Eli Lilly & Co. (NYSE:LLY)

The analysis of the financial data over the five-year period reveals several key trends and insights into the company's operational efficiency and value creation.

Net Operating Profit After Taxes (NOPAT)

The NOPAT exhibits a fluctuating pattern with a peak in 2020 at approximately 6.36 billion USD, followed by a steady decline reaching its lowest point in 2023 at around 3.09 billion USD. Notably, there is a significant recovery in 2024, where NOPAT rises sharply to approximately 8.47 billion USD, the highest in the observed period.

Cost of Capital

The cost of capital demonstrates a gradual increase from 8.14% in 2020 to a peak of 8.54% in 2023, then stabilizes slightly at 8.53% in 2024. This upward trend indicates a rising cost associated with the company’s financing over the years, which could be influenced by changing market conditions or increased risk perceptions.

Invested Capital

Invested capital shows variability over the years, initially increasing from about 24.56 billion USD in 2020 to 26.14 billion USD in 2021, then dropping to 24.3 billion USD in 2022. It rises again significantly in the following years, reaching 29.38 billion USD in 2023 and further increasing to 35.8 billion USD in 2024. This overall upward trend suggests an expansion in the company’s asset base or capital employed.

Economic Profit

Economic profit follows a pattern somewhat similar to NOPAT, beginning at around 4.36 billion USD in 2020 and decreasing consistently to approximately 580 million USD by 2023. In 2024, economic profit rebounds strongly to about 5.41 billion USD. The sharp decline and subsequent recovery indicate periods of diminished and then enhanced value creation relative to the cost of capital during the analyzed period.

In summary, the data highlights a period of contraction in profitability and economic value from 2020 through 2023, coupled with rising invested capital and cost of capital. The recovery in 2024 is pronounced and suggests a positive turnaround in operational performance and value generation. The increase in invested capital may reflect strategic investments or expansion efforts that initially put pressure on profits but ultimately contributed to improved financial outcomes by the final year.

The financial data reveals notable fluctuations in both net income and net operating profit after taxes (NOPAT) over the five-year period ending in 2024.

Net Income

Net income displayed a downward trend from 2020 to 2023, decreasing from 6,193,700 thousand US dollars in 2020 to 5,240,400 thousand US dollars in 2023. However, in 2024, net income surged significantly to 10,590,000 thousand US dollars, almost doubling the previous year’s figure. This sharp increase suggests an exceptional improvement in profitability during the final reported year.

Net Operating Profit After Taxes (NOPAT)

NOPAT exhibited a consistent decline throughout the period from 2020 through 2023, beginning at 6,357,340 thousand US dollars in 2020 and dropping steadily to 3,090,452 thousand US dollars in 2023. This represents a reduction of more than 50% over these years. However, in 2024, NOPAT rebounded strongly, rising to 8,466,038 thousand US dollars, indicating a considerable recovery in operating profitability after taxes.

Overall Insights

The downward trend in both net income and NOPAT from 2020 to 2023 may reflect operational challenges or increased costs impacting profitability. The significant rebound in 2024 for both metrics suggests a positive turnaround, possibly as a result of improved operational efficiency, cost management, or increased revenues. The divergence in magnitude between net income and NOPAT in 2024, with net income showing a larger increase, may imply changes in non-operating factors, tax strategies, or extraordinary items affecting the net income figure.

Income Taxes

The amount of income taxes showed a declining trend from 2020 to 2022, decreasing from approximately 1,036,200 thousand USD in 2020 to 561,600 thousand USD in 2022. This represents almost a halving over this period. However, starting in 2023, there was a significant increase in income taxes, rising sharply to about 1,314,200 thousand USD and continuing upward to 2,090,400 thousand USD in 2024. This reversal suggests a change in taxable income or tax strategy leading to a more than threefold increase from the 2022 low.

Cash Operating Taxes

Cash operating taxes exhibited a consistent year-over-year increase across the entire period. Beginning at roughly 1,244,662 thousand USD in 2020, the amount rose to 1,446,213 thousand USD in 2021. This upward trend accelerated considerably starting in 2022, with cash operating taxes reaching 2,811,147 thousand USD, then 3,731,159 thousand USD in 2023, and finally 4,911,605 thousand USD in 2024. The steady and strong growth in this metric indicates increasing operational tax expenses, potentially reflecting higher operating profits or changes in tax regulations impacting cash tax outflows.

Summary of Trends

Overall, while income taxes initially declined before a sharp increase in later years, cash operating taxes steadily increased every year with accelerating growth. This divergence suggests that while reporting or accrual-based tax expenses (income taxes) fluctuated, the actual cash tax payments consistently rose, implying increasing operational profitability or other factors driving higher taxation cash flows. The pronounced rise from 2022 onwards in both categories signals a significant change in the tax or operational landscape during this more recent period.

The financial data over the five-year period reveals notable trends regarding the company’s debt levels, equity, and invested capital.

Total reported debt & leases

This figure remained relatively stable from 2020 through 2022, fluctuating slightly around 17 billion US dollars. However, there was a significant increase starting in 2023, rising sharply to approximately 26.3 billion and further increasing to around 34.8 billion by the end of 2024. This upward trajectory indicates a substantial rise in debt and lease obligations in the most recent years.

Total Eli Lilly and Company shareholders’ equity

Shareholders’ equity showed a consistent upward trend throughout the period. It increased from about 5.6 billion in 2020 to nearly 9.0 billion in 2021, followed by further growth to approximately 10.6 billion in 2022. Although there was only a modest increase in 2023, equity rose notably again in 2024 to approximately 14.2 billion. This pattern reflects overall strengthening in the company’s equity base over the period.

Invested capital

Invested capital exhibited some volatility but generally increased over the five-year span. After a rise from about 24.6 billion in 2020 to 26.1 billion in 2021, it declined to 24.3 billion in 2022, suggesting some contraction or divestment activities. Subsequently, invested capital expanded significantly in the last two years, reaching approximately 29.4 billion in 2023 and 35.8 billion in 2024. This uptrend indicates increased allocation of resources, possibly for growth or expansion purposes.

In summary, the company’s financial structure demonstrates a rising reliance on debt from 2023 onward, accompanied by steady gains in shareholders’ equity. The invested capital reflects initial contraction followed by substantial growth, consistent with strategic investments or asset acquisitions. The combined trends suggest an aggressive capital deployment strategy supported by increased leverage and equity growth.

The financial data presents a view of the company's economic profit, invested capital, and economic spread ratio over a five-year period. Several trends are notable from this information.

Economic Profit

The economic profit exhibits variability throughout the analyzed years. Starting at approximately 4.36 billion US dollars in the initial year, it declined significantly in the subsequent years, reaching a low point around 580 million US dollars. However, in the most recent year, there was a substantial rebound to approximately 5.41 billion US dollars, indicating a strong recovery or improvement in value creation beyond the cost of capital.

Invested Capital

The invested capital shows a generally upward trajectory across the period. Beginning at nearly 24.56 billion US dollars, it decreased slightly in the third year but then increased consistently in the last two years, peaking at over 35.8 billion US dollars. This increase reflects the growing assets or capital base employed in the company's operations.

Economic Spread Ratio

The economic spread ratio, which measures economic profit relative to invested capital, follows a similar fluctuating pattern as economic profit. It started high at about 17.74%, declined steadily to a low point near 1.98%, and then recovered to 15.12%. This pattern suggests that while returns on invested capital weakened significantly during the mid-period, they improved markedly in the latest year analyzed.

Overall, the company's economic performance demonstrates a period of decline followed by notable recovery. The contracted economic profit and spread in the middle years could indicate challenges or increased costs, whereas the recent improvements imply enhanced efficiency or profitability. The increased invested capital in later years may have supported the recent profit growth, although such growth needs to be sustained to maintain positive economic returns firmly.

The analysis of the annual financial data reveals several noteworthy trends over the five-year period considered.

Economic Profit

There is a fluctuating pattern in economic profit, starting at a high of approximately 4.36 billion USD in the initial year, followed by a decline in the subsequent years, reaching a low point of around 580 million USD. Remarkably, in the final year, economic profit shows a substantial recovery, surpassing the initial value and peaking at approximately 5.41 billion USD. This indicates variability in the company's ability to generate profit above its cost of capital, with a significant rebound in the most recent period.

Revenue

The revenue demonstrates a consistent upward trajectory throughout the period. Beginning at roughly 24.54 billion USD, revenue steadily increases year-over-year, ultimately reaching an impressive 45.04 billion USD by the end of the last reported year. This continuous growth suggests expanding sales or service income, reflecting successful market penetration or product demand.

Economic Profit Margin

The economic profit margin shows a decreasing trend in the first four years, dropping from approximately 17.76% to a low of 1.7%, indicating a diminishing ratio of economic profit relative to revenue. However, in the final year, there is a recovery to 12.02%, reflecting an improvement in profitability efficiency. This pattern highlights initial pressure on economic profitability despite growing revenues, followed by a substantial margin enhancement towards the end of the period.

In summary, the company experienced increasing revenue over the period, while economic profit and its margin faced volatility with declines in the intermediate years but significant recovery in the most recent year. This may indicate strategic initiatives or operational improvements implemented to enhance profitability after a period of contraction in economic returns.