Amphenol Corporation (APH) Cash Flow Statement

The OCF/NI ratio fell to 0.88 in Q2 2026, the lowest in the trailing ten quarters, driven by a $728M working capital outflow. This suggests that rapid revenue growth is consuming cash in receivables and inventory, a pattern that may persist if growth continues at this pace. Investors should monitor whether this is a temporary timing issue or a structural shift in cash conversion efficiency.

Despite quarterly volatility, FCF margins have generally trended upward from 11.7% in Q3 2024 to 13.7% in Q2 2026, with a peak of 22.8% in Q4 2025. This improvement appears driven by operating leverage and disciplined capex, which remains below 5% of revenue. The recent dip in Q1 2026 was likely due to seasonal working capital swings, but the overall trajectory suggests strong cash generation relative to peers.

Amphenol's capex/revenue ratio averaged roughly 4% in 2026, well below the 5-7% typical for industrial manufacturers. This suggests that growth is being achieved with minimal incremental fixed investment, likely due to the decentralized model and asset-light manufacturing. The low capital intensity supports high FCF conversion, but investors should consider whether maintenance capex is adequate to sustain asset quality over the long term.

The working capital outflow in Q2 2026 is the largest in the trailing ten quarters, coinciding with the 51.7% YoY revenue surge. This suggests that receivables and inventory are growing faster than payables, a common strain during rapid expansion. If this trend continues, it could pressure operating cash flow despite strong net income, warranting close monitoring of days sales outstanding and inventory turns.

The $10.6B acquisition outflow in Q1 2026 dwarfs the typical $50-300M quarterly spend, indicating a transformative acquisition that aligns with the surge in cash reserves to $11.1B. This deployment strategy may enhance growth but introduces integration risk, as larger deals are harder to absorb than the historical bolt-on acquisitions. Investors should assess whether the acquired assets can maintain the company's premium margins.

The cumulative OCF/NI ratio of 1.18 over the period suggests that Amphenol's earnings are well-backed by cash, with non-cash charges like D&A and SBC adding back more than working capital absorbs. This divergence is a positive signal, as it implies that reported profits are not being inflated by aggressive accruals. However, the recent working capital outflows could narrow this gap if they persist.