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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.

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.

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.

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.

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 Instructions]

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

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.

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.

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

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.

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.

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.

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

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?

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.

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

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.

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.

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

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?

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.

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.

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? .

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.

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

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. .

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.

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

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?

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.

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.

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

Ladies and gentlemen, thank you for joining us, and welcome to the Second 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.

Good morning, and welcome to FMC Corporation's 2026 Second 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 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 and 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 reversed to sales, excluding India. A reconciliation and definition of these terms as well as other non-GAAP financial terms to which we may refer during today's conference call are provided on our website.

With that, I will now turn the call over to Pierre.

Thank you, Curt, and good morning, everyone. In the second quarter, we continued to execute against our priorities. We delivered EBITDA above our guidance generated meaningful free cash flow and advanced several initiatives that strengthen our balance sheet. Sales were below our expectation as a challenging operating environment, including geopolitical uncertainty, unfavorable weather and low insect pressure created additional pressure on both volume and price. Growers and channel partners remain focused on managing costs and working capital which resulted in cautious purchase pattern across many markets. Against this backdrop, we continued to make progress on our 4 operational peers reducing debt, improving the competitiveness of our core portfolio, managing the post patent transition for an ex year and growing new active ingredients. These pillars remain the foundation of the company's plan to improve earnings and cash generation while positioning FMC for future growth and the expanding contribution of its innovation pipeline. With the equity investment from Tessenderlo Group marking the conclusion of the strategic review, we now have clarity on the path forward and are focused on execution. We made substantial progress during the quarter particularly in strengthening our balance sheet through this reduction.

Over the past several months, we announced the key components of our plan to generate of proceeds to pay down debt. These include signing a definitive agreement for the sale of our India commercial business for $252 million, closing on the licensing agreement for emisoxarten with Corteva and an upfront payment of $200 million, entering into a framework agreement for a new work, Delaware property for $114 million, reaching an agreement with Tessenderlo Group for a $400 million minority equity investment as well as progressing on several smaller asset sales.

Together, these actions are expected to significantly strengthen balance sheet and liquidity position, combined with a successful $1.2 billion secured bond offering we completed in May, they will provide greater financial flexibility as we continue to execute our strategy. Andrew will discuss the impact on our balance sheet and cash flow in more detail shortly. With debt reduction well underway, our attention remains on the operational actions that will improve business performance over time.

Turning to our second pillar. Improving the competitiveness of our core portfolio. Over the past year, we have focused on simplifying how we operate improving the efficiency of our manufacturing and supply chain network and reducing structural costs across the business. These actions are intended to strengthen our competitive position and better align our cost structure with the markets we serve.

As previously announced, our objective is to exit active ingredients and formulation production assets that are no longer cost competitive and transition production toward to lower-cost sources. While this work remains underway, we are increasingly confident in the value it will deliver. In addition, we have made meaningful progress in realigning our supply chain and are beginning to see benefits from those efforts.

Moving to our third pillar. We remain focused on executing a post-patent strategy for Ranexaper. We continue to see strong demand for a differentiated formulations and meter. Sales of these products grew more than 35% year-over-year during the second quarter. We also remain focused on volume growth outpacing lower pricing as the market evolves, despite increased generic competition, branded diamide sales, excluding India, were essentially flat year-over-year. Over time, we expect branded diamide to grow in revenue as pricing stabilizes, and we continue to take market share from all the classes of insecticides. We are already seeing encouraging signs of volume growth.

In the second quarter, we saw very strong gains in hectares treated in key countries like Brazil, where product underground usage is up over 40%. These results reinforce our confidence in our post-patent strategy.

Our fourth pillar remains on track with our expectations. During the quarter, we continued to advance registration and commercialization efforts around the world, including securing registration of Isoflex active in the EU with launches expected to begin in '27.

As we have discussed previously, the pace of growth of new technology is influenced not only by customer adoption but also by the timing of regulatory approvals and registrations, which are outside of our control. We continue to see external validation of the value of our innovation pipeline. The licensing agreement for emisoxafen with Cortiva represents the third significant licensing agreement involving 1 of our proprietary active ingredients, following agreements of Isoflex active with Bayer and Frontier with Corteva.

Turning to our second quarter results on Slide 4, 5 and 6 provide detail of our performance. The operating environment for crop chemical remains challenging. Growers are faced with a difficult situation of low prices for many crops, combined with higher costs for input such as fertilizers and fuel driven by the uncertain geopolitical environment. We are seeing growers respond to these margin pressures by carefully managing costs and reducing discretionary spending wherever possible. For crop protection chemicals that can mean trading down to a generic or reducing the number of applications. In addition, data from a proprietary or farm intelligence insect metering platform provides unique visibility into field conditions and indicates a lower insect pressure so far this year.

With our current portfolio created more toward insecticide. This is especially relevant to FMC. We expect that over the next few years, the introduction and expansion of our new active ingredients will shift FMC to a more balanced portfolio with less reliance on safety side and a stronger position in herbicides and fungicides.

Our second quarter revenue of $841 million, excluding India, was 1% lower than the low end of our guidance range. As we forecasted, they were reduced orders from diamide partners as well as expected registration losses in NDA. However, we encountered additional volume headwinds in North America as strain margin drove careful purchasing behavior for growers of nonspecialty crops. Excessive hit in EMEA also led to lower-than-expected demand. We saw strong volume growth in new relexapia formulations, particularly in Brazil and North America. New actives showed good growth but we do not expect the bulk of the year-on-year increase to occur until the fourth quarter went through a peer in LatAm and North America as well as Isoflex in Australia will be in higher demand.

Second quarter pricing was down slightly more than our mid-single-digit expectation due to greater-than-expected pressure on core legacy products. Similar to prior quarters, there was more pronounced pricing pressure in Lat Am and, to a lesser degree, Asia. New active ingredients and sales up her delivered solid growth during the quarter contributing to higher sales from our growth portfolio.

Turning to Slide 6. We reported second quarter EBITDA of $153 million which was 2% above the high end over guidance range, driven by greater-than-expected cost availability. This was primarily driven by spend discipline in nonmanufacturing areas and a few favorable quarter-specific items. Adjusted earnings per share of $0.26 was 62% lower than prior year, due to the reduction in EBITDA and higher interest expense. The result was at the high end of guidance range driven by EBITDA.

Shifting to a forward guidance. Our updated financial outlook are on Slides 7 through 9. Starting with Slide 7. In Full year sales are now expected to be $3.5 billion to $3.7 billion, a decline of 7% at the midpoint. We have updated our full year outlook to reflect the more challenging market conditions we've seen so far this year. We now expect more pricing pressure and less volume growth of core legacy products than our pre forecast. Volume is now expected to be in line with prior year as sales of new active ingredients and increased Terex sales to grow in Brazil offset reduced diamide partner orders. Price is expected to decline mid- to high single digit consistent with what we observed in the first half. The removal of India is a 2% headwind and FX is expected to be a low single digit away. Adjusted EBITDA is now expected to be between $620 million and $680 million. The 23% decline at the midpoint reflects lower price and FX headwinds, partially offset by favorable costs. Adjusted EPS is expected to be between $1.19 and $1.49, with a 55% decline at the midpoint, reflecting both lower EBITDA and higher interest expense.

Given the uncertainty around the duration of the conflict in Iran and potential U.S. trade actions, we continue to assume that the run related cost pressures and tariff-related benefits largely offset each other.

Turning to Slide 8. We expect third quarter sales between $840 million and $900 million. We expect the market conditions that we observed in the second quarter to persist in the third quarter. The majority of the 9% midpoint sales decline is due to price, which is expected to be a mid- to high single-digit headwind. Volume is expected to be lower, mainly driven by North America distributors managing inventory by shifting orders from Q3 to Q4. In Brazil, we are continuing our strategy to overall sales to distributors to favor cops and direct sales. This decision negatively impact Q3 sales in favor Q4 sales. It reflects our intent to continue to stabilize the performance and predictability of Brazil's sales as we enter Q4 and 2027. We expect overall growth portfolio sales to increase in the quarter driven by solid performance from new active ingredients. Third quarter EBITDA is expected to be between $120 million and $140 million. This represents a 45% decline at the midpoint, driven mainly by lower price with volume and FX acting as some money headwinds. Adjusted EPS is expected to be $0.05 and 0.30, a decline of 90% at the midpoint driven by lower EBITDA and higher interest.

Slide 9 provides our outlook for the fourth quarter, which we expect will represent a return to year-over-year growth. Sales are expected to be between $1.06 billion and $1.2 billion, an increase of 4% at the midpoint. We are not expecting major changes to market conditions. And as such, we are forecasting a price decrease similar to the first 3 quarters in the mid- to high single digits. We are expecting strong volume growth, but is not based on the assumption of sharp improvement in regional markets. About half of the volume growth is expected to come from increased sales in Brazil, driven by new products and a more established sales force, which has now been in place for over a year. The remaining half of fourth quarter growth is expected to come from new products as well as the shift in order timing by North America distributors from Q3 to Q4.

Fourth quarter EBITDA is expected to be between $275 million and $315 million, representing 5% growth at the midpoint. Lower price and FX headwinds are expected to be more than offset by favorable cost and higher volume. We are expecting strong cost favorability due to cost mitigation actions including lower raw materials. Adjusted EPS is expected to be between $1.09 and $1.33. This represents a 1% increase at the midpoint as higher EBITDA more than offset elevated interest expense.

I will now turn the call over to Andrew.

Thanks, Pierre. I'll start this morning with free cash flow on Slide 10. Free cash flow in the second quarter was $357 million, $318 million higher than the prior year period. Included in free cash flow this quarter is the $200 million prepayment from Corteva as part of the licensing agreement for rimasoxitan that was finalized in June. This payment is reflected in the change in other operating assets and liabilities net line on our cash flow statement and has a long-term advanced payment liability on our balance sheet. As a result, it does not impact working capital.

While the specific structure of the remasoxin licensing agreement may not recur, we expect licensing and collaboration agreements to remain a part of our business model, an important contributor to operating cash flow over time. We intend to pursue additional opportunities to license molecules from our portfolio and to enter collaborations that allow us to share the cost of developing earlier-stage active ingredients. The reality is that our pipeline contains more high-quality active ingredients that we can fund and develop in a timely manner on our own. As a result, partnerships such as our licensing agreements with Corteva for remesoxatan and Fluindapyr and with buyer for Isoflex active as well as future co-development arrangements are becoming an increasingly important part of our operating model. These collaborations help accelerate the development and commercialization of new technologies while also providing a meaningful source of operating cash generation.

Beyond the prepayment from Corteva, free cash flow in the second quarter also benefited from lower receivables overall, with strong collections in Asia, including India, and in EMEA as well as lower cash taxes. We are updating our 2026 free cash flow outlook to reflect both the updated EBITDA outlook and the Corteva prepayment. We now expect free cash flow to be in the range of $75 million to $225 million or $150 million at the midpoint. Our free cash flow guidance also includes approximately $170 million in expected cash spending on restructuring driven largely by the significant reshaping of our manufacturing and supply network that is underway. Free cash flow, excluding restructuring would be approximately $320 million in 2026 at the guidance midpoint.

While we do expect to have meaningful continued cash spending on restructuring in 2027, this should dramatically reduce in 2028 and beyond, greatly improving our free cash flow generation. Moving next to the balance sheet and leverage. The second quarter was a particularly active quarter on the financing front. In mid-April, we amended our existing revolving credit facility. In May, we completed a $1.2 billion senior secured bond offering. We were pleased with the strong demand for the offering. Significant oversubscription allowed us to meaningfully increase the size and reduce the rate of the offering from launch. Proceeds from the bond offering were used to redeem the $500 million in senior notes that were due to mature in October as well as to reduce borrowings under our revolver.

We ended the second quarter with gross debt of approximately $4.3 billion, down $250 million from the prior quarter end. Cash on hand increased $86 million to $477 million, resulting in net debt of approximately $3.8 billion, down $339 million from the prior quarter end. Net debt to trailing 12-month EBITDA was 5.1x. As we described on the April call, the most recent amendment to our revolving credit agreement included changes to our customers leverage metrics. The maximum total leverage ratio is not measured formally for the second or third quarters under the terms of the amendment, but would have been approximately 5.6x. The maximum total leverage covenant will be reinstated in the fourth quarter at 6.75x through December 31, 2027. Secured debt to trailing 12-month EBITDA was 1.66x and as compared to a covenant limit of 3.5x. Minimum interest coverage ratio was 2.78x as compared to a covenant minimum of 2.0x.

Looking now at year-end debt levels. Based on our free cash flow guidance, together with proceeds from the India sale, Delaware site sale leaseback and the Tessenderlo equity investment and after reflecting dividends, financing fees and transaction costs, we expect to end 2026 with net debt of approximately $2.6 billion. At the midpoint of our EBITDA guidance, this would suggest year-end 2026 net debt to trailing 12-month EBITDA of roughly 4x.

While this is still meaningfully higher than where we would like to be long term, we believe FMC will be well positioned to further improve leverage metrics as we return to EBITDA growth in 2027 and maintain a relentless focus on driving free cash flow from the business. As a result of the financing actions completed in the quarter, we have substantial available liquidity. Borrowings under our revolving credit facility were $250.5 million at June 30. With letters of credit backed by the revolver of $188.6 million, we had more than $1.56 billion of borrowing capacity available under our revolver at quarter end. We are comfortably in compliance with our covenant metrics. Our next bond maturity is 3 years away with $500 million of notes due in October 2029. We feel confident that all of the financing and strategic actions we are taking this year are greatly strengthening the financial foundation of the company.

But lastly, moving to the income statement. Second quarter sales benefited from a 2% currency tailwind, primarily coming from strengthening of the Brazilian real. Looking ahead, we expect FX to move from being a tailwind in the first half to being relatively neutral in the second half, resulting in a low single-digit FX impact on revenue for the full year. Second quarter interest expense of $71.3 million was up $10 million, with the impact of financing activity in the quarter, partially offset by interest income and lower foreign interest expense. We now expect full year 2026 interest expense to be in the range of $275 million to $285 million, up approximately $40 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. The effective tax rate on adjusted earnings in the second quarter was 17%, in line with our expected full year effective tax rate of 16% to 18%.

And with that, I'll hand the call back to Pierre.

Thank you, Andrew. To close the 2026 market environment will continue to be challenging. We are using these challenging conditions to improve the performance of some critical countries by repositioning their business. We are strengthening FMC's financial foundation, advancing the actions tied to operational peers and maintaining a clear focus on execution. The work underway will allow our core business to become competitive again while a new technology portfolio becomes a larger part of the company. The work underway in 2026 will position FMC to return to growth as early as '27 and beyond.

With that, we are happy to take your questions.

[Operator Instructions] Your first question comes from the line of Duffy Fischer with Goldman Sachs.

First question is just around the ramp from your Q3 midpoint to your Q4 midpoint, kind of $165 million of improvement. Can you walk through sequentially what those buckets are, what are the big drivers? Because again, margin goes from like 15% in Q3 to over 25% in Q4 and give some qualitative indication just how certain are you of those buckets? Do you have orders in hand? Is it based on just kind of historic norm repeating itself. Just try to help us get comfortable with that big ramp-up from Q3 to Q4.

Yes. Thanks, Duffy. Let me go from -- try to go from Q3 to Q4. The big drivers on the positive front First, the non-diamide, and that includes the growth, of course, in direct sales in Brazil, we're expecting this to be about $150 million. The new active ingredients, we believe with the number we still have forecasting, it's going to be from Q3 to Q4 about $70 million. And then you have others, including branded Rexair, especially in Latin America in the range of $40 million. So when you go from Q3 to Q4, those 3 buckets, less technical sales. As you know, we have less buy from partners for diamides. We get to a number which is in the range of -- an increase in the range of $260 million.

Now the non diamide core I talk about, it's largely driven by the normal seasonality usually. You see -- and historically, you see an increase from Q3 to Q4 of about 15%. And that is, in addition, it's a bit higher this time because we do are increasing our sales are sales in Brazil. And as you've heard in the script, we have a shift in North America of sales from Q3 to Q4. The second largest driver is the new active ingredients, and that is going to be mostly fund up year in North America and Isoflex in Australia and the margin plant health are the rest. So that's roughly the bridge from Q3 to Q4, which go from seasonality to specific actions we are taking like direct sales or new active ingredients.

Your next question comes from the line of Edlain Rodriguez with Mizuho Securities.

I mean Pierre -- I mean I kind of wanted to ask you something about more medium and longer term. Clearly, 2026 is a transition year. as you navigate the changes in action you are undertaking to improve the portfolio, it seems like it's a process where things can get worse before they get better. But in the end, you will come out stronger. The question is, with the things you can control, like when do you think we will start to see the benefits of the work you're doing? I mean essentially, like how does the patient get better going forward?

Yes. Thank you. Listen, I believe at this stage, and that's a discussion we're having here open and open. As we look at it, we have all the reasons in the world to believe that 2026 is the trough. We believe the worst is behind us with the loss of IP protection on a Nexteer. And folate, all signs are pointing to us being able to protect Ranexa earnings in '27.

Now so if you assume that, I'm looking at 4 critical things which will be starting to make 2027 the first growth year. First, let's talk about our biggest issue in 2026. This is a $2.1 billion non diamide core business, and that business is down this year or should be down when we closed the year by about 5%.

With all the work we are doing on a global manufacturing footprint, we should be competitive again and back to growth as soon as next year. Now if we only assume to get back to an annual growth of 1% or 2%, which would be below market. So it's fairly modest. If you compare to being down 5% this year, this is an incremental sales of about $120 million to $150 million. So that's the first bucket. Just linked to the work we do on our manufacturing footprint.

On bucket number 2 is our new active ingredients. The growth should be accelerating to a minimum of 50% to 70% as we are gaining more and more registration. If you look at the expected size of our new active ingredients, that will be in '27 versus '26, an additional $150 million to $200 million. Branded sales appear steady as she go should continue its mid-single-digit growth. It's an additional $20 million.

Last point -- and this one, I have not qualified. We keep on shifting more and more of our sales business in Brazil toward cups and direct sales. This also should represent a growth, but we are not quantifying it yet because as you know, we are controlling sales toward the more traditional distribution network. So we need to balance the growth in cups and direct sales versus the decrease in the more traditional network, that's more of a budget exercise, not yet capable of controlling that.

On the negative front, still have some negative impact of Dima sales to partners, but it will be getting smaller and smaller as this segment is getting smaller and most of the cost decrease for Ranexa year has taken place. So if you look at that without quantifying the last bucket around Brazil, this is natural growth of $300 million to $350 million in '27 versus 2026. And that should keep on improving as we grow as the new active ingredients will be getting more and more traction. So as you say, the patient should get better quickly we believe '27 all indications are pointing towards a return to growth next year.

Your next question comes from the line of Frank Mitsch with Fermium Research.

Pierre, I wanted to drill on Slide 5 the breakdown by the regions. North America came down fairly significantly. And you mentioned a competitive market in North America. I was wondering if you could expand upon that, where specifically and how sustainable is that competitive market and how we should think about that in the future.

Yes. Thanks, Frank. You're absolutely right. North America was down. It is the negative news of the quarter for us. And there is multiple drivers. They all went the wrong way. First and above all, it's a volume story. As you know, in North America, we are very strong in specialty crops with our insecticide business. Rice production was at the lowest level since 1997. That was -- that's a big market for us, very low insect pressure, so we lost a lot of sales in specialty crops. Row crops is less of a market for us but still important. And it is absolutely certain that low margin at the grower level, high uncertainties. This is translating into growers managing their costs as much as possible. You see some trading from more branded products to generic product. And in some cases, keeping applications. So yes, Q2 was from a volume standpoint, a very negative quarter. There is something to a less extent, but we have a license on a product, nerves, which is called pyroxasulfone, and the company which owns this license, it's only a license we have for North America, lower IT protection. So that product became more of a generic product, and we lost and we lost sales in that not sales, but we lost on pricing a lot and also on volume in -- on these products. So I would say by far, the #1 driver in North America in addition to some pricing, but the #1 driver for the reason I just listed our volume.

Your next question comes from the line of Chris Parkinson with Wolfe Research.

Great. Pierre, we take a step back and we look at the intermediate and longer-term growth in diamides. Perhaps could you just update us on what you think the overall growth rate is including all the new entrants in terms of like the transitory period that we're currently in, which class of other intensity classifications were stealing share from? Is it organic phosphates, carbonates, neonic. And just how you think about the overall TAM there? Because it seems like the market trajectory is still growth and that there's basically competitive behaviors in the beginning of that process. So if you could just hit on the highlights there from your own perspective, it would be greatly appreciated.

Thanks, Chris. Yes, I'm going to speak carefully here because we have a strategy in place for an cap. And as I said before, the big test will be in Q3, Q4 when we're going to have the major market with the entrance of new generics in Latin America and North America. So we are not yet there. And I'm talking about Q1 and Q2 indicators on much lower market. I would say that the #1 sign of success, we are looking in a strategy is the mix of our portfolio as we were expecting shifting toward the high-end products. We are growing very fast on the new mix shares we have, especially the bifenthrin and relax mixture as well as the high concentration products. So 35% growth in that sector, that's what we're expecting. We commend the premium for those products. So that's the first positive. We are seeing some signs that the market is growing, and we've seen that in Brazil, where we are gaining toward lower end insecticide, but that is at the very beginning of the process. I think the big test is going to take place in the second half of the year, but we do have some signal we've seen in Brazil, products on the ground against some of those in safety side has been strong in the first half of the year, but again, on small volume. So indicators are good that the strategy with the lower cost we have reached and the strategy to move to higher and certainly, we are not expecting at the earnings level next year and the long term to be a contributor to earnings growth for the company. But I would say that all indicators are pointing between the mix change and what we see at this stage of volume gain on the lower end says towards stabilizing earnings certainly in 2027. That's all I can say today in terms of what we're able to verify on the market.

Your next question comes from the line of Joel Jackson with BMO Capital Markets.

Pierre, when you did all the action for the last bunch of months, you were aggressive, you did a lot of things. It seemed like you thought you could do kind of hold earnings around $100 million EBITDA with the free cash flow around that. You've come down a little bit lower this year, leverage a little bit higher than maybe what you would have thought. What other actions do you feel that you should wait for 2027, you get the rebound you're been talking about earlier on this call? Or are there other things you want to do, might you consider cutting the dividend, doing things to protect the balance sheet some more in this 2016 a bit lower than thought?

I'm going to let Andrew talk about cash flow and what we do in terms of additional actions we are planning for next year. I'm only going to answer the last point you've made around dividend. As you know, our dividends are small. It is certainly a topic we will have with the Board and continue to have with the board a $50 million cost annual lease. But no decision -- absolutely, no decision has been taken at this stage in terms of the dividend. But Andrew, do you want to add anything?

Sure. I think, look, Joel, on the free cash flow side, obviously, we updated the free cash flow guidance with the change in the EBITDA guidance and with the rimasoxibin licensing deal. There are more moving parts in that. And just to touch on that briefly as I address your question, from a cash from operations perspective, net-net, we moved the guidance midpoint up $85 million, that's about $200 million from the rimisoxin deal. So obviously, some headwinds hitting against that, certainly the biggest being the lower EBITDA expectation. We also have some higher restructuring spending as we're accelerating some of our actions to improve our manufacturing network. We do see a little less improvement in working capital this year because of the sales shift from Q3 to Q4. And there's a few other minor drags as well. From a CapEx perspective, with accelerating some of those movements on our manufacturing footprint, we were able to reduce the expected CapEx for the year by about $40 million. Our outlook for discontinued operations is unchanged. We did highlight we'll be pulling out certain charges that are related to transactions that flow through the restructuring line. We'll pull that out from free cash flow under divestiture expenses. And the net of those changes is really just on a like-for-like basis, a $50 million reduction in the free cash flow for the year.

I do think, again, from a working capital perspective, back to part of your question here, we do expect to release from working capital this year in part from liquidation of receivables in our India business, but in part from the rest of our business. But we have more work to do on improving working capital. as we continue into a better rhythm with our production cadence as we continue to drive a more aggressive collections of receivables and improving overall credit quality of the portfolio. So I think you'll see this year some good improvement in inventory reduction as we get through the year, more work to do on receivables and payables as we go into 2027.

And I think, Joel, let me be a little bit on what Andrew just said because it's 1 of the very critical part of our balance sheet. You will see this year, it's something we fully control its inventory, and we do have strong expectation that we're going to make some very significant progress on the inventory situation. we are monitoring that very closely and all indicators are pointing to our strong progress. The place where we have work to do, we are starting it this year. It's going to be very important next year is on receivable. And it's very much part of the strategy we have in Brazil, and we've talked about the move to customers, which have more certainty of paying less slow moving and better terms like cups and direct sales that some of the I would call consolidated distribution network, which is becoming much more uncertain. So it's 1 area of focus maybe not as much progress this year as we would like. But certainly, we are making that a very high priority. We should see very strong improvement as we are changing our mix of customer, especially in Latin America and Brazil next year.

Your next question comes from the line of Patrick Cunningham with Citi.

Just a couple of questions on the cost side. I think you mentioned at the top of the call some quarter-specific items that benefit the cost, I guess, first, what were those some costs pulled forward? And then can you sort of quantify what the headwinds tailwinds might be for the second half?

Sure, Patrick, it's Andrew. I'll take this one. look, in Q2, comment we made relative to guidance, we had some improved cost favorability and nonmanufacturing items. Some of that is SG&A and R&D. And some of that, quite honestly, is just some smaller items that generally, we wouldn't talk about, but we had a couple of things that were positive in the quarter and that contributed. I'll give you a simple example. We annually review our achievement reserve, which is since we think of uncashed checks and other kind of liabilities and we found that we were over accrued based on what was actually do an outstanding. So there are a few minor little favorable things like that. But when they add up they were an ad versus guidance in terms of our cost position. I think we look at costs for the remainder of the year, we do have a bit of 2 different stories with the quarters. In the third quarter, we really don't have much of a cost tailwind. You'll remember that, that's a really tough quarter comp versus the prior year. We had a very strong cost tailwind in the prior year period much of which was onetime favorability from increased cost of volume absorption in '25 -- Q3 '25. So Q3 is a flattish cost quarter, whereas we had pretty significant cost favorability in Q4. And that really is driven by lower purchase price of raw materials year-on-year. So it is a little bit of a split pattern between the 2 quarters it does amplify with the weaker sales in Q3, the headwinds in Q3 and helps amplify the strengths in Q4. So I think, again, everybody should expect Q3 flattish costs, Q4, a pretty strong tailwind for costs.

Your next question comes from the line of Arun Viswanathan with RBC Capital Markets. Please go ahead.

Yes. So I guess my question is just as you look forward, maybe you can just provide an update on where you stand in the restructuring efforts. So obviously, you talked about the new products growth. But maybe on the diamides and [indiscernible], do you think the pressure has stopped there? And are you guys holding gross margin kind of stable? And then as you look into fiscal '27, do you expect continued growth on that front. What could you provide as far as kind of where you are in some of these restructuring efforts?

I think -- for -- I mean, we really have to separate when we talk about diamide [indiscernible] at the sales up here is data protected. There is no generic in the major countries today. It's a difficult product to make. We are anticipating the '28, '29 period when we will lose data protection to avoid to be taken by surprise like we did in the next up year with preparing in advanced formulation and having a defense strategy. So -- but that is a '28, '29 problem. For renexapir, we continue the strategy as we have defined. So far, it is proving to worthy. I would say the positive or good surprise for me is that we keep on finding ways to lower our manufacturing cost, which is giving us a couple of things. It's protecting our gross margin and it's positioning the product better to gain market share over the lower and insecticides. So a total focus between the volume and the cost is when we get into '27 and beyond for a leap to protect the earnings contribution of the product to the P&L of the company. And I would say that right now, all indicators are going that way. As I said, it will not be viewed as a growth product. But the cost restructuring keeps on going positively. It's going to position us very competitively versus the quality generics giving us a lot of flexibility to act and giving us a premium on the high-end product, which we are growing very fast. Sales up here is a different story. It is still a very profitable product, which is growing in the mid-single digits. So and for which we are preparing the '28 plus data protection situation.

Your next question comes from the line of Ben Theurer with Barclays.

A lot been touched upon already, but I just wanted to kind of like maybe go back and understand a little bit what your expectation is in terms of like just profit improvement as we move into '27, '28, the ramp with the new active ingredients it's still some of the headwinds you've alluded to, Pierre earlier as it relates to the former diamides, et cetera. So how should we think about that? I remember earlier in the year, you've talked about something like mid-teens EBITDA growth into '27, '28. Do you think that can still hold based on also the fact that we have a lower starting base? Or how should we think about the growth algorithm as we move into '27, '28?

I think '27 diamides, I'm going to talk of Rexair because, as I said, again, slather in Fans, we are expecting revenues and earnings growth in 2027. Renexapir, I believe, will be at least the earnings contribution of 2026. #1 driver in this 1 is very important, and that's the 1 and the most confident in because it is really happening right now is the contribution of the high-end diamide mix and product. portfolio mix is changing very much towards those products. We actually have and are expecting very soon a registration, which will impact '27. It's going to impact '26 in Brazil, which is a blend of Renexapir and doxicarb, which is a very important product to address resistance. That's going to be a source of growth, significant for us next year. What is to be proven, I have to be clear on this one, it's a Q3, Q4 story for us to be checked is how fast and how much we can penetrate the lower end market of the Renexapir using a low mine manufacturing costs with a single. Indications are good, but I don't want to declare victory yet until I've seen it in Q3, Q4 in North America and Brazil. So really, I am not seeing as you remember at the beginning of the Q&A, I gave a bridge into '27. I believe that Renexapir will not handicap performance in 2027.

This concludes the FMC Corporation Earnings Call. Thank you for attending. You may now disconnect.

All right. I think we'll get started. Next up, I'm very proud to have today, FMC Corporation, ticker FMC, based in Philadelphia, Pennsylvania, my hometown, very proud. Today, we have Pierre Brondeau, the CEO; as well as Andrew Sandifer, our CFO. I'm proud to know these gentlemen for almost 15 years. Been through a lot. So looking forward to the presentation here today.

Pierre and Andrew, perhaps we could just pull a very quick audible and I went out of my way to make sure your partner did not speak about it in the prior presentation, but you did sign a $200 million deal for an exciting AI molecule in the next few years. Perhaps we could just start the presentation by highlighting that agreement, what it means to you, both short-term and long-term balance sheet and commercial optionality.

Yes. Thanks, Chris. Good to be here. As you know, we said we would license a molecule to a partner who would be the best potential partner for that molecule. And Corteva is the partner with whom we wanted to work, it's a great molecule. It's a dual mode of action, multiple applications in multiple crops, but certainly soybean and corn are the crops, which are the first target. The benefit of this deal is twofold. First of all, for us and the current situation we're in, $200 million is part of the debt reduction process we have in place. As you know, we've said we're going to be attempting to go as high as $1 billion of debt down payments by either licensing or selling assets. So $200 million is part of this process and doing it at this time in '26 was important.

Then there is more the strategic and commercial aspect. The problem of the crop chemical industry, it's a highly, highly fragmented industry. I think we are the fifth largest, and we have a 7% market share. When you have a molecule of that quality, with such capabilities, you need to find partners to reach the broadest possible market. And you need to find partners which have maybe a more complementary portfolio than we do, which is Corteva. So for us, that was our preferred partner. It increased significantly the size of the market potential for us and the ability to sell that molecule. The way the contract is structured, the $200 million is a prepayment for the molecule. We were intending to believe we'll get the first registration in 2028, so start to sell at that period of time. And the way the construct is in the future is we are selling -- we keep the manufacturing of the product. We are selling the product at a cost plus to Corteva.

The plus is a blend of margin in the manufacturing plus royalties. And then both companies can sell their own formulations based on an active ingredient. The Corteva licensing of the active ingredients for them to sell their own formulation is for corn, soybean in the Americas. We were also selling corn, soybean in the Americas but we retain sole property of that molecule for all other crops and for the rest of the world. So that's a summary of the deal.

Just as a quick update in terms of the progress to the $1 billion. So there have been a few moving parts, but just simple calculations, you had sold the Indian business, let's say, a few weeks, but just over a month ago. So that was one part of it. I do not believe the working capital aspect is included in that. So you have the India sale plus the $200 million. So we're approaching roughly half of -- roughly half of the target. Is that the way to think about it as we head into the second half? Is there anything -- do you have a line of sight on anything else that we could be thinking about?

Yes. So we are half of the target because there is small things we've done, we've announced, but they went under the radar screen because they were small, like, for example, we sold for close to $20 million a flotation chemical business we had in Europe. So you're right, it's $250 million for India, it's $200 million. It's a few other small businesses, so we are close to $500 million. We do expect -- I've said many times that we have a real estate deal, which we are intending to sign. Hopefully, we're talking about a couple of weeks. And that would all take us significantly beyond the $500 million. So about half of the way -- we're at half of the year and it will be a big deal half of the way to $1 billion.

Perfect. And just obviously, there have been a lot of moving parts in the global CPC markets over the last several years, several months. One of the things that I've traditionally done with you, as we always discussed about this time of the year about the second half and look at the Brazilian market and just how things are shaping up. But perhaps if we just take a step back and just given your expectations in the framework, which you initially offered at the beginning of the year, and I'll leave it open-ended. How do you see the first half evolving? We always think about agriculture in halves? How are you thinking about your order book for the second half. So I'll leave that as an open-ended question for what you're comfortable conveying, but anything quick to update us on?

Yes. Actually, I think I can -- what is it? Was 16th of June -- 17. So we are about 13 days from the end of the quarter. I think the quarter is good. I think I can right now. Got the CFO next to me, he might jump on me, but I think we can confirm guidance for the second quarter. Things are unfolding as we were expecting so second quarter looks good right now. And I think we're going to deliver the numbers we committed to for Q2. Then Q3, Q4, as you know, Q3, Q4 is the back end of the year loaded year or half year. I mean, listen, it's mid-June. So we have not yet been through the formal process of doing the full year forecast. I would just say, at this stage, I have not seen anything which would make me reconsider a full year target as we stated it so far.

So the number we've announced in terms of guidance for the full year without being through the process, which we need to do. And usually, this process is taking place in -- during the month of July after the end of the second quarter, when we close the second quarter, then we go to the reforecast, we haven't done that. But what I see at this stage, not formally, but I don't see any reason to change the full year.

One of the reasons for which I'm saying that is the second half relies very much on Latin America and mostly Brazil. We are in a very different situation than we were a year ago. I think by the time we get to the earnings call for Q2, we'll have more than half of the orders in hand that we need to deliver on the second half. To give you a sense of comparison, it would be more than double what we had last year at the same period. Significant progress on direct sales. As you know, we are shifting our commercial strategy towards large farm and mega farm and direct sales and co-ops more than the distribution retailer system, and this is paying off. I think last year, we were a bit behind.

We started in April, May to realize that those farms, the large farms start to place their orders in Q1 beginning of Q2. The sales organization was ready at the time. So we have a much healthier situation around Brazil and Latin America this year than we had last year in the same period. So that's why I'm getting a level of confidence, which is much higher than what I had before and which is making me say at this stage, I don't have any information to reconsider our full year target.

And please correct me if I'm even remotely off on this number. But even in the best of times when Brazil was on fire and everything was doing incredibly well, you'd be probably 55%, maybe slightly higher in terms of your order book. So you're at the upper end of the historical range, double last year. Is that a fair characterization?

Completely.

Awesome. So taking a step back, you outlined with the Board in February, and you've used the term running parallel strategies in terms of a core strategic review as well as continuing independent, obviously, contingent on -- partly contingent on the $1 billion of debt paydown for which now you seem like you're fairly on track given it's June. Can you just give kind of an update on your thought process, how the board is thinking about it? It seems like you're confident in kind of the numbers are falling in the right places on the independent side of it. But just any update you could offer us would be greatly appreciated.

Yes. The strategic option. This process has been going on. It is still going on. Obviously, as we move forward, the number of parties we are discussing with is getting smaller, obviously. It is a process, which I believe any company which is going through a process like this one should bring to a close not too late. It's obviously always very distracting for an organization to know that there is a strategic process which is being run. So I -- my intent of what I would like to be able to do is to certainly by the time we get at the end of July to the earnings call for Q2 to be at a place where we can announce that we've closed this process, and here are what we're going to do. That's where we are, but discussions are still going on.

So one of the things in terms of -- we've had discussions over this over more than a decade, but one of the things that seems to be misunderstood and perhaps the situation with diamides is distracting even more so than normal. It's just the value of some of the inherent and some off-patent, some on-patent, the value of some of the AIs for which FMC is a leader. And obviously, there have been ebbs and flows, especially over the last few years of competition. I totally get that. But what do you find in terms of the assessment and in terms of the valuation of your company from the Street, feel free to take a shot at me as well. What do you find is the most misunderstood? Is it something legacy like your dominant position in sulfentrazone, is it the underappreciation for Isoflex or fluindapyr, Cyazypyr even just you still have a lot of very strong market positions. And once again, I understand the ebb and flow, but what's the 1 or 2 where you'd say, you know what, it's really frustrating that the Street seems to be missing this and the opportunities. And once again, feel free to focus the hit on me. I can take it.

I think frustrating is not the word I would use because I would be in your job, I might be thinking the same way. When you look at a company like FMC, which has been highly successful with a molecule like Rynaxypyr. And with a lot of growth, a lot of earnings. You get to a place where that patent goes away. It is clearly having an impact. Thus, there is a fact that some of the actions you have to take on that molecule to be able to develop a post-patent strategy, which is fundamentally lowering the cost of that molecule has a very big impact on your pricing to your partners to whom you're selling the active on the cost-plus. Those 2 together are creating certainly a concern for investors on the short-term.

There is also, if I would be in your shoes, I would look at you losing protection in that big molecule, you've got to set up a new strategy, which is a post-patent strategy, how successful will you be against very aggressive generics. So all of those questions are valid. Okay. And all those questions lead to the kind of numbers we are showing in '26, '27. So not from a point of frustration, but from a point of looking at what FMC will be. That's where I'd like to talk about. And obviously, the discussion on Rynaxypyr takes away the positive discussion of things are going to be happening over the next 3, 4 years. I think what we have to realize is that we have 4 molecules which are being launched between '26 and '25 and in '28, including rimisoxafen we talked about licensing with Corteva, which represents over $2 billion in sales.

There is a fifth molecule of a fungicide is going to come to market in 2030. It's going to have the same potential. All of those molecules are $500 million to $700 million. I think also something which is very, very critical for the future. If you ask -- if you tell me the question, Pierre, which company will you run better. We would prefer to run FMC 2018 or FMC 2030.

And I would say, by a long shot, FMC 2030. And here is the reason FMC 2018 was a very, very good company, but we were an insecticide company Cyazypyr and Rynaxypyr were more than 50% of our portfolio. Insecticide is the least predictable of the crop protection products are not the one which are matching the concerns of the growers. It's always herbicide, fungicide, insecticides because insecticides, you never know what's going to come and when it's going to come.

With the new molecules we are putting on the market. If I think about the 5: 2 fungicide, 3 herbicide. And you think about FMC in the 30-plus period, half of our portfolio will be herbicide. The 1/4 of our portfolio will be from fungicide, a 1/4 of our portfolio will be insecticide, much, much more aligned with what the market needs, much more predictable with a very high percentage of IP-protected molecule and the growth portfolio being more than 50% of the portfolio. So that's what we are heading towards.

Obviously, the concern for the very short term, linked to Rynaxypyr kind of hide all of this positive, which is a number of new IP protected molecule, very often with very high efficacy, new mode of action. And most importantly, what I think has not been emphasizing enough a complete reshaping of the portfolio to something which is much more in line with what the market needs.

Got it. Just circling back to Rynaxypyr, and I think everybody is aware of, we don't need to rehatch, obviously, the last few years. But when you take a step back and you look at the growth and the new market entrants is, I think the kind of the benchmark thought here. But when you take a step back and look at the market growth and the potential for that molecule to actually steal significant market share from other insecticide classifications, it still seems as though, I mean, others have been successful, it still seems that the volumes are growing, pricing, cost plus has been a significant portion of obviously, the risk over the next few years. How do you feel about the growth of that holistically of that molecule, '26, '27, '28? Is there -- are there still the opportunities to steal further market share? And you can be -- the door's closed, buyers down the hall. But how do you feel about that now? Because at some point, once everybody enters the market, things presumably could stabilize and then you'll have the broader market share opportunity as an insecticide classification. Any quick thoughts?

Yes. First of all, you should not underestimate it. The price pressure will be there. I mean there is no doubt the generics are going to be very aggressive for Rynaxypyr. Everybody wants a piece of this market. There is indication right now when you look at the export stats from China and some from India that the price is increasing. In some cases, the numbers are showing that the price is doubling for generics. We are not yet seeing it on the market. So we still feel the price pressure from generics. The way I look at it, to answer your question, is the cost plus supply to Rynaxypyr partners is going to become anecdotal. It's getting smaller and smaller. This year, it's going to be less than $100 million, it's disappearing.

So that piece is not going to have a big impact in the years to come. For the rest, yes, we are seeing it the much lower cost we have, allowing us to have much lower pricing are allowing us, and we're seeing it right now, we've done it in North America, for example to gain market share over a lower end insecticide. So we see a growth of the volume. But as important for us as that is shifting the mix of a Rynaxypyr portfolio more toward the high-end molecule. It's also happening. We have today a growth in our portfolio of the two high concentrations, the mixture -- first mixture we've introduced with bifenthrin, which extend the spectrum. We are awaiting and is very important Q2 early Q3 for registration for a new mixture with indoxacarb, which would be very important for Brazil. So to shift toward high-end mixture formulation, high concentration, we have the tablet, the effervescent tablet for rice is going to be part of the success. So we need to make both happening.

One is gaining market share over the low end, we see some of that, and we need to shift the portfolio towards the high end where we command a premium. Now I'm only commenting about indications we have right now, it's working. In Q1, Q2, we see it. But frankly, the big test, it's North America, Latin America, including Brazil, in Q3, Q4. That's where really we're going to see how well our strategy is working.

So there are 2 things I want to unpack there. The first is, when you look at the data, and forgive me because I don't want to get ahead of myself, but it sounds like you may not either. But when you look at the data out of Asia for base molecules that have been off for decades, for the first time in years, it does appear as if pricing is beginning to stabilize. I've contacted a couple of the distributors and the wholesalers, and I get these blasts occasionally and saying everything per liter is -- you see these things go up 1%, $0.10 here, $0.20 here, $0.30 there. And you kind of start getting the indication that pricing for the first time in a while is stabilizing.

At the same time, you look at the Asian exports and a bit of a lag but the Asian exports to Latin America in particular appear to be, I wouldn't say going down but plateauing for the first time in a few years. You mentioned a comment about Rynaxypyr, you're not seeing it yet. Am I looking at the wrong data as far as the preliminary indicator for the second half? Or is it -- we just don't want to get ahead of ourselves? Or how are you thinking about that? And are you seeing -- beginning to see some of the similar things?

I'm more -- I don't want to get ahead of myself. We have placed and holding on to price increase in Europe, for example. It's holding. There is indications that there is stabilization of pricing in Latin America at this stage coming from generics, but we are seeing it more on the nonselective herbicide like 2,4-D and glyphosate more than you see it on the selective herbicide or other products. So there is some signal of stabilization of pricing, but I want to be prudent because we don't see it yet in a product line, which were maybe a bit more technical than the nonselective products. And we are still seeing pressure. So when I talk to my leadership team in Latin America and Brazil, they believe H2 could see price increase. But until I've seen it, I'm going to stay very prudent because we -- there is price pressure. There is price pressure right now.

So hopefully, those indications you've talked about, I want to verify. But right now, I just need more proof that this will be happening. We've been too surprised over the last 3 years, always expecting things are going to turn and they didn't turn. So I'd rather prepare myself to compete in a tough pricing situation and be pleasantly surprised than starting to act like this is going to happen and then it doesn't happen.

One of the things that I find -- you hit on this a little bit, let's dig in a little bit deeper, but I find there's not enough focus on Isoflex, it seems as though everything that you've been discussing in terms of approvals and the commercialization pathway and the kind of the breadth of the market size, quite frankly, seems to be overlooked because of the noise in the other areas. There have been a few approvals over the last, what, 6, maybe 9 months. One big one a couple of months ago. Could you hit on that product in particular? I assume you agree with me that it's underappreciated, but I would love to talk about the potential market size and how you're thinking about that relative to other NPIs, which you've launched in the last few years.

I'm glad you're asking the question because you're right, Isoflex has been a bit overlooked. And timing is perfect. It was in Europe. We had a -- last week, we were at a major customer event in England, where we had all of the big European customers for the official launch of Isoflex. I have rarely seen an enthusiasm from customers, growers, distributors, retailers for that molecule. For cereals right now, weed is a major, major problem. I mean you look at a field for cereals, you just don't see the cereals. The yields are terrible. Isoflex has a very, very high efficacy. We got the registration for these products in England. And customers were waiting for the last minute because the cereals time is September, October to buy for that registration to come, which came in July or June?

Late June.

Late June. And we still sold quite a lot of it. This year, we're going to have a full year in the U.K. We got the registration of the active itself about a month ago for the EU. So now we're doing all of the formulation registration and we do have multiple requests from the retailers and the growers to local registration authorities in Spain, France, Italy and Germany to get right to sell Isoflex under preregistration status. Those guys are prepared to buy in Q4 that early. That's how important. To give you a sense, our team in Europe would tell you that Isoflex in the next 3 to 4 years in terms of volume will be bigger than Cyazypyr and Rynaxypyr together. And you talk about the numbers that are floating around for Europe are north of $300 million in a very short period of time. So a very good molecule. Of course, there is more application than cereals in Europe.

We do have applications in Latin America. Sugarcane application showing -- sugarcane, yes, showing some very, very strong results. We've applied for registration. So there is much more application but you are correct because of our discussion around rimisoxafen dual mode of action, the Rynaxypyr situation Cyazypyr, it's been overlooked. It's a very important molecule. And the one with fluindapyr is going to grow the fastest.

And Chris, I would just add. In our guidance for this year, we've talked about the 2 ingredients that are currently commercializing, fluindapyr and Isoflex, contributing about $300 million to $400 million in revenue for the year. That doesn't have anything in it for potential emergency use exemptions in Europe. And what Pierre was describing, where growers in a number of countries are really lobbying to be able to use that technology before it's formally fully registered by country. So that would be upside. And I think that's just a further endorsement on the quality of that technology and how valuable it will be in the field, much like I think the Corteva agreement speaks very loudly about the strength of rimisoxafen as a technology. I think that strong pull from growers for Isoflex is a good testament to the technology and the strength of that product for Europe and for cereals in particular.

It does appear European farmers continuously are stepping up. So I wish them the best sincerely. Two last questions. Just very quickly, could you just give before we wrap up an update on free cash flow. It seems like it's basically neutral. What are the puts -- obviously, the things that is going to be contingent on the second half. And Andrew, perhaps if you could just hit on kind of the puts and takes what you're monitoring? And as of today, if this was the starting point, do you feel better than you did on January 1?

Look, we're guiding to a midpoint of 0 essentially for free cash flow. And there's 2 big swings in that. One is we have substantial cash restructuring costs this year. We're taking a lot of actions to get the cost position in the right place for our core portfolio. Following some big steps we took with Rynaxypyr last year, we're doing this for the rest of our off-patent active ingredient portfolio, so some big cash spending there. That's a headwind that dampens our ability to deliver positive free cash flow this year. On the plus side, we are monetizing the working capital from the India business. We're operating the India business on a cash basis, selling cash only and collecting older receivables, and that helps offset some of that headwind from cash restructuring.

As always, a big dynamic in our working capital just -- our working capital is a big dynamic in our free cash flow. It's a competitive environment. Many of the parts of the world we're in, in Brazil, particularly the strong growth that's longer term. So we're doing a lot of things to try to manage that working capital, both from receivables and an inventory perspective. So we'll have more to say in July, but I think certainly, that band around breakeven free cash flow this year is the right place.

Now for my hardest question. Pierre, to wrap up, U.S. or France?

U.S. or France. And you really want to ask that question?

They said that would be easy.

You know what France is going to have a third star. I'm certain of it. And I was hesitating, but I thought it would not be appropriate out of respect for this group here, but I was about to wear French jersey today, but I decided not to do it. But it was wearing one yesterday.

We welcome the rooster. We understand. Gentlemen, thank you very, very much. I always enjoy these firesides, if there's anything we can do, let us know. Thank you.

Thank you.

Thanks, Chris.

Hey, everyone. This is Mike Sison, Wells Fargo. I cover the ever exciting chemical industry, which actually has outperformed over the last year-to-date, about 14%. S&P was up about 8%. FMC stock has struggled a little bit, down 15% year-to-date and well off its decade high of over $100.

Today, we have Andrew Sandifer, CFO of FMC, is here to tell us the company's turnaround story, how do we get that stock back on the right track? It's got to be more exciting than some X story, right? That's going public at the end of the week. But thank you for spending some time with us.

Thank you, Mike. I appreciate you having us here.

I guess the first question is the strategic review. You're in progress of doing one. I recall the Board at your last public meeting or have some offers on the table or something like that. I'm sure you can't get into the specifics, but any sort of color of what you think the Board and you guys are looking for, for a deal or a transaction that would create value for shareholders or versus staying in a stand-alone company?

Yes. So maybe I'll start off with that part first and then build there. I think as we've described it, there's really 2 things we're working on is Plan A, which is the operational priorities we've set for the company in 2026 to really get it back on a more strong footing and prepare for a return to profitable growth.

And then in parallel to that, Plan B, which is a broader strategic review. Yes. Plan A is really driven by 4 key initiatives: aggressively paying down debt, primarily through asset sales and licensing arrangements and other things we can talk a little more as interest to people. Doing the right things to change the cost position for our core portfolio, doing some pretty significant cost restructuring to restore competitiveness for that part of our business, implementing and executing our Rynaxypyr strategy for those patents.

And then finally, really the crux of the future for the company, which is really delivering on the potential of the new -- 4 new active ingredients that process of introducing. But to your point, back in February, conversation I started a little bit earlier than that. But at the earnings call, we disclosed that our Board had asked management to work with the Board on an exploration of strategic options. And we're very careful with the language and strategic options up to and including a sale of the company.

And over the past several months, a small group of us and the executive team working with the Board and with outside advisers have worked on a number of different options, and a lot of discussions and a couple of different opportunities, a couple of different propositions that were interesting enough to really take to the board. That dialogue and that process is still ongoing.

So there's only so much I can say today other than it's still very active. It's the full range of things that we could be thinking about, whether that's an outright change of control transaction or a merger or a strategic collaboration. All of the above are being -- have been considered and are continue to be considered. There are some active discussions. And while we can't be certain about time line, there are some practical realities. Discussions have been going on for a bit. And there is only so long you can run an organization with all of your employees under a cloud of uncertainty about what the future looks like.

So I would expect that sometime between now, here early mid-June and in our Q2 call at the end of July, we'll have some more clarity that we'll be able to share. There's not a specific data I can point to at this point. Like I said, it's just an active set of discussions and evaluation with the Board. But I do think we would like to come to a more formal conclusion in a direction here before too long. But these kinds of discussions and dialogues with the Board take time. But again, I would expect sometime here before the earnings call at the end of July, we'll have something more substantial, I would say.

Well, we have 25 minutes left. So just in case something pops up...

We'll see if the phone buzzes in the interim.

And so let's walk through the turnaround potential for FMC a little bit. You talked about the 4 ingredients. As I recall, expected to have sales between $300 million to $400 million in '26, $800 million by 2027, $1 billion by 2030 and then potentially $2 billion by 2035. So I'm going to botch this.

But the first one was Dodhylex herbicide. It got registered in 2025. Just for investors, why is this herbicide more effective than what's on the market now? How do you see that ramping in '26 and then and '27? And then what do you think -- could this be -- I'm not going to ask for all 4, but could this be a diamide -- or could this -- which one could be a big one? And what's kind of the base case for this longer term?

Sure. So Dodhylex, which is...

Close...

No worries. It's a lot easier to say than [ tetflupyrolimet ], which is the chemical name of the molecule. Look, it's an herbicide. It's a herbicide that is selective to rice, and that's the leading application for it is in rice crops. It is a herbicide that kills grassy weeds in a crop that itself is a grass. So it's a very rare thought that you can -- that it's something that differentially impacts plants that are like rice, but not rice itself.

Has applications broader than rice, some very interesting potential for that molecule beyond that. But all of the initial registrations are really focused on rice. Obviously, Asia being a key area of focus as a key rice growing region, but the U.S., parts of Latin America, all part of that program. The first registrations, we actually do have a few small countries with temporary registrations right now, but nothing material. We'll start seeing real revenue in '27, assuming we get the registrations that are expected in '26 and '27 for that.

And then a nice ramp through '27 through the early 2030s. We think that could be $400 million to $600 million. To get to the higher end, you need to broaden beyond rice. And we do -- again, we do think there are some significant opportunities there. And one of the things that's really exciting about that molecule it is one of the first, if not the first, herbicides with a new -- fundamentally new mode of action, meaning a biological pathway that attacks in the plant to kill the weed introduced in 30 years.

So it is truly novel brand-new technology to the world and a crop that desperately needs new tools to control weeds. So super, super exciting thing, very high confidence that as we get the registrations that, that ramps and becomes a very interesting product. It's not a Rynaxypyr. It will never peak out at $1.6 billion, at least not anytime soon. We'll see how inflation plays in compound long enough. But it is a big meaningful contributor to the growth of the company.

Great. And then can you just remind us just because it's -- we're going to talk about the diamides at some point. How does patents work for these? How long do they last?

So the patents, there are multiple types of patents. The primary ones are composition of matter patents, which deal with the specific molecule itself. There's some strategy involving the timing in which you apply for those patents. So we identify in early-stage discovery R&D compounds that have particular biological activity against pests of interest.

So in this case, against grassy weeds and you test it and you get more comfortable that, that molecule may have some interesting commercial viability. And at some point, you apply for a patent. Depending on the country, it's probably a 15-, 17-year patent life. But it takes another 7 to 10 years from whenever you've patented to get that product to market. So you're probably in a 10-plus year window that you're selling under complete patent protection, the composition of matter.

Now there are additional things you can do as you're finishing the development of that product. You can patent manufacturing methods, you can patent formulations in the way that, that product is used with other ingredients, whether they are other active ingredients or nonactive ingredients to help make it a better performing product.

You can also look to ways of novel delivery methods that can add additional patent protection. So from a patent protection perspective, by the time you introduce, you're usually a decade or more of protection. You also, in our industry, because you have to provide a tremendous amount of toxicological and biological activity data to get the product registered, many countries also provide protections to you as the initial holder of that data and go beyond the life of the patent. This is particularly in the EU, where you will get data exclusivity that extends the life of your protection as the innovator long beyond patent time. So that's a quick synopsis of the patents.

Okay. And then I guess the second one, I think I could pronounce this one, Isoflex. Herbicide.

That's an easier one.

Easier one. Got EU approval in February '26, more registrations expected in '27. So I guess similar to Dodhylex, I just wanted to be able to pronounce it. What makes this herbicide special potential for growth and longer term?

So Isoflex is another herbicide, particularly useful in cereal crops, but not exclusively. There are some other non-cereal applications as well. It was first introduced in Australia, also introduced in certain Latin American countries, certain Asian countries, but the significant market is Europe, right? Biggest producer of cereals in the world.

We -- the active ingredient and formulated products were registered late in 2025 in the U.K. So we'll have -- we missed a good piece of that selling season, unfortunately, in 2025, but we'll have a full year of selling season in the U.K. for this year's winter cereal season. The active ingredient in Isoflex, as you noted, in February of '26 was registered in the EU. We now have to get product -- formulated product level registrations at the country level. That's what will take through why we won't get formal introduction until 2027 across the EU.

What's particularly interesting about this product in the EU in particular, the number of tools that growers growing cereals in Europe have to control weeds is becoming more and more limited. So this is the first new product in a long time for cereal growers to help control the weeds in their fields. And if you look at some pictures of what a typical cereals field looks like in Europe, it's hard to see the cereals for the weeds. So it's a tremendous opportunity for yield improvement for cereal growers in Europe.

So much so that while we have no control over this, and I want to be very clear about that, we do have certain -- in certain European Union countries right now, there are farmers petitioning for emergency use exemptions that would allow them to utilize Isoflex-based products before the products are formally registered. That would be upside for us in '26 if that were to occur. We don't control that. We don't influence that. But we are ready if there is an opportunity there. We would be glad to help growers out in Europe and give them a better tool and a new tool to help control weeds and cereals.

Great. And then the third herbicide, Rimisoxafen, first registration in '28. Again, what's the excitement about that one?

So my colleague, Curt, who's with us today, who knows that I have probably irrational excitement about this one. But Rimisoxafen is -- it's a really unique herbicide, new to the world. When we talk about modes of action in terms of the way that herbicide attacks a weed in terms of biological processes, it is not only a new mode of action, it's actually 2 new modes of action. It attacks 2 different biological pathways in the plant that have never been seen in the world before.

And anybody who pays attention at all to the herbicide space knows that there's growing challenges with resistance that builds up in plants from having been exposed year after year after year to herbicides like glyphosate or 2,4-D or dicamba. And what Rimisoxafen will do is give growers a new tool to control really difficult weeds that aren't easily controlled by most of the available technology on the market today.

And it's particularly useful with some resistant weeds like Palmer amaranth, which is a highly, very fast reproducing weed that can really damage crops very rapidly. And the number of tools on the marketplace that are out there that can help control that is getting really, really small. So this is a big one for corn and soy in the Americas. This is one we're super, super excited about. And it is because of the degree of novelty and technical innovation that's involved in this product. This one is a big one. Again, it won't be Rynaxypyr, but all 4 of these products, we think, are in the $400 million to $600 million kind of range for peak sales. This is one that could be at the higher end of that.

Okay. And then the last one is a fungicide, fluindapyr. You've had launches in the U.S., Brazil and Argentina. Any more launches coming? And what do you think makes that one special?

So fluindapyr is a fungicide. It's good for a number of crops, but particularly soybeans. It does -- it's one of many products that can help control soy -- Asian soybean rust, but also works in corn on some -- particularly in some diseases that are becoming very relevant in the U.S. and in the Central U.S., in particular, tar spot and southern rust, where there are very limited tools to control. And certainly, there are diseases that you don't want to get into your field and there's some preventative value to this as well.

Fluindapyr, as you noted, has been registered in a number of countries. We've got most of the registrations, if not all, that we're going to go after. We're really in the ramp-up phase. And that's a product where we are seeing very substantial year-on-year growth. And it's a great example of where we're using partnerships to help accelerate that growth. Last year, we entered into a partnership with Corteva, where we provide a formulated product to them that they market directly to their customers, allowing us to more rapidly gain adoption in the United States. So a win-win for both companies. And we are seeing very, very good growth there. So fluidapyr, I'd say, is furthest along in its commercialization, but a lot more room to continue growing.

Okay. And then just maybe your quick thoughts on how the ramp-up is for these 4 in 2026. And then the goal for 2030, I would assume that's heavily Dodhylex -- X, whatever, I'm sorry. Dodhylex and then Isoflex. Or is it...

Yes. So I think of it build this way. Right now, fluindapyr largely registered. Isoflex still gaining momentum and getting key European registrations to come in 2027. It's a really big introduction. Dodhylex just starts getting commercially introduced in '27, Rimisoxafen first registrations in 2028. So they build in that order.

We did about $200 million in sales across the 2 that are currently commercial. Isoflex and fluindapyr last year. We expect those 2 to represent between $300 million and $400 million in sales this year, building to [ $828 million ]. And then as you noted, by mid-2030 is up to $2 billion in peak sales here. The gating condition really is getting the registrations.

And there's always a little bit of timing risk there, but we feel pretty good about our line of sight on registrations. So we think there's a pretty good trajectory here to see that really strong accelerating growth from these active -- these new active ingredients.

Great. Sort of the second area of the turnaround is the balance sheet. You recently said that there is licensing potential. I wasn't -- I don't remember if it was one of these 4 or one of your other molecules, but can you maybe walk through some of that license potential as part of the $1 billion debt paydown potential? And I think you recently said you've chosen a partner for that and that you will have an update today, at some point.

Yes. So one of our 4 big priorities for this year is really shoring up the balance sheet. And we set a goal to pay down $1 billion of debt. At our last call, we sketched out where we have in currently active negotiations about $700 million in transactions. That included the India transaction, which has been signed for $250 million for the sale of our India business. That will close sometime before end of the year. But that's a piece of it.

The next largest and the topic that you're raising here is around active ingredient licensing. Active ingredient licensing is something that's very common in our industry. Again, the idea being that none of us are big enough on our own necessarily to maximize the penetration of a product as rapidly as possible on our own.

And particularly, FMC is the smallest of the 5 innovative -- innovation-led crop protection chemical businesses. There's a significant benefit from us from gaining route to market through our peer companies. We also have some very special molecules in our active ingredient pipeline. And certainly, the 4 we just talked through, the active -- the discussion that is very close to completion is about one of those molecules.

And it is an opportunity to work with a partner whose route to markets are very complementary to ours and will allow us to, quite honestly, expand and accelerate the value of that molecule such that there's upside beyond what we just talked about in terms of peak market value potential for that by having that additional route to market. That deal is imminent.

I would say one word to you in terms of the process, lawyers. No, all joking aside. These are complicated transactions. When we say licensing, we're understating what the actual transaction is. It's a commercial agreement where we will supply active ingredient to the partner, and they will formulate and market products based on that active ingredient.

To be able to do so, they need a license to our intellectual property because it's patented active ingredient to be able to legally sell that. They'll also need access to our registration data. Those have significant value. And while we do these kinds of partnerships in normal course, I mentioned earlier, the partnership that we have with Corteva in the U.S. for fluindapyr, right? This is a very normal part of what we do.

What is different about this one is that it also will come with a substantial upfront payment. And that's in part because of the nature of the supply that's involved and because of how special and differentiated this technology really is. So we're very excited about the prospects. I regret that I'm not able to be more specific today. I would just repeat the word imminent, and we look forward to being able to share more details in the near future.

Got it. Great. Just a reminder for the folks on the webcast, I have on Bloomberg. If anybody wants to ask a question, just let me know, same in the field here. In terms of the $1 billion, so you got $255 million for India. I thought you had this other stuff that gets you to $425 million. That's already done.

Yes. So let's separate the 2 pieces. Yes. So India, we carry on our balance sheet as a held-for-sale asset at a value of $425 million.

I see.

That represents both the sale price for the transaction $425 million, and the cash that we expect that business to generate while we continue to operate it until it closes. So that cash will flow through free cash flow is embedded in our free cash flow guidance. So relative to the debt paydown target, it's $250 million to $255 million that is...

And then to get to $700 million, it's a combination of the licensing and real estate deals.

Licensing, real estate and a collection of a number of smaller.

Smaller things. Okay. Great. Why don't we move to the diamides. They're off patent. Maybe just frame up where are we now in sales in 2025? And what's sort of the plan to...

Yes. So let's separate the 2 because I think we've long sort of oversimplified by referring to the diamides. It's really 2 different molecules, Rynaxypyr and Cyazypyr. Rynaxypyr, the final patents expired on Rynaxypyr at the end of 2025 as well as the remaining data protections.

Cyazypyr is still under significant data protection in most of its key markets through much of the rest of the decade. So we still consider and report Cyazypyr as a part of our growth portfolio because there's still more growth to come from there and it's still protected, although not necessarily by composition of matter patents, but by other protections.

Let's focus a little more on Rynaxypyr, where really all of those protections have fallen away in the last year. That business is stabilizing. It's down this year, again, primarily because of a reduction in our partner sales. So not dissimilar to what we're doing now with other new active ingredients.

When Rynaxypyr was introduced to the market, the innovator, the company we bought that molecule from entered into some licensing agreements and partnership agreements with a couple of other major partners. We took on those agreements when we bought that business and continue to operate that. That business, over time, it became a cost-plus contract structure. And as we prepared for the post-patent transition, it became clear to us that the supply chain we had in place was not going to be competitive in cost with generic entrants.

So we took some very significant write-downs in 2024 and '25 to change that manufacturing supply chain and radically reduce the cost of manufacturing of Rynaxypyr. The good news is that prepares us very well for protecting and growing the profitability and sales of our branded Rynaxypyr business as we go through this transition.

But as for the partner business, it created significant headwind, right, because they benefited from those changes directly. So I would say the silver lining in what has been multiyears of headwind and particularly the last 2 years, we've talked a lot about the drag from decline year-on-year in the partner Rynaxypyr business is, it's becoming a small enough business now.

We'll do something on the order of $100 million in sales to partners of Rynaxypyr this year that even if it drops another meaningful chunk next year, it's no longer as material to our results. So it's really going to become -- I don't -- I wouldn't expect that next year, we're going to be talking a lot about partner Rynaxypyr.

The branded Rynaxypyr piece is where there's more interesting stuff going on. The partner business sort of fades away in obsolescence as we move into the post-patent period. Branded business, there's a tremendous opportunity for us to maintain value in the branded business. We have a cost position that is comparable to quality generics. So at the low end and less differentiated simple formulations of Rynaxypyr, we can be cost competitive.

We still command a brand -- a premium for branding and quality and service, but we have to be conscious and reflective of what competitive pricing is. But we're increasingly shifting our mix for Rynaxypyr to value-added formulations, either mixtures with other active ingredients to give you improved test coverage or help address resistance issues. Rynaxypyr has been out for a long time. A lot of bugs have been exposed to Rynaxypyr over time and have evolved to develop some resistance to the molecule.

So one of the most effective techniques has been to pair it up with another molecule to help make sure you maintain effective control of pests. We have the deepest knowledge of anyone in the world on how to do that because we've been managing that molecule for its life cycle. So we are seeing and a big part of our strategy is to shift our mix increasingly to differentiated mixtures, to higher concentration formulations to differentiated novel delivery methods.

But at the same time, having a cost position that allows us to compete with lower value, less differentiated formulations with generic producers. We think what that results in is flattish profit dollars for Rynaxypyr. Contribution, I think, is the best way to think about it.

I don't really do a profit at the product level in the same way, with growing sales coming out of '26 to '27, because we see higher volume growth despite lower pricing as Rynaxypyr-based products become more accessible. The limitation, even though Rynaxypyr is a massive molecule, one of the top 5 all-time molecules in the ag industry, it never got as big as it could because it was too expensive to use in a lot of lower value crop applications.

So at a different cost point, you can see significant elasticity of demand. And we have seen this in countries like China and in Turkey, where in the years after patent expiration, the volume in markets of Chlorantraniliprole, the generic form of Rynaxypyr, tripled as the price point shifted and you could move into new applications.

So our strategy is to take advantage of both that volume growth with a very different cost position that's competitive with quality generics. And at the same time, shift the mix to where we are emphasizing more value-added differentiated mixtures that allow us to earn a higher return, higher margin than just competing on a cost basis with simple generics.

Right. Great. Shifting gears real quick. You're guiding to EBITDA $670 million, $730 million for the year, sales $3.60 billion, $3.80 billion. Maybe just kind of your thoughts on the crop protection market overall. The Iran war clearly has created soaring fertilizer costs. This is not good for farmers. I think most of your orders are set for crop protection this for the quarter and maybe a little bit needs to be added to your order book for Brazil. But how do you think the war and the increase in fertilizers, which they can't skip per se, is going to affect your industry?

Look, I think it's -- this has been a challenging couple of years for the crop protection industry in general. Lots of deflationary impacts, pretty aggressive generic competition, particularly coming out of China following a restart of the industry after it was shut down for a couple of during COVID.

The Iran war has a bunch of tentacles to it, right? The immediate symptom everyone is seeing is around fertilizers. And yes, fertilizer price inflation does put pressure on farmer economics and that doesn't help in terms of where we are with the crop protection business. The longer this situation goes on in Iran, the more inflationary effects, I think, are going to be felt over a broader set of inputs to where we are -- crop protection chemicals, the intermediates used to make them are far enough downstream from oil that we're not seeing it just yet, but it's coming.

And the longer this disruption goes on, this conflict goes on, you're going to start seeing inflation and inputs for crop chemicals. And we have seen this movie before. In '21 and '22, when we had massive supply disruptions, principally in China because of COVID controls, we saw significant cost inflation. 2022, FMC had over $450 million of cost inflation in our P&L in 1 year, right? What happened? We raised prices.

So while that's not a great thing, particularly since there's pressure on farmer profitability right now, I do think there are pretty well observed interplays between energy prices and crop prices over time, not on a daily basis, but if there's sustained higher oil price, I would expect to see corn and soybeans trade up. Higher revenues for growers help solve a lot of problems, but it doesn't relieve all pressure, but will help.

But as if these pressures continue to build and show up in cost increases that hit the inputs that are direct into crop protection chemistry, I would expect you're going to see price movement. And that, I think, can help break some of both the actual reality in the industry and some of the sentiment around the industry.

Sentiment around the industry, I think, is very negative right now because of pricing trends and generic pressures. You're seeing a wave of new innovation coming. I think we're at the leading edge of that with the new active ingredients we just talked about. Some of our peer companies have some interesting technology coming a little later, but coming here as well. I think that's a part of the shift that will come in terms of sentiment around the industry.

And I think moving away from this deflationary environment, even though I have no wish to see conflict further extended, the damage is already done. There is going to be inflation. It is going to come through. I think that will help shift the pricing dynamic. It may not lead to restoring prices to where they were, but it may turn the tide from talking about continued easing and erosion of pricing to back to prices moving back up a little bit.

So that can help change, I think, both sentiment and change the tone and discussions. It's all going to be pressed on crop prices moving up so that it allows room in the farmer's P&L to allow them to make a profit and to be able to support it. But I think there's a pretty good logical connection.

A quick follow-up from folks on the webcast asking on the pricing, how do you sort of manage that with the potential for more generics that might be used as farmers are a little bit stressed?

Yes. Look, it's a double-edged sword. A lot of generics live on very razor thin margins. And both -- it's not just pricing, it's availability. And we are already seeing some reports of easing of pricing and reduced availability from the lowest to low-end generics.

Anecdotal, not yet -- not really hard data yet, but we are seeing some decent data -- some decent anecdotal evidence of this. I think that's really how this starts to switch is that it's going to start taking the folks who are really living on the knife's edge and pushing them over. And then people who have enough margin to buffer and be able to continue operating are going to have to raise price to offset that cost over time.

Okay. And then just on Brazil, I think you recently said that the order book looks good or maybe even better. Any thoughts on Brazil because that's a big chunk of your outlook for this year.

Yes. Look, certainly, we have a very heavily back-end-weighted, second-half-weighted outlook for the year, right? As you described, the $700 million in EBITDA at the midpoint, $488 million of that, and our guidance midpoint is coming in the second half. And certainly, Brazil is a key contributor to that.

For us, Brazil is really driven by growth in the new active ingredients and repositioning of our core portfolio of products. And it's enabled by a shift in go-to-market to more emphasis on the direct sales to large growers channel. complementing going through co-ops and through traditional distribution and retail.

So we've made some public comments recently, both on the earnings call and another conference recently around the order book and specifically the order book for sales to these direct customers in Brazil, where we've been -- we started a new -- that route to market last year, and we're ramping up. This year, we've got a sales force that's been in the field for the full year. And we are seeing significantly higher orders.

More than 50% of the orders that we need to hit our plan for the year for direct customers, we already have in hand. Those orders that will be fulfilled in Q3 and Q4, but they're being negotiated now, and that number is continuing to climb. We'll update that number more precisely at the July call, but we're above 50% and continue to build very good momentum there. And that helps increase our confidence in the ability to deliver heavily out of Brazil in the second half.

Got it. Yes, 2 follow-up questions in 2 minutes. So wrap it up, real quickly. Question is like it sounds like inflation is coming. Are you going to get pricing out to offset that for you? Or how do you see that?

I think we're going to be -- as we did the last time, we're going to be very thoughtful about how we approach pricing that as inflation starts to the P&L, and remember, we turn inventory about twice a year. So it's not a quick hit. It will take time before that starts showing up. We'll start having conversations with customers and start moving prices.

Then the last question was you built this up to $700 million. How do we get to $1 billion in terms of debt reduction? And then any conversations with the rating agencies and how they think about your liquidity? Maybe you have some from refinancing.

Yes. So very quickly, we get from $700 million to $1 billion by selling additional product lines and businesses. We have prioritized things that had limited to no near-term EBIT impact. So India wasn't making any money for us. So we get proceeds with no diminishment of our future earnings capability. Licensing actually grows our future earnings capability, pull some of it forward.

The real estate transactions such that we may actually get an operating benefit when we're done, we'll see. The things that would next need to be done start to have more difficult trade-offs where you are giving up some of your near-term EBITDA for debt reduction. And that's the reason we sequenced it this way, we'll continue to work it.

We feel very good about liquidity. We had a very well-received bond offering 2 weeks ago, raised $1.2 billion. We went out initially for $750 million. We'll be using that to pay off the maturity in October as well as to bring down particularly revolver borrowings at this point. But we feel very comfortable about liquidity, very favorable response from the ratings agencies there.

And from a credit perspective, the next real maturity we have is in 2029. So we feel very good about the -- from a debt perspective. We would prefer to be an investment-grade metrics. That's going to take a few years to get back. That's the destination. But from where we are today with the debt reduction that we're going to do this year and the work that we've done to improve the liquidity and with the offering and work we did with the revolver earlier this year, we feel very comfortable where we are with the balance sheet right now.

And just one last quick one, maybe, 2027, you talked about double-digit growth, feeling better about that potential?

Yes. I think we are feeling better about that potential. I think the momentum for the new products in particular. And look, we need to finish the restructuring of our manufacturing footprint. We know how to do that. We're good at that. So we feel very confident about starting. We'll get some of those benefits in '27, bigger in '28, but we will get some benefit in '27. We know how to do that. We'll get it executed.

Thank you, Andrew. Appreciate it.

Thanks, Mike.

All right. Let's go on to our next session, kicking off the afternoon with FMC, a very large global producer of crop chemical, crop protection chemicals and distributor of same. We're joined here by Pierre Brondeau, the CEO; Andrew Sandifer, CFO. Gentlemen, it's interesting times we live in, interesting times for FMC as well.

Maybe you could kick off and Pierre and Andrew give us a bit of a state of the union for FMC.

Sure. This time, the company is, as we say, '26 is a critical year. We've defined a strategic plan. which is based on 4 pillars for the company in terms of paying down debt, restructuring and manufacturing footprint post [indiscernible] strategy and new technology and of course, the financing of the company. And while we do that at the same time, the Board has asked to look at strategic options, including the sale of the company, but not limited to the sale of the company. So that's about where we are, very high focus on our 2026 strategic plan, but at the same time, looking at other options.

Okay. Let's talk about some of the latest news. So you sold the India business, you've been trying to sell it for a little while. You sold it for $250 million against the $1 billion you're trying to deleverage. Maybe give a bit of an update on that and how the working capital works in that deal.

Sure. Just to make sure we're very clear. $255 million is the number we're expecting. We're marked at $425 million today. $425 million corresponds to the $255 million corresponding to the sale of the business and the rest representing the cash collection we will be doing in between now and the day we close on the deal, mostly selling from inventory or collecting accounts receivable. So that's -- and if you look at the forecast we have for cash collection plus the amount we get, you get to this number of $425 million.

And you've really put out a plan this year of trying to deleverage by $1 billion. We're going to get into the fundamentals in a second, but I think it's very topical. You've been looking at a plan to try to deleverage this year by about $1 billion. This will be $250 million of the $1 billion, correct?

Correct.

And maybe you can walk through your plans, some of the things you've got on the go here to maybe get close to $1 billion.

Sure. What I talked at the earnings call was right now, we have line of sight for $700 million. Why do I call line of sight? It's the amount for which we are currently in negotiation. So as you say, $255 million will be the India deal. We are getting very close to signing a licensing agreement for one of the molecule with an upfront payment. That upfront payment will go to paying down debt. And then it's a commercial licensing deal, and then we'll be supplying the product to a partner.

We will also pay royalty. That's the bucket #2. Bucket #3, and I'm giving those in order of size. Bucket #3 is real estate deals. I'm talking here 9-digit deals. Those are big deals, very large site, which we would sell to developers, and we would only use through a leaseback, the part which we are using. That takes us pretty close to the $700 million. And then we need to get to $700 million, we have a series of molecule or nonstrategic businesses we are currently in negotiation for. That's what we negotiate. Then we have a list of other things. We would be potentially selling, but those are not yet in negotiation. We started to focus on the one which had the longest lead time.

The sale leaseback deals, so all of this that you're talking about, what would kind of be the earnings impact going forward?

Well, the India, we know it was that we've talked about it, very small, very small earnings at the end. The licensing is very interesting because it increased the revenues. When you have a technology, which is a technology of quality, -- it's a very fragmented market. We are one of the largest crop chemical company, and we have a 7% market share. So what you do in our business, you find companies of quality, which have a complementary crop profile and it allows you to increase the market you can reach.

So licensing the molecule to a partner would be accretive to us and would increase sales and EBITDA in the future in addition to the onetime payment. The leaseback will have almost no impact because we'll sell, we'll get the revenues. And then we will lease back for part, but we will not have to do all of the maintenance of the entire site. Then the rest, the small molecules for business, that could have an EBITDA impact, but we're talking about very few tens of millions of dollars, so very minimum.

And on the licensing and the prepayment options for the molecule, I think you're working on a deal now for 1 molecule, correct?

Correct.

Any update on that?

Yes. We are almost through the finish line, I think we're...

Do you announce it now?

No. But I would say we're a couple of weeks from signing it. We have chosen the partner. We believe it's a quality partner. It's the right partner from the crop profile. We are in agreement on all of the financial terms. We are finishing to redact the -- what I would call the legal terms around the contract.

Redact, you said? or react?

Yes. And then we'll get to signature. So Andrew, a couple of weeks? What we think a couple of weeks.

Okay. Okay. Fair enough. I want to talk to you about -- let's get into the fundamentals of macro here. Are you seeing -- is FMC seeing a little bit of weakening in generic pressures? Like are you seeing this current conflict, has it raised the cost of production in places like China and India that maybe would lower the pressure a bit? Or is it too early to say?

So here is the way I would answer this question. I'm looking at Latin America and Brazil are today the place where you get the most information about generic behaviors because you're preparing for the big Q3, Q4. And especially for direct sales, you're getting a lot of those sales taking place in Q1, Q2. Today, I believe the pricing is leveling off. We are not seeing this constant spiral down of pricing. So there is a situation, I would say, which at least is stabilizing. Now maybe something more interesting for us. If you remember at the earnings call, which was 2 weeks ago, I said for direct sales for the second half of the year, we had 36% of the orders in hand for the second half of the year.

Surprisingly, we have 50% today. So within 2 weeks, we jumped from 36% to 50%. I've really been in a situation where on May 6, we had half of the sales -- direct sales we needed to make H2. The forecast we have right now seem to lead to a number of 65% to 70% of sales in hand by end of June to do H2 for direct sales and about 60% for overall sales. Those are very, very solid numbers. We have not seen those numbers in a long time. What could it be? It could be possibly the channel, which might be not as full as it used to be. But I believe it is also may be less generic pressure and farmers looking for more security of supply today, and that's why we're seeing this demand. So that's an indication. I cannot make a rule out of it, but as an indication and what we see today, I would say yes to your question.

Just to build on that to clarify, we're speaking specifically about the Brazil market.

Brazil, yes.

With the numbers, yes.

Yes. Those numbers are specifically for Brazil.

Is that with you with FMC holding your price ideas? Or have you raised prices in the last couple of weeks?

No, we've not raised prices. Our price -- we've kept our price stable. There are going to be a place in the world where we'll be selectively increasing price for some reason. But overall, in Latin America, we've kept our price flat. What we are looking at in terms of pricing before we make any decision in the impact is the impact of the Iran war. If that would be to last for a longer period of time, it would have an impact on pricing. And I think that's the time when we'll have a decision to be made to adjust pricing accordingly. So I don't want to start to do bits and pieces and some short-term action. I would rather wait to see where all -- where things are going to go and make a decision in the third quarter.

And it's interesting -- another interesting year for FMC has been on the loss of exclusivity as expected of CTPR, Rynaxypyr in China. What have you learned about that market post exclusivity? Or did the conflict here mess up the market. So you're not exactly sure how this market is developing, if that makes any sense.

Yes. I think the market in India hasn't changed much from a demand standpoint. For Rynaxypyr, the market in India has been challenged by something which has nothing to do with the war in Iran. It's because Rynaxypyr is being used a lot because of generic coming very early, there is very significant resistance to Rynaxypyr. So that's been one of the impediments to development of growth. I believe the war has an impact on overall generic pricing, including Rynaxypyr.

Okay. Let's talk about some more of your initiatives. You talked about wanting to outsource the manufacturing of some of your non-diamide core products and exiting some high-cost AI and formulation plants. Maybe talk about that.

Sure. Process is going as planned. I think it's a very heavy lift. It's a complex process because not only you have to exit plant, find a new home for your product, but you also have to rethink your registration. But it's a process which is mapped out. We do have the definition of what we've got to do. And I'm not expecting at this stage any surprise. I'm pretty certain, if not certain, that this process will be finished by the end of Q1 2027. It's going accordingly to plan for most of the product. We know where they will go. We know where we're going to get the resistance. heavy lift, but highly predictable.

Anything else in the -- no excuse me. The crop protection market, any other things that maybe people in the market are missing, like any observations you have this year in terms of material cost, demand, inventories, product switching?

No. I think if you put the -- if you put the war aside, there is -- the big change has been the Rynaxypyr running out of patents and generic coming into it. And up to now in the last couple of years, maybe I've seen the generic more active than I've ever seen. But this is leveling off right now. So it seems like we are in a period where we see more stability in the market and more predictability.

And you talk about Brazil, so you're seeing ordering pick up, which is great. It's also a weird market in Brazil, right, with credit problems, like it must be a very -- you have a new sales team that's what, a year or so in place. It must be -- you say predictable, but it must be difficult to predict actually, all these factors?

Yes, I'm going to say a few comments and I'll ask Andrew to complement. But we are very, very careful and specific to whom we sell in Brazil. We do not go with a broad brush. First of all, we do have a very strong focus on increasing our sales to crops and to direct sales to farmers. I mean those are our 2 #1 target. Then, of course, the distribution channel is very important to us. But there is companies we know are in situations where financially, we should not sell to them, and we don't. I don't know, Andrew, if you want to add anything.

Yes. I think as Pierre sketched, I mean, there's been a couple of major changes in the distribution channels in Brazil. Certainly, the rise in more direct sales is a big part of that, and we're able to do good credit analysis on large growers and understand their position and get comfortable with credit risk there. In the more traditional distribution retail channel, there were several attempts to roll up that market. Those have failed.

Two private equity-backed roll-ups have essentially gone into financial -- different degrees of financial restructuring. We're in a situation with them that we're managing through the less overexposure, but we're on basically selling only on cash terms going forward. So not taking on any further risk with them and a few other larger distribution businesses that have similar profile. So I think that as Pierre said, I think the key is just being very disciplined about where we're extending credit and shifting the mix to customers that are inherently like co-ops, just the nature of their structure globally in Brazil. They're more inherently creditworthy.

Let's talk about the pipeline a bit. So you've got some new AIs, you've been pushing them out. They're growing. Talk about what's performing better than expected, maybe what's been more challenged than expected?

I think it's progressing as well as we're expecting. I mean the critical issues when issues you would be facing when you're launching molecules like that is forecasting the timing, not because of the demand from the grower standpoint. Demand is here. The product are high-quality product, they are patented, they have new mode of action. The problem is the speed at which you get the registration. Give you an example, Isoflex, we got the registration for the active at the level of the EU. But then you have to take the formulation you will be selling and you need to get the registration in each of the country in the EU where you will be selling. We're expecting that in the first half of 2027. But you know what, you missed that and then you miss the European season. So that's where the predictability is difficult. But so far, it's performing as we would expect.

Okay. And then also biologicals, you did a good acquisition a few years ago. That's also one of your growth engines. Maybe talk about that.

Sure. At biological, we have, I would say, 2 portfolio. We have a regular biological portfolio, which is growing, 10% to 15% a year. And then we have pheromones, which is viewed more as a research. It's still on negative earnings. We had that first full-size sales in Brazil in the first quarter. Results were pretty good. We had yield improvement according to the farmers where we sold the product by 5% to 15%. And we had a decrease, and I think it was caterpillar by 75%. So I would say the results are encouraging, but it's a very early stage still.

What gets you most excited about the pipeline? You pick one product, one application?

For biological, I would say...

Anything in the pipeline?

Anything in the pipeline for me, it's -- now it's a tough question because I love our 4 new molecules. I think we have a -- here is the thing why I can't dissociate them. The 4 new molecules have 3 herbicide and 1 fungicide. Two of them have new mode of action. One has a dual mode of action. But what is very important, not only they are new products with very high efficacy, they will change the portfolio of the company.

Today, we are mostly an insecticide and we're an insecticide company. Insecticides are the most difficult to predict. In 2, 3, 4 years, we'll be a company which will be 50% herbicide, 25% fungicide, 25% insecticide, it's a much, much better portfolio. And we'll have 50% of the portfolio of the company, which will be a growth portfolio. So for me, if you ask me what I'm the most excited about is those 4 molecules. Now for all of this to happen, we cannot dissociate that from the work we're doing on the manufacturing footprint to get our core business back to market growth instead of the erosion we've seen in the past. So those are the 2 critical things which need to happen next -- in the years to come.

Okay. So that's what I want to start talking about is, we've seen core contract a bit for different reasons. We've seen the growth part of the portfolio, be kind of flattish. What -- in each part core, what's the main thing you got to see happen to be able to get to at least flat and for growth? What's the main thing you got to see happen to be able to get into growth? Did I say it right?

I think the core portfolio, if we talk about the non-diamide portfolio because we've talked about our next IPM, but non-diamide core portfolio, we have one core competencies, which we always have from the early days of FMC is formulation technologies. The problem we have is we are not capable of deploying a formulation technology because the active ingredients we are using for that are too expensive. Overall, we are manufacturing at a cost which is not competitive on the market and prevent us to have this core competency in place.

I am convinced that by the middle of 2027, once we have a core portfolio, competitive with generics on cost, and then we're able to deploy our formulation technology, we will grow faster than the market. I mean if the market grow 2%, 3%, we should be able to expect 3%, 4% growth for this part. And that's very critical because you can do whatever you want. When half of your company is going down 4% or 5% a year, it doesn't work. We need to get that back to a 4% growth rate, and I believe we're going to start to see that in '27.

Do you think you're reversing your trough, your FMC trough this year? Or might it be in '27?

No. This year.

This year.

This year is a year where we need to execute on the 4 pillars of the strategy and reset the financing of the company. And I believe if we execute all of these, we'll be in the position in '27 to see growth.

And I think you talked about the resetting the financing. Maybe you could give an update -- I think you said that you can give an update on the credit amendments -- credit amendments you made the other month?

Yes. I think certainly on the financing side, we did update our revolving credit agreement in April. A bit of a logical continuation of an amendment we made in December, whereas as we shifted to noninvestment-grade rated borrowing, putting up collateral against the revolving credit agreement. In December, we've had an IP-based collateral structure that was meant to be temporary. We have a pretty complex international tax structure. It took a while to get all of the legal documentation in place to put more traditional collateral in place.

So now with this April amendment, we have $6 billion of collateral in terms of direct liens and another $3 billion in terms of pledges of subsidiary assets, et cetera, that back our $2 billion revolving credit facility. It's just literally the legal work it took to get that collateral package in place, took us well into the beginning of April. We'll use that same collateral package to support an anticipated bond offering here in the second quarter, where we do expect to go to the market with a secured high-yield bond to both address the maturity that we have of $500 million in notes that mature in October. But also to the extent we're able to place it, we would like to term out some of the revolver debt and bring down short-term borrowings through that offering.

Okay, Pierre. So you're -- Andrew, you're doing a lot of thinking about what FMC is and what it's going to be in the future and what do you need to partner with and sell off and shore up the balance sheet and then think about what happens after that. I think you're doing a process also to figure out, as part of your review, should FMC still be a stand-alone company, right? That's fair?

That's correct.

What you're -- a few months into this. What are sort of your initial observations?

So for the company employees, we are all highly focusing on the 2026 operational plan we discussed. Now with the Board, we decided to also look at strategic options, including the sale of the company. This process started in February. We had over 20 companies who we are talking with. That has been decreasing. We had a few propositions, diverse proposition. So there were a range of options, which made it to our Board. We had a Board meeting 2 weeks ago, just before the earnings call. We've looked at those options, took a position on each of them with our Board, gave that back to the banks who went back to the companies and the discussions are ongoing.

Now here is what I think. That's my point of view, okay? It's only me thinking. But my view is that June, July, certainly no later that the earnings call for Q2, which will be the end of July, we should have a decision to go one way or the other, which means to either go with a strategic option with a partner, selling, merging, whatever it is or carry on with the strategic plan as we have defined. I think we are advanced enough in the discussion. We will not need more than a couple of months to make decisions. Plus, I believe for an organization, 5, 6 months with the uncertainty is as much as an organization can take and stay focused on the operating plan. So that's the target. The Board is completely involved. We are involved as a management team. And I think we'll get with a very clear answer at least at the earnings call for Q2 at the end of July and move on from this point.

Status quo is pretty clear. Selling the company is pretty clear. You talk about the middle, which was like some sort of partnerships. Can you conceptually talk about what you're talking about?

When I mean partnership, it was -- when you look at strategic options, it goes from equity injected in the company, to merger with company, to selling the company. What I call partnership, [indiscernible] merger. So those are -- because there is always a full range strategic options.

Okay. Now you see the kind of landscape out there like I do, right? You see Corteva separating into CP and Seed, SpinCo or pure plays. You see BASF splitting off Crop Science, I think, second half of '27, you see maybe Bayer Crop Science splitting off in the next couple of years. So the whole landscape is going to change. I don't know what that means fundamentally exactly, but when you think of that landscape, regardless of what you do, we have to see that, that landscape is going to be different in 3 years, fair?

Correct?

How do you think about all that when you think about your 2 or 3 options here?

Well, here is what I think. If we carry on with a strategic plan, and we do not have one of the options, which is in front of us happening, I would not be surprised when you would have multiple companies, stand-alone independent crop protection to see again some merger and acquisition taking place. I think the industry most likely will be prone for acquisition. Size matter, size matter, especially for technology companies. So if things don't happen now, they will happen in 2 or 3 years, I believe, when all of what you described is in place.

You're one of a couple of peers that has that view that consolidation "has to" happen in CP. Can you elaborate sort of why it has to happen? You talked about size matters. Anything you want to add to that? Why -- like what's going in the industry right now? And you kind of described some of it today. We have what is so specific industry now that is leading to consolidation that should lead to consolidation.

I think it's quite basic. If you're a technology company, you need to be able to manufacture a generic pricing while being able to support all the marketing and research spending for new technology. The smaller you are, the more difficult to bring one molecule to market, costs $300 million in about 12 years. And usually, what you like to do is a new molecule every year or other year. So there is a significant technology spending if you want to bring the type of technology growers need. At the same time, you need to have a manufacturing network, allowing you to compete with the lowest cost producer. So that's what I believe size matter.

So Pierre, would you agree in your career, the best deal you ever did was being able to buy the diamides and the R&D lab from DuPont. Would you agree that was your best deal?

Definitely.

And that deal came because went down to all the ag chem mergers, I believe, and you can change my words if you want, but the regulator said, I don't want to lose an innovator. I don't -- I want to have multiple players that are doing stuff. So if this is true and you could see deals, you get worried that EU, U.S. regulators, governments don't want to lose innovators, don't want to lose players.

Yes, it's definitely a possibility. That being said, I think there is more and more of a realization that technology is expensive. And the value of what we call technology company with -- will diminish if those companies are too small. And if you really want to bring innovation, you need to have a minimum size to spend multi-hundred million dollars in R&D. So you're correct, it could be a position some legislative bodies would take, but I think things will be changing, and there will be more receptivity to merger in the future of companies.

The deals have to be constructed, I guess, knowing that landscape, does that make sense?

Definitely.

Where you'd have to keep, yes, innovation, make sure there's not some consolidation in innovation. It's hard to explain, but yes.

What you have to be able to demonstrate is that a merger will create more innovation capability than not doing it. If you cannot demonstrate that, if you do it for cost synergy purely, that will not work.

In merger scenario, do you see FMC as being the main innovator leader in that merger? Or would you be -- what's the right word, secondary?

I can't answer that because I don't know if we will be part of those mergers. I don't know when it will be happening. I don't know what will be the status of our technology road map at that time. I think we do have, especially for our size, a very rich new technology portfolio in molecule we are putting on the market today as well as what we have in our development pipeline. How will that impact the role we might or might not play years from now when the industry will possibly change, it's very hard to say.

Do you think some value come if FMC was partnered or merged with like a seed player? Was that...

I don't know -- my friend, Chuck just broke up the company. So if he's right, I should not, and I respect him. So...

But 10 years ago -- 10 year ago, everybody was bundling and now they're not.

Yes. Listen, I'm just going to say Chuck is a good friend.

I wasn't asking about Corteva. I wasn't even asking...

He is a smart man, and I have to say if he does that, there is a good reason. So I'm not going to plan to go the other way.

I had no -- I was actually asking in general. I'm just wondering if you're talking about mergers. So I'm trying to figure out sort of like some of the different arrangements that have pitched you, the merging of you and seeds or you and fertilizer, I'm being silly now, but you know what I mean.

No, no, it's not being silly. In all seriousness, if -- to answer your question seriously, when I talk merger, I would take merger within the same market segment. I would talk about crop protection company merging with crop protection company. I think that creates more synergies in terms of technology capability rather than the seed merging with a crop chemical where you have way less of a technology synergy.

Because the synergy are going to be on the back end, right? It's going to be the manufacturing and...

Definitely. Manufacturing and technology road map, that's where you have the benefit. So I think seed company might merge with seeds company, crop chemical company might merge with crop chemical company. I see that much more than I would see an expansion of the product line.

And in the case that you hopefully stay stand-alone, talk about sort of how do you -- as you traverse the trough this year and move into your pipeline and get past the Rynaxypyr come off exclusivity and redo the manufacturing base, Talk about how you would see the company -- think of company culture and sort of -- an optimization and moving ahead back to growth? Like how would you see that playing out?

I think the company is poised for growth. I think a lot of what we are facing, there is, of course, the market, but there are things we've done to ourselves. We could have avoided to do, but this company culturally is more a growth company than a cost-watching company. And I think even if we know how to decrease our cost, we know how to do cost synergies, I think we are poised for growth. That's what people want. They can't wait. They can't wait to -- they understand the importance of '26 and what we have to do. But everybody, I can tell you when I talk to my employees, they are all looking '27, '28, '29, where we are back to do what we know how to do business.

Is there a case then that if that's what you can do, you can improve things, start getting growth, meaning going status quo, waiting a few years, next administration, no conflict in around, you're talking about you want to have a path by July or by August at the latest. Is there a reason to maybe defer status quo, try and improve the business and try to -- and then maybe with the goal of going back to the market in 3 years when you're better. Does that make sense?

Makes sense. But really, I think that for the 3, 4, 5 years, we have what we need to grow, flourish, be profitable with what we have in our pipeline and our structure. So there is absolutely no urgency if, as you say, we passed the month of August, it would not be to position ourselves for selling the company 2 years down the road. It could happen. Anything could happen, but it would be to carry on because the road map we have could create a very, very attractive company, which could be very capable to keep on growing by itself in 30 and past 30s.

It'd be more like you're not getting the value you want this summer, the spring or summer. So the path to status quo is the way to go. And maybe that's -- you just stay there forever or maybe there's always possibility you look for a deal in 3 years. That's all I'm saying.

That's...

The value is not there. And this year, I'm making this up, I have no idea, right? But yes.

That's the case.

Okay. 2 minutes we have left, Pierre, Andrew, what do you think investors are missing the most about FMC these days?

The problem FMC has is, to say the least, the last 3 or 4 years results were not spectacular. Consequently, when you're in a situation like this one, the normal reaction of investors, and I would do exactly the same thing, is to look at what will this company do in the next 6 to 12 months because we've got to prove what we say we're going to do. So maybe what investors are missing because of that situation is the potential I described before, if we succeed with our delivery of the 2026 plan as designed, start back to growth in '27, past '27, we are going to have an incredible portfolio.

I mean, very balanced new technology, more than 50% of the portfolio of the company will be growth. By 2035, patented molecule with new mode of action. I mean it's going to be a company which will be much, much better than what the company was in '18, '19 post the DuPont acquisition because of the breadth of the product. The problem is until we have proven in '26 that we can do what we say we would do, people will have a hard time looking beyond that. So first, let's regain the credibility. Let's do what we say we're going to do. And then we'll move on to the next step and maybe people will have more time and belief to look into the future of this company.

Thanks a lot, guys. Appreciate it.

Thank you.

Ladies and gentlemen, thank you for joining us, and welcome to the First 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.

Good morning, and welcome to FMC Corporation's 2026 First 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 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, CTPR means Chlorantraniliprole, 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 we may refer during today's conference call are provided on our website.

With that, I will now turn the call over to Pierre.

Thank you, Curt, and good morning, everyone. During the first quarter, we delivered results that exceeded the midpoint of our guidance range. In addition, we made good progress on our 2026 operational priorities, which are listed on Slide 3. These are strengthening the balance sheet through targeted debt reduction of approximately $1 billion, improving the competitiveness of our core portfolio, managing the post-patent transition for Rynaxypyr and supporting sales growth of new active ingredients, including Isoflex active, fluindapyr and Dodhylex active.

I will start by providing an update on the progress of these 4 operational priorities, beginning with the debt reduction. We are continuing to target approximately $1 billion of debt paydown during 2026. The sale of our India commercial business continues to progress very well. We are in late stages with several potential buyers and expect to sign a definitive agreement in May. In addition, we are in advanced discussions with multiple potential partners regarding licensing of one of our new active ingredients, which we expect will include an upfront payment. We anticipate concluding talks in the coming weeks.

The remainder of the debt paydown is expected to come from proceeds from the sale of noncore assets, including potential sales of noncore businesses and/or molecules as well as multiple sizable real estate opportunities, some of which are in advanced negotiations.

Next, FMC continues to take decisive action to optimize our manufacturing cost structure and rebuild the competitiveness of a non-diamide core portfolio in a market increasingly impacted by low-cost generic competitors. We intend to shift production from high-cost plants to lower-cost sources in Asia. We expect this transition will be completed by Q1 2027 and that will result in a more competitive core portfolio.

Additionally, in advance of the sale of our India commercial business, we have already completed the restructuring in Asia to account for the reduced size of the business. We continue to look for opportunities to further optimize our cost structure across the company in 2026.

Regarding Rynaxypyr, we continue to advance our post-patent strategy with a clear focus, driving sales growth while keeping overall branded earnings that are flat. Our strategy is progressing, and we are seeing early signals that give us confidence. For example, we are observing positive reactions to a price repositioning with strong volume growth for high load formulations and differentiated mixtures. In addition, we are already seeing some small early share gains from other classes of insecticides.

On the earnings side, ongoing cost improvements are supporting margin that are in line with our expectations. We continue to pursue additional opportunities for cost reduction, which will further improve the competitiveness of the Rynaxypyr business. We are still in the early stage of a post-patent Rynaxypyr market and believe that some customers are adopting a wait-and-see approach as they gauge the availability and efficacy of CTPR generic offerings. Our strategy will play out over the coming quarters as we implement our plan.

And finally, regarding our new active ingredients, we are seeing solid growth. Sales of these products doubled year-over-year in the first quarter, highlighting the increasing demand from growers. The growth of this product is expected to build momentum, driven in part by new launches and additional registration. For example, we recently received regulatory approval for Isoflex active in the EU. This is a significant achievement as it is the first new herbicide approved in the EU since 2019. We expect product launches to begin in 2027, giving us new or expanded access to more than 55 million planted hectares of cereals, corn, oilseed rape and potato in the EU.

In addition, many of our customers have requested preregistration exemptions to use Isoflex in Italy, Germany, France and Spain this year. If granted, this will represent upside to outlook for the second half.

We continue to concentrate on these 4 operational priorities as the basis for improved results. In parallel, the Board authorized evaluation of strategic alternatives announced in February 2026 is progressing and multiple options are being evaluated.

Turning to our first quarter results. Slide 4, 5 and 6 provide details on our performance. First quarter crop protection market conditions were mostly in line with our expectations. Challenging margins and stressed liquidity for customers and growers led to cautious purchasing in most countries. Lower grower margins also increased the willingness to use generic products or skip some preventative applications. As expected, the regions with more pronounced competitive pressure were LatAm and Asia, where generics are more prevalent.

First quarter sales of $762 million were $12 million above the midpoint of the guidance, driven by better-than-expected FX and volume. While sales were 4% lower than prior year, sales were up 1% on a like-for-like basis after excluding India from both current and prior year periods. Sales made under the FMC brand grew 6% on a like-for-like basis and included strong volume growth in EMEA and North America in herbicides and Cyazypyr. This was mostly offset by lower sales to diamide partners.

These partners accounted for nearly half of our overall price decline of 6%. The remaining drivers of lower price were branded Rynaxypyr price, repositioning to support our post-patent strategy and a competitive market for our legacy core products. Volume grew 2% and FX was a 5% tailwind.

The growth portfolio significantly outperformed the core portfolio due to higher sales of branded Cyazypyr, new active ingredients and plant health.

First quarter EBITDA of $72 million was $17 million higher than the high end of our guidance range with FX, cost and volume all favorable to expectations. Adjusted loss per share of $0.23 was $0.15 better than the guidance midpoint due to higher EBITDA.

Looking ahead to Q2, our financial outlook is listed on Slide 7. We expect second quarter revenue to be between $850 million and $900 million. The 17% decline at the midpoint is almost entirely due to lower sales to diamide partners and the removal of India. Excluding these 2 factors, our results would be similar to prior year as branded volume growth in most regions and the low single-digit FX tailwind are offset by lower branded pricing due to competitive market in our core products as well as the brand Rynaxypyr pricing action.

Adjusted EBITDA is expected to be $130 million to $150 million, down 32% at the midpoint to prior year. Lower sales are driving the decline, partially offset by favorable costs.

Adjusted earnings per share is expected to be between $0.16 and $0.26. This represents a decline of 70% at the midpoint to prior year due mainly to lower EBITDA and higher interest expense.

Turning to Slide 8. Our full year 2026 financial guidance ranges are unchanged from our last call. Sales of $3.6 billion to $3.8 billion represents a decline of 5% at the midpoint as a mid-single-digit price decline and the removal of India sales are partially offset by volume growth, including strong contribution from new products.

EBITDA is expected to be $670 million to $730 million. At the midpoint, this is a 17% decline, mostly in the first half as lower price and FX headwind are partially offset by lower cost and volume growth.

Adjusted EPS is expected to be $1.63 to $1.89, which is a 41% decline at the midpoint, mostly due to lower EBITDA and higher interest expense. We are maintaining our full year guidance despite the increased uncertainty related to tariffs and the conflict in Iran. We are beginning to see higher energy, transportation and petrochemical costs flow through to product costs. At the same time, current tariffs are lower, and there is potential to recover previously paid tariffs.

At this stage, it remains difficult to forecast product costs or the magnitude and timing of future tariff impacts of recoveries given the uncertainty around the duration of the conflict in Iran and potential additional U.S. trade actions. As a result, we are currently assuming that the Iran-related cost pressure and tariff-related benefits largely offset each other.

We expect to provide an updated outlook at our next earnings call as we gain greater clarity on how these factors may affect full year results.

Slide 9 provides our implied second half guidance using our first quarter results and our second quarter outlook. At the midpoint, we are expecting sales and EBITDA to be largely consistent with last year's second half. Sales, excluding India, are expected to be up 1% at the midpoint versus last year, with volume growth outpacing a mid-single-digit price decline and a minor FX headwind.

EBITDA is expected to decline 6% at the midpoint as lower price and minor FX headwinds are partially offset by volume growth and lower costs. Adjusted EPS is expected to be down 15% due to lower EBITDA, higher tax and higher interest expense.

Turning to Slide 10. I'll walk through the key factors bridging second half 2025 EBITDA to 2026, and why we are confident in our expectations for the second half. We expect volume contribution to EBITDA to grow with roughly 2/3, driven by new active ingredients, particularly in LatAm and EMEA. We anticipate a mid-single-digit price decline, which is consistent across the full year. An FX headwind is expected to be mostly offset by cost favorability.

Our expectation for the second half volume growth are reinforced by positive signals we are seeing in LatAm. At the end of April, we already have orders representing 32% of our H2 direct sales in Brazil, which validates our confidence in the second half outlook. By the end of June, we are expecting orders representing about half of second half direct sales. We have a higher percentage of commitment on a higher sales number versus last year, reflecting the impact of the new direct sales organization put in place in 2025, which is now in full action.

The positive signals we are seeing in LatAm, combined with the demand for new active ingredients, give us confidence in achieving our second half targets. By the end of Q2, we also expect to have more clarity on a review of strategic options as well as debt paydown progress. We anticipate communicating these updates at the next earnings call.

I will now turn the call over to Andrew.

Thanks, Pierre. I'll start this morning with a few income statement items. First quarter sales benefited from a 5% currency tailwind, primarily coming from strengthening of the euro and the Brazilian real. As we progress through 2026, we expect FX to move from being a tailwind in the first half to being a minor headwind in the second half, resulting in an FX impact on revenue for the full year that is roughly neutral.

First quarter interest expense of $64.8 million was up $14.7 million. This increase is driven by 2 factors: the higher rate on the subordinated debt we issued last May and higher short-term domestic borrowing costs.

We continue to expect full year 2026 interest expense to be in the range of $255 million to $275 million, up approximately $25 million versus the prior year at the midpoint due to higher borrowing costs of our senior and subordinated notes following the redemption of the notes maturing in October of '26.

We continue to expect depreciation and amortization for full year 2026 to be between $160 million and $170 million. The effective tax rate on adjusted earnings in Q1 was 17%, in line with our expected full year effective tax rate of 16% to 18%.

Moving next to the balance sheet and leverage. We ended the first quarter with gross debt of approximately $4.5 billion, up $459 million from year-end. Cash on hand decreased $194 million to $391 million, resulting in net debt of approximately $4.1 billion, up $652 million from year-end, consistent with our normal seasonal working capital build. Gross debt to trailing 12-month EBITDA was 5.7x at quarter end, while net debt to EBITDA was 5.2x.

We've continued to work with our bank group to further evolve our revolving credit facility to be more in line with our current credit ratings. On April 16, a further amendment to the revolver became effective. This amendment transitions the revolver to being fully secured, moving away from the springing collateral concept included in the prior amendment.

The amended agreement maintains the current capacity of $2 billion and the current maturity of June 2028. We added a collateral package to secure revolver lenders worth approximately $6 billion through direct liens and up to approximately $9 billion, including subsidiary guarantees and pledges of stock of subsidiaries. As a result, we are substantially over collateralized.

With the latest amendment, we now have 2 maximum leverage covenants. The first is maximum allowable total leverage, which considers all of FMC's outstanding debt. This total leverage covenant will not be measured until December 31, 2026, when it will be reinstated at 6.75x through December 31, 2027. The second is the newly added secured leverage covenant, which limits the amount of secured borrowing allowable to 3.5x trailing 12-month EBITDA over the life of the credit agreement. On March 31, our secured leverage would have been about 1.3x, well below the new covenant.

To be clear, while the maximum total leverage covenant was technically waived for the first quarter, we were in compliance with the previous covenant. Total leverage was 5.67x at March 31 as compared to the prior total leverage covenant limit of 6.0x. We are appreciative of the 100% support from our bank group for these changes.

We intend to go to market this quarter with a secured high-yield bond offering to redeem $500 million of notes that mature in October, market conditions permitting. Should market conditions turn unfavorable, we have more than adequate available liquidity to redeem the maturing notes if necessary. As we move through the rest of 2026, we will use all proceeds from asset disposals, licensing agreements, real estate opportunities, et cetera, to pay down debt.

Moving on to free cash flow on Slide 11. Free cash flow in the first quarter was negative $628 million, $32 million lower than the prior year period. Lower EBITDA drove a decline in cash from operations year-over-year, which was only partially offset by lower capital spending. We continue to expect free cash flow for 2026 to be in the range of negative $65 million to positive $65 million or breakeven at the midpoint.

This includes approximately $150 million in restructuring cash spending. Compared to the prior year, lower EBITDA, higher restructuring spending, higher cash interest expense and modestly higher capital expense are expected to be offset by improved working capital performance in the ongoing business, the liquidation of India working capital and lower cash taxes.

With that, I'll hand the call back to Pierre.

Thank you, Andrew. I'll close by simply saying that we remain focused on improving the business and results through the 4 operational priorities. I am happy with the progress we have made so far, and I expect that starting 2027, we will see more meaningful benefits reflected in our sales, earnings and balance sheet. Based on the actions we are taking, I believe the first half will represent an earnings trough for the business with higher sequential earnings in the second half of this year, followed by improved full year results in '27 and 2028.

With that, we are happy to take your questions.

[Operator Instructions] Your first question comes from the line of Mike Sison with Wells Fargo.

Good start to the year. Pierre, you gave good detail on your second half outlook. Where do you think the biggest challenges are going to be to sort of hit that? Obviously, Brazil is going to be the biggest part of that. And then I'm just curious, it sounded like you were more confident in racking up orders for the second half. Maybe a little bit more color on the new sales organization and why those orders are coming in maybe better than last year?

Yes. Thanks, Mike. Let me try to do one thing because I think that maybe the most -- the best way to explain H2 is to tell why we do expect such a ramp-up coming from H1 and what are the very key drivers. So I'm going to try to put that into a few buckets and tell you why we are confident.

I'm going to take -- if you think about it, our forecast in H2 at the midpoint is about $425 million of sales improvement in H2 versus H1. So I'm going to try to take the 3 main buckets allowing us to have the expectation of this $425 million increase. The first one is the non-diamide core. We are expecting $150 million to $200 million of improvement. And the main driver is direct sales in Brazil. As I said in our prepared comments, we already have a very significant number of orders in hand. By the middle of the year, we should have half of the orders required to deliver our H2 number in Brazil. And that is because the new sales organization is now fully in action.

Remember last year, we made that decision that organization was ready to act by April, May. But as you can see with the numbers we are giving of the orders we have in hand, we missed a big part of the season, not this year, and our orders in hand are already much higher than last year on a much bigger target number.

Number two, of the improvement, about $50 million to $80 million is Rynaxypyr. Number one driver, and we see that every year, there is nothing new to it. It's always the same sequence. There is significantly less partner headwind in the second half than what we see in the first half. We also have a stronger branded performance in the second half.

And the last one, the third one, maybe the most important is our new active ingredients, which are accounting for about $175 million to $200 million, mostly LatAm, North America, but also remember, the cereal season in EMEA in Great Britain, where we sell Isoflex is in the third quarter. So non-diamide core, $150 million to $200 million, Rynaxypyr, mostly with the less headwind from partners, $50 million to $80 million and new AI is about $175 million to $200 million. And the AI is very consistent with what we are seeing in the first quarter in terms of demand.

Now that gives you a range of $375 million to $480 million for a guidance of $425 million. Puts and takes, obviously, will not be everything at the low end or at the high end. And we do have growth expected in Cyazypyr and plant health. So that gives us a comfortable range versus a targeted number.

If I would do the H2 to H2 '25, '26, that's a very simple story. That's what we had in the prepared remarks. Basically, direct sales are the driver with new active ingredients, and that's offset by FX and price. So Mike, that's about the -- as precisely as I can do of a bridge with much higher level of confidence in each of those 3 buckets with what we are seeing right now.

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

So a question on Rynaxypyr and in particular, the partner sales. I think you've talked about that being $200 million in revenue, which for the company would, let's say, be 5% or 6% of total sales. But last year in Q1, your price was down 9%. You called out partner sales as being half of that. You also called out this Q1 partner sales being half of your price decline of 6%.

So it seems like collectively, on a 2-year stack, that's been like 7% of total company sales price down on something that's like only 6% or 7% of the company's sales. So the math doesn't triangulate for me at least. So can you talk about how big was that partner sales at the peak? How big is it on the run rate today? And roughly how much is the price fallen for partner sales in particular?

Yes. I'm trying to reconcile those numbers, especially using '25 to '26, that's the easiest comparison. First, in '25 versus '24, remember, that's where we had the highest price drop because that is the time when we had the highest cost reduction in the manufacturing of Rynaxypyr. So we are still seeing an impact as we continue to lower price, but less in '26 than it was in '25. We do expect to keep on reducing cost in '27. So you will also see price down on partner sales, but it will be even less than it is this year.

From a size standpoint, maybe to summarize, if you remember what we said last year, our total Rynaxypyr sales were about $800 million. And that was made of $600 million of branded sales and about $200 million of partner sales. If we look at 2026, we are forecasting $700 million of Rynaxypyr sales. That will be $600 million of branded Rynaxypyr, flat number versus '25, but partner sales decreasing to a number lower than $100 million. So as you can see, partner sales because of price and also volume are going to be accounting in '26 for less than half of what it was last year.

We believe that is a trend we're going to keep on seeing. At this point, the partner sales of $100 million going down next year, is going to be a very small part of our company. And regarding the branded sales, I think we believe that earnings for this year will be similar to prior year on similar sales. And that's what we are seeing right now is, in fact, as we were expecting, the volume gain, the improved mix, as I said in the prepared comments, a significant move toward high-end mixtures and high load with the new pricing, lower pricing, the cost reduction compensate for the lower price. So flat branded sales at $600 million, flat earnings for branded Rynaxypyr is the target for this year. Partner sales going from $200 million to $100 million.

Your next question comes from the line of Josh Spector with UBS.

I'm curious if you could talk a little bit about your views around input costs and what that means, particularly out of Asia broadly for your second half and fourth quarter? Is that something that you're going to have to get additional pricing for to offset this year? Or is that more of a 2027 event? And I'm honestly not sure that if generic prices are going up and maybe supply is more constrained, is that a risk or an opportunity for you in the second half?

Thanks, Josh. Listen, we talked a lot about that when we were doing the forecast for the second half. And we felt we do not have enough information on the future impact on inputs for our business. I mean, we all know the situation for fertilizers and for crop protection. Today, we are seeing some impact of the Iran war. We have impact at the level of the transportation, distribution, delays plus cost. There is higher energy cost in some of our plants, especially in India. And we are seeing some of the raw material price increase.

But at this stage, we've put a number in a forecast, but left it not at a significant level. It's very hard. If the war stops in the next few weeks, we believe the impact on us will be fairly minor. If it lasts for a long time, then that's going to be another story, but we do not have enough information. So at this stage, we're looking at the impact being pretty muted. We see some impact, but nothing major. We're going to have to be watching very, very carefully how it's evolving depending upon the length of the conflict.

Regarding generics, there are 2 aspects. One is the information we are getting, the data we are given and what we see on the market. What we see on the market is pricing from generic leveling off. We do not have this pricing spiral down that we've seen over the last 2 years. So it seems like we are at a time at the market level where we are seeing a stable situation.

Now information we have would tend to prove that there could be or there should be a price increase in the second half. We have not factored that in our H2 forecast because it's not reached the market yet. For example, I'm sure you've seen the announcement on Rynaxypyr moving from the low 20s to $47 to $50 a kilogram. Those are information which have not yet reached the market. We have not seen a significant jump, but all indication on exports and local pricing is that they are moving up. So to answer your question, we have not factored anything in the forecast, neither in terms of opportunity due to pricing of generics or significant impacts of the war.

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

Pierre, you mentioned potential other assets for sale. You spoke about real estate. Is there anything else within the FMC portfolio, I don't know, plant health, just to throw something out there. What else are you thinking of monetizing? And can you give us an order of magnitude of roughly what you think potential proceeds could be? And if you could give us a little description of some of the noncore real estate or other types of assets, so just we can have an understanding of what you're looking at?

Yes. I'm going to give you as much detail as I can because, of course, negotiations being ongoing. They are confidential as much at the request of the people with whom we are negotiating than for us. But basically, where we are today on the target of $1 billion. Number one is, as I said, is India. We are expecting to close on the India deal in the month of May. We are very, very advanced. There is not that many issues remaining with the -- we have a few players still in the race, but we are weeks, maybe days away from signing an agreement. That's number one.

Regarding the licensing of an active ingredient, we are in negotiation with multiple parties. We also -- it's a matter of weeks before we make a decision which partner to go with. The negotiations are ongoing. Then there is some -- we've been establishing a list of molecules, which are noncore for us, but which are of significant interest to some companies either because of the market they serve or because they have a specific strength in some crops where we do not play. So we have a few of those, which are right now -- a few molecules, which are right now in negotiation.

And finally, we do have a few negotiations which are going on and some are quite advanced on real estate deal, which would be sale and leaseback of sites we have where, first of all, we do not need to own them. Second of all, it's easier to lease back. And third of all, they are much bigger than what we would need. If I put all of these together, and I'm only listing the things which are in active negotiation and well advanced, we have about line of sight to $700 million, about 70% of our target. That's what is currently in a very active negotiation.

Your next question comes from the line of Mike Harrison with Seaport Research Partners.

I was hoping Pierre that you could talk a little bit more about what you're seeing with Rynaxypyr taking share from other classes of insecticides? I know that's the strategy that you guys put in place by trying to reduce costs and take the price lower to make it more competitive. But maybe just give a little more detail on which specific classes you're seeing some share gains from, and if that gives you confidence that you're going to see further traction with that strategy?

Yes. You will understand I'm going to be a little bit discreet around which specific class of insecticide because that would be talking directly the competitors who are leading those leaders in those different type of insecticide. But yes, we have seen that. Actually the only place where we are seeing concrete results right now of the extension of sales into different type of insecticides for Q1 is in North America. Indications we have is with what our sales force right now with the new pricing is targeting is a strong level of confidence that this is going to work. But North America was the place where we saw that the most in the first quarter.

Now it's early stage, lots of players are taking a wait-and-see attitude. So the real proof of how well our Rynaxypyr strategy is working will be in Q3 and Q4. But yes, we have actual sales we have taken from other class of insecticides.

The other thing which is going very well and maybe a bit better than we're expecting is the mix. With the new pricing we have for Rynaxypyr, we are seeing more and more of the growers moving toward the high-end part of our portfolio. Those are the high load and those are the advanced mixture. Now, it's always the same. It's Q1. It's not the biggest quarter for Rynaxypyr. It's an early stage, but I would say that the percentage of sales and the new mix for advanced technology is higher than we're expecting, which is very positive for us because it's despite the lower price, still a place where we have a solid price premium. I'd say, in the first quarter, about half of the sales moved toward the high-end part of the portfolio.

Your next question comes from the line of Chris Parkinson with Wolfe Research.

Pierre, I'd really like to dive a little bit more into some of the new products, which haven't necessarily been the greatest focus, but seem to be progressing pretty well. Beginning with Isoflex with the new registration and the kind of the tangible market opportunity, can you just kind of give a framework on how you're thinking about the initial opportunity as well as kind of the longer-term opportunity there? And then understanding that Brazil is obviously challenging for pretty much everybody at the end of last season, what's the update of Rynaxypyr in terms of like -- in terms of how your order book that you've been referencing the progress there, how does fit into that as well?

Listen, Isoflex is going to be a very critical product, obviously, in Latin America, but it's going to be a very, very critical product in Europe. We believe that in not too long, that's what our team in Europe would say Isoflex will be very quickly bigger than Rynaxypyr and Cyazypyr together. Where are we on Isoflex, and that's a process which is a bit more complicated in Europe is, first, you need to obtain the registration of the active in the EU, which we just got a few weeks ago. So that's a very important step because only when you have that step, you can start to get registration for the product you would sell in each of the countries, the formulation you would sell in each of the countries.

Great Britain is different. We obtained the registration for the formulation last year, and that's going to be the bulk of our sales in 2026. Now that being said, the product is working so well. We're going to have 100% of reorder and growth in Great Britain for this product. And our customers in multiple countries are asking for exemption to be able to use the product. So we don't know if that's going to happen or not. But all in all, going very well, confirming the performance of the product and the target numbers we've been giving so far are being confirmed.

There is no showstopper here. Fluindapyr, same thing. Fluindapyr is growing fast. The only limitation to growth of fluindapyr, including in Brazil is the registration process. We do have 19 right now pending registrations, which, as we get them, it allows the product to grow. It's a part of the direct sales. Also, it's one of the driver for the success of direct sales in Brazil. So as I said, Rynaxypyr, we're going to have to see and wait on Q3, Q4. We have a good level of confidence. Fluindapyr, a new product, the level of confidence is higher. I mean that's -- the demand is very strong. So there is no issue here, only the speed at which we are getting the registration.

Your next question comes from the line of Jeff Zekauskas with JPMorgan.

In the first quarter, your prices on average were down 6%. If you exclude diamides, what would prices have done? And secondly, in the first quarter, were Cyazypyr prices up or down or flat?

Jeff, it's Andrew. I'll take that one. Look in first quarter for the non-diamide products, prices were down in the low single digits percent on that sales. We saw significant price reductions in branded Rynaxypyr and the partner Rynaxypyr business. But across the non-diamide core portfolio, which is the bulk of the rest of it, it's in the low single digits. It was a very good quarter in terms of repositioning. Volume, not great. We'll keep working on that. But I think as we continue to improve competitiveness of those costs, you'll start to see improvement there for the non-diamide core portfolio. For Cyazypyr, prices were relatively flat, but we did see good volume growth, particularly in Europe. So it's been -- it was a good quarter for Cyazypyr.

Your next question comes from the line of Joel Jackson with BMO Capital Markets.

Just following up on the partnering -- the licensing deal you're trying to do for the One AI with the upfront payment. If I heard correctly, it's one AI that you're looking at getting something close. I imagine you're looking at all of your new AIs. Could you maybe -- if that's correct, can you maybe elaborate a little bit on why one particular AI seems more likely with partners wanting to license it? Or is there something else happening? Or just talk about that dynamic, please?

Yes. It is -- I'm going to give by answering that if you think about it more information maybe than I should. But actually, there is 2 different ways to think about licensing. When a product has full registration, you license the product or mixtures, but it's not a broad licensing of the molecule. For example, we take a product like Rynaxypyr -- sorry, fluindapyr. Fluindapyr is a product for which we have the active being registered and then people can develop formulations and get registration for formulation. So for this kind of product, you go with multiple licensing as you see opportunities. So for example, fluindapyr, we licensed part of the product to Bayer and to Corteva, Corteva last year and Bayer 2 years ago. So it's a very different approach.

When you have the most advanced technology, for which one of your partners is very interested, it's a broader licensing, which is done because you don't have yet the registration. This work still needs to be done. So it's a full access to the molecule, but it's a very different type of approach because the product is not yet at a point of being commercial.

So that's why if you think about our product, there are 3 products for which we have a significant number or start to have some registration and one which is still away from commercialization and registration. It doesn't mean -- by no means does it say that we will not be licensing the other products, but it will most often be licensing without upfront payment and the royalty is being paid as the product is being sold.

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

Just on the new product pipeline approvals, what do you need to see in the back half of this year to know that 2027 is on track? Which ones are still pending that you think are particularly important?

I don't have the list off the top of my mind. We have a road map with all of the registrations, which need to happen for '27. As I said -- and the number is 19. We have the exact road map. We know exactly where they are for the product. I could not go through the -- each of the country right now, but there is no place where we see specific delay, which would concern us in terms of 2027 target.

Yes. I'll just build on that, Pierre. I think when you look at fluindapyr, a lot of that growth will be growth with existing registrations in existing countries. As we've said, we've gotten pretty much all the registrations for the active ingredient fluindapyr by country that we were targeting. So there's a lot more introduction of new formulations and just penetration of those countries to drive growth from '27 to '26 with fluindapyr.

With Isoflex, it's really getting the product -- formulated product registrations in the EU. As Pierre commented earlier, we are seeing formal requests from growers in multiple European countries to try to get exemptions to use those products in advance of getting them fully registered. But certainly, in '27, we would hope to have full product registrations for all of the Isoflex-based products for particularly EU 27 countries, and that's a big driver of growth.

The only really other place where there's big growth in the new active ingredients, we do expect a little bit more growth from Dodhylex. We do anticipate a few new registrations for Dodhylex in 2027. It's not nearly on the same scale of year-on-year growth as the growth from fluindapyr and Isoflex. So I think as we look to '27, it's really a continuation of the trend of fluindapyr and Isoflex that will drive new active ingredient growth with a little extra spice thrown into the mix from first early introductions of Dodhylex in a few other countries.

And as Andrew said, I mean, if you think about fluindapyr, it's going to be mostly in North America and Latin America, and that's where we're getting -- we should be obtaining new formulation registration. Isoflex, we have the EU. It's all of the major country where we should get early in 2027, the registration for Isoflex. And Dodhylex, its registration in Asia. That's what counts. For Dodhylex, I would say 90% of the market is in Asia. So that's where we are expecting and watching the new registration.

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

I am very far from being a tariff lawyer or anything like that, but is there any possibility that you get refunds that we're seeing kind of along the lines of some of these other companies that have been reporting that an opportunity set? And then, you said you're seeing some positive signs on mix improvement in Rynaxypyr in 1Q. I'm assuming the hope is that continues in 2Q, in the second half? And ultimately, the point is it will be a bigger book of business in 2H. What drives the variance around the success of that 2H? Is it the same mix shift? Is there a risk that the price premium you have on the lower end doesn't hold up in Brazil? Like how do we gauge the upside, downside of what this 2H might look like for Rynaxypyr?

Yes. Okay. Let me start with the tariffs and then I'll go to Rynaxypyr, Tariffs, I'm not a tariff lawyer either. There is 2 types of tariffs which we have paid. There is tariffs which have been what's called...

Liquidated.

Liquidated, which means tariffs which have been through the process of being paid, collected and transferred to different places of usage and they are out of the customs. For this, there is no process in place to even file to recover them. It does not mean that we will not recover them. But right now, there is not a defined process. The other tariffs, the ones which have not been liquidated, which have been collected by custom, but which have not gone through the process of being dispatched and are still there, there is a process in place by which you can apply. Applying doesn't mean you get it, but you can apply for it. Those seem to have a higher probability to be collected faster than the others.

Ultimately, all of them should be -- with a court decision should be recoverable. One category seems to be faster than the other, but frankly, we do not know. We do not know. It's still something we are watching very closely. We're working with the lawyers who are giving us their input. As I say, one category is very likely. One is don't know if a process will be put in place.

Regarding Rynaxypyr, I think whether it's Brazil or North America in H2, all the strategy to be fully successful, I think the #1 criteria is how we are going to be performing in growing the percentage of sales on the high-end part, which is higher the high concentration or the mixtures and positioning them at the right price to still be competitive. The reason for that is because Rynaxypyr has been on the market for a while, there is resistance very much in China, starting to be significant in Latin America. Those formulations very often help positioning the product and address the resistance issue or the efficacy issue.

So I'd say a significant part of our strategy and maybe in H2, more important than the gain of volume against generic with a single is that piece, succeeding in growing as much as we can the high-end part of our portfolio, which we are selling at a premium.

It is what happened beyond expectation in Q1, but of course, on a lower volume than what we will see in Q3 and Q4. Also because the patent just ran out at the end of '25, generics are starting to be active in some countries like Brazil, North America, but let's face it, they will be more active in Q3, Q4 than they were in Q1. So the real test is in the second half of the year.

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

Hi. Good morning. I'm Jeff Zekauskas. I analyze chemicals here at JPMorgan. It's my pleasure this morning to introduce the management of FMC. Representing FMC is Pierre Brondeau, who's the CEO; and Pierre has served 2 tours of duty at FMC. He was CEO from 2010 through 2020 and then again from 2024 to the present. Previous to his tenure at FMC, he was the President and COO of Rohm and Haas. And following the acquisition of Rohm and Haas by Dow, Pierre headed Dow's Advanced Materials division. And there are many CEOs that have come from running the Advanced Materials division. With Pierre is Andrew Sandifer, who is the CFO of FMC since 2018, and Andrew also spent time in the old days at Rohm and Haas. Curt Brooks, who heads Investor Relations is in the audience. The form today we'll have is a fireside chat.

Pierre, one of the endeavors that FMC is involved in or one of the strategic pathways is the sale or the monetization of the company? Have you learned anything from that experience?

You always learn when you go through such a process. I think, as I said many times, I need to be monitoring the 2 approach we have with the company, what we call the Plan A, which is go alone and keep on going with 4 pillars paying down debt, restructuring and manufacturing footprint plus Rynaxypyr, patent protection strategy and new product growth. And then there is looking at what are the strategic options around the sale of the company, which could be sale, which could be merger or any other option. What I have seen on the Plan B, which is the strategic options as we call it for the company, is there is interest. Bank are talking to multiple parties. I'd say there is 5 to 10 parties which are interested in the process at different levels in different manners. There is I think when I look at almost every single party, if there is one thing I have learned is when we see a lot of value in our portfolio of new technologies, we are not wrong.

Because that's pretty much where all of the people who are looking at FMC are focusing on. I mean certainly, there is Rynaxypyr or there is the postpatent period, but lots of people are moving beyond that. We do have 4 molecules coming to the market. We do have 2 fungicides very close to getting out of the development phase towards the '30. And we have a portfolio which will be fundamentally transformed by this new technology to being much more herbicide, fungicide and then a balance of pesticide and biological. So a very different portfolio. And that's where I see a lot of focus. I have to say that's the thing I've learned. I was expecting to be tortured on Rynaxypyr and what will we do versus generics and how we defend our position post patent protection. But I think the vast majority of the conversation is on the new pipeline.

So when you look at your Plan B, is it really a question of strategic interest rather than private equity interest in FMC.

I think it's both.

It's both.

It's both. It's a broad range of companies.

And -- but primarily strategic, no, because in the event of a combination, there are synergies, which a private equity company couldn't capture?

You know, you could see and I've got to be careful not to divulge too much. But I would say it is strategic, it's private equity and sometimes a blend of strategic and private equity. So it's a broad range.

So if I gave you $30 per share for FMC, would you take it?

So would I take it? I believe some shareholders would take it and some would not like it. I think we have a new generation of shareholders who came lately when the stock was in the 20s or in the mid-teens. And certainly, those people would be able to make over a short period of time, a significant profit and they would take it. There is more historical shareholders, which are above this number. And we've been told in no uncertain way that there is a significant amount of shareholders who believe in a future where FMC is alone and the stock will get over $30 because of the pipeline we have. Now if you ask me personally, I'm a shareholder of the company. I'm not taking $30. I think as a stand-alone, we can go much higher, but I still run the company. So I have to trust what I do. But it's -- it depends where you stand. It depends if you're a new shareholder and if you're a historical shareholder.

Since we have the luxury of having Andrew up here, one of the events for FMC this year is the refinancing of, I guess, $500 million in debt that comes due in October. I think it's a 3.2% coupon. Do you have the strategy for that or plan for that?

So we've got -- I think stepping back, Jeff, I think we've got multiple ways we can address the October maturity. And to be very clear, we'll deal with this shortly. We have adequate liquidity through our revolving credit facility to absorb the redemption of those notes if needed. That's not the plan. I think our intent certainly would be probably in the second quarter to get out there, get out in public markets and do an offering to replace and redeem those bonds. I think that where we start from, though, I think we have right now a revolving credit facility. It's essentially an investment-grade revolving credit facility. In the last amendment, we introduced this concept of a springing security that would trip if we were further downgraded after the initial downgrade to noninvestment grade.

I think we're in midst of active discussions with the bank group to continue to evolve that agreement, probably move to more traditional security rather than the springing security kind of situation, something more appropriate for a company in the BB+ and then a legacy -- some of the legacy elements of the existing agreement. That would also give us a little more operational flexibility through the next several years. And again, set that -- clear the table to go out and do a bond offering in the second quarter, high yield likely secured to address that immediate maturity. I think in conjunction with that, I think as Pierre pointed to, the first pillar of the operating plan for 2026 is paying down debt, right? And so certainly, while we would -- we're very intent on making sure we address that maturity, we're equally as focused on being able to take the steps that are needed to continue to bring the absolute level of debt that the company is supporting down significantly.

Okay. Thank you for that. Obviously, FMC is an agricultural company. But so many companies are touched in different ways by the conflict in Iran. Is that something that touches FMC in a significant way?

In a significant way, right now, I would say no. But right now, -- so if you think about the product we sell as a crop protection company, they are quite removed away from the direct petchem raw material. And most of the cost is in the conversion process where you get to the final product. The place where we see today disruption is not in the cost of a product, it is more on the logistic aspect. Boats are harder to move. Containers are more difficult to find. So to bring the product at the right place at the right time require logistic organization to work differently than what we've done. So that's where we see an impact. We're not yet at an impact where we see cost fundamentally changing. But should the conflict last a long time, it will sooner or later. I mean gas prices going up, oil prices going up, raw materials in the petchem industry are going up.

If this conflict is over in 3 weeks, it will be a blip. We will not see much of an impact. If it lasts for 6 months, yes, we will see an impact. It will reach our product, raw material will have an impact. Energy will have an impact. Plant will be more expensive to operate. So for us to say that it will have a very significant impact, it's a matter of time. If it's a short-lived conflict, will be all right. If it's prolonged, and I call prolonged 6 months, then yes, yes, we will see an impact. We're in a quite different place from input like fertilizers, which are being impacted right away because of their location and the nature of the product. So for us, right now, we're still in a decent position beside logistics, just a matter of time.

So if the conflict were prolonged, then how would that affect FMC?

I think it will be -- it will affect FMC like it will affect every crop chemical company. We will just all see because we pretty much all manufacture in the same part of the world. We have about the same cost base. So we will all see increasing cost. So the question will be what is the status of the ag industry at that time? What is the company's situation? Can we push some of those costs into our customers or not? We'll be facing this kind of a situation.

And the routes that are affected, is it more India to the United States or China to the U.S. or it's some other route?

Both of them.

Both of them. I'd like to talk to you a little bit about Rynaxypyr and Cyazypyr before we get to the growth elements of the company, if I might. What's been your experience of the growth of the Rynaxypyr and Cyazypyr in volume terms in 2024 and '25.

I think in 2024 and 2025, we started to see a slowdown of the growth of those molecules because we started to see generics penetrating some market. Market like India, of course, like China, Asia, Turkey, some markets in Latin America. So we had a slowdown of the growth versus the period of 2021, '22, but still a pretty healthy market because our patent position, especially around process was keeping generics away from the main market, North America, Europe, Brazil. So we were still seeing some volume growth. Dollars-wise, we saw a decrease in the number, but we've not been -- we've been very truthful about the situation.

There is 2 type of business. There is what we call the branded business, what we sell to the market, and there is what we sell to our partners. What we sell to our partners are products they use for manufacturing and we sell them, make formulations. We sell them on a cost-plus basis to be prepared for the post-patent period for Rynaxypyr. We had to significantly decrease the manufacturing cost. That has translated into a decrease of price to our partners. So that has decreased the overall sales in dollars.

So there was a theory at a point in time that the global volume for these types of chemicals would increase because prices were coming down. That is prices are down probably double digits each year for the past 2 years and maybe that trend is continuing. Are you surprised that there hasn't been more volume uplift for the industry or has there been a volume uplift for the industry, but it's not been something that's touched you because of the magnitude of competitive response.

There has been some volume uplift.

Yes.

To give you a sense, in place like Turkey or China, in the last 3 to 4 years, the size of the market tripled. So we have seen some volume uptick, and we are expecting significant volume uptick starting in 2026. Because to see the volume uptick you need to have a broad penetration of this market by the generics, and you need to have companies like FMC bring this product at a price, which is much lower than where we have been historically, which we can afford to do because we have a much lower cost. So it has been happening in some locations, Turkey, India, China, market has tripled. And we are expecting this market in volume to significantly grow in Brazil, in North America, in Latin America, we will see it, and we're seeing it.

So your view is that beginning in 2026, the volume characteristics for Rynaxypyr should be better for FMC as well as for the other competitors?

Definitely.

As a best case.

Yes, definitely you will see Rynaxypyr penetrating other markets, other insecticide market, broadening the number of applications. There will be a significant volume growth of Rynaxypyr starting in 2026.

When you look at the pricing of Rynaxypyr, obviously, there are competitive responses. How predictable is the price decline for 2026 as far as you perceive it? Is it something where you think you could be right or wrong by a lot? Or is it something which is much more well defined?

It's a difficult question to answer because there are going to be multiple type of Rynaxypyr. You would have low quality, very cheap products. We might not even compete with them. We're going to compete with the high end of the generics. Plus, I think we have a reputation in this market for having been making this molecule for decades of quality, and we have brands. So we will sell at a premium. We have some strong certainty of the pricing we need to be at, taking into account the manufacturing cost to establish our objective, to have flat earnings from '26 -- from '25 to '26 with Rynaxypyr. So we know where we should be.

That's the goal.

That's the goal. The goal, exactly. That's the goal. '25, '26 earnings in dollars flat. To do that, we'll have to increase volume significantly, but we'll have to decrease price using the fact that we have decreased cost, and we'll have to participate in this expansion of the molecule. So we know where we need to be. We are pretty confident of at what price our customers will be buying our product. To know the range of price from our competitors, it's pretty wide and pretty hard to predict.

So you need a lot of volume growth to do that.

We do. We do.

Yes, double digit?

Double digit. Definitely double digit.

But let's not forget, there's very large cost reduction here as well, right? And it's been a part of the headwind, as Pierre mentioned, on our partner business in the past year. It continues to be a headwind in '26. That's that balancing of volume price cost that allows us to get the branded business to flat dollars profitability.

How about Cyazypyr? Are Cyazypyr prices decreasing in 2026 as a base case?

No, it's a very different molecule. First of all, it's a more complex molecule to make. Generics are not yet producing. It's a molecule which in many part of the world until '28, '29 are data protected, which means cannot be sold by any other companies than FMC. So there is not at all the same price pressure you would see on branded. I am talking branded Cyazypyr than you would see on the Rynaxypyr. Now we're not going to make the mistake of the past. We are anticipating the post data protection period for Cyazypyr. So we are working on the cost. We are decreasing the cost. We are preparing the formulation. So we're going to get much more ready for the post-data protection for Cyazypyr than we were for Rynaxypyr. And all this process is taking place right now.

And that beginning of price degradation should happen in 2027?

No. No. '29, '30.

'29 or '30. So Cyazypyr is good.

Cyazypyr is still a growth molecule. It's growing fast. The price is healthy. It's data protected. So it's -- it's like Rynaxypyr was a few years ago.

Interesting. So sometimes what FMC says is that 2027 is a transformational year, where earnings will go from a period of difficulty to a period of strength, but you've got to offset. I mean, key to that is trying to keep Rynaxypyr profits level or not really being pushed down further and then you get the benefits of some Cyazypyr growth.

If you go towards the back end of '27, second half of '27, that's when we see the transformation of FMC because of multiple things. First of all, Rynaxypyr, the big transformation period will be behind us, it's '26. The market will be more established. The price will be more established. The strategy will be in place. And the objective is not earnings growth. It's flat earning, protecting earnings. So that we believe we can do. It's not an objective which is out of reach at all. Cyazypyr is still very healthy until '28, until '29 is growing.

Now I think Cyazypyr is a very different molecule from Rynaxypyr because it's much smaller. You will not have the same level of capital investment and generic participation than you saw in Rynaxypyr, which was a much bigger molecule and much easier to manufacture. So we're not expecting at all the same type of market situation with Cyazypyr. The big thing for us starting in '27 is the growth of the new molecules. And that's when they start to get to level in dollars and growth, which really matters for the company. And then you get into the '29, '30s where your growth portfolio is very significant versus the rest of the portfolio.

So in terms of the growth dynamic at FMC, I know that you've talked about licensing some of your key molecules. And I believe that, that's 2026 event for you. How is that licensing effort coming?

Licensing. So let me talk about Pillar #1 of the 2026 plan, which is the $1 billion debt we have to pay.

Yes.

And remember, there is India. Sale of business in India, there is a licensing of a new molecule.

So India is $400 million, $450 million, some number like that or on your books it's...

It's in the books of $450 million. I'm going to let you explain what it is.

Yes. So India fair market value for the business when it was marked to held for sale is $450 million. That represents 2 value drivers. One is expected proceeds from a sale. But the second is the cash generated by that business as we're liquidating working capital during the period that we operated until closing of such a sale. So with anticipation of closing the sale towards the end of this year, we are still operating that business. We are still generating cash from that business. We're mainly selling from inventory. So we're monetizing working capital. So that's a component of the $450 million in value.

The $450 million is inclusive of the working capital?

Inclusive of working capital monetization as well as expected proceeds from a transaction.

So for this year, number one is going well. India is moving forward. We're well within target. We have multiple binding offers. So it's going well. Number two is licensing of one molecule. This process is going very well. We've made progress since last time I talked publicly. So we're feeling quite confident that we're going to get to the right place quite quickly with advanced payments contributing to the $1 billion. You always need points on the scorecard. So the point the 2 of us we want for the earnings call, we would like to be able to say more about India, where we are with more firm of a decision. We would like to be able to announce a licensing deal with more detail on what it is. And we would like to be able to talk more about where we are in the refinancing of the company, which is giving us the breathing room we need to move forward. So those are progressing quite well and very much in line with what we're expecting.

So there's one molecule that you wish to license. Is it 1 of 2? Or is it one? In other words, do you have 2 of them, and you're seeing if you can license either one of them or you have one of them, and you're trying to see whether you can license that one?

So we have 4 new molecules, fluindapyr, Isoflex, Dodhylex and Rimisoxafen. Fluindapyr which is a fungicide has already been licensed. It's been licensed to Bayer. It's been licensed to Corteva. Remain 3 molecules. And right now, we are negotiating on one of those molecules.

On one?

On one. It doesn't mean the other one are not for license or the other one are not under discussion. But the one we are talking about, which will lead to upfront payment, it's one molecule. It doesn't mean the others are not licensable, but what we're talking about is one molecule which is perfectly defined for which we're having a negotiation in place.

So this would be Rimisoxafen as the -- because that's the one that's not yet in the market or if you were looking at it from an outsider's point of view, that would be the logical one to focus on.

You're not wrong, it could be if you -- if we apply your logic, it could be Rimisoxafen or Dodhylex, which are the 2 least advanced from registration and most advanced from technology with new mode of action. So you're not wrong that those will be the 2 one -- the other being commercials already and being already in the process of registration.

So my memory isn't perfect. But I think that what you've said is that by 2035, maybe the revenues of these 4 molecules are $2 billion. And if you license one for $500 million, and that's a value -- maybe the gross margin is 50%, something like that. So would that mean that the way that you would calculate that $2 billion number would be $2 billion, maybe less $1 billion for the licensing of the molecule in trying to conceptualize how this would touch FMC over a longer period of time. Is that a base case way of doing it?

So first, your memory is right, but I am changing your numbers on that. Maybe your memory is not helping you because I think it's more -- it's closer to $2.5 billion. But that's -- the very important point is licensing increase your sales, does not decrease your sales. Because what you do is take a product Dodhylex or Rimisoxafen, new molecule, new mode of action, cost over $300 million to develop those products. Now you put those products in the market as formulated product. We are in a very fragmented industry. FMC is one of the largest company in that space. We have 7% market share. So the market available to us is 7% of the total market.

If we choose the right partner, who has a complementary product line in terms of crops or a complementary geographical strength, it allows us to penetrate a much broader market than if we would go alone. So what do we do? We keep on the manufacturing of the product. We sell this product to a partner. They pay a royalty and they access market we could not access. So actually, if you would do the net present value of a molecule licensed versus a molecule not licensed, it would be a higher number for the licensed molecule. One of the reasons for which the number is closer to $2.5 billion than $2 billion is because we are contemplating -- we have the licensing of fluindapyr. We're contemplating the licensing of this molecule.

Of the mystery molecule.

So we should never think that licensing a company cannibalize your business. No, it increases the size of your business. And that's why you see most product company when they have a unique molecule, patented molecule would look for partners who are complementary to what they are. I'll give you a simple example. Take FMC, 70% of the sales, speciality. So fruit, vegetables, nuts, tree nuts, cotton, sugarcane, okay? You have companies like BASF, Bayer, Cortiva, Syngenta, which would do 60% or 70% of their sales in row crops. I mean think about that, we only do 30% row crops. We do 60%, 70%. The row crops market, they are allowing us to reach, we could never reach by ourselves. So it's an all new market. A licensee would help us reach we could not by ourselves.

Okay. Thank you. That's very clear. At FMC, there's really an initiative to lower your manufacturing costs. Why is it that it's so expensive to manufacture outside of India or China, and you already had a large Indian operation. Why did you not keep that if what you wanted to do is really bring your manufacturing costs down?

All right. Thanks, because it allows me to be very specific. In India, we are selling our commercial operations. We are keeping a plant which is a global plant. The active ingredient plant in India, which is producing globally, we are keeping it as well as we have a research center in India, we are keeping. So those are not being sold. They are very important, and they're going to be important in a transformation process. So we're keeping those. Manufacturing in the Western world from a capital spend to a cost of employees, to benefit, to environmental all the aspects are more expensive than the ability you would have to have lower cost manufacturing in place like India or China.

Okay. Pierre, thank you for a very clear overview of FMC, and we wish you good fortune in the licensing of these molecules and the transformation of the company. Thank you very much.

All right. Thank you very much.

Welcome back, everybody. As we kind of move into the afternoon, I'm pleased to be welcome welcome Pierre Brondeau CEO and President of FMC; and Andrew Sandifer, who's EVP and CFO. FMC has been a long-standing participant in the conference and obviously a very fundamentally important player to the agriculture market. So thank you for coming and joining us.

There's been a lot, obviously, with the business, both fundamentally and strategically. And I guess if we kind of just go through it and kick off.

I wanted to ask you a little bit on the strategic side because the company kind of said, we're taking various paths. We are potentially for sale. We're looking at licensing agreements, asset sales. So can you help frame and structure what's currently at process as it relates to this?

Yes. Thank you. I think it's the most important question because there is some confusion around what are options, strategic options and what is in the 2026 operational plan. There is 2 paths. Plan A, Plan B. Plan A is the 2026 operational plan, for which decisions have been made and are being executed. There is multiple pillars to this Plan A. Number one, divesting assets to pay down debt for about $1 billion. Number two, reshaping manufacturing footprint to bring back to competitivities our core product. Number three, implementation of the Rynaxypyr post-patent strategy. And number four, the growth of the 4 new active ingredients.

Those are the 4 pillars of our 2026 strategic plan. In the $1 billion divestiture of assets, the number one is selling our business in India. This is proceeding very well. We are expecting binding offers in the next 2 weeks as first step and fundamental step to the process. Number 2 is licensing of one of our advanced molecule with an upfront -- significant upfront payment, allowing us to payment debt. We are currently in negotiation with different parties, I would say, very close to a decision.

So that part number 2, which is licensing all of the molecule with upfront payment. And the upfront payment is just not a few dollars. It's a meaningful part of the $1 billion, is very close to happening hopefully, Q1, beginning of Q2. Then there is a series of other activities which we are undertaking, how we cannot be more precise because they are less advanced, but they are in the process of due diligence for some companies which are interested in those assets.

So I would say that part of the -- that pillars of the 4 pillars is progressing very well as expected, with the top 2 being very well advanced, Plan A. Plan B, when we presented Plan A to the Board, they've approved the plan. And their view was it's a very solid plan, but like any plan, there is risks. If if something goes wrong in this plan, what are the alternatives? Could you explore strategic options for the company beside this plan which could be selling the company, merging the company or any other option. Now Plan A is the priority, but we are running Plan B, fully. You do not look at Plan B by just waiting for a couple of phone calls. We are running it like a divestiture process. We've hired 2 banks, bank of America and Goldman Sachs, who are running the process.

We do have a legal adviser. We have prepared the management presentation in the data, and we have actually already given management presentation to parties which are interested in the acquisition potentially of FMC. So this process is fully in motion. Despite the fact that my priority, as a CEO, is Plan A, and delivering an the operating plan. The other process is being fully run and completely in motion currently.

So is it fair to assume that a lot of the companies that are looking at Plan A are also in Plan B as it relates to licensing and some of these opportunity sets? Or do you find them to be separate considerations?

You could have companies which are on both sides.

And so if I think about a normal licensing deal, at least the way that we kind of see them historically, it's a partnership and say, for example, Fluindapyr with Corteva, right? You have the sales and incrementally, you collect the license or the value stream as the sales progress. So when you go forward with something like a lump sum upfront? Is there -- like what kind of haircut do you think you're at risk of taking by moving everything forward. Or it feels like there's more risk to the buyer conceptually, right? So how does that conversation evolve? And if I look at your 4 actives and it's $2 billion of peak sales by 2035-ish.

$2.5 billion, yes.

$2.5 billion, okay. Well, that's important for me to know. So what's like a realistic sum that you could get in a licensing agreement really today for some of this though?

So we cannot diverge of course, the prepayments. We do not take a haircut. It's -- there is a very different type of licensing agreements. When you license Fluindapyr and Fluindapyr is not the molecule we are talking about licensing today. Fluindapyr is a molecule which has been registered in most of the large markets. So usually, those license are done pretty quickly with the licensing agreement and payment by the licensee as we go.

Here, we are talking about more advanced molecule, very often, which do not have registration or all of the registration. It's a longer process, which require more due diligence to understand the molecule, its capacity, the probability will be registered. All of this is behind us, has been done. But you're acquiring a molecule much earlier in the process. So you don't take a haircut, but it's a different type of licensing.

Also, this type of licensing very often comes with an exclusivity on some territories and some crops, which you will not have in a simple licensing agreement for somebody to sell a molecule. So those are deeper, broader licensing agreement. Why are they beneficial to us? It's because -- and we would do this type of licensing agreement regardless of not of the situation we are in. We -- when you have a molecule of quality, you want to be able to reach the largest possible market. The ag industry is a very, very fragmented market. We are one of the largest crop chemical company in the world, and we have 7% market share.

If you want to reach a broader market with this molecule, you need to find partners which have complementary crop profile and complementary geographical profile because then you reach a bigger market. Then you give to these companies a commercial license. What does it mean? You sell them -- you manufacture, we keep the manufacturing of the molecule. We sell them the molecule at a cost plus, then they pay royalty and then they create mixtures for the crop they want to treat.

So that's the way it works, very different type problem. For us, the benefit is reaching a larger market, but it's also financially, if you think about it, by selling the molecule at a cost plus, plus royalty, knowing that we do not have the selling, tax service expense from a dividend margin, you might have a lower gross margin, but you might have -- you will have an equivalent EBITDA margin on the product. So net present value of a molecule, which is licensed to the right partner is higher than the same molecule you try to keep for yourself.

Would something like Dodhylex be open for this? Or is it even further out type of actions.

It will be one of the three molecule Dodhylex, Rimisoxafen or Isoflex. Obviously, when you talk about these kind of molecule, what I've said, you tend to think more Dodhylex and Rimisoxafen, which have less registration and are a bit further away from commercialization.

Because if I think about product efficacy and breadth that felt like us, Dodhylex probably has a huge -- when I look at applicable market, that's one where I feel like it could actually go really broad.

I think the 2 molecules -- if I look at the 4 molecules we are putting on the market today, the 2 molecules which have the most unique technical capabilities and market breadth, Dodhylex and Rimisoxafen. 2 molecules with a new mode of actions in each of them and Rimisoxafen with a dual mode of action.

Along the same lines and maybe a little bit different, but would you look to sell any product lines down? Like would you just sell the entire -- I'll go to Isoflex, right? Would you sell the whole Isoflex suite, AI production active ingredient production to sales and just divest that AI segment to somebody. Or Cyazypyr, could you carve out Cyazypyr, the footprint up and down the scale and say, this is yours now, if you want to buy.

Very different question about Cyazypyr. And one of the new molecules. Cyazypyr I have not even given any thought about, potentially selling Cyazypyr. Selling one of the new molecule, there would be 2 reasons for which we would do it. One would be an absolutely insane price or us being completely desperate. I don't think we're going to be facing any of those 2 situations. So today selling more of the molecule is not in the cards. We would rather sign good licensing agreement. Think about FMC, '26, difficult year, we know it. The operating plan is not a walk in the park.

But if we get successfully through 2026, 2027 is looking really good. Our core business will be in great shape. And we'll have 4 molecules taking off with very fast growth, reaching $1 billion very quickly, $2.5 million in potential and very unique molecule and rebalancing our portfolio from an insecticide company to much more balanced herbicide, fungicide biological and insecticide?

No, this is all very helpful context because I think we, in the days following, we had a lot of conversations, like, well, if they're just going to sell or remove the economics of the primary growth engines like what's left? And so it sounds like that's not really on table, which I think is helpful as it relates to creating a story that's ownable and capitalizable beyond just this is what the cycle is going to do.

I hear you. You're absolutely right. I mean, for us, priority number one is Plan A which include retaining the 4 new molecules.

Yes. And so -- I think FMC, over time, has always had a successful platform in part just because of breadth of products and applications, right? It's not just you have a pretty broad spectrum of markets. But it feels like pressure at the same time is pretty uniform across this core portfolio. And maybe that's not the case. Are there specific portions that are just being hit particularly hard that you can address? Or is this -- that core business is all kind of unilaterally under pressure across all your modes of action and products?

The latter. I think what's been happening is, over the last 3 years, because of the prolonged downturn, the low demand price have been going down constantly. Generics have been very active in pushing price down. And I must admit something. I realized maybe a few quarters too late that our portfolio, our core portfolio was getting uncompetitive from a price standpoint because our cost was too high. Half of it is produced in high-cost plants, and even the one we are producing or procuring in low-cost regions could be done at lower cost.

So we have redefined a process to relook at our footprint and bring back manufacturing cost in a place where with a straight molecule or with formulation, we can compete with any generics around the world. Now there is locations where those products are being more impacted. That's the place where the generics are more active. Latin America and especially Brazil being one. Asia being another one. After that, North America and last will be Europe, which is the most stable market we have. But overall, it's an issue of a manufacturing cost of core molecule that we need to fix across the board.

So you kind of touched on 2 things that I want to parlay into. First is as you look at where you're priced. Have you basically priced back on top of the market? So if I were to see, if we were to diligence in commodity crop chemical prices rise 5%, will your core portfolio also be up 5% now? Is it -- are you kind of on top of market prices and competing where the market is now?

We try to be where the market is. The problem is in the deflationary market when price is going down. If you look at our results over the last few quarters, what we have lost is volume because there were cases where price were going down to a place where it didn't make sense for us to stay with the market price. So most of the time, when you look at volume loss at FMC, it's on core products. And if you look in 2026, that is the number one driver of a lower EBITDA versus 2025, it's same thing. We're not going to be able to go after all of the business on the core because of the manufacturing cost.

But so if volumes -- because I think -- it feels like the next 2, 3 years does set up more favorably for crop protection, right? Farmer profitability may be aside, the business feels like we're putting in a bit of a floor volumetrically, I think we should grow. I had Chuck up here earlier, and I think he would articulate a similar expectation around volumes can grow from here. So then would it look like FMC reentering some of these markets as demand came back and then volume growth if we saw prices higher?

Like how should I see you contribute then or play as the cycle recovers.

So we've not moved away from any markets. We just lost business at specific customers. That's more the situation where a customer will be able to get a price from a generic and we could not follow. That's why we lost volume. But we moved away from no market. The way we look at it and tend to agree with Chuck that we should see volume growth '26, '27, '28. Our view is if we put ourselves in a place where we are competitive at the bottom of the cycle, we'll be even more competitive when the market grows, and we'll be capable of taking full advantage of that growth.

So the last thing we want to do is wait for the market to grow for us to be back to competitiveness. We just want to lower price to be able to be competitive, regardless of where we are in the cycle. We have not moved away from any markets. We are still with the same molecule, but we've lost business and specific customers where we couldn't follow competition.

And so you talked about operating costs associated with $1 billion in revenue being down 35%, I think, it's the target. How do you get there? So what actions are you taking? And I mean, is this like $300 million in savings? Is that kind of the rough number we're looking at?

Not exactly. It's saving 35% of the manufacturing cost, $1 billion is the selling price. So if manufacturing cost is 50%, it's 35% -- $150 million, $170 million. But there is 2 aspects of it. One of the cost reduction is going to be made by moving out of manufacturing of active ingredients in Europe and North America, and move all of this to lower cost country, India and China, either in our India and China plants or with our total manufacturing partners, very often exclusive or through contract supplies with generics, who are working with us. So that's the way we're going to do it. So we're going to limit our operations in Europe to more formulations and manufacturing of active ingredients and refocus all of the manufacturing to India and China.

Do you have to be a manufacturer of active ingredients, though? Can you just -- because it feels like the capital investment and requirement for active ingredient manufacturing might not be worth it anymore, if you can just be a formulator, right?

It's not very high. Those are not big brands. I mean our capital spending every year is $100 million. So it's not a very high capital spend. Plus, our plants could be expanded without building new plants. Plus, there is something which is fundamental for us. We have the 4 new active ingredients I've talked to you about. We have 2 new fungicides coming out of the development in research. We want to be able to manufacture those products. Those products need to be manufactured in-house. We are a manufacturing company, so we're not moving out manufacturing actives.

And how do you choose -- I mean, India and China, like under a traditional sense, obviously makes a lot of sense. How do you navigate just tariff, tariff uncertainty considering the ebb and flow of headlines, the risks around U.S.-China trade tensions. Is there just no ability to put this in somewhere like Vietnam or like what is ultimately the draw that gets you back to China and India?

On China and India, first of all, all the places where we have already facilities, where there is most of the raw materials coming from. Where there is the people, the knowledge. Second of all, I think people have to remember that for a company like FMC, the U.S. is not the world. The U.S. is only 20% of the market. Manufacturing in India and China put us in a very beneficial position for 80% of our business.

So yes, we have an issue with tariffs, but it's for North America, it's for the U.S., not even North America, it's U.S. Canada is pretty big for us. It's for the U.S. And the U.S. is not even 20% of the world market. Second of all, there is such a difference in manufacturing cost than manufacturing in India or China, plus the tariff is lower than manufacturing in one of our plants in Europe or in North America.

Andrew, to bring you in on this. So the restructuring work this year is consuming cash. Next year, if we return to growth, typically, that's a working capital headwind. How do we chart -- if the company is going to grow 15% in '26 and 15% in '27. How do we chart the cash flow progress from here?

Yes. It's excellent question, Matt. I think if you look starting at '26, we've guided to a midpoint of essentially breakeven free cash flow. Now embedded in that is about $130 million of cash restructuring spend for both the manufacturing footprint changes, Pierre was just talking about as well as for some final costs in the next -- over the next couple of years from a large take-or-pay supply agreement in our Rynaxypyr that we walked away from 2 years ago.

So that is one of the big headwinds on free cash flow in '26. There will be a step-down in restructuring spending from '26 to '27, but it's still pretty meaningful. It will take through the first quarter of '27 to make all the manufacturing changes we're talking about. And we still have another year of material take-or-pay payments from the older and Rynaxypyr supply contract that comes in -- that needs to be paid in 2027.

So what I think you'll see is you'll start seeing pretty healthy EBITDA growth after the repositioning in '26. We've said openly mid-teens, 15% kind of range in '26, '26 into '27 and '27 into '28. As you get that higher level of EBITDA, more of that will flow down to free cash flow. By '28, certainly, there's a much less drag from restructuring expenses. There will be a pretty significant step down from '27 to '28 with the restructuring expenses. But we do have some legacy expenses and some other semi-fixed expenses.

We pay about $135 million a year in cash for legacy environmental costs that are both in our mixture of discontinued ops, continuing operations, obviously, interest expense, taxes, those kinds of things. So getting that top part of the EBITDA to free cash flow, flow back to higher number, leads to a lot more drop-through. Then the last piece I'd put, Pierre pointed this point before, we spend about $100 million a year in CapEx. We're not particularly fixed asset intensive. But with growth, there is working capital growth.

We are doing a lot of things to both improve efficiency on all dimensions of working capital. We're working on ways to bring that cash conversion cycle back to more historical norms. It's been stretched over the past 3 years as we've been in recovery mode coming out of the big post-COVID correction. And as we've had some pretty big shifts in mix in our business, less B2B business on shorter terms, more business and long-term markets like Brazil and Turkey. So I think you will see an improvement in working capital productivity as we go through '26, '27, '28 as well that will reduce the amount of working capital dollars growth that's needed to support that top line growth.

Okay. I appreciate that. I wanted to talk a little bit, we've been layering in the discussion on AI.

Good morning, and welcome to the Fourth Quarter 2025 Earnings Call for the FMC Corporation. This event is being recorded. I would now like to turn the conference over to Mr. Curt Brooks, Director of Investor Relations for FMC Corporation. Please go ahead.

Good morning, and welcome to FMC Corporation's Fourth Quarter Earnings Call. Joining me today to provide today's prepared remarks are Pierre Brondeau, Chairman, Chief Executive Officer and President; and Andrew Sandifer, Executive Vice President and Chief Financial Officer. After their comments, we will take 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, CTPR means chlorinerenllprol, earnings means adjusted earnings and EBITDA means adjusted EBITDA. A reconciliation and definition of these terms as well as other non-GAAP financial terms to which we may refer during today's conference call are provided on our website.

With that, I will now turn the call over to Pierre.

Thanks, Curt, and good morning, everyone. Last night, FMC announced our fourth quarter and full year 2025 results as well as our 2026 priorities. Importantly, we also announced that our Board of Directors has authorized exploring strategic options, including, but not limited to a potential sale of the company. To strengthen our business and position ourselves for success, we are laser-focused on executing our operational priorities in 2026. Those include strengthening the balance sheet, improving the competitiveness of our core portfolio, managing our post-patent Rynaxypyr strategy and driving growth of new active ingredients.

In parallel, the company is working to evaluate the best path forward for the benefit of the business and to maximize shareholder value. Accordingly, the Board of Directors has decided that a formal proactive process to evaluate strategic options makes sense to undertake at this time. The strategic review is at a preliminary stage. We have retained financial and legal advisers to assist us with this process.

This strategic review does not impact the process underway to sell our India commercial business. As we look ahead, we are committed to position FMC for long-term success, and that starts with working toward our 2026 priorities as laid out on Slide 4. To strengthen our balance sheet, we are targeting paying down over $1 billion of debt through asset sales and licensing agreements. This includes the sale of our India commercial business, which continues to progress with binding bids expected to be received in the second quarter.

In addition, we are in active discussions regarding licensing agreements, which include upfront payments. Increasing the competitiveness of our off-patent portfolio product remains a top priority. Our goal is to lower the cost of non-diamide products to more effectively compete against generics. 2025 sales of this core product, excluding Rynaxypyr, were approximately $2.2 billion. Nearly $1 billion of these sales came from products manufactured in high-cost facilities. We expect to lower the manufacturing cost of these products by at least 35% by 2027. This is a complex process, which will require a reregistration for most products as well as a buildup of inventory in advance of the transition.

As a result, we will be limited in our ability to adapt to manufacturing mix to the changing needs of our customers. We believe this reduced flexibility will act as a sales headwind in 2026 and has been reflected in our forward guidance. In addition, we are executing a post-patent strategy for Rynaxypyr. 2025 sales were just over $800 million and in line with our expectation.

Beginning 2026, there will be generic offerings of CTPR in all markets. As CTPR becomes more widely available through generics, resistance is likely to increase. For example, we are seeing past resistance in rice crops in China and Japan. Our advanced formulations and mixture are designed to address this challenge. As the owner of the original molecule, we have viewers of historical proprietary data which benefits our development of formulations and mixtures to combat resistance.

For a more basic formulations over the next year, our plan remains to lower price and grew volume by capturing market share from all the classes of insecticides. We are already observing success with this strategy in a number of countries. We anticipate branded Rynaxypyr earnings barrels in 2026 to be in line with prior year as higher volume, particularly for more advanced offerings and lower costs offset lower price.

Finally, we are committed to the continued sales growth of 4 new active ingredients. We are only in the early stages of sales for 4 new molecules, but we are already seeing solid growth. Sales have increased from approximately $130 million in 2024 to approximately $200 million in 2025. For sales are almost entirely driven by Frontier and Isoflex. Dodhylex received emergency registration in 2 countries, which resulted in modest sales in 2025. While sales of new active ingredients grew 54% in 2025, they were below our expectations of $250 million.

This was mainly due to impact from later-than-expected registration for Isoflex in great retail. We estimate 2026 sales for new active ingredients to be between $300 million and $400 million barrels. These actives are in high demand with 3 of them offering a new mode of action. We still expect sales of the 4 actives to exceed $2 billion by 2035. We believe executing these priorities position us to enter 2027 with a stronger balance sheet, a more competitive portfolio and growing sales of higher-margin differentiated products.

Our 2026 full year guidance is provided on Slide 5. We're expecting full year sales of $3.6 billion to $3.8 billion to be down 5% at the midpoint versus prior year. Price is expected to be a mid-single-digit headwind driven by Rynaxypyr, which is consistent with the post-patent strategy. The removal of India is expected to be a 2% full year headwind that will only impact the first half. Excluding India, we expect volume to be modestly higher, driven by new actives and branded Rynaxypyr. Full year adjusted EBITDA is expected to be between $670 million to $730 million.

As you can see on Slide 6, the main headwind versus prior is in our legacy portfolio due to competitive mix. Product appear overall is expected to decline, driven by diamide partner sales. It is important to note that branded Rynaxypyr earnings are expected to be in line with prior year as implemented strategy. Tariffs are expected to be a $20 million headwind, nearly all of which will impact first quarter results. We expect positive impact from a growth portfolio with particularly strong contribution from new active ingredients.

Our first quarter sales guidance outlined on Slide 7 is $725 million to $775 million, 5% lower than prior year. Price is expected to be lower by mid-single-digit which is consistent with our expectation for all quarters this year. The removal of India represents an additional 5% headwind. We do expect some volume growth as modest increases across most regions are largely offset by a few significant factors. There have been a large number of generic CTPR offerings announced, particularly in the U.S. and Brazil as the last other patents expired at year-end.

Distributors and retailers have been reluctant to fully stock Rynaxypyr until they better understand the quality, availability and grow a response to these generic offerings. We believe Generic Country is also impacting our diamide partners from whom we are expecting lower orders in the first quarter. Finally, land registration losses in Europe will impact volume growth. We expect adjusted EBITDA to be between $45 million and $50 million, which is 58% lower than prior year and represents about half of the total EBITDA network headwind we expect for the year.

The expected EBITDA reduction is largely due to lower price as well as cost factors that are unique to Q1. For example, manufacturing costs are unfavorable to prior year in the first quarter. But as the year progresses, manufacturing costs are forecasted to become scorable. In addition, the full year $20 million tariff charges are recorded almost entirely in Q1. EBITDA margin in the first quarter is expected to be around 7%. This abnormally low margin is caused by the combination of lower sales on which to absorb relatively flat fixed cost and the unique cost headwind I just noted. We expect this margin profile to be unique to Q1 with subsequent quarter margins returning to more normal levels as a result of the sales and favorable manufacturing costs.

I will now turn the call over to Andrew.

Thanks, Pierre. I'll start this morning with a brief overview of our fourth quarter results. Let me note that you can find more detailed description of our fourth quarter and full year 2025 results on Slides 12 through 18 of today's presentation. During the fourth quarter, we continued to operate in challenging market conditions, including intense competition from generics and weaker grower margins. These conditions affected the timing of purchases and product mix for crop protection.

While we delivered adjusted EBITDA and adjusted EPS near our guidance midpoints, sales came in below our guidance range. We recorded $1.08 million in Q4 sales, a decline of 11% year-over-year or 5% on a like-for-like basis, excluding India. Price declined 6%, driven by lower Rynaxypyr and strong market competition, particularly in Latin America, which led to pricing headwinds for our core portfolio of products. Volumes were weaker than anticipated with a decline of 1% due to high competitive pressure.

Fourth quarter adjusted EBITDA was $280 million, a decline of 17% versus the prior year quarter, down 8% on a like-for-like basis, excluding India from the prior year. Lower price and volume were partially offset by lower costs and FX. Adjusted earnings per share for the quarter was $1.20, a 33% decline due to lower adjusted EBITDA and higher interest.

Moving on to free cash flow and the balance sheet. We reported GAAP cash from operations of $657 million for the fourth quarter, up $230 million versus the prior year period. The increase was driven by a release of working capital, particularly from receivables. This led to free cash flow of $623 million for the quarter. We ended 2025 with cash from operations of negative $6 million, which included $103 million of cash restructuring spending. 2025 free cash flow was negative $165 million. We ended the fourth quarter with net debt of approximately $3.5 billion, down over $550 million from the third quarter due to strong free cash flow.

Net debt to trailing 12-month EBITDA was 4.1x at year-end, while covenant leverage was 4.6x. As a reminder, our covenant limit is 6x through the third quarter of 2026 and then steps down to 5.5x at year-end. Turning to Slide 8 and the cash flow outlook for 2026. Free cash flow for 2026 is expected to be in the range of negative $65 million to positive $65 million or breakeven at the midpoint, including an expected $130 million in restructuring spending. Lower EBITDA, higher restructuring spending and modestly higher capital expense are expected to be offset by the liquidation of India working capital, lower cash taxes and improved working capital performance in the ongoing business.

Despite breakeven free cash flow and lower EBITDA, with the successful execution of our debt paydown plan, we expect to end 2026 with a reduction in net leverage of approximately 1/2 turn. We would then expect leverage to further improve in subsequent years with higher free cash flow from growing EBITDA and reduced restructuring spending.

With that, I'll hand the call back to Pierre.

As we look ahead, a key driver of our growth and what differentiates us from the majority of other crop chemical providers is our R&D pipeline of new active ingredients. This pipeline is the result of years of dedicated work by research and development teams, and it represents a significant competitive advantage for FMC.

On Slide 9, we have provided base sales expectation using the current targeted crops. But we believe there is substantial upside to sales through application on additional crops. Funatogicide has been registered and launched in all major countries where we intend to sell, including the U.S. and Brazil. Going forward, the focus will be on expanding sales through continued grower education. So flex active, we already registered and selling in a number of countries. Sales are expected to increase in 2026, in particular due to a full growing season of sales in great Britain, following a delayed registration in 2025.

Further growth is expected in 2027 following product registration in the EU. We remain on track to receive this important registrations as we recently received accrual for the active ingredient last week. DADIlex-active is the first new mode of action herbicide in over 30 years. We are confident that this herbicide can be useful in other crops like sugarcane and expect meaningful contribution from Goodix beginning in 2027. Finally, Rimisoxafen is expected to begin receiving registration in 2028. Rimisoxafen is the first herbicide ever to be classified as a dual mode of action. It is primarily targeted with farmer emerald and is now resistant to 8 herbicide classes.

This preemergent herbicide will offer corn and soybean growers a new solution to an increasingly challenging problem. In addition to these 4 molecules, we have 2 more active ingredients in development. While we expect sales of these 2 active to begin during the early 2030s, that contribution is not included in the $2 billion of expected 2035 sales listed in the slide. The growth of these active ingredients are an implant part of our key dynamics for 2027 and 2028, which are outlined on Slide 10.

In addition to accelerating the growth of the new actives, it is important for us to also stabilize our core portfolio by executing a Rynaxypyr post patent strategy and by improving the competitiveness of our legacy core. We expect margins to improve with SG&A and R&D spend growing much slower on top line sales. The combination of these actions is expected to result in EBITDA growth in the mid-teens percent in both 2027 and 2028.

In closing, we are committed to position FMC for long-term success. Our teams across the company are focused on executing our operational priorities for the same -- with the same dedication and innovation that has always defined FMC. At the same time, we are undertaking a process to explore strategic alternatives. We believe that pursuing both paths simultaneously best position us to maximize value for shareholders.

With that, we are ready to take your questions.

[Operator Instructions] Our first question comes from Josh Spector from UBS.

This is Lucas Beaumont on for Josh. So just firstly, like I mean you're targeting $700 million in EBITDA this year. I guess, just given the volatility that we've seen in the portfolio the past couple of years. I was wondering if you could kind of just help us think about the different relative contributions there that are coming from the products in the portfolio. So I mean we have the key product groups for Rynaxypyr, your new product sales biologicals in the legacy court, it's like off patent. .

So I mean it seems like potentially you're implying maybe $400 million on legacy $80 million to $90 million on each of like Rynaxypyr, Cyazypyr and the growth buckets have about $40 million on biologicals. So I mean I know you guys talked about the sales a lot. There's been a lot of volatility in there with the pricing and the earnings outlook. So I mean anything you kind of share to help sort of understand the components would be correct.

It's Andrew. I'll take the first crack at this one. Look, we don't break out profitability by product line. I think when we think about what's going on in the business this year, certainly, profitability of the core portfolio, the non-Rynaxypyr portfolio is a big contributor. It's a big part of the portfolio, and we've given those dimensions previously. It's about half the sales of the company. So it's obviously a big contributor to profitability. The Rynaxypyr, as Per stated in the prepared comments, -- we're expecting the branded Rynaxypyr business to deliver earnings that are essentially flat year-on-year.

We do see a decline in the partner sales portion of the Rynaxypyr business, both in price as our continued efforts to improve cost for Rynaxypyr are shared with our partners through the cost plus pricing contract mechanism as well as lower volumes. Again, as Pierre mentioned in his prepared comments. For the rest of the portfolio, we will see increasing contribution from the growth portfolio from all 3 elements of the growth portfolio, both at sales and in profitability with contributions from Cyazypyr, certainly from the new as we have meaningful growth from the year before and from plant health.

Just to answer at a high level around the volatility and our level of confidence I think we have very high level of confidence in our total growth portfolio. The 4 new actives, plant health, the sales appear. We also have a high level of confidence in our ability to keep earnings flat from 25% for branded Rynaxypyr and we're already seeing how this is going to be deployed. The 2 places, really, which are challenging outperformance are very well identified. The first one is our core portfolio. We know that we do have about $1 billion of the production, which is not cost competitive and for which we are challenging -- we are being challenged to grow and losing market share. That's the #1 contributor, and that's where we have a high level of focus.

The number 2 is sales to a diamide partner. We had to lower the Rynaxypyr cost. We had no way around that. And on top of that, I believe a partner must be challenged also on Rynaxypyr sales with less volume. So those are the 2 factors today, which are creating the most headwind in 2026 and which are being addressed to go away in 2027.

We Great. I mean I guess just following on from that then, I mean you called out that you think you're going to be able to drive kind of mid-teens EBITDA growth into '27 and '28. So maybe if you can just talk us through you see the drivers to achieve that sort of off this year's base. And I guess, what's giving you the confidence there that you can deliver on that given the challenging environment that we've seen in the past couple of years?

I think if you look into -- the question was a bit hard to follow, but if you look today at the 2026 challenges, they are very clearly identified in 2 buckets. Going into 2027, we know and we have confidence in our growth portfolio. It's been the growth of those products have been stable for the last 2 years. So the 2 factors we really do have to -- and that will continue. There is no reason for that not to continue to provide growth, and that's where most of the growth is going to come in 2027. It's a continuation of what's been happening in the last 2 or 3 years.

Where we have been underperforming is, as I said, the core portfolio, excluding Rynaxypyr. This one is only an issue of manufacturing cost. Our products are good. Our network is good. Our customers are confidence. We are just not competitive at the price level. We are correcting that. We are completely redoing a manufacturing footprint in high-cost countries, and this is well on its way. The number 2 is the Rynaxypyr partner contracts. We -- there is a limit to how much we can increase the cost of Rynaxypyr. We are getting close to the end of this price reduction, which can reduce the impact it will have on pricing to a partner.

And in addition, the size of those contracts is becoming smaller and smaller. So the impact in '27 is going to be very minor. So delivering a 15% EBITDA growth in 2027 has to be done by a continuation of what we have done over the last 2 years on the growth platform, which we are confident we can do and really, really get a core product competitive from a manufacturing standpoint, which we expect to do by the end of 2026 or early '27.

Our next question comes from Aleksey Yefremov from KeyCorp.

Just wanted to follow up on the sale of the entire company. Have you had any discussions so far? Any interest? And was this prompted by any inbound inquiries?

No. We -- what we've done, Aleksey, is a normal process. We worked with our Board, and we presented to the Board a business plan, which I have described and that business plan includes $1 billion of reduction of our debt. That is part of the base plan, which also include improving the competitiveness of the core portfolio, the Rynaxypyr strategy and the growth of Active. That's the base plan which lead to a $700 million EBITDA target. Once we presented to the Board, we also discussed is there a way to increase shareholder return. Is there a way to maybe improve the growth of the sales of our new active ingredients and speed up the development process of the actives we have in development currently.

And should we think about having our company operating under a different ownership, which could be beneficial to shareholders and which could be beneficial to the performance of our portfolio. That discussion with the Board led us to say we need to go to pursue 2 paths: Path number one, the plan I presented to you, path number two, an entire sale of the company. And for this, we are getting structured we've hired advisers [indiscernible] legal, and the process is being put in place right now.

Our next question comes from Christopher Parkinson from Wolf Research.

This is Harris Fein on for Chris. I guess following up on the last one. Looking out to 2027 and 2028, still looks like you're confident in building some momentum. Can you just talk about the thought process around the timing of initiating a strategic review? And any more color about how you're weighing a full sale versus an asset sale licensing agreement, what those different structures might look like?

Yes. So the $1 billion of debt reduction which is the sale of India, which is taking place. We are waiting for binding offers right now. The licensing of all of our new molecules as well as other assets we have identified, this is going on with the basic plan. That is independent from the sale of the entire company. That's the base operating plan. On the side, there is another path which is mostly focused on the entire sale of the company.

And this is for the reason I said before, shareholder return as well as potentially giving more potential for the company to a period in a better way. So the process of partial divestiture versus full divestiture are separate. One is taking place with the base plan. The other one is a separate process. We are currently undertaking right now.

Our next question comes from Vincent Andrews from Morgan Stanley.

I wanted to follow up on the strategic alternatives in a couple of ways. First, Pierre, could you just clarify, is it only possible to do a licensing deal or all the entire company? Or is it possible that somebody could buy the new molecules in the pipeline, somebody else could buy the diamides and somebody else could buy the balance of the business or other types of permutations or are there limitations just in terms of the way that the company is set up from a manufacturing perspective that would make it too difficult to do something like that? .

So I believe the company is set up in a way where multiple things could be happening. I would never say and never close any option, which would be beneficial to the company and the way we operate and which would be beneficial to shareholders. But from a probability or level today. I think the 2 highest probability we have in front of us. One is the base plan, which include licensing, a sale of asset and the sale of India. The other one is the full sale of the company. There could be things in between. But right now, they are not part of the way we are thinking about the company. Obviously, if people come with interesting ideas about things we could do, we would listen. But right now, we are focusing on 2 paths as the principal actions we are taking.

Our next question comes from Joel Jackson from BMO Capital Markets.

Pierre and team, I'm just trying to reconcile some of the guidance you're giving some of the different product buckets in '26. There was kind of a prior question on this earlier, but I just want to focus on revenue. I'm looking also, of course, of the good nuance guidance you gave last year for all the product buckets going out for a few years. So if I understand, I mean, you said what you think the new AIs will do in the growth portfolio in '26, but there's some other product buckets.

Like so I think you're saying Rynaxypyr sales will be down this year, partnered and nonpartnered. So that's the first question. Then the rest of the portfolio, nonrecurring core would also be down this year. And then in growth, would SaaS appear be down in 26% for sales and then would be roughly flat to up for the plant health. Like can you just -- those other buckets? So Rynaxypyr, noncore Rynaxypyr, Cyazypyr and plant health. Talk about how you see '26 to '25 specifically, individually, sorry.

Joe, it's Andrew. I'm going to take the first track at this, and Pierre will chime in with some additional comments. When we think about the sort of the core versus the growth portfolio and big strokes for revenue. For Rynaxypyr, as Pierre mentioned, we're expecting flat earnings from the branded business. Revenue could be slightly down, but it's not a tremendous difference. Where you have the shrink year-on-year in the Active business is in partner sales. That's both from price, from the cost plus pricing mechanism and from volume with the partners.

For our legacy core, all the remaining core products, we are expecting a slight contraction drop year-on-year, that's pricing and volume, right? So overall, the core portfolio is down year-on-year from '26 versus '25. When we look at the growth portfolio, we have growth in all aspects of the growth portfolio. led by the 4 new active ingredients. They're growing strongly, right? And again, Pierre walked through in the detail of the slide, some very, very good momentum with Fluindapyr having been registered in all the core countries and with accelerating growth of Isoflex, particularly with having a full selling season in Great Britain this year.

Plant health also grows. So all 3 pieces of the core portfolio are growing in '26, but it's really differentially impacted by the new active ingredients.

I think it's important what Andrew said is, the growth portfolio, there is no part of the growth portfolio, including branded sales appear the 4 active ingredients and plant health, all of them are growing. Rynaxypyr, the strategy is focused on earnings and we do expect Branded Rynaxypyr earnings to be flat versus '25. And then where we have a contraction it's in partner sales for Rynaxypyr and the core portfolio.

Our next question comes from Edlain Rodriguez from Mizuho.

Pierre, just 1 quick 1 for me. like how confident are you that you have a good sense of the challenges facing the company? Because, again, things keep popping up here and there. So yes, I mean, your confidence level that you have -- you know exactly what the challenges are. And looking on year out that you have -- that you see a path out of this funk and you have a solution to fix it.

Listen, it's a valid and it's a good question. I'm going to answer that in a very, very straight manner. I think we've done a lot since I've been back in the company. There is 1 part which I missed. It is the risk we had to see a core portfolio outside of Rynaxypyr being as challenged as it's been by generic. And if you look at the performance of the company, we pretty much performed as expected in every aspect, except the core portfolio outside of Rynaxypyr. The problem is that it's a big part of the company. It's $2.2 billion. So just shrinking on this part of the company by 3%, 4% is a significant impact. I was not anticipating that the downturn would last that long and that there will be that amount of competitiveness in that part of our portfolio especially in place like Latin America.

I would have to do it again. I will have started the restructuring of manufacturing footprint earlier. It is what it is, but if you look today at the portfolio of the company, the entire growth portfolio, the 3 parts are in great shape and performing exactly as we are expecting. The Rynaxypyr branded strategy is clearly in place. We have 1 thing to fix. It's the core portfolio. We know how to do it. It's ongoing. The plan is in place and is started.

So why am I so confident? It's because the number of things we have to fix is limited. It's 1 thing. The rest, it's in place. The problem, this thing, we have to fix with better fix it because it's big, but it's not that complicated to know what we have to do.

Our next question comes from Frank Mitsch from Sinomine Research.

Pierre, I would assume that you're thinking 2026 is a bottom for the company. And so I'm just curious in terms of the timing of the sale of the company, I mean, it would seem like you're having these discussions at the bottom of the cycle, which might not be -- get the best value for shareholders at this particular point in time. Can you just address the timing and why not wait until your restructuring program is yielding tangible results?

Thanks, Frank. Yes, I think we do have a base plan, which allows us to go through 2026, which I expect at this point is at the bottom of the cycle for the company. And I also believe that getting through 2026, we were doing it, will create growth starting in '27, '28. That's the base plan we need to execute on reducing our debt. And this process, we need to bring in $1 billion into the company. Like any plan, you always have to raise the risk and the certainty you have to deliver it.

We are pretty confident about this plan and believe it will take us the right place in '27. So that being said, we have a Board and this board has the responsibility to look for shareholders and how to get the best from the portfolio we have in the company. So when you think about that as an operator, clearly focused on 2026 will be the bottom of the company and should allow us to go back to growth in '27.

Working with the Board, we also believe it is important to always look at a double path. A parallel path will allow benefit for the shareholders and potentially thinking about doing more things with the portfolio of the company that we can do alone. When you take money to restructure a company like we are doing, it is money you don't stand in accelerating the growth of your new active ingredients, including the one in research.

So the question we have to ask ourselves is will this company operate better, grow faster under a different ownership, which will have maybe more flexibility financially than FMC has today. So having both brands are valid. It is not like not selling the company would be a disaster because we don't have a plan to go through '26. I think the '26 plan is robust, and will put us in a good place in '27, but the alternative could be highly beneficial for shareholders and would allow the company potentially to operate better and faster. That's why the 2 process are being followed in parallel.

Our next question comes from Kevin McCarthy from Vertical Research Partners.

This is Matt Hatter on for Kevin McCarthy. Could you provide an update on your upcoming debt maturities and covenant obligations? What's your plan for the next tranches of debt that are coming due?

Sure. Thanks, Matt, it's Andrew. I'll take that one. Look, we have $500 million bonds maturing in October. Obviously, our intent to refinance them in advance of their maturity. Fall back, we can absorb that into the existing revolver capacity. But our intent is to replace them with new financing well in advance of that. We're in discussions with our financial advisers in the best form that we might pursue to do that.

But certainly, our intent is to refinance those here in the first half. When we look at our overall debt levels, as Pierre has made very clear, we are intensely focused on reducing total debt of the company. We have a plan to reduce that debt by $1 billion this year through a mix of asset sales, licensing agreements, et cetera. We have very strong confidence in that, very advanced discussions on the sale of the India business. discussions underway on licensing and on other asset disposals, we're not at liberty to go into any further detail at the day, but good progress in all of those dimensions.

So that's an important part of getting the company on a much stronger footing by the end of '26, During '26, we will obviously have to manage closely our debt levels and our working capital. We recently renegotiated our revolving credit facility to get much higher covenants, that amendment was finalized in early December. We asked for a very high covenant 6x to allow us the flexibility to work through the things that we need to do in '26. And that will require us, given the seasonality of our EBITDA outlook with a very light first quarter and then building through the year to manage the traditional working capital build very carefully. And the team is laser-focused on managing inflows and outflows of cash in the company to keep debt within those covenants.

So I think we have a good plan to address the upcoming maturity. I think we have a good plan to continue managing within the existing covenants. But we are looking at all kinds of financing options and how we might put the company on better footing faster, right? And that's something that will be very active discussions over the next -- particularly the first half of this year. Again, to directly address the maturities, but also just to make sure that as we're paying down debt, we have the right overall capital structure for the company.

Our next question comes from Mike Harrison from Seaport Research Partners.

I was hoping, Pierre, that you could talk a little bit more about the new products coming in at $200 million rather than the $250 million you expected. It seems like that's a fairly large shortfall that just be related to a registration delay in the U.K. And I guess maybe looking forward, can you discuss some of the factors that might drive that new product revenue toward the higher end or lower end of the $300 million to $400 million range that you've given for 2026. .

Yes. First, for the $50 million shortfall, your comment is correct. It is not all the delay in registration for Isoflex. The delay in registration in Isoflex is a big part of this shortfall. But you also know that our sales in Brazil, especially the direct sales to growers fell short of what we were expecting. It was still for a new market penetration, what I would consider a success but not as successful as you were expecting. And part of those sales we didn't do were including through an appeal.

So the majority of the shortfall is the registration delay, and the -- there is an additional shortfall influence year because of direct sales being a bit lower than what we are expecting. Now the range of $300 million to $400 million seems to be wide what would drive us toward the higher end is mostly registrations. The speed at which we get registration, how much of them we had not for [indiscernible] but for Isoflex. There is a place where we have, for example, exception to registration, which have been requested by our customers. We don't know if they will be granted or not. So there is a registration aspect, which moves a lot in terms of timing. It doesn't change the fundamentals when you go 2, 3 years down the road, but on a short period of time, 6 months could matter.

Our next question comes from Matt Deer from Bank of America.

This is Salvator Tiano filling in for Matt. Sorry, I just want to go back to Rynaxypyr trying to understand a couple of things. Number one, based on the flow chart, you mentioned that the EBITDA decline this year on Rynaxypyr will be from your partner sales. If I'm reading that waterfall chart correctly, it looks like it's kind of a $50 million EBITDA, and last, I remember the idea was partner sales for Rynaxypyr were $200 million. So that's in terms of revenue, not even earnings.

So that implies a massive, massive reduction in margin. So are these numbers correct? And why are the earnings on that small bucket declining as much? And the second is, I get the branded Rynaxypyr earnings target of being flat year-on-year. But can you talk a little bit about the top line for branded Rynaxypyr earnings. What gives you confidence that the volumes will be flat given the competition? And also, what is your assumption on price, especially since we noticed that you started lowering the price in Q4, as mentioned in some of the slides, right?

All right. So it's Andrew. I'll start this off and Pierre will take the second part of this. I think, look, for Rynaxypyr in particular, as we think about the partner sales, we're looking at a reduction in volume and price. And when we look at the slide, let's be clear, we are intentionally not giving those numbers. We gave you a dimensional view of the drivers. So I would not -- I'm not going to comment directly on estimates that people might try to infer from that slide. What we're trying to give you is a directional sense of the major drivers and what's happening with the EBITDA this year.

So certainly, volume and price or impacts on the partner sales for Rynaxypyr and reduced both sales and profitability year-on-year for that piece of business. For the branded Rynaxypyr business, we have a combination of factors at play. We are reducing price, particularly on less differentiated solar formulations that directly compete with low-cost generic entrants. We are also seeing a mix shift where we're putting much more emphasis on our advanced formulations, mixtures and high concentration product offerings. The combination of that mix shift volume gains as we're increasing penetration of Rynaxypyr more broadly, not just into the existing markets and a significantly lower cost, right? We continue to have cost reduction from '24 to '25 to '26 allow us to deliver a relatively flat profitability of branded Rynaxypyr year-over-year. At the top line, it's a similar kind of story and it's again, that combination of volume and price -- volume, including the mix shifts.

Pierre, do you want to add some things to the outlook for Rynaxypyr?

Yes. The only thing I would add is you cannot make a straight calculation, lower price, higher volume, where do we land in profitability because you have a change in the mix which is enormous with the work we are doing. I'll give you an example. I believe for Rynaxypyr in 2026, 50% of our sales will shift to advance formulation. So it is not at all the same portfolio in 2026 that we would have in 2025. And this 50% advanced formulation command a higher price. So there is no price decrease for those formulations. That's why we have to be very careful that -- it is not -- the price will be lower, the cost will be lower, and we'll have to increase the volume to compensate for the lower price. There is a very large part of the portfolio, which doesn't see a lower price. As I said before, it's at least 50% in 2026.

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

All right. We'll go ahead and get started. Again, very thankful to welcome the FMC team. Pierre Brondeau, the CEO; and Andrew Sandifer, the CFO. I've known these guys going back years, been kind of a quiet last year, I guess, jokingly for you guys.

I mean it's been a tough last year. So Pierre, maybe just take a minute and kind of a little after action review, if you were sitting here a year ago, what you would have expected to happen, versus what has happened over the last year, just to kind of level set the changes going on at FMC?

You start with a tough question because if I look back -- if I look back when I came back over a year ago, I looked at where the company was and I looked at what needed to take place? And we really, with the team, we listed all of the things. And I made a decision which may be looking now might not have been the best decision.

I approached the company by thinking more of a soft landing, balancing, protecting EBITDA, and at the same time paying debt slowly, retaining dividend and focusing on some of the very critical things I felt were impacting the performance of the company short term, which was the level of inventory we had in the channel. The Rynaxypyr strategy, the situation in India and the leadership, which had to be reshaped. And I felt there is other things, but those 4 should allow us to keep our head above the water and carry on and go.

Where I am today? And a year ago, I thought that, that would do it. When I'm back now, I'm thinking, the company needs much more of a rethinking. We need to recreate the foundation of this company. I think what we did have to be done, but we have to go one step further. I think we need to be more aggressive on the balance sheet side. And there is multiple ways to do it, not to solely rely on free cash flow, but put everything on the table. From portfolio to working capital, and we think about what are all of the things we can do for 2026 to be a year where we will change significantly our balance sheet.

I also think that -- if you think about our portfolio today, we have what we call the growth portfolio, and that piece is going well. And then we have the core portfolio where there is Rynaxypyr and there was a very big focus I had on with the strategy and the cost. But there is still $2.5 million of what we call the core product, which are molecules which compete with generics and we use to make formulations. This should have deserved more attention.

I think we lost share. It's a big part of the company. I mean, $2.5 billion, that is we lost share. We had negative growth, and we are price impacted without being cost competitive. And I think we have to look at those products and really look at where we make them, how we make them, look at the supply chain, and completely rethink the supply chain to be capable to compete with more aggressive generation. And I think the more aggressive approach to the balance sheet and a more aggressive approach to overall cost of manufacturing product should have been taken on at an earlier stage. It's going to be a big area of focus in 2026.

Fair. Okay. And then maybe touch on -- when you say be more aggressive on the balance sheet, specifically kind of what are you looking at, or what should investors expect to see happen there?

It's -- it's an early stage for me to talk too much about it, but we do have tools. Let me -- first, Andrew has a top priority to look at working capital. We have $2 billion of working capital. I have to believe there is significant money to be extracted.

The decision we've made about India and selling the business. That's multi-hundred million, which could go down to paying debt. We made the decision around dividend. I also think we have to be brave enough to look at the portfolio. I think there is things we can do with the portfolio. It's early to talk about, but I think there is things we can do with the portfolio. And also, we talked about that at the last earnings call. We have 5 active ingredients, which are very good new molecules. Most of the technology companies have contacted us with some level of interest around licensing.

I think there is places for strategic licensing with companies which have, maybe, a different crop profile than us, more in row crops. We are more in specialty. Maybe molecules which are not used straight, but which are used as partners for mixtures. And maybe there is some smart ways to do licensing, which could also help with the debt payment. So there is a series of things we have to look at. But what I'm saying is this year, we're going to put everything on the table.

Okay. And just because you went there because it's always interesting to me, you look at where the market cap of the company is, the enterprise value, you're like, okay, either have been doing this wrong for 25 years or there's value there. What if you sold one of the molecules. I mean, you know, fluindapyr and just said, okay, again, not generating a ton of EBITDA today, so that would be very deleveraging. Is something like that on the table, or that's a step too far?

Today, it's a step too far. I believe with the plan and thinking we could put in place, we don't need to go that far. I think there is in between steps to be taken between the portfolio and strategic licensing, which would not require us to move away from one of those 4 molecules, because those 4 molecules do have a multibillion-dollar potential. And I don't think -- we are still highly profitable. We are still north of 20% EBITDA margin. So we're still a good company. We have access to fund. We have a good revolver. I don't think that we are in a -- the stock is more -- what happens in the stock is more dramatic than the real shape of the company. So I don't think we have to go that far.

Okay. And so let's just put some numbers around kind of a bit. So on the Rynaxypyr, I think the numbers I've been working with, and tell me if they're different, roughly $800 million in revenue as we head into next year. $200 million that you're selling to partners, basically other large ag chem. $200 million that are kind of in cocktails, different types of mixtures. And then $400 million that's kind of sold as just a Rynaxypyr molecule. That's the part that's most at risk next year. And as I understood the strategy, the price of that probably comes down 15%, 20%.

But then hopefully, that leads to volume gains because you would move into like, let's say, territory that neonicotinoids or something are doing today, so you could actually grow maybe 20% kind of offset that. So the top line on that $400 million stays roughly flat. Is that still with what we're seeing kind of with generic ag in general, the right way to think about what happens with Rynaxypyr into next year?

That's it. Your math is correct. I would maybe -- the only thing I would correct a little bit is the 10% to 15% pricing could sometimes go all the way to 30%. So there could be price decrease for the straight molecule to go into some market, which could be a stronger price decrease. And there is also maybe more of a formulation work where we have more of a premium.

We know there is resistance, for example, which is taking place almost everywhere on Rynaxypyr. We do have formulations which will be registered and patented, which allow to address resistance. We do have high concentration product. We have multiple mixtures like the one with fluindapyr, which extends the spectrum. So what you said is completely correct. Maybe some pricing a bit more drastic than what you say and a bit more work towards still technology-based formulation.

Interesting. Okay. And then that's just round numbers, 30%. If price does come down 30%, obviously, you've known it was going to come down. There's work you can do on the cost side, and I always think about it, again, I own a couple of farms is like, they take you to play golf. Maybe you go see a baseball game. All that stuff comes out if I want to buy at a generic price. I don't get tech support. So how much cost can you take out of that Rynaxypyr COGS to offset, again, maybe $100 million in price decline?

I think you talk about everything comes with the sale of the product. And I would talk a lot about growth in this organization, which are helping the farmers. I believe we can sell at a premium somewhere between 10% and 20%. We don't have to go down to generic pricing. Between the quality, the brand and the tech service, we can sell at a premium. Some cases, we've been selling up to 20% of premium. So it depends, but we don't have to go to the historic pricing.

Okay. Fair enough. But then is there a meaningful margin hit to that or the volume plus the cost takeout can roughly mean that the margin stays the same? Or should we think about, again, for every 10 points in price, margin comes down half that? How to think about roughly the margin hit on it?

So the cost has been going down significantly. I mean, on the order of magnitude. The volume will have to be significant. We have a simple objective, which is keep the dollar earnings of the business flat, '25, '26, '27 and '28. So it's -- we don't expect any growth in earnings. We're going to look more at the dollar at the bottom.

And pricing and cost is not everything because remember, we're going to still have most likely multi-hundred million dollars of molecules where we have $200 million, which are sold at a premium. Because they avoid multiple spray, because they address the resistance issue and more efficacy. So it's not only a single equation of price, cost and volume. There is also all of the premium markets we're adding.

And then the sister product, Cyazypyr, I think in my model, I've got it roughly $0.5 billion in revenue, like $475 million or something. As Rynaxypyr comes down, does that do anything to Cyazypyr because the gap between the two in price would increase? Do you even lose volume from Cyazypyr to Rynaxypyr? Or do you have to make any price adjustments on Cyazypyr?

No, they are different products. Rynaxypyr is a very narrow spectrum with a very high efficacy. Cyazypyr is not used for the same application. It's a product which has a very, very broad spectrum. So they are not -- growers never have to make a decision between I buy Cyazypyr or I buy Rynaxypyr, depending upon the type of pest, and would buy one product or the other. Cyazypyr is under data protection in some places until '29, so which is equivalent to IP protection. So there is no impact of what's happening on Rynaxypyr on to Cyazypyr.

That being said, '27 is tomorrow. We don't want to get surprised with Cyazypyr the way we did it with Rynaxypyr. So we are starting the process of working on the manufacturing cost, bring it down to the same level of cost we have for Rynaxypyr, preparing the formulation. So all of this work is taking place to be ready when the market -- when the molecule is in the public domain.

Okay. And then if we jump on the next bucket kind of the core products, at least on my numbers, if you back out Rynaxypyr, Cyazypyr, you're kind of at $2 billion to $2.2 billion on the core pesticide, something like that. So that's it?

Not pesticide. Crop products.

Crop products, yes, yes. Okay. Fair. So that seems to be where the latest trouble has kind of popped up is in that group of, let's just call it, $2 billion because I like round numbers.

So what's changed there relative to what you thought before? What's the solution that needs to happen? And kind of what's the financial impact on that $2 billion as we go through the process?

I think multiple things have changed. We could have anticipated. First of all, if I think about '18, '19, '20, customers needed Rynaxypyr, Cyazypyr. There was no generic to be seen for another 5 years. And growers usually, when they buy a couple of molecules need to buy a broad range of molecule because there is the rebate system and there is a limited number of suppliers. So there was a natural sale of a lot of products coming with Rynaxypyr and Cyazypyr. That is going away because Rynaxypyr is not going to be. It's going to be in the public domain. So we'll have less of a leverage for that.

I also think that we had a strange period of '21, '22, '23, where there was a lack of supply because China shut down post COVID. There was this big inflation period where pretty much people were so worried about supply that you could sell at whatever price. That doesn't exist anymore. Pricing is going down. We are in deflation period. So pricing is more important.

Number three, we are in a period where farm economics is not as good and people buy more on price than they did before. So you put all of those things together, I think it would have been wise in '20, '21, '22 to have rethought our manufacturing cost for those molecules because there would be one day where you would be facing competition against generics maybe with less levers to sell those products at a premium.

And so as you're making the changes now to that $2 billion, how should investors think about the impact as they're trying to model that? What changes happen there as we get into '26, '27, '28? Is it a dip and then a bounce back? Or is it kind of a steady glide down? Or how to think about either margins or just contribution?

If I think about '26, we're in the process of doing the budget. I don't have much information. But if I think about '26, the probability for '26 to be better than '25 is very, very small. There is more headwind than there is tailwind. Pricing is not doing better. Pricing is stabilizing, okay? It's stabilizing, but it's been going down so fast in '25 that the average pricing in '25 versus '26, '26 is going to be lower. So we're going to have a lower pricing overall, even if there is more stabilization of pricing right now.

Tariffs. We still don't know about India. We don't have the rules, but tariffs are going to be a headwind in '26. We are not expecting much of a change in the market and the demand. So we don't expect there going to be a step change in the market.

And then last, it's going to take a year for us to fix our manufacturing footprint to be competitive on our market. So '26 is the year where we're going to be recreating the foundation of the company. '27 -- here is the objective. If things go our way, we do what we expect to do on the balance sheet with all of the options we have today, and we finish '26 or end -- or start '27 with a balance sheet in a much better shape. We do all of the changes we want to make, especially around the cost in '26, and there is an EBITDA jump in '27. And now we start '27 with a much smaller balance sheet and a higher EBITDA and a debt-to-EBITDA ratio, which makes much more sense.

So the way I see it is a '26, which will be a year of very deep transformation. It's going to be heavy lift. Benefit seen right away in '27. And I think we'll talk about '28 target where in addition to everything I say, by the time you get to '28, your 4 new molecules are going to be starting to get closer to $1 billion. That's meaningful. That's the number. This year, it's $250 million. Most likely, we're going to be expecting a number like $400 million for next year.

But then by the time you get to '28, we will have 3 of the 4 which will be commercial, and we'll be launching the fourth one, Rimisoxafen. That's when you start to get to $1 billion with molecules which are growing 20%, 30%, 40% a year. So then it's a very different profile. You get much more to the type of company we were in '17, '18, '19 with a large part of your portfolio growing fast at a premium and being IP protected.

Fair. And if you had to rank those 4 molecules for 7 years out, again, when they're at maturity, how would you rank which ones have the shot at being the biggest or the best for the portfolio?

Funny enough, they are in the same range. They are all a $400 million to $700 million molecule. So together, they are $2 billion to $2.5 billion. They're about the same range. They could be bigger if we find the right licensing partners, which have access to markets where we have less of an access. So -- and we like -- we like part of the sales under licensing because you sell them at a cost plus. It's quick cash. Those are paid in 45 days. So to have a part of that portfolio in a cost-plus supply from a cash standpoint is beneficial, and you increase your market reach because some companies have access to crop we don't.

Okay. And when you just do the work board exercise, either by crop or by geography, where is it that you are weaker that you would look for a partner? Is it Africa? Is it [indiscernible] trees? Kind of like where is it that you would need the most help or could get the most help selling product?

I think I'm going to ask help for my CFO next to me, but to give you a percentage. But generally speaking, as a company, we are much, much stronger in what is called specialty crops than row crops. We make most of our business, sugarcane, cotton, fruit, vegetable, peanuts. And the percentage of all of those together, but...

Yes, corn and soybean is about 30% of the product mix. Fruit and vegetables and other specialty crops are significantly larger collectively. It is more fragmented by individual crop. But when you think about those categories. So I think certainly, compared to some of the other major players out there, we are less levered to particularly Americas corn and soybean.

I would bet you that -- and I don't know their numbers, but I would bet you that a company like Corteva is almost the reverse because being also a seed company. It's normal that most of their crop chemical work is dedicated toward row crops.

Right. Right. Okay. And so just the idea would be if you could do -- the perfect deal would be to do a deal with another large -- Syngenta, Bayer, BASF, Corteva, you would get some money upfront, and you would get a partner that could help basically accelerate the sales of that -- one of the 4 products, or maybe all 4 products. And that is a big driver in kind of bringing down the leverage on the balance sheet. That's...

That's one of the options we have.

And besides using like licensing deals for the molecules, kind of I guess, what are the other more aggressive ways that you can attack the balance sheet? Again, working capital, I think you called out. Is there stuff within the core business within that $2 billion? Or again, that doesn't make sense to try to monetize?

I'm going to have to be super vague, but yes, there is India. Yes, there is licensing. Yes, there is working capital. And yes, there is portfolio options. But at this stage, I cannot talk more about it. But there is portfolio options.

Okay. And if you look at the market to sell or to license into today, you can go back, obviously, there was a period that everybody want to acquire. The 2000, early 2000s, people were rolling up the industry. We haven't seen a lot of acquisition done lately. Is there still appetite there? Do you think for people to want to get bigger in ag chem? Or is this a tougher time to do deals?

I think if you talk -- when I talk to all of my colleagues who run technology-based crop company, we realize that it's getting more and more difficult because of regulatory, and more and more expensive to develop new molecules. We also know that you need new molecules because with the amount of generic resistance increases very fast. So you need new mode of actions.

So today, lots of people say if we could join force on the technology front, which would imply consolidation. Frankly, I do not know if consolidation will be possible. 6, 7 years ago, we know we acquired the DuPont business because Europe wanted 5 technology companies. Has that changed? I don't know. But if that has not changed, consolidation will be prevented by antitrust.

On the other hand, authorities could very well be realizing that developing new molecules is going to require bigger and more powerful companies. So that could be a driver to bring new molecules to the market. So I don't think there is less appetite. But for all of us, there is still uncertainty around the antitrust rules.

Okay. Fair. And then just because we get asked it a lot, I think people would be interested in your view. The announcement that Corteva was going to separate itself, which is kind of 180 degrees versus, again, what everybody always want to do, which is kind of roll things together and glam them together. What's your take on that? What that means for the industry? Just kind of how you see that impacting FMC and the industry going forward?

I cannot comment on the decision Chuck made. I'm sure he has reasons to believe that those two companies will be operating better independently than each of those businesses. And to some extent, -- to some extent, I understand that the model might be different. As I discussed, the crop chemical business is going to require a blend of innovation and high focus on cost, which you might not have on the seed side. So there are going to be different drivers in those business. And that could be one of the reasons for which he believes the focus and the top management has to be different.

For FMC, an independent crop chemical company creates an additional partner. And if I dare saying, I hope my friend Chuck is not going to be mad at me, but today, the crop chemical side of Corteva serve the Pioneer seed side. So it's almost a captive. Now Corteva is a very smart company. And when a competitor has a better product, they don't hesitate to bring this product into the package. But the separation for us should open up a bit more, I would say, the Pioneer hectares than what it is today. So I don't see a negative for us. We have a potential additional partner, and we have more acres open to us. So I don't dislike the move at all.

Okay. Okay. I guess, obviously, you've talked to a lot of investors in the last several months. The stock has done poorly. Where do you think when you talk to them, your view of kind of where we're going over the next several years and the value there versus what they push back on, where do you see the biggest disconnects between your view of FMC and investors?

I think '26 is a turn. There has been, what I still believe, an exaggerated reaction from a stock standpoint. The company has a capability which is much beyond the market cap today. So I would say that we are paying the price, and our shareholders are paying a price, maybe not enough of an aggressive change of the company. We are soft landing, I thought it would work, would not work.

This company has a tremendous portfolio. We have 4 new molecules and nobody else is putting 4 new molecules on the market. And we have Cyazypyr, which is a fantastic molecule. I think we underestimated two things. And we're paying the price for that, but they are not easy, but they are correctable. One is the balance sheet and the speed at which we needed to correct that. I missed that, and that's going to be an area of focus. The other one is with all of the challenge around the growth molecules, Cyazypyr, the loss of patent on Rynaxypyr, we maybe forgot a bit that we had $2 billion, $2.5 billion of business to protect.

So all of those are highly correctable in a short period of time. I think in 12 months, we're going to make a big, big change. And I think the potential of the company is intact. And the reaction was exaggerated. You know what, I would have acted that, faster, have a more drastic change, maybe we would not be where we are.

Okay. And then maybe two more for me, about out of time here. But when you think about the price and the volume numbers that you guys will print, let's say, back half of this year through next year, we do have some comps. Obviously, Corteva has ag chem, Bayer, BASF.

How do you think you'll look relative to peers over that period? Because it does feel like your numbers have looked a little bit lower in the back half. And originally, we kind of thought, well, okay, this is just Chinese generics kind of hitting Latin America, you know, writ large. But do you think your portfolio, in particular, will do less good versus peers on price and volume next year?

Next year, I don't know. I think if I look at the second half we are not dramatically underperforming the industry. If you look at the numbers from our peer company, we're not underperforming them. We are underperforming versus what we thought we could do.

Looking at where we came from, looking at how much we were prevented to grow because of what we had in the channel, we had super aggressive targets, especially in Latin America and especially with the building of a new sales organization. This process is working very well, but it's working slower than what we're expecting. So I think the disappointment is not as much versus our performance against peer company but versus our own targets, which we missed.

Okay. And then maybe the last one for me. You'd obviously stepped back from the active CEO role once before. You just lost your President. I mean this is going to be a heavy grind. Is it -- I mean, like the next 3 years, should investors expect you to be here leading the charge? Or do you want to bring in somebody who is kind of more of a CEO? Or kind of, what's your thought process around just kind of how to manage the leadership through this change?

Yes. At this stage, I don't have a timing. I'm committed to the Board to only leave when I have a replacement and when the company is on track. And we are not recruiting a replacement right now, and we are not recruiting a CEO. The position which was held by Ronaldo was a bit artificial in the sense that it was creating a layer between me and the region, which is not a normal situation. The region need to report to the CEO because that's where the action is taking place.

I need to see customers, I need to see, I need to travel. So at that point, the way we decided with the Board is the best structure was delayer, have the regions reporting straight on to me, and do what I have to do in 2026 and beyond, and leave when the company is in place. There is no active search for -- we are, of course, our Board has a search committee, which is always watching what is outside. So we have a current list we're updating. And we are looking at talent inside and doing talent reviews. But right now there is nobody pushing me out.

I think -- the fact, yes, you're committing to it, I think...

And I don't intend to run away.

Okay. Terrific.

Unfortunately, I'm here, Andrew.

Awesome. Listen, we run ourselves out of time. Thank you so much, team FMC for coming and spending some time with us, and we'll catch up with you a little bit later. Thank you.

Thank you so much.

Good morning, and welcome to the Third Quarter 2025 earnings Call for FMC Corporation. This event is being recorded. [Operator Instructions] I would now like to turn the conference over to Mr. Curt Brooks, Director of Investor Relations for FMC Corporation. Please go ahead.

Good morning, everyone, and welcome to FMC Corporation's third quarter earnings call. Joining me are Pierre Brondeau, Chairman and Chief Executive Officer; Andrew Sandifer, Executive Vice President and Chief Financial Officer. Today, Pierre will provide an overview of our third quarter performance as well as an outlook for the fourth quarter.

Andrew will provide an overview of select financial results. After our prepared remarks, we will take questions. Our earnings release and today's slide presentation are available on our 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 and EBITDA means adjusted EBITDA. A reconciliation and definition of these terms as well as other non-GAAP financial terms to which we may refer during today's conference call are provided on our website.

With that, I will now turn the call over to Pierre.

Thanks, Curt, and good morning, everyone. Before we get into the details of our third quarter results, I want to acknowledge that our sales this quarter were below our expectation. Two factors led to these results. The first is constrained credit for our customers in Brazil and Argentina as a result of liquidity the second is pricing pressure from generics, mainly in Latin America. These issues became apparent as we neared the end of the quarter, and at the planting season was getting underway in Latin America.

We expect both dynamics to persist in the fourth quarter. Consequently, we're accelerating planned cost actions similar to what we did with the next year in order to keep a less differentiated core portfolio product competitive. Our belief remains that being a pure-play agricultural sciences company is the right focus, and we have a strong pipeline of innovative technologies to support that.

Slide 3 to provide details on our third quarter performance. We reported third quarter GAAP net sales of $542 million which is 49% lower than prior year. The vast majority of the year-over-year decline is attributed to significant long-term actions taken in India to better position the commercial business for sale. During our last earnings call, has shared that we are not operating our business in India differently. Following the designation of that country's commercial business as held for sale.

We've also discussed elevated inventory in the India channel many times. Over the course of the third quarter, we made the decision to take back a substantial amount of channel inventory in the form of returns. To further clear inventory from the channel, we offered pricing credit to distributors encouraging faster movement of products. These actions are intended to support the sale of our India commercial business.

The process is moving forward smoothly with strong interest and a high volume of inbound inquiries. Excluding India, from current and prior year sales third quarter revenue of $961 million, down 4% year-on-year on a like-for-like basis. This was driven by a 6% price decline half from adjustments in certain cost plus contracts with specific [indiscernible] partners and half from intensified competition in market. Despite increased competitiveness, volume grew 2%. The company's growth portfolio increased by mid-single-digit percent, with sales of new active ingredients nearly doubling versus prior year. This is evidence of the strong demand for this technology. We remain confident in reaching a target of $250 million of new active ingredient sales by the end of the year.

Overall, sales were below our expectations. Much of the shortfall was driven by Latin America where our sales lagged prior year by 8%. The market landscape in that region is more challenging than we expected due to the 2 factors I touched on earlier. Low liquidity, leading to constrained credit for our customers in Brazil and Argentina and pressure from generics.

About half of our sales shortfall late in America was driven by an unwillingness on our part to sell full volumes to customers with credit risk. The other half was due to lost sales mainly to mega farmers where we were not willing to lower price to levels offered by generics for off-patent products. Generics have always been active in this region but their impact is increasing in large part because of the favorable registration environment.

For example, product registration in the EU or the U.S. can cost upwards of $1 million, whereas in Brazil, the cost of registration is approximately $70,000. This in combination with recent regulatory registration, make it faster and cheaper for generics to uptitration. On a positive note, our decision to invest in an additional route to market in Brazil to serve large soybean and corn growers is proving to be worthwhile.

Sales are still ramping up but we are seeing good results with over 300 new customers invoiced to date. The other regions performed more in line with expectations. While not as intense as Latin America, we did observe generic pressure in Asia, and to a lesser extent, North America and EMEA.

Sales improved in North America and EMEA, driven by higher volumes, including contribution from the recent launch of Isoflex active in great Britain. We reported adjusted EBITDA of $236 million with EBITDA margin of approximately 25%. Adjusted EBITDA was 17% higher than the prior year on an as-reported basis and 23% higher than prior year on a like-for-like basis, adjusting for India. The $6 million above the midpoint of our guns, our strong EBITDA performance reflects disciplined cost control and a focused approach to pricing that prioritize margin and credit quality.

The year-over-year improvement was driven mainly by cost of goods sold, including lower raw materials improved fixed cost absorption and restructuring benefits. EBITDA also benefited from higher volumes and a favorable product mix as our new products saw greater demand. This was partially offset by lower price and an FX headwind. Adjusted earnings per share was $0.89 up 30% from prior year and just above the midpoint of our guidance. The year-over-year improvement was driven by higher adjusted EBITDA. Slide 6 and 7 provide detail on our outlook for the remainder of the year.

We are anticipating the condition we observed in the third quarter to continue in the fourth quarter. We're now expecting fourth quarter sales, excluding India to be in the $1.12 billion to $1.22 billion. On a like-for-like basis, that represents a 2% increase at the midpoint after adjusting for India. We're expecting higher volume to be driven by the growth portfolio. Fourth quarter price is expected to be mid- to high single-digit headwind due to competitive pricing as well as the impact of cost plus contract diamide partners. FX is expected to be low single-digit tailwind.

Fourth quarter adjusted EBITDA is expected to be in the $265 million to $305 million, a decline of 16% at the midpoint on an as-reported basis and a decline of 7% on a like-for-like basis. Lower cost Higher volume and minor FX tailwinds are expected to be more than offset by lower price. Adjusted EPS is forecasted to be $1.40 to $1.36, a decline of 30% at the midpoint due to a lower EBITDA and abnormally low tax rate in the prior year. We are adjusting our full year guidance to include third quarter results and updated fourth quarter guidance. Revenue is now expected to be between $3.92 billion and $42 billion. Full year adjusted EBITDA is now expected to be $830 million to $870 million, with the reduction to prior guidance mainly due to lower sales.

Adjusted EPS is now forecasted to be $2.92 to $3.14. As a reminder, these guidance ranges include contribution from the India business for the first half only. Free cash flow guidance has been lower to a range of negative $200 million to $0, driven by lower cash from operations. The reduction in guidance reflects the increased pricing pressure we are facing in our core portfolio. To address this issue, we are taking cost actions to improve the competitiveness of patenting reasons. When I returned as CEO, my focus was on completing several transformation initiatives. These included correcting FMC inventory in the channel to align with customer target levels.

Implementing a post-patent strategy for an [indiscernible] , establishing an additional route to market in Brazil, ensuring the right resources were in place for a growth portfolio to deliver its full potential and initiating the sales of the India business. With those initiatives now complete, we are continuing to evaluate business to ensure alignment with the strategic priorities and long-term objective. Over the last 2 years, we've removed about $250 million in cost from the business to navigate the challenges of destocking and adjust relax at a cost to prepare for its [indiscernible] life cycle.

We now need to apply that same discipline across our core portfolio particularly for a nondifferentiated product where we're competing directly on price. We are taking 2 key actions: First, we have initiated a strategic review of our manufacturing footprint. Our intent is to exit active regions in formulation plants as well as other sources that are 2 expensive to operate and transition that production to lower-cost sources. This is a major undertaking. We've already begun the work to identify and develop those alternative sources, and we expect to plan to be fully in place by the end of 2026.

Earlier this month, we moved production of 2 active ingredients from 1 of our facility to other manufacturing locations where lower costs will strengthen FMC's ability to compete in this post-patent market. Second, we're implementing a broader cost reduction plan across Asia to account for a reduced size of the business following the India sales. Our objective is straightforward become a cost competitive company, capable of competing with generic on less differentiated product in the region while also growing a portfolio of IP-protected products that command higher margins.

By 2028, we expect to have new active ingredients in commercialization alongside of growing family of biological products. Some are already launched in select markets such as Isoflex active influence which are tracking in line with expectations. We continue to strongly believe in the power of our new product pipeline. In a world with more generic products and increasing resistance new active ingredients will become even more of a true differentiated for FMC.

I'll now turn the call over to Andrew to provide more detail on our India results for the quarter and on the cash outlook.

Thanks, Pierre. Let me start with some additional details on the impact of the India held for sale business on this quarter's financial statements. As Pierre noted earlier, we reported GAAP revenue of $542 million for the third quarter. This reflects negative revenue of $419 million in our India held-for-sale business. The substantial channel inventory in the country was reflected in our financial statements primarily as receivables.

During the quarter, we took several onetime actions to prepare the business for sale. These included physical product returns, taking provisions for additional product returns that will be completed in the fourth quarter and granting price credits to customers on the remaining channel inventory to encourage faster clearing of that channel inventory. Each of these actions had the effect of reducing revenue as well as receivables.

The net result was negative revenue for India for the quarter. This will also result in a substantial reduction in inventory held in the channel to much more normalized levels with excess inventory to be held directly on FMC India's books as FMC owned inventory. We are doing this as we believe it is much easier for a buyer to describe more certain value to physical inventory being purchased in a business sale than to receivables, which are subject to collection and other risks.

Further, rapidly correcting channel inventory reduces risks associated with recent changes in the application of local indirect taxation rules. We intend to manage the India business with a heightened focus on the liquidation of inventory in advance of completing the sale of the business. Third quarter GAAP net loss of $569 million reflects approximately $510 million of charges and write-downs for the India held-for-sale business.

Of this, $282 million reflects the channel inventory actions I just described. The remaining $227 million represents an impairment charge to bring the carrying value of the business to its estimated fair market value. The combination of the channel inventory actions and the impairment charge led to a write-down of the net assets identified as held for sale on our September 30 balance sheet to $450 million.

As a reminder, third quarter total company adjusted EBITDA of $236 million excludes the results of the India held-for-sale business. Moving now to some other specific income and statement items. Third quarter revenue, excluding the India held-for-sale business was $961 million, which reflects a 1% currency tailwind with benefit primarily coming from strengthening of the Brazilian real and the euro.

We now expect the minor FX tailwinds to revenue experienced in the third quarter to continue in the fourth quarter, primarily driven by the Brazilian real and to a lesser degree by the euro and Mexican peso. For the full year, FX remains a minor headwind to revenue due to the 2% headwind in the first half. Third quarter interest expense of $64.1 million was up $5.4 million with the impact of the higher rate on our recent subordinated debt offering, only partially offset by lower short-term domestic rates and balance.

We now expect full year 2025 interest expense to be in the range of $230 million to $240 million, essentially in line with the prior year, but up from our prior guidance, reflecting slightly higher than previously expected interest expense in the third quarter. We continue to expect depreciation and amortization for full year 2025 to be between $170 million and $180 million. The effective tax rate on adjusted earnings in the third quarter was 12%, and which brings our year-to-date effective tax rate in line with the midpoint of our updated expected full year effective tax rate of 12% to 14%.

Moving next to the balance sheet and leverage. We ended third quarter with gross debt of approximately $4.5 billion, up $379 million from the prior quarter. Cash on hand increased $60 million to $498 million, resulting in net debt of approximately $4.0 million, up $319 million in the prior quarter. Gross debt to trailing 12-month EBITDA was 5x at quarter end, while net debt to EBITDA was 4.5x. Relative to our levered covenant, which includes adjustments to both the numerator and denominator, leverage was 4.94x as compared to a covenant limit of 5.25x.

Moving on now to free cash flow on Slide 8. Free cash flow in the third quarter was negative $233 million, $365 million lower than the prior year period. Cash from operations was down significantly due to the absence of working capital release from payables seen in the prior year period as well as due to delays in collections. Free cash flow year-to-date is negative $789 million with the absence of the working capital improvement seen in the prior year being the key driver.

Relative to our internal expectations, Free cash flow in the third quarter was significantly impacted by collection delays. In Latin America, these delays are a result of both reduced liquidity in the channel as well as delays in growers monetizing the proton crop. Elsewhere, collection delays are coming primarily from intensified competitive pressures going beyond price competition to include payment terms as well. In light of actual performance year-to-date, our reduced outlook for EBITDA and our expectation of continued working capital pressures in the fourth quarter, we've reduced our outlook for full year free cash flow to a range of negative $200 million to $0.

This updated free cash flow outlook combined with the $291 million in dividends paid thus far this year suggests an increase in net debt of roughly $400 million at year-end. As such, we are taking 2 immediate actions. First, our Board of Directors has changed the company's dividend policy to establish a new quarterly dividend payout of $0.08 per share, affected with the pending declaration of our next dividend payable in January of 2026. This is an over 85% reduction in quarterly dividend, which will reduce the funding need for the dividend by $250 million in 2026.

This will allow significantly more of the free cash flow we generate in 2026 and to be directed to debt reduction. Second, we've begun discussions with our brand group to further amend the financial covenants in our revolving credit facility agreement provide us with additional flexibility as we navigate these challenges. We anticipate completing this amendment in the fourth quarter and will provide further updates at that time.

These actions are in addition to the cost reduction efforts Pierre described earlier in the call, which will also help increase future free cash flow generation. so they will require use of cash in the short term. And to be abundantly clear, all free cash flow generated beyond the roughly $40 million required annually to fund the reduced dividend will be directed to debt repayment until we return leverage to healthier investment-grade levels.

And with that, I'll hand the call back to Pierre.

Thank you, Andrew. Normally, at this time of the year, we would provide some directional commentary for the upcoming year. However, as we look ahead to 2026, there are still a number of uncertainties not at least of which are tariffs for China and India. On our February earnings call, we will be in a better position to provide formal numerical guidance for '26 as well as new not year outlook. .

Taking a step back, FMC's second half guidance is consistent with last year on a like-for-like basis, excluding India. With sales down 1% and EBITDA up 4% at the midpoint of guidance. Despite a challenging market, volume is growing in the second half as the industry recovers. And while growth is below our initial expectations, performance remains solid, and we are taking these size actions to strengthen our position.

We're adapting our strategy. We're redefining our manufacturing footprint. We're reducing costs while making the necessary capital location decision. The growth engine of the company and new active ingredients is intact, and we are protecting our ability to invest in the innovation that differentiate us.

With that, we're ready to take your questions.

[Operator Instructions] The first question comes from Duffy Fischer with the company Goldman Sachs.

Yes. So on the free cash flow guide, at the midpoint, you're down $400 million versus what you expected last quarter. Can you just talk about the buckets of what's eating up that cash flow? I know some of it is working capital. And then do you think you get a onetime release of that back next year? Or is this going to be a new going forward, higher commitment of cash needed for your EBITDA delivery?

Thanks. It's Andrew. I'll take this question. Look, in terms of changes got from last guidance to the current guidance on free cash flow for $25 million look, it starts with a $60 million reduction in full year EBITDA guidance, right? Let's be clear, we've taken down sales by over $200 million and EBITDA by $60 million since our prior guidance. And that has an impact on collections, which only collections are predominance of the move and guidance between those 2 calls.

Lower sales in Q3 and Q4 means less that will be collected not all would be collected in those quarters by any means, but we would have collected some of those sales. We're also because of liquidity conditions seeing fewer cash sales. There's a portion of our mix that is sold. It's basically immediate payment as cash sales. liquidity constraints are limiting that part of the collections mix in Q3 and Q4. And we are seeing competitive pressure that's pushing for longer terms.

So the biggest part of the bridge between past guidance and current guidance is collections. There are a couple of other factors. There are certainly some noise around our India exit. There was a certain amount of cash that were built into our guidance being collected in the second half into our prior guidance. for India. As we've made adjustments and decisions on how we want to operate that business to better prepare it for sale, there is some friction there. And we are seeing some higher cash spending than we had previously anticipated.

And this is things like higher tariffs. The India tariffs that are currently in place. We're not a part of our thinking when we last gave cash guidance. We've taken some additional restructuring actions. As Pierre mentioned, we shut down a manufacturing line that has cash cost for the shutdown of that manufacturing line. And we are seeing higher cash interest expense as per higher carrying higher commercial paper balances or higher working capital. And that bridge, again, the primary piece is collection. So as we look ahead to Certainly, we would expect to see delays, collections from the cotton crop in Brazil to be caught up in the early part of '26. But we do anticipate continued competitive pressure on terms.

So we're still working through as we think through budget for '26, how we see those dynamics playing out. There's also considerable uncertainty around tariffs. And just a reminder, we pay tariffs upfront. It takes a long time for that to flow through our P&L, we recognized as revenue and profit through the long supply chain that we have, but those tariffs are paid very early in that process. And then we will have further restructuring expenses in 2026 as we reconfigure our manufacturing network and streamline our Asia operations. So I would expect that we'll have meaningful free cash flow, particularly with the lower funding need for the dividend in '26 to allow for significant debt reduction. But only at this point, it's just too early to get too strong of an indication for 2026 cash flow.

Next question comes from Win Doerr with the company, Barclays.

Could you give us maybe a little bit of an indication where you expect the sale price for that India business might be and the more color on the buyer interest, that would be appreciated.

So right now, as you could see in the way we are presenting the results the number of the value for the value of that business is about $450 million as a total value. The interest level is very high, and I would say, higher than what we were expecting. The number of inbound request is higher than we're expecting vast majority of local companies, but still some international companies and sponsors looking into the business. So the business is, the process is proceeding quite well anything, Andrew, you want to add on the value of the business?

No, just to note that we did write down the business to its fair market value of $450 million. That reflects the value of the business, which includes substantial value for the brands as well as the existing business infrastructure that would be transferred to a buyer. It also reflects the value of the working capital that is invested in that business. .

The next question comes from Matthew DeYoe with the company, Bank of America.

Good morning. I appreciate there's a lot of uncertainty in the outlook. And I know there's some patent issues, obviously, approaching. But just as we think about the credit position, and the expectation for working capital headwinds, tailwinds next year. Do you remain committed to the IG rating? And like how do you think about backstopping that is equity issuance to protect IG on the table or not? Maybe that's too early to talk about. I just wanted to get a sense.

Yes. Thanks, Matt. It's Andrew again. I think it's a bit early to talk about all the potential actions. I think certainly, we've done a number of things that we're taking with the specific intention of supporting the investment-grade rating we did the hybrid subordinated offering in May. We've just announced a very significant cut in the dividend. I think at this point, we recognize that our metrics are not currently in line with an investment-grade rating.

The agencies have been supportive of working with us as we continue to work through our transformation. We've started discussions with them, but it's a bit of a work in progress at this point. So look, I think we're focused on making sure we're doing the right things for the business in the long-term health and returning over a period of time to investment-grade ratings, how the agencies view that, we influence the don't control. But we're going to do the right things in terms of reducing the use of cash to fund the dividend.

So it will allow us time to pay down debt and also to support the restructuring costs that we need to get the manufacturing footprint in its right place. So at this point, I think we expect to end the year if you take the midpoint of our guidance range for EBITDA and for free cash flow and the implied debt, that implies net debt at year-end at about 4x net debt at that point, it will take a couple of years to get that back into more in line with investment-grade ratings.

So we're going to continue to do everything we can to manage cash conservatively effectively, direct all the available cash to debt repayment debt reduction, and we'll keep working with the agencies to show them the path that we see to returning to healthier metrics.

Our next question comes from Jeff Zekauskas with the company, JPMorgan.

There are different structural changes going on in the crop chemical industry. Your competitor, Corteva is going to plans to split into a seed business at crop chemical business as you think of competing against them, do you think it will be easier to compete against an entity that's a pure crop chemical company or do you think that it will be harder that they'll lack the seed component? Do the seeds make any difference in selling crop chemicals?

Of course, it's a question we've been asking ourselves and which is difficult to answer. My initial reaction and once again, until we are in the situation, it will be difficult to say. But it might not change how difficult it is to compete against the crop chemical company as a stand-alone. It might have a benefit for us, and I'm highly speculating here. is that it might open more for us in the future, the Corteva seed hectares to sell our crop chemical products.

So not expecting much of a change. I think Corteva Crop Chemicals will be as good in the future as they are today. Could we be in a situation where we have more opportunities on the sale front of [indiscernible] with their crop chemical being maybe less captive. That is a positive.

The next question comes from Edlain Rodriguez with the company, Mizuho.

Quick question, Pierre. Like how much of what's going on right now, do you think is FMC-specific? versus I don't know how much is the industry issues. And related to that, when do you think you'll have a good sense of what's really going on with the portfolio because it seems like you play in a game of lack of mall and the problems keeps reserving and then you have to put the fire out. Like when do you think you have a better sense of what's going on in your portfolio? And is it that company specific versus industry-specific?

All right. I'm going to try to answer. It's an important question. We are obviously looking at. First, let me talk about what is, I would say industries. let's face it. We still are in a slow market. The market is not worsening. I think we're at the bottom of the cycle, but the market is not improving. So we are facing a situation where the demand is soft, and there is ample capacities mostly due to generics, increasing their capacity.

So there is, especially in places where it's easy for generics to get registration like Asia or Latin America there is an intensified competition on the non-IP protected product with generic and especially for direct sales to customers. So it's a broader industry statement. Now what is more FMC-specific? I think there is a positive FMC portfolio. This is our new technology.

Our new technologies are growing very fast, and there is a very strong demand Unfortunately, it's not growing fast enough because registration in our industry takes time. So as important as those products are and as important as our growth portfolio is it is not today large enough to impact significantly the performance of the companies. On the negative front, there is 2 events which happened in [indiscernible] , and we talked about it. We don't view that as a growth molecule, and it's a molecule for which we have developed a strategy to protect earnings, but not to grow earnings.

Now comes the last point we talked about in our remarks. We were hoping about a year ago to see a market ramping up and being able to defend better a non-IP-protected product using branding, using service, using mixers, IP-protected niches. It is a fact that we knew that we had a manufacturing cost, which was not very competitive for part of the portfolio. We believe for the next 2, 3 years, we could live with that. It is not happening. I think with the market remaining soft, we are seeing generics being more and more aggressive, and we are forced to do maybe a bit earlier in a more aggressive way, a completely thinking of a manufacturing portfolio. So I would say there is apart, which is industry linked. And then on the FMC side, there is a lot of positive, but '26, '27 are a bit early to see those product influencing strongly and specifically to FMC is the [indiscernible] situation we've discussed and our manufacturing costs, which need to be addressed.

Our next question comes from Laurence Alexander with the company Jefferies.

How much of your portfolio is now in the category of reassessing the production costs and likely bringing prices down in '26 and '27 and then related to that, does the season in Brazil and the generic pressure, is that also leading you to rethink how much of a diamide reset you might have in '26 and '27.

So to answer your first question, I want to be careful because we are just starting this work and changing manufacturing in our world is not only a matter of changing manufacturing. You also have to take into account new sources and registration. So it's a very involved process. I would say, for sure, we will retain in our manufacturing portfolio.

[indiscernible] sales up here, the 4 new active ingredients, and there is also 2 important molecule today which are multi-hundred million dollars, which are produced in some of our low-cost plants, which will stay with us. All of the rest in the analysis is candidate for being moved to a different manufacturing location or different sourcing. Regarding diamides, at this stage, we do not believe what we are talking about is changing our strategy or make us believe we should go further in terms of pricing that dynamic around [indiscernible] especially was very much in place, was already happening.

There is nothing changing here. So at this stage, we do not believe it will have an impact, that being said. We've developed the strategy, we are starting implementation and we will be adjusting as we need between cost to take share over other type of insecticide or lower end market and high-end mixers to reinforce our position on the high-end market for [indiscernible]. So we will adjust, but there is nothing jumping at us right now requiring a change in our strategy.

Our next question comes from Joel Jackson with the company, BMO Capital Markets.

Pierre and team, Pierre, describing a lot going on, obviously, with the company, you're talking about doing maybe how you manufacture for a larger portfolio, you're exiting at India, you've got things of the MAX going on next year. You made some management changes recently.

As you go through all this, are you starting to think about in a fragmented industry in crop chems does FMC have the right structure? Should it be acquisitive? Should you start looking at it, if you should partner with others? I mean tell me about how deep your thoughts are going here into all the scenarios that could happen.

Yes. I think we believe we have a clear path on where the company is going. It's evolving in terms of the speed at which we should do it, but we have a clear path. We do believe if we project ourselves by 2028. We have a very high level of comfort in the way the company should be operating because at that time, between biological, the 4 new active ingredients and sales at year we will have a very significant growth portfolio, which will be generating strong growth and profit.

With all of the work we are doing, and it's very heavy lifting in 2026, we would be able to protect our core portfolio including [indiscernible] to grow at market speed. And I think at that time, by this time in 2028, when our growth portfolio is significant enough, we will be in a position to be a company which will be looking much more like the company we were in 2018, and the model is showing it.

The very positive thing is we know how to change the manufacturing process and structure, and we have a very solid demand on the new technologies which are coming at us, including the 1 which are not commercialized yet, where we have demand from customers to get accelerated registration from authorities. So I think that is fairly straightforward. I have to be completely honest, the difficult period for us is 2026 while we are readjusting the company to be able to get to the point I just described, ownership, I think partnership will be more and more.

And also on the technology front will be more and more part of the way we do business. We could see, for example, the discussion and partnership we have on [indiscernible] with Corteva. This is working very well. And I think it's going to be the name of the game for crop chemical company in the future.

The next call is from Patrick Cunningham with the company Citigroup.

What are the cost reduction initiatives you have in Asia following the India sale? And would exiting more countries in the region potentially be on the table for you or perhaps other regions as well?

I didn't get the first part there. I can answer the second part. Right now, India is an isolated case and is the only country for which we intend to take the type of action we are taking. Other countries in Asia or even for that matter in Latin America, for historical reasons, not performing as well as we would like, but all of them are fixable, and we have a plan for them.

So to the second part of your question, India is an isolated case and the only 1 for which we are intending to have a sale process. The first part of the question.

What are some of the cost actions in Asia.

Cost actions in Asia it's quite simple. I mean think about a region where India reached multi-hundred peak sales with quite a large infrastructure to support India to support manufacturing there to support research and development and was a very significant part of the region.

We have not fundamentally changed the way that region is structured with very significant sales. You do not need the same R&D as before. you do not need the same marketing, you do not need the same sales structure and you don't need the same administration. So we need to resize the reason to something which is much smaller than what it used to be.

Our next question comes from Chris Parkinson with the company, Wolfe Research.

Great. Thank you so much. Pierre, there's still a lot of things in terms of your R&D pipeline that has significant value. And obviously, we're seeing good things out of [indiscernible] there are a lot of things in '26, '27, I believe, in the thermos, nematodes. I mean there's a lot of things that are still there that the market perhaps is overlooking what is your willingness or aversion to potentially trying to monetize or partner with some of the value that's there just to alleviate some of the pressures that the company is currently facing. Is that at all on the table? Or is that something that's just not a consideration?

Interesting question, Chris as you can guess, this is something we talk about. It always depends where the product stands in its development. and it could generate a different type of partnership. At this stage, we are excluding selling any of the active ingredients, which are the closest to commercialization and you name the 4 of them as well as some which are in the pipeline getting closer to commercialization.

But we very much consider partnership with other companies. We had multiple in bonds in terms of interest for those molecules. And it is something we would not ignore, I could not tell what will be the structure of those partnerships, but it's absolutely something which is on the table but not selling the molecule and us not participating in the growth of those molecules, which represent the future of FX.

Our next question comes from Aleksey Yefremov with the company KeyCorp.

Thanks Pierre, in light of this shifting environment, you had a goal of keeping right Acier earnings flat next year. What are your latest thoughts on that?

At this stage, we believe it is still a valid strategy. We've been starting the implementation of our strategy at the end of the third quarter, not because we are seeing a major change in the way generics are penetrating new territories because we are still patent protected. But we see customers rightfully so, putting their purchase of [indiscernible] on hold until they see what will be happening early '26 when generics will be coming. .

So for us, it's a prelude to what we will be facing in 2026. Hence, we put in place started to put in place our strategic plan from [indiscernible] and if you look at the third quarter number, it's demonstrating that what we do and the way we think about it is valid. Sales are flat volumes are up and price is down, which is the fundamental of what we want to do when we implement that strategy in 2026. So at this stage, we are staying with the same plan.

We have no indication that we should change it. But as I said before, we shall adapt depending upon this is unfolding.

The next question comes from Vincent Andrews with the company, Morgan Stanley.

Andrew, could I ask you on the $2.3 billion of non India receivables. Is there a way you can help us understand what percentage of those have already been consumed by a grower and you're waiting for them to monetize the crop to be paid versus what percentage is maybe still in the supply chain, it hasn't been sold yet and could still be subject to some type of price rebate if market prices have moved negatively versus what that inventory is originally sold for?

Interesting question, not something I can directly answer today, Vincent. I think certainly, as we look at where we are with working capital right now, we're building working capital as we sell into the new seasons in Latin America in particular. We are seeing an increase like-for-like, excluding India, and receivables year-on-year. So we are watching that closely with what's going on with competitive pressure on terms, et cetera. But I'm not able to characterize the receivables and the way that you're asking today. .

I think just some general proportion, certainly in this part of the year and as we get to year-end, you should expect that 40% to 50% of our receivables are in Latin America, which is seasonally appropriate as we are growing. We have seen some delays in collection in Latin America, particularly around the monetization of the cotton crop, as we've talked about that's led to a modest uptick in past news but past dues of short duration in that 30- to 60-day window as we're waiting for farmers to get paid by the commodity houses for their crop.

So that's a little bit of color there on working capital, but just certainly would reinforce working capital receivable is something to get an incredible amount of focus from the management team as we navigate what's going on with market dynamics today.

Final question comes from Josh Spector with the company, UBS.

I have 2 quick ones. One, kind of related to the past 1 slightly, just around fourth quarter cash from ops. I mean, basically, you need about a $700 million uplift. It looks like to hit your guidance. I mean is that all net working capital reduction and collections? And do you have visibility towards that with high confidence and then second, kind of related more around inventory dynamics with weaker demand and more generics pressure, are you taking inventory action that's impacting fourth quarter EBITDA? And is there any carryover risk with that into 2026?

So look, Q4 is always a profoundly positive cash flow quarter for us with the seasonality of working capital. including significant prepayments in the U.S. business. So the proportions you're pointing to, yes, I mean, you're looking at a circa $700 million free cash flow fourth quarter. That is in no ways unprecedented and very much our normal seasonality. Certainly, we are watching closely the pressures on terms and particularly the mix of our sales that are sold sort of on a cash basis collected within the quarter that could impact that.

To your second question around inventory, we do expect to end the year with a bit more inventory now than what we had originally contemplated because of lower sales. We have a very long supply chain. So a lot of the active ingredient for those sales was already procured and is in inventory. It may not be all the way into formulated product, but we have that material on hand. And that does impact the way we are thinking about the working capital build that's traditional in the first half of the year for us in terms of what production we need to have materials available to meet the sales plan for the first half of next year.

So too early to be too specific on that. But certainly, what's happening with inventory right now will influence our production plans that product needed in the first half and will impact what the magnitude of the working capital build in the first half will be next year.

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