Warner Bros. Discovery Inc. (NASDAQ:WBD)

The financial data reveals several notable trends and shifts over the five-year period. Net operating profit after taxes (NOPAT) demonstrated significant fluctuation, beginning with a negative value in 2017, then rising substantially to a peak in 2019, followed by a declining trend in the subsequent years but remaining positive. This pattern indicates an initial operational loss, substantial improvement reaching maximum profitability in 2019, and a tapering off of profit thereafter.

The cost of capital exhibited variability during the period, starting at 8.41% in 2017, rising to above 10% in 2018, peaking at 11.82% in 2020, and declining again to 9.71% in 2021. This suggests changing risk perceptions or capital costs associated with the company, which may have impacted investment and profitability decisions.

Invested capital steadily increased until 2018, reaching over 31 billion US dollars, and then slightly decreased and stabilized around 30.7 billion through to 2021. This trend implies initial expansion or asset acquisition followed by a period of stable investment levels.

Economic profit remained negative throughout the entire period, indicating that the company did not generate returns exceeding its cost of capital in any year. The negative economic profit values fluctuated, reaching their least negative point in 2019, corresponding with the peak in NOPAT, then worsening again in the following years. This persistent negative economic profit suggests that the invested capital was not yielding sufficient returns to cover the cost of capital, highlighting an ongoing value destruction despite periods of positive operating profit.

Net Operating Profit After Taxes (NOPAT)

Negative in 2017, peaked in 2019, followed by a decline but stayed positive thereafter.

Cost of Capital (%)

Fluctuated, highest in 2020, indicating varying capital costs and investment risks over the period.

Invested Capital

Increased sharply through 2018, then stabilized and slightly decreased, suggesting initial expansion then consolidation.

Economic Profit

Consistently negative, indicating returns below cost of capital and ongoing value destruction despite operational profit growth.

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 exhibits several notable trends over the five-year period ending December 31, 2021. A key measure of financial performance, economic profit, remains negative throughout the timeline, indicating that the company has consistently experienced a shortfall in returns relative to its cost of capital. Although there was a significant improvement in economic profit in 2019, reducing the loss substantially from prior years, this gain was not sustained as the negative trend deepened again in 2020 and 2021.

Invested capital shows a general increase from 2017 to 2018, followed by a slight decline and relative stabilization through 2021. The substantial rise between 2017 and 2018 suggests increased capital deployment or acquisition activity during that period, after which the company maintained a relatively steady invested capital base.

The economic spread ratio, which measures the difference between return on invested capital and the cost of capital, mirrors the economic profit trend by remaining persistently negative. Although the magnitude of the negative spread decreased in 2019, indicating improved efficiency or profitability relative to capital costs, this improvement was temporary. Negative spreads re-emerged and deepened again in subsequent years, reinforcing the indication of underperformance in generating value above capital costs.

Economic Profit

Consistently negative over the five-year span, with a pronounced but temporary reduction in losses during 2019.

Invested Capital

Substantial growth from 2017 to 2018, followed by relative stability from 2019 through 2021.

Economic Spread Ratio

Remained negative throughout, with a notable but short-lived improvement in 2019, returning to negative levels thereafter.

In summary, the company has faced ongoing challenges in generating returns that exceed its cost of capital. While capital investment increased markedly at one point, this has not translated into sustained economic profit or a positive economic spread. The data suggests a need for strategic reassessment to improve capital efficiency and overall profitability moving forward.

Adjusted Revenues

The adjusted revenues demonstrated an overall upward trend across the reported periods. Starting at $6,952 million in 2017, there was a significant increase to $10,558 million in 2018, marking a sharp growth. Subsequent years showed moderate fluctuations with $11,372 million in 2019, a slight decrease to $10,723 million in 2020, followed by a recovery and further growth to $12,115 million in 2021. This indicates general revenue expansion with some volatility.

Economic Profit

The economic profit remained negative throughout the period, indicating ongoing challenges in generating profit beyond the cost of capital. The losses narrowed significantly from -$1,899 million in 2017 to -$522 million in 2019, suggesting improved operational efficiency or cost management during this time. However, this improvement was short-lived, as economic profit deteriorated again to -$1,838 million in 2020 and slightly worsened further to -$1,918 million in 2021, highlighting a return to substantial economic losses.

Economic Profit Margin

The economic profit margin trend mirrors the economic profit pattern, consistently negative and indicating persistent economic losses as a percentage of revenues. It improved from -27.32% in 2017 to a less negative figure of -4.59% in 2019, showcasing the period of relative improvement. Nevertheless, this margin weakened again to -17.14% in 2020 and modestly improved to -15.83% in 2021, underscoring continued difficulties in achieving profitability relative to revenue.

Summary Insights

The data reflects a company experiencing substantial revenue growth over the five-year span, more than doubling its adjusted revenues from 2017 to 2021. Despite this growth, economic profitability remained negative, with periodic improvements that were not sustained beyond 2019. The combination of increasing revenue with persistent negative economic profit suggests that costs, investments, or capital charges remain significant challenges. The volatile but generally negative economic profit margin reinforces the need for strategic measures to enhance profitability and capital efficiency.