Moog Inc. (MOG-A) Cash Flow Statement

The OCF/NI ratio swung from -0.57 in 2026Q1 to 1.05 in 2026Q3, reflecting a sharp reversal in working capital dynamics. This suggests that the reported net income is increasingly backed by actual cash generation, though the volatility in conversion ratios across quarters warrants monitoring. The positive conversion in the most recent quarter aligns with the strong net income growth, but investors should note that the prior quarter's negative conversion was driven by significant working capital outflows.

The FCF trajectory shows a strong sequential improvement, with the 2026Q3 FCF margin of 11.9% exceeding the prior-year quarter's 8.8%. This rebound appears driven by a combination of higher net income and favorable working capital collections, as evidenced by the $168.6M working capital inflow. However, the quarterly FCF has been erratic, swinging from -$165.1M in 2025Q1 to $108.9M in 2024Q4, suggesting that the company's cash generation is subject to significant timing effects, likely tied to milestone payments in its defense programs.

Capital expenditures have remained in a narrow band of $27.5M to $42.4M per quarter, with CapEx/Revenue declining from 4.6% in 2024Q4 to 2.5% in 2026Q3. This suggests that Moog is not in a heavy investment phase, and the moderate capital intensity supports FCF generation. The relatively low CapEx relative to D&A (which averages around $24M per quarter) implies that maintenance capex is roughly in line with depreciation, leaving room for growth investments if needed.

The working capital line is the primary driver of the quarterly cash flow volatility, with large outflows in Q1 quarters (2025Q1: -$214.7M, 2026Q1: -$172.0M) and significant inflows in Q3/Q4 quarters. This pattern suggests a seasonal build-up of receivables or inventory early in the fiscal year, followed by collections later. The magnitude of these swings—often exceeding $100M—indicates that Moog's cash conversion is heavily influenced by contract milestones and customer payment terms, which investors should factor into their cash flow projections.

The company has consistently paid dividends of around $9M per quarter, but buyback activity has been highly variable, ranging from -$77.5M in 2025Q2 to +$84.9M in 2026Q3 (note: negative values indicate net issuance or repurchase? The data shows negative buybacks in most quarters, which may indicate net share issuance or repurchases? Actually, the sign convention is unclear; positive buybacks in 2026Q3 suggest repurchases, while negative values in prior quarters might indicate issuance or data quirks). The 2026Q3 buyback of $84.9M is a notable outlier, suggesting management may be deploying excess cash to offset dilution or return capital. However, the inconsistency in buyback amounts makes it difficult to discern a clear trend, and investors should monitor whether this level of repurchase is sustainable.

The cumulative OCF/NI ratio of approximately 0.8 over the trailing ten quarters suggests that Moog's earnings have not been fully converted into cash, with the shortfall likely tied to working capital investments and timing. This divergence is not unusual for defense contractors with long-cycle programs, but it implies that the quality of earnings may be lower than the income statement suggests. Investors should monitor whether this gap narrows as revenue growth normalizes, as persistent divergence could signal aggressive revenue recognition or deteriorating collection efficiency.