Fidelity National Information Services Inc. (NYSE:FIS)

The analysis of the annual current and deferred income tax expenses reveals several noteworthy trends over the five-year period from 2018 to 2022.

Current Provision

The current provision fluctuated significantly across the years. It started at $324 million in 2018 and then decreased substantially to $215 million in 2019. In 2020, it increased to $307 million, followed by a more pronounced rise to $460 million in 2021. The most notable change occurred in 2022 when the current provision almost doubled from the previous year, reaching $902 million. This upward trend, especially the sharp increase in the latest year, suggests an escalating obligation related to income taxes on current earnings.

Deferred Benefit

The deferred benefit consistently remained negative throughout the period, indicating a deferred tax asset or favorable timing differences. The values showed little change between 2018 and 2019 (-$116 million and -$115 million respectively). However, there was a significant increase in the deferred benefit's magnitude in 2020, reaching -$211 million. This value then decreased in magnitude in 2021 to -$89 million before sharply increasing again to -$525 million in 2022. The fluctuating pattern, with a substantial increase in 2022, implies variability in deferred tax impacts but a general trend towards recognized deferred tax benefits.

Provision for Income Taxes

The overall provision for income taxes, which combines current and deferred figures, showed a downward trend from 2018 ($208 million) to 2020 ($96 million). It rebounded strongly in 2021 to $371 million and maintained a similar level in 2022 at $377 million. This trend reflects the interaction of increasing current provisions and fluctuating deferred benefits, with the overall tax provision stabilizing at a higher plateau in the last two years after a trough in 2020.

In summary, the data indicate that while deferred tax benefits have experienced volatility in magnitude, their overall contribution remained negative and fluctuated notably, especially in the last year. Conversely, the current tax provision displayed strong growth, particularly in 2022, which is the primary driver behind the rising overall income tax provision in recent years. These patterns suggest an evolving tax expense landscape characterized by growing current tax liabilities and variable deferred tax effects.

The data reveals several notable trends in the components influencing the effective income tax rate over the five-year period ending December 31, 2022.

Federal Statutory Income Tax Rate

The federal statutory income tax rate remained constant at 21% throughout the period, providing a stable baseline for tax rate analysis.

State Income Taxes

State income tax rates displayed significant volatility. After a slight decrease from 2.9% in 2018 to 2.5% in 2019, the rate spiked markedly to 14.6% in 2020, decreased to 6.7% in 2021, and further declined to near the starting level at 2.6% in 2022. This fluctuation suggests changes in state tax liabilities or tax planning strategies within those years.

Federal Benefit of State Taxes

This benefit consistently provided a negative adjustment reducing overall tax rates, varying from -0.6% to -3.1%. The largest negative effect occurred in 2020, aligning with the peak in state income taxes that year, indicating an amplified benefit from federal deductibility of state taxes during higher state tax expense periods.

Foreign Rate Differential

The foreign rate differential showed a diminishing impact over time, starting at -1.7% in 2019, deepening to -10.1% in 2020, and then recovering to a slight positive effect of 0.2% in 2022. The negative values indicate a higher foreign tax rate relative to the U.S. rate during most of the period, lessening in the final year.

Book Basis in Excess of Tax Basis for Goodwill Impairment and Disposition

There was variability in this item, with no impact in initial and last years, but a notable positive contribution peaking at 9.2% in 2020 and a significant negative adjustment of -25.1% in 2022. This suggests substantial goodwill-related tax basis differences affecting the tax rate significantly in those years.

Tax Benefit from Stock-Based Compensation

This tax benefit increased markedly in 2020 with a -18.1% impact, while remaining smaller in other years (-0.2% to -8.1%). The sharp increase in 2020 suggests amplified stock-based compensation expenses or changes in valuation methods during that year.

U.K. Tax Rate Adjustment

Only reported in 2020 and 2021, this adjustment contributed significantly to the tax rate with 38.2% and 23.6%, respectively, indicating tax law or accounting changes specifically affecting UK operations in those years.

Non-Deductible Executive Compensation

This item increased sharply to 10.6% in 2019 and remained elevated at 9% in 2020, before dropping rapidly to negligible levels by 2022. This pattern suggests fluctuating executive compensation expenses impacting non-deductible tax components.

Foreign-Derived Intangible Income Deduction

Consistently negative from 2018 to 2021, reaching a low of -7.2% in 2020 and recovering to nearly neutral (0.1%) in 2022, indicating changes in foreign intangible income taxation benefits over time.

CVR Liability Fair Value and Foreign Currency Adjustment

Introduced in 2019 at 0.7%, this adjustment peaked at 8.2% in 2020, then reduced to near zero by 2022. This trend likely reflects volatility in contingent value rights or foreign currency effects impacting tax calculations.

Acquisition-Related Items

Reported only in 2019 and 2020, shifting from a positive 1.8% to a negative -15.9%, indicating acquisition-related tax impacts became burdensome in 2020 before ceasing to significantly affect tax rates thereafter.

Other Items

This category fluctuated mildly, showing minor positive or negative impacts without clear trend or magnitude relevance.

Effective Income Tax Rate

There was substantial volatility, with an increase from 18.8% in 2018 to a peak of 47% in 2021, followed by an anomalous negative effective tax rate of -2.3% in 2022. The latter suggests the company recognized net tax benefits or credits exceeding taxable income in 2022, a noteworthy anomaly compared to prior years.

Overall, the data indicates that while the statutory federal rate was stable, the effective tax rate fluctuated widely due to significant variations in state taxes, goodwill impairment adjustments, stock-based compensation benefits, U.K. tax rate adjustments, and various foreign tax components. The considerable spike in the effective rate in 2021 followed by a negative rate in 2022 indicates substantial one-time or non-recurring tax events influencing those years.

The financial data across the five-year period reveals several notable trends in deferred tax assets and liabilities, as well as related components.

Net Operating Loss Carryforwards

These showed a general upward trend, increasing from 108 million USD in 2018 to 233 million USD in 2022, despite a slight dip in 2021. The growth suggests an accumulation of tax attributes potentially usable to offset future taxable income.

Employee Benefit Accruals

This item exhibited considerable volatility, rising sharply from 58 million USD in 2018 to 177 million USD in 2019, then declining to 111 million USD in 2022. The fluctuation indicates variability in employee-related liabilities or benefits accruals during the period.

Other Deferred Tax Assets

These assets increased from 105 million USD in 2018 to a peak of 204 million USD in 2020, before declining to 126 million USD in 2022. This pattern suggests an initial growth in other deferred tax benefits followed by a reduction, potentially due to utilization or revaluation.

Gross Deferred Income Tax Assets and Valuation Allowance

Gross deferred tax assets increased significantly from 271 million USD in 2018 to a peak of 580 million USD in 2020, then declined moderately to 508 million USD by 2022. Concurrently, the valuation allowance also increased in magnitude, reaching -218 million USD in 2022 from -116 million USD in 2018, implying a growing recognition of uncertainty about the realizability of some deferred tax assets.

Deferred Income Tax Assets

The net deferred tax assets increased notably from 155 million USD in 2018 to 376 million USD in 2020, followed by a decline to 290 million USD in 2022. This reflects a similar pattern to gross assets but after accounting for valuation allowances.

Deferred Income Tax Liabilities

Liabilities rose sharply from -1483 million USD in 2018 peaking near -4474 million USD in 2021, before decreasing to -3807 million USD in 2022, driven largely by significant amortization of goodwill and intangible assets. This indicates large deferred tax obligations arising from intangible asset amortization that peaked and then trended downward.

Amortization of Goodwill and Intangible Assets

The amortization costs showed a steep increase in negative value from -1291 million USD in 2018 to a peak negative impact of -4123 million USD in 2019 with a gradual reduction in absolute terms towards -3261 million USD by 2022. This pattern suggests intense amortization activity peaked early in the period and then stabilized at a lower level.

Other Deferred Tax Liabilities and Deferred Contract Costs

Both categories showed steady increases in their negative balances over time. Other deferred tax liabilities grew from -83 million USD to -337 million USD, while deferred contract costs increased from -109 million USD to -209 million USD between 2018 and 2022, indicating rising deferred tax obligations associated with these accounts.

Net Deferred Income Tax Asset (Liability)

This net figure consistently displayed a negative balance throughout the period, starting at -1328 million USD in 2018 and worsening to -3517 million USD in 2022. The trend suggests that overall, deferred tax liabilities outweighed deferred tax assets, though the net liability decreased slightly from its peak levels seen in 2019 and 2021.

Foreign Currency Translation Adjustments

This item was sporadically reported, with negative impacts noted in 2019, 2020, and 2021, followed by a positive adjustment in 2022. The volatility highlights exchange rate effects on deferred tax balances over the years.

In summary, the data indicates increasing net operating loss carryforwards and deferred tax assets with growing valuation allowances, suggesting caution in asset realizability. Deferred tax liabilities, driven primarily by intangible asset amortization, expanded significantly but showed some reduction in recent periods. Overall, the net deferred tax position remained a liability with fluctuations influenced by goodwill amortization and foreign currency translation adjustments.

The analysis of the provided financial data illustrates the movement in deferred income tax assets and liabilities over a five-year period.

Noncurrent Deferred Income Tax Assets

These assets show a moderate fluctuation throughout the period. They increased from 32 million USD in 2018 to 38 million in 2019 and then slightly rose to 40 million in 2020. There was a notable increase in 2021, reaching 49 million USD, followed by a decline to 33 million USD in 2022. The trend indicates variability with a peak in 2021, and the most recent data displays a reduction near the initial value in 2018.

Noncurrent Deferred Income Tax Liabilities

The liabilities reveal a sharp increase in 2019, soaring from 1,360 million USD in 2018 to 4,281 million USD. Subsequently, there is a slight decrease to 4,017 million USD in 2020, followed by a minor upward movement to 4,193 million USD in 2021. In 2022, liabilities fell again to 3,550 million USD. Despite the fluctuations, the liabilities remain significantly elevated in comparison to the 2018 figure, indicating sustained high deferred tax liabilities over the latter years.

Overall, while deferred tax assets have shown less pronounced changes with a peak in 2021, the deferred tax liabilities have experienced substantial volatility but remained at elevated levels from 2019 through 2022. The pattern suggests that the company is managing complex tax positions, with deferred tax liabilities consistently outweighing assets by a wide margin throughout the period.

The financial data exhibits notable fluctuations over the five-year span from 2018 to 2022 in key balance sheet and income statement items after adjustments for reported and deferred income taxes.

Total Assets

Both reported and adjusted total assets increased dramatically from approximately $23.7 billion in 2018 to around $83.8 billion in 2019 and 2020, indicating a significant change likely due to acquisition or revaluation. Following this peak, total assets remained relatively stable through 2021 but then declined markedly to approximately $63.2 billion in 2022. The adjustment between reported and adjusted values is minimal, suggesting that deferred tax effects had limited impact on total asset valuation.

Total Liabilities

Reported total liabilities surged from $13.5 billion in 2018 to approximately $34.4 billion in 2019 and remained near that level through 2020 and 2021, with a moderate increase to around $35.9 billion in 2022. Adjusted liabilities show a somewhat lower base, increasing from $12.2 billion to $30.3 billion over the same periods, reaching about $32.3 billion in 2022. The consistent gap between reported and adjusted liabilities suggests ongoing deferred tax adjustments that reduce the liability base but maintain a steady upward trajectory across the period.

Stockholders’ Equity

Equity experienced a substantial rise from roughly $10.2 billion reported in 2018 to nearly $49.4 billion in 2019 and 2020, reflecting the asset increase likely tied to transaction activity mentioned previously. Subsequently, equity gradually decreased each year, ending at $27.2 billion in 2022 for reported figures. Adjusted equity follows a similar pattern but at consistently higher levels than reported equity, indicating deferred tax adjustments favoring shareholders' equity. The overall decline after 2020 suggests a reduction in net asset value or retained earnings distribution.

Net Earnings (Loss) Attributable to Common Stockholders

Net earnings show significant volatility and a downward trend across the years. In 2018, net earnings were positive at $846 million (reported) and $730 million (adjusted), decreasing sharply in 2019 and 2020, with adjusted figures turning negative in 2020 (-$53 million). A brief recovery occurs in 2021 with positive earnings, but 2022 reflects a considerable loss of approximately $16.7 billion (reported) and $17.2 billion (adjusted). This drastic shift to a substantial loss in the most recent year signals extraordinary charges or operational difficulties substantially impacting profitability.

Overall, the data illustrates a period of growth and expansion culminating in 2020, followed by a steady contraction in assets and equity, coupled with deteriorating profitability resulting in a significant net loss in 2022. Deferred tax adjustments moderately influence balance sheet totals but do not alter the fundamental trends observed in reported financials.

Net Profit Margin

The reported net profit margin showed a significant decline from 10.04% in 2018 to a negative -115.09% in 2022, indicating a substantial deterioration in profitability. Adjusted net profit margin followed a similar trend, decreasing from 8.67% in 2018 to -118.7% in 2022. Both reported and adjusted margins experienced volatile fluctuations with modest positive values in 2019 and 2021 but turning negative in the final year, suggesting increasing losses or unusual tax adjustments impacting net earnings.

Total Asset Turnover

The reported and adjusted total asset turnover ratios remained identical throughout the period, starting at 0.35 in 2018, dropping sharply to 0.12 in 2019, then gradually recovering to 0.23 by 2022. This pattern indicates reduced efficiency in asset utilization after 2018, followed by a slow improvement, though turnover remained well below the initial level, signaling possible asset base expansion without proportional revenue growth.

Financial Leverage

Reported financial leverage decreased from 2.33 in 2018 to 1.7 in 2019 and stayed relatively stable until 2021, before rising again to 2.32 in 2022. Adjusted financial leverage showed a similar pattern but consistently lower values, starting at 2.06 in 2018, bottoming at 1.56 in 2019, and increasing back to 2.06 in 2022. The fluctuations imply changes in the capital structure with periods of deleveraging followed by increased reliance on debt or equity financing towards the end of the period.

Return on Equity (ROE)

Reported ROE exhibited a sharp decline from 8.28% in 2018 to -61.43% in 2022, reflecting a significant erosion of shareholder returns. Adjusted ROE mirrored this trend, falling from 6.32% to -56.11% over the same interval. The negative values in the final year represent substantial losses relative to equity, consistent with the deteriorated profitability indicated by net margins.

Return on Assets (ROA)

The reported ROA decreased markedly from 3.56% in 2018 to -26.42% in 2022, while adjusted ROA also declined from 3.08% to -27.27%. The trend signals worsening overall asset profitability, consistent with lower net income and asset turnover rates. Despite slight recoveries during intermediate years, the final outcomes point to significant inefficiencies or operational challenges.

Over the examined five-year period, the company experienced notable fluctuations in both reported and adjusted net earnings attributable to common stockholders. Initially, in 2018, reported net earnings were significantly positive at 846 million USD, but this figure sharply declined in the subsequent years, reaching a low point of negative 16,720 million USD by the end of 2022. Adjusted net earnings exhibited a similar downward trajectory, starting at 730 million USD in 2018 and culminating in a substantial loss of 17,245 million USD in 2022. These figures indicate increasing financial challenges or extraordinary items impacting earnings over time.

When evaluating profitability through net profit margins, a consistent decline is evident. Reported net profit margins dropped from 10.04% in 2018 to a deeply negative figure of -115.09% in 2022. Adjusted net profit margins reflect a parallel trend, decreasing from a positive 8.67% in 2018 to -118.7% by 2022. The negative margins in the final year suggest significant losses relative to revenue, implicating either escalating costs, declining revenues, or both.

The year-to-year changes reveal that 2019 and 2020 were marked by a sharp reduction in earnings and margins, indicating potentially adverse operational or market conditions during those years. A modest recovery is observed in 2021, with both reported and adjusted net earnings turning positive again, alongside a slight improvement in profit margins. However, this recovery was short-lived, as 2022 showed a dramatic reversal with large net losses and severely negative margin percentages.

Overall, the data reflects a distressed financial performance trend, with the company experiencing increasing losses and deteriorating profitability over the analyzed timeframe. The significant losses reported in 2022 particularly highlight an urgent need for strategic financial management and operational improvements to restore positive earnings and stabilize profit margins.

Reported Net Earnings (US$ in millions)

Steady decline from 846 (2018) to -16,720 (2022), indicating progressively worsening profitability and possible large impairment charges or extraordinary expenses.

Adjusted Net Earnings (US$ in millions)

Followed a comparable downward trend from 730 (2018) to -17,245 (2022), suggesting persistent underlying losses when adjusting for non-recurring items.

Reported Net Profit Margin (%)

Decreased drastically from 10.04% (2018) to -115.09% (2022), highlighting sustained operational difficulties and negative returns in recent years.

Adjusted Net Profit Margin (%)

Also declined from 8.67% (2018) to -118.7% (2022), reinforcing the deterioration in profitability excluding one-time effects.

The data reveals significant fluctuations in the total assets and asset turnover ratios over the examined five-year period.

Total Assets

The reported total assets increased sharply from US$ 23,770 million in 2018 to US$ 83,806 million in 2019, remaining relatively stable around this level through 2020 and 2021 before declining to US$ 63,278 million in 2022. The adjusted total assets followed a similar pattern, with minor differences in magnitude but consistent trends. This indicates a substantial expansion in asset base between 2018 and 2019, stability through the subsequent two years, and a notable reduction by the end of 2022.

Total Asset Turnover

The reported total asset turnover ratio experienced a steep decline from 0.35 in 2018 to 0.12 in 2019, coinciding with the asset base expansion. Subsequently, it showed a gradual increase, reaching 0.23 by 2022. The adjusted total asset turnover mirrored this trajectory exactly, indicating consistent adjustments in deferred tax treatment have minimal impact on asset efficiency measurement. The initial decline may reflect the rapid asset expansion outpacing revenue growth, while the subsequent recovery suggests improving utilization of assets over time.

Overall, the company underwent a period of rapid asset accumulation in 2019, which negatively impacted asset turnover initially. Over the following years, asset turnover improved, reflecting more effective asset use despite a reduction in asset size in 2022. The close alignment between reported and adjusted figures indicates that deferred income tax adjustments did not significantly distort the underlying asset and efficiency metrics during the period analyzed.

Over the analyzed period, total assets displayed significant fluctuations. Both reported and adjusted total assets increased markedly from 2018 to 2019, rising from approximately 23.7 billion US dollars to about 83.8 billion US dollars. This elevated level was relatively stable through 2020 and 2021, with a slight decrease noted in 2021. In 2022, however, total assets experienced a notable decline, falling to around 63.2 billion US dollars in reported terms and a similar level in adjusted terms.

Stockholders’ equity also followed a somewhat similar trajectory but with some differences in magnitude and timing. Reported equity surged from 10.2 billion US dollars in 2018 to approximately 49.4 billion US dollars in 2019, remaining fairly constant through 2020. A gradual decline began in 2021, continuing into 2022, where equity reduced to roughly 27.2 billion US dollars. Adjusted equity values are consistently higher than reported figures, indicating the impact of the adjustments, and show a similar trend: a significant rise from 2018 to 2019, stability through 2020, followed by a decline in 2021 and a sharper decrease in 2022, ending at approximately 30.7 billion US dollars.

The financial leverage ratios, both reported and adjusted, depict an inverse trend relative to assets and equity changes. Reported financial leverage decreased from 2.33 times in 2018 to 1.7 times in both 2019 and 2020, indicating a reduction in leverage with the increase in equity relative to assets. A minor increase to 1.75 times occurred in 2021, followed by a sharp rise to 2.32 times in 2022, suggesting increased leverage as total equity declined relative to total assets. Adjusted financial leverage follows a similar pattern but at lower levels: starting at 2.06 in 2018, dropping to around 1.56 - 1.57 in 2019 and 2020, rising slightly to 1.61 in 2021, and then increasing more substantially to 2.06 in 2022.

Overall, the data reflect a period of rapid growth and asset accumulation between 2018 and 2019, stabilizing in subsequent years but followed by a pronounced contraction in 2022. Equity trends mirror this pattern, with adjustments consistently resulting in higher equity balances than reported figures. The financial leverage ratios highlight decreased leverage during the expansion phase and elevated leverage levels in the latest year, reflecting the changes in asset and equity composition.

The financial data reveals notable volatility in both earnings and equity figures over the five-year period, with significant fluctuations observed in 2022.

Net Earnings (Loss) Attributable to Common Stockholders

The reported net earnings demonstrated a steep decline from US$846 million in 2018 to US$298 million in 2019, followed by a further decrease to US$158 million in 2020. A moderate recovery to US$417 million occurred in 2021, but this was dramatically reversed in 2022 with a substantial loss amounting to US$17,720 million. The adjusted net earnings show a similar trajectory, declining from US$730 million in 2018 to negative territory in 2020 at -US$53 million, rebounding to US$328 million in 2021, and plunging sharply to -US$17,245 million in 2022. This pattern indicates a severe deterioration in profitability in the most recent year after a period of relative instability.

Total Stockholders’ Equity

The reported total stockholders' equity surged significantly from US$10,215 million in 2018 to approximately US$49,440 million in 2019, maintaining a relatively stable range through 2021 and then declining to US$27,218 million in 2022. Adjusted total equity follows a similar trend, increasing to US$53,683 million in 2019, remaining around that level through 2021, and decreasing to US$30,735 million in 2022. These figures suggest an initial large capital increase or asset revaluation, followed by a downward adjustment or capital reduction in the latest fiscal year.

Return on Equity (ROE)

Reported ROE reflects a steep decline from 8.28% in 2018 to marginal return levels below 1% in the subsequent years, with a notable drop to -61.43% in 2022. Adjusted ROE also trends downward, moving from 6.32% in 2018 to negative returns in 2020, a slight recovery in 2021 to 0.64%, and ending with a significant negative return of -56.11% in 2022. This indicates that the company’s profitability relative to equity has deteriorated sharply, particularly in the most recent reporting period, aligning with the losses recorded.

Overall, the data denotes a period of substantial financial stress culminating in 2022, characterized by marked losses, reduced equity, and sharply negative returns on equity. Prior years exhibit instability but comparatively less severe financial impacts. The adjusted figures generally corroborate the reported values, confirming the sustained negative trend.

Reported net earnings (loss) attributable to common stockholders

There is a clear downward trajectory over the analyzed periods. Starting at a positive 846 million USD in 2018, net earnings sharply declined to 298 million USD in 2019 and further decreased to 158 million USD in 2020. A moderate recovery is observed in 2021 with earnings rising to 417 million USD. However, 2022 shows a severe reversal with a substantial loss of 16,720 million USD, indicating a significant financial challenge or extraordinary event within that year.

Adjusted net earnings (loss) attributable to common stockholders

The adjusted figures follow a similar declining trend. Earnings decreased from 730 million USD in 2018 to 183 million USD in 2019, turning negative at -53 million USD in 2020. The year 2021 saw an improvement to 328 million USD, but like the reported data, 2022 experienced a drastic loss totaling 17,245 million USD. The adjusted figures confirm the reported trends but also highlight negative profitability beginning in 2020.

Reported total assets

Reported total assets increased significantly from 23,770 million USD in 2018 to a peak of approximately 83,842 million USD in 2020 and remained relatively stable in 2021 at 82,931 million USD. A notable decline occurred in 2022, with total assets reducing to 63,278 million USD. This suggests potential asset disposals or writedowns during the latest period.

Adjusted total assets

Adjusted total assets closely mirror the reported figures throughout the periods, confirming consistency in asset adjustments. The pattern of rising asset base from 23,738 million USD in 2018 to stable figures around 83,802 million USD in 2020 and 82,882 million USD in 2021 is evident. The sharp decline to 63,245 million USD in 2022 is likewise reflected in the adjusted asset data.

Reported Return on Assets (ROA)

The reported ROA figures depict a steep decline across the timeline. From an ROA of 3.56% in 2018, it declined sharply to 0.36% in 2019 and further to 0.19% in 2020. There was a slight improvement to 0.5% in 2021. The year 2022 shows a dramatic drop to -26.42%, indicating a severe erosion of asset profitability, which correlates with the significant net loss reported for that year.

Adjusted Return on Assets (ROA)

Adjusted ROA trends maintain a similar trajectory to the reported figures, although consistently slightly lower. Starting at 3.08% in 2018, adjusted ROA deteriorated to 0.22% in 2019, became negative at -0.06% in 2020, improved to 0.4% in 2021, and then sharply declined to -27.27% in 2022. This confirms the erosion of returns adjusted for specific items affecting profitability, with critical losses manifesting from 2020 onwards and culminating in 2022.