KLA Corp. (NASDAQ:KLAC)

The data reveals several significant trends in the company's financial performance and capital efficiency over the six-year period from June 30, 2019, to June 30, 2024.

Net Operating Profit After Taxes (NOPAT)

NOPAT exhibited a fluctuating but overall increasing trend over the period. It declined slightly from approximately $1.39 billion in 2019 to $1.31 billion in 2020, possibly reflecting adverse conditions during that year. Subsequently, it rose sharply to $2.16 billion in 2021 and continued to grow substantially to peak at $3.46 billion in 2023. However, there was a moderate decrease to $3.28 billion in 2024, indicating a slight downturn after strong growth.

Cost of Capital

The cost of capital showed a gradual upward trend across the years, increasing from 16.14% in 2019 to 17.40% in 2024. This steady rise suggests a moderate increase in the overall required return rate, which could reflect changing market risk perceptions or an evolving capital structure.

Invested Capital

Invested capital consistently increased year over year, starting at approximately $6.61 billion in 2019 and growing to $8.88 billion by 2024. This steady growth in capital base indicates ongoing investments in the company's assets or operations, supporting its expansion or operational improvement strategies.

Economic Profit

Economic profit demonstrated significant volatility but an overall rising trend until 2022. It decreased from $320 million in 2019 to $217 million in 2020, then surged to nearly $980 million in 2021. The company achieved its highest economic profit of $2.08 billion in 2022, followed by a slight decline to $2 billion in 2023 and a further decrease to $1.74 billion in 2024. Despite the recent declines, economic profit remains substantially higher than in the earlier years, indicating sustained value creation above the cost of capital.

Overall, the company has exhibited strong growth in profitability and invested capital over the analyzed period, despite some fluctuations. The rising cost of capital presents an increasing hurdle rate, yet the company has consistently generated economic profit well above zero, signaling effective capital utilization and value generation. The peak in both NOPAT and economic profit around 2022-2023 followed by moderate declines in 2024 suggests a potential stabilization or early signs of pressure on profit margins or capital efficiency.

Net Income Attributable to KLA

The net income attributable to the company demonstrated a generally upward trend from 2019 through 2023, increasing from approximately 1.18 billion US dollars in 2019 to a peak of about 3.39 billion US dollars in 2023. This represents a significant growth, nearly tripling over the five-year period. However, in 2024, there was a noticeable decline in net income to around 2.76 billion US dollars, indicating a reduction following the prior year’s peak.

Net Operating Profit After Taxes (NOPAT)

The NOPAT closely mirrored the trend observed in net income, starting at approximately 1.39 billion US dollars in 2019, slightly decreasing in 2020, then rising sharply through 2021 to 2023, reaching its highest point at around 3.46 billion US dollars in 2023. Similar to net income, NOPAT experienced a decline in 2024 to about 3.28 billion US dollars. Despite the dip, the NOPAT for 2024 remains significantly higher than the initial years.

Overall Trends and Insights

Both net income and NOPAT exhibited strong growth over the five-year period leading up to 2023, with the company showing an ability to increase profitability consistently. The peak in 2023 suggests an optimal operational and financial performance year. The subsequent decline in 2024, though noticeable, still reflects elevated profit levels when compared to the earlier years. This pattern could suggest external market or operational factors impacting profitability after a period of growth. The alignment in trends between net income and NOPAT indicates consistent operational efficiency translating into net earnings.

Provision for Income Taxes

The provision for income taxes exhibited notable fluctuations over the reported periods. Starting at approximately 121 million US dollars in mid-2019, the figure decreased to about 102 million in mid-2020, indicating a reduction in tax expense or taxable income during that fiscal year. However, there was a significant increase in mid-2021 to around 283 million, followed by a drop to 167 million in mid-2022. Subsequently, the provision sharply rose again, surpassing 400 million in mid-2023 and continuing its upward trend to approximately 428 million by mid-2024. This volatility may reflect changes in the company’s profitability, tax strategies, or regulatory tax environments.

Cash Operating Taxes

Cash operating taxes showed a consistent upward trend from mid-2019 through mid-2023. Beginning near 166 million US dollars, the amount surged to over 224 million by mid-2020. This growth accelerated in the subsequent years, with cash taxes reaching more than 360 million in mid-2021 and peaking at over 805 million in mid-2023. This rise suggests increasing cash tax outflows possibly related to higher taxable income or changes in tax payment schedules and policies. However, mid-2024 shows a decline to around 600 million, indicating a reduction in tax payments or potentially the utilization of tax credits or refunds.

Total Reported Debt & Leases

Over the analyzed period, total reported debt and leases exhibited a general upward trend. From June 2019 to June 2021, the levels remained relatively stable, fluctuating modestly between approximately 3.5 billion US dollars. However, a notable increase occurred in June 2022, where debt and leases nearly doubled to about 6.8 billion US dollars. This elevated level slightly decreased in June 2023 to approximately 6.1 billion, before rising again to around 6.8 billion in June 2024. This pattern suggests a significant increase in financial obligations starting in 2022, followed by sustained high levels through 2024.

Total Stockholders’ Equity

Stockholders' equity initially showed a steady increase, rising from approximately 2.7 billion US dollars in June 2019 to 3.4 billion in June 2021. However, there was a sharp decline in June 2022, with equity dropping to around 1.4 billion US dollars, less than half the previous year's figure. Subsequent periods saw a recovery, with equity increasing to nearly 2.9 billion in June 2023 and further to approximately 3.4 billion in June 2024. This significant dip in 2022 followed by recovery may indicate an exceptional event or adjustment impacting equity during that year.

Invested Capital

Invested capital showed a steady and consistent upward trend across the analyzed years. Beginning at about 6.6 billion US dollars in June 2019, the figure increased modestly to roughly 6.8 billion by June 2021. From June 2022 onwards, the invested capital continued to rise more markedly, reaching approximately 8.1 billion in 2022, 8.5 billion in 2023, and 8.9 billion in 2024. This steady increase reflects ongoing investment in the company’s operations or assets.

Overall Insights

The data reveals a significant rise in total reported debt and leases beginning in 2022, coinciding with a sharp reduction in stockholders’ equity during the same year. Despite these fluctuations, invested capital has consistently grown over the full period, indicating sustained capital deployment. The combined movement of increasing debt and partnering equity recovery after 2022 suggests active financial management balancing leverage with equity rebuilding. These dynamics imply possible strategic financing or restructuring activities around 2022 affecting the company’s capital structure.

Economic Profit

The economic profit shows a fluctuating trend over the six-year period. It decreased from 319,969 thousand USD in mid-2019 to 216,632 thousand USD in mid-2020. Subsequently, there was a strong recovery with a significant increase to 979,238 thousand USD in mid-2021, followed by a peak at 2,080,237 thousand USD in mid-2022. After reaching this peak, economic profit declined to 2,000,450 thousand USD in mid-2023, and further decreased to 1,739,304 thousand USD by mid-2024. Overall, despite some setbacks, economic profit remains substantially higher in the latter years compared to the beginning of the period.

Invested Capital

The invested capital has demonstrated a steady upward trend throughout the timeframe. Starting at 6,611,994 thousand USD in mid-2019, it showed slight decline by mid-2020 to 6,592,642 thousand USD, but then consistently increased year-over-year, reaching 8,881,599 thousand USD by mid-2024. This reflects ongoing investment and expansion of capital base over the period under review.

Economic Spread Ratio

The economic spread ratio experienced considerable variability during the years analyzed. It began at 4.84% in mid-2019, followed by a decrease to 3.29% in mid-2020. The ratio then improved markedly, rising sharply to 14.36% in mid-2021 and peaking at 25.76% in mid-2022. After this peak, the ratio declined to 23.46% in mid-2023 and further to 19.58% in mid-2024. Despite the recent decrease, the economic spread ratio remains significantly elevated compared to the earlier years, indicating improved profitability relative to invested capital.

Economic Profit

The economic profit experienced significant fluctuations over the analyzed periods. Starting at 319,969 thousand USD in mid-2019, it declined to 216,632 thousand USD in mid-2020. Subsequently, there was a sharp increase reaching a peak of 2,080,237 thousand USD by mid-2022. Following this peak, economic profit slightly decreased to 2,000,450 thousand USD in mid-2023 and continued to decline to 1,739,304 thousand USD by mid-2024. This pattern suggests periods of both substantial growth and contraction in profitability.

Adjusted Revenues

Adjusted revenues demonstrated a general upward trend across the years analyzed. Beginning at 4,735,860 thousand USD in mid-2019, revenues increased steadily each year, reaching a maximum of 10,733,739 thousand USD by mid-2023. However, a decrease was observed in mid-2024, where revenues declined slightly to 10,349,482 thousand USD. Despite this recent decline, the overall trajectory reflects strong growth over the six-year period.

Economic Profit Margin

The economic profit margin showed notable variability throughout the timeline. Initially at 6.76% in mid-2019, the margin decreased significantly to 3.68% in mid-2020. This was followed by a sharp rise, peaking at 21.78% in mid-2022. Subsequently, the margin declined to 18.64% in mid-2023 and further decreased to 16.81% by mid-2024. This pattern indicates fluctuating profitability relative to revenue, with a peak in mid-2022 and a downward adjustment thereafter.

Overall Insights

The data reveals a period marked by strong revenue growth alongside volatile economic profit and margin values. The peak in economic profit and margin around mid-2022 coincides with the highest observed profitability efficiency. The subsequent declines in both economic profit and margin, despite relatively stable revenue levels, may indicate increasing costs or changes in operational efficiency. Continuous monitoring of expense management and profit conversion rates could be essential for sustaining financial performance.