FMC Corporation had a pricing arrangement in North America that, the company said, made it hard for distributors to carry its products at current market prices. On October 15, it announced it was changing the model. Third-quarter results showed what that decision cost.
Third-quarter revenue came in at $106 million, down 80% from the same period a year earlier. The commercial actions — the pricing overhaul and the write-down of higher-priced products sitting in distributor warehouses — stripped roughly $639 million from revenue, according to the company's October 29 earnings release. The company also said the quarter reflected weaker than expected demand.
The revenue figure captures only part of the damage. The GAAP net loss for the quarter was $2.07 billion, driven by the write-downs together with non-cash adjustments to deferred tax assets and intangible assets. Adjusted EBITDA — operating earnings before interest, taxes, depreciation and amortisation, stripped of one-time items — came in at negative $559 million, with the commercial actions responsible for approximately $672 million of that charge.
For a holder of the stock, the practical question is how much of that charge is gone and how much keeps coming. The answer depends on which piece you are looking at.
About $500 million of the EBITDA charge relates to switching North America from a high-gross-price-plus-rebate model to a simpler net price. Under the old arrangement, FMC charged a high sticker price and paid distributors a rebate at the end of the market year. The new model removes that cycle, so the rebate that would have paid out in the fourth quarter instead landed in third-quarter results — along with adjustments to bring existing channel inventory to the new net price. This piece, FMC says, does not change its forward cash obligations.
The remaining roughly $175 million covers specific products held by distributors in Brazil, the United States, Canada and Argentina at prices above current market. FMC marked those products down to help move them downstream, and that portion will reduce what the company collects from those customers in future quarters.
FMC now expects full-year adjusted EBITDA of negative $124 million to negative $104 million. Chairman, CEO and president Pierre Brondeau said in the release that completing this work "positions FMC for improved performance in 2027 and a stronger growth and earnings profile in 2028."
Shares closed 30.53% higher at $6.20 after the earnings release, on dollar volume of about $104 million.
FMC says the transition will take three more quarters to complete. Discussions with channel customers are still under way, and the company has not said how many have agreed to the new pricing terms.