Keurig Dr Pepper Inc. (NASDAQ:KDP)

The financial data presents several key trends in the company's operating performance and capital efficiency over the four-year period ending December 31, 2021.

Net Operating Profit After Taxes (NOPAT)

NOPAT exhibited a consistent upward trend throughout the period, increasing from $903 million in 2018 to $2,588 million in 2021. Notably, the largest annual growth occurred between 2020 and 2021, indicating a significant improvement in operating profitability.

Cost of Capital

The cost of capital experienced a gradual increase from 8.74% in 2018 to 9.45% in 2021. This upward movement suggests a rising hurdle rate for investments, which could impact the company's valuation and capital allocation decisions.

Invested Capital

Invested capital remained relatively stable across the four years, with slight fluctuations around the $44 billion mark. The modest decrease from 2018 to 2020 was followed by a slight increase in 2021, indicating cautious capital deployment or asset management during this time frame.

Economic Profit

Economic profit, which measures value creation after accounting for the cost of capital, remained negative throughout the period but showed a continuous improvement. The deficit narrowed from -$2,997 million in 2018 to -$1,581 million in 2021, reflecting an enhanced ability to generate returns above the cost of capital. However, despite improvements, the company did not achieve positive economic profit during these years.

Overall, the data reveals a company improving its operating profit significantly while managing invested capital with stability. The rising cost of capital presents an increasing challenge, but the continuous reduction in negative economic profit suggests progress toward value creation, though full positive economic profit remains to be achieved.

The financial performance over the four-year period demonstrates a notably positive trend in profitability measures.

Net Income Attributable to KDP

The net income attributable to the company increased substantially, starting at 586 million US dollars in 2018 and rising to 2,146 million US dollars by the end of 2021. This represents a more than threefold increase over the period, with a particularly strong jump between 2020 and 2021, where net income grew by approximately 62%. The steady increases in the prior years reflect consistent growth in profitability.

Net Operating Profit After Taxes (NOPAT)

NOPAT also exhibited strong growth, increasing from 903 million US dollars in 2018 to 2,588 million US dollars in 2021. The year-over-year increases indicate robust operating profitability improvements, with the most significant rise observed in the last year, mirroring the trend seen in net income. The growth rate from 2020 to 2021 was approximately 45%, demonstrating enhanced operational efficiency and effective tax management contributing to increased net operating profits.

Overall, the data indicates significant and sustained financial improvement in key profitability metrics, with the largest gains occurring in the most recent year. This suggests successful management strategies and operational execution leading to stronger earnings and operational results over time.

The financial data reveals the trends in tax-related expenses over the four-year period ending December 31, 2021. There is an upward trajectory in both the provision for income taxes and cash operating taxes, though the growth rates and amounts vary between these two categories.

Provision for Income Taxes

This figure rose from 202 million US dollars in 2018 to 653 million US dollars in 2021. The largest year-over-year increase occurred between 2020 and 2021, with an increase of 225 million US dollars. The provision more than tripled over the four years, indicating a substantial increase in income tax expenses recognized during this period.

Cash Operating Taxes

Cash operating taxes demonstrated a consistent upward trend, increasing from 381 million US dollars in 2018 to 733 million US dollars in 2021. The increase across the period was approximately 92%, with the most significant jump occurring between 2018 and 2019 (224 million US dollars). The growth in cash taxes paid suggests rising tax obligations or improved tax payment alignments within the company.

Overall, the data reflects a significant increase in both accrued income tax provisions and actual cash tax payments over the examined period. The increases may be indicative of growing profitability, changes in tax regulation, or alterations in financial strategies related to tax expenses. The sharper rise in the provision for income taxes in the final year suggests a possible anticipation of higher tax liability.

The financial data reveals a consistent trend in the company's capital structure over the analyzed period from 2018 to 2021. There is a clear decline in the total reported debt and leases, indicating a steady reduction in liabilities.

Total reported debt & leases

Starting at 16,236 million US dollars in 2018, this figure decreases each year, reaching 13,266 million US dollars by the end of 2021. This downward trend suggests a strategic effort to reduce financial leverage or improve the balance sheet strength.

Stockholders’ equity

Stockholders' equity shows a gradual increase across the same timeframe, moving from 22,533 million US dollars in 2018 to 24,972 million US dollars in 2021. This incremental rise indicates growth in the company’s net assets, which may reflect retained earnings accumulation or capital infusions.

Invested capital

Invested capital remains relatively stable, fluctuating slightly without a clear upward or downward trajectory. It begins at 44,635 million US dollars in 2018, decreases marginally to 43,835 million US dollars in 2020, and recovers slightly to 44,109 million US dollars in 2021. This stability may imply consistent investment levels despite changing debt and equity components.

Overall, the reduction in debt combined with the increase in equity suggests an improvement in the financial robustness and potentially a lower risk profile. The steadiness of invested capital implies that the company maintained its asset base, possibly reflecting controlled investment or capital expenditure activities balanced by depreciation or disposals.

Economic profit

The economic profit has shown a consistent improvement over the analyzed four-year period. Starting from a negative value of -2997 million USD in 2018, the loss narrowed to -2177 million USD in 2019 and remained almost stable in 2020 at -2173 million USD. Further progress was noted in 2021, with economic profit improving to -1581 million USD. This trend indicates a steady reduction in economic losses.

Invested capital

The invested capital remained relatively stable throughout the period. Beginning at 44,635 million USD in 2018, it slightly decreased to 44,138 million USD in 2019, followed by a further marginal decline to 43,835 million USD in 2020. In 2021, a slight increase was observed with invested capital rising to 44,109 million USD, suggesting steady investment levels without significant expansion or contraction.

Economic spread ratio

The economic spread ratio, which reflects the difference between return on invested capital and cost of capital, demonstrated gradual improvement yet remained negative. The ratio improved from -6.71% in 2018 to -4.93% in 2019 and -4.96% in 2020, showing slight fluctuations but an overall better position compared to the initial year. In 2021, further improvement was recorded with the ratio at -3.58%, indicating a narrowing gap between returns and costs but still not reaching positive territory.

Overall financial insights

The data reveals a company in a phase of gradual recovery from economic losses, as evidenced by the improving economic profit and economic spread ratio. Despite the losses, the firm sustained stable levels of invested capital, pointing to a consistent asset base. The shrinking negative economic spread suggests increasing operational efficiency or improved return generation on invested capital relative to costs. However, the persistence of negative values underscores ongoing challenges in achieving economic profitability.

Net Sales

Net sales exhibited a consistent upward trend from 2018 through 2021. Beginning at 7,442 million US dollars in 2018, net sales increased significantly to 11,120 million in 2019. This positive trajectory continued, reaching 11,618 million in 2020 and further rising to 12,683 million in 2021, indicating steady growth in revenue generation over the four-year period.

Economic Profit

Economic profit demonstrated improvement over the analyzed period, although it remained negative throughout. Starting from a low of -2,997 million US dollars in 2018, the economic loss decreased to -2,177 million in 2019 and remained relatively stable at -2,173 million in 2020. By 2021, the economic loss had further reduced to -1,581 million, suggesting enhanced operational performance or better cost management, but the company still did not achieve positive economic profit.

Economic Profit Margin

The economic profit margin followed a positive trend toward improvement, moving from -40.27% in 2018 to -19.57% in 2019 and slightly improving to -18.71% in 2020. By 2021, the margin reached -12.46%, reflecting increased efficiency or better profitability relative to sales, albeit still negative. This decreasing negative margin aligns with the reduction in economic profit losses and the rise in net sales, signaling progress in economic value creation.

Overall Insights

The juxtaposition of rising net sales with declining economic losses and improving economic profit margins suggests that the company has been enhancing its operational efficiency and managing costs more effectively over the years. Although economic profit remains below zero, the trend indicates substantial improvements toward achieving profitability and stronger economic returns relative to its sales base.