Warner Bros. Discovery Inc. (NASDAQ:WBD)

Net Operating Profit After Taxes (NOPAT)

The NOPAT demonstrated a significant variation over the period. It started with a negative result in 2017 at -121 million USD, then sharply increased to a positive 1,195 million USD in 2018. This upward trend continued, reaching a peak of 2,393 million USD in 2019. Following this peak, NOPAT declined to 1,788 million USD in 2020 and further to 1,066 million USD in 2021, indicating a substantial reduction in operating profitability during the last two years.

Cost of Capital

The cost of capital fluctuated across the years without a consistent trend. It increased from 8.27% in 2017 to 9.93% in 2018, slightly decreased to 9.26% in 2019, then sharply rose to 11.61% in 2020, before declining again to 9.56% in 2021. These variations suggest shifting financing conditions or changes in the risk profile of investments.

Invested Capital

Invested capital rose significantly from 21,151 million USD in 2017 to 31,259 million USD in 2018, reflecting substantial capital deployment. It remained relatively stable afterward, with minor decreases and increases: 30,994 million USD in 2019, 30,674 million USD in 2020, and 30,724 million USD in 2021. This stability suggests consistent investment levels after 2018.

Economic Profit

Economic profit remained negative throughout the entire period. Starting at -1,870 million USD in 2017, it worsened slightly to -1,909 million USD in 2018. Despite the increase in NOPAT in 2019, the economic profit improved significantly to -475 million USD but then deteriorated again to -1,774 million USD in 2020 and returned to -1,870 million USD in 2021. These results show ongoing challenges in generating returns above the cost of capital, despite fluctuations in operating profitability.

Net Income (Loss) Available to Discovery, Inc.

The net income experienced significant fluctuations over the five-year period. In 2017, the company reported a net loss of 337 million USD. A substantial turnaround occurred in 2018, with net income improving sharply to 594 million USD. This positive trend continued through 2019, peaking at 2069 million USD, indicating a phase of strong profitability. However, subsequent years showed a decline, with net income falling to 1219 million USD in 2020 and further down to 1006 million USD in 2021. Despite this decline, net income remained positive and considerably higher than the 2017 loss, reflecting sustained profitability after the initial recovery.

Net Operating Profit After Taxes (NOPAT)

NOPAT mirrored a similar trajectory to net income but on a different scale. The value was negative in 2017 at -121 million USD, indicating operational challenges. A sharp recovery took place in 2018 as NOPAT increased substantially to 1195 million USD. This improvement continued in 2019, reaching a high point of 2393 million USD, which suggests enhanced operational efficiency and profitability. However, the subsequent years showed a downward trend with NOPAT decreasing to 1788 million USD in 2020 and 1066 million USD in 2021. This decline suggests that while operations remained profitable, perhaps operational cost pressures or other factors impacted the efficiency or scale of profit generation.

Overall Trends and Insights

Both net income and NOPAT demonstrate a recovery from losses in 2017 to strong profitability in 2019. This trend indicates successful strategic or operational changes during these years. However, the decline in the last two years suggests emerging challenges or market conditions affecting profitability. Despite this decline, the company maintained positive earnings, indicating resilience. The gap between NOPAT and net income also suggests consistent tax impacts and possibly financing costs that moderated net income compared to operating profits.

Provision for Income Taxes

The provision for income taxes fluctuated significantly over the analyzed period. Starting at 176 million US dollars in 2017, it increased sharply to 341 million in 2018. This was followed by a notable decline to 81 million in 2019. Subsequently, the provision rose again to 373 million in 2020 before decreasing to 236 million in 2021. These fluctuations indicate variability in the company’s taxable income or tax planning strategies over the years.

Cash Operating Taxes

Cash operating taxes demonstrated a generally increasing trend throughout the period. From 537 million US dollars in 2017, the amount increased steadily to 627 million in 2018 and further to 728 million in 2019. Although there was a slight decline to 698 million in 2020, the figure rebounded to reach a peak of 880 million in 2021. This overall upward trajectory may suggest growing taxable operations or changes in tax payment timing and cash flow management.

The financial data reveals several notable trends over the five-year period ending December 31, 2021. The total reported debt and leases exhibited fluctuation rather than a consistent trajectory. Starting at approximately $14.99 billion in 2017, the debt increased notably to about $17.78 billion in 2018. Subsequently, it declined over the next three years, reaching approximately $15.64 billion in 2021. This suggests a period of increased borrowing followed by a gradual reduction or restructuring of debt obligations.

Stockholders’ equity showed a consistent and robust upward trend throughout the period. Beginning at $4.61 billion in 2017, equity rose sharply to approximately $8.39 billion in 2018 and continued to increase steadily year-over-year, reaching about $11.60 billion by 2021. This steady growth in equity indicates an improvement in the company’s net asset position and indicates potentially positive retained earnings or capital injections over time.

Invested capital peaked in 2018 at approximately $31.26 billion, having increased significantly from $21.15 billion in 2017. Following 2018, invested capital remained relatively stable through 2021, hovering around $30.7 billion without substantial increase or decrease. This stabilization after an initial sharp rise could imply a plateau in new investments or acquisitions during the latter part of the period under review.

Total Reported Debt & Leases

Increased from 2017 to 2018, then gradually decreased each subsequent year, ending lower in 2021 than its peak.

Total Stockholders’ Equity

Displayed continuous and steady growth across the entire period, indicating strengthening financial foundations.

Invested Capital

Experienced a significant rise from 2017 to 2018, followed by a plateau, remaining relatively unchanged from 2018 through 2021.

The financial data reveals several trends concerning economic profit, invested capital, and the economic spread ratio over the five-year period from 2017 to 2021.

Economic Profit

The economic profit figures were consistently negative across all reported years, indicating that the company did not generate returns above its cost of capital during this period. Starting at -$1,870 million in 2017, the economic loss slightly increased to -$1,909 million in 2018, followed by a significant improvement in 2019 with a reduction to -$475 million. However, this improvement was not sustained, as economic profit declined again to -$1,774 million in 2020 and remained roughly at the same level of -$1,870 million in 2021. This pattern suggests a temporary gain in 2019 before returning to higher losses.

Invested Capital

Invested capital showed a consistent increase from $21,151 million in 2017 to $31,259 million in 2018, followed by a plateau around the $30 billion mark for the subsequent years, ending at $30,724 million in 2021. This indicates a substantial initial investment increase and a stable capital base thereafter, which may have implications for the company’s capital structure and investment strategy.

Economic Spread Ratio

The economic spread ratio, representing the spread between the return on invested capital and the cost of capital, remained negative throughout the period, reinforcing that the company was not creating value beyond its capital costs. The ratio improved from -8.84% in 2017 to -6.11% in 2018, improved substantially to -1.53% in 2019, coinciding with the improvement in economic profit. However, the ratio again worsened to -5.78% in 2020 and slightly declined to -6.09% in 2021, mirroring the deterioration observed in economic profits.

Overall, the data indicates a period of sustained negative economic profitability despite a stable and substantial invested capital base, with a notable but brief improvement in 2019. The consistent negative economic spread ratio highlights challenges in generating sufficient returns relative to the capital costs during these years.

The financial data reveals several notable trends over the five-year period ending December 31, 2021.

Adjusted Revenues

Adjusted revenues exhibit an overall upward trend during the period. Beginning at $6,952 million in 2017, revenues increased significantly to $10,558 million in 2018. This growth continued in 2019, reaching $11,372 million. Although revenues slightly declined to $10,723 million in 2020, likely impacted by external factors, the company rebounded in 2021 with adjusted revenues peaking at $12,115 million, the highest level observed in the timeframe.

Economic Profit

Economic profit remained consistently negative throughout the period, indicating that the company did not generate returns above its cost of capital. The company reported losses of -$1,870 million in 2017 and -$1,909 million in 2018, reflecting persistent underperformance. In 2019, the economic loss decreased markedly to -$475 million, suggesting an improvement in profitability or capital efficiency for that year. However, this positive trend reversed in 2020 and 2021, with losses once again around -$1,774 million and -$1,870 million respectively, indicating a return to higher economic deficits.

Economic Profit Margin

The economic profit margin followed a pattern similar to the economic profit itself. Starting at -26.91% in 2017, the margin improved to -18.08% in 2018 and further improved significantly in 2019 to -4.18%, suggesting enhanced profitability relative to revenues during that year. This improvement was not sustained, as margins deteriorated again to -16.54% in 2020 and slightly improved to -15.43% in 2021, confirming a reversion to less efficient capital use or profitability despite the increase in revenues in the latest year.

Overall, the data indicates that despite growth in adjusted revenues, the company struggled to achieve positive economic profit, with a notable exception in 2019 when economic losses sharply decreased. However, this improvement was temporary, as losses escalated again in the subsequent years. The economic profit margin trends corroborate this, showing transient improvement before reverting to negative levels indicative of structural challenges in generating value above capital costs.