(a) as mentioned many times, Q1-Q2 cash flow isn't the annualized burn rate because Q3-Q4 is their seasonally stronger cash flow period. (b) whatever you think the burn rate will be through Q2-22, the complete cessation of the ISS agreement on 30-6-22 is strongly cash flow positive to Schrole - in calendar 2020, ISS received $2.3M from sales of Schrole Advantage, and starting 1-7-22 that number goes to zero, meaning all else equal that SCL will recapture about $2M cash flow straight to the bottom line.
As long as SCL maintains the majority of its Schrole Advantage customer base post ISS - which seems on track given renewals are tracking at record levels (94%) now that SCL has taken the customer relationship piece back from ISS - then they just need to make it through to 30-6-22, upon which time the step-change in cash flows will be realized from the cancellation of ISS' 50% revenue share.
SCL Price at posting:
1.0¢ Sentiment: Buy Disclosure: Held
