Axon Enterprise Inc. (NASDAQ:AXON)

The analysis of the annual financial data related to property, plant, and equipment reveals several notable trends and patterns over the five-year period.

Land

The value of land remained stable from 2018 to 2019 at approximately $2.9 million. A significant increase occurred in 2020, rising sharply to about $57 million, followed by a gradual decline in the subsequent two years, ending at around $51.6 million in 2022.

Building and Leasehold Improvements

This category showed steady growth, increasing from approximately $19.6 million in 2018 to about $25.9 million in 2022. The increase appears consistent with gradual investment or revaluation.

Production Equipment

Production equipment demonstrated substantial growth, particularly from 2019 onwards. The value rose from about $19.8 million in 2018 to over $57 million in 2022, reflecting significant capital expenditures or upgrades targeting production capacity.

Computers, Equipment, and Software

This category increased steadily, with a notable acceleration in growth between 2021 and 2022, moving from roughly $8.4 million in 2018 up to approximately $25.2 million in 2022, indicating increased investment in technology assets.

Furniture and Office Equipment

Values remained relatively stable across the period, fluctuating slightly but maintaining a range between $6.5 million and $7.4 million, suggesting limited new investment or disposals.

Vehicles

Vehicle assets grew gradually from $1.4 million in 2018 to $4.0 million in 2022, showing a consistent but moderate increase in this asset category.

Capitalized Internal Software Development Costs

There was a significant increase in capitalized software development costs, which remained relatively flat through 2020 but then grew sharply to $12.2 million in 2021 and further to $14.2 million in 2022, highlighting enhanced focus on software development activities.

Construction-in-Process

Construction-in-process assets exhibited strong growth, more than quadrupling from $14.8 million in 2018 to $62.3 million in 2022. This trend indicates ongoing, sizable investments in projects that are not yet capitalized as completed assets.

Property and Equipment, Cost

The total cost of property and equipment showed remarkable expansion, more than tripling from approximately $77.8 million in 2018 to nearly $247.7 million in 2022. This substantial increase reflects extensive capital investments over the five years.

Accumulated Depreciation

Accumulated depreciation increased in absolute terms each year, from around $39.9 million in 2018 to $77.9 million in 2022, consistent with the aging of assets and growing asset base.

Property and Equipment, Net

The net book value of property and equipment displayed significant growth, rising from about $37.9 million in 2018 to approximately $169.8 million in 2022. This increase aligns with the higher levels of investment and expansion of asset base observed across categories.

Overall, the data reveal a pattern of substantial capital investment, particularly in land, production equipment, software development, and construction-in-process. Steady increases in accumulated depreciation are consistent with the expansion of assets. The growth in net asset values suggests an ongoing strategy focused on expanding and modernizing property and equipment holdings.

Average Age Ratio

The average age ratio exhibits a decreasing trend over the five-year period, declining from 53.27% in 2018 to 39.72% in 2022. This consistent decline suggests that the company has been managing its asset base with relatively newer equipment or has been actively investing in replacing or upgrading its property, plant, and equipment.

Estimated Total Useful Life

The estimated total useful life of assets shows variations, starting at 15 years in 2018, then reducing to 10 years in 2019 and 2020, followed by a slight reduction to 9 years in 2021, and an increase back to 10 years in 2022. This inconsistency may reflect changes in the asset mix, revisions in asset lifespan assumptions, or changes in technology impacting asset longevity estimates.

Estimated Age, Time Elapsed Since Purchase

The estimated asset age remains relatively stable with a minor decreasing trend, moving from 8 years in 2018 down to 4 years in 2021 and 2022. The significant drop from 8 to 5 years between 2018 and 2019, and then stabilization indicates accelerated asset replacement or acquisitions of newer assets, likely contributing to the reduction in average age ratio.

Estimated Remaining Life

The estimated remaining life of the assets remains mostly consistent at 5 years from 2019 through 2021, except for an initial period of 7 years in 2018 and a slight increase to 6 years in 2022. This stability suggests that while the assets are aging, management expects them to retain useful life for a similar duration over these years, which aligns with observed trends in asset renewal.

Accumulated Depreciation

There is a consistent increase in accumulated depreciation over the five-year period. The value rose from 39,885 thousand USD in 2018 to 77,895 thousand USD in 2022, indicating ongoing use and aging of property, plant, and equipment assets.

Property and Equipment Cost

The cost of property and equipment shows significant growth from 77,778 thousand USD in 2018 to 247,738 thousand USD in 2022. This sharp increase, particularly notable between 2019 and 2022, suggests substantial investments or acquisitions of fixed assets during these years.

Land

Land values remained stable at 2,900 thousand USD in 2018 and 2019 but then spiked dramatically to 57,052 thousand USD in 2020. Thereafter, the value slightly decreased in subsequent years, reaching 51,612 thousand USD by 2022. This pattern may reflect major land acquisitions in 2020 followed by revaluations or disposals.

Average Age Ratio

The average age ratio demonstrated a steady decline from 53.27% in 2018 to 39.72% in 2022. This trend indicates that the property, plant, and equipment are becoming relatively younger, likely due to significant recent additions to the asset base, which dilute the overall average age.

Property and Equipment Cost

The cost of property and equipment exhibited a substantial upward trend over the analyzed period. Starting at $77.8 million in 2018, it increased moderately to $85.6 million in 2019, followed by a significant jump to $152.7 million in 2020. This growth continued through 2021 and 2022, reaching $197.2 million and $247.7 million, respectively. This pattern indicates substantial investment or acquisition activities in property and equipment assets during these years.

Land

The value of land remained constant at $2.9 million between 2018 and 2019, then surged dramatically to $57.1 million in 2020. However, subsequent years saw a gradual decline in land value, decreasing to $54.9 million in 2021 and further to $51.6 million in 2022. This trend suggests possible revaluation, sales, or adjustments in the land holdings after the peak in 2020.

Depreciation and Amortization Expense Related to Property and Equipment

Depreciation and amortization expenses rose consistently throughout the years. Beginning at $4.9 million in 2018, expenses increased to $7.9 million in 2019, then to $9.2 million in 2020. A notable rise occurred in 2021, reaching $15.8 million, and further escalated to $20.4 million in 2022. This increasing expense aligns with the growth in property and equipment assets, reflecting higher depreciation charges due to larger or newer asset bases.

Estimated Total Useful Life

The estimated total useful life of property and equipment displayed some fluctuation. Initially recorded at 15 years in 2018, it decreased to 10 years in 2019 and remained at this level through 2020. In 2021, the useful life was slightly reduced to 9 years, before returning to 10 years in 2022. These changes may indicate adjustments in depreciation policies or revisions in asset lifespan estimates to better reflect usage patterns or technological obsolescence.

Accumulated Depreciation

The accumulated depreciation shows a consistent upward trend over the five-year period. Starting at 39,885 thousand US dollars in 2018, it increased gradually to 77,895 thousand US dollars by the end of 2022. This steady rise indicates ongoing depreciation of property, plant, and equipment assets, reflecting both the passage of time and continued asset usage or addition of depreciable assets.

Depreciation and Amortization Expense

The annual depreciation and amortization expense related to property and equipment demonstrates a marked increase over the period analyzed. Beginning at 4,900 thousand US dollars in 2018, the expense rose significantly each year, reaching 20,400 thousand US dollars in 2022. The sharp increase, especially between 2020 and 2022, suggests accelerated asset depreciation possibly due to new acquisitions or changes in depreciation policies or asset mix.

Time Elapsed Since Purchase

The average time elapsed since purchase of the assets decreased from 8 years in 2018 to 4 years in both 2021 and 2022. This reduction indicates a younger asset base over time, which could be the result of recent investments or replacements of older plant and equipment. The decreasing asset age may also correlate with the increasing depreciation expense observed, as newer assets might have higher initial depreciation charges.

Overall Insights

There is a clear pattern of significant investment or asset turnover, as evidenced by the increased depreciation expense and decreasing average asset age. The consistent growth in accumulated depreciation alongside an increasing annual expense suggests ongoing capital expenditure or asset upgrades. This dynamic points to a strategy of maintaining or expanding production capacity with relatively newer machinery, which affects the financial statements through higher depreciation charges and adjusted asset valuation over time.

Property and Equipment, Net

The net value of property and equipment exhibited a consistent upward trend over the analyzed period. Starting at $37,893 thousand in 2018, the figure increased moderately to $43,770 thousand in 2019. A marked acceleration occurred from 2019 to 2020, with the value more than doubling to $105,494 thousand. This growth continued, reaching $138,457 thousand in 2021 and $169,843 thousand in 2022, indicating significant investment or acquisition activities related to property and equipment during these years.

Land

The recorded value of land remained static at $2,900 thousand for both 2018 and 2019. A substantial increase was noted in 2020 when the value surged dramatically to $57,052 thousand, followed by slight decreases to $54,868 thousand in 2021 and $51,612 thousand in 2022. This pattern suggests a significant purchase or revaluation of land assets in 2020, with minor adjustments in subsequent years.

Depreciation and Amortization Expense Related to Property and Equipment

Depreciation and amortization expense demonstrated a steady rise throughout the period. Beginning at $4,900 thousand in 2018, the expense increased to $7,900 thousand in 2019 and then to $9,200 thousand in 2020. More pronounced growth was observed in 2021 and 2022, with expenses escalating to $15,800 thousand and $20,400 thousand, respectively. This pattern is consistent with the increased asset base and reflects higher consumption of asset value over time.

Estimated Remaining Life (in years)

The estimated remaining life of property and equipment, expressed in years, started at 7 years in 2018. It decreased to 5 years in 2019 and remained constant through 2021. In 2022, the estimated remaining life increased slightly to 6 years. This variation may indicate changes in the asset mix, possibly including newer acquisitions with longer useful lives or re-evaluations of asset longevity.