Allergan PLC (NYSE:AGN)

Net Operating Profit After Taxes (NOPAT)

The net operating profit after taxes exhibited a significant negative amount throughout the entire period. Initially, it improved from -3.5 billion in 2015 to about -2 billion in 2016, showing a reduction in losses. However, there was a sharp decline in 2017 with a large increase in the negative figure to over -10.5 billion. Subsequently, the losses decreased but remained substantial, with values close to -5.7 billion in 2018 and approximately -5.4 billion in 2019.

Cost of Capital

The cost of capital experienced minor fluctuations during the period. It started at 16.57% in 2015, slightly decreased to 16.04% in 2016, and further declined to its lowest point at 14.48% in 2017. After that, it increased again to 15.5% in 2018 and peaked at 16.77% in 2019, reflecting a rising trend toward the end of the period.

Invested Capital

Invested capital demonstrated a consistent declining trend from 2015 to 2019. It decreased steadily from approximately 127.5 billion USD in 2015 to 80.3 billion USD in 2019. This reduction suggests a substantial downsizing or disposition of assets over the years.

Economic Profit

The economic profit remained negative throughout the analyzed timeframe, underscoring ongoing challenges. The figure started at around -24.6 billion USD in 2015 and showed some improvement to -19.8 billion in 2016. However, it declined again in 2017 to approximately -25.5 billion, matching the net operating profit trend’s volatility. In 2018 and 2019, the losses lessened somewhat to -19.8 billion and -18.8 billion respectively, indicating a slight recovery though consistently negative economic value was generated.

Net Income (Loss) Attributable to Shareholders

The net income attributable to shareholders shows significant volatility over the observed period. Starting from approximately 3.9 billion US dollars at the end of 2015, it experienced a substantial increase to nearly 15 billion US dollars by the end of 2016. This peak was followed by a sharp reversal into negative territory, with losses amounting to approximately 4.1 billion US dollars in 2017. The negative trend continued in subsequent years, with losses deepening to around 5.1 billion and 5.3 billion US dollars in 2018 and 2019, respectively.

Net Operating Profit After Taxes (NOPAT)

The NOPAT metric also reflects a deteriorating operating performance over the period. It began in 2015 with a negative figure of about 3.5 billion US dollars, improved slightly in 2016 to approximately minus 2 billion US dollars, indicating a reduction in operating losses. However, in 2017, NOPAT deteriorated sharply, reaching a loss exceeding 10.5 billion US dollars. This was followed by some improvement yet continued negative results in 2018 and 2019, with losses of about 5.7 billion and 5.4 billion US dollars, respectively.

Overall Financial Trends

The company’s financial performance exhibits considerable instability over the five-year span. The marked peak in net income in 2016 appears anomalous given the general trend of losses in other years. Both net income and operating profitability suffer from large losses in recent years following the 2016 peak, suggesting potential challenges affecting operational efficiency and profitability after 2016.

The divergence between net income and NOPAT indicates that non-operating factors, such as one-time gains or losses, may have influenced net income, particularly in 2016. The sustained negative operating profit after taxes highlights fundamental operational difficulties that warrant further investigation.

The data reveals significant fluctuations in the provision (benefit) for income taxes over the five years analyzed. Initially, there is a substantial tax benefit recorded, with the provision showing negative values each year from 2015 through 2018, indicating the company recognized income tax benefits rather than expenses during this period. The magnitude of the benefit peaks in 2017 with an amount exceeding -6.6 million US dollars, suggesting an extraordinary tax gain or adjustment that year. However, in 2019, this trend reverses, and the provision shifts to a positive value of approximately 146 thousand US dollars, reflecting a tax expense rather than a benefit.

In contrast, the cash operating taxes exhibit a more variable and less consistent pattern. The cash taxes paid decreased from about 398 thousand US dollars in 2015 to roughly 295 thousand in 2016 but then surged to approximately 1.24 million in 2017. This rise contrasts with the significant tax benefit recorded in the provision for the same year. A striking observation is seen in 2018 when the cash operating taxes turn negative, indicating a tax refund or credit of nearly 399 thousand US dollars. Following this, the cash taxes return to a positive figure of approximately 897 thousand US dollars in 2019.

Overall, the provision for income taxes and cash operating taxes demonstrate divergent movements during several years, which may indicate timing differences, adjustments, or tax strategy effects on reported versus actual cash tax payments. The large tax benefits recorded in provisions in earlier years, especially 2017, suggest one-time tax events or re-measurements impacting the income statement, while the cash operating taxes reflect the actual tax payments made or refunded, exhibiting a more volatile profile with a notable negative value in 2018.

The financial data reveals several important trends over the five-year period ending December 31, 2019. The total reported debt and leases exhibit a consistent downward trajectory. Starting from approximately $42.89 billion in 2015, the debt decreases every year, reaching about $23.22 billion by the end of 2019. This represents a significant reduction in the company's leverage or obligations associated with debt and leases over the period.

Shareholders’ equity also demonstrates a declining pattern throughout these years. From $76.59 billion at the end of 2015, it slightly decreases to $76.19 billion in 2016 and continues this downward trend to $58.17 billion by 2019. This consistent reduction indicates possible challenges with retained earnings, equity issuance, or other comprehensive income affecting the equity base.

The invested capital, which encompasses the company's overall capital invested in operations, similarly shows a decreasing trend. Beginning at approximately $127.50 billion in 2015, invested capital reduces each year, culminating at about $80.27 billion in 2019. This decline suggests a potential shrinking scale of invested assets or capital employed, which could relate to asset divestitures, depreciation outpacing capital expenditure, or capital structure adjustments.

Total reported debt & leases

Substantial reduction by nearly 46% from 2015 to 2019, indicating active debt repayment or lease obligation reduction.

Shareholders’ equity

Gradual decline of roughly 24% over the period, possibly signaling diminished profitability, dividend distribution exceeding earnings, share repurchases, or adverse comprehensive income impacts.

Invested capital

Marked decrease of approximately 37%, reflecting either asset shrinkage, depreciation exceeding reinvestment, or strategic restructuring.

In summary, all three key financial measures present downward trends, with debt levels showing the most pronounced reduction, followed by invested capital and shareholders’ equity. The data implies an overall contraction in the scale of the business's financial operations and capitalization, alongside a strategic effort to reduce leverage.

Economic Profit

The economic profit demonstrates a consistently negative value throughout the five-year period, reflecting ongoing losses when considering the cost of capital. The magnitude of these losses shows variability, with a peak negative value recorded in 2017 at approximately -25.54 billion US dollars. There is a slight improvement trend from 2017 through 2019, yet the economic profit remains substantially negative, indicating persistent challenges in generating profit above the company’s cost of capital.

Invested Capital

The invested capital exhibits a clear downward trend from 2015 to 2019. Starting at about 127.5 billion US dollars in 2015, it decreases steadily each year, reaching roughly 80.3 billion by the end of 2019. This reduction suggests a possible strategy to streamline assets, divest non-core operations, or decreased reinvestment in capital. The decline in invested capital is consistent and could reflect efforts to improve capital efficiency or adjust the asset base in response to business conditions.

Economic Spread Ratio

The economic spread ratio remains negative across all periods, indicating that the return on invested capital is below the cost of capital. The spread ratio worsens notably in 2017, dropping to -24.67%, which aligns with the year’s largest economic loss. Although there is some fluctuation, the ratio never approaches a positive spread, implying ongoing challenges in achieving value creation. The persistent negative spread suggests that the company has not succeeded in generating returns sufficient to cover capital costs, thus reflecting continued operational or investment inefficiencies.

Economic Profit

The economic profit remained negative throughout the observed period from 2015 to 2019, indicating the company consistently operated at an economic loss. While the value fluctuated significantly, it showed some improvement after 2017; the economic loss decreased notably from approximately -25.5 million in 2017 to about -18.8 million in 2019. Despite this improvement, the economic profit values in 2018 and 2019 remained substantial in negative terms, suggesting ongoing challenges in generating value above the cost of capital.

Adjusted Net Revenues

Adjusted net revenues displayed a somewhat fluctuating but generally stable trend during the five-year period. Revenues started at approximately 15.1 billion in 2015, decreased slightly in 2016 and 2018, but overall showed minor growth by 2019, reaching close to 16.1 billion. This suggests that while revenues remained stable at a high level, growth was modest without consistent upward momentum.

Economic Profit Margin

The economic profit margin followed a negative trend throughout the period, reflecting the negative economic profit relative to revenues. The margin improved gradually from -163.48% in 2015 to -117.01% in 2019, indicating a reduction in the scale of the economic loss relative to revenue. However, the margin remained deeply negative, suggesting that despite operational size and revenue generation, the company struggled with profitability from an economic value-added perspective.

Overall Analysis

Over the five years, the company maintained relatively stable revenues but failed to generate positive economic profit, resulting in persistent negative economic profit margins. There were signs of improvement post-2017 in both economic profit and margin, which might reflect cost control or efficiency gains. However, the data indicates ongoing financial challenges, with the company unable to surpass its cost of capital and achieve economic profitability in this period.