Raytheon Co. (NYSE:RTN)

The financial data over the five-year period reveals several notable trends in revenue composition, cost structure, profitability, and expense management.

Revenue Composition

Products consistently accounted for approximately 83.6% to 84.5% of net sales, showing a stable dominance in the sales mix. Services constituted the remaining 15.5% to 16.4%, reflecting little change in the balance between products and services over the period.

Cost Structure

The cost of sales for products hovered between 59.5% and 62.6% of net sales, exhibiting a mild downward trend in 2018 before a slight increase in 2019. The cost of sales related to services showed a consistent decline from 13.45% in 2015 to 12.57% in 2019, suggesting some efficiency improvements in service delivery costs.

Overall, combined cost of sales for products and services decreased from 75.6% to a low of 72.34% in 2018 before rising again to 73.39% in 2019, underpinning the fluctuations seen in product costs.

Gross Margin

Gross margin improved from 24.4% in 2015 to a peak of 27.66% in 2018, reflecting the reduction in cost of sales during that year. It then slightly declined to 26.61% in 2019 but remained above earlier years, indicating a generally favorable trend in profitability before operating costs.

Operating Expenses and Income

General and administrative expenses consistently declined as a percentage of net sales, from 11.44% in 2015 to 10.24% in 2019, signaling enhanced expense control or operational efficiencies.

Operating income showed a strong upward trend from 12.96% in 2015 to 16.77% in 2018, slightly settling at 16.36% in 2019, closely aligning with the movements in gross margin and overhead expense reductions.

Non-Operating and Retirement Expenses

Interest expense steadily decreased from 1.0% to 0.62% of net sales, indicating declining debt-related costs or improved financing structures. In contrast, interest income rose gradually, albeit remaining minimal in magnitude.

Retirement benefits non-service expense was reported only in 2018 and 2019, with a substantial negative impact of -4.55% in 2018 which reduced to -2.36% in 2019, affecting non-operating income sharply in 2018.

Other non-operating income (expense) showed minimal volatility but turned positive in 2019.

Collectively, non-operating income (expense) net turned markedly negative in 2018 at -5.14%, largely due to retirement expenses, but improved to -2.7% in 2019.

Income Before Taxes and Net Income

Income from continuing operations before taxes moderately declined from 11.99% in 2015 to 11.63% in 2018, recovering to 13.66% in 2019. The dip in 2018 corresponds with the noted spike in non-operating expenses.

Federal and foreign income taxes showed a variable pattern, with a sharp decrease in 2018 to -0.98% from prior years around -3.15% to -4.39%, followed by a partial increase to -2.26% in 2019, possibly influenced by changes in tax provisions or rates.

Income from continuing operations and net income followed similar trends, falling in 2017 then rising substantially in 2018 and 2019 to reach approximately 11.4% of net sales by the end of the period.

Net Income Attributable to the Company

The net income attributable to the company peaked at 11.46% of net sales in 2019 after a dip in 2017, driven mainly by operational gains and improved tax efficiency. This indicates an overall strengthening of profitability despite the intermittent increase in non-operating expenses.

In summary, the data reflects stable sales composition with modest improvements in cost management, especially in service-related cost reductions and administrative efficiency. Profitability improved notably in the latter years, driven by higher gross margins and operating income. Some volatility in non-operating expenses, particularly retirement benefits, affected pre-tax income trends but the company managed to enhance net income margins by 2019. Tax expense variability also played a role in shaping net earnings outcomes across the period.