Common-Size Income Statement
Quarterly Data
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HP Inc., common-size consolidated income statement (quarterly data)
Based on: 10-Q (reporting date: 2019-07-31), 10-Q (reporting date: 2019-04-30), 10-Q (reporting date: 2019-01-31), 10-K (reporting date: 2018-10-31), 10-Q (reporting date: 2018-07-31), 10-Q (reporting date: 2018-04-30), 10-Q (reporting date: 2018-01-31), 10-K (reporting date: 2017-10-31), 10-Q (reporting date: 2017-07-31), 10-Q (reporting date: 2017-04-30), 10-Q (reporting date: 2017-01-31), 10-K (reporting date: 2016-10-31), 10-Q (reporting date: 2016-07-31), 10-Q (reporting date: 2016-04-30), 10-Q (reporting date: 2016-01-31), 10-K (reporting date: 2015-10-31), 10-Q (reporting date: 2015-07-31), 10-Q (reporting date: 2015-04-30), 10-Q (reporting date: 2015-01-31), 10-K (reporting date: 2014-10-31), 10-Q (reporting date: 2014-07-31), 10-Q (reporting date: 2014-04-30), 10-Q (reporting date: 2014-01-31), 10-K (reporting date: 2013-10-31), 10-Q (reporting date: 2013-07-31), 10-Q (reporting date: 2013-04-30), 10-Q (reporting date: 2013-01-31).
- Gross Profit Margin Trends
- The gross profit margin as a percentage of net revenue shows considerable variability over the periods analyzed. Initially, from early 2013 through early 2015, gross profit margin remains relatively stable, fluctuating mostly between approximately 22% and 24.7%. However, from early 2015 onward, a notable decline occurs, with margins dropping closer to the 17-19% range, signaling increased cost pressures or pricing challenges.
- Cost of Revenue
- Cost of revenue consistently represents the majority share of net revenue, generally exceeding 75%. From 2013 to mid-2015, cost of revenue hovers around 75% to 77%, but starting in 2015, there is a clear shift upward, often surpassing 80%, indicating rising direct expenses relative to revenue. The increase corresponds inversely to the gross profit decline observed during the same period.
- Operating Expenses
- Research and development expenses maintain a range mostly between 2% and 3.6% of net revenue throughout the timeline, with some modest fluctuations but no clear strong upward or downward trend. Selling, general and administrative (SG&A) expenses exhibit greater variability; initially ranging between approximately 11% and 12.5%, these costs decrease notably in 2015 and 2016, briefly dipping below 7%, before stabilizing around 8-9% in later periods. This suggests efforts to reduce overhead and improve operational efficiency, particularly visible in the 2015-2016 timeframe.
- Special Charges and Other Adjustments
- Restructuring and other charges display intermittent spikes, notably between 2013 and 2016, with certain quarters showing charges up to approximately 2.35% of net revenue. These spikes indicate periodic restructuring or related activities impacting costs. Acquisition-related charges, generally minimal, become somewhat more pronounced after 2015, but remain below 0.5%. Amortization of intangible assets declines significantly after 2015, dropping from near 1% to below 0.2%, reflecting possible changes in acquisition accounting or asset write-downs. Separation costs appear mostly in mid-2015 to early 2016, peaking at nearly 2%, indicative of organizational changes during that period. Impairments, specifically data center asset impairments, are noted only once around 2015, corresponding to a short-term nonrecurring expense.
- Earnings from Operations and Net Earnings
- Earnings from operations demonstrate a moderate level of volatility but generally stay within a 3.5% to 9.4% range. Notable peaks occur in mid-2016 with earnings hitting around 9.39%, followed by some declines and recoveries. A significant drop in earnings from operations is observed in certain quarters but tends to rebound subsequently. Net earnings follow a similar pattern with some quarters, such as early 2018, showing sharp spikes up to 13.35%, largely influenced by non-operating items. Overall, net earnings as a percentage of revenue remain positive and cyclical, reflecting fluctuations in operational efficiency and external factors.
- Interest and Other Financial Items
- Interest and other net expenses typically account for less than 1% of net revenue, but exhibit occasional significant negative spikes, particularly in 2018 and late 2019, reaching magnitudes above -5%. This suggests episodic financial costs or losses related to investments, currency, or debt servicing impacting profitability unevenly over time.
- Tax Provision
- Tax provisions generally range between -1.5% and -1%, with occasional positive values indicating tax benefits or adjustments in specific quarters, notably in 2015 and some quarters in 2018. These positive tax effects contribute to swings in net earnings beyond purely operational results.
- Overall Summary
- The financial data reveals a company experiencing fluctuating profitability margins and cost pressures, particularly visible in the widening gap between increasing cost of revenue and declining gross profit margins post-2015. Operating expense management seems to have moderated SG&A costs in mid-periods, while research and development expenses remain relatively stable. One-time charges such as restructuring, acquisition-related costs, and impairments introduce variability in specific quarters. Earnings from operations and net earnings are cyclical but generally maintain positive trends, although impacted by significant variations in interest and tax components. This pattern suggests ongoing efforts to balance cost structures and maintain profitability amidst market or internal challenges.