Ingredion Incorporated (INGR) Cash Flow Statement

The OCF/NI ratio has been erratic, swinging from 4.59x in 2024Q4 to 0.23x in 2026Q1, indicating that reported earnings are not consistently translating into cash. The recent quarters show a negative working capital impact, with WC Chg of -$55M and -$195M in 2026Q2 and Q1, respectively, suggesting that cash is being tied up in operations. This volatility may reflect timing of collections and inventory builds, but the sustained low conversion in early 2026 warrants close monitoring.

The FCF margin has swung from 15.4% in 2025Q4 to -4.3% in 2026Q1, indicating that the company is not generating sufficient cash to cover capital expenditures in recent quarters. This deterioration is driven by a combination of elevated capex (over $100M per quarter) and weak operating cash flow, which fell to $33M in 2026Q1. The negative FCF may be a seasonal pattern, but the magnitude of the swing suggests that the company's cash generation is highly sensitive to working capital dynamics.

The company has been investing heavily in its specialty ingredients and plant conversions, with quarterly capex exceeding $100M in 2026. This elevated capital intensity may be aimed at expanding higher-margin product lines, but it is also pressuring free cash flow. Given the prior income statement analysis showing operating margin compression, the increased capex may not yet be yielding the expected returns, and investors should monitor whether these investments translate into improved cash generation.

The large negative working capital adjustments in early 2026 suggest that the company is building inventory or facing slower collections, which is consuming cash. This pattern is consistent with the prior income statement analysis showing revenue declines, as customers may be delaying payments or the company is stocking up on raw materials. The erratic working capital changes make it difficult to predict cash flow, and management's ability to stabilize these swings will be critical for maintaining dividend coverage.

The company has consistently paid dividends of around $52-54M per quarter, and buybacks have been variable, with $90M in 2025Q4 and $129M in 2024Q4. However, in 2026Q1 and Q2, buybacks were minimal, possibly to conserve cash. The continued dividend payments despite negative FCF suggest that management is prioritizing shareholder returns, but this may be unsustainable if cash flow does not improve. The company may need to rely on debt or existing cash reserves to fund these distributions.

While the cumulative OCF exceeds net income, the gap has narrowed recently, and the quarterly conversion has been inconsistent. The divergence is particularly pronounced in 2026, where net income of $256M in Q1 and Q2 contrasts with operating cash flow of only $123M, implying that earnings are not being fully realized as cash. This may be due to working capital buildup or other non-cash adjustments, and it raises questions about the quality of earnings. Investors should monitor whether this gap narrows as the company's mix shift progresses.