FMC Conference Call Summary Company Overview - **Company**: FMC Corporation (NYSE:FMC) - **Date**: December 03, 2025 - **Speakers**: Pierre Brondeau (CEO), Andrew Sandifer (CFO) Key Points Industry Context - FMC operates in the agricultural chemicals sector, focusing on crop protection products, including innovative molecules like Rynaxypyr and Cyazypyr [1][2][3] Financial Performance and Strategy - The company faced challenges over the past year, leading to a reassessment of its strategies and financial health [2][3] - FMC's approach shifted from a "soft landing" strategy to a more aggressive stance on balance sheet management and cost control [5][6] - The company has $2 billion in working capital, with potential for significant extraction to improve financial flexibility [10] Product Portfolio Insights - FMC's core portfolio includes Rynaxypyr, which has seen a decline in market share, resulting in negative growth of approximately $2.5 billion [7][8] - The company is facing pricing pressures, with potential price decreases of 10%-30% for Rynaxypyr, but aims to offset this through volume gains and premium pricing strategies [18][19][21] - Cyazypyr is projected to generate around $500 million in revenue, with no expected impact from Rynaxypyr's pricing changes [27][28] Future Outlook - The company anticipates a challenging 2026, with expectations for lower pricing and continued headwinds, but aims for a significant transformation and improvement in 2027 [39][40] - FMC plans to launch four new molecules by 2028, potentially reaching $1 billion in revenue, with growth rates of 20%-40% [42][43] - The company is exploring strategic licensing opportunities to enhance market reach and reduce debt [12][49] Market Dynamics - The agricultural chemicals market is experiencing increased competition from generics, necessitating a focus on innovation and cost management [53][54] - The separation of Corteva into independent entities may create additional partnership opportunities for FMC [56][59] Leadership and Management - The CEO is committed to leading the company through its transformation and will remain until a suitable replacement is found [70][72] - The company is not actively seeking a COO but is restructuring to improve operational efficiency [70][71] Investor Sentiment - There is a perceived disconnect between the company's potential and its current market valuation, attributed to past strategic missteps [60][62] - FMC's management believes that the company's capabilities and portfolio position it well for recovery and growth in the coming years [64][66] Additional Insights - The company acknowledges the need for a more aggressive approach to its balance sheet and product portfolio management [5][11] - FMC's focus on specialty crops over row crops differentiates it from competitors, providing unique market opportunities [47][48] This summary encapsulates the key discussions and insights from the FMC conference call, highlighting the company's strategic direction, financial performance, and market positioning.

Financial Data and Key Metrics Changes - The company reported an adjusted net loss of $0.07 per diluted share, a significant narrowing compared to the previous quarter [4][16] - The net interest margin (NIM) expanded by 10 basis points to 1.91%, marking the third consecutive quarter of growth [5][18] - Operating expenses decreased by $800 million on an annualized basis compared to the previous year [5][19] - Criticized and classified assets declined by $600 million or 5% quarter-over-quarter and by $2.8 billion or 20% year-to-date [5][25] Business Line Data and Key Metrics Changes - The Commercial and Industrial (C&I) business originated $1.7 billion in new loan outstandings, with net loan growth of $448 million in the C&I portfolio [5][15] - Multifamily and Community Reinvestment Act (CRA) payoffs totaled $1.3 billion, continuing a trend of exceeding forecasts [6][22] - The provision for loan losses decreased by 41%, while net charge-offs declined by 38% [6][25] Market Data and Key Metrics Changes - The company has seen a significant reduction in overall Commercial Real Estate (CRE) balances, down $9.5 billion or 20% since year-end 2023 [22] - The CRE concentration ratio declined by 95 basis points to 407% since year-end 2023 [22] Company Strategy and Development Direction - The company is focused on transforming into a top-performing regional bank, emphasizing a customer-centric relationship-based culture [28] - Plans to originate new high-quality CRE loans in diverse geographic areas are set to begin in the fourth quarter [15][37] - The company aims to diversify its loan portfolio to a mix of one-third CRE, one-third C&I, and one-third consumer [22] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the trajectory of profitability, citing a consistent narrowing of net losses and improved credit quality [4][6] - The company anticipates continued growth in C&I loans, projecting a run rate of $1.7 billion to $2.2 billion in originations per quarter [40][57] - Management noted that the balance sheet is expected to stabilize and begin growing in 2026 [53][81] Other Important Information - The company completed a holding company reorganization, which simplifies its corporate structure and is expected to lower operating expenses by approximately $15 million [28] - The CET1 capital ratio improved by nearly 350 basis points, ranking among the highest among regional banks [12][20] Q&A Session Summary Question: NII guidance for the year - Management indicated that the balance sheet would likely stabilize in Q4 and begin to grow in 2026, with continued NIM expansion expected [33][35] Question: C&I production expectations - Management expects C&I originations to continue growing, with a run rate of $1.7 billion to $2.2 billion per quarter anticipated [40][46] Question: Regulatory relief from holding company elimination - The elimination of the holding company is expected to reduce regulatory burdens and streamline operations, leading to cost savings [58][59] Question: Expense outlook and cost-saving opportunities - Management highlighted significant reductions in non-interest expenses and identified further opportunities for cost savings in FDIC expenses and vendor costs [68][70] Question: Non-interest-bearing deposit growth - Management expects non-interest-bearing deposits to grow as new C&I relationships are established and private banking efforts are enhanced [72][74] Question: Credit quality and non-performing loans - Management noted a strong reduction in non-performing loans and indicated a focus on managing credit quality moving forward [78][80]

Financial Data and Key Metrics Changes - The company reported an adjusted net loss of $0.07 per diluted share, a significant improvement compared to the previous quarter [4][16] - The net interest margin (NIM) expanded for the third consecutive quarter, increasing by 10 basis points to 1.91% [5][18] - Operating expenses decreased year-over-year by $800 million on an annualized basis [5][18] - Criticized and classified assets declined by $600 million or 5% on a linked quarter basis and by $2.8 billion or 20% year-to-date [5][25] Business Line Data and Key Metrics Changes - The Commercial and Industrial (C&I) business originated $1.7 billion in new loan outstandings, with overall net loan growth of $448 million in the C&I portfolio [5][15] - Multifamily and Community Reinvestment Act (CRA) payoffs totaled $1.3 billion, continuing a trend of exceeding forecasts [5][16] - The provision for loan losses decreased by 41%, while net charge-offs declined by 38% [5][25] Market Data and Key Metrics Changes - The company has seen a significant reduction in overall Commercial Real Estate (CRE) balances, which have declined by $9.5 billion or 20% since year-end 2023 [22] - The CRE concentration ratio decreased by 95 basis points to 407% since year-end 2023 [22] Company Strategy and Development Direction - The company is focused on transforming into a top-performing regional bank, emphasizing a customer-centric relationship-based culture [28] - Plans to originate new high-quality CRE loans in diverse geographic areas are set to begin in the fourth quarter [15][37] - The company aims to diversify its loan portfolio to a mix of one-third CRE, one-third C&I, and one-third consumer [22] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the trajectory of C&I loan growth, projecting a run rate of $1.7 billion to $2.2 billion in originations per quarter [40][57] - The company anticipates balance sheet growth starting in Q1 2026, with a target of reaching approximately $108 billion by the end of 2027 [81] Other Important Information - The company completed a holding company reorganization, which simplifies its corporate structure and is expected to reduce operating expenses by approximately $15 million [28] - The CET1 capital ratio stands at 12.45%, ranking among the highest among regional bank peers [20] Q&A Session Summary Question: NII guidance for the year - Management indicated that the balance sheet would likely stabilize in Q4 and expects continued NIM expansion due to various factors, including the management of funding costs [33][35] Question: C&I production outlook - Management expects C&I production to continue growing, with a run rate of $1.7 billion to $2.2 billion per quarter anticipated [40][46] Question: Regulatory relief from holding company elimination - The elimination of the holding company is expected to reduce regulatory burdens and streamline operations, leading to cost savings [58] Question: Expense management and future cost savings - Management highlighted significant reductions in non-interest expenses and identified further opportunities for cost savings in FDIC expenses and vendor costs [68][70] Question: Non-interest-bearing deposit growth - Management expects growth in non-interest-bearing deposits from new C&I relationships, private banking, and retail branches [72][74]

Core Viewpoint - Chinese buyers have secured approximately 8 million tons of soybeans for September and 4 million tons for October, totaling 12 million tons, all sourced from South America, with no share from the U.S. [1] - The traditional "golden window" for U.S. soybean exports from September to January is unusually quiet this year, with U.S. exporters having sold only about 3 million tons by the end of July, marking a 20-year low [1][3]. Group 1 - The first layer of impact from China not purchasing U.S. soybeans is a disruption in pricing, leading to deeper discounts and financial strain on farmers who must choose between selling at lower prices or holding onto inventory [3]. - The second layer involves a disruption in the supply chain, affecting transportation and storage, which can lead to increased costs and inefficiencies throughout the agricultural export system [3]. - The third layer is political repercussions, particularly in agricultural states that are crucial for U.S. political dynamics, where reduced soybean exports could harm local incomes and lead to calls for policy changes [4]. Group 2 - The U.S. agricultural sector is facing a structural issue where high tariffs and political rhetoric are counterproductive, leading to a reliance on subsidies that do not address the underlying market access problems [4][5]. - The current environment prioritizes low-noise trading, with buyers diversifying their sources to mitigate risks, indicating a shift in how global supply chains are managed [7]. - China's strategy of securing soybean contracts from South America is seen as optimizing its asset-liability balance, focusing on cost, risk, and supply stability [8]. Group 3 - The U.S. has been using trade as a political tool, which may yield short-term benefits but risks long-term damage to its agricultural sector as buyers seek to diversify their supply sources [10]. - The competitive advantage of South America in this context is attributed to years of infrastructure development and the ability to provide stable supply chains, contrasting with the U.S.'s current challenges [10].

Financial Data and Key Metrics Changes - The company reported net income of $18.4 million or $0.12 per share, with adjusted net income of $48.4 million or $0.31 per share, reflecting a strong performance in the second quarter [12][13] - Net interest income increased by 3.4% from the prior quarter to $240 million, driven by strong loan growth and higher loan yields [14] - The net interest margin expanded to 3.1%, supported by a three basis point increase in average loan yields to 5.93% [14][15] Business Line Data and Key Metrics Changes - Total annualized loan growth reached 9%, with significant contributions from lender finance, fund finance, and purchased single-family residential loans [5][14] - Core held for sale loans increased by 12% annualized, while construction loans declined due to payoffs and completed projects [7][8] - Non-interest income totaled $32.6 million, down 3% from the prior quarter, primarily due to fluctuations in CRA-related equity investments [18] Market Data and Key Metrics Changes - The company experienced strong production levels in loan origination, achieving the highest level of originations since the merger at $1.2 billion [7] - Average core deposits increased by 5% annualized, although the average balance per account faced pressure due to seasonal and macroeconomic factors [16][19] - The multifamily portfolio, representing 26% of the loan portfolio, has significant repricing opportunities with $3.2 billion maturing over the next two and a half years [17] Company Strategy and Development Direction - The company is focused on optimizing its balance sheet through strategic sales of loans, aiming for high-quality, consistent, and sustainable earnings growth [5][10] - There is a strong emphasis on maintaining disciplined pricing and underwriting standards while proactively managing credit risk [9][11] - The company aims to capitalize on growth opportunities in California, leveraging its position as a leading business bank in the region [25][26] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the resilience of the market and strong demand for products and services, despite uncertainties in the broader macroeconomic environment [11] - The outlook for the second half of 2025 includes expectations for continued growth in core profitability and mid-single-digit increases in net interest income [21][22] - Management highlighted the importance of maintaining a strong credit quality profile while pursuing growth opportunities [20][21] Other Important Information - The company repurchased $150 million of common stock, representing about 6.8% of shares, with $150 million remaining in the buyback program [6] - A one-time non-cash income tax expense of $9.8 million was recorded, primarily related to the revaluation of deferred tax assets [13] - The company anticipates $243 million of loan sales to close in the third quarter, with a focus on maintaining a healthy capital position [13][19] Q&A Session Summary Question: Loan sales and balance sheet impact - Management clarified that loan sales do not necessitate a one-to-one relationship with unwinding wholesale funding, as they have been growing rapidly and providing leverage on sold loans [31][34] Question: Expense guidance and ECR - Management indicated that while expenses came in below guidance, they expect to settle at the lower end of the range due to investments in compensation and infrastructure [38][39] Question: Asset quality and provisioning expectations - Management expects normalized provisioning to be around $10 to $12 million per quarter, depending on the type of loans being grown [109][110] Question: M&A considerations - Management emphasized the focus on organic growth and maintaining independence, while remaining open to opportunities if market conditions normalize [112][114]

Investment Rating - The report maintains a "Buy" rating for China State Construction International (3311 HK) with a target price of HKD 18.79 [8][9]. Core Views - The strategic premium subscription by China Orient Asset Management (International) Holdings Limited, which will increase its stake from approximately 3.56% to 8.02%, reflects confidence in the company's future development in international markets and construction technology [1][3]. - The transaction is expected to significantly optimize the company's balance sheet and enhance operational capabilities, with approximately 16.67% of the proceeds allocated to debt repayment and the remaining funds directed towards construction technology and business investments [3][5]. - The booming development of the Northern Metropolis and the focus on urban renewal in mainland China present opportunities for the company, particularly in prefabricated construction [4]. Financial Projections - The report forecasts the company's net profit attributable to shareholders for 2024, 2025, and 2026 to be HKD 10.425 billion, HKD 11.830 billion, and HKD 13.361 billion respectively, with a steady growth rate [5][7]. - Revenue is projected to grow from HKD 113.734 billion in 2023 to HKD 157.989 billion by 2026, reflecting a compound annual growth rate [7][18]. - The company's estimated PE ratio for 2025 is set at 8x, with a target price adjustment from HKD 16.64 to HKD 18.79 based on strong contract growth and improved profitability [5][8].