KLA Corp. (NASDAQ:KLAC)

The financial performance, as measured by economic profit, demonstrates a generally positive trajectory over the observed period. Net operating profit after taxes (NOPAT) increased significantly from 2020 to 2022, plateaued in 2023, experienced a slight decrease in 2024, and then increased again in 2025. Invested capital consistently rose throughout the period, indicating ongoing investment in the business. The cost of capital exhibited a moderate upward trend. Consequently, economic profit mirrored the NOPAT trend, showing substantial growth initially, followed by stabilization and a final increase.

NOPAT Trend

NOPAT increased from US$1,310,622 thousand in 2020 to US$2,157,964 thousand in 2021, representing a substantial gain. Further growth was observed in 2022, reaching US$3,432,493 thousand. A slight decline to US$3,284,868 thousand occurred in 2024 before recovering to US$3,852,307 thousand in 2025. This suggests periods of strong operational performance interspersed with potential challenges or strategic shifts.

Cost of Capital Trend

The cost of capital experienced a gradual increase over the six-year period, moving from 16.27% in 2020 to 17.32% in 2025. While the increases are relatively small year-over-year, the consistent upward trend indicates a potentially increasing risk profile or changes in market conditions affecting funding costs.

Invested Capital Trend

Invested capital consistently increased throughout the period, starting at US$6,592,642 thousand in 2020 and reaching US$9,244,891 thousand in 2025. This continuous growth suggests ongoing investment in assets and operations, potentially driving future growth opportunities.

Economic Profit Trend

Economic profit increased significantly from US$237,807 thousand in 2020 to US$1,002,283 thousand in 2021, and continued to grow to US$2,106,431 thousand in 2022. It remained relatively stable at US$2,028,982 thousand in 2023, decreased to US$1,769,531 thousand in 2024, and then increased to US$2,250,674 thousand in 2025. The fluctuations in economic profit appear to be influenced by the interplay between NOPAT and the cost of capital, with the 2024 dip potentially attributable to the combined effect of a slight NOPAT decrease and a cost of capital increase.

Overall, the observed trends suggest a company that has generally improved its economic profitability, despite some fluctuations. The continued investment in capital, coupled with increasing NOPAT in the later years, indicates a potential for sustained value creation. Monitoring the cost of capital and its impact on economic profit will be crucial for future performance.

The financial performance over the reviewed periods demonstrates notable fluctuations and growth patterns in key profitability metrics.

Net Income Attributable to KLA

The net income shows a strong upward trajectory from 1,216,785 thousand US dollars in mid-2020 to 3,381,277 thousand US dollars by mid-2023, indicating a substantial increase in profitability over the initial years. However, there is a decline in mid-2024 to 2,761,896 thousand US dollars, suggesting a temporary setback or increased expenses during this period. This is followed by a significant recovery and peak at 4,061,643 thousand US dollars in mid-2025, marking the highest profit level recorded in these periods.

Net Operating Profit After Taxes (NOPAT)

NOPAT trends closely follow the net income pattern, starting at 1,310,622 thousand US dollars in mid-2020 and rising steadily to 3,464,285 thousand US dollars by mid-2023. There is a minor decline to 3,284,868 thousand US dollars in mid-2024, aligning with the net income dip and possibly indicating operational challenges or market factors impacting earnings. By mid-2025, NOPAT recovers to 3,852,307 thousand US dollars, reflecting improved operational efficiency and profitability.

Overall, the data indicates robust growth in profitability over the five-year span with a minor interruption around mid-2024. The subsequent recovery in the latest period suggests resilience and effectiveness in addressing prior challenges.

The financial data reveals notable fluctuations in the taxation-related expenses over the analyzed periods.

Provision for Income Taxes

This item exhibits a generally increasing trend with some volatility. Starting from approximately 101.7 million USD in mid-2020, the provision saw a significant rise to 283.1 million USD by mid-2021. However, it then decreased to 167.2 million USD in mid-2022 before sharply increasing again to 401.8 million USD in mid-2023. The upward momentum continued, reaching 428.1 million USD in mid-2024 and further increasing to 582.8 million USD by mid-2025. Overall, there is a clear upward trajectory with a notable dip in the middle of the period.

Cash Operating Taxes

Cash operating taxes show a consistent and marked upward trend over the time horizon. Beginning at 224.5 million USD in mid-2020, the figure rose steadily to 360.2 million USD in mid-2021 and further climbed to 553.4 million USD by mid-2022. This increase continued substantially, reaching 805.2 million USD in mid-2023. A temporary decrease occurred in mid-2024 to 600.4 million USD, after which the amount surged again to a peak of 854.9 million USD by mid-2025. Despite the single-year decline in mid-2024, the overall pattern is one of significant growth in cash operating tax payments.

In summary, both provision for income taxes and cash operating taxes show increasing trends over the five-year period, indicative of either growth in taxable income, changes in tax rates, or adjustments in tax accounting. The volatility in the provision for income taxes suggests variability in anticipated tax expenses, while the cash operating taxes generally increase, reflecting the actual cash outflows related to tax payments with a minor temporary decline. These trends highlight growing fiscal obligations and possibly evolving tax strategies or financial conditions during the period analyzed.

The annual financial data reveals several notable trends in the company's capital structure from 2020 to the projected figures in 2025.

Total Reported Debt & Leases

The total reported debt and leases showed some volatility over the period analyzed. Initially, the debt level was approximately $3.57 billion in mid-2020, slightly decreasing to around $3.55 billion in mid-2021. Subsequently, there was a marked increase, with debt nearly doubling to about $6.77 billion by mid-2022. This peak was followed by a decline to approximately $6.06 billion in mid-2023. The debt rose again to an estimated $6.82 billion in mid-2024 before decreasing to roughly $6.09 billion by mid-2025. Overall, the company's debt levels experienced significant fluctuations, suggesting adjustments in financing strategy or capital needs during this period.

Total KLA Stockholders’ Equity

Stockholders’ equity grew from approximately $2.67 billion in mid-2020 to a peak near $3.38 billion in mid-2021. However, it then sharply declined to about $1.40 billion by mid-2022. This sudden drop contrasts with a recovery trend starting in mid-2023, when equity climbed back to nearly $2.92 billion, rising further to approximately $3.37 billion in mid-2024 and ultimately reaching an estimated $4.69 billion in mid-2025. This pattern indicates a strong rebound in equity after a significant contraction, possibly due to operational results, capital injections, or asset revaluations during this timeframe.

Invested Capital

Invested capital shows a consistent upward trend throughout the period examined. Starting at about $6.59 billion in mid-2020, it increased steadily each year to reach an estimated $9.24 billion by mid-2025. This gradual rise suggests ongoing investments in the business's productive assets, reflecting growth initiatives or expansion strategies employed by the company.

In summary, while invested capital demonstrated steady growth, the capital structure evidenced by debt and equity components experienced significant variability. The fluctuations in debt and equity, particularly the sharp decline and subsequent recovery in stockholders’ equity, signal dynamic financial management possibly responding to external conditions or strategic shifts. The overall increase in invested capital alongside these changes implies that the company is actively managing its financial resources to support its operations and growth outlook over the medium term.

The financial performance, as indicated by economic value added metrics, demonstrates a significant upward trend followed by a stabilization and subsequent increase over the observed period. Economic profit increased substantially from 2020 to 2022, then experienced a slight decrease in 2023 before recovering and exceeding prior levels in 2025. Invested capital consistently increased throughout the period, reflecting ongoing investment in the business. The economic spread ratio, a key indicator of profitability relative to capital employed, exhibits a corresponding pattern of growth and fluctuation.

Economic Profit

Economic profit began at 237,807 thousand US dollars in 2020 and rose dramatically to 1,002,283 thousand US dollars in 2021. Further growth was observed in 2022, reaching 2,106,431 thousand US dollars. A modest decline to 2,028,982 thousand US dollars occurred in 2023, followed by a decrease to 1,769,531 thousand US dollars in 2024. The final year observed, 2025, shows a recovery and increase to 2,250,674 thousand US dollars, surpassing all previous values.

Invested Capital

Invested capital consistently increased throughout the period. Starting at 6,592,642 thousand US dollars in 2020, it grew to 6,820,696 thousand US dollars in 2021, 8,075,406 thousand US dollars in 2022, 8,526,100 thousand US dollars in 2023, 8,881,599 thousand US dollars in 2024, and finally reached 9,244,891 thousand US dollars in 2025. This consistent growth suggests ongoing investment in the business operations.

Economic Spread Ratio

The economic spread ratio increased significantly from 3.61% in 2020 to 14.69% in 2021, and continued to rise to a peak of 26.08% in 2022. A decrease to 23.80% was noted in 2023, followed by a further decline to 19.92% in 2024. The ratio then increased again in 2025, reaching 24.35%. This indicates fluctuations in the profitability generated per unit of invested capital, with a general upward trend over the entire period despite the intermediate declines.

The observed patterns suggest a period of rapid growth and increasing profitability, followed by a period of stabilization and renewed growth. The consistent increase in invested capital alongside the fluctuating economic spread ratio indicates a dynamic relationship between investment and returns. The recovery in both economic profit and the economic spread ratio in 2025 is a positive indicator.

The financial performance, as measured by economic profit and its margin, demonstrates a significant upward trend over the observed period, followed by a stabilization and then a renewed increase. Economic profit experienced substantial growth from 2020 to 2022, before exhibiting a slight decline in 2023 and 2024, and then recovering in 2025. This pattern is reflected in the economic profit margin.

Economic Profit

Economic profit began at US$237,807 thousand in 2020 and increased dramatically to US$1,002,283 thousand in 2021. Further growth was observed in 2022, reaching US$2,106,431 thousand. A decrease to US$2,028,982 thousand occurred in 2023, followed by another decrease to US$1,769,531 thousand in 2024. By 2025, economic profit rebounded to US$2,250,674 thousand, surpassing the 2022 peak.

Adjusted Revenues

Adjusted revenues mirrored the trend in economic profit, increasing from US$5,884,690 thousand in 2020 to US$6,920,382 thousand in 2021. Continued expansion led to US$9,551,504 thousand in 2022 and US$10,733,739 thousand in 2023. A slight decline to US$10,349,482 thousand was noted in 2024, before a substantial increase to US$12,087,609 thousand in 2025.

Economic Profit Margin

The economic profit margin increased from 4.04% in 2020 to 14.48% in 2021, indicating improved profitability relative to revenue. This upward trend continued to 22.05% in 2022. A decrease to 18.90% occurred in 2023, followed by a further decrease to 17.10% in 2024. The margin then recovered to 18.62% in 2025, suggesting a restoration of profitability following the temporary decline. The margin demonstrates a strong correlation with the absolute economic profit values.

The fluctuations in both economic profit and margin between 2022 and 2025 warrant further investigation to determine the underlying drivers. While the overall trend is positive, the intermediate dip suggests potential challenges or changes in cost structure or revenue generation during those years. The strong recovery in 2025 indicates successful mitigation of these challenges or a return to favorable operating conditions.