Allergan PLC (NYSE:AGN)

The financial data reveals several key trends in the company's performance over the five-year period from 2015 to 2019.

Net Operating Profit After Taxes (NOPAT)

NOPAT demonstrates a pattern of significant losses each year. While losses decreased from approximately -3.5 billion in 2015 to around -2.0 billion in 2016, the figure worsened dramatically in 2017, reaching a loss exceeding 10.5 billion. Subsequently, NOPAT improved in 2018 and 2019, although it remained negative at approximately -5.7 billion and -5.4 billion, respectively. This indicates persistent operational challenges with occasional fluctuations in profitability.

Cost of Capital

The cost of capital decreased from 16.75% in 2015 to a low of 14.63% in 2017, then increased to 16.95% by 2019. The reduction in the mid-period suggests a more favorable investment environment or lower perceived risk during those years, followed by a reversal potentially reflecting increased risk or changes in market conditions by the end of the period.

Invested Capital

Invested capital consistently declined each year, dropping from approximately 127.5 billion in 2015 to roughly 80.3 billion in 2019. This downward trend may indicate asset sales, divestitures, or strategic reductions in investment commitments. It reflects a contraction in the company’s capital base over time.

Economic Profit

Economic profit remained negative throughout the period, ranging from roughly -25 billion in 2015 to near -19 billion in 2019. Despite some improvement in economic profit from 2017 onwards, the company consistently failed to generate returns above its cost of capital, indicating value destruction over these years.

Overall, the company faced significant operational losses and was unable to generate positive economic profit during the entire period. The consistent decline in invested capital and fluctuating cost of capital rates suggest efforts to manage capital more efficiently amid ongoing profitability challenges. However, the negative economic profit signals sustained issues in creating shareholder value.

Net Income (Loss) Attributable to Shareholders

The net income attributable to shareholders shows significant volatility over the observed period. Starting from approximately 3.9 billion US dollars at the end of 2015, it experienced a substantial increase to nearly 15 billion US dollars by the end of 2016. This peak was followed by a sharp reversal into negative territory, with losses amounting to approximately 4.1 billion US dollars in 2017. The negative trend continued in subsequent years, with losses deepening to around 5.1 billion and 5.3 billion US dollars in 2018 and 2019, respectively.

Net Operating Profit After Taxes (NOPAT)

The NOPAT metric also reflects a deteriorating operating performance over the period. It began in 2015 with a negative figure of about 3.5 billion US dollars, improved slightly in 2016 to approximately minus 2 billion US dollars, indicating a reduction in operating losses. However, in 2017, NOPAT deteriorated sharply, reaching a loss exceeding 10.5 billion US dollars. This was followed by some improvement yet continued negative results in 2018 and 2019, with losses of about 5.7 billion and 5.4 billion US dollars, respectively.

Overall Financial Trends

The company’s financial performance exhibits considerable instability over the five-year span. The marked peak in net income in 2016 appears anomalous given the general trend of losses in other years. Both net income and operating profitability suffer from large losses in recent years following the 2016 peak, suggesting potential challenges affecting operational efficiency and profitability after 2016.

The divergence between net income and NOPAT indicates that non-operating factors, such as one-time gains or losses, may have influenced net income, particularly in 2016. The sustained negative operating profit after taxes highlights fundamental operational difficulties that warrant further investigation.

The data reveals significant fluctuations in the provision (benefit) for income taxes over the five years analyzed. Initially, there is a substantial tax benefit recorded, with the provision showing negative values each year from 2015 through 2018, indicating the company recognized income tax benefits rather than expenses during this period. The magnitude of the benefit peaks in 2017 with an amount exceeding -6.6 million US dollars, suggesting an extraordinary tax gain or adjustment that year. However, in 2019, this trend reverses, and the provision shifts to a positive value of approximately 146 thousand US dollars, reflecting a tax expense rather than a benefit.

In contrast, the cash operating taxes exhibit a more variable and less consistent pattern. The cash taxes paid decreased from about 398 thousand US dollars in 2015 to roughly 295 thousand in 2016 but then surged to approximately 1.24 million in 2017. This rise contrasts with the significant tax benefit recorded in the provision for the same year. A striking observation is seen in 2018 when the cash operating taxes turn negative, indicating a tax refund or credit of nearly 399 thousand US dollars. Following this, the cash taxes return to a positive figure of approximately 897 thousand US dollars in 2019.

Overall, the provision for income taxes and cash operating taxes demonstrate divergent movements during several years, which may indicate timing differences, adjustments, or tax strategy effects on reported versus actual cash tax payments. The large tax benefits recorded in provisions in earlier years, especially 2017, suggest one-time tax events or re-measurements impacting the income statement, while the cash operating taxes reflect the actual tax payments made or refunded, exhibiting a more volatile profile with a notable negative value in 2018.

The financial data reveals several important trends over the five-year period ending December 31, 2019. The total reported debt and leases exhibit a consistent downward trajectory. Starting from approximately $42.89 billion in 2015, the debt decreases every year, reaching about $23.22 billion by the end of 2019. This represents a significant reduction in the company's leverage or obligations associated with debt and leases over the period.

Shareholders’ equity also demonstrates a declining pattern throughout these years. From $76.59 billion at the end of 2015, it slightly decreases to $76.19 billion in 2016 and continues this downward trend to $58.17 billion by 2019. This consistent reduction indicates possible challenges with retained earnings, equity issuance, or other comprehensive income affecting the equity base.

The invested capital, which encompasses the company's overall capital invested in operations, similarly shows a decreasing trend. Beginning at approximately $127.50 billion in 2015, invested capital reduces each year, culminating at about $80.27 billion in 2019. This decline suggests a potential shrinking scale of invested assets or capital employed, which could relate to asset divestitures, depreciation outpacing capital expenditure, or capital structure adjustments.

Total reported debt & leases

Substantial reduction by nearly 46% from 2015 to 2019, indicating active debt repayment or lease obligation reduction.

Shareholders’ equity

Gradual decline of roughly 24% over the period, possibly signaling diminished profitability, dividend distribution exceeding earnings, share repurchases, or adverse comprehensive income impacts.

Invested capital

Marked decrease of approximately 37%, reflecting either asset shrinkage, depreciation exceeding reinvestment, or strategic restructuring.

In summary, all three key financial measures present downward trends, with debt levels showing the most pronounced reduction, followed by invested capital and shareholders’ equity. The data implies an overall contraction in the scale of the business's financial operations and capitalization, alongside a strategic effort to reduce leverage.

The analysis of the financial data over the five-year period reveals several notable trends in economic profit, invested capital, and economic spread ratio.

Economic Profit

The economic profit values consistently indicate substantial negative figures throughout the period, beginning at approximately -24.86 billion USD in 2015 and showing some fluctuation thereafter. There was a slight improvement in 2016 to about -20.04 billion USD, but this was followed by a deterioration in 2017. Subsequent years saw a gradual improvement again, with economic profit reaching around -18.97 billion USD by 2019. Despite this improvement, the figures remain deeply negative, reflecting ongoing challenges in generating economic value above the cost of capital.

Invested Capital

Invested capital presents a clear downward trend, decreasing steadily from around 127.5 billion USD at the end of 2015 to approximately 80.3 billion USD by the end of 2019. This represents a notable reduction of roughly 37%, suggesting a significant capital divestment, asset sales, or operational downsizing over the period. The consistent decline implies a strategic shift or restructuring aimed at optimizing capital allocation.

Economic Spread Ratio

The economic spread ratio, which measures the spread between return on invested capital and cost of capital as a percentage, remains negative throughout the period. Values ranged from -19.5% in 2015 to as low as -24.82% in 2017, indicating that the company consistently earned returns significantly below its cost of capital. Although there was some variability, the ratio remained at deep negative levels by 2019 (-23.63%), reinforcing the observation that the company struggled to generate value-enhancing returns on its invested capital.

In summary, the data reflects a company facing persistent economic challenges, as evidenced by sustained negative economic profit and economic spread ratio figures. The concurrent substantial reduction in invested capital may be a strategic response to these issues, potentially aimed at improving operational efficiency or reallocating resources. However, the continued negative economic spread indicates that profitability issues relative to capital costs were not fully resolved during this timeframe.

The financial data reveals several notable trends over the five-year period ending December 31, 2019. The adjusted net revenues exhibit relative stability with modest fluctuations, increasing overall from approximately 15.06 billion US dollars in 2015 to about 16.08 billion US dollars in 2019. This indicates a generally steady revenue base without significant growth acceleration or decline.

In contrast, the economic profit, measured in thousands of US dollars, presents a consistent negative value throughout the period. Although the economic loss decreases over time—from approximately -24.86 billion in 2015 to around -18.97 billion in 2019—this persistent negative figure suggests that the company has struggled to generate economic profit across these years. The reduction in economic loss may indicate some improvement in cost management or profitability metrics, but the economic profit remains deeply negative.

The economic profit margin, expressed as a percentage, mirrors the pattern observed in economic profit. It remains negative across all periods, indicating that the economic losses are substantial relative to revenue. However, the margin improves from a highly negative -165.04% in 2015 to -117.95% by 2019. This trend points toward gradually decreasing inefficiencies or better utilization of revenue in terms of economic profitability, though the margin is far from positive territory.

Adjusted Net Revenues

Show a pattern of relative stability with slight growth over the five years, ranging narrowly between approximately 14.56 billion and 16.08 billion US dollars.

Economic Profit

Consistently negative, reflecting substantial economic losses that decrease from about -24.86 billion US dollars to approximately -18.97 billion US dollars, signaling some improvement yet remaining deeply negative.

Economic Profit Margin

Strongly negative throughout the timeframe, improving from -165.04% in 2015 to -117.95% in 2019, suggesting a reduction in losses relative to net revenues but continued significant economic inefficiency.

Overall, the data indicates that while the company has maintained relatively steady revenue levels, it has been unable to convert these revenues into positive economic profit. The gradual improvement in economic profit and profit margin suggests progress toward better economic performance, though substantial challenges persist in achieving profitability from an economic perspective.