Fidelity National Information Services Inc. (NYSE:FIS)

Net Operating Profit After Taxes (NOPAT)

NOPAT exhibited a declining trend from 2018 through 2020, decreasing sharply from 889 million USD in 2018 to 325 million USD in 2020. There was a partial recovery in 2021, with NOPAT rising to 524 million USD. However, 2022 showed a substantial negative value of -17,009 million USD, indicating significant operational losses during this period.

Cost of Capital

The cost of capital remained relatively stable over the years, fluctuating slightly between 10.58% and 10.7% from 2018 to 2019, then gradually declining to 9.27% by 2022. This downward trend suggests a marginally cheaper capital expense environment, although the variation is not pronounced.

Invested Capital

Invested capital experienced substantial fluctuations. There was a dramatic increase from 22,222 million USD in 2018 to 75,448 million USD in 2019, remaining fairly stable through 2020 and 2021 around the mid-70,000 million USD mark. In 2022, invested capital decreased significantly to 52,862 million USD, indicating a reduction in the company’s capital base.

Economic Profit

Economic profit was negative throughout the period observed. The losses deepened from -1,463 million USD in 2018 to over -7,400 million USD levels in 2019 and 2020. Although the economic profit loss narrowed slightly in 2021 to -6,418 million USD, it worsened considerably in 2022, reaching -21,907 million USD. The persistent negative economic profit highlights the company’s challenges in generating returns above its cost of capital.

Net earnings (loss) attributable to common stockholders

From 2018 through 2021, net earnings displayed a significant downward trend. Beginning at 846 million USD in 2018, earnings decreased sharply to 298 million USD in 2019 and further to 158 million USD in 2020. A partial recovery occurred in 2021, with net earnings increasing to 417 million USD. However, 2022 saw a dramatic reversal, with net earnings recording a substantial loss amounting to -16,720 million USD, indicating a severe deterioration in profitability during that year.

Net operating profit after taxes (NOPAT)

NOPAT followed a pattern similar to net earnings over the same period. Starting at 889 million USD in 2018, NOPAT declined to 578 million USD in 2019 and further to 325 million USD in 2020. An improvement occurred in 2021, with NOPAT rising to 524 million USD. In 2022, NOPAT experienced a significant negative swing, registering a loss of -17,009 million USD, closely mirroring the net earnings loss and highlighting operational challenges impacting the company drastically in that year.

Overall insights

The data reveal a weakening profitability trend from 2018 to 2020, followed by some operational recovery in 2021. The extreme losses recorded in 2022 suggest extraordinary events or impairments that severely affected financial performance. Both net earnings and NOPAT demonstrate a high correlation in their trajectory, underscoring consistent operational and financial difficulties particularly in the final year observed.

Provision for income taxes

The provision for income taxes exhibited a notable fluctuation over the analyzed years. Initially, there was a significant decline from 208 million US dollars in 2018 to 100 million in 2019, followed by a slight decrease to 96 million in 2020. However, from 2020 onwards, the provision increased sharply to 371 million in 2021 and slightly further to 377 million in 2022. This pattern indicates a period of reduced tax obligations or accounting adjustments in the middle years, followed by a substantial rise in tax provisions in the most recent years.

Cash operating taxes

Cash operating taxes demonstrated a variable upward trend with some fluctuations. The amount decreased from 389 million in 2018 to 290 million in 2019, then rebounded to 381 million in 2020. After 2020, there was a significant increase to 508 million in 2021, and this upward trajectory accelerated sharply to 962 million in 2022. This progression suggests increasing cash tax outflows in recent years, which may reflect growing taxable income or changes in tax payment schedules.

Over the observed period, the total reported debt and leases displayed a significant increase from 2018 to 2019, rising from approximately 9.4 billion to 20.8 billion US dollars. This level remained relatively stable through to 2022, fluctuating slightly but staying near the 20.5 billion mark.

The total stockholders’ equity exhibited a sharp growth from 2018 to 2019, more than quadrupling from just over 10.2 billion to nearly 49.4 billion US dollars. However, this equity value began to decline gradually after 2019, decreasing to approximately 47.3 billion in 2021, before falling more substantially to around 27.2 billion by the end of 2022.

Invested capital followed a somewhat similar trend as the debt figures, showing a substantial rise from 22.2 billion in 2018 to a peak of 75.4 billion in 2019. Following that peak, invested capital remained relatively steady around 73.3 to 75.0 billion through 2020 and 2021 but then saw a marked decrease to approximately 52.8 billion in 2022.

Overall, the data suggest a period of significant capital expansion and leverage increase around 2019, followed by a phase of declining equity and invested capital starting in 2021 and continuing through 2022. This pattern may indicate strategic changes in capital structure or operational adjustments during the latter years of the period analyzed.

Economic Profit

The economic profit demonstrates a consistent negative trend throughout the five-year period. Starting at -$1,463 million in 2018, it sharply declined to -$7,492 million in 2019 and remained relatively stable around -$7,469 million in 2020. There was a slight improvement in 2021 with a value of -$6,418 million. However, in 2022, the economic profit deteriorated drastically to -$21,907 million, indicating a significant escalation in economic losses in that year.

Invested Capital

Invested capital rose substantially from $22,222 million in 2018 to $75,448 million in 2019, marking a major increase. It then remained relatively stable through 2020 and 2021, with values of $75,049 million and $73,331 million respectively. However, in 2022, invested capital decreased notably to $52,862 million, indicating a considerable reduction in capital employed.

Economic Spread Ratio

The economic spread ratio was negative throughout all periods, reflecting a gap between the return on invested capital and its cost. It worsened from -6.58% in 2018 to nearly -10% in 2019 and 2020. Although there was a mild improvement in 2021 to -8.75%, the ratio plummeted to -41.44% in 2022, revealing a sharp decline in profitability relative to the cost of capital in the most recent year.

Overall Analysis

The data reveals a pattern of sustained financial underperformance. Despite substantial increases in invested capital in the earlier years, economic profit remained negative and even worsened markedly by 2022. The economic spread ratio’s deepening negativity particularly in 2022 emphasizes a deteriorating ability to generate returns above the cost of capital. The decline in invested capital in 2022 may indicate attempts to reduce capital deployment in response to poor returns, but it coincides with the largest economic loss, suggesting challenges in restructuring or operational efficiency during that period.

Adjusted Revenue

The adjusted revenue demonstrated a consistent upward trend over the period analyzed. Starting at $8,347 million in 2018, it increased steadily each year, reaching $14,527 million by 2022. This represents a substantial growth, indicating expansion in top-line performance.

Economic Profit

Economic profit showed negative values throughout the entire period, revealing ongoing losses. The loss was $1,463 million in 2018, worsening sharply to a peak negative value of $7,492 million in 2019. While it slightly improved in 2020 and 2021, reaching losses of $7,469 million and $6,418 million respectively, it deteriorated significantly in 2022, with the economic loss rising dramatically to $21,907 million. This indicates growing economic inefficiencies or substantial costs impacting profitability despite rising revenues.

Economic Profit Margin

The economic profit margin mirrored the movement seen in economic profit, staying in negative territory throughout. It declined steeply from -17.53% in 2018 to -72.06% in 2019, signaling worsening profitability relative to revenue. Although the margin improved somewhat over the next two years, climbing to -59.17% in 2020 and -46.2% in 2021, it collapsed to -150.8% in 2022. The significant negative margin in 2022 reflects a severe deterioration in economic profitability relative to revenue, underscoring disproportionate costs or losses.

Overall Analysis

Despite a clear growth in adjusted revenue, the associated economic profit and economic profit margin indicate increasing inefficiencies and substantial financial challenges. The worsening economic profit margin, especially in 2022, suggests that growth in revenue was not accompanied by effective cost management or value creation. The large economic losses call for a detailed review of cost structures, investment efficiency, or external factors adversely impacting profitability.