Super Micro Computer Inc. (NASDAQ:SMCI)

Net Operating Profit After Taxes (NOPAT)

The net operating profit after taxes initially decreased significantly from 123,581 thousand USD in 2019 to 70,352 thousand USD in 2020, representing a decline. Subsequently, NOPAT showed a steady increase in the following years, rising to 103,035 thousand USD in 2021, then experiencing a substantial surge to 314,116 thousand USD in 2022. This upward trajectory continued sharply through 2023 and 2024, reaching 627,683 thousand USD and ultimately 1,116,783 thousand USD respectively. Overall, the company demonstrated strong profitability growth after the initial setback in 2020.

Invested Capital

The invested capital exhibited a gradual increase from 1,150,419 thousand USD in 2019 to 1,282,041 thousand USD in 2021. There was a notable acceleration in growth in 2022 and 2023, with invested capital nearly doubling between 2021 and 2023, reaching 2,437,425 thousand USD. However, in 2024, invested capital increased drastically to 7,676,769 thousand USD, more than tripling from the previous year. This sharp rise in capital investment suggests significant expansion or asset acquisition activities during the most recent period.

Return on Invested Capital (ROIC)

The ROIC metric shows fluctuations consistent with the trends in NOPAT and invested capital. Initially, ROIC declined from 10.74% in 2019 to 5.68% in 2020, reflecting reduced efficiency or profitability relative to capital employed during that year. The ratio recovered to 8.04% in 2021, and improved substantially to 14.13% in 2022, aligning with increasing profitability. ROIC peaked at 25.75% in 2023, indicating optimal capital utilization and profitability balance. In 2024, however, ROIC decreased to 14.55%, which likely reflects the disproportionately high increase in invested capital relative to the growth in NOPAT.

Summary

The overall analysis reveals a period of initial decline in profitability followed by strong recovery and growth in both NOPAT and invested capital. The company appears to have pursued significant capital investments starting in 2022, leading to a peak in operational efficiency in 2023 as reflected by ROIC. The subsequent sharp increase in invested capital in 2024, while contributing to higher absolute profit levels, resulted in a reduction of capital efficiency metrics compared to the previous year. This pattern may suggest a strategic shift towards expansion or large-scale investment initiatives that have yet to fully translate into proportional profit increases.

Operating Profit Margin (OPM)

The operating profit margin demonstrates a fluctuating yet generally increasing trend over the period. Beginning at 4.41% in mid-2019, it declined to a low of 2.63% in mid-2020, followed by a modest recovery in 2021. A significant improvement occurred in 2022, reaching 7.18%, with a peak in 2023 at 11.58%. However, a decline to 8.96% is observed in 2024, indicating some reduction in operational profitability in the most recent year.

Turnover of Capital (TO)

The turnover of capital shows a downward trend overall. Starting at 3.09 in 2019, it decreased to 2.69 in 2020 and hovered around similar levels in 2021. There was a further decline in 2022 to 2.35, followed by a slight rebound to 2.95 in 2023. In 2024, the ratio dropped significantly to 1.97, indicating lower efficiency in utilizing capital to generate revenue in the latest period.

Effective Cash Tax Rate (1 – CTR)

This metric remains relatively high over the years, consistently above 75%. It peaked at 86.56% in 2021, showing the company retained a smaller portion of its pre-tax cash flow after taxes in that year. The rate decreased to 75.32% in 2023 but increased again to 82.52% in 2024, suggesting volatility but generally a consistently high cash taxation burden.

Return on Invested Capital (ROIC)

Return on invested capital exhibits considerable volatility and marked improvement over time. Starting from 10.74% in 2019, ROIC dropped noticeably to 5.68% in 2020, then improved in subsequent years to 8.04% in 2021 and a sharp rise to 14.13% in 2022. The highest return is observed in 2023 at 25.75%, followed by a decline to 14.55% in 2024. Despite the fluctuations, the overall direction signals enhanced capital efficiency and profitability in the recent years relative to the earlier period.

The financial data demonstrates notable fluctuations and overall growth across key performance indicators over the examined periods.

Net Operating Profit Before Taxes (NOPBT)

The NOPBT reveals a general upward trend from 2019 through 2024. Starting at $156.7 million in 2019, the profit declined substantially to $87.7 million in 2020, indicating a significant profit contraction that year. However, from 2020 onward, there was a strong recovery with NOPBT rising to $119.0 million in 2021, surging to $375.1 million in 2022, and then more than doubling to $833.4 million in 2023. The upward trajectory continued into 2024, reaching $1.35 billion. This pattern highlights increasing profitability after an initial setback in 2020.

Adjusted Net Sales

Adjusted net sales show a fluctuating but generally ascending trend. Sales peaked at approximately $3.56 billion in 2019, fell modestly to around $3.34 billion in 2020, and returned to near previous levels in 2021. Starting in 2022, there was a marked increase in sales, climbing sharply to $5.23 billion, then to $7.19 billion in 2023, and nearly doubling again to $15.1 billion in 2024. The data indicates strong revenue growth particularly after 2021, consistent with expanded business activities or market demand.

Operating Profit Margin (OPM)

The operating profit margin experienced variability with a general improvement trend. It started at 4.41% in 2019 but declined to a low of 2.63% in 2020, coinciding with the reduced profit levels during that year. The margin improved moderately to 3.35% in 2021, followed by significant gains in the next two years: increasing to 7.18% in 2022 and peaking at 11.58% in 2023. In 2024, the margin slightly eased to 8.96%. This suggests enhanced operational efficiency and profitability, though the slight decline in 2024 indicates some margin pressure despite robust profit growth.

Overall, the financial data portrays a recovery phase beginning in 2021, characterized by substantial increases in both sales and profitability metrics in subsequent years. The improved margins reflect better cost management or pricing power. The year 2020 stands out as a challenging period with declines across all metrics, which were subsequently overcome with strong growth and profitability expansion. The growth in revenue and profits from 2022 onwards highlights strengthened market position or operational scaling.

Adjusted Net Sales

The adjusted net sales demonstrate an overall increasing trend throughout the periods analyzed. Notably, sales decreased slightly from 3,555,499 thousand USD in mid-2019 to 3,339,631 thousand USD in mid-2020. From that point onward, there was a steady and substantial growth, reaching 15,101,179 thousand USD by mid-2024. The growth between mid-2022 and mid-2024 is particularly pronounced, more than doubling within this two-year span.

Invested Capital

The invested capital also shows a general upward trajectory. Starting at 1,150,419 thousand USD in mid-2019, the figure increased modestly through mid-2021. A significant rise is observed beginning mid-2022, accelerating sharply to reach 7,676,769 thousand USD by mid-2024. This sharp increase indicates additional capital investment or asset acquisition in the most recent years.

Turnover of Capital (TO)

The turnover of capital ratio exhibits a declining trend over the analyzed period, with some fluctuations. It began at 3.09 in mid-2019, followed by a dip to 2.69 in mid-2020. There was a minor recovery to 2.77 in mid-2021, but the ratio decreased again to 2.35 in mid-2022. A rise to 2.95 occurred mid-2023 before the ratio significantly dropped to 1.97 in mid-2024. The decreasing trend in turnover suggests that capital productivity in generating sales has diminished, particularly notable in the latest period despite substantial sales growth.

Summary

The data reveals a strong growth in adjusted net sales accompanied by a significant increase in invested capital, especially from mid-2022 onward. However, the turnover of capital ratio decline suggests diminishing efficiency in capital usage, as the sharp increase in invested capital outpaces the rate of sales growth. This could signify expansion or investment phases that have yet to fully translate into proportional sales returns. Monitoring the balance between capital investment and sales efficiency will be critical going forward.

Cash Operating Taxes

The amount of cash paid for operating taxes exhibits considerable volatility over the periods analyzed. Initially, it decreased from 33,161 thousand USD in 2019 to 15,997 thousand USD in 2021. However, from 2021 onwards, there is a marked upward trend, with tax payments rising significantly to 61,030 thousand USD in 2022 and sharply increasing further to 205,704 thousand USD in 2023, followed by a moderate increase to 236,509 thousand USD in 2024. This increase in cash operating taxes in recent years may correspond to higher taxable income or adjustments in tax regulations or company policy.

Net Operating Profit Before Taxes (NOPBT)

Net operating profit before taxes experienced fluctuations throughout the period but with an overall substantial increase. The profit fell from 156,742 thousand USD in 2019 to 87,695 thousand USD in 2020, then recovered to 119,032 thousand USD in 2021. Since then, a strong upward momentum is evident, with profits surging to 375,146 thousand USD in 2022, further nearly doubling to 833,387 thousand USD in 2023, and reaching 1,353,291 thousand USD in 2024. This suggests significant improvements in operational performance and profitability over the later years.

Effective Cash Tax Rate (CTR)

The effective cash tax rate demonstrated variability without a clear consistent trend. It remained relatively stable around the low 20% range in 2019 and 2020, declined to a low of 13.44% in 2021, increased moderately to 16.27% in 2022, peaked at 24.68% in 2023, and decreased to 17.48% in 2024. The fluctuation in the effective tax rate might reflect changes in tax planning strategies, varying profitable jurisdictions, or shifts in tax legislation impacting the company's tax liabilities relative to profit before taxes.