Free cash flow takeaway
A quick read on the company's cash generation and what it means for investors.
In the fiscal third quarter, free cash flow improved year-over-year but weakened sequentially. Revenue was stable compared to both prior periods.
- Operating cash flow was higher than a year ago but lower than the preceding quarter, while capital expenditure increased both sequentially and year-over-year, resulting in a narrowed free cash flow margin compared to the prior quarter but an improved margin versus last year.
- Compared with the preceding quarter, free cash flow declined due to a decrease in operating cash flow and an increase in capital expenditure. Compared with the same quarter one year earlier, free cash flow rose as operating cash flow improved, partially offset by higher capital spending.
FCF snapshot
Quarterly and TTM cash-flow metrics with the minimum valuation context.
TTM free cash flow
$2.4B
Trailing twelve-month free cash flow.
Quarter free cash flow
$751.4M
Free cash flow in the selected fiscal quarter.
Operating cash flow
$943.1M
Cash generated by operations before capital spending.
CapEx
$191.7M
Capital spending and related asset purchases.
FCF margin
14.7%
The share of revenue converted into free cash flow.
Cash flow trend
A short quarterly history shows whether FCF is scaling with revenue or only spiking for one period.
| Period | Revenue | Operating CF | CapEx | FCF | FCF margin |
|---|---|---|---|---|---|
| 2023-05-28 | $5.0B | $751.6M | $338.2M | $413.4M | 8.2% |
| 2023-08-27 | $4.9B | $378.1M | $141.7M | $236.4M | 4.8% |
| 2023-11-26 | $5.1B | $1.1B | $152.2M | $965.5M | 18.8% |
| 2024-02-25 | $5.1B | $943.1M | $191.7M | $751.4M | 14.7% |
Cash conversion quality
Checks that separate high-quality free cash flow from accounting noise or working-capital timing.
| FCF / net income | 112.1% | Shows whether accounting earnings convert into cash. |
| CapEx / revenue | 3.8% | Lower capital intensity usually supports FCF margin. |
| Net cash | n/a | Cash and equivalents minus total debt. |
Recent events shaping cash flow
Near-term business events that help explain the free cash flow result.
Year-over-Year Operating Cash Flow Improvement
Operating cash flow was higher than the same quarter last year, providing the main support for the year-over-year increase in free cash flow. In the broader nine-month period, management noted that the rise in operating cash flow was primarily driven by higher net earnings, excluding a prior-year divestiture gain.
This improvement enabled free cash flow to exceed the year-ago level despite higher capital expenditure.
What the cash flow says
How to interpret the company's free cash flow beyond the headline number.
Operating cash flow was higher than a year ago but lower than the preceding quarter, while capital expenditure increased both sequentially and year-over-year, resulting in a narrowed free cash flow margin compared to the prior quarter but an improved margin versus last year.
Compared with the preceding quarter, free cash flow declined due to a decrease in operating cash flow and an increase in capital expenditure. Compared with the same quarter one year earlier, free cash flow rose as operating cash flow improved, partially offset by higher capital spending.
Monitor the trajectory of capital expenditure, which has increased significantly from both the prior quarter and the year-ago quarter.