FLOC, Flowco Holdings Inc.

Will it survive?

• Can it pay its interest? 7.9×
  Comfortable
  Operating income $149M ÷ interest expense $19M
  What this means

  Operating profit covers interest with the kind of margin Graham wanted for a defensive holding. Necessary, not sufficient, it says solvent, not cheap.

• How heavy is the debt, net of cash? $163M · 1.1× operating profit
  Modest net debt
  Cash $5M − debt $168M
  What this means

  Netting $5M of cash and short-term investments against $168M of debt leaves $163M owed, about 1.1× a year's operating profit. Net debt is the leverage figure that matters: the cash is already set against the debt. Strategic or illiquid investments aren't counted here.

• How long is cash tied up? 182d
  Long (60+ days)
  DSO 48 + DIO 158 − DPO 24 days
  What this means

  Days cash is tied up between paying suppliers and collecting from customers. Lower is better; a long cycle means growth itself eats cash.

Is it a good business?

• Return on invested capital —
  Not enough data
  Industry peers: median 5%
  What this means

  The filing data didn't include the inputs for this check.

• Owner-earnings margin 17%
  High through the cycle
  3-yr median margin, range 16%–22%; latest $167M = operating cash $294M − maintenance capex $127M
  Industry peers: median 6%
  What this means

  What an owner could take out without starving the business: operating cash less the maintenance capital it must spend to hold its position — Buffett's owner earnings. That's 22% of revenue this year, a 17% median across 3 years. Treating stock comp as the real expense it is (less $11M of SBC) leaves $156M.

• Are earnings backed by cash? 7.11×
  Cash-backed
  Cash from ops $294M ÷ net income $41M

  In the filing’s words The filing discloses a material weakness in its financial controls — the reported numbers here, and the record built on them, are only as reliable as the controls that produced them.

  What this means

  How much of reported profit showed up as operating cash. Above 1× is reassuring; well below suggests earnings lean on accruals. One year is noisy, growth and working-capital swings distort it, and this is operating cash, not free cash. Watch the multi-year trend.

How is the cash used?

• Where do the earnings go? 9%
  Reinvests most of it
  Dividends + buybacks $15M ÷ Owner Earnings $167M
  What this means

  Of $167M Owner Earnings, $15M (9%) went back to shareholders, $0 dividends, $15M buybacks. Net of $11M stock comp, the real buyback was about $4M. Returning most of it is the mark of a mature business with little left to reinvest at a high return; reinvesting most could mean a long runway, or empire-building. The split doesn't say which; the return earned on it (see ROIC) does.

• Investing or harvesting? 0.88×
  Maintaining
  Capex $127M ÷ depreciation $145M
  What this means

  Descriptive, not a grade. Above ~1× means investing faster than assets wear out (growth, or, sustained for years, today's earnings carrying less depreciation than tomorrow's will). Below means spending less than it's wearing out (efficiency, or a melting asset base). The ratio won't tell you which; the filings will.

Graham’s defensive tests · 2 of 3 met

Graham’s numerical criteria for the defensive investor (The Intelligent Investor, ch. 14), run on the filings. A floor of safety, not a buy signal; many fine modern businesses fail his strictest liquidity rules by design.

• Adequate size Miss
  Revenue ≥ $2B · $760M
  What this means

  Big enough to weather a storm. Graham's 1972 floor was ~$100M of sales (≈ $700M today); we use a $2B revenue line as a conservative modern stand-in.

• Strong liquidity Pass
  Current ratio ≥ 2× · 3.34×
  What this means

  Current assets at least twice current liabilities, near-term bills covered without touching the business. Strict by design: many cash-rich modern firms run leaner and miss it, holding their cushion in longer-dated securities.

• Conservative debt Pass
  Debt ≤ working capital · $168M vs $182M WC
  What this means

  Graham's rule that borrowings not exceed net current assets. Capital-heavy and buyback-heavy firms routinely fail it, read it next to interest coverage, not alone.

• Moderate price —
  P/E ≤ 15 and P/E × P/B ≤ 22.5 · decided by the price
  What this means

  Graham's valuation gate, the wall he kept between a sound business and a sound investment. Three-year average earnings are $1.89/share (latest year $1.31), the averaged base the calculator's gate runs on, and book value is $7.23/share. Enter a price in “What the price implies” just below for the P/E, P/B, and whether it clears. But this is the rule Buffett outgrew: there's no hard P/E law, and a wonderful business can deserve a far richer multiple if the thesis holds, treat it as the bargain-hunter's floor, not a verdict on the price.