Dollar General Corp. (NYSE:DG)

The financial data for current and deferred income tax expenses over the six-year period reveals notable fluctuations with distinct trends emerging in each category.

Current Income Tax Expense

The current income tax expense exhibits an overall increasing trend from 2019 to 2021, rising from approximately $373.6 million to $714.3 million. Following this peak, there is a decline in 2022 to around $549.6 million, with further decreases observed in 2023 and 2024, reaching approximately $384.4 million by the most recent period. This pattern suggests that the company experienced increasing taxable income or changes in tax rates up to 2021, followed by reductions in taxable income or other influencing factors leading to decreased current tax obligations.

Deferred Income Tax Expense

The deferred tax expense shows a different dynamic. From 2019 to 2020, it remains relatively stable at around $52-55 million, before declining to about $35 million in 2021. A substantial increase occurs in 2022 and 2023, with deferred tax expense surging to $114.4 million and $236 million, respectively. However, in 2024, there is a significant decrease to approximately $73.8 million. This volatility suggests changes in timing differences affecting deferred taxes, such as alterations in asset valuations, liability recognition, or tax law impacts that caused a large spike in deferred tax expense before receding.

Total Provision for Income Taxes

The total provision for income taxes, combining current and deferred components, follows a generally rising trend from 2019 through 2021, peaking at nearly $749.3 million. Despite a reduction in 2022 to about $664 million, the provision again rises to $700.6 million in 2023 before a sharp decline to $458.2 million in 2024. The fluctuations in total tax provision largely reflect the movements in current tax expense, modulated by the more variable deferred tax component.

In summary, the data indicates that the current tax expense was the predominant contributor to the overall income tax provision and showed an increase until 2021 followed by decreases thereafter. The deferred tax expense was more volatile, with a notable spike in 2022 and 2023 before a sharp reduction in 2024. These patterns may reflect underlying changes in taxable income, tax planning strategies, accounting adjustments, or regulatory impacts influencing the timing and recognition of tax expenses over the periods analyzed.

The analysis of the annual tax-related financial data reveals several notable trends regarding the effective income tax rate and its components over the six-year period.

U.S. Federal Statutory Tax Rate

This rate remained constant at 21% throughout the entire duration, indicating no changes in the federal statutory tax policy affecting the corporation in the timeframe analyzed.

State Income Taxes, Net of Federal Income Tax Benefit

This component showed some fluctuations over the years. Starting from 2.2% in 2019, it rose to a peak of 2.8% in 2020, then decreased to 2.4% in 2021, followed by slight increases to 2.5% and 2.6% in 2022 and 2023 respectively, before declining again to 2.2% in 2024. Overall, state income taxes exhibited moderate variability but did not show a consistent upward or downward trend.

Jobs Credits, Net of Federal Income Taxes

This factor consistently contributed to reducing the effective tax rate, with negative percentages throughout. It started at -1.4% in 2019, then showed a mild trend toward reduction in impact, reaching a low impact of -0.8% in 2021. Subsequently, it increased again in magnitude to -1.3% and -1.2% in 2022 and 2023 respectively, before deepening further to -1.6% in 2024. This suggests a varying but generally significant credit impact on the effective tax rate.

Other, Net

This category exhibited some fluctuations and less consistency. It began with a slight negative effect of -0.1% in 2019, intensified to -0.3% and -0.6% in 2020 and 2021 respectively, then moderated to -0.5% in 2022. Notably, in 2023 it reversed to a minor positive impact of 0.1%, while data for 2024 is missing. This indicates occasional variability in other tax-related items affecting the overall tax rate.

Effective Income Tax Rate Before Impact of Federal Tax Rate Changes

This rate fluctuated moderately around the low 22% range. It began at 21.7% in 2019, then slightly rose to 22.2% in 2020, dipped to 22.0% in 2021, and fell back to 21.7% in 2022. It increased to 22.5% in 2023 before falling to 21.6% in 2024. The changes reflect variations mainly driven by state taxes, job credits, and other components rather than the federal statutory rate.

Impact of Federal Tax Rate Changes

This item was only significant in 2019, when it reduced the effective tax rate by 0.6%. There were no reported impacts in subsequent years, implying no federal tax rate changes affected the effective rate beyond 2019.

Effective Income Tax Rate

The comprehensive effective income tax rate closely mirrors the rate before federal tax rate changes, ranging from 21.1% in 2019 to a high of 22.5% in 2023 and then declining to 21.6% in 2024. The rate demonstrates relative stability with minor annual fluctuations, suggesting overall consistent tax expense levels relative to income generated.

In summary, the effective income tax rate remained relatively stable throughout the period, supported by a steady federal statutory rate and fluctuating state income taxes and credits. The jobs credits consistently lowered the effective tax burden, while other tax items showed variable influences. Despite some year-to-year variations, no drastic shifts are observable in the tax rate structure, affirming a stable tax expense environment for the company.

The analysis of the financial data over the periods from February 2019 through February 2024 reveals several notable trends and changes in the company's financial position.

Deferred compensation expense

This expense has shown a consistent upward trend, increasing from 6,490 thousand US dollars in 2019 to 13,441 thousand US dollars in 2024, indicating growing obligations or accruals associated with employee compensation over time.

Accrued expenses

There is significant volatility in accrued expenses, peaking at 52,195 thousand US dollars in 2021 before dramatically falling to 7,274 thousand US dollars in 2023 and then rising again to 13,112 thousand US dollars in 2024. This fluctuation suggests changes in the company's short-term liabilities and payment schedules.

Accrued rent

This liability has steadily declined from 22,668 thousand US dollars in 2019 to 306 thousand US dollars in 2024, reflecting either a reduction in rent obligations or changes in accounting treatments of lease-related expenses.

Lease liabilities

Lease liabilities exhibit a significant increase, starting at approximately 2.17 billion US dollars in 2020 and rising steadily to more than 2.85 billion US dollars in 2024. This upward trajectory likely reflects increased leasing commitments or expansion through leased assets.

Accrued insurance

Accrued insurance costs show moderate growth from 6,869 thousand US dollars in 2019 to 8,732 thousand US dollars in 2024, indicating rising insurance-related liabilities.

Accrued incentive compensation

These accrued liabilities peaked sharply in 2021 at 46,083 thousand US dollars, then decreased significantly to 5,356 thousand US dollars in 2024, suggesting variations in performance-based compensation accruals, possibly linked to company earnings fluctuations.

Share based compensation

This expense remained relatively stable with minor fluctuations, oscillating between 15,309 and 19,495 thousand US dollars throughout the period, indicating consistent issuance or recognition of equity-based compensation.

Interest rate hedges

The value of interest rate hedges declined steadily from 1,421 thousand US dollars in 2019 to effectively zero by 2023, implying the gradual cessation or expiration of hedging activities tied to interest rates.

Tax-related items

Tax benefit of income tax and interest reserves

These benefits are nominal and range mostly below 1,000 thousand US dollars, with a notable increase to 1,028 thousand US dollars in 2024.

State and foreign tax net operating loss carryforwards

There is a strong upward trend, with the amount increasing from 598 thousand US dollars in 2019 to 9,781 thousand US dollars in 2024, suggesting growing potential tax benefits from past losses.

State tax credit carryforwards

These credits fluctuate but generally increased, reaching 19,463 thousand US dollars in 2024, indicating accumulation of tax credits which may reduce future tax liabilities.

Deferred tax assets and liabilities

Deferred tax assets, before valuation allowances

This figure soared from 96,564 thousand US dollars in 2019 to nearly 3 billion US dollars in 2024, reflecting substantial timing differences and future tax benefits.

Valuation allowances

The valuation allowances increased negatively from -4,433 thousand US dollars to -17,000 thousand US dollars, possibly reflecting higher uncertainties or reduced realizability of deferred tax assets.

Net deferred tax assets (liabilities)

The net figure remains a liability throughout the period, worsening from approximately -610 million US dollars in 2019 to about -1.13 billion US dollars in 2024, indicating deferred tax liabilities exceeded assets and grew over time.

Deferred tax liabilities

The liabilities increased significantly, from -701 million US dollars in 2019 to over -4 billion US dollars in 2024, contributing largely to the net deferred tax position.

Property and equipment and lease assets

Property and equipment

This asset category has increased in negative value (indicating accumulated depreciation or net book value on the balance sheet) from -322,575 thousand US dollars in 2019 to -736,322 thousand US dollars in 2024, consistent with asset aging and capital expenditure patterns.

Lease assets

Similarly, lease assets, first recorded in 2020, increased in negative value to -2.82 billion US dollars by 2024, in line with growing lease liabilities and the capitalization of leases.

Inventories

Inventory levels rose sharply in negative values from around -56,221 thousand US dollars in 2019 to almost -200,000 thousand US dollars in 2024, indicating substantial accumulation of stock or a potential write-down.

Trademarks

Intangible assets in trademarks remain relatively stable, with minor decreases in negative value, suggesting little change in intangible asset valuation.

Prepaid insurance

Prepaid insurance assets increased in negative value from -12,639 thousand US dollars to -20,275 thousand US dollars, consistent with increased prepaid expense balances.

Other financial items

There is variability in smaller items labeled as "Other," with increased positive balances reaching over 22,800 thousand US dollars by 2024 for some items, while others show slight increases in negative balances, reflecting a diverse mix of miscellaneous liabilities and assets.

Overall, the data exhibit growth in lease-related items, deferred tax assets and liabilities, and certain accrued expenses, while some expense categories such as accrued rent and incentive compensation showed substantial declines. The expanding lease liabilities alongside increasing lease assets suggest ongoing capitalizing of leasing arrangements. The large deferred tax liability position implies a significant difference in book and tax basis assets or liabilities. The consistent increase in deferred compensation costs and inventories may indicate increased operational scale or shifts in company strategy.

The financial data reveals a consistent upward trend in deferred tax liabilities over the six-year period analyzed. Beginning at approximately $609.7 million in early 2019, the deferred tax liabilities increased steadily each year, reaching approximately $1.13 billion by early 2024.

The increments between consecutive years show a gradual acceleration. For instance, from 2019 to 2020, the increase was about $65.5 million, while from 2022 to 2023, the increase was approximately $235,652 thousand, indicating more significant growth in deferred tax liabilities during these later periods.

This steady and accelerating rise in deferred tax liabilities might reflect growing timing differences between accounting profits and taxable income, possibly due to increased fixed asset additions, changes in tax regulations, or other temporary differences. The company appears to be managing an expanding deferred tax obligation, which could have future cash flow implications when these liabilities reverse.

Trend

Consistent increase in deferred tax liabilities from $609.7 million to $1.13 billion over six years.

Growth Pattern

Gradual acceleration in annual increases, with larger increments in recent years.

Potential Implications

Indicates growing timing differences impacting tax expenses and future cash outflows.

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

Total Liabilities

Both reported and adjusted total liabilities exhibit a consistent upward trend from 2019 through 2024. Reported liabilities increased from approximately 6.79 billion to 24.05 billion US dollars, while adjusted liabilities rose from about 6.18 billion to 22.91 billion US dollars. The adjustment appears to moderately reduce the liabilities compared to reported figures but follows a similar growth trajectory throughout the years.

Shareholders’ Equity

Reported shareholders' equity shows fluctuations with an initial rise between 2019 and 2020, peaking at around 6.7 billion, followed by a general decline to approximately 5.54 billion in 2023, before recovering to nearly 6.75 billion in 2024. In contrast, adjusted shareholders’ equity consistently remains higher than reported values in all years and demonstrates a less volatile pattern. Adjusted equity peaks in 2021 near 7.37 billion, dips slightly over the next two years, and attains its highest level of about 7.88 billion in 2024.

Net Income

Reported net income trends show growth from 1.59 billion in 2019 to a maximum of approximately 2.65 billion in 2021, followed by a decline to around 1.66 billion in 2024. Adjusted net income follows a similar pattern but with consistently higher values. It rises steadily from about 1.64 billion in 2019 to a peak of 2.65 billion in 2023 before falling to approximately 1.74 billion in 2024. The adjustments to net income tend to increase reported figures by a moderate margin, indicating recognition of certain deferred tax effects or other adjustments that positively impact net earnings.

Overall, liabilities have grown significantly, which may indicate increased debt or other obligations, while shareholders’ equity shows some volatility but generally maintains its level when adjustments are considered. Net income peaks around 2021-2023 and declines thereafter, suggesting recent challenges affecting profitability. The adjusted data consistently presents a more favorable view of equity and earnings, highlighting the impact of tax-related adjustments on financial results.

Net Profit Margin

The reported net profit margin exhibits an initial slight decline from 6.2% in 2019 to 6.17% in 2020, followed by a marked increase reaching a peak of 7.87% in 2021. Afterward, it declines progressively to 4.29% by 2024. The adjusted net profit margin follows a similar pattern, consistently remaining marginally higher than the reported figures, peaking at 7.97% in 2021 before declining to 4.48% in 2024.

Financial Leverage

Reported financial leverage demonstrates a steady upward trajectory from 2.06 in 2019 to a peak of 5.25 in 2023, then decreases to 4.56 in 2024. The adjusted financial leverage mirrors this trend but remains consistently lower than the reported values, peaking at 4.4 in 2023 and dropping to 3.91 in 2024. This suggests an increase in the company's use of debt over time, with a modest reduction in the most recent period.

Return on Equity (ROE)

Reported ROE shows an overall increasing trend from 24.77% in 2019 to a high of 43.6% in 2023, before declining significantly to 24.61% in 2024. The adjusted ROE follows a comparable pattern, remaining below the reported figures but rising to 40.17% in 2023 and then falling to 22.01% in 2024. These fluctuations indicate heightened profitability efficiency until 2023, followed by a notable decline.

Return on Assets (ROA)

Reported ROA declines sharply from 12.04% in 2019 to 7.5% in 2020, improves to 10.27% in 2021, and then gradually decreases to 5.39% in 2024. Adjusted ROA behaves similarly, with values slightly above reported figures until 2023, then also declining to 5.63% in 2024. This points to variable asset efficiency with an overall downward movement in the last years.

Overall Insights

The financial metrics reveal a general pattern of improvement in profitability and efficiency leading up to 2021-2023, followed by a pronounced decline in 2024 across all margins and returns. The increase in financial leverage up to 2023 suggests growing reliance on debt financing, which may have supported the increased returns. However, the later reduction in leverage alongside drops in margins, ROE, and ROA may indicate emerging challenges or a strategic shift in capital structure. Adjusted figures consistently show better performance than reported, reflecting the impact of income tax adjustments on the financial outcomes.

The financial data over the periods from fiscal year ending February 1, 2019, through February 2, 2024, exhibits several notable trends in both reported and adjusted net income alongside their respective profit margins.

Reported Net Income

The reported net income experienced an overall increasing trend from 2019 to 2021, rising from approximately $1.59 billion to $2.65 billion. However, after peaking in 2021, it declined in subsequent years, dropping to about $2.4 billion in 2022 and 2023, and a further significant decrease to approximately $1.66 billion in 2024.

Adjusted Net Income

Adjusted net income followed a similar upward trajectory through 2021, increasing from roughly $1.64 billion to $2.69 billion. Unlike the reported figures, adjusted net income continued to increase in 2022 and 2023, reaching a high of about $2.65 billion, before decreasing notably to approximately $1.74 billion in 2024.

Reported Net Profit Margin

The reported net profit margin aligns with the net income trend, starting at 6.2% in 2019 and rising to a peak of 7.87% in 2021. Subsequently, it declined steadily to 7.01% in 2022, 6.38% in 2023, and further down to 4.29% in 2024, reflecting a weakening profitability relative to revenue.

Adjusted Net Profit Margin

Similarly, the adjusted net profit margin improved from 6.41% in 2019 to a peak of 7.97% in 2021, maintaining relatively higher margins than the reported figures. It then declined gradually to 7.35% in 2022 and 7.01% in 2023, before falling sharply to 4.48% in 2024.

Overall, the data indicates strong growth in profitability and net income through 2021, followed by a downward trend in the most recent years, with a marked decline in 2024. Adjusted figures consistently show higher income and margin than reported figures, suggesting beneficial effects of the adjustments on the financial performance measures. The pronounced drop in 2024 signals potential challenges impacting profitability and earnings that merit further investigation.

The analysis of the financial data reveals several notable trends in shareholders' equity and financial leverage over the six-year period.

Shareholders’ Equity

Reported shareholders' equity displays a fluctuating pattern with an initial increase from approximately 6.42 billion US dollars in early 2019 to around 6.70 billion in early 2020, followed by a slight decline through 2021 and 2022 periods, reaching approximately 5.54 billion in early 2023. However, there is a marked recovery in early 2024, with reported equity rising to nearly 6.75 billion dollars.

Adjusted shareholders' equity consistently exceeds the reported figures, starting at about 7.03 billion in early 2019 and peaking near 7.38 billion in 2020 and 2021. Although it shows a downward trend in 2022 and 2023, falling to just over 6.60 billion, it rebounds strongly in 2024 to approximately 7.88 billion. This adjusted measure reflects the impact of annual and deferred income tax adjustments, providing a more favorable equity position throughout the period.

Financial Leverage

Reported financial leverage demonstrates a rising trend from 2.06 times in 2019 to a peak of 5.25 times in early 2023, indicating increasing use of debt relative to equity over most of the period. A reduction to 4.56 times in early 2024 suggests a recent deleveraging or equity base increase.

Adjusted financial leverage follows a similar trajectory but remains consistently lower than the reported leverage. It increases from 1.88 times in 2019 to 4.40 times in 2023, then decreases to 3.91 times in 2024, mirroring the deleveraging trend observed in the reported figures. This adjustment portrays a less aggressive leverage profile when considering tax effects.

Overall, the data indicate an initial phase of equity growth, followed by reduction in reported equity and a buildup of financial leverage, culminating in deleveraging and equity recovery in 2024. The adjusted figures consistently suggest a stronger equity base and more moderate financial leverage compared to unadjusted data, enhancing the company's financial stability when tax adjustments are accounted for.

The financial data exhibits a series of notable trends across the reviewed fiscal years. Both reported and adjusted net incomes demonstrate overall growth from the year ending February 1, 2019, through the year ending January 29, 2021, peaking at over 2.6 billion US dollars. Subsequently, reported net income shows some volatility, declining in the years ending January 28, 2022, and February 2, 2024, with a local high in the year ending February 3, 2023. Adjusted net income follows a similar pattern but maintains higher levels than the reported net income for all periods, indicating persistent adjustments that increase the income figures.

Shareholders’ equity shows a contrasting pattern. Reported shareholders’ equity increases slightly early on, reaching about 6.7 billion US dollars in 2020, but then declines significantly to approximately 5.5 billion in 2023 before rebounding strongly to nearly 6.75 billion by 2024. Adjusted shareholders’ equity consistently remains higher than reported equity across all periods, indicating systematic upward adjustments. The adjusted equity peaks in 2024, surpassing previous highs and suggesting an underlying strengthening in the company’s capital base when accounting for deferred or other tax-related adjustments.

Return on equity (ROE) trends align with the net income and equity movements but illustrate more pronounced fluctuations. Reported ROE escalates sharply from 24.77% in 2019 to a peak of 43.6% in 2023, before dropping to 24.61% in 2024. Adjusted ROE mimics this trend but remains consistently lower than reported ROE, indicating that the adjustments tend to moderate the profitability ratios. The peak ROE years correspond with relatively lower adjusted shareholders’ equity and higher net income levels, highlighting efficient earnings generation relative to equity in those years.

Overall, the data reveals strong profitability growth early in the period, followed by some volatility in income and equity in the latter years. Adjustments related to deferred tax or similar items consistently increase equity and net income metrics, which affects the interpretation of the company’s financial health and profitability. The year ending February 2, 2024, shows a reduction in profitability ratios and net income, despite an increase in adjusted equity, suggesting changes in earnings quality or tax-related impacts that merit further investigation.

Net income

Growth until 2021, subsequent volatility with a downward trend by 2024.

Adjusted net income consistently above reported figures.

Shareholders’ equity

Reported equity peaks in 2020, declines through 2023, recovers in 2024.

Adjusted equity consistently higher, with a peak in 2024.

Return on equity (ROE)

Reported ROE peaks in 2023, then declines sharply in 2024.

Adjusted ROE follows a similar but lower pattern than reported ROE.

General insight

Deferred tax and other adjustments increase equity and net income, influencing profitability metrics and financial health assessment.

Recent decline in profitability ratios despite increased adjusted equity suggests shifts in earnings quality or tax impacts.

Reported Net Income

The reported net income shows a generally upward trend from February 2019 to February 2023, increasing from approximately 1.59 billion to 2.42 billion US dollars. However, there is a decline in the most recent period ending February 2024, dropping significantly to about 1.66 billion US dollars. This suggests a challenging financial year or potential one-time factors negatively impacting profitability after a period of growth.

Adjusted Net Income

The adjusted net income follows a similar pattern to reported net income but consistently presents higher values over all periods. It increases steadily from around 1.64 billion US dollars in February 2019 to a peak of approximately 2.65 billion US dollars in February 2023. Like the reported net income, adjusted net income decreases in the last period to about 1.74 billion US dollars, indicating that even after adjustments, the company faced a decline.

Reported Return on Assets (ROA)

The reported ROA exhibits fluctuations over the six-year period. It starts at 12.04% in February 2019, drops sharply to 7.5% in January 2020, then recovers to over 10% in early 2021. Following that, it trends downward again, reaching 5.39% in February 2024. The decline in the latest year aligns with the drop in net income, implying reduced efficiency in asset utilization.

Adjusted Return on Assets (ROA)

The adjusted ROA maintains a similar trend to the reported ROA but is slightly higher throughout the years. It decreases from 12.43% in February 2019 to 7.75% in January 2020, before peaking at 10.4% in January 2021. Afterwards, it gradually declines, reaching 5.63% by February 2024. This downward trajectory suggests decreasing profitability relative to assets after adjustments for income tax effects.

Overall Trends and Insights

Both reported and adjusted financial metrics reveal an overall growth phase followed by a significant decline in the most recent fiscal year. The higher adjusted figures indicate the impact of reported and deferred income tax adjustments positively affecting net income and ROA figures. The decline in profitability and asset efficiency in the latest period could be indicative of external economic factors, operational challenges, or tax-related impacts that merit further investigation. The consistent gap between reported and adjusted values highlights the importance of tax-related adjustments in evaluating the company’s financial performance.