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
Old Dominion Freight Line Inc., economic profit calculation
US$ in thousands
Based on: 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), 10-K (reporting date: 2018-12-31).
1 NOPAT. See details »
2 Cost of capital. See details »
3 Invested capital. See details »
4 2022 Calculation
Economic profit = NOPAT – Cost of capital × Invested capital
= 1,440,126 – 18.14% × 4,117,551 = 693,041
An examination of the financial performance from 2018 to 2022 reveals a period of substantial growth in economic value creation. While the company experienced a phase of stagnation and marginal profitability between 2019 and 2020, a significant inflection point occurred in 2021, leading to a rapid acceleration in economic profit by the end of 2022.
- Net Operating Profit After Taxes (NOPAT)
- NOPAT remained relatively flat between 2018 and 2020, characterized by a slight dip in 2019 followed by a modest recovery. A sharp upward trajectory began in 2021, with profit increasing to over 1 billion USD, and further expanding to 1.44 billion USD in 2022. This trend indicates a significant surge in operational profitability during the latter two years of the analysis period.
- Invested Capital and Cost of Capital
- The cost of capital remained remarkably stable throughout the five-year period, fluctuating narrowly between 18.07% and 18.14%. Concurrently, invested capital showed a steady increase, rising from 3.06 billion USD in 2018 to 4.12 billion USD in 2022. The consistency of the cost of capital suggests a stable risk profile and funding environment despite the increase in the capital base.
- Economic Profit Evolution
- Economic profit exhibited significant volatility in the early years, falling from 112 million USD in 2018 to a nominal loss of 242 thousand USD in 2019, before recovering to 16 million USD in 2020. The subsequent expansion of NOPAT far outpaced the growth in capital charges, resulting in a surge of economic profit to 366 million USD in 2021 and 693 million USD in 2022. This shift demonstrates that the company transitioned from barely covering its cost of capital to generating substantial value in excess of its required return.
AI Ask an analyst for more
Net Operating Profit after Taxes (NOPAT)
Old Dominion Freight Line Inc., NOPAT calculation
US$ in thousands
Based on: 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), 10-K (reporting date: 2018-12-31).
1 Elimination of deferred tax expense. See details »
2 Addition of increase (decrease) in allowance for uncollectible accounts.
3 Addition of increase (decrease) in equity equivalents to net income.
4 2022 Calculation
Interest expense on capitalized operating leases = Operating lease liability × Discount rate
= 98,100 × 3.80% = 3,728
5 2022 Calculation
Tax benefit of interest expense = Adjusted interest expense × Statutory income tax rate
= 5,291 × 21.00% = 1,111
6 Addition of after taxes interest expense to net income.
7 2022 Calculation
Tax expense (benefit) of investment income = Investment income, before tax × Statutory income tax rate
= 4,884 × 21.00% = 1,026
8 Elimination of after taxes investment income.
- Net Income
- The net income displayed a consistent upward trend throughout the periods observed. Starting at 605,668 thousand USD in 2018, it showed a modest increase to 615,518 thousand USD in 2019. The growth rate accelerated in 2020, reaching 672,682 thousand USD. The largest increments occurred in the subsequent years, with net income rising significantly to 1,034,375 thousand USD in 2021 and further to 1,377,159 thousand USD in 2022. This pattern indicates robust profitability improvements over the five-year span.
- Net Operating Profit After Taxes (NOPAT)
- NOPAT exhibited a generally increasing trend similar to net income, though with some fluctuations. In 2018, NOPAT stood at 664,318 thousand USD. The figure slightly declined in 2019 to 625,596 thousand USD, followed by a marginal increase in 2020 to 635,624 thousand USD, suggesting a period of stagnation or mild operational challenges. From 2020 onward, NOPAT experienced substantial growth, climbing to 1,069,664 thousand USD in 2021 and reaching 1,440,126 thousand USD in 2022. This growth trajectory reflects enhanced operational efficiency and profitability post-2020.
- General Observations
- The financial results reveal strong overall growth in both net income and NOPAT, with particularly notable expansions in the last two years. The rise in net income outpaces the earlier years’ increments significantly, paralleling the improvements in operational profit after taxes. The data suggests successful operational scaling or favorable market conditions contributing to elevated profitability. The slight dip in NOPAT between 2018 and 2019 did not adversely affect the long-term growth trend.
AI Ask an analyst for more
Cash Operating Taxes
Old Dominion Freight Line Inc., cash operating taxes calculation
US$ in thousands
Based on: 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), 10-K (reporting date: 2018-12-31).
- Provision for Income Taxes
- The provision for income taxes exhibited a general upward trend over the five-year period. Starting at $209,845 thousand in 2018, the figure remained relatively stable in 2019 with a slight decrease to $208,431 thousand. From 2020 onwards, there was a noticeable increase each year, with the provision rising to $228,682 thousand in 2020, a more significant jump to $354,048 thousand in 2021, and reaching $464,190 thousand in 2022. This pattern suggests escalating taxable income or changes in tax rates, contributing to higher tax provisions.
- Cash Operating Taxes
- Cash operating taxes also followed an increasing trend across the period analyzed. Beginning at $152,350 thousand in 2018, there was a continuous rise each year, progressing to $194,492 thousand in 2019 and accelerating further to $270,585 thousand in 2020. The upward trend continued with $324,728 thousand in 2021 and peaked at $402,267 thousand in 2022. The steady annual growth indicates increased cash outflows related to taxes, which may reflect improved operational profitability or higher tax obligations.
- Comparative Insights
- Both provision for income taxes and cash operating taxes showed consistent growth, with cash operating taxes increasing at a slightly faster pace relative to the provision for income taxes in the early years. By 2022, the absolute difference between the two figures widened, with cash taxes amounting to $402,267 thousand compared to a tax provision of $464,190 thousand. This divergence highlights the company's growing tax payments in cash, which might impact liquidity, while the tax provision increase aligns with accounting recognition of income tax liabilities.
AI Ask an analyst for more
Invested Capital
Old Dominion Freight Line Inc., invested capital calculation (financing approach)
US$ in thousands
Based on: 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), 10-K (reporting date: 2018-12-31).
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 shareholders’ equity.
5 Removal of accumulated other comprehensive income.
6 Subtraction of short-term investments.
- Total Reported Debt & Leases
-
The total reported debt and leases exhibited a fluctuating trend over the five-year period. Initially, there was a decline from 127,153 thousand US dollars at the end of 2018 to 111,500 thousand US dollars in 2019. Subsequently, this figure increased substantially in 2020 to 206,231 thousand US dollars. From 2020 onward, the debt level slightly decreased, reaching 202,747 thousand US dollars in 2021 and further reducing to 198,063 thousand US dollars by the end of 2022. Overall, the debt level is significantly higher in 2022 compared to 2018, indicating an increase in leverage or financing obligations over the period despite some moderation after 2020.
- Shareholders’ Equity
-
Shareholders’ equity demonstrated consistent growth throughout the analyzed years. Starting from 2,680,483 thousand US dollars at the end of 2018, equity increased each year, reaching 3,065,717 thousand in 2019, 3,326,288 thousand in 2020, 3,679,807 thousand in 2021, and slightly decreasing to 3,652,917 thousand in 2022. This upward trend reflects a strengthening equity base, with only a minor dip in the final year that may warrant further investigation. The steady increase suggests accumulation of retained earnings or other equity enhancements over time.
- Invested Capital
-
Invested capital rose consistently from 3,056,198 thousand US dollars in 2018 to 4,117,551 thousand US dollars in 2022. There was a modest increase from 2018 to 2019, reaching 3,453,801 thousand, followed by a slight decline in 2020 to 3,423,416 thousand. Post-2020, there was a notable rise, with invested capital hitting 3,881,401 thousand in 2021 and continuing up to 4,117,551 thousand in 2022. This overall upward trend in invested capital indicates expanding asset base or capital deployment, potentially supporting growth initiatives or operational scaling during the observed timeframe.
AI Ask an analyst for more
Cost of Capital
Old Dominion Freight Line Inc., cost of capital calculations
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 37,630,139) | 37,630,139) | ÷ | 37,820,839) | = | 0.99 | 0.99 | × | 18.22% | = | 18.13% | ||
| Long-term debt, including current maturities3 | 92,600) | 92,600) | ÷ | 37,820,839) | = | 0.00 | 0.00 | × | 3.62% × (1 – 21.00%) | = | 0.01% | ||
| Operating lease liability4 | 98,100) | 98,100) | ÷ | 37,820,839) | = | 0.00 | 0.00 | × | 3.80% × (1 – 21.00%) | = | 0.01% | ||
| Total: | 37,820,839) | 1.00 | 18.14% | ||||||||||
Based on: 10-K (reporting date: 2022-12-31).
1 US$ in thousands
2 Equity. See details »
3 Long-term debt, including current maturities. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 32,446,727) | 32,446,727) | ÷ | 32,654,027) | = | 0.99 | 0.99 | × | 18.22% | = | 18.11% | ||
| Long-term debt, including current maturities3 | 104,500) | 104,500) | ÷ | 32,654,027) | = | 0.00 | 0.00 | × | 3.62% × (1 – 21.00%) | = | 0.01% | ||
| Operating lease liability4 | 102,800) | 102,800) | ÷ | 32,654,027) | = | 0.00 | 0.00 | × | 3.00% × (1 – 21.00%) | = | 0.01% | ||
| Total: | 32,654,027) | 1.00 | 18.12% | ||||||||||
Based on: 10-K (reporting date: 2021-12-31).
1 US$ in thousands
2 Equity. See details »
3 Long-term debt, including current maturities. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 25,411,604) | 25,411,604) | ÷ | 25,623,304) | = | 0.99 | 0.99 | × | 18.22% | = | 18.07% | ||
| Long-term debt, including current maturities3 | 105,400) | 105,400) | ÷ | 25,623,304) | = | 0.00 | 0.00 | × | 3.62% × (1 – 21.00%) | = | 0.01% | ||
| Operating lease liability4 | 106,300) | 106,300) | ÷ | 25,623,304) | = | 0.00 | 0.00 | × | 3.10% × (1 – 21.00%) | = | 0.01% | ||
| Total: | 25,623,304) | 1.00 | 18.09% | ||||||||||
Based on: 10-K (reporting date: 2020-12-31).
1 US$ in thousands
2 Equity. See details »
3 Long-term debt, including current maturities. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 16,439,956) | 16,439,956) | ÷ | 16,552,556) | = | 0.99 | 0.99 | × | 18.22% | = | 18.10% | ||
| Long-term debt, including current maturities3 | 46,100) | 46,100) | ÷ | 16,552,556) | = | 0.00 | 0.00 | × | 4.79% × (1 – 21.00%) | = | 0.01% | ||
| Operating lease liability4 | 66,500) | 66,500) | ÷ | 16,552,556) | = | 0.00 | 0.00 | × | 4.00% × (1 – 21.00%) | = | 0.01% | ||
| Total: | 16,552,556) | 1.00 | 18.12% | ||||||||||
Based on: 10-K (reporting date: 2019-12-31).
1 US$ in thousands
2 Equity. See details »
3 Long-term debt, including current maturities. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 12,209,782) | 12,209,782) | ÷ | 12,337,535) | = | 0.99 | 0.99 | × | 18.22% | = | 18.03% | ||
| Long-term debt, including current maturities3 | 45,600) | 45,600) | ÷ | 12,337,535) | = | 0.00 | 0.00 | × | 4.79% × (1 – 21.00%) | = | 0.01% | ||
| Operating lease liability4 | 82,153) | 82,153) | ÷ | 12,337,535) | = | 0.01 | 0.01 | × | 4.79% × (1 – 21.00%) | = | 0.03% | ||
| Total: | 12,337,535) | 1.00 | 18.07% | ||||||||||
Based on: 10-K (reporting date: 2018-12-31).
1 US$ in thousands
2 Equity. See details »
3 Long-term debt, including current maturities. See details »
4 Operating lease liability. See details »
Economic Spread Ratio
Old Dominion Freight Line Inc., economic spread ratio calculation, comparison to benchmarks
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Economic profit1 | 693,041) | 366,278) | 16,247) | (242) | 112,017) | |
| Invested capital2 | 4,117,551) | 3,881,401) | 3,423,416) | 3,453,801) | 3,056,198) | |
| Performance Ratio | ||||||
| Economic spread ratio3 | 16.83% | 9.44% | 0.47% | -0.01% | 3.67% | |
| Benchmarks | ||||||
| Economic Spread Ratio, Competitors4 | ||||||
| FedEx Corp. | -6.35% | -3.82% | — | — | — | |
| Uber Technologies Inc. | -73.74% | -22.90% | — | — | — | |
| Union Pacific Corp. | -1.50% | -2.36% | — | — | — | |
| United Airlines Holdings Inc. | -3.37% | -10.29% | — | — | — | |
| United Parcel Service Inc. | 11.65% | 17.48% | — | — | — | |
Based on: 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), 10-K (reporting date: 2018-12-31).
1 Economic profit. See details »
2 Invested capital. See details »
3 2022 Calculation
Economic spread ratio = 100 × Economic profit ÷ Invested capital
= 100 × 693,041 ÷ 4,117,551 = 16.83%
4 Click competitor name to see calculations.
Between 2018 and 2022, there is a pronounced trend of increasing economic value creation. Following a period of volatility and a marginal contraction in 2019, a substantial acceleration in both economic profit and capital efficiency is observed.
- Invested Capital Growth
- Invested capital demonstrates a general upward trajectory, rising from 3,056,198 thousand US dollars in 2018 to 4,117,551 thousand US dollars by the end of 2022. Aside from a slight decrease in 2020, the consistent growth indicates an ongoing expansion of the capital base utilized in operations.
- Economic Profit Trajectory
- Economic profit exhibited significant volatility in the early part of the period, shifting from a positive 112,017 thousand US dollars in 2018 to a marginal deficit of 242 thousand US dollars in 2019. This was followed by a recovery in 2020 and an exponential surge in the subsequent two years, peaking at 693,041 thousand US dollars in 2022. This indicates a capacity to generate value far exceeding the cost of capital in the latter years.
- Economic Spread Ratio Performance
- The economic spread ratio highlights a sharp improvement in value creation efficiency. After declining from 3.67% in 2018 to a low of -0.01% in 2019, the ratio rebounded to 0.47% in 2020 before climbing aggressively to 9.44% in 2021 and 16.83% in 2022. The rapid expansion of this ratio suggests that the return on invested capital increased significantly faster than the growth of the capital base itself.
AI Ask an analyst for more
Economic Profit Margin
Old Dominion Freight Line Inc., economic profit margin calculation, comparison to benchmarks
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Economic profit1 | 693,041) | 366,278) | 16,247) | (242) | 112,017) | |
| Revenue from operations | 6,260,077) | 5,256,328) | 4,015,129) | 4,109,111) | 4,043,695) | |
| Performance Ratio | ||||||
| Economic profit margin2 | 11.07% | 6.97% | 0.40% | -0.01% | 2.77% | |
| Benchmarks | ||||||
| Economic Profit Margin, Competitors3 | ||||||
| FedEx Corp. | -4.51% | -2.92% | — | — | — | |
| Uber Technologies Inc. | -37.80% | -21.09% | — | — | — | |
| Union Pacific Corp. | -3.59% | -6.31% | — | — | — | |
| United Airlines Holdings Inc. | -3.07% | -21.67% | — | — | — | |
| United Parcel Service Inc. | 5.20% | 7.98% | — | — | — | |
Based on: 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), 10-K (reporting date: 2018-12-31).
1 Economic profit. See details »
2 2022 Calculation
Economic profit margin = 100 × Economic profit ÷ Revenue from operations
= 100 × 693,041 ÷ 6,260,077 = 11.07%
3 Click competitor name to see calculations.
The financial performance from 2018 to 2022 is characterized by a period of initial volatility followed by a phase of rapid expansion in value creation. While the early part of the period showed fluctuating returns, the latter years demonstrate a significant increase in both absolute economic profit and the efficiency of revenue utilization.
- Economic Profit Trajectory
- Economic profit experienced a sharp decline between 2018 and 2019, moving from 112,017 thousand US dollars to a marginal loss of 242 thousand US dollars. A recovery began in 2020 with 16,247 thousand US dollars, which served as a baseline for exponential growth in subsequent years. By 2022, economic profit reached 693,041 thousand US dollars, representing a substantial increase in the company's ability to generate returns exceeding its cost of capital.
- Revenue Growth and Correlation
- Revenue from operations remained relatively stagnant between 2018 and 2020, fluctuating around the 4 million US dollar mark. However, a strong upward trend emerged in 2021 and 2022, with revenue climbing to 5,256,328 thousand US dollars and 6,260,077 thousand US dollars, respectively. The correlation between the surge in revenue and the surge in economic profit suggests strong operating leverage, where revenue growth significantly outpaced the increase in the cost of capital.
- Economic Profit Margin Expansion
- The economic profit margin reflects a dramatic improvement in value creation efficiency. After dropping to -0.01% in 2019 and remaining low at 0.40% in 2020, the margin expanded rapidly to 6.97% in 2021 and reached a peak of 11.07% in 2022. This trajectory indicates that a larger portion of each dollar of revenue is contributing to economic value added, shifting the business from a state of near-zero economic profit to a high-value-creation model.
In summary, the period concludes with a strong positive trend. The transition from a negative economic profit margin in 2019 to an 11.07% margin in 2022 underscores a fundamental improvement in profitability relative to the capital employed.
AI Ask an analyst for more