Deckers Outdoor Corp. (NYSE:DECK)

The analysis of the financial data over the six-year period presents several notable trends concerning profitability, capital costs, invested capital, and economic profit.

Net Operating Profit After Taxes (NOPAT)

NOPAT shows a consistent upward trajectory from 2018 to 2023. Starting at 130,421 thousand US dollars in 2018, there was a significant increase in 2019 to 281,186 thousand US dollars. Subsequent years maintained growth, reaching 502,935 thousand US dollars by 2023. This steady increase indicates improved operational efficiency and profitability after accounting for taxes over the analyzed period.

Cost of Capital

The cost of capital remained relatively stable, with minor fluctuations around the 13% mark. It increased slightly from 12.93% in 2018 to 13.58% in 2023, suggesting a marginal rise in the company's required rate of return on invested capital, possibly reflecting changing market conditions or risk profiles.

Invested Capital

Invested capital demonstrated a steady growth from 1,227,436 thousand US dollars in 2018 to 1,948,548 thousand US dollars in 2023. This gradual increase shows ongoing investment into the company's assets or operations, potentially to support growth initiatives or capacity expansion. The increase is consistent year-on-year, indicating sustained capital deployment.

Economic Profit

The economic profit, which considers the cost of capital, moved from a negative value of -28,270 thousand US dollars in 2018 to positive figures in subsequent years. Starting in 2019, economic profit became positive at 108,232 thousand US dollars and continued rising considerably to 238,228 thousand US dollars by 2023. This shift and sustained growth highlight the company's increasing ability to generate returns above its capital costs, reflecting enhanced value creation.

In summary, the financial data reveals a strong and consistent growth in operating profitability, effective management of capital costs, incremental investments in capital assets, and a significant improvement in economic profit. These patterns suggest that the company's operations have become more efficient and value-generating over the period analyzed.

The financial data reveals a consistent upward trend in both net income and net operating profit after taxes (NOPAT) over the six-year period ending March 31, 2023. This indicates sustained profitability and operational efficiency improvements.

Net Income

Net income exhibited significant growth from 114,394 thousand USD in 2018 to 516,822 thousand USD in 2023. This represents more than a fourfold increase over the period, underscoring strong earnings expansion. Notably, the largest annual increases appear between 2018 to 2019 and 2020 to 2021, suggesting episodes of accelerated profitability gains.

Net Operating Profit After Taxes (NOPAT)

NOPAT mirrored the net income trend, rising steadily from 130,421 thousand USD in 2018 to 502,935 thousand USD in 2023. The data suggests improved operational efficiency and tax management. The gap between net income and NOPAT is relatively consistent, implying a stable relationship between earnings and after-tax operating profit.

Overall, the upward trends in net income and NOPAT reflect positive financial performance, characterized by continuous growth and effective operating profit generation over the six-year span. This progression indicates successful management and potentially stronger market positioning.

The data reflects the annual figures for income tax expense and cash operating taxes over six fiscal years ending March 31 from 2018 through 2023.

Income Tax Expense

The income tax expense exhibited a declining trend from 2018 to 2019, decreasing from approximately 106.3 million USD to 64.6 million USD. This lower level was maintained relatively stable into 2020. However, in fiscal year 2021, income tax expense increased significantly to about 119 million USD. After a slight decrease in 2022 to approximately 112.7 million USD, the figure increased again in 2023 to roughly 149.3 million USD, marking the highest value in the dataset.

Cash Operating Taxes

Cash operating taxes followed a somewhat parallel but more volatile trajectory. There was a notable decrease from about 103 million USD in 2018 to roughly 59.9 million USD in 2019. In 2020, a minor increase to 63.2 million USD was observed, followed by a large jump to approximately 129.3 million USD in 2021. The increasing trend continued into 2022 with payments rising to around 141.7 million USD, and higher still in 2023 at approximately 158.1 million USD.

Overall, both income tax expense and cash operating taxes decreased significantly during the initial two-year period, reached a trough around 2019–2020, and then displayed a sharp upward trend starting in 2021 through 2023. The rise in both metrics during the later years suggests an increase in taxable income or changes in tax rates, tax policies, or the company’s tax planning strategies during this timeframe. The cash operating taxes consistently remain slightly lower than the income tax expense except for 2021 and 2022, where cash taxes exceeded the income tax expense, indicating possible timing differences or adjustments in tax provisions.

The financial data reveals several key trends in the company's capital structure and equity position over a six-year period ending March 31, 2023.

Total Reported Debt & Leases

The total debt and leases decreased from $308.6 million in 2018 to a low point of $222.1 million in 2022, indicating a significant reduction in leverage during that period. However, in 2023, this figure rose to $246.5 million, reflecting a partial reversal of the prior deleveraging trend.

Stockholders’ Equity

Stockholders’ equity demonstrated consistent growth throughout the entire timeframe. Beginning at $940.8 million in 2018, it increased steadily each year, reaching $1.77 billion by 2023. This upward trajectory indicates sustained profitability and/or retained earnings accumulation, contributing to a strengthening equity base.

Invested Capital

Invested capital, representing the total amount invested in the business from both equity and debt, also showed a persistent upward trend. It increased from $1.23 billion in 2018 to nearly $1.95 billion in 2023. This reflects not only the rise in equity but also ongoing capital investments or asset growth, with the company supporting expansion or operational needs through a combination of equity and debt financing.

Overall, the company has managed to grow its equity base substantially over the period while maintaining a moderate and somewhat fluctuating debt level. The partial increase in debt and leases in the most recent year suggests a potential strategic shift toward leveraging capital structure more actively after a period of deleveraging. The consistent growth in invested capital indicates ongoing investment in the business's long-term assets, supporting future growth prospects.

Economic Profit

The economic profit showed a significant upward trend over the period analyzed. Beginning with a negative value of -28,270 thousand US dollars in 2018, the figure transitioned into positive territory by 2019 with 108,232 thousand US dollars. From 2019 onwards, economic profit consistently increased each year, reaching 238,228 thousand US dollars by 2023. This indicates an improving ability to generate returns above the cost of capital over time.

Invested Capital

Invested capital steadily increased throughout the period. It started at 1,227,436 thousand US dollars in 2018 and rose each subsequent year to 1,948,548 thousand US dollars by 2023. This progressive growth suggests ongoing investments or acquisitions, supporting expansion or asset base growth. The rising invested capital, combined with the increasing economic profit, implies efficient utilization of capital.

Economic Spread Ratio

The economic spread ratio followed a positive trajectory. Starting from a negative rate of -2.3% in 2018, it improved sharply to 8.28% in 2019. This upward trend persisted across the years, achieving 12.23% in 2023. The increasing ratio reflects enhanced profitability per unit of invested capital, signifying better performance in generating returns over costs.

Economic Profit

The economic profit shows a significant positive trend from 2018 to 2023. Initially, there was a negative value of -28,270 thousand US dollars in 2018, which shifted to a positive value of 108,232 thousand in 2019. This upward trend continued steadily each year, reaching 238,228 thousand US dollars by 2023. The data indicates improved profitability and value creation over the observed period.

Adjusted Net Sales

Adjusted net sales increased consistently throughout the time frame. Starting at approximately 1,903,339 thousand US dollars in 2018, net sales grew steadily each year, peaking at about 3,624,930 thousand US dollars by 2023. This represents a near doubling in adjusted net sales over the six-year period, suggesting sustained revenue growth and expanding sales operations or market presence.

Economic Profit Margin

The economic profit margin moved from a negative -1.49% in 2018 to positive values starting in 2019, where it registered 5.36%. This margin progressively increased year-over-year, stabilizing around 6.4% to 6.57% from 2021 onwards. The steady improvement reflects enhanced efficiency in generating economic profit relative to sales, highlighting better cost management or pricing strategies in recent years.