Allergan PLC (NYSE:AGN)

Over the analyzed periods from 2015 to 2019, the net operating profit after taxes (NOPAT) demonstrates significant fluctuations with an overall trend of negative values, indicating consistent losses. The magnitude of these losses peaks sharply in 2017, with a NOPAT of approximately -10.55 billion USD, followed by a marked reduction in losses in the subsequent years, although losses remain substantial in 2018 and 2019, both exceeding -5 billion USD.

The cost of capital exhibits a slight downward trend from 2015 to 2017, decreasing from 16.29% to 14.25%, before rising again to 16.49% by 2019. This suggests some variations in the company’s perceived risk or financing structure, peaking to its highest rate at the beginning and end of the observed period.

Invested capital shows a consistent and notable decline over the years, dropping from approximately 127.5 billion USD in 2015 to about 80.3 billion USD in 2019. This downward trend may indicate ongoing asset divestitures, impairments, or shifts in the company’s investment strategy preferring less capital-intensive operations or possibly shrinking scale of operations.

Economic profit remains negative throughout the entire period, underscoring that the company consistently fails to generate returns above its cost of capital. The largest negative economic profit is recorded in 2017, aligning with the highest negative NOPAT value, and although it improves slightly in 2018 and 2019, it still shows substantial value destruction, averaging nearly -19 billion USD by 2019.

Overall, the data reflect a company facing significant challenges in generating profitable returns relative to its invested capital. The persistent negative economic profit combined with high cost of capital and shrinking invested capital may indicate strategic restructuring or financial difficulties throughout these years.

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.

Economic Profit

The economic profit remains negative throughout the period, indicating continuous economic losses. It starts at approximately -24.28 billion US dollars in 2015, improves somewhat in 2016 to about -19.55 billion, then worsens again in 2017 to around -25.31 billion. After 2017, it shows a trend of gradual improvement but remains significantly negative, ending near -18.59 billion in 2019. This pattern suggests persistent challenges in generating value beyond the cost of capital.

Invested Capital

The invested capital exhibits a consistent downward trend over the five-year period. Beginning at approximately 127.5 billion US dollars in 2015, it declines steadily each year, reaching around 80.3 billion by the end of 2019. This reduction implies possible divestments, asset sales, or reduced capital expenditures, reflecting strategic adjustments or resource optimization efforts.

Economic Spread Ratio

The economic spread ratio, representing the difference between return on invested capital and cost of capital, is negative throughout, indicating that invested capital is not generating sufficient returns above its cost. The ratio improves slightly from -19.04% in 2015 to -17.57% in 2016, then deteriorates to its lowest point at -24.44% in 2017. Subsequent years show marginal improvements, reaching -23.16% in 2019, but remaining deeply negative overall. This persistent negative spread signals ongoing value destruction at the capital level.

Overall Trends and Insights

The data reveals a company struggling to achieve positive economic profit and returns on its invested capital. Although there is some improvement in economic profit and economic spread ratio after 2017, all key indicators remain negative by the end of 2019. The steady decline in invested capital suggests efforts to streamline operations or reduce asset base, possibly in response to financial underperformance. The magnitude and persistence of negative economic profit and spread highlight significant challenges in generating value for shareholders during the observed period.

Over the analyzed period, several financial metrics display distinct trends. The economic profit figures are consistently negative, indicating ongoing unprofitability from an economic value perspective. Despite some fluctuations, the economic profit remains at a substantial deficit throughout the years, with the lowest point observed in 2017. The economic profit improves somewhat after 2017, reflected by less negative values in 2018 and 2019, signaling a reduction in economic losses but still indicating overall economic inefficiency.

Adjusted net revenues show moderate variability, fluctuating with no clear consistent growth trajectory. Initial revenues decreased slightly from 2015 to 2016, followed by an increase in 2017. Revenues remain relatively stable thereafter, with a slight upward trend toward 2019. This pattern suggests some resilience and stabilization in revenue generation despite the broader economic profit challenges.

The economic profit margin, expressed as a percentage, parallels the trends in economic profit, remaining negative throughout the period. There is a notable improvement from the peak negativity in 2015 to less negative margins in 2018 and 2019. This indicates an incremental enhancement in the ratio of economic profit relative to revenues, though the margin remains substantially negative, implying persistent efficiency issues.

Economic profit

Persistently negative across all years, moving from -24.28 billion in 2015 to -18.59 billion in 2019, with a peak deficit in 2017.

Adjusted net revenues

Show moderate fluctuations: starting at 15.06 billion in 2015, dipping in 2016, peaking in 2017 at 15.96 billion, and roughly stabilizing near 16.08 billion by 2019.

Economic profit margin

Consistently negative, improving from -161.17% in 2015 to -115.62% in 2019, indicating reduced losses relative to revenue but remaining financially unfavorable.

In summary, while adjusted net revenues exhibit some stability and slight growth toward the end of the period, economic profit and related margins remain significantly negative, though they show improvement after 2017. The data suggests structural challenges in achieving economic profitability despite steady revenue streams.