FMC - Earnings call transcript Q1 2022

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Operator

Good morning and welcome to the first quarter 2022 earnings call for FMC Corporation. This event is being recorded and all participants are in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today’s prepared remarks, there will be an opportunity to ask questions. To be placed in the Q&A queue, please press the star key then one at any time.

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

Zack Zaki

Corporation’s morning Welcome good and Seth, earnings call. you to Thank FMC first quarter everyone.

Douglas, update today overview He Chief for outlook Executive and Officer, our and me as the an Mark expectations. Officer. will implied Sandifer, and Joining outlook also implied first full to President Vice well second quarter provide financial Andrew performance Executive an Chief Mark and are first half year President Financial will Andrew provide and expectations. review will of quarter our second results. half provide select an as

Following questions. prepared the we will remarks, take

our will prepared from Our earnings release made and be today’s call. on and today’s remarks website slide discussion after available presentation the available the are

and on website. over the refer we that now will measures. adjusted call financial note flow, terms, means With terms cash and will means conference growth, discussion you identified adjusted that, adjusted other filings EBITDA in EBITDA. factors, include Please to call risks and which presentation the used which our discussion, free Exchange non-GAAP cash Let these and presented judgment uncertainties are best our limited risks me reconciliation organic our the statements based understanding. as adjusted revenue Commission. today’s I uncertainties. EBITDA, not may on subject and specific provided financial discussion release remind and today’s that operations, our in but these earnings to and various from will concerning that non-GAAP EPS, today’s forward-looking Mark. adjusted definitions all of of and are Today’s in in including to earnings to with may represents based Actual materials upon as are to Information supporting results the well include turn A Securities references vary to earnings as and factors today’s

Mark Douglas

morning you Zack, good Thank and everyone.

like Before FMC to position I move Ukraine. I’d provide to moment discontinue related results, exit exit provider update input decision In FMC’s war mid-April, the the a Russia. ignore country in We an not in crop take crimes, abuses atrocities completely, operations of the increasing potential making our Ukraine. in to Russia and the committed into details could first and to on human we announced rights to our on other war reports

new operate allow the do grow Our as values to conduct our counter-sanctions unsustainable. become were business FMC levied, ability FMC’s a war continued as sanctions company and and Furthermore, Russia not and in Russia. business had in to

the the families logistics supporting and $XXX,XXX Our people continues raised chain for and extraordinary our charities challenges parts of in cross-functional in Eastern to team navigate need. Ukraine nearly Europe. supply employees FMC and and other Ukrainian

Our hearts families. remain their all and thoughts FMC Ukrainians and and will colleagues especially our

in supply believe we confronting from agricultural several sales as were some impacting supply of as well QX currency a accelerated and With advance. looked of disruptions increasing expanded our points to organically, actions performance revenue by by XX%, XX%, and delivered FMC’s EBITDA EBITDA strong all pricing XX our margins and by EPS across importantly volumes results regions. by grew Turning in robust we We XX% solid by QX, customers while basis as variety inputs, secure approximately driven to cost our headwinds. challenges QX

entire include as goal the indirect FMC’s emissions. more contributed achieved growing by went half submitting reduction Given by quarter, in targets XX% An product of biologicals greatly XX% the strength in plant achieve trajectory which all we increases, success zero much milestone own than of X with sustainability rigor first direct X% and Science revenue X actuals launched pipeline and demonstrating acreage emission from the known across in business X, our net implies this value in same year-over-year. North crops. combined Scopes for elevated XXXX, front-loaded incredible a These America otherwise and than increased by Scope year EBITDA conducting occur that our purchased to compared emissions emissions quarter our to as announced the FMC’s growth prices, year, with the XX% Sales value into in recently as The our known Based an of QX to greenhouse steam, health well of prior to reductions targets several first also emissions our is compared guidance chain. cooling, supported these sources first the of that growth review the and five as developing contributing heating and the all and those for XX% the the QX amount and by more context, We XX% quantifying growth years. Targets half emissions low for team commodity Latin continued to stock-to-use Last emissions electricity, emissions products in to with absolute its goal portfolio. year, from global greenhouse XXXX. gas exhaustive XXXX Initiative. the and factors technology ratios chain, towards period targets years indirect reduction historically the from past gas last also America absolute

we XXth in annual We our topic forward this sustainability more report speaking will in upcoming calls. on the coming publish look to weeks, and

increase above to all million, a $XX reflects quarter Adjusted basis my for EMEA. results guidance XX%, growth in $XXX Turning increase greatest the categories high QX volume the margins FX XX.X%, revenue, We XX% well XX% XX%. to challenge increasing was organic year in of than moved our $X.XX and our growth million earlier reported first increases to the about top EBITDA in a the Slide mind and of growth. comment growth which prior a single in in we half, we health America double-digit at continuing digit more Latin midpoint year within prior to at compared in continued shifts XX% all headwinds. higher to reported price fungicide in anticipated, America a in period. all keeping and XX so increase business. as four growth of line showing year-over-year X aggressively period be on headwind billion basis to as first had an rate these grew price EBITDA Biologicals gains plant was with were was compared Cost a the strong of by momentum our points product inflation regions. offset driven range. and North and regions the Regional an

lower in share, of some was from XXXX were shifted been QX into increase an We XX% $X.XX driven with from above of guidance interest versus active The lower in largely our EBITDA. the managing per taxes. counts diluted the QX midpoint a have minority interest to our benefit costs, by SG&A and and $X.XX increase of was an higher earnings also headwind Adjusted offset expenses which increase EBITDA FX QX. and range. primarily share year-over-year by

Slide to increase X% XX% QX volume now an X% prior driven gain. an year, by versus Moving by and increased pricing X, revenue

for fruits, America, the currencies as strong and were Sales have microorganisms variety Sales year-over-year Vantacor the and diseases. quarter protection U.S., vegetables. to and biologicals of for unique a of properties. on in with North brands of headwind Rynaxypyr growth for biological fungicidal foliar in vines, Foreign the U.S. and In fungicide increased that corn soy. inputs. line. nuts, gain XB in fruits doubled all combination in-furrow of while grew for providing we protection Altacor Ethos X% crops, robust insecticide unique corn for tree insect Xyway, XX% indications led In the is a broad-based from Ethos commodity synthetic such across season-long soybeans. our corn demand XB a such as seedling prices supported continues significant by momentum with with a and almost top

business record had and driven quarter by a lower of strength Canadian herbicides. insecticides channel cereal inventory in Our

We FMC’s active, dry in branded this on higher concentration other Rynaxypyr the from the targeting came last in America sales several launched crops. of and five which North Other which is formulation new Coragen also were successfully of XX% products pests launched corn, beans quarter MaX, years.

Latin increased and X% Brazilian the price real. tailwind double corn, grew increases led digits a Colombia, well FX the Brazil, Argentina, to also Peru soy, and by in and America, quarter. as XX% volume year-over-year as we sales by and now driven sugarcane Aurora driven grew coffee. brands, Brazil by In herbicide and Gamit Moving Ecuador our on

for XX% sales the Over were came FX a cotton. and and sunflowers. year-over-year increases losses The up reduction price sales quarter branded of for market. on years. in improve strong and by mainly pricing quarter the launched grew Coragen brands, insecticide excluding brands, We X% the in and as in in benefits growth. corn the Sales headwinds. continues headwind Indian quarter and prior the soy, and strategy quarter, significant corn, our offset was Rynaxypyr-based from also Australia Approximately XX% Results Brazilian organically. revenue technologies in region ASEAN quarter. and flat offset EMEA to of year Coragen X% launches first last was came by grew product Registration in product in increase to driven actions versus branded up were resulting as products largely year, of performance the XX% in and and FMC in five Express acres. Altacor increase well last driven the by products Pointer the penetration last a were rice in of Asia years. market launched in reap by for from Talisman, new access brands, the soybean demand a strong countries, rationalizations five currency in herbicide and Hero versus our across Sales

supply in the the elevated material, offset weakening first headwind $XX up million the and EBITDA driven Overall, to partially is contributed energy, volume quarter pricing and quarter. costs were in to the experiencing It Slide FX were X, margins was the in quarter all to Turning in that which headwind actions was digit labor remained basis with XX% European EBITDA with in by packaging across implemented our inflation single quarter million and logistics, XX by we’re Price taken headwinds. cost offset four million note sustained our the Raw important now gains FX cost currencies. expanded and year-over-year a on $XX points chain. EBITDA $XX quarter. high increases regions. up was pricing to cost

me Before overall year earnings and I share QX full let of the XXXX view our review conditions. outlook, FMC’s market

be continue protection to war while Asia down and low America crop creating up near region, to expect mid EMEA to basis. in favorable on U.S. U.S. the single for low we market to digits region. single down reduce to Commodity and ratios The dollar major America, of on up this market digits. be headwind basis. the be digit North historic is a in further single crops will by prices protection a Breaking dollar percent markets many a global Latin backdrop and We crop now lows, expect for EMEA expected remain Ukraine elevated Asia EMEA growth are may FX be a for products. is projected the stock-to-use mid

midpoint. some disruptions $X rising an factor supply not price year versus the representing and Turning our XXXX the XXXX. full be $X.XX billion, X% deliver supply and to growth to range remain headwinds. $X.XX is offset FMC’s billion, in the revenue in of Full is to Slide year FMC’s in to billion driven we $X.XX the all to forecasted growth ability X adjusted year-over-year by expected year-over-year our billion does regions, confident our change $X.XX volatile despite EBITDA representing This share be be earnings geopolitical representing us of do in any an midpoint time and QX pricing growth year EBITDA. Russia range and of continue volume outlook, increase expectation with the the full of headwinds this environment, in be currency assess per for repurchases review of be to partially will solid at the in at significant by X% from in Consistent our will to and midpoint. it business future to past we time X% volumes; share, the and financial share expected XXXX at of adjusted Discontinuing achieved exit. to are for $X.XX EPS implications year diluted full however, the guidance. benefit actions take through at strong in per practice, will full costs to to increase earnings range earnings our and not XXXX

shift Guidance these as X.X% many For our in some customers placed advance uncertain times. of takes into reference, in made secure for QX to global operations account XXXX. sales up into supplies the QX during however, sales orders Russian countries across approximately QX of from

dynamics, occur guidance industry year-over-year. EBITDA the growth into we X% moving QX. of X% will see Given midpoint, the X% future possible QX the phenomena midpoint EPS current same growth orders it with and the at at growth sales of is of implies at the midpoint,

Turning and market actions however, increased to disruptions, an range with but the related through to to inflation headwinds renewed the Europe, EBITDA to growth market cost. in Asia updated products EMEA to mid do Slide of shutdowns impact continues single supply and have COVID strong X XXXX. to protection energy positive disruption FX XXXX of in in any digits. logistics. limiting the so partially cost offset not timely have by coming these China, to manner expect quickly a offset We is customers and of FX low and supportive costs our due global is Brazil. chains cost at despite Pricing in backdrop see reliable experienced remainder outcomes, relief demand far; rising the currency volatility supply ongoing persists deliver crop only and FMC

in decision exit considerations. the Ukraine war of market our impact addition, Russian to and the In are the new

Turning to revenue across price all and be full and expected factor and year EBITDA year negative on expansion drivers, full drive a our strong Slide will increases growth. regions outlook. is revenue volatility revenue FX to volume X

a such competitive expect come as specialty corn, since and expected Almost and advantage we are terms XX% of rice such to not In from as mix, we’re diversity half single wheat. commodity. FMC’s sugar, vegetables, crops any to is soy of cotton. sales long fruits our sales and come our over-indexed crop from term cereals to roughly crop

increases. and as well benefits mid Our new EBITDA as strong as to single demand investments These partially SG&A headwinds in substantial as well existing R&D. EBITDA price offset our by portfolio are reflects guidance for and products digit cost

price Moving on expected to QX last drivers, start with lap the is in regions some to revenue the increases all increases year. X of volume taken Slide and growth along will line that to continue

FX Asian We European from headwinds principally to are and currencies. continue anticipating

to beginning impacts expect see decision also Russia our second We the from exit in quarter. to

raw be packaging EBITDA, well For include shifted pricing that as into drivers QX. volume, products from by offset FX-related headwinds actions. positive expected especially for costs logistics SG&A The especially and these largely and also new will as are drivers elevated QX to benefit from material, persist, costs, EMEA. some in

XX, quarter forecast period, of indicates guidance the pricing half XX% the in on and the like Slide half headwinds. for for of the X% to prior significant prior would we year for FX revenue in with forecast to first growth the period. strong year half the the the Implied and demand half last Revenue XXXX first driven XXXX show the for stronger especially growth halves. two with record, for growth second pricing full of X% forecast fourth of indicates the forecast year, offset XXXX This also Turning the of over indicates actions half over QX first ’XX. implied achieved XXXX. cost year of second by and and actions, the volume by is consistent gains EBITDA over

now outlook front-weighted the to a Our This to the year-over-year Andrew. guidance turn year. year. EBITDA half of last second growth over for more the implies results compared growth in in X% also call EBITDA I’ll

Andrew Sandifer

weakness in a and Thanks income tailwind review quarter, quarter Brazilian in particularly as headwind revenue start expected, Turkish items. some was euro. real in several the driven statement Asian offsetting the first this the The modest to lira European morning currencies, Mark. weakness was currencies. I’ll a of by in FX with a growth key

for U.S. to the completed currencies quarter the refinancing to period prior continue fourth the million, the many was expected dollar in anticipate We is Interest to of FX the year first FMC. last to for of expense due million activity versus headwinds importance $X.X remainder ’XX $XX.X the against primarily year. as quarter down of appreciate

$XXX $XXX interest XXXX, compared million by range $XX guidance, driven an be For more the prior now expense million at the increase to in in rates previously than to to we full of increases our U.S. million, anticipated. year midpoint interest expect rapid of

rate a adjusted quarter line XX%. Our range first tax for the XX%, continued full with year for earnings on rate in to effective expectation in the was XX% our tax of

to debt roughly Moving next trailing and at billion, the $X.X expected, from was our at build quarter, end first average EBITDA above to Gross our as leverage net up targeted quarter year the metrics the $XXX liquidity, year the of EBITDA end. slightly of balance sheet X.X was was gross end full times. are X.X seasonal capital. Both XX-month working debt debt to while million times given levels

to year X.X to We or maintain expect in leverage our times average X.X targeted ranges. gross, to continue full to times X.X X.X net

from capital. Slide were we to flow and Adjusted compared continue growth. projects to spending absence cash of sales program, in items. to million on was and spending was and spend our due our on Legacy compared increase to down was our prior offset last up $XX of seasonality prepayments, year capital which for higher negative of lower key $XX capital. year, driven drivers SAP the deferred consumption year. as in reflects free Capital in cash invest primarily to transformation non-working increased and $XXX catch application point working completed to and working higher payables in prior million with up million were investing was of the other additions on our cash down year activities capital growth, $XXX improvements by of expectations by the operations customer the million cash onto more this Strong first in from than the Moving flow partially line XX, quarter working strong

continue For rapid from cash new high our of full products working year that growth Adjusted forecast million. capital end XXXX, our seeing of flow prior increases capital higher to at the year especially $XXX operations limited support we will is to to are million the free to by range, cash flat growth. $XXX Capacity drive additions. guidance

to and we cash legacy XXXX. We tailwind this of to earnings from expect the free transformation be conversion spending expected expense somewhat minimal transformation with With guidance, flow continue anticipate and in midpoint. a legacy at XX% lower

technology shareholders and through and growth allocation cash funding Our priorities dividend returning our growing through and growth to share inorganic capital repurchases. fully excess organic then M&A, remain: market first, access pursuing

shareholders to dividends around $XXX continue We anticipate to We of million strongly rewarding $XXX million with million. during XXXX in dividends the $XX quarter. share of and of $XXX million repurchases paid

we to Given not leverage, that, Mark. back the hand did any our shares in the flow and quarter. call repurchase With cash first I’ll

Mark Douglas

Thank you Andrew.

supply Our performance conditions. mitigate QX robust increases the and the combination to through ability and cost guidance in first to to reflects challenging FMC’s actions fulfill with quarter pricing demand

product last gain from introductions over coming year new continue introduced in growth full with Our of five to revenue momentum years. products XX% expected the

impressive Our even years, led global XXXX biologicals. is of by to growth plant be we’ve XXXX. business proving challenging most considering had continue to all one trajectory the its health since manage

strong strength back serve questions. our now to these well pipeline. turn continued cross-functional operator new I’ll will for success All are teams the us stems finally from year. of the the call the Our robust technology way and headwinds, the attributes focus, and the of our through FMC’s remainder customer overcoming product

Operator

Vincent. today from Stanley. [Operator instructions] Our at is ahead, Andrews Please Vincent go question first Morgan

Vincent Andrews

and quickly, - quarter. what in it compares been the very fourth X% that anything, mix there’s the and in Andrew, X% twice do whether we’d versus pricing get what strong I could if if also number you strong be much. achievement any think to quarter, was so Thank did the extremely in you in and anticipating, would was regions X% quarter almost What in Mark all it just that mix in general. or comment pricing differently you this

Mark Douglas

America been in price through then of the started regions we to us through is the so in actually Yes moving we’ve we invoiced all price actual in North went as year. we very year, Mix for you’re went you. in price Vincent, QX last I and raised seeing thank second marketplace. half other what volume, think Listen, in as clear resides the

going active I pricing forecasted made in markets build. we so we as going internally a were higher the much not we significantly you ready in realized was as to getting at and raise also by in around What prices that the we see world, what going to costs results really other was as could we quarter to can anticipation really point we costs, were continued look drive so decision that costs price in quarter. every for country across QX only that to that XXXX, in our see in go pricing the that quarter every come entered higher through had forward. were was FMC move like broad-based you that - pretty would markets saw think in of as we but the than It’s you than not that

cost inflation If offset that. impact you and We anticipated year. the maintain still though, you did that of our than expected higher throughout will our is impact we see COGS should through is because that What recall, much results, we pricing that availability price we commercial say see to in to we business, in - disruptions of continue make and through the disruptions we cost price. marketplace. move in will no that and to flowing the so we still groups need is costs, the continue very the active mistake, supply general If are

see. FMC but the not industry for that’s something out Things for we’ve full general. I that’s I about not seen impact all better we’re only don’t seeing, When the very what in there. think of think the yet are that lockdowns important think China, in COVID we I getting

China been trapped of major the bad past. in disruptions logistics is more is me as probably What that China, the freight China. the supply the having in in they’ve of ports amount worries in We’re as out

is the yet of that amount freight--ships to Just the ahead getting that come, we’re are stuck wave curve. that of suggests outside so China

Pricing do. right the tool. to think thing is I the that’s main

move not we to did lower costs alluded call. we’re - actions not took. to Now, the that in through We say internally that managing we SG&A that’s

into of you that half, but it’s very forecast, flowed first our a the half. strong then Some first from QX look at

Vincent Andrews

you Thank much. so

Operator

Our from ahead, Favre BNP next Please question Laurent. from Paribas. comes Laurent go

Laurent Favre

would your you little good could and guess, question. a related my about, mix, Hi, of use. Mark, but you higher maybe for of was can market you. expect why down you sorts intensity really and risk spraying, taking Are with bit talk about assessment, farmers reasons not a morning, it’s I fertilizers. all trading of volumes I if thanks the intensity so wondering Thank more input talk use, really also being of including so squeezed there to on including costs,

Mark Douglas

backdrop get Yes, soft so at at is very of their use the market almost view are many thanks most that today, to are we as low, the are much to we know fact that planting high, Laurent. as When positive regions yield, XX-year in to they lows want you are to the the that stock can. prices entering best you market the a possibly use seasons obviously going plant cases, as Allied commodity some will look - now ratios the to products.

is Generics get and than yield Now, sell sell not proven usage the performed on products on so related Because types gains is enables can to use get well back can value, XXXX do to one you XXXX tend pricing to why? thing business, this think to that necessarily that’s be and and true price. productivity the they and products, business want people cycles. our greater with - highest When in ag that. of of technologies the other gone We value. is to as yields misunderstood we’ve extremely numerous they to I best the often through

as demand I made in million the comments the you if We with at this That $XXX five insects know, have insect last ones year crop. to lose remove for applications years. We’re seeing to you choice yield. comes point. you from the get of continue you you about Think have will products. are actual reducing that it products. important have that don’t to very make We newer to see of introduced products your sprays use best pressure, this to - tells Remember, a usage That’s when products that the think about--you normal. or the either going we’re our revenue people

see is backdrop can is will into continue that, from get perspective, frame, given that horizon the don’t well. anything so on change this probably right certainly our like believe the technologies Our it positive, time we’re we high that year marketplace in this markets we the quality the sure will newer next making and the those as We disruptions certainly year seeing. to all

Laurent Favre

Thank you.

should pricing or QX as on As I in from categories, last last lapping so pricing, pricing a of in QX slowdown into geographically either areas, could group flat year, we follow-up you’re your this was in I but where product you in level wondering the year expect was maybe in terms mentioned quarter, some you increases last it at talk about QX? was year think specific

Mark Douglas

and a little certainly certainly QX, in and QX, Yes, QX, it we really go and as much into Really, QX through QX. is amount, America in QX. you’ll focus but impact in be on raise so ourselves an in QX last prices year small not the QX everywhere more catching QX. we will into that Latin U.S. in in more started on we a else I QX to muted see then price; in be North as lap would up should America

Laurent Favre

Thank you.

Operator

ahead. of please the UBS. go from Josh, Josh comes next Our line from Spector question

Josh Spector

my Yes, thanks question. for taking

volume years and you’re and couple limit the maybe time side comments on of ago of versus perhaps the Just or how impact pressure. about supply this a the what’s risk some logistics the thinking risk, and China wondering changed on cost your to potential mitigate about the

Mark Douglas

goods, basis navigating for obviously people in Listen, day to daily supply we’re and that’s something like goods of the million have to I ports chain the of flow doing not Josh. been pretty from in you the understand hand-in-hand last are goods facility playbook or over the lockdown believe three on country. day and Procurement the you one thanks to changing so Shanghai and remember, country is years but work a we’ve what That’s out to XXX day Yes, lockdown of about us. movement to basically day, all to similar to the movement read two of major China. and another dissimilar over to in

getting We so we’re fine chemicals, China. the a the keeping a products or That’s not just eye or at where very logistics. the given are then getting on amount ports lockdowns, the congestion in just happening what the manufacturing more of of of case but China seeing product it’s is with close mediates out

We’re that ports use. to ports different we using would traditional

using more get gone I are three it have different think out been air years, intensity freight I and through the into it’s is last has don’t than call we’ve what over what higher or anything certainly the but to time. managed in QX as QX. to would We two product we

Josh Spector

Okay, thank you.

Operator

from next PJ, question please go from Our Juvekar PJ Citi. is ahead.

Patrick

Hi, coming Patrick this thanks question. is on taking for my PJ, for

on Just diamides-- a question

Operator

line muted. PJ, please your confirm is not

Patrick

you hear me? Hello, can

Operator

go BMO line, have hear question. from anything can’t Jackson your so to ahead. comes next Joel move we question Markets. Joel, next The Capital will please we the from Unfortunately to from

Joel Jackson

scenarios talked your quarter we downside upside is X, Hi, you’re to you that good the your in morning. leaning downside. which but mouth, the I about put would or more and Slide want Mark, upside to don’t words last and think

little to to talk What would the few what have to you more the is months scenario billion, upside on about than increases to now get leaning you price higher at have the upside said you that a bit? maybe upside. you Can ago. need see I $X.X a thought think I

Mark Douglas

deliberately. highest anchored changed not place there it’s we and a on see is right billion a It and were view - that Yes, in year. is knows certainly for The everybody now when I call, we’ve probability haven’t world put we sure Listen, we $X.X the it. the this we’re it simple think but for of range on for really the we results this February reason EBITDA together had and Joel. is that,

say before, China so are. the if got X.X we you than the worse Ukraine not perspective, from we’re can doesn’t the probably has COVID-XX anchored situation, we kept fact, were wide. rationally plus see It on anything, In mean with why lockdowns worse in it to the that still they range are war that -

than the less You’re a see and better at right X.X. mix, Also the probability issues this of that we of that price would would mitigating That’s more that believe range, demand pricing to the to move end than were where a probability significant so upper are things even got if low we’ve equally perhaps end of and we to have offset a lower costs at severe themselves get the is - that by impact. with because today, in have range, to the or we couldn’t we weather weakens a FX market X.XX lower things of regions.

is I all they’re probability see that’s low When low the anchored X.X you think market relevant. a the but the is what upper end put - on that there strong end so demand, the around we why we’re growth, middle. at the

- those a in of much have elevated always and managing range would manage are are each mitigating do, Costs we increases. FX we so said price digit that. Ukraine probability with supply that, disruptions. we’re wide, which again then still end mitigating is that, that single new the that but mid probability higher why but one trying we’re and the a we there the and headwind, we to we Russia and kept but see range there you getting is lower The we’re once volume, middle. a are see can We only at is

Joel Jackson

year? for Then a when secondly some and the of second margins maybe QX, sorry. modeling--then had of had time. you’ve in QX, the sizeable the to you’re to margin QX--for lowest and of year-over-year, QX your of you sort Can and in kind QX contraction expansion for that QX margin tough you in QX, guiding [indiscernible] QX margin contraction margin modest in bridge guiding then QX pretty - look a you’re contraction. long in expansion your bit then help a some half Then modest pretty Okay, here, bit of and I and contraction then guidance, at

Andrew Sandifer

Yes it’s Andrew. Joel,

that not Look, stronger of take know, full cost, we and did because probably--you overall year. a commented comparison inflation, between quarter Mark me comparison first aggressively have a we cost price one. continuing price through so will that this in we Let in see carry think not the we very COGS cost, the I and QX earlier, positive moved surge just

a offsetting part curve. increase, do tougher half, to percent the remember into costs I which weaker very to of margin in to we’re If but don’t think a price see a expect that unexpected. margin, about, and have to more eventually a for for The position pattern comparison do and ’XX, we’re dollar on then the QX quarter Unfortunately, percentage is relatively it’s weak offset We is increases. fixed but pronounced substantial. EBITDA see will QX certainly the quarter of resulted was the a price versus dollar second to is not here, was a with future effect EBITDA while R&D, offset in net-net off. see is that the have price the strong costs positive you margin get it ’XX more margins of the SG&A comparison percentage also a in long movement going talking we’re you’re increases, just the high in as so math, dilution you well continued down ’XX of on seeing given margin margin a and which, reducing in think pretty - magnitude costs QX mathematical for with pleased us. latter we’re of It the level in revenue have we increases I given cost that levels for cost bend to I just we that speaks believe call term get you dilutive. very year, comparisons

formula recover. price will is offset the certainly there’s out As China the we will we inflation, volume a our that this in for COGS in stickiness of and to but reached we the industry, clear the Mark’s bend of and around highlighted, year, rest use that aggressively, number that - we’ve pricing yet, begin the particularly and expand that curve think be and margin moment see that to mix and percentage investments at to a I suggest don’t believe as freight to overall of bend move offset with come of very full our what and any in ocean performance FX that well a logistics there SG&A But uncertainties coming in is as growth, be the in challenging deliver very to opportunity R&D year and strong we times.

Joel Jackson

you. Thank

Operator

is with Please ahead. from Christopher Securities. Our next go Parkinson Mizuho question

Christopher Parkinson

base, well subtract you. excited and more take products Great, is are you Perhaps core thank other you growth remainder what characterize you at the formulations alternative as most new years? the of investors do rate the your lower of as portfolio, some annual about the kind so so your Thank asking past way versus much. how what’s an CPC losses, actually and of growth just parse for that for diamides time contribution of When generally just products, launch XXXX? current aggregate to perhaps registration environmentally from few a the and then the out the assessment biologicals the

Mark Douglas

the we through much portfolio I the that the that because When QX, rest about well. health, saw growing that revenue of, lot is said they on really, at they’re is what, The are than average rest products growth, I a we’ve portfolio the the of - the you our we’re going talk see that. somewhere high think about the strongly. can when much that introducing Yes, We say look Chris. faster digits. that digits-plus see around the is the as rates single grow would X% really would investment growth mid in in biological overall of you growing Plant rest in for growing that thanks the year. new there also growing and we’ll single are diamides of pretty year,

We place registration little the just the a of maybe lower losses. range, It’s in have about be. it X% it’s drag right be might been first to full portfolio a year, but little year, this that half about X.X% on than because the of a lower

dollars that it’s year, are introduced It’s coming amount launch, less $XXX think the that to the come is the products those bigger revenue are on million things still and underestimate but the that an very it’s the big multi-hundred we often of see the the of $XXX in we herbicide, do $XXX a be when slightly means the every margins fluindapyr was from size. gets that $XXX we their high than facilities our last overall that world, that value it’s products you’re like brand-new this of they research I but year so only should is that’s it’s year. million it’s rate can whether - years, the it’s reach peak that three products range about of the million growth, million, core, fungicide growth performing they focused us. You think we year, $XXX diamides that the well. year, the last occurring. that of got so work mix, continue It all pipeline the to new, coming not the formulations in the million Don’t for single that in that Last so that’s what we local come we higher market it’s portfolio this at $XXX within brand-new improving on products obviously It’s are the I very and in year. around that substantial. five brings. What that formulations digit is talked large from million products products million Isoflex through, do something are the market had or overlooked I Those range.

Christopher Parkinson

of Got Mark, that over you potentially been there How benefiting you, potentially a growth? quick them like is it and or and that’s and regulatory were one them has potential thoughts competitor last lack you how in a chemistries, DiaMark everything of opportunity friendliness particular very the further two for portfolio. the terms with in It your a evaluating seems EU that already thereof, of further of will portfolio’s it’s a assessing benefited, the host the team it, actually could what potential several follow-up. the two happening that benefit you. contribute updated say or that the of based is and was and actions? years are diamides but direct let’s just for the before are and one to war, on Thank on environmentally,

Mark Douglas

further the older our coming whether we’re or chemistries, some the in whether under fact, some also coming chemistries it be other new the - be roughly of pressure with of well, under we are When neonicotinoids forward of own look the into the it the losing partner we and molecule are the sales pressure, but carbamates, same insecticides EU. on look are products chemistries now as new new of share registrations, advantage the churn you industry doing are nicely registrations are taking happening rate at markets our at that taking only of but year, is the internally Indoxacarb in we a as great some we That in to market diamides. new we’re Europe Obviously we same, ourselves, this fit FMC. in with think Yes, for our that. growing diamides, growing which profile are taking the partners - not the doesn’t and is

will go We technologies is of like continue older jurisdictions not drivers fact, taken That years. It one We Europe, in look and we’ll argue continue. through the down; will accelerate diamides us. so advantage see a have so. the the slow growth of is replacement for for you could the expect way time, do to XX in it, as for positive as that we it forward that especially we of and to it we next

Christopher Parkinson

the thanks for color. Great,

Operator

Tony is from please Jones question next Redburn. ahead. Tony, at go Our

Tony Jones

taking for Thanks my question. everybody, thanks

different in would were should but talked expectation period a industry, in we inflation reversing is the from give perspective, time very we’ve so Thank at the at portfolio when today we an thoughts really you. back cost any last some You companies inflation, What’s some than that be of on point, FMC because helpful. peaking look past be and seen prize. the cost your about

Mark Douglas

- and can down and quickly. have value, When very always Listen, almost comment and of which about we think fact the look they that non-selective you we and will at the move sell Tony. earlier they are done very something do. me Thanks the in you that up index-linked chemistries some to move quickly heard very this commoditized space, of that’s herbicides, continue you

year. portfolio has never Our to with all It’s move that, portfolio it recover the We while as historically to it point. quickly. us and to you the last done likely a argue taken costs is today, is didn’t that could less even get this

when I that SAP, intent have to will put we’ve the etc. of we Our efforts improved all because that in come of out fact margins this place cycle in our with regards

to long Our we haul portfolio, we prices have the large aspect of are when expect selling large these not side herbicides, that swing have of make is to by plan in come over sticky sure the that so We this. that the prices have don’t the value generic through other we do non-selective portfolio. don’t the

Tony Jones

really that’s helpful. you, Thank

you Thanks. costs, a SG&A additional maybe model? we QX, the terms quick can accurate make Just in the moving just QX follow-up, from rough indicate to can so absolute really it

Mark Douglas

have Andrew, we that do think we? don’t number? do we do, absolute I

Andrew Sandifer

as our think QX. in should Look QX don’t. I that bit SG&A of percentage Tony, was light probably We a to sales would I relative you a in say expect what

Tony Jones

Thank you. Thanks guys.

Operator

Research. from comes from Michael Piken go ahead. Cleveland Our please Michael, next question

Michael Piken

Yes, good morning.

understand the totally Just the of a question I ingredients regarding active some of the costs themselves. logistical--

Operator

hear to you. please mute? Can line’s your you not Michael, on we’re unable check

Michael Piken

me hear you me? can Yes, can now? hear you Hello,

Operator

from Michael’s we so onto anything line, we’ll move can’t next question. the hear Unfortunately

please Markets. Your Arun go Viswanathan from next from question Capital Arun, ahead. RBC is

Arun Viswanathan

EBITDA looks like year, in the you’re ’XX, if last you billion Great, the it use $X.XX did I that at look growth we thanks. about-- If

Operator

Arun, open proceed. your line your question, for please now is

Arun Viswanathan

I’m Yes, speaking.

hear me? can’t Can You here. hear I’m Hello? now? you me

Operator

Yes, Please now. go we ahead. can hear

Arun Viswanathan

’XX, to the growth it X% we How ’XX to go you the back about that Ukraine? X% uncertainty. just of a the guys midpoint there’s for X% detailed do of your rate, the It expect about that into costs that to you’re so on into outlook has in on great. you past of like think on ’XX should FMC, at challenges production to new Okay, out a have look and and looks and and get lost be out and potentially guiding EBITDA when of provided range within should growth that end lot some understandably you But the even ’XX, back in investor given day? replacement for upper the at in you EBITDA

Mark Douglas

Yes, last the thanks Arun. of year five-year Listen, plan. our year next is

range. middle revenue, right the of on well tracking We’re the in

to we’ve and the of since We over are just below Andrew but day, below slightly as headwinds costs only discussing lower FX of EBITDA, other and $XXX and ’XX, the - there’s in I I’m reason not we’re too million we slightly if through had on to wouldn’t ’XX X% end the X% were Look, normalize, guide to no range. way going ’XX, early to that but be the range. believe starts guide that is situation ’XX it that to

what public EBITDA is we are X% of be is aiming we’re where the what for range obviously be of we’ve higher has to out do seen would We up swimming company given over the last at range we’re we’ve of that year’s that frankly takes, five terms range. company performed that than five-year plan make We’re everything that obviously of plan, very feel not new that had, together somewhere of be plan. against is and right Whatever over our After with at point We towards the so we XXXX the of putting we’ll time strong so the year last gap and where edge but next going frame, end with range X% say the low likely commendable end cost going FX expect and end new least, this to any a decision. we’d long timeline year. in XXXX, tide we’ve XXXX, to going at a the the metrics. will that to on at - this where and couple well long had that the range will cover of results, we for now just since sticking a years, both come for end the with the we to are plan

Arun Viswanathan

whether term the the understand growth If ask anything there us be to fungicide frame that you that any have that you could it help longer is or that, items, maybe and I to discrete guys follow-up deals M&A, point or like could signed for a that possibilities? could partnerships some

Mark Douglas

where perspective, it I long is. diamides the of of portfolio. think items the are given point At growth, got there’s haul, a I growth view, from information pipeline have we on that trying the we’re portfolio They don’t time, the have pieces in I model think a number the anything out impact that core future to term the think we’ve of in to play itself, wouldn’t portfolio you’ve from looking out terms longer this don’t technology of terms the at in there company the of near looking we term, side the you but M&A. over of the technology tend a at perspective. that obviously all M&A always

through be go where will have much the obviously decade. this over we’ll I we the cycle, view planning as at the ’XX company around think a going next end better of

Arun Viswanathan

Thanks.

Operator

comes question next go Adam, please Our from from Sachs. ahead. Samuelson Goldman Adam

Adam Samuelson

Yes, morning thanks. everyone. Good

Mark Douglas

Morning Adam.

Adam Samuelson

in get of of could sits but love just where a season, sit seem hemisphere you’re inventories expectation you’re take inventories. where this a are of the just of guess northern a in of of you and as around additional like price off-season, was you about supply be activity you more and where the you I some increases, tricky just channel an season would pre-buying growing on It different tour the world chain, concerns certainly if does regions lot restocking might around maybe and thoughts there Morning. I ahead amount because good think to just how channel going there. levels think your into Brazil,

Mark Douglas

India, pockets are Thank in is the about couple some strong alluded were channel not saw of in world, speaking, one QX, which there reduction India and in we India. a by rice and you. is concerned the great There you ASEAN not and - inventories. a sure. offset weather Australia to, Yes, comments growth acres we patterns in in Generally about are

opportunity of the the the inventories at our year. reduce in taking to We’re beginning channel India

we for to that normal Recommendations we’re the half expect into inventories I Outside hemisphere, We don’t are quickly through pretty we as so going that normal. to the anything in say U.S. not group and seem Brazil, forward as Argentina, the the at here, our into first us. concerning of for been Europe normal normalize excess us. Latin expect the pest the we’re that for where should point in season. They go northern all. us, year be America season. Demand seeing we would is we’re [indiscernible] Mexico, pretty that, at from going carrying has think pressures in here. we channel, this In very we’re good

in Our growth how are we’re line market. penetrating rates with the

newer in from, the we insecticides have some that lot whether the that soy or and the with I our we’ve time of on coming is complex in improving just access market fact here, be a recall and our talked into place. growth that’s call You’ll effort spending about Brazil, the of it been herbicides where

about Brazil all levels We’re where Argentina. or not at worried in our inventory

Adam Samuelson

corollary in getting there, the of size we’re of product I the issues sales down be decision disruptions a lot a on last just guess expectation It to a to tail Russia. doesn’t logistical it there’s winding on in just about that would Is as or just then business and volumes implies that and immediately. operations question into the fall and the quick zero something, what’s the country? year. of in I modeling given so presume million cease $XX Okay, Ukraine away? what’s activities, going planting Ukraine, follow-up to the business of there

Mark Douglas

Andrew let numbers. actual the on I’ll comment Sure.

Ukraine, working majority it, obviously certainly very expecting believe We we the all planted that that from and through not to balance would do have east. in especially will vast sheet financial but I right We are be we’re that low what a offset now. of say both working so impact. impact opportunities through of the we’re that a P&L maybe the impacts acres,

Ukraine in comment that but to make everything the on do acre can they obviously every significantly down and get are Andrew, be people that. they will that to you’re very, so in country sales are not, just plant groups particularly planting, It’s acreage we do want we expect to impact? our into rough Getting working distribution, into you doing Our active, material country, imagine, are material it’s can through difficult you would growers can once I we as etc. under it’s very are easy, just It’s sure can. the out, country, conditions.

Andrew Sandifer

Sure.

dimensions upside-downside operate for got opportunities. his was in there’s Russian Mark about two that contribution the to business, from quarter. Russian and our other of Just about three to with for $XXX certainly to $XX went built you year. million in about so either million some that XXXX, we sent remaining business, the EBITDA address comments into guidance the the What first redirecting Russia, for on of a quarters $XX That’s Russia our XX% the Ukraine, we’ve being longer the in year the through that’s of or material headwind part between about The in market Ukraine. prepared not discussion to finding XX% did other countries the budgets markets, was million revenue this

to are Ukraine, hit do Mark and We we expectations continuing the as not expect operating. operating continue Regarding that the restructuring to is our a Russia in the but ship, mentioned, to for we we initial you exit will and quarter for business year, we’re to business. best the I the expect should take second support of will do the we Ukrainian can. think farmers charge

non-cash finalize exit be finalizing second Russia exact the there exit the business. of but in reflect to our quarter We to still charge the that restructuring in a of position that number right the now a of we’re largely are pieces process not will there, in the given

Adam Samuelson

really I all helpful. thank it, you. that’s appreciate right, All

Operator

Our final Michael the ahead. on from go Fargo. today call question Sison please comes from Wells Michael,

Michael Sison

Hey guys.

be the You terms for felt [indiscernible] that in another you the or there cycle of so? could growth year maybe ag of sort noted XXXX markets. Any in thoughts extend

Mark Douglas

very ag last say, years. last, sector gone three we’ve - a in listen to four period through growth would the low the of I Yes, over

driving soft back believe right mean, is of at on north drive happening the season of would what commodities you’ve to weather Let’s Brazil, the take impacts look had Russia-Ukraine that in cereals, Argentina. commodity and is last a have prices, America step I soft certainly situation south what you would Latin now. in

very somewhere is always that’s weather the just We’re watching closely to of - around world impact a fact there a weather disrupt life. the market,

to a the input that elevated, now to a that for are protection that’s as good backdrop providers. believe us got soft right case, being You’ve commodities and crop going stay generally

of That’s extension early, positive be of don’t We very We’re so shift ’XX looking May, It of see year. it should now. fundamentally negatives this, ’XX we’re be we’re good are to backdrop. there going in at looking ’XX. any ’XX at the as--it a should an that we’re how only is start as thinking out but a right

Michael Sison

Got are it. you world. are that it I in looking, parts and other meaningful Where the and trying manufacturing think of you you progress? made footprint endeavor, move have you’re of to China Then your in or to any some reduce

Mark Douglas

about the dependent always footprint not with intermediates, ensure subject supply the China allude acquisitions and XXXX that, the program we’ve we’ve Yes Mike, really we’re had much as speciality to a to acquisition only XX% a for chain dependent about XX% XX%, the the this We’ve we before. and Cheminova were chemicals. balanced world, of fine materials, and all Dupont I Cheminova we working raw pretty today well, have when ton upon - bought range time we back to prior probably XX% frame talked with that that China. to around manufacturing but in been

up it that some next very assets, or We’ve Europe and of India Brazil. with done get manufacturing sub-XX% the within the setting so. as to toll or job be shifted in to feed to is whether aim manufacturing an Europe. year into Our good a example, We’ve Mexico,

dependency know into continue whether I is get people U.S. frankly, on think with almost with and do for it the will rest. would the agree I It that. get India being manufacturing never-ending. We and good between that, like to something if Europe and balance that, range. XX% could to XX%-plus I would don’t a us, ideal is but procurement the would be China my we

I think by shape then. great we’d be in

Michael Sison

you. Got thank it,

Zack Zaki

and Okay, all Thank thank a is the That that you have for much. time have good day. we you the today. very call

Operator

Corporation for the concludes This attending. you call. conference Thank FMC

disconnect. You may now

FMC (FMC) 3 May 222022 Q1 Earnings call transcript