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    FMC Corp (FMC)

    Board Change

    Business Description

    FMC Corporation is a global agricultural sciences company dedicated to assisting growers in producing food, feed, fiber, and fuel while adapting to environmental changes. The company operates in a single business segment, focusing on the development, marketing, and sale of crop protection chemicals, including insecticides, herbicides, and fungicides, as well as biologicals, crop nutrition, and seed treatment products, collectively known as plant health . FMC's portfolio is primarily composed of insecticides and herbicides, with a smaller but growing segment of fungicides and plant health products, which are used to enhance crop yield and quality by controlling pests, weeds, and diseases . The company also invests in innovative technologies and new product formulations to maintain its competitive edge in the agrochemical industry .

    1. Insecticides - Develops and markets chemicals that protect crops by controlling insect pests, contributing significantly to the company's revenue.
    2. Herbicides - Offers solutions for weed control, helping to improve crop yield and quality by eliminating unwanted vegetation.
    3. Fungicides - Provides products that prevent and control fungal diseases, ensuring healthier crops and better yields.
    4. Plant Health Products - Includes biologicals, crop nutrition, and seed treatment products aimed at enhancing overall plant health and productivity.

    Q3 2024 Summary

    Initial Price$57.36July 1, 2024
    Final Price$65.67October 1, 2024
    Price Change$8.31
    % Change+14.49%

    What went well

    • FMC expects 6% revenue growth in 2025, with cost savings toward the higher end of $200 million, driven by stronger savings from their cost reduction plans.
    • The company is achieving sustainable cost savings in R&D without impacting the launch of four new active ingredients, by improving decision-making processes and coordination between regional and central research centers.
    • FMC is confident in its production capacity to meet increased demand from distributors, positioning the company to benefit fully from the expected market recovery.

    What went wrong

    • FMC is experiencing significant pricing pressure on its diamide products in China and India due to sharp price declines, with some prices being lower than production costs, suggesting market dumping and potential risks to future profitability.
    • In Latin America, FMC is facing continued pricing challenges, expecting mid-single-digit price decreases year-over-year in Q4, as it aggressively adjusts prices to regain lost market share from competitors like Bayer, BASF, and Syngenta. Additionally, the bankruptcy of a large distributor, to which FMC was highly exposed, caused volume losses and required seeking new customers at possible costs.
    • FMC is reducing R&D spending by $50 million as part of a cost reduction plan, which, while claimed not to impact current product launches, raises concerns about potential effects on future innovation and long-term growth.

    Q&A Summary

    1. 2025 Guidance Update
      Q: Can you update 2025 targets on growth and costs?
      A: FMC maintains its 2025 outlook of around 6% revenue growth. This assumes flat pricing and no FX impact. While pricing could be more challenging, they have not made new assumptions yet. On costs, FMC is moving toward the higher end of expected savings, closer to $200 million.

    2. Pricing Pressure and Diamides
      Q: Outlook on pricing, especially for diamides?
      A: Pricing pressure is linked to market conditions and channel inventory levels. FMC expects price pressure to ease potentially in the second half of 2026 as markets normalize. Diamides face less pricing pressure outside of India and China due to patent protections. Globally, the diamide market is up 10%, driven by 50%-60% growth in Cyazypyr, while Rynaxypyr is down mid-single digits due to Asia.

    3. Latin America Challenges
      Q: Why was Latin America worse in Q3, and outlook?
      A: Q3 was challenging due to delayed rains, challenging pricing, and the loss of a large distributor. FMC adjusted pricing to maintain market share, which impacted margins. For Q4, they expect a mid-single-digit price decrease year-on-year. Pricing pressure is expected to ease significantly moving into 2025.

    4. R&D Cost Reductions
      Q: Are R&D cuts temporary or structural?
      A: The $50 million R&D cost reduction is sustainable. Savings come from being more selective in discovery research and improving screening tools. There is no impact on the launch of four new molecules.

    5. Volume Trends and Potential Headwinds
      Q: Is Q4 volume guidance reliable, and risks for next year?
      A: Q3 volumes were better due to pull-forward sales; FMC adjusted full-year forecasts accordingly. Diamide sales in North America may not pose a significant headwind in 2025, but precise budgets are still being developed.

    6. New Product Launches
      Q: How will new products affect growth in 2025?
      A: New products like Fluindapyr and Isoflex are expected to support growth in 2025. Launches will occur mainly in Latin America and the U.S., with most growth in the second half due to seasonality. Registration losses in Europe are known and factored in; new products may offset these.

    7. Q4 Cost Savings and Sales Visibility
      Q: How much of the cost savings were achieved, and Q4 sales visibility?
      A: About $30 million of the $50 million H2 savings were achieved in Q3, with $20 million expected in Q4. In Brazil, they have about 40% of forecasted Q4 orders in hand, which is better than last year, indicating market recovery.

    8. Production Capacity and Restock Cycle
      Q: Can FMC meet increased demand during restocking?
      A: FMC has sufficient production capacity and raw materials to meet increased demand. Manufacturing is busier than last year, and they are well-positioned to benefit from a restock cycle.

    9. North America Volume Gains
      Q: Breakdown of North American volume gains?
      A: Over half of diamide growth is from sales to diamide partners. FMC sells 100% through wholesalers before reaching growers.

    10. China Diamide Prices
      Q: Impact of falling diamide prices in China?
      A: In China and India, diamide prices have fallen, partly due to dumping of excess inventory at prices below production cost. FMC's diamide business in China is not significant. They are not overly concerned due to patent protections elsewhere and are developing a cost roadmap to compete effectively.

    Key Metrics

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    Executive Team

    NamePositionStart DateShort Bio
    Mark A. DouglasPresident, Chief Executive Officer, and DirectorJune 1, 2020Mark A. Douglas has been serving as the President, CEO, and Director of FMC Corporation since June 1, 2020. He joined FMC in March 2010 and has held several key positions, including President of the Agricultural Solutions business .
    Andrew D. SandiferExecutive Vice President and Chief Financial Officer2018Andrew D. Sandifer has been the EVP and CFO of FMC since 2018. He previously served as Vice President and Treasurer from 2016 to 2018, and as Vice President, Corporate Transformation from 2014 to 2016 .
    Ronaldo PereiraExecutive Vice President and President, FMC Americas2021Ronaldo Pereira has been the EVP and President of FMC Americas since 2021. He previously served as President of FMC Americas from 2019 to 2021 and Vice President of FMC LATAM from 2017 to 2019 .
    Michael F. ReillyExecutive Vice President, General Counsel, Chief Compliance Officer, and Secretary2019Michael F. Reilly has been the EVP, General Counsel, Chief Compliance Officer, and Secretary at FMC since 2019. He previously served as Vice President, Associate General Counsel, and Chief Compliance Officer from 2016 to 2019 .
    Diane AllemangExecutive Vice President and Chief Marketing Officer2021Diane Allemang has been the EVP and Chief Marketing Officer at FMC since 2021. She previously served as Vice President and Chief Marketing Officer from 2018 to 2021 .
    Jacqueline ScanlanExecutive Vice President and Chief Human Resources OfficerSeptember 25, 2023Jacqueline Scanlan joined FMC as the EVP and Chief Human Resources Officer on September 25, 2023. She previously held senior HR positions at Axalta and Haemonetics .
    Vsevolod RostovtsevExecutive Vice President and Chief Technology Officer2023Vsevolod Rostovtsev has been the EVP and Chief Technology Officer at FMC since 2023. He previously served as the Director of Discovery Chemistry for Agricultural Solutions from 2017 to 2023 .
    Thaisa HugenneyerExecutive Vice President, Integrated Supply ChainMarch 1, 2024Thaisa Hugenneyer will serve as the EVP, Integrated Supply Chain at FMC starting March 1, 2024 .
    Brian P. AngeliExecutive Vice President and Chief Marketing OfficerMay 1, 2024Brian P. Angeli will serve as the EVP and Chief Marketing Officer at FMC starting May 1, 2024 .

    Questions to Ask Management

    1. Given that you were late in adjusting pricing in Latin America and may have lost market share to competitors, how do you plan to regain this market share while maintaining profitability in such a challenging pricing environment?
    2. With Rynaxypyr experiencing low single-digit global declines driven by challenges in Asia, what specific strategies are you implementing to reverse this trend and drive growth for this key product?
    3. You mentioned potential challenges with pricing in 2025 but have not made specific assumptions yet; how do you plan to mitigate the risk of price erosion impacting your target of 6% revenue growth next year?
    4. Following the bankruptcy of a large distributor in Latin America, how does this affect your distribution strategy in the region, and what measures are you taking to reduce similar risks in the future?
    5. With uncertainties surrounding diamide sales in 2025 due to ongoing negotiations and market conditions, how confident are you in meeting your earnings growth projections, and what contingencies are in place if diamide growth underperforms?

    Share Repurchase Program

    Program DetailsProgram 1
    Approval DateFebruary 2022
    End Date/DurationSeptember 30, 2025
    Total additional amount$1 billion
    Remaining authorization amount$825 million
    DetailsThe program aims to manage capital structure and return value to shareholders. It includes repurchases to offset dilution from share-based compensation. No specific timetable or price targets are set.

    Past Guidance

    Q3 2024 Earnings Call

    • Issued Period: Q3 2024
    • Guided Period: Q4 2024 and FY 2025
    • Guidance:
      1. Revenue Growth: Expected to grow by 19% in Q4 2024 at the guidance midpoint .
      2. EBITDA Growth: Expected to grow by 32% at the midpoint in Q4 2024 .
      3. EPS Growth: Expected to grow by 54% at the midpoint in Q4 2024 .
      4. Full Year Guidance: Adjusted for the sale of the Global Specialty Solutions business .
      5. Interest Expense: For FY 2025, expected to be $235 million to $240 million .
      6. Effective Tax Rate: For FY 2024, expected to be 13% to 15% .
      7. Free Cash Flow: Expected to be $400 million to $500 million for FY 2024 .
      8. Cost Savings from Restructuring: Targeting $125 million to $150 million in 2024 .
      9. Leverage: Covenant leverage expected to be approximately 4x by year-end 2024 .

    Q2 2024 Earnings Call

    • Issued Period: Q2 2024
    • Guided Period: Q3 2024, Q4 2024, and FY 2024
    • Guidance:
      1. Full Year Revenue: $4.3 billion to $4.5 billion .
      2. Full Year EBITDA: $880 million to $940 million .
      3. Q3 2024 Revenue: $1 billion to $1.09 billion .
      4. Q3 2024 EBITDA: $165 million to $195 million .
      5. Q4 2024 Revenue: $1.34 billion to $1.45 billion .
      6. Q4 2024 EBITDA: $353 million to $383 million .
      7. Free Cash Flow for FY 2024: $400 million to $500 million .
      8. Interest Expense for FY 2024: $235 million to $240 million .
      9. Effective Tax Rate for FY 2024: 14% to 17% .
      10. Leverage: Covenant leverage approaching 4x by year-end 2024 .

    Q1 2024 Earnings Call

    • Issued Period: Q1 2024
    • Guided Period: Q2 2024 and FY 2024
    • Guidance:
      1. Sales: $4.5 billion to $4.7 billion for FY 2024 .
      2. EBITDA: $900 million to $1.05 billion for FY 2024 .
      3. Adjusted EPS: $3.23 to $4.41 per share for FY 2024 .
      4. Free Cash Flow: $400 million to $600 million for FY 2024 .
      5. Interest Expense: $225 million to $235 million for FY 2024 .
      6. Effective Tax Rate: 14% to 17% for FY 2024 .
      7. Q2 2024 Sales: $1 billion to $1.15 billion .
      8. Q2 2024 EBITDA: $170 million to $210 million .
      9. Q2 2024 Adjusted EPS: $0.43 to $0.72 .
      10. Restructuring Benefits: $50 million to $75 million in 2024 .

    Q4 2023 Earnings Call

    • Issued Period: Q4 2023
    • Guided Period: Q1 2024 and FY 2024
    • Guidance:
      1. Revenue: $4.5 billion to $4.7 billion for FY 2024 .
      2. EBITDA: $900 million to $1.05 billion for FY 2024 .
      3. Adjusted EPS: $3.23 to $4.41 per share for FY 2024 .
      4. Free Cash Flow: $400 million to $600 million for FY 2024 .
      5. Adjusted Cash from Operations: $670 million to $850 million for FY 2024 .
      6. Capital Additions: $95 million to $105 million for FY 2024 .
      7. Legacy and Transformation Cash Spending: $155 million to $165 million for FY 2024 .
      8. Free Cash Flow Conversion: 104% for FY 2024 .
      9. Dividends: $290 million in 2024 .
      10. Interest Expense: $225 million to $235 million for FY 2024 .
      11. Effective Tax Rate: 14% to 17% for FY 2024 .
      12. Covenant Leverage: Below 3.5x by year-end 2024 .

    Latest news

    Recent developments and announcements about FMC.

    Corporate Leadership

      Board Change

      ·
      Dec 12, 2024, 10:08 PM

      Anthony DiSilvestro has been elected as a director of the FMC Corporation's Board of Directors, effective December 12, 2024. He will serve on the Audit Committee and the Compensation and Human Capital Committee .

      Leadership Change

      ·
      Dec 11, 2024, 10:08 PM

      Pierre R. Brondeau is leaving his position as Chairman and Chief Executive Officer of FMC Corporation. The departure is part of an executive severance plan adopted by the company's Compensation Committee. Andrew D. Sandifer will remain as Executive Vice President and Chief Financial Officer, with his existing severance agreement still in effect. The plan includes severance benefits for executives terminated without cause or for good reason, with different terms depending on whether the termination occurs during a change in control period .