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  "documentTitle": "Saputo Inc. (TSX:SAP)",
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  "authorName": "Spruce Point Capital Management",
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  "notes": "Includes a callout box with a red flag icon, a text block explaining methodology, a table of cash flow statements, and a table comparing cash from operations to EBITDA.",
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      "text": "Spruce Point has serious concerns about the accuracy and methodology of Saputo's goodwill impairment testing. Saputo claims that EBITDA is a measure of cash flow in performing its DCF. However, our analysis shows that EBITDA is a poor proxy for cash flow and converts at around 70%. Moreover, Saputo produces cash flow statements for its Australian business where we find a precipitous decline of -98.9% from 2021 to 2022. Yet, no impairment was recorded.",
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      "text": "Saputo claims that EBITDA is a measure of cash flow in performing its DCF. However, our analysis shows that EBITDA is a poor proxy for cash flow and converts at around 70%.",
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      "text": "Cash flow conversion ratio: -98.9%",
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      "text": "Considering the activities of the Dairy Division (Australia) and the Dairy Division (UK) were added to the Company's operational footprint in more recent years, we also estimated the recoverable amounts for these divisions using a discounted cash flow (value in use) model based on the following key assumptions: Cash flows: Cash flow forecasts for a given CGU are based on earnings before interest, income taxes, depreciation and amortization, and are adjusted with growth rates. The cash flow forecast does not exceed a period of five years with a terminal value calculated as a perpetuity in the final year. Terminal growth rate: Management uses a terminal growth rate to adjust its forecasted cash flows based on expected increases in inflation and revenues for the CGU. The terminal growth rate used were 2.5% for the Dairy Division (Australia) and 2.2% for the Dairy Division (UK). Discount rate: Cash flows are discounted using pre-tax discount rates. The pre-tax discount rates used were 7.1% for the Dairy Division (Australia) and 6.5% for the Dairy Division (UK).",
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      "text": "Source: Saputo Financials",
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      "text": "Source: Saputo Annual Reports",
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      "text": "Source: Australian Filings for A.C.N 166 119 133 Pty Ltd",
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      "text": "Consolidated Cash Flow Statement for the year ended 31 March 2022",
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      "kind": "table",
      "text": "As A Whole, Saputo's Adjusted EBITDA Is A Poor Proxy For Cash Flow",
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      "kind": "title",
      "text": "Spruce Point Believes Goodwill Impairment Is Being Delayed With A Flawed Testing Methodology",
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