Ero Copper Corp. (ERO) Cash Flow Statement

The quarterly ratio of operating cash flow to net income swings widely, from a negative value in 2024Q4 to 2.71 in 2025Q3, which suggests reported earnings are substantially shaped by non-cash items and timing effects. Working capital movements, including a $52.9M outflow in 2025Q4 and a $23.8M outflow in 2026Q1, appear to explain much of the shortfall in individual periods. Investors should monitor whether the trailing conversion rate stabilizes above 1.0 over a full cycle before treating reported earnings as a reliable proxy for cash generation.

The move from consistent cash burn in 2024 to three consecutive quarters of positive FCF in 2026 suggests the operating base has become more durable, though the 2026Q1 print of $19.9M shows the trend is not linear. Capital spending has remained elevated at roughly 21.7% to 30.3% of revenue in 2026, which means the improvement is coming from operating cash generation rather than from restrained investment. The recent FCF strength warrants monitoring for persistence, since a single strong quarter driven by working capital release could overstate the underlying run rate.

The reduction in capex relative to revenue appears driven largely by the revenue step-up rather than a material cut in absolute spending, as quarterly capex has stayed in a $60M to $86M band throughout the period. Because the MCSA complex and Tucumã project require sustained investment to replace high-grade reserves, a substantial share of this spending is likely growth-oriented rather than maintenance. Analysts should separate sustaining from expansion capex before extrapolating the current capital intensity into future free cash flow.

The alternating sign of working capital changes across adjacent quarters suggests that shipment timing and concentrate settlement cycles, rather than structural deterioration, are driving much of the noise. Provisional pricing adjustments may amplify these swings because receivables are marked to later settlement prices. The absence of a consistent directional trend means the working capital line should be treated as a timing variable when assessing underlying cash conversion.