FMC - Earnings call transcript Q2 2022

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good morning, and welcome to the Second Quarter 2022 Earnings Call for FMC Corporation. This event is being recorded, and all participants are in a listen-only mode. [Operator Instructions]. After today's prepared remarks, there will be an opportunity to ask questions. [Operator Instructions]. to conference like to now would turn over the Mr. I for Director of Zaki, FMC Investor Zack Relations Corporation. ahead. go Please

Zack Zaki

Thank you, Jagrita, Corporation's and good morning, everyone. earnings second Welcome call. quarter to FMC

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

Following remarks, will questions. take the we prepared

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

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

Mark Douglas

growers. high gains. while dynamic Zack, everyone. strong and input FMC primarily morning, FX volume a another environment, was demand despite and quarter inflation This the in performance our price value significant market price first ability by reflects headwinds. you, robust growth cost global to costs offer growth half offsetting for of Overall, to Thank globally, and driven increases with good delivered we

to half driven by price second of in expect a growth continue and supportive We volume strong year, market again the increases a environment.

to Slide Turning X.

used of crop and Before like pioneered outlook, results control to has details protection on our pheromone a Denmark-based that technology insect comments quarterly full few acquisition manufacture we I'd products. review BioPhero, of company offer to our recently year a bioprocessing a completed

the may larva, crops. used would is by production in rapidly than members growing The mating are within a enabling manufacture changer, methods As insect billion platform production a closed on damage our are approximately XX, significantly generate acquisition, margins pheromones by revenue by lower produced species. pheromones game business. you July significantly know, at which of health but expected biologicals EBITDA other naturally are to pheromones, insects in Pheromones of costs for process, lowering XXXX. It provides several same which pheromone-based significantly to in the insect otherwise large-scale to ways a high products, target are a production disrupting routes. protect crops protection which expands of trigger of social $X and at volume variety portfolio plant subsequent above-average to crop and of pheromones FMC's proprietary generations hence BioPhero's There fermentation route response

technology this growers health base, plant another the opportunity continue our and expanding acquisition been to is around great to bringing biological have We products world.

of portfolio driven organically, and X%. X% demand strong above Adjusted quarter, XX% X%, our of X. was in were growth this price was driven We the range. Russia midpoint increase year-over-year over for on up year-over-year. detailed and market exit by in an are $X.XX EPS X, across EPS in greatest reflect categories, increase Our per by increase the increase the insecticide impact our diluted and slides The double-digit share EBITDA Revenue QX year. earnings guidance count. from innovative at X up EBITDA several had and our April with showing up of an primarily $X.XX product GAAP results lower results average XX% the share

grasshoppers Mexico and prior the increased our portfolio versus America, in for portfolio. XX% of EMEA. business price Results in organically. and in volume year-over-year. last the of were XX% a sales growth launched grew more quarter. reflects portfolio sales biologicals The year. the products soy a strong business led sustainable conditions, herbicides crops. sales grew past by momentum sales range growth were in year-over-year, successful demand was corn up cereals Brazil, plant solutions. also Texas global and for health XX% offset impacted by broad Coragen five driven reported launch soy, of growth XX% and in North pressure made by sales, XX% quarter, grew targeting In an of products $X.XX our by Rynaxypyr, growth these and and had grew than but total in corn. Sales Demand And compared XX% and the with and Diamides In year, of our in digits. second insecticides insecticide up same we're XX% In the herbicide Latin billion Our XX% X% dry the MaX, by both to America. full spectrum double insecticide North this this period year-over-year, The Sales customers' and We increased our powered by a and California the supported led quarter America years for from America, led North pest other in Argentina. Canada, cotton. such to due pests America Midwest by high EMEA new led in as in Latin

for cereals. And results last was and Volume pricing, outperform X% headwinds. year adjusted from Aside and for $XXX an quarter price million increases X% million to Cyazypyr $XX increased offset versus Herbicide In and in for India price Demand on in herbicides. was above down were in Asia the more gains the $XX second organically. X% grew range. Pricing offset of the EBITDA Australia, headwinds. products prior to the of X% and competing guidance of demand FX Overall, contributed up continued compared quarter. million, vegetables. strong fruits by were year, than Overwatch by finally, driven and period, increase midpoint Average increases applications FX cost inflation gains our

than from the quarter European chains. supply headwind Asian dollar. the as headwinds against was million more the the As to challenge of and inflation first in FX continued due cost weakening doubled we U.S. to expected, $XX our currencies a quarter,

of Before on update crop we FMC's low the mid of low our high single We EMEA conditions. single and digits, grow expect up half up to North U.S. now review versus driven year protection America FX. be single regarding on Asia still Latin will digit impact global digits. full to up a including to you our double expected digits, pricing low the the market expected by overall now growth. dollar primarily is now herbicides. outlook, basis let mid still while is market to XXXX single second non-selective be digits views me earnings expect single digits, down of earlier mid is be be We expected expectation to America to

Excluding currency low single to impact, is EMEA expected grow digits.

products versus remain from crop of in While somewhat elevated protection they commodity well the XXXX. the year, year for our well earlier prices highs end have historical demand the through their come This this bodes and down averages. into of

to Moving Slide X.

looking business of quarters halves underlying a in seen demand in shifts the better the cost We Therefore, year. at between performance. have pronounced understanding individual gives and this

the the $XXX we and our half, contribute quarters lower second to are guidance, have full For price of result year than the which guidance. period. Cost growth was the headwinds and to to respectively. inflation two the million are achieve million of more EBITDA of of to expected forecast midpoint significant When for but growth, impact drivers There $XXX EBITDA, the EBITDA the the expected more increases the to represents required price over quarter. increases as increases. million, more of These expected strong and again X% volume. drivers cost in is first $XXX context than a biggest fourth for continued cost offset in the resulting third cost year, FX volume prior quarter, performance contributed almost reasons In three our with than increase the of EBITDA growth the half consider half first year in full year primary very

lack of from cost from suppliers. the The secondary tertiary sourcing preferred and suppliers to related inflation first to due is our reason availability

turns to cost guidance. The in material second between orders the North roughly of the Latin twice XX% on our half P&L, in of six lag FMC America half. drivers biggest months high and deliver of impact already and are its second we our typically And revenue a inventory captured the our year. have America is reason procuring since second needed Brazil

year the we in our making speak, X% For year. contribute is to to QX in much Overall, in this second growth prices. by the favorable The taking previous a we which higher due the place years, at than is U.S., customer expect second reference, following as in order this earlier the increase are average very commodity XXXX. of the discussions is of than normally driven half us strong half confident EBITDA orders In demand time forecast. XX% of around

full Turning at of year in first to range in XX% FMC's by we and be outlook. by Asia. year billion, billion foreign After the representing $X.X year, currency regions, the increase EMEA the review price revenue volume all XXXX. earnings an full strong impact raising versus are will and to driven of growth $X.X a to Slide growth of XXXX midpoint XXXX partially X of Sales offset and a half

Slide growth X% quarter the benefit narrowing are in earnings X. billion of midpoint. is potential midpoint. is to X% as year for QX growth to representing our and range provided future is X.XX from not any diluted sales past now EBITDA EBITDA practice, the growth outlook adjusted range an factor year-over-year QX year-over-year on at strong and for mid QX are single of growth absence a representing our the Guidance full XXXX repurchases to share digit per the be sales We highest do EPS to guidance at QX in XX%. Midpoint be targeted $X.XX expected and at limited guidance. to share, the be The narrowed compared cost well, in share exceptionally to will of at the the EBITDA third by with year, implies expected year-over-year up of This the volatility headwinds midpoint in increase implies continue. to we price adjusted billion, $X.XX EPS the in increases increases per in in X.XX at in compared are to despite be with growth Russia expected FX in are while growth midpoint of also period. sales XX% midpoint the high X% increases year-over-year Cost QX, to QX the the forecasted to earnings prior an of the XX% increases. quarter. anticipated price year-over-year. result to EPS the of is lower to year Consistent

XXXX Moving updated outcomes EBITDA XX. of now Slide to drivers the on

high improved, keeping costs to growth single of unchanged. the cost though and volume to the growth signs are headwinds guidance and market expected midpoint offset flattening. we strong in Price elevated, have to of beginning our assumptions digit the inflation FX cost the mid see While are remain

of With we be expect While expect realized not to do the benefits we increases highest XXXX. call in that, year to the material the Andrew. from I'll cost turn now easing until inflation QX, over

Andrew Sandifer

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

higher Asian expense of interest rapidly in in expect rates, up by full year quarter $X.X refinancing to European United for in the continue range $XXX we XXXX of $XXX compared million of XXXX. the increase partially fourth and $XX.X an primarily the million, offset to prior FX of by balances, interest the to million benefits now interest short-term the prior for With $XX headwinds and rising completed States, second higher our especially due was We currencies. remainder driven versus to expense year quarter guidance. period, rates anticipate the million for be debt at midpoint the Interest XXXX, the to activity million,

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

EBITDA the to was end end roughly of $X.X from at Gross trailing was at the due end million sheet and EBITDA timing quarter, was leverage in leverage cash next slightly to while with debt Moving debt quarter year liquidity. debt debt our was was subsidiaries. debt the up of X.Xx. Gross XX-month the net balance targeted foreign gross to from X.Xx levels, second of XXXX. while targeted to line billion, return above $XXX Net

to XX. Slide on cash flow Moving on

additions Strong for were spending the primarily cash in program, was $XXX sales the year-to-date was negative Legacy spending $XXX the period. activities the was of price free essentially prior was prior million down, cash the in driver completed quarter working Second year as increased higher other period cash including period. on by operations aggressive consumption down to line million. capital. increases was prior $XX our of which adjusted key year driven SAP and and from impact absence negative of the growth, with to investing of on due flow year compared receivables, capital. Year-to-date Capital million, transformation working substantially

the We million more of the $XXX midpoint. growth range. capital flow to operations free and the million in of at to the $XXX narrowing million, XXXX is Adjusted $XX now a reflecting $XXX operations million year-on-year expected for EBITDA guidance our full are $XXX cash year at from Working million, to range expected $XXX unchanged in at in result to narrow cash the is reduction unchanged range guidance of to cash of million midpoint from the midpoint. be

conversion Our cash, year With of impact guidance XX%, with and cash dividends. midpoint, this three-year our additions legacy also anticipate million targets. deployed rolling capital the of long-term at we with in transformation capital. conversion million limited the XXXX, of this Through remain for $XXX free by guidance, flow have half $XXX XX% acquisition results the first cash for in BioPhero and we guidance on million unchanged. line working conversion free This inflation's in of $XXX and

and the not flow, in Given our of did the free acquisition BioPhero seasonality the shares any purchase cash FMC we first half.

repurchases to and expect repurchases. guidance. to remainder up $XXX return $XXX outlook investors dividends share million since through we gave to reduced reflects of the changes continued we to share million The two For XXXX, up last key in for

of First, as I to mentioned just a moment ago, we acquire deployed $XXX cash million BioPhero.

of XXXX incremental are interest increases. expected the we amount in in faster than of mitigate Second, rate the impact debt we to limiting part had earnings

flow back We shareholders. utilize reward And hand continue our that, to to XXX% with invest than to Mark. free call cash and the growth of more to expect I'll in

Mark Douglas

call an and in is The protection inflationary followed FMC overall throughout costs, out which same regions time, positive, strong challenging to in on this environment, as in the we Andrew. operator industry focus market especially we an Thank in I'll to a that to crop all largely broader half our growth to the At period. outperform you, the QX, biological XXXX. solid products deliver delivered performance strong across agricultural delivering expect year the remains second second back is for FMC advantage. volume turn quarter, with the positioned remains half well constrained increases the environment. turning financial continue XXXX. expected, working a and despite by growth continue now with first Price strong EBITDA macro questions. by a chemicals the strong to

Operator

Absolutely.

Instructions]. question-and-answer will We begin [Operator the session. now

The with Mizuho. line Parkinson question of Christopher from the comes first

may You proceed.

Christopher Parkinson

Thank what's possible want basis, aspects The on Can much North as anything a I give and ask a India just peak, this as imagine believe to you mind. XQ the Good that the Great. if the be hit Mark, humanly be you Obviously, XQ divergence on and Street cost so between you quarter? little. that and in you should are would Brazil, things you attention XQ, they're else paying considerations. on also fourth everybody's America I third color your the on versus much. confidence on morning. to? sequential hit But that could and

Mark Douglas

question Chris, look and And slides QX and in QX, start see at lack for really of by the cost to when P&L. ball on that in QX the QX increase by a we've driven think obvious rolling. same you Thanks, the is the the clear flowing Yes. been that Look, through the we script costs. I driven is pretty that

top in we at QX. It that necessarily we What yet inside is growth external this you? we And is at look QX midpoint, have the line have through growth You the six about we buy tell from reason that by we XX% round tells the QX, months X% very those you company. our That have the environment. all top our not when driven of cost in strong raw growth cadence in P&L. does the flow EBITDA line, see the lag before a the half about controlled second materials raw materials, is simply

So that in costs for instance, in are the coming knew costs back we QX were QX. that seeing we're

large it's but the XX not increases surprise. So last see continued over amount, we've for gone months. It's to that we've us, a a

other script of considerable hand that perspective, confidence what have degree. following. month getting markets, a a in the about in robust. already Commodity that? at have to to the now end the customers We're high. at continue stage thing are more I particular see seeing orders prices this. the than normally is Well, the acreage just Brazil, in in are Why would talking still same and ready of a is Brazil we will season. think us That from Now cycle. Canada where robust a the happen QX Brazil Latin It's we increase of demand. said and than on the America. markets doesn't so we are day, normally later the U.S. in of this be or Latin will parts America, for And in by usually

perspective. we those the a not QX, So from QX, also will we've that we have QX. already lot know in only confidence, high a but Because already perspective of a cost in top from line that costs degree incurred of in hit Why?

structure I you probably are crises what three in think QX. Things operating So vast of we us we're I majority in for to will not can see are to time units actually that about cost operating, the that any China. the the managing for our out first and already I tell be know the of And well. years, very fact flowing well are our suppliers flowing through. manufacturing we like generally

we about very confident So supply. feel

The price. element other is

fourth see embedded You midyear our of prices can significantly for raised we've and our as year. already say lot the still third quarters. high and into cost on QX. prices mean price, we coming. degree price increases that move those very more from there'll are Doesn't confidence pricing But structure not is be we structure the of to are a have we moving that fact A and last we're

comment QX. further on a Just

from there You $XX absorbing can billion, our driven we've kept through guidance The exit of midpoint seen $X.X of we've is of the And EBITDA that remember, flowing Russia. of P&L. biggest see impact our Russian impact million is But of predominantly by costs lack the change another in QX. factor. despite is our

that of downwards. gets in think here, but covering guidance noise Russia we So are and kind our the we moved lost haven't I

the how a aspect think very P&L. I that's of So managing we're positive

of in feel how that hope QX, very very I insight our top gives line QX. of QX. confident a also We're QX. more little into We're So confident you we about

Christopher Parkinson

is dive as what what look And right secondary color. more be material cost you That's more doesn't Slide like give confidence terms as does have you competent bit the to helpful? very you're in, the which all purchasing as that it is little we helpful basis? helpful, But do of into dynamic that now just you your the inflation? very Perhaps XX, want year, And right you. in box, in sequential head what on just what note, XXXX? a perhaps here the actual terms on a would still Thank of the that end you you're want terms of checks And X.XX. of than few very entering a we in stack top Can in the XXXX. if benefit that [ph] a in

Mark Douglas

highest We believe this, Yes. inflation. level that at do we're what the call we of

Obviously, QX. starting are see commented off. just to taper We on that it I've

We second the benefit our the through as normal will about and first you would although see expect continues mistake. to If XXXX. half some still half see are year occurs, significant because see we continue the cadence be into P&L go that in to it whether inflation, of I would that of start make would that in from a high, doubt the I'm lower no that. it you costs flow talking

I So next start costs. we year that of of that second the real acceleration it's to would think see lower half

Christopher Parkinson

the Thank for color. you

Mark Douglas

Thanks, Chris.

Operator

the from Jackson comes question next The you. BMO with Markets. Capital line of Thank Joel

proceed. may You

Joel Jackson

I'll Maybe is since questions up that topic It on most of right. the investors right important is now. line among Chris follow

You high be of XXXX, these Like if would the kind numbers. XX% are 'XX we're the of like, year was beginning I kind might said, sort QX, entering really what If of early the years, in see of your couple QX, XX% look give would XXs? is 'XX in of you is guidance, been don't the mid the half know half in second mid what What inflation XX% through just of look to really like? XXs, because come the -- divergent margins -- first things where 'XX and you continue. last that helpful off they've it of

Mark Douglas

guidance, about a you early. It is glad asking little know Joel. I'm the

Joel Jackson

'XX? know, I but just early

Mark Douglas

of from cost as Listen, a P&L. seeing hear pretty lot QX. QX around a for next I extremes then you're go a a you. lot normalized of think into QX margin and see Yes, are good do margins And more a think the in year. of perspective, we first in I Obviously, what got midpoint. I allied us half price you'll to have advantages the we we've of

the you XX expect. would our last, in would think So over look that's if margins I we XX% I plus of that at say, sort what months range,

that early We're wouldn't numbers going I the at right year. our into the this point, now. I next any in middle because go So have further frankly than budget process don't of

So the we kind of go of average margins into next expect first half as year.

Joel Jackson

That's obviously, you don't if sense can't R&D with And And extremely then BioPhero, expense have R&D give I inflation you increase complicated. second some helpful. it's out the versus question number going be, figure might based around, positions, the might that to it's sort what a in what is of to of maybe then Do number on you And 'XX increase color rate your might get R&D be tidbit some know, of in run 'XX? 'XX, have be some let expense. yet, can people, solely I now us BioPhero?

Mark Douglas

Yes.

and look is point, would that's if that, on where level, around All when additive think about people we're one at essentially two acquiring with chain. or are There in for expenses. I something acquisition. are but I Joel. manufacturing Not a bad at you in I a what are people rough number. today to this think took R&D those the you the do million BioPhero, be that supply $XX XX expense that thinking, base R&D. an FMC It's

Joel Jackson

kind a small. Thanks helpful. lot. It looks that's Okay, of

Mark Douglas

Thanks.

Operator

the Laurence next Thank Jefferies. of you. Alexander question with from The line comes

proceed. may You

Laurence Alexander

strong year? levels Can the give questions. on of heading a have Good you two then seeing more of next think the into you American that morning. will sort it you're seen sort regionally year And be what about will of Latin I of back half going you've inventory bit detail tough given as into year and the lapping very that? be this rate, you lap sort how growth the growth to

Mark Douglas

frankly the start a India. is We're be we this in on in commented the our inventory Laurence. the significant would I've of as the call, India. Everywhere through the okay through second right we're only and earnings reduction with at in acres inventory. inventory very else, there much levels I'll And working very has world perspective with from is will rice say good been everywhere Yes, year. inventories, half now. spot, last I That in done the go speaking, on pretty

and that to on growth we our much co-ops sales into regards So every the country building Mexico, Brazil. with of Latin What's out further because the we're pretty market growth, a market the in not in worried little we're is Brazil share end especially our trajectory, and more the reach going about Argentina America in year. from known, With little access. it we've into investing and retail to talked a distribution resources bit in about South. We're major are

and actually growth with we're share corn growth, So the in herbicides. insecticides market especially seeing is soy and

necessarily repeat of in and growth for us. So I not we it's growth but know market the very quickly the sense the obviously do. access. people, numbers We're look big in Latin It's same selling that America, we which really to growing are expanding new

Laurence Alexander

be new sort period growing before equilibrium Can get of long think how well you of more sort of you take, to sense can this or long you shares? give market a trend of a this you how above sort for reestablishing have will stable

Mark Douglas

the at got a now, the alone, think market where are the strong, new quite that We take of. know at advantage I portfolio registration we we're to market that our are is with algorithm you ways year taking of of for market, we today, last share time. chemical look share million that the expect Yes, X% protection go. this to have can $XXX I years launched that and the and the pipeline roughly company that introductions When have know of robust over we we product insecticide continue given look products a our that it and that you older most chemistries size will considerable five business new amount products. we is do those from getting with is losses of very crop

see slowing So long a down time, Laurence. algorithm for quite I that don't

Laurence Alexander

you. Thank

Operator

Paribas. line comes with you. The the from question Thank of next BNP Laurent Favre

proceed. may You

Laurent Favre

I've I the for a morning. I comment kind cost around suppliers. from us on you that could instance. having first to you question, give wondering how of half, was here secondary Mark, the in got Good tertiary side. dig three was some made, Hi. want into to And if or source big idea the of again,

Mark Douglas

were In as chain you difficult acquire. anecdote, my was that I groups we the talked half reviews at that year, of a to point. short. getting I that we groups extremely the very In conversations where long the materials And it materials talk about supply that last the today's to of where when first half, Only very year this a it's quite procurement when about sources say have, we Laurent, give secondary is And and was first basically we're all raw of is list. can we this list percentage second short? and an are half rarely

So the it over from way months. about a as good you That's meaningful give last as has changed in six could I a perspective.

Laurent Favre

prices Thank the started especially then [indiscernible] factoring to you. on down. in, we what And see second pricing coming you're herbicide and is as one

the year are business. think also I of and price both for this the next side you selective that non-selective pricing but Do is year? it's you guess in -- your normalizing through So into end factoring of side, the herbicide

Mark Douglas

No. Actually, opposite. the

in are last XX you over see seen pricing think of the non-selectives increases, linked lot material raw rapid terms so their own which I of to do months. the of costs the that a world a we've closely in is

in prices those to on the value We've very many ballgame. You're in that world, alleviate. the decreases so. we'll as prices back continue raising speak the to been We're as do of of We're different raising we bring. a we and likely some see parts pressures

of deceleration not do see pricing. So a we

As now. increasing the XX X we right price go X to to months, over months next we're

Laurent Favre

Okay. Thank you.

Mark Douglas

you. Thank

Operator

from Samuelson Thank line the comes you. question Goldman The next Sachs. Adam of with

proceed. may You

Adam Samuelson

Yes. Thank morning, you. Good everyone.

Mark Douglas

Good morning.

Adam Samuelson

I bit Asia hoping guess in growth by was constant very The in certainly I region, was if maybe strong. America dig in robust. and the side, growth on to little I'm were less the growth and South currency looking North a

that nearly India, just And it of hoping You get was just market color you declining and mention competitive acres dynamics in outlook North in Mark, how to is any alluded Asia rice there? and see in I on the to some just managing inventories region region. the and China, broader India. rice

Mark Douglas

$XXX region a We'll our it's from point for consider perspective, revenue market It's Certainly, one markets. a countries. It's us. those main I top competitive us, are China, it's north But and continuing of million. two strategic inventory working to a we rice. driven grow said, ASEAN the grow that driving biggest say there, of fruit key segments we'll market. doing not sure. us a sourcing that in is rice. year Pakistan highly and I especially of our region. by is big it's channel something introduce Australia. that technologies, and as us, is not new don't the is countries vegetables The mention last but ASEAN; the are of really And all the not been on launch to India the for one that with Yes, because factor for due well. We it's for Those ASEAN countries in through drivers. cereals are very, the India, would on countries. very herbicide Australia the

industry biological high health a a quite biological fruit as vegetables from have flourishing biologicals. markets, very a interestingly enough quality plant and South which Korea and Korea, are lot of a perspective, very use they South perspective can Japan there important the and Now and especially

that becoming health for us. perspective is interesting from very Asia plant So

Adam Samuelson

could think that's got in the Europe, do you're might just if is that a But comments -- Okay, about the And some around some any in on you've on still intermediates what Denmark. natural movements and have side, and power Europe? energy direction squeeze how source thinking another and in operations seeing that helpful. in broadly Europe, and one of I thoughts you've and cost the in gas and assumed about risks especially about important have to power you inflation we come abating one your from really

Mark Douglas

Yes.

[ph], of we from our flex use and energy fuel an energy especially our can facilities. facilities, our manufacturing perspective to all the in Romlund or So use major run manufacturing in one facilities,

given There overall into in on our fuel also We Romlund doing Romlund, some for structure. inflation can Obviously, have that's been traditionally been that there we curtailed, are are elements run time. natural Russian cost run cost So on built gas. diesel and activities. in

perspective, going and $X.X longer like have procure We will view those come think parts we world. our in pretty sources Germany, for of $XXX purchases a raw material we million raw other forward facilities. term something be of on think I costs materials good from what the for of dual a out From billion those have we all materials

pretty a secured. from perspective, that supply So one have we

Adam Samuelson

I'll I appreciate it really color. Thanks. pass that on. Okay, great.

Mark Douglas

you. Thank

Operator

question Andrew of Stanley. Morgan next The the Vincent line you. from comes with Thank

You proceed. may

Vincent Andrew

morning. Good you. Thank

little that you'll in impact revenue Just, positive And associated you're until And within a that a launch just the they'll is not costs to those new new also mentioned want launches. have incurring about XQ whether Mark, wondering Maybe quarter you some products then to talk have with XQ? obviously revenue. going obviously, the also to fourth some those. see I'm bit

Mark Douglas

We've in a in number that launches but into go Europe, at have It's kind now of we expense in terms really launched. this products Canada that quite expense. are that mainly much steam We're don't growth, started coming through the of smaller got Yes, that I SG&A Asia in seeing pick start then herbicides are pretty that QX. up our seeing obviously, And now. lumpiness any we're of will as which insecticides continue. built get each to we think have point quarter. launch in

launch a schedule. view have very good our We of

spend and launch launches before So money actual on years what's two much pretty we We a itself. coming. half know the about

quarters. step sudden it's spending rather up. a increase we a all not go numbers over So It's of as of a gradual

there not launch necessarily any that to QX, expense, really do number. launch although So SG&A expense is is in with it within

Vincent Andrew

from cash And look lot it you. we maybe you Q. a on how you targeting? XX% in out the versus going how that still of to trend sort you're half in half about it's the first capital that flow the once could to Thank will But conversion the the bit get operations, clearer Okay. see to all sure I'm little working a second Andrew, just talk played

Andrew Sandifer

Yes, sure, Vincent.

certainly story the capital. from not least flow very, in big first particularly, of it's the impact volume substantial half very is the the from both I in growth but think high increases. working growth receivables cash in price And

receivables. increases price our inflate directly those So

the the the versus big growth 'XX, of in the big difference So is half story the working first really capital. in prior and year

positive always, given good seen there, market shape. said, pretty farmer the backdrop, performance. pretty that around good the actually world we good as spots we're Now here but economics have collection uniformly. We've and There are in

with concerns collecting up, dollars prior aggressively. having and at security with going are pretty of we grower about the So people and and versus supply meaningfully the improved absolute receivables actually moment, collecting strong the healthy year, sheets days very receivables very balance are

will we swing. see the So seasonal

business, pronounced the very seasonal size America capital, the a a working year. have with of more bit and in of half really cash of use a is amplified We North by the prepayments distribution the which first

second the the with and many the a high shift world, drive operations cash selling from parts of reversal second strong in very So half in will for from very to collecting and mode half. mode that collections big very,

Vincent Andrew

much. you Thank very

Andrew Sandifer

Thanks.

Operator

Bank of next the question of with America. line The comes from Steve Byrne Thank you.

You may proceed.

Stephen Byrne

normally the that in an do factor your when you already have bigger slow that be play could year? Could place. additional recognized? revenue third LatAm Do expectations? actually to the of out you bit you quarter to will Do in be have third. that mentioned orders a LatAm shift quarter on going of contributing are second quarter this there Mark, a how view a the on XX% be fourth fourth that's you somewhat half have the more than You into in visibility for

Mark Douglas

a No, in starts we given what for we not around the of really. means of September. call mid When September planting that shift to season, of can That Brazil, kind plan sort normal end weather patterns.

Latin how at just out. plays normally factored us the we kind meaningful anything not how QX but QX, of for we quarter we into there. big I a of that Argentina. obviously that into But don't Brazil, on is think look will have America, in Obviously, it there's factored QX. QX most We've I as depend do. So weather think

Stephen Byrne

the And drill those between how versus And more in have affect that a affect supply mix from supply agreements? of price? from last agreements more year is the with? a direct has licensees EBITDA? And franchise. What from split how fraction diamide stream that changed two you've And been down that sales does in bit buckets wanted the as that shift little revenue does you your that FMC that price? Is importantly, on growing to in

Mark Douglas

Yes.

we've range in That into our products marketplace, obviously partners. we're FMC -- partners. as branded look about XX% So XX/XX; third at been through kind the added it's of when you of where are we today, XX% more about has growing like the

it's grew pretty diamides digits. of to high the for and fair the think single of we in I our income. sort growth say, both split mid we In pegged sort though, between it's sources evenly rate QX, of teens,

the the impact we neutral. individual specifics on us basis have, obviously. percent we speaking, the On a generally about of talk for EBITDA the price side, don't is contracts But that

way. So manage that we it

FMC or So from from growth an us for either equally as EBITDA perspective the from our valuable is partners.

board partners selling XX So marketplace. gearing the up They got obviously I into would now because more continue would that to grow expect to on to XX/XX. I now. expect see and we've are the

on conversation not does And the neonicotinoids, the take the whether world. as grows, older I diamides. taking some earlier the the around that XX% alluded a as the takeaway the of to think from pyrethroids, questions, the It's other diamides see we of the of share important and from some carbamates be as one an this of the number we is certainly they chemistries, from of for you most I grow. expansion it away should market XX%, detract pool

Stephen Byrne

Thank you.

Mark Douglas

Thank you.

Operator

Markets. with of Capital you. Yefremov Thank next from Aleksey comes line KeyBanc The the question

proceed. may You

Aleksey Yefremov

Do talking in about level lag. first Thanks. Do Good kind your to of Mark, you fourth you quarter? further the for XXXX? were expect costs six morning, months quarter visibility costs first and quarter of QX the have from everyone. you on any decline

Mark Douglas

Yes, Andrew? I'll let pick one up. that Andrew

Andrew Sandifer

through twice described, today as about things we two our I start buy Mark we inventory think Aleksey, turn Yes, a that P&L since flowing quarters out. year,

that cost continue is the lower in we the And a 'XX. I far that seen of that So increases through much But me, and cost largest the the with things increase is to QX careful is yet. expect 'XX picture is some the level. 'XX. excuse of starting and QX the a the be parts of now, what do coming we're bit QX complete visibility of expectation gotten largest We've so of that costs our very we're not to little this to seeing of certainly at largest in just getting the quarter, year. from it's question increase, want buying do do buying particularly the QX, a of first quarter, into not -- we're and cost buy tilted half that different phrasing quarter. They of we've for

in year-on-year the expect in But increase of there rate cost to QX. inflation drop down We still QX. is

the So but at drop off costs. this seeing inflation, off not an in point, what a flattening necessarily yet in absolute is we're

still I think for second then 'XX. headwinds the seeing what we'll outlook the our I at go the opportunities of QX cost that rest this the anticipate likely in through the in half QX but see point think some of we swing see and start QX, to purchasing with we to into So this is, continue for and QX, quarter

Aleksey Yefremov

and why up, how as price a first follow so. roughly And were volume it's less low more to How market strong, or you optimizing is gain it demand on volume, level not gains prioritize, in or is in profitability or other for higher prices teens, the And this share at are the frequently profit XX% less a do not raise versus the half, maybe Andrew. Thanks, worth Mark, and share if optimal? end? you volume or

Mark Douglas

that Yes. targeting moving Listen, we're and we're and single our I increases at in direction. you price clearly digit increase, that think price look can high

the price in like increases. we offset of are very Normally, company unheard a basis. of single inflation kind FMC, on those to general low price digits a For

categories products high extremely when of we're some I at we that are in sell our products. think marketplace, margin looking the

from the not or you bottom You with Taking increase those to tremendous success products. whether price line, with the chemistries newer all know for volume the diamides, of chemistries adds value instance. older the

this level the sometimes And a decisions Sometimes been at increases don't. cost. we year. of how we that's local made the will that overall mix It's with do, price offset are we've that working mantra

us, complicated price. the a changed to on of aggressive it's last be company. or I much so, it's inside So would for say Except over the more year discussion somewhat

than every region so world, of price ever We have have more before. the in we driven

Aleksey Yefremov

a Thanks lot.

Operator

Thank Michael Sison the you. Fargo. from comes The line of next with Wells question

You may proceed.

Michael Sison

Good Hi. morning. Nice quarter.

XQ that you of process of you change to million cost in is that more the So and more. second getting growth, terms XXX the XX%, I just are some had your why impressive, quarter But in of up this it structural was than occurred when maybe inflation? in sort think in you understand about costs growth past, any just just the volume pretty You've you of materials, on cost way and X% EBITDA the the of of Slide was your logistics curious, had X.

is maybe I'm over cost just this of might how away structural much than more go time? just curious So it

Mark Douglas

like about talked Argentina, region, driven is that are the of term, well. in of resources SG&A around Those decrease they're longer thanks time. ASEAN logistics for as that projects costs, obviously we're over investments. its think structural investing they're access variable sense that's do would market headcount, the the and those raw structural obviously cost in Listen, I U.S. them flow. I are I is are will Mike, as that the say because packaging, Brazil, cost quarter. we parts of of the in R&D materials, company, the most the and to ebb growth more the been the on its expect and that only And India, places comment its Yes, embedded that

transient. around precision as apps, I structural agriculture other would what such the majority investments as call is those vast precision Ark The ag growing are our intelligence, farm costs. more But we're out

Michael Sison

which and it. And fourth quarter, for the a think it for Got be revenue. then quarter tends about to range outcomes EBITDA a the wide when has you

lower drives the those do of just So what ranges? end sort think the and of end curious, upper you

Mark Douglas

we look obviously, parts had American the think pressure success from perspective, Well, a North the be in talked pest about world? I would does our just of what business. it revenue like We some in

was Canada that forecast, that we than drives As immediately. gets in higher pressure used normally much demand

that the market newer to of and customers, market success, same new So you can can drive the have the you the more expand that we drive that speed around would success sold those you end as and of our us events access in upper products the look way. of if that the series being to terms of share, Also, world upper drive range. the to to end

Michael Sison

Got it. Thank you.

Mark Douglas

Thanks, Mike.

Operator

from next Spector of line you. Josh the Thank with UBS. comes question The

You may proceed.

Josh Spector

to expect to expect for thoughts were through, we any the that to the Thanks not was guess of lot volumes on worse, sure of is guys. up spend repeat, should guess base. volume The or I'd higher second the you pretty the terms in I taking or lot incremental really essentially different, the a costs should questions. and be volumes have a I'm be the I for But drop outperformance, a curious drop better. Yes. XQ, if higher Hi, my optically follow similar a through quarter better, how much cost side. on much XQ just result that or the the Thanks. appreciated? given volumes we minimal did better

Mark Douglas

off affected have we through do it let our range not be can I'll speaking, in a that? comment give But the different drop through Josh. through you want wide Andrew Andrew, was reasons. drop details. far Thanks, average. you generally because the on of XQ to And

Andrew Sandifer

a trailing think, to I basis, drop big contribution contribution volume that Josh, the variation was four in the XX%. about that from growth be quarter look, was to to through, EBITDA The revenue itself volume. XX% and Yes. quarters that On QX. the relative from can a about

in we right what with line it's So expect.

long-term that mix A bridges of about our everyone in XX%, value, Our reminder is [ph] is reflects component volume our average the growth. the volume. mix high which to in

to to can is for quarters beyond. perfect volume be XX% in basis in I several see the costs expect next -- that perfect But a It's that and it's should lumpiness EBITDA on XX% indicator. a in to not increase. there continue because should swings range that that significant You think not drop through rolling you

Josh Spector

on through guess the was normal volume offset Thanks. bar way, another asked was the by drop cost but I that bar.

it volume you upside bought different? months cost bar Is and visibility or if were ago, what volume to the any saw would So had of reason be why the volumes X%, would offset happen wouldn't you you six forecast? XX% you expect greater in there your bar that

Andrew Sandifer

volume cost Yes. offset Josh, drop have certainly think further pretty stronger growth healthy can help I increases. that through that will the

make we've up increasing between certainly, what any well headwinds will bridge cost second piece think with then been together I that looking and of to where cover in look the price. cover difference at pace we're when to much investments price and trying the you volume. volume R&D FX SG&A COGS. very do as as half there the growth, substantial will as a able headwinds that to we're what at help be the in is price increases where And increases as But possible we

Josh Spector

you. Thank Okay.

Operator

from comes Juvekar Citi. The the P.J. Thank question of line next you. with

You may proceed.

P.J. Juvekar

Yes, hi. morning. Good

you Your your raw wondering only cost growth -- break up raw growth costs material you XX% if top was about the labor? Thank was down XQ, material can was line your and other but And EBITDA and just you in X%. down that. inflation I organic just was costs what sort talked all those inflation the kind costs? may costs, And three like in of sort Can three within of What you. What's AIs? packaging logistical or break buckets. of from be buckets? are

Mark Douglas

the But costs. we vast biggest far, is don't material break thanks logistics majority anything, Do raw want ingredients, would Andrew. tell followed of spectrum P.J., for But down the we Yes. and the by buy. that the whole say active We normally buy, question. you that I chunk the those types to by packaging. is you then that intermediates

Andrew Sandifer

from materials, ingredients don't Yes. I and materials, there's the P.J., to I buy. substantial those all those. suppliers active overall think, use to look, chunk tertiary in raw point had that inflation as think categories; disruption is biggest I'd and many and in of raw secondary big impact substantial -- an Mark that there's logistics. We've intermediates them. said, and need all of packaging category had we We've of three

one those being versus to the of growing point wouldn't I categories So disproportionately other.

P.J. Juvekar

so Thank some you multiples question you to the acquisitions? bought your these believe my Thank acquired biologicals, make is holes of what you BioPhero, days? these biologicals what biologicals Okay. second have that like the plant that on that are And at being and you. areas health would And are you some are you.

Mark Douglas

out listen, P.J. technology Yes, Thanks, building portfolio. we're the

microbe today technology. biologicals Obviously, we've are into Our around based really technology pheromone now. extended

of through ventures in We a investments FMC peptides, area potential which development. also have new pesticide was whole

have a with Novozymes enzymes We pesticides. developing as relationship

So technology where that country. biologicals we We'll on And countries as import continue. from what probably market feel floor the have call we the for to microbe not continue will quite world good indigenous structure many as perspective, to technology. microbes of there's access M&A in can't that side, a a important. here on around we That much basic because geographic opportunities, are you is the of side look

is easy that R&D development you in So you get it. need countries. and to those One need to therefore, way acquire

the are deals than a that we're haven't of perspective, a indicative. Andrew, that do. So looking have you near any seen it's may But multiple something I through view term go at. From I in better

Andrew Sandifer

a BioPhero, acquisition just example, commercial more were not at revenue, thoughts small looking in few but the are yet. amounts scale kinds are early for multiples. P.J., stage. the A lot of space biological sales targets we Yes, of large on of

when was It case a the the come certainly as meaningful that at for capital. cost transaction NPV And the of looked of value where multiples economics into not acquisition really multiples acquisition. IRR BioPhero, considering we really play. on is the really to and our IRR So

adjusted on attractive. risk a very, even So very basis,

more we early stage. to smaller of that So think tend the targets there are be types out companies, about that

traditional in valuation. multiples thinking relevant terms less EBITDA So are of about

P.J. Juvekar

Thank you color. Great. the for

Andrew Sandifer

absolutely. Yes,

Mark Douglas

you. Thank

Operator

of Thank from question Jones Tony you. with Redburn. the comes final The line

may You proceed.

Tony Jones

chance does production, your Yes. capacity that local any past everybody. for local over the all you have to chain medium have this Good any to sort and term? dislocation the the Thank more a supply seeing supply we've ask shift With year you. CapEx implications from Thank or perspective, question. regional the And mismatch? found morning, over for partial of you

Mark Douglas

more that Thanks, you look have Tony. are we chain we would toll have at in more are balanced Americas. manufacturers We're forward. toll -- the investments manufacturers much coming and a mismatches, as call at we our for molecules in in ground, looking said real Europe. putting we're in active No that active what structure go India, operations in, potential we although feed the in the I supply When and we're will

So that overall, quite But I heavily, the formulating feed wouldn't in the U.S. grows, need our mismatch. industry in especially say business. we capacity have we're certainly something U.S. for as the a investing is to

something think I as the and as that close do base driving that's you of operations. and can local can that --? as you So getting thinking customer our as strategic around to your formulating very capacity manufacturing is Andrew, notion you want to

Tony Jones

Thanks. That's helpful. really

Andrew Sandifer

question envisioned and capital building geographically of When to our the on out a was piece thinking that points think to add points supply. having just multiple in you -- source related part our balancing terms there I'll much of the of had Tony, chain of supply very that. this, plan CapEx second more that and diverse, part think your out I

but compared tend as So be It's is couple about trivial, not that start stepping synthesis. years, low capital comment plan, example. to including heavy a is equipment. not CapEx very not talking has the capital. this for not factored about AI This that just those significant when also of formulation This plans, they're investments new we've been to chemical way for I And CapEx would past into over we year. thinking the been the our up guidance

Tony Jones

Thanks, great. guys. That's

Mark Douglas

much. very Thanks

Zack Zaki

day. that have a time good for Thank and the you all have call is That right. All today. we the

Operator

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

disconnect. now may You

FMC (FMC) 3 Aug 222022 Q2 Earnings call transcript