FMC Q3 Earnings Call Highlights

Key Points

• FMC reported a severe third-quarter loss after recording $672 million in charges, including a roughly $500 million non-cash adjustment from its North American pricing-model transition and about $175 million from customer inventory price reductions. Underlying results also missed expectations as distributors reduced replenishment orders.
• The company lowered its fourth-quarter outlook to revenue of $1.04 billion–$1.14 billion, adjusted EBITDA of $210 million–$230 million and adjusted EPS of $0.56–$0.70, citing weak grower economics, competition and demand uncertainty.
• FMC cut its full-year 2026 free-cash-flow forecast to negative $350 million–$150 million but expects asset-sale proceeds and cost actions to reduce net debt. Management views 2027 as a potential inflection point, targeting adjusted EBITDA of at least $650 million, with a preliminary 2028 target of $760 million–$840 million.

FMC NYSE: FMC reported a third-quarter loss after recording $672 million in charges tied to commercial actions aimed at reducing the value of inventory held by distribution-channel customers and changing its North American pricing model.

Chairman, CEO and President Pierre Brondeau said the company’s underlying third-quarter performance was also below expectations, as channel customers in several major markets reduced replenishment orders late in September to finish the season with lower inventory levels. He said customers have been responding to high financing costs, perceived ample product supply and uncertain demand by holding historically low inventory values.

“The underlying shortfall does not explain the magnitude of the actions we announced on October 15th,” Brondeau said, referring to the commercial measures. He said FMC determined that a broader response was necessary to remove inventory-related constraints on future product orders.

Commercial actions drive third-quarter charges

The company is transitioning its North American business to a pricing framework in which upfront prices are closer to expected net prices. FMC’s previous model used higher gross invoice prices followed by significant rebates. According to Brondeau, the old structure could leave channel partners carrying inventory values above the expected post-rebate net price, limiting their willingness to order additional FMC products.

The North American pricing-model change resulted in an approximately $500 million third-quarter charge. FMC characterized the charge as non-cash and said it does not alter future cash obligations. The charge included pricing and rebate adjustments related to the new model, as well as adjustments to bring inventory already in the North American channel closer to post-rebate net prices.

FMC also took actions to reduce the price of certain higher-priced products already held by customers in Brazil, Argentina, the United States and Canada. Those actions accounted for roughly $175 million of the EBITDA impact and apply to selected products sold into the channel since 2023. FMC said this portion of the charge is expected to reduce future cash collections through credit notes or pricing credits on new orders.

Brondeau said implementation has begun and is expected to occur over the next three quarters. He said initial customer feedback had been positive.

• Third-quarter revenue was $106 million, including approximately $639 million of impact from commercial actions.
• Excluding commercial actions and India, underlying sales were $745 million, below the low end of FMC’s original guidance because of lower-than-expected volumes.
• Adjusted EBITDA was negative $559 million, including about $672 million tied to commercial actions.
• Underlying adjusted EBITDA, excluding the actions, was $113 million and below the low end of prior guidance.
• Adjusted earnings per share were negative $4.41.

Fourth-quarter outlook lowered

FMC expects difficult market conditions to continue in the fourth quarter, including constrained grower margins, intense competition and demand uncertainty in several regions. The company cited potential El Niño effects as one factor contributing to uncertainty.

The company forecast fourth-quarter revenue of $1.04 billion to $1.14 billion, approximately flat from a year earlier at the midpoint. FMC expects volume growth to be offset by a high-single-digit percentage price decline, primarily from strategic pricing actions and products entering post-patent phases.

Higher volumes are expected to come from increased direct-to-grower sales in Brazil, growth in new products and more competitive pricing, management said. FMC forecast fourth-quarter adjusted EBITDA of $210 million to $230 million, down 22% from the prior-year period, and adjusted EPS of $0.56 to $0.70. The EBITDA outlook was reduced from prior guidance mainly because of a larger expected pricing headwind.

Executive Vice President and CFO Andrew Sandifer said FMC expects full-year interest expense of $270 million to $280 million and depreciation and amortization of $160 million to $170 million. The company now expects an adjusted full-year effective tax rate of 12% to 14%.

Cash flow, balance sheet and asset transactions

Third-quarter free cash flow was negative $18 million, an improvement of $214 million from the prior-year period, as working-capital improvement more than offset lower EBITDA. FMC lowered its full-year 2026 free-cash-flow outlook to negative $350 million to negative $150 million, including an expected $180 million of restructuring spending.

Sandifer said the revised cash-flow outlook reflects weaker third- and fourth-quarter results, lower expected fourth-quarter collections and higher restructuring spending. FMC’s forecast assumes customer prepayments in the fourth quarter will be comparable with 2025 levels.

At Sept. 30, FMC had approximately $4.2 billion of gross debt, $736 million of cash and approximately $3.4 billion of net debt. The balance sheet reflected a $403 million equity investment from Tessenderlo Group, which closed Sept. 23 and increased Tessenderlo’s ownership to about 20% of FMC’s common stock. Brondeau also welcomed Tessenderlo Group CEO Luc Tack to FMC’s board.

FMC said it remained in compliance with all debt covenants at quarter-end. The company expects to close the sale of its India business around Dec. 1 and complete a sale-leaseback transaction involving its Delaware site by year-end. Assuming those transactions close as planned, FMC expects to end 2026 with approximately $3.1 billion in net debt and no outstanding revolver balance.

Preliminary 2027 and 2028 targets

Management said 2027 could represent a financial inflection point, supported by new active ingredients, improved product flow through the channel, lower returns and rework, and benefits from manufacturing changes. FMC expects fluindapyr growth, potential Isoflex derogations in Spain, France and Belgium, and differentiated Rynaxypyr formulations and mixtures to support its portfolio.

FMC’s preliminary planning calls for 2027 adjusted EBITDA of at least $650 million and as much as $730 million. The range depends partly on how quickly the commercial actions improve channel movement, Brondeau said.

For 2028, FMC expects adjusted EBITDA of approximately $760 million to $840 million, with broader manufacturing-cost benefits, further new-product growth and reduced cash restructuring spending. Management plans to provide formal 2027 guidance and more detail on its 2028 outlook in February.

About FMC (NYSE:FMC)

FMC Corporation NYSE: FMC is an agricultural sciences company that develops and markets crop protection products and technologies. Its portfolio is designed to help farmers manage weeds, insects and diseases that can affect crop yields and quality.

The company's products include herbicides, insecticides, fungicides, biological crop protection products and seed treatment solutions. FMC also develops crop health technologies and digital tools intended to support more precise and efficient agricultural applications.

FMC serves farmers, agricultural retailers and distributors in major farming regions around the world, with products used across a broad range of crops.

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