Mixed results of CLG revenue up 59% to $219 and NPATA up 87% to $26m (includes acquisitions), but a number of orange flags

Pros:

• NPATA of $26m (now a $130m market cap, non cash amortisation of $14.7m from acqusitions)
• Debt: expecting a 125 BP decreasing in their debt in the coming 45 days, with the ability to refinancing over the coming year once rates fall
• Trading at 5x NPATA
• Management remain bullish on the long term growth and sees ample growth opportunities

Cons

• No guidance: they provided guidance last year, no guidance for the next financial year
• Cash flow: Cash flow was poor, especially in H2 which has been a trend for the business. Cash balance decrease $9.2m for the full year mainly due to a $9.5m payout of an acquisition, paid $7.9m in tax (only $2.6m on the P&L), increased working capital (inventories up $4m), CapEx was $10m which is expected to fall to $5-6m in 2025. a broader issue for the business which joe vaguely touched on was billing and receivables, receivables grew YoY to $36m from $26m in 2023 along with payables falling from $29m to $20m, Joe mentioned on the call that most of their partners/ customers are large companies (ie. HP, Coles, Dell, Woolworths), for the most part their customers are much larger businesses and i suspect they are getting much more preferable billing terms than CLG hence the large discrepancy between the cash flow and profit.
• Debt: still remains high at $83m ($40m in cash)
• Packaging: Packaging division provided another poor result, australian revenue which is mostly packaging was down 9% along with EBITDA at 6%. they mentioned seeing profitable growth going forward but Joe was very vague on the call regarding any explanation.

In summary, still incredibly cheap from a NPATA perspective, but incredibly expensive from an cash flow perspective. Hoping for some reversal in cash flow for 2025 and improved performance within the packaging division. Not much need to go right here at the current price, some very modest growth and paying down of debt. I think the share price is struggling with expectations of investors, i don't see too much growth within the business and i wonder if a recent IPO, and obvious tailwinds trends have hyped up expectations for a quite boring business.