About Me

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Avram Fisher, Founder & Portfolio Manager of Long Cast Advisers, is a former equity analyst at CSFB and BMO covering industrials and business services. He has prior experience in private equity; as a corporate governance analyst; as a writer; reporter and private investigator; and as a lifeguard and busboy (I still clear plates when my kids don't). This blog is an open book of ideas about patient investing and about starting up a small-cap focused RIA. It is part decision-diary, part investment observations and part general musings. Nothing on this blog is a solicitation for business nor a recommendation to buy or sell securities. It is simply a way to organize and share thoughts with an expanding audience of independent, patient and talented small cap investors. www.longcastadvisers.com

Thursday, February 26, 2015

$STLY: 4Q14 earnings and the margin of safety

Stanley Furniture STLY is was a US domestic manufacturer of youth furniture under the "Young America" brand and operates as an offshore producer of the "Stanely Furniture" brand as well. I've written a bit about it here ...

http://goo.gl/pMwGqG

... to keep this summary as brief as possible, in 2010 the co embarked on a program to manufacture the youth business domestically, selling the "Made in USA" / higher quality / safer for kids theme while going against the tide of offshore production.

This decision was made by the CEO Glenn Prillaman. From 2010 through 2014, the company invested $9M into a manufacturing plant in NC and burned shareholder equity from $93M in 2009 to $75M.

In 2014, the same CEO reversed the strategy, closed the plant and now with shareholder equity down to $50M, they are becoming a "lean" variable cost designer, source-er and marketer of case goods furniture. In 2014 they also ended the "Young America" brand ... but then decided to relaunch it later in 2015 as an offshore manufacturer.

I'm a believer that when you make a mistake, as soon as you know it, own up to it and change it. It's never too late. So I applaud the CEO's intellectual honesty despite his value destruction (and I also applaud the activist investors involved in the stock for pushing him in that direction).

I'm also a believer as an investor in "margin of safety" and that's what we have here. In this case, the margin of safety is hidden. 

In order to understand it appropriately, two adjustments need to be added to the balance sheet.

The adjustments are ...

adding the $15M cash surrender value of an insurance policy to cash (it resides on the BS as a l/t asset)
adding a $4.5M distribution from CDSOA expected in 1Q15. (CDSOA is money collected by U.S. Customs for imports covered by antidumping duties; as a former domestic producer they are entitled to their share).

Here is a table showing the balance sheet unadj / adjusted ... 





... these adjustments indicate multiples far more appropriate for a value investor and one focused on a margin of safety. (The net / net calculation is cash + .75 AR + .5 INV less current liabilities). 

The bottom of the table infers the EBITDA required to hit an 8x multiple. On an adjusted basis, this is $700K per quarter, about what the company did in 4Q14.

The company will re-introduce the YA brand in 2015; it formerly contributed roughly $40M in revenues / year. If it can do 1/2 that in line with existing mid-20% GP and 4% EBIT margins, then EBITDA could grow 25% from current levels.

Not a lot needs to go right to see the upside. It doesn't take a big imagination to see the stock growing at least that much in one year's time, with a margin of safety on the downside.

Monday, February 23, 2015

the face of wall street and investing lacks diversity and meaning

Working 10+ yrs as a sell side analyst, it was easy to forget the wide world of people out there who know nothing about finance, for whom EBITDA, CAGR and capital, capitalize, recap, etc. etc. are meaningless and empty. My father ran a manufacturing business for 30 years and still doesn't know what these terms mean.

But even people who don't know about investing, they invest nonetheless, for whatever reason, through a wirehouse account or what have you. I think at the high net worth levels, they fall into the bucket of clients that Goldman called "muppets."

So walking up Avenue of the Americas (ie 6th Ave) in the 40's the other day, passing the Fox News building with its financial news scroll and the E-Trade retail branch, with its CNBC monitors facing the the sidewalk, I took the opportunity to consider what the face of Wall Street - and the face of investing - must seem like to people.

The farside cartoon "what we say to dogs" came to mind. Blahblahblahblahblah.

https://www.flickr.com/photos/sluggerotoole/153603564/

It all just struck me as so wrong. So unapproachable and confusing, talking at a pace only Aaron Sorkin would love, about things that sound like nonsense to most people.

The nonsense hit me first. Unlike sports, which for most people is an emotional but not financial endeavor, people who know little about Wall Street still invest in it, either through direct retail investment or indirect retirement / pensions investments. This latter class of passive investors could use information that helps them understand what's really going on.

Yet these programs about the stock market - whether its Cramer or CNBC or Fox Business - it's just a pretty narrow variety of blather from 7AM to 4PM. (That these shows are largely meaningless to the professional but for the game theory aspect of "what other people are talking about" is a bit of a secret).

The narrowness of these programs hit me next. The economy is incredibly diverse, yet wall street (in general) and these shows specifically are predominantly white. I realize that most TV lacks diversity and most TV is generally pretty stupid, but these news programs, with their big budgets, have an opportunity to tell stories outside the blips and the crawl and the scroll and the tickers.

But they don't. The economy is vastly important to investors and business owners but we only talk about in soundbites about how the market is up or down.So much time and money is spent working and investing, yet the daily banter on stocks - on radio or TV - is just absurd.

It's really a shame and it really gets my goat.

This all ties into one of my goals in starting my RIA, which is to educate clients about why we own certain companies, who we are investing with and what the expected outcomes are, in plain simple language, regardless of what "the market" does.

I view this goal as hand in hand with being a steward of client capital as well as generating returns ahead of the market, over time and after fees.

Thursday, February 19, 2015

On the "wonderous future" sold to investors and 76ers fans

There's often a conflict in sports around trade deadlines, when a fans' emotional attachment to their team bumps up against the unemotional "dumping" and "asset gathering" of mgmt.

I'm speaking of course about the overlap between sports and investing and the "promises of a bright future" for a team in turnaround. When it comes to the 76ers at this year's deadline its' a real crashing prism; The Sixers just traded away 2/5th of their starting team - PG Michael Carter Williams and F KJ McDaniels - in return they got a development league PG, a future 1st round and a future 2nd pick.

In investing parlance, they divested productive assets that reflected at least 1/3rd of their offense (or revenues) for future - albeit unknown and uncertain - assets. The media gives them a pass and calls it genius but it pains this fan to no end.

What makes the comparison between sports and investing so obvious in this case is the owner of the Sixers, Josh Harris, who is also the co-founder of Apollo Global Mgmt (along with Leon Black, with whom we own ESWW). Harris bought the team with two friends from Wharton, David Blitzer now at Blackstone, and another PM before the 2011/2012 season.

Their general manager, Sam Hinkie, isn't a "baller" but a former Bain consultant with a Stanford MBA and he is at the forefront of the "analytics" trend in the NBA, which ranks players on efficiency not points and assists.

Hinkie shuns the media and seemingly any urge to win today. Or tomorrow. This is just his latest trade of starting players for future draft picks. Indeed, they have more than 10 draft picks over the next two years including likely two first round picks this year and next. A shirt seen at an MLK day game: "I have a dream, but the 76ers traded it for a 2nd round draft pick."

If you think about the equivalent of owning these draft picks to investment analysis you might say the balance sheet is undervalued b/c it doesn't appropriately reflect the future draft assets. Where does its value sit, this player to be named later? We know the cost is the league minimum, perhaps that is its liability, but the rest is unknown. But we know what they gave up and there is no certainty they will do better in the future.

So what does this losing team have? A lot of draft picks and a spirited coach with a great attitude half-way into a four-year contract, and lots of young players to teach. And they spend little for these players. The 76ers are actually 20% below the salary minimum that teams are required to spend each year.

So the present stinks and the media calls Hinkie "the mad genius". The team on the court, is meaningless. Over the span of the 3 2/3 seasons that Josh Harris owns the team, its winning % is just 35%. Year one, they inexplicably made it to within one game of the finals, winning playoff games against teams with hurt stars.

So they blew up the team, these owners but with the prior GM, going the traditional route of trading away their star F and a 7' C (now a reliable starter for a bad team) in exchange for a change maker, an all star, who happened to be the aging damaged C Andrew Bynum who had bad knees and never played for them.

So they changed GM and are now running in the other direction, eschewing long term all star talent for draft picks. And the record has declined. This year its 23%, as it was last, but undoubtedly after these trades it will get worse.

It is what they call a "turnaround."

So what skill is this ownership showing as it progresses through this plan? How do we even gauge progress?

I'm reminded of Stanley Furniture (STLY), a furniture manufacturer also in "turnaround". The company has in the last 12-mos embarked on a "new" strategy away from manufacturing in the US to an "asset light" strategy using only its design capabilities and distribution channels and simply outsourcing all the manufacturing to overseas subcontractors.

The shift is the work of the current CEO Glenn Prillaman. Glenn worked his way up the company since joining as a sales agent in 1993, but this is no "bootstrapper" story; his father Albert was the CEO and Chairman.

And this new change in strategy? It reverses the one he did in 2010, when he took over as CEO and embarked on then "contrarian strategy" to on-shore manufacturing of "high end" youth furniture. He invested $9M into a manufacturing plant in NC over three years, and burned shareholder equity from $93M in 2009 to $75M. And in 2014, they just shut down the plant. Same CEO, new strategy, but with shareholder equity now down to $50M. It's not just out with the old, it's also out 50% of its value. And the old CEO still remains.

I, a new shareholder, am along with the plan under the assumption that the new board - including activist investors and a former colleague of mine from CSFB - can make the right changes and extract the right value from the company even if the CEO has been a value destroyer. I have money at stake in this investment, but I have done my homework and it has thus far paid off. The risks that most concern me are how the company can manage its distribution channels after selling it one idea (US made) and now another (no manufacturing). But the issue of the stewardship of the guy who got us here in the first place, that is a hard nut to swallow. But I can sell at any time, currently with a profit.

The point is, as everyone knows, CEO's can screw up. And when they do - and it sadly happens often - it damages investors and employees and brands and communities. We don't give them a pass when they screw up in corporate America, why give them a pass now? I know Knicks fans could sympathize.

What does the fan do here? We cannot sell. We are captive. In some respects, we are like investors in a fund with a lockup. Perhaps so to speak, like an investor in a PE fund, like Apollo. What is it that these guys do so well that makes them rich? B/c clearly their track record as basketball investors is rather weak.

So I imagine momentarily the comptroller of a municipality or a treasurer of a pension fund or CIO of an endowment who is sold on the idea of the wonderous future by someone like Josh Harris. Perhaps these people - the comptroller or the CFO - are the same folks who invested with Apollo in the convertible debt of a company called "Environmental Solutions Worldwide," which makes diesel particulate filters.

In 2010, back when California regulations called for widespread use of DPF's, such an investment had a wonderous future. But looking ahead, investors would have lost 99% of their money; in 2010 the stock traded at $1,200 / share. I own it and have written about it here at a $60 / share.

And now imagine our same imprudent investors sold by the same institutional madness the same promise of a wonderous future, in say MBS in 2007 or a transaction hedged by oil at $100 or the Swiss Franc at 1.2 to the Euro.

Promises of a wonderous future come cheap only to those selling it, not to the buyers.

And that appears to be the sad point I've learned about the owner of my team today and what we should all keep in mind about these wall street mavens who get pass after pass after pass for being "masters of the universe."

These owners behind the trades today, and trades in prior years, and trades in oil or debt of distressed companies, they are not always the good stewards of capital we hope them to be, but they are simply selling a wonderful future. And it dawns on me that's where institutional "wall street" really excels - where it captivates investors - who allow themselves to be sold on the promises but not the risks of uncertainty.

Every part of me is opposed to the Wall Street principle of "selling the wonderful future" and I try to avoid it at all costs. Unfortunately, I can't avoid it with my basketball team. But I can warn readers that these guys are not mad geniuses. This is their second turnaround and its prolonged.

They are not rich because of the great investments they've made - they have a number of bad investments - but they are rich b/c they are good at selling people on the "wonderous future." That's what they are doing here.

There is nothing to do as a fan but I remind all investors there is no easy money nor is there an easy draft pick. And I caution anyone sold on the idea of the wonderous future or the "easy money" to do their homework or find and entrust people who can do it for them, prudently, honestly and with integrity.

Just please don't hold it against them if they root for the 76ers.

Thursday, February 12, 2015

Charlie Munger's harness racing analogy; (why sitting on your hands might sometimes be best)

CM writes: "I used to play poker when I was young with a guy who made a substantial living doing nothing but bet harness races.... Now, harness racing is a relatively inefficient market. You don't have the depth of intelligence betting on harness races that you do on regular races. What my poker pal would do was to think about harness races as his main profession. And he would bet only occasionally when he saw some mispriced bet available. And by doing that, after paying the full handle to the house ‑ which I presume was around 17% ‑ he made a substantial living."

http://goo.gl/Osc4eN


For people who invest professionally, there is an urge to invest even if sitting on their hands waiting for the right investment might be the best decision. No decision is itself a decision, and sometimes the hardest, but occasionally the wisest.




Wednesday, February 11, 2015

$FHCO - my letter to the board re: comp filed with the SEC

Since FHCO halted its dividend in order to acquire add'l products, I thought it made sense for them to change their comp structure from one based on unit sales and operating margins to one driven by ROIIC.

So I wrote them a letter.

And for some reason, they filed it with the SEC.

http://www.sec.gov/divisions/corpfin/cf-noaction/14a-8/2015/avramfisher010815-14a-8.pdf

Tuesday, February 10, 2015

$ARIS. CEO's employee agreement long overdue

$ARIS just filed an employee agreement with the CEO ending what had been a series of one years contracts. The company needs to keep its CEO to the very end.

The CEO of ARIS Roy Olivier has been in the catalog / EPC business since starting his own company in his basement in 1993. But he left money on the table selling it in 2000 and for only $9M. That business, now part of a larger catalog library, has grown into a $600M revenue division of Snap-On's.

It seems to me that with ARIS, Roy is intent on getting the full value out of the business he started back in 1993 and recoup the money he left on the table when he sold his business. So this employee agreement that no longer requires annual extensions seems long overdue.

***

ARI Network Services (ticker: ARIS) is a small cap growth company with a $51M mkt cap and $10M in net debt, leading to a total enterprise value of $61M. The company has $34M in trailing 12-mos revenues through F1Q15 (fiscal year end is July 31) up 5% y/y. At F1Q15, TTM EBITDA was $4M, up 38% y/y. This infers a 12% TTM EBITDA margin though management has long indicated that at “run rate”, when all services and verticals are established, margins should run north of 15%. The six year average EBITDA margin is 14%. Since 2006, annual operating cash flow has averaged 12% of annual revenues.

The stock currently trades for $3.66. At current prices, the stock is trading at 15x EV / trailing EBITDA. However, the trailing valuation is deceptively high because it includes debt from a recent acquisition (inflating the numerator) that hasn’t yet impacted the income statement (deflating the denominator). I estimate that the forward EV / FY2015 EBITDA including a full year of recently acquired EBITDA is 10x. This is at the low end of the company’s historical valuation.

The company was founded in 1981 on the "concept of delivering electronic catalog services to the agriculture industry." These catalogs remain the core of the company and though no longer in books or CD-ROM but via online licenses, the operating scale remains. ARIS pays for the catalog information from OEMs and resells it into dealer channels. 

In 1996, the company began to expand to other vertical markets with the same product; delivering electronic parts catalogs (EPC's) to enable dealers to identify parts and product. 

Their industry is a small choke point for independent dealers. The company has moved beyond the agriculture sector to powersports, outdoor equipment, home medical equipment, appliances, marine, RV's and more recently wheel / tire. The last of the ag business was sold in FY2011.

According to the most recent 10K, ARI content includes 500,000 models from more than 1,400 OEM’s and these are used by more than 22,000 equipment dealers, 195 distributors and 140 manufacturers worldwide.AT SOME POINT I WILL COMPARE COMPETITOR CATALOG LIBRARY SIZES

The core EPC business is straightforward and simple. Aggregate catalogs of parts licensed from OEM's and sell them via subscriptions to dealers, who use them to sell product to customers and find products for services, replacement and repair. This is the content that drives the business and ultimately becomes a photo on a webpage, a parts description for replacement or repair. The catalog business represents roughly 40% of revenues. It is the engine of the business and where the CEO has significant experience.

ARIS also provides a handful of dealer services around the EPC – website development, ecommerce, lead generation – services that primarily help a dealer get customers in the door. Roughly 50% of revenues are derived from developing websites and e-commerce sites for the dealers. On its own, website and ecommerce services are not particularly attractive, high margin or price protected but the catalog engine makes these sticky. These services help put the content to work.

The other 10% of revenue mix is an assortment of lead generation, and a relatively new (acquired in 2013) digital marketing service and newer (acquired in 2014) business management services - including point of sale devices – from the acquired TCS business.

Through organic and acquired growth, sales have increased 12% CAGR and EBITDA 10% CAGR through TTM F1Q15. By year end, with the benefit of a full year of acquired profit, the 7-Yr CAGR for EBITDA approaches 16%.





The growth is certainly acquired. If you look at NET ASSETS (assets less goodwill) LESS LIABILITIES , you would arrive at an proxy for "organic" shareholder equity. For ARIS one would see a decline from $3M to $1M of this "core" shareholder equity since F1Q12. It is a concern for me. Part of the uncertainty of owning the stock. But the company generates cash flow.

And the ingredients are there; It has a "choke point" product, a growing customer base, has added services and verticals and with additional marketing / customer svcs spending to support sales should grow revenues, cash flow and "organic" shareholder value.

Management and stewardship: ARIS is managed by a CEO Roy Olivier who owns 5% of the company and is an entrepreneur in the EPC world. According to published reports, in 1993 he started "Media Solutions International" in his basement as a service and catalog company focused on the construction, mining and material handling markets.

That catalog (at the time on CD-ROM), enabled OEM's, dealers and customers to automate and standardize parts, services, warranty, and sales functions. The business was not materially profitable, and he sold it in 2000 (according to public filings) to Bell & Howell for $9M (http://goo.gl/acj5U8).

Bell & Howell subsequently changed its name to ProQuest and MSI became part of the "Proquest Business Solutions" segment (search for "Media Solutions" in the ProQuest filings here http://goo.gl/ho3a92).

After selling his business, Roy lost his independence and became an employee. It is the bane of the entrepreneur who sells out too soon. In 2001, Roy - no longer running the business he'd founded - left Proquest and consulted, explored opening dealerships and profitably invested in real estate and construction projects. It was a good time for that type of venture.

But leaving left left money on the table; in 2006, Proquest Business Solutions, under the leadership of Andrew Wyszkowski, was sold to Snap-On for roughly $500M, mostly cash. At the time of the sale, PQBS was generating $180M in sales, $115M in gross profit and $50M in EBITDA. This business is now part of Snap-On's "Diagnostic and Repair Information" segment, which generates annual revenues of roughly $650M out of a total SNA revenues of $3.1B (Information on the sale of PQBS to SNA can be found here http://goo.gl/ir6amv).

Roy joined ARI Network Services as VP of Global Sales and Marketing in 2006, around the time that Proquest was sold to SNA. He was elevated to the CEO role in 2008.

So his role running the company is critical to its continued growth and my thesis that Roy is intent on getting the full value out of the business he started back in 1993 and recoup the money he left on the table when he sold his business.

Investment Adviser Act of 1940 Sec 202 (11) Investment Adviser

(11) “Investment adviser”
means any person who, for compensation, engages in the business of advising others, either directly or through publications or writings, as to the value of securities or as to the advisability of investing in, purchasing, or selling securities, or who, for compensation and as part of a regular business, issues or promulgates analyses or reports concerning securities; 

but does not include

·        a bank, or any bank holding company as defined in the Bank Holding Company Act of 1956 [12 U.S.C. 1841 et seq.] which is not an investment company, except that the term “investment adviser” includes any bank or bank holding company to the extent that such bank or bank holding company serves or acts as an investment adviser to a registered investment company, but if, in the case of a bank, such services or actions are performed through a separately identifiable department or division, the department or division, and not the bank itself, shall be deemed to be the investment adviser;

·        any lawyer, accountant, engineer, or teacher whose performance of such services is solely incidental to the practice of his profession;

·        any broker or dealer whose performance of such services is solely incidental to the conduct of his business as a broker or dealer and who receives no special compensation therefor;

·        the publisher of any bona fide newspaper, news magazine or business or financial publication of general and regular circulation;

·        any person whose advice, analyses or reports relate to no securities other than securities which are direct obligations of or obligations guaranteed as to principal or interest by the United States, or securities issued or guaranteed by corporations in which the United States has a direct or indirect interest which shall have been designated by the Secretary of the Treasury, pursuant to section 3(a)(12) of the Securities Exchange Act of 1934 [15 U.S.C. 78c (a)(12)], as exempted securities for the purposes of that Act [15 U.S.C. 78a et seq.];

·        any nationally recognized statistical rating organization, as that term is defined in section 3(a)(62) of the Securities Exchange Act of 1934 [15 U.S.C. 78c (a)(62)], unless such organization engages in issuing recommendations as to purchasing, selling, or holding securities or in managing assets, consisting in whole or in part of securities, on behalf of others;;  [1]

·        any family office, as defined by rule, regulation, or order of the Commission, in accordance with the purposes of this subchapter; or


·        such other persons not within the intent of this paragraph, as the Commission may designate by rules and regulations or order.

http://www.law.cornell.edu/uscode/text/15/80b-2

Thursday, February 5, 2015

the investing side of personal

I've been a personal investor since the mid-1990's, always with my own money. What started out as a hobby and passion became a career. I transitioned from a writer / reporter to institutional finance working as a sell-side analyst at CSFB and BMO from 1999 to 2012, with two years off from 2002-2004 for B-school (go Bearcats!). I paid for my MBA with MYG puts when steel prices were rising and buying FWLT out of bankruptcy.

I worked at BMO from '04-'12 - I was laid off when they dropped coverage of my sector - and I expected to move to the buyside, but it never worked out that way. I was surprised at the reluctance to hire from the sell side, but I also understand the difference between writing reports or issuing recommendations and actually putting money to work.

I think "ageism" may have also been an issue and no doubt, personality as well. People want employees who look, think and act like themselves, and there aren't that many self-deprecating, slightly anxious, left-leaning liberals in finance who can't let an inappropriate comment go untold. IF there are they hired from Wharton.

Still, the time spent looking wasn't a total loss; I looked for a job and I found my kids.

And now I'm starting a business, what I call the "food truck" version of a fund, by starting out as an RIA, a low cost hurdle, in order to get experience managing other people's money, experience the stress of it, and hopefully over time I can attract institutional money by showing and hewing to a process and with it, generate a strong and steady track record.

As I'm going through the process of investing other people's money, I've come to realize how incredibly personal investing is. At the mutual fund level, ETF level or widely diversified portfolio level, this obviously isn't the case.

But at the stock picking level - what we call "active investing" - with other people's money at stake, where I don't want to lose someone else's hard earned income, and where I'm really focused on investing in businesses that can out earn and out-return other opportunities over time, where the choices are narrow and deeply researched, it's an incredibly personal process, the winnowing, the selecting and the deciding.

I recently bought shares of EVI - a tiny $16M market cap / $14.6M EV* co that distributes laundry and dry cleaning equipment - and the balance sheet just screamed to me, with a valuation below the median of its last 10 quarters, even while other investors seemed to have lost interest in the co. And if EV is adjusted for the growth in EBITDA margin, it's actually cheaper per unit of margin than it was when it was 1/2 the price.

If I spent my time listening to what other people say and write, I'd be pulled this way and that and would never have bought it, or half the other things I have owned over time (and usually it's the things I've bought on others advice that I often kick myself for doing afterwards).

I find my "center" getting back to what attracted me to investing in the first place; the process of discovery, reading about every company on the Yahoo! industry browser, industry by industry, below a certain market cap threshold, reading its profile and filings.

If a company can't use language properly to explain itself to me, I'm not interested. If it can, and the business makes sense to me, I'll check the numbers. If there's an opportunity to grow balance sheet and cash flow, I'll build a model and look at history over a cycle, 12 quarters and the rest annual. I'll look at performance, read old filings and a rough valuation history.

Porter's "five forces" is a simple but well established method of thinking about a business or at least framing questions that can develop further leads, always asking myself, "what don't I know?".

I'll check the competitors. If the competitors seem better positioned, I'll look at them. If at any time it seems like I went down the wrong hole, I go back. But if this all checks out and the valuation seems appropriate, I'll start compiling sources of people to call for information.

That process worked for me when I started out nearly 20 years ago. In the interstitial period I learned a whole lot more about business analysis and strategy, traveled the world with CEO's and CFO's, talked with some of the smartest investors and I wrote a ton of earnings notes and forecasts. In the process, I gained a wealth of knowledge that should help with my business, including that when the narrative wraps up too easily, you've probably already lost.

And now I'm excited to getting back to doing what excited me about this in the first place and sharing those ideas with people here as well, and putting money to work, the purest kind of investing of all.

* In calculating EV, I deduct customer deposits from cash b/c that's really a form of working capital.