Illumina Inc. (NASDAQ:ILMN)

The data reflects the financial position concerning intangible assets and goodwill over a five-year period. Several key trends can be observed regarding the values and their movements in different categories.

Licensed Technologies

The value of licensed technologies remains constant at $95 million throughout the period. No growth or decline is evident in this category, indicating stability or lack of new valuation changes.

Core Technologies

Core technologies exhibit some fluctuations. The value decreases from $328 million in 2016 to $300 million in 2017, increases again to $331 million in 2018, slightly decreases to $325 million in 2019, and reaches $352 million in 2020. Overall, this suggests moderate variability but a positive upward trend by the end of the period.

Customer Relationships

Customer relationship values show a gradual downward trend from $33 million in 2016 to $31 million in 2020. This indicates a slight reduction in the valuation of this intangible asset over time.

License Agreements

This category maintains a steady value of $14 million each year, signifying no changes or revaluations.

Trade Name

The trade name value rises from $5 million in 2016 to $9 million in 2018, then declines sharply to $4 million by 2019 and remains at that level through 2020. This suggests some revaluation or impairment after 2018.

Intangible Assets, Gross Carrying Amount

The gross carrying amount of intangible assets fluctuates, starting at $475 million in 2016, decreasing to $448 million in 2017, increasing to $481 million in 2018, slightly decreasing to $469 million in 2019, and finally rising to $496 million in 2020. These movements reflect changes in the underlying intangible asset components.

Accumulated Amortization

Accumulated amortization shows a consistent increase (more negative) from -$237 million in 2016 to -$354 million in 2020, reflecting ongoing amortization expense that gradually reduces the net book value of intangible assets.

Intangible Assets, Net

The net value of intangible assets declines from $237 million in 2016 to $142 million in 2020, with some fluctuations. After a substantial drop to $175 million in 2017, it slightly recovers in 2018 to $185 million, then falls more sharply in 2019 and remains nearly stable in 2020. This downward trend suggests the amortization effect outweighs new additions or revaluations.

Goodwill

Goodwill remains relatively stable between 2016 and 2019, fluctuating slightly around $770 to $830 million, then increases significantly to $897 million in 2020. This rise may indicate acquisitions or revaluations increasing goodwill in the last year.

Intangible Assets and Goodwill, Total

The sum of intangible assets and goodwill mirrors previous trends. After a decrease from $1,013 million in 2016 to $946 million in 2017, it recovers to $1,016 million in 2018 but drops again to $969 million in 2019. In 2020, the total rises to $1,039 million, the highest point in the period. This increase is largely driven by the rise in goodwill despite the decline in net intangible assets.

Overall, the financial data portrays a mixed but stable profile for intangible assets and goodwill. While some individual categories like core technologies and trade name exhibit variability, licensed technologies and license agreements remain unchanged. The net intangible asset value declines due to consistent amortization, while goodwill experience a notable increase in the last year. Consequently, total intangible assets and goodwill demonstrate slight growth by the end of the period, potentially reflecting acquisitions or revaluation impacts.

Total Assets

The reported total assets increased steadily from US$4,281 million in 2016 to US$7,585 million in 2020. This represents a significant growth trend over the five-year period. The adjusted total assets, which likely exclude goodwill and other intangible factors, follow a similar upward trajectory, rising from US$3,505 million in 2016 to US$6,688 million in 2020. The growth in adjusted assets confirms that the increase in total assets is not solely due to acquisitions or goodwill but also reflects organic asset growth.

Stockholders' Equity

Reported stockholders’ equity also exhibited a consistent increase, moving from US$2,197 million in 2016 to US$4,694 million in 2020. This growth suggests an overall strengthening of the company’s capital base as reflected in the balance sheet. Adjusted stockholders’ equity, which is lower than the reported figures, also increased steadily from US$1,421 million in 2016 to US$3,797 million in 2020. The divergence between reported and adjusted equity implies a considerable amount of goodwill or intangible assets accounted for in the reported equity, but the upward trend in adjusted equity indicates real growth in the net asset base.

Overall Trends and Insights

The consistent upward trend in both reported and adjusted total assets as well as stockholders' equity implies robust financial growth and capitalization. The increasing gap between reported and adjusted figures suggests the presence of significant intangible assets, such as goodwill, which have an impact on the reported financial position. Nonetheless, the adjusted figures demonstrate that the underlying asset base and equity position have improved substantially over the period analyzed.

The financial ratios over the analyzed five-year period reveal several noteworthy trends and changes.

Total Asset Turnover

Both the reported and goodwill adjusted total asset turnover ratios exhibit a clear declining trend from 2016 to 2020. The reported total asset turnover fell from 0.56 in 2016 to 0.43 in 2020, while the adjusted ratio declined from 0.68 to 0.48 over the same period. This indicates a progressively lower efficiency in generating sales from total assets, with the adjusted figures consistently higher than the reported ones, suggesting that goodwill adjustments enhance the apparent asset productivity.

Financial Leverage

Financial leverage, both reported and adjusted, shows a decreasing trend from 2016 to 2019, followed by a slight increase in 2020. The reported financial leverage decreased from 1.95 to 1.59 between 2016 and 2019 then slightly increased to 1.62 in 2020. The adjusted financial leverage similarly declined from 2.47 to 1.71 before rebounding slightly to 1.76. The adjusted leverage consistently remained higher than the reported leverage, indicating that goodwill adjustments account for additional leverage not captured in the reported figures.

Return on Equity (ROE)

Return on equity demonstrates volatility with a general downward trajectory in later years. Reported ROE increased from 21.06% in 2016 to a peak of 26.41% in 2017, then declined gradually to 13.98% in 2020. Adjusted ROE follows a similar pattern but at higher levels, starting at 32.55% in 2016, peaking at 36.7% in 2017, and declining more sharply to 17.28% in 2020. The declining ROE in recent years may reflect challenges in profitability or increased asset base without proportional net income growth.

Return on Assets (ROA)

ROA, both reported and adjusted, displays fluctuating values with a peak around 2017-2019 and a decline in 2020. Reported ROA rose from 10.81% in 2016 to 13.81% in 2017, fluctuated around 11.87% to 13.7% through 2019, then fell to 8.65% in 2020. Adjusted ROA trends follow similarly but at higher magnitudes, rising from 13.2% in 2016 to 16.18% in 2017, peaking at 15.43% in 2019 before decreasing to 9.81% in 2020. The declining ROA in the last year suggests reduced asset efficiency in generating net income.

Overall, the adjusted ratios tend to show stronger performance metrics compared to the reported ones, highlighting the impact of goodwill adjustments on the financial indicators. The downward trends in asset turnover, ROE, and ROA towards 2020 indicate potential challenges in operating efficiency and profitability, while financial leverage remains moderately stable with slight declines and modest recovery. This pattern could reflect changing business conditions or strategic decisions affecting asset utilization and capital structure.

Total Assets

The reported total assets have shown a consistent increase over the five-year period, rising from US$4,281 million in 2016 to US$7,585 million in 2020. Similarly, the adjusted total assets, which presumably exclude goodwill or other intangible assets, have also increased steadily from US$3,505 million to US$6,688 million during the same timeframe. This indicates overall growth in the asset base, whether measured by reported or adjusted figures.

Total Asset Turnover Ratios

Both the reported and adjusted total asset turnover ratios display a downward trend over the period examined. The reported total asset turnover decreased from 0.56 in 2016 to 0.43 in 2020, showing a declining efficiency in utilizing total assets to generate revenue. Adjusted total asset turnover followed a similar pattern, though starting from a higher base of 0.68 in 2016 and declining to 0.48 by 2020. This decline suggests that despite growing asset bases, the revenue generated per unit of asset is decreasing, or not increasing proportionally with asset growth.

Insights

The simultaneous increase in both reported and adjusted total assets alongside declining asset turnover ratios points to potential concerns about asset utilization efficiency. While the company's asset base has expanded significantly—possibly due to investments, acquisitions, or capital expenditures—the revenue growth relative to these assets has not kept pace, as reflected in lower turnover ratios. The adjusted figures, excluding goodwill, show a similar trend, which implies that the company's operational asset efficiency may be diminishing over time. This pattern may warrant further investigation into the causes, such as underperforming assets or changes in business operations.

Total Assets

The reported total assets consistently increased from US$4,281 million at the end of 2016 to US$7,585 million by the end of 2020. Similarly, the goodwill adjusted total assets rose from US$3,505 million in 2016 to US$6,688 million in 2020. Although both measures show growth, the adjusted total assets remain consistently lower than the reported values, reflecting the exclusion of goodwill assets. The pace of increase in both reported and adjusted assets was notable, with a more pronounced jump between 2017 and 2018.

Stockholders' Equity

Reported Illumina stockholders’ equity grew steadily from US$2,197 million in 2016 to US$4,694 million in 2020, more than doubling over the period. The adjusted equity, which excludes goodwill, followed a similar upward trend, increasing from US$1,421 million in 2016 to US$3,797 million in 2020. The difference between reported and adjusted equity remained substantial across all years, highlighting the significant impact of goodwill on equity valuation. Growth rates appeared consistent year over year with no major deviations.

Financial Leverage

The reported financial leverage ratio, defined as total assets divided by total stockholders’ equity, demonstrated a declining trend from 1.95 in 2016 to a low of 1.59 in 2019, before slightly rising to 1.62 in 2020. This reduction indicates a gradual decrease in reliance on debt or liabilities relative to equity on a reported basis. The adjusted financial leverage, which accounts for goodwill adjustments, showed a higher starting point at 2.47 in 2016 but also consistently decreased to 1.71 by 2019, followed by a minor increase to 1.76 in 2020. Both leverage metrics suggest improved capitalization and a stronger equity base over the analyzed period, with adjusted leverage consistently reflecting higher risk due to exclusion of goodwill.

Overall Insights

The data reveals a continuous strengthening of the company’s balance sheet. Growth in total assets and equity signifies expansion and an increase in net worth. The downward trend in financial leverage ratios indicates a move toward less financial risk and improved financial stability. The adjustments for goodwill consistently reduce asset and equity values while increasing leverage ratios, suggesting that a significant portion of the reported values is attributable to intangible assets. Despite this, the company appears to maintain a solid equity cushion and prudent leverage levels throughout the years.

Reported total Illumina stockholders’ equity

The reported total stockholders’ equity demonstrated a consistent upward trend over the five-year period. Starting at 2,197 million USD in 2016, it increased steadily each year, reaching 4,694 million USD by the end of 2020. The growth was most significant between 2017 and 2019, with a gradual slowdown observed between 2019 and 2020.

Adjusted total Illumina stockholders’ equity

The adjusted total stockholders’ equity, which accounts for goodwill adjustments, also showed a persistent rise across the observed years. It rose from 1,421 million USD in 2016 to 3,797 million USD in 2020. Similar to the reported figure, the increase was more pronounced from 2017 to 2019, with a slower growth rate in the last year noted.

Reported Return on Equity (ROE)

The reported ROE exhibited variability over the period. It peaked at 26.41% in 2017, followed by a gradual decline over the next three years, ending at 13.98% in 2020. This suggests diminishing efficiency in generating profit from equity on a reported basis toward the latter years.

Adjusted Return on Equity (ROE)

The adjusted ROE, which excludes goodwill effects, was consistently higher than the reported ROE throughout all periods. It reached its highest value of 36.7% in 2017, then showed a downward trend ending at 17.28% in 2020. Despite the decline, the adjusted ROE remained notably above the reported figures, indicating a stronger profitability metric when goodwill is excluded.

Summary of Trends and Insights

Overall, both reported and adjusted equity metrics grew substantially from 2016 through 2020, reflecting an expanding equity base. However, both return on equity measures, reported and adjusted, peaked in 2017 and have been decreasing since. The sharper decline in reported ROE compared to adjusted ROE may indicate that goodwill adjustments have a significant impact on profitability measures. The declining ROE trends in the last years suggest the company faced challenges in maintaining profit generation efficiency relative to its equity increase.

Total Assets

The reported total assets demonstrated a consistent upward trend over the five-year period, increasing from 4,281 million US dollars in 2016 to 7,585 million US dollars in 2020. This signifies an approximate 77% growth in reported assets. Similarly, the goodwill adjusted total assets also exhibited steady growth, rising from 3,505 million US dollars to 6,688 million US dollars, which is about a 91% increase. The adjusted assets are consistently lower than the reported assets, reflecting the removal of goodwill from the asset base.

Return on Assets (ROA)

The reported ROA fluctuated throughout the years, initially increasing from 10.81% in 2016 to a peak of 13.81% in 2017. Following this peak, it showed modest decreases and rises, reaching 13.7% in 2019 before dropping significantly to 8.65% in 2020. The adjusted ROA follows a similar pattern but at higher values, starting at 13.2% in 2016 and peaking at 16.18% in 2017. After fluctuating between 13.48% and 15.43% from 2018 to 2019, it also declined sharply to 9.81% in 2020. This suggests that excluding goodwill presents a higher asset profitability, but both measures indicate a marked decline in 2020.

Insights

The increase in total assets over the period indicates significant growth or investment activity within the company. The difference between reported and adjusted assets highlights the impact of goodwill on the company’s asset base. Return on assets, both reported and adjusted, reflect relatively strong profitability until 2019, followed by a notable downturn in 2020, which could be indicative of operational challenges or external market conditions impacting profitability. The consistently higher adjusted ROA suggests that goodwill might be diluting the apparent efficiency of asset utilization when included.