Manufacturing: EBIT and capex
Capex-heavy manufacturing runs 8-12% EBIT margin in 2026 by Damodaran median. D&A timing diverges from maintenance capex over multi-year cycles, making EBIT noisy year-on-year. EBITDA minus maintenance capex is a cleaner sense-check for the cash-generative core[Damodaran].
Typical EBIT margins (2026)
- Machinery: 11.6%
- Electrical equipment: 9.2%
- Construction supplies: 10.6%
- Building materials: 10.1%
- Auto & Truck: 5.1%
- Steel: 6.1%
Why D&A noise hurts EBIT comparability
A manufacturer that just completed a $2B greenfield plant has elevated D&A relative to maintenance capex for the first 3-5 years. EBIT looks artificially depressed. The opposite is true for a manufacturer that has been under-investing: low D&A flatters EBIT, but the maintenance bill will catch up.
EBITDA-capex as the sense-check
Operating Cash Flow proxy = EBITDA - Maintenance capex
Use disclosed maintenance capex when the company provides it (Caterpillar does, Boeing does not). When not disclosed, the rough proxy is depreciation expense itself.
See Tesla FY25 for the capex-heavy worked example and the D&A line-item page.