CNH Industrial N.V. (CNH) Cash Flow Statement

The OCF/NI ratio has deteriorated from a peak of 10.99 in 2025Q4 to 1.05 in 2026Q2, indicating that cash conversion is now barely covering net income. This compression appears driven by negative working capital changes of -$174M in 2026Q2, reversing the large positive swings seen in late 2025. Investors should monitor whether this signals a structural shift in receivables or inventory management, or merely seasonal timing.

The FCF trajectory shows a clear deterioration from the robust +$1.2B in 2024Q4 to negative territory in early 2026, with FCF margins falling from 25.0% to -2.7%. This aligns with the prior income statement analysis of decelerating revenue and strained profitability, suggesting that the company is now consuming cash as it invests through the downturn. The negative FCF, combined with thin net margins, implies reduced financial flexibility to service debt or return capital.

Despite the cyclical downturn, capex has not been cut proportionally, with quarterly spending averaging around $250M in 2026 versus $200M in 2024. This suggests management is prioritizing long-term investments, possibly in precision agriculture technology, over short-term cash preservation. However, with FCF already negative, this elevated capex may strain liquidity if the downturn persists, warranting close monitoring of management's commitment to capital discipline.

The extreme volatility in working capital—ranging from +$1.3B in 2024Q4 to -$1.4B in 2024Q1—suggests that CNH is actively managing dealer inventories and receivables in response to weak retail demand. The negative working capital in 2026Q2 may indicate that the company is reducing production and shipments to align with end-market demand, which could pressure near-term revenue but is a prudent response to the trough. Investors should watch for sustained negative working capital as a sign of prolonged destocking.

The dramatic reduction in dividends and buybacks—from a combined $653M in 2024Q2 to $162M in 2026Q2—indicates that management is prioritizing balance sheet stability over shareholder returns. This is consistent with the strained balance sheet signal and high leverage, suggesting that the company may be preserving cash to service debt or fund operations. While this may disappoint income-focused investors, it appears prudent given the negative FCF and cyclical trough.

The cumulative OCF of $4.1B versus net income of $1.9B suggests that cash generation has been stronger than earnings on a cumulative basis, but this is largely due to favorable working capital releases in late 2025. However, the recent reversal in working capital may indicate that this source of cash is fading, and future cash conversion could align more closely with net income. Investors should not extrapolate the historical OCF/NI ratio, as it is heavily influenced by cyclical working capital dynamics.