Micron Technology Inc. (NASDAQ:MU)

Net Operating Profit After Taxes (NOPAT)

The NOPAT demonstrates significant fluctuations throughout the periods. It starts at a high of 6,650 million USD in 2019, drops sharply to 2,891 million in 2020, then rebounds to 5,967 million in 2021, and further increases to a peak of 9,071 million in 2022. However, following this peak, there is a dramatic decline to a negative value of -5,885 million in 2023, before a modest recovery to 857 million in 2024. This pattern suggests considerable volatility in operating profitability, with a notable downturn in the most recent two years.

Cost of Capital

The cost of capital remains relatively stable over the six-year period, fluctuating slightly between 16.46% and 17.16%. This narrow range indicates a consistent cost structure related to capital expenses, without significant spikes or drops that could be attributed to external market conditions or changes in the company's financial risk profile.

Invested Capital

Invested capital follows an upward trend from 38,774 million USD in 2019 to 53,327 million in 2024, showing a steady increase in the resources allocated towards the business. This consistent rise suggests ongoing investment, expansion, or capital expenditures. Notably, growth slows down after 2022, as the values plateau between 53,467 million in 2023 and 53,327 million in 2024, indicating a possible stabilization of capital investment levels.

Economic Profit

Economic profit exhibits substantial volatility and mirrors the fluctuations seen in NOPAT, but with greater severity. From a slight positive 141 million USD in 2019, it plunges to a negative 4,151 million in 2020, then improves but remains negative at -1,987 million in 2021. A brief positive spike to 147 million in 2022 is followed by a deep descent into a significant loss of -14,686 million in 2023, and a reduction of the deficit to -8,220 million in 2024. These large negative values highlight that the company has not been generating returns above its cost of capital consistently, particularly in the last two recorded years, emphasizing challenges in value creation.

Net Income (Loss) Attributable to Micron

The net income attributable to the company displayed considerable volatility over the six-year period. Starting at $6,313 million in 2019, it declined sharply to $2,687 million in 2020. This was followed by a recovery in 2021, reaching $5,861 million, and a further increase to $8,687 million in 2022, marking the peak in the observed timeframe. However, this positive trend did not persist, as the net income turned negative in 2023 with a loss of $5,833 million. In 2024, the company managed to return to profitability with a net income of $778 million, albeit significantly lower than the previous highs.

Net Operating Profit After Taxes (NOPAT)

The NOPAT figures closely mirrored the trends observed in net income, indicating a strong correlation between operating profitability and net results. The value started at $6,650 million in 2019, dropped to $2,891 million in 2020, then increased in 2021 and 2022 to $5,967 million and $9,071 million, respectively. The peak in 2022 was followed by a significant decline in 2023 to a negative NOPAT of $5,885 million. In 2024, there was a slight recovery to a positive NOPAT of $857 million, yet this remains a fraction of the 2022 peak.

General Observations

The financial data reveal a pattern of cyclical fluctuations with a notable peak in 2022 across key profitability metrics. The sharp reversals to negative values in 2023 suggest the occurrence of adverse events or operational challenges during that year. Although partial recovery is evident in 2024, profitability has not returned to prior peak levels. These variations underscore the company's exposure to volatile operating conditions affecting its financial performance.

Income Tax Provision

The income tax provision exhibits a fluctuating pattern over the analyzed periods. Initially, it significantly decreased from 693 million US dollars in August 2019 to 280 million in September 2020. This was followed by a moderate increase to 394 million in September 2021 and a substantial rise to 888 million in September 2022. Subsequently, there was a notable decline to 177 million in August 2023, with a subsequent increase to 451 million by August 2024. This variability may suggest changes in profitability, tax rates, or adjustments related to deferred tax assets or liabilities.

Cash Operating Taxes

The cash operating taxes demonstrated a similar but not identical trend to the income tax provision. It decreased from 345 million US dollars in August 2019 to 189 million in September 2020. A pronounced increase followed, with cash operating taxes rising to 446 million in September 2021 and further to 618 million in September 2022. Thereafter, there was a steep decline to 172 million in August 2023, followed by an increase to 428 million in August 2024. The alignment of cash operating taxes with the income tax provision suggests consistency in tax-related cash outflows, although the variations indicate potential timing differences or changes in tax payments relative to the tax provision.

The financial data over the six-year period demonstrates several notable trends in the company’s capital structure and financing strategy.

Total reported debt & leases

The total reported debt and leases have generally increased from 6,415 million USD in 2019 to 14,078 million USD in 2024. This represents more than a doubling of debt levels over the period. A modest rise is observed annually until 2022, followed by a substantial jump between 2022 and 2023, indicating potential increased leverage or investment activities financed through debt.

Total Micron shareholders’ equity

Shareholders’ equity shows a steady upward trend from 35,881 million USD in 2019 to a peak of 49,907 million USD in 2022. However, a decline occurs in 2023 down to 44,120 million USD, after which equity slightly recovers to 45,131 million USD in 2024. This fluctuation suggests possible changes in retained earnings or other comprehensive income and potentially some equity adjustments during 2023.

Invested capital

Invested capital consistently increased from 38,774 million USD in 2019 to 53,327 million USD in 2024. The growth is relatively steady with a notable acceleration from 2020 to 2022, followed by a plateau and slight decrease in the last year. This trend signifies continued investment in fixed and working capital assets, maintaining a high level of capital employed in the business despite recent minor declines.

Overall, the data reveals a financial strategy focused on expanding capital investment and taking on more debt, especially after 2022, with equity levels reflecting some volatility. The rise in debt outpaces the growth of equity in the latest periods, indicating increased leverage. The relatively stable invested capital suggests sustained operational scale with potential recalibration in capital structure.

The financial data reveals several noteworthy trends in the company's economic performance over the six-year period under review.

Economic Profit

Economic profit exhibited significant fluctuations, starting from a positive value of 141 million US dollars in 2019. It then declined sharply into negative territory in 2020, reaching -4,151 million US dollars and improving slightly in 2021 but still remaining negative at -1,987 million US dollars. The profit briefly became positive in 2022 with a modest 147 million US dollars, only to plummet again in subsequent years, recording substantial losses of -14,686 million US dollars in 2023 and -8,220 million US dollars in 2024. This pattern indicates recurring challenges in generating value above the cost of capital.

Invested Capital

The invested capital shows a general upward trend throughout the period, increasing from 38,774 million US dollars in 2019 to a peak of 53,467 million US dollars in 2023, before slightly declining to 53,327 million US dollars in 2024. This steady increase suggests continued investments and accumulation of assets, although the minor decrease in the last year may indicate some divestment or asset revaluation.

Economic Spread Ratio

The economic spread ratio, representing the return relative to capital cost, fluctuated widely. Starting at a positive 0.36% in 2019, it deteriorated significantly to -9.82% in 2020 and improved marginally to -4.29% in 2021. The ratio again reached a slight positive in 2022 at 0.28%. However, it worsened drastically to -27.47% in 2023 and improved somewhat to -15.41% in 2024. These figures reinforce the challenges in generating adequate returns on invested capital, with particularly severe performance in recent years.

In summary, despite increasing invested capital over the period, economic profit and spread have been largely negative and volatile, indicating difficulties in achieving sustainable profitability and efficient capital utilization. The intermittent brief improvements were insufficient to offset the overall trend of declining value generation relative to capital investment.

Revenue

Revenue exhibited fluctuations over the observed periods. It declined from $23,406 million in 2019 to $21,435 million in 2020, followed by a substantial increase to $27,705 million in 2021 and a further rise to $30,758 million in 2022. However, there was a sharp decline to $15,540 million in 2023 before revenue rebounded to $25,111 million in 2024. Overall, revenue experienced significant volatility with a peak around 2022.

Economic Profit

The economic profit demonstrated considerable instability across the years. Starting at a positive $141 million in 2019, it plunged to a negative $4,151 million in 2020 and improved slightly to a negative $1,987 million in 2021. It returned to a modest positive $147 million in 2022, only to experience a dramatic fall to a negative $14,686 million in 2023. By 2024, economic profit improved somewhat but remained deeply negative at $8,220 million. This trend indicates significant challenges in generating value above cost, with extreme profitability volatility.

Economic Profit Margin

The economic profit margin closely mirrors the erratic nature of economic profit. The margin was marginally positive at 0.6% in 2019 but sharply decreased to -19.36% in 2020, improving to -7.17% in 2021 and then returning near zero at 0.48% in 2022. The margin deteriorated drastically to -94.51% in 2023 before improving to -32.73% in 2024. This pattern reflects severe efficiency and profitability issues during these years, with occasional periods of recovery.

Overall Assessment

The data reveals significant volatility in financial performance, with revenue peaking in 2022 but dropping sharply in 2023, followed by a partial recovery. Economic profit and its margin show persistent struggles to maintain profitability, with pronounced negative values in most years except for two instances of marginal gains. The extreme negative economic profit in 2023 corresponds with the largest negative economic profit margin and the lowest revenue point, suggesting that profitability pressures intensified that year. The subsequent improvement in 2024, though meaningful, did not return the company to positive economic profitability.