Fidelity National Information Services Inc. (NYSE:FIS)

Net Operating Profit After Taxes (NOPAT)

The net operating profit after taxes exhibited significant volatility over the observed period. Beginning at $889 million in 2018, NOPAT sharply declined to $578 million in 2019 and further decreased to $325 million in 2020. Although there was a notable recovery to $524 million in 2021, the figure drastically dropped to a substantial negative of $17,009 million in 2022, indicating considerable operational challenges or extraordinary losses in the most recent year.

Cost of Capital

The cost of capital showed a modest downward trend from 10.63% in 2018 to 9.3% in 2022. This gradual decline suggests a slight reduction in the company’s required rate of return over time, potentially reflecting improved market conditions or changes in capital structure.

Invested Capital

Invested capital witnessed a sharp increase from $22,222 million in 2018 to $75,448 million in 2019. It remained relatively stable in 2020 and 2021, with $75,049 million and $73,331 million respectively, before decreasing to $52,862 million in 2022. Despite the drop in the final year, invested capital levels remained significantly higher than at the start of the period.

Economic Profit

The economic profit consistently remained negative throughout the period, indicating that the company was not generating returns above its cost of capital. Initially, the economic loss was $1,473 million in 2018, which escalated sharply to losses exceeding $7 billion in 2019 and 2020. Although the economic loss slightly improved to $6,449 million in 2021, it worsened substantially to a deficit of $21,927 million in 2022, paralleling the sharp decline in NOPAT.

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 exhibits a consistently negative trend throughout the five-year period, starting at -1,473 million USD in 2018 and deepening substantially to -21,927 million USD by 2022. Notably, the most significant decline occurred between 2021 and 2022, indicating substantially increased economic losses in the latest period.

Invested Capital

Invested capital increased markedly from 22,222 million USD in 2018 to a peak of 75,448 million USD in 2019. Thereafter, it remained relatively stable through 2020 and 2021, before declining to 52,862 million USD in 2022. This pattern suggests a period of substantial investment growth followed by a moderate reduction in the most recent year.

Economic Spread Ratio

The economic spread ratio is negative across all years, reflecting an ongoing inability to generate returns above the cost of capital. It deteriorated from -6.63% in 2018 to nearly -10% by 2020, slightly improving to -8.79% in 2021 before sharply worsening to -41.48% in 2022. The steep decline in 2022 indicates a substantial decrease in the efficiency with which invested capital is generating economic value.

Overall Insights

The data suggest a worsening financial performance over time, with economic profit declining sharply despite substantial invested capital. The persistently negative and increasingly adverse economic spread ratio supports the conclusion of declining capital efficiency and value creation capability. The significant downturn in 2022 highlights heightened financial challenges, possibly reflecting adverse market conditions or operational inefficiencies impacting profitability and capital returns.

Economic Profit

The economic profit demonstrates a consistently negative value throughout the five-year period, indicating persistent losses in economic terms. Starting at -1,473 million US dollars in 2018, the loss deepened substantially in 2019 to -7,527 million. This trend of high negative economic profit continued through 2020 and 2021, with values hovering around -7,500 million and -6,449 million respectively. In 2022, the negative economic profit worsened sharply, reaching -21,927 million US dollars, which marks the most significant loss in the period under review.

Adjusted Revenue

The adjusted revenue shows a steady upward trend over the five years, evidencing growth in top-line income. Beginning at 8,347 million US dollars in 2018, the revenue increased each year, reaching 10,396 million in 2019 and continuing to grow to 12,623 million in 2020, 13,891 million in 2021, and finally 14,527 million in 2022. This indicates ongoing expansion in business volume or sales despite the negative economic profit figures.

Economic Profit Margin

The economic profit margin is consistently negative, reflecting losses relative to the revenue base. In 2018, the margin was -17.65%, significantly deepening to -72.41% in 2019. It improved slightly in 2020 to -59.44% and further to -46.42% in 2021, indicating some containment of the losses relative to revenue growth during these years. However, in 2022, the margin deteriorated drastically to -150.94%, which suggests that the losses expanded at a rate far exceeding revenue growth, signaling severe profitability challenges during this final period.