Economic Value Added (EVA)
EVA is registered trademark of Stern Stewart.
Economic value added or economic profit is the difference between revenues and costs,where costs include not only expenses, but also cost of capital.
Economic Profit
Enphase Energy Inc., economic profit calculation
US$ in thousands
Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).
1 NOPAT. See details »
2 Cost of capital. See details »
3 Invested capital. See details »
4 2023 Calculation
Economic profit = NOPAT – Cost of capital × Invested capital
= 521,640 – 21.98% × 1,302,318 = 235,363
The analysis of economic value creation from 2019 to 2023 reveals a trajectory of volatility followed by significant growth in value generation, peaking in 2022 before experiencing a moderate contraction in 2023.
- Net Operating Profit After Taxes (NOPAT)
- A general upward trend in operational profitability is observed, with NOPAT increasing from 168,136 thousand USD in 2019 to a peak of 575,824 thousand USD in 2022. A temporary decline occurred in 2020, and while the 2023 figure of 521,640 thousand USD represents a slight reduction from the prior year, it remains substantially higher than the baseline established in 2019.
- Capital Investment and Cost of Capital
- The cost of capital has remained remarkably stable over the five-year period, fluctuating narrowly between 21.96% and 22.87%. During this time, invested capital expanded significantly, rising from 528,927 thousand USD in 2019 to 1,302,318 thousand USD by 2023. The most aggressive expansion of the capital base occurred between 2021 and 2022, where invested capital grew by approximately 64%.
- Economic Profit and Value Creation
- Economic profit exhibited significant variance, moving from a positive 47,190 thousand USD in 2019 to a deficit of 79,272 thousand USD in 2020, indicating that operational returns were insufficient to cover the cost of capital during that fiscal year. A subsequent recovery led to a peak economic profit of 290,537 thousand USD in 2022. The decrease to 235,363 thousand USD in 2023 is primarily driven by the contraction in NOPAT, as the cost of capital remained steady and the invested capital base continued to expand slightly.
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Net Operating Profit after Taxes (NOPAT)
Enphase Energy Inc., NOPAT calculation
US$ in thousands
Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).
1 Elimination of deferred tax expense. See details »
2 Addition of increase (decrease) in allowance for doubtful accounts.
3 Addition of increase (decrease) in deferred revenues.
4 Addition of increase (decrease) in warranty obligations.
5 Addition of increase (decrease) in liabilities related to restructuring activities.
6 Addition of increase (decrease) in equity equivalents to net income.
7 2023 Calculation
Interest expense on capitalized operating leases = Operating lease liability × Discount rate
= 24,022 × 7.00% = 1,682
8 2023 Calculation
Tax benefit of interest expense = Adjusted interest expense × Statutory income tax rate
= 10,521 × 21.00% = 2,209
9 Addition of after taxes interest expense to net income.
10 2023 Calculation
Tax expense (benefit) of investment income = Investment income, before tax × Statutory income tax rate
= 69,728 × 21.00% = 14,643
11 Elimination of after taxes investment income.
The annual financial data reveals significant trends in both net income and net operating profit after taxes (NOPAT) over the five-year period ending December 31, 2023.
- Net Income
- Net income experienced a decline from 2019 to 2020, decreasing from $161,148 thousand to $133,995 thousand. This was followed by a moderate recovery in 2021, with net income rising to $145,449 thousand. A substantial increase occurred in 2022, where net income nearly tripled compared to the previous year, reaching $397,362 thousand. The upward trend continued into 2023, with net income rising further to $438,936 thousand.
- Net Operating Profit After Taxes (NOPAT)
- NOPAT showed a similar pattern to net income but with more pronounced fluctuations. It decreased slightly from $168,136 thousand in 2019 to $132,831 thousand in 2020. In 2021, NOPAT nearly doubled to $255,560 thousand, indicating a strong improvement in operating profitability. A significant surge occurred in 2022, with NOPAT reaching $575,824 thousand, which more than doubled the previous year’s figure. However, in 2023, there was a notable decrease to $521,640 thousand, representing a decline compared to 2022 but still substantially above values from earlier years.
- Overall Trends and Insights
- Both net income and NOPAT reflect a recovery and growth trajectory after an initial dip in 2020, suggesting that the company improved profitability after the economic challenges that year. The dramatic increases in 2022 indicate a period of exceptional operational performance. The slight decline in NOPAT in 2023, despite continuing growth in net income, might indicate changes in operational efficiency or expense structure that merit further examination. The general upward trend for both metrics over the five years suggests strengthening financial health and enhanced value generation.
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Cash Operating Taxes
Enphase Energy Inc., cash operating taxes calculation
US$ in thousands
Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).
- Income Taxes Provision for (Benefit From)
- The income taxes provision exhibited a volatile trend over the five-year period. It started with a negative value of -$71,034 thousand in 2019, indicating a tax benefit or credit situation. This negative provision decreased substantially to -$14,585 thousand in 2020 and further to -$24,521 thousand in 2021, showing fluctuations in tax benefits during these years. However, in 2022, there was a significant reversal, with the provision turning positive to $54,686 thousand, indicating a tax expense. This upward trend continued in 2023, reaching $74,203 thousand, which suggests increasing tax liabilities or reduced tax benefits in these latter years.
- Cash Operating Taxes
- Cash operating taxes demonstrated a steady and strong upward trajectory throughout the analyzed period. Beginning at $3,653 thousand in 2019, the amount nearly doubled to $6,809 thousand in 2020, more than doubled again to $16,301 thousand in 2021, and saw a dramatic rise to $54,271 thousand in 2022. The growth culminated at $108,957 thousand in 2023, representing an approximately 30-fold increase from the 2019 figure. This continuous increase suggests substantially higher cash tax outflows, potentially reflecting improved profitability, changes in tax regulations, or reduced tax incentives.
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Invested Capital
Enphase Energy Inc., invested capital calculation (financing approach)
US$ in thousands
Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).
1 Addition of capitalized operating leases.
2 Elimination of deferred taxes from assets and liabilities. See details »
3 Addition of allowance for doubtful accounts receivable.
4 Addition of deferred revenues.
5 Addition of warranty obligations.
6 Addition of liabilities related to restructuring activities.
7 Addition of equity equivalents to stockholders’ equity.
8 Removal of accumulated other comprehensive income.
9 Subtraction of construction in process.
10 Subtraction of marketable securities.
The financial data over the five-year period reveals key trends in the company's capital structure and financial positioning.
- Total Reported Debt & Leases
- The total reported debt and leases exhibit a significant increase from 2019 to 2020, more than tripling from approximately $118.3 million to $350.6 million. This upward trajectory accelerates further in 2021 when debt nearly triples again to over $1.05 billion. In 2022, the total debt continues to rise but at a moderated pace, reaching approximately $1.31 billion, and remains relatively stable through 2023.
- Stockholders’ Equity
- Stockholders’ equity shows growth overall, with a notable increase from $272.2 million in 2019 to nearly $484 million in 2020. However, in 2021 there is a decline to about $430.2 million. Following this dip, equity increases substantially in 2022 to $825.6 million and reaches $983.6 million by 2023, nearly doubling from the previous year and demonstrating a strengthening equity base in recent periods.
- Invested Capital
- Invested capital fluctuates over the period with an initial sharp increase from $528.9 million in 2019 to $951.5 million in 2020. It then decreases to $779.2 million in 2021 before sharply rising again in 2022 to $1.29 billion and remaining relatively stable through 2023 at about $1.30 billion. This pattern suggests periods of investment expansion followed by some consolidation before significant capital deployment resumes.
Overall, the data indicates a trend of increasing leverage over the five years, especially between 2019 and 2021, followed by stabilization in debt levels. Equity has grown robustly after a slight setback in 2021, supporting a stronger capital base by 2023. Invested capital reflects these financing changes, showing corresponding increases that suggest strategic growth initiatives or acquisitions that require elevated capital investment. The stabilization in debt alongside rising equity towards the end suggests an effort to balance the capital structure for sustained financial health.
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Cost of Capital
Enphase Energy Inc., cost of capital calculations
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 16,626,446) | 16,626,446) | ÷ | 17,878,768) | = | 0.93 | 0.93 | × | 23.36% | = | 21.72% | ||
| Debt3 | 1,228,300) | 1,228,300) | ÷ | 17,878,768) | = | 0.07 | 0.07 | × | 4.64% × (1 – 21.00%) | = | 0.25% | ||
| Operating lease liability4 | 24,022) | 24,022) | ÷ | 17,878,768) | = | 0.00 | 0.00 | × | 7.00% × (1 – 21.00%) | = | 0.01% | ||
| Total: | 17,878,768) | 1.00 | 21.98% | ||||||||||
Based on: 10-K (reporting date: 2023-12-31).
1 US$ in thousands
2 Equity. See details »
3 Debt. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 29,015,256) | 29,015,256) | ÷ | 30,840,481) | = | 0.94 | 0.94 | × | 23.36% | = | 21.98% | ||
| Debt3 | 1,800,777) | 1,800,777) | ÷ | 30,840,481) | = | 0.06 | 0.06 | × | 4.64% × (1 – 21.00%) | = | 0.21% | ||
| Operating lease liability4 | 24,448) | 24,448) | ÷ | 30,840,481) | = | 0.00 | 0.00 | × | 6.50% × (1 – 21.00%) | = | 0.00% | ||
| Total: | 30,840,481) | 1.00 | 22.19% | ||||||||||
Based on: 10-K (reporting date: 2022-12-31).
1 US$ in thousands
2 Equity. See details »
3 Debt. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 19,513,074) | 19,513,074) | ÷ | 21,010,462) | = | 0.93 | 0.93 | × | 23.36% | = | 21.69% | ||
| Debt3 | 1,481,638) | 1,481,638) | ÷ | 21,010,462) | = | 0.07 | 0.07 | × | 4.63% × (1 – 21.00%) | = | 0.26% | ||
| Operating lease liability4 | 15,750) | 15,750) | ÷ | 21,010,462) | = | 0.00 | 0.00 | × | 7.40% × (1 – 21.00%) | = | 0.00% | ||
| Total: | 21,010,462) | 1.00 | 21.96% | ||||||||||
Based on: 10-K (reporting date: 2021-12-31).
1 US$ in thousands
2 Equity. See details »
3 Debt. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 24,965,624) | 24,965,624) | ÷ | 26,464,798) | = | 0.94 | 0.94 | × | 23.36% | = | 22.04% | ||
| Debt3 | 1,479,423) | 1,479,423) | ÷ | 26,464,798) | = | 0.06 | 0.06 | × | 5.70% × (1 – 21.00%) | = | 0.25% | ||
| Operating lease liability4 | 19,751) | 19,751) | ÷ | 26,464,798) | = | 0.00 | 0.00 | × | 7.70% × (1 – 21.00%) | = | 0.00% | ||
| Total: | 26,464,798) | 1.00 | 22.29% | ||||||||||
Based on: 10-K (reporting date: 2020-12-31).
1 US$ in thousands
2 Equity. See details »
3 Debt. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 7,278,663) | 7,278,663) | ÷ | 7,491,633) | = | 0.97 | 0.97 | × | 23.36% | = | 22.70% | ||
| Debt3 | 200,258) | 200,258) | ÷ | 7,491,633) | = | 0.03 | 0.03 | × | 7.57% × (1 – 21.00%) | = | 0.16% | ||
| Operating lease liability4 | 12,712) | 12,712) | ÷ | 7,491,633) | = | 0.00 | 0.00 | × | 8.60% × (1 – 21.00%) | = | 0.01% | ||
| Total: | 7,491,633) | 1.00 | 22.87% | ||||||||||
Based on: 10-K (reporting date: 2019-12-31).
1 US$ in thousands
2 Equity. See details »
3 Debt. See details »
4 Operating lease liability. See details »
Economic Spread Ratio
Enphase Energy Inc., economic spread ratio calculation, comparison to benchmarks
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Economic profit1 | 235,363) | 290,537) | 84,465) | (79,272) | 47,190) | |
| Invested capital2 | 1,302,318) | 1,285,383) | 779,239) | 951,473) | 528,927) | |
| Performance Ratio | ||||||
| Economic spread ratio3 | 18.07% | 22.60% | 10.84% | -8.33% | 8.92% | |
| Benchmarks | ||||||
| Economic Spread Ratio, Competitors4 | ||||||
| Advanced Micro Devices Inc. | -29.29% | -28.90% | 27.67% | — | — | |
| Analog Devices Inc. | -10.15% | -11.51% | -14.75% | -9.69% | — | |
| Applied Materials Inc. | 13.05% | 23.03% | 18.51% | 6.87% | — | |
| Broadcom Inc. | 4.75% | 3.50% | -5.73% | -10.95% | — | |
| Intel Corp. | -20.02% | -13.23% | 3.35% | — | — | |
| KLA Corp. | 21.12% | 23.49% | 11.99% | 1.04% | — | |
| Lam Research Corp. | 4.47% | 19.45% | 14.80% | -0.90% | — | |
| Micron Technology Inc. | -29.79% | -2.16% | -6.77% | -12.20% | — | |
| NVIDIA Corp. | -16.49% | 25.71% | 6.18% | — | — | |
| Qualcomm Inc. | 0.07% | 26.51% | 23.91% | 8.98% | — | |
| Texas Instruments Inc. | 12.26% | 32.84% | 31.47% | — | — | |
Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).
1 Economic profit. See details »
2 Invested capital. See details »
3 2023 Calculation
Economic spread ratio = 100 × Economic profit ÷ Invested capital
= 100 × 235,363 ÷ 1,302,318 = 18.07%
4 Click competitor name to see calculations.
The financial performance between 2019 and 2023 reflects a period of significant volatility followed by substantial value creation. The relationship between invested capital and economic profit indicates a period of aggressive scaling and an overall improvement in the efficiency of capital deployment, despite a notable downturn in 2020.
- Economic Profit
- Economic profit exhibited significant fluctuations over the five-year period. An initial positive value of 47,190 thousand USD in 2019 transitioned into a negative value of -79,272 thousand USD in 2020, indicating that the company failed to cover its cost of capital during that year. A strong recovery followed, with profits increasing to 84,465 thousand USD in 2021 and reaching a peak of 290,537 thousand USD in 2022. A slight contraction occurred in 2023, with economic profit settling at 235,363 thousand USD.
- Invested Capital
- There is a clear upward trajectory in the total amount of capital invested in the business. Invested capital grew from 528,927 thousand USD in 2019 to 1,302,318 thousand USD by 2023. While a temporary reduction was observed in 2021, where capital decreased to 779,239 thousand USD, the subsequent surge in 2022 and 2023 suggests an expansion of the operational asset base to support growth.
- Economic Spread Ratio
- The economic spread ratio mirrors the volatility seen in economic profit, serving as a measure of value creation efficiency. The ratio dropped from 8.92% in 2019 to -8.33% in 2020, signaling a destruction of economic value. However, efficiency improved rapidly thereafter, climbing to 10.84% in 2021 and peaking at 22.60% in 2022. The ratio moderated to 18.07% in 2023, yet remained substantially higher than the pre-2022 levels.
The analysis indicates that the increase in invested capital since 2021 has been effectively leveraged to generate higher economic profits. Although 2023 showed a marginal decline in both economic profit and the spread ratio compared to 2022, the organization maintains a significantly stronger value-creation profile than it possessed at the start of the analyzed period.
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Economic Profit Margin
Enphase Energy Inc., economic profit margin calculation, comparison to benchmarks
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Economic profit1 | 235,363) | 290,537) | 84,465) | (79,272) | 47,190) | |
| Net revenues | 2,290,786) | 2,330,853) | 1,382,049) | 774,425) | 624,333) | |
| Add: Increase (decrease) in deferred revenues | 115,112) | 122,504) | 76,718) | (8,849) | 71,957) | |
| Adjusted net revenues | 2,405,898) | 2,453,357) | 1,458,767) | 765,576) | 696,290) | |
| Performance Ratio | ||||||
| Economic profit margin2 | 9.78% | 11.84% | 5.79% | -10.35% | 6.78% | |
| Benchmarks | ||||||
| Economic Profit Margin, Competitors3 | ||||||
| Advanced Micro Devices Inc. | -74.75% | -71.67% | 10.43% | — | — | |
| Analog Devices Inc. | -36.44% | -43.15% | -94.78% | -31.50% | — | |
| Applied Materials Inc. | 8.75% | 13.30% | 11.81% | 5.22% | — | |
| Broadcom Inc. | 8.31% | 6.55% | -13.49% | -30.22% | — | |
| Intel Corp. | -34.00% | -18.61% | 3.75% | — | — | |
| KLA Corp. | 16.78% | 19.86% | 11.82% | 1.16% | — | |
| Lam Research Corp. | 3.93% | 14.36% | 11.93% | -1.04% | — | |
| Micron Technology Inc. | -102.50% | -3.70% | -11.32% | -24.08% | — | |
| NVIDIA Corp. | -13.05% | 17.23% | 4.83% | — | — | |
| Qualcomm Inc. | 0.06% | 17.66% | 14.40% | 6.77% | — | |
| Texas Instruments Inc. | 15.81% | 28.80% | 28.15% | — | — | |
Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).
1 Economic profit. See details »
2 2023 Calculation
Economic profit margin = 100 × Economic profit ÷ Adjusted net revenues
= 100 × 235,363 ÷ 2,405,898 = 9.78%
3 Click competitor name to see calculations.
The financial performance regarding economic value creation from 2019 to 2023 is characterized by a period of volatility followed by rapid expansion and a subsequent slight stabilization. A notable shift in capital efficiency occurred between 2020 and 2022, during which the organization transitioned from value destruction to significant value creation.
- Economic Profit Volatility
- Economic profit experienced a sharp decline from 47,190 thousand US$ in 2019 to a deficit of 79,272 thousand US$ in 2020, indicating that returns fell below the cost of capital during that period. A strong recovery followed, with economic profit increasing to 84,465 thousand US$ in 2021 and reaching a peak of 290,537 thousand US$ in 2022. A moderate contraction was observed in 2023, with the figure adjusting to 235,363 thousand US$.
- Revenue Growth Patterns
- Adjusted net revenues showed a consistent and aggressive upward trend from 2019 through 2022, rising from 696,290 thousand US$ to 2,453,357 thousand US$. This expansion indicates a substantial scaling of the business operations. In 2023, revenues plateaued, showing a slight decrease to 2,405,898 thousand US$.
- Economic Profit Margin Analysis
- The economic profit margin mirrored the trajectory of the absolute economic profit. The margin fell from 6.78% in 2019 to -10.35% in 2020, marking the lowest point of capital efficiency. Recovery was evident in 2021 at 5.79%, followed by a peak of 11.84% in 2022. Although the margin declined to 9.78% in 2023, it remained significantly higher than the levels recorded in 2019, 2020, and 2021, suggesting a sustained improvement in the ability to generate economic value relative to revenue.
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