On Holding AG (ONON) Cash Flow Statement

The OCF/NI ratio swung from 0.22 in 2026Q1 to 2.15 in 2026Q2, driven almost entirely by working capital swings of -$122.1M and +$5.4M respectively. This suggests earnings quality is sound, but cash generation is heavily dependent on the timing of inventory and receivables. Investors should monitor whether the 2026Q2 conversion is sustainable or a one-off unwind of prior quarter's build.

FCF margin oscillated between -3.3% and 24.6% over the past ten quarters, with 2026Q2's 23.6% near the historical high. The 2026Q1 dip to 0.8% appears tied to working capital outflows, not a deterioration in underlying cash generation. This trajectory suggests a seasonal pattern where Q1 is consistently weak, while Q2 and Q4 capture the bulk of cash conversion.

CapEx/Revenue has stayed between 1.6% and 3.9%, well below the 5-7% typical for vertically integrated footwear peers. This suggests ONON's outsourced manufacturing keeps capital requirements low, allowing most operating cash flow to convert directly to FCF. The modest uptick in 2026Q2 may reflect retail store build-out, but the absolute level remains manageable.

The volatility in working capital is the primary driver of quarterly cash flow swings, with 2026Q1's -$122.1M outflow reversing to a +$5.4M inflow in 2026Q2. This pattern suggests inventory build-up ahead of peak selling seasons, but the magnitude of the swings warrants monitoring for potential over-ordering. If inventory continues to grow faster than sales, future markdowns could pressure the 62.8% gross margin.

With zero capital returned to shareholders, the $1.02B cash balance appears to be earmarked for retail expansion and brand building. This is consistent with a high-growth phase, but investors should watch for a shift toward capital returns as growth matures. The absence of acquisitions in the data suggests a preference for organic scaling over M&A.