US dollars to about 16.06 billion US dollars. However, in 2024, working capital decreased slightly to approximately 14.72 billion US dollars, indicating a moderate reduction after reaching a peak the previous year.

Revenues

Revenues exhibit significant fluctuation over the analyzed period. Starting at about 8.5 billion US dollars in 2020, revenues nearly doubled to 16.07 billion US dollars in 2021. Following this peak, there is a notable decline to around 12.17 billion US dollars in 2022. Revenues then show a gradual recovery, rising to approximately 13.12 billion US dollars in 2023 and further increasing to 14.20 billion US dollars by 2024, though they have not returned to the 2021 peak level.

Working Capital Turnover Ratio

The working capital turnover ratio indicates the efficiency of using working capital to generate revenue. This ratio increased from 1.2 in 2020 to 1.59 in 2021, suggesting improved efficiency during this period. However, the ratio declined sharply to 0.96 in 2022 and further to 0.82 in 2023, indicating less effective utilization of working capital relative to revenues. In 2024, there is a marginal increase to 0.97, reflecting a slight improvement but still lower efficiency compared to the earlier years.

Summary Insights

Overall, while working capital has generally increased, its efficiency in generating revenues has declined since 2021, as evidenced by the reduced turnover ratio. Revenues peaked in 2021 but subsequently decreased before showing signs of recovery. The combination of rising working capital and fluctuating revenues has led to reduced operational efficiency, suggesting that the company may need to optimize its working capital management to better support revenue generation in the future.

Inventory Turnover

The inventory turnover ratio exhibits notable fluctuations throughout the observed periods. Starting at a low point of 0.58 in 2020, it increases significantly to 1.25 in 2021, indicating an improvement in inventory management and sales efficiency during that year. However, from 2021 onwards, the ratio declines consistently, reaching 0.65 in 2022, followed by slight increases and decreases in subsequent years, ending at 0.64 in 2024. This trend suggests a deteriorating turnover rate after the peak in 2021, potentially reflecting slower inventory movement or increased stock levels relative to sales.

Average Inventory Processing Period

The average inventory processing period also shows significant variability, essentially moving inversely to the inventory turnover ratio. It decreases sharply from 625 days in 2020 to 292 days in 2021, implying a more efficient inventory cycle in 2021, consistent with the improved turnover ratio observed that year. Following 2021, the processing period lengthens markedly again, reaching 562 days in 2022, then showing slight improvements and setbacks in following years, ending at 572 days in 2024. This prolonged processing duration after 2021 indicates slower turnover of inventory, which is consistent with the decreasing inventory turnover ratio during the same period.

Overall Insights

The data indicates a distinct peak in inventory efficiency in 2021, characterized by the highest turnover ratio and the shortest inventory processing period within the five-year span. After this peak, there is a regression towards longer inventory holding periods and reduced turnover efficiency. This pattern could reflect changes in operational strategy, sales dynamics, supply chain issues, or market conditions impacting inventory management. The persistence of increased processing times and reduced turnover after 2021 might warrant further investigation to identify underlying causes and to optimize inventory control moving forward.

Receivables Turnover

The receivables turnover ratio exhibited an overall increasing trend from 2.07 in 2020 to a peak of 2.66 in 2021, indicating improved efficiency in collecting receivables in that year. However, this was followed by a decline to 2.28 in 2022, with minor fluctuations thereafter, registering 2.31 in 2023 and slightly decreasing to 2.29 in 2024. Despite the initial improvement, the turnover ratio stabilized at a level somewhat lower than the 2021 high, suggesting a moderate reduction in collection efficiency over the recent years.

Average Receivable Collection Period

The average receivable collection period displayed an inverse pattern relative to the receivables turnover ratio. It dropped significantly from 177 days in 2020 to 137 days in 2021, reflecting faster collection during that period. Subsequently, it rose to 160 days in 2022, remained nearly unchanged at 158 days in 2023, and slightly increased to 160 days again in 2024. This indicates a lengthening in the time taken to collect receivables following 2021, settling at a longer duration similar to that observed in 2022 and later years.

Overall Insight

The data reveals a peak in collection efficiency during 2021, demonstrated by the highest receivables turnover ratio and shortest collection period. Since that point, the company experienced a moderate decline in collection effectiveness, with ratios and periods moving towards less favorable values by 2024. The stabilization in these metrics over the past three years suggests a consistent yet less optimized approach to managing receivables compared to the 2021 benchmark.

Average Inventory Processing Period

The average inventory processing period exhibited significant fluctuations over the five-year span. Initially, the period was notably high at 625 days in 2020, then drastically decreased to 292 days in 2021, indicating a substantial improvement in inventory turnover. However, from 2021 onward, this period increased again, reaching 562 days in 2022, 519 days in 2023, and 572 days in 2024, suggesting some challenges in inventory management or changes in inventory levels that extended processing duration after the initial improvement.

Average Receivable Collection Period

The average receivable collection period demonstrated moderate variability but remained within a narrower range compared to the inventory period. It decreased from 177 days in 2020 to 137 days in 2021, showing enhanced efficiency in collecting receivables. Following this, there was a slight increase to 160 days in 2022, maintaining almost stable figures at 158 days in 2023 and 160 days in 2024. This indicates that the company’s collection period stabilized after the initial improvement.

Operating Cycle

The operating cycle mirrored the trends of both the inventory processing and receivable collection periods, evidencing considerable variability. The cycle substantially shortened from 802 days in 2020 to 429 days in 2021, indicating an overall improvement in the operational efficiency related to inventory and receivables management. However, similar to the inventory period, the operating cycle lengthened again in subsequent years, reaching 722 days in 2022, 677 days in 2023, and 732 days in 2024. This suggests a partial reversal of the efficiency gains made in 2021 and points to increased cash conversion cycle duration in recent periods.

Payables Turnover

The payables turnover ratio exhibited significant fluctuations over the analyzed periods. It increased sharply from 2.36 in 2020 to a peak of 4.32 in 2021, indicating a faster rate of payments to suppliers during that year. However, the ratio declined in subsequent years, falling to 2.65 in 2022, then slightly rising to 2.99 in 2023, before decreasing again to 2.5 in 2024. This pattern suggests variability in the speed at which payables are settled, with a notable acceleration in 2021 followed by a gradual return to lower turnover levels.

Average Payables Payment Period

The average payables payment period mirrored the inverse trend of the payables turnover ratio. Initially, it decreased substantially from 155 days in 2020 to 84 days in 2021, reflecting quicker payments made during 2021. In the subsequent years, this period increased, lengthening to 138 days in 2022, then moderately shortening to 122 days in 2023 before expanding again to 146 days in 2024. These shifts suggest that after a year of accelerated payments, the company extended its payment terms in the following years, when compared to 2021, though still maintaining shorter payment periods than those seen in 2020.

Average Inventory Processing Period

The average inventory processing period showed a marked decrease from 625 days in 2020 to 292 days in 2021, indicating a significant improvement in inventory turnover. However, this was followed by an increase in the subsequent years, reaching 562 days in 2022, 519 days in 2023, and 572 days in 2024. This trend suggests that while inventory management efficiency improved sharply in 2021, it experienced some deterioration afterwards, though the period remained lower than the initial 2020 value.

Average Receivable Collection Period

The average receivable collection period demonstrated a downward trend from 177 days in 2020 to 137 days in 2021, indicating a faster collection of receivables. After this improvement, the period stabilized, fluctuating slightly around 158 to 160 days from 2022 through 2024. This pattern reflects increased efficiency in receivables collection in 2021, with relatively consistent performance in the following years.

Average Payables Payment Period

The average payables payment period displayed a reduction from 155 days in 2020 to 84 days in 2021, suggesting quicker payments to suppliers. In the years after, the period extended, rising back to 138 days in 2022 and fluctuating to 122 days in 2023 and 146 days in 2024. This indicates a trend of initially accelerating payments, then gradually elongating the payment terms again, nearing the early period's duration by 2024.

Cash Conversion Cycle

The cash conversion cycle followed a similar pattern to the inventory processing period, with a steep decrease from 647 days in 2020 to 345 days in 2021, implying enhanced operational efficiency in managing working capital. However, the cycle lengthened again over the next three years, reaching 584 days in 2022, 555 days in 2023, and slightly increasing to 586 days in 2024. Despite this rebound, the cycle remained substantially lower than the initial 2020 figure, reflecting a net improvement in cash flow management over the observed period.