Thursday, February 6, 2025

The New York Times ($NYT) filed its latest corporate earnings report on Wednesday, giving the Calcbench research time another chance to engage in one of our favorite pastimes: analysis of segment disclosures!

Specifically, the NYT reports two revenue streams, subscription and advertising, for two separate customer categories: online and print customers. That lets us ask some interesting questions:


  • How much is online revenue growing as a portion of total revenue? 

  • Is online revenue growing fast enough to replace declining print revenue? 

  • Is online revenue growing fast enough to keep revenue growing overall? 


Using our Export Data Tables feature, we were able to answer those questions within a few minutes. We tracked subscription and advertising revenue for print customers, the same for online customers, added everything up — and that let us see how print and online revenue compared as portions of the total revenue mix.


Figure 1, below, shows that online revenue is surging along quite nicely.



We should note that print and online revenue added together don’t equal total revenue precisely, because the Times does have several smaller lines of revenue not included here. Nonetheless, the Times is now clearly a digital publication with a legacy business delivering print newspapers to people’s doorsteps. 


Calcbench can also dig up historical data for revenue segments like this, often going years back. It’s not always perfect because companies do sometimes change their reporting segments or add new segments, but many times you can still get great historical data.


For example, Figure 2, below, shows digital subscription revenue (but not digital advertising revenue) as a percentage of total revenue, going back to the start of 2020. 



Just another example of the insights you can get into corporate performance, if you dig into the right data!


Wednesday, February 5, 2025

Most financial analysts think of inventory as a current asset, and in most cases you’d be correct — except for those cases where you’re not. 

Turns out, more than a few companies disclose inventory as a non-current asset. The tricky part is that in many of those cases, the non-current inventory is added to “other assets.” You, the financial analyst on the outside, need to dig into the footnotes if you want to find that information. 


Typically that would be a painstaking exercise — but fear not! XBRL is coming to the rescue with a dedicated XBRL tag, InventoryNoncurrent. That allows you to use Calcbench to find the item simply and quickly.


So what is non-current inventory, anyway?


One example of non-current inventory comes from Pfizer (PFE). The pharma giant reported $4.57 billion in non-current inventory at the end of 2023, compared to $10.19 billion of current inventory. The information was included in the Other Financial Information note, and included the following table:


The small print shows that this amount was included in Other noncurrent assets. 


Another example is another pharma giant, Gilead Sciences (GILD). It reported $1.58 billion in non-current inventory at the end of 2023, compared to $1.79 billion of current inventory. This information was also included in the Other Financial Information note, and included the following table:


Again, you need to squint; but the table shows total inventory of $3.37 billion distributed between current and non-current inventory. Especially interesting is the note on the bottom stating that the non-current inventory “consist primarily of raw material.” 

Merck & Co. (MRK), which reported $3.35 billion of non-current inventory in Other Assets, stated that these amounts “are comprised almost entirely of raw materials and work in process inventories.” No additional information was provided by Merck (or any other of the above companies) about the nature of these materials or inventories. 


Is non-current inventory exclusive to pharma?  


Not entirely. It’s a common line-item in the pharma industry, sure; but non-current inventory does sometimes streak across the balance sheets of other sectors, too. 


For example, Freeport-McMoRan (FCX) reported $1.34 billion in non-current inventory at the end of 2023 was reported on the balance sheet, tucked away in the non-current assets section and labeled as “Long-term mill and leach stockpiles.”


The better question to ask, then, is what sorts of businesses would have inventory that qualifies as non-current? U.S. Generally Accepted Accounting Principles defines inventory as “goods that a company holds for sale or use.” Non-current inventory would be goods that the company is holding for sale or use sometime in the long term — like, not within the current fiscal year. Raw materials, leaching stockpiles (whatever those are), and related goods would all fit the bill. Certain industries lend themselves to that more than others. 


Interested in learning more about inventory, non-current inventory, or other interesting data? Reach out to us at us@calcbench.com. Tell us what’s on your mind and how we can help.


Saturday, February 1, 2025

Strap in, everybody! Today Calcbench kicks off our quarterly earnings analysis extravaganza, with our first visit to the Calcbench Earnings Tracker for Q4 2024. 

As you may know, we track these earnings using our Earnings Tracker template, which pulls in financial disclosures as companies file their latest earnings releases with the Securities and Exchange Commission. The Earnings Tracker provides an up-to-the minute snapshot of financial performance compared to the year-earlier period.


Today is our first look at fourth-quarter numbers. At close of business on Friday, Jan. 31, we had Q4 filings for roughly 360 non-financial firms. Revenue was up a bit from the year-ago quarter, net income was up more, capex even more than that. See Figure 1, below.



Interesting to see that the cost of revenue declined 3.94 percent, because we’re always looking for signs of inflation and that’s where said signs would appear. Then again, we only have a relative handful of firms reporting data so far; three weeks from now we’ll have data from well more than 1,000 firms and that could tell a much different picture. All we can say for now is, we’ll see. 


All that said, the filers in our Earnings Tracker so far are the biggest of the big: Altria, Albertsons, 3M, all the major airlines, all the major tech companies, Dow, ExxonMobil, Lockheed, Royal Caribbean, and all the biggest from every other industry. So even now, this first glimpse into Q4 earnings is useful.


Calcbench will continue to update our earnings tracker at the end of every week for the next few weeks, as quarterly reports flood into the database. 


If Calcbench subscribers wish to get their hands on the template we use for this analysis, so you can conduct your own experiments at home, use this link to the file


Please note that it will only work with an active Calcbench subscription. If you need an active subscription (and who doesn’t, really, when swift access to real-time data is so important?), contact us at info@calcbench.com.


General Motors filed its latest earnings release on Tuesday morning — and for all you students of non-GAAP adjustments to earnings, you have plenty to study here. 

The headline net income number from GM’s filing was a net loss of $2.96 billion for the fourth quarter, a huge swing from $2.1 billion in net income from the year-ago period. That said, GM then proceeded to add back $5.2 billion in adjustments, which led to non-GAAP adjusted net income of $2.51 billion for the quarter. 


What were those adjustments? Using the Export Data Tables feature that we’ve discussed previously, Calcbench pulled each one from GM’s earnings release and listed them all in table format. See Figure 1, below.



As you can see, the single largest adjustment was a $4.01 billion restructuring charge GM declared to extricate itself from joint-venture business in China. The company also declared a $500 million restructuring charge stemming from its decision (announced last month) to get out of the robotaxi business; and a $643 million charge related to previously announced buyouts of Buick dealerships.


It’s also interesting to note that the $5.2 billion worth of adjustments in Q4 accounted for the lion’s share of all non-GAAP adjustments GM made for the entire 2024 year. 


Adjusted earnings for the entire year were $14.94 billion, buoyed by $6.49 billion of adjustments. If you do the math, 80 percent of those adjustments happened in Q4. 


What we don’t yet know is the exact breakdown of that $2.96 billion loss reported in the top line of the earnings release. GM did report quarterly revenue of $47.7 billion, an 11 percent increase from the year-ago period; but details on cost of revenue and other operating expenses will need to wait until the company files its complete Form 10-K, which could be another few weeks.




Thursday, January 23, 2025

The airline industry has been filing Q4 and year-end 2024 earnings releases fast and furious this week, and that’s always a fun time here at Calcbench. Why? Because airline earnings releases are full of exotic disclosures (GAAP and non-GAAP alike), which gives us yet another excellent opportunity to dive into the data.

Perhaps the most important non-GAAP earnings disclosure from airlines is total revenue per available seat mile, known as TRASM — but we’ve written about TRASM plenty of times before, so today we’re looking at another metric: average fuel cost per gallon.


This is a non-GAAP disclosure that all major airlines report. We like it because fuel is one of the single largest expenses an airline has, and average cost per gallon gives you a normalized sense of that cost pressure over time. You can find it via the Disclosures & Footnotes page; just pull up the airline’s earnings release and search for “fuel” or “gallon” and you’ll find it momentarily.


Figure 1, below, charts average fuel costs per gallon for six major U.S. airlines from 2021 through 2024 (although please note that Southwest ($LUV) and JetBlue ($JBLU) haven’t yet filed their Q4 numbers). 




As you can see, all the airlines endured painful price hikes in 2022. Presumably that was driven by Russia’s invasion of Ukraine and overall inflation, both of which sent oil prices soaring that year. 


Average prices have since taken a bumpy downward path since then, but individual airlines often had average costs that vary considerably. For example, Alaska Air ($ALK) paid considerably more for fuel at the end of 2023, while Delta Air Lines ($DAL) has managed to keep its average fuel costs lower than all its rivals for pretty much all of the last three years. 


Airlines make other fuel-related disclosures, too. For example, they typically offer forward-looking guidance on estimated fuel costs, which you could then cross-check a few quarters later to see how well an airline you follow did or didn’t meet its expectations. They also report total fuel consumed and total money spent on fuel.


That said, remember that fuel consumed and total fuel cost can’t really give you an apples-to-apples comparison among airlines, since those numbers will vary wildly depending on an airline’s size, type of aircraft used, and routes flown. (Hence we like average fuel cost per gallon, which is more about an airline’s ability to plan for and hedge future costs.)


And of course, operating metrics about fuel look at an airline’s costs. Calcbench also tracks several metrics more related to an airline’s revenue, such as— 


  • TRASM, or total revenue per available seat mile

  • CASM, costs per available seat mile

  • Load factor, which is the percentage of seating capacity filled by customers

  • Percentage of revenue coming from passengers


Want to conduct your own easy analytical adventure in the airline industry? If you are a Professional-level Calcbench subscriber and have installed the Calcbench Excel Add-In, all you need to do is download our template from DropBox. The template will then automatically pull the latest quarterly data as the airlines file earnings reports. 


After that, the sky’s the limit!






Tuesday, January 21, 2025

Another day, another Q4 earnings release, another dollop of financial analysis to show what’s possible in the wide world of Calcbench!

This time we turned our eyes to Prologis ($PLD), which owns and operates logistics real estate around the world— think data centers, distribution hubs, and the like. Prologis reports as a real estate investment fund, a sector that has a unique set of metrics such as FFO (funds from operations), AFFO (adjusted funds from operations), occupancy rates, and more. 


Prologis filed its Q4 and full-year 2024 earnings release this morning. We started reading, and found this table of operating performance metrics on the first page:


 


Average occupancy of 95.6 percent certainly seems high at first glance, but how has that metric performed over time? Using the Export Data Tables feature from our Recent Filings page (a shortcut we explained on these blog pages last week) we pulled average occupancy rates for each of Prologis’ last 12 quarters. The result is Figure 1, below.



Hmmm. Overall occupancy rates are still quite high in absolute terms, but in historical terms that number is clearly trending downward. 


Calcbench can’t interpret any meaning from those results. We just have easy access to earnings release data, including historical data and all the good stuff tucked away in the footnotes. If you have a project you’re working up and need some help, drop us a line any time at us@calcbench.com



Friday, January 17, 2025

Today, the final working day of the Biden Administration, the Department of Health & Human Services announced that it had added 15 more drugs to its Medicare Drug Price Negotiation Program, to see how much the federal government can pressure pharmaceutical companies into lowering their prices. 

Obvious question for financial analysts: which firms make these drugs, and how important are those products to the company’s total revenue? 


Don’t worry — Calcbench figured it out for you!


Pharmaceutical firms are required to report annual sales of their blockbuster drugs as individual operating segments of the whole business. So we just took the list of drugs newly added to the Medicare Negotiation program, identified who sells them, and then looked up each drug’s individual revenue. The result is Table 1, below.



As you can see, some of the drugs are major revenue sources for their respective manufacture. Xifaxan, used to treat diarrhea, accounted for 20 percent of Bausch Cos.’ ($BHC) total sales in 2023; that’s a lot of exposure. 


Even more precarious is the position of Novo Nordisk ($NVO), which has three weight loss drugs (Ozempic, Weygovy, and Reybelsus) on the list, and altogether they accounted for a whopping 36 percent of Novo’s revenue in 2023.


What will the numbers look like for 2024? Ask us in a few weeks as the pharma firms start filing their annual reports. We’ll stay on it. 


To be clear, nobody yet knows what price the incoming Trump Administration will negotiate with the pharma companies on our list, or whether the Trump Administration will even bother negotiating at all. President-elect Trump has railed about the high price of drugs before, but the pharmaceutical industry has challenged the legality of the Medicare Negotiation Program in court and it’s not clear that the Trump Administration will bother to defend it.


Politics isn’t our thing here so we’ll have those questions alone. Still, right now, the addition of new drugs to the negotions list poses a significant new risk to Big Pharma firms. Calcbench can help you quickly identify and assess the size of that risk, so you can respond accordingly.


Thursday, January 16, 2025

UnitedHealth Corp. ($UNH) filed its Q4 and full-year 2024 earnings release today. The release did not discuss the Dec. 4 murder of Brian Thompson, chief executive officer of the company’s single largest operating unit — so Calcbench extends our condolences to Thompson’s loved ones, and will otherwise follow the company’s lead and focus on its recent financial performance.

Figure 1, below, shows UnitedHealth’s total revenue for the last eight quarters. As one can see, revenue in 2024 was up appreciably from 2023. 



Figure 2 shows that quarterly revenue broken down by business unit. To little surprise, insurance premiums accounted for the solid majority of all company revenue. 



That’s how the money is coming in. Figure 3, below, shows how it’s going out: UnitedHealth operating expenses for the last eight quarters. Again to little surprise, most of UnitedHealth’s costs go toward paying medical claims. 



Lastly, we wanted to understand medical costs as a portion of revenue. Figure 4 shows that for the last eight quarters that number has stayed within a narrow band, accounting for roughly two-thirds of all revenue every quarter for the last two years. 



The Calcbench research team pulled together all these charts in less than 10 minutes, using the Export Data Tables feature we discussed in a post earlier this week. That feature is available to all Calcbench users, to dig up precise, comprehensive, segment-level data with just a few keystrokes.


Bank of America (BAC) reported their earnings for 2024 this morning and Calcbench has all the data you might want. Net Income increased by $637M in 2024 compared to 2023, an increase of 2.56%. Digging deeper, it is interesting to note that this increase in Net Income is in spite of a substantial increase in their net charge offs. Net charge offs increased from $3.799B in 2023 to $6.031B in 2024, an increase of $2.232B or 58.75%.


An even deeper dive into the numbers allows us to examine the areas in which BAC is experiencing these charge offs. The vast majority seem to stem from the consumer banking segment, specifically, credit cards. Net charge offs on credit cards increased from $2.561B in 2023 to $3.745B in 2024, an increase of $1.184B or 46.23%.


Some other areas also showed some significant increases. For example, Commercial Real Estate related charge offs increased by 252% (from $245M in 2023 to $864M in 2024), U.S. Commercial related charge offs increased by 213% (from $124M in 2023 to $388M in 2024).



Interested in seeing more? Here is the link to the data used for this post: http://sheet.calcbench.com/?publicID=e0f6b09823f06f5e896c978344d55a368a6d4eade4e8f6072bdca5bd8578c0f9.

Want even more information? Reach out to us@calcbench.com



Tuesday, January 14, 2025

As we all wait for Q4 and full-year 2024 earnings to arrive, Calcbench wanted to share yet another way that subscribers can quickly find, analyze, and export all that financial data companies report. We got you covered.

Start with our Recent Filings page, which tracks and indexes corporate filings typically within a few minutes of those filings arriving at the Securities and Exchange Commission. For many companies (and almost all large ones), you’ll see an option on the far right side of your screen that says Export Data Tables. See Figure 1, below.



If you click on that Export Data Tables option, Calcbench will then open a new tab displaying all the table data from the company you’ve chosen in spreadsheet format. We randomly selected Calumet ($CLMT), a solvents manufacturer that filed preliminary earnings results on Jan. 14, to see what would come up. The result is Figure 2, below.



OK, a quick table to reconcile Calumet’s estimated net loss for Q4 to the company’s Adjusted EBITDA. Calumet reported a potential range for Q4 net loss, and we won’t know the precise number until it files a full earnings release and quarterly report in a few weeks — but you can already see some internal adjustment items and what they’re likely to be.


There’s more, too. Look at that row of buttons above the spreadsheet: the second one from the left says “Filings.” If you click on that button, you’ll get a new display that lets you see all the recent filings right there next to your spreadsheet. See Figure 3, below.



Now you can choose from any of the filers on that new pane on the right; when you hit “Export Data Tables” again, that information will automatically populate into the spreadsheet display on the left.


Even better, notice the text field above that list of recent filers. You can type in the name of any company, and get a display of all filings for that company. We typed in JPMorgan Chase ($JPM), and got the results shown in Figure 4, below.



Astute observers will notice the spreadsheet display is now different. That’s because once the list of JPMorgan filings appeared, we clicked on Export Data Tables for the Form 8-K earnings filing listed near the top. As soon as we did, Calcbench displayed all important financial metrics at the top and then listed 10 tables’ worth of data further down the spreadsheet. It’s all there, waiting to be exported to your own desktop in a tidy Excel spreadsheet. 


(Especially astute observers will even notice that the Calumet data is still there on the spreadsheet too, in a secondary tab pushed to the back.)


You can use these capabilities to hop from one filing to another, extracting footnote-level disclosures and piling them into nifty spreadsheet tables with just a few clicks; Calcbench does all the heavy extraction and processing for you. Everything is neatly labeled, lined up, and ready to go.


All you need is a Calcbench subscription, a keen sense of which companies you want to study, and strong fingers to start typing as soon as the earnings data starts to arrive. We’ll do the rest!


Monday, January 13, 2025

Welcome back to earnings season, everyone! Delta Air Lines ($DAL) has filed its Q4 and full-year 2024 earnings release — and with that filing, we are off to the races again! 

We always love Delta earnings reports because they’re a great example of the non-GAAP disclosures that companies make, and which Calcbench tracks. In the airline world, two critical non-GAAP disclosures are total revenue per available seat mile (TRASM) and cost per available seat mile (CASM). Just about every major airline reports those two items in their earnings releases, including Delta. 


Calcbench indexes both disclosures, so you can track them through time using our See Tag History feature. We did precisely that, and the result is Figure 1, below. 



As you can see, TRASM has generally stayed above CASM for the last three years, except for a brief period at the start of 2022 (when inflation was all the rage). 


The airlines publish lots of other nuggets too, such as fuel expense ($2.41 billion for the fourth quarter at Delta), average fuel price per gallon ($2.36, which is less than what Calcbench pays at the pump), aircraft rent expense, landing fees, and other items. Delta also breaks out revenue for passenger services, cargo service, and the always popular “Other” line of revenue.


We’ll be publishing more earnings snippets in days and weeks to come; and don’t forget our world-renowned Calcbench Earnings Tracker, which compiles earnings performance every quarter compared to the year-earlier period. We don’t have enough 2024 filings yet to launch the tracker for Q4, but it will be up and running soon!


Calcbench offers a huge amount of data to our subscribers, and sometimes that’s all a subscriber wants — reams and reams of historical data, that you can use to populate your own models and analytical tools. 

Today we wanted to give curious readers a quick look at how that works. The place to start is our Standardized Metrics page


This page lists all the specific pieces of financial data that Calcbench tracks: nearly 1,500 items, from universally known disclosures reported by everyone on the primary financial statements, to some truly obscure stuff disclosed by a relative few companies, only in the footnotes. 


When you first arrive at the Standardized Metrics page, you’ll see something like Figure 1, below.



From there you can expand the menu for each of those five categories of data, to see a brief description of each data item we track. See Figure 2, which shows some of the non-GAAP disclosures we track. 




From there you can select or de-select the specific data items you want to include in your models. 


An important point here is that when you identify certain data you want to collect, Calcbench provides all instances of that data for as far back as the company reported it. So for example, if you wanted to pull 120 points of data for a large accelerated filer, you’d receive every instance of all 120 individual data points — and for a large filer, that could go as far back as 2008, when companies first started publishing their financial disclosures in machine-readable format. You could easily have 10,000 pieces of information to populate your model.


How It Works


To be clear, this material is for Calcbench subscribers who subscribe to and use our API. With a bit of Python programming in a Jupyter notebook, you can build a routine that specifies exactly what data you want for some company you’re researching. Then execute that routine, and your model fills up with all the data Calcbench has.


For example, say you want to build a historical model of financial disclosures for Labcorp Holdings ($LH), an object would be returned that might look like Figure 3, below.



Zooming in on the very first items in the upper-left corner, you see:



We’re looking at what Labcorp disclosed for share-based expense (that is, equity compensation) for a few periods in 2021. But look closely: Labcorp made two separate disclosures for the period “2021-0,” which is the period of the whole year. First Labcorp reported an expense of $153.7 million on Feb. 25, 2022; and then it reported an expense of $132.9 million on Feb. 26, 2024. 


What’s that about? Labcorp revised its share-based expense disclosure between 2022 and 2024. You can even see that the second, revised disclosure is flagged as such, under the column that says “revision.”


Why is that useful? Because if your firm wants to model Labcorp’s financial performance through a certain period of time — say, from 2017 to 2023 — you’d need that number originally reported in 2022; the updated 2024 number wouldn’t have existed in the timeframe for your model.


You could also look at all that data from other angles. Our first example only looked at one item, share-based compensation expense, across multiple periods. Figure 4, below, shows multiple disclosure items for only one period.



Again, notice that you can track the data as originally filed and as subsequently revised, if that’s information you need to know.


That’s just one example of how Calcbench can help you build point-in-time models, with exquisite amounts of precision in the data you want to include. Look for more examples sometime in the future— and for anyone who wants to get started with API-level analysis but has questions, always feel free to contact us at us@calcbench.com


Monday, December 30, 2024

All the technology giants will be filing their 2024 annual reports by late January, and they’re all likely to report gobs and gobs of net income; but how many gobs of net income, exactly, compared to the rest of Corporate America? 

After all, one popular theory in financial analysis in recent years is that earnings from the tech giants have been pulling away from the rest of large corporations, devouring an ever-larger share of total net income. So using our Multi-Company database page, the crack Calcbench research pulled net income numbers for the S&P 500 for the last seven years, and then mapped out what share of total net income went to eight tech giants compared to all other firms. 


The eight firms we classified as tech giants are:


  • Amazon ($AMZN)

  • Apple ($AAPL)

  • Broadcom ($AVGO)

  • Facebook ($META)

  • Google ($GOOG)

  • Microsoft ($MSFT)

  • Netflix ($NFLX)

  • Nvidia ($NVDA)


The results are in Figure 1, below.



As you can see, the share of net income from the tech giants (in red) has essentially doubled: from 10.2 percent of all S&P 500 net income in 2017 to 20.9 percent of all net income in 2023.

Put another way, net income for the non-tech giants went from $894.1 billion in 2017 to $1.43 trillion in 2023, an increase of 59.8 percent. Net income for the eight tech giants, however, soared by 270 percent — from $101.9 billion to $377.7 billion in that same seven-year period.


Figure 2, below, puts more precise numbers on the trend and also shows the percentage of earnings going to the tech giants. 


Wow. It’s especially impressive to see the pandemic-scarred year of 2020, where the tech giants kept propelling net income upward even as all other S&P 500 companies saw net income fall sharply. On the other hand, in the inflation-scarred year of 2022, net income for all other companies only declined by 12.9 percent; for the tech giants, it fell 19.2 percent.

What will 2024 earnings look like? Ask us again in about four weeks, once most of the S&P 500 (and all of the tech giants) have filed their annual reports. For now, we can see that the tech giants are accounting for a larger share of total earnings — but the progression is not nearly as linear and constant as one might assume. 


Tuesday, December 24, 2024

Nothing says “Christmas present” to Calcbench like a complicated non-GAAP net income disclosure, replete with adjustments just begging to be analyzed — and sure enough, Broadcom ($AVGO) delivered the other day with its 2024 annual report!

We can start with a look at the earnings release, filed on Dec. 12. The semiconduct giant reported $51.57 billion in revenue, up 44 percent from the prior year; operating income of $13.46 billion, a decline of 17 percent; and net income of $5.89 billion, down 58 percent. 


Except, those are the boring old GAAP numbers. Read further down the earnings release and you arrive at adjusted, non-GAAP numbers, and they tell quite a different tale. See Figure 1, below. 



Broadcom booked so many adjustments, of such large size, that its GAAP net income of $5.89 billion transformed into non-GAAP net income of $23.73 billion — up 29 percent from $18.79 billion in non-GAAP net income for the prior year. 


One can see the line-item adjustments driving that non-GAAP change:


  • $9.27 billion for amortization costs

  • $5.67 billion for stock-based compensation

  • $1.79 billion for restructuring costs


OK, companies make those adjustments to arrive at non-GAAP net income all the time — but these are huge numbers. What, specifically, is driving them at Broadcom? 


To answer that question, we opened the Footnotes and Disclosure tool and searched for the word “amortization” in Broadcom’s 10-K report, which the company filed on Dec. 20. This resulted in matches all over the report, but one match caught our eye immediately: the Management Discussion & Analysis. 


We went there, and found our answer: Broadcom’s acquisition of VMWare! That deal, which closed in November 2023, was valued at $61 billion; and the financial reporting consequences are visible all over the income statement. Consider these excerpts from the MD&A:


Selling, general and administrative expense increased $3,367 million, or 211%, in fiscal year 2024, compared to the prior fiscal year. The increase was primarily due to higher compensation, including higher stock-based compensation, as a result of an increase in headcount from the VMware Merger… 


Restructuring and other charges recognized in operating expenses were $1,533 million and $244 million in fiscal years 2024 and 2023, respectively. The fiscal year 2024 charges primarily included employee termination costs from cost reduction activities related to the VMware Merger…


Amortization of acquisition-related intangible assets recognized in operating expenses increased $1,850 million, or 133%, in fiscal year 2024, compared to the prior fiscal year primarily due to higher amortization of customer-related intangible assets from the VMware Merger…


We could continue, but you get the picture. Broadcom swallowed a whale when it acquired VMWare, and that whale will take some time to digest.


Actually, that brings up another question. What might future amortization costs be? After all, Broadcom acquired a lot of intangible assets from VMWare, and those assets are amortized on a straight-line basis until they reach zero. So you can model out future amortization of intangibles, and Broadcom provides a table listing those costs! It’s right there in the Goodwill & Intangibles footnote disclosure. See Figure 2, below.



Broadcom even discloses how many years it will be amortizing the various intangible assets it has. We can’t say for sure that all of the amounts above relate directly to the VMWare deal, but clearly that deal accounts for a substantial portion of things. 


That’s all just one example of how you can study non-GAAP disclosures in Calcbench to understand where they come from and what they mean for the company’s overall operations. The data is all there; you just need the right tools to pull it out! Happy holidays!





Friday, December 13, 2024

You may have missed this while eating your kale salad, but on Dec. 12 Krispy Kreme ($DNUT) filed an 8-K announcing that the company has suffered some sort of material cybersecurity event.

What happened, exactly? We’re not sure, and it seems that Krispy Kreme isn’t either. The company only disclosed that on Nov. 29 it was “notified regarding unauthorized activity on a portion of its information technology systems… The company is experiencing certain operational disruptions, including with online ordering in parts of the United States. Daily fresh deliveries to our retail and restaurant partners are uninterrupted.”


OK, that’s not good. Krispy Kreme then continued, saying that the attack “has had and is reasonably likely to have a material impact on the company’s business operations until recovery efforts are completed. The expected costs related to the incident… are reasonably likely to have a material impact on the company’s results of operations and financial condition.”


That disclosure arises from a rule the Securities and Exchange Commission adopted in 2023 requiring companies to disclose material cybersecurity incidents. Companies need to disclose the nature and scope of the attack, along with any estimate of the attack’s impact on the company’s operations and financial condition. 


Typically those incidents are privacy breaches, which might result in painfully expensive litigation and regulatory costs — but more and more often, we’re also seeing incidents that are ransomware attacks disrupting actual operations. That seems to be the case for Krispy Kreme here. 


One interesting thought experiment is to look at Krispy Kreme’s recent financial reports, to get a sense of how much this attack might cost. 


For example, Krispy Kreme already says the attack will be material to operations. Well, in Krispy’s most recent quarterly report, it reported net income of $55.2 million. If we define material as 2 percent of that number, the attack is costing the company at least $1.1 million.


To be clear, that is speculation on our part. When Krispy says the attack will have a “material impact on the company’s results of operations, we don’t know whether the company is talking about revenue, operating income, or some other metric. But something material is going on.


Astute analysts might also be wondering: “If Krispy Kreme suffered a material attack, doesn’t that mean its IT controls were weak? Isn’t that the sort of thing a company is supposed to discuss in its Controls & Procedures disclosure?”


Yes it is, and you raise an excellent question. Using our Footnotes and Disclosure Query tool, we found that Krispy Kreme reported in its Q3 2024 report that internal controls over financial reporting were fine. Ditto for its more fulsome discussion of internal control in the 2023 10-K filing from earlier this year. We at Calcbench don’t have a good answer for what went wrong now; you might want to ask that question on Krispy’s next earnings call. 


As Krispy Kreme gets a grip on this incident and the damage becomes more clear, the company should disclose more precise details about the cost. We’ve found other filers, for example, that even reported “earnings adjusted for cybersecurity incident.” 


Thankfully, you can still get donuts at Krispy Kreme locations. Food for thought as you’re standing in line.



 Want to build a simple earnings model in seconds? We’ve got you covered.

To start, we’ll a look at new earnings releases for today (Thursday December 12).

(alternatively you can choose any company you want from the dropdown at https://www.calcbench.com/detail)

Any earnings release that has data in table form will have an “Export Data Tables” link all the way to the right. Click this to start.


What you will immediately get is an online spreadsheet. If you haven’t used our online spreadsheet tool before, you’ll have to log in with your Calcbench credentials.

All of the data tables from the earnings release will appear in the spreadsheet.



Now the fun begins. Click on the Build PR Model menu button on the top menu bar. Merge in previous period earnings releases to build a history. 

You can choose to remove any tables that don’t interest you, and do some formatting. Pretty soon you have a complete model in full as reported line item detail.  

  


At any time you can export to Excel, or save the environment to your Calcbench account for later use. Or even share a link with other people. For example...take a look at the spreadsheet created here.  

 


Monday, December 9, 2024

Everyone appreciates having more useful financial data to analyze — but exactly where do those financial disclosures come from? Who decides what those metrics are? 

Typically that work falls to the Financial Accounting Standards Board (FASB), and they have some fresh news on that front.


FASB is working on a new project to study financial key performance indicators. The group recently published a call for people in the financial analysis world (that would be you) to comment on what makes for good financial KPIs, and we encourage our readers to give FASB’s request a read and offer your opinion.


Oh, and the data that FASB used to do its preliminary research on KPIs came from Calcbench. #HumbleBrag


Why is FASB undertaking this project, and why should you care? Because more and more companies are disclosing financial KPIs in their earnings releases, but those KPIs —  EBITDA, adjusted EPS, free cash flow, or various others — are not part of U.S. Generally Accepted Accounting Principles, which means they aren’t subject to the same rigor and uniform structure as GAAP.


For example, when you look at a GAAP disclosure (revenue, inventory, liabilities, net income, and so forth), you can be confident that all filers calculate those disclosures in the same manner. That’s not the case for, say, adjusted EBITDA, adjusted EPS, or other financial KPIs; companies must calculate such KPIs consistently from one period to the next, but each company can perform those calculations in its own way. 


But back to that point about so many companies now disclosing financial KPIs. If so many companies are doing so, perhaps FASB should try to bring some order to that chaos? That’s the question this KPI project is trying to answer. See Figure 1, below, which shows the five financial KPIs most often cited by public filers.



Finding KPIs in Calcbench


You can find financial KPIs in Calcbench in several places.


First, if you’re researching a specific company using our Company-in-Detail page, you have an option to see the non-GAAP financial metrics that company might report. You’ll find that by looking for the “Show Guidance and non-GAAP Metrics” tab immediately above the data display. Figure 2, below, shows an example from Ingredion ($INGR). 



The red arrow points to the relevant tab you want to activate. It appears as “Hide Guidance and Non-GAAP” above because we’ve already pressed it; and when we did, those three KPIs — adjusted net income, adjusted EPS, and adjusted operating income — all appeared. 


For example, if you look further down the table, you’ll see GAAP operating income too, which is only $268 million compared to the non-GAAP adjusted operating income of $282 million. You’d see the same for net income and EPS too, but we clipped them from the image for the sake of brevity.


You can also use our Multi-Company page to research the financial KPIs of several companies at once. Figure 3, below, shows several of Ingredion’s peer companies and a few of the financial KPIs they disclose. Note that they all disclose adjusted revenue and EBITDA, but only some report non-GAAP operating income.




You can also search for non-GAAP financial metrics via our Disclosures and Footnotes Query page. For example, you could select a group of companies and then search their earnings releases for telling phrases, such as “adjusted net income.” We did that for S&P 500 companies that filed earnings releases in the last 30 days, and found two: Medtronic ($MDT) and Dollar Tree ($DLTR). 


Presumably we found only two because most S&P 500 companies had filed their latest earnings releases in October, along with their Q3 2024 results. Anyway, that quickly let us see what adjusted net income those two companies filed, along with other non-GAAP financial metrics also disclosed nearby.


Speak up!


Back to FASB’s call for comment. FASB lists numerous questions it has about financial KPIs, where the group would welcome comment from investors and companies alike. Such as:


  • If you use financial KPIs in your analysis, are the financial KPIs you use comparable across different entities?

  • If your company and your company’s peers present financial KPIs outside the financial statements, are the financial KPIs comparable?

  • Would you benefit from standardized GAAP definitions of commonly used financial KPIs? 

  • Should the FASB provide criteria for entities to use to determine when a defined financial KPI needs to be disclosed? 


And so on and so forth. We all want better, more rigorous financial data, and projects like these are what allows such data to happen. So if you care about financial reporting and have feelings on KPIs, do share them with FASB. And if we can help with your other non-GAAP financial analysis challenges, drop us a line at us@calcbench.com to tell us what’s on your mind!


Tuesday, December 3, 2024

That’s all, folks — we’re calling time on earnings reports for Q3 2024, and final results paint the same mottled picture for net income and capex spending that we’ve seen for the last six weeks. 

As readers of this blog know, we use the world-renowned Calcbench Earnings Tracker to collect financial disclosures as companies file their latest earnings releases with the Securities and Exchange Commission. With data from more than 3,900 non-financial firms now collected and crunched, we can offer a more complete picture of how Q3 2024 performance compares to the year-earlier period.

The headline performance numbers are in Figure 1, below.

As you can see, revenue is up 4.5 percent from the year-ago period, while net income is down 4.5 percent — but that decline is misleading. We previously noted that the decline in net income was driven by two specific one-time items at Intel ($INTC) and Johnson & Johnson ($JNJ) that were so huge they skewed net income for the entire sample; strike those two, and net income for everyone else was actually up 5.2 percent. 

The other big story from Q3 earnings is net capex spending. In total, net capex spend for all 3,900+ firms is up 16.7 percent from the year-ago period. That should be great news, because it means lots of companies are investing in capital equipment for long-term growth. Right? 

Not exactly. As we first noted several weeks ago, that jump in net capex spending comes from a small number of large firms ramping up their capex spending dramatically. Remove those few big spenders from the group, and net capex spending for all other companies actually declined in Q3. 

For example, net capex spending for all firms went from $287.6 billion one year ago to $335.6 billion this quarter, an increase of $48 billion. But the 10 firms that increased their net capex spending the most raised their spending levels by $48.9 billion — more than the total increase for the whole group. Which means that net capex spending for the 3,900 other firms had to decline.

Indeed, if you widen the lens a bit more, the 25 biggest spenders in our group increased capex spend by $64.1 billion, which is 133 percent of that $48 billion total. So the real story is that a small number of large firms (mostly in technology or energy) ramped up their capex spending dramatically.

Who were these big spenders? See Table 1, below.

An important point to note here is that these numbers are net capex spending. That is, it’s the total amount of money a company spends to purchase new fixed assets, minus whatever gains the company made from selling other fixed assets. When a company reports negative net capex spend, that means it is selling more fixed assets than it’s buying, and is essentially shrinking its total footprint of fixed assets. 

Well, why are companies doing that? With so many companies collectively reporting negative net capex spending, what does that tell us about changing macro-economic conditions? What assets are they selling, anyway? Are they selling because they need cash, or selling because of some strategic shift that allows them to dump assets they no longer need? 

We at Calcbench don’t know (presumably the answers will vary from one company to the next), but clearly these are questions worth keeping in mind as you run your own models and prepare for whatever earnings call is on your calendar. Calcbench gives you the information you need to ask better questions, and then find better answers. 

Calcbench will now put the Earnings Tracker on pause until mid-January, when we start to see Q4 2024 and full-year earnings arrive. 

If Calcbench subscribers wish to get their hands on the template we use for this analysis, so you can conduct your own experiments at home, use this link to the file

Please note that the above file will only work with an active Calcbench subscription. If you need an active subscription (and who doesn’t, really, when swift access to real-time data is so important?), contact us at us@calcbench.com.


Sunday, December 1, 2024

It’s not news that Nvidia ($NVDA), maker of advanced chips to power artificial intelligence, is one of the most impressive companies in all the world these days. Still, when you look at Nvidia’s performance in detail — which we did over Thanksgiving break, based on the company’s recently filed third-quarter report — the results really are breathtaking.

Figure 1, below, shows Nvidia’s revenue by geographic segment for the last few years. 



As you can see, from the start of 2022 into mid-2023, Nvidia’s largest single market was Taiwan; but even then, the company also had an impressively even spread of revenue among the United States, China, and the rest of the world too. 


That all changed at the start of this year, when the U.S. first became Nvidia’s primary geographic market — and then peeled away from all others, even as total revenue had also taken off like a rocket. In the space of nine months, the U.S. market had become hugely important for Nvidia’s success. 


Then we get to the really good stuff: Nvidia’s revenue by operating segment. See Figure 2, below. 



Holy silicon! We knew for a while that sales of chips for AI systems (seen in blue above) were leading the charge at Nvidia, but we didn’t appreciate just how much Nvidia has become an AI chip company. Its revenue from AI chips have zoomed into the stratosphere, while a few side businesses still bring in about $3 billion every quarter


To put things another way, those non-AI segments at Nvidia are on pace to bring in $12.9 billion in 2024. If Nvidia spun out those rump segments as a stand-alone business (and we can hear you all saying, “Hmmmm, that’s interesting….”), that NewCo would fall smack in the middle of the S&P 500. And it’s the business we’re all squinting to see, compared to the AI chip segment. 


Pulling together this analysis was easy. We simply opened our Footnotes & Disclosure Query page and looked up Nvidia’s operating segments disclosure. Then we hovered our cursor over the relevant tables for a moment until ‘Export tag history’ appeared, and exported. A few quick keystrokes later in Excel, and we had our charts ready for you.


Tuesday, November 26, 2024

Today we want to keep pulling on a financial analysis thread we first noticed in our post last week about Q3 2024 earnings: that trends in spending on capital equipment may not be as rosy as they seem.

Specifically, we noticed that while growth in “capex” spending among 3,200 firms seems positive — up 17 percent compared to the year-ago period — that increase was actually driven by only 10 firms spending gobs more money on capital expenditures. Among all the other firms we examined, Q3 2024 capex spending actually fell compared to Q3 2023 levels.


So how true is that pattern, really? Which firms are pouring money into capex spending, and to what extent is that spending among the few distorting the picture for the whole? 


To unpack those issues, we first pulled together a peer group of 1,800 non-financial firms with at least $100 million in revenue. Then, using our Bulk Data Query page, we looked at their quarterly capex spending from the start of 2021 through Q2 2024, broken into three groups:


  • The entire population of roughly 1,800 firms;

  • The entire population minus five tech giants: Amazon, Apple, Facebook, Google, and Microsoft;

  •  Those five tech giants alone.


The results are quite something. Quarterly capex spending for the whole group went from $248.4 billion at the start of 2021 to $299.8 billion by mid-2024, an increase of 20.7 percent. Among the five tech giants, however, capex spending went from $28.8 billion to $53.8 billion in that same period — an increase of 87 percent. 


The five big tech companies’ share of total capex spending also increased, from 11.6 percent of all capex spending at the start of 2021 to 17.9 percent by mid-2024. 


So Silicon Valley capex spending is booming. Presumably that’s to fund new data centers for cloud computing and AI, although remember that Amazon also has huge needs for warehouses, delivery vehicles, and other goods related to its e-commerce operations. Regardless, the big tech firms are pouring so much money into capex spending that they distort the capex picture for Corporate America as a whole. See Figure 1, below.


So yes, capex spending is increasing among a wide range of firms, which is good; but financial analysts need to pay attention to the details, since a small number of big spenders are distorting the true level of investment happening across most companies.

Individual Capex Changes


We also used our Multi-Company page to look at individual companies’ capex spending, comparing Q3 2023 and Q3 2024 levels. Figure 2, below, is the chart we ran in our previous post listing the 10 firms with the biggest increases in capex spending.


OK, we have a few of the big tech companies there, as suspected from the first half of this post. We were also intrigued to see oil companies in the mix, including Occidental Petroleum ($OXY), Devon Energy ($DVN), and Dominion Energy ($D). What are those guys doing?

To answer that, we cracked open the Disclosures & Footnotes Query page to see what we could find — and we found some good stuff!


For example, that $8.9 billion increase in capex spending at Occidental is largely due to the company acquiring Crownrock in August 2024 for $12.4 billion in cash, stock, and assumed debt. That deal added property, plant, and equipment assets worth $11.8 billion to Occidental’s balance sheet, and that’s where the jump in capex spending came from.


As an aside, in that same disclosure Occidental also said it expects oil to reach $97 per barrel over the next 15 years, and natural gas to go from $2.80 per 1,000 cubic feet to $5.10. There’s always good stuff in the footnotes if you look!


Our point is simply that sound financial analysis depends on a granular look at data; you can’t rely on a simple headline — “companies are spending more on capital equipment, so the economy is great” — to guide decisions specific to the companies you follow. You need to look at company-specific data, often tucked away in the footnotes. Calcbench has that data, and all the tools you need to bring it to the surface and find out what’s really going on.


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