I think we all know Q3 was good based on the divvy and cash announcement but I believe it will be very strong based on that change in cash balance. yes many assumed this also from the cash balance but I thought I would try and estimate a reasonable profit range to give us more confidence with this assumption
cashflow = profit minus use of cash and plus sources of cash all from operations, investing and financing activities
thus when we know change in cash but not profit , to find profit = (change in cash) add use of cash and deduct source of cash ( the opposite of determining cashflow)
1. change in cash = $111M for the period july 1 - October 4. reduce to approx. $106M for just 3 mths
2. dividend was 14.5M (use of cash) - thus add that back to cash change
3. first 6 mths of year (cashflow statement filed with SEC doesn't break down to just q2) saw a source of cash from financing of approx. $5M for income tax benefit for share based compensation - thus will deduct $3M for Q3 from change in cash figure
4. depreciation/amortization and share based compensation (both non cash expense thus a source of cash ) of say $10M ( bit more than in q2 due to higher amortization due to synacthen deal ) - so deduct from cash change
5. q1 and q2 saw cash raised from share issuance of approx. $7M ( stock options and grants I suspect) - don't have breakdown for just q2 as again cashflow statement uses just 6 month period but would assume it was bit higher in q3 than in either of q1 or q2 with the climbing stock price so lets use $5M for q3 ( this is very hard to estimate mind you ) - thus we deduct $5M from change in cash
using all the above calculations PROFIT = $102.5M ( 106 + 14.5 - 3 - 10 -5 )
lol nommie, what took me hours of analysis and pages took nommie just 10 seconds and one line to get 1.69 , now that is what I call quick and dirty!
1.69 falls within my 1.63 - 1.95 range
still sticking with 1.79 assuming no buy backs
ya I know im likely over heads of many and don't mean to keep going on but just responding to questions to help clear it up and maybe even help some learn.
the questions are good as im not perfect so good to see if I made any mistakes
What happened to change in receivables, inventory ,short term investments. other assets. other current liabilities and other liabilities. Several of those line items had relatively large swings between the first and second quarters of FYE 13
cashflow statement by company only provided for first 6 mths of 2013
net change in working capital (ar, inv, payables, all other current assets and liabs) increased by $3M thus draining cash by $3M , well within my +/- 10M variance
yes I know some individual items had large swings over $10M between q1 and q2 but you have to look at all of them in totality ( as that all that matters in the end).
ie lets just say you only had 3 accounts even though qcor has like 15-20. lets say AR, Inv and AP
Say AR drops by $20M (a source of cash as reveivebales were turned into cash)
Say Inv increases by $5M ( use of cash as inv needed to be bought with cash)
payables decreased by 15M ( use of cash as company paid off its suppliers faster)
so 2 accounts saw big swings of 15 and 20M but when you add all 3 together the net change in cash was ZERO ( + 20, -5, -15 = 0 )
While there is no cashflow statement for Q2 I manually calculated the WC cashflow and it came out to minus $8.4M ( again within my $10M variance) , that means the company USED $8.4M in cash to fund increased WC investment.
Remember my $1.70 non gaap estimate is assuming $0 for change in WC investment. If in Q3 the company again uses $8.4M in cash for WC, then my estimate increases to $1.93. Again my range is $1.95 - $1.63 using a $10M WC variance from the mid point of 1.79
did you not read my analysis? - part 2
I have a $10M + or - variance for working capital changes - impossible to estimate this with any precsion but I did go back over past statements and it did look like the max or min was around $10M for w/c changes
Good analysis. I also add $6.25M of non cash expense to your number for acquisition. They are not really royalties, but I see them structured/treated as such to conform with GAAP. Does this sound correct to you? Also, the Thursday balance (increase of $111M) was probably right before a weekly check run and payroll distribution. Can't be sure of this though. I am conservatively saying $1.50 GAAP EPS.
Good luck to everyone.
6.25M ? for what acquisition? Sorry I don't see this.
as for the payroll , even assuming it was the day before a weekly pay, that would leave approx 2 days of payroll expensed in Q3 and not paid with cash, so we are talking what around $300,000 - immaterial to my analysis