Becton, Dickinson & Co. (NYSE:BDX)

Net Operating Profit After Taxes (NOPAT)

The net operating profit after taxes (NOPAT) exhibits a fluctuating pattern over the six-year period. Initially, NOPAT increased significantly from 717 million US dollars in 2016 to 1300 million in 2017. However, it then experienced a sharp decline to 570 million in 2018. Following this, NOPAT recovered to 1105 million in 2019 but decreased again to 991 million in 2020. The most notable increase occurred in 2021, with NOPAT reaching 2155 million, the highest value recorded in the period analyzed.

Cost of Capital

The cost of capital remains relatively stable over the years, fluctuating within a narrow range from 9.23% to 9.86%. It decreased slightly from 9.61% in 2016 to 9.23% in 2017, followed by a gradual increase up to 9.86% in 2021. These changes indicate a fairly consistent cost of financing for the company throughout the period.

Invested Capital

Invested capital shows an upward trend initially, rising substantially from 22258 million US dollars in 2016 to a peak of 47282 million in 2018. After this peak, the amount slightly decreased to 45181 million in 2019 and then varied modestly around the 46000 million mark through 2021, where it recorded a value of 45278 million. This suggests significant capital investment during the early part of the period, followed by stabilization in recent years.

Economic Profit

Economic profit remains negative throughout the six-year period, indicating that the company did not generate returns above its cost of capital in these years. The negative values deepen from -1422 million in 2016 to a low point of -3931 million in 2018, reflecting considerable value destruction despite increasing invested capital. Although economic loss slightly improved thereafter, reaching -2308 million by 2021, it still denotes underperformance relative to capital costs.

Summary

The combined data reveals a company facing challenges in converting its invested capital into economic profit. Despite fluctuations and some recovery in net operating profit after taxes, economic profit remains deeply negative, suggesting inefficiency in generating returns above the cost of capital. The stable cost of capital and high levels of invested capital emphasize the importance of improving operational effectiveness to enhance shareholder value.

Net Income

The net income figures exhibit considerable fluctuation over the reported periods. Starting at 976 million US dollars in 2016, it increased moderately to 1100 million in 2017. However, 2018 saw a sharp decline to 311 million, representing a significant downturn. This was followed by a strong recovery in 2019, where net income rose to 1233 million. A decline occurred again in 2020, as net income dropped to 874 million. The latest figure in 2021 indicates a substantial increase to 2092 million, marking the highest value in the dataset and demonstrating a notable overall upward trend despite earlier volatility.

Net Operating Profit After Taxes (NOPAT)

NOPAT trends are somewhat aligned with net income, but they reflect less volatility. It started at 717 million US dollars in 2016 and sharply increased to 1300 million in 2017, marking a significant improvement. In 2018, NOPAT declined to 570 million, though this drop was less severe in relative terms compared to the net income decline in the same year. Subsequently, NOPAT recovered to 1105 million in 2019 and saw a slight decrease to 991 million in 2020. The year 2021 shows a dramatic increase to 2155 million, the highest point in the period, underscoring strong operational profitability improvements.

Summary Insights

Both net income and NOPAT demonstrate cyclical patterns characterized by steep declines followed by significant recoveries. The year 2018 stands out as an outlier with notably lower profitability, suggesting possible operational or market challenges during that period. The firm’s overall financial performance shows strong resilience and upward momentum by 2021, indicating effective management of costs and revenue growth leading to enhanced profitability. The 2021 figures exceeding previous highs imply robust financial health and operational efficiency.

The financial data reveals significant fluctuations in the income tax provision (benefit) over the observed periods. Initially, the income tax provision shows a negative value in 2017 (-124 million USD), indicating a benefit rather than an expense. This contrasts with the positive provisions in 2016 (97 million USD) and the substantial increase to 862 million USD in 2018. The value dips again in 2019 to a negative figure (-57 million USD), signaling another tax benefit, followed by a recovery to positive values in 2020 and 2021, reaching 111 million USD and 150 million USD, respectively. This volatility suggests variability in taxable income or tax planning strategies affecting provisions for income taxes.

Cash operating taxes also exhibit variability but with somewhat less drastic changes. The cash tax payment starts at 748 million USD in 2016, sharply decreases to 109 million USD in 2017, then peaks dramatically at 1,285 million USD in 2018. After this peak, there is a decline to 711 million USD in 2019, followed by further decreases and stabilization around 508 million USD in 2020, and a slight increase to 537 million USD in 2021. This pattern may reflect changes in operational profitability, timing differences in tax payments, or varying tax obligations year over year.

Income Tax Provision (Benefit)

Displayed considerable volatility with alternating positive and negative values, suggesting fluctuations in reported taxable income or tax expense recognition.

Peak observed in 2018, with a significant tax expense recorded.

Negative values in 2017 and 2019 suggest periods where tax benefits or credits were recognized.

The latter years (2020 and 2021) show moderate positive provisions, indicating a potential stabilization.

Cash Operating Taxes

Experienced sharp variations, with the highest cash tax paid in 2018 aligning with the peak in income tax provision.

Following the 2018 peak, the cash tax outlay declined and stabilized at a lower level by 2020 and 2021.

This may suggest shifts in operational profitability, timing issues in tax payments, or changes in tax liabilities over these years.

The financial data presented reveals notable trends in the company's capital structure and financing over the six-year period ending September 30, 2021.

Total Reported Debt & Leases

This item shows a significant increase from 2016 to 2018, rising from $11,801 million to a peak of $21,951 million in 2018. Subsequently, there is a consistent downward trend from 2018 through 2021, decreasing to $18,080 million. This decline may suggest efforts to reduce leverage or refinance obligations with lower levels of debt.

Shareholders’ Equity

Shareholders’ equity exhibits strong growth throughout the period. Starting at $7,633 million in 2016, it more than doubles by 2018 to $20,994 million, then continues increasing steadily to nearly $23,677 million by 2021. This upward trajectory indicates sustained profitability or capital infusions supporting the equity base.

Invested Capital

Invested capital reflects the combined financing through debt and equity and follows a similar pattern as debt, increasing from $22,258 million in 2016 to a peak of $47,282 million in 2018. Afterward, invested capital experiences a moderate decline, ending at $45,278 million in 2021. This suggests that while the total capital invested in the business grew substantially initially, it has somewhat plateaued or been optimized in recent years.

Overall, the data indicates an initial period of expansion or increased financing up to 2018, followed by a phase of debt reduction and stability in total invested capital. The continuous growth in shareholders’ equity through this period highlights strengthening financial resilience and potential value creation for shareholders.

Economic Profit

The economic profit demonstrated a consistent negative trend throughout the period, indicating ongoing challenges in generating returns above the cost of capital. Initially recorded at -1,422 million USD in 2016, the loss deepened to a peak negative value of -3,931 million USD by 2018. Although slight improvements were noted in subsequent years, with losses narrowing to -2,308 million USD in 2021, the company did not achieve positive economic profit in any year under review.

Invested Capital

Invested capital showed a marked increase from 22,258 million USD in 2016 to a peak of 47,282 million USD in 2018, more than doubling over two years. Following this peak, there was a moderate contraction and stabilization around 45,000 million USD from 2019 onwards, indicating a possible strategic adjustment or divestiture after rapid capital deployment.

Economic Spread Ratio

The economic spread ratio was consistently negative across all periods, reflecting the company’s returns fell short of its cost of capital. The ratio worsened from -6.39% in 2016 to a nadir of -8.31% in 2018, correlating with the peak negative economic profit and highest invested capital in the same year. A subsequent recovery trend is observed, with the spread ratio improving to -5.1% by 2021, suggesting enhanced operational efficiency or capital management, though still remaining below the break-even point.

The analyzed financial data reveals notable trends in the company's economic profit, revenues, and economic profit margin over the six-year period ending September 30, 2021.

Economic Profit

The economic profit consistently remained negative throughout the period, indicating the company did not generate value in excess of its cost of capital. Initially, the economic profit was -1,422 million USD in 2016, worsening to a low point of -3,931 million USD in 2018. After 2018, there was a gradual improvement, with economic profit losses decreasing to -2,308 million USD by 2021. This demonstrates some recovery post-2018 but still reflects a significant negative performance.

Revenues

Revenue trends display overall growth with some fluctuations. Starting at 12,483 million USD in 2016, revenues slightly declined to 12,093 million USD in 2017, then sharply increased to 15,983 million USD in 2018. This upward trend continued to 17,290 million USD in 2019. Despite a minor dip to 17,117 million USD in 2020, revenues rose substantially to 20,248 million USD in 2021, marking the highest revenue figure in the period. This suggests enhanced top-line performance, particularly in the latter years.

Economic Profit Margin

The economic profit margin was negative each year, mirroring the negative economic profit values. It started at -11.39% in 2016, worsened to a peak loss margin of -24.59% in 2018, and then improved steadily to -11.4% in 2021. This indicates that while the company was initially losing a significant portion of revenue after covering costs, the margin narrowed over time, paralleling improvements in economic profit and rising revenues.

In summary, the company experienced persistent economic losses though with improving trends from 2018 onwards. Revenue growth was significant in later years, supporting an improving economic profit margin despite the ongoing negative profitability. The financial performance indicates challenges in generating economic value above its cost of capital, but efforts to enhance operational efficiency or market performance may be yielding gradual benefits.