Earnings Analysis for JNJ (Johnson & Johnson)
Revenue Analysis
Total and Operating Revenue: Over the three-year period, Total Revenue showed variations, peaking in Q2 2023 at $25.53 billion and dipping to $20.89 billion in Q1 2023. This reflected fluctuating market conditions and sales performance.
Gross Profit Margins: Gross Profit also varied, with a high of $17.32 billion in Q2 2023 and a low of $14.21 billion in Q1 2023. The Gross Profit Margins ranged from a low in Q1 2023 influenced by unusual expenses to a consistent performance in other periods.
Cost Management
Cost of Revenue: The Cost of Revenue was highest in Q2 2023 at $8.21 billion. This indicates a cost management challenge as revenue increased but so did the cost, impacting margins.
Operating Expense: Operating Expenses showed a peak in Q2 2023 at $10.09 billion, corresponding with the high revenue periods, reflecting higher sales and marketing activities.
Total Expenses: Similarly, Total Expenses were highest in the same quarter at $18.31 billion, suggesting elevated operational activities.
Profitability Analysis
EBITDA: EBITDA was strongest in Q2 2023 at approximately $9.04 billion, contrasting sharply with the very low EBITDA of $805 million in Q1 2023 due to significant unusual expenses.
Operating Income: Operating Income followed a similar pattern, with $7.22 billion in Q2 2023 but a substantial decrease in other periods, especially a negative in Q1 2023.
Pretax Income: Pretax Income highlights were $6.76 billion in Q2 2023. Conversely, Q1 2023 faced a loss before taxes, significantly influenced by unusual expense items.
Net Income: The Net Income peaked in Q2 2023 at $5.14 billion. Q1 2023 showed a rare net loss, indicating a period heavily offset by non-recurring costs.
Cash Flow Indicators
Reconciled Depreciation: Reconciled Depreciation expenses were consistent, showing a gradual increase across the years, reflecting ongoing investments in asset durability.
Interest Expense: Interest expense was highest in Q2 2023 ($346 million), suggesting increased borrowing potentially to support operational expansion or other corporate activities during higher revenue periods.
Taxation
Tax Rate: The normal tax rate varied, reaching as high as 0.239 in Q2 2023, indicating differing tax liabilities influenced by operational jurisdictions and profits.
Tax Provision: Tax provisions were significantly impacted in Q1 2023 with a negative value as adjusted for unusual items, resulting in a tax benefit owing to the losses incurred.
Tax Effect of Unusual Items: These effects were most notable in Q1 2023 ($-1.55 billion), directly impacting the financial results through substantial deductions.
Shareholder Metrics
Diluted and Basic EPS: EPS reached its zenith in Q3 2023 at $10.21 diluted and $10.32 basic, corresponding with substantial net income from discontinued operations. However, Q1 2023 saw negative EPS figures due to losses.
Average Shares: The number of shares issued was slightly increasing, reflecting possibly minor share issuances or buybacks impacting per-share calculations.
Net Income Available to Common Stockholders: This value was impacted heavily in periods of both high income (Q3 2023: $26.03 billion) and significant losses (Q1 2023).
Conclusion
JNJ’s financial performance over the past three years highlighted variability in its ability to manage costs against revenues, heavily influenced by unusual items and operational challenges. Strong revenue peaks align with high costs, suggesting a need for refined cost control strategies. Improved focus on steady growth in new markets and managing non-recurring costs could enhance future profitability and shareholder returns.