Pinned straw:
Thanks for the commentary @mikebrisy and @Scoonie - agree with both. From my perspective, it's a positive that they've now had sequential FCF - it's only 2 quarters (so not too excited yet), but it definitely bucks the trend of previous comparable periods. I like the balance sheet, and if Tela did become problematic, at least there is some cash to weather a storm. Hoping they could maybe go direct if Tela does fall off a cliff (could even be an acquisition opportunity). I should also add, you've got to be careful on valuation on this one - obviously everything is quoted in $NZ, except the market cap which is AUD so convert first before making comparisons on prices.
Held IRL.
@Scoonie has succintly captured the key points. So, I'll just support his remarks on the challenge $ARX is facing by updating my usual cash flows trend chart.
The fitted, dotted lines are for the last 8Q only, and there is good positive overall trend towards cash generation.
However, it has been a tortuous journey to breaking through to neutral cashflow, and it looks like the trajectory might be flattening, which obviously a straightline fit cannot show.
The second chart showing Trailing 12 Month measures (TTM) I think paints the picture more clearly.
My narrative for this industry segment is that as the multiple dermal repair players scale their various products at a rates(15%-50%) significantly above the overall segment growth (c. 10%), and towards annual revenues up to and beyond $100m, competitive challenges continue to intensify. That is the competitive backdrop that means I've lost conviction as to the future earnings trajectory in $PNV, my previously favoured pick.
Disc: Not held