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
Expand Energy Corp., economic profit calculation
US$ in millions
Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31).
1 NOPAT. See details »
2 Cost of capital. See details »
3 Invested capital. See details »
4 2024 Calculation
Economic profit = NOPAT – Cost of capital × Invested capital
= -723 – 10.10% × 22,822 = -3,029
The financial trajectory of Expand Energy Corp. between 2021 and 2024 demonstrates a significant transition from substantial value creation to value destruction. Economic profit has declined precipitously over the four-year period, culminating in a substantial negative figure in the final year, which indicates that the company is no longer generating returns sufficient to cover its cost of capital.
- Net Operating Profit After Taxes (NOPAT)
- A severe downward trend is observed in operating profitability. NOPAT decreased from US$ 6,263 million in 2021 to US$ 2,933 million in 2023, before collapsing into a negative value of US$ 723 million in 2024. This consistent erosion of operating income suggests a fundamental decline in operational efficiency or a significant increase in operating expenses.
- Invested Capital and Cost of Capital
- The capital base has expanded aggressively, growing from US$ 7,990 million in 2021 to US$ 22,822 million in 2024. The most notable increase occurred in the final year, where invested capital nearly doubled. Concurrently, the cost of capital remained relatively stable, fluctuating within a narrow range between 10.03% and 10.44%. Despite the stability of the percentage rate, the absolute capital charge increased substantially as the total invested capital grew.
- Economic Profit Analysis
- Economic profit reflects a compounding negative effect of falling operating profits and a rapidly expanding capital base. From a peak of US$ 5,461 million in 2021, economic profit declined steadily to US$ 1,688 million in 2023. The shift to a deficit of US$ 3,029 million in 2024 is the result of the simultaneous occurrence of negative NOPAT and a record high in invested capital, signaling that the recent capital deployment has yet to yield positive economic returns.
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Net Operating Profit after Taxes (NOPAT)
Expand Energy Corp., NOPAT calculation
US$ in millions
Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31).
1 Elimination of deferred tax expense. See details »
2 Addition of increase (decrease) in allowance for doubtful accounts.
3 Addition of increase (decrease) in equity equivalents to net income (loss).
4 2024 Calculation
Interest expense on capitalized operating leases = Operating lease liability × Discount rate
= 145 × 5.99% = 9
5 2024 Calculation
Tax benefit of interest expense = Adjusted interest expense × Statutory income tax rate
= 132 × 21.00% = 28
6 Addition of after taxes interest expense to net income (loss).
The financial data reveals a downward trend in the profitability indicators over the four-year period.
- Net Income (Loss)
- The net income shows a consistent decline from US$ 6,328 million at the end of 2021 to US$ -714 million by the end of 2024. This represents a significant deterioration in profitability, moving from a strong positive net income to a negative result, indicating losses in the latest period.
- Net Operating Profit After Taxes (NOPAT)
- Similarly, NOPAT also declines steadily from US$ 6,263 million in 2021 to US$ -723 million in 2024. The trend mirrors net income, demonstrating a substantial decrease in operational profitability after accounting for taxes. The transition into negative territory further highlights operational difficulties by the end of the period.
Overall, both key profit metrics exhibit a marked deterioration, signaling challenges in maintaining profitability and operational effectiveness over the time span analyzed. The consistent yearly declines suggest possible adverse factors influencing earnings and operations, culminating in losses by the fourth year.
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Cash Operating Taxes
Expand Energy Corp., cash operating taxes calculation
US$ in millions
Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31).
- Income Tax Expense (Benefit)
- The income tax expense shows significant volatility over the analyzed periods. Initially, there is a benefit recorded in 2021 with a negative value of -106 million USD, which sharply increases in magnitude to -1285 million USD in 2022, indicating a substantial tax benefit or credit during that year. However, this trend reverses in 2023, where the figure shifts to a positive tax expense of 698 million USD, suggesting a considerable tax liability incurred that year. In 2024, the amount again reverses to a tax benefit of -127 million USD, though less pronounced than in 2022. This pattern reflects substantial fluctuations in taxable income, tax adjustments, or changes in tax policy affecting the company’s tax position annually.
- Cash Operating Taxes
- The cash operating taxes demonstrate a generally rising trend from 2021 to 2023, starting at 18 million USD in 2021 and increasing to 82 million USD in 2022, then reaching a peak at 293 million USD in 2023. This steady increase may indicate growing profitability or changes in tax payments related to operating activities. However, in 2024, there is a sharp decline to 24 million USD, which could reflect a reduction in taxable income, tax credits applied, or operational changes affecting tax payments. Overall, the cash tax payments show a pattern of growth followed by a significant drop.
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Invested Capital
Expand Energy Corp., invested capital calculation (financing approach)
US$ in millions
Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31).
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 equity equivalents to stockholders’ equity.
5 Removal of accumulated other comprehensive income.
The financial data for the four-year period reveals notable fluctuations and significant growth in the company's capital structure components.
- Total Reported Debt & Leases
- This item shows considerable variability. Initially, debt increased substantially from 2,316 million USD at the end of 2021 to 3,212 million USD in 2022. Subsequently, it decreased to 2,127 million USD in 2023 before surging dramatically to 5,825 million USD by the end of 2024. The sharp rise in 2024 represents a notable increase, more than doubling the 2023 figure, which may indicate aggressive financing or capital expenditure efforts during that year.
- Stockholders’ Equity
- Equity displays a consistent upward trajectory across the four years. Starting at 5,671 million USD in 2021, it rose to 9,124 million USD in 2022, further to 10,729 million USD in 2023, and reached 17,565 million USD in 2024. This steady increase suggests ongoing profitability, retained earnings growth, or equity financing activities contributing to a strengthening balance sheet position.
- Invested Capital
- Invested capital also shows an upward trend, increasing from 7,990 million USD in 2021 to 10,988 million USD in 2022, then to 11,924 million USD in 2023, and substantially rising to 22,822 million USD in 2024. The steep increase in 2024 aligns with the spike in total debt and equity, indicating expanded asset investment or acquisitions funded by a combination of debt and equity.
Overall, the company has significantly expanded its financial base over the period, with substantial increases in both equity and debt, particularly evident in 2024. The growth in invested capital aligns with these financing changes, suggesting intensified investment activity. The pattern of debt fluctuations coupled with steady equity growth implies a strategic approach to capital structure management, balancing debt leverage with equity enhancement.
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Cost of Capital
Expand Energy Corp., cost of capital calculations
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 23,835) | 23,835) | ÷ | 29,528) | = | 0.81 | 0.81 | × | 11.47% | = | 9.26% | ||
| Debt3 | 5,548) | 5,548) | ÷ | 29,528) | = | 0.19 | 0.19 | × | 5.55% × (1 – 21.00%) | = | 0.82% | ||
| Operating lease liability4 | 145) | 145) | ÷ | 29,528) | = | 0.00 | 0.00 | × | 5.99% × (1 – 21.00%) | = | 0.02% | ||
| Total: | 29,528) | 1.00 | 10.10% | ||||||||||
Based on: 10-K (reporting date: 2024-12-31).
1 US$ in millions
2 Equity. See details »
3 Debt. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 10,967) | 10,967) | ÷ | 13,009) | = | 0.84 | 0.84 | × | 11.47% | = | 9.67% | ||
| Debt3 | 1,943) | 1,943) | ÷ | 13,009) | = | 0.15 | 0.15 | × | 6.21% × (1 – 21.00%) | = | 0.73% | ||
| Operating lease liability4 | 99) | 99) | ÷ | 13,009) | = | 0.01 | 0.01 | × | 7.02% × (1 – 21.00%) | = | 0.04% | ||
| Total: | 13,009) | 1.00 | 10.44% | ||||||||||
Based on: 10-K (reporting date: 2023-12-31).
1 US$ in millions
2 Equity. See details »
3 Debt. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 10,737) | 10,737) | ÷ | 13,783) | = | 0.78 | 0.78 | × | 11.47% | = | 8.93% | ||
| Debt3 | 2,927) | 2,927) | ÷ | 13,783) | = | 0.21 | 0.21 | × | 7.10% × (1 – 21.00%) | = | 1.19% | ||
| Operating lease liability4 | 119) | 119) | ÷ | 13,783) | = | 0.01 | 0.01 | × | 6.64% × (1 – 21.00%) | = | 0.05% | ||
| Total: | 13,783) | 1.00 | 10.17% | ||||||||||
Based on: 10-K (reporting date: 2022-12-31).
1 US$ in millions
2 Equity. See details »
3 Debt. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 8,407) | 8,407) | ÷ | 10,758) | = | 0.78 | 0.78 | × | 11.47% | = | 8.96% | ||
| Debt3 | 2,313) | 2,313) | ÷ | 10,758) | = | 0.22 | 0.22 | × | 6.21% × (1 – 21.00%) | = | 1.05% | ||
| Operating lease liability4 | 38) | 38) | ÷ | 10,758) | = | 0.00 | 0.00 | × | 3.80% × (1 – 21.00%) | = | 0.01% | ||
| Total: | 10,758) | 1.00 | 10.03% | ||||||||||
Based on: 10-K (reporting date: 2021-12-31).
1 US$ in millions
2 Equity. See details »
3 Debt. See details »
4 Operating lease liability. See details »
Economic Spread Ratio
Expand Energy Corp., economic spread ratio calculation, comparison to benchmarks
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | ||
|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||
| Economic profit1 | (3,029) | 1,688) | 2,619) | 5,461) | |
| Invested capital2 | 22,822) | 11,924) | 10,988) | 7,990) | |
| Performance Ratio | |||||
| Economic spread ratio3 | -13.27% | 14.15% | 23.84% | 68.35% | |
| Benchmarks | |||||
| Economic Spread Ratio, Competitors4 | |||||
| Chevron Corp. | -3.13% | -3.75% | 6.75% | -2.37% | |
| ConocoPhillips | 0.96% | 6.61% | 19.35% | 5.03% | |
| Exxon Mobil Corp. | -0.99% | 3.12% | 11.89% | 3.26% | |
Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31).
1 Economic profit. See details »
2 Invested capital. See details »
3 2024 Calculation
Economic spread ratio = 100 × Economic profit ÷ Invested capital
= 100 × -3,029 ÷ 22,822 = -13.27%
4 Click competitor name to see calculations.
The financial trajectory from 2021 to 2024 reflects a significant deterioration in value creation, characterized by a transition from substantial economic gains to a value-destructive state.
- Economic Profit
- A consistent and accelerating downward trend is observed in economic profit. After starting at US$ 5,461 million in 2021, the figure declined to US$ 2,619 million in 2022 and further to US$ 1,688 million in 2023. This decline culminated in a sharp reversal in 2024, with economic profit falling to negative US$ 3,029 million, indicating that the company's returns failed to cover its cost of capital in the final year.
- Invested Capital
- Invested capital exhibited a continuous upward trajectory throughout the analyzed period. A steady increase was noted from US$ 7,990 million in 2021 to US$ 11,924 million in 2023, followed by a substantial surge in 2024, where capital reached US$ 22,822 million. The significant expansion of the capital base in 2024 coincided with the shift into negative economic profit.
- Economic Spread Ratio
- The economic spread ratio shows a severe contraction, falling from 68.35% in 2021 to -13.27% in 2024. The rapid erosion of this ratio suggests a diminishing margin between the return on invested capital and the cost of capital. The transition to a negative spread in 2024 highlights a period of value destruction, where the growth in invested capital was not matched by a corresponding increase in operational returns.
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Economic Profit Margin
Expand Energy Corp., economic profit margin calculation, comparison to benchmarks
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | ||
|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||
| Economic profit1 | (3,029) | 1,688) | 2,619) | 5,461) | |
| Revenues | 4,259) | 6,047) | 14,123) | 7,301) | |
| Performance Ratio | |||||
| Economic profit margin2 | -71.11% | 27.91% | 18.55% | 74.80% | |
| Benchmarks | |||||
| Economic Profit Margin, Competitors3 | |||||
| Chevron Corp. | -3.38% | -4.05% | 6.08% | -2.95% | |
| ConocoPhillips | 1.86% | 9.56% | 18.61% | 8.39% | |
| Exxon Mobil Corp. | -1.10% | 2.87% | 8.86% | 3.21% | |
Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31).
1 Economic profit. See details »
2 2024 Calculation
Economic profit margin = 100 × Economic profit ÷ Revenues
= 100 × -3,029 ÷ 4,259 = -71.11%
3 Click competitor name to see calculations.
The financial trajectory from 2021 to 2024 demonstrates a severe erosion of economic value generation. A consistent decline in economic profit culminated in a significant deficit by the end of 2024, signaling that the organization ceased to generate returns exceeding its cost of capital.
- Economic Profit Trends
- Economic profit experienced a continuous downward trajectory, falling from US$ 5,461 million in 2021 to US$ 1,688 million in 2023. This decline accelerated sharply in 2024, resulting in a negative economic profit of US$ 3,029 million, indicating a transition from value creation to value destruction.
- Revenue Performance
- Revenue figures exhibited high volatility, peaking at US$ 14,123 million in 2022 before entering a steep decline. By December 31, 2024, revenues had fallen to US$ 4,259 million, representing a substantial contraction from the 2022 peak and falling below 2021 levels.
- Economic Profit Margin Analysis
- The economic profit margin showed extreme instability, starting at 74.80% in 2021 and dropping to 18.55% in 2022 despite the increase in revenue. While a moderate recovery to 27.91% was noted in 2023, the margin collapsed to -71.11% in 2024, reflecting a critical misalignment between revenue generation and the underlying cost of capital.
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