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  "docSlug": "5402c37b0a60",
  "documentTitle": "GTT Communications, Inc. (GTT)",
  "authorId": "60_Wolfpack_Research",
  "authorName": "Wolfpack Research",
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  "sourceTypeSlug": "short_seller",
  "sourceTypeLabel": "Short seller",
  "presentationDate": "2019-06-06 00:00:00",
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  "notes": "The slide uses a peer benchmark table to expose a gap in financial performance, specifically targeting GTT's low cash conversion rate compared to industry peers.",
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      "text": "GTT's trailing-twelve-month (“TTM”) cash conversion rate is only 5.1% - significantly worse than most of its peers, whose weighted average cash conversion rate is 21.5%.",
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      "text": "cash conversion rate: 5.1%",
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      "text": "In reality, GTT generated negative free cash flow of -$16 million in Q1 2019 and only $4.3 million in all of 2018. The fact of the matter is that, following the acquisition of Interoute, which deviated significantly from GTT’s “capex-light” strategy, it is mathematically impossible for GTT to generate meaningful free cash flow without significantly improving its cash conversion rate.",
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      "text": "With management’s guidance for capex to remain at 7% of revenue and a cash conversation rate of only 5.1%, GTT cannot generate real positive free cash flow. Free cash flow is defined as operating cash flow (“OCF”) less capex. If OCF is only 5.1% of revenue (and declining), while capex remains at 7% of revenue, it is mathematically impossible for GTT to generate positive free cash flow.",
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      "text": "GTT’s abysmal cash conversion rate is a side effect of its aggressive accounting practices. Creative accounting can synthetically grow the top line for a few quarters. However, it is impossible for the accounting department to generate cash flow. GTT’s OCF/Sales ratio (cash conversion rate) has been declining since Q3 2017, indicating that an increasing amount of GTT’s reported growth has come from the accounting department.",
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      "text": "GTT’s trailing-twelve-month (“TTM”) cash conversion rate is only 5.1% - significantly worse than most of its peers, whose weighted average cash conversion rate is 21.5%.",
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      "text": "TTM Cash Conversion table comparing GTT to 11 peers across 1Q19 OCF, 1Q19 Sales, and OCF/Sales metrics.",
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