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These news articles seem to only give half the info.
Are we looking bad or good?
Not what you want to hear.
The Good
1. $250M positive cashflow in 2018; at $13, it's trading under 3 x ttm cashflow;
2. Accelerated and paid off $125M in debt in January v. refinancing it;
3. Doing that drops interest xp to $35M/year;
4. Given cashflow, reached $0 net debt;
5. Already addressed the supplier issue by diversifying away from the sole source problem;
6. Inventory is relatively lean and fresh.
The Bad
1. Had a supplier problem with a sole source of subassemblies that caused supply constraints;
2. Caused a delay that won't fully work itself out until Q2;
3. The liquidation of excess inventory of older gens boosted sales in Q4 17, Q1 18, and 2Q 18 so comps are harder this year without the excess inventory to liquidate;
4. Europe macroeconomic environment stinks;
5. Traditional watch sales continue to decline.
The Ugly
1. Smartwatch sales aren't growing rapidly even taking into consideration the supplier issue;
2. The Q1 guidance includes a $20M gain on sale of IP to Google so it will be real bad from ops.
The cashflow size and $0 net debt puts a floor on this one in my opinion, but there's really nothing positive to look forward to for more than six months.
Company can blame Covid but not really. Fosl's downward trend in watch sales started long before with proliferation of smart phones and then the smartwatch. Company says they are moving towards the digital watch sector...opps about five years too late. Apple, Fitbit/Google, and Samsung must be shaking in their boots now that fosl finally realized this.
Company puts out that it has 320 mil cash and equivalent and 230 mil of debt. Hmm....what about the 520mil in accts pay and accrued expenses against accts rec of 230mil.
Sure you can build up cash if you don't pay your bills.