<< While FLM has had large CAPEX over the last 4 quarters, my system of cash flow analysis factors that. They have poor working capital because they are bleeding cash from operations. In the last 4 quarters, they have a negative CFO of 94M. In addition to that they invested an excess of 56M in CAPEX. >>
I didn't talk about capex in my post at all. If you look at the line items in the cash flow statement (specifically, cash flow from operations), you can plainly see that it is the working capital adjustments that cause CFO to be negative (i.e., cash is being used in working capital). Negative CFO cannot cause working capital deterioration; the working capital deterioration causes the negative CFO.
There should be quite a bit of improvement in working capital (i.e., cash will be generated from working capital) through increased inventory turns and improvement in the payables/inventories ratio, which should allow cash flow from ops (and FCF) to ultimately be positive the rest of this year and in 2003.
At least, that's what is supposed to happen. And that was the whole point of my post. Fleming is bleeding cash not because business is poor but because they've done a poor job of managing working capital -- receivables, inventories, and payables. If they can bring that back in line, they have a great chance of generating nice FCF. If they can't, they're headed for big trouble. We'll just have to see what actually happens.
<< I haven't done a detailed analysis of FLM, so there is more that I don't know about the company than there is that I know. I have only crunched the cash flow numbers as provided by Yahoo. >>
The actual SEC filings are better to look at, IMO. Those actually break down the numbers in a more meaningful way. Yahoo shows financial statements in a standard way that usually doesn't break line items out in as much detail as the actual SEC filings do.
<< I, however, am taking the position that if, as a retailer, they can't make money in this strong consumer-driven market, they will find it more difficult going forward as the consumer starts to slow down. >>
One clarification -- Fleming is a wholesaler. |
