ConocoPhillips (NYSE:COP)

Net Operating Profit After Taxes (NOPAT)

The net operating profit after taxes demonstrated a significant turnaround over the analyzed periods. Initially, there was a substantial loss of approximately -2,991 million US dollars in 2020. However, in the following year, a marked improvement was recorded, with NOPAT rising sharply to over 10,273 million US dollars. This upward trajectory continued into 2022, peaking at 21,159 million US dollars. Subsequently, the profitability declined in the next two years, falling to 12,357 million in 2023 and further to 9,976 million in 2024, yet remaining positive throughout.

Cost of Capital

The cost of capital displayed a moderate upward trend from 13.74% in 2020 to a high of 15.17% in 2022, followed by a slight decline in the subsequent years to 14.96% in 2023 and 14.55% in 2024. This suggests an increased risk or cost of financing during the earlier years, with a slight easing thereafter.

Invested Capital

The invested capital showed consistent growth over the time frame. Starting from approximately 50,870 million US dollars in 2020, it increased sharply to 76,355 million in 2021. The following period saw a minor decline to 75,520 million in 2022, but the upward trend resumed afterward, rising to 81,278 million in 2023 and reaching a high of 106,371 million in 2024. This indicates ongoing investment and expansion activities.

Economic Profit

Economic profit improved markedly from a notable negative value of -9,983 million US dollars in 2020 to approximately -816 million in 2021. In 2022, economic profit turned positive, reaching 9,700 million US dollars, evidencing value creation. However, this positive performance was not sustained, as the economic profit dropped significantly to 198 million in 2023 and then reversed to a considerable negative figure of -5,496 million in 2024. This shift points to challenges in maintaining profitability relative to invested capital and cost of capital in the later 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 analysis of the financial indicators over the five-year period reveals notable fluctuations in the company's economic performance and capital allocation efficiency.

Economic Profit

There is a significant variability in economic profit across the years. In 2020, the company recorded a substantial economic loss of -9,983 million US dollars, which sharply decreased in magnitude to -816 million in 2021. A remarkable turnaround occurred in 2022, with economic profit reaching a positive peak of 9,700 million US dollars. However, this improvement was not sustained, as economic profit declined to 198 million US dollars in 2023 and reversed into a negative figure again in 2024 at -5,496 million US dollars. This pattern indicates volatility and challenges in maintaining consistent profitability.

Invested Capital

The invested capital shows a generally upward trend over the five years. Starting at 50,870 million US dollars in 2020, it rose to 76,355 million in 2021, representing a significant increase. Although there was a slight decrease to 75,520 million in 2022, invested capital subsequently increased to 81,278 million in 2023 and further to 106,371 million in 2024. The consistent growth in invested capital suggests ongoing investments and expansion or asset acquisition strategies, despite fluctuations in economic profit.

Economic Spread Ratio

The economic spread ratio, which reflects the return over invested capital relative to cost, mirrors the pattern observed in economic profit. It starts at a negative -19.62% in 2020, substantially improves to -1.07% in 2021, and turns positive at 12.84% in 2022. However, the ratio decreases significantly afterward, dropping to 0.24% in 2023 and falling back to a negative -5.17% in 2024. This trajectory underscores the difficulty in sustaining returns above the cost of capital during the latter years.

Overall, the data portrays a period marked by high volatility in profitability and return metrics, with a peak performance in 2022 followed by a decline. Concurrently, the continued increase in invested capital indicates persistent investment efforts, possibly reflecting strategic initiatives or market conditions that have not consistently translated into positive economic profit.

Economic Profit

The economic profit demonstrates significant volatility over the five-year period. It started with a substantial negative value of -9,983 million US dollars in 2020, improving drastically in 2021 to -816 million US dollars. The year 2022 marked a strong positive turnaround with economic profit reaching 9,700 million US dollars, the highest point in the series. However, this was followed by a sharp decline back into negative territory in 2023, at -198 million US dollars, and further worsening in 2024 to -5,496 million US dollars. This pattern indicates fluctuating profitability with a notable peak in 2022 followed by a reversal.

Sales and Other Operating Revenues

Sales and operating revenues increased markedly from 18,784 million US dollars in 2020 to a peak of 78,494 million US dollars in 2022. This rapid growth signifies strong operational performance or market conditions during this period. Subsequently, revenues declined in 2023 to 56,141 million US dollars and further decreased to 54,745 million US dollars in 2024. Despite the decline, revenue levels in 2023 and 2024 remained significantly higher than in 2020, suggesting sustained elevated sales compared to the initial year.

Economic Profit Margin

The economic profit margin exhibited a volatile trend consistent with the economic profit values. Beginning at a steep negative margin of -53.14% in 2020, it improved substantially to nearly breakeven at -1.78% in 2021. The margin peaked positively at 12.36% in 2022, reflecting highly efficient operations or profitability in that year. In the subsequent years, the margin again declined sharply to 0.35% in 2023 and further to -10.04% in 2024. The fluctuation suggests instability in profit generation relative to revenue over the analyzed period.

Overall Insights

The data reflects a cyclical pattern in profitability with a clear peak in 2022, where both economic profit and profit margin reached their highest points. This peak corresponds with the highest sales and operating revenues recorded during the period. The subsequent decline in 2023 and 2024, despite still relatively high revenue levels, indicates potential challenges in cost management, market conditions, or other economic factors negatively impacting profitability. The trend highlights the importance of addressing the factors causing volatility to achieve more consistent profitability in the future.