Allergan PLC (NYSE:AGN)

The data presents a multi-year financial performance evaluation focusing on net operating profit after taxes (NOPAT), cost of capital, invested capital, and economic profit. The analysis reveals notable trends and fluctuations over the five-year span.

Net Operating Profit After Taxes (NOPAT)

The NOPAT values are consistently negative throughout the period, indicating operating losses after tax. The magnitude of these losses exhibits a significant increase in 2017, reaching the lowest point at approximately -10.55 billion US dollars. Following this peak loss, there is a noticeable improvement in 2018 and 2019, with losses decreasing to around -5.67 billion and -5.36 billion US dollars respectively. Although still negative, this reduction suggests some recovery or cost control measures during the latter years.

Cost of Capital

The cost of capital fluctuates within a relatively narrow range, starting at 16.65% in 2015, dipping to its lowest at 14.55% in 2017, and rising again to 16.85% in 2019. This pattern illustrates a decrease in capital expenses or risk considerations mid-period, followed by an increase nearing the end of the period.

Invested Capital

Invested capital demonstrates a clear declining trend, dropping from approximately 127.5 billion US dollars in 2015 to about 80.27 billion US dollars in 2019. This gradual reduction indicates asset base contraction or asset sales, reflecting strategic adjustments in capital deployment or operational scale.

Economic Profit

Economic profit remains negative across all years evaluated, signifying that the company is not generating sufficient returns above its cost of capital. The losses peak in 2017 at around -25.62 billion US dollars. Despite this, a modest improvement is visible by 2019 when economic loss decreases to approximately -18.88 billion US dollars. This trend parallels the NOPAT pattern and is consistent with the reduction in invested capital, suggesting efforts to improve capital efficiency, although profitability remains an issue.

In summary, the company experienced significant operational and economic losses throughout the period under review, with the most substantial downturn occurring in 2017. The subsequent years show a partial recovery in profit metrics concurrent with a reduction in invested capital. Nevertheless, the persistent negative economic profit points to ongoing challenges in achieving value creation above the cost of capital.

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 shows negative values throughout the analyzed period, indicating losses each year. Starting from approximately -24.7 billion US dollars in 2015, there was an improvement in 2016 with a reduction in losses to nearly -19.9 billion. However, losses increased again in 2017 to about -25.6 billion, followed by a decline in 2018 and 2019 to approximately -19.9 billion and -18.9 billion respectively. Overall, despite fluctuations, the losses tend to remain significant but show some recovery toward the end of the period.

Invested Capital

Invested capital demonstrates a clear and consistent decreasing trend from 2015 to 2019. It decreased from roughly 127.5 billion US dollars in 2015 to around 80.3 billion in 2019. This steady reduction in invested capital suggests a strategic downsizing or divestment over the analyzed years.

Economic Spread Ratio

The economic spread ratio remains negative throughout the five years, indicating that the returns on invested capital were below the cost of capital. The ratio started at -19.4% in 2015 and showed slight improvement to -17.92% in 2016. However, it deteriorated significantly in 2017 to -24.74%, with slight recovery in 2018 to -21.8%, then decreased again to -23.53% in 2019. This pattern suggests ongoing challenges in generating value relative to the cost of capital.

The financial data reveals several noteworthy trends over the five-year period. Adjusted net revenues exhibit a fluctuating but generally stable pattern, beginning at approximately 15.06 billion US dollars in 2015, decreasing slightly in 2016, and then increasing again in 2017 and 2019, peaking at around 16.08 billion US dollars in 2019. This suggests the company experienced modest revenue growth with some variability during the period.

In contrast, economic profit figures remain consistently negative throughout the years, indicating a persistent economic loss. The magnitude of the negative economic profit fluctuates, with a slight improvement observed from -24.73 billion US dollars in 2015 to -18.88 billion US dollars in 2019. This trend implies an ongoing challenge in generating returns above the cost of capital, although there is a gradual reduction in the economic loss over time.

The economic profit margin, which measures economic profit as a percentage relative to revenues, also remains negative but improves gradually from -164.19% in 2015 to -117.44% in 2019. This improvement indicates increasing efficiency or profitability relative to revenues, despite the margins remaining significantly below zero. The consistent negative margins suggest the company faced structural issues regarding profitability but made some progress in mitigating losses.

Adjusted Net Revenues

Stable with slight growth, peaking in 2019 at around 16.08 billion US dollars.

Economic Profit

Consistently negative, but improving from about -24.73 billion US dollars in 2015 to -18.88 billion US dollars in 2019.

Economic Profit Margin

Negative throughout, improving from -164.19% to -117.44%, indicating reduced economic losses relative to revenues.