Presentation on theme: "1 1 Title of Your Presentation – 08.20.08 [ Title of Presentation] ROI-Leasing-Bonus Depreciation."— Presentation transcript:
1 1 Title of Your Presentation – [ Title of Presentation] ROI-Leasing-Bonus Depreciation
Provocative Question: If you could make a one-time investment of $10,000……… …………and then save $60,000 in labor per year……………….. …………….for the next 5 years, would you be interested?
3 3 New Opportunities for Selling Capital Equipment Leasing Options Bonus Depreciation Capital Equipment Sale All about ROI Leasing is a way to Leverage ROI MAKING ROBOTICS MAKE SENSE
Advantages of Leasing Allows Company to take advantage of ROI and see savings without a large Capital Investment Preserves Company Capital for other uses Lease is Collateralized by Equipment –Often does not impact the Companys Credit Line For Capitalized Lease, can take full advantage of IRS Section 179 Bonus Depreciation
Durabotics has Associations with: –GCI Leasing –Kraus Anderson Leasing –M&I Leasing Durabotics is not involved with the Lease –Leasing company and Customer have the Lease –Durabotics facilitates by getting parties together –Durabotics benefit from the lease is the sale of the equipment –Customer can get their own leasing source…our sources are provided as a courtesy Advantages to Durabotics for Customer to use a lease –Customer can more readily afford equipment – big down payments and capital outlays are no longer an issue. –Payments come on time –Cash advantage for both parties - DB gets progress payments, such as 30% down, 30% on design review, 30% on acceptance run-off, 10% on Final Acceptance, BUT customer only pays First and Last Months payment…and in many cases, just the first payment. –Once sold, the Lease is between Leasing Company and Customer, Durabotics responsibilities are same as for any other transaction.
TWO BASIC TYPES OF LEASES Capitalized Lease – Usually 3-7 year term –Less than 10% Buyout – Usually $1 buyout –Impacts Capital Budget - Equipment is Capitalized Shows up on Companies Books as Asset/Liability –Company gets the depreciation Operating Lease – Usually 3-7 year term –10% or Greater Buyout at end of lease* –Impacts Operating Budget – often can be initiated by Plant Manager without going to upper management, committees, etc. Does not show up on company balance sheet –Company does not own at the end unless they pay the 10% buyout –Leasing Company gets the Depreciation Note: there are many other options – these are only examples. *for 5 year term, 10% buyout is the equivalent of about 4 monthly payments
Current Lease Rates – typical high side estimates* Capitalized Lease –5 Year - $1 Buyout – Cost of Equipment x.021 –3 Year - $1 Buyout – Cost of Equipment x.032 Operating Lease –5 Year – 10% Buyout – Cost of Equipment x.020 –3 Year – 10% Buyout – Cost of Equipment x.030 –5 Year – 20% Buyout – Cost of Equipment x.018 –3 Year – 20% Buyout – Cost of Equipment x.027 *These are High-End Estimates to be used for Budgeting –Actual rates vary daily and depend upon Customers Credit Rating, Financial Situation, etc The above are examples only. –There are many different Term and Buyout arrangements possible
8 Over-Simplified Example Average cost of employee full burden with benefits General Industry - $30,000 Food Industry - $45,000-$55,000 Medical Device and Pharmaceutical Industries - $50,000-$60,000 and up Replacing 2 people, 2 shifts – 4 x $30,000 = $120,000/year = $10,000/month Typical cost of Robot System that replaces 2 people/2shifts = $200,000 approx (can vary widely) ROI on labor alone = $200,000/$120,000 = 1.7 years* Typical Lease Payment (5 year, $1 buyout) = $4,200/mo Your cash outlay = 1 st /last payment = 2 x $4,200/mo = $8,400 You save: Monthly – Currently monthly labor – lease payment = $10,000/mo - $4,200/mo = $5,800 savings/mo Investment recoup = $10,000/$5,800 < less than 2 months! Additional ROI – Improved efficiency, Uptime, Scrap Rate, Costs associated with injuries, etc Additional Costs Ignored – Maintenance, spare parts, etc
9 OK – you were thinking of a SMALLER system – It still works! Average cost of employee - $30,000 with benefits (general industry) Replacing 1 person, 2 shifts – 2 x $30,000 = $60,000/year = $5,000/month Typical cost of Robot System that replaces 1 person,2 shifts = $120,000 approx (can vary widely) ROI on labor alone = $120,000/$60,000 = 2 years* Typical Lease Payment (5 year, $1 buyout) = $2,500/mo Your cash outlay = 1 st /last payment = 2 x $2,500/mo = $5,000 You save: Monthly – Currently monthly labor – lease payment = $5,000/mo - $2,500/mo = $2,500 savings/mo Investment recoup = $5,000/$2,500 = 2 months!
10 Robotic Palletizing Example of ROI – Lease – Bonus Depreciation Calculations Versatile – Flexible – Multi-Line $238,500 example with $7,000 installation
11 Robotic Palletizing Workcell Palletizes boxes from two (2) separate production lines –25 parts/minute/line –50 parts/minute – total throughput. Two (2) modes: –Mode 1 for Independent Palletizing –Mode 2 for Mixed Load Palletizing. –Easy to program Fuji Robot Conveyors Escapements Pallet Handling Controls/HMI interface, Slip/Grip Sheet Handling Safety equipment Duraspec Process Performance Guarantee
12 Major System Components Robot - Fuji EC 201, 4-Axis Palletizing Robot Robot Pedestal Base End Effector Pallet Stack Rack (1) Infeed Conveyors (2) Product Pick-Up Conveyors (2) Pallet Outfeed Conveyors (2) Slip/Grip Sheet Stand (1) Safety Guarding – Wire Mesh perimeter guarding with (2) interactive light curtains Control System with Touchscreen Interface
Example - ROI-Lease-Depreciation Calcs.xls
2010 IRS Section 179 Bonus Depreciation For Capital Equipment put into Service in 2010 (Includes CAPITALIZED LEASES): First $250,000* of total equipment purchased can be 100% depreciated in 2010 Next $550,000* can be 50% depreciated in 2010 Remainder is depreciated at standard 14% 7-year straight line depreciation *Per HIRE Act Signed into law 3/18/2010 for IRS Section 179
Extra Help from Uncle Sam: Bonus Depreciation!
SUMMARY OF ABOVE EXAMPLE for a $245,000 PURCHASE These savings assume certain tax rates and other assumptions, and are provided to demonstrate concept. Customer must verify with their own tax and accounting professionals.
Reasons Why Not to Lease? Customer cannot guarantee 3 years or 5 years of production –Valid point – probably wouldnt justify a straight capital purchase either Our Company doesnt do leases –Ask Question: Do you have a copy machine? –Fact is: they may not have considered it.
Durabotics Challenge Durabotics is not selling leases. We have several Leasing Companies that are Custom-Project Friendly It does not matter to us if the customer finds their own package from their own sources. Our objective is to make our customers aware of this type of financing tool
Questions from Group What can we do with this information?