inTEST Corporation (INTT) Cash Flow Statement

The OCF/NI ratio swings violently from +13.33 in 2026Q2 to -22.13 in 2024Q2, which indicates the reconciliation between accrual earnings and cash is dominated by timing items rather than a stable conversion engine. With D&A of roughly $15.4M and SBC of $4.6M over the period against just $1.6M of cumulative net income, the apparent conversion strength looks more like the arithmetic of a low-earnings, high-depreciation base than evidence of high-quality earnings, consistent with the thin 1.0% operating margin noted in the income statement work.

FCF margin ranges from -15.9% to +19.9% within the window, and the fact that the strongest quarters (2025Q1 at 19.9%, 2026Q2 at 16.7%) coincide with large working-capital movements implies the trajectory is not yet anchored to the sequential revenue recovery identified in the income statement analysis. Investors should monitor whether FCF can hold positive territory as working-capital tailwinds fade, since cumulative FCF of roughly $10.0M over ten quarters translates to an unspectacular mid-single-digit average margin against a business still demonstrating cyclical demand.

Spending at roughly 1.4% of revenue suggests the asset base is not being replenished at depreciation run-rate, which may support FCF in the near term but could pressure manufacturing flexibility if semiconductor equipment demand keeps recovering. Some of the D&A likely represents amortization of intangibles from the 2024Q1 acquisition (net cash outflow of $18.9M), so the true maintenance-capex gap may be narrower than the headline ratio implies — a distinction the cash flow statement alone does not resolve.

The pattern of large releases during weak-revenue quarters (2025Q1: -$2.3M net income yet +$5.5M working capital) followed by heavy builds as revenue recovers (2026Q1: -$6.3M) suggests the company harvests cash in downturns and reinvests it into receivables and inventory during upturns — an understandable but cash-constraining cycle. Because the two most recent quarters show a -$6.3M then -$0.1M swing, the working-capital contribution appears to be normalizing, which may compress reported OCF even if revenue growth continues.

This positive divergence is the mirror image of the typical accrual-red-flag pattern and is largely explained by $15.4M of D&A plus $4.6M of SBC exceeding the modest profit base, meaning cash generation is real but heavily dependent on non-cash add-backs rather than retained earnings. The implication is that INTT's balance-sheet capacity has been built through depreciation-shielded cash flow rather than profitability, which may prove less resilient if the semiconductor cycle turns and working capital reverses direction again.