Stock buybacks by S&P 500 companies are heading for another record year, raising alarms about declining levels of corporate cash.

Goldman Sachs is now projecting that S&P 500 firms will spend $940 billion on share repurchases in 2019, easily beating last year’s record of $806.4 billion. Total buyback executions among all companies were up 26% through mid-July.

The buyback boom, however, is draining corporate cash. For the first time since the financial crisis, companies are now returning more cash to shareholders than they are generating in free cash flow, with the level of buybacks to free cash flow hitting 104% for the 12 months ending in the first quarter of 2019.

“Payout ratios are elevated, cash balances have declined, and leverage has risen to a new all-time high,” David Kostin, chief U.S. equity strategist at Goldman, wrote in a recent client note.

Gross debt outstanding has climbed 8% over the past 12 months, while S&P 500 earnings are tracking for a 2.6% second-quarter decline. “Unless earnings growth accelerates materially, companies will likely continue to fund spending by drawing down cash balances and increasing leverage,” Kostin predicted.

As CNBC reports, the Trump administration’s $1.7 trillion tax cut “had spurred hopes that companies would eschew the buyback formula that has helped generate the longest bull market run in Wall Street history and instead lead to more investment in equipment and personnel.”

But Goldman’s forecast of a 13% increase in buybacks for 2019 compares with projected gains of only 8% in capital expenditures and 9% for research and development.

According to Goldman, non-financial companies have drained $272 billion in cash over the past 12 months to fund buybacks, representing a 15% decline and the steepest drop since at least 1980. Non-financial cash balances as a percentage of assets has declined from 12.7% in June 2017 to a nine-year low of 10.4%.

“Although we expect growth in capex, R&D, and cash M&A, we expect companies will continue to increase cash return to shareholders as they have in recent years,” Kostin said.

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