Free cash flow takeaway
A quick read on the company's cash generation and what it means for investors.
Pinnacle West reported negative free cash flow for the quarter, driven by capital expenditure exceeding operating cash flow. The free cash flow margin improved sequentially but weakened compared to the same quarter last year.
- Revenue was stable year over year and higher sequentially. Operating cash flow increased from the prior quarter but declined from a year ago. Capital expenditure rose in both comparisons, resulting in a larger free cash flow deficit year over year and a slightly larger deficit sequentially, though the margin improved due to higher revenue.
- Sequentially, revenue and operating cash flow increased, but capital expenditure rose more, resulting in a slightly more negative free cash flow. The free cash flow margin improved from the prior quarter. Year over year, revenue was stable, operating cash flow declined, capital expenditure increased, and free cash flow became more negative, with the margin weakening.
FCF snapshot
Quarterly and TTM cash-flow metrics with the minimum valuation context.
TTM free cash flow
-$691.7M
Trailing twelve-month free cash flow.
Quarter free cash flow
-$247.0M
Free cash flow in the selected fiscal quarter.
Operating cash flow
$226.0M
Cash generated by operations before capital spending.
CapEx
$473.0M
Capital spending and related asset purchases.
FCF margin
-22.0%
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 |
|---|---|---|---|---|---|
| 2022-09-30 | $1.5B | $443.6M | $433.6M | $10.0M | 0.7% |
| 2022-12-31 | $1.0B | $209.5M | $430.6M | -$221.1M | -21.9% |
| 2023-03-31 | $945.0M | $211.6M | $445.2M | -$233.6M | -24.7% |
| 2023-06-30 | $1.1B | $226.0M | $473.0M | -$247.0M | -22.0% |
Cash conversion quality
Checks that separate high-quality free cash flow from accounting noise or working-capital timing.
| FCF / net income | -222.6% | Shows whether accounting earnings convert into cash. |
| CapEx / revenue | 42.2% | 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.
Capital Expenditure Increase
Capital expenditure rose compared to both the prior quarter and the same quarter last year, outpacing operating cash flow growth. The filing notes planned additions to facilities, consistent with this increase.
The elevated capital spending continues to pressure free cash flow, requiring monitoring of future spending plans and financing.
What the cash flow says
How to interpret the company's free cash flow beyond the headline number.
Revenue was stable year over year and higher sequentially. Operating cash flow increased from the prior quarter but declined from a year ago. Capital expenditure rose in both comparisons, resulting in a larger free cash flow deficit year over year and a slightly larger deficit sequentially, though the margin improved due to higher revenue.
Sequentially, revenue and operating cash flow increased, but capital expenditure rose more, resulting in a slightly more negative free cash flow. The free cash flow margin improved from the prior quarter. Year over year, revenue was stable, operating cash flow declined, capital expenditure increased, and free cash flow became more negative, with the margin weakening.
Monitor the trajectory of capital expenditure relative to operating cash flow, as the gap determines the free cash flow outcome.