CAPEX is not in the P&L, only depreciation is. Capex is fairly minimal for a law firm anyway ($125K this year, $78K last). You'll see this on the cashflow statement not the P&L.
The "underlying" and "pro forma" EBITDAs both strip out the $740K share based comp even though that is a core part of their business model. Essentially giving equity to senior lawyers to at least partially replicate the partnership style economics they would've otherwise had or aspired to.
In terms of other "one-off" costs they have circa $500K in somewhat vaguely defined acquisition related expenses and another $600K in even more vaguely defined personal expenses of the partners of the law firms they acquired. Presumably they would need to compensate for that with normal comp going forward, otherwise why would those partners want to stick around (or work as hard) with a big cut to their take home packages?
Unclear on the decline in operating cashflows. Seems odd as conceptually they should have much better cashflow conversion then the listed PI peers. They get money in trust at the outset and bill-out every 2 weeks or when it hits $5K. Clients fund disbursements themselves.
These guys need better clarity on how they present their financials. They can be forgiven for having a lackluster finance function as a micro-cap but for them the share price and investor perception is more important than most companies as they are actively using stock as currency for acquisitions and that is a key pillar of their business model.
AFL Price at posting:
45.5¢ Sentiment: None Disclosure: Not Held
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