Surprise! Robotics Companies Are NOT Capital Intensive

Please allow me to blow your mind and overturn the common sense notion that robotics companies are capital intensive.  Comparing profitable, public, U.S. based robotics companies to a diverse basket of prominent public companies shows that robotics companies do not require a lot equipment and property to make successful businesses.

In fact, robotics companies have the least property plant and equipment of any of the companies I selected for comparison–which deliberately included such tech giants as a chip maker, an operating system maker, and a search engine giant.  Looking at capital expenditure and depreciation, the robotics companies are again among the leanest of the companies on the list.

The only companies that had such low numbers for CAPEX and depreciation had their assets tied up in very long term investments like real estate and aircraft manufacturing facilities.  Also, most of the robotics companies are still growing and may have their capital expenditures boosted as a percentage of revenues by their anticipated growth.  Take a look at the trend line.

Now what people may mean when they say that robotics is ‘capital intensive’ is that the marginal cost of goods sold for a robotics company is greater than $0/per unit that consumer web applications have–but if that’s what they mean they should come out and say it and not be sloppy in their reasoning.

Angels, VCs, and other investors are you paying attention?  Big plays are going to be made on relatively small bets.

As a Percentage of Revenue
Ticker

Company

PPE Depreciation

CAPEX

Robotics

IRBT

iRobot

6.81%

2.42%

3.05%

ISRG

Intuitive Surgical

11.31%

1.68%

6.79%

AVAV

Aerovironment

7.24%

2.76%

4.61%

CGNX

Cognex

9.86%

1.72%

2.43%

Robotics Median

8.55%

2.07%

3.83%

Robotics Average

8.80%

2.14%

4.22%

Diversified

GOOG

Google

25.33%

3.68%

9.07%

MSFT

Microsoft

11.67%

3.95%

3.37%

T

AT&T

84.50%

14.50%

15.87%

INTC

Intel

43.75%

9.52%

19.93%

XOM

ExxonMobil

45.96%

3.34%

6.63%

BA

Boeing

13.55%

2.12%

2.36%

D

Dominion Resources

206.34%

8.96%

25.40%

AA

Alcoa

77.82%

5.94%

5.16%

DIS

Disney

38.99%

4.50%

7.32%

HD

Home Depot

34.54%

2.39%

1.65%

Diversified Median

41.37%

4.23%

6.98%

Diversified Average

58.25%

5.89%

9.68%

Some notes on the analysis:

-Data comes from the companies last 10-K filing.  Some companies include different things in revenue (where possible I tried to exclude revenue from a financing arm), in deprecation (some include amortization of intangible assets), and capital expenditure (Intuitive, for example, includes the acquisition of intangible assets).

-I wanted to look at a diverse basket of public companies and tried to pick companies that might be similar in some ways to robotics companies but whose earnings would not be unduly influenced by robotic related income.  For example, I excluded offshore oil field services companies because they were too close to being robotics companies, but still not pure enough to get a good view of the diversified company.  I did include Disney (which does anamatronics), Boeing (which has a UAV making subsidiary), and Google (which has a robotic car division) because I thought the revenues contributed to the these companies by robotics related activities had no material impact on the financial metrics.  However, their tangential involvement in robotics speaks to their similarity to robotics businesses.

-Future analysis should look at some other places where capital use can be buried.  For example, Cost of Goods Sold can hide capital that is employed on the companies behalf further up the supply chain.  It is possible that current assets like inventory may also need to be higher for robotics companies.  Also, we should compare total assets and liabilities to the revenue generated to similarly sized public companies to see if there is a substantial difference.

About Robert Morris
A robotics businessman working to make the economy more human.

2 Responses to Surprise! Robotics Companies Are NOT Capital Intensive

  1. Pingback: Robotics capital intensive?! What are you smoking? Don’t believe it. « robocosmist

  2. Pingback: Is a dollar worth a dollar on a tech company’s balance sheet? « robocosmist

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