EQT Corp. (NYSE:EQT)

Net Operating Profit After Taxes (NOPAT)

The NOPAT values exhibit significant volatility over the analyzed periods. In 2017, a positive figure of approximately 408 million US dollars was recorded. However, subsequent years show consistent negative values, reflecting operational challenges. The lowest point is observed in 2018 with around -2.33 billion US dollars, followed by improvements in 2019 and 2020, though still negative. The figure declines again in 2021, indicating a continuing struggle to generate positive operating profit after taxes.

Cost of Capital

The cost of capital exhibits fluctuations with an overall moderate range between approximately 5.82% and 12.81%. There is a notable decrease from 12.81% in 2017 to a low of 5.82% in 2019, suggesting a reduced cost of financing during this period. Subsequently, the rate increases again reaching around 10.94% by 2021, implying either higher risk or increased capital costs in recent years.

Invested Capital

Invested capital shows a clear downward trend from 2017 through 2020. Initially, it decreases significantly from about 26.5 billion US dollars in 2017 to roughly 15.6 billion in 2020. In 2021, a slight increase occurs, bringing invested capital to around 16.5 billion US dollars. This pattern suggests that the company reduced its asset base or capital expenditures in the earlier years, with a modest reinvestment or expansion in the final year.

Economic Profit

The economic profit remains negative throughout the analyzed period, reflecting consistent destruction of shareholder value relative to the cost of capital. The largest negative economic profit appears in 2018 at approximately -4.16 billion US dollars. Although fluctuations occur, the overall economic profit shows no recovery trend, ending with increased losses in 2021 compared to some prior years. This indicates that the company’s investments have not generated returns above their cost of capital during these years.

Summary of Trends and Insights

The financial metrics collectively highlight operational and financial difficulties, particularly post-2017. The persistent negative NOPAT and economic profit imply ongoing operational inefficiencies or external challenges impacting profitability. The trends in invested capital suggest a strategic pullback or asset reduction, potentially to conserve resources or reallocate capital. Variations in the cost of capital reflect changing market conditions or risk assessments, which, combined with the other financial struggles, could affect the company’s ability to finance growth or recovery. Overall, the data points to the need for strategic reassessment to improve profitability and capital efficiency.

Net Income (Loss) Attributable to EQT Corporation

Over the five-year period from 2017 to 2021, net income exhibited a significant downward trend. In 2017, net income was positive, amounting to approximately $1.51 billion. However, from 2018 onwards, the company incurred losses each year, with the loss magnitude increasing initially in 2018 (around $2.24 billion), followed by a somewhat reduced loss of roughly $1.22 billion in 2019. The losses remained substantial in 2020 and 2021, with figures close to $967 million and $1.16 billion respectively. This pattern suggests persistent financial challenges beginning in 2018 and continuing through 2021, without a return to profitability within this timeframe.

Net Operating Profit After Taxes (NOPAT)

The NOPAT data reveals a similar trajectory to net income, indicating consistent operating losses from 2018 forward. Starting with a positive NOPAT of about $408 million in 2017, the company faced a steep decline to a negative $2.33 billion in 2018. Subsequent years show ongoing negative NOPAT values, though somewhat less severe than 2018, with losses of approximately $1.34 billion, $908 million, and $1.35 billion in 2019, 2020, and 2021 respectively. The continuous negative NOPAT reflects challenges in the core operations, implying difficulties in generating operating profitability post-2017.

Overall Trend Analysis

The data indicates a critical inflection point between 2017 and 2018, with both net income and operating profit shifting sharply from profitability to significant losses. This negative trend persists without material improvement through to 2021. Despite some fluctuations in the magnitude of losses, the absence of recovery highlights ongoing adverse conditions impacting the company's earnings and operational efficiency over this interval.

The financial data reflects fluctuations and notable trends in the tax-related components over the five-year period ending December 31, 2021.

Income Tax Benefit

This item shows a consistent decrease in the magnitude of the tax benefit from 2017 through 2020, moving from approximately -1,188,416 thousand US dollars in 2017 to -298,858 thousand US dollars in 2020. The decreasing absolute value suggests a diminishing tax benefit over time. However, in 2021, there is a slight reversal with the income tax benefit increasing in magnitude to -434,175 thousand US dollars, indicating a partial rebound in the tax benefits recognized.

Cash Operating Taxes

Cash operating taxes exhibit significant volatility during the period. Notably, there is a sharp increase in the cash operating tax outflow in 2018, with a value of -510,482 thousand US dollars, which markedly exceeds the amounts of the surrounding years. In 2019 and 2020, these operating taxes decreased substantially to -58,336 and -85,720 thousand US dollars respectively. Contrasting with previous years, a positive figure of 64,624 thousand US dollars is observed in 2021, indicating a cash inflow or a tax refund rather than an outflow, which marks a substantial positive shift in this cash flow item.

Overall, the data reveals a general trend of decreasing income tax benefits until 2020 followed by a slight increase in 2021, alongside a volatile pattern in cash operating taxes which includes a significant outflow anomaly in 2018 and a notable positive inflow in 2021. These trends suggest shifts in the tax strategy, tax payments, or recognition of tax benefits, as well as possible changes in underlying tax positions or operational tax circumstances during the analyzed period.

Total reported debt & leases

Over the five-year period, total reported debt and leases exhibited a general downward trend from 6,193,259 thousand USD at the end of 2017 to a low of 4,975,379 thousand USD at the end of 2020. However, this was followed by an increase to 5,537,714 thousand USD at the end of 2021, indicating a partial reversal of the previous declining trend.

Common shareholders’ equity

The common shareholders' equity showed a consistent decline from 13,319,618 thousand USD in 2017 to a low of 9,255,240 thousand USD in 2020. Notably, in 2021 there was a recovery to 10,029,527 thousand USD, suggesting improvement in equity position after several years of decrease.

Invested capital

Invested capital experienced a sharp decline from 26,508,072 thousand USD in 2017 to 15,621,670 thousand USD in 2020. This represents a significant reduction in invested capital over these years. In 2021, there was a modest increase to 16,527,021 thousand USD, signaling a stabilization or slight growth after the downward trajectory.

Economic Profit Trend

The economic profit remained negative throughout the period from 2017 to 2021, indicating consistent value destruction. The figure showed a worsening trend from -2,988,335 thousand USD in 2017 to a peak negative value of -4,156,730 thousand USD in 2018, followed by some improvement in 2019 with a decrease in losses to -2,308,194 thousand USD. However, this improvement was not sustained, as losses increased again in 2020 and 2021, reaching -3,157,166 thousand USD by the end of 2021.

Invested Capital Trend

Invested capital decreased steadily from 26,508,072 thousand USD at the end of 2017 to 15,621,670 thousand USD at the end of 2020. There was a slight recovery in 2021, with invested capital rising to 16,527,021 thousand USD. Overall, the trend suggests a significant reduction in invested capital over the five-year period, indicating possible divestments or asset reductions.

Economic Spread Ratio Analysis

The economic spread ratio was consistently negative, reflecting returns below the cost of capital. The ratio showed a marked decline from -11.27% in 2017 to -22.6% in 2018, signaling increased inefficiencies or higher relative costs. In 2019, the ratio improved to -13.86%, but this improvement was short-lived as the ratio deteriorated again in 2020 to -16.21%, and further declined to -19.1% in 2021. This pattern indicates fluctuating but overall weak profitability relative to capital cost.

Overall Financial Insights

The data reveals a company facing persistent challenges in generating economic profit, with negative returns on invested capital throughout the analyzed period. Despite a significant reduction in invested capital, the economic profit remained in deficit, and the economic spread ratio consistently indicated underperformance relative to required returns. The fluctuations in both economic profit and spread ratio suggest variability in operational efficiency or changes in market conditions, yet the overall financial health appears constrained by enduring profitability issues.

Economic Profit

The economic profit demonstrates a consistently negative trend throughout the period, indicating persistent losses. The lowest value occurred in 2018 with approximately -4.16 million USD, followed by a notable improvement in 2019 to about -2.31 million USD. However, economic profit deteriorated again in 2020 to roughly -2.53 million USD and further decreased in 2021 to approximately -3.16 million USD. While there was some fluctuation, the overall economic profitability did not reach positive territory during any of the years observed.

Sales of Natural Gas, Natural Gas Liquids, and Oil

Sales figures show significant variability over the five-year span. Starting at approximately 2.65 million USD in 2017, sales more than doubled in 2018 to around 4.70 million USD. Sales then decreased in 2019 to about 3.79 million USD and declined further in 2020 to roughly 2.65 million USD, returning to the 2017 level. In 2021, sales experienced a strong rebound, reaching a peak of approximately 6.80 million USD, the highest level recorded in the period analyzed.

Economic Profit Margin

The economic profit margin consistently remained negative throughout the timeframe, reflecting the lack of profitability relative to sales. The margin improved from -112.71% in 2017 to -88.53% in 2018 and continued to reduce negatively to -60.88% in 2019, indicating an improving efficiency or profitability rate albeit still negative. In 2020, the margin worsened again to -95.55%, before improving markedly in 2021 to -46.40%, the least negative margin observed across the years. This suggests an improving trend in economic profit margin towards better economic performance relative to sales.