ConocoPhillips (NYSE:COP)

The financial performance over the analyzed periods shows notable fluctuations in key profitability and capital efficiency metrics.

Net Operating Profit After Taxes (NOPAT)

NOPAT experienced a significant turnaround from a negative value of -$2,991 million in 2020 to a strong positive peak of $21,159 million in 2022. However, following this peak, profitability declined in the subsequent years, falling to $12,357 million in 2023 and further to $9,976 million in 2024. Despite this decline, NOPAT remained positive from 2021 onward, indicating overall profitability after taxes during these years.

Cost of Capital

The cost of capital showed a gradual upward trend from 13.93% in 2020 to a high of 15.39% in 2022. This metric slightly decreased to 15.18% in 2023 and further to 14.75% in 2024, suggesting some easing in capital costs toward the end of the period but remaining elevated relative to 2020. This pattern reflects changes in the economic or market conditions impacting the company's weighted average cost of capital.

Invested Capital

Invested capital increased steadily over the years from $50,870 million in 2020 to $106,371 million in 2024. A substantial rise was observed particularly between 2023 and 2024, indicating increased asset base or reinvestment activities. The continuous growth in invested capital points to expansion or significant capital expenditures undertaken by the company.

Economic Profit

Economic profit exhibited considerable volatility across years. It started with a sizeable negative figure of -$10,079 million in 2020, improving dramatically to near breakeven at -$974 million in 2021, and then reaching a solid positive economic profit of $9,533 million in 2022. This was followed by a sharp drop to nearly zero ($23 million) in 2023 and a fall back into negative territory of -$5,717 million by 2024. These fluctuations imply that, despite periods of creating substantial value above the cost of capital, the company faced challenges in sustaining economic profit, especially in the latter part of the period.

Overall, the company showed strong operational improvements and value creation through 2022, which were partially reversed in the subsequent years. Growing invested capital alongside rising but fluctuating economic profits and cost of capital suggests an environment of expanding investment with mixed returns on these investments.

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 performance indicators over the five-year period exhibit notable fluctuations, reflecting changes in profitability and investment efficiency.

Economic Profit

Economic profit demonstrates considerable volatility throughout the reviewed years. In 2020, a significant loss of US$ -10,079 million was observed, which sharply improved to a near breakeven position in 2021 with a loss of US$ -974 million. The year 2022 marks a peak with a positive economic profit of US$ 9,533 million, indicating strong value creation. However, this was followed by a dramatic decline to a marginal positive amount of US$ 23 million in 2023 and subsequently a return to a substantial negative economic profit of US$ -5,717 million in 2024.

Invested Capital

Invested capital has generally increased over the entire period. Starting from US$ 50,870 million in 2020, the figure rose significantly to US$ 76,355 million in 2021. There was a slight decrease in 2022 to US$ 75,520 million, but growth resumed with US$ 81,278 million in 2023 and reached a high of US$ 106,371 million by 2024. This upward trend indicates ongoing capital investment and expansion in asset base.

Economic Spread Ratio

The economic spread ratio follows a pattern consistent with economic profit, showing marked variability. It was deeply negative at -19.81% in 2020, improved to -1.28% in 2021, and then reached a strong positive value of 12.62% in 2022. In the subsequent years, the ratio dropped sharply to 0.03% in 2023 and turned negative again at -5.37% in 2024. This suggests fluctuations in the returns generated over the cost of capital, with periods of efficiency followed by decline.

Overall, the financial indicators underscore a period characterized by significant shifts in value generation and capital efficiency. The peak performance in 2022 is a clear outlier compared to other years, suggesting either exceptional operational success or favorable economic conditions in that year. The subsequent decline by 2024 calls for careful management attention to the drivers of return and the increasing capital base's profitability.

Economic Profit

The economic profit experienced significant fluctuations over the analyzed periods. There was a substantial loss of -10,079 million US dollars at the end of 2020, which greatly narrowed to a loss of -974 million in 2021. In 2022, the company achieved a positive economic profit of 9,533 million, indicating a strong recovery and improvement in value creation. However, this positive momentum was not sustained, with economic profit dropping sharply to 23 million in 2023 and returning to a negative figure of -5,717 million in 2024.

Sales and Other Operating Revenues

Sales and operating revenues showed a notable upward trend initially, rising from 18,784 million US dollars in 2020 to a peak of 78,494 million in 2022. This increase suggests strong revenue growth during this period. However, revenue declined in the subsequent years, dropping to 56,141 million in 2023 and slightly decreasing further to 54,745 million in 2024. Despite the decline, revenues remained substantially higher than the 2020 figure.

Economic Profit Margin

The economic profit margin closely mirrored the pattern of economic profit. It started at a steep negative margin of -53.66% in 2020, improved substantially to nearly break even at -2.13% in 2021, and turned positive with 12.15% in 2022. This positive peak was short-lived, with the margin falling to a marginally positive 0.04% in 2023, before reverting to a negative margin of -10.44% in 2024. This indicates volatility in profitability relative to sales, with a temporary phase of economic value creation followed by renewed deterioration.

Overall Analysis

The data reflect a period of recovery and growth between 2020 and 2022, highlighted by increasing revenues and a turnaround in economic profit from negative to positive. The peak in 2022 suggests effective operational performance or favorable market conditions during that year. However, the subsequent decline in 2023 and 2024 in both economic profit and profit margin alongside lower revenues points to challenges affecting profitability and value generation. This could indicate rising costs, market pressures, or other operational inefficiencies that offset revenue gains. The trend underscores the importance of addressing the factors behind the recent downturn to restore economic profitability.