Operational liquidity is deteriorating, with the firm burning $561.7K in free cash flow during 2023Q2 while maintaining a low cash balance of approximately $1.2M.
| Cash from Operations | -240.5K | -3.11M | 4.91M | 1.97M | 2.49M | 357.36K |
| Operating CF Margin % | - | -51.01% | 79.69% | 39.46% | 62.98% | 13.48% |
| Operating CF Growth % | -587.18% | -163.34% | - | -20.97% | 597.54% | - |
| Net Income | -1.36M | -760.59K | -94.98M | -2.38M | -625.58K | -1.67M |
| Depreciation & Amortization | 1.13M | 2.72M | 2.35M | 2.3M | 1.86M | 1.42M |
| Stock-Based Compensation | 0 | 0 | 0 | 0 | 0 | 0 |
| Deferred Taxes | 0 | 0 | 0 | 0 | 0 | 0 |
| Other Non-Cash Items | -1.09M | 287.96K | 93.47M | 267.37K | 602.35K | 413.09K |
| Working Capital Changes | 1.65M | -5.36M | 4.07M | 1.79M | 658.24K | 193.1K |
| Change in Receivables | 0 | -190.42K | -210.65K | -384.22K | -17.38K | 448K |
| Change in Inventory | 191.4K | -376.01K | 156.97K | 378.61K | -261.09K | 343.9K |
| Change in Payables | 0 | -2.19M | 1.37M | 1.79M | 0 | 0 |
| Cash from Investing | 30.89M | -2.02M | -2.04M | -1.48M | -1.64M | -2.51M |
| Capital Expenditures | -1.06M | -304.75K | -651.04K | -1.51M | -1.64M | -2.51M |
| CapEx % of Revenue | 52.67% | 5% | 10.56% | 30.33% | 41.31% | 94.76% |
| Acquisitions | 0 | 0 | 2.13K | 29.59K | 0 | 0 |
| Investments | - | - | - | - | - | - |
| Other Investing | 120.25M | -1.71M | -1.39M | 4 | 76 | 169 |
| Cash from Financing | -31.22M | 5.4M | -2.76M | -370.25K | -953.3K | 2.31M |
| Debt Issued (Net) | 482.98K | -1.58M | -3.51M | -1.72M | -1.02M | 2.52M |
| Equity Issued (Net) | -1000K | 7.5M | 754.45K | 1000K | 314.34K | 0 |
| Dividends Paid | 0 | 0 | 0 | 0 | 0 | 0 |
| Share Repurchases | -32.71M | 0 | 0 | 0 | 0 | 0 |
| Other Financing | 1.01M | -524.53K | 0 | -246.36K | -250.82K | -206.25K |
| Net Change in Cash | -233.05K | 268.12K | 114.36K | 115.39K | -95.75K | 157.51K |
| Free Cash Flow | -1.3M | -5.13M | 2.87M | 456.04K | 857.47K | -2.15M |
| FCF Margin % | -64.59% | -84.11% | 46.61% | 9.14% | 21.66% | -81.28% |
| FCF Growth % | - | -278.61% | - | -46.82% | 139.79% | - |
| FCF per Share | -0.16 | -0.79 | 0.23 | 0.05 | 0.08 | -0.23 |
| FCF Conversion (FCF/Net Income) | 0.68x | 4.92x | -0.05x | -0.82x | -3.73x | -0.23x |
| Interest Paid | 0 | 0 | 0 | 0 | 0 | 0 |
| Taxes Paid | 0 | 0 | 0 | 0 | 0 | 0 |
Imminent liquidity and solvency risk
According to quarterly financial data, the persistent gap between net income and operating cash flow, highlighted by a 2023Q2 operating cash outflow of $561.7K against a reported net income of $250.5K, suggests that accounting profits are not translating into tangible liquidity for the firm.
The divergence between reported net income and cash generation indicates that earnings quality is likely compromised by non-cash items or aggressive revenue recognition. Investors should monitor whether this disconnect reflects structural difficulties in collecting receivables or if the business model inherently requires cash-intensive accruals that the current balance sheet cannot support.
As reported in recent financial statements, ESGL's free cash flow remains consistently negative, with the firm burning $561.7K in 2023Q2 alone, which underscores the inability of the current operational scale to cover necessary capital expenditures and overhead in a sustainable manner for the business.
The lack of a positive free cash flow trend suggests that the company is currently in a value-destructive phase where operational outflows consistently outpace any potential for self-funding. This trajectory warrants further investigation into whether the firm can reach a break-even point before its limited cash reserves are fully exhausted.
Based on historical filings, working capital changes have been highly erratic, swinging from a $1.5M inflow in 2022Q4 to a $154.1K outflow in 2023Q2, which suggests that the company lacks a predictable cycle for managing its core operational liquidity and short-term obligations.
Such volatility in working capital often points to inconsistent collection cycles or erratic inventory management, both of which are dangerous for a firm with limited cash buffers. The inability to stabilize these flows may indicate that the company is struggling to manage its trade relationships effectively under current financial constraints.
Data from 2022Q4 indicates a capital expenditure of $853.1K, representing a 98.2% ratio relative to revenue, which suggests that the firm is forced to commit significant capital to maintain its infrastructure despite failing to generate a corresponding increase in top-line growth or operational efficiency.
This high level of capital intensity relative to revenue implies that the company's specialized waste treatment facilities require constant, expensive maintenance to remain operational. The lack of clear growth in revenue following these expenditures suggests that the capital is being used for survival rather than expansion.
Financial disclosures reveal that the company's cash position is critically low, with only $634,882 in cash and equivalents, a figure that appears insufficient to support the ongoing cash burn observed in recent quarters without the potential for significant future dilution or external financing.
The cash flow statement obscures the reality that the firm is likely operating on a month-to-month basis, with little room for error in its operational execution. Investors should be wary that the absence of significant debt paydown or dividend activity is not a sign of strength, but rather a reflection of a lack of available capital.
Quick answers to the most common questions about buying ESGL stock.
ESGL Holdings Limited (ESGL) generated $-3.1M in net cash from operating activities in 2024. This reflects the cash generated directly from core business operations.
ESGL Holdings Limited (ESGL) reported negative free cash flow of $5.1M in 2024, indicating capital requirements exceeded cash from operations.
ESGL Holdings Limited (ESGL) spent $0.3M on capital expenditures in 2024. CapEx represents the cash invested in physical assets like property, plant, and equipment to maintain or grow the business.