RE:RE:Debt Free by now, what will they do with the extra cash! JosephM1 wrote
Irrelevant when in 4th quarter or beginning of 1st quarter Cardinal goes completely debt free! But my off the cuff is as follows.
As of June 30, net debt was 62 million.
3rd quarter free cash flow of lets say 70 million after cap ex
70 million minuse buyback of 3.4 mill shares at 7, 25 million, leaves 45 million available to reduce debt in q3.
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After taking a better look at third quarter oil prices it appeared oil averaged a little over $100 for the quarter. According to their presentation at $100 oil CJ should have annual cashflow of aprox. $425 million. That would equal aprox. $106 million in cashflow for the third quarter. Subtracting Capex and increased capex for the second half of aprox. $35 million for the quarter that does leave aprox. $70 million in Free Cashflow for the third quarter. Subtract from that aprox. $ 24 million for the dividend and aprox. $25 million for the share buybacks and you come up with aprox. $21 million left over for debt reduction. Subtract the $21 million from the $62 million debt at the end of the second quarter and debt should be down to aprox. $41 million by the end of the third quarter.
According to CJ they will not have debt down to below $50 million before early in the fourth quarter. The only thing i can see for the differance is that they may have spent more than the $35 million average for each quarter of the second half in the third quarter.
So far in the fourth quarter oil has averaged around $90. If that continues until the end of the year CJ should have Cashflow in the fourth quarter of aprox. $90 million. If capex was higher by aprox. $9 million in the third quarter it should only be around $26 million in the fourth quarter. The 6 cent monthly dividend will cost CJ aprox. $28 million in the fourth quarter. Leaving aprox. $46 million in Free Cashflow for the fourth quarter.
With a total debt of $50 million early in the fourth quarter and Free Cashflow at $90 oil CJ may actually be able to bring down debt to near zero by the end of the year as they said they would.
There are so many unknowns as to what they have actually spent on capex etc in the third quarter that it is hard to know exactly where they are. The third quarter results will give us a much better idea of where they stand. Whether they get to zero debt by the end of the year or first quarter of next year does not really matter that much although the sooner the better. It would be nice if they can do it by the end of the year as they promised as it is always nice to be able to count on what management says they will do.
If they can get debt to zero by the end of this year 2023 should be a very good year for a debt free CJ with Free Cashflow of aprox. $235 million per year flowing in and not one penny of interest or principal payments going to the banks.
Its all ours.