Free cash flow generation remains fragile, with capital expenditures consuming 12.2% of revenue in 2025Q4 and operating cash flow to net income ratios showing significant historical instability.
Hongli Group Inc. (HLP) cash flow statement — 7-year operating, investing & financing cash flows
| Metric | Dec'25 | Dec'24 | Dec'23 | Dec'22 | Dec'21 | Dec'20 | Dec'19 |
|---|
| Cash from Operations | 878.27K | -414.03K | 884.92K | 2.49M | 1.14M | 2.76M | 1.79M |
| Operating CF Margin % | 4.48% | -2.94% | 5.53% | 12.29% | 5.25% | 24.78% | 19.25% |
| Operating CF Growth % | 312.12% | -146.79% | -64.5% | 118.75% | -58.78% | 54.57% | - |
| Net Income | 1.94M | -1.88M | 864.72K | 2.93M | 3.2M | 2.42M | 2.08M |
| Depreciation & Amortization | 811.21K | 943.04K | 1.05M | 655.41K | 701.79K | 683.3K | 596.07K |
| Stock-Based Compensation | 0 | 1.97M | 0 | 0 | 0 | 0 | 0 |
| Deferred Taxes | -18.12K | -31.22K | -25.13K | 15.6K | 0 | 0 | 0 |
| Other Non-Cash Items | 233.3K | 96.72K | -286.2K | 7.3K | -3.01K | 77.2K | 17.62K |
| Working Capital Changes | -2.09M | -1.51M | -714.03K | -1.12M | -2.76M | -419.72K | -904.46K |
| Change in Receivables | -3.95M | -339.69K | 1.21M | -2.88M | -1.84M | -619.95K | 560.19K |
| Change in Inventory | 193.15K | -389.78K | 190.14K | 131.69K | -1.46M | -445.42K | -191.23K |
| Change in Payables | 444.92K | 39.27K | -1.56M | 523.9K | 1.4M | 387.51K | -82.3K |
| Cash from Investing | -1.26M | -33.31M | -2.25M | -11.67M | -3.05M | -2.01M | -1.34M |
| Capital Expenditures | -1.32M | -32.51K | -2.08M | -9.53M | -1M | -584.61K | -1.34M |
| CapEx % of Revenue | 6.72% | 0.23% | 12.99% | 46.99% | 4.63% | 5.24% | 14.44% |
| Acquisitions | 41.74K | -33.63M | 0 | -3.62M | -2.05M | -1.45M | 0 |
| Investments | - | - | - | - | - | - | - |
| Other Investing | 13.91K | 349.02K | -174.71K | 1.49M | 0 | 21.96K | 0 |
| Cash from Financing | 1.26M | 33.51M | 382.09K | 10.84M | 983.36K | 322.58K | -625.45K |
| Debt Issued (Net) | 1.26M | 530.11K | -6.96M | 10.63M | 941.07K | -55.95K | 23.15K |
| Equity Issued (Net) | 0 | 33M | 7.23M | 0 | 0 | 0 | 0 |
| Dividends Paid | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| Share Repurchases | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| Other Financing | 0 | -21.53K | 118.11K | 210.12K | 42.3K | 378.53K | -648.6K |
| Net Change in Cash | 960.38K | 109.12K | -1.3M | 1.58M | -902.65K | 1.15M | -183.51K |
| Free Cash Flow | 660.82K | -446.54K | 21.13K | -7.04M | 134.98K | 2.18M | 446.23K |
| FCF Margin % | 3.37% | -3.17% | 0.13% | -34.7% | 0.62% | 19.54% | 4.8% |
| FCF Growth % | 247.99% | -2213.4% | 100.3% | -5314.78% | -93.81% | 388.56% | - |
| FCF per Share | 0.01 | -0.01 | 0.00 | -0.58 | 0.01 | 0.18 | 0.04 |
| FCF Conversion (FCF/Net Income) | 0.45x | 0.22x | 1.02x | 0.85x | 0.36x | 1.14x | 0.86x |
| Interest Paid | 0 | 599.52K | 650.8K | 371.21K | 313.68K | 258.24K | 269.13K |
| Taxes Paid | 0 | 38.8K | 374.49K | 72.52K | 324.11K | 302.86K | 629.81K |
Quick answers to the most common questions about buying HLP stock.
Hongli Group Inc. (HLP) generated $0.9M in net cash from operating activities in 2025. This reflects the cash generated directly from core business operations.
Hongli Group Inc. (HLP) generated $0.7M in free cash flow in 2025. Free cash flow is the cash left over after capital expenditures, which can be used to pay dividends, repurchase shares, or pay down debt.
Hongli Group Inc. (HLP) spent $1.3M on capital expenditures in 2025. CapEx represents the cash invested in physical assets like property, plant, and equipment to maintain or grow the business.
Key Metrics
Top Statement Risk
Working capital volatility
Earnings Quality Remains Highly Volatile
As reported in financial statements, HLP's operating cash flow to net income ratio has fluctuated wildly, reaching 1.21 in 2025Q4 but dipping into negative territory during multiple prior periods, suggesting that accounting profits frequently decouple from actual cash generation due to aggressive working capital swings.
The significant variance between net income and operating cash flow indicates that earnings are heavily influenced by non-cash accruals and timing differences in customer payments. Investors should monitor whether this instability reflects genuine operational friction or merely the inherent lumpiness of project-based steel fabrication contracts.
FCF Margin Recovery Remains Fragile
Based on the provided cash flow data, HLP's free cash flow margin reached 10.4% in 2025Q4, a notable improvement from the negative margins seen in 2024, yet the historical trend shows a recurring inability to sustain positive cash flow across consecutive reporting periods.
While the recent return to positive free cash flow is encouraging, the historical data suggests that growth phases often consume more cash than they generate. This pattern implies that the company's business model may require significant upfront investment that periodically overwhelms the cash-generating capacity of its core operations.
Capital Intensity Constrains Cash Reserves
According to recent SEC filings, HLP's capital expenditure reached 12.2% of revenue in 2025Q4, highlighting a high capital intensity that frequently absorbs the majority of operating cash flow and limits the company's ability to build a meaningful liquidity buffer for future downturns.
The high ratio of capital expenditure to revenue suggests that maintaining the precision of their cold-rolling lines requires constant reinvestment. This ongoing need for capital spending appears to be a structural drag on free cash flow, leaving the company vulnerable if revenue growth were to stall.
Working Capital Swings Dictate Liquidity
As evidenced by the quarterly cash flow statements, working capital changes have been a primary driver of cash volatility, with a $2.0 million outflow in 2025Q2 followed by a $385.9K outflow in 2025Q4, illustrating the company's struggle to manage cash conversion cycles effectively.
The frequent and large negative working capital adjustments suggest that HLP may be extending generous credit terms to its OEM customers or facing delays in inventory turnover. This reliance on working capital management to fund operations warrants further investigation into the company's collection efficiency and inventory management practices.