Revenue Analysis
Total and Operating Revenue: VFC’s operating revenue showed a dip in Q3 2023 ($3.03 billion) compared to Q1 2023 ($2.74 billion) but increased in Q4 2023 to $2.96 billion. This fluctuation indicates potential volatility in market demand or sales cycles.
Gross Profit Margins: Gross profit followed a similar pattern, peaking in Q3 2023 at $1.55 billion and then dropping to $1.63 billion by Q4 2023. The gross profit margin remained relatively consistent, reflecting stable cost management relative to sales.
Cost Management
Cost of Revenue: Cost of revenue increased from $985 million in Q2 2023 to $1.38 billion by Q1 2024, aligning with changes in revenue, suggesting variable costs are a significant component of total costs.
Operating Expense and Total Expenses: Operating expenses were $1.20 billion in Q1 2024, comparatively lower than other quarters. Total expenses peaked in Q4 2023 at $2.74 billion, indicating significant non-operating or unusual expenditures during this period.
Profitability Analysis
EBITDA: EBITDA peaked at $630 million in Q4 2023 but was significantly lower in previous periods, suggesting increased operational efficiency or reduced costs in the final quarter.
Operating Income: There was a noticeable increase in operating income from a loss in Q2 2023 to a gain of $224 million by Q4 2023, reinforcing the improvements in operational management.
Pretax Income and Net Income: Pretax income was negative in three out of four quarters, with a particular low of -$65 million in Q4 2023. Similarly, net income was consistently negative, pointing to challenges in achieving profitability after accounting for expenses and taxes.
Cash Flow Indicators
Reconciled Depreciation: Reconciled depreciation appeared stable, indicating consistent capital expenditure depreciation practices.
Interest Expense: Interest expenses showed fluctuation, which could be attributed to varying debt levels or changes in interest rates over the period.
Taxation
Tax Rate: The effective tax rate varied dramatically across the periods, impacting the net income calculations. The tax rate was notably high in Q3 2023 at 0.21 versus a very low 0.005 in Q1 2024.
Tax Provision: Tax provisions were high in Q3 2023 ($754 million), suggesting significant taxable income or adjustments.
Tax Effect of Unusual Items: Significant negative values were noted, particularly -$90 million in Q4 2023, affecting net tax after unusual items.
Shareholder Metrics
Diluted and Basic EPS: Both diluted and basic EPS were negative across all periods, with the lowest at -1.16 in Q3 2023, indicating losses per share for stockholders.
Average Shares: The number of shares outstanding remained roughly constant, implicating that changes in EPS were not due to changes in share count.
Net Income Available to Common Stockholders: This was consistently negative, underscoring the financial struggles VFC faced throughout the period.
Conclusion
VFC experienced notable financial volatility across the observed periods, with challenges in maintaining profitability despite some quarters showing improved revenue and operational income. Cost management and addressing unusual or non-operating expenses could be fundamental areas for improvement. Strategic focus on enhancing operational efficiency and possibly restructuring financial obligations may help improve profitability and shareholder value in upcoming periods.