Amgen Inc. (NASDAQ:AMGN)

Current Provision

The current provision for income taxes generally increased from 2020 through 2023, rising from $1,232 million in 2020 to a peak of $2,353 million in 2023. However, in 2024, there was a notable decrease to $1,757 million, representing a reduction of approximately 25% compared to the previous year. This suggests a potential decline in taxable income or changes in tax rates or legislation affecting current taxes payable.

Deferred Benefit

The deferred tax benefit, expressed as a negative number, indicates reductions in tax expense due to timing differences or other deferred items. Over the five-year period, the deferred benefit increased significantly in magnitude from -$363 million in 2020 to -$1,275 million in 2022, indicating larger deferred tax assets or reductions in future tax liabilities. Although there was a slight reduction in magnitude in 2023 to -$1,215 million, it remained substantially higher than in earlier years. In 2024, the deferred benefit remained relatively stable at -$1,238 million. This pattern indicates ongoing significant adjustments in deferred tax accounts impacting total tax expense.

Provision for Income Taxes

The total provision for income taxes exhibited some variability across the period. It started at $869 million in 2020, then decreased slightly to $808 million in 2021 and to $794 million in 2022. In 2023, the provision increased considerably to $1,138 million, followed by a sharp decline to $519 million in 2024, the lowest level over the years shown. This trend reflects the combined impact of changes in both current and deferred tax components, indicating fluctuations in overall tax liability that may be influenced by operational results, tax planning strategies, or changes in accounting estimates related to deferred taxes.

The data reveals several noteworthy trends in the tax-related percentages over the analyzed periods. The federal statutory tax rate remains constant at 21% throughout all years, serving as a stable benchmark for other tax components.

Foreign earnings

This component exhibits negative values consistently, indicating a tax benefit or deduction effect from foreign earnings. The values fluctuate between -4.7% and -7.8%, with the lowest point occurring in 2021, followed by a general slight recovery but remaining negative.

Foreign-derived intangible income

This metric shows a gradual increase in negative impact over time, moving from -0.7% in 2020 to -3.0% in 2024. The trend suggests an increasing influence of foreign intangible income deductions or related tax effects over the years.

Credits, Puerto Rico excise tax

These credits fluctuate notably, starting with negative values around -2.9% to -3.4% in early years, turning positive at 0.3% in 2023 before data is missing for 2024. This reversal indicates a possible change in credit treatment or tax policy impact.

Interest on uncertain tax positions

There is a clear upward trajectory in interest-related expenses on uncertain tax positions, rising steadily from 1.1% in 2020 and 2021 to 4.2% in 2024. This suggests increasing tax uncertainties or disputes incurring higher interest charges over time.

Credits, primarily federal R&D

The credit for research and development shows a strengthening tax benefit, moving from -1.4% in 2020 to a significant -5.4% in 2024. This trend indicates an increasing utilization or recognition of R&D tax credits, potentially reflecting higher qualifying investments or changes in credit policies.

Acquisition IPR&D

Data for acquisition-related in-process research and development (IPR&D) is available only for 2021 at 4.9%, suggesting a notable but isolated tax effect that year likely related to acquisition activity.

Audit settlements

This category has a single recorded negative value of -1% in 2020, with no subsequent data, implying either resolved settlements or lack of significant audit adjustments in following years.

Other, net

The net other tax adjustments remain near zero, slightly negative at the start (-0.7% in 2020) and shift toward small positive values in 2023 and 2024, indicating minor fluctuations without a clear directional trend.

Effective tax rate

The effective tax rate varies between 10.7% and 14.5%, lower than the statutory rate, reflecting the cumulative impact of credits, deductions, and other tax effects. The rate trends upward to 14.5% in 2023 before decreasing to 11.3% in 2024, suggesting fluctuations in tax planning outcomes or operational profitability impacting taxable income.

Overall, the fiscal data indicates a consistent reliance on various tax credits, particularly related to foreign earnings and R&D activities, alongside increasing concerns with uncertain tax positions. The effective tax rate remains steadily below the statutory rate, showcasing effective tax strategies that leverage credits and deductions despite some volatility in specific tax components over the period.

The financial data demonstrates several key trends over the five-year period from December 31, 2020, through December 31, 2024. The analysis focuses on changes in various financial items, highlighting increases, decreases, and notable fluctuations.

NOL and Credit Carryforwards

There is a steady increase from $794 million in 2020 to a peak of $1,465 million in 2023, followed by a slight decline to $1,352 million in 2024. This suggests growing benefits from tax loss carryforwards, though the reduction in the final year may indicate utilization or expiration of some credits.

Accrued Expenses

The accrued expenses generally increase over the period, from $561 million to $693 million, with a slight dip in 2022. The consistent rise suggests growing short-term obligations or costs incurred but not yet paid.

Capitalized Research and Development Expenses

Data is available starting in 2022, showing a rapid increase from $515 million to $1,762 million by 2024. This reflects a significant ramp-up in investment in R&D activities being capitalized, possibly indicating expanded product development efforts.

Investments

Investment figures are sporadic, with $270 million reported in 2022, dropping to $1 million in 2024 and a negative $99 million in 2023 reflecting possible divestitures or write-downs. This irregular pattern indicates fluctuating investment activity or reclassification.

Expenses Capitalized for Tax

These expenses show an increase from $144 million in 2020 to $244 million in 2021, then a gradual decrease to $200 million in 2024. This trend might reflect changes in tax strategy or variations in capitalization thresholds.

Earnings of Foreign Subsidiaries

Starting with unavailable data in 2020 and 2021, earnings show a strong increase from $192 million in 2022 to $1,496 million by 2024, indicating substantially improved profitability or expanded operations outside the domestic market.

Stock-based Compensation

There is a steady increase from $92 million in 2020 to $159 million in 2023, followed by a decline to $130 million in 2024. The upward trend reflects increased use or valuation of stock incentives, with a recent decrease potentially signaling a compensation strategy adjustment.

Other (Income/Expenses)

This category fluctuates with a moderate rise from $301 million to $361 million over the five years, indicating other operating or non-operating income/expenses growing at a modest rate.

Deferred Income Tax Assets

Deferred income tax assets more than triple from $1,892 million in 2020 to $5,995 million by 2024, suggesting an increasing recognition of future tax benefits from temporary differences and carryforwards.

Valuation Allowance

The negative valuation allowance increases in magnitude from -$571 million to -$1,019 million, indicating a higher estimated potential for certain deferred tax assets to not be realized, despite the overall growth of deferred tax assets.

Net Deferred Income Tax Assets

Net deferred tax assets experience a strong rise from $1,321 million in 2020 to $4,976 million in 2024, reflecting the balance between gross deferred assets and valuation allowances moving favorably over time.

Acquired Intangible Assets

A significant negative value expanding from -$903 million to -$3,028 million by 2023 before slightly recovering to -$2,573 million in 2024 indicates large intangible asset write-offs or amortization expenses related to acquisitions impacting the balance negatively.

Debt

Debt levels show slight reductions from -$282 million to -$264 million, suggesting minor repayment or net reduction in borrowings over the period.

Fixed Assets

Fixed assets remain relatively stable with small fluctuations, ranging from -$148 million to -$143 million, indicating little change in property, plant, and equipment net of depreciation.

Fair Value of Acquired Inventory

There is a marked decrease between 2022 and 2023, dropping from -$5 million to -$349 million, partially recovering to -$114 million in 2024. This volatile pattern suggests revaluation or impairment of inventory acquired in acquisitions.

Other (Liabilities or Expenses)

Negative values grow moderately from -$189 million to -$244 million, implying an increase in other unspecified liabilities or expenses over time.

Deferred Income Tax Liabilities

These liabilities increase substantially from -$1,522 million to a peak of -$4,108 million in 2023, then decline to -$3,338 million in 2024, reflecting large timing differences likely connected to intangible assets and acquired inventories.

Deferred Income Taxes, Net

Starting at a negative position of -$201 million in 2020, net deferred income taxes improve progressively to a positive $1,638 million by 2024, indicating an overall beneficial position after accounting for deferred tax assets and liabilities.

Overall, the data indicates increasing capitalization of research and development, stronger foreign subsidiary earnings, and growing deferred tax assets, offset partially by rising valuation allowances and substantial amortization or impairment of intangible assets. The balance of deferred tax liabilities and net deferred taxes shows significant changes implying active management of tax-related timing differences. Debt levels remain stable, while accrued expenses and stock-based compensation show consistent upward trends with minor recent adjustments.

The financial data indicates significant fluctuations in deferred income tax assets and liabilities over the five-year period ending December 31, 2024.

Deferred Income Tax Assets

The deferred income tax assets exhibit a substantial upward trend. Starting from an unreported value in 2020, the asset value rose sharply to 219 million USD in 2021, then more than quadrupled to 954 million USD in 2022. This increasing trend accelerates further in 2023 with assets reaching 2,800 million USD and continues growing, albeit at a slower pace, reaching 3,254 million USD in 2024. This pattern suggests an expanding recognition of deferred tax benefits over the period, which may be related to timing differences in income recognition, adjustments in tax planning strategies, or the realization of future deductible amounts.

Deferred Income Tax Liabilities

Conversely, deferred income tax liabilities show a more volatile trajectory. Beginning at 201 million USD in 2020, liabilities are unreported for 2021, then markedly decline to 11 million USD in 2022. A sharp increase follows, with liabilities rising to 2,354 million USD in 2023 before decreasing to 1,616 million USD in 2024. This volatility may indicate shifting timing differences on taxable income or changes in the company's assets that generate these liabilities. The spike in 2023 suggests a possible revaluation or growth of taxable temporary differences, while the decline in 2024 points to some resolution or reduction in these differences.

Overall, the significant rise in deferred income tax assets alongside the volatile but generally increasing liabilities reflects dynamic tax position management. The company appears to be recognizing greater future tax benefits while experiencing variations in its future tax obligations. These changes could be attributed to operational shifts, tax law changes, or strategic tax planning measures executed during this period.

Total Assets

Total assets, both reported and adjusted, show notable fluctuations over the five-year period. Reported total assets decreased slightly from 62,948 million USD in 2020 to 61,165 million USD in 2021, then increased steadily to peak at 97,154 million USD in 2023 before declining to 91,839 million USD in 2024. Adjusted total assets follow a similar pattern, with values slightly lower than reported figures in later years, reaching a high of 94,354 million USD in 2023 and decreasing to 88,585 million USD in 2024. This pattern suggests increased asset accumulation through 2023, followed by a contraction or revaluation in 2024.

Total Liabilities

The total liabilities, both reported and adjusted, consistently rise across the period, indicating growing obligations. Reported total liabilities increased from 53,539 million USD in 2020 to a peak of 90,922 million USD in 2023, then slightly decreased to 85,962 million USD in 2024. Adjusted liabilities display a similar growth trend, rising steadily to 88,568 million USD in 2023 and dropping marginally to 84,346 million USD in 2024. The relatively smaller gap between reported and adjusted liabilities suggests limited deferred tax effects on liabilities.

Stockholders’ Equity

Stockholders' equity shows a general declining trend over the period. Reported equity starts at 9,409 million USD in 2020, decreases significantly to 3,661 million USD in 2022, then recovers somewhat to 6,232 million USD in 2023 before declining to 5,877 million USD in 2024. Adjusted equity figures are consistently lower than reported values from 2021 onwards, notably reaching a low of 2,718 million USD in 2022 and increasing moderately to 5,786 million USD in 2023 before dropping again to 4,239 million USD in 2024. This trend indicates a diminishing residual interest, potentially due to increased liabilities or reduced retained earnings.

Net Income

Reported net income varies over the years with a peak in 2020 at 7,264 million USD, declining to 5,893 million USD in 2021, slightly increasing in 2022 and 2023 to 6,552 and 6,717 million USD respectively, and falling substantially to 4,090 million USD in 2024. Adjusted net income follows a downward trend more pronounced than the reported income, decreasing from 6,901 million USD in 2020 to 2,852 million USD in 2024. The greater reduction in adjusted net income compared to reported figures could indicate the impact of deferred taxes or other adjustments reducing recognized profitability over time.

General Insights

The overall financial pattern reflects growth in asset base and liabilities until 2023, followed by contraction or adjustment in 2024. Equity figures show erosion over time, especially on an adjusted basis, suggesting that increases in liabilities outpace asset growth or profitability. Net income decline in adjusted terms underscores the potential influence of deferred tax adjustments or one-time items affecting earnings quality. The divergence between reported and adjusted figures emphasizes the importance of considering deferred income tax effects when assessing the financial health and performance trends.

Net Profit Margin

The reported net profit margin experienced a decline from 29.97% in 2020 to 12.77% in 2024, showing a contracting profitability trend with occasional fluctuations. The adjusted net profit margin also declined more sharply, dropping from 28.47% in 2020 to 8.91% in 2024. This indicates a consistent reduction in profitability when excluding income tax effects, with a more pronounced decrease in adjusted figures over the analyzed periods.

Total Asset Turnover

The reported total asset turnover remained relatively stable around 0.39-0.40 from 2020 to 2022 but dropped to 0.28 in 2023 before recovering partially to 0.35 in 2024. The adjusted total asset turnover showed a similar pattern, maintaining close to 0.39-0.40 initially, decreasing to 0.29 in 2023, and improving slightly to 0.36 in 2024. This suggests a short-term decline in asset utilization efficiency followed by modest recovery.

Financial Leverage

There was a notable upward trend in financial leverage with the reported ratio rising from 6.69 in 2020 to a peak of 17.79 in 2022, then slightly decreasing but remaining elevated at 15.63 in 2024. The adjusted financial leverage showed similar volatility but with higher values, reaching 23.61 in 2022, declining to 16.31 in 2023, then increasing again to 20.9 in 2024. This indicates increased reliance on debt or other leveraged financing over the period, especially considering the adjusted figures.

Return on Equity (ROE)

The reported ROE displayed significant volatility, rising sharply from 77.2% in 2020 to 178.97% in 2022, followed by a decrease to 69.59% in 2024. The adjusted ROE similarly peaked at 194.15% in 2022 before declining to 67.28% in 2024. The high ROE figures, coupled with fluctuating financial leverage, suggest periods of high profitability driven in part by increased leverage, with a downward adjustment in recent years.

Return on Assets (ROA)

The reported ROA declined steadily from 11.54% in 2020 to 4.45% in 2024. The adjusted ROA followed a similar downward trend from 10.96% to 3.22% over the same period. This consistent decrease indicates diminishing efficiency in generating returns from assets, reflecting pressures on core operating performance irrespective of tax adjustments.

The financial data reveals a declining trend in both reported and adjusted net income over the analyzed periods. Reported net income decreased from 7,264 million US dollars in 2020 to 4,090 million US dollars in 2024, showing a significant reduction. Similarly, adjusted net income declined from 6,901 million US dollars in 2020 to 2,852 million US dollars in 2024. This downward trajectory indicates a diminishing profitability in absolute terms.

Net profit margins, both reported and adjusted, also exhibit a consistent decline during the given timeframe. The reported net profit margin dropped from 29.97% in 2020 to 12.77% in 2024, while the adjusted net profit margin decreased from 28.47% to 8.91%. These decreases in percentage terms suggest that the company’s efficiency in converting sales into net profit has worsened substantially.

Reported Net Income

Declined steadily from 7,264 million US dollars in 2020 to 4,090 million US dollars in 2024, indicating a weakening profitability trend.

Adjusted Net Income

Exhibited a similar declining pattern, falling from 6,901 million US dollars in 2020 to 2,852 million US dollars in 2024, reflecting adjustments that may pertain to income tax considerations.

Reported Net Profit Margin

Decreased from nearly 30% to approximately 13% over the five-year period, signifying a considerable reduction in profitability relative to revenue.

Adjusted Net Profit Margin

Fell from around 28.5% to below 9%, reinforcing the trend observed in reported margins and highlighting the impact of adjustments on net profitability.

Overall, the data points to a notable decline in both net income and profitability margins, with adjusted figures consistently lower than reported ones. This suggests that deferred income tax adjustments may have a material impact on the company’s financial performance, exacerbating the observed downward trends in profitability.

Reported Total Assets

The reported total assets show an initial decrease from 62,948 million US dollars in 2020 to 61,165 million in 2021. This is followed by an increase to 65,121 million in 2022 and a notable rise to 97,154 million in 2023. In 2024, there is a decline to 91,839 million. Overall, the assets exhibit considerable volatility with a significant peak in 2023.

Adjusted Total Assets

Adjusted total assets display a pattern similar to the reported figures. Starting at 62,948 million in 2020, they decrease gradually to 60,946 million in 2021, then increase to 64,167 million in 2022 and sharply rise to 94,354 million in 2023. By 2024, adjusted assets decrease to 88,585 million. The adjustments do not substantially alter the overall trend but slightly reduce asset values compared to reported amounts in the later years.

Reported Total Asset Turnover

This ratio remains relatively stable around 0.39 to 0.4 from 2020 through 2021, indicating consistent sales generation relative to assets. It dips slightly to 0.38 in 2022 and then declines more substantially to 0.28 in 2023, suggesting decreased efficiency in asset utilization amid the peak in asset base. In 2024, the turnover recovers to 0.35, reflecting improved efficiency although still below earlier levels.

Adjusted Total Asset Turnover

The adjusted asset turnover ratio follows a similar trajectory to the reported turnover. It stays at 0.39-0.4 in the first two years, rises marginally to 0.39 in 2022, then declines sharply to 0.29 in 2023. By 2024, it improves to 0.36. The adjustment marginally increases turnover ratios in 2022 and 2023, suggesting that deferred income tax adjustments slightly improve perceived asset efficiency.

Summary of Trends

Overall, the asset base exhibits substantial growth during 2023, accompanied by a decline in asset turnover ratios, indicating lower efficiency in asset use during the asset expansion phase. Both reported and adjusted figures reveal parallel trends, with adjustments moderating asset values and turnover ratios slightly. The recovery of turnover ratios in 2024 suggests some normalization in asset utilization following the volatility in the prior year.

Total Assets

The reported total assets exhibited a fluctuating pattern over the period, starting at $62,948 million at the end of 2020 and decreasing slightly to $61,165 million in 2021. This was followed by an increase in 2022 to $65,121 million and a significant jump in 2023 to $97,154 million. However, there was a decline in 2024 to $91,839 million. The adjusted total assets mirrored this trajectory closely but were consistently slightly lower than the reported figures, with values ranging from $62,948 million in 2020 to a low of $60,946 million in 2021, peaking at $94,354 million in 2023, and declining to $88,585 million in 2024.

Stockholders’ Equity

The reported stockholders’ equity showed a pronounced decreasing trend from 2020 through 2022, dropping from $9,409 million to $3,661 million. This was followed by a recovery in 2023 to $6,232 million, then a slight decline again in 2024 to $5,877 million. The adjusted stockholders’ equity values were consistently below the reported figures, exhibiting a similar pattern: starting at $9,610 million in 2020, declining to $2,718 million in 2022, somewhat recovering to $5,786 million in 2023, and decreasing again to $4,239 million in 2024. Overall, the adjusted figures indicate a more substantial reduction in equity over the analyzed years than the reported figures suggest.

Financial Leverage

The reported financial leverage ratio demonstrated a rising trend from 6.69 in 2020, climbing to 9.13 in 2021, and sharply increasing to 17.79 in 2022. It then decreased somewhat to 15.59 in 2023 and remained relatively stable at 15.63 in 2024. The adjusted financial leverage ratio was slightly different, showing an increase from 6.55 in 2020 to 9.4 in 2021, then a notable surge to 23.61 in 2022, followed by a decline to 16.31 in 2023, and a rise again to 20.9 in 2024. This indicates that when incorporating deferred tax adjustments, the company’s leverage was significantly higher, especially in 2022 and 2024, suggesting a greater reliance on debt relative to equity than shown by the reported figures alone.

Net Income Trends

The reported net income shows a generally declining trend from 2020 to 2024, with figures starting at $7,264 million in 2020 and falling to $4,090 million in 2024. There is a notable dip in 2021 to $5,893 million followed by a slight recovery in 2022 and 2023. However, 2024 sees a significant decrease to the lowest level in the observed period. The adjusted net income follows a similar pattern, starting at $6,901 million in 2020 and decreasing more sharply to $2,852 million by 2024, indicating sustained downward pressure on income after adjustments.

Stockholders’ Equity Analysis

Reported stockholders’ equity exhibits volatility and a downward trajectory over the period. The value peaks at $9,409 million in 2020 but declines steeply by 2022 to $3,661 million. Although there is some recovery in 2023 to $6,232 million, it again decreases to $5,877 million in 2024. Adjusted stockholders’ equity also shows a steep decline, with values dropping from $9,610 million in 2020 to $2,718 million in 2022, followed by a partial rebound in 2023 before declining again in 2024 to $4,239 million. The adjustments lead to consistently lower equity values, suggesting significant deferred tax effects impacting reported equity.

Return on Equity (ROE) Patterns

Reported ROE demonstrates high variability with elevated values throughout the period. It spikes to an exceptional 178.97% in 2022, indicative of a very low equity base or exceptional income effects that year. Generally, the reported ROE remains above 60%, varying from 69.59% to 178.97%. Adjusted ROE follows a similar trend, also peaking sharply in 2022 at 194.15%, and otherwise remaining relatively close to reported ROE figures but generally slightly lower. The marked spikes in ROE correspond with the periods of lowest equity, highlighting the leverage effect of reduced equity on ROE metrics.

Overall Insights

The data reflect a challenging period with declining net incomes and shrinking equity bases, which significantly amplify ROE figures especially in 2022. The adjustments for deferred income taxes reduce reported net income and equity consistently, signifying substantial tax-related accounting impacts. The volatility in equity and resultant ROE spikes suggest potential risks or one-time events affecting the company’s financial position during this timeframe. The decline in both reported and adjusted income towards 2024 may indicate continuing operational or market challenges.

Net Income Trends

The reported net income shows a decline from US$7,264 million in 2020 to US$4,090 million in 2024, with a notable dip in 2021 followed by partial recoveries in 2022 and 2023, before falling sharply in 2024. The adjusted net income follows a similar downward trajectory, decreasing steadily from US$6,901 million in 2020 to US$2,852 million in 2024. This consistent decline in both reported and adjusted figures indicates weakening profitability over the period under review.

Total Assets Trends

The reported total assets exhibit moderate fluctuation, starting at US$62,948 million in 2020, dipping slightly in 2021, then rising substantially to US$97,154 million in 2023 before decreasing to US$91,839 million in 2024. The adjusted total assets mirror this pattern closely but with slightly lower values from 2021 onwards, indicating that deferred income tax adjustments have a moderate but consistent impact on asset valuation. The considerable increase between 2022 and 2023 suggests significant asset accumulation or revaluation during that interval, partially reversed in 2024.

Return on Assets (ROA) Analysis

The reported ROA declines from 11.54% in 2020 to 4.45% in 2024, reflecting diminishing efficiency in utilizing assets to generate net income. The adjusted ROA, which accounts for deferred tax effects, decreases from 10.96% to 3.22% over the same period, consistently remaining below the reported ROA. This pattern signifies that the adjustments related to deferred income taxes further reduce the apparent profitability relative to total assets. The sharpest declines occur between 2022 and 2024, reinforcing the observation of reduced operational performance or increased asset base not proportionally translating into net income.

Overall Insights

The data collectively indicates a trend of decreasing profitability as measured by net income and ROA, both reported and adjusted for deferred income tax effects, over the five-year span. Despite a notable increase in total assets particularly around 2023, returns on these assets have decreased significantly, suggesting challenges in asset utilization or margin pressures. The growing divergence between reported and adjusted figures underscores the material impact of deferred income tax considerations on financial performance assessment. This calls for attention to underlying factors affecting income recognition and asset valuation policies.