AmerisourceBergen Corp. (NYSE:ABC)

The financial data reveals several significant trends over the period from 2017 to 2022. Net operating profit after taxes (NOPAT) showed an overall positive trajectory from 2017 through 2019, increasing from approximately $772 million to nearly $1.19 billion. However, there was a sharp decline in 2020, where NOPAT turned negative, recording a loss of around $4.62 billion. This was followed by a recovery in the subsequent years, with NOPAT rising again to approximately $1.78 billion in 2021 and further to about $2.39 billion in 2022.

The cost of capital demonstrated a relatively stable pattern, fluctuating slightly within a narrow range from 8.22% to 8.95% across the years. It reached its lowest point in 2021 at 8.22% and its highest in 2022 at 8.95%, indicating modest variability without dramatic shifts.

Invested capital showed growth from 2017 through 2019, increasing from about $10.87 billion to roughly $12.35 billion. In 2020, this figure sharply decreased to approximately $7.13 billion, which aligns with the observed negative NOPAT for that year. Post-2020, invested capital rebounded to about $12.9 billion in 2021 and continued to increase slightly to around $13.02 billion in 2022, suggesting re-investment or recovery activities.

Economic profit followed a pattern similar to NOPAT, beginning with negative values in 2017 and 2018 but improving to a positive value in 2019. The year 2020 saw a dramatic drop, with economic profit deeply negative at over $5.24 billion, reflecting the substantial operational challenges faced. In 2021 and 2022, economic profit improved significantly, posting positive figures of approximately $718 million and $1.23 billion, respectively, indicating a resurgence in value creation beyond the cost of capital.

Summary of Financial Trends

There is a clear pattern of growth in operating profit and economic profit before 2020, interrupted by a severe downturn in 2020, likely reflecting significant one-time or extraordinary events adversely impacting profitability and capital investment.

Cost of capital remained relatively stable, suggesting consistent investor expectations for returns despite operational fluctuations.

Invested capital reductions and subsequent recoveries mirror the profit trends and imply a strategic reprioritization and reallocation of resources around 2020.

The recovery post-2020 in both NOPAT and economic profit, alongside increased invested capital, points to effective corrective measures and a restoration of financial health.

Net income (loss) attributable to AmerisourceBergen Corporation

The net income figures exhibit significant volatility over the analyzed periods. Initially, there is a substantial increase from approximately 364 million USD in 2017 to around 1.66 billion USD in 2018, followed by a notable decline to about 855 million USD in 2019. The year 2020 stands out with a dramatic shift into a net loss of approximately 3.41 billion USD, indicating a severe financial setback. However, recovery occurs in subsequent years, with net income rebounding to nearly 1.54 billion USD in 2021 and increasing slightly to approximately 1.70 billion USD in 2022. This trend suggests a sharp but temporary disruption in profitability, with the company managing to restore positive earnings thereafter.

Net operating profit after taxes (NOPAT)

The NOPAT figures mirror the overall pattern observed in net income but show even greater variability. From 2017 to 2019, NOPAT demonstrates consistent growth, increasing from approximately 772 million USD to nearly 1.19 billion USD. In 2020, a significant downturn occurs, with NOPAT plunging into a substantial negative figure of roughly 4.62 billion USD, signaling operational challenges or extraordinary expenses. The company recovers in 2021 and 2022, with NOPAT rising to approximately 1.78 billion USD and further to about 2.39 billion USD, exceeding previous peak levels. This rebound reflects improved operational efficiency or favorable conditions post-2020.

Provision (benefit) for income taxes

The provision for income taxes exhibits significant volatility across the observed periods. Initially, there was a positive provision amounting to 553,403 thousand USD in 2017, followed by a substantial negative provision of -438,469 thousand USD in 2018, indicating a tax benefit during that year. In 2019, the provision returned to a positive amount of 112,971 thousand USD. The year 2020 saw a drastic shift with a large tax benefit of -1,894,273 thousand USD, which is an anomaly compared to other years. Subsequently, the provision reverted to positive amounts, recording 677,251 thousand USD in 2021 and a slightly decreased but still substantial 516,517 thousand USD in 2022. Overall, these fluctuations suggest unpredictable tax outcomes, potentially influenced by changes in tax laws, one-time adjustments, or varying profitability impacts.

Cash operating taxes

Cash operating taxes generally demonstrate a more stable yet somewhat varied trend relative to the provision for income taxes. Starting at 288,588 thousand USD in 2017, there was a notable increase to 403,869 thousand USD in 2018. However, 2019 witnessed a sharp decline to 121,219 thousand USD, followed by a negative figure of -316,612 thousand USD in 2020, indicating a refund or tax credit situation in that year. In the subsequent years, 2021 and 2022, the amounts reverted to positive territory at 385,676 and 371,488 thousand USD, respectively, showing consistent tax payments in these periods. The pattern suggests that actual cash tax payments are subject to fluctuations, possibly reflecting timing differences, tax planning measures, or the impact of deferred tax assets and liabilities.

Total reported debt & leases

The total reported debt and leases exhibited a rising trend from 2017 to 2018, increasing from approximately 3.7 billion to 4.8 billion US dollars. This amount remained relatively stable in 2019 and 2020 around 4.6 billion before experiencing a significant spike in 2021, reaching approximately 7.8 billion. In 2022, the debt level decreased to about 6.7 billion, yet remained substantially higher than the levels observed prior to 2021.

Total stockholders’ equity (deficit)

Stockholders' equity showed steady growth from 2017 to 2018, increasing from about 2.1 billion to 2.9 billion US dollars, and remained close to this level in 2019. However, there was a sharp decline in 2020, resulting in a deficit position of approximately -1.0 billion US dollars. The equity recovered slightly in 2021, reaching a positive 223 million, but reverted to a negative equity balance of approximately -212 million in 2022. This pattern reflects significant volatility and financial stress within the period analyzed.

Invested capital

Invested capital increased steadily from 2017 through 2019, rising from roughly 10.9 billion to 12.3 billion US dollars. In 2020, it declined sharply to about 7.1 billion, representing a significant reduction. The invested capital then rebounded notably in 2021, climbing back to approximately 12.9 billion, and showed marginal growth in 2022, reaching about 13.0 billion. This fluctuation indicates a substantial reallocation of capital resources particularly around 2020.

Economic Profit

The economic profit exhibited significant volatility over the analyzed period. Initially, it was negative in 2017 (-182,360) and 2018 (-51,482), then shifted to a positive value in 2019 (118,356). However, in 2020, economic profit deteriorated dramatically to a substantial negative figure (-5,242,232). Following this sharp decline, the company recovered strongly in 2021 and 2022, with economic profits rising to 718,365 and 1,227,055 respectively. This pattern suggests an exceptional adverse impact in 2020, likely due to extraordinary circumstances, followed by a robust recovery.

Invested Capital

The invested capital increased steadily from 10,870,238 in 2017 to 12,285,847 in 2018, and slightly more to 12,346,959 in 2019. There is a notable decrease in 2020 to 7,128,161, paralleling the year of the economic profit downturn. Subsequently, invested capital rebounded to 12,902,673 in 2021 and 13,020,519 in 2022. The sharp dip in 2020 may indicate divestitures, asset impairments, or other capital adjustments that were later reversed or offset.

Economic Spread Ratio

The economic spread ratio followed a pattern consistent with economic profit trends. It was negative in 2017 (-1.68%) and closer to neutral in 2018 (-0.42%), turned positive in 2019 (0.96%), and then plummeted drastically to -73.54% in 2020. This was followed by a substantial recovery to 5.57% in 2021 and 9.42% in 2022. The extreme negative spread in 2020 underscores a period of considerable inefficiency or wasted capital, with significant improvement in subsequent years.

Overall Insights

The data reveals a strong correlation between economic profit, invested capital, and economic spread ratio. The year 2020 stands out as a major disruption, with both economic profit and economic spread ratio turning sharply negative and invested capital declining markedly. The subsequent years show recovery not only to pre-2020 levels but surpassing them, indicating effective corrective measures or favorable market conditions. These fluctuations suggest exposure to significant external or internal shocks in 2020, with resilience demonstrated in the recovery phase.

Revenue

Revenue has shown a consistent upward trend over the analyzed period, increasing each year from approximately 153.1 billion US dollars in 2017 to 238.6 billion US dollars in 2022. This steady growth reflects strong and continual expansion in company sales or service provision.

Economic Profit

Economic profit exhibits significant volatility during the period. Starting with a negative value of approximately -182.4 million US dollars in 2017, it improved to a positive 118.4 million US dollars by 2019. However, in 2020 there was a sharp and substantial decline into a large loss of approximately -5.2 billion US dollars. Following this setback, economic profit rebounded strongly in the subsequent two years, reaching positive values of 718.4 million and 1.2 billion US dollars in 2021 and 2022 respectively. This pattern suggests periods of both financial challenge and recovery.

Economic Profit Margin

The economic profit margin closely mirrors the trends observed in economic profit. Initially negative in 2017 and 2018, it turned positive in 2019 at 0.07%. The margin then plunged to a significant negative value of -2.76% in 2020, indicating a considerable erosion of profitability relative to revenue during that year. Subsequent recovery is evident with margins returning to positive territory at 0.34% in 2021 and increasing further to 0.51% in 2022. This suggests an improvement in the efficiency with which the company converts revenue into economic profit following the downturn.

Overall Insights

The period reflects strong revenue growth combined with volatile profitability outcomes. The marked downturn in economic profit and its margin in 2020 could indicate extraordinary challenges such as increased costs or adverse market conditions. The recovery in later years signifies effective management actions or improved market conditions that restored profitability. Despite fluctuations in economic profit, the consistent revenue growth could provide a solid foundation for future financial stability and performance enhancement.