Savvy Trades and Investments

[abh3vt]

For what its worth, I think FCF is one of the most volatile fundamental measurements because it incorporates changes in working capital (i.e. changes in current assets and current liabilities). NOA discusses FCF for Q2 here:

"Free cash flow was an outflow of $1.5 million as both changes in working capital balances and increases in capital
work in progress resulted in approximately $30 million of free cash flow being deferred into subsequent quarters.
The primary drivers of free cash flow being adjusted EBITDA of $86.9 million, sustaining capital additions of $37.3
million and cash interest expense of $13.6 million generated $36.0 million in the quarter. Sustaining capital additions
were solely incurred on routine capital maintenance of the heavy equipment fleets in Australia and Canada with no
replacement equipment purchased in the quarter and the levels largely reflecting depreciation of $39.6 million. "

This actually is an improvement for FCF in Q2 2024 vs y/y of outflow of $Can 4.7MM. And the reason for the increase in adjusted pretax margins are the adding back of expenses associated with changes in FV of contingent obligations AND a write off of assets held for sale. Both seem very justified to me to add back. NOA is showing improvement in EBITDA and pretax income, adjusted for non-cash or one time expenses. Also, they are showing improvement in the margins of those metrics on improving revenues too. Comps coming up are easier too.