Shockwave Medical Inc. (NASDAQ:SWAV)

Net Operating Profit After Taxes (NOPAT)

The net operating profit after taxes displayed a negative trend from 2019 through 2021, with losses deepening from -49,755 thousand USD in 2019 to -64,111 thousand USD in 2020. A significant reduction in loss occurred in 2021, decreasing to -7,113 thousand USD. In 2022, the company achieved a positive turnaround with a substantial profit of 122,053 thousand USD, which further increased to 170,498 thousand USD in 2023, indicating marked improvement in operational profitability.

Invested Capital

Invested capital initially decreased from 158,673 thousand USD in 2019 to 91,274 thousand USD in 2020, followed by a sharp increase to 174,255 thousand USD in 2021. This upward trend accelerated significantly in 2022 and 2023, reaching 318,057 thousand USD and 672,462 thousand USD respectively. The substantial growth in invested capital suggests considerable expansion or increased asset base over the evaluated period.

Return on Invested Capital (ROIC)

ROIC showed a highly negative performance in the first three years, with values declining from -31.36% in 2019 to a nadir of -70.24% in 2020, then recovering to -4.08% in 2021. A strong positive turnaround ensued in 2022 with ROIC reaching 38.37%, though this declined to 25.35% in 2023. Despite the slight decrease in 2023, the company demonstrated considerable improvement in generating returns on its invested capital compared to the initial years.

Overall Analysis

Over the five-year period, the company transitioned from sustained operational losses to profitability, paralleled by a significant increase in invested capital. The ROIC metrics reflect this recovery, with early years marked by negative returns that shifted to robust positive returns in the later years. While 2023 shows a decrease in ROIC compared to 2022, profitability continued to strengthen. The trends indicate successful strategic initiatives or operational improvements leading to better capital utilization and profit generation.

Operating Profit Margin (OPM)

The operating profit margin exhibited a significant improvement over the observed period. Starting at a deeply negative -115% in 2019, the margin progressively increased, reaching near breakeven at -2.64% in 2021. Subsequently, it transitioned to positive territory in 2022, achieving 25.51%, and slightly declined to 25.29% in 2023. This trend indicates a substantial enhancement in operational efficiency and profitability over the five-year span.

Turnover of Capital (TO)

The turnover of capital demonstrated a steady upward trend from 0.27 in 2019 to a peak of 1.54 in 2022, indicating improved asset utilization and revenue generation per unit of capital invested. However, in 2023, the ratio decreased to 1.09, suggesting a reduction in capital turnover efficiency or a potential change in asset base or sales dynamics.

1 – Effective Cash Tax Rate (CTR)

The value representing one minus the effective cash tax rate remained consistently high at 100% for the initial three years, implying minimal or no cash taxes paid relative to profit. From 2022 onwards, this rate declined to 97.68% and further to 92.33% in 2023, indicating an increase in effective tax payments and a reduction in tax shield or loss carryforwards utilized.

Return on Invested Capital (ROIC)

The return on invested capital showed a highly volatile pattern. It started at -31.36% in 2019 and worsened to -70.24% in 2020, reflecting negative returns on capital investment. By 2021, ROIC recovered to -4.08%, approaching break-even levels, and then surged to a positive 38.37% in 2022, indicating strong returns. In 2023, it declined to 25.35% but remained solidly positive, reflecting continued profitability though with some decrease from the prior year.

The financial data exhibits significant improvement in key operational metrics over the analyzed five-year period.

Net Operating Profit Before Taxes (NOPBT)

The company experienced substantial losses in the initial years, with NOPBT recorded at -49,365 thousand US dollars in 2019 and declining further to -63,658 thousand US dollars in 2020. The losses sharply decreased in 2021, reaching a near break-even point at -6,266 thousand US dollars. Subsequently, there was a marked turnaround as NOPBT turned positive in 2022, reaching 124,951 thousand US dollars, and continued to increase strongly to 184,665 thousand US dollars in 2023. This trend indicates a successful transition from loss to profitability.

Revenue

Revenue displayed robust growth throughout the period. It started at 42,927 thousand US dollars in 2019 and increased steadily to 67,789 thousand US dollars in 2020. The revenue more than tripled in 2021 to 237,146 thousand US dollars, followed by a doubling to 489,733 thousand US dollars in 2022, and further growth to 730,230 thousand US dollars in 2023. This consistent upward trajectory highlights effective top-line expansion possibly driven by increased sales volume or market penetration.

Operating Profit Margin (OPM)

The operating profit margin showed a recovery trend aligning with improvements in profitability. Initially, margins were deeply negative at -115% in 2019 and improved to -93.91% in 2020, reflecting ongoing operational challenges. In 2021, the margin nearly reached breakeven at -2.64%. By 2022, the margin turned positive to 25.51%, sustaining a similar level at 25.29% in 2023. This positive margin thereafter reflects increased operational efficiency and the company's ability to convert revenue into profit.

Overall, the data reveals a company that has undergone a significant financial turnaround, shifting from substantial losses to strong profitability, supported by rapid revenue growth and improved operational efficiency. The stabilization of a positive operating profit margin in the last two years complements the notable increase in net operating profit before taxes, suggesting solid financial health and effective management strategies in recent periods.

The financial data reveals significant growth in revenue over the analyzed period. Revenue increased steadily from approximately 42.9 million US dollars in 2019 to 730.2 million US dollars in 2023, showing a strong upward trend each year. Notably, the most substantial revenue growth occurred between 2020 and 2021, when revenue more than tripled, and continued to rise substantially through 2023.

Invested capital experienced fluctuations over the same period. It initially decreased from roughly 158.7 million US dollars in 2019 to 91.3 million in 2020, possibly indicating a reduction in asset base or operational scale in that year. However, after 2020, invested capital increased consistently to 672.5 million US dollars in 2023, reflecting expansion or increased capital investment in the company’s operations.

The turnover of capital ratio, which measures how efficiently invested capital generates revenue, improved significantly from 0.27 in 2019 to a peak of 1.54 in 2022, suggesting enhanced efficiency and utilization of invested capital during this period. However, there was a decline in the ratio to 1.09 in 2023, indicating a reduction in capital efficiency despite continued revenue growth. This may imply that the invested capital grew at a faster rate relative to revenue in the most recent year, possibly due to substantial investment in growth or expansion initiatives.

Overall, the data depicts a company experiencing rapid revenue growth accompanied by expanding invested capital and improving capital efficiency until 2022. The slight downturn in capital turnover in 2023 suggests a potential shift in investment strategy or increased capital intensity that may require monitoring to ensure sustained operational efficiency.

Cash Operating Taxes

The cash operating taxes exhibit a consistent and substantial upward trend over the analyzed period. Starting at $390,000 in 2019, the amount more than doubled by 2020 to $453,000, followed by a nearly twofold increase to $847,000 in 2021. There is a pronounced rise to $2,898,000 in 2022, culminating in a significant jump to $14,167,000 in 2023. This sharp increase in recent years suggests an expanding tax obligation, potentially reflecting higher taxable income or changes in tax policy.

Net Operating Profit Before Taxes (NOPBT)

Net operating profit before taxes demonstrates a marked improvement from a deep negative position in 2019 and 2020 to positive profitability by 2022. The figures transition from a loss of approximately $49.4 million in 2019 to a larger loss of $63.7 million in 2020, followed by a much reduced loss of $6.3 million in 2021. A significant turnaround occurs in 2022 with a net operating profit of $124.9 million, which further increases to $184.7 million in 2023. This shift indicates successful operational improvements and profitability gains over the period.

Effective Cash Tax Rate (CTR)

The effective cash tax rate data is only available for 2022 and 2023, showing an increase from 2.32% to 7.67%. This rise is consistent with the growing cash operating taxes and increased profitability, indicating a higher proportion of pre-tax income being paid as cash taxes. The low tax rates in these years might reflect tax planning strategies, deferred taxes, or credits previously utilized.