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 – 18.08% × 4,117,551 = 695,633
The economic performance over the five-year period is characterized by a significant acceleration in value creation beginning in 2021. While economic profit experienced a sharp contraction between 2018 and 2019, the subsequent years demonstrate a robust recovery and substantial growth in absolute economic profit, indicating a marked improvement in the ability to generate returns exceeding the cost of capital.
- Net Operating Profit After Taxes (NOPAT)
- NOPAT remained relatively stagnant between 2018 and 2020, with values fluctuating between US$ 625.6 million and US$ 664.3 million. A strong upward trajectory is observed starting in 2021, with NOPAT increasing to US$ 1.07 billion and further climbing to US$ 1.44 billion by December 31, 2022. This represents a growth of approximately 127% from the 2020 level.
- Invested Capital and Cost of Capital
- Invested capital showed a general upward trend, increasing from US$ 3.06 billion in 2018 to US$ 4.12 billion in 2022. Concurrently, the cost of capital remained remarkably stable, maintaining a narrow range between 18.01% and 18.08%. The stability of the cost of capital suggests that the increase in economic profit was driven by operational performance and margin expansion rather than a reduction in the required rate of return or financing costs.
- Economic Profit Trends
- Economic profit exhibited high volatility in the early part of the period, falling from US$ 113.9 million in 2018 to a low of US$ 1.9 million in 2019, which indicates that the return on invested capital nearly converged with the cost of capital. However, a powerful recovery is evident in the final two years, with economic profit surging to US$ 368.7 million in 2021 and reaching US$ 695.6 million by the end of 2022. This trajectory confirms that the growth in NOPAT significantly outpaced the growth in the capital charge, resulting in substantial economic value added.
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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.
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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 $464,190 thousand. This divergence highlights the company's growing tax payments in cash, which might impact liquidity, while the tax provision increase aligns with accounting recognition of income tax liabilities.
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Invested Capital
Old Dominion Freight Line Inc., invested capital calculation (financing approach)
US$ 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.
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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 | × | 18.16% | = | 18.07% | ||
| 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 | 18.08% | ||||||||||
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 | × | 18.16% | = | 18.04% | ||
| 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 | 18.06% | ||||||||||
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 | × | 18.16% | = | 18.01% | ||
| 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 | 18.03% | ||||||||||
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 | × | 18.16% | = | 18.03% | ||
| 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 | 18.06% | ||||||||||
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 | × | 18.16% | = | 17.97% | ||
| 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 | 18.01% | ||||||||||
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 | 695,633) | 368,718) | 18,395) | 1,928) | 113,930) | |
| Invested capital2 | 4,117,551) | 3,881,401) | 3,423,416) | 3,453,801) | 3,056,198) | |
| Performance Ratio | ||||||
| Economic spread ratio3 | 16.89% | 9.50% | 0.54% | 0.06% | 3.73% | |
| Benchmarks | ||||||
| Economic Spread Ratio, Competitors4 | ||||||
| FedEx Corp. | -6.21% | -3.67% | — | — | — | |
| Uber Technologies Inc. | -73.68% | -22.85% | — | — | — | |
| Union Pacific Corp. | -1.45% | -2.31% | — | — | — | |
| United Airlines Holdings Inc. | -3.35% | -10.27% | — | — | — | |
| United Parcel Service Inc. | 11.70% | 17.53% | — | — | — | |
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 × 695,633 ÷ 4,117,551 = 16.89%
4 Click competitor name to see calculations.
The period between 2018 and 2022 is characterized by an initial contraction in economic value creation followed by a period of aggressive growth and improved capital efficiency. While the company faced a near-total erosion of economic profit in 2019, the subsequent three years demonstrate a robust recovery and a significant expansion in the value generated over the cost of capital.
- Economic Profit Trajectory
- Economic profit exhibited extreme volatility, dropping from $113.9 million in 2018 to a low of $1.9 million in 2019. A recovery phase began in 2020 with a modest increase to $18.4 million, which transitioned into an exponential growth phase. By 2021, economic profit reached $368.7 million, and by 2022, it surged to $695.6 million, indicating a substantial increase in the company's ability to generate returns above its capital charges.
- Invested Capital Expansion
- Invested capital showed a consistent upward trend, increasing from $3.06 billion in 2018 to $4.12 billion in 2022. A minor contraction was noted in 2020, where capital dipped slightly to $3.42 billion from the $3.45 billion recorded in 2019. The overall growth in the capital base suggests a steady expansion of operations and assets throughout the analyzed period.
- Economic Spread Ratio Performance
- The economic spread ratio reveals a dramatic improvement in capital productivity. The ratio collapsed from 3.73% in 2018 to a marginal 0.06% in 2019, signifying that the return on invested capital had almost converged with the cost of capital. However, a sharp reversal occurred thereafter, with the ratio climbing to 0.54% in 2020, 9.50% in 2021, and peaking at 16.89% in 2022. This acceleration indicates that the company significantly widened the gap between its returns and its cost of capital, maximizing the efficiency of every dollar invested.
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Economic Profit Margin
Old Dominion Freight Line Inc., economic profit margin calculation, comparison to benchmarks
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Economic profit1 | 695,633) | 368,718) | 18,395) | 1,928) | 113,930) | |
| Revenue from operations | 6,260,077) | 5,256,328) | 4,015,129) | 4,109,111) | 4,043,695) | |
| Performance Ratio | ||||||
| Economic profit margin2 | 11.11% | 7.01% | 0.46% | 0.05% | 2.82% | |
| Benchmarks | ||||||
| Economic Profit Margin, Competitors3 | ||||||
| FedEx Corp. | -4.41% | -2.81% | — | — | — | |
| Uber Technologies Inc. | -37.77% | -21.04% | — | — | — | |
| Union Pacific Corp. | -3.47% | -6.17% | — | — | — | |
| United Airlines Holdings Inc. | -3.05% | -21.63% | — | — | — | |
| United Parcel Service Inc. | 5.22% | 8.00% | — | — | — | |
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 × 695,633 ÷ 6,260,077 = 11.11%
3 Click competitor name to see calculations.
The financial performance from 2018 to 2022 is characterized by a period of initial volatility followed by an aggressive expansion in value creation. While the early part of the period saw a significant contraction in economic profit, the subsequent two years demonstrate a strong recovery and a substantial increase in both operational scale and capital efficiency.
- Economic Profit Trend
- Economic profit experienced a sharp decline between 2018 and 2019, falling from 113,930 thousand US$ to 1,928 thousand US$. A marginal recovery occurred in 2020, followed by a period of rapid growth. By 2021, economic profit rose to 368,718 thousand US$, and by 2022, it reached 695,633 thousand US$, representing a significant increase in the value generated above the company's cost of capital.
- Revenue from Operations Growth
- Operational revenue remained relatively stagnant between 2018 and 2020, fluctuating slightly around the 4 million US$ mark. However, a strong upward trajectory began in 2021, with revenue increasing to 5,256,328 thousand US$, and continuing upward to 6,260,077 thousand US$ by the end of 2022. This indicates a successful scaling of operations in the latter half of the observed period.
- Economic Profit Margin Analysis
- The economic profit margin serves as a key indicator of efficiency in value creation. The margin plummeted from 2.82% in 2018 to a near-zero level of 0.05% in 2019, suggesting that the returns on capital barely covered the cost of capital during that period. From 2021 onward, there was a dramatic expansion in the margin, reaching 7.01% in 2021 and 11.11% in 2022. This trajectory indicates that economic profit grew at a significantly faster rate than revenue, reflecting improved operational leverage and enhanced capital productivity.
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