ONEOK Inc. (NYSE:OKE)

Net Operating Profit After Taxes (NOPAT)

Over the five-year period, NOPAT exhibited fluctuations with an overall upward trajectory. Starting at approximately 1.89 billion US dollars in 2018, it increased moderately in 2019 to just over 2.04 billion US dollars. However, 2020 saw a significant decline to approximately 1.37 billion US dollars, indicating a challenging year. This was followed by a substantial rebound in 2021, where NOPAT rose sharply to about 2.55 billion US dollars, and continued to increase marginally in 2022 to roughly 2.72 billion US dollars. This pattern suggests resilience and recovery after a downturn.

Invested Capital

Invested capital showed a consistent upward trend across the period, increasing from around 16.42 billion US dollars in 2018 to approximately 22.06 billion US dollars in 2022. This steady growth, despite a slight dip between 2020 and 2021, indicates continued investment and expansion of the company's asset base or operational scale.

Return on Invested Capital (ROIC)

The ROIC percentage reveals variability with a distinct decline in 2020, mirroring the NOPAT downturn. Beginning at 11.5% in 2018, ROIC decreased to 10.26% in 2019 and then dropped further to 6.31% in 2020. Thereafter, it recovered significantly to 11.93% in 2021 and improved slightly to 12.34% in 2022, surpassing the initial 2018 level. This trend indicates an initial reduction in efficiency or profitability against invested capital during the 2020 downturn, followed by a robust improvement in subsequent years.

Summary

The data reflects a period of financial challenge in 2020, characterized by declines in NOPAT and ROIC, coinciding with a global economic disruption. Subsequent years demonstrate strong recovery and growth in profitability and capital productivity. The continuous increase in invested capital suggests ongoing commitments to business growth, while improvements in ROIC indicate enhanced management effectiveness in generating returns from invested resources.

Operating Profit Margin (OPM)

The operating profit margin exhibited fluctuations over the observed period. It peaked at 21.09% in 2019, reflecting a relatively strong operational efficiency. However, it subsequently declined to 17.78% in 2020 and continued to decrease through 2021 and 2022, reaching a low of 13.08%. This downward trend suggests increasing pressures on operating profitability in the most recent years.

Turnover of Capital (TO)

The turnover of capital ratio displayed volatility, starting at 0.77 in 2018 and dipping to a low of 0.40 in 2020. A notable recovery occurred in 2021 with the ratio returning to 0.77, and it further increased to 1.01 in 2022. This suggests an improvement in asset utilization efficiency, with the company generating more revenue per unit of capital invested by the end of the period.

Effective Cash Tax Rate (CTR)

The metric representing one minus the effective cash tax rate remained relatively stable, ranging between approximately 90% and 95%. The highest level was observed in 2019 at 95.19%, while slightly lower values were seen in 2020 to 2022, but overall this indicates a consistently high proportion of income retained after taxes across all years.

Return on Invested Capital (ROIC)

Return on invested capital demonstrated variability. Initially at 11.5% in 2018, it declined notably to 6.31% in 2020, which may indicate a period of lower investment efficiency or increased costs. However, a recovery trend followed, with ROIC rising to 11.93% in 2021 and slightly further to 12.34% in 2022, suggesting improved returns on capital invested towards the end of the period.

General Insights

Overall, the financial metrics indicate a challenging environment between 2019 and 2020, marked by declining profitability and lower returns on invested capital. The subsequent years show signs of operational recovery, particularly in capital utilization and return metrics. Despite this, the operating profit margin continued to erode, which may point to margin pressure or rising costs that are impacting profitability even as efficiency and returns improve. The tax-related metric stability suggests consistent effective tax management throughout the period.

Net Operating Profit Before Taxes (NOPBT)

Over the period from 2018 to 2022, the net operating profit before taxes displayed a fluctuating but generally upward trend. Starting at approximately 1.99 billion USD in 2018, it increased to about 2.14 billion USD in 2019, followed by a notable decline to approximately 1.52 billion USD in 2020. Subsequently, the NOPBT showed strong recovery and growth, reaching around 2.72 billion USD in 2021 and further increasing to nearly 2.93 billion USD in 2022.

Revenues

Revenues exhibited a different pattern with a significant dip in 2019 and 2020, falling from approximately 12.59 billion USD in 2018 to 10.16 billion USD in 2019 and then further dropping to about 8.54 billion USD in 2020. From 2020 onwards, revenues showed a marked recovery and considerable growth, rising sharply to roughly 16.54 billion USD in 2021 and then increasing further to about 22.39 billion USD in 2022. This indicates a strong resurgence in revenue generation after the downturn.

Operating Profit Margin (OPM)

The operating profit margin shows a declining trend over the five-year period. Beginning at 15.79% in 2018, it rose to a peak of 21.09% in 2019, but then declined to 17.78% in 2020. The margin continued to decrease to 16.45% in 2021 and further dropped to 13.08% in 2022. Despite increasing absolute profits and revenues in recent years, the decreasing operating profit margin suggests either rising costs or pricing pressures impacting profitability relative to revenues.

Summary

The data reveals a period of volatility with an initial decline in revenues and profits around 2019-2020, likely indicative of adverse economic or operational conditions. However, from 2021 onwards, the company experienced robust growth in both revenues and net operating profit before taxes, surpassing previous levels. Notwithstanding this growth, the steady decline in operating profit margin suggests that the company’s efficiency or cost management relative to revenue has diminished, warranting further analysis into expense control or pricing strategy.

The financial data reveals several notable trends in the company's performance and capital utilization over the five-year period.

Revenues

Revenues experienced a decline from 2018 through 2020, dropping from approximately 12.6 billion US dollars in 2018 to about 8.5 billion in 2020. This was followed by a strong recovery in 2021 and 2022, with revenues increasing substantially to roughly 16.5 billion and then to nearly 22.4 billion by the end of 2022. The sharp rise in the latter two years suggests improved market conditions or operational performance.

Invested Capital

Invested capital increased steadily throughout the period. Starting at about 16.4 billion US dollars in 2018, it grew to approximately 22.1 billion by 2022. While the growth was consistent year-over-year, the pace of increase slowed slightly between 2021 and 2022 compared to previous years.

Turnover of Capital (TO)

The turnover of capital, defined as revenues divided by invested capital, exhibited a decreasing trend from 2018 to 2020, moving from 0.77 down to 0.40. This decline indicates diminishing efficiency in capital utilization during this period. However, there was a rebound in 2021, restoring the turnover ratio back to 0.77, and an improvement to 1.01 in 2022, marking the highest efficiency in the analyzed timeframe.

In summary, the company underwent a period of declining revenues and capital turnover efficiency between 2018 and 2020, concurrent with a rising invested capital base. This was reversed in the subsequent two years, with revenues sharply increasing and the turnover of capital improving, indicating enhanced operational efficiency and better use of invested capital by the end of 2022.

Cash Operating Taxes

The cash operating taxes showed a consistent upward trend from 2018 through 2022. Starting at 100,721 thousand US dollars in 2018, this figure increased annually, reaching 206,551 thousand US dollars by the end of 2022. This represents more than a doubling of cash tax payments over the five-year period, indicating higher tax obligations or taxable income.

Net Operating Profit Before Taxes (NOPBT)

Net operating profit before taxes displayed variability over the observed period. Initially, it increased from 1,988,543 thousand US dollars in 2018 to 2,143,469 thousand in 2019. However, there was a significant decline to 1,518,441 thousand in 2020, potentially reflecting adverse conditions during that year. This was followed by a substantial recovery and growth in 2021 and 2022, reaching 2,720,168 thousand and 2,928,437 thousand US dollars respectively, suggesting strong operational performance in the latter years.

Effective Cash Tax Rate (CTR)

The effective cash tax rate exhibited fluctuations during the period. It was relatively low in 2018 and 2019, at 5.07% and 4.81% respectively. The rate more than doubled to 10.09% in 2020, aligning with the decline in operating profit that year. It then decreased to 6.14% in 2021 and slightly increased to 7.05% in 2022. This pattern indicates variability in tax efficiency or changes in tax regulations and incentives impacting cash tax obligations relative to profits.

Overall Insights

Over the five-year period, the company experienced fluctuations in operating profitability, with a notable dip in 2020 followed by recovery and growth. Cash operating taxes rose steadily, suggesting increasing taxable income or changes in tax policies. The effective cash tax rate showed significant variation, which may reflect strategic tax management or shifts in external tax environment. The combination of these trends points to dynamic financial and tax conditions affecting the company.