Time Warner Cable Inc. (NYSE:TWC)

The financial data reveals several notable trends concerning profitability and capital efficiency over the five-year period under review.

Net Operating Profit After Taxes (NOPAT)

The NOPAT figures demonstrate a fluctuating pattern without a clear upward or downward trend. Starting at 3,328 million US dollars in 2011, it reached a peak of 3,807 million in 2012, declined to 3,388 million in 2013, rose again to 3,745 million in 2014, and then decreased to 3,391 million by the end of 2015. This volatility indicates some inconsistency in the company's operating profitability year over year.

Cost of Capital

The cost of capital increased overall during the timeframe, beginning at 8.76% in 2011 and ending at 10.93% in 2015. While there was a slight dip in 2012 to 8.38%, the general trend points to rising financing costs or increased risk perception by capital providers. The peak value was 10.93% in the final year, reflecting potentially higher hurdle rates or market conditions impacting the company’s capital expenses.

Invested Capital

The invested capital remained relatively stable, fluctuating modestly between approximately 44,327 and 46,124 million US dollars. The lowest point occurred in 2013 with 44,327 million, while the highest figure was 46,124 million in 2012. The narrow range suggests that the company maintained a consistent level of capital investment, with no significant expansion or divestment trends evident.

Economic Profit

The economic profit values were negative throughout the entire period, signifying that the company did not generate returns exceeding its cost of capital. The losses in economic profit deepened substantially over time, starting from -609 million US dollars in 2011, improving slightly to -57 million in 2012, then deteriorating significantly to -1,083 million in 2013. Subsequent years showed improvement relative to 2013 but remained deeply negative, with -715 million in 2014 and worsening further to -1,562 million in 2015. This trend highlights an increasing inability to create value over and above the cost of capital, particularly notable in the latter years.

In summary, although operating profit showed some recovery in certain years, increasing cost of capital and stable invested capital combined with persistent and growing negative economic profits indicate challenges in achieving value creation. The company’s returns did not keep pace with its capital cost, potentially signaling inefficiencies or competitive pressures affecting its financial performance.

Net income attributable to TWC shareholders

The net income showed an upward trend from 2011 to 2012, increasing from $1665 million to $2155 million. However, in 2013 a decline occurred to $1954 million, followed by a slight recovery in 2014 to $2031 million. The year 2015 saw another decrease to $1844 million, indicating a general volatility with a peak in 2012 and subsequent fluctuations.

Net operating profit after taxes (NOPAT)

NOPAT increased from $3328 million in 2011 to $3807 million in 2012, mirroring the peak found in net income for the same year. In 2013, NOPAT declined to $3388 million but rose again in 2014 to $3745 million, approaching the 2012 level. By 2015, NOPAT decreased to $3391 million, showing the same fluctuating pattern observed in net income, with 2012 and 2014 as relatively stronger years.

Overall financial performance trends

Both net income and NOPAT exhibited similar cyclical patterns over the five-year period. The highest values were observed in the early part of the timeframe (specifically 2012), followed by periods of decline and partial recovery. This suggests fluctuations in profitability and operating efficiency, potentially reflecting changes in operational effectiveness, market conditions, or other external factors influencing financial outcomes.

The financial data indicates fluctuations in the income tax provision and cash operating taxes of the company over the five-year period ending December 31, 2015.

Income Tax Provision

The income tax provision demonstrates an overall upward trend from 2011 through 2014, increasing from 795 million US dollars in 2011 to a peak of 1,217 million in 2014. However, in 2015, there is a slight decline to 1,144 million US dollars. This suggests rising taxable earnings or adjustments in tax liabilities during the initial years followed by a moderate reduction in the last year.

Cash Operating Taxes

Cash operating taxes present a more variable pattern. Beginning at 705 million US dollars in 2011, the amount rises sharply to 1,194 million in 2012 and continues to increase to 1,281 million in 2013. Subsequently, it decreases to 973 million in 2014 before partially rebounding to 1,057 million in 2015. This fluctuation may reflect changes in the company's actual cash outflows for taxes, potentially influenced by alterations in tax payment timing, tax credits, or tax planning strategies.

Overall, while the income tax provision generally increased over the period with a minor decline at the end, the cash operating taxes followed a less consistent path, showing considerable volatility. The divergence between the income tax provision and cash operating taxes in certain years may indicate differences between accounting for tax expenses and actual cash paid, affecting cash flow management and tax planning effectiveness.

Total reported debt & leases

The reported debt and leases demonstrate a consistent declining trend over the observed period. Starting at 27,138 million USD at the end of 2011, the debt slightly increased to 27,378 million USD in 2012, then steadily decreased each year thereafter, reaching 23,183 million USD by the end of 2015. This indicates a reduction in the company's leverage or obligations related to debt and lease commitments over five years.

Total shareholders’ equity

Shareholders’ equity shows some fluctuations but a general upward trend across the period. Initially, the equity value decreased from 7,530 million USD in 2011 to 6,943 million USD in 2013. Afterward, the equity figures improved significantly, increasing to 8,013 million USD in 2014 and further to 8,995 million USD by the end of 2015. This growth suggests strengthening of the company's net asset position or profitability retention over time.

Invested capital

Invested capital remained relatively stable throughout the period, with minor fluctuations. It started at 44,961 million USD in 2011, peaked at 46,124 million USD in 2012, then decreased to 44,327 million USD in 2013. It showed slight increases in subsequent years, ending at 45,332 million USD in 2015. This stability reflects consistency in the company's overall capital base employed in operations.

Economic Profit

The economic profit exhibited significant fluctuations over the five-year period, with notable negative values each year. Starting at -609 million US dollars in 2011, it sharply improved in 2012 to -57 million US dollars, indicating a near break-even situation. However, the profit declined substantially again in 2013 to -1,083 million US dollars, followed by a moderate improvement in 2014 to -715 million US dollars. The downward trend reemerged in 2015, reaching the lowest point of -1,562 million US dollars. This pattern reflects persistent challenges in generating positive economic profit, with considerable volatility across the years.

Invested Capital

The invested capital remained relatively stable throughout the period, fluctuating within a narrow range between approximately 44,300 million and 46,100 million US dollars. Beginning at 44,961 million in 2011, it experienced a slight increase in 2012 to 46,124 million, followed by a decrease in 2013 to 44,327 million. Subsequent years showed a modest rise to 44,929 million in 2014 and 45,332 million in 2015. Overall, the invested capital demonstrates consistency without significant expansion or contraction.

Economic Spread Ratio

The economic spread ratio remained negative throughout the reporting period, revealing a consistent inability to generate returns above the cost of capital. In 2011, the ratio was -1.35%, improved marginally in 2012 to -0.12%, signaling some operational improvement. However, the ratio deteriorated sharply to -2.44% in 2013, followed by a partial recovery to -1.59% in 2014. 2015 saw the largest decline to -3.45%, indicating worsening profitability relative to invested capital. The persistent negative spread ratios underscore ongoing inefficiencies or challenges in value creation.

The financial data reveals notable patterns in economic profit, adjusted revenue, and economic profit margin over the five-year period ending December 31, 2015.

Adjusted Revenue

The adjusted revenue demonstrates a consistent upward trend throughout the entire period. Beginning at approximately $19.7 billion in 2011, it increased steadily each year, reaching around $23.7 billion by the end of 2015. This steady revenue growth indicates a continuous expansion or improvement in the company's sales or service offerings.

Economic Profit

The economic profit shows a pattern of persistent negative values across all years, indicating losses when accounting for the cost of capital. The values fluctuate significantly, with the smallest loss recorded in 2012 (-$57 million) and the largest loss in 2015 (-$1,562 million). This suggests that although the company’s revenue grew, profitability did not improve correspondingly, and economic losses deepened, especially in the final year of the period.

Economic Profit Margin

The economic profit margin remains consistently negative over the period, reflecting the losses relative to revenue. It moved from -3.09% in 2011 to a minimal loss of -0.27% in 2012, followed by a sharp decline to -4.89% in 2013. The margin improved somewhat in 2014 to -3.13%, but then deteriorated substantially to -6.58% in 2015. This volatility, especially the worsening margin in 2015, aligns with the rising absolute losses observed in economic profit.

In summary, the data indicates that while adjusted revenue grew steadily, the company struggled to convert this growth into positive economic profit. The persistent and increasing negative economic profit and worsening profit margin by 2015 highlight ongoing challenges in generating returns above the cost of capital during the analyzed period.