Archer-Daniels-Midland Company (ADM) Cash Flow Statement

The massive swings in OCF/NI, from 19.63 in 2025Q2 to -0.69 in 2025Q4, are driven by working capital changes of $3.5B and -$915M respectively, as reported. This suggests that reported net income is a poor proxy for cash generation in any given quarter, and investors should focus on normalized cash flows. The 2026Q2 ratio of 1.27 is more moderate, but the historical volatility indicates that earnings quality is heavily influenced by commodity price movements and timing of settlements.

The FCF margin improved from -3.6% in 2025Q4 to 3.9% in 2026Q2, but this is still below the 18.8% achieved in 2025Q2. The positive FCF in 2026Q2 was driven by a $1.1B operating cash flow, but the prior quarter's negative FCF suggests that the company's cash generation is not yet stable. The trajectory appears to be improving, but the volatility in working capital and commodity prices makes it difficult to project a sustained upward trend.

CapEx has been relatively stable, ranging from $194M to $492M, with no clear trend. The capital intensity of ~1.5% of revenue is low for an asset-heavy business, but this may be because ADM's assets are already in place and maintenance capex is modest. However, the company's ability to generate FCF depends on maintaining these assets, and any increase in capex for growth initiatives could pressure FCF. The stability of capex suggests a mature asset base, but investors should monitor for any step-up in spending.

The extreme swings in working capital, particularly in 2025Q2 and 2025Q3, are consistent with a company that holds large physical inventories and uses derivatives to hedge. The negative working capital changes in 2025Q4 and 2026Q1 suggest a release of cash, while the positive change in 2026Q2 indicates a build-up. This volatility makes it difficult to assess the underlying efficiency of collections and payables, but it does highlight the importance of monitoring inventory levels and commodity prices as key drivers of cash flow.

Dividends have been consistently around $250M per quarter, which is a significant portion of the company's free cash flow in weaker quarters. Buybacks were only present in 2024Q1 and 2024Q2, totaling over $2B, but have been absent since. This suggests that management is prioritizing dividend stability over share repurchases, possibly to maintain investor confidence during periods of volatile earnings. The lack of buybacks in recent quarters may indicate a conservative approach to capital allocation, given the accounting investigation and uncertain commodity environment.

The cumulative OCF/NI ratio of approximately 2.1x indicates that ADM's cash flow is significantly higher than its reported net income, likely due to large non-cash items such as depreciation and amortization, which totaled around $2.9B over the period. However, this divergence also reflects the impact of working capital swings, which can inflate or deflate cash flow in any given period. The positive cumulative gap suggests that the company's earnings quality is not as poor as quarterly volatility might suggest, but it also highlights the need to adjust for working capital to get a true picture of cash generation.