Constellation Brands Inc. (NYSE:STZ)

The analysis of the annual current and deferred income tax expenses over the six periods reveals significant fluctuations and variability in the tax provision components.

Current Income Tax Expense

The current income tax expense generally decreased from $425.5 million in fiscal 2017 to $174.7 million in fiscal 2021, showing a downward trend with some variability. Notably, in 2019 and 2020, the current tax expense dropped sharply from $259 million to $187.1 million, then further to $174.7 million. However, there was a rebound in 2022 to $224.6 million, suggesting a partial recovery or increased taxable income in that year.

Deferred Income Tax Expense

The deferred income tax expense exhibited extreme volatility, marked by large swings between positive and negative values. It started positively at $128.7 million in 2017 before plunging to a negative $428.1 million in 2018, indicating a deferred tax benefit rather than an expense. Subsequently, it rebounded to $426.9 million in 2019, then sharply declined to a negative $1.1537 billion in 2020, the largest absolute value observed. In 2021 and 2022, deferred tax expense returned to positive territory at $336.4 million and $84.8 million respectively. These pronounced fluctuations suggest considerable changes in temporary differences, tax rate effects, or adjustments related to tax assets and liabilities.

Overall Income Tax Provision (Benefit)

The total income tax provision, combining current and deferred components, reflects the volatility seen in the deferred tax line. In 2017, the provision was a significant expense of $554.2 million but collapsed to a mere $11.9 million in 2018 due to the large deferred tax benefit. It surged again to $685.9 million in 2019, then reversed dramatically to a benefit of $966.6 million in 2020, consistent with the major negative deferred income tax movement. The subsequent years showed positive tax provisions of $511.1 million in 2021 and $309.4 million in 2022, indicating a return to overall tax expense but at more moderate levels compared to the earlier peaks.

In summary, while the current income tax expense declined and then partially recovered, the deferred tax expense was highly erratic with sharp reversals each year, greatly influencing the total income tax provision. The remarkable volatility in deferred taxes suggests significant underlying accounting or tax events impacting timing differences and valuation allowances during the period under review.

The financial data reveals notable fluctuations in the effective tax rate and its contributing components over the examined six-year period. The statutory U.S. federal income tax rate exhibits a significant decline, dropping from 35% in 2017 to a stable 21% from 2019 onward. This reduction aligns with broader tax reform trends during this time frame.

State and local income taxes, net of federal income tax benefits, show considerable volatility. The rate ranges from a low of -25% in 2022 to a peak of 8.7% in 2020. The negative figure in 2022 suggests substantial tax benefits or refunds at the state and local level relative to federal tax liabilities, contrasting sharply with the generally positive rates in earlier years.

Net income tax provision (benefit) from legislative changes is erratic, with a significant negative impact in 2018 (-15.5%) and a large positive value in 2020 (57.9%). This variability indicates the influence of specific legislative adjustments affecting the tax expense notably in those years.

Items related to earnings taxed at rates other than the U.S. statutory rate fluctuate between -13.6% and 5%, with a generally negative trend in most years except 2020, which shows a positive 5%. This pattern implies differing international tax dynamics or other jurisdictional tax rate impacts influencing overall taxation.

Excess tax benefits from stock-based compensation awards demonstrate modest fluctuations, including negative effects in some years, most prominently -15.5% in 2022. These variations likely reflect changes in stock compensation accounting and related tax impacts during the period.

The net income tax provision for adjustment to valuation allowance shows a sharp increase in 2022 (124.2%), following relatively minor movements in prior years. This spike suggests a significant reevaluation of deferred tax assets or liabilities affecting tax expense in the last year.

Miscellaneous items remain relatively small and stable in magnitude, fluctuating slightly between -0.9% and 1.9% without major influence on the overall tax expense trends.

The effective tax rate exhibits pronounced volatility, with an exceptionally low rate in 2018 (0.5%) and exceptionally high rates in 2020 (102.3%) and 2022 (99.7%). Aside from those outlier years, the effective tax rate aligns more closely with the statutory rate, particularly in 2017 (26.5%) and 2021 (20.1%). The extreme values in 2020 and 2022 indicate extraordinary tax events or accounting treatments impacting reported tax obligations.

In summary, the data reflects a tax environment significantly influenced by legislative changes, valuation adjustments, and variable state and local tax impacts. The large swings in the effective tax rate highlight considerable tax expense volatility, which may affect earnings predictability and financial planning.

Intangible Assets

The value of intangible assets shows data starting in 2019 at approximately 1,616,700 thousand US dollars. It rises steadily to reach 2,188,800 thousand US dollars by 2022. However, there are negative values in earlier years (-720,600 thousand in 2017, -499,800 thousand in 2018, and -522,100 thousand in 2022) which may indicate amortization or impairments recorded prior to or during these periods.

Loss Carryforwards

Loss carryforwards fluctuate over the observed period, starting at 144,000 thousand US dollars in 2017, dipping to 106,000 thousand in 2018, and then growing consistently to 349,800 thousand by 2022. This upward trend suggests an increasing amount of tax losses being available to offset future taxable income.

Stock-based Compensation

Stock-based compensation exhibits volatility, beginning at 43,200 thousand in 2017, dropping to 29,100 thousand in 2018, then increasing sharply to 75,600 thousand in 2020, before declining again to 22,900 thousand in 2022. This pattern may reflect changes in equity incentive plans or expense recognition schemes over these years.

Lease Liabilities

Lease liabilities first appear in 2020 at 89,200 thousand US dollars and then show a declining trend to 69,000 thousand by 2022, consistent with amortization or repayment of lease obligations over time.

Inventory

Inventory levels generally increase from 12,500 thousand in 2017 to 51,800 thousand in 2022, with some fluctuation such as a dip in 2021 to 26,600 thousand. The overall growth might indicate increased production or stockpiling, while the dip could reflect inventory management adjustments.

Investments in Unconsolidated Investees

Starting data in 2020 shows 106,100 thousand US dollars, dipping to 36,700 thousand in 2021, then increasing dramatically to 541,000 thousand in 2022. Negative values in earlier years (e.g., -448,900 thousand in 2019) might represent impairments or disposals. The sharp rise in 2022 suggests increased investment or revaluation gains.

Other Accruals

Other accruals demonstrate volatility with an initial rise from 36,100 thousand in 2017 to 93,400 thousand in 2019, then a decline to 33,700 thousand in 2021, but again increasing to 67,800 thousand in 2022. The 2022 entry also shows a negative figure (-50,500 thousand), indicating possible adjustments or reversals.

Gross Deferred Tax Assets

These assets show an overall upward trend from 235,800 thousand in 2017 to 3,291,100 thousand in 2022, with a notable jump in 2019 and 2020. This growth signifies larger anticipated tax benefits from deductible temporary differences and carryforwards.

Valuation Allowances

Valuation allowances decreased in magnitude from -134,100 thousand in 2017 to -54,100 thousand in 2020 but increase sharply in negative terms to -552,100 in 2022, indicating a more conservative approach in recognizing deferred tax assets, possibly due to increased uncertainty about realizability.

Deferred Tax Assets, Net

Net deferred tax assets initially rise significantly from 101,700 thousand in 2017 to 2,555,900 thousand in 2020, followed by a slight decline to 2,173,000 in 2021, then recovering to 2,739,000 in 2022. This fluctuating but overall upward trajectory reflects changes in timing differences and recoverability assessments.

Property, Plant, and Equipment

Negative values across all years indicate depreciation or accumulated depletion, ranging from -255,000 thousand in 2017 to -186,000 thousand in 2022, showing relatively stable impairment or depreciation expenses over time.

Provision for Unremitted Earnings

This provision remains fairly stable over time, fluctuating around -22,000 to -26,000 thousand between 2017 and 2022, suggesting consistent deferred tax liability related to foreign earnings not repatriated.

Right-of-Use Assets

Introduced in 2020 at -80,500 thousand, these assets decrease in absolute value to -59,800 thousand by 2022. This aligns with accounting for lease assets under new lease accounting standards and subsequent amortization.

Deferred Tax Liabilities

Deferred tax liabilities show a significant reduction from -1,234,100 thousand in 2017 to -283,500 thousand in 2020, followed by a slight increase to -903,300 thousand in 2022, indicating changes in taxable temporary differences and expectations of future tax payment obligations.

Deferred Tax Assets (Liabilities), Net

The net value transitions from a negative position (-1,132,400 thousand in 2017) to positive figures beginning in 2019, peaking at 2,272,400 thousand in 2020, then declining moderately to 1,835,700 thousand in 2022. This shift reflects a material change in the tax position, with more deferred tax assets realized or recognized over time relative to liabilities.

Deferred Tax Assets

The deferred tax assets display a significant upward trend from 2017 to 2018, rising sharply from 1,200 thousand US dollars to 2,183,300 thousand US dollars. This increase continues, albeit at a slower rate, reaching a peak of 2,656,300 thousand US dollars in 2020. Subsequently, deferred tax assets show a declining trend over the following two years, decreasing to 2,492,500 thousand US dollars in 2021 and further to 2,351,500 thousand US dollars in 2022. Despite this decline, the values in the last two years remain substantially higher than the initial figure in 2017.

Deferred Tax Liabilities

The deferred tax liabilities exhibit a decreasing pattern overall. Starting at 1,133,600 thousand US dollars in 2017, liabilities decrease to 718,300 thousand US dollars in 2018 and then slightly increase to 1,029,700 thousand US dollars in 2019. From 2019 onward, there is a consistent decrease, falling to 384,000 thousand US dollars in 2020, a slight increase to 569,700 thousand US dollars in 2021, followed by another decrease to 515,800 thousand US dollars in 2022. The fluctuations suggest variability but with an overall downward trajectory across the years analyzed.

Summary of Trends

Overall, deferred tax assets have significantly increased since 2017, peaking around 2020 before experiencing a moderate decline in the recent years. Deferred tax liabilities have generally decreased over the period, with fluctuations in some years. The divergence between the growth of deferred tax assets and the reduction in deferred tax liabilities may indicate changes in the company's tax positions, timing differences, or adjustments in tax strategies over the period under review.

The financial data reveals several noteworthy trends over the six-year period ending February 28, 2022. Both reported and adjusted total assets increased from 2017 to 2019, with reported assets rising from approximately $18.6 billion to $29.2 billion and adjusted assets showing a slightly lower peak at $27 billion in 2019. However, after 2019, total assets in both categories declined steadily, reaching $25.9 billion reported and $23.5 billion adjusted by 2022. This indicates a contraction in asset base following a period of growth.

Total liabilities followed a somewhat similar trajectory. Reported liabilities grew from about $11.7 billion in 2017 to a peak near $16.4 billion in 2019, then decreased to around $13.8 billion by 2022. Adjusted liabilities were consistently lower but showed a comparable pattern, rising to $15.4 billion in 2019 before dropping to approximately $13.3 billion in 2022. The reduction in liabilities after 2019 suggests deleveraging or repayment activities during the later years.

Equity trends differ between reported and adjusted data. Reported stockholders’ equity increased substantially from around $6.9 billion in 2017 to over $13.5 billion in 2021, before declining to $11.7 billion in 2022. The adjusted equity figures, however, show more moderate growth, rising from approximately $8.0 billion in 2017, peaking at $11.4 billion in 2019, and then decreasing to about $9.9 billion by 2022. This divergence indicates that adjustments related to income tax effects and potentially other accounting treatments impact the perceived equity value, particularly after 2019.

Net income attributable to the company shows considerable volatility. Reported net income increased significantly from $1.5 billion in 2017 to $3.4 billion in 2019 but experienced a sharp decline to a marginal loss of $11.8 million in 2020. This was followed by a recovery to $2 billion in 2021 and another slight loss in 2022. Adjusted net income mirrors this pattern but with larger fluctuations, including a substantial loss of $1.16 billion in 2020. The adjustment appears to amplify the volatility and suggests that deferred income tax and other tax adjustments had a material impact on profitability, particularly during the 2020 fiscal year.

Overall, the data reveals a growth phase culminating in 2019, followed by a period of contraction and increased volatility through 2022. Asset and liability reductions alongside fluctuating equity values point to significant changes in financial structure and performance. The pronounced swings in adjusted net income underscore the effects of tax-related adjustments on operating results, which merit further investigation for a comprehensive understanding of financial health.

Total Assets

Growth through 2019 followed by steady declines.

Total Liabilities

Peak in 2019, then decreases indicating deleveraging.

Stockholders’ Equity

Reported equity grew sharply until 2021, then fell; adjusted equity was more stable but declined after 2019.

Net Income

Marked volatility with strong growth through 2019, a deep dip in 2020, partial recovery in 2021, and weakness in 2022; adjusted figures show amplified fluctuations due to tax effects.

Net Profit Margin Trends

The reported net profit margin exhibits significant volatility over the period, peaking at 42.33% in 2019 before sharply declining to a negative value of -0.14% in 2020. It partially recovers in 2021 to 23.19% but again turns negative in 2022 at -0.46%. The adjusted net profit margin follows a similar pattern but shows a more pronounced negative dip of -13.97% in 2020. It rebounds to positive margins in 2021 and 2022, reaching 27.1% and 0.5%, respectively.

Total Asset Turnover Patterns

Reported total asset turnover generally declines from 0.39 in 2017 to 0.28 in 2019, then gradually increases through 2022, reaching 0.34. The adjusted total asset turnover maintains a slightly higher ratio than the reported figures from 2019 onward, indicating improved asset utilization once adjustments for tax are considered, rising steadily to 0.38 by 2022.

Financial Leverage Developments

Reported financial leverage reveals a decreasing trend from 2.7 in 2017 to 1.99 by 2021, before increasing again to 2.2 in 2022. Conversely, the adjusted financial leverage shows a modest upward trend until 2020, peaking at 2.5, followed by a decline and a slight rise again, ending at 2.38 in 2022. The adjusted figures consistently remain lower than reported leverage, indicating adjustments reduce leverage assessment.

Return on Equity (ROE) Analysis

Reported ROE rises from 22.28% in 2017 to a high of 28.82% in 2018, then declines through 2020 to negative -0.1%. Thereafter, it partially recovers to 14.69% in 2021 but dips slightly below zero at -0.34% in 2022. Adjusted ROE mirrors this trend but with generally lower volatility, peaking at 33.89% in 2019, falling to -11.82% in 2020, and recovering to 19.99% in 2021 and a marginal positive 0.45% in 2022.

Return on Assets (ROA) Observations

The reported ROA follows a trajectory similar to ROE, increasing from 8.25% in 2017 to 11.75% in 2019, sharply dropping to near zero in 2020, rebounding in 2021, and then declining again to a small negative in 2022. Adjusted ROA shows less pronounced fluctuations but still dips into negative territory in 2020 and achieves a slight positive value of 0.19% in 2022. This suggests asset profitability was adversely affected in 2020, with partial recovery thereafter.

General Insights

The year 2020 emerges as an anomaly with widespread negative impacts across all key profitability metrics, likely reflecting extraordinary circumstances. Adjusted metrics generally display more restrained volatility compared to reported figures, implying that deferred income tax adjustments moderate the extremes of profitability and leverage measures. Post-2020, a gradual recovery is evident, though profitability ratios remain below pre-2020 highs, signifying a cautious financial environment or operational challenges. Asset turnover improvements post-2019 suggest better asset utilization which may support future profitability rebounds.

Reported Net Income (Loss) Attributable to CBI

The reported net income demonstrated a positive growth trend from 2017 through 2019, rising from $1,535,100 thousand in 2017 to a peak of $3,435,900 thousand in 2019. However, there was a significant decline into negative territory in 2020, with a loss of $11,800 thousand. The income recovered somewhat in 2021, reaching $1,998,000 thousand, before falling again to a loss of $40,400 thousand in 2022.

Adjusted Net Income (Loss) Attributable to CBI

Adjusted net income followed a more volatile pattern. It increased from $1,663,800 thousand in 2017 to $3,862,800 thousand in 2019, showing strong growth. In 2020, the adjusted net income turned negative, experiencing a significant loss of $1,165,500 thousand. The figure then rebounded to $2,334,400 thousand in 2021 before declining sharply to a modest positive $44,400 thousand in 2022.

Reported Net Profit Margin

The reported net profit margin showed a similar trajectory, improving steadily from 20.94% in 2017 to a high of 42.33% in 2019. In 2020, it turned negative (-0.14%), returning to a positive 23.19% in 2021 before again declining below zero to -0.46% in 2022. This indicates significant profitability fluctuations in the last two years.

Adjusted Net Profit Margin

The adjusted net profit margin also exhibited strong growth early on, increasing from 22.69% in 2017 to a peak of 47.59% in 2019. The margin then plunged dramatically to -13.97% in 2020, reflecting major adjustments or one-time impacts. It recovered to a positive 27.1% in 2021 but fell sharply to 0.5% in 2022, signaling near break-even profitability after adjustments.

Summary of Observations

Overall, the data reveals a period of robust profitability and growth until 2019, followed by significant downturns in 2020, likely due to extraordinary or non-recurring factors, as indicated by the sharp drops in both reported and adjusted figures. The recovery in 2021 suggests some normalization, but the decline in 2022 points to ongoing challenges. The adjusted figures, which consider deferred taxes and other adjustments, show greater volatility but maintain a similar directional pattern to reported results. The fluctuations in profit margins align closely with income trends, confirming variability in earnings quality and operational performance over time.

The data presents a six-year trend from fiscal years ending in February 2017 through 2022, focusing on reported and adjusted total assets and total asset turnover ratios.

Total Assets

Reported total assets increased steadily from approximately 18.6 billion US dollars in 2017 to a peak of about 29.2 billion in 2019. Following this peak, a declining trend is observed, with assets decreasing to around 25.9 billion by 2022. Adjusted total assets, which account for certain tax-related adjustments, follow a similar pattern but show a slightly lower value starting in 2019 relative to reported assets. Adjusted assets rose from roughly 18.6 billion in 2017 to approximately 27.0 billion in 2019, then declined continuously to about 23.5 billion by 2022. This indicates a contraction in asset base after 2019, with adjusted figures consistently below reported totals from 2019 onward.

Total Asset Turnover

The reported total asset turnover ratio exhibits a declining trend from 0.39 in 2017 to a low of 0.28 in 2019, suggesting a decrease in efficiency in using assets to generate revenue during this period. From 2019 onward, this ratio shows a gradual improvement, rising to 0.34 by 2022. The adjusted total asset turnover ratio similarly trends downward until 2019 but starts to improve earlier and more pronouncedly, moving from 0.39 in 2017 down to 0.30 in 2019 and then increasing steadily to 0.38 by 2022. This suggests that, when accounting for tax adjustments, the efficiency of asset utilization in generating revenue improved more substantially after 2019 compared to the reported basis.

Overall, the data reveals a period of asset expansion until 2019, followed by a contraction phase through 2022. Concurrently, asset turnover ratios decline in the early years but recover after 2019, particularly on the adjusted basis. The divergent asset totals post-2019 between reported and adjusted data likely reflect deferred income tax effects impacting asset valuation but also indicate relatively better operational efficiency as reflected in increasing turnover ratios.

The analysis of the annual financial data reveals distinct trends in the company's asset base, equity position, and financial leverage over the six-year period evaluated.

Total Assets

The reported total assets demonstrate an overall increasing trend from US$18,602,400 thousand in FY 2017 to a peak of US$29,231,500 thousand in FY 2019. However, after 2019, reported assets decline, falling to US$25,854,800 thousand by FY 2022. Adjusted total assets follow a similar pattern, increasing from US$18,601,200 thousand in FY 2017 to US$27,048,200 thousand in FY 2019, then decreasing steadily to US$23,504,300 thousand by FY 2022. The adjustment results in lower total asset values in FY 2019 and subsequent years, indicating a significant effect of deferred tax adjustments on asset valuation post-2018.

Stockholders’ Equity

Reported total stockholders’ equity grows significantly from US$6,891,200 thousand in FY 2017 to US$12,551,000 thousand in FY 2019, followed by minor fluctuations, reaching US$13,598,900 thousand in FY 2021 before decreasing to US$11,731,900 thousand in FY 2022. In contrast, adjusted equity values are higher than reported in FY 2017 and FY 2018 but consistently lower from FY 2019 onwards, starting at US$11,397,400 thousand in FY 2019 and trending downward to US$9,896,200 thousand by FY 2022. This reflects the impact of deferred tax adjustments reducing equity in later years.

Financial Leverage

The reported financial leverage ratio declines from 2.7 in FY 2017 to 1.99 in FY 2021, indicating a gradual reduction in reliance on debt financing relative to equity over this period. However, in FY 2022, the ratio increases slightly to 2.2, suggesting a modest rise in leverage. Conversely, the adjusted financial leverage ratio remains relatively stable but slightly higher across the years, beginning at 2.32 in FY 2017, peaking at 2.5 in FY 2020, and then declining to 2.11 in FY 2021 before increasing again to 2.38 in FY 2022. The higher adjusted leverage compared to the reported measure after 2018 indicates that deferred income tax adjustments affect the leverage assessment, presenting a more leveraged position when these factors are considered.

In summary, both reported and adjusted data show asset growth peaking in 2019 followed by a decline through 2022. Equity values are notably affected by deferred tax adjustments, resulting in lower adjusted equity figures compared to reported equity in recent years. While reported leverage trends downward initially, adjusted measures indicate a relatively elevated leverage position, highlighting the significance of considering deferred tax impacts in financial analysis for more accurate risk assessment.

The financial data reveals a fluctuating performance in both reported and adjusted net income attributable to the company over the six-year period. Initially, reported net income demonstrated a strong upward trend from 1,535,100 thousand US dollars in 2017 to a peak of 3,435,900 thousand US dollars in 2019. However, this was followed by a sharp decline to a slight loss of 11,800 thousand US dollars in 2020, a recovery to 1,998,000 thousand in 2021, and a return to negative territory with a loss of 40,400 thousand in 2022.

The adjusted net income data follows a similar but more volatile pattern. After a moderate increase from 1,663,800 thousand in 2017 to 1,890,800 thousand in 2018, adjusted net income surged significantly to 3,862,800 thousand in 2019. This was followed by a substantial loss of 1,165,500 thousand in 2020. A strong recovery occurred in 2021 with adjusted net income reaching 2,334,400 thousand, and then a modest positive income of 44,400 thousand in 2022. The adjusted figures suggest notable impacts from tax or other adjustments that accentuate operational performance swings.

Examining total stockholders’ equity, the reported values increased steadily from 6,891,200 thousand in 2017 to a high of 13,598,900 thousand in 2021, before declining to 11,731,900 thousand in 2022. Adjusted equity, however, shows a different trajectory with an increase from 8,023,600 thousand in 2017 to a peak of 11,397,400 thousand in 2019, followed by a consistent decline through to 9,896,200 thousand in 2022. This divergence indicates that adjustments significantly impact equity values and could be related to deferred tax or other comprehensive income items.

Analysis of return on equity (ROE) highlights the variation between reported and adjusted profitability relative to equity. Reported ROE peaked at 28.82% in 2018 and remained relatively high through 2019 (27.38%), before plummeting to slightly negative (-0.1%) in 2020. It rebounded to 14.69% in 2021 and decreased again to -0.34% in 2022. Adjusted ROE shows more pronounced volatility, rising from 20.74% in 2017 to a high of 33.89% in 2019, dropping sharply to -11.82% in 2020, recovering to 19.99% in 2021, and moderating to 0.45% in 2022.

Overall, the data indicates a period of strong financial growth through 2019, disrupted significantly in 2020 likely due to extraordinary factors impacting profitability and equity. The subsequent years show partial recoveries in net income and ROE but fail to reach previous peaks. Adjusted figures underscore greater variability, suggesting that tax adjustments and other non-operational factors are materially influencing reported financial outcomes. The decline in stockholders’ equity from 2021 into 2022 in both reported and adjusted terms signals caution regarding capital stability moving forward.

The financial data reveals distinct trends over the six-year period from 2017 to 2022. The reported net income attributable to the company experienced an upward trajectory from 2017 to 2019, peaking significantly in 2019. However, in 2020, there was a sharp decline to a slight loss, followed by a recovery in 2021 and another downturn in 2022 with a small loss again. This volatility indicates periods of financial stress or exceptional events impacting profitability.

When adjusted for annual reported and deferred income tax effects, the net income follows a similar pattern but with notable differences in magnitude. The adjusted net income generally shows higher values than the reported figures in positive years, reflecting adjustments that improve net earnings, except in 2020 where a substantial adjusted loss occurred, much larger than the reported loss. The adjusted figures show a rebound in 2021 and a modest positive result in 2022, suggesting that tax adjustments have a material impact on the perception of profitability during challenging years.

Regarding total assets, the reported values show steady growth from 2017 to 2019, reaching a peak before declining in 2020 and continuing a downward trend through 2022. The adjusted total assets follow a similar pattern but at consistently lower levels, which implies that certain assets might be excluded or adjusted downward for tax purposes. The decline in total assets post-2019 could reflect divestitures, asset impairments, or changing business conditions.

The return on assets (ROA) measure further underscores the profit volatility. Reported ROA increases from 8.25% in 2017 to a high of 11.75% in 2019, then plunges to nearly zero in 2020 before recovering moderately in 2021 and declining again in 2022 to slightly negative. Adjusted ROA trends mirror this but show a more pronounced drop in 2020, dipping deeply into negative territory, followed by a partial recovery and a small positive return in 2022. This suggests that tax-related adjustments exacerbate the perceived impact of economic or operational difficulties in the downturn period and somewhat cushion the results in recovery phases.

Overall, the data indicates a period of growth and profitability leading up to 2019, a significant disruption in 2020 with losses both reported and adjusted, and partial recovery afterward with persistent volatility. Tax adjustments materially affect profitability and asset measures, particularly during the negative performance years, highlighting the importance of considering both reported and adjusted figures for an accurate assessment of financial health.

Reported Net Income

Growth through 2019, sharp loss in 2020, partial recovery in 2021, loss in 2022.

Adjusted Net Income

Similar trend with higher peaks, deeper losses in 2020, modest gains in 2021 and 2022.

Reported Total Assets

Increasing until 2019, then steadily decreasing through 2022.

Adjusted Total Assets

Lower than reported assets consistently; declining trend post-2019.

Reported ROA

Improvement until 2019, near zero in 2020, followed by partial recovery and slight negativity in 2022.

Adjusted ROA

Higher than reported ROA in prosperous years; sharp negative impact in 2020; slight positive in 2022.