FMC - Q4 2025

Transcript

Operator (participant)

Ladies and gentlemen, this is the operator. Today's FMC Corporation conference call is scheduled to begin momentarily. If you should experience difficulties during today's call, please signal a conference specialist by pressing the star key followed by zero. If you would like to be placed in a Q&A queue, please press star key, then one at any time. Your lines will be placed on music hold until the conference begins. Good morning and welcome to the fourth quarter 2025 earnings call for the FMC Corporation. This event is being recorded, and all participants are in a listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's prepared remarks, there will be an opportunity to ask questions. To be placed in the Q&A queue, please press the star key, then one at any time.

If you are using a speakerphone, please pick up your handset before pressing the keys. I would now like to turn the conference over to Mr. Kurt Brooks, Director of Investor Relations for FMC Corporation. Please go ahead.

Curt Brooks (Director of Investor Relations)

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 chlorantraniliprole, 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.

Pierre Brondeau (Chairman, CEO and President)

Thanks, Pierre, 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 our sales 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 a post-patent Rynaxypyr strategy, and driving growth of our 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 advisors to assist us with this process. The 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 four. 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.

Twenty twenty five 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 re-registration 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 sale headwind in 2026 and has been reflected in our forward guidance. In addition, we are executing a post-patent strategy for Rynaxypyr. Twenty twenty five 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 pest 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 years of historical proprietary data which benefit our development of formulations and mixtures to combat resistance. For more basic formulations of Rynaxypyr, our plan remains to lower price and grow 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 barriers in 2026 to be in line with prior as higher volume, particularly for more advanced offerings, and lower cost offset lower price. Finally, we are committed to the continued sales growth of four new active ingredients.

We are only in the early stages of sales for four new molecules, but we are already seeing solid growth. Sales have increased from approximately $130-$200 million in 2024 to approximately $200 million in 2025. Those sales are almost entirely driven by fluindapyr and Isoflex. Dodhylex received emergency registration in two 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 impacts from lower-than-expected registration for Isoflex in Great Britain. We estimate 2026 sales for new active ingredients to be between $300 million and $400 million. These actives are in high demand, with three of them offering a new mode of action. We still expect sales of the four 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 five. We're expecting full year sales of $3.6-$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 our 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-$730 million. As you can see on slide six, the main headwind versus prior is in our legacy portfolio due to competitiveness.

Rynaxypyr 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 we implement our 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 seven is $725 million-$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 of our patents expired at year-end. Distributors and retailers have been reluctant to fully stock Rynaxypyr until they better understand the quality, availability, and grower response to these generic offerings. We believe generic entry is also impacting our diamide partners, from whom we are expecting lower orders in the first quarter. Finally, planned 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 net 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 favorable. 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 higher sales and favorable manufacturing costs. I will now turn the call over to Andrew.

Andrew Sandifer (EVP and CFO)

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 reported $1.08 billion 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 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 in 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 -$6 million, which included $103 million of cash restructuring spending.

Twenty twenty five 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 4.1 times at year-end, while covenant leverage was 4.6 times. As a reminder, our covenant limit is 6 times through the third quarter of 2026 and then steps down to 5.5 times at year-end. Turning to slide eight and that 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 break even 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 break-even free cash flow and lower EBITDA, with a successful execution of our debt paydown plan, we expect to end 2026 with a reduction in net leverage of approximately one-half 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.

Pierre Brondeau (Chairman, CEO and President)

As we look ahead, the 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 our research and development teams, and it represents a significant competitive advantage for FMC. On slide nine, 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. fluindapyr fungicide 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. For Isoflex active, we are 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 these important registrations, as we recently received approval for the active ingredient last week. Dodhylex 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 Dodhylex 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 Palmer Amaranth and is now resistant to eight herbicide classes.

This pre-emergent herbicide will offer corn and soybean growers a new solution to an increasingly challenging problem. In addition to these four molecules, we have two more active ingredients in development. While we expect sales of these two active to begin during the early 2030s, their contribution is not included in the $2 billion of expected 2035 sales listed in the slide. The growth of these active ingredients are an important part of our key dynamics for 2027 and 2028, which are outlined on slide 10. In addition to accelerating the growth of our 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 than 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 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 positions us to maximize value for shareholders. With that, we're ready to take your questions.

Operator (participant)

Thank you. We will now begin the Q&A session. To be placed in the queue, please press star, key, then one on your touchscreen phone. If you are using a speakerphone, please pick up your handset before pressing the keys. Please limit yourself to one question. If you have additional questions, you can jump back in the queue. To withdraw from the queue, please press star, then two. At this time, we will pause momentarily to assemble our roster. Our first question comes from Josh Spector from UBS. Josh, your line is now open. Please go ahead.

Speaker 12

Hi. Good morning. This is Alex Amarant for Josh. So just firstly, so I mean, you're targeting $700 million in EBITDA this year. I guess just given the volatility that was 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 kind of product groups: Rynaxypyr, Cyazypyr, new product sales, biologicals, and the legacy core that's off-patent. So I mean, it seems like potentially you're implying maybe $400 million on legacy, $80-$90 million on each of Rynaxypyr, Cyazypyr, and the growth buckets, and then about $40 million on biologicals.

So I mean, I know you guys talk about the sales a lot, but there's been a lot of volatility in there with the pricing and the earnings outlook. So I mean, anything you'd kind of share to help sort of understand the components would be great. Thanks.

Andrew Sandifer (EVP and CFO)

Hey, 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 and the non-Rynaxypyr core portfolio is a big contributor. It's a big part of the portfolio, and we've given those dimensions previously. It's about half of the sales of the company. So it's obviously a big contributor to profitability. The Rynaxypyr, as Pierre stated in 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 costs 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 three elements of the growth portfolio, both in sales and in profitability, with contributions from Cyazypyr, certainly from the new AIs as we have meaningful growth from the year before and from plant health.

Pierre Brondeau (Chairman, CEO and President)

Just to answer at a high level around the volatility and our level of confidence, I think we have a very high level of confidence in our total growth portfolio: the four new actives, plant health, and Cyazypyr. We also have a high level of confidence in our ability to keep earnings flat from 2025 for branded Rynaxypyr, and we're already seeing how this is going to be deployed. The two places, really, which are challenging our performance are very well identified. The first one is our core portfolio. We know that we do have about $1 billion of production, which is not cost-competitive and for which we are being challenged to grow and losing market share. That's a number one contributor, and that's where we have a high level of focus. The number two is sales to a dynamite partner.

We had to lower the Rynaxypyr cost. We had no way around that. On top of that, I believe a partner must be challenged also on Rynaxypyr sales with less volume. Those are the two factors today which are creating the most headwind in 2026 and which are being addressed to go away in 2027.

Speaker 12

Great. Thanks. 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 2027 and 2028. So maybe you could kind of just talk us through how 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 we've seen in the past couple of years? Thanks.

Pierre Brondeau (Chairman, CEO and President)

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 two buckets. Going into 2027, we know and we have confidence in our growth portfolio. It's been the growth of those products that have been stable for the last two years. So the two 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 two or three 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 have confidence.

We are just not competitive at the price level. We are correcting that. We are completely redoing our manufacturing footprint in high-cost countries, and this is well on its way. The number two is the Rynaxypyr partner contract. There is a limit to how much we can decrease the cost of Rynaxypyr. We are getting close to the end of this price reduction, which is going to 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 2027 is going to be very minor.

Delivering a 15% EBITDA growth in 2027 has to be done by a continuation of what we have done over the last two years on the growth platform, which we are confident we can do, and really, really get our core products competitive from a manufacturing standpoint, which we expect to do by the end of 2026, early 2027.

Operator (participant)

Thank you. Our next question comes from Aleksey Yefremov from KeyBanc Capital Markets. Your line is now open. Please go ahead.

Aleksey Yefremov (Managing Director and Equity Research Analyst)

Thanks, and good morning, everyone. 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?

Pierre Brondeau (Chairman, CEO and President)

No. 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 includes improving the competitiveness of the core portfolio, the Rynaxypyr strategy, and the growth of actives. That's the base plan, which leads 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 two 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 advisors, bank and legal, and the process is being put in place right now.

Operator (participant)

Thank you. Our next question comes from Christopher Parkinson from Wolfe Research. Your line is now open, Christopher. Please go ahead.

Harris Fein (SVP)

Great. Thank you. This is Harris Fein for Chris. Thanks for taking my question. I guess following up on the last one, looking out to 2027 and 2028, it 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? Thank you.

Pierre Brondeau (Chairman, CEO and President)

Yes. So the $1 billion of debt reduction, which is the sale of India, which is taking place, we are waiting for buying offers right now, the licensing of one 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 operate in a better way. So the process of partial divestiture versus full divestiture are separate. One is taking place with a base plan. The other one is a separate process we are currently undertaking right now.

Operator (participant)

Thank you. Our next question comes from Vincent Andrews from Morgan Stanley. Your line is now open. Please go ahead.

Vincent Andrews (Managing Director)

Thank you and good morning, everyone. 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 sell 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?

Pierre Brondeau (Chairman, CEO and President)

So I believe a 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 level today, I think the two highest probability we have in front of us, one is the base plan, which includes a licensing, a sale of assets, 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 two paths as the principal actions we are taking.

Operator (participant)

Thank you. Our next question comes from Joel Jackson from BMO Capital Markets. Your line is now open. Please go ahead.

Joel Jackson (Senior Analyst)

Good morning, Pierre and team. I'm just trying to reconcile some of the guidance that you're giving for some of the different product buckets in 2026. There was kind of a prior question on this earlier, but I just want to focus on revenue. And I'm looking also, of course, at the good nuanced guidance you gave last year for all the product buckets going out for a few years. So if I understand, I mean, you've said what you think the new AIs will do in the growth portfolio in 2026, but just some for the product buckets. So I think you're saying Rynaxypyr sales will be down this year, partnered and non-partnered. So that's the first question. Then the rest of the portfolio, non-Rynaxypyr and Core, would also be down this year.

And then in growth, would Cyazypyr be down in 2026 for sales and then would be roughly flat to up for the Plant Health? Can you just those other buckets, so Rynaxypyr, non-Core Rynaxypyr, Cyazypyr, and Plant Health, talk about how you see 2026 versus 2025 specifically, individually? Sorry. Thanks.

Andrew Sandifer (EVP and CFO)

Hey, Joel its Andrew. I'm going to take the first crack at this, and Pierre will chime in with some additional comments. When we think about sort of the core versus the growth portfolio in 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 Rynaxypyr 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, a drop year-on-year. That's pricing and volume, right? So overall, the core portfolio is down year-on-year from 2026 versus 2025.

When we look at the growth portfolio, we have growth in all aspects of the growth portfolio, led by the four new active ingredients. They're growing strongly, right? And again, as Pierre walked through in detail on 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 three pieces of the core portfolio are growing in 2026, but it's really differentially impacted by the new active ingredients.

Pierre Brondeau (Chairman, CEO and President)

Yeah. I think it's important one, Drew, to say, is the growth portfolio, there is no part of the growth portfolio including branded Cyazypyr, the four 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 2025. And then where we have a contraction, it's in partner sales for Rynaxypyr and the core portfolio.

Operator (participant)

Thank you. Our next question comes from Edlain Rodriguez from Mizuho. Your line is now open. Please go ahead.

Edlain Rodriguez (Director)

Thank you. Good morning. Pierre, just one quick one for me. 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 yeah, I mean, your confidence level that you have, you know exactly what the challenges are. And looking one, two. Out that you see a path out of this funk and you have a solution to fix it?

Pierre Brondeau (Chairman, CEO and President)

As I said, 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 one 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 generics. 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 would be that amount of competitiveness in that part of the portfolio, especially in places like Latin America. I would have to do it again. I would have started the restructuring of a manufacturing footprint earlier. It is what it is. But if you look today at the portfolio of the company, the entire growth portfolio, the three parts, are in great shape and performing exactly as we're expecting. The Rynaxypyr branded strategy is clearly in place. We have one thing to fix. It's the core portfolio. We know how to do it. It's ongoing. The plan is in place, and it's started. So why am I so confident? It's because the number of things we have to fix is limited. It's one thing. The rest, it's in place.

The problem, this thing we have to fix, we better fix it because it's big. But it's not that complicated to know what we have to do.

Edlain Rodriguez (Director)

Thank you.

Operator (participant)

Thank you. Our next question comes from Frank Mitsch from Fermium Research. Your line is now open. Please go ahead.

Frank Mitsch (President)

Thank you. Good morning. 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 to 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? Thank you.

Pierre Brondeau (Chairman, CEO and President)

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 the way we are doing it will create growth starting in 2027, 2028. That's the base plan we need to execute on reducing our debts. And this process, we need to bring in $1 billion into the company. Like any plan, you always have to weigh the risks and the certainty you have to deliver it. We are pretty confident about this plan and believe it will take us to the right place in 2027. 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 it to go back to growth in 2027. Working with the board, we also believe it is important to always look at a double path. A parallel path would 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 spend in accelerating the growth of your new active ingredients, including the one in research. So the question we have to ask ourselves is, would this company operate better, grow faster, under a different ownership which will have maybe more flexibility financially than FMC has today? So I think both plans are valid.

It is not like not selling the company would be a disaster because we don't have a plan to go through 2026. I think the 2026 plan is robust and will put us in a good place in 2027. But the alternative could be highly beneficial for shareholders and would allow the company potentially to operate better and faster. That's why the two processes are being followed in parallel.

Operator (participant)

Thank you. Our next question comes from Kevin McCarthy from Vertical Research Partners. Your line is now open. Please go ahead.

Speaker 13

Hi. This is Matt Hutworth 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?

Andrew Sandifer (EVP and CFO)

Sure. Thanks, Matt. Its Andrew, I'll take that one. Look, we have $500 million bonds maturing in October. Obviously, our intent is to refinance them in advance of their maturity. Fallback, 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 advisors on 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, 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, etc.

We have very strong confidence in that plan, very advanced discussions on the sale of the India business, discussions underway on licensing, and on other asset disposals that we're not at liberty to go into any further detail at today. 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 2026. During 2026, 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 6 times to allow us the flexibility to work through the things that we need to do in 2026.

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 bill very carefully. The team is laser-focused on managing inflows and outflows of cash in the company to keep debt within those covenants. 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. We are looking at all kinds of financing options and how we might put the company on better footing faster, right? 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.

Operator (participant)

Thank you. Our next question comes from Mike Harrison from Seaport Research Partners. Your line is now open. Please go ahead.

Mike Harrison (Managing Director and Senior Chemicals Analyst)

Hi. Good morning. 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 to just be related to a registration delay in the U.K. 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-$400 million range that you've given for 2026?

Pierre Brondeau (Chairman, CEO and President)

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 we were expecting. And part of those sales we didn't do were including fluindapyr. So the majority of the shortfall is the registration delay. And there is an additional shortfall in fluindapyr because of direct sales being a bit lower than what we were expecting. Now, the range of $300 million-$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 add, not for fluindapyr but for Isoflex. There is a place where we have, for example, exceptions 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 two, three years down the road. But on a short period of time, six months could matter.

Operator (participant)

Thank you. Our next question comes from Matt DeYoe from Bank of America. Your line is now open. Please go ahead.

Matt De Yoe (Senior Equity Research Analyst)

Yes. Thank you very much. At least how well that I am feeling in format. Sorry. I just want to go back to Rynaxypyr and 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 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-over-year.

But can you talk a little bit about the top line for branded Rynaxypyr? Mainly, 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? Thank you very much.

Andrew Sandifer (EVP and CFO)

All right. Good morning, Matt De Yoe. Andrew here, 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. When we look at the slide and let's be clear, we are intentionally not giving those numbers. We gave you a dimensional view of the drivers. So 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 EBITDA this year. So certainly, volume and price are impacts on the partner sales for Rynaxypyr and reduce both sales and profitability year-over-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 solo 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've continued to have cost reduction from 2024 to 2025 to 2026, 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. 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?

Pierre Brondeau (Chairman, CEO and President)

Yeah. 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 advanced formulation. So it is not at all the same portfolio in 2026 that we would have in 2025. And this 50% advanced formulation commands 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 our portfolio which doesn't see a lower price.

As I said before, it's at least 50% in 2026.

Operator (participant)

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