Stock Analysis on Net
Stock Analysis on Net

Time Warner Inc. (NYSE:TWX)

This company has been moved to the archive! The financial data has not been updated since April 26, 2018.

Common-Size Income Statement

Time Warner Inc., common-size consolidated income statement

Microsoft Excel
12 months ended: Dec 31, 2017 Dec 31, 2016 Dec 31, 2015 Dec 31, 2014 Dec 31, 2013
Revenues 100.00 100.00 100.00 100.00 100.00
Costs of revenues -56.43 -55.86 -57.45 -58.02 -54.47
Gross profit 43.57% 44.14% 42.55% 41.98% 45.53%
Selling, general and administrative -17.39 -17.47 -17.16 -18.97 -21.70
Amortization of intangible assets -0.63 -0.65 -0.67 -0.74 -0.84
Restructuring and severance costs -0.38 -0.40 -0.21 -1.87 -0.83
Asset impairments -0.05 -0.15 -0.09 -0.25 -0.47
Gain (loss) on operating assets, net 0.21 0.27 0.00 1.70 0.48
Operating income 25.33% 25.74% 24.41% 21.84% 22.17%
Interest income 0.67 0.77 0.78 0.67 0.31
Interest expense -3.88 -4.73 -4.92 -4.95 -4.31
Interest expense, net -3.21% -3.96% -4.14% -4.27% -3.99%
Investment gains (losses), net 0.96 0.50 -0.11 0.11 0.20
Loss on equity method investees -0.49 -0.97 -0.44 -0.56 -0.51
Premiums paid and costs incurred on debt redemption -3.48 -3.44 -0.26 0.00 0.00
Other -0.10 -0.16 -0.11 -0.01 -0.07
Other loss, net -3.10% -4.06% -0.91% -0.46% -0.38%
Income from continuing operations before income taxes 19.01% 17.72% 19.37% 17.10% 17.80%
Income tax provision -2.24 -4.37 -5.87 -2.87 -5.87
Income from continuing operations 16.77% 13.35% 13.50% 14.23% 11.93%
Discontinued operations, net of tax 0.00 0.04 0.13 -0.24 0.46
Net income 16.77% 13.39% 13.63% 13.99% 12.39%
Net loss attributable to noncontrolling interests 0.01 0.00 0.00 0.00 0.00
Net income attributable to Time Warner Inc. shareholders 16.78% 13.39% 13.63% 13.99% 12.39%

Based on: 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31), 10-K (reporting date: 2014-12-31), 10-K (reporting date: 2013-12-31).

The financial trajectory from 2013 to 2017 is characterized by a general expansion of net profit margins, moving from 12.39% to 16.78%. This improvement is primarily driven by increased operating efficiency and a reduction in the relative burden of selling, general, and administrative expenses, despite the emergence of significant debt redemption costs in the later years of the period.

Operating Margin and Efficiency
Gross profit margins exhibited slight volatility, starting at 45.53% in 2013, dipping to 41.98% in 2014, and stabilizing around 43.57% by 2017. A notable trend is the consistent reduction in selling, general, and administrative expenses, which declined from 21.70% of revenues in 2013 to 17.39% in 2017. This optimization contributed to a steady increase in operating income, which rose from 22.17% in 2013 to a peak of 25.74% in 2016, before ending at 25.33% in 2017.
Non-Operating Expenses and Financial Costs
Net interest expense showed a downward trend, improving from 3.99% of revenues in 2013 to 3.21% in 2017. However, the later period is marked by the introduction of substantial premiums paid and costs incurred on debt redemption, which were negligible prior to 2015 but escalated to 3.44% in 2016 and 3.48% in 2017. Additionally, other losses net of gains saw a significant increase in 2016 and 2017, peaking at 4.06% and 3.10% respectively, which partially offset the gains made in operating efficiency.
Taxation and Net Profitability
The income tax provision as a percentage of revenues was highly inconsistent, fluctuating from a high of 5.87% in 2013 and 2015 to a low of 2.24% in 2017. This reduction in the effective tax burden played a significant role in boosting the final net income margin. The net income attributable to shareholders closely mirrored the total net income, ending the period at 16.78% of revenues, representing a total expansion of 4.39 percentage points over the five-year span.

Overall, the organization successfully converted higher operating margins into increased net profitability. While significant non-operating charges related to debt redemption and other losses emerged toward the end of the period, they were effectively mitigated by disciplined SG&A management and a declining effective tax rate.

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