NLI Holdings, Inc. (NL) Cash Flow Statement

The OCF/NI ratio has printed below 1.0 in six of ten quarters, with extremes of -71.18 (2025Q1) and 20.53 (2025Q2) that reflect how thinly net income is spread rather than genuine cash quality swings. More telling, the residual between operating cash flow and net income plus depreciation plus working capital moves from +$35.9M (2025Q4) to -$30.1M (2024Q3), which is consistent with the prior finding that non-operating items dominate reported earnings and may not map cleanly into operating cash.

FCF was negative in four of ten quarters, yet 2026Q2's 13.5% margin on $5.9M of FCF follows two consecutive negative prints, so the recent improvement reads more like normalization than a trend investors can extrapolate. Because capex is immaterial at 0.6%-3.5% of revenue, essentially all FCF volatility traces to operating cash flow swings, meaning NL's FCF trajectory is only as reliable as its working capital cycle.

Working capital absorbed cash in seven of ten quarters, and even 2026Q2's positive $7.4M operating cash flow was generated despite a $10.2M working capital drag, implying underlying operations produced cash before the cycle's continued absorption. The data does not disaggregate receivables, inventory, or payables, so whether this reflects a lengthening collection cycle, inventory build ahead of revenue, or supplier terms cannot be determined here and warrants further investigation.

Dividend outlays peaked at $24.9M in 2024Q3 and $14.7M in 2025Q3, quarters in which operating cash flow was -$5.7M and free cash flow was -$6.1M in the former, a pattern that suggests payout policy has been decoupled from cash generation. With acquisition data unavailable, total capital deployment cannot be fully assessed, but on the disclosed items the return-of-capital program is the single largest cash use and appears to be drawing on reserves.

Depreciation of $9.9M over the period is far too small to explain a gap of this size, so the divergence cannot be attributed to normal non-cash add-backs and instead points to earnings that have been recognized well ahead of collection. Investors should monitor whether the working capital outflows reverse into future periods, since a reversal would close the cumulative gap, while persistence would suggest the reported profit base remains more accounting than cash.