A couple quarters ago Rite Aid produced some outstanding free cash flow numbers (in the neighborhood of $484M) fueled by $520M of cash flow generated from operating activities.
There was a lot of discussion about whether this was an abberation (fluff for Mary as Ace says) or the shape of things to come. We should get the answer on that one real soon when next quarter's numbers come out.
FCF for the last 4 Qtrs has been:
$32M, $484M, ($41M), and ($392M)
It will be very interesting to see what they replace that big ugly negative $392M with this year.
> Goodwill write off last year and the year before.
The large goodwill write off you refer to occurred TWO YEARS AGO. It was referenced by Rite Aid one year ago as an explanation for why the year ago numbers were so different from the two-year ago numbers. It has ABSOLUTELY NO EFFECT on any of the numbers reported in the last eight quarters.
> Per Generally Accepted Accouting Principles, read, required.
Yup. Everybody should do their own reading and understand. If you don't want to delve into accounting principles then just go back to the conference call transcripts from one year ago and management explains it all fairly straightforwardly.
> Turned earnings into loss on the balance sheets.
This statement is absolutely FALSE. In the year of the write-off, Rite Aid's reported loss is LARGER THAN the write-off. 3rd grade level math tells us this means Rite Aid would have experienced a loss even without the Goodwill write-off.
Oh yeah, about the title of the post. I was surprised to see the recent Motley Fool article state that their trailing twelve month FCF was negative. I'm guessing they must not have included the most recent quarter in their calculations.
**** I was surprised to see the recent Motley Fool article state that their trailing twelve month FCF was negative. I'm guessing they must not have included the most recent quarter in their calculations. ****
I was able to calculate the TTM negative FCF of $197M reported by Motley Fools as follows: ($43M), $484M, ($160M) and ($478M) in Q2FY11, Q1FY11, Q4FY10 and Q3Fy10, respectively. Included in the ($478M) FCF for Q3FY10 is a $400M payment to A/R securitizations, which RAD refinanced with LT debt.
When RAD discusses its results for FY10, it generally excludes the A/R securitization payments from cash flow from operations and includes them as reductions of debt (substance over form I expect). For example, RAD disclosed $230M of cash flow from operations for FY10 in a September 15, 2010 presentation (($325M) GAAP reported amount, add back $555M A/R securitization payments), while including the $555M A/R securitization payments as part of its debt reduction for FY10.