Apr. 4 at 5:46 PM
$RGP Their payout ratio based on cash flow (which is a very generous way to measure it) is 173% for their most recent quarter, so it's likely RGP will be cutting its div... With
$25 mn per quarter in FCF, and paying out
$43.4 mn per quarter on the div, they’re burning through
$20.6 mn of cash per quarter on the div... And they only have
$73 mn in cash left on hand... Assuming they want to hold at least
$30 mn in operating cash, they can keep up this charade for a couple of more quarters before they have to start cutting the div... There’s just less structural demand for their services, and increased competition from web-based AI competitors with much smaller footprints and cost structures... Cutting operating costs will help but it just isn’t enough to correct the imbalances here... A 50% div cut is coming, and there’s a really low probability things will improve enough over the short term to preclude it from being necessary...
