Draft Manufacturer Impact 

C&
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Manufacturer Impact AnalysisPurpose Assess the impacts of potential energy conservation 

on manufacturers

 Cash flow model to represent industry
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 Industry Net Present Value (INPV) provides a succinct summary of impDiscounted Cash Flow Model (2013 to 2048)

 Base Yr Ancmt Yr 

Industry Income Statement (in 2013$ millions) 2013 2014 2015 2016 2017 

Revenues 223.7 $ 229.0 $ 236.4 $ 242.9 $ 247.5 $ 

Total Shipments (million units) 0.377 0.385 0.398 0.409 0.41

- Materials 107.9 $ 110.5 $ 114.0 $ 117.1 $ 119.4 $ 

- Labor 29.5 $ 30.2 $ 31.1 $ 32.0 $ 32.6 $ 

- Depreciation 5.8 $ 6.0 $ 6.1 $ 6.3 $ 6.4 $ 

- Overhead 20.5 $ 21.0 $ 21.7 $ 22.3 $ 22.7 $ 

- Standard SG&A 48.3 $ 49.5 $ 51.1 $ 52.5 $ 53.4 $ 

- R&D 3.6 $ 3.7 $ 3.8 $ 3.9 $ 4.0 $ 

- Product Conversion Costs - $ - $ - $ - $ - $ 

- Stranded Assets - $ - $ - $ - $ - $ 

Earnings Before Interest and Taxes (EBIT) 8.1 $ 8.3 $ 8.5 $ 8.8 $ 8.9 $ 

Per Unit EBIT ($/unit) $ 21.46 21.46 $ 21.46 $ 21.46 $ 21.46 $ 

EBIT/Revenues (%) 3.6% 3.6% 3.6% 3.6% 3.6% - Taxes 2.2 $ 2.3 $ 2.3 $ 2.4 $ 2.4 $ 

Net Operating Profit after Taxes (NOPAT) 5.9 $ 6.0 $ 6.2 $ 6.4 $ 6.5 $ 

Cash Flow Statement 

NOPAT 5.9 $ 6.0 $ 6.2 $ 6.4 $ 6.5 $ 

+ Depreciation 5.8 $ 6.0 $ 6.1 $ 6.3 $ 6.4 $ 

+ Loss on Disposal of Stranded Assets - $ - $ - $ - $ - $ 

- Change in Working Capital - $ 1.0 $ 1.4 $ 1.2 $ 0.9 $ 

Cash Flows from Operations 11.7 $ 11.0 $ 11.0 $ 11.5 $ 12.1 $ 

- Ordinary Capital Expenditures 6.0 $ 6.2 $ 6.4 $ 6.6 $ 6.7 $ 

- Capital Conversion Costs - $ - $ - $ - $ - $ 

Free Cash Flow 5.6 $ 4.8 $ 4.6 $ 4.9 $ 5.4 $ 

Discounted Cash Flow

Free Cash Flow 5.6 $ 4.8 $ 4.6 $ 4.9 $ 5.4 $ 

Terminal Value - $ - $ - $ - $ - $ 

Present Value Factor 0.000 1.000 0.894 0.800 0.71Discounted Cash Flow $ 4.8 - $ 4.1 $ 3.9 $ 3.9 $ 

INPV at Baseline 55.7 $ 
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Manufacturer Markup ScenariosChange in manufacturer markup reflects the industry’s ability to in

prices to recover conversion cost investments Lower Bound: Flat Markup

• Minimal cost recovery

• Manufacturers are not able to raise prices due to market factors

• Minimal change in end‐user pricing

 Upper Bound: Recovery Markup

• High cost recovery

• Manufacturers are able to increase MSP to recover conversion co

• Maximum increase in end‐user pricing

Pricing & Markups
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Flat Markup

Base Case PER 10 PER 25 PER 40 PER 55 

ESCC 1.35 1.35 1.35 1.35 1.35 

ESFM 1.33 1.33 1.33 1.33 1.33 

IL 1.44 1.44 1.44 1.44 1.44 

VT‐S 1.35 1.35 1.35 1.35 1.35 

RS‐V TBD ‐‐‐‐

Markups

Cost Recovery Markup

Base Case PER 10 PER 25 PER 40 PER 55 

ESCC 1.35 1.46 1.49 1.51 1.58 

ESFM 1.33 1.39 1.46 1.50 1.60 

IL 1.44 1.48 1.52 1.59 1.67 

VT‐S 1.35 1.38 1.37 1.38 1.41 

RS‐V TBD ‐‐‐‐

% Change

Base Case PER 10 PER 25 PER 40 PER 55 

ESCC 0% 8% 10% 12% 17% 

ESFM 0% 5% 10% 13% 20% 

IL 0% 3% 6% 10% 16% 

VT‐S 0% 2% 1% 2% 4% 

RS‐V TBD ‐‐‐‐
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INPV Results

$(350.0)$(300.0)$(250.0)$(200.0)$(150.0)$(100.0)

$(50.0)

$‐

$50.0

$100.0

Base Case PER 10 PER 25 PER 40 PER 55 

INPV Results

Flat Markup Cost Recovery
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Industry Value in $M

Base Case PER 10 PER 25 PER 40 PER 55 

Flat Markup $ 55.7 $ 44.3 $ 6.3 $ (61.3) $ (175

Cost Recovery

Markup $ 55.7 $ 53.1 $ 28.3 $ (24.2) $ (108

INPV Results

% Change in Industry Value

Base Case PER 10 PER 25 PER 40 PER 

Flat Markup 0% ‐21% ‐89% ‐210% ‐415

Cost Recovery

Markup 0% ‐5% ‐49% ‐143% ‐295
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Questions?Manufacturer Impact Analysis