Free cash flow takeaway
A quick read on the company's cash generation and what it means for investors.
The quarter's free cash flow margin weakened significantly compared to both the prior quarter and the same quarter last year, as operating cash flow declined while capital expenditure remained elevated. The company's liquidity position remained strong, with cash and equivalents and available credit facility, but the conversion of revenue into free cash flow decreased notably.
- Cash conversion from revenue to free cash flow was lower than in the preceding quarter and the year-ago period, primarily due to a reduction in operating cash flow and a higher level of capital spending relative to revenue.
- Compared to the immediately preceding quarter, free cash flow and margin were lower, driven by a decline in operating cash flow despite a slight revenue decrease. Versus the same quarter one year earlier, revenue was slightly higher, but operating cash flow was lower and capital expenditure was substantially higher, resulting in a much lower free cash flow and margin.
FCF snapshot
Quarterly and TTM cash-flow metrics with the minimum valuation context.
TTM free cash flow
$1.4B
Trailing twelve-month free cash flow.
Quarter free cash flow
$87.4M
Free cash flow in the selected fiscal quarter.
Operating cash flow
$408.9M
Cash generated by operations before capital spending.
CapEx
$321.5M
Capital spending and related asset purchases.
FCF margin
4.5%
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 |
|---|---|---|---|---|---|
| 2022-07-01 | $2.1B | $420.8M | $218.1M | $202.7M | 9.7% |
| 2022-09-30 | $2.2B | $1.0B | $271.1M | $731.3M | 33.4% |
| 2022-12-31 | $2.1B | $731.3M | $373.0M | $358.3M | 17.0% |
| 2023-03-31 | $2.0B | $408.9M | $321.5M | $87.4M | 4.5% |
Cash conversion quality
Checks that separate high-quality free cash flow from accounting noise or working-capital timing.
| FCF / net income | 18.9% | Shows whether accounting earnings convert into cash. |
| CapEx / revenue | 16.4% | Lower capital intensity usually supports FCF margin. |
| Net cash | -$812.2M | Cash and equivalents minus total debt. |
Recent events shaping cash flow
Near-term business events that help explain the free cash flow result.
Decline in Free Cash Flow Margin
The free cash flow margin contracted sharply from both the prior quarter and the year-ago quarter, reflecting a combination of lower operating cash flow and higher capital expenditure. The reduction in operating cash flow was not offset by the modest revenue change.
Continued pressure on free cash flow generation may constrain future capital allocation flexibility.
What the cash flow says
How to interpret the company's free cash flow beyond the headline number.
Cash conversion from revenue to free cash flow was lower than in the preceding quarter and the year-ago period, primarily due to a reduction in operating cash flow and a higher level of capital spending relative to revenue.
Compared to the immediately preceding quarter, free cash flow and margin were lower, driven by a decline in operating cash flow despite a slight revenue decrease. Versus the same quarter one year earlier, revenue was slightly higher, but operating cash flow was lower and capital expenditure was substantially higher, resulting in a much lower free cash flow and margin.
Monitor the trend of capital expenditure relative to operating cash flow, as elevated spending combined with reduced cash generation could pressure free cash flow.