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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
Net Operating Profit after Taxes (NOPAT)
Cash Operating Taxes
Invested Capital
Cost of Capital
Economic Spread Ratio
Economic Profit Margin

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	2,073,654)	1,991,931)	1,214,151)	262,790)	340,562)
Cost of capital²	20.81%	21.22%	20.28%	19.22%	16.56%
Invested capital³	10,925,400)	9,371,400)	7,560,500)	6,889,500)	6,857,500)

Economic profit⁴	(200,450)	3,061)	(318,938)	(1,061,202)	(795,242)

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
= 2,073,654 – 20.81% × 10,925,400 = -200,450

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ON Semiconductor Corp., NOPAT calculation

US$ in thousands

12 months ended:	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Net income attributable to ON Semiconductor Corporation	2,183,700)	1,902,200)	1,009,600)	234,200)	211,700)
Deferred income tax expense (benefit)¹	(121,000)	20,900)	90,500)	(114,500)	13,000)
Increase (decrease) in accrued restructuring charges²	13,500)	(6,400)	4,600)	6,000)	(300)
Increase (decrease) in equity equivalents³	(107,500)	14,500)	95,100)	(108,500)	12,700)
Interest expense	74,800)	94,900)	130,400)	168,400)	148,300)
Interest expense, operating lease liability⁴	12,672)	13,803)	7,521)	7,247)	6,156)
Adjusted interest expense	87,472)	108,703)	137,921)	175,647)	154,456)
Tax benefit of interest expense⁵	(18,369)	(22,828)	(28,963)	(36,886)	(32,436)
Adjusted interest expense, after taxes⁶	69,103)	85,876)	108,957)	138,761)	122,020)
Interest income	(93,100)	(15,500)	(1,400)	(4,900)	(10,200)
Investment income, before taxes	(93,100)	(15,500)	(1,400)	(4,900)	(10,200)
Tax expense (benefit) of investment income⁷	19,551)	3,255)	294)	1,029)	2,142)
Investment income, after taxes⁸	(73,549)	(12,245)	(1,106)	(3,871)	(8,058)
Net income (loss) attributable to noncontrolling interest	1,900)	1,600)	1,600)	2,200)	2,200)
Net operating profit after taxes (NOPAT)	2,073,654)	1,991,931)	1,214,151)	262,790)	340,562)

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
= 264,000 × 4.80% = 12,672

⁵ 2023 Calculation
Tax benefit of interest expense = Adjusted interest expense × Statutory income tax rate
= 87,472 × 21.00% = 18,369

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
= 93,100 × 21.00% = 19,551

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.

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ON Semiconductor Corp., cash operating taxes calculation

US$ in thousands

12 months ended:	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Provision (benefit) for income taxes	350,200)	458,400)	146,600)	(59,800)	62,700)
Less: Deferred income tax expense (benefit)	(121,000)	20,900)	90,500)	(114,500)	13,000)
Add: Tax savings from interest expense	18,369)	22,828)	28,963)	36,886)	32,436)
Less: Tax imposed on investment income	19,551)	3,255)	294)	1,029)	2,142)
Cash operating taxes	470,018)	457,073)	84,769)	90,557)	79,994)

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.

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ON Semiconductor Corp., invested capital calculation (financing approach)

US$ in thousands

	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Current portion of financing lease liabilities	800)	14,200)	12,700)	—)	—)
Current portion of long-term debt	794,000)	147,800)	160,700)	531,600)	736,000)
Long-term debt, excluding current portion	2,542,600)	3,045,700)	2,913,900)	2,959,700)	2,876,500)
Long-term financing lease liabilities	22,400)	23,000)	10,200)	—)	—)
Operating lease liability¹	264,000)	281,700)	174,900)	147,900)	114,000)
Total reported debt & leases	3,623,800)	3,512,400)	3,272,400)	3,639,200)	3,726,500)
Total ON Semiconductor Corporation stockholders’ equity	7,782,600)	6,188,500)	4,585,400)	3,538,500)	3,301,700)
Net deferred tax (assets) liabilities²	(562,100)	(342,600)	(323,100)	(371,600)	(247,600)
Accrued restructuring charges³	17,900)	4,400)	10,800)	6,200)	200)
Equity equivalents⁴	(544,200)	(338,200)	(312,300)	(365,400)	(247,400)
Accumulated other comprehensive (income) loss, net of tax⁵	45,200)	23,200)	40,600)	57,600)	54,300)
Non-controlling interest	18,000)	18,500)	19,000)	19,600)	22,400)
Adjusted total ON Semiconductor Corporation stockholders’ equity	7,301,600)	5,892,000)	4,332,700)	3,250,300)	3,131,000)
Marketable securities, classified as available-for-sale⁶	—)	(33,000)	(44,600)	—)	—)
Invested capital	10,925,400)	9,371,400)	7,560,500)	6,889,500)	6,857,500)

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.

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ON Semiconductor Corp., cost of capital calculations

Dec 31, 2023

	Capital (fair value)¹	Weights					Cost of capital
Equity²	33,156,430)	33,156,430)	÷	37,417,230)	=	0.89	0.89	×	23.20%	=	20.56%
Long-term debt and financing lease liabilities, including current portion³	3,996,800)	3,996,800)	÷	37,417,230)	=	0.11	0.11	×	2.71% × (1 – 21.00%)	=	0.23%
Operating lease liability⁴	264,000)	264,000)	÷	37,417,230)	=	0.01	0.01	×	4.80% × (1 – 21.00%)	=	0.03%
Total:	37,417,230)					1.00					20.81%

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 »

Dec 31, 2022

	Capital (fair value)¹	Weights					Cost of capital
Equity²	34,730,220)	34,730,220)	÷	38,692,220)	=	0.90	0.90	×	23.20%	=	20.83%
Long-term debt and financing lease liabilities, including current portion³	3,680,300)	3,680,300)	÷	38,692,220)	=	0.10	0.10	×	4.91% × (1 – 21.00%)	=	0.37%
Operating lease liability⁴	281,700)	281,700)	÷	38,692,220)	=	0.01	0.01	×	4.90% × (1 – 21.00%)	=	0.03%
Total:	38,692,220)					1.00					21.22%

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 »

Dec 31, 2021

	Capital (fair value)¹	Weights					Cost of capital
Equity²	25,370,322)	25,370,322)	÷	29,510,322)	=	0.86	0.86	×	23.20%	=	19.95%
Long-term debt and financing lease liabilities, including current portion³	3,965,100)	3,965,100)	÷	29,510,322)	=	0.13	0.13	×	2.93% × (1 – 21.00%)	=	0.31%
Operating lease liability⁴	174,900)	174,900)	÷	29,510,322)	=	0.01	0.01	×	4.30% × (1 – 21.00%)	=	0.02%
Total:	29,510,322)					1.00					20.28%

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 »

Dec 31, 2020

	Capital (fair value)¹	Weights					Cost of capital
Equity²	17,237,223)	17,237,223)	÷	21,319,023)	=	0.81	0.81	×	23.20%	=	18.76%
Long-term debt and financing lease liabilities, including current portion³	3,933,900)	3,933,900)	÷	21,319,023)	=	0.18	0.18	×	2.96% × (1 – 21.00%)	=	0.43%
Operating lease liability⁴	147,900)	147,900)	÷	21,319,023)	=	0.01	0.01	×	4.90% × (1 – 21.00%)	=	0.03%
Total:	21,319,023)					1.00					19.22%

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 »

Dec 31, 2019

	Capital (fair value)¹	Weights					Cost of capital
Equity²	8,591,272)	8,591,272)	÷	12,863,272)	=	0.67	0.67	×	23.20%	=	15.50%
Long-term debt and financing lease liabilities, including current portion³	4,158,000)	4,158,000)	÷	12,863,272)	=	0.32	0.32	×	4.03% × (1 – 21.00%)	=	1.03%
Operating lease liability⁴	114,000)	114,000)	÷	12,863,272)	=	0.01	0.01	×	5.40% × (1 – 21.00%)	=	0.04%
Total:	12,863,272)					1.00					16.56%

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 »

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	(200,450)	3,061)	(318,938)	(1,061,202)	(795,242)
Invested capital²	10,925,400)	9,371,400)	7,560,500)	6,889,500)	6,857,500)
Performance Ratio
Economic spread ratio³	-1.83%	0.03%	-4.22%	-15.40%	-11.60%
Benchmarks
Economic Spread Ratio, Competitors⁴
Advanced Micro Devices Inc.	-21.81%	-21.50%	35.19%	8.94%	—
Analog Devices Inc.	-7.56%	-8.92%	-12.19%	-7.22%	—
Applied Materials Inc.	16.49%	26.40%	21.90%	10.15%	9.84%
Broadcom Inc.	7.58%	6.15%	-3.16%	-8.58%	-8.25%
Intel Corp.	-14.85%	-8.34%	8.71%	14.33%	—
KLA Corp.	24.09%	26.36%	14.99%	3.88%	—
Lam Research Corp.	7.99%	22.90%	18.26%	2.38%	—
Micron Technology Inc.	-26.99%	0.78%	-3.77%	-9.32%	—
NVIDIA Corp.	-10.89%	31.31%	11.75%	-2.26%	—
Qualcomm Inc.	2.88%	29.31%	26.72%	11.76%	—
Texas Instruments Inc.	15.05%	35.70%	34.32%	29.47%	—

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 × -200,450 ÷ 10,925,400 = -1.83%

⁴ Click competitor name to see calculations.

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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	(200,450)	3,061)	(318,938)	(1,061,202)	(795,242)
Revenue	8,253,000)	8,326,200)	6,739,800)	5,255,000)	5,517,900)
Performance Ratio
Economic profit margin²	-2.43%	0.04%	-4.73%	-20.19%	-14.41%
Benchmarks
Economic Profit Margin, Competitors³
Advanced Micro Devices Inc.	-55.67%	-53.32%	13.26%	4.00%	—
Analog Devices Inc.	-27.15%	-33.44%	-78.31%	-23.46%	—
Applied Materials Inc.	11.05%	15.24%	13.98%	7.73%	6.82%
Broadcom Inc.	13.27%	11.50%	-7.43%	-23.67%	-21.93%
Intel Corp.	-25.22%	-11.73%	9.76%	15.09%	—
KLA Corp.	19.13%	22.29%	14.77%	4.35%	—
Lam Research Corp.	7.01%	16.90%	14.73%	2.77%	—
Micron Technology Inc.	-92.84%	1.35%	-6.31%	-18.39%	—
NVIDIA Corp.	-8.61%	20.99%	9.19%	-2.93%	—
Qualcomm Inc.	2.53%	19.53%	16.09%	8.88%	—
Texas Instruments Inc.	19.40%	31.31%	30.70%	26.41%	—

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 × -200,450 ÷ 8,253,000 = -2.43%

³ Click competitor name to see calculations.

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ON Semiconductor Corp. (NASDAQ:ON)

Economic Value Added (EVA)

Economic Profit

Net Operating Profit after Taxes (NOPAT)

Cash Operating Taxes

Invested Capital

Cost of Capital

Economic Spread Ratio

Economic Profit Margin