Free cash flow takeaway
A quick read on the company's cash generation and what it means for investors.
Revenue and free cash flow were higher than the prior quarter, but free cash flow was lower than the same quarter a year ago. The free cash flow margin improved from negative to positive, driven by a sharp reduction in capital expenditure.
- Operating cash flow was lower than the prior quarter, while revenue was higher. Capital expenditure decreased significantly, enabling free cash flow to turn positive and the free cash flow margin to improve from negative to positive.
- Compared to the prior quarter, revenue was higher, operating cash flow was lower, capital expenditure was much lower, and free cash flow improved from a negative amount to a positive amount. Compared to the same quarter a year ago, revenue was higher, operating cash flow was lower, capital expenditure was slightly higher, and free cash flow was lower.
FCF snapshot
Quarterly and TTM cash-flow metrics with the minimum valuation context.
TTM free cash flow
$416.0M
Trailing twelve-month free cash flow.
Quarter free cash flow
$471.0M
Free cash flow in the selected fiscal quarter.
Operating cash flow
$1.0B
Cash generated by operations before capital spending.
CapEx
$577.0M
Capital spending and related asset purchases.
FCF margin
11.5%
The share of revenue converted into free cash flow.
FCF reconciliation
Free cash flow is not a GAAP line item; it should be bridged from the cash flow statement.
| Operating cash flow | $1.0B | Cash generated by operations before capital spending. |
| Capital expenditures | $577.0M | Capital spending used to bridge CFO to FCF. |
| Free cash flow | $471.0M | Operating cash flow less capital spending. |
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 |
|---|---|---|---|---|---|
| 2022-06-30 | -$1.4B | $1.2B | $940.0M | $214.0M | -15.1% |
| 2022-09-30 | $578.0M | $1.1B | $1.2B | -$19.0M | -3.3% |
| 2022-12-31 | $3.3B | $1.3B | $1.1B | $199.0M | 6.0% |
| 2023-03-31 | $3.3B | $939.0M | $870.0M | $69.0M | 2.1% |
| 2023-06-30 | -$1.6B | $1.3B | $1.4B | -$68.0M | 4.2% |
| 2023-09-30 | $842.0M | $1.1B | $1.1B | -$56.0M | -6.7% |
| 2023-12-31 | $3.7B | $1.4B | $519.0M | $895.0M | 24.0% |
| 2024-03-31 | $3.5B | $1.0B | $653.0M | $376.0M | 10.8% |
| 2024-06-30 | -$1.8B | $1.3B | $1.5B | -$263.0M | 14.7% |
| 2024-09-30 | $874.0M | $1.2B | $1.4B | -$168.0M | -19.2% |
| 2024-12-31 | $4.1B | $1.0B | $577.0M | $471.0M | 11.5% |
Cash conversion quality
Checks that separate high-quality free cash flow from accounting noise or working-capital timing.
| FCF / net income | 68.4% | Shows whether accounting earnings convert into cash. |
| CapEx / revenue | 14.1% | Lower capital intensity usually supports FCF margin. |
| Net cash | -$13.0B | 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 reduction
Capital expenditure decreased sharply from the prior quarter, which was the primary factor in turning free cash flow positive and improving the free cash flow margin from negative to positive.
This reduction directly enabled the company to generate positive free cash flow in the current quarter, reversing the prior quarter's negative free cash flow.
What the cash flow says
How to interpret the company's free cash flow beyond the headline number.
Operating cash flow was lower than the prior quarter, while revenue was higher. Capital expenditure decreased significantly, enabling free cash flow to turn positive and the free cash flow margin to improve from negative to positive.
Compared to the prior quarter, revenue was higher, operating cash flow was lower, capital expenditure was much lower, and free cash flow improved from a negative amount to a positive amount. Compared to the same quarter a year ago, revenue was higher, operating cash flow was lower, capital expenditure was slightly higher, and free cash flow was lower.
Monitor the impact of the pending acquisition of H&E on cash allocation, as the filing notes that share repurchases have been paused due to this transaction.
Risks and tripwires
Observable signals that would weaken the free cash flow thesis.
| Risk | Tripwire | Why it matters |
|---|---|---|
| FCF margin compression | FCF margin falls for two consecutive quarters. | Cash conversion may be weakening before earnings show it. |
| Capital intensity rises | CapEx/revenue moves materially above the recent run rate. | More operating cash flow would be consumed before becoming FCF. |
| Working capital drag | Inventory or receivables grow faster than revenue. | Reported growth may not translate into cash. |