Edwards Lifesciences Corp. (NYSE:EW)

The analysis of the annual current and deferred income tax expenses reveals several notable trends over the period from 2017 to 2021.

Current Income Tax Expense

The current income tax expense exhibits a substantial fluctuation during the period. It starts at a high level of 424,200 thousand US dollars in 2017, sharply decreasing to 60,400 thousand US dollars in 2018. From this relatively low point, it shows a recovery and upward trend, increasing to 109,100 thousand in 2019, 145,500 thousand in 2020, and reaching 242,900 thousand in 2021. This pattern indicates considerable variability in taxable income or tax rates, with a notable uptrend in the latter years.

Deferred Income Tax Expense (Benefit)

The deferred income tax expense (benefit) demonstrates a pattern of alternating positive and negative values, signifying shifts between deferred tax expenses and benefits. In 2017, a positive expense of 27,100 thousand US dollars is observed. This turns into a benefit of -21,200 thousand in 2018, followed by a return to a deferred expense of 10,500 thousand in 2019. Subsequently, the company reports substantial deferred tax benefits in both 2020 (-52,200 thousand) and 2021 (-44,000 thousand). The increasing magnitude of deferred tax benefits in the last two years suggests significant adjustments in deferred tax assets or liabilities, possibly due to changes in timing differences or tax planning initiatives.

Income Tax Provision

The income tax provision, representing the overall tax expense combining current and deferred components, echoes the fluctuations observed in the individual components. Starting at 451,300 thousand US dollars in 2017, it falls sharply to 39,200 thousand in 2018. It then rises to 119,600 thousand in 2019, slightly decreases to 93,300 thousand in 2020, and climbs again to 198,900 thousand in 2021. This pattern reflects the influence of both current and deferred tax expense movements, with a notable dip in 2018 and mixed trends thereafter.

Overall, the data indicate significant variability in both current and deferred tax expenses over the analyzed years, with recent years marked by sizeable deferred tax benefits that reduce the total income tax provision. This suggests dynamic tax management and potentially changing tax circumstances affecting the company's tax expense profile.

United States federal statutory income tax rate

The statutory income tax rate experienced a marked decrease from 35% in 2017 to a stable level of 21% from 2018 through 2021.

Effective income tax rate, before impact related to 2017 U.S. Tax Reform

This rate shows a significant decline from 15.19% in 2017 to 3.07% in 2018, followed by a moderate increase to around 10% in the subsequent years, ending at 11.69% in 2021. The trend indicates a substantial impact in 2018 with partial recovery towards higher effective tax rates in later years.

Effective income tax rate

The effective income tax rate charted a steep drop from 43.61% in 2017 to 5.15% in 2018, with a gradual increase stabilizing around 10-12% for the years 2019 through 2021. This pattern mirrors the adjusted rate's trend but starts from a much higher initial point in 2017, reflecting the significant impact of tax reforms and possibly other factors on reported taxes.

The financial data reveals several noteworthy trends over the five-year period ending in 2021.

Compensation and Benefits

There is a consistent upward trend with values increasing from 53,900 thousand US dollars in 2017 to 109,800 thousand US dollars in 2021. This nearly doubles the expense over the period, indicating either growth in personnel costs or expansion within the company.

Benefits from Uncertain Tax Positions

This item decreases sharply from 66,100 thousand US dollars in 2017 to 22,200 thousand in 2018, then remains relatively stable, with a gradual increase to 33,900 thousand by 2021. The initial decline is significant and suggests changes in tax risk assessments or resolution of prior uncertainties.

Net Tax Credit Carryforwards

A steady increase is observed, from 78,800 thousand US dollars in 2017 to 142,000 thousand in 2021. This growth reflects accumulating tax credits that the company can utilize against future tax liabilities, possibly arising from growing research and development or other tax-favored activities.

Net Operating Loss Carryforwards

Fluctuations occur but with an overall rising trend from 47,300 thousand US dollars in 2017 to 69,400 thousand in 2021. This indicates available losses which can offset taxable income in future periods, suggesting periods of operational challenges offset by later recoveries.

Accrued Liabilities

The amounts show considerable volatility, with a large increase from 29,200 thousand in 2017 to 78,800 thousand in 2018, a sharp decline to 6,100 thousand in 2019, before rising again substantially to over 108,000 thousand by 2021. Such swings may reflect variable short-term obligations or reserves influenced by operational or regulatory factors.

Inventories

Inventories increase from 6,800 thousand in 2017 to a peak of 16,300 thousand in 2020, followed by a decrease to 13,500 thousand in 2021. The initial growth suggests stockpiling or expansion of production, with the later decline potentially indicating improved inventory management or changes in demand.

Cash Flow and Net Investment Hedges

This item shows sporadic and incomplete values, with 13,300 thousand in 2017, a decrease in later years to negative amounts where data is available. The inconsistency limits definitive conclusions, but the negative amounts may reflect losses or costs related to hedging activities.

State Income Taxes

State income taxes expense declines sharply from 5,800 thousand in 2017 down to 400 thousand in 2021, indicating reduced taxable income at the state level, tax planning efficiencies, or favorable state tax rate changes.

Investments

The figure remains relatively flat around 1,500 to 1,800 thousand US dollars from 2017 through 2020 before dropping to 700 thousand in 2021, indicating stable but diminishing investment levels in recent years.

Lease Liability Obligations

Data is only present from 2019, showing a decrease from 18,400 thousand to 6,600 thousand by 2021, which may reflect lease terminations or repayments.

Other Items

Values fluctuate irregularly with no clear trend, ranging from 1,300 to 4,100 thousand positive values, and some negative adjustments, suggesting miscellaneous items with variable impact.

Deferred Tax Assets Before Valuation Allowance

These assets increase steadily from 304,500 thousand in 2017 to 485,600 thousand in 2021, indicating growing temporary differences and carryforwards eligible for future tax benefit recognition.

Valuation Allowance

The valuation allowance becomes increasingly negative from -41,600 thousand in 2017 to -82,500 thousand in 2021, implying a growing portion of deferred tax assets is considered unlikely to be realized.

Deferred Tax Assets (Net)

Despite the increasing valuation allowance, net deferred tax assets rise from 262,900 thousand in 2017 to 403,100 thousand in 2021, reflecting the overall growth in deferred assets outpacing the allowance increases.

Property, Plant, and Equipment

These show increasing negative values from -20,000 thousand in 2017 to -64,100 thousand in 2021, which could indicate impairment, disposals, or accumulated depreciation outpacing additions.

Deferred Tax on Foreign Earnings

Negative values enlarge over time, from -3,100 thousand in 2017 to -26,300 thousand in 2021, signifying increased deferred tax liabilities related to foreign income.

Right-of-Use Assets

Recorded only from 2019 with negative values decreasing slightly from -17,500 thousand to -6,100 thousand by 2021, consistent with lease accounting under new standards and possible lease terminations or amortization.

Other Intangible Assets

Negative and relatively stable, roughly around -75,000 thousand throughout the period, suggesting consistent amortization or impairment levels.

Deferred Tax Liabilities

The negative liabilities increase in magnitude from -76,900 thousand in 2017 to -181,000 thousand in 2021, reflecting growing obligations likely due to timing differences on taxable temporary differences.

Net Deferred Tax Assets (Liabilities)

This net figure declines from 186,000 thousand in 2017 to 135,400 thousand in 2019, then rises again to 222,100 thousand by 2021, demonstrating variability in the balance of deferred tax items over time.

Deferred Tax Assets

The deferred tax assets show a fluctuating yet generally increasing trend over the five-year period. The value decreased from 213,600 thousand US dollars in 2017 to 174,000 thousand US dollars in 2018, marking a notable decline. It remained relatively stable in 2019 at 172,200 thousand US dollars. However, from 2019 onward, there is a significant upward trend, with the deferred tax assets rising to 230,900 thousand US dollars in 2020 and further increasing to 246,700 thousand US dollars in 2021. This suggests an improving position in terms of future tax benefits, especially in the latter years.

Deferred Tax Liabilities

The deferred tax liabilities display a generally decreasing trend with some fluctuations. Starting at 27,600 thousand US dollars in 2017, the liabilities significantly dropped to 9,000 thousand US dollars in 2018. However, in 2019 there was a sharp increase to 36,800 thousand US dollars, representing the highest value in this period. Subsequently, the liabilities declined progressively to 28,100 thousand US dollars in 2020 and further down to 24,600 thousand US dollars in 2021. Overall, this indicates a reduction in future tax obligations after a peak in 2019, which may reflect changing tax strategies or tax basis differences related to asset values.

The financial data reveals several important trends over the five-year period from 2017 to 2021. A consistent increase can be observed in both reported and adjusted total assets, signaling growth in the company's asset base. Reported total assets rose from approximately $5.70 billion in 2017 to $8.50 billion in 2021, while adjusted total assets increased similarly from about $5.48 billion to $8.26 billion over the same timeframe. This growth trend indicates a steady expansion of resources held by the company.

Regarding liabilities, a different pattern emerges. Reported total liabilities initially decreased from around $2.74 billion in 2017 to roughly $2.18 billion in 2018, followed by a general increase through 2020 reaching about $2.66 billion, then stabilizing in 2021. The adjusted total liabilities follow a similar pattern, with a decline early on and gradual increase later, suggesting some volatility in the company's obligations but with a leveling off in the latest year. This indicates improved control or stabilization of debt levels in recent periods.

Stockholders’ equity, both reported and adjusted, shows a clear upward trajectory, growing from approximately $2.96 billion (reported) and $2.77 billion (adjusted) in 2017 to $5.84 billion and $5.61 billion respectively in 2021. This substantial increase reflects the company’s enhanced net worth and retained earnings over time, further confirmed by consistent growth in net income figures.

Net income trends reveal notable fluctuations. Reported net income rose from $584 million in 2017 to a peak near $1.05 billion in 2019, followed by a dip to about $823 million in 2020 and a significant rebound to approximately $1.50 billion in 2021. Adjusted net income follows a comparable pattern, slightly differing in absolute values but showing the same general movement. The dip observed in 2020 could be linked to extraordinary events impacting profitability, while the rebound in 2021 highlights a strong recovery and improved earnings performance.

Assets

Consistent growth in both reported and adjusted values indicates expanding asset base.

Liabilities

Initial decline followed by increase and stabilization suggests management of obligations with recent control improvements.

Stockholders’ Equity

Steady increase highlights strengthened financial position and accumulation of shareholder value.

Net Income

Profitable trends with fluctuations, including a downturn in 2020 and a recovery in 2021, indicating resilience and capacity to rebound after challenges.

Net Profit Margin

The reported net profit margin exhibited an overall upward trend from 16.99% in 2017 to a peak of 28.73% in 2021, with a notable dip in 2020 to 18.77%. Similarly, the adjusted net profit margin followed a comparable pattern, increasing from 17.78% in 2017 to 27.89% in 2021, also showing a decrease in 2020 to 17.58%. The margins indicate strong profitability growth over the period, with a significant drop during 2020, possibly reflecting external challenges impacting earnings.

Total Asset Turnover

The reported total asset turnover ratio increased from 0.6 in 2017 to a high of 0.7 in 2018, but then gradually declined to 0.62 by 2021. The adjusted total asset turnover mirrored this trend, rising to 0.72 in 2018 before a gradual decrease to 0.63 in 2021. This suggests a peak in asset efficiency around 2018, followed by a modest reduction in generating revenue per unit of assets.

Financial Leverage

Both reported and adjusted financial leverage ratios showed a consistent decline from 2017 through 2021. Reported leverage decreased from 1.93 in 2017 to 1.46 in 2021, while adjusted leverage fell from 1.98 to 1.47 in the same interval. This declining leverage trend indicates a conservative approach to financing over time, reducing dependency on debt or increasing equity financing.

Return on Equity (ROE)

The reported ROE experienced growth from 19.74% in 2017 to a peak of 25.76% in 2021, with a dip in 2020 to 18%. Adjusted ROE followed a similar pattern, peaking slightly higher at 26.35% in 2019 and ending at 25.99% in 2021. The decline in 2020 aligns with the dips observed in profit margins and asset turnover, reflecting temporary performance challenges. Overall, the ROE improvements suggest enhanced profitability relative to shareholders' equity.

Return on Assets (ROA)

ROA values increased from 10.25% (reported) and 11.14% (adjusted) in 2017 to 17.68% (reported) and 17.67% (adjusted) in 2021, with an evident drop in 2020 to around 11% in both measures. This rising trend outside of 2020 indicates improving efficiency in using assets to generate earnings. The 2020 dip corresponds to the time frame of other performance challenges, possibly due to extraordinary circumstances.

Reported Net Income

The reported net income demonstrated a generally upward trend over the five-year period. Starting at 583.6 million US dollars in 2017, it increased to 722.2 million in 2018 and further to 1.047 billion in 2019. In 2020, there was a decline to 823.4 million, followed by a substantial rebound to 1.503 billion in 2021, marking the highest value during the timeframe.

Adjusted Net Income

Adjusted net income followed a somewhat similar trajectory with slightly different magnitudes. It increased from 610.7 million in 2017 to 701.0 million in 2018, then rose sharply to 1.057 billion in 2019. A decrease to 771.2 million was observed in 2020, mirroring the reported net income trend, with a recovery to 1.459 billion in 2021. The adjusted figures are generally higher than reported ones in the earlier years but fall below reported net income in 2018 and 2020.

Reported Net Profit Margin

The reported net profit margin exhibited variability over the years. It increased from 16.99% in 2017 to 19.4% in 2018 and peaked at 24.08% in 2019. However, it dropped to 18.77% in 2020 before rising significantly to 28.73% in 2021, the highest margin in the period analyzed. This pattern indicates fluctuating profitability, possibly influenced by operational or market factors.

Adjusted Net Profit Margin

Adjusted net profit margin trends closely parallel those of the reported margin, starting at 17.78% in 2017 and slightly declining to 18.83% in 2018. It then peaked at 24.32% in 2019, followed by a decrease to 17.58% in 2020. The margin increased appreciably to 27.89% in 2021. The adjusted margin is consistently close to reported margins, with minor differences reflecting adjustments from deferred and reported income tax.

Overall Insights

Both reported and adjusted net income show growth interrupted by a decline in 2020, likely related to external economic conditions. Recovery in 2021 is strong, exceeding previous peak levels. Profit margins reflect similar volatility, with particularly notable improvements in 2019 and 2021, potentially indicative of improved operational efficiency or favorable market dynamics. The close alignment between reported and adjusted figures suggests income tax adjustments have a moderate impact on overall profitability metrics.

The financial data presents an overview of the company's asset base and asset utilization efficiency over a five-year period, with figures reported both on a total and an adjusted basis for tax effects.

Total Assets

The reported total assets increased consistently from approximately 5.70 billion US dollars at the end of 2017 to roughly 8.50 billion US dollars by the end of 2021. This indicates a steady expansion of the company’s asset base over the period. The adjusted total assets, which account for annual reported and deferred income tax adjustments, show a similar upward trend, starting at about 5.48 billion and reaching approximately 8.26 billion US dollars in 2021. The difference between reported and adjusted figures is relatively stable, suggesting consistent tax-related adjustments without significant volatility.

Total Asset Turnover

The reported total asset turnover ratio started at 0.60 in 2017, increased to 0.70 in 2018, and then showed a gradual decline to stabilize around 0.61-0.62 in the years 2020 and 2021. This pattern points to a peak in asset efficiency in 2018, followed by a moderate decrease and stabilization in the subsequent years. Adjusted total asset turnover ratios mirror this trend closely, being slightly higher than their reported counterparts throughout the period. The adjusted ratios moved from 0.63 in 2017 to a peak of 0.72 in 2018 and then declined, reaching 0.63 in both 2020 and 2021. This suggests that the company maintained relatively steady efficiency in generating revenue from its asset base when accounting for tax adjustments.

Overall, the data reflects a company that has steadily grown its asset base while maintaining a generally consistent level of asset utilization efficiency, with a notable peak in turnover ratios in 2018 followed by a moderate decline and stabilization in the following years. The consistency between reported and adjusted data underscores the stable impact of tax-related adjustments on financial metrics during this timeframe.

Assets

The reported total assets demonstrate a general upward trend over the five-year period. Starting at $5,695,800 thousand in 2017, assets declined slightly in 2018 to $5,323,700 thousand, followed by consistent growth through 2019 to 2021, reaching $8,502,600 thousand by the end of 2021. The adjusted total assets follow a similar trajectory, beginning at $5,482,200 thousand in 2017, showing a modest decrease in 2018, then increasing steadily through 2021 to $8,255,900 thousand. This indicates an overall expansion of the asset base with minor fluctuations early in the period.

Stockholders’ Equity

Both reported and adjusted stockholders’ equity have increased notably from 2017 through 2021. The reported equity rose from $2,956,200 thousand in 2017 to $5,835,900 thousand in 2021, with consistent year-over-year growth. Adjusted equity mirrors this trend, rising from $2,770,200 thousand to $5,613,800 thousand within the same timeframe. This significant increase in equity suggests improved net asset value and potential strengthening of the company’s capital base.

Financial Leverage

The reported financial leverage ratio has decreased steadily from 1.93 in 2017 to 1.46 in 2021. The adjusted financial leverage shows a comparable decline from 1.98 to 1.47 during the same period. The downward trend in leverage ratios indicates a reduction in the extent to which the company relies on debt financing relative to equity, suggesting improved financial stability and possibly a stronger equity position relative to liabilities.

Overall Insights

The data reflects a solid growth pattern in total assets and stockholders’ equity over the five-year span. Despite minor decreases in assets in 2018, the company has demonstrated consistent growth and strengthening of its equity base. The decrease in financial leverage ratios reinforces the conclusion of reduced financial risk and enhanced balance sheet strength. Adjusted figures closely follow the reported data, suggesting that adjustments for income tax considerations do not materially alter the overall financial position but provide a refined perspective. Together, these trends indicate improved financial health and a potentially more conservative capital structure over time.

Net Income Trends

Both reported and adjusted net income exhibit an overall upward trajectory from 2017 through 2021. Reported net income increased from approximately $584 million in 2017 to $1.5 billion in 2021, more than doubling over the five-year span. Adjusted net income followed a similar pattern, rising from around $611 million in 2017 to nearly $1.46 billion in 2021. Notably, reported net income peaked in 2019 at $1.05 billion, dipped in 2020, and then rose sharply in 2021. Adjusted net income also mirrored this pattern, though with a slightly lower figure in 2020, suggesting some volatility likely influenced by adjustments around that period.

Stockholders’ Equity Analysis

The reported stockholders’ equity increased steadily each year, starting at roughly $2.96 billion in 2017 and reaching $5.84 billion by 2021. Adjusted stockholders’ equity shows a parallel trend, growing from about $2.77 billion in 2017 to $5.61 billion in 2021. This consistent growth in equity indicates an expanding capital base and possibly retained earnings contributing to the equity through the period. The difference between reported and adjusted figures remains relatively stable, suggesting that deferred income tax adjustments have a consistent but moderate impact on equity values.

Return on Equity (ROE) Patterns

Reported ROE shows fluctuation over the five years: increasing from 19.74% in 2017 to a peak of 25.24% in 2019, dropping sharply to 18% in 2020, and then recovering to 25.76% in 2021. Adjusted ROE follows a similar pattern: rising from 22.05% in 2017 to 26.35% in 2019, declining to 17.64% in 2020, before climbing back to 25.99% in 2021. These ROE movements indicate that profitability relative to equity experienced a dip in 2020, potentially due to external or operational challenges, but rebounded strongly in 2021. Adjusted ROE values are consistently slightly higher than reported values, reflecting the impact of tax adjustments on profitability measures.

Overall Insights

The financial data indicate strong growth in net income and equity over the analyzed period, with temporary setbacks evident in 2020 likely tied to broader economic or company-specific factors. Both reported and adjusted data follow very similar trends, though adjusted figures slightly temper some of the reported numbers, reflecting the influence of deferred tax assets or liabilities. Return on equity trends underscore the company’s ability to generate profits from its equity base, despite a notable dip in 2020, followed by a swift recovery.

Net Income Trends

The reported net income demonstrates a general upward trajectory over the five-year period, increasing from 583,600 thousand US dollars in 2017 to 1,503,100 thousand US dollars in 2021. There was a notable peak in 2019 at 1,046,900 thousand US dollars, followed by a dip in 2020 to 823,400 thousand US dollars before rising sharply again in 2021. The adjusted net income follows a similar pattern, starting higher than the reported figure in 2017, slightly decreasing in 2018, then peaking in 2019 at 1,057,400 thousand US dollars. It also experiences a decrease in 2020 to 771,200 thousand US dollars, before recovering in 2021 to 1,459,100 thousand US dollars. The alignment between reported and adjusted net income values suggests consistent adjustments in tax and other accounting treatments across the period, with notable impacts in the years 2018 and 2020.

Total Assets Trends

Total assets reported have generally increased over the analysis period, moving from 5,695,800 thousand US dollars in 2017 to 8,502,600 thousand US dollars in 2021. There is an exception in 2018, where a decline is observed, dropping to 5,323,700 thousand US dollars. From 2018 onward, the assets steadily increased, with the most significant growth between 2020 and 2021. Adjusted total assets mirror this pattern closely, albeit with consistently lower values indicating the removal of certain components or adjustments related to deferred tax treatments. The upward trend in total assets suggests expansion or acquisition activities as well as accumulated earnings retained within the company.

Return on Assets (ROA) Trends

The reported ROA reflects fluctuating profitability relative to asset base, starting at 10.25% in 2017, peaking at 16.14% in 2019, then falling to 11.38% in 2020 before rising significantly to 17.68% in 2021. The adjusted ROA shows a similar trend with higher values at each point, beginning at 11.14% in 2017 and reaching 17.67% in 2021. The close correspondence between reported and adjusted ROA metrics indicates that the adjustments made have limited impact on asset profitability ratio, except for a slightly higher adjusted ROA consistently suggesting a more favorable profitability perspective when adjusted for tax effects.

Overall Insights

From 2017 to 2021, the company demonstrates a robust growth pattern in both net income and total assets, accompanied by improvements in asset profitability as indicated by ROA. The temporary declines in 2018 for assets and in 2020 for income highlight potential external or internal challenges during those periods. Adjustments related to deferred income tax provide a slightly more optimistic financial view, enhancing net income and ROA figures consistently. These trends collectively reflect effective management of resources and profitability, despite some volatility in economic outcomes and tax-related adjustments.