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:
- Balance Sheet: Assets
- Common-Size Balance Sheet: Liabilities and Stockholders’ Equity
- Analysis of Reportable Segments
- Common Stock Valuation Ratios
- Enterprise Value to FCFF (EV/FCFF)
- Dividend Discount Model (DDM)
- Present Value of Free Cash Flow to Equity (FCFE)
- Return on Equity (ROE) since 2005
- Current Ratio since 2005
- Aggregate Accruals
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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)
- NOPAT experienced a notable decline from 2019 to 2020, decreasing from approximately 348.9 million USD to 182.6 million USD. This was followed by a recovery phase where NOPAT increased to 267.9 million USD in 2021 and further surged to 444.9 million USD in 2022. However, in 2023, NOPAT declined again to 389.6 million USD, indicating some volatility in profitability over the years.
- Cost of Capital
- The cost of capital remained stable throughout the period, holding steady at approximately 21.19% from 2019 through 2023. This consistency suggests that the company’s risk profile and financing costs did not materially change during these years.
- Invested Capital
- Invested capital showed a generally upward trajectory over the five-year period, starting at around 575.2 million USD in 2019, with a slight decrease in 2020 to 555.7 million USD. From 2020 onward, there was a continuous increase, reaching approximately 718.1 million USD in 2021, 840.7 million USD in 2022, and sharply rising to 1.12 billion USD in 2023. This trend indicates ongoing capital investment or asset growth within the company.
- Economic Profit
- Economic profit followed a similar pattern to NOPAT but showed more pronounced fluctuations. It declined significantly from 227.0 million USD in 2019 to 64.9 million USD in 2020. Subsequently, economic profit rose to 115.7 million USD in 2021 and saw a strong increase to 266.7 million USD in 2022. Nevertheless, there was a decrease to 152.9 million USD in 2023. Despite this decline, economic profit remained positive, indicating value generation above the cost of capital in all years.
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
- The economic profit exhibited notable fluctuations over the observed period. It initially declined sharply from 227,049 thousand US dollars in 2019 to 64,893 thousand in 2020, reflecting a significant downturn. Following this trough, economic profit showed a moderate recovery in 2021, rising to 115,698 thousand, and then surged substantially in 2022, reaching a peak of 266,727 thousand. However, in 2023, economic profit decreased again to 152,894 thousand, indicating volatility in the company's profitability over the years.
- Invested Capital
- The invested capital demonstrated a consistent upward trend throughout the timeframe. Starting at 575,173 thousand US dollars in 2019, it experienced a slight decline in 2020 to 555,694 thousand, after which it increased steadily each year. By 2023, the invested capital more than doubled from its initial value, culminating at 1,117,290 thousand. This pattern suggests ongoing growth in the company’s capital base, potentially supporting expansion or reinvestment strategies.
- Economic Spread Ratio
- The economic spread ratio mirrored the volatility seen in economic profit. Initially high at 39.47% in 2019, it deteriorated sharply to 11.68% in 2020, indicating a decline in the returns generated over the cost of capital. The ratio recovered somewhat in 2021 to 16.11% and saw a significant improvement in 2022, reaching 31.73%. However, a notable decrease occurred in 2023, when the ratio fell to 13.68%, reflecting volatility in the company’s efficiency in value creation relative to its invested capital.
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.
The financial data reveals several notable trends across the analyzed periods. Adjusted revenues experienced considerable fluctuations, starting with a significant decline from 494,508 thousand USD in 2019 to 311,341 thousand USD in 2020, followed by a recovery and growth to 449,048 thousand USD in 2021 and a further increase to 669,360 thousand USD in 2022. However, in 2023, revenues slightly decreased to 636,735 thousand USD.
Economic profit demonstrated a volatile pattern. It sharply dropped from 227,049 thousand USD in 2019 to 64,893 thousand USD in 2020, then rebounded to 115,698 thousand USD in 2021. The subsequent year showed a strong increase to 266,727 thousand USD, the highest over the five-year span, before decreasing to 152,894 thousand USD in 2023. This volatility suggests periods of varying profitability intensity relative to the company’s operations or cost structure.
The economic profit margin, reflecting efficiency in converting revenues into economic profit, also showed wide variation. Starting at 45.91% in 2019, it declined sharply to 20.84% in 2020 and slightly improved to 25.77% in 2021. A significant increase to 39.85% occurred in 2022, after which it diminished again to 24.01% in 2023. These changes indicate fluctuations in cost management or pricing power affecting profitability ratios over time.
- Revenue Trends
- Initial decline in 2020, recovery, peak in 2022, slight reduction in 2023.
- Economic Profit Trends
- Strong decrease in 2020, partial recovery, peak in 2022, moderate decline in 2023.
- Economic Profit Margin Trends
- High in 2019, decreased sharply in 2020, gradual improvement, peaked in 2022, then declined in 2023.
Overall, the data indicates that the company faced significant challenges in 2020, reflected in decreased revenues and profitability. The period following 2020 shows a recovery phase with improved operational performance, culminating in record profitability in 2022. However, 2023 exhibits a regression in both revenue and profit margins compared to the previous year, suggesting increased pressure on economic returns despite relatively high revenue levels.