FMC Corporation
02/27/2026 | Press release | Distributed by Public on 02/27/2026 10:50
Annual Report for Fiscal Year Ending December 31, 2025 (Form 10-K)
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Overview
FMC Corporation is a global agricultural sciences company dedicated to providing farmers innovative solutions that increase the productivity and resilience of their land. We operate in a single distinct business segment. We develop, market and sell all three major classes of crop protection chemicals (insecticides, herbicides and fungicides) as well as biologicals, crop nutrition, and seed treatment products, which we group as plant health. FMC's innovative crop protection solutions help growers produce food, feed, fiber and fuel for an expanding world population while adapting to a changing environment. FMC is committed to discovering new insecticide, herbicide, and fungicide active ingredients, product formulations and pioneering technologies that are consistently better for the planet.
FORWARD-LOOKING INFORMATION
Statement under the Safe Harbor Provisions of the Private Securities Litigation Reform Act of 1995: FMC and its representatives may from time to time make written or oral statements that are "forward-looking" and provide other than historical information, including statements contained herein, in FMC's other filings with the SEC, and in reports or letters to FMC stockholders.
In some cases, FMC has identified forward-looking statements by such words or phrases as "will likely result," "is confident that," "expect," "expects," "should," "could," "may," "will continue to," "believe," "believes," "anticipates," "predicts," "forecasts," "estimates," "projects," "potential," "intends" or similar expressions identifying "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, including the negative of those words and phrases. Such forward-looking statements are based on management's current views and assumptions regarding future events, future business conditions and the outlook for the company based on currently available information. These statements involve known and unknown risks, uncertainties and other factors that may cause actual results to be materially different from any results, levels of activity, performance or achievements expressed or implied by any forward-looking statement. Additional factors include, among other things, the risk factors and other cautionary statements filed with the SEC included within this Form 10-K as well as other SEC filings and public communications. FMC cautions readers not to place undue reliance on any such forward-looking statements, which speak only as of the date made. Forward-looking statements are qualified in their entirety by the above cautionary statement. FMC undertakes no obligation, and specifically disclaims any duty, to update or revise any forward-looking statements to reflect events or circumstances arising after the date of such statements or to reflect the occurrence of anticipated events, except as otherwise required by law.
India Held for Sale Business
In July 2025, the Board of Directors approved a plan to divest the Company's commercial business in India in response to ongoing commercial challenges in the country. FMC plans to continue to actively participate in the India market through a supply agreement with the eventual buyer of the business for its patented and data-protected portfolio, ranging from new diamide technologies to active ingredients and biologicals. The Company will continue its active ingredients manufacturing operations in India. The sale process is underway and is expected to conclude in 2026; and, therefore, the assets related to this business are classified as held for sale beginning in the third quarter of 2025. However, there is no assurance that we will be able to complete the divestment in the expected timeline and on favorable terms, or that we will be able to successfully enter into a supply agreement with the buyer. Although the business does not qualify for recognition as discontinued operations and will continue to be presented in the Company's reported results until a transaction is completed, we believe excluding India's operating results from our non-GAAP measures during the held for sale period, beginning with the third quarter of 2025, provides management and investors with useful supplemental information regarding our ongoing financial performance. In preparation for the sale, we took a series of target actions to optimize the business for transfer and reflect its fair value.
Total adjustment - approximately $522 million
The assets associated with the India commercial business held a carrying value of approximately $960 million at June 30, 2025. We evaluated the fair value of the assets associated with the business and determined the estimated fair value less costs to sell to be $450 million. Accordingly, we recorded $522 million of charges and write-downs in 2025 as a result of one-time commercial actions to prepare the India business for sale and an asset impairment charge in accordance with the held-for-sale accounting standards. This adjustment was reflected across multiple income statement line items as presented in the table below.
|
Twelve Months Ended December 31, |
Affected Line Item in the Consolidated Statements of Income (Loss) | |||||||||||||
| (in Millions) | 2025 | 2024 | ||||||||||||
| Operating results, substantially one-time commercial actions | $ | 319.8 | $ | - |
Revenue, Cost of sales and services, and Selling, general and administrative expenses
|
|||||||||
| Asset impairment | 194.8 | - | Restructuring and other charges (income) | |||||||||||
| Third party provider costs | 7.1 | - | Restructuring and other charges (income) | |||||||||||
| India held for sale business | $ | 521.7 | $ | - | ||||||||||
•Operating results, substantially pre-sale commercial adjustments ($320 million): These one-time actions commenced during the period included product returns and pricing changes designed to (1) accelerate receivables collection, (2) optimize the working capital mix of receivables and inventory, and (3) address contemporaneous changes in local indirect taxation. These adjustments impacted both the Revenueand Cost of sales and services line items on the consolidated statement of income (loss), resulting in revenue charges for the India business in the third quarter of 2025. These actions were taken in both collaboration with and in anticipation of customer behavior stemming from known indirect tax implications and broader market dynamics. These steps will help mitigate collection and local tax risks and position the business for a stronger sale outcome. The $320 million is made up of revenue charges of $422 million, a credit to cost of sales of $128 million and SG&A charges of $26 million.
•Asset impairment ($195 million): Following the commercial adjustments, we evaluated the remaining carrying value of the net assets associated with the business. The difference between the adjusted carrying value and the estimated fair value, less costs to sell, was recorded as an asset impairment, reflected within the Restructuring and Other Chargesline item on the consolidated statement of income (loss).
Balance sheet impact -The combination of commercial adjustments and impairment resulted in a write-down of the net assets identified as held for sale to $450 million, as presented on the consolidated balance sheet as of December 31, 2025.
2025 Highlights
The following are the more significant developments in our businesses during the year ended December 31, 2025 compared to the year ended December 31, 2024:
•In December 2025, the Board of Directors approved management's comprehensive plan, referred to as Project Foundation, to further optimize FMC's cost structure and organizational operations. A key component of this initiative is the Manufacturing Restructuring Program, which focuses on redesigning FMC's manufacturing footprint and includes exiting certain high-cost active ingredient and formulation plants and transitioning production to lower-cost sources. These actions are intended to create a cost-competitive structure that enables FMC's products to better compete with generics while fully leveraging its innovative technology portfolio. In addition, we are implementing cost-reduction initiatives in Asia to reflect the smaller scale of the region's business following the planned sale of the India commercial operations. We intend to continue to right-size our cost base and optimize the overall organizational structure, with a sustained focus on driving cost improvements and productivity amid ongoing challenges. However, these actions may take longer than expected to implement, may result in higher-than-anticipated costs or operational disruptions, and may not achieve the expected efficiencies, cost savings or strategic objectives. During the twelve months ended December 31, 2025, we incurred non-cash asset write-off and accelerated depreciation costs of $155.7 million primarily associated with the planned exit of certain production activities, other miscellaneous charges, including professional service provider costs, of $14.5 million and severance and employee separation costs of $1.8 million in connection with Project Foundation.
•Revenue of $3,467.4 million in 2025 decreased $778.7 million or approximately 18 percent versus last year primarily driven by one-time commercial actions taken to position the India business for sale. Excluding those actions which resulted in revenue charges for the India business beginning in the third quarter of 2025, revenue decreased 8 percent versus the prior year driven by a 6 percent price decline, roughly half of which was due to adjustments for certain diamide partners on "cost-plus" contracts. The remaining price decline was mostly attributed to competitive pressure on core portfolio products. On a regional basis, sales in Europe, Middle East and Africa increased by 4 percent, sales in Latin America decreased by 3 percent, and sales in North America decreased 6 percent. Sales in Asia, which included the adjustments for one-time commercial actions in India, decreased approximately 83 percent. A more detailed review of revenue excluding the commercial actions related to the India held for sale business is discussed under the section titled "Results of Operations."
•Our gross margin of $1,283.0 million decreased by $365.9 million or approximately 22 percent versus the prior year gross margin of $1,648.9 million. Gross margin as a percent of revenue was 37 percent for the year ending December 31, 2025. Excluding the impact of the one-time commercial actions, our gross margin as a percent of revenue was 41 percent, which increased compared to a gross margin percentage of 39 percent in the prior year as a result of continued cost improvement partially offset by lower pricing during the period.
•Selling, general and administrative expenses increased from $644.6 million to $684.9 million, or approximately 6 percent versus the prior year period to support investment in new products. Research and development expenses of $266.1 million decreased $11.9 million or 4 percent. The decrease in spending on research and development relates to the timing of project expenses as well as continued cost reduction efforts in connection with restructuring activities.
•Net loss attributable to FMC stockholders of $2,238.9 million decreased $2,580.0 million compared to net income attributable to FMC stockholders of $341.1 million in the prior year primarily driven by a significant increase in restructuring and other charges recorded during the period. As a result of the significant decrease in our stock price during the fourth quarter of 2025, we performed a test of our goodwill and other intangible assets for impairment in connection with the preparation of our financial statements for the year ending December 31, 2025. We recorded a $1,356.2 million write-off of our remaining goodwill balance in connection with the impairment test. Additionally, as previously mentioned, we recorded $522 million of charges and write-downs in 2025 as a result of one-time commercial actions to prepare the India commercial business for sale and an asset impairment charge in accordance with the held-for-sale accounting standards. Adjusted after-tax earnings from continuing operations attributable to FMC stockholders of $372.0 million decreased $64.3 million or approximately 15 percent. See the disclosure of our adjusted earnings non-GAAP financial measurement under the section titled "Results of Operations".
2026 Priorities and Strategic Review
In 2026, we plan to focus on executing our operational priorities, one of which is strengthening the balance sheet by paying down debt through asset sales and licensing agreements, including the previously announced sale of our India commercial business which is classified as held for sale. Our priorities also include improving the competitiveness of the company's legacy core portfolio, managing the post-patent transition for Rynaxypyr®active, and supporting the growth of new active ingredients, such as Isoflex®active, fluindapyr, Dodhylex™active and rimisoxafen. However, we expect continued pressure on price during the year due to competitive market dynamics for core portfolio products and lower Rynaxypyr® active pricing. We will maintain our focus on reducing costs, which are expected to be lower for the full year despite expected pressure in the first quarter due to the timing of tariffs and manufacturing variances.
Additionally, as announced in February 2026, the Board of Directors has authorized the exploration of strategic options, including but not limited to, the sale of the company. FMC's four new active ingredients, along with its broader development pipeline, are unique and transformative. The company believes there is significant opportunity to enhance shareholder value and ensure the long-term success of our portfolio by accelerating growth and delivering enhanced financial results with additional investment in these technologies. The strategic review is at a preliminary stage, and there can be no assurance that the process will result in any transaction.
Results of Operations - 2025, 2024 and 2023
Overview
The following charts provide a reconciliation of adjusted EBITDA, adjusted Earnings, revenue excluding India, organic revenue growth and return on invested capital ("ROIC"), all of which are non-GAAP financial measures, from the most directly comparable GAAP measure. Adjusted EBITDA, revenue excluding India, and organic revenue growth are provided to assist the readers of our financial statements with useful information regarding our operating results. Our operating results are presented based on how we assess operating performance and internally report financial information. For management purposes, we report operating performance based on earnings before interest, income taxes, depreciation and amortization, discontinued operations, and corporate special charges. Our adjusted earnings measure excludes corporate special charges, net of income taxes, discontinued operations attributable to FMC stockholders, net of income taxes, and certain non-GAAP tax adjustments. Beginning in the third quarter of 2025, the operating results of the India commercial business during the held for sale period are excluded from our adjusted EBITDA and adjusted Earnings measures. The adjustments previously noted, as well as the India held for sale business, are excluded by us in the measure we use to evaluate business performance and determine certain performance-based compensation. Organic revenue growth excludes the impacts of foreign currency changes and the India held for sale business during the held for sale period beginning in the third quarter of 2025, which we believe is a meaningful metric to evaluate our revenue changes. These items are discussed in detail within the "Other Results of Operations" section that follows. In addition to providing useful information about our operating results to investors, we also believe that excluding the effect of corporate special charges, net of income taxes, and certain non-GAAP tax adjustments from operating results and discontinued operations allows management and investors to compare more easily the financial performance of our underlying business from period to period. These measures should not be considered as substitutes for net income (loss) or other measures of performance or liquidity reported in accordance with U.S. GAAP.
| (in Millions) | Year Ended December 31, | ||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| Revenue (GAAP) | $ | 3,467.4 | $ | 4,246.1 | $ | 4,486.8 | |||||||||||
| Costs and expenses | |||||||||||||||||
| Costs of sales and services | 2,184.4 | 2,597.2 | 2,655.8 | ||||||||||||||
| Gross margin | $ | 1,283.0 | $ | 1,648.9 | $ | 1,831.0 | |||||||||||
| Selling, general and administrative expenses | 684.9 | 644.6 | 734.3 | ||||||||||||||
| Research and development expenses | 266.1 | 278.0 | 328.8 | ||||||||||||||
| Restructuring and other charges (income) | 1,960.3 | 219.8 | 212.3 | ||||||||||||||
| Total costs and expenses | $ | 5,095.7 | $ | 3,739.6 | $ | 3,931.2 | |||||||||||
|
Income from continuing operations before non-operating pension, postretirement and other charges (income), interest expense, net and income taxes(1)
|
$ | (1,628.3) | $ | 506.5 | $ | 555.6 | |||||||||||
| Non-operating pension, postretirement and other charges (income) | 18.7 | 18.2 | 18.2 | ||||||||||||||
| Interest expense, net | 239.6 | 235.8 | 237.2 | ||||||||||||||
| Income (loss) from continuing operations before income taxes | $ | (1,886.6) | $ | 252.5 | $ | 300.2 | |||||||||||
| Provision (benefit) for income taxes | 314.2 | (150.9) | (1,119.3) | ||||||||||||||
| Income (loss) from continuing operations | $ | (2,200.8) | $ | 403.4 | $ | 1,419.5 | |||||||||||
| Discontinued operations, net of income taxes | (36.6) | (61.8) | (98.5) | ||||||||||||||
| Net income (loss) (GAAP) | $ | (2,237.4) | $ | 341.6 | $ | 1,321.0 | |||||||||||
| Adjustments to arrive at Adjusted EBITDA (non-GAAP): | |||||||||||||||||
| Corporate special charges (income): | |||||||||||||||||
|
Restructuring and other charges (income) (3)
|
$ | 1,775.7 | $ | 219.8 | $ | 238.1 | |||||||||||
|
Non-operating pension, postretirement and other charges (income)(4)
|
18.7 | 18.2 | 18.2 | ||||||||||||||
|
India held for sale business (5)
|
521.7 | - | - | ||||||||||||||
| Discontinued operations, net of income taxes | 36.6 | 61.8 | 98.5 | ||||||||||||||
| Interest expense, net | 239.6 | 235.8 | 237.2 | ||||||||||||||
| Depreciation and amortization | 173.6 | 176.3 | 184.3 | ||||||||||||||
| Provision (benefit) for income taxes | 314.2 | (150.9) | (1,119.3) | ||||||||||||||
|
Adjusted EBITDA (non-GAAP) (2)
|
$ | 842.7 | $ | 902.6 | $ | 978.0 | |||||||||||
____________________
(1)Referred to as operating profit.
(2)Adjusted EBITDA is defined as operating profit excluding corporate special charges (income), depreciation and amortization expense, and the India held for sale business.
(3)The year ended December 31, 2025 includes charges incurred in connection with a shutdown of a product line at one of our manufacturing sites as part of Project Focus of $17.3 million, which are recorded to "Cost of Sales and services"on the consolidated statements of income (loss). Charges of $1,758.4 million recorded as "Restructuring and other charges (income)" on the consolidated statements of income (loss) for the year ended December 31, 2025 are also included in the reconciliation above. See Note 7 to the consolidated financial statements included within this Form 10-K for details of restructuring and other charges (income).
(4)Our non-operating pension and postretirement charges (income) are defined as those costs (benefits) related to interest, expected return on plan assets, amortized actuarial gains and losses and the impacts of any plan curtailments or settlements. These are excluded from our operating results and are primarily related to changes in pension plan assets and liabilities which are tied to financial market performance and we consider these costs to be outside our operational performance. We continue to include the service cost and amortization of prior service cost in our operating results noted above. These elements reflect the current year operating costs to our business for the employment benefits provided to active employees. The year ended December 31, 2025 also includes other charges of $3.3 million incurred as a make-whole premium in connection with the early redemption of $500 million of the Senior Notes due May 18, 2026.
(5)Beginning with the third quarter of 2025, the operating results of the India commercial business are excluded from our Adjusted EBITDA during the held for sale period. For the year ended December 31, 2025, we have excluded $521.7 million in charges and write-downs related to the India held for sale business including charges of $319.8 million recognized in connection with one-time commercial actions to position the India business for sale, asset impairment charges of $194.8 million to record the assets held for sale to their estimated fair value less costs to sell, and $7.1 million in third party provider costs incurred in connection with the transaction. The one-time commercial actions to prepare the India business for sale resulted in a decrease to the Revenueand Cost of sales and services line items on the consolidated statement of income (loss) and the impairment charges as well as third party provider costs were recorded to Restructuring and other charges (income)on the consolidated statement of income (loss). Refer to the India Held for Sale Businesssection for further details.
ADJUSTED EARNINGS RECONCILIATION
| (in Millions, except per share amounts) | Year Ended December 31, | ||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| Net income (loss) attributable to FMC stockholders (GAAP) | $ | (2,238.9) | $ | 341.1 | $ | 1,321.5 | |||||||||||
|
Corporate special charges (income), pre-tax (1)
|
1,794.4 | 238.0 | 256.3 | ||||||||||||||
|
India held for sale business(2)
|
521.7 | - | - | ||||||||||||||
|
Income tax expense (benefit) on Corporate special charges (income) (3)
|
(158.1) | (37.1) | (32.8) | ||||||||||||||
| Corporate special charges (income), net of income taxes | $ | 2,158.0 | $ | 200.9 | $ | 223.5 | |||||||||||
| Adjustment for noncontrolling interest, net of tax on Corporate special charges (income) | - | - | (1.6) | ||||||||||||||
| Discontinued operations attributable to FMC Stockholders, net of income taxes | 36.6 | 61.8 | 98.5 | ||||||||||||||
|
non-GAAP tax adjustments (4)
|
416.3 | (167.5) | (1,167.4) | ||||||||||||||
| Adjusted after-tax earnings from continuing operations attributable to FMC stockholders (non-GAAP) | $ | 372.0 | $ | 436.3 | $ | 474.5 | |||||||||||
| Diluted earnings per common share (GAAP) | $ | (17.88) | $ | 2.72 | $ | 10.53 | |||||||||||
| Corporate special charges (income), pre-tax per diluted share | 14.33 | 1.90 | 2.05 | ||||||||||||||
| India held for sale business | 4.16 | - | - | ||||||||||||||
| Income tax expense (benefit) on Corporate special charges (income) per diluted share | (1.26) | (0.30) | (0.26) | ||||||||||||||
| Corporate special charges (income), net of income taxes per diluted share | $ | 17.23 | $ | 1.60 | $ | 1.79 | |||||||||||
| Adjustment for noncontrolling interest, net of tax on Corporate special charges (income) per diluted share | - | - | (0.02) | ||||||||||||||
| Discontinued operations attributable to FMC stockholders, net of income taxes per diluted share | 0.29 | 0.49 | 0.78 | ||||||||||||||
| Tax adjustments per diluted share | 3.32 | (1.33) | (9.30) | ||||||||||||||
| Adjusted after-tax earnings from continuing operations attributable to FMC stockholders per diluted share (non-GAAP) | $ | 2.96 | $ | 3.48 | $ | 3.78 | |||||||||||
|
Average number of shares outstanding used in the adjusted after-tax earnings from continuing operations per diluted share computations (5)
|
125.6 | 125.4 | 125.5 | ||||||||||||||
____________________
(1)Represents restructuring and other charges (income), and non-operating pension, postretirement and other charges (income). The year ended December 31, 2025 includes charges incurred in connection with a shutdown of a product line at one of our manufacturing sites as part of Project Focus of $17.3 million, which are recorded to "Cost of Sales and services"on the consolidated statements of income (loss). Charges of $1,758.4 million recorded as "Restructuring and other charges (income)" on the consolidated statements of income (loss) for the year ended December 31, 2025 are also included in the reconciliation above.
(2)Beginning with the third quarter of 2025, we excluded the operating results of the India commercial business from our adjusted earnings during the held for sale period for non-GAAP purposes. For the twelve months ended December 31, 2025, we have excluded $521.7 million of charges and write-offs in connection with the India held for sale business as a result of one-time commercial actions to prepare the India business for sale and an asset impairment charge in accordance with the held-for-sale accounting standards. For further details, refer to note 5 in the Adjusted EBITDA reconciliation above.
(3)The income tax expense (benefit) on Corporate special charges (income) is determined using the applicable rates in the taxing jurisdictions in which the Corporate special charge or income occurred and includes both current and deferred income tax expense (benefit) based on the nature of the non-GAAP performance measure.
(4)We exclude the GAAP tax provision, including discrete items, from the non-GAAP measure of income, and include a non-GAAP tax provision based upon the projected annual non-GAAP effective tax rate. The GAAP tax provision includes certain discrete tax items including, but are not limited to: income tax expenses or benefits that are not related to continuing operating results in the current year; tax adjustments associated with fluctuations in foreign currency remeasurement of certain foreign operations; certain changes in estimates of tax matters related to prior fiscal years; certain changes in the realizability of deferred tax assets and related interim accounting impacts; and changes in tax law. In 2024 and 2023, we recorded significant deferred tax assets, net of valuation allowance, due to various tax incentives granted to the Company's Swiss subsidiaries (the "Swiss Tax Incentives"). The initial recognition of these Swiss Tax Incentives did not impact our adjusted non-GAAP effective tax rate but will be considered annually as we realize the benefits. Management believes excluding these discrete tax items, as well as the impacts of the Swiss Tax Incentives, assists investors and securities analysts in understanding the tax provision and the effective tax rate related to continuing operating results thereby providing investors with useful supplemental information about FMC's operational performance. Refer to the explanation below on the provision for income taxes for further detail of the non-GAAP tax adjustments for the twelve months ended December 31, 2025.
(5)The average number of shares outstanding used in the twelve months ended December 31, 2025 diluted adjusted after-tax earnings from continuing operations per share computation (non-GAAP) includes 0.4 million diluted shares. This number of shares differs from the average number of shares outstanding used in diluted earnings per share computations (GAAP) as we had a net loss from continuing operations attributable to FMC stockholders during the twelve months ended December 31, 2025. Per share amounts may differ due to the average number of outstanding shares used in the calculation.
RECONCILIATION OF REVENUE (GAAP)
TO REVENUE EXCLUDING INDIA (NON-GAAP)(2)
| Twelve Months Ended December 31, | |||||||||||
| 2025 | 2024 | ||||||||||
| Revenue (GAAP) | $ | 3,467.4 | $ | 4,246.1 | |||||||
|
Less: Revenue from India commercial business(1)
|
(421.9) | - | |||||||||
|
Revenue excluding India (non-GAAP)(2)
|
$ | 3,889.3 | $ | 4,246.1 | |||||||
___________________
(1)Beginning with the third quarter of 2025, revenue from the India commercial business is excluded from our results during the held for sale period for non-GAAP purposes. During the twelve months ended December 31, 2025, we took several one-time commercial actions to prepare the India commercial business for sale. For further details, refer to note 5 in the Adjusted EBITDA reconciliation above.
(2)Although the India held for sale business does not qualify for recognition as discontinued operations, we believe Revenue excluding India (non-GAAP) provides management and investors with useful supplemental information regarding our ongoing revenue performance.
ORGANIC REVENUE GROWTH RECONCILIATION
| Twelve Months Ended December 31, 2025 vs. 2024 | |||||
| Total Revenue Change (GAAP) | (18) | % | |||
| Less: Revenue for India held for sale business for the twelve months ended December 31, 2025 | (10) | % | |||
|
Revenue Excluding India Change (non-GAAP) (1)
|
(8) | % | |||
| Less: Foreign Currency Impact | - | % | |||
|
Organic Revenue Change (non-GAAP)
|
(8) | % | |||
(1)Beginning with the third quarter of 2025, revenue from the India commercial business is excluded from our adjusted results during the held for sale period for non-GAAP purposes, as described in note 5 in the Adjusted EBITDA reconciliation above.
RECONCILIATION OF NET INCOME (LOSS) ATTRIBUTABLE TO
FMC STOCKHOLDERS (GAAP) TO RETURN ON INVESTED CAPITAL ("ROIC")
NUMERATOR (NON-GAAP) AND ADJUSTED ROIC (USING NON-GAAP NUMERATOR)
We believe Adjusted ROIC provides management and investors with useful supplemental information regarding our utilization of capital provided by both equity and debt as well as our working capital and free cash flow management. Additionally, vesting of certain restricted stock awards granted to officers is connected to Adjusted ROIC as a performance metric.
| Twelve Months Ended | |||||||||||
| December 31, 2025 | |||||||||||
|
Net income (loss) attributable to FMC stockholders (GAAP)
|
$ | (2,238.9) | |||||||||
| Interest expense, net, net of income taxes | 208.4 | ||||||||||
| Corporate special charges (income) | 1,794.4 | ||||||||||
| India held for sale business | 521.7 | ||||||||||
| Income tax expense (benefit) on Corporate special charges (income) | (158.1) | ||||||||||
| Discontinued operations attributable to FMC stockholders, net of income taxes | 36.6 | ||||||||||
| Tax adjustments | 416.3 | ||||||||||
| ROIC numerator (non-GAAP) | $ | 580.4 | |||||||||
| December 31, 2025 | December 31, 2024 | ||||||||||
| Total debt | $ | 4,074.9 | $ | 3,365.3 | |||||||
| Total FMC stockholders' equity | 2,071.5 | 4,487.5 | |||||||||
|
Total debt and FMC stockholders' equity (GAAP)
|
$ | 6,146.4 | $ | 7,852.8 | |||||||
| ROIC denominator (2 yr average total debt and FMC stockholders' equity) | $ | 6,999.6 | |||||||||
|
ROIC (using Net income (loss) attributable to FMC stockholders (GAAP) as numerator)
|
(31.99) | % | |||||||||
| Adjusted ROIC (using non-GAAP numerator) | 8.29 | % | |||||||||
Results of Operations
In the discussion below, all comparisons are between the periods unless otherwise noted. In certain instances, parts included in the variance explanations in the discussion below may not sum to the total variance for the financial statement line item due to rounding.
Revenue
2025 vs. 2024
Revenue of $3,467.4 million decreased $778.7 million, or approximately 18 percent versus the prior year period primarily driven by revenue charges in India due to one-time commercial actions to prepare the India business for sale. Excluding the India held for sale business beginning in the third quarter of 2025, revenue decreased 8 percent versus the prior period driven by a price decline of 6 percent, roughly half of which was due to adjustments for certain diamide partners on "cost-plus" contracts. The remaining price decline was attributed to competitive pressure on core portfolio products and price reductions for branded Rynaxypyr® active. Volume improved 1 percent driven by increased demand for new active ingredients and expanded market access in Brazil. Foreign currency impacts were essentially flat to prior year. The removal of India revenue for the second half of 2025 as compared to the inclusion of India revenue in 2024 accounted for a decrease in revenue of approximately 3 percent during the period.
2024 vs. 2023
Revenue of $4,246.1 million decreased $240.7 million, or approximately 5 percent versus the prior year period. Volume improved as the year progressed and resulted in a 3 percent increase in revenue year over year. Price and foreign currency impacts were headwinds during the period of 6 percent and 2 percent, respectively. Higher volume was driven by the Company's growth portfolio, and particularly the new active ingredients Isoflex® active and fluindapyr.
See below for a discussion of revenue by region.
| Total Revenue by Region | |||||||||||||||||
| Year Ended December 31, | |||||||||||||||||
| (in Millions) | 2025 | 2024 | 2023 | ||||||||||||||
| North America | $ | 1,102.2 | $ | 1,173.4 | $ | 1,204.8 | |||||||||||
| Latin America | 1,351.4 | 1,389.5 | 1,401.1 | ||||||||||||||
| Europe, Middle East and Africa (EMEA) | 871.5 | 834.8 | 899.2 | ||||||||||||||
|
Asia (1)
|
142.3 | 848.4 | 981.7 | ||||||||||||||
| Total Revenue | $ | 3,467.4 | $ | 4,246.1 | $ | 4,486.8 | |||||||||||
1.During the twelve months ended December 31, 2025, we took several one-time commercial actions to prepare the India commercial business for sale. These one-time actions to position the India business for sale resulted in revenue charges of $421.9 million for the India business in 2025 and included the recognition of actual inventory returns during the period, an increase to the reserve for future sales returns, and various pricing actions to assist with the acceleration of receivable collection.
2025 vs. 2024
North America:Revenue decreased approximately 6 percent in the year ended December 31, 2025 driven by lower volumes from customers in the U.S. delaying purchases during the first quarter and expected destocking in Canada during the second quarter. Solid branded growth in the U.S., most notably in the growth portfolio, partially offset the impact of lower volumes. Lower pricing, primarily for branded products, also contributed to the decrease during the period.
Latin America:Revenue decreased approximately 3 percent for the year ended December 31, 2025 primarily due to lower pricing and limited volume growth driven by generic pressure in the market. In addition, low liquidity caused customer credit constraints in Brazil and Argentina and acted as a further inhibitor to growth. The decrease in revenue was partially offset by direct sales to cotton growers in Brazil and sales of new active ingredients fluindapyr and Isoflex®active.
EMEA:Revenue increased approximately 4 percent (up approximately 3 percent organically) driven by strong volume gains mainly in the growth portfolio and aided by the recent launch of Isoflex®active in Great Britain.
Asia:Revenue decreased approximately 83 percent compared to the prior year period primarily due to one-time commercial actions to prepare the India commercial business for sale. Revenue excluding India (non-GAAP) for the year ended December 31, 2025 was down 33 percent (down approximately 32 percent organically) year-over-year primarily due to lower volumes and significant pricing pressure caused by generic competition in the region.
2024 vs. 2023
North America:Revenue decreased approximately 3 percent in the year ended December 31, 2024 due to a significant decline in volumes during the first quarter as a result of continued pressure from channel destocking behavior. Volume recovery as a result of improved inventory levels in the channel during the following quarters partially offset the decrease in the first quarter. Unfavorable pricing actions also contributed to the decrease in the revenue during the period. Strong growth in fungicides, particularly from flutriafol and fluindapyr products, positively impacted sales in the region.
Latin America:Revenue decreased approximately 1 percent for the year ended December 31, 2024 compared to the prior year period. Organically, revenue increased approximately 5 percent driven by volume growth primarily related to branded diamides and Onsuva™, a fluindapyr-based fungicide. The volume growth was partially offset by unfavorable impacts from pricing actions, primarily in Brazil, during the period, which were caused by competitive pressure as demand returned as well as one-time customer incentives, offered primarily during the second quarter, aimed at addressing high cost inventory in the channel.
EMEA:Revenue decreased approximately 7 percent, or approximately 4 percent organically, versus the prior year period. Branded Cyazypyr® active products contributed to volume growth in the region that partially offset the impact of registration removals and the rationalization of some lower margin products.
Asia:Revenue decreased approximately 14 percent, or approximately 12 percent organically, versus the prior year period caused by lower volumes, primarily due to ongoing destocking behavior, specifically in India. Pricing pressure caused by competitive pressure was an additional headwind in the region.
Gross margin
2025 vs. 2024
Gross margin of $1,283.0 million decreased by $365.9 million, or approximately 22 percent versus the prior year period primarily due to 23 percent decrease caused by the one-time commercial actions taken in India. Cost improvement during the period resulted in a 21 percent increase to gross margin, respectively. The increase was partially offset by lower pricing and volumes of 15 percent and 2 percent, respectively, during the period. Foreign currency was a headwind of 3 percent. Gross margin percent of approximately 37 percent decreased compared to approximately 39 percent in the prior year period. Excluding the impact of the one-time commercial actions, our gross margin as a percent of revenue was 41 percent, which increased compared to gross margin percentage of 39 percent in the prior year as a result of continued cost improvement partially offset by lower pricing during the period.
2024 vs. 2023
Gross margin of $1,648.9 million decreased by $182.1 million, or approximately 10 percent versus the prior year period resulting from a 13 percent decrease due to lower pricing in all regions due to competitive pressure as demand returned. The decrease in price was partially offset by a 2 percent increase due to positive input cost improvement and a 1 percent increase from volume growth. Gross margin percent of approximately 38.8 percent slightly decreased from approximately 40.8 percent in the prior year period driven by higher unabsorbed fixed costs as well as registration removals during the period.
Selling, general and administrative expenses
2025 vs. 2024
Selling, general and administrative expenses of $684.9 million increased by $40.3 million, or approximately 6 percent versus the prior year period. The increase in selling, general and administrative expenses is primarily the result of investment to support new products as well as additional sales force in Brazil to support the expanded market access in the country.
2024 vs. 2023
Selling, general and administrative expenses of $644.6 million decreased by $89.7 million, or approximately 12 percent versus the prior year period. The decrease in selling, general and administrative expenses is primarily due to cost reduction measures implemented in connection with our Project Focus initiative as well as operating cost mitigation actions in effect since last year due to lower business performance.
Research and development expenses
2025 vs. 2024
Research and development expenses of $266.1 million decreased by $11.9 million, or approximately 4 percent compared to the previous year. The decrease in spending on research and development relates to the timing of project expenses as well as continued cost reduction efforts in connection with restructuring activities.
2024 vs. 2023
Research and development expenses of $278.0 million decreased by $50.8 million, or approximately 15 percent versus the prior year period. The decrease in research and development costs is a result of cost reduction efforts related to Project Focus. Reductions in research and development spending were done without sacrificing investments in areas such as Plant Health and our new active ingredient pipeline.
Other Results of Operations
Depreciation and amortization
2025 vs. 2024
Depreciation and amortization of $173.6 million decreased $2.7 million, or approximately 2 percent, as compared to 2024 of $176.3 million. The decrease was the result of the write off of certain assets during 2024 as part of our Project Focus restructuring initiative partially offset by certain intangible assets that began amortization in 2025.
2024 vs. 2023
Depreciation and amortization of $176.3 million decreased $8.0 million, or approximately 4 percent, as compared to 2023 of $184.3 million. The decrease was the result of the write off of certain amortizable assets in the first half of 2024 as part of our Project Focus restructuring initiative.
Interest expense, net
2025 vs. 2024
Interest expense, net of $239.6 million increased by $3.8 million, or approximately 2 percent, compared to $235.8 million in 2024 primarily driven by refinancing activity. An increase of $18.9 million in connection with refinancing activity and higher foreign debt balances and rates was partially offset by a decrease of approximately $15.1 million due to lower short-term domestic balances and rates.
2024 vs. 2023
Interest expense, net of $235.8 million decreased by $1.4 million, or approximately 1 percent, compared to $237.2 million in 2023 primarily driven by lower debt balances and rates. Specifically, lower foreign balances and rates resulted in a decrease in interest expense of approximately $6.5 million. The decrease in interest expense was partially offset by an increase of approximately $5.1 million due to higher domestic short-term interest rates.
Corporate special charges (income)
Restructuring and other charges (income)
Our restructuring and other charges (income) are comprised of restructuring, assets disposals and other charges (income) as described below:
| Year Ended December 31, | |||||||||||||||||
| (in Millions) | 2025 | 2024 | 2023 | ||||||||||||||
| Restructuring charges | $ | 271.5 | $ | 303.0 | $ | 48.4 | |||||||||||
| Other charges (income), net | 1,688.8 | (83.2) | 163.9 | ||||||||||||||
|
Total restructuring and other charges (income) (1)
|
$ | 1,960.3 | $ | 219.8 | $ | 212.3 | |||||||||||
_______________
(1) See Note 7 to the consolidated financial statements included in this Form 10-K for more information.
2025
Restructuring charges of $271.5 million primarily includes restructuring charges related to Project Foundation as well as Project Focus. The charges of $172.0 million for Project Foundation incurred during the twelve months ended December 31, 2025 include non-cash asset write-off and accelerated depreciation costs of $155.7 million primarily associated with the planned exit of certain production activities, other miscellaneous charges, which includes professional service provider costs, of $14.5 million and severance and employee separation costs of $1.8 million. We also incurred charges related to Project Focus of $99.1 million consisting of $25.4 million of severance and employee separation costs, $27.8 million of other miscellaneous charges, including professional service provider costs, and write-offs of $45.9 million on assets identified for disposal, which includes $27.0 million of abandonment charges recorded in connection with a shutdown of a product line at one of our manufacturing locations.
In connection with Project Foundation, the Company expects to incur pre-tax restructuring charges over the life of the program in the range of approximately $560 million to $635 million, which is subject to future changes, in connection with these efforts. The Company expects non-cash asset write-off and/or accelerated depreciation charges in the range of $420 million to $440 million, primarily related to the planned exit of production activities and manufacturing operations at certain manufacturing sites. In addition to the non-cash write-off charges, the Company expects to incur $140 to $195 million of cash expenditures in connection with these activities: the Company estimates total severance charges and related benefit costs to be in the range of $50 to $80 million; the Company expects to incur cash consulting and other professional service fees totaling approximately $10 to $20 million to help execute these actions; and additionally, we may incur $80 to $95 million in other cash charges, such as decommissioning costs and contract termination charges. We may incur additional charges in connection with Project Foundation and will provide an estimate of any additional charges when known. Restructuring actions under the program are expected to be substantially complete by the end of 2027.
As of December 31, 2025, we have implemented substantially all the activities associated Project Focus. The charges incurred during the year ended December 31, 2025 and prior years are within the expected range for pre-tax restructuring charges of approximately $425 million to $475 million over the life of the program. Project Focus-related charges include severance and related benefit costs, asset write-off charges, and contract abandonment charges. Any remaining amounts incurred in connection with remaining activities under the program, which are not expected to be material, will be reflected in our consolidated results of operations as they become probable and estimable or a triggering event is identified in accordance with the relevant accounting guidance.
During the year ended December 31, 2025, we also recognized income of $0.4 millionrelated to previously implemented restructuring initiatives including a gain recognized on the disposition of a previously closed manufacturing site.
Other charges (income), net, of $1,688.8 million is primarily driven by a $1,356.2 million write-off of our entire goodwill balance during the fourth quarter. As a result of the recent significant decrease in our stock price, we performed a test of our goodwill and other intangible assets for impairment in connection with the preparation of our financial statements, which triggered the write-off. Other charges (income), net, also includes the asset impairment charge of $194.8 million and third party provider costs of $7.1 million incurred related to the India held for sale business. Following the commercial adjustments to prepare the India business for sale, we evaluated the remaining carrying value and recorded an impairment charge for the difference between the adjusted carrying value and the estimated fair value of the net assets associated with the business, less costs to sell. In addition to the goodwill write-off and charges related to the India held for sale business, other charges (income), net, include $99.4 million of charges associated with our environmental sites, a charge of $11.9 million due to changes in our estimate for Furadan ®disposal costs at our Middleport site, losses of $7.7 million related to the devaluation of the Argentine peso driven by government actions, and $11.7 million of other miscellaneous charges.
2024
Restructuring and other charges (income) primarily includes restructuring charges incurred in connection with the Project Focus initiative. For the year ended December 31, 2024, we incurred $132.1 million of contract abandonment charges as a result of the continued evaluation of our supply chain footprint during the fourth quarter of 2024 and $53.3 million of non-cash asset write off charges resulting from the contract cessation with one of our third-party manufacturers during the second quarter of 2024. The decision to exit these agreements was driven in part by our ability to source these materials from lower cost locations. Charges incurred in connection with Project Focus also consist of $55.8 millionin severance and employee separation charges, including costs associated with the CEO transition, $31.0 million of professional service provider costs and other miscellaneous charges associated with the project, accelerated depreciation of 20.5 million on assets identified for disposal in connection with the restructuring initiative, and $13.2 million of asset impairment charges.
During the year ended December 31, 2024, we also recognized income of $2.9 million related to previously implemented restructuring initiatives including a $3.1 million gain recognized on the disposition of a previously closed manufacturing site.
Other charges (income), net, of $(83.2) million is comprised of a gain, net of full year incurred transaction costs, of $174.4 million from the sale of our GSS business, which was completed on November 1, 2024. The divestiture of GSS, which includes a line of products that serve a diverse mix of non-crop markets such as golf courses, professional sports stadiums and pest control, is a key step in FMC's strategic plan to focus solely on innovating products and services for the global crop protection market. The gain from the GSS sale was partially offset by $74.7 million of charges associated with our environmental sites and $16.5 million of other miscellaneous charges.
2023
Restructuring and other charges (income) includes $40.1 million of severance and employee separation costs and $5.4 million of provider costs associated with the Project Focus restructuring initiative. Other restructuring costs of $8.7 million relate to employee separation and asset impairment costs incurred as part of various ongoing initiatives. These restructuring charges were offset by a $5.8 million gain recognized on the disposition of land related to a previously closed manufacturing facility.
Other charges (income), net, of $163.9 million is comprised of $75.2 million in currency related charges driven by significant devaluation actions taken by the Argentine Government during the fourth quarter of 2023 as well as similar devaluation actions in Pakistan and Argentina during previous quarts of 2023. Other charges (income), net, also includes $13.0 million in charges primarily resulting from the third quarter acquisition of in-process research and development assets that do not meet the criteria for capitalization. We also incurred $66.9 million in environmental charges associated with remediation and other miscellaneous charges of $8.8 million.
Non-operating pension and postretirement charges (income)
2025 vs. 2024
Charges for each of the years ended December 31, 2025 and 2024 were $18.7 million and $18.2 million
2024 vs. 2023
Charges for each of the years ended December 31, 2024 and 2023 were $18.2 million.
Provision (benefit) for income taxes
In 2025, we recognized an income tax expense of $314.2 million, which resulted in an effective tax rate of negative 16.7 percent. For the year ended December 31, 2024, we recorded an income tax benefit of $150.9 million resulting in an effective tax rate of negative 59.8 percent. For the year ended December 31, 2023, we recorded an income tax benefit of $1,119.3 million resulting in an effective tax rate of negative 372.9 percent. Note 11 to the consolidated financial statements included in this Form 10-K includes more details on the drivers of the GAAP effective rate and year-over-year changes.
We believe showing the reconciliation below of our GAAP to non-GAAP effective tax rate provides investors with useful supplemental information about our tax rate on the core underlying business.
| Year Ended December 31, | |||||||||||||||||||||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||||||||||||||||||||
| (in Millions) | Income (Expense) | Tax Provision (Benefit) | Effective Tax Rate | Income (Expense) | Tax Provision (Benefit) | Effective Tax Rate | Income (Expense) | Tax Provision (Benefit) | Effective Tax Rate | ||||||||||||||||||||||||||
| GAAP - Continuing operations | $ | (1,886.6) | $ | 314.2 | (16.7) | % | $ | 252.5 | $ | (150.9) | (59.8) | % | $ | 300.2 | $ | (1,119.3) | (372.9) | % | |||||||||||||||||
| Corporate special charges (income) | 2,316.1 | 158.1 | 238.0 | 37.1 | 256.3 | 32.8 | |||||||||||||||||||||||||||||
|
Revisions to valuation allowances of historical deferred tax assets (1)
|
- | (45.3) | - | 1.6 | - | 223.5 | |||||||||||||||||||||||||||||
|
Net impact of Switzerland tax incentives (1)
|
- | (334.7) | - | 153.9 | - | 830.8 | |||||||||||||||||||||||||||||
|
Foreign currency and other discrete items (1)
|
- | (36.3) | - | 12.0 | - | 113.1 | |||||||||||||||||||||||||||||
| non-GAAP - Continuing operations | $ | 429.5 | $ | 56.0 | 13.0 | % | $ | 490.5 | $ | 53.7 | 10.9 | % | $ | 556.5 | $ | 80.9 | 14.5 | % | |||||||||||||||||
_______________
(1)Refer to note 3 of the Adjusted Earnings Reconciliationtable within this section of this Form 10-K for an explanation of tax adjustments.
The primary drivers for the fluctuations in the effective tax rate for each period are provided in the table above.
During the three months ended December 31, 2023, the Company's Swiss subsidiaries were granted ten-year tax incentives effective for 2023 and retroactively for 2021 and 2022. The tax incentives were awarded for the Company's commitment to invest in additional headcount and transfer significant intellectual property as well as establishing a new global technology and innovation center in Switzerland. Deferred tax benefits of $1,149 million and related valuation allowances of $318 million were recorded during the three months ended December 31, 2023 to reflect the net estimated future reductions in tax of $831 million associated with the incentives.
In connection with our plans to establish a global technology and innovation center in Switzerland, we initiated changes to our corporate entity structure, including intra-entity transfers of certain intellectual property, during the second quarter of 2024. As a result, we recorded a net tax benefit of approximately $300 million. This benefit, net of valuation allowance, was primarily a result of the recognition of a step-up in tax basis to the fair value of the transferred intellectual property by one of the Company's Swiss subsidiaries. In addition, local tax impacts associated with the disposition of the transferred intellectual property were recorded as well as an increase in our valuation allowance associated with Swiss nonrefundable tax credits as a result of indirect effects of the transferred intellectual property. During the fourth quarter of 2024 and 2025, the Company recorded additional valuation allowances of approximately $120 million and $285 million, respectively, as a result of updated projections of future earnings associated with the 2023 deferred tax benefits noted above.
Historically, FMC's Brazil valuation allowance position was based on long-standing local transfer pricing rules, as well as certain material favorable permanent statutory tax deductions available to FMC Brazil as part of local tax law. During the three months ended December 31, 2023, the Company released its FMC Brazil valuation allowance and recorded a tax benefit of approximately $223 million as a result of the Brazilian Government enacting a new tax law that significantly limits FMC Brazil's ability to benefit in the future from the material favorable permanent statutory tax deductions previously available as part of local tax law.
Excluding the items in the table above, changes in the non-GAAP effective tax rate were primarily due to the impact of geographic mix of earnings among our global subsidiaries. See Note 11 to the consolidated financial statements included within this Form 10-K for additional details related to the provisions for income taxes on continuing operations, as well as items that significantly impact our effective tax rate.
Discontinued operations, net of income taxes
Our discontinued operations primarily reflect adjustments to retained liabilities from previously discontinued operations and include environmental liabilities, other postretirement benefit liabilities, self-insurance, long-term obligations related to legal proceedings and historical restructuring activities. See Note 9 to the consolidated financial statements included within this Form 10-K for additional details on our discontinued operations.
2025 vs. 2024
Discontinued operations, net of income taxes represented a loss of $36.6 million in 2025 compared to a loss of $61.8 million in 2024. The loss during both periods was primarily due to adjustments related to the retained liabilities from our previously discontinued operations. The loss in 2025 was partially offset by a $34.5 million reduction in our required legal reserve due to a decrease in outstanding cases.
2024 vs. 2023
Discontinued operations, net of income taxes represented a loss of $61.8 million in 2024 compared to a loss of $98.5 million in 2023. The loss during both periods was primarily due to adjustments related to the retained liabilities from our previously discontinued operations. The twelve months ended December 31, 2024 includes an offsetting gain of $18.0 million recognized as the result of an insurance settlement for retained legal reserves.
Net income (loss)
2025 vs. 2024
The net loss recognized during the period was $2,237.4 million as compared to net income of $341.6 million in the prior year period. The change year over year is primarily attributable to the goodwill write off of $1,356.2 million and approximately $522 million of adjustments recorded in connection with preparing the India commercial business for sale. The change in the provision for income taxes also contributed to the decrease in net income during the period. The benefit for income taxes for the twelve months ended December 31, 2024 was the result of a tax benefit of approximately $300 million recorded due to changes in our corporate entity structure in connection with our plans to establish a global technology and innovation center in Switzerland. In comparison, we recorded a $314.2 million provision for income taxes during the twelve months ended December 31, 2025.
The only difference between Net income (loss) and Net income (loss) attributable to FMC stockholders is noncontrolling interest.
2024 vs. 2023
Net income decreased to $341.6 million from $1,321.0 million primarily as a result of a decrease of $968.4 million to our benefit for income taxes. We recorded significant one-time tax benefits in the prior year related to tax incentives granted to our Swiss subsidiaries as discussed above. In the fourth quarter of 2024, we recorded higher valuation allowances on these tax benefits. In 2024, we also recorded a $300 million income tax benefit in connection with the changes to our corporate entity structure made as part of establishing our global technology and innovation center in Switzerland. Additionally, lower gross margin, as discussed above, negatively impacted our results for the period. The change in our gross margin and benefit for income taxes was partially offset by a gain of $18.0 million in discontinued operations during the second quarter as the result of an insurance settlement for retained legal reserves. Our research and development expenses and our selling, general, and administrative expenses were also lower as a result of cost containment.
Adjusted EBITDA (non-GAAP)
2025 vs. 2024
Adjusted EBITDA of $842.7 million decreased $59.9 million, or approximately 7 percent versus the prior year period. Adjusted EBITDA was impacted by favorable costs of approximately 32 percent. The cost improvement was offset by a decrease in price and volumes impacting adjusted EBITDA by 29 percent and 3 percent, respectively. Foreign exchange impacts were also a headwind of 2 percent during the period. Adjusted EBITDA for the year ended December 31, 2024 includes contributions from the India commercial business. However, the year ended December 31, 2025 excludes the operating results of the India commercial business for six months as the held for sale period began in the third quarter of 2025. This exclusion accounts for 5 percent of the decrease in Adjusted EBITDA as compared to the prior year period.
2024 vs. 2023
Adjusted EBITDA of $902.6 million decreased $75.4 million, or approximately 8 percent versus the prior year period. Cost as well as volume improvement of approximately 14 percent and 1 percent, respectively, were fully offset by unfavorable pricing impacts of approximately 25 percent. Favorable foreign currency impacts of approximately 2 percent also increased adjusted EBITDA.
Liquidity and Capital Resources
As a global agricultural sciences company, we require cash primarily for seasonal working capital needs, capital expenditures, and return of capital to shareholders. We plan to meet these liquidity needs through available cash, cash generated from operations, and borrowings under our committed Revolving Credit Facility as well as other liquidity facilities, and in certain instances access to debt capital markets. On February 5, 2026, we announced that the Company is engaging in a strategic review to explore options to enhance shareholder value. Potential strategic paths may include partnerships, joint ventures, mergers, acquisitions, or licensing transactions, a combination of these, or other strategic transactions. Information involving our material cash requirements is detailed below.
Cash
Cash and cash equivalents at December 31, 2025 and 2024, were $584.5 million and $357.3 million, respectively. Of the cash and cash equivalents balance at December 31, 2025, $577.3 million was held by our foreign subsidiaries. We have established plans to repatriate cash from certain foreign subsidiaries with minimal tax on a go forward basis. Other cash held by foreign subsidiaries is generally used to finance subsidiaries' operating activities and future foreign investments. See Note 11 to the consolidated financial statements included within this Form 10-K for more information on our indefinite reinvestment assertion.
Outstanding debt
At December 31, 2025, we had total debt of $4,074.9 million as compared to $3,365.3 million at December 31, 2024. Total debt included $2,769.8 million and $3,027.9 million of long-term debt (excluding current portions of $585.6 million and $76.1 million) at December 31, 2025 and 2024, respectively. Our short-term debt consists of foreign borrowings and borrowings under our committed Revolving Credit Facility. Foreign borrowings decreased from $135.7 million at December 31, 2024 to $76.5 million at December 31, 2025. We had borrowings of $643.0 million under our Revolving Credit Facility at December 31, 2025. We had no commercial paper borrowings at December 31, 2025 as compared to outstanding commercial paper of $125.6 million at December 31, 2024. We provide parent-company guarantees to lending institutions providing credit to our foreign subsidiaries.
On May 27, 2025, the Company completed the sale of $750 million aggregate principal amount of 8.45% Subordinated Notes due November 1, 2055. The Company used the net proceeds from this offering to redeem $500 million of the senior notes due May 18, 2026 and for general corporate purposes. The Company paid a make-whole premium of $3.3 million in connection with the early redemption of the senior notes, which is recorded within"Non-operating pension, postretirement and other charges (income)"on the consolidated statement of income (loss). Fees incurred to secure the Subordinated Notes have been deferred and will be amortized over the terms of the arrangement.
As of December 31, 2025, we were in compliance with all of our debt covenants. In February 2025 and December 2025, we entered into new amendments to our Revolving Credit Facility to amend the maximum leverage and minimum interest coverage ratios and to extend the maturity date of the facility to 2028. Increases to the Company's regular quarterly dividend are limited and other restrictions are effective as defined in the amended agreement entered into in December 2025. Our ability to meet certain restrictive covenants and guarantees in our Revolving Credit Facility and other debt instruments will be subject to economic conditions and to financial, market, and competitive factors, many of which are beyond our control. If our business does not perform in line with current expectations, we will be at risk of non-compliance with such covenants and guarantees. See Note 12 to the consolidated financial statements included within this Form 10-K for further details.
Our total debt maturities, excluding discounts, is $4,105.5 million at December 31, 2025, with $1,305.1 million payable in the next 12 months. As of December 31, 2025, we had contractual interest obligations of $3,480.3 million outstanding, with $166.5 million payable in the next 12 months. Contractual interest is the interest we are contracted to pay on our long-term debt obligations. We do not have any long-term debt subject to variable interest rates at December 31, 2025.
Access to credit and future liquidity and funding needs
As of December 31, 2025, borrowings under our Revolving Credit Facility were $643.0 million and letters of credit outstanding under the Revolving Credit Facility totaled $209.8 million. At December 31, 2025, our remaining borrowing capacity under our credit facility was $1,147.2 million. In accordance with U.S. GAAP, we have classified the borrowings under the Revolving Credit Facility as short-term debt. The Company intends to refinance any draw under the line of credit with successive short-term borrowings, as needed, through the maturity date in 2028. At December 31, 2025, we had no borrowings outstanding under the commercial paper program. Our balances under the Revolving Credit Facility and commercial paper program fluctuate from year to year depending on working capital needs.
Working Capital Initiatives
We offer to a select group of suppliers a voluntary supply chain finance program as part of our continued efforts to improve our working capital efficiency. We do not believe that changes in the availability of the supply chain finance program would have a significant impact on our liquidity. See Note 2 for more information on the key terms and balances of the program.
From time to time, the Company may sell receivables on a non-recourse basis to third-party financial institutions. These sales are normally driven by specific market conditions, including, but not limited to, foreign exchange environments, customer credit management, as well as other factors where the receivables may lay. See Note 8 for more information on receivables factoring.
Commitments
We provide guarantees to financial institutions on behalf of certain customers, principally customers in Brazil for their seasonal borrowing. The total of these guarantees was $53.1 million at December 31, 2025. These guarantees arise during the ordinary course of business from relationships with customers and nonconsolidated affiliates. Non-performance by the guaranteed party triggers the obligation requiring us to make payments to the beneficiary of the guarantee. Based on our experience these types of guarantees have not had a material effect on our consolidated financial position or on our liquidity. Our expectation is that future payment or performance related to the non-performance of others is considered unlikely.
In connection with certain of our property and asset sales and divestitures, we have agreed to indemnify the buyer for certain liabilities, including environmental contamination and taxes that occurred prior to the date of sale. Our indemnification obligations with respect to these liabilities may be indefinite as to duration and may or may not be subject to a deductible, minimum claim amount or cap. In cases where it is not possible for us to predict the likelihood that a claim will be made or to make a reasonable estimate of the maximum potential loss or range of loss, no specific liability has been recorded. If triggered, we may be able to recover certain of the indemnity payments from third parties. In cases where it is possible, we have recorded a specific liability within our Reserve for Discontinued Operations. Refer to Note 9 to the consolidated financial statements included within this Form 10-K for further details.
Taxes, Pension, Environmental, and Other Discontinued Liabilities
As of December 31, 2025, the liability for uncertain tax positions was $59.6 million. Our consolidated balance sheets contain accrued pension and other postretirement benefits, our environmental liabilities, and our other discontinued liabilities for which we are unable to make a reasonably reliable estimate of the periods in which these liabilities might be paid beyond 2026. We believe any liability arising from potential environmental obligations is not likely to have a material adverse effect on our liquidity or financial condition as it may be satisfied over many years. See our discussion under 2025 Cash Flow Outlook in the Free Cash Flow section within this Form 10-K for information on these liabilities and the related expected payments in 2026.
Derivatives
At times we can be in a derivative liability position that can require future cash obligations. However, as of December 31, 2025, we had no such obligations.
Leases
We have lease arrangements for equipment and facilities, including office spaces, IT equipment, transportation equipment, and machinery equipment. As of December 31, 2025, we had fixed lease payment obligations of $149.0 million, with $31.0 million payable within 12 months.
Purchase obligations
Purchase obligations consist of agreements to purchase goods and services that are enforceable and legally binding and specify all significant terms, including fixed or minimum quantities to be purchased, price provisions and timing of the transaction. We have entered into a number of purchase obligations for the sourcing of materials and energy where take-or-pay arrangements apply. As of December 31, 2025, our purchase obligations were $179.9 million, with $68.5 million payable in the next twelve months. The majority of the minimum obligations under these contracts are take-or-pay commitments over the life of the contract and not a year by year take-or-pay. As such, the obligations related to these types of contacts are considered payable in the earliest period in which the minimum obligation could be due under these types of contracts.
Statement of Cash Flows
Cash provided (required) by operating activities of continuing operations was $(6.2) million, $736.7 million and $(300.3) million for 2025, 2024 and 2023, respectively.
The table below presents the components of net cash provided (required) by operating activities of continuing operations.
| (in Millions) | Year ended December 31, | ||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
|
Income from continuing operations before non-operating pension and postretirement charges (income), interest expense, net and income taxes(GAAP)
|
$ | (1,628.3) | $ | 506.5 | $ | 555.6 | |||||||||||
| Restructuring and other charges (income), non-cash commercial actions for India held for sale business, transaction-related charges and depreciation and amortization | 2,435.2 | 396.1 | 396.6 | ||||||||||||||
|
Change in trade receivables, net (1)
|
228.4 | (348.8) | 192.4 | ||||||||||||||
| Change in guarantees of vendor financing | (39.8) | 15.9 | (72.4) | ||||||||||||||
|
Change in advance payments from customers (2)
|
(1.8) | (26.5) | (199.1) | ||||||||||||||
|
Change in accrued customer rebates (3)
|
(58.9) | 30.7 | 16.0 | ||||||||||||||
|
Change in inventories (4)
|
(156.3) | 475.8 | (72.8) | ||||||||||||||
|
Change in accounts payable (5)
|
20.1 | 171.7 | (626.0) | ||||||||||||||
|
Change in all other operating assets and liabilities (6)
|
(218.0) | 74.7 | (13.7) | ||||||||||||||
|
Restructuring and other spending (7)
|
(112.4) | (130.0) | (30.3) | ||||||||||||||
|
Environmental spending, continuing, net of recoveries (8)
|
(32.5) | (35.4) | (34.5) | ||||||||||||||
|
Pension and other postretirement benefit contributions (9)
|
(3.9) | (5.5) | (2.4) | ||||||||||||||
|
Net interest payments (10)
|
(241.9) | (232.2) | (229.6) | ||||||||||||||
|
Tax payments, net of refunds (11)
|
(196.1) | (156.3) | (180.1) | ||||||||||||||
| Cash provided (required) by operating activities of continuing operations (GAAP) | $ | (6.2) | $ | 736.7 | $ | (300.3) | |||||||||||
____________________
(1)Both periods include the impacts of seasonality and the receivable build intrinsic in our business. The change in cash flows related to trade receivables in 2025 was driven by lower revenue year over year as well as timing of collections. Collection timing is more pronounced in certain countries such as Brazil where there may be terms significantly longer than the rest of our business. Additionally, timing of collection is impacted as amounts for both periods include carry-over balances remaining to be collected in Latin America, where collection periods are measured in months rather than weeks.
(2)Advance payments are typically received in the fourth quarter of each year, primarily in our North America operations as revenue associated with advance payments is recognized, generally in the first half of each year following the seasonality of that business, as shipments are made and title, ownership and risk of loss pass to the customer. The activity in 2025 was consistent with the same period in 2024. The change in 2024 was driven by higher advance payments received during 2024 compared to the same period in 2023 offset by the higher application of those advances against current period sales.
(3)These rebates are primarily associated within North America, and to a lesser extent Brazil, and in North America generally settle in the fourth quarter of each year given the end of the respective crop cycle. The changes year over year are mostly associated with lower revenues and the mix in sales eligible for rebates and incentives as well as timing of certain rebate payments.
(4)Changes in inventory reflect the inventory build required during 2025 to meet projected demand compared to the 2024 period which was impacted by a lower sales outlook as a result of the channel destocking. The changes in inventory during 2024 reflect the lower inventory build required following the lower sales volume in 2023 resulting from the channel destocking. Higher sales during the second half of 2024 contributed to the decrease in inventories. The change in cash flows during 2023 is the result of lower than expected sales volume during the period.
(5)The change in cash flows related to accounts payable in 2025 was driven by the timing of payments made to suppliers and vendors. As of December 31, 2025, approximately 86 percent of our accounts payable balance was considered current, which we define as outstanding less than 30 days past the invoice due date. In accordance with our standard terms, invoices are held for payment when there is an open dispute with the vendor. The remaining balance of accounts payable primarily consists of invoices that meet this criteria. As of December 31, 2024, approximately 99 percent of our accounts payable balance was considered current under the same definition. The change in cash flows related to accounts payable in 2024 was driven by the timing of payments to suppliers and vendors following a period of reducing spending in the prior period. The change in cash flows related to accounts payable in 2023 is primarily due to lower raw material inventory purchases due to the decline in demand and, to a lesser extent, the timing of payments made to suppliers and vendors
(6)Changes in all periods presented primarily represent timing of payments associated with all other operating assets and liabilities.
(7)See Note 7 to the consolidated financial statements included within this Form 10-K for further details.
(8)In addition to the environmental cash spend presented in the table above, our results for each of the years presented also include environmental charges for environmental remediation of $99.4 million, $74.7 million and $66.9 million, respectively. The amounts represent environmental remediation spending which were recorded against pre-existing reserves, net of recoveries. Environmental obligations for continuing operations primarily represent obligations at shut down or abandoned facilities within businesses that do not meet the criteria for presentation as discontinued operations. The amounts recorded against pre-existing reserves in 2025 will be spent in future years.
(9)There were no voluntary contributions to our U.S. qualified defined benefit plan, which is slightly over funded, in 2025, 2024 and 2023.
(10)Interest payments increased in 2025 due to refinancing activity and higher foreign debt balances and rates. The increase was partially offset by a decrease due to lower short-term domestic balances and rates.
(11)Amounts shown in the chart represent net tax payments of our continuing operations across various jurisdictions.
Cash provided (required) by operating activities of discontinued operations was $(74.0) million, $(65.6) million and $(86.1) million for 2025, 2024 and 2023, respectively.
Cash required by operating activities of discontinued operations in 2025 is directly related to environmental spending of $42.3 million as well as $31.7 million for other postretirement benefit liabilities, self-insurance, long-term obligations related to legal proceedings, collectively. 2024 and 2023 spending were of a similar nature. Discontinued operations for 2024 also includes cash proceeds, net of fees of $18.0 million received as the result of an insurance settlement for retained legal reserves. Additionally, during 2023, we paid $16.5 million for a portion of settlement amount related to one of our discontinued foreign environmental remediation sites and the remaining payment of $11.3 million was paid in 2024.
Cash provided (required) by investing activities of continuing operations was $(99.7) million, $263.6 million and $(154.4) million for 2025, 2024 and 2023, respectively.
Cash required by investing activities of continuing operations for 2025 of $99.7 million decreased compared to cash provided by investing activities for 2024 of $263.6 million. In 2024, we received proceeds, net of the preliminary working capital adjustment, of approximately $340 million in connection with the completion of the sale of our Global Specialty Solutions ("GSS") business to Environmental Science US, LLC d/b/a Envu, which was completed on November 1, 2024. During the twelve months ended December 31, 2025, we also paid approximately $11.7 million to Envu as a true-up of the final working capital adjustment related to the sale. The timing of payments related to capital expenditures as contributed to the change year over year.
Cash required for 2023 is primarily due to capital expenditures for increased capacity, and to a lesser extent, acquisition related spending associated with the acquired IPR&D assets completed during the third quarter of 2023.
Cash provided (required) by financing activities of continuing operations was $386.0 million, $(870.1) million and $331.5 million in 2025, 2024 and 2023, respectively.
Cash provided by financing activities of continuing operations increased during the twelve months ended December 31, 2025 compared to the same period in the prior year primarily due to the proceeds of $750 million from the Subordinated Notes. The increase was partially offset by the redemption of $500 million of senior notes and financing fees associated with the issuance of the Subordinated Notes. There were no share repurchases during the twelve months ended December 31, 2025 and 2024 under the publicly announced program.
The change in cash provided by financing activities in 2024 is primarily due to lower commercial paper borrowings during the period as well as the absence of the net impact of the 2023 bond issuance and repayment of the 2021 term loan. The proceeds from the GSS sale were used to pay down outstanding debt. There were no share repurchases during 2024 under the publicly announced program.
The change in cash provided by financing activities in 2023 is primarily due to higher commercial paper balances and an increase in short term foreign borrowings as well as the proceeds from the Senior Notes. This increase was partially offset by the repayment of the $800 million term loan, and $75 million in repurchases of common stock under the publicly announced program.
Free Cash Flow
We define free cash flow, a non-GAAP financial measure, as all cash inflows and outflows excluding those related to financing activities (such as debt repayments, dividends, and share repurchases) and acquisition related investing activities. Additionally, in 2024, free cash flow excludes the proceeds, net of transaction costs, from the sale of our GSS business. Therefore, our calculation of free cash flow will almost always result in a lower amount than cash from operating activities from continuing operations, the most directly comparable U.S. GAAP measure. However, the free cash flow measure is consistent with management's assessment of operating cash flow performance and we believe it provides a useful basis for investors and securities analysts about the cash generated by routine business operations, including capital expenditures, in addition to assessing our ability to repay debt, fund acquisitions including cost and equity method investments, and return capital to shareholders through share repurchases and dividends.
Our use of free cash flow has limitations as an analytical tool and should not be considered in isolation or as a substitute for an analysis of our results under U.S. GAAP. First, free cash flow is not a substitute for cash provided (required) by operating activities of continuing operations, as it is not a measure of cash available for discretionary expenditures since we have non-discretionary obligations, primarily debt service, that are not deducted from the measure. Second, other companies may calculate free cash flow or similarly titled non-GAAP financial measures differently or may use other measures to evaluate their performance, all of which could reduce the usefulness of free cash flow as a tool for comparison. Additionally, the utility of free cash flow is further limited as it does not reflect our future contractual commitments and does not represent the total increase or decrease in our cash balance for a given period. Because of these and other limitations, free cash flow should be considered along with cash provided (required) by operating activities of continuing operations and other comparable financial measures prepared and presented in accordance with U.S. GAAP.
The table below presents a reconciliation of free cash flow from the most directly comparable U.S. GAAP measure.
FREE CASH FLOW RECONCILIATION
| (in Millions) | Year ended December 31, | ||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
|
Cash provided (required) by operating activities of continuing operations(GAAP) (1)
|
$ | (6.2) | $ | 736.7 | $ | (300.3) | |||||||||||
|
Capital expenditures(2)
|
(96.3) | (67.9) | (133.9) | ||||||||||||||
|
Other investing activities(2)(3)
|
11.2 | (3.7) | (9.8) | ||||||||||||||
|
Proceeds from land disposition (4)
|
- | - | 5.8 | ||||||||||||||
| Capital additions and other investing activities | $ | (85.1) | $ | (71.6) | $ | (137.9) | |||||||||||
|
Cash provided (required) by operating activities of discontinued operations(5)
|
(74.0) | (65.6) | (86.1) | ||||||||||||||
|
Divestiture transaction costs (6)
|
- | 14.0 | - | ||||||||||||||
| Free cash flow (non-GAAP) | $ | (165.3) | $ | 613.5 | $ | (524.3) | |||||||||||
___________________
(1)Includes cash payments made in connection with our Project Focus transformation program of $93.9 million and $106.2 million for the years ended December 31, 2025 and 2024. For additional detail on Project Focus, see Note 7.
(2)Components of cash provided (required) by investing activities of continuing operations. Refer to the below discussion for further details.
(3)Included in the amounts is cash spending associated with contract manufacturers of $2.7 million and $2.9 million for the years ended December 31, 2024 and 2023, respectively.
(4)During 2023, we received the final payment of $5.8 million related to the agreement with the Shanghai Municipal People's Government.
(5)Refer to the above discussion for further details.
(6)Represents transactional-related costs such as legal and professional third-party fees associated with the sale of our GSS business. Proceeds from the sale of our GSS business are excluded from free cash flow; therefore, we have also excluded the related transaction costs from free cash flow.
2026 Cash Flow Outlook
Our cash needs for 2026 include operating cash requirements (particularly working capital as well as environmental, asset retirement obligation, and restructuring spending), and capital expenditures as well as mandatory payments of debt and dividend payments. We plan to meet our liquidity needs through available cash, cash generated from operations and borrowings under our committed Revolving Credit Facility. At December 31, 2025 our remaining borrowing capacity under our credit facility was $1,147.2 million.
We expect 2026 cash provided (required) by operating activities of continuing operations and free cash flow (non-GAAP) to increase primarily due lower cash taxes and improved working capital performance, including other assets and liabilities, partially offset by lower Adjusted EBITDA and higher restructuring spending. We also expect the proceeds from the anticipated completion of the sale of our India commercial business to be used to pay down debt.
Key cash requirements included in cash provided by operating activities of continuing operations
Pension
We do not expect to make any voluntary cash contributions to our U.S. qualified defined benefit pension plan in 2026. The plan is slightly overfunded and our portfolio is comprised of 100 percent fixed income securities and cash. Our investment strategy is a liability hedging approach with an objective of maintaining the funded status of the plan such that the funded status volatility is minimized and the likelihood that we will be required to make significant contributions to the plan is limited.
Environmental
Projected 2026 spending, net of recoveries includes approximately $50 million to $60 million of net environmental remediation spending for our sites accounted for within continuing operations. Environmental obligations for continuing operations primarily represent obligations at shut down or abandoned facilities within businesses that do not meet the criteria for presentation as discontinued operations.
Projected 2026 spending, net of recoveries includes approximately $40 million to $50 million of net environmental remediation spending for our discontinued sites. These projections include spending as a result of a settlement reached in 2019 at our Middleport, New York site of $10 million maximum per year, on average, until the remediation is complete.
Total projected 2026 environmental spending, inclusive of sites accounted for within both continuing operations and discontinued sites, is expected to be in the range of $90 million to $110 million.
Restructuring and asset retirement obligations
We expect to make payments of approximately $130 million to $155 million in 2026, which primarily relate to Project Foundation and Project Focus activities. As previously noted in the section titled "Results of Operations," we expect to incur approximately $560 million to $635 million of pre-tax restructuring charges in connection with Project Foundation in total over the life of the program. This includes $420 million to $440 million of non-cash asset write-off charges. We expect cash payments of approximately $65 million during 2026 in connection with Project Foundation. We have implemented substantially all the activities associated with Project Focus. However, we expect cash payments of approximately $63 million primarily related to the cash payments required in association with contract abandonment activities executed under the program.
Capital additions and other investing activities
Projected 2026 capital expenditures and expenditures related to contract manufacturers are expected to be in the range of approximately $90 million to $110 million. The spending is mainly driven by investments for our new products. Expenditures related to contract manufacturers are included within "other investing activities."
Share repurchases
Except for purchases associated with our equity compensation plans, we do not anticipate any share repurchases during 2026 in compliance with the amendment to the Company's credit agreement. See Item 5. Market for the Registrant's Common Equity, Related Stockholders Matters and Issuer Purchases of Equity Securities for additional information regarding the Company's publicly announced repurchased program authorized in February 2022.
Dividends
For the years ended December 31, 2025, 2024 and 2023, we paid $291.3 million, $290.6 million and $290.5 million in dividends, respectively. As part of a broader response to the challenges the company is facing and to further prioritize debt reduction, the Board of Directors in October 2025 made the decision to reduce the quarterly dividend to $0.08 per share. On January 15, 2026, we paid dividends aggregating $10.0 million to our shareholders of record as of December 31, 2025. This amount is included in"Accrued and other liabilities"on the consolidated balance sheet as of December 31, 2025. We expect to continue to make quarterly dividend payments. Future cash dividends, as always, will depend on a variety of factors, including earnings, capital requirements, financial condition, general economic conditions and other factors considered relevant by us and is subject to final determination by our Board of Directors. The company has a long history of returning cash to shareholders and will continue to evaluate its capital allocation on an ongoing basis. As described in Note 12 to the consolidated financial statements, increases to the Company's regular quarterly dividend are limited in connection with the Company's credit agreement as amended in December 2025.
Contingencies
See Note 19 to our consolidated financial statements included within this Form 10-K.
Recently Adopted and Issued Accounting Pronouncements and Regulatory Items
See Note 2 "Recently Issued and Adopted Accounting Pronouncements and Regulatory Items" to our consolidated financial statements included within this Form 10-K.
Fair Value Measurements
See Note 18 to our consolidated financial statements included in this Form 10-K for additional discussion surrounding our fair value measurements.
Critical Accounting Policies and Estimates
Our consolidated financial statements are prepared in conformity with U.S. generally accepted accounting principles ("U.S. GAAP"). The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses. We have described our accounting policies in Note 1 "Principal Accounting Policies and Related Financial Information" to our consolidated financial statements included in this Form 10-K. We have reviewed these accounting policies, identifying those that we believe to be critical to the preparation and understanding of our consolidated financial statements. We have reviewed these critical accounting policies with the Audit Committee of the Board of Directors. Critical accounting policies are central to our presentation of results of operations and financial condition in accordance with U.S. GAAP and require management to make estimates and judgments on certain matters. We base our estimates and judgments on historical experience, current conditions and other reasonable factors. Our most critical accounting estimates and assumptions, which are those that involve a significant level of estimation uncertainty and have had, or are reasonably likely to have, a material impact on our financial condition or results of operations, include: Impairments and valuation of long-lived and indefinite-lived assets, Pension and other postretirement benefits, valuation allowance on deferred tax assetsand theAllowance for credit losses on our trade receivables.Additional critical accounting policies are included within the list below:
Revenue recognition and trade receivables
We recognize revenue when (or as) we satisfy our performance obligation which is when the customer obtains control of the good or service. Rebates due to customers are accrued as a reduction of revenue in the same period that the related sales are recorded based on the contract terms. Refer to Note 3 to our consolidated financial statements included in this Form 10-K for more information.
We record amounts billed for shipping and handling fees as revenue. Costs incurred for shipping and handling are recorded as costs of sales and services. Amounts billed for sales and use taxes, value-added taxes, and certain excise and other specific transactional taxes imposed on revenue-producing transactions are presented on a net basis and excluded from revenue on the consolidated statements of income (loss). We record a liability until remitted to the respective taxing authority.
We periodically enter into prepayment arrangements with customers and receive advance payments for product to be delivered in future periods. These advance payments are recorded as deferred revenue and classified as "Advance payments from customers" on the consolidated balance sheet. Revenue associated with advance payments is recognized as shipments are made and transfer of control to the customer takes place.
Trade receivables consist of amounts owed to us from customer sales and are recorded when revenue is recognized. The allowance for trade receivables represents our best estimate of the probable losses associated with potential customer defaults. In developing our allowance for trade receivables, we use a two-stage process which includes calculating a general formula to develop an allowance to appropriately address the uncertainty surrounding collection risk of our entire portfolio and specific allowances for customers where the risk of collection has been reasonably identified either due to liquidity constraints or disputes over contractual terms and conditions.
Our method of calculating the general formula consists of estimating the recoverability of trade receivables based on historical experience, current collection trends, and external business factors such as economic factors, including regional bankruptcy rates, and political factors. Our analysis of trade receivable collection risk is performed quarterly, and the allowance is adjusted accordingly.
We also hold long-term receivables that represent long-term customer receivable balances related to past-due accounts which are not expected to be collected within the current year. Our policy for the review of the allowance for these receivables is consistent with the discussion in the preceding paragraph above on trade receivables. Therefore, on an ongoing basis, we continue to evaluate the credit quality of our long-term receivables utilizing aging of receivables, collection experience and write-offs, as well as existing economic conditions, to determine if an additional allowance is necessary.
We believe our allowance for credit losses is a critical accounting estimate because the underlying assumptions used for the reserve can change from time to time and potentially have a material impact on our results of operations. Based on a combination of historical trends as well as current economic factors, we apply judgment to reserve for expected credit losses in the period in which the sale is recorded. A substantial change in the operating environments in any of our key locations (driven by weather conditions, industry specific events, and macroeconomic conditions) may result in actual adjustments that differ from our original assumptions.
Environmental obligations and related recoveries
We provide for environmental-related obligations when they are probable and amounts can be reasonably estimated. Where the available information is sufficient to estimate the amount of liability, that estimate has been used. Where the information is only sufficient to establish a range of probable liability and no point within the range is more likely than any other, the lower end of the range has been used.
Estimated obligations to remediate sites that involve oversight by the United States Environmental Protection Agency ("EPA"), or similar government agencies, are generally accrued no later than when a Record of Decision ("ROD"), or equivalent, is issued, or upon completion of a Remedial Investigation/Feasibility Study ("RI/FS"), or equivalent, that is submitted by us to the appropriate government agency or agencies. Estimates are reviewed quarterly by our environmental remediation management, as well as by financial and legal management and, if necessary, adjusted as additional information becomes available. The estimates can change substantially as additional information becomes available regarding the nature or extent of site contamination, required remediation methods, and other actions by or against governmental agencies or private parties.
Our environmental liabilities for continuing and discontinued operations are principally for costs associated with the remediation and/or study of sites at which we are alleged to have released hazardous substances into the environment. Such costs principally include, among other items, RI/FS, site remediation, costs of operation and maintenance of the remediation plan, management costs, fees to outside law firms and consultants for work related to the environmental effort, and future monitoring costs. Estimated site liabilities are determined based upon existing remediation laws and technologies, specific site consultants' engineering studies or by extrapolating experience with environmental issues at comparable sites.
Included in our environmental liabilities are costs for the operation, maintenance and monitoring of site remediation plans ("OM&M"). Such reserves are based on our best estimates for these OM&M plans. Over time we may incur OM&M costs in excess of these reserves. However, we are unable to reasonably estimate an amount in excess of our recorded reserves because we cannot reasonably estimate the period for which such OM&M plans will need to be in place or the future annual cost of such remediation, as conditions at these environmental sites change over time. Such additional OM&M costs could be significant in total but would be incurred over an extended period of years.
Included in the environmental reserve balance, other assets balance and disclosure of reasonably possible loss contingencies are amounts from third-party insurance policies, which we believe are probable of recovery.
Provisions for environmental costs are reflected in income, net of probable and estimable recoveries from named Potentially Responsible Parties ("PRPs") or other third parties. See Note 10 to the consolidated financial statements included within this Form 10-K for further information. All other environmental provisions incorporate inflation and are not discounted to their present value.
In calculating and evaluating the adequacy of our environmental reserves, we have taken into account the joint and several liability imposed by Comprehensive Environmental Response, Compensation and Liability Act ("CERCLA") and the analogous state laws on all PRPs and have considered the identity and financial condition of the other PRPs at each site to the extent possible. We have also considered the identity and financial condition of other third parties from whom recovery is anticipated, as well as the status of our claims against such parties. Although we are unable to forecast the ultimate contributions of PRPs and other third parties with absolute certainty, the degree of uncertainty with respect to each party is taken into account when determining the environmental reserve by adjusting the reserve to reflect the facts and circumstances on a site-by-site basis. Our liability includes our best estimate of the costs expected to be paid before the consideration of any potential recoveries from third parties. We believe that any recorded recoveries related to PRPs are realizable in all material respects. Recoveries are recorded as either an offset in "Environmental liabilities, continuing and discontinued" or as "Other assets" in our consolidated balance sheets in accordance with U.S. accounting literature.
See Note 10 to our consolidated financial statements included within this Form 10-K for changes in estimates associated with our environmental obligations.
Impairments and valuation of long-lived and indefinite-lived assets
Our long-lived assets primarily include property, plant and equipment and intangible assets. Historically, our long-lived assets also included goodwill; however, we recorded a write-off of our remaining goodwill balance during the year ended December 31, 2025. Refer below for further detail of the write-off.
We test for impairment whenever events or circumstances indicate that the net book value of our property, plant and equipment may not be recoverable from the estimated undiscounted expected future cash flows expected to result from their use and eventual disposition. In cases where the estimated undiscounted expected future cash flows are less than net book value, an impairment loss is recognized equal to the amount by which the net book value exceeds the estimated fair value of assets, which is based on discounted cash flows at the lowest level determinable. The estimated cash flows reflect our assumptions about selling prices, volumes, costs and market conditions over a reasonable period of time.
We perform an annual impairment test of our indefinite-lived intangible assets and, historically, our goodwill, in the third quarter of each year, or more frequently whenever an event or change in circumstances occurs that would require reassessment of the recoverability of those assets. Our fiscal year 2025 annual impairment test was performed during the third quarter ended September 30, 2025. At the time of the annual impairment test, we determined no goodwill impairment or indefinite-lived asset impairment existed and the fair value was in excess of the carrying value for each asset class. As a result of the significant decrease in our stock price during the fourth quarter of 2025, we also performed a test of our goodwill and other intangible assets for impairment in connection with the preparation of our financial statements during the fourth quarter of 2025. We recorded a $1,356.2 million write-off of our remaining goodwill balance in connection with the impairment test. There was no impairment identified on our other intangible assets.
In performing our evaluation, we assess qualitative factors such as overall financial performance of our portfolio, anticipated changes in industry and market structure, competitive environments, planned capacity and cost factors such as raw material prices. We estimate the fair value of the reporting unit using a discounted cash flow model as part of the income approach. We assess the appropriateness of projected financial information by comparing projected revenue growth rates, profit margins and tax rates to historical performance, industry data and selected guideline companies, where applicable. Our key assumptions include future cash flow projections, tax rates, terminal growth rates and discount rates.
We employ the relief from royalty method of the income approach to value our brand portfolios (indefinite-lived intangible assets). The principle behind this method is that the value of the intangible asset is equal to the present value of the after-tax royalty savings attributable to owning the intangible asset. Primary inputs and key assumptions include revenue forecasts attributable to each portfolio, royalty rates (considering both external market data and internal arrangements), tax rates, terminal growth rates and discount rates.
Estimating the fair value requires significant judgment and actual results may differ due to changes in the overall market conditions. We believe we have applied reasonable assumptions which considers both internal and external factors.
We believe that an accounting estimate relating to asset impairment is a critical accounting estimate because of the inherent uncertainty within the underlying assumptions. An adverse change in any of these assumptions could result in an impairment charge which would potentially have a material impact on our results of operations.
See Note 7 to our consolidated financial statements included within this Form 10-K for charges associated with long-lived asset disposal costs and the activity associated with the restructuring reserves.
Pension and other postretirement benefits
We provide qualified and nonqualified defined benefit and defined contribution pension plans, as well as postretirement health care and life insurance benefit plans to our employees and retirees. The costs (benefits) and obligations related to these benefits reflect key assumptions related to general economic conditions, including interest (discount) rates, healthcare cost trend rates, expected rates of return on plan assets and the rates of compensation increase for employees. The costs (benefits) and obligations for these benefit programs are also affected by other assumptions, such as average retirement age, mortality, employee turnover, and plan participation. To the extent our plans' actual experience, as influenced by changing economic and financial market conditions or by changes to our own plans' demographics, differs from these assumptions, the costs and obligations for providing these benefits, as well as the plans' funding requirements, could increase or decrease. When actual results differ from our assumptions, the difference is typically recognized over future periods. In addition, the unrealized gains and losses related to our pension and postretirement benefit obligations may also affect periodic benefit costs (benefits) in future periods.
We use several assumptions and statistical methods to determine the asset values used to calculate both the expected rate of return on assets component of pension cost and to calculate our plans' funding requirements. We apply the fair value approach for our liability-hedging asset class, which does not involve deferring the impact of excess plan asset gains or losses in the determination of these two components of net periodic benefit cost. This class of assets is comprised solely of fixed income securities and therefore, provides a natural hedge (liability-hedging assets) against the changes in the recorded amount of net periodic benefit cost. We use an actuarial value of assets to determine our plans' funding requirements. The actuarial value of assets must be within a certain range, high or low, of the actual market value of assets, and is adjusted accordingly.
We select the discount rate used to calculate pension and other postretirement obligations based on a review of available yields on high-quality corporate bonds as of the measurement date. In selecting a discount rate as of December 31, 2025, we placed particular emphasis on a discount rate yield-curve provided by our actuary. This yield-curve, when populated with projected cash flows that represent the expected timing and amount of our plans' benefit payments, produced an effective discount rate of 5.32 percent for our U.S. qualified plan, 4.71 percent for our U.S. nonqualified, and 4.89 percent for our U.S. other postretirement benefit plans.
The discount rates used to determine projected benefit obligation at our December 31, 2025 and 2024 measurement dates for the U.S. qualified plan were 5.32 percent and 5.60 percent, respectively. The effect of the change in the discount rate from 5.60 percent to 5.32 percent at December 31, 2025 resulted in a $20.4 million increase to our U.S. qualified pension benefit obligations. The effect of the change in the discount rate used to determine net annual benefit cost (income) from 4.97 percent at December 31, 2024 to 5.32 percent at December 31, 2025 resulted in a $2.2 million decrease to the 2025 U.S. qualified pension expense.
The change in discount rate from 5.60 percent at December 31, 2024 to 5.32 percent at December 31, 2025 was attributable to an increase in yields on high quality corporate bonds with cash flows matching the timing and amount of our expected future benefit payments between the 2024 and 2025 measurement dates. Using the December 31, 2025 and 2024 yield curves, our U.S. qualified plan cash flows produced a single weighted-average discount rate of approximately 5.32 percent and 5.60 percent, respectively.
In developing the assumption for the long-term rate of return on assets for our U.S. Plan, we take into consideration the technical analysis performed by our outside actuaries, including historical market returns, information on the assumption for long-term real returns by asset class, inflation assumptions, and expectations for standard deviation related to these best estimates. Our long-term rate of return for the fiscal year ended December 31, 2025, 2024 and 2023 was 5.25 percent, 4.50 percent and 4.75 percent, respectively.
For the sensitivity of our pension costs to incremental changes in assumptions see our discussion below.
Sensitivity analysis related to key pension and postretirement benefit assumptions.
A one-half percent increase in the assumed discount rate would have decreased pension and other postretirement benefit obligations by $35.5 million and $36.4 million at December 31, 2025 and 2024, respectively, and increased pension and other postretirement benefit costs by $0.3 million, $0.3 million and $0.5 million for 2025, 2024 and 2023, respectively. A one-half percent decrease in the assumed discount rate would have increased pension and other postretirement benefit obligations by $38.0 million and $39.1 million at December 31, 2025 and 2024, respectively, and decreased pension and other postretirement benefit costs by $0.2 million in 2025, $0.2 million in 2024, and $0.1 million in 2023.
A one-half percent increase in the assumed expected long-term rate of return on plan assets would have decreased pension costs by $4.6 million, $5.0 million and $5.0 million for 2025, 2024 and 2023, respectively. A one-half percent decrease in the assumed long-term rate of return on plan assets would have increased pension costs by $4.6 million, $5.0 million and $5.0 million for 2025, 2024 and 2023, respectively.
Further details on our pension and other postretirement benefit obligations and net periodic benefit costs (benefits) are found in Note 13 to our consolidated financial statements in this Form 10-K.
Income taxes
We have recorded a valuation allowance to reduce deferred tax assets in certain jurisdictions to the amount that we believe is more likely than not to be realized. In assessing the need for this allowance, we have considered a number of factors including future taxable income, the jurisdictions in which such income is earned and our ongoing tax planning strategies. In the event that we determine that we would not be able to realize all or part of our net deferred tax assets in the future, an adjustment to the deferred tax assets would be charged to income in the period such determination was made. Similarly, should we conclude that we would be able to realize certain deferred tax assets in the future in excess of the net recorded amount, an adjustment to the deferred tax assets would increase income in the period such determination was made.
Additionally, we file income tax returns in the U.S. federal jurisdiction and various state and foreign jurisdictions. Certain income tax returns for FMC entities taxable in the U.S. and significant foreign jurisdictions are open for examination and adjustment. We assess our income tax positions and record a liability for all years open to examination based upon our evaluation of the facts, circumstances and information available at the reporting date. For those tax positions where it is more likely than not that a tax benefit will be sustained, we have recorded the largest amount of tax benefit with a greater than 50 percent likelihood of being realized upon ultimate settlement with a taxing authority that has full knowledge of all relevant information. We adjust these liabilities, if necessary, upon the completion of tax audits or changes in tax law.
See Note 11 to our consolidated financial statements included within this Form 10-K for additional discussion surrounding income taxes.
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