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:
- Common-Size Balance Sheet: Liabilities and Stockholders’ Equity
- Analysis of Profitability Ratios
- Analysis of Solvency Ratios
- Enterprise Value to EBITDA (EV/EBITDA)
- Enterprise Value to FCFF (EV/FCFF)
- Selected Financial Data since 2005
- Debt to Equity since 2005
- Price to Earnings (P/E) since 2005
- Price to Book Value (P/BV) 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)
- The net operating profit after taxes exhibits variability over the periods analyzed. Starting at 348,876 thousand US dollars in 2019, there is a sharp decline in 2020 to 182,624 thousand, followed by a recovery to 267,856 thousand in 2021. A significant increase is observed in 2022, reaching 444,863 thousand, before decreasing to 389,641 thousand in 2023. Overall, the NOPAT demonstrates fluctuations but maintains an upward trend after the initial dip in 2020.
- Cost of Capital
- The cost of capital remains stable throughout the years, holding steady at approximately 21.27%. This consistency suggests a stable risk profile and capital structure from 2019 through 2023, providing a constant benchmark for evaluating economic profit against invested capital.
- Invested Capital
- Invested capital shows a consistent increasing trend during the analyzed period. The value moves from 575,173 thousand US dollars in 2019, slightly declining to 555,694 thousand in 2020, then ascending through subsequent years to 718,143 thousand in 2021, 840,706 thousand in 2022, and reaching 1,117,290 thousand in 2023. The steady rise indicates ongoing investments or asset growth within the company.
- Economic Profit
- Economic profit follows a pattern that mirrors some aspects of NOPAT but shows distinct variability. It starts at 226,577 thousand US dollars in 2019, declines significantly to 64,436 thousand in 2020, then recovers to 115,108 thousand in 2021. A peak is reached in 2022 with 266,036 thousand, before decreasing to 151,976 thousand in 2023. Despite fluctuations, economic profit remains positive and generally reflects a recovery and growth phase after the 2020 dip.
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 considerable fluctuation over the five-year period. It started at a high point of 226,577 thousand US dollars in 2019, sharply declined to 64,436 thousand in 2020, and then partially recovered to 115,108 thousand in 2021. In 2022, economic profit peaked at 266,036 thousand, surpassing the initial 2019 figure, but subsequently decreased again to 151,976 thousand in 2023. This pattern indicates volatility with a notable rebound in 2022 followed by a decline in the most recent year.
- Invested Capital
- Invested capital shows a consistent upward trend throughout the period. Beginning at 575,173 thousand US dollars in 2019, it decreased slightly in 2020 to 555,694 thousand but rebounded significantly thereafter. There was a substantial increase in 2021 to 718,143 thousand, followed by continued growth in 2022 and 2023 to 840,706 thousand and 1,117,290 thousand respectively. This steady increase suggests ongoing capital investments or asset accumulation over time.
- Economic Spread Ratio
- The economic spread ratio, expressed as a percentage, followed a pattern similar to economic profit but with sharper swings. Starting at 39.39% in 2019, it drastically declined to 11.6% in 2020, recovered moderately to 16.03% in 2021, then surged to 31.64% in 2022 before dropping again to 13.6% in 2023. This indicates variability in the return spread relative to invested capital, with a notable peak in 2022 but lower returns overall in the most recent year.
- Summary of Trends and Insights
- Over the observed time frame, economic profit and economic spread ratio both experienced significant volatility, with a marked low in 2020 likely impacted by external factors affecting profitability, followed by recovery and peaks in 2022. However, these improvements were not sustained into 2023, where a decline is evident. In contrast, invested capital demonstrated a clear and continuous increase after a minor dip in 2020, suggesting persistent scaling or reinvestment strategies. The divergence between steadily growing invested capital and fluctuating profitability metrics may warrant further investigation into efficiency or return on investment dynamics in recent years.
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 analysis of the financial data reveals several notable trends over the five-year period.
- Economic Profit
- Economic profit exhibits fluctuations throughout the period. It starts relatively high at 226,577 thousand US dollars in 2019, declines sharply to 64,436 thousand in 2020, then recovers to 115,108 thousand in 2021. The profit peaks at 266,036 thousand in 2022 before decreasing again to 151,976 thousand in 2023. This pattern indicates volatility with a significant rebound in 2022 but an overall downward adjustment in the most recent year.
- Adjusted Revenues
- Adjusted revenues show a decreasing trend initially, from 494,508 thousand US dollars in 2019 down to 311,341 thousand in 2020. Subsequently, revenues increase substantially to 449,048 thousand in 2021 and reach a peak of 669,360 thousand in 2022. However, in 2023, adjusted revenues experience a slight decline to 636,735 thousand. Despite the dip in 2023, the general trend from 2020 onwards shows strong revenue growth.
- Economic Profit Margin
- The economic profit margin mirrors the fluctuating nature of economic profit. Starting at 45.82% in 2019, it declines steeply to 20.7% in 2020, then increases moderately to 25.63% in 2021. The margin rises further to 39.74% in 2022 before dropping to 23.87% in 2023. The margin’s fluctuations reflect variability in profitability relative to revenue across the years, with a notable peak in 2022 indicative of stronger profitability efficiency during that year.
In summary, the economic profit and its margin both demonstrate significant volatility, with strong improvement in 2022 followed by declines in 2023. Adjusted revenues experienced a marked recovery after 2020, reaching the highest point in 2022 before slightly falling in 2023. These trends suggest that while revenue grew robustly after 2020, profit efficiency and absolute profit values faced challenges in the latest year, implying possible pressures on cost management or market conditions that affected profitability.