ConocoPhillips (NYSE:COP)

Net Operating Profit After Taxes (NOPAT)

The NOPAT showed a significant recovery from a negative value of -2991 million US dollars in 2020 to a positive 10273 million US dollars in 2021. This upward trend continued strongly in 2022, reaching a peak of 21159 million US dollars. However, in 2023 and 2024, NOPAT experienced a decline, falling to 12357 million and 9976 million US dollars respectively, indicating some challenges in maintaining the high profit levels achieved in 2022.

Cost of Capital

The cost of capital gradually increased from 13.91% in 2020 to 15.37% in 2022. After reaching this high point, it slightly decreased to 15.15% in 2023 and further to 14.73% in 2024. This suggests that the cost associated with financing the company's operations peaked in 2022 and began to ease slightly thereafter.

Invested Capital

Invested capital showed a consistent upward trajectory over the period. Starting at 50870 million US dollars in 2020, it increased substantially each year, reaching 76355 million in 2021. There was a slight decrease in 2022 to 75520 million, but growth resumed afterwards, hitting 81278 million in 2023 and sharply rising to 106371 million in 2024. This indicates ongoing investment in the company's assets and operations, with a notable acceleration in capital deployment in the last reported year.

Economic Profit

Economic profit was deeply negative at -10067 million US dollars in 2020 but improved significantly by 2021, narrowing the loss to -954 million. The company achieved a strong positive economic profit of 9555 million in 2022, reflecting value creation exceeding the cost of capital. However, this positive momentum was not sustained in subsequent years as economic profit dropped to 45 million in 2023 and reverted to a negative -5688 million in 2024. This pattern reveals fluctuations in the company's ability to generate returns above its cost of capital, with a notable peak in 2022 followed by a period of underperformance.

Overall Insights

The analysis of the data indicates a period of significant recovery and peak profitability around 2022, followed by a decline in financial performance in the subsequent years. The increase in cost of capital until 2022 may have impacted profitability margins, and while invested capital generally rose, this did not consistently translate into economic profit after 2022. The volatility in economic profit highlights challenges in maintaining value creation despite increasing investment and fluctuating costs. The downward trend in NOPAT and economic profit after 2022 suggests that the company faced operational or market pressures reducing its profitability and economic value generation in the most recent years.

Net Income (Loss) Attributable to ConocoPhillips

The net income attributable to the company demonstrated significant volatility over the analyzed period. In 2020, the figure was a substantial loss of 2,701 million US dollars, indicating a challenging financial year. However, a dramatic recovery occurred in 2021, with net income rising to 8,079 million US dollars, reflecting a strong turnaround.

The upward trend continued in 2022, with net income reaching a peak of 18,680 million US dollars, more than doubling the previous year's performance. Despite a notable decline in 2023 to 10,957 million US dollars, net income remained robust and significantly positive. In 2024, the figure further declined to 9,245 million US dollars, representing a tapering off of profitability but maintaining a solid profit level relative to earlier years.

Net Operating Profit After Taxes (NOPAT)

The net operating profit after taxes followed a pattern similar to net income, though with some differences in magnitude. The company recorded a negative NOPAT of 2,991 million US dollars in 2020, aligning with the overall loss experienced that year.

A sharp improvement occurred in 2021, with NOPAT rising to 10,273 million US dollars. This growth trend accelerated in 2022, reaching a peak at 21,159 million US dollars, which was the highest point in the observed period. Subsequently, NOPAT decreased to 12,357 million US dollars in 2023 and then to 9,976 million US dollars in 2024.

Despite these declines in the last two years, NOPAT remained significantly positive, indicating continued operational profitability post-tax, though at a lower level than the peak in 2022.

Overall Trend Summary

The financial results demonstrate a recovery from significant losses in 2020 to strong profitability in subsequent years. Both net income and NOPAT peaked in 2022, followed by decreases in the later years of 2023 and 2024, suggesting a potential moderation in earnings after a period of exceptional growth.

The alignment in trends between net income and NOPAT suggests consistent operational performance after tax impacts are considered. The decline after the peak year may indicate changing market conditions, operational challenges, or strategic shifts impacting profitability, but the company remains financially robust relative to 2020 lows.

Income Tax Provision (Benefit)

The income tax provision exhibited significant volatility over the five-year period. In 2020, the provision was a benefit amounting to -485 million USD, indicating a tax credit or refund. This trend reversed dramatically in 2021 with a substantial increase to 4633 million USD, followed by further escalation in 2022 reaching 9548 million USD. Thereafter, the provision declined notably in 2023 to 5331 million USD and continued to decrease in 2024 to 4427 million USD. This pattern suggests a shift from a net tax benefit to considerable tax expenses, peaking in 2022 before trending downward in subsequent years.

Cash Operating Taxes

Cash operating taxes demonstrated an overall upward trajectory from 2020 through 2022, increasing from 502 million USD in 2020 to 7594 million USD in 2022. However, after this peak, the amount decreased significantly to 4270 million USD in 2023 and saw a slight further reduction to 4150 million USD in 2024. This indicates that while the company’s cash tax payments rose sharply in the initial years, they moderated in the most recent periods.

Comparative Insights

Both the income tax provision and cash operating taxes followed similar trends with increases up to 2022 and subsequent declines. The notable spike in 2022 for both metrics may reflect higher taxable income or changes in tax rates or structures influencing the tax liabilities. The subsequent decline may indicate improved tax planning, tax rate reductions, or decreased taxable income in the latter years.

Total Reported Debt & Leases

The total reported debt and leases exhibit a fluctuating yet overall increasing trend from 2020 through 2024. The debt rose significantly from 16,154 million in 2020 to a peak of 20,601 million in 2021, followed by a decline to 17,188 million in 2022. Subsequently, the debt increased again, reaching 19,634 million in 2023 and further escalating to 25,348 million by the end of 2024. This pattern indicates periods of both deleveraging and increased borrowing or lease obligations, with a notable surge in the final reported year.

Common Stockholders’ Equity

Common stockholders’ equity demonstrates a consistent upward trajectory across all years presented. Starting at 29,849 million in 2020, equity grew substantially each year, reaching 45,406 million in 2021, 48,003 million in 2022, and 49,279 million in 2023. The growth accelerates notably in 2024 with equity rising to 64,796 million. This steady increase reflects a strengthening equity base, likely supported by retained earnings growth and possibly additional equity issuance or valuation gains.

Invested Capital

Invested capital shows an overall growth trend with slight volatility. Beginning at 50,870 million in 2020, it increased sharply to 76,355 million in 2021 but then edged down marginally to 75,520 million in 2022. Afterwards, invested capital resumed growth, climbing to 81,278 million in 2023 and making a more pronounced leap to 106,371 million in 2024. The upward movement in invested capital corresponds with the increases in both equity and debt, indicating expanding asset bases or capital expenditures that may be financed through both debt and equity.

The financial data over the periods from 2020 to 2024 reveal significant fluctuations in key performance indicators, highlighting volatility in economic profitability and investment efficiency.

Economic Profit

Economic profit showed a marked improvement from a substantial negative figure of -10,067 million US dollars in 2020 to near break-even in 2021 with -954 million US dollars. This positive momentum continued in 2022 with a strong economic profit of 9,555 million US dollars. However, the profit sharply declined again to a marginal 45 million US dollars in 2023, followed by a reversal back to a sizeable negative value of -5,688 million US dollars in 2024. This pattern indicates considerable instability in value creation during the period.

Invested Capital

Invested capital displayed a consistent upward trend throughout the observed years, increasing from 50,870 million US dollars in 2020 to 106,371 million US dollars in 2024. Notably, the most significant increase occurred between 2023 and 2024, where invested capital rose from 81,278 million to 106,371 million US dollars. This growth in capital base may reflect expansion or higher asset base requirements, potentially impacting profitability.

Economic Spread Ratio

The economic spread ratio, which measures the return over the cost of capital, mirrored the fluctuations in economic profit. It started with a deeply negative spread of -19.79% in 2020, improved dramatically to -1.25% in 2021, and further rose to a high positive of 12.65% in 2022. Following the peak, it plunged to near zero at 0.06% in 2023 before declining further to -5.35% in 2024. This indicates that the returns on invested capital were significantly variable and suggest periods of both value destruction and creation.

Overall, the financial data suggest a challenging operating environment with substantial volatility in economic profit and returns on invested capital. Despite steadily increasing invested capital, the company experienced wide swings in economic profitability and spread ratios, reflecting inconsistencies in efficiency or market conditions impacting the returns during this timeframe.

Economic Profit

The economic profit exhibits significant volatility over the analyzed period. Initially, there is a substantial negative value of -10,067 million USD at the end of 2020, indicating a large economic loss. This loss dramatically improves by the end of 2021, reducing to -954 million USD. For 2022, the figure shifts to a positive economic profit of 9,555 million USD, representing the peak within the observed years. However, this positive trend is not sustained, as the economic profit drops sharply to a marginal positive amount of 45 million USD in 2023, followed by a return to negative territory at -5,688 million USD in 2024. Overall, the economic profit demonstrates instability with a peak in 2022 followed by a notable decline.

Sales and Other Operating Revenues

Sales and operating revenues show a general upward trend from 2020 to 2022, increasing from 18,784 million USD to 78,494 million USD. This represents a substantial growth period, more than quadrupling sales within two years. However, starting in 2023, sales decrease noticeably to 56,141 million USD and continue to decline slightly to 54,745 million USD in 2024. Despite the decline post-2022, revenue levels remain significantly higher than at the start of the period, indicating strong growth followed by partial contraction or stabilization.

Economic Profit Margin

The economic profit margin follows a pattern consistent with economic profit, initially very negative at -53.59% in 2020 but improving substantially by 2021 to -2.08%. In 2022, the margin turns positive to 12.17%, reinforcing the year as a peak performance period. The margin then sharply decreases to near zero at 0.08% in 2023 and turns negative again at -10.39% in 2024. This pattern signals a period of strong profitability growth followed by a significant fall, highlighting margins' sensitivity to changing economic profitability.

Summary Insights

The data reveals a volatile financial performance characterized by a recovery phase culminating in 2022 when both economic profit and margin reach their highest point. This recovery aligns with rapid revenue growth up to 2022. However, the subsequent years show a notable downturn in profitability despite revenues remaining relatively high, suggesting increases in costs or other adverse factors impacting profitability. The return to negative economic profits and margins in 2024 signals challenges in sustaining the peak performance achieved two years earlier.