FMC's Cash Crisis Deepens as Turnaround Plan Includes Potential Sale Amid Stock Collapse

What happened

FMC has reported consecutive poor earnings quarters, leading to a stock price cut in half over the past year. Management's turnaround strategy now openly includes possibly selling the company, signaling acute financial distress beyond typical operational challenges. Underlying this are severe cash flow issues: operating cash flow was negative $663.3 million for the first nine months of 2025, with debt ballooning to $4.54 billion and covenant headroom tightening to 4.94x leverage against a 5.25x maximum. The company is relying heavily on receivables monetization and short-term funding to mask collection delays, particularly in Latin America, while executing portfolio exits like the India divestiture. Despite these actions, the equity remains a credit-shaped claim dependent on near-term cash conversion, not ag-cycle demand, with no margin of safety at current levels.

Implication

FMC's equity offers no intrinsic margin of safety, as value is subordinated to debt and hinges entirely on converting working capital into cash without increased factoring. A potential sale introduces a binary outcome but likely at a distressed valuation unless operational cash flow inflects positively first. Critical near-term catalysts are Q4 2025 earnings and early-2026 evidence that Latin America collections normalize, reducing reliance on receivables monetization. Without clear debt reduction and covenant headroom expansion, the stock risks further declines, mirroring a credit instrument rather than a turnaround story. Given the high uncertainty and lack of cash generation, a 'wait' stance remains prudent, focusing on hard financial metrics over management's optimistic narratives.

Thesis delta

The new article highlights management's consideration of selling the company, which could accelerate a resolution but also signals desperation rather than operational improvement. This does not alter the core thesis that equity value is a levered claim on cash recovery, as any sale would be driven by the same cash constraints and likely cap upside. Investors should still prioritize monitoring operating cash flow and covenant compliance over M&A speculation, as the fundamental turnaround depends on collections, not exit strategies.