FMC 2026 年第三季法說會：商業費用重塑展望

重點摘要

• FMC 公司 (NYSE: FMC) 公布 2026 年第三季營收為 1.06 億美元，此前扣除了約 6.39 億美元的商業行動費用。若排除這些行動與印度市場的影響，基礎銷售額為 7.45 億美元。
• 調整後 EBITDA 為負 5.59 億美元，其中包括商業行動帶來的 6.72 億美元影響。若排除這些行動，基礎調整後 EBITDA 為 1.13 億美元。
• 隨著 FMC 將北美定價調整至更接近預期淨價，公司錄得約 5 億美元的非現金費用。另有約 1.75 億美元與巴西、阿根廷、美國和加拿大特定通路庫存的重新定價有關。
• 2026 全年自由現金流預測下調至負 3.5 億美元至負 1.5 億美元。重組前的預期區間為負 1.7 億美元至正 3,000 萬美元。
• 管理層預計第四季調整後 EBITDA 為 2.1 億美元至 2.3 億美元，調整後每股盈餘 (EPS) 為 0.56 美元至 0.70 美元。以中位數計算，營收預計將與去年同期持平。
• 初步規劃顯示 2027 年調整後 EBITDA 為 6.5 億美元至 7.3 億美元，2028 年調整後 EBITDA 約為 7.6 億美元至 8.4 億美元，具體取決於商業行動和製造調整的執行情況。

核心財務數據

FMC 還錄得約 8.09 億美元與美國和瑞士遞延所得稅資產相關的非現金調整，以及與 Rynaxypyr 業務相關的 2.88 億美元非現金減損。這些項目影響了 GAAP 盈餘，但已排除在調整後指標之外。

業務與營運表現

FMC 表示，由於通路客戶減少補貨訂單並希望在季末維持異常低的庫存價值，第三季需求在 9 月最後幾週急劇轉弱。高昂的融資成本、供需不確定性以及舊有通路庫存價格偏高，限制了全系列產品的訂單。

該公司正透過將前期發票價格調整至更接近預期淨價，來改變其北美商業模式。以往的結構是採用較高的毛價，隨後再給予高額回扣，導致庫存記錄價值高於最終淨價，直到回扣達成並支付為止。

此轉型在第三季產生了約 5 億美元的非現金費用。管理層表示，這項改變應能簡化定價，降低未來回扣的波動性，並協助通路客戶將 FMC 產品與通用替代品做出明確定位。

FMC 另行調降巴西、阿根廷、美國和加拿大通路中已有的特定產品價值。這項約 1.75 億美元的措施適用於 2023 年以來在不同成本結構、競爭條件和專利保護水平下銷售的特定產品。

管理層預計將在未來三個季度內實施。目標是加速產品向種植者的流動，減少退貨和返工，並消除未來補貨訂單的障礙。

管理層業績展望

第四季方面，管理層預計中位數營收將與去年同期大致持平。預計出貨量增加將抵消高個位數的價格下滑。出貨量的支撐應來自巴西直銷給種植者數量的增加、新產品以及更有競爭力的定價，而進入後專利期產品的戰略性降價仍是逆風因素。

管理層預計 2027 年將標誌著財務轉折點的開始。規劃的驅動因素包括新有效成分的成長（特別是 fluindapyr）、Isoflex 的進一步登記註冊、通路流動性改善，以及製造佈局調整帶來的部分年度效益。

該公司預計商業轉型將在 2028 年基本完成，並獲得更廣泛的全年製造成本效益以及新有效成分更強勁的貢獻。正式的 2027 年展望與額外 2028 年細節預計將於 2 月公布。

假設印度業務出售與德拉瓦州售後租回案按計畫完成且自由現金流保持在展望範圍內，FMC 預計在 2026 年底淨債務約為 31 億美元且無循環貸款餘額。

風險與關鍵觀察點

FMC 預計艱困的市場環境仍將持續，包括種植者利潤空間承壓、競爭激烈以及區域需求不確定性。價格壓力依然顯著，特別是近期失去智慧財產權保護的產品。

通路庫存措施的執行情況是核心不確定因素。FMC 初步 2027 年 EBITDA 區間的位置，部分取決於產品通過分銷通路到達種植者的速度。

這項約 1.75 億美元的庫存重新定價措施，預計將在四到六個季度內透過折讓單或價格抵減影響未來的現金收回。管理層表示，該金額可能會被更快的收回速度以及延遲付款或壞帳沖銷風險的降低部分抵銷。

流動性仍是首要任務。截至 9 月 30 日，有擔保債務對契約 EBITDA 比率為 1.4 倍，低於 3.5 倍的上限；利息保障倍數為 2.3 倍，高於 2.0 倍的最低要求。管理層預計 FMC 在 2027 年之前將持續符合債務契約規定，但計劃在該年上半年主要以自有資金支應季節性營運資金累積。

分析師問答重點

商業行動對現金流的影響：管理層表示，約 5 億美元的北美定價模式費用對 2026 年現金流沒有影響，且在一個作物週期內整體應對現金保持中性。未來較低的總應收款項應會被大幅減少的回扣支付所抵銷。約 1.75 億美元的通路重新定價措施是未來主要的現金流逆風。

2027 年現金生成狀況：FMC 未公布正式的 2027 年自由現金流展望。公司表示，重組前實現自由現金流收支平衡是有可能的，儘管重組支出仍將顯著，但會低於 2026 年預期的約 1.8 億美元。

成本結構與研發：管理層表示，僅靠進一步降低成本無法恢復業績，並強調重返營收成長的重要性。FMC 打算透過吸收通膨影響，使銷售、一般及行政費用 (SG&A) 大致保持平穩。公司還旨在維持現有的研發支出，同時可能透過更多合作關係來加速開發並降低成本。

印度業務剝離：FMC 表示，出售案按計畫推進，預計於 12 月 1 日完成交割。公司預估交割前將獲得約 2.5 億美元的總交易款項，以及來自印度業務的約 1.3 億美元 2026 年現金收回，其中年初至今已收回 1.15 億美元。

2027 年營運假設：管理層預計核心業務將實現低個位數成長，成長平台將以 15% 左右（mid-teens）的速度擴展。在新有效成分（主要由 fluindapyr 帶動）預計將成長約 50% 的情況下，管理層還預計價格和出貨量將共同帶來正面貢獻。

電話會議完整逐字稿

完整財報電話會議逐字稿

管理層陳述

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.

分析師問答

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.