ConocoPhillips (NYSE:COP)

The common-size income statement reveals several noteworthy trends between 2021 and 2025. Revenues and other income consistently represent over 100% of sales and other operating revenues, fluctuating between 104.33% and 105.50% over the period. While initially stable, operating income demonstrates a declining trend, and net income experiences a more pronounced decrease throughout the observed timeframe.

Revenue Composition

Equity in earnings of affiliates increased from 1.82% to 3.06% between 2021 and 2023, before decreasing to 2.26% in 2025. Gain on dispositions decreased significantly from 1.06% in 2021 to 0.09% in 2024, with a slight recovery to 1.24% in 2025. Interest income showed a substantial increase from 0.07% to 0.73% between 2021 and 2023, then decreased to 0.53% in 2025. A notable gain on investment in Cenovus Energy was recorded in 2021 (2.27%) and 2022 (0.32%), but was absent in subsequent years.

Cost of Goods Sold and Operating Expenses

Purchased commodities, as a percentage of sales, remained consistently negative, ranging from -36.55% to -43.28%. Production and operating expenses increased in magnitude from -8.93% in 2022 to -17.53% in 2025. Selling, general and administrative expenses also increased, moving from -0.79% to -1.51% over the same period. Depreciation, depletion, and amortization exhibited a similar upward trend, increasing from -9.56% to -19.51%. These increasing expense percentages contribute to the observed decline in operating income.

Profitability

Operating income decreased steadily from 29.84% in 2021 to 22.97% in 2025. Income before income taxes followed a similar pattern, declining from 27.74% to 21.47%. Net income experienced the most significant decrease, falling from 17.63% in 2021 to 13.55% in 2025. The income tax provision as a percentage of sales decreased from -10.11% to -7.92% over the period, but this decrease did not offset the decline in income before taxes.

Other Items

Interest and debt expense remained relatively stable, fluctuating between -1.03% and -1.45%. Accretion on discounted liabilities also remained consistent, with a slight increase from -0.32% to -0.64%. Impairments were minimal, with a negative impact in 2021 and 2023, and a small negative impact in 2024 and 2025.

In summary, while revenues remained relatively stable, increasing operating and production expenses, coupled with a decline in certain gains, contributed to a consistent decrease in operating income and net income over the five-year period. The composition of revenue sources also shifted, with a reduced reliance on gains from dispositions and a fluctuating contribution from equity earnings.