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
Deckers Outdoor Corp., economic profit calculation
US$ in thousands
Based on: 10-K (reporting date: 2023-03-31), 10-K (reporting date: 2022-03-31), 10-K (reporting date: 2021-03-31), 10-K (reporting date: 2020-03-31), 10-K (reporting date: 2019-03-31), 10-K (reporting date: 2018-03-31).
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
= 502,935 – 15.92% × 1,948,548 = 192,715
The analysis of economic profit from 2018 to 2023 reveals a significant transformation in value creation, shifting from initial value destruction to substantial and sustainable economic gains.
- Net Operating Profit After Taxes (NOPAT)
- A consistent and aggressive upward trajectory is observed in NOPAT, which increased from 130,421 thousand US$ in 2018 to 502,935 thousand US$ by 2023. The most substantial growth occurred between 2018 and 2019, where NOPAT more than doubled, establishing a strong foundation for subsequent operational expansion.
- Invested Capital and Cost of Capital
- Invested capital expanded steadily from 1,227,436 thousand US$ to 1,948,548 thousand US$ over the observed period. Parallel to this expansion, the cost of capital remained remarkably stable, fluctuating marginally between 15.11% and 15.92%. This stability indicates that the increase in the capital base did not result in a significant escalation of the required rate of return.
- Economic Profit Performance
- Economic profit transitioned from a deficit of -55,054 thousand US$ in 2018 to a surplus of 192,715 thousand US$ by 2023. After pivoting to positive value creation in 2019, a minor contraction was noted in 2020, followed by an accelerated growth phase from 2021 through 2023. The widening gap between NOPAT and the capital charge confirms that the company has significantly improved its ability to generate returns exceeding its cost of capital.
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Net Operating Profit after Taxes (NOPAT)
Deckers Outdoor Corp., NOPAT calculation
US$ in thousands
Based on: 10-K (reporting date: 2023-03-31), 10-K (reporting date: 2022-03-31), 10-K (reporting date: 2021-03-31), 10-K (reporting date: 2020-03-31), 10-K (reporting date: 2019-03-31), 10-K (reporting date: 2018-03-31).
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 revenue.
4 Addition of increase (decrease) in equity equivalents to net income.
5 2023 Calculation
Interest expense on capitalized operating leases = Operating lease liability × Discount rate
= 246,488 × 3.20% = 7,888
6 2023 Calculation
Tax benefit of interest expense = Adjusted interest expense × Statutory income tax rate
= 11,330 × 21.00% = 2,379
7 Addition of after taxes interest expense to net income.
8 2023 Calculation
Tax expense (benefit) of investment income = Investment income, before tax × Statutory income tax rate
= 15,563 × 21.00% = 3,268
9 Elimination of after taxes investment income.
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.
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Cash Operating Taxes
Deckers Outdoor Corp., cash operating taxes calculation
US$ in thousands
Based on: 10-K (reporting date: 2023-03-31), 10-K (reporting date: 2022-03-31), 10-K (reporting date: 2021-03-31), 10-K (reporting date: 2020-03-31), 10-K (reporting date: 2019-03-31), 10-K (reporting date: 2018-03-31).
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.
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Invested Capital
Deckers Outdoor Corp., invested capital calculation (financing approach)
US$ in thousands
Based on: 10-K (reporting date: 2023-03-31), 10-K (reporting date: 2022-03-31), 10-K (reporting date: 2021-03-31), 10-K (reporting date: 2020-03-31), 10-K (reporting date: 2019-03-31), 10-K (reporting date: 2018-03-31).
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 revenue.
5 Addition of equity equivalents to stockholders’ equity.
6 Removal of accumulated other comprehensive income.
7 Subtraction of construction in progress.
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 $1.95 billion in 2023. This reflects not only the rise in equity but also ongoing capital investments or asset growth, with the company supporting expansion or operational needs through a combination of equity and debt financing.
Overall, the company has managed to grow its equity base substantially over the period while maintaining a moderate and somewhat fluctuating debt level. The partial increase in debt and leases in the most recent year suggests a potential strategic shift toward leveraging capital structure more actively after a period of deleveraging. The consistent growth in invested capital indicates ongoing investment in the business's long-term assets, supporting future growth prospects.
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Cost of Capital
Deckers Outdoor Corp., cost of capital calculations
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 12,169,037) | 12,169,037) | ÷ | 12,415,525) | = | 0.98 | 0.98 | × | 16.19% | = | 15.87% | ||
| Mortgage payable3 | —) | —) | ÷ | 12,415,525) | = | 0.00 | 0.00 | × | 0.00% × (1 – 21.00%) | = | 0.00% | ||
| Operating lease liability4 | 246,488) | 246,488) | ÷ | 12,415,525) | = | 0.02 | 0.02 | × | 3.20% × (1 – 21.00%) | = | 0.05% | ||
| Total: | 12,415,525) | 1.00 | 15.92% | ||||||||||
Based on: 10-K (reporting date: 2023-03-31).
1 US$ in thousands
2 Equity. See details »
3 Mortgage payable. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 7,282,824) | 7,282,824) | ÷ | 7,504,894) | = | 0.97 | 0.97 | × | 16.19% | = | 15.71% | ||
| Mortgage payable3 | —) | —) | ÷ | 7,504,894) | = | 0.00 | 0.00 | × | 0.00% × (1 – 21.00%) | = | 0.00% | ||
| Operating lease liability4 | 222,070) | 222,070) | ÷ | 7,504,894) | = | 0.03 | 0.03 | × | 2.60% × (1 – 21.00%) | = | 0.06% | ||
| Total: | 7,504,894) | 1.00 | 15.77% | ||||||||||
Based on: 10-K (reporting date: 2022-03-31).
1 US$ in thousands
2 Equity. See details »
3 Mortgage payable. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 9,329,600) | 9,329,600) | ÷ | 9,552,642) | = | 0.98 | 0.98 | × | 16.19% | = | 15.81% | ||
| Mortgage payable3 | —) | —) | ÷ | 9,552,642) | = | 0.00 | 0.00 | × | 0.00% × (1 – 21.00%) | = | 0.00% | ||
| Operating lease liability4 | 223,042) | 223,042) | ÷ | 9,552,642) | = | 0.02 | 0.02 | × | 3.10% × (1 – 21.00%) | = | 0.06% | ||
| Total: | 9,552,642) | 1.00 | 15.87% | ||||||||||
Based on: 10-K (reporting date: 2021-03-31).
1 US$ in thousands
2 Equity. See details »
3 Mortgage payable. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 5,482,856) | 5,482,856) | ÷ | 5,778,572) | = | 0.95 | 0.95 | × | 16.19% | = | 15.36% | ||
| Mortgage payable3 | 30,901) | 30,901) | ÷ | 5,778,572) | = | 0.01 | 0.01 | × | 4.93% × (1 – 21.00%) | = | 0.02% | ||
| Operating lease liability4 | 264,815) | 264,815) | ÷ | 5,778,572) | = | 0.05 | 0.05 | × | 3.30% × (1 – 21.00%) | = | 0.12% | ||
| Total: | 5,778,572) | 1.00 | 15.50% | ||||||||||
Based on: 10-K (reporting date: 2020-03-31).
1 US$ in thousands
2 Equity. See details »
3 Mortgage payable. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 4,421,716) | 4,421,716) | ÷ | 4,695,413) | = | 0.94 | 0.94 | × | 16.19% | = | 15.25% | ||
| Mortgage payable3 | 31,504) | 31,504) | ÷ | 4,695,413) | = | 0.01 | 0.01 | × | 4.93% × (1 – 21.00%) | = | 0.03% | ||
| Operating lease liability4 | 242,193) | 242,193) | ÷ | 4,695,413) | = | 0.05 | 0.05 | × | 4.93% × (1 – 21.00%) | = | 0.20% | ||
| Total: | 4,695,413) | 1.00 | 15.48% | ||||||||||
Based on: 10-K (reporting date: 2019-03-31).
1 US$ in thousands
2 Equity. See details »
3 Mortgage payable. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 3,349,259) | 3,349,259) | ÷ | 3,657,826) | = | 0.92 | 0.92 | × | 16.19% | = | 14.83% | ||
| Mortgage payable3 | 32,082) | 32,082) | ÷ | 3,657,826) | = | 0.01 | 0.01 | × | 4.93% × (1 – 31.52%) | = | 0.03% | ||
| Operating lease liability4 | 276,486) | 276,486) | ÷ | 3,657,826) | = | 0.08 | 0.08 | × | 4.93% × (1 – 31.52%) | = | 0.26% | ||
| Total: | 3,657,826) | 1.00 | 15.11% | ||||||||||
Based on: 10-K (reporting date: 2018-03-31).
1 US$ in thousands
2 Equity. See details »
3 Mortgage payable. See details »
4 Operating lease liability. See details »
Economic Spread Ratio
Deckers Outdoor Corp., economic spread ratio calculation, comparison to benchmarks
| Mar 31, 2023 | Mar 31, 2022 | Mar 31, 2021 | Mar 31, 2020 | Mar 31, 2019 | Mar 31, 2018 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | |||||||
| Economic profit1 | 192,715) | 164,711) | 124,640) | 65,593) | 78,897) | (55,054) | |
| Invested capital2 | 1,948,548) | 1,736,074) | 1,642,284) | 1,422,595) | 1,307,197) | 1,227,436) | |
| Performance Ratio | |||||||
| Economic spread ratio3 | 9.89% | 9.49% | 7.59% | 4.61% | 6.04% | -4.49% | |
| Benchmarks | |||||||
| Economic Spread Ratio, Competitors4 | |||||||
| lululemon athletica inc. | 1.44% | 7.33% | -0.78% | — | — | — | |
| Nike Inc. | 7.24% | 9.27% | 9.24% | — | — | — | |
Based on: 10-K (reporting date: 2023-03-31), 10-K (reporting date: 2022-03-31), 10-K (reporting date: 2021-03-31), 10-K (reporting date: 2020-03-31), 10-K (reporting date: 2019-03-31), 10-K (reporting date: 2018-03-31).
1 Economic profit. See details »
2 Invested capital. See details »
3 2023 Calculation
Economic spread ratio = 100 × Economic profit ÷ Invested capital
= 100 × 192,715 ÷ 1,948,548 = 9.89%
4 Click competitor name to see calculations.
The financial performance between 2018 and 2023 demonstrates a significant transition from value destruction to consistent value creation. This period is characterized by a steady expansion of both the capital base and the returns generated in excess of the cost of capital.
- Economic Profit Trend
- Economic profit experienced a complete reversal from a deficit of 55.1 million US dollars in 2018 to a surplus of 192.7 million US dollars by 2023. After shifting into positive territory in 2019, the figure maintained a strong upward trajectory, indicating an enhanced capacity to generate wealth beyond the required return on capital.
- Invested Capital Growth
- A consistent year-over-year increase in invested capital is observed, rising from 1.23 billion US dollars in 2018 to 1.95 billion US dollars in 2023. This steady growth suggests a continuous commitment to scaling operations and investing in the asset base to support long-term expansion.
- Economic Spread Ratio Performance
- The economic spread ratio improved from -4.49% in 2018 to 9.89% in 2023. Although a moderate decline occurred in 2020, where the ratio fell to 4.61%, it subsequently grew for three consecutive years. This expansion indicates that the return on invested capital is increasing at a faster rate than the cost of capital, reflecting improved operational efficiency and higher capital productivity.
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Economic Profit Margin
Deckers Outdoor Corp., economic profit margin calculation, comparison to benchmarks
| Mar 31, 2023 | Mar 31, 2022 | Mar 31, 2021 | Mar 31, 2020 | Mar 31, 2019 | Mar 31, 2018 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | |||||||
| Economic profit1 | 192,715) | 164,711) | 124,640) | 65,593) | 78,897) | (55,054) | |
| Net sales | 3,627,286) | 3,150,339) | 2,545,641) | 2,132,689) | 2,020,437) | 1,903,339) | |
| Add: Increase (decrease) in deferred revenue | (2,356) | 10,379) | —) | —) | —) | —) | |
| Adjusted net sales | 3,624,930) | 3,160,718) | 2,545,641) | 2,132,689) | 2,020,437) | 1,903,339) | |
| Performance Ratio | |||||||
| Economic profit margin2 | 5.32% | 5.21% | 4.90% | 3.08% | 3.90% | -2.89% | |
| Benchmarks | |||||||
| Economic Profit Margin, Competitors3 | |||||||
| lululemon athletica inc. | 0.80% | 4.54% | -0.65% | — | — | — | |
| Nike Inc. | 2.88% | 4.19% | 4.34% | — | — | — | |
Based on: 10-K (reporting date: 2023-03-31), 10-K (reporting date: 2022-03-31), 10-K (reporting date: 2021-03-31), 10-K (reporting date: 2020-03-31), 10-K (reporting date: 2019-03-31), 10-K (reporting date: 2018-03-31).
1 Economic profit. See details »
2 2023 Calculation
Economic profit margin = 100 × Economic profit ÷ Adjusted net sales
= 100 × 192,715 ÷ 3,624,930 = 5.32%
3 Click competitor name to see calculations.
An analysis of the financial performance from March 31, 2018, to March 31, 2023, reveals a strong upward trajectory in economic value creation. The transition from a negative economic profit to a sustained positive growth pattern indicates an increasing ability to generate returns exceeding the company's cost of capital over the six-year period.
- Economic Profit Trends
- A significant reversal is observed between 2018 and 2019, where economic profit shifted from a deficit of US$ 55.05 million to a surplus of US$ 78.90 million. Following a minor contraction in 2020 to US$ 65.59 million, the figure experienced accelerated growth, peaking at US$ 192.72 million by March 31, 2023. This trend demonstrates a substantial increase in the absolute value created for shareholders.
- Adjusted Net Sales Expansion
- Consistent growth in scale is evident, with adjusted net sales rising from US$ 1.90 billion in 2018 to US$ 3.62 billion in 2023. The growth trajectory became more pronounced after 2021, suggesting that the expansion in economic profit was supported by a significant increase in top-line revenue.
- Economic Profit Margin Analysis
- The economic profit margin reflects a recovery and subsequent expansion phase. After starting at -2.89% in 2018, the margin moved into positive territory in 2019 at 3.90%. Despite a brief decline to 3.08% in 2020, the margin improved steadily over the final three years, reaching 5.32% by 2023. This indicates that the company not only grew in size but also improved the efficiency of its capital utilization relative to its sales volume.
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