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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- Income Statement
- Statement of Comprehensive Income
- Balance Sheet: Liabilities and Stockholders’ Equity
- Cash Flow Statement
- Common-Size Balance Sheet: Assets
- Selected Financial Data since 2005
- Operating Profit Margin since 2005
- Return on Assets (ROA) since 2005
- Price to Book Value (P/BV) since 2005
- Analysis of Debt
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Economic Profit
ON Semiconductor 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 NOPAT shows a strong upward trend from 2019 through 2023. Starting at approximately 341 million USD in 2019, it declined to around 263 million USD in 2020. However, it surged significantly in 2021 to over 1.2 billion USD, continuing to increase in the subsequent years, reaching just above 2 billion USD by the end of 2023. This indicates improved operational profitability over the period after an initial drop in 2020.
- Cost of Capital
- The cost of capital increased from 16.74% in 2019 to a peak of 21.46% in 2022, slightly declining to 21.05% in 2023. This rising trend suggests an increasing required rate of return on investments, possibly reflecting higher perceived risk or changes in market conditions over the five-year period.
- Invested Capital
- Invested capital gradually increased from approximately 6.86 billion USD in 2019 to 10.93 billion USD in 2023. The most notable increases occurred from 2021 onwards, indicating substantial investment in long-term assets or working capital growth within the company during this period.
- Economic Profit
- Economic profit remained negative throughout the years analyzed, suggesting that the company's returns did not consistently exceed its cost of capital. Despite improvements from a deficit of over 1 billion USD in 2020 to a much smaller loss in 2022, economic profit again declined in 2023 to approximately -226 million USD. This pattern indicates ongoing challenges in generating value beyond the cost of financing, despite operational improvements reflected in rising NOPAT.
- Overall Analysis
- While the company demonstrated significant growth in operational profitability as measured by NOPAT, this has been offset by increasing invested capital and a rising cost of capital. The persistent negative economic profit implies that capital returns have not yet met or exceeded the increasing capital costs, highlighting the need for careful capital allocation and efficiency improvements. The decline in economic profit observed in the most recent year suggests potential emerging challenges or increased capital costs impacting value creation.
Net Operating Profit after Taxes (NOPAT)
ON Semiconductor 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 accrued restructuring charges.
3 Addition of increase (decrease) in equity equivalents to net income attributable to ON Semiconductor Corporation.
4 2023 Calculation
Interest expense on capitalized operating leases = Operating lease liability × Discount rate
= × =
5 2023 Calculation
Tax benefit of interest expense = Adjusted interest expense × Statutory income tax rate
= × 21.00% =
6 Addition of after taxes interest expense to net income attributable to ON Semiconductor Corporation.
7 2023 Calculation
Tax expense (benefit) of investment income = Investment income, before tax × Statutory income tax rate
= × 21.00% =
8 Elimination of after taxes investment income.
- Net income attributable to ON Semiconductor Corporation
- The net income shows a consistent upward trend over the five-year period. Starting from approximately 211.7 million US dollars in 2019, it increased modestly to 234.2 million in 2020. A significant jump occurred in 2021, with net income more than quadrupling to around 1.009 billion. This strong growth continued through 2022 and 2023, reaching about 1.902 billion and 2.184 billion US dollars respectively, indicating robust profitability improvement and operational performance over time.
- Net operating profit after taxes (NOPAT)
- NOPAT values display some fluctuations initially but then show a marked increase from 2021 onward. In 2019, NOPAT was approximately 340.6 million US dollars but declined to 262.8 million in 2020. Starting 2021, there was a substantial rise to around 1.214 billion US dollars. The upward trajectory continued into 2022 and 2023 with NOPAT reaching roughly 1.992 billion and 2.074 billion US dollars respectively. This pattern suggests improved operational efficiency and effective tax management contributing to growing operating profitability.
Cash Operating Taxes
ON Semiconductor 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 financial data reveals notable fluctuations in both the provision for income taxes and cash operating taxes over the five-year period ending December 31, 2023.
- Provision (benefit) for income taxes
- This item shows significant volatility throughout the periods. In 2019, the provision was a positive value of 62,700 thousand US dollars, indicating income tax expense recognition for that year. In 2020, there was a reversal to a tax benefit of 59,800 thousand US dollars, suggesting the company recognized a tax benefit rather than an expense. Following this, 2021 experienced a sharp increase in tax provision to 146,600 thousand US dollars, more than doubling the 2019 figure. The upward trend continued markedly in 2022, reaching 458,400 thousand US dollars, the highest in the period under review. In 2023, the provision decreased somewhat to 350,200 thousand US dollars, although it remained substantially higher than the values reported in 2019 through 2021.
- Cash operating taxes
- Cash operating taxes demonstrate an overall increasing trend over the five years. Beginning at 79,994 thousand US dollars in 2019, the amount increased modestly to 90,557 thousand US dollars in 2020. In 2021, there was a slight decline to 84,769 thousand US dollars. However, a pronounced upward shift occurred in 2022, with cash operating taxes escalating dramatically to 457,073 thousand US dollars. This elevated level sustained into 2023 with a further slight increase to 470,018 thousand US dollars.
In summary, both the provision for income taxes and cash operating taxes experienced considerable growth from 2021 onwards, with particularly sharp increases in 2022 and 2023. The provision for income taxes fluctuated between an expense and a benefit in the early years but settled into a notably higher expense level in later years. The cash operating taxes overall trend upward, with a pronounced rise starting in 2022, possibly aligning with the increases in the provision for income taxes, indicating higher taxable income or changes in tax positions and payments during those years.
Invested Capital
ON Semiconductor 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 accrued restructuring charges.
4 Addition of equity equivalents to total ON Semiconductor Corporation stockholders’ equity.
5 Removal of accumulated other comprehensive income.
6 Subtraction of marketable securities, classified as available-for-sale.
- Total Reported Debt & Leases
- The total reported debt and leases showed a decreasing trend from 3,726,500 thousand USD at the end of 2019 to 3,272,400 thousand USD at the end of 2021. However, this downward trend reversed in the subsequent years, increasing to 3,512,400 thousand USD in 2022 and further to 3,623,800 thousand USD in 2023. Overall, the debt levels exhibit a moderate fluctuation with a reduction phase followed by a gradual increase.
- Total ON Semiconductor Corporation Stockholders’ Equity
- Stockholders' equity demonstrated consistent and considerable growth over the five-year period. Starting at 3,301,700 thousand USD in 2019, equity increased steadily each year, reaching 7,782,600 thousand USD by 2023. This reflects strong capital accumulation and possibly retained earnings or equity issuances that enhanced the company's net worth significantly over time.
- Invested Capital
- Invested capital showed a gradual upward trajectory throughout the period. Beginning at 6,857,500 thousand USD in 2019, it remained relatively stable through 2020 but increased notably to 7,560,500 thousand USD in 2021, followed by a sharper rise to 9,371,400 thousand USD in 2022 and 10,925,400 thousand USD in 2023. This trend indicates increasing investment in the company's operational assets, which may support business growth and expansion activities.
Cost of Capital
ON Semiconductor Corp., cost of capital calculations
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Long-term debt and financing lease liabilities, including current portion3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2023-12-31).
1 US$ in thousands
2 Equity. See details »
3 Long-term debt and financing lease liabilities, including current portion. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Long-term debt and financing lease liabilities, including current portion3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2022-12-31).
1 US$ in thousands
2 Equity. See details »
3 Long-term debt and financing lease liabilities, including current portion. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Long-term debt and financing lease liabilities, including current portion3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2021-12-31).
1 US$ in thousands
2 Equity. See details »
3 Long-term debt and financing lease liabilities, including current portion. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Long-term debt and financing lease liabilities, including current portion3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2020-12-31).
1 US$ in thousands
2 Equity. See details »
3 Long-term debt and financing lease liabilities, including current portion. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Long-term debt and financing lease liabilities, including current portion3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2019-12-31).
1 US$ in thousands
2 Equity. See details »
3 Long-term debt and financing lease liabilities, including current portion. See details »
4 Operating lease liability. See details »
Economic Spread Ratio
ON Semiconductor 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 | ||||||
| Advanced Micro Devices Inc. | ||||||
| Analog Devices Inc. | ||||||
| Applied Materials Inc. | ||||||
| Broadcom Inc. | ||||||
| Intel Corp. | ||||||
| KLA Corp. | ||||||
| Lam Research Corp. | ||||||
| Micron Technology Inc. | ||||||
| NVIDIA Corp. | ||||||
| Qualcomm Inc. | ||||||
| Texas Instruments Inc. | ||||||
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 showed a negative trend throughout the examined period. It declined from -807,223 thousand US$ in 2019 to a deeper loss of -1,075,774 thousand US$ in 2020. Subsequently, there was a notable improvement in 2021, with economic profit losses reducing to -335,941 thousand US$. This improving trend continued into 2022, reaching near breakeven levels at -18,944 thousand US$. However, in 2023, the economic profit again deteriorated to -225,776 thousand US$, indicating some regression from the very low loss level observed the previous year.
- Invested Capital
- Invested capital exhibited a consistent upward trajectory over the five-year period. Starting at 6,857,500 thousand US$ in 2019, it grew steadily each year, reaching 10,925,400 thousand US$ by the end of 2023. This rising capital base suggests ongoing investments and asset growth within the company, which more than doubled its invested capital value within the five-year span.
- Economic Spread Ratio
- The economic spread ratio remained negative across all years, indicating that returns on invested capital have consistently fallen short of the cost of capital. It worsened from -11.77% in 2019 to -15.61% in 2020, mirroring the pattern seen in economic profit. A marked improvement followed in 2021 when the ratio improved significantly to -4.44%, with a near breakeven figure of -0.2% observed in 2022. Despite this recovery, the ratio again declined to -2.07% in 2023, indicating a slight reversal of positive momentum but still much improved relative to earlier years.
- Overall Trends and Insights
- The data outlines a company experiencing economic challenges, with consistently negative economic profit and spread ratios indicating returns insufficient to cover the cost of capital. However, a clear recovery trend was evident starting from 2021 through 2022, characterized by reduced losses and approaching breakeven in both economic profit and spread. The increase in invested capital signals expansion and capital accumulation, which may contribute to future growth despite recent losses. The regression seen in 2023 suggests potential volatility or external pressures impacting profitability. Continued monitoring of economic profit and spread in relation to invested capital will be critical to assess sustained improvement or emerging risks.
Economic Profit Margin
ON Semiconductor 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 | ||||||
| Revenue | ||||||
| Performance Ratio | ||||||
| Economic profit margin2 | ||||||
| Benchmarks | ||||||
| Economic Profit Margin, Competitors3 | ||||||
| Advanced Micro Devices Inc. | ||||||
| Analog Devices Inc. | ||||||
| Applied Materials Inc. | ||||||
| Broadcom Inc. | ||||||
| Intel Corp. | ||||||
| KLA Corp. | ||||||
| Lam Research Corp. | ||||||
| Micron Technology Inc. | ||||||
| NVIDIA Corp. | ||||||
| Qualcomm Inc. | ||||||
| Texas Instruments Inc. | ||||||
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 ÷ Revenue
= 100 × ÷ =
3 Click competitor name to see calculations.
- Revenue Trend
- The company's revenue exhibited a general upward trend from 2019 to 2023. Starting at approximately 5.52 billion USD in 2019, revenue slightly decreased to 5.26 billion USD in 2020, which could be attributed to external disruptions or market conditions during that year. Subsequently, there was a notable recovery and growth in 2021 to about 6.74 billion USD, followed by continued expansion reaching a peak of approximately 8.33 billion USD in 2022. However, the revenue slightly declined in 2023 to roughly 8.25 billion USD, indicating a marginal contraction but overall maintaining higher levels compared to the earlier years.
- Economic Profit Trend
- The economic profit figures reflect persistent negative values throughout the entire period, indicating that the company did not achieve economic profitability in any year observed. Although the economic profit remained significantly negative in 2019 and worsened in 2020, falling from around -807 million USD to approximately -1.08 billion USD, there was a substantial improvement in the following years. By 2021, the economic loss narrowed considerably to about -336 million USD, then further declined dramatically to near breakeven at approximately -19 million USD in 2022. Despite this improvement, the company regressed in 2023 with economic profit dropping to nearly -226 million USD, suggesting challenges in sustaining economic profitability.
- Economic Profit Margin Analysis
- Consistent with the economic profit values, the economic profit margin remained negative throughout the period, highlighting a consistent inability to generate returns above the cost of capital. The margin steepened negatively from about -14.63% in 2019 to a low of -20.47% in 2020, paralleling the deepest economic loss. Following this, there was a marked recovery in profitability metrics, with the margin improving significantly to -4.98% in 2021 and further to nearly neutral at -0.23% in 2022, reflecting a near break-even position. Nonetheless, the margin deteriorated again in 2023 to approximately -2.74%, indicating a decline in economic efficiency relative to the previous year, despite improved revenue levels.
- Overall Insights
- The data reveals that while revenue has grown substantially over the years, the company has consistently struggled to translate this growth into positive economic profits. The severe loss in 2020 appears to be a turning point followed by a period of recovery and improved operational leverage, as visible in 2021 and 2022. However, the setback in economic profit and margin in 2023 suggests emerging pressures or operational challenges that have impacted the company's ability to maintain economic profitability. This pattern underscores the importance of examining cost structures, capital efficiency, and possibly market dynamics specific to recent years to reverse the recent economic performance decline.