RPC, Inc. (RES) Cash Flow Statement

The OCF/NI ratio averaged over 3.5 in the last two years, with 2026Q2 at 3.60, suggesting that non-cash charges like D&A (around $43M per quarter) are driving the gap. This implies that reported net income understates the company's cash-generating ability, but the sustainability of this conversion depends on maintaining D&A levels and working capital swings.

FCF margins have ranged from -0.2% to 16.0% over the past ten quarters, with the most recent quarters showing sub-3% margins. This volatility suggests that the company's cash generation is highly sensitive to capex timing and working capital swings, which may limit its ability to consistently fund shareholder returns.

The reduction in capex intensity may indicate a shift toward maintenance spending, but the absolute levels (over $30M per quarter) still absorb a significant portion of OCF. This suggests that the company is prioritizing fleet upkeep over expansion, which could limit growth but also reduce future cash drag if spending remains controlled.

The large swings in working capital, particularly in 2024Q2 and 2024Q4, suggest that the company's cash flow is heavily influenced by timing of receivables and payables. This volatility may indicate inefficiencies in collections or inventory management, and investors should monitor whether these swings stabilize as revenue growth moderates.

The stable dividend suggests a commitment to returning cash to shareholders, but the lack of consistent buybacks may indicate management's preference for preserving liquidity. Given the volatile FCF, the dividend appears well-covered by OCF, but the sustainability of this payout could be tested if cash generation deteriorates further.

The large cumulative gap is primarily due to D&A and working capital inflows, which have boosted OCF. This suggests that the company's earnings quality is high, but investors should be cautious: the gap may narrow if D&A declines or working capital turns negative, potentially reducing future cash flow.