Free cash flow takeaway
A quick read on the company's cash generation and what it means for investors.
PPG generated strong free cash flow in the current quarter, a significant improvement from negative free cash flow in both the preceding quarter and the same quarter last year. The improvement was driven by higher operating cash flow with relatively stable capital expenditure.
- Revenue increased sequentially and year-over-year, while operating cash flow rose sharply, leading to a positive free cash flow margin after two consecutive negative quarters. Capital expenditure was nearly unchanged from the prior quarter and lower than the year-ago period.
- Compared to the prior quarter, free cash flow improved from negative to positive, driven by a much higher operating cash flow and similar capital spending. Versus the same quarter last year, the company also reversed a large negative free cash flow, mainly through stronger operating cash flow and lower capital expenditure.
FCF snapshot
Quarterly and TTM cash-flow metrics with the minimum valuation context.
TTM free cash flow
$1.3B
Trailing twelve-month free cash flow.
Quarter free cash flow
$414.0M
Free cash flow in the selected fiscal quarter.
Operating cash flow
$536.0M
Cash generated by operations before capital spending.
CapEx
$122.0M
Capital spending and related asset purchases.
FCF margin
8.5%
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 |
|---|---|---|---|---|---|
| 2022-09-30 | $4.5B | $512.0M | $104.0M | $408.0M | 9.1% |
| 2022-12-31 | $2.1B | $587.0M | $118.0M | $469.0M | 21.8% |
| 2023-03-31 | $4.4B | $85.0M | $120.0M | -$35.0M | -0.8% |
| 2023-06-30 | $4.9B | $536.0M | $122.0M | $414.0M | 8.5% |
Cash conversion quality
Checks that separate high-quality free cash flow from accounting noise or working-capital timing.
| FCF / net income | 86.1% | Shows whether accounting earnings convert into cash. |
| CapEx / revenue | 2.5% | Lower capital intensity usually supports FCF margin. |
| Net cash | -$5.7B | Cash and equivalents minus total debt. |
Recent events shaping cash flow
Near-term business events that help explain the free cash flow result.
Operating cash flow surge
Operating cash flow increased substantially from the prior quarter and year-ago period, far outpacing revenue growth. This was the primary factor behind the swing to positive free cash flow.
The strong operating cash flow allowed the company to generate healthy free cash flow even with steady capital spending.
What the cash flow says
How to interpret the company's free cash flow beyond the headline number.
Revenue increased sequentially and year-over-year, while operating cash flow rose sharply, leading to a positive free cash flow margin after two consecutive negative quarters. Capital expenditure was nearly unchanged from the prior quarter and lower than the year-ago period.
Compared to the prior quarter, free cash flow improved from negative to positive, driven by a much higher operating cash flow and similar capital spending. Versus the same quarter last year, the company also reversed a large negative free cash flow, mainly through stronger operating cash flow and lower capital expenditure.
Monitor whether operating cash flow can sustain its current level as revenue growth may moderate in coming quarters.