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
Amphenol Corp., economic profit 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 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
= 2,010,042 – 19.90% × 13,752,400 = -726,788
The period between 2019 and 2023 demonstrates a fluctuating financial performance as measured by economic profit. Net operating profit after taxes generally increased over the period, however, the cost of capital and invested capital also rose, ultimately resulting in consistently negative economic profit.
- Net Operating Profit After Taxes (NOPAT)
- NOPAT increased from US$1,277,245 thousand in 2019 to US$1,351,172 thousand in 2020, representing a growth of approximately 5.8%. A further substantial increase was observed in 2021, reaching US$1,644,807 thousand, followed by US$2,040,201 thousand in 2022. In 2023, NOPAT experienced a slight decrease to US$2,010,042 thousand, though remaining significantly higher than in earlier years.
- Cost of Capital
- The cost of capital exhibited a consistent upward trend throughout the analyzed period. Starting at 18.98% in 2019, it increased to 19.19% in 2020, 19.22% in 2021, 19.54% in 2022, and reached 19.90% in 2023. This continuous rise in the cost of capital contributed to the negative economic profit observed each year.
- Invested Capital
- Invested capital showed a steady increase over the five-year period. From US$9,029,400 thousand in 2019, it grew to US$10,035,300 thousand in 2020, US$12,048,900 thousand in 2021, US$12,775,400 thousand in 2022, and finally reached US$13,752,400 thousand in 2023. This expansion in invested capital, coupled with the rising cost of capital, further exacerbated the negative economic profit.
- Economic Profit
- Economic profit remained negative throughout the period. It began at -US$436,951 thousand in 2019 and deteriorated to -US$575,100 thousand in 2020, and -US$671,284 thousand in 2021. A slight improvement was seen in 2022 with a value of -US$456,508 thousand, but economic profit worsened again in 2023, reaching -US$726,788 thousand. The increasing magnitude of the negative economic profit suggests that the company’s returns are not covering its cost of capital, despite growth in NOPAT.
In summary, while NOPAT demonstrated growth, the increases in both the cost of capital and invested capital consistently outweighed these gains, resulting in a sustained period of negative economic profit. The economic profit figures indicate that the company is not generating returns sufficient to satisfy investor expectations, given the associated capital costs.
Net Operating Profit after Taxes (NOPAT)
Amphenol Corp., NOPAT calculation
US$ 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 doubtful accounts.
3 Addition of increase (decrease) in equity equivalents to net income attributable to Amphenol Corporation.
4 2023 Calculation
Interest expense on capitalized operating leases = Operating lease liability × Discount rate
= 303,700 × 3.60% = 10,933
5 2023 Calculation
Tax benefit of interest expense = Adjusted interest expense × Statutory income tax rate
= 150,433 × 21.00% = 31,591
6 Addition of after taxes interest expense to net income attributable to Amphenol Corporation.
7 Elimination of discontinued operations.
The financial data reveals a generally positive trend in profitability over the five-year period from 2019 to 2023, with some fluctuations in specific measures.
- Net Income Attributable to Amphenol Corporation
- This metric shows a consistent increase from 2019 to 2023, starting at 1,155,000 thousand US dollars in 2019 and rising to 1,928,000 thousand US dollars in 2023. The most significant jump occurred between 2020 and 2021, where net income increased by approximately 32.2%, from 1,203,400 to 1,590,800 thousand US dollars. Growth continued through 2022, reaching 1,902,300 thousand US dollars, before showing a more modest increase of about 1.3% into 2023.
- Net Operating Profit After Taxes (NOPAT)
- NOPAT followed a similar upward trend, rising from 1,277,245 thousand US dollars in 2019 to a peak of 2,040,201 thousand US dollars in 2022. This represents an overall increase of nearly 60%. There is a steady year-over-year improvement, with the largest increase again visible from 2021 to 2022. However, in 2023, there is a slight decline of approximately 1.5%, decreasing to 2,010,042 thousand US dollars. Despite this small reduction, the 2023 figure remains significantly higher than in the early years.
Overall, the data indicates strong growth in profitability, with both net income and NOPAT more than doubling during the examined timeframe. The minor dip in NOPAT in 2023 suggests a potential plateau or emerging challenges affecting operating profit, though net income continues to rise slightly. This pattern suggests effective operational performance and profitability growth over the longer term, with a need to monitor recent subtle downturns in operating profit closely.
Cash Operating Taxes
Amphenol 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 provision for income taxes and cash operating taxes for the analyzed periods reveal notable trends in tax-related expenses.
- Provision for income taxes
- There was a decrease from 331,900 thousand USD in 2019 to 313,300 thousand USD in 2020, indicating a reduction in estimated tax liabilities. In 2021, this figure sharply increased to 409,100 thousand USD, followed by a further rise to 550,600 thousand USD in 2022. However, in 2023, a slight decline to 509,300 thousand USD was observed, suggesting some relief in tax provisions compared to the previous year but still significantly higher than pre-pandemic levels.
- Cash operating taxes
- Cash operating taxes also decreased from 342,736 thousand USD in 2019 to 307,985 thousand USD in 2020, mirroring the provision trend and likely reflecting the impact of external economic factors. Beginning in 2021, cash taxes increased substantially to 464,115 thousand USD and continued to increase through 2022 and 2023, reaching 583,929 thousand USD and 599,691 thousand USD respectively. This steady increase indicates an upward pressure on actual tax payments despite the slight reduction in provisions in 2023.
Overall, the data shows a downward shift in both tax provisions and cash taxes during 2020, possibly due to extraordinary circumstances affecting taxable income. However, from 2021 onwards, both measures display a pronounced upward trend, highlighting a recovery or growth phase characterized by higher taxable earnings and increased cash tax outflows. The divergence in 2023, where cash taxes slightly rise while provisions fall, may suggest adjustments in expected future tax liabilities or timing differences in tax payments.
Invested Capital
Amphenol 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 equity equivalents to stockholders’ equity attributable to Amphenol Corporation.
5 Removal of accumulated other comprehensive income.
6 Subtraction of investments.
- Total reported debt & leases
- The total reported debt and leases exhibited an overall upward trend from 2019 through 2021, increasing from approximately $3.81 billion to $5.05 billion. This was followed by a decline in the subsequent two years, lowering the figure to about $4.64 billion by 2023. The initial rise may indicate increased leverage or financing activities, while the subsequent decrease suggests debt reduction or repayment strategies.
- Stockholders’ equity attributable to Amphenol Corporation
- Stockholders' equity showed consistent growth throughout the examined period, rising from roughly $4.53 billion in 2019 to $8.35 billion in 2023. This steady increase points to strengthening financial stability, possibly driven by retained earnings, profitable operations, or issuance of equity, thereby enhancing the company's net worth.
- Invested capital
- Invested capital demonstrated a continuous increase over the five years, expanding from approximately $9.03 billion to $13.75 billion. The upward trend reflects ongoing investments in assets, acquisitions, or capital expenditures supporting the company’s growth and operational capacity. The growth rate in invested capital generally outpaced that of debt, indicating a rising equity contribution.
Cost of Capital
Amphenol Corp., cost of capital calculations
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 62,540,867) | 62,540,867) | ÷ | 66,939,367) | = | 0.93 | 0.93 | × | 21.15% | = | 19.76% | ||
| Debt3 | 4,094,800) | 4,094,800) | ÷ | 66,939,367) | = | 0.06 | 0.06 | × | 2.66% × (1 – 21.00%) | = | 0.13% | ||
| Operating lease liability4 | 303,700) | 303,700) | ÷ | 66,939,367) | = | 0.00 | 0.00 | × | 3.60% × (1 – 21.00%) | = | 0.01% | ||
| Total: | 66,939,367) | 1.00 | 19.90% | ||||||||||
Based on: 10-K (reporting date: 2023-12-31).
1 US$ in thousands
2 Equity. See details »
3 Debt. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 48,329,455) | 48,329,455) | ÷ | 52,808,155) | = | 0.92 | 0.92 | × | 21.15% | = | 19.36% | ||
| Debt3 | 4,185,000) | 4,185,000) | ÷ | 52,808,155) | = | 0.08 | 0.08 | × | 2.81% × (1 – 21.00%) | = | 0.18% | ||
| Operating lease liability4 | 293,700) | 293,700) | ÷ | 52,808,155) | = | 0.01 | 0.01 | × | 2.70% × (1 – 21.00%) | = | 0.01% | ||
| Total: | 52,808,155) | 1.00 | 19.54% | ||||||||||
Based on: 10-K (reporting date: 2022-12-31).
1 US$ in thousands
2 Equity. See details »
3 Debt. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 47,909,192) | 47,909,192) | ÷ | 53,169,992) | = | 0.90 | 0.90 | × | 21.15% | = | 19.06% | ||
| Debt3 | 5,009,800) | 5,009,800) | ÷ | 53,169,992) | = | 0.09 | 0.09 | × | 2.12% × (1 – 21.00%) | = | 0.16% | ||
| Operating lease liability4 | 251,000) | 251,000) | ÷ | 53,169,992) | = | 0.00 | 0.00 | × | 2.20% × (1 – 21.00%) | = | 0.01% | ||
| Total: | 53,169,992) | 1.00 | 19.22% | ||||||||||
Based on: 10-K (reporting date: 2021-12-31).
1 US$ in thousands
2 Equity. See details »
3 Debt. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 39,340,414) | 39,340,414) | ÷ | 43,834,914) | = | 0.90 | 0.90 | × | 21.15% | = | 18.98% | ||
| Debt3 | 4,265,400) | 4,265,400) | ÷ | 43,834,914) | = | 0.10 | 0.10 | × | 2.65% × (1 – 21.00%) | = | 0.20% | ||
| Operating lease liability4 | 229,100) | 229,100) | ÷ | 43,834,914) | = | 0.01 | 0.01 | × | 2.60% × (1 – 21.00%) | = | 0.01% | ||
| Total: | 43,834,914) | 1.00 | 19.19% | ||||||||||
Based on: 10-K (reporting date: 2020-12-31).
1 US$ in thousands
2 Equity. See details »
3 Debt. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 30,871,356) | 30,871,356) | ÷ | 34,853,456) | = | 0.89 | 0.89 | × | 21.15% | = | 18.73% | ||
| Debt3 | 3,782,700) | 3,782,700) | ÷ | 34,853,456) | = | 0.11 | 0.11 | × | 2.77% × (1 – 21.00%) | = | 0.24% | ||
| Operating lease liability4 | 199,400) | 199,400) | ÷ | 34,853,456) | = | 0.01 | 0.01 | × | 3.20% × (1 – 21.00%) | = | 0.01% | ||
| Total: | 34,853,456) | 1.00 | 18.98% | ||||||||||
Based on: 10-K (reporting date: 2019-12-31).
1 US$ in thousands
2 Equity. See details »
3 Debt. See details »
4 Operating lease liability. See details »
Economic Spread Ratio
Amphenol 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 | (726,788) | (456,508) | (671,284) | (575,100) | (436,951) | |
| Invested capital2 | 13,752,400) | 12,775,400) | 12,048,900) | 10,035,300) | 9,029,400) | |
| Performance Ratio | ||||||
| Economic spread ratio3 | -5.28% | -3.57% | -5.57% | -5.73% | -4.84% | |
| Benchmarks | ||||||
| Economic Spread Ratio, Competitors4 | ||||||
| Apple Inc. | 137.57% | 199.09% | 195.45% | 143.42% | — | |
| Arista Networks Inc. | 24.75% | 20.28% | 35.32% | 17.74% | — | |
| Cisco Systems Inc. | 6.46% | 6.38% | 5.62% | 9.93% | — | |
| Dell Technologies Inc. | -0.20% | 3.75% | -0.79% | -1.52% | — | |
| Super Micro Computer Inc. | 4.15% | -4.75% | -12.72% | -15.67% | — | |
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 × -726,788 ÷ 13,752,400 = -5.28%
4 Click competitor name to see calculations.
The economic spread ratio exhibited fluctuations over the five-year period. While generally negative, indicating the company’s return on invested capital is less than its cost of capital, the magnitude of the negative spread varied annually.
- Economic Spread Ratio Trend
- The economic spread ratio began at -4.84% in 2019 and decreased to -5.73% in 2020, representing a widening negative spread. A slight improvement was observed in 2021, with the ratio moving to -5.57%. This was followed by a notable positive shift in 2022, where the ratio improved to -3.57%, suggesting a narrowing of the gap between return and cost of capital. However, this improvement was not sustained, as the ratio deteriorated to -5.28% in 2023, returning to a level comparable to that of 2020 and 2021.
The invested capital consistently increased throughout the period, moving from US$9,029,400 thousand in 2019 to US$13,752,400 thousand in 2023. This growth in invested capital occurred alongside generally negative economic profit, which also increased in absolute value over the period, reaching US$-726,788 thousand in 2023.
- Relationship between Invested Capital and Economic Profit
- Despite the increasing invested capital, the company consistently generated negative economic profit each year. The increasing absolute value of economic profit alongside rising invested capital suggests that the company’s investments are not generating returns sufficient to cover the cost of capital. The economic spread ratio reflects this dynamic, consistently remaining negative and demonstrating a lack of value creation from the invested capital.
The improvement in the economic spread ratio in 2022, while temporary, indicates a period where the company’s returns approached the cost of capital more closely than in other years. However, the subsequent decline in 2023 suggests that this positive trend was not maintained, and the fundamental issue of insufficient returns relative to invested capital persists.
Economic Profit Margin
Amphenol 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 | (726,788) | (456,508) | (671,284) | (575,100) | (436,951) | |
| Net sales | 12,554,700) | 12,623,000) | 10,876,300) | 8,598,900) | 8,225,400) | |
| Performance Ratio | ||||||
| Economic profit margin2 | -5.79% | -3.62% | -6.17% | -6.69% | -5.31% | |
| Benchmarks | ||||||
| Economic Profit Margin, Competitors3 | ||||||
| Apple Inc. | 21.64% | 23.53% | 22.71% | 18.80% | — | |
| Arista Networks Inc. | 18.68% | 13.97% | 20.69% | 13.83% | — | |
| Cisco Systems Inc. | 6.42% | 7.15% | 6.27% | 10.36% | — | |
| Dell Technologies Inc. | -0.11% | 1.96% | -0.68% | -1.29% | — | |
| Super Micro Computer Inc. | 1.41% | -2.02% | -4.59% | -5.81% | — | |
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 ÷ Net sales
= 100 × -726,788 ÷ 12,554,700 = -5.79%
3 Click competitor name to see calculations.
The economic profit margin exhibited a generally negative trend over the five-year period. While fluctuations occurred, the company consistently generated negative economic profit, indicating that returns did not exceed the cost of capital.
- Economic Profit Margin Trend
- The economic profit margin began at -5.31% in 2019 and deteriorated to -6.69% in 2020. A slight improvement was noted in 2021, with the margin reaching -6.17%. However, this was followed by a positive shift to -3.62% in 2022, representing the least negative margin within the observed timeframe. The most recent year, 2023, saw a return to a more negative position, with the margin declining to -5.79%.
Net sales demonstrated an increasing trend from 2019 to 2022, growing from US$8,225,400 thousand to US$12,623,000 thousand. However, in 2023, net sales experienced a slight decrease to US$12,554,700 thousand, although remaining significantly above the 2019 level.
- Relationship between Net Sales and Economic Profit Margin
- Despite the growth in net sales between 2019 and 2022, the economic profit margin did not consistently improve. The improvement in the margin in 2022 coincided with the highest level of net sales, suggesting a potential, though not definitive, correlation. The decrease in net sales in 2023 was accompanied by a worsening of the economic profit margin, further supporting this observation. The negative economic profit values across all years indicate that increased sales volume alone was insufficient to generate positive economic returns.
Economic profit itself consistently registered as negative throughout the period, starting at -US$436,951 thousand in 2019 and reaching its lowest point at -US$726,788 thousand in 2023. The value in 2022 was -US$456,508 thousand, the least negative value in the period.
- Economic Profit Magnitude
- The magnitude of the negative economic profit increased substantially from 2019 to 2023, with a particularly significant decline observed in the most recent year. This suggests that the cost of capital consistently exceeded the returns generated by the company’s operations, and that this gap widened over time. The 2022 value represents a temporary reduction in the size of the economic loss.