Becton, Dickinson & Co. (NYSE:BDX)

The financial data over the six-year period reveals several notable trends and shifts in the company's performance and efficiency metrics.

Net Operating Profit After Taxes (NOPAT)

The NOPAT experienced considerable fluctuations across the years. Initially, there was a significant increase from 717 million USD in 2016 to a peak of 1300 million USD in 2017. This was followed by a sharp decline in 2018 to 570 million USD, then a recovery in 2019 to 1105 million USD. In 2020, NOPAT decreased somewhat to 991 million USD, but in 2021, it more than doubled to reach 2155 million USD, indicating a strong rebound and improved profitability at the end of the period.

Cost of Capital

The cost of capital remained relatively stable with slight fluctuations. It started at 9.59% in 2016, dipped marginally to 9.21% in 2017, and then generally increased over the following years, reaching 9.84% in 2021. The overall trend shows a mildly increasing cost of capital over the period.

Invested Capital

Invested capital steadily increased from 22,258 million USD in 2016 to a high point of 47,282 million USD in 2018. After 2018, invested capital decreased somewhat and stabilized around the mid-40,000 million USD range, with values fluctuating slightly but remaining consistent towards the end of the period (45,278 million USD in 2021).

Economic Profit

Economic profit was consistently negative throughout all years, implying the invested capital did not generate returns exceeding its cost. The negative economic profit deepened from -1418 million USD in 2016 to its worst point at -3923 million USD in 2018. Although it slightly improved thereafter, economic profit remained substantially negative through 2021 (-2300 million USD), highlighting ongoing challenges in creating value above the capital cost despite the improvements in NOPAT.

In summary, the company demonstrated volatile operational profitability with a pronounced increase in NOPAT in 2021. However, this increase was insufficient to offset the high cost of capital, as economic profit remained negative throughout the period. Invested capital grew substantially until 2018, followed by a plateau. The stable to slightly rising cost of capital accentuates the importance of improving returns to create positive economic value going forward.

Net Income

The net income figures exhibit considerable fluctuation over the reported periods. Starting at 976 million US dollars in 2016, it increased moderately to 1100 million in 2017. However, 2018 saw a sharp decline to 311 million, representing a significant downturn. This was followed by a strong recovery in 2019, where net income rose to 1233 million. A decline occurred again in 2020, as net income dropped to 874 million. The latest figure in 2021 indicates a substantial increase to 2092 million, marking the highest value in the dataset and demonstrating a notable overall upward trend despite earlier volatility.

Net Operating Profit After Taxes (NOPAT)

NOPAT trends are somewhat aligned with net income, but they reflect less volatility. It started at 717 million US dollars in 2016 and sharply increased to 1300 million in 2017, marking a significant improvement. In 2018, NOPAT declined to 570 million, though this drop was less severe in relative terms compared to the net income decline in the same year. Subsequently, NOPAT recovered to 1105 million in 2019 and saw a slight decrease to 991 million in 2020. The year 2021 shows a dramatic increase to 2155 million, the highest point in the period, underscoring strong operational profitability improvements.

Summary Insights

Both net income and NOPAT demonstrate cyclical patterns characterized by steep declines followed by significant recoveries. The year 2018 stands out as an outlier with notably lower profitability, suggesting possible operational or market challenges during that period. The firm’s overall financial performance shows strong resilience and upward momentum by 2021, indicating effective management of costs and revenue growth leading to enhanced profitability. The 2021 figures exceeding previous highs imply robust financial health and operational efficiency.

The financial data reveals significant fluctuations in the income tax provision (benefit) over the observed periods. Initially, the income tax provision shows a negative value in 2017 (-124 million USD), indicating a benefit rather than an expense. This contrasts with the positive provisions in 2016 (97 million USD) and the substantial increase to 862 million USD in 2018. The value dips again in 2019 to a negative figure (-57 million USD), signaling another tax benefit, followed by a recovery to positive values in 2020 and 2021, reaching 111 million USD and 150 million USD, respectively. This volatility suggests variability in taxable income or tax planning strategies affecting provisions for income taxes.

Cash operating taxes also exhibit variability but with somewhat less drastic changes. The cash tax payment starts at 748 million USD in 2016, sharply decreases to 109 million USD in 2017, then peaks dramatically at 1,285 million USD in 2018. After this peak, there is a decline to 711 million USD in 2019, followed by further decreases and stabilization around 508 million USD in 2020, and a slight increase to 537 million USD in 2021. This pattern may reflect changes in operational profitability, timing differences in tax payments, or varying tax obligations year over year.

Income Tax Provision (Benefit)

Displayed considerable volatility with alternating positive and negative values, suggesting fluctuations in reported taxable income or tax expense recognition.

Peak observed in 2018, with a significant tax expense recorded.

Negative values in 2017 and 2019 suggest periods where tax benefits or credits were recognized.

The latter years (2020 and 2021) show moderate positive provisions, indicating a potential stabilization.

Cash Operating Taxes

Experienced sharp variations, with the highest cash tax paid in 2018 aligning with the peak in income tax provision.

Following the 2018 peak, the cash tax outlay declined and stabilized at a lower level by 2020 and 2021.

This may suggest shifts in operational profitability, timing issues in tax payments, or changes in tax liabilities over these years.

The financial data presented reveals notable trends in the company's capital structure and financing over the six-year period ending September 30, 2021.

Total Reported Debt & Leases

This item shows a significant increase from 2016 to 2018, rising from $11,801 million to a peak of $21,951 million in 2018. Subsequently, there is a consistent downward trend from 2018 through 2021, decreasing to $18,080 million. This decline may suggest efforts to reduce leverage or refinance obligations with lower levels of debt.

Shareholders’ Equity

Shareholders’ equity exhibits strong growth throughout the period. Starting at $7,633 million in 2016, it more than doubles by 2018 to $20,994 million, then continues increasing steadily to nearly $23,677 million by 2021. This upward trajectory indicates sustained profitability or capital infusions supporting the equity base.

Invested Capital

Invested capital reflects the combined financing through debt and equity and follows a similar pattern as debt, increasing from $22,258 million in 2016 to a peak of $47,282 million in 2018. Afterward, invested capital experiences a moderate decline, ending at $45,278 million in 2021. This suggests that while the total capital invested in the business grew substantially initially, it has somewhat plateaued or been optimized in recent years.

Overall, the data indicates an initial period of expansion or increased financing up to 2018, followed by a phase of debt reduction and stability in total invested capital. The continuous growth in shareholders’ equity through this period highlights strengthening financial resilience and potential value creation for shareholders.

Economic Profit

The economic profit demonstrated a consistent negative trend throughout the observed period. Starting at -1418 million USD in 2016, it deteriorated significantly to -3923 million USD by 2018. Although there was some improvement after 2018, the economic profit remained negative, with values of -3300 million USD in 2019, -3545 million USD in 2020, and -2300 million USD in 2021. This pattern indicates ongoing challenges in generating returns above the cost of capital.

Invested Capital

The invested capital showed a strong upward trend initially, increasing from 22,258 million USD in 2016 to a peak of 47,282 million USD in 2018. Subsequently, it slightly decreased, maintaining levels around 45,000 million USD in the following years, with 45,181 million USD in 2019, 46,312 million USD in 2020, and a slight decline to 45,278 million USD in 2021. This suggests significant capital deployment up to 2018, followed by a period of relative stability with minor fluctuations.

Economic Spread Ratio

The economic spread ratio remained negative throughout all reported years, indicating returns consistently below the cost of capital. Beginning at -6.37% in 2016, the ratio improved slightly in 2017 to -5.46%, before worsening to -8.3% in 2018. Afterwards, the ratio improved gradually to -7.3% in 2019 and -7.65% in 2020, with a notable improvement to -5.08% in 2021. This reflects a general trend of diminishing negative spread, which may imply incremental improvements in operational efficiency or profitability relative to invested capital.

Economic Profit

The economic profit exhibits a consistent negative trend throughout the observed periods, indicating losses each year. It started at -$1,418 million in 2016 and deteriorated, reaching its most substantial deficit of -$3,923 million in 2018. Although the loss decreased somewhat after 2018, with values of -$3,300 million in 2019 and -$3,545 million in 2020, it improved more notably in 2021, closing at -$2,300 million. This pattern suggests significant challenges in generating economic profit, with some recovery signs in the latest period.

Revenues

Revenues show an overall upward trajectory over the six years. Starting from approximately $12,483 million in 2016, revenues slightly declined in 2017 to $12,093 million. From 2017 onwards, revenues increased steadily, with a substantial jump in 2018 to $15,983 million and continued growth through 2019 and 2020, reaching $17,290 million and $17,117 million respectively. The most pronounced growth occurred in 2021, where revenues surged to $20,248 million, marking the highest value in the dataset. This indicates strong sales performance and expansion over time despite fluctuating economic profit.

Economic Profit Margin

The economic profit margin remains negative throughout the review period, mirroring the economic profit pattern. It began at -11.36% in 2016 and worsened, reaching a low of -24.54% in 2018. The margin improved slightly in 2019 to -19.08% and remained relatively stable around -20.71% in 2020. By 2021, there was a noticeable improvement bringing the margin back to -11.36%, identical to the initial period level. This represents a partial recovery in profitability efficiency, although the margin still indicates losses relative to revenues.

Overall Insights

The company exhibits a scenario of growing revenues accompanied by persistent negative economic profit and profit margins. The strongest decline in economic profit and margin occurred around 2018, followed by gradual improvements, especially in the latest year. These trends suggest that while revenue generation has improved significantly, translating that growth into economic profitability remains a principal challenge. The partial recovery seen in 2021 might reflect better cost management or operational efficiencies but economic profit is still negative, highlighting the need for continued focus on profitability enhancement.