Micron Technology Inc. (NASDAQ:MU)

Net Operating Profit After Taxes (NOPAT)

The NOPAT figures show significant volatility over the analyzed periods. Starting at 6,650 million USD in 2019, the value sharply declined to 2,891 million USD in 2020. This was followed by a recovery to 5,967 million USD in 2021 and a further increase to 9,071 million USD in 2022. However, in 2023 there was a pronounced decline resulting in a negative figure of -5,885 million USD, significantly reversing prior gains. The most recent data for 2024 indicate a partial recovery, with NOPAT increasing back to a positive 857 million USD, though still substantially below earlier peak levels.

Cost of Capital

The cost of capital remained relatively stable throughout the periods, fluctuating narrowly between 16.72% and 17.44%. There is no marked upward or downward trend, suggesting consistent financing costs or required rates of return during these years.

Invested Capital

Invested capital demonstrates a steady upward trend from 38,774 million USD in 2019 to a peak of 53,467 million USD in 2023. The value slightly decreased in 2024 to 53,327 million USD, indicating a relatively stable capital investment base in recent years after continuous growth.

Economic Profit

Economic profit shows considerable fluctuation and trends that mirror the volatility of operating performance and invested capital costs. Beginning with a modest positive value of 37 million USD in 2019, economic profit turned negative in 2020 (-4,264 million USD) and improved but remained negative in 2021 (-2,116 million USD). It briefly recovered to near breakeven in 2022 (3 million USD) before deteriorating sharply in 2023 (-14,826 million USD), indicating an economic loss exceeding the company’s cost of capital. The 2024 figure, while still negative at -8,365 million USD, suggests some mitigation of economic losses relative to the previous year.

Summary Insights

The financial performance over the examined periods highlights periods of strong operating profit growth followed by significant downturns. Despite an increase in invested capital, the company experienced substantial economic losses in the last two years, linked to the severe decline in NOPAT. The stable cost of capital indicates consistent external financial conditions, but the negative economic profit in recent years highlights challenges in generating returns above the capital cost. The partial recovery in 2024 suggests potential measures taken to improve profitability, although economic value creation remains impaired compared to earlier periods.

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.

Economic Profit

The economic profit exhibits significant volatility over the observed periods. Starting with a modest profit of 37 million USD in 2019, it sharply declined to a substantial loss of 4,264 million USD in 2020, followed by a reduction in losses to 2,116 million USD in 2021. There was a brief return to near breakeven with a slight profit of 3 million USD in 2022, but losses escalated again dramatically to 14,826 million USD in 2023 and slightly improved yet remained severely negative at 8,365 million USD in 2024.

Invested Capital

The invested capital shows a consistent upward trend over the six-year period. Beginning with 38,774 million USD in 2019, the capital invested increased year-on-year, reaching 42,291 million USD in 2020, 46,342 million USD in 2021, 52,741 million USD in 2022, and peaking at 53,467 million USD in 2023, with a slight decrease to 53,327 million USD in 2024. This steady growth indicates ongoing capital investment despite fluctuating profitability.

Economic Spread Ratio

The economic spread ratio, which measures returns relative to cost of capital, mirrors the pattern of economic profit with pronounced negative deviations. Starting near zero at 0.1% in 2019, it deteriorated sharply to -10.08% in 2020 and further to -4.57% in 2021. A marginal positive improvement occurred in 2022 with a ratio of 0.01%, yet the ratio plummeted again to -27.73% in 2023 and remained deeply negative at -15.69% in 2024. These figures suggest that the company struggled to generate returns above its capital costs for most of the period, with particularly poor performance in the later years.

Overall Insights

The data indicates a challenging financial environment characterized by significant negative economic profits and declining economic spread ratios in recent years, despite a consistent increase in invested capital. The ability to generate economic profit has weakened considerably, suggesting inefficiencies or adverse market conditions impacting return on investment. The brief periods of near zero economic profit and spread ratios are isolated instances amid predominantly negative performance, highlighting instability in value creation.

Revenue

Revenue exhibited significant fluctuations over the analyzed periods. Starting at $23,406 million in 2019, revenue decreased to $21,435 million in 2020, followed by a notable increase to $27,705 million in 2021 and further growth to $30,758 million in 2022. However, in 2023, revenue sharply declined to $15,540 million before rebounding to $25,111 million in 2024. This pattern indicates volatility with a pronounced dip in 2023 but overall upward momentum by the latest period.

Economic Profit

The economic profit showed a negative trend for most years, with only minor positive values in 2019 ($37 million) and 2022 ($3 million). The remaining years reflected substantial losses, especially in 2020 and from 2023 to 2024. The largest economic profit deficit occurred in 2023 with -$14,826 million, followed by a sizable loss of -$8,365 million in 2024 and -$4,264 million in 2020. The intermediate losses in 2021 stood at -$2,116 million. These results underscore persistent challenges in generating returns exceeding the cost of capital.

Economic Profit Margin

The economic profit margin mirrored the economic profit's trend, starting with a marginally positive 0.16% in 2019 and turning deeply negative thereafter. The margin steeply declined to -19.89% in 2020 and improved slightly to -7.64% in 2021. A near-break-even level was observed in 2022 at 0.01%. Nonetheless, a severe contraction occurred in 2023 with a margin of -95.4%, followed by a partial recovery to -33.31% in 2024. This illustrates a highly volatile capacity to convert revenue into economic profit, severely deteriorating in recent years but showing signs of some improvement.

Summary

The financial data reveals that despite revenue growth during several periods, economic profitability has been predominantly negative, pointing to structural or operational inefficiencies or high capital costs. The extreme volatility, especially in 2023's sharp downturn in both revenue and profitability, suggests unusual or one-time adverse events impacting performance. Although there was a notable recovery in 2024, economic profit and margin remain substantially negative, signaling ongoing challenges in achieving sustained economic value creation.