Warner Bros. Discovery Inc. (NASDAQ:WBD)

The financial data for the reported and adjusted net income available to the company over the period from December 31, 2017, to December 31, 2021, reveals noteworthy trends.

Reported Net Income (Loss)

The reported net income exhibits a significant variation between 2017 and subsequent years. In 2017, the company experienced a substantial loss of 337 million USD. However, this situation reversed sharply in 2018 when the reported net income increased to a positive 594 million USD. The upward trend continued in 2019 with a further increase to 2,069 million USD, which represents the peak figure in the period analyzed. Following this peak, the reported net income declined in 2020 to 1,219 million USD and further decreased in 2021 to 1,006 million USD. Despite this decrease post-2019, the reported net income remained positive and considerably above the 2017 level.

Adjusted Net Income (Loss)

The adjusted net income closely mirrors the pattern observed in the reported net income across the five-year period. The adjusted net income also started with a loss of 322 million USD in 2017, followed by a positive shift to 594 million USD in 2018 and reaching the maximum of 2,069 million USD in 2019. Similar to the reported values, the adjusted net income decreased to 1,219 million USD in 2020 and declined further to 1,006 million USD in 2021. The near-identical values for both reported and adjusted net income imply minimal adjustment impact or reclassifications within this timeframe.

In summary, the company recovered strongly from the negative earnings in 2017, achieving peak profitability in 2019, followed by a moderate decline over the next two years. The consistency between reported and adjusted net income suggests that reported earnings provide a reliable indication of the company's income performance during these years.

The financial performance indicators show notable fluctuations over the five-year period examined. Starting with profitability, both reported and adjusted net profit margins exhibit an initial negative value in the earliest year, followed by a sharp improvement in the subsequent year and reaching a peak in the third year. Specifically, margins recover from a negative 4.9% in the initial year to over 18% in the third year, before declining to approximately 8% by the final year reported.

Return on equity (ROE) mirrors this pattern closely. The reported and adjusted ROE figures both demonstrate a significant turnaround from negative values at the beginning of the period to a peak exceeding 20% in the third year. Subsequently, ROE declines steadily but remains positive through to the last year, ending at just below 9%.

Regarding return on assets (ROA), the data reveal a less pronounced but consistent trend aligned with the other metrics. The initial negative ROA values improve to positive figures in the second year, peak in the third year at over 6%, and then experience a gradual decline through the remaining years, settling slightly below 3% in the latest period.

Overall trends

There is a marked recovery and growth phase in the central years of the period analyzed, followed by a gradual decline in profitability and returns thereafter.

Profitability margins

The net profit margins demonstrate resilience after initial losses, suggesting operational improvements or favorable conditions that peaked in the middle years before tapering.

Equity returns

ROE shows a strong correlation with profit margins, indicating effective management of shareholder equity during the peak years but weakening returns toward the end.

Asset efficiency

ROA reflects the company’s efficiency in utilizing assets to generate profit, exhibiting similar upward and downward trends, though at a lower magnitude compared to ROE.

In summary, the metrics indicate a period of recovery and strong financial performance followed by a phase of diminishing returns. This may warrant further investigation into external market factors, internal operational changes, or capital structure adjustments contributing to the observed fluctuations in profitability and return measures.

The financial data indicate notable fluctuations in net income and profit margins over the five-year period analyzed.

Net Income Trends

Reported net income transitioned from a significant loss of $337 million in 2017 to positive territory in 2018, reaching $594 million. The upward trajectory continued, peaking at $2,069 million in 2019. However, subsequent years show a decline, with net income decreasing to $1,219 million in 2020 and further to $1,006 million in 2021. Adjusted net income follows an identical pattern, confirming the consistency between reported and adjusted figures.

Profit Margin Trends

Reported net profit margin reflects a similar pattern to net income. It shifted from a negative margin of -4.9% in 2017 to a positive 5.63% in 2018 and increased significantly to 18.57% in 2019. This indicates improved profitability during this period. Nevertheless, profit margins subsequently decreased to 11.42% in 2020 and then to 8.25% in 2021, signaling a reduction in profitability. Adjusted net profit margin figures mirror this trend closely.

Insights

The data reveal a strong recovery and growth phase between 2017 and 2019, characterized by increasing profitability and net income. The peak in 2019 suggests optimal operational or market conditions during that year. However, the declining net income and profit margins in 2020 and 2021 may reflect challenges such as market disruptions, increased costs, or competitive pressures impacting financial performance. The consistency between reported and adjusted measures indicates limited impact from exceptional items or accounting adjustments on these trends.

Net Income Trends

The reported net income (loss) available shows a significant improvement from a loss of $337 million at the end of 2017 to a positive $594 million in 2018. This positive trajectory continues with a substantial increase to $2,069 million in 2019. However, after reaching this peak, net income decreases to $1,219 million in 2020 and further declines to $1,006 million in 2021. The adjusted net income figures mirror this trend closely, indicating consistent adjustments have little effect on the overall income pattern.

Return on Equity (ROE) Trends

Reported ROE reflects a similar pattern to the net income, starting with a negative return of -7.31% in 2017, then turning positive at 7.08% in 2018. The ROE peaked significantly at 20.92% in 2019, indicating strong profitability relative to equity at that time. Following this peak, the ROE decreased substantially to 11.65% in 2020 and further to 8.67% in 2021. Adjusted ROE aligns exactly with reported ROE across all periods, suggesting that adjustments do not alter the equity profitability perspective.

Overall Observations

The data shows a recovery and growth phase from 2017 through 2019 in terms of both net income and ROE, followed by a diminishing trend in profitability for 2020 and 2021. The parallel behavior of reported and adjusted figures suggests that the accounting adjustments applied do not materially impact the reported financial outcomes during these periods. The decline after 2019 may warrant further analysis to identify external or internal factors that contributed to reduced profitability and efficiency in equity use.

Net Income Trends

The reported net income available to the company showed significant improvement from a loss of $337 million in 2017 to a profit of $2,069 million in 2019. Following this peak, net income decreased to $1,219 million in 2020 and further declined to $1,006 million in 2021. The adjusted net income followed the same pattern, indicating a consistent adjustment methodology with no discrepancy from the reported figures.

Return on Assets (ROA) Trends

The reported ROA experienced similar trends as net income. It was negative at -1.49% in 2017, then improved to positive territory at 1.82% in 2018. ROA peaked in 2019 at 6.13%, which aligns with the highest net income recorded among the years. Subsequently, ROA decreased to 3.58% in 2020 and further declined to 2.92% in 2021. Adjusted ROA values mirror the reported ROA, confirming the adjustments have little to no impact on this profitability metric.

Overall Insights

The financial performance of the company improved markedly from 2017 through 2019, achieving strong profitability and asset utilization in 2019. However, performance diminished in the following two years, with both net income and ROA showing a downward trend. The consistency between reported and adjusted data suggests reliability in the reporting practices and adjustments applied.