Western Midstream Partners, LP (WES) Cash Flow Statement

The persistent OCF/NI ratio above 1.0, even in quarters with lower net income, suggests that non-cash charges like D&A are substantial and that working capital changes are generally favorable. The 2026Q2 spike to 2.49, driven by a $1.0B operating cash flow against $403.6M net income, may reflect timing of collections or one-time items, but the overall trend supports robust cash conversion.

The dramatic quarter-over-quarter FCF increase is partly due to negative capex in 2026Q1 (likely a refund or timing), but the underlying operating cash flow growth from $479.8M to $1.0B suggests volume-driven expansion. FCF margins have averaged over 40% in recent quarters, well above peers like EPD (2.5%) and ET (6.4%), indicating superior cash generation relative to revenue.

The elevated capex/revenue ratio, particularly in 2026Q2, suggests WES is investing heavily in expansion projects, likely to capture growing production volumes. While this pressures near-term FCF, the strong operating cash flow generation implies these investments are expected to yield returns, consistent with the company's accelerating revenue growth.

The negative working capital changes in the first half of 2026 may indicate faster payments to suppliers or slower collections, but the overall pattern is mixed. The positive changes in 2025 and 2024 suggest efficient working capital management, though the recent swings warrant monitoring for potential cash flow volatility.

The distribution coverage ratio of approximately 1.36 over the last four quarters indicates that WES is generating sufficient cash to fund its distributions, though the 2026Q2 dividend increase may pressure coverage if FCF normalizes. The absence of buybacks suggests management prioritizes returning cash via distributions, which is typical for MLPs.

The persistent excess of operating cash flow over net income is largely attributable to D&A, which averaged $177M per quarter, and favorable working capital changes. This divergence suggests that WES's earnings understate its cash-generating ability, a positive signal for distribution sustainability, but investors should monitor whether this gap narrows as growth capex stabilizes.