Kimberly-Clark Corp. (NYSE:KMB)

The financial data reflecting the current and deferred income tax expenses over the five-year period ending December 31, 2020, exhibit several notable trends and variations.

Current Income Taxes

The current income taxes display a downward trend from 2016 to 2018, beginning at 937 million US dollars in 2016 and decreasing significantly to 469 million US dollars by 2018. This decline is followed by a modest recovery in 2019 to 547 million US dollars and further increase in 2020 reaching 631 million US dollars. This pattern suggests a period of reduced tax liability in the middle of the timeline, with a subsequent partial rebound in later years.

Deferred Income Taxes

The deferred income taxes show greater volatility and a differing trend from the current income taxes. Starting at -15 million US dollars in 2016, the figure decreases further to -69 million in 2017, indicating an increase in deferred tax liabilities or reductions in deferred tax assets. From 2018 onward, the deferred income taxes shift to positive territory, rising to 2 million US dollars in 2018, 29 million in 2019, and 45 million in 2020. This positive progression suggests an improving deferred tax position, possibly due to changes in timing differences or tax planning strategies.

Provision for Income Taxes

The provision for income taxes, which consolidates current and deferred amounts, mirrors the general patterns observed in current taxes. It decreases from 922 million US dollars in 2016 to 471 million in 2018, followed by an increase to 576 million in 2019 and 676 million in 2020. The provision consistently remains lower than the initial value in 2016 but trends upward after the trough in 2018, reflecting the combined effects of current and deferred tax variations.

Overall, the data reveal an initial phase of tax expense reduction across both current and provision for income taxes between 2016 and 2018, followed by a steady recovery through 2020. In contrast, deferred income taxes move from negative to positive values during the same period, indicating a shift from deferred liabilities to deferred assets or improved deferral benefits. These trends may be indicative of changes in taxable income, tax regulations, or strategic tax management within the company.

The analysis of the provided annual financial data reveals several notable trends regarding the effective income tax rate and its components over the period from 2016 to 2020.

U.S. Statutory Rate

The U.S. statutory tax rate on income before taxes remained steady at 35% for 2016 and 2017, then declined significantly to 21% starting in 2018 and maintained this level through 2020. This reflects a major statutory tax reform impact beginning in 2018.

State Income Taxes, Net of Federal Tax Benefit

The state income tax rate, net of federal tax benefit, decreased from 1.8% in 2016 to 1.1% in 2017, peaked at 3.7% in 2018, then declined again to 2.5% in 2019 and further to 2.3% in 2020. This suggests variability in state tax expenses relative to federal benefits over time.

Routine Tax Incentives

Routine tax incentives consistently reduced the overall tax rate throughout the five years, with the negative impact fluctuating between -2% and -5.4%. The most substantial incentive effect occurred in 2018 (-5.4%), coinciding with the statutory rate decrease.

Net Tax Cost (Benefit) on Foreign Income

This component showed a tax benefit (negative percentage) in 2016 and 2017 (-2.6% and -3.8% respectively), but reversed to a tax cost (positive percentage) from 2018 onward, gradually increasing from 1.6% in 2018 to 2.7% in 2020. This transition indicates a shift from foreign tax benefits to increased foreign tax liabilities.

Valuation Allowance

The valuation allowance fluctuated slightly, starting at 0.2% in 2016, turning negative in 2017 (-0.1%), then rising notably to 1.6% in 2018, before decreasing to 1.0% and 0.7% in 2019 and 2020 respectively. The rise in 2018 corresponds with the period following tax reform, suggesting some adjustments in deferred tax assets.

Nonrecurring Capital Loss

A nonrecurring capital loss was recorded only in 2019 at -1.8%, indicating a one-time deductible loss impacting that year's tax expense.

Other, Net

This category varied considerably, with slight positive and negative impacts over the years: 0.2% in 2016, a dip to -1.1% in 2017, further decrease to -2.9% in 2018, then a reversal to positive 1.0% in 2019 and 0.7% in 2020. The fluctuations suggest diverse miscellaneous tax adjustments.

Effective Income Tax Rate, Before Net Impact of the Tax Act

This measure declined from 30.6% in 2016 to 28.4% in 2017, then dropped sharply to 19.6% in 2018, followed by a slight increase in 2019 (21.7%) and 2020 (23.1%). The sharp drop in 2018 aligns with the statutory rate change and indicates significant tax benefits aside from the reform impact.

Net Impact of the Tax Act

The net effect of the Tax Act shows a negative impact of -2.5% in 2017 and a positive impact of 6.4% in 2018, with no data for other years. This suggests that while some tax benefits were realized in 2017 related to the upcoming reform, 2018 saw an offsetting increase in tax expense or valuation related to the act’s implementation.

Effective Income Tax Rate

The overall effective tax rate decreased from 30.6% in 2016 to 25.9% in 2017, edged up slightly to 26.0% in 2018, then declined to 21.7% in 2019 and increased marginally to 23.1% in 2020. The trend reflects the influence of statutory tax rate changes, tax incentives, and other adjustments, with a notable tax rate reduction in the post-reform years compared to 2016.

Overall, the data reveals significant tax rate reduction beginning in 2018 due to statutory changes, accompanied by fluctuating state taxes and tax incentives. The shift from foreign tax benefits to costs and the impact of valuation allowances and one-time losses contribute to variability in the effective tax rate over the analyzed period.

Pension and Other Postretirement Benefits

There is a continuous decline over the observed periods, decreasing from 499 million USD in 2016 to 239 million USD in 2020, indicating a reduction in related liabilities or obligations.

Tax Credits and Loss Carryforwards

This item experiences fluctuations but overall shows a moderate increase, starting at 450 million USD in 2016 and rising to 477 million USD in 2020, with a slight dip in 2018 followed by recovery.

Lease Liability

Data is missing for the initial years but appears in 2019 at 104 million USD and increases to 117 million USD in 2020, reflecting the recognition of lease obligations likely due to accounting standard changes.

Other Deferred Tax Assets

The values decrease significantly from 598 million USD in 2016 to 388 million USD in 2019, followed by an increase to 465 million USD in 2020, indicating volatility in various deferred tax asset components.

Deferred Tax Assets, Before Valuation Allowances

This figure consistently declines from 1,547 million USD in 2016 to 1,088 million USD in 2018, then slightly recovers to 1,298 million USD in 2020. The trend suggests an improvement in the underlying deferred tax asset base starting from 2019.

Valuation Allowances

The valuation allowances increase in magnitude from -225 million USD in 2016 to -272 million USD in 2020, with a fluctuating pattern. The allowances tend to deepen, which could indicate rising concerns over realizability of deferred tax assets.

Deferred Tax Assets (Net of Valuation Allowances)

The net deferred tax assets decline overall from 1,322 million USD in 2016 to 868 million USD in 2018, with a slight recovery to 1,026 million USD in 2020. This pattern parallels the gross figures but is dampened by increased valuation allowances.

Property, Plant, and Equipment, Net

These assets are reported as negative values, increasing in magnitude from -1,079 million USD in 2016 to -900 million USD in 2020, implying either a reduction in net asset book value or presentation as liability-related balances with a slight recovery after 2018.

Investments in Subsidiaries

The balance decreases in absolute terms from -190 million USD in 2016 to -111 million USD in 2020, displaying a trend toward lower investment exposure or write-downs in subsidiary holdings.

Goodwill

Goodwill decreases steadily from -83 million USD in 2016 to -54 million USD in 2020, reflecting impairment charges or disposals of goodwill assets over the years.

Intangible Assets

Reported only in 2019 and 2020, the intangible assets figures transition from -4 million USD to a substantial -159 million USD, indicating a considerable recognition or impairment during these years.

Lease Asset

Similar to lease liabilities, lease assets are recorded starting 2019 at -105 million USD and slightly increase in negative value to -117 million USD in 2020. This corresponds with new leasing standards affecting asset recognition.

Other Deferred Tax Liabilities

These liabilities decrease from -1,620 million USD in 2016 to -1,106 million USD in 2018, then increase again to -1,487 million USD in 2020, showing fluctuations in tax-related liabilities offsetting deferred tax assets.

Net Deferred Tax Assets (Liabilities)

The net position worsens progressively across the period, moving from -298 million USD in 2016 to -461 million USD in 2020, indicating growing net deferred tax liabilities and a weaker overall deferred tax asset position.

The financial data reveals distinct trends in the deferred tax assets and liabilities over the five-year period ending December 31, 2020.

Deferred Tax Assets

The deferred tax assets exhibit a generally positive upward trend. Starting at 234 million US dollars in 2016, the value slightly decreased to 215 million in 2017. Subsequently, a steady increase is observed year over year, reaching 220 million in 2018, 242 million in 2019, and culminating at 262 million in 2020. This gradual rise suggests improving future tax benefit realizations or an increase in deductible temporary differences recognized by the company.

Deferred Tax Liabilities

Deferred tax liabilities demonstrated more volatility. There was a notable decline from 532 million in 2016 to 395 million in 2017. However, post-2017, the liabilities showed consistent growth, climbing to 458 million in 2018, 511 million in 2019, and a significant jump to 723 million in 2020. This sharp increase in 2020 could imply an expansion in taxable temporary differences or adjustments related to tax rates or accounting estimates.

Overall, while deferred tax assets increased moderately over the period, deferred tax liabilities first declined and then surged in the last two years, particularly in 2020. This divergence indicates a widening net deferred tax liability position, which could impact future tax expenses and cash flows. The trends highlight potential changes in the company's asset and liability structure related to taxes, warranting further investigation into the underlying causes such as changes in tax legislation, asset base, or accounting policies.

Assets

Reported total assets exhibited a moderate upward trend over the five-year period, rising from 14,602 million USD at the end of 2016 to 17,523 million USD by the end of 2020. Adjusted total assets followed a similar pattern, increasing from 14,368 million USD in 2016 to 17,261 million USD in 2020. This indicates a steady growth in the asset base when accounting for income tax adjustments.

Liabilities

Reported total liabilities showed fluctuations but generally increased from 14,427 million USD in 2016 to 16,626 million USD in 2020. Adjusted total liabilities also rose, though starting slightly lower at 13,895 million USD in 2016 and reaching 15,903 million USD in 2020. The steady increase in liabilities, both reported and adjusted, suggests a consistent growth in the company’s obligations, albeit managed within the context of rising assets.

Stockholders’ Equity

Reported stockholders’ equity figures demonstrated significant volatility, with a negative value of -102 million USD in 2016, a peak at 629 million USD in 2017, dropping to -287 million USD in 2018, then gradually recovering to 626 million USD by 2020. Adjusted equity values showed a somewhat more favorable trend, starting at 196 million USD in 2016, peaking at 809 million USD in 2017, turning slightly negative at -49 million USD in 2018, before increasing substantially to 1,087 million USD in 2020. This fluctuation suggests that the equity position experienced instability early on but improved significantly towards the end of the period, with adjustments strengthening the reported figures.

Net Income

Reported net income attributable to Kimberly-Clark Corporation fluctuated over the years, starting at 2,166 million USD in 2016, peaking slightly at 2,278 million USD in 2017, dropping notably to 1,410 million USD in 2018, then recovering to 2,352 million USD in 2020. Adjusted net income closely mirrored reported values, with minor variations, reflecting net incomes of 2,151 million USD in 2016, 2,209 million USD in 2017, and increasing to 2,397 million USD in 2020. The net income trend indicates resilience after a dip in 2018, with adjustments having a minimal impact on the profitability representation.

Overall Insights

The data reveals a company experiencing growth in total assets and liabilities, with a notable improvement in equity towards the latter years. The fluctuations in equity and net income suggest periods of volatility, especially in 2018, but the overall trajectory points to recovery and strengthening financial performance by 2020. Adjusted figures generally support the reported data, indicating that income tax adjustments do not significantly alter the company’s financial position or profitability trends.

Net Profit Margin

The reported and adjusted net profit margins exhibit similar trends over the five-year period. Both metrics decline significantly in 2018, reaching their lowest points at approximately 7.63% and 7.64%, respectively. Following this dip, both margins recover in 2019 and continue to rise in 2020, with adjusted net profit margin slightly exceeding the reported figures each year.

Total Asset Turnover

Both reported and adjusted total asset turnover ratios remain relatively stable between 2016 and 2019, fluctuating around 1.2 to 1.3. However, a decline is noticeable in 2020, with ratios dropping to 1.09 (reported) and 1.11 (adjusted), indicating a reduction in asset efficiency in the most recent year. Adjusted figures consistently show marginally higher turnovers than reported values.

Financial Leverage

Financial leverage data show considerable volatility and some missing values. The adjusted leverage ratio experiences sharp fluctuations, notably a peak at 73.31 in 2016, a decrease to 18.46 in 2017, and another rise to 63.73 in 2019 before dropping again in 2020. Reported financial leverage is only available for two years: 24.09 in 2017 and 27.99 in 2020, suggesting limited data but a slight upward movement between those points.

Return on Equity (ROE)

ROE figures are inconsistent, with notable disparities between reported and adjusted values and several missing entries. Adjusted ROE is exceptionally high in 2016 (1097.45%), declines substantially by 2017, and then fluctuates with a notable peak again in 2019 before dropping to 220.52% in 2020. Reported ROE figures are only provided for 2017 and 2020, showing extremely high levels (over 360%), indicating potential one-off effects or adjustments affecting comparability.

Return on Assets (ROA)

Both reported and adjusted ROA closely align throughout the period, showing a general downward trend from approximately 15% in 2016-2017 to a low near 9.7-9.9% in 2018, followed by a partial recovery in 2019 and a slight decline in 2020. The consistency between reported and adjusted ROA suggests limited impact of tax adjustments on asset-based profitability.

Summary Insights

The data reveal an overall pattern of financial performance fluctuations, with a pronounced dip in profitability ratios in 2018 across multiple metrics, followed by recovery in 2019 and mixed results in 2020. The similarity between reported and adjusted values for margins and asset turnover indicates that tax adjustments have a minimal effect on operational performance metrics. However, financial leverage and ROE exhibit volatility and high values, potentially reflecting balance sheet structure changes or exceptional items. The decline in asset turnover in 2020 and moderate decrease in ROA may warrant further investigation into asset utilization and efficiency during that period.

The analysis of the adjusted financial data over the five-year period reveals several notable trends in profitability metrics.

Net Income Trends

The reported net income attributable to the company exhibited moderate growth from 2016 through 2017, increasing from 2166 to 2278 million US dollars. However, a significant decline occurred in 2018, dropping to 1410 million US dollars. This decline was followed by a recovery in 2019 and continued growth in 2020, reaching 2352 million US dollars. The adjusted net income follows a very similar trend pattern, with a slight difference in values, confirming the consistency of income adjustments related to reported data.

Net Profit Margins

The reported net profit margin also follows a similar trend to net income. Beginning at 11.9% in 2016, it increased marginally to 12.48% in 2017 before sharply decreasing to 7.63% in 2018. The margin rebounded in 2019 and rose slightly in 2020 to 12.29%. Adjusted net profit margin percentages closely align with the reported figures, showing slightly lower but consistent values. The adjusted margins range from 11.82% in 2016 to a low of 7.64% in 2018 and then improve steadily through 2020 to a peak of 12.52%.

Insights on Financial Performance

The decline observed in 2018 in both net income and profit margins suggests an unusual or non-recurring event affecting profitability during that year. The subsequent recovery in the following two years indicates a return to stable or improving profitability levels. The minimal differences between reported and adjusted figures suggest that reported earnings were reliable without significant distortions from one-time tax-related influences during this period.

The financial data indicates a general upward trend in both reported and adjusted total assets over the five-year period from 2016 to 2020. Reported total assets increased from 14,602 million US dollars in 2016 to 17,523 million US dollars in 2020. Similarly, adjusted total assets rose from 14,368 million US dollars to 17,261 million US dollars during the same time frame. This reflects an overall growth in asset base.

Regarding asset turnover ratios, both reported and adjusted figures show a declining trend over the years. Reported total asset turnover started at 1.25 in 2016 and dropped to 1.09 by 2020. Adjusted total asset turnover followed a similar pattern, beginning at 1.27 in 2016 and decreasing to 1.11 in 2020. This suggests that while the asset base expanded, the efficiency with which assets generate revenue has diminished somewhat over time.

Total Assets Trends

The total assets, both reported and adjusted, demonstrated consistent growth, increasing by approximately 20% over the five-year period. This suggests investment in asset expansion or accumulation of resources, which may be linked to strategic growth initiatives or acquisitions.

Asset Turnover Trends

The total asset turnover ratios indicate a gradual decline, implying decreasing efficiency in asset utilization. The company generated less revenue per unit of asset over time, which may reflect challenges in maintaining sales growth proportionate to asset growth or possible changes in the asset composition.

Comparison of Reported vs Adjusted Metrics

Adjusted figures are consistently slightly lower than reported totals for assets, reflecting the impact of the income tax adjustments. The trends in turnover ratios for adjusted data closely mirror those of reported data, suggesting that the adjustments have a minimal effect on interpreting operational efficiency trends.

The data reveals fluctuations in total assets, stockholders’ equity, and financial leverage for the company over the five-year period from 2016 to 2020. Analyzing the reported and adjusted figures provides insights into financial stability and changes in capital structure after accounting for deferred income tax adjustments.

Total Assets

Reported total assets exhibited moderate variation, beginning at 14,602 million US dollars in 2016, peaking slightly to 15,283 million in 2019, and reaching the highest value of 17,523 million in 2020. Adjusted total assets followed a similar trend but were consistently slightly lower than reported totals, moving from 14,368 million in 2016 to 17,261 million in 2020. This indicates overall asset growth during the period, with deferred tax adjustments having a minor reducing effect on the asset base.

Stockholders’ Equity

The reported stockholders’ equity demonstrated significant volatility, featuring negative values in four out of five years (e.g., -102 million in 2016 and -287 million in 2018), with only 2017 and 2020 showing positive equity of 629 and 626 million respectively. On the other hand, adjusted stockholders’ equity values were mostly positive except for 2018 (-49 million), showing a stronger position when adjusted for income tax items, particularly in 2020 where adjusted equity was significantly higher at 1,087 million. These fluctuations suggest underlying accounting or tax-related adjustments impact the equity position notably from year to year.

Financial Leverage

Reported financial leverage ratios were only available for 2017 and 2020, with values of 24.09 and 27.99 respectively, indicating a highly leveraged position during those years. Adjusted financial leverage data, though partly incomplete, shows a wide range—from 73.31 in 2016 (indicating very high leverage) down to 15.88 in 2020 (a marked decrease). The adjusted leverage in 2019 was also relatively high at 63.73. This pattern suggests substantial changes in the company’s capital structure after adjustment, with a trend towards reduced leverage by 2020 when accounting for deferred income tax impacts.

Overall, the adjustments related to deferred income tax yield a more positive view of equity and a reduction in leverage ratios over time, particularly by the end of 2020. The growth in total assets together with these equity and leverage changes may indicate improving financial health when deferred tax effects are considered. However, the volatility in reported equity highlights potential risks or inconsistencies that merit further investigation.

The financial data presents both reported and adjusted measures for net income, stockholders’ equity, and return on equity (ROE) over the five-year period from 2016 to 2020.

Net Income Trends

Reported net income attributable to the company fluctuated over the period. It started at $2,166 million in 2016, increased slightly to $2,278 million in 2017, then experienced a significant decline in 2018 to $1,410 million. The net income recovered in 2019 to $2,157 million and further increased in 2020 to $2,352 million.

The adjusted net income closely mirrors the reported numbers, with slight differences in amounts. Adjusted net income remained relatively stable except for the noticeable dip in 2018, followed by a strong recovery in the subsequent two years, reaching its highest point at $2,397 million in 2020.

Stockholders’ Equity Trends

Reported total stockholders’ equity showed extreme volatility and negative values in many years. In 2016 and 2018, equity was negative ($-102 million and $-287 million respectively), turned slightly negative again in 2019 ($-33 million), and then rose sharply to a positive $626 million in 2020.

The adjusted total stockholders’ equity figures exhibit similarly volatile patterns but with considerable numerical differences. Equity was positive in 2016 ($196 million) and 2017 ($809 million), sharply dropped to negative ($-49 million) in 2018, increased to $236 million in 2019, and rose markedly to $1,087 million in 2020.

Return on Equity (ROE) Patterns

Reported ROE data is incomplete, with values only available for 2017 (362.16%) and 2020 (375.72%). These high percentages suggest disproportionately large returns relative to reported equity, likely influenced by negative equity values in other periods.

Adjusted ROE shows even more volatility and some incomplete data. The adjusted ROE reached an exceptionally high 1,097.45% in 2016, then decreased to 273.05% in 2017. Data for 2018 is missing, but ROE rose again to 926.27% in 2019 before declining to 220.52% in 2020. The extremely elevated ROE percentages in several years indicate abnormal profitability ratios, likely driven by the fluctuations and low base in stockholders' equity.

Overall, the data reveals highly volatile equity figures that impact the interpretation of ROE metrics. The company experienced a notable dip in profitability in 2018, followed by a recovery period. The adjusted figures suggest similar trends but with significant adjustments affecting the equity base and profitability ratios. The extreme swings and negative equity values caution against relying solely on ROE without considering the underlying equity fluctuations.

Net Income Trends

Reported net income showed fluctuation over the period, initially increasing from 2,166 million USD in 2016 to 2,278 million USD in 2017, followed by a significant decline to 1,410 million USD in 2018. It then rebounded to 2,157 million USD in 2019 and further increased to 2,352 million USD in 2020. Adjusted net income exhibited a similar pattern, with a decrease in 2018 mirrored by recovery in subsequent years, ending at 2,397 million USD in 2020.

Assets Evolution

Total assets on a reported basis generally trended upward over the five-year span, starting at 14,602 million USD in 2016 and reaching 17,523 million USD by 2020. Adjusted total assets followed a parallel trend, increasing from 14,368 million USD in 2016 to 17,261 million USD in 2020, indicating consistent asset growth after correcting for deferred income tax adjustments.

Return on Assets (ROA) Analysis

Reported ROA fluctuated throughout the timeframe, peaking at 15.04% in 2017, dropping sharply to 9.71% in 2018, prior to recovering to 14.11% in 2019 and then slightly declining to 13.42% in 2020. Adjusted ROA values mirrored this trend closely, with a high of 14.97% in 2016, a low of 9.88% in 2018, and upward recovery reaching 13.89% in 2020. The adjustments for deferred income taxes resulted in marginal differences in ROA percentages, indicating the adjustments had limited impact on efficiency measures.

Overall Financial Insights

The data reflects a period of volatility in earnings and asset efficiency around 2018, but with subsequent recovery and improvement thereafter. Asset base growth was steady, suggesting continued investment or accumulation of resources. The close alignment between reported and adjusted figures implies that deferred income tax effects, while present, did not materially alter the financial performance trends. The company appears to have managed a rebound in profitability and asset utilization following the 2018 downturn.