I’d keep a close eye on free cashflow estimates going forward. Management is hoping the upfront +$10m plant capex spend and then ongoing capex will deliver materials cost savings, higher throughput and lower unit costs etc.
Free cashflow slumped for 2021.
A manufacturing facility introduces new complexity to operations, managerial distraction from branding and partnerships etc and burdens free cashflow. Ebitda profit measurements become increasingly irrelevant when capex upgrades become business as usual spend. It is usually a curse to valuation multiples.
Valuation models need to start factoring in reductions to free cashflow estimates (vs sales and ebitda).
Add to My Watchlist
What is My Watchlist?