Free cash flow margin contracted to 1.0% in 2026Q1 from 35.3% in 2025Q4, reflecting a significant $129M working capital outflow and increased capital intensity.
| Cash from Operations | 1.2B | 1.27B | 1.06B | 882M |
| Operating CF Margin % | - | 26.78% | 24.48% | 21.86% |
| Operating CF Growth % | -34.78% | 19.98% | 20.29% | - |
| Net Income | 650M | 0 | 724M | 533M |
| Depreciation & Amortization | 380M | 0 | 394M | 403M |
| Stock-Based Compensation | 4M | 0 | 13M | 13M |
| Deferred Taxes | 8M | 0 | -81M | -79M |
| Other Non-Cash Items | -25M | 1.06B | -3M | 55M |
| Working Capital Changes | 174M | 214M | 14M | -43M |
| Change in Receivables | -31M | -12M | -53M | 12M |
| Change in Inventory | -58M | -51M | -84M | 86M |
| Change in Payables | 150M | 119M | 78M | -54M |
| Cash from Investing | -304M | -285M | -172M | -226M |
| Capital Expenditures | -303M | -285M | -200M | -231M |
| CapEx % of Revenue | 6.12% | 6% | 4.61% | 5.72% |
| Acquisitions | 0 | 0 | 0 | 0 |
| Investments | - | - | - | - |
| Other Investing | -1M | 0 | 28M | 5M |
| Cash from Financing | -198M | -248M | -848M | -628M |
| Debt Issued (Net) | 4.01B | 4.01B | 0 | 0 |
| Equity Issued (Net) | -22M | 3M | 0 | 0 |
| Dividends Paid | -30M | -13M | 0 | 0 |
| Share Repurchases | -25M | 0 | 0 | 0 |
| Other Financing | -4.15B | -4.25B | -848M | -628M |
| Net Change in Cash | 695M | 749M | 27M | 24M |
| Free Cash Flow | 898M | 988M | 861M | 651M |
| FCF Margin % | 18.14% | 20.78% | 19.86% | 16.13% |
| FCF Growth % | - | 14.75% | 32.26% | - |
| FCF per Share | 4.27 | 4.72 | 4.11 | 3.11 |
| FCF Conversion (FCF/Net Income) | 1.38x | 1.84x | 1.53x | 1.74x |
| Interest Paid | 0 | 0 | 0 | 0 |
| Taxes Paid | 0 | 94M | 62M | 80M |
Geopolitical supply chain concentration
As reported in recent financial statements, Qnity's OCF/NI ratio fluctuated significantly, dropping to 0.89 in 2026Q1 from a peak of 4.91 in 2025Q4, which suggests that net income is currently a volatile proxy for the actual cash-generating capacity of the underlying semiconductor materials business.
The sharp divergence between net income and operating cash flow in 2026Q1 indicates that accrual-based accounting may be masking underlying cash volatility. Investors should monitor whether this trend reflects seasonal working capital requirements or a structural shift in the timing of cash collections from major foundry customers.
Based on Qnity's reported figures, the FCF margin contracted to 1.0% in 2026Q1 from 35.3% in 2025Q4, highlighting a period of intense capital deployment that warrants further investigation into whether this represents a temporary investment cycle or a permanent increase in the company's capital intensity.
The rapid decline in FCF margin suggests that the company is prioritizing infrastructure build-out or inventory accumulation over immediate cash preservation. This trajectory implies that while the business remains profitable, its ability to self-fund growth is currently constrained by significant cash outflows related to operational scaling.
According to recent SEC filings, Qnity's CapEx/Rev ratio reached 9.3% in 2026Q1, a level that appears elevated compared to the 4.2% observed in 2025Q2, suggesting a deliberate acceleration in spending to support advanced node manufacturing capabilities and long-term competitive positioning within the semiconductor stack.
The increase in capital intensity suggests management is aggressively investing in capacity to meet the demands of 3nm and 2nm node transitions. This level of spending may indicate that the company is moving beyond maintenance-level investment to capture structural growth in advanced packaging materials.
Data from recent quarterly filings indicates a significant working capital outflow of $129M in 2026Q1, which contrasts sharply with the $268M inflow seen in 2025Q4, suggesting that inventory management and receivables cycles are currently subject to substantial fluctuations tied to customer fab utilization rates.
The swing in working capital suggests that Qnity is absorbing the impact of supply chain adjustments within its customer base. Investors should monitor whether these outflows are indicative of strategic inventory builds to mitigate supply chain risks or a potential slowdown in the cash conversion cycle.
Quick answers to the most common questions about buying Q stock.
Qnity Electronics, Inc. (Q) generated $1.27B in net cash from operating activities in 2025. This reflects the cash generated directly from core business operations.
Qnity Electronics, Inc. (Q) generated $988.0M 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.
Qnity Electronics, Inc. (Q) spent $285.0M on capital expenditures in 2025. CapEx represents the cash invested in physical assets like property, plant, and equipment to maintain or grow the business.
In 2025, Qnity Electronics, Inc. (Q) returned $13.0M to shareholders via cash dividends. This shows the company's commitment to returning capital to its equity investors.