2025-2026 EBITDA Targets
Q: How will you catch up to meet your 2025-2026 EBITDA targets?
A: Despite lowering our 2024 guidance due to finishing 2023 lower than expected, we remain confident in achieving our $1.2 to $1.5 billion EBITDA targets for 2025 and 2026. Temporary headwinds like high-cost inventory will dissipate, especially the biggest impact in Q1, lessening in Q2 and disappearing in the second half. We anticipate benefits from our restructuring plan, aiming for a $150 million run rate by end of 2025. Additionally, with the market expected to return to normal growth rates, we believe we'll catch up through a combination of new product introductions, improved mix, and operational efficiencies.

New Product Growth
Q: What's driving growth from new products in 2024?
A: New product introductions are a significant growth driver, contributing about $200 million in new growth for 2024. Approximately $100 million of this comes from products launched within the year, which aligns with our historical performance. These products are spread across all regions, led by Asia, and are expected to deliver above-average margins, improving our mix as we progress through the year.

Pricing Pressures by Region
Q: How are pricing headwinds affecting you in different regions?
A: We anticipate a moderate pricing headwind in 2024, primarily in Latin America, especially in Q1, due to competitive pressures. EMEA and North America are managing price well, with expectations of stabilizing prices as we lap previous increases. For Q1, the pricing headwind is less than the 5% experienced in Q4.

Inventory Impact on Margins
Q: How is high-cost inventory affecting your margins?
A: Carryover of higher-cost inventory from last year impacts Q1 margins significantly, with diminishing effects in Q2, and dissipating in the second half. We're intentionally drawing down inventories, and as we enter Q2, we expect to ramp up manufacturing activities, improving fixed cost absorption and margins. This realignment will position us favorably for margin improvement in the latter part of the year.

Working Capital and Cash Flow
Q: What are your expectations for working capital and cash flow in 2024?
A: Working capital, particularly accounts payable and inventory, are major drivers of cash release in 2024. Unlike previous years, we expect a more limited working capital build in Q1 due to sufficient inventory levels. This shift will help us deleverage quickly, aiming to end the year with covenant leverage below 3.5x, assuming proceeds from the GSS divestiture.

Diamides Business and Partners
Q: What's the outlook for your diamides business, including your partners?
A: Our branded diamides business continues strong, with successful product launches like Premio Star in Brazil. However, our partners are drawing down inventories, which they began in 2023, and we expect further declines in 2024. While we don't have detailed visibility into their sales, as we supply them with active ingredients, we anticipate this inventory drawdown to end eventually, which will normalize the business.

2024 Price-Cost Balance
Q: How do you view the price-cost balance for 2024?
A: We are managing price carefully and are determined not to chase volume at the expense of margins. Our margins are approximately 22%, aligning with industry highs. We expect cost to be a strong tailwind as input costs turn favorable through the year, offsetting any pricing headwinds. The net price-cost relationship for the year is positive.

Channel Inventories in India
Q: How are high channel inventories in India affecting you?
A: High channel inventories in India, due to three years of bad monsoons and low pest pressure, remain a challenge. Working through this excess inventory will take all of 2024 and possibly into 2025, depending on weather patterns. We expect to discuss this issue throughout the year as it continues to impact the market.

Raw Material Cost Tailwinds
Q: What benefits do you expect from raw material cost deflation?
A: While we're not quantifying the exact benefit, we are purchasing materials at or below the cost of what we have in inventory. As we work through the higher-cost inventory, we anticipate raw material costs to become a tailwind, improving our cost position as we progress through the year.

Supply Chain Visibility
Q: What have you learned from measures to increase channel inventory visibility?
A: We have gained insights into how distributors manage their inventories, noting that they are reducing inventory levels. In regions like the U.S., inventory at the grower and retailer levels is at or even below normal levels, which may positively influence demand as the season progresses.