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.
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Texas Pacific Land Corp. pages available for free this week:
- Cash Flow Statement
- Common-Size Income Statement
- Analysis of Liquidity Ratios
- Analysis of Short-term (Operating) Activity Ratios
- Analysis of Reportable Segments
- Return on Assets (ROA) since 2005
- Debt to Equity since 2005
- Total Asset Turnover since 2005
- Price to Sales (P/S) since 2005
- Analysis of Revenues
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Economic Profit
Texas Pacific Land Corp., economic profit calculation
US$ in thousands
| 12 months ended: | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|---|
| Net operating profit after taxes (NOPAT)1 | ||||||
| Cost of capital2 | ||||||
| Invested capital3 | ||||||
| Economic profit4 | ||||||
Based on: 10-K (reporting date: 2023-12-31), 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).
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
= – × =
- Net Operating Profit After Taxes (NOPAT)
- The net operating profit after taxes experienced a significant decline from 348,876 thousand US dollars in 2019 to 182,624 thousand US dollars in 2020. However, from 2020 onwards, there was a recovery and upward trend, with NOPAT increasing to 267,856 thousand in 2021 and reaching a peak of 444,863 thousand in 2022 before slightly decreasing to 389,641 thousand in 2023. This pattern suggests volatility but generally improved operating profitability after the slump in 2020.
- Cost of Capital
- The cost of capital remained steady at around 21.27% to 21.28% throughout the entire period from 2019 to 2023, indicating stable capital costs without significant fluctuations during these years.
- Invested Capital
- Invested capital showed a general increasing trend over the five-year period. It decreased slightly from 575,173 thousand US dollars in 2019 to 555,694 thousand in 2020, followed by a consistent rise each year reaching 1,117,290 thousand US dollars by 2023. This indicates ongoing capital investment and asset base expansion in recent years.
- Economic Profit
- Economic profit decreased sharply between 2019 and 2020, from 226,510 thousand to 64,371 thousand US dollars, mirroring the drop in NOPAT. Subsequent years saw a steady recovery with incremental increases to 115,024 thousand in 2021 and a significant jump to 265,938 thousand in 2022. In 2023, economic profit declined again to 151,846 thousand but remained above the levels observed in 2020 and 2021. This pattern reflects the overall profitability after considering the cost of capital, indicating fluctuating but generally positive value creation with a dip in 2023.
- Summary
- Overall, the company experienced a notable downturn in 2020 affecting both profitability and economic profit, likely due to external factors impacting operations. Recovery was strong in 2021 and especially in 2022 with improvements in net operating profit and economic profit, alongside continuous growth in invested capital. In 2023, despite sustained high invested capital, there was a decrease in both NOPAT and economic profit, suggesting some pressures on profitability or efficiency in capital use during that year. The constant cost of capital indicates that external financing conditions remained stable throughout the period.
Net Operating Profit after Taxes (NOPAT)
Texas Pacific Land Corp., NOPAT calculation
US$ in thousands
Based on: 10-K (reporting date: 2023-12-31), 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).
1 Elimination of deferred tax expense. See details »
2 Addition of increase (decrease) in allowance for expected credit loss.
3 Addition of increase (decrease) in unearned 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
= × =
6 2023 Calculation
Tax benefit of interest expense = Adjusted interest expense × Statutory income tax rate
= × 21.00% =
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
= × 21.00% =
9 Elimination of after taxes investment income.
The financial data reveals fluctuations in profitability figures over the five-year period from 2019 to 2023. Both net income and net operating profit after taxes (NOPAT) demonstrate notable variations that suggest changes in operational performance and earnings capacity.
- Net Income (US$ in thousands)
- Net income initially decreased substantially from 318,728 in 2019 to 176,049 in 2020, indicating a significant dip in profitability. However, this was followed by a recovery in 2021, where net income rose to 269,980. The upward trend continued more strongly in 2022, reaching a peak of 446,362. In 2023, net income slightly declined to 405,645 but remained well above the levels observed in 2019 through 2021, signifying overall growth in earnings over the period.
- Net Operating Profit After Taxes (NOPAT) (US$ in thousands)
- NOPAT exhibited a similar trend to net income. It fell from 348,876 in 2019 to 182,624 in 2020, paralleling the decrease in net income and reflecting weaker operational profitability in that year. Subsequently, NOPAT rebounded to 267,856 in 2021 before surging to a high of 444,863 in 2022. In 2023, it decreased to 389,641, maintaining a level significantly above the early years of the data set. This pattern suggests that the operating efficiency and after-tax profitability improved notably after 2020, despite the slight decline in the most recent year.
In summary, the data highlight a pronounced downturn in 2020 followed by a strong recovery through 2022, with a modest decline in 2023. Both net income and NOPAT exhibit consistent directions, indicating that the changes in reported earnings are underpinned by changes in core operational performance rather than extraordinary items. The sustained improvement after 2020 suggests a positive shift in business conditions or management effectiveness that strengthened profitability during this period.
Cash Operating Taxes
Texas Pacific Land Corp., cash operating taxes calculation
US$ in thousands
Based on: 10-K (reporting date: 2023-12-31), 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).
The data reveals significant fluctuations in both income tax expense and cash operating taxes over the five-year period from 2019 to 2023.
- Income Tax Expense
- There is a notable decrease in income tax expense from 83,527 thousand US dollars in 2019 to 43,613 thousand in 2020, reflecting nearly a 48% decline. This is followed by a sharp increase to 93,037 thousand in 2021, which exceeds the 2019 level. The upward trend continues with income tax expense rising to 122,493 thousand in 2022, marking the highest value in the five-year span. In 2023, there is a moderate decline to 111,916 thousand, although this still represents a substantially higher level compared to the earlier years under review.
- Cash Operating Taxes
- Cash operating taxes show a different pattern. Initially, there is a slight decrease from 57,519 thousand in 2019 to 46,023 thousand in 2020. Subsequently, there is a significant increase to 93,269 thousand in 2021, closely paralleling the rise in income tax expense that year. The upward trajectory continues with a peak of 119,954 thousand in 2022. In 2023, cash operating taxes decline to 104,525 thousand but remain substantially elevated compared to the first two years, indicating sustained higher tax-related cash outflows in recent years.
Overall, both income tax expense and cash operating taxes exhibit a considerable dip in 2020, potentially indicative of changes in profitability or tax strategies during that period. From 2021 onwards, there is a marked upward trend resulting in significantly higher tax expenses and cash taxes through 2022, followed by slight decreases in 2023. This dynamic suggests variability in taxable income levels or tax planning outcomes that impacted the company’s tax liabilities and cash payments over these years.
Invested Capital
Texas Pacific Land Corp., invested capital calculation (financing approach)
US$ in thousands
Based on: 10-K (reporting date: 2023-12-31), 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).
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 unearned revenue.
5 Addition of equity equivalents to total equity.
6 Removal of accumulated other comprehensive income.
The financial data reveals significant trends in the company's capital structure and financing over the five-year period ending in 2023.
- Total reported debt & leases
- This metric shows a consistent decline from 2019 through 2023, decreasing from $3.367 million to $2.024 million. The decline is visible except for a slight increase in 2022 compared to 2021. Overall, the downward trend suggests the company has been reducing its reliance on debt and lease obligations over the observed period.
- Total equity
- Total equity experienced fluctuations initially, dropping from $512.1 million in 2019 to $485.2 million in 2020, but subsequently rose sharply. From 2020 onwards, equity increased markedly, reaching $1.043 billion by 2023. This upward trajectory indicates notable growth in the shareholders’ stake and possibly retained earnings or new equity infusions.
- Invested capital
- Invested capital follows a similar pattern to total equity but at a higher absolute level. It declined slightly from $575.2 million in 2019 to $555.7 million in 2020, then increased significantly in subsequent years, culminating in $1.117 billion in 2023. This increase signifies expanding investment in business assets funded through a combination of equity and debt, with the debt portion being relatively reduced.
In summary, the financial data points to a strategic reduction in debt exposure while equity and total invested capital have grown substantially. This may reflect a strengthening of the company’s financial position, with increased capitalization and potentially improved asset base, positioning it for future growth or stability.
Cost of Capital
Texas Pacific Land Corp., cost of capital calculations
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Operating lease liability3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2023-12-31).
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Operating lease liability3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2022-12-31).
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Operating lease liability3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2021-12-31).
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Operating lease liability3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2020-12-31).
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Operating lease liability3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2019-12-31).
Economic Spread Ratio
Texas Pacific Land Corp., economic spread ratio calculation, comparison to benchmarks
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Economic profit1 | ||||||
| Invested capital2 | ||||||
| Performance Ratio | ||||||
| Economic spread ratio3 | ||||||
| Benchmarks | ||||||
| Economic Spread Ratio, Competitors4 | ||||||
| Chevron Corp. | ||||||
| ConocoPhillips | ||||||
| Exxon Mobil Corp. | ||||||
Based on: 10-K (reporting date: 2023-12-31), 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).
1 Economic profit. See details »
2 Invested capital. See details »
3 2023 Calculation
Economic spread ratio = 100 × Economic profit ÷ Invested capital
= 100 × ÷ =
4 Click competitor name to see calculations.
- Economic Profit
- Economic profit exhibited significant fluctuations over the observed period. It started at a high level in 2019, declined markedly in 2020, followed by a recovery in 2021. The peak was reached in 2022 before experiencing a decrease in 2023. These variations suggest sensitivity to operational or market factors impacting profitability.
- Invested Capital
- Invested capital showed a consistent upward trend throughout the period. Beginning at approximately 575 million US dollars in 2019, it declined slightly in 2020 but increased substantially in subsequent years, reaching over 1.11 billion US dollars by 2023. This pattern reflects ongoing capital deployment and expansion efforts.
- Economic Spread Ratio
- The economic spread ratio followed a variable pattern. It was relatively strong in 2019, decreased sharply in 2020, and improved in 2021 and 2022 but did not reach the initial level observed in 2019. The ratio fell again in 2023. These fluctuations mirror changes in profitability relative to the cost of capital, indicating varying efficiency in generating returns over time.
Economic Profit Margin
Texas Pacific Land Corp., economic profit margin calculation, comparison to benchmarks
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Economic profit1 | ||||||
| Revenues | ||||||
| Add: Increase (decrease) in unearned revenue | ||||||
| Adjusted revenues | ||||||
| Performance Ratio | ||||||
| Economic profit margin2 | ||||||
| Benchmarks | ||||||
| Economic Profit Margin, Competitors3 | ||||||
| Chevron Corp. | ||||||
| ConocoPhillips | ||||||
| Exxon Mobil Corp. | ||||||
Based on: 10-K (reporting date: 2023-12-31), 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).
1 Economic profit. See details »
2 2023 Calculation
Economic profit margin = 100 × Economic profit ÷ Adjusted revenues
= 100 × ÷ =
3 Click competitor name to see calculations.
- Economic Profit
- The economic profit displayed a fluctuating trajectory over the observed period. Starting at a high level in 2019, it significantly declined in 2020, reflecting a reduction of more than half compared to the previous year. In 2021, the economic profit rebounded, reaching a value midway between the 2019 and 2020 figures. The year 2022 saw a substantial increase, with economic profit peaking at its highest point in the period analyzed. However, in 2023, there was a noticeable decline, though the figure remained above the 2020 and 2021 levels.
- Adjusted Revenues
- Adjusted revenues showed considerable volatility across the years. The initial value in 2019 was relatively strong but experienced a sharp drop in 2020, decreasing by roughly 37%. In 2021, revenues recovered significantly, though still below the 2019 mark. A sharp upward trend occurred in 2022, with revenues reaching the highest level during the period examined. In 2023, adjusted revenues slightly decreased from the prior year but remained substantially higher than the 2019 to 2021 figures.
- Economic Profit Margin
- The economic profit margin exhibited a pattern similar to that of economic profit. Beginning with a robust margin in 2019, there was a notable contraction in 2020, dropping to less than half of the initial percentage. Although some recovery occurred in 2021, the margin did not approach the 2019 level. The year 2022 marked a significant improvement, with the margin reaching nearly 40%. A decline occurred in 2023, bringing the margin down to approximately 24%, still higher than the bottom values recorded in 2020 and 2021.
- Overall Analysis
- The data reveals that both economic profit and adjusted revenues experienced substantial declines in 2020, likely indicating external or operational challenges during that year. Subsequent years showed varying degrees of recuperation, with 2022 particularly strong in terms of both profitability and revenue. Despite the drop in 2023, the financial indicators remained above the lower levels witnessed in 2020 and 2021. The movements in economic profit margin closely correspond with economic profit changes, highlighting fluctuations in operational efficiency or cost management relative to revenues. The trends suggest periods of recovery and growth following initial setbacks, with some volatility persisting into the latest year.