-$16.84
$27.11
bear -$16.84
base $4.40
bull $27.11
margin of safety $1.60
market price* $5.66
Business condition attached to the margin of safety
Business cash flow before interest must clearly cover the interest bill and the 2028-2029 maturities (the revolving credit facility and the $500 million of notes due 2029) must be refinanced or repaid: at least two consecutive quarters of operating cash flow, after capital spending and legacy environmental spending, comfortably above cash interest (roughly $240 million a year), with borrowings falling toward $3.5 billion or less.
FMC Corporation, based in Philadelphia, makes and sells crop protection chemicals (insecticides, herbicides and fungicides) to farmers around the world. 2025 revenue was about $3.5 billion: roughly 39% from Latin America (including Brazil), 32% from North America, 25% from Europe, the Middle East and Africa, and 4% from Asia. About a third of sales come from two insecticide families built on diamide chemistry: Rynaxypyr (about $0.8 billion of 2025 revenue) and Cyazypyr (about $0.4 billion). The basic patents on both have expired in all major markets, and the manufacturing-process patents expired in many major markets in December 2025, so generic makers can now compete. FMC's prices fell about 6% in each of 2024 and 2025, and management expects continued price pressure in 2026. The company is also selling its India commercial business, has cut its dividend, and reports that its review of strategic options has concluded. On September 23, 2026 it closed the sale of about 20% of its shares to Tessenderlo Group for roughly $403 million (30.3 million new shares). What we measured. We start with cash from operations, then remove swings in receivables, inventories, payables, customer advances and rebates (timing, not lasting earning power), subtract stock compensation, and subtract only the 'keep-the-plants-running' part of capital spending (about 2% of sales; growth spending is not charged). We also keep the roughly $70 to $90 million a year of legacy environmental cleanup at discontinued sites in the cost, because it is a real recurring cash outflow. On that basis, cash left for shareholders per share was $2.52 (2018), $3.21 (2019), $5.29 (2020), $5.19 (2021), $6.59 (2022), $1.72 (2023), $2.08 (2024) and negative $1.54 (2025). Because we value the business first and then subtract what it owes, we add back cash interest paid ($237 million in 2025) to see the cash the business produces before its lenders: $3.50, $4.28, $6.37, $6.16, $7.73, $3.55, $3.93 and $0.36 per share. We use 2018 to 2025 (median $4.11 per share, about $514 million a year) because it starts with FMC's November 2017 purchase of DuPont's crop protection business and spans a full farm-chemical cycle: the 2020 to 2022 boom and the 2023 to 2025 customer destocking and price erosion. Why the cases sit below that median. The boom years had full diamide patent protection and heavy customer restocking; those conditions have reversed. Rather than trim the historical level, each case starts from current evidence: first-half 2026 revenue was $1.63 billion versus $1.84 billion a year earlier (down 12%), and second-quarter revenue was down 17%. The most recent full year, 2025, produced $45 million of cash before lenders, down 91% from $493 million in 2024. Our base case assumes $250 million in 2026, well above that trailing figure, for dated reasons in the filings: 2025 carried a $259 million outflow in 'other operating' items (versus a $91 million inflow in 2024) and $112 million of restructuring cash spending, and the second-quarter 2026 report shows the six-month operating cash outflow narrowing to $272 million from $509 million a year earlier. We could not tie the $259 million 2025 outflow to specific items; the filing describes it only as timing of payments. What FMC owes. At June 30, 2026 borrowings were about $4.28 billion (long-term $3.96 billion including the current portion, plus $317 million short-term) against $477 million of cash. We treat $250 million of cash as needed to operate, count the rest and the $403 million of new equity as available to repay debt, and add the $24 million minority interest, leaving about $3.65 billion. Debt carrying rates above 6% adds to what is owed: the 8.45% subordinated notes due 2055, and refinancing the revolving credit facility (extended to 2028; $643 million drawn at year-end 2025) and $500 million of notes due 2029 after the company's ratings were cut below investment grade, partly offset by older lower-coupon notes. We add about $0.4 billion in the bear case, $0.2 billion in the base case and $0.1 billion in the bull case. The credit agreement's covenants were loosened in February and December 2025, and it grants lenders a lien over substantially all assets if two agencies rate the company below BB+/Ba1. Values below are divided by about 155.5 million shares (125.2 million before the Tessenderlo issuance). Bear case: generic diamides keep pushing prices down with nothing new replacing the lost profit. Cash before lenders falls from $200 million in 2026 to $150 million, $100 million and then $75 million a year from 2029, and stays there. The business is worth about $1.5 billion; it owes about $4.1 billion; the company appears to owe roughly $2.6 billion more than it is worth (about negative $16.84 per share), and shareholders would likely be wiped out or heavily diluted in a restructuring around the 2028 and 2029 maturities. Base case: $250 million in 2026 and $275 million from 2027 onward, flat, with no growth credited. The step up rests on restructuring spending rolling off and the signed India sale, not on hoped-for demand. New molecules (Isoflex, fluindapyr, Dodhylex, rimisoxafen) are assumed only to replace what generic competition erodes; FMC spends about $266 million a year on research (already counted as a cost) and has 19 active ingredients in development, which is the evidence for that replacement, but we do not credit any growth from them. The business is worth about $4.6 billion; it owes about $3.9 billion; the difference is about $0.7 billion, or $4.40 per share. Bull case: cash before lenders rises to $300 million in 2026, $375 million, $450 million and $500 million from 2029 (close to the 2018 to 2025 median) as cost programs, lower-cost diamide manufacturing and the growth in new-molecule volumes already visible in 2024 and 2025 all deliver. The business is worth about $8.0 billion; it owes about $3.8 billion; the difference is about $4.2 billion, or $27.11 per share. What would make this wrong. Our biggest judgement is removing working capital swings: over 2018 to 2025 they absorbed about $1.1 billion of cash while sales fell, and part of the receivables tied up in India was written down (a $320 million non-cash charge in 2025), so not all of that cash will come back; that risk is carried in the bear case. We did not add company-announced items whose terms we could not verify in the filings: the $252 million India sale, a $200 million rimisoxafen licensing payment from Corteva and a $114 million Newark sale-leaseback. If all were received in cash and used to repay debt they would add at most about $3.60 per share to each case before offsetting effects. The base case is very sensitive to cash flow: a $50 million change in yearly cash before lenders moves its value by about $5 per share. Change since our previous analysis: we previously showed a bear case of negative $20.00, a base of $12.80 and a bull of $79.10. Base and bull are lower because we now discount at a flat 6%, credit no growth that is not already secured, and spread the value over about 24% more shares after the Tessenderlo issuance; the bear case is slightly better because the $403 million of new equity reduces net debt.