Callouts & quotes from 804+ activist slides

"“there was uncertainty around how much we were relying on additional receivable sales, and there was uncertainty about how much we would sell in receivables. That’s the biggest change that is leading to this [updated guidance] and flowing that through speaks to the majority of the change in our GPU line item.” — Garcia"

"TIP REIT will be required to fund land capex for the first two years after the spin-off. Thereafter, TIP REIT will be Target Corp’s land developer through its Preferred Vendor Agreement. As such, Target Corp will generate significant free cash flow and will likely deleverage to an A-/A3 ratings profile after two years"

"If Val-gan can grow organically at a high single-digit rate as Valeant management projects, and management can invest the company’s free cash flow in new acquisition targets at historical rates of return, then we believe management can achieve its goal of 15%-20% annual EPS growth — Valeant Presentation April 22, 2014"

"to pursue multiyear upfront contracts with enterprise customers to help meet its fiscal year 2023 free cash flow goal. Upfront billings of enterprise customers in fiscal year 2023 substantially exceeded historical levels, helping the company to meet its lowered annual free cash flow target. — Autodesk (quoted in text)"

"Spruce Point does not believe the Evoqua deal was an effective roll-up strategy worthy of the commanding valuation paid by Xylem. After deploying $490m for acquisitions, cash flow struggled ever since COVID-19, and its final acquisition of Mar Cor appears to have been a bust with the return of unpaid earnout money."

"On your second question, so about 21% of our revenue in Q4 was spent on inventory, on our IoT devices and on inventory. And so with a minus 3% free cash flow margin, our free cash flow margin sans dollars going out the door for inventory would have been positive 18%. — Samsara CFO Phillips, Q4 FY2023 Earnings Call"

"Novartis cell and gene therapy (cont’d): Views the machine as a “failed purchase” and would have sent it back if they could; has no value proposition versus traditional flow cytometers that are a fraction of the price and have lower operating costs, can run more assays, and have higher throughput and better data."

""It feels very expensive to me. If you go through the three methodologies, valuing the cash flows, on a relative value basis and the third thing is what its worth on a price to book basis if you were to think about it as a financing company. In all three metrics, it's quite expensive." — Former Sunnova Executive"

"We estimate gross profit per system will continue to drop as the solar investment tax credit steps down over the next 2 years. Lower margins and a reduced benefit for tax equity investors look to pressure an industry which already has tight margins and relies on tax equity to support their negative cash flows."

"Spruce Point believes Kornit Digital (“the Company” or KRNT) saw 2018 revenues, and particularly cash flow, driven entirely by Amazon’s expansion of its Merch program, which are likely to taper based on a slow-down of program growth, and would leave a gaping hole in Kornit’s aggressive revenue growth strategy."

"Perion promotes its iHub, but how does the model work? In the most recent version, it not only made the pictograph significantly less elaborate, removed the millions and billions of data points, but also changed the flow of video monetization and social, a key part of the growth story, and also removed Bing."

"But essentially from 2014, 2015 and 2016 there was very little CapEx that was spent at DigitalGlobe to build satellites. And they took advantage of that and all the cash flow that was generated during this period and bought back about$300 million of stock. — Interim Maxar CFO (former MDA CFO) Anil Wirasekara"

"BR has experienced multiple expansion over the past few years, while the evidence shows its cash flow has deteriorated, it has a shrinking ecosystem and greater customer concentration, has failed to deliver on the UBS project in a timely manner, and may be under increasing regulatory scrutiny from the SEC."

"Each of these developments is unfortunate and places management’s full-year guidance at risk, in our view. The risk to earnings has obvious flow through implications to the company’s cash flow, which adds to concern given the company’s already challenged liquidity and balance sheet profile. — Goldman Sachs"

"The system is outdated and they need a lot of innovation on their workflows. That's the feedback we have gotten. But I would definitely recommend doing their due diligence and also speaking to the references, and I think that kind of sums it up. I tend to use this line quite a few times. — IQVIA executive"

"SMCI is currently trading at the highest revenue multiple in its sector, likely a reflection of investors perception that it is growing revenues the fastest. However, unlike its peers which have historically solid free cash flow generation, SMCI has not demonstrated any long-term free cash flow ability."

"“We even have a challenge in R&D in recruiting scientific groups to use these new methods. It partially might be learning a new technology, which is a barrier, but it's also scientists get set in their ways. With flow cytometry, it's an old technology, but it works.” — Bristol Meyers Squibb employee #1"

"“We believe that the presentation of Adjusted Free Cash Flow is relevant and useful to investors because it provides a measure of cash available to pay the principal on our debt and pursue acquisitions of businesses or other strategic investments or uses of capital.” — GTT Q1 2019 SEC Form 10-Q, p. 40"

"Lasertec is an extreme, textbook accounting fraud that checks off every box: claiming to have the highest margins in the industry; but alarmingly little cash flow and the lowest cash conversion among its peers; accompanied by the highest inventory level of any semicap equipment supplier in the world."

"Given our discussions with former employees and forensic analysis of Stryker’s historical inability to deal with its SG&A and cost bloat, along with rising supply chain and inflation challenges, we view it unlikely that its free cash flow will increase 4.4% in 2022 and that earnings will grow 25.2%."

""Our Foundry wraps proprietary software and automation around core cell engineering workflows—designing DNA, writing DNA, inserting that DNA into cells, testing to measure cell performance—and leverages data analytics and data science to inform each iteration of design." — Ginkgo Bioworks Prospectus"

"Without taking on any debt or implementing any additional operational improvements, Bristol-Myers will have the ability to use ~$37 billion of cumulative unlevered free cash flow over the next five years to execute a “String of Pearls” strategy (i.e. in-licenses, partnerships, small acquisitions)"

"Without taking on any debt or implementing any additional operational improvements, Bristol-Myers will have the ability to use ~$37 billion of cumulative unlevered free cash flow over the next five years to execute a “String of Pearls” strategy (i.e. in-licenses, partnerships, small acquisitions)"

"Without taking on any debt or implementing any additional operational improvements, Bristol-Myers will have the ability to use ~$37 billion of cumulative unlevered free cash flow over the next five years to execute a “String of Pearls” strategy (i.e. in-licenses, partnerships, small acquisitions)"

"Given the Company’s tendency to ignore its hardware business activities and propensity for creative accounting, it should come as no surprise that CFO Phillips has suggested on several occasions that investors simply ignore the cash flow impacts of the Company’s hardware transactions altogether."

"Our 2025E Low forecast assumes sustained weakness in North American new life sales, stronger than expected outflows from the UK-based adviser platform, and further challenges for the international business, which has been under pressure recently due to macro-related headwinds in China and Spain."

"While there are multiple contributing factors to TI’s underperformance, we believe the most significant has been the dramatic increase in capital investment announced in 2022, which has led to a fundamental deviation from TI’s long-held commitment to driving growth in free cash flow per share."

"We believe Limbach significantly overstates its free cash flow, which in turn inflates its reported Adj. EBITDA-to-FCF conversion rate. While the Company claims an 80% conversion rate over the past six years, our Spruce Point-adjusted FCF analysis suggests the true figure may be less than 60%."

"Yeah, whatever, this is an expensive piece of machine. What does it do? They haven't built anything new. It's built of flow cytometry and some optofluidics, which already exist, and they just married the two, and now they're claiming that they can do something fancy. — Takeda ex-lead scientist"

"WD-40’s share price defies logic and trades at an extreme valuation. Post the last financial crisis in 2018, management has directed ~62% of total free cash flow into repurchasing shares at increasingly inflated prices, while it methodically reduces its stake in the Company to almost nothing."

"ISS continues to have concerns with the Compensation Committee's decision to approve bonus payments at 110 percent of target when the company failed to achieve the minimum performance goals for operating income before depreciation and amortization and free cash flow. — RiskMetrics Group (ISS)"

"Spruce Point has concerns about financial relationships and flows of payments between C3, its CEO's foundation, two directors and its sales partners. Spruce Point asks C3 to clarify the nature of the relationships and economic value proposition to C3 shareholders with enhanced disclosures."

""The Company reclassified prior year comparative figures in the condensed consolidated statement of cash flows to conform to the current year's presentation....This change in presentation did not have an impact on the Company's financial condition or operating results." — Amcor 10-Q Note 1"

"The deterioration of Skechers' cash flow margins since 2018, coupled with a history of mismatch between its CFO and net income (before non-controlling interest) and thus highly suspect earnings quality, suggests that something is fundamentally wrong with the Company's financial model."

"We provide evidence that since 1999, the Company has generated a cash flow deficit of -$1.6bn after capital expenditures, business investment, and asset-shuffling and repositioning, while making +$4.7bn and +$3.9bn of dividends and share repurchases effectively through debt-financing."

"Dropbox does warn that its Free Cash Flow excludes payments for finance leases and that it may be calculated differently from other companies in the industry, limiting its usefulness. When asked about finance leases, the CFO avoids highlighting the effect on the financial statements."

"Amgen employee #1, a scientist and group leader has interfaced closely with BLI for 5+ years. Remains unenthusiastic about the instrument; machine is prone to major errors, creating distrust and hesitation among Amgen staff; still have to hack it get it to work for various workflows."

"It is evident that if investors include acquisition related expenses when calculating the company's free cash flow, the sum of free cash flow generated from 2013 to 2018 would be $205 million, as compared to $1.1 billion if those acquisition related expenses were excluded from capex."

"If Val-gan can grow organically at a high single-digit rate as Valeant management projects, and management can invest the company’s free cash flow in new acquisition targets at historical rates of return, then we believe management can achieve its goal of 15%-20% annual EPS growth"

"Because of the substantially lower risk of predicting lots sales in mature MPCs (it is effectively inevitable, although subject to macro factors in the short term), we believe one should use very low discount rates to discount future cash flows from lot sales in HHC’s mature MPCs"

"“When the costs to manufacture the assets are greater than (predominant to) the estimated value transferred from Leasing equipment into inventory, the related cash receipt has been recorded as an inflow in net cash (used in) provided by operating activities.” — FTAI Q3 2024 10-Q"

"MDA has consistently produced poor free cash flow. From 2012-2017 average free cash flow was C$33m (US$30m). Leading up to the DigitalGlobe deal, it even reported bank overdrafts of cash. YTD 2018 overdrafts have continued, and debt is rising through credit facility borrowing."

"CEO: "What makes WSP so unique in its ability to convert consistently higher net income into free cash flow." CFO: "Cash management will continue to be a focus, and we expect that our free cash flow will annually exceed our net earnings." — CEO and CFO, Analyst Day, March '22"

"An investor spoke with FTAI. FTAI confirmed that the new language indicates that the test to report Aerospace Products income on the Operating or Investing side of the Cash Flow Statement is determined by the amount of capitalized costs to the assets while held in Inventory."

"Moreover, we believe that there is a material risk that any insurance covering potential claw backs may be void if there is a determination of tax fraud, which could subject RUN and the tax equity investors to significant liabilities, and ABS holders to reduced cash flows."

"Xylem is trying to pass off $70 million of transaction costs in Q2 2023 as an addition to Adjusted Free Cash Flow. However, we take issue with this figure because it appears to be on a pre-tax basis when added to operating cash flow, which is an after-tax financial result."

"ROAD initially touted its “Attractive Financial Profile with High Return on Capital” by showing Free Cash Flow (FCF) Conversion and Return on Capital Employed (ROCE). By 2023, ROAD’s FCF Conversion definition markedly changed, and it ceased to provide a chart showing ROCE."

"The sell side values VRNT on a P/E basis against Non-GAAP EPS. This approach fails to take into account Verint's poor organic growth, the widening disparity between GAAP EPS and (low-quality) Non-GAAP EPS, and the Company's failure to grow cash flow despite a flood of M&A."

"AOL has used the valuable cash flows generated by its declining Access and Search businesses to fund what we believe are massive losses of more than $500 million per year in its Display advertising business in pursuit of its goal of becoming a premium online media company."

"At best, Archer is where Joby was a full two years ago. This is generous, as it at that time, Joby had reported 15% completion but had a larger fleet and evidence indicates they had done more R&D and amassed far more flight hours and miles flown than Archer has at present."

"A close look at Nuvei's working capital and balance sheet reveals that payables are being increased at a faster rate than receivables. Working capital is turning more negative. We believe this is helping to generate cash flow in the near term which may not be sustainable."

"Now, betting on an electric future is a popular thing to do. While we don’t know the winners or the losers, the market loves all these stocks, which trade at multiples that seem ambitious to people like me, who try to tie a value to boring things like future cash flows."

"Even under management's wellness center ramp-up assumptions – which we consider overly-ambitious – PetIQ's new wellness centers would fail to generate positive cash flow until FY22, and would not generate a positive return on total investment until the following year."

"Ströer's year-end cash flow statements wrongly show that Ströer had no borrowings during the year. In fact, Ströer draws down tens of millions euro on its credit facility each of the first three quarters of the year, which it then repays before the end of the quarter."

"Cash flows from operating activities increased $43.0 million in the first 13 weeks of 2018 compared to the first 13 weeks of 2017. Higher profits, lower inventories and lower management incentive payouts accounted for the increase in cash provided. — Weis Markets MD&A"

"We observe that Axon just reported its worst Q1 cash burn in its public history. Management is claiming this is due to the Taser 7 ramp, and trade-in credit terms. However, we believe there are other factors at work that will cause cash flow to remain under pressure."

"Hence, a fraudster is trapped by double-entry bookkeeping and the interdependence between the income statement, balance sheet, and cash flow statement – they cannot overstate profits on the income statement without also overstating assets or understating liabilities."

"While YT appears to have started to hide assets in Blitz in 2017 (two years before declaring bankruptcy), we have found that this money started to flow back into FFAI in April 2019 through a note purchase agreement with Blitz and other employees and relatives of YT."

"DLO's prospectus claims its "direct connections with merchants serve as a strong competitive advantage and barrier to entry for competing providers, and makes incremental volume that flows through [its] platform highly margin accretive." — DLO F-1, May 5, 2021, p.82"

"We refer to calculation with no credit for ongoing price increases as AFFO methodology (i.e., free cash flow will continue to grow by level of price increases), and calculation which adds back for price increases as bond methodology (i.e., true fixed income yield)."