FMC (FMC) 2025 Conference September 03, 2025 07:30 AM ET Company ParticipantsPierre Brondeau - Chairman & CEORonaldo Pereira - PresidentConference Call ParticipantsLaurence Alexander - Equity AnalystLaurence AlexanderOf the Jefferies Industrial Conference. This is Lawrence Alexander with the Jefferies Chemicals team. To start off today, I'd like to introduce the team from FMC Corporation. Today we have Pierre Brondeau, who's the CEO, Andrew Sandifer, the CFO, and Ronaldo Pereira, who's the President. Thank ...

Core Insights - Biotalys is progressing with the regulatory approval of its first protein-based biocontrol product, EVOCA, with the U.S. EPA confirming that the scientific review is ongoing and all additional information requests have been addressed [2][3] - The company now anticipates that the final steps of the registration procedure will occur in Q4 2025, a delay from the previous expectation of completion by the end of September [2] - EVOCA is designed to control fungal diseases such as Botrytis and powdery mildew, providing biodegradable solutions for fruit and vegetable growers [3] Company Overview - Biotalys is an AgTech company focused on developing precision biocontrol solutions based on proteins for crop protection in pre- and post-harvest markets [5] - The company utilizes its AGROBODY technology platform to create products that combine the efficacy of traditional chemical solutions with the environmental benefits of biological alternatives [5] - Founded in 2013 as a spin-off from the VIB, Biotalys is headquartered in Ghent, Belgium, and is listed on Euronext Brussels [5]

Core Insights - FMC Corporation has received registration for Fundatis® herbicide powered by Isoflex® active in Great Britain for use in winter wheat and winter barley, marking a significant advancement in herbicide technology [1][2][3] Product Details - Fundatis® herbicide combines Isoflex® active with beflubutamid, providing a new tool for resistance management and contributing to integrated weed management programs [3] - The herbicide effectively controls key annual grass weeds such as Blackgrass and Italian Ryegrass, as well as broadleaf weeds like Groundsel and Speedwell [3] Regulatory Approvals - The registration in Great Britain is part of a broader regulatory approval process, with Isoflex® active already registered in multiple countries including Argentina, Australia, and Brazil [4] - FMC has submitted a regulatory application for Isoflex® active in the European Union, indicating ongoing expansion efforts [4] Company Commitment - FMC emphasizes its commitment to innovative crop protection technologies, aiming to empower growers to enhance their farming practices and overcome resistance challenges [3][6] - The company is dedicated to discovering new active ingredients and product formulations that are environmentally friendly [6]

Financial Performance - FMC Corporation reported second quarter 2025 revenue of $1.05 billion, an increase of 1 percent compared to the same period in 2024, and a 2 percent organic growth [1][4] - The company’s GAAP net income for the second quarter was $0.53 per diluted share, reflecting a 77 percent decrease from the prior year due to prior year tax incentives [1][4] - Adjusted earnings per diluted share were $0.69, up 10 percent from the second quarter of 2024 [1][4] Revenue Drivers - The increase in revenue was primarily driven by a 6 percent growth in volume, as customers reached target inventory levels for FMC products, despite a 3 percent decline in pricing [2][3] - Sales in North America decreased by 5 percent, while Latin America saw a 1 percent increase, and EMEA sales rose by 29 percent [3][4] Operational Changes - FMC's Board of Directors approved the divestment of its commercial business in India, with plans to maintain participation in the market through a supply agreement with the buyer [6][7] - The revenue from the India commercial business will be classified as held for sale starting in the third quarter, and its earnings will be excluded from adjusted EBITDA and adjusted EPS [7][8] Future Outlook - For the full year 2025, FMC expects revenue excluding India to be between $4.08 billion and $4.28 billion, a decrease of 2 percent at the midpoint compared to the previous year [10][12] - The third quarter revenue forecast, excluding India, is projected to be between $1.00 billion and $1.10 billion, reflecting a 1 percent decline at the midpoint compared to the third quarter of 2024 [8][12] - Adjusted EBITDA for the third quarter is expected to range from $210 million to $250 million, representing a 14 percent increase at the midpoint compared to the prior year [8][12]

FMC Conference Call Summary Company Overview - FMC is a leading crop protection company with a diversified portfolio serving all crops globally [1] Key Points and Arguments Leadership and Strategy - Pierre Brondeau returned as CEO motivated by a strong belief in FMC's potential for revenue and earnings growth, citing the company's robust portfolio [3][4] - The first half of 2025 was deemed crucial for resetting the company and preparing for future growth [4][11] Financial Guidance and Performance - FMC is comfortable with its Q2 guidance, indicating normal planting conditions and demand [5][6] - Inventory levels are expected to meet or exceed targets, with a clean channel for products going into Q3 and Q4, except for challenges in India [7][8] Industry Dynamics - Competitive price pressure exists but is not as severe as perceived, with low to mid-single-digit pricing pressure expected for the half [12][16] - The company is monitoring pricing trends, particularly in relation to manufacturing costs and contracts with partners [12][13] Collaborations and New Products - Recent collaborations with Corteva and Bayer are seen as strategic advantages, particularly in expanding market reach and validating product quality [17][19] - The agreement with Corteva involves selling a formulated product, which is expected to enhance sales without diluting EBITDA margins [20][21] Growth and Market Position - FMC is focusing on four active ingredients to drive growth, with expectations of significant sales increases from new products [41][42] - The company is optimistic about the potential for market expansion, particularly for Rynaxypyr, which has a limited market share but strong growth prospects [39][40] Supply Chain and Industry Impact - A recent plant explosion in China has reduced generic supply, leading to increased prices for generics, which may benefit FMC [44][48] - Demand remains stable across regions, with no significant impact from tariffs or weaker crop prices observed [49][50] Financial Health and Cash Flow - FMC projects free cash flow in the range of $200 million to $400 million for the year, with a midpoint of $300 million [56] - A recent debt offering was completed to improve the debt mix and maintain an investment-grade credit rating [58][59] Cost Management and Future Outlook - FMC has achieved significant cost savings and is shifting focus from cost-cutting to growth initiatives [60][62] - The company aims to double the size of its new product offerings from the previous year, with ongoing registration efforts for new products in various markets [65][66] Additional Important Insights - The leadership has undergone significant restructuring, with a focus on enhancing commercial capabilities and market penetration [10][11] - The company is confident in its ability to protect and grow its market share despite the impending patent expiration of Rynaxypyr [31][36] This summary encapsulates the key discussions and insights from the FMC conference call, highlighting the company's strategic direction, financial performance, and market dynamics.

Financial Data and Key Metrics Changes - The company generated net sales of $116 million in Q1 2025, a decrease of 14% compared to $135 million in Q1 2024 [6][16] - Adjusted EBITDA for Q1 2025 was $3 million, down from $15.5 million in the same period last year [6][16] - Operating expenses decreased by $5 million year-over-year [5][10] - Gross profit margin declined to 26% in Q1 2025 from 31% in the previous year [18] Business Line Data and Key Metrics Changes - Metem sales increased by 14% year-over-year, while Diamond sales rose by 17% due to increased peanut acreage [8][9] - The absence of a previously canceled herbicide product negatively impacted sales [16] - The company faced challenges in the Mexican agave market and drought conditions in Australia, affecting overall performance [8][16] Market Data and Key Metrics Changes - Inventory levels at distributors are down nearly 23% compared to the previous year, indicating a prolonged destocking period [24] - Corn plantings are at historically high levels, which may positively impact demand for the company's products [24] - The company noted a competitive pricing environment, particularly in the fungicide and herbicide categories [56][58] Company Strategy and Development Direction - The company is focused on cost containment and improving net working capital, with a goal of achieving a 15% adjusted EBITDA margin over the long term [10][48] - A transformation plan is in place to streamline operations and improve financial results [26] - The company is exploring options for a longer-term capital structure to replace its current credit agreement [21] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism about a recovery in demand as inventory levels are at historic lows [23][62] - The company has adjusted its full-year adjusted EBITDA target range to $40 million to $44 million, down from $45 million to $52 million [12] - Management highlighted the importance of executing the transformation plan to position the company for a cyclical upturn [22][26] Other Important Information - The company faced delays in filing its 10-K and 10-Q due to internal control matters and the need for a detailed review of major assets [13][15] - The company is working on a remediation plan to address identified material weaknesses in internal controls [15] Q&A Session Summary Question: Can you elaborate on the year-over-year top line performance? - Management noted that the removal of the Dactyl product significantly impacted top line sales, along with challenges in the agave market and drought in Australia [31][32] Question: What are the expectations for cash taxes this year? - The company expects cash taxes to be in the range of $4 million to $5 million due to international obligations [43] Question: Can you provide details on pricing pressures and competitive environment? - Management indicated that competitive pricing was influenced by inventory levels and not necessarily by specific product competition, with expectations for improvement in the future [56][58]

Group 1 - FMC Corporation is a global agricultural giant that provides innovative and sustainable crop protection solutions, with a history dating back to 1883 [1] - The company has evolved significantly over the years, entering various businesses beyond its initial focus on insecticide spraying [1] Group 2 - The analyst expresses a focus on undervalued and disliked companies or industries with strong fundamentals and good cash flows, particularly in sectors like Oil & Gas and consumer goods [1] - The analyst emphasizes a long-term value investing approach while also engaging in deal arbitrage opportunities [1]

Core Insights - Bayer AG reported a net profit of 1.3 billion euros (approximately $1.45 billion) for Q1 2025, a decrease from 2 billion euros in the same period last year [1] - The company confirmed its outlook for the full year 2025 at constant currencies despite current tariff announcements and mitigation measures [1] - Bayer is reorganizing its Crop Science division in Germany to enhance competitiveness globally [1][2] Financial Performance - Adjusted earnings were 65 cents, surpassing the consensus estimate of 38 cents [5] - Sales reached $14.45 billion (13.74 billion euros), exceeding the consensus of $13.39 billion [5] - EBITDA before restructuring and litigation charges fell 7% year-on-year to 4 billion euros in Q1 [5] - Sales in the agricultural business decreased by 3.3% to 7.58 billion euros [5] - Sales of prescription medicines increased by 4.1% to 4.548 billion euros [5] - Significant growth rates were recorded for new products, including a 77.5% increase for the cancer drug Nubeqa (515 million euros) and an 86.6% increase for Kerendia (161 million euros) [5] Strategic Changes - Bayer will focus on advanced, strategic products that provide clear benefits to farmers and are difficult for generic manufacturers to replicate [2] - The company plans to cease operations in Frankfurt by late 2028 as part of its restructuring efforts [2][3] - The Dormagen site will remain Bayer's main production hub for crop protection products, but it will be streamlined to maintain competitiveness [3] - Bayer will stop producing generic active ingredients and formulations that are widely available at lower prices globally [3] - The changes are expected to affect approximately 200 of the 1,200 employees at the Dormagen site, primarily in active ingredient production and formulation [3]

Core Insights - Nufarm is collaborating with ChrysaLabs to quantify soil carbon sequestration benefits from the expansion of Carinata production in South America, which is part of Nufarm's bioenergy portfolio aimed at producing low-carbon fuels for hard-to-decarbonize sectors like aviation [1][4] - ChrysaLabs provides an integrated solution for carbon measurement and verification, which is expected to lower costs and enable scaling in the carbon market, utilizing advanced sensing technology [2][6] - The project aims to create a carbon-to-carbon cycle by cultivating Carinata as an intermediate crop, sequestering atmospheric carbon back into the soil while delivering measurable climate benefits [3][4] Company Overview - Nufarm is a global company focused on crop protection and seed technologies, addressing challenges in food, feed, fiber, and sustainable fuel production [5] - ChrysaLabs specializes in soil data and carbon quantification, helping partners measure and scale carbon projects through innovative sensing technology [6] Strategic Implications - The partnership between Nufarm and ChrysaLabs is expected to advance carbon modeling and unlock new business opportunities in scalable biofuel production, bridging sustainability with profitability [4] - Nufarm's bioenergy programs are independently certified to meet various sustainability standards, providing traceable assurance for airlines and corporate customers to demonstrate credible emission reduction claims [4]

Q1 2025 Financial Results - Revenue decreased by 14% from Q1 2024, totaling $791 million compared to $918 million[9] - GAAP Net Loss was $(16) million, a decrease of $(13) million compared to Q1 2024's $(3) million[9] - Adjusted EBITDA decreased by 25% to $120 million, compared to $161 million in Q1 2024[9] - Adjusted EPS decreased by 50% to $0.18, compared to $0.36 in Q1 2024[9] Regional Revenue Performance - North America revenue decreased by 10% organically, or 27% excluding FX, to $207 million[14] - Latin America revenue decreased by 28% year-over-year, but increased by 17% excluding FX, reaching $186 million[14] - Asia revenue decreased by 24% year-over-year, or 21% excluding FX, to $125 million[14] - EMEA revenue decreased by 11% year-over-year, or 7% excluding FX, to $273 million[14] 2025 Financial Outlook - Q2 2025 revenue is projected to be between $104 billion and $1.10 billion, a decrease of 2% year-over-year[25] - Q2 2025 Adjusted EBITDA is expected to be between $175 million and $205 million, a decrease of 6% year-over-year[25] - FY 2025 revenue is projected to be between $4.15 billion and $4.35 billion, flat year-over-year or up 3% excluding GSS[27] - FY 2025 Adjusted EBITDA is projected to be between $870 million and $950 million, up 1% year-over-year or 4% excluding GSS[27] Tariff Impact - The company estimates $15 million to $20 million of direct incremental costs in 2025 due to tariffs[30]