FMC 2026年第3四半期決算説明会：商業関連費用が見通しを一変

主要ポイント

• FMCコーポレーション（NYSE: FMC）が発表した2026年第3四半期の売上高は、約6億3900万ドルの商業的措置費用を計上した結果、1億600万ドルとなった。同措置およびインド事業を除いた実質売上高は7億4500万ドルだった。
• 調整後EBITDAは、商業的措置による6億7200万ドルの影響を含め、マイナス5億5900万ドルとなった。同措置を除いた実質調整後EBITDAは1億1300万ドルだった。
• FMCは、北米の価格設定を予想純価格に近づける移行を行ったことで、約5億ドルの非現金費用を計上した。さらに約1億7500万ドルは、ブラジル、アルゼンチン、米国、カナダにおける特定流通在庫の価格改定に関連している。
• 2026年通期のフリーキャッシュフロー見通しは、マイナス3億5000万ドル〜マイナス1億5000万ドルに引き下げられた。事業再編費用控除前の予想レンジは、マイナス1億7000万ドル〜プラス3000万ドルである。
• 経営陣は第4四半期の調整後EBITDAを2億1000万ドル〜2億3000万ドル、調整後EPSを0.56ドル〜0.70ドルと予想している。売上高は中間値ベースで前年同期比ほぼ横ばいとなる見通しである。
• 予備計画では、商業的措置および製造構造の変更の実施を前提として、2027年の調整後EBITDAを6億5000万ドル〜7億3000万ドル、2028年の調整後EBITDAを約7億6000万ドル〜8億4000万ドルと見込んでいる。

主要財務データ

FMCはまた、米国およびスイスにおける繰延税金資産に関する約8億900万ドルの非現金調整と、リナキシピル事業に関連する2億8800万ドルの非現金減損損失を計上した。これらの項目はGAAP基準の損益に影響を与えたが、調整後指標からは除外された。

事業および営業業績

FMCによると、流通顧客が補充注文を抑制し、異例の低い在庫水準でシーズンを終えようとしたため、第3四半期の需要は9月最後の数週間に急激に悪化した。高水準の調達金利、需給の不透明感、および古い流通在庫の高価格が、ポートフォリオ全体の受注を抑制した。

同社は、事前請求価格（インボイス価格）を予想純価格に近づけることで、北米の商業モデルを変更している。従来の構造では、高い総販売価格を設定した後に大幅なリベートを適用していたため、リベートが確定し支払われるまで、最終純価格を上回る価額で在庫が計上されていた。

この移行により、第3四半期に約5億ドルの非現金費用が発生した。経営陣は、この変更により価格設定が簡素化され、将来のリベートの変動性が低減するほか、流通顧客がジェネリック製品に対してFMC製品の位置付けを明確にしやすくなると述べている。

FMCはこれとは別に、ブラジル、アルゼンチン、米国、カナダの流通段階にすでに存在する特定製品の評価額を引き下げている。この約1億7500万ドルの措置は、2023年以降に異なるコスト構造、競合状況、特許保護水準のもとで販売された特定製品に適用される。

経営陣は、この実施が今後3四半期にわたって行われると見込んでいる。その目的は、生産者への製品流通を加速させ、返品や再作業を削減し、将来の補充注文に対する障壁を取り除くことである。

経営陣による業績見通し

第4四半期について、経営陣は中間値ベースの売上高が前年同期比でほぼ横ばいになると予想している。販売数量の増加が、1桁台後半の価格下落を相殺する見込みである。数量面では、ブラジルでの生産者向け直接販売の増加、新製品、より競争力のある価格設定が下支えとなる一方、特許保護期間終了後に移行した製品での戦略的な値下げが引き続き逆風となる。

経営陣は、2027年が業績転換の始まりになると見込んでいる。計画されている成長要因には、新しい有効成分（特にフルインダピル）による拡大、Isoflexの追加登録、流通フローの改善、ならびに製造拠点再編に伴う年度途中からの効果が含まれる。

同社は、商業モデルの移行が2028年にほぼ完了し、通年での製造コスト削減効果が拡大するとともに、新しい有効成分の寄与がより強まると予想している。正式な2027年ガイダンスおよび2028年の詳細については2月に発表される予定である。

FMCは、インド事業の売却およびデラウェア州でのセール・アンド・リースバック取引が計画通り完了し、フリーキャッシュフローがガイダンス内に収まることを前提として、2026年末の純有利子負債が約31億ドルとなり、リボルビングローン残高がゼロになると見込んでいる。

リスクと主な注視点

FMCは、生産者の収益圧迫、激しい競合、地域的な需要の不透明感など、厳しい市場環境が続くと予想している。特に最近知的財産権の保護期間が終了した製品において、価格下落圧力が依然として強い。

流通在庫に関する措置の実行が最大の不確実要因である。FMCの2027年EBITDA予備計画レンジにおける位置付けは、製品が流通チャネルを通じて生産者にどれだけ迅速に行き渡るかに部分的に依存する。

約1億7500万ドルの在庫価格改定措置は、今後4〜6四半期にわたり、クレジットノートや価格クレジットを通じて将来の現金回収に影響を与える見込みである。経営陣は、回収の加速や支払遅延・貸倒損失リスクの低減によって、この金額の一部が相殺される可能性があると述べている。

流動性の確保が引き続き優先課題である。9月30日時点で、財務制限条項（コベナンツ）上の担保付負債対EBITDA倍率は上限3.5倍に対して1.4倍、インタレスト・カバレッジ・レシオは最低限度2.0倍に対して2.3倍であった。経営陣はFMCが2027年を通じてコベナンツを遵守し続けると予想しているが、同年前半の季節的な運転資金需要については、主に自己資金で賄う計画である。

アナリストQ&Aの要点

商業的措置によるキャッシュフローへの影響：経営陣によると、北米の価格モデル変更に伴う約5億ドルの費用は2026年のキャッシュフローに影響を与えず、作付サイクル全体を通じて概ねキャッシュニュートラルになる見込みである。将来の総回収額の減少は、リベート支払額の大幅な減少によって相殺される見通しである。約1億7500万ドルの流通価格改定措置が、将来における主なキャッシュのマイナス要因となる。

2027年のキャッシュ創出：FMCは2027年の正式なフリーキャッシュフローのガイダンスを発表しなかった。同社は、事業再編支出は引き続き相応の規模となるものの2026年予想の約1億8000万ドルを下回る見通しであり、事業再編費用控除前のフリーキャッシュフローで損益分岐点に達する可能性があると述べた。

コスト構造とR&D：経営陣は、さらなるコスト削減だけでは業績は回復しないとし、売上高の成長回帰を強調した。FMCはインフレを吸収することでSG&Aを概ね横ばいに維持する方針である。また、開発の加速とコスト削減のためにパートナーシップの活用度を高める可能性を模索しつつ、現在のR&D支出を維持することを目指している。

インド事業の売却：FMCは、12月1日の取引完了予定に向けて売却が順調に進んでいると述べた。同社は、取引完了前にインド事業から約2億5000万ドルの総取引収入と2026年に約1億3000万ドルの現金回収を見込んでおり、そのうち1億1500万ドルは年初来で回収済みである。

2027年の事業前提条件：経営陣は、コア事業が1桁台前半の成長を達成し、成長プラットフォームが10%台半ばのペースで拡大すると予想している。新しい有効成分は、主にフルインダピルが牽引し、約50%成長する見込みである。また、経営陣は価格と販売数量の合計がプラスに寄与すると予想している。

決算説明会文字起こし全文

決算説明会の完全なトランスクリプト

経営陣による説明

Operator

Ladies and gentlemen, thank you for joining us, and welcome to the Third Quarter 2026 Earnings Call for FMC Corporation. This event is being recorded, [Operator Instructions]. I will now hand the conference over to Mr. Curt Brooks, Director of Investor Relations for FMC Corporation. Please go ahead.

Curt Brooks

Good morning, and welcome to FMC Corporation's 2026 Third Quarter Earnings Call. Today's prepared remarks will be provided by Pierre Brondeau, Chairman, Chief Executive Officer and President; and Andrew Sandifer, Executive Vice President and Chief Financial Officer. After prepared comments, we will take on questions, our earnings release and today's slide presentation are available on the FMC Investor Relations website and the prepared remarks from today's discussion will be made available after the call.

Let me remind you that today's presentation and discussion will include forward-looking statements that are subject to various risks and uncertainties concerning specific factors, including, but not limited to, those factors identified in our earnings release and in our filings with the Securities and Exchange Commission. Information presented represents our best judgment based on today's understanding. Actual results may vary based on these risks and uncertainties.

Today's discussion and the supporting materials will include references to adjusted EPS, adjusted EBITDA, free cash flow, organic revenue growth and revenue excluding India, all of which are non-GAAP financial measures. Please note that as used in today's discussion, earnings means adjusted earnings EBITDA means adjusted EBITDA and sales refers to sales excluding India. A reconciliation and definition of these terms as well as other non-GAAP financial terms, to which you may refer during today's conference call are provided on our website. With that, I'll now turn the call over to Pierre.

Pierre Brondeau

Thank you, Curt. Today, I want to spend most of my time on the commercial actions we announced on October 15. Why we decided to take them and what they mean for the business going forward. I'll then walk through our third quarter results in more detail and the forward outlook. First, some brief context on the quarter. Our underlying performance was below our expectations before considering the impact of the commercial actions. Through the early part of September, third quarter performance was tracking broadly in line.

However, during the final weeks of the quarter, channel customers in several key markets sharply reduced replenishment orders as they thought to close the season with lower inventory levels. Given the importance of September, to Q3 results, the impact on sales was significant. But the underlying short fall does not explain the magnitude of the actions we announced on October 15. Apart from weaker demand, there is an issue, which is having an outsized impact on the business. In response to high financing costs, the perception of import supply and demand uncertainty, channel customers are seeking to hold the lowest inventory values we have ever seen.

For FMC, this creates a specific constraint for 2 reasons. First, a North America business model has been based on a higher gross price followed by significant rebates. As a result, the gross invoice price carried in customers' inventory can remain above the expected net price until those rebates are earned and paid. Second, some customers are holding SMT products that entered the channel at prices above current market levels. These products were sold on different cost structures, competitive conditions and levels of patent protection. The elevated price of these products can delay their movement downstream to growers.

Both reasons increase the value of FMC inventory held by customers. This limits customers' ability or willingness to place orders across the FMC portfolio. To address this issue, we are taking 2 actions to reduce the value of their FMC channel inventory. These actions are resulting in the third quarter EBITDA impact of $672 million. First, we are transitioning the North America business model to a framework that brings the upfront price closer to the expected net price. This change resulted in approximately $500 million charge in the third quarter.

This is a noncash charge, which does not change future cash obligations. These charge related to the first commercial actions consist of 2 components. The first and larger components reflect pricing and rebate adjustments associated with the transition to the new model. Under the previous model, fourth quarter sales would have continued at a higher gross price. With high rebate paid after the end of the crop season. Since we moved to the new model on October 1, which is the start of the North America are season, that same gross price and rebate cycle will not continue in the fourth quarter.

As a result, the remaining adjustments associated with the recently completed crop season was recognized in the third quarter. The second component reflects adjustments needed to bring inventory already in the North America channel from the higher gross price closer to post rebate net price. The new model is expected to materially reduce the volatility associated with future rebate payments. It should also provide a simple pricing structure for FMC and our customers while allowing those customers to manage the value of FMC inventory more closely with the current market condition.

In addition, bringing the upfront price closer to the expected net price should make it easier for customers to position FMC products competitively against generic alternatives downstream. The second commercial action we are taking is to reduce the price of select high-priced products held by channel customers in Brazil, Argentina, the U.S. and Canada. These adjustments are intended to bring the value of that inventory closer to FMC's current pricing. To be clear, we are only adjusting the value of high-priced products already in the channel.

Our objective is to support movement of these affected product downstream to growers and remove the constraint on future replenishment of FMC products. These actions represent the remaining approximately $175 million EBITDA impact and applies to select products sold into the channel since 2023.

It is the only component of the total charge that is expected to reduce future cash collections. These pricing adjustments will be booked against accounts receivable or via pricing credits on new orders. We have managed these higher-priced products in the channel as part of our ongoing business operations, expecting to break down their pricing incrementally over time.

After assessing our third quarter results, the industry outlook and the need to change a North America business model. It became clear at that time that more comprehensive actions were needed given the priority customers are placing on holding very low inventory values. We have spent the past several years making significant changes to the company. We have lowered costs, change our manufacturing footprint, generated significant proceeds to support our balance sheet and advanced new products to market allowing this inventory issue to continue constraining the business will limit our ability to fully realize the benefits of that work.

Therefore, we have decided to address the issue more comprehensively now. The faster products move downstream to growers, the quicker we can start to realize the benefit of our current competitive pricing. Moreover, the manufacturing changes underway across our legacy portfolio are expected to further improve our cost position and our ability to compete. While the final impact of these actions is reflected in the third quarter results implementation is just beginning.

Discussions with customers are taking place now, and we expect to transition the transition to occur over the next 3 quarters. Initial customer feedback has been very positive and reinforces our view that these actions address an important commercial constraint. Our priority is now on implementing them in a disciplined and structured way. With that context, let me turn to our third quarter results, I outlined on Slide 4, 5 and 6.

Third quarter revenue was $106 million including approximately $639 million of impact from the commercial actions. Excluding the commercial actions in India, Underlying sales were $745 million. This was below the low end of our original guidance due to lower-than-expected volumes. Price was a year-on-year headwind, including the effect of our strategic pricing actions for products which have recently lost IP protection.

Third quarter adjusted EBITDA was negative $559 million including approximately $672 million associated with the commercial actions. Excluding those actions, underlying EBITDA was $113 million. This was below the low end of our original game as weaker-than-expected volume were partially offset by better-than-expected cost. Adjusted earnings per share were negative $4.41, which was well below our initial guidance due mainly to the impact from the commercial actions.

Turning now to Slide 7 for our updated fourth quarter outlook. We expect the challenging market conditions that we observed in the third quarter to continue. This includes strain grower margins a highly competitive market and demand uncertainty in multiple regions stemming from potential line impact. We are guiding fourth quarter revenue between $1.4 billion and $1.14 billion, which is about flat versus prior year at the midpoint as volume growth is offset by a high single-digit price decline.

The pricing headwind is mostly driven by strategic pricing actions but transitioning to the post patent phase. Higher volumes are expected to be driven by increased direct to grow sales in Brazil growth of new products and more competitive FMC pricing. Adjusted EBITDA is expected to be between $210 million and $230 million, a decline of 22% versus the prior year. Lower pricing and an FX headwind are expected to be partially offset by higher volume and favorable costs. This is lower than our prior Q4 guidance due mainly to an increase in the pricing headwind. Adjusted earnings per share is expected to be between $0.56 and $0.70. I will now turn the call over to Andrew.

Andrew Sandifer

Thanks, Per. I'll start this morning with some income statement items. Third quarter sales reflect a minor FX tailwind and with favorability from the Brazilian real, partially offset by modest strengthening of several EMEA currencies. FX was a modest headwind in EBITDA due to shifts in currency values versus how we were hedged. Looking forward to the rest of the year, we expect a similar profile, a minor FX tailwind at revenue, combined with a modest FX headwind at EBITDA. .

Third quarter interest expense of $73.6 million was up $9 million versus the prior year period, with the impact of financing activity earlier in the year, only partially offset by lower foreign borrowing and higher interest income. We expect full year 2026 interest expense to be in the range of $270 million to $280 million, up approximately $35 million versus the prior year at the midpoint. Due to the impacts of the recent financing activity, partially offset by lower foreign interest expense. We continue to expect depreciation and amortization for full year 2026 to be between $160 million and $170 million.

There were several extraordinary changes in the third quarter charges in the third quarter. We took charges of $639 million against revenue and $672 million against EBITDA and coming from the commercial actions that Pierre described a few moments ago. These charges impact both GAAP and adjusted metrics as reported. There are 2 additional charges that impact our GAAP earnings this quarter that are excluded from our adjusted metrics, consistent with our non-GAAP reporting policy. We recorded noncash adjustments of approximately $809 million to deferred tax assets in the United States and Switzerland as well as a noncash impairment charge against our indefinite-lived intangible assets related to our Rynaxypyr business of $288 million.

These charges reflect revised expectations regarding future operating results and cash flows that reduced the book value of these assets. As a result of the commercial charges, and expected negative reported earnings before tax for full year 2026. We now expect a full year effective tax rate on adjusted earnings of 12% to 14%. The effective tax rate on adjusted earnings through the quarter is now 13% in the midpoint of this range. Moving next to free cash flow on Slide 8. Free cash flow in the third quarter was negative $18 million, $214 million better than the prior year period

Significantly lower EBITDA in part due to the commercial action charges was more than offset by working capital improvement. Free cash flow before restructuring was modestly positive after considering the $23 million in cash restructuring spending in the quarter. In light of the year-to-date performance and the conditions that led to our taking the commercial actions discussed we've updated our outlook for free cash flow for 2026. We now expect full year of 2026 free cash flow to be in the range of negative $350 million to negative $150 million.

This change in outlook for free cash flow is driven by several factors, including lower than previously expected Q3 results, lower than previously expected Q4 EBITDA outlook, lower collections in Q4 and and somewhat higher restructuring spending. We traditionally received large advanced payments from customers, particularly in the United States during the fourth quarter. Our free cash flow forecast assumes similar levels of customer prepayments is in 2025. And Further, our full year free cash flow guidance includes an expected $180 million in restructuring spending.

Therefore, free cash flow before restructuring is expected to be negative $170 million to positive $30 million. Moving next to the balance sheet, leverage and liquidity. We ended the third quarter with gross debt of approximately $4.2 billion, up $103 million from year-end 2025. Cash on hand increased $259 million to $736 million. This resulted in net debt of approximately $3.4 billion, $48 million lower than at year-end 2025.

Cash and net debt this quarter reflect the $403 million equity investment by Tecendrelo Group that closed on September 23. With this investment, to Cenlar Group now owns approximately 20% of FMC's outstanding common stock. We were in compliance with all covenants at September 30. Covenant EBITDA is calculated differently from reported adjusted EBITDA and and the definite allows charges like the commercial action charges taken in the third quarter to be added back for covenant purposes. Secured debt to covenant EBITDA was 1.4x, well below the 3.5x covenant.

Interest coverage was 2.3x above the minimum 2.0x. And while total debt covenant EBITDA is not formally measured for the third quarter, this metric would have been 6.1x as compared to the 6.75x covenant limit. It will be reinstated at December 31, 2026. We continue to make good progress on the 2 transactions we expect to close in the fourth quarter, both of which will generate additional cash proceeds. The sale of our India business remains on track for a planned December 1 close and the sale-leaseback of our Delaware site is also expected to close by year-end. Cash and debt at September 30 reflect the proceeds from the remission licensing deal and the Decenderlo Group equity investment.

Assuming the India and Delaware transactions closed in the fourth quarter as expected and considering our outlook for free cash flow, we expect to end 2026 with net debt of approximately $3.1 billion, with no outstanding revolver balance. At this level of debt and guided EBITDA, we expect to remain in compliance with all covenants at year-end. Further, we expect to remain in compliance with all covenants through 2027. We have a solid liquidity position supported by meaningful cash on hand and available borrowing capacity to our facilities.

We are confident this positions us well to meet the needs of the business. While the commercial actions take effect -- we will prioritize liquidity. And as such, we intend to largely self-finance the seasonal working capital build in the first half of 2027. And with that, I'll hand the call back to Pierre.

Pierre Brondeau

Thank you, Andrew. Before I close and following Andrew's comments on the Tessenderlo Group investments, I want to formally welcome Luc Tack, CEO of Tessenderlo Group to the Board of Directors. We look forward to working with in. The commercial actions we discussed earlier are directly connected to our 4 operational priorities but do not represent a change in our strategy. Instead, they enable their implementation and form the basis for how we are thinking about performance in 2027 and 2028.

With that as a backdrop, then provide some preliminary perspective on these 2 years. We will provide formal 2027 gains and additional perspective in 2028 in February. At that point, planning will be complete and we'll have had the time to assess how quickly our commercial actions are taking effect. For today, I want to share the preliminary ranges reflected in our current planning. We expect 2027 to mark the beginning of a financial inflection for FMC. Sales of the new active ingredients are expected to increase, led mainly by Fun taper, where we have new registration pending in 6 new countries, along with continued expansion in existing markets.

Potential irrigations for Isoflex in Spain, France and Belgium will also contribute to growth of new actives. In addition, differentiated renexatia formulation and mixture are also expected to support the branded portfolio. The benefit of the commercial action should build over the year as FMC products move more quickly through the channel. These actions will lower our costs by reducing product return and rework. In addition, we expect partial year benefit from our ongoing manufacturing changes weighted towards the second half of the year.

Together, these actions are expected to support improved competitiveness and growth across the portfolio. As part of our manufacturing footprint redesign, Sales at per manufacturing will move to 1 of our low-cost manufacturing sites. While this will negatively impact 2027 partner sales as cost reduction flow through cost plus arrangements. The much larger brand business will benefit from the lower cost base.

Based on a preliminary we currently see 2027 adjusted EBITDA of at least $650 million and as much as $730 million. We recognize this is a broad rate where we'll land within it will depend on how quickly the commercial actions we discussed today improve the flow of our products with the channel to grow. Looking ahead to 2028, we expect a greater contribution from the same drivers described for 2027. The transition associated with the commercial actions is expected to be largely complete and the new manufacturing footprint should be delivering a broader cost benefit across the core portfolio for the full year.

Growth from new active ingredients is expected to accelerate further through the continued expansion of fluindapyr with increased contribution from Isoflex and Derivex. Isoflex is expected to gain key registration in Europe and Donilex in Brazil and Asia during 2028. We also expect the first launch of Rense the headwind from diamide partner contracts is expected to be much smaller. As shown on Slide 10, these factors are expected to support strong growth and earnings profile for FMC based on our preliminary planning, we currently expect 2028 adjusted EBITDA of approximately $760 million to $840 million billion.

We also expect 2028 to be a year with much stronger cash generation helped by greatly reduced cash restructuring spending. We recognize that confidence in FMC can only be rebuilt through execution and results. Our priorities are clear: complete the commercial actions protect liquidity, lower the cost of our core portfolio and continue growing new technologies. With that, we are ready to take your questions.

Operator

[Operator Instructions]

Your first question comes from the line of Vincent Andrews with Morgan Stanley.

質疑応答

Vincent Andrews

I wanted to try to get a sense of what cash flow will look like for 2027 and I guess a couple of things. Andrew, I think you made a comment about what you thought prepayments would be in the fourth quarter, but I wasn't clear whether you thought they would be the same as last year, you thought it'd be a lot lower than than last year?

And then if you could also talk to the $175 million from the third quarter actions, the future cash effect of that, is that that you will have to forgo cash collection in 2027 and beyond to provide that $175 million back to your customers? Or is some of that just a write-down of receivables? And any other bridge items for cash flow next year as well would be helpful. And any sort of sense of how positive it could be would be helpful.

Andrew Sandifer

Sure. That's a lot there. I'll try to see if we can knock that in various pieces. To start with the simple one. Our free cash flow guidance for 2026 assumes flat prepays to the prior year, so the same level of customer prepays that we received in 2025. As we look ahead to 2027 Obviously, EBITDA growth will be a big contributor to the free cash flow prospects. We do have some relatively fixed pieces of our walk from free cash -- from EBITDA to free cash flow, particularly cash when we look at interest expense, relatively cash taxes, legacy expenses, et cetera.

We're continuing to work through the budget for 2025. So we're not prepared to give formal guidance on free cash flow today. I would suggest certainly that there is a continued high level of restructuring spending in 2027, though at a lower level than what we're experiencing in 2026. We have guided to $180 million roughly of cash spending on restructuring in 2026. It will be lower than that in 2027, but still a meaningful drag on cash flow.

At this point in our budgeting process, we believe it's possible to get to a free cash flow before restructuring that's breakeven, but it would not at this point, it's going to be premature to give too much of a guidance. To your specific question around the commercial actions, I'll give a brief answer here. The $175 million, which is really adjusting the value of inventory held by customers that was sold under very different market conditions and at much higher prices. That will be executed through credit notes or pricing credits against future orders. Credit notes would reduce the value of accounts receivable that's not yet been collected.

So that is theoretically at least a reduction in future cash flows. The time it may, in fact, actually accelerate collection in places where that product may not have moved as quickly may allow us to bring cash forward more than what it might have without taking those incentives. And in other places where that inventory has been paid for by customers, it would be a pricing credit against future sales. So it just reduces the amount of cash we would receive from customers on that future sales.

So over a 4- to 6-quarter period, that probably is a cash headwind for the company. But again, there may be some offsets there in terms of collections that would have either been further delayed or potential bad debt write-offs or other issues if that product were not repriced and unable to move through the channel more quickly. So I don't personally view that as 100% cash headwind over the long-term horizon.

Operator

Your next question comes from the line of Salvator Tiano with KeyBanc.

Unknown Analyst

Yes. Thank you very much. I just want to continue a little bit on the free cash flow. As you said, the $175 million is pretty much forgoing receivables, $500 million, if I understood correctly, is the timing. So theoretically you were going to give these rebates, I believe, correct me if I'm wrong, they are accrued already in your liabilities. It's just that you're giving them earlier. So can you tell us in your updated Q4 -- sorry, in your updated 2026 guidance for free cash flow, how much of that $175 million do you assume essentially you're not getting back this year versus the next few quarters that you said for '26?

And out of the $500 million as well, how much do you think is this year versus next year as it's brought forward versus when it was originally supposed to affect your cash flow.

Andrew Sandifer

So why don't we take that in reverse order and Pierre certainly jump in anywhere here. On the $500 million, there is no impact to '26 to '26 cash flow the rebates that we have to pay cash rebates that we'll pay in December in the U.S. are earned on sales that our customers made to their customers and the market year from October 1, 2025 to September 30, 2026. The payment of those rebates has always been in our free cash outlook for 2026.

There is no change from that action and what we expect to have a cash outflow in 2026. In 2027, we will be selling at a lower gross price, but we'll also be paying substantially lower rebates as that difference between the gross price and the net price is much lower. We don't believe there's any impact on our cash flow from that change in rebates over the crop year. There may be some timing impacts where historically in North America, we would sell in -- particularly Q4, Q1, Q2, we would collect that -- we would sell at a high gross price historically.

We would collect those sales in the second and third quarters. and then we didn't pay a very large rebate in the fourth quarter. This year, we'll sell in a similar kind of timing, but we will sell at a lower gross price, so we will collect a lower amount in Q2 and Q3 and but we will pay out a substantial lower rebate in Q4. such that by the time we get to Q4 of '27, we don't believe there's really a net impact from that $500 million in rebate charges to the cash of the company.

It does change between quarter-to-quarter, but not over the crop season. So I think that's an important thing to understand about the changes in the pricing structure and the rebate in North America.

Pierre Brondeau

Yes. I think let me add a comment around how much of the $125 million cash leakage could be expected in 2026. It is still a number we are looking at is not a large part of the $175 million because as you can understand, we are at the end of October, and we are starting to implement commercial actions now. So we are right now putting in place the plan for the next 2 weeks to be discussed with the customers. Some of those actions will lead to assurance of credit notes during maybe the second half of November and December to get this process started.

But it is not a very significant amount of the $175 million, we are overall expecting to generate as credit notes.

Operator

Your next question comes from the line of Matthew DeYoe with Bank of America.

Matthew DeYoe

On. Pierre, we get a lot of questions around go-forward revenues and the cost structure of the company and just maybe somewhat of a hard floor on for it. But clearly, as sales have come under pressure, some of your like overhead costs have ballooned a bit as a percent of revenue, right? Maybe not so much on an absolute dollar basis. But if you think about the cost structure of FMC, you shifted from mid-teens SG&A to sales to over 20%.

So what -- what can you do to address that cost structure from an overhead perspective? I know you're obviously very focused on the operational side of the business. But from an overhead, obviously, what can you do there? And then can FMC still support the same amount of just overall R&D spend that it has? Or is that something that you also have to kind of take some measures on to be more efficient?

Pierre Brondeau

Yes. I mean the percentage of SG&A increase versus sales comes more from the decline in sales that increase in G&A. If you look over the last few years, our SG&A cost has remained in that number roughly flattish, which means we've been more than absorbing all of the inflation, which has been significant. We had a cost restructuring in '24, '25 to eliminate $300 million of SG&A cost. We then have the manufacturing footprint where we have eliminated about 1,000 positions shut down 3 plants.

We had another restructuring in September where we've been eliminated another safety position. And we've just made a move where we've been eliminating among the top 100 position about 20 to 25 high compensation. So we are getting to a place where we will not save the performance of the company through future cost savings, it is absolutely vital. And that's centered to what we do now. FMC will return to high performance only depending upon our ability to grow and that's where if you look at our strategic pillars and the commercial actions we are taking, that is where all of our focus will be -- we certainly intend to maintain flat SG&A spend, which mean absorbing inflation going forward.

That being said, the focus has to be to return to growth in '27 and '28. We do believe -- we do believe very strongly and only in the next few quarters, we'll prove that that the actions we are taking are absolutely vital in terms of returning back to growth. We have a portfolio with a new manufacturing cost, which will be cost competitive. We do have new technologies for which we are getting more and more registration by '28, we will have 3 of those products fully commercial. We are going to see the benefit in '27 and '28, thanks to the commercial actions of less return, less rework, less of an impact of credit notes so we have a pretty strong certainty that we are handling in '27 and '28 back to growth.

I will obviously result in a decrease of as a percent of sales. But where I am focused right now after all of the restructuring we've done over the last 3 years is getting the corporation back to growth. And that's why this last action we took. And I'll tell you, it's been in my mind for the last month. I just needed a a point where I felt there was no other way to move forward to bring back growth to the company that we took those actions, and they will be vital to go back to growth.

So -- that's where the focus is. I think we've done a lot in cost structure. Obviously, if we do not succeed in growing the top line, then we are facing another problem. And then you're right, we're going to have to look at our infrastructure costs for the company. But right now, almost solely focused with the actions we are taking on top line growth, which we believe is very achievable with the last set of actions we have taken, which are very critical. And by the way, to make a comment.

I can tell you, I was myself with customers over the last few days. We are meeting with all of our customers. We are preparing a plan per customer. It is very, very well received. On the point -- the last point you made around R&D. At this stage, R&D is a very solid contributor to growth. We do have 4 new active upbringing in the market we have multiple products in the pipeline, which are very interesting, and we need to keep on accelerating formulation research in the region.

I would like to hold R&D spending where it is today. Now I am not excluding the fact that we might have to think in the future and maybe the very near future about R&D with a different model, which is all based on partnership. That is what is more critical today, which is developing single molecule new active by yourself as a company might be a story of the past and in the future, I believe we're going to have to join force with partners on specific projects to increase the speed of development and reduce the cost.

Operator

Your next question comes from the line of Duffy Fisher with Goldman Sachs.

Patrick Fischer

Can we just go back to the $500 million charge, that part of it? Roughly, what's the split between the transition to new pricing model and adjusting the gross price would be question one. And then two, for each of those transactions, can you walk through the double entry accounting basically, what happened in Q3 through the P&L, balance sheet, cash flow statement and then what happens with those going forward.

Andrew Sandifer

Duffy, it's Andrew. Let me take a crack at some of this. Certainly, the $500 million charge in the quarter, that split about 60-40 between the change in the pricing structure of the mechanics itself versus the change in the gross to net price on historic inventory. In terms of the flow-through of those items from the income statement to the balance statement A big chunk of it goes against the crude rebates. The next biggest piece goes against trade receivables and then there's some minor adjustments to advance payments and current liabilities. .

But when we publish the more detailed balance sheet and accompanying notes with 10-Q later today, that will be a little more transparent. But those are really -- those are the 3 lines on the balance sheet that are most directly impacted on our -- from these charges in Q3. And again, from a Q3 perspective, there's really no cash impact. These are noncash charges. The only time that there's a cash impact is in the future periods, and it's really not related to the $500 million rebate pricing structure change in North America as we just described in a few questions ago.

It's much more related to where we're giving credit notes and pricing adjustments for channel inventory held by customers that was sold at much higher prices and it's held in inventory value by our customers at much higher prices.

Operator

Your next question comes from the line of Kevin McCarthy with Vertical Research Partners. Kevin, please go ahead.

Kevin McCarthy

Andrew, maybe a couple for you. With regard to the pending divestiture of your India business, are you still expecting to extract $200 million of working capital in addition to the $252 million transaction value and then secondly, I'd welcome your thoughts on what you're baking into your guidance for any foreign exchange-related impacts given the volatility in the Brazilian reais postelection?

Andrew Sandifer

Yes. Great questions. We'll start with India. Look, we are currently -- we're updating our carrying value for the India held-for-sale business to a fair value of $260 million at the September 30 print date. You will see this in 10-Q that we file later today. We started the year with a carrying value of about $450 million with the gross proceeds that we expect the terms of the initial sign of the deal, about $250 million. .

Cash collected of about -- we're expecting to collect about $130 million this year before closing. We've collected $115 million in cash year-to-date from the India business. The different -- the remaining difference is deal fees, FX, some other frictions that come with the executing of the transaction. But essentially, we've been around a 400 number for the value of that transaction from the beginning. The headline price plus the cash received. Obviously, there's always frictions with executing a transaction, but we're still in that same ballpark.

So we're very pleased with progress. Like I said, we're on track for the December 1 close. We think we have a very good partner in crystal crop in terms of out of a route to market for our new technology going forward in India. So we think they're going to be a very, very good partner to work with over the long term in addition to this initial transaction.

So we're very, very excited about that, the trickier sorry, I pause there, the trickier part of your question. Obviously, last weekend's election in Brazil has caused a bit of a market upset with BRL it's basically I think from our viewpoint, it's basically reversed strengthening the Brazil with the expectations by polls at the election might go the other way. So for a lot of our planning purposes for the rest of '26 and '27, we were planning at levels pre that run up.

So not a specific headwind that I would point to in our Q4 outlook related to the BRL and certainly, the current rates factor in very much in the way we're thinking about 2027.

Operator

Your next question comes from the line of Lucas Beaumont with UBS.

Your next question comes from the line of Laurent Favre with BNP Paribas.

Laurent Favre

I'd like to go back to, I guess, the 2027 early look that you provided, I'm more thinking about the industry backdrop. I was wondering how you've been sort of tensing in price against variable costs. I understand you will have benefits on manufacturing costs, but I would have assumed that the disruptions related to the Middle East would start to sort of show up into the variable cost inflation side, are you assuming you get pricing back into positive territories into '27? .

Pierre Brondeau

Let me take this opportunity to Laurent to give you an overall view of how we think about '27 just to break it down along the line of the way we describe the company. We believe our core business should be back to growth even at a low level because we will not yet be benefiting for the full year from the manufacturing cost. We are not today, there is some level of inflation of raw materials, but for some reason, it is not a number which is dramatically impacting manufacturing cost. It is, to some extent, but it is not a big driver.

So when we look at our business, the core business will be growing in the low single digit, mostly driven for us by a normalized channel with the commercial actions we are taking and we continue to grow our direct sales in Brazil, and that include pricing into the equation, but not expecting a major cost increase from raw material. Then we are looking at the growth platform. I think it's going to be up in the mid-teens, and that is driven by new active ingredients, which we believe will be growing 50%, mostly driven by fluindapyr that year.

And then when you look at costs, much more important that inflation cost on raw material we're expecting a very significant decrease of cost because of the fact that we will have cleaned up the channel inventory we're going to be way less return of products, which we've been getting over the last few years, which impact top line we will be getting, obviously, less rework to do when we receive those products. And of course, with the atoms we have taken way less impact of credit notes. If you think about cost of the corporation, that is going to have a much cost and even turbine, a much more much, much greater impact than the inflation we are seeing today with the Detroit of on wood with the Strand situation.

Finish 1 single comment. Maybe to get you towards the EBITDA. If you take the 3 comments I made around core around growth and the improvement linked to the change of the channel and the lower cost. We've applied to those 3, and we've quantified each of those 3 and applied in EBITDA in the 18% to 19% and that is what is driving us to the kind of range we are giving for '27.

Operator

Your next question comes from the line of Laurence Alexander with Jefferies.

Laurence Alexander

So just to clarify 1 of the comments about the core business. When you say it's back to growth, is your intention for '27 and '28 that both volume and price will be net positive? Or will it be back to growth in the sense that volumes are positive, but net price is probably negative or negative relative to inflation and you're making up for that elsewhere in the portfolio. .

Pierre Brondeau

So the first one, we're impacting that the price volume will be a net positive for us. and even greater in '28, where we'll have a full year impact of the new manufacturing footprint.

Operator

Your next question comes from the line of Lucas Beaumont with UBS.

Lucas Beaumont

I just wanted to follow up on the free cash flow. So I mean, the for the year, you sort of reduced the outlook by $400 million there. It seems like maybe $70 million of that is kind of associated with the cut to the second half EBITDA. Can you kind of just walk us through the buckets of what the rest is sort of baked in their place?

Andrew Sandifer

Yes. So if we look at the full year cash flow outlook versus our prior guide certainly, it starts with the reduction in EBITDA, right? We underperformed the midpoint of our prior guidance for Q3 by about $17 million. We've reduced the outlook for Q4 by $75 million. So it's nearly $100 million reduction in the EBITDA outlook for the full year on an underlying basis. .

Second thing I'd point to is sales also lagged in the third quarter and its compound lower sales that we experienced earlier in the year to where the collections and that we will collect from sales made earlier in the year. Particularly from the under delivery of sales in Q3 and see things we sold in Q3 that a portion of which we would have collected in Q4 are lower than what we had previously expected. For sales that we make in Q4 that we collect in Q4 which is nontrivial portion of our U.S. business.

Because of the shift in gross pricing, we could sell the same number of units collected a lower amount of gross sales in the fourth quarter and certainly from forecast to forecast, that is a reduction in collections in Q4. Now the natural offset to that is in Q4 of '27 we will be paying significantly lower rebates. That's my earlier comment about over the cycle, those rebate changes in North America really should be cash flow neutral. And then finally, there is some amount of credit notes that will be applied in Q4.

As Pierre described earlier, that's a very active discussion. We have an estimate in there. It could be higher and lower based on how timing and how agreements are reached with customers, but that does factor in as well. So those combination of 4 factors are essentially how we shift from the prior recast guidance to our current guidance.

Pierre Brondeau

Just 1 comment about the $175 million, the last comment, and we made. The more we use is not always the news because that would mean that we are reaching agreements with customers. So there would be some level of payment but there would be some significant level of increased revenues from those transactions. So we have made some assumptions but going beyond what we have is not at all bad news from a potential growth in Q4 above what we have in the plan should those contract be reached with customers faster than what we have in the plan.

Operator

This concludes the FMC Corporation earnings call. Thank you for attending. You may now disconnect.