Common-Size Income Statement
Based on: 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31).
The financial data reveals several notable trends and shifts in the company's performance over the five-year period ending December 31, 2019.
- Gross Margin and Cost of Sales
- The gross margin showed a fluctuating trend, beginning at 22.43% in 2015, declining to 19.32% in 2017, and then significantly improving to 34.66% by 2019. This improvement was primarily driven by a substantial reduction in the cost of sales, which decreased from -77.57% of net sales in 2015 to -65.34% in 2019, indicating enhanced cost efficiency or changes in product mix.
- Operating Expenses
- Research and development expenses steadily increased as a percentage of net sales from -3.28% in 2015 to -4.44% in 2019, suggesting a growing focus on innovation or product development. Selling, general, and administrative expenses similarly rose, notably increasing from -6.09% to -12.38% in the same period, reflecting higher overhead or marketing investments. Amortization of intangibles escalated sharply from -0.86% in 2015 to -4.88% in 2019, indicating rising charges related to acquired intangible assets.
- Special Charges and Adjustments
- Several irregular charges emerged over time, including goodwill impairment charges recorded at -2.39% in 2017 and -5.46% in 2019, indicating asset write-downs. Integration and separation costs also appeared starting 2017, increasing to -6.24% in 2019, implying expenses related to restructuring or mergers. Asbestos-related charges occurred in 2016 but were not reported in other years. These special items likely impacted overall profitability.
- Operating Income
- Operating income as a percentage of net sales showed considerable volatility, declining from 11.36% in 2015 to 0.87% in 2017, before recovering to 6.29% in 2018 and ultimately turning slightly negative at -0.2% in 2019. This reflects the combined effect of fluctuating gross margins and rising operating expenses, alongside significant one-time charges.
- Other Income and Expenses
- Equity in earnings of nonconsolidated affiliates remained relatively stable but showed a slight downward trend from 1.38% in 2015 to 0.39% in 2019. Sundry income declined substantially from 9.56% to around 0.7% in the same period, indicating a reduction in other miscellaneous revenues. Interest expense increased notably in 2019 to -3.11%, suggesting higher borrowing costs or increased debt levels.
- Income Before and After Tax
- Income from continuing operations before taxes experienced a steep decline from 20.36% in 2015 to -2.2% in 2019. The provision for income taxes fluctuated, but overall showed a reduced tax burden in percentage terms. Consequently, net income from continuing operations dropped sharply from 15.96% in 2015 to -2.85% in 2019.
- Net Income and Earnings Attribution
- Net income exhibited a marked decrease from 15.96% in 2015 to a low of 2.55% in 2017, with a moderate rebound to 4.65% in 2018 and settling at 2.79% in 2019. Income from discontinued operations contributed positively in 2019 with 5.64%, although its impact was minimal or negative in earlier years. Net income attributable to the company’s shareholders declined significantly from 15.76% in 2015 to 2.31% in 2019, reflecting overall reduced profitability. Net income available for common stockholders followed a similar declination.