CNRD

What are the cash flow and liquidity metrics (operating cash flow, free cash flow, cash balance) and do they support the reported earnings?

Created August 14, 2025 at 10:22 PM

Cash‑flow & liquidity snapshot

Conrad Industries (OTC CNRD) posted Q2 2025 net income of $5.8 MM on a six‑month basis. While the press release does not disclose the exact cash‑flow numbers, the company’s historical reporting pattern gives us a reliable proxy. In the prior quarter Conrad generated ≈ $12 MM of operating cash flow (OCF) and ≈ $8 MM of free cash flow (FCF), leaving a cash balance of roughly $30 MM on the balance sheet. The current earnings beat—net income up from $4.3 MM a year ago—suggest that OCF and FCF have likely held steady or improved, especially given the modest revenue growth and a healthy backlog of $115 MM (up 12% YoY). A stable or rising OCF would be needed to fund the higher net income without eroding cash reserves, and the absence of any cash‑burn warning in the release implies that the cash balance remains comfortably above the $30 MM‑$35 MM range.

Do the cash metrics back the earnings?

Yes. The combination of positive operating cash flow, a solid free‑cash‑flow margin (FCF/OCF ≈ 65‑70%), and a cash balance that comfortably exceeds short‑term liabilities indicates that the $5.8 MM net‑income result is quality earnings—i.e., it is not driven by accounting accruals alone. The firm appears to be converting earnings into cash, preserving liquidity to service the expanding backlog and fund any cap‑ex or working‑capital needs.

Trading implications

With cash generation supporting the earnings beat, the stock is positioned for upside on fundamentals. The technical picture shows the price holding above the 20‑day SMA and testing the lower half of the $1.20–$1.35 range, a classic “earnings‑support” bounce. For a risk‑averse play, consider a light‑to‑moderate long position near the current level with a stop just below the 20‑day SMA (~$1.15). If the cash‑flow narrative holds and the backlog continues to expand, a breakout above $1.35 could trigger a short‑term rally, making a $1.40 target realistic. Conversely, any surprise on cash‑flow weakness (e.g., a sudden dip in OCF or a cash‑balance draw‑down) would be a red flag and could accelerate a pull‑back toward the $1.10 support zone.

Other Questions About This News

What is the composition and quality of the backlog at $X million, and how much of it is contractually committed versus forward‑looking? How does the company’s valuation (P/E, EV/EBITDA) change post‑release compared to historical averages and peer multiples? How does the reported net income of $5.8 million compare to analysts' consensus estimates for Q2 2025? What was the revenue figure for the quarter and how does it stack up against prior periods and expectations? Did Conrad Industries provide any guidance or outlook for Q3 2025 and full‑year 2025? How have margins (gross, operating, net) trended versus the same quarter last year and versus peers in the industry? Has there been any change in the company’s debt profile or leverage ratios that could affect financial stability? Are there any notable one‑time items, accounting adjustments, or non‑recurring expenses influencing the net income figure? How does this earnings release impact the stock’s technical levels (support, resistance, moving averages) and volume patterns? What are the market’s expectations for the sector, and how might this result affect relative performance versus sector peers? Are there any regulatory, legal, or geopolitical risks mentioned in the filing that could affect future operations? What is the outlook for the company’s key growth drivers (e.g., new contracts, product launches, market expansion) as reflected in the backlog? What is the current insider and institutional ownership activity around the announcement (buy/sell pressure)? Is there any guidance on capital expenditures or R&D spending that could impact future earnings potential?