FMC (US:FMC)2024-02-06 18:05Financial Data and Key Metrics Changes - Fourth quarter sales in North America decreased by 37% year-over-year due to lower volume after a record Q4 in 2022 [9] - Latin America sales fell by 38%, with a 41% decline excluding foreign exchange effects, attributed to lower volumes and a low double-digit pricing decline [9] - Fourth quarter EBITDA was 41% lower than the prior year, primarily due to lower sales, although cost management provided a strong tailwind [10] - Full year 2023 EBITDA margin was nearly 22%, down approximately 240 basis points but still at industry-leading levels [10][11] - Free cash flow for 2023 was negative $524 million, with adjusted cash from operations down $960 million compared to the prior year [29] Business Line Data and Key Metrics Changes - Branded diamide sales in Q4 were up 5%, with sales flat or higher in all regions [8] - New product introductions (NPI) sales were down only 2% and accounted for over 13% of total revenue, a record high [11] - Full year diamide sales totaled $1.8 billion, a decline of about 15%, while branded diamides were only down 7% [11] Market Data and Key Metrics Changes - Sales in Asia were flat year-over-year, with inventory destocking offsetting growth in fungicides and biologicals [9] - EMEA revenue decreased by 24%, or 22% lower excluding foreign exchange, primarily due to lower volume in herbicides [9] - The company expects the global market to be flat to down low single digits in 2024, with India anticipated to be down for the full year due to channel inventory issues [13] Company Strategy and Development Direction - The company is undergoing a global restructuring plan to transform its operating model, with a focus on cost management and efficiency [16][18] - FMC plans to enhance visibility into channel inventory through various initiatives across key markets [12] - The company anticipates revenue growth in 2024 to be driven by volume growth led by new product introductions, expecting NPI sales to grow by approximately $200 million [14] Management's Comments on Operating Environment and Future Outlook - Management noted that market conditions and buyer behavior were as expected in Q4, with the exception of Latin America, which faced drought conditions [7] - The company expects a transition year in 2024, with a recovery anticipated in the second half of the year [34] - Management remains confident in achieving long-term growth targets despite short-term challenges, citing strong drivers for the industry [34][50] Other Important Information - The company recorded a GAAP income tax benefit of roughly $1.2 billion in Q4 due to extraordinary tax events [25] - Gross debt at year-end was approximately $4 billion, with a gross debt to trailing 12-month EBITDA ratio of 4.0x [27] - The restructuring plan is expected to yield $50 million to $75 million in cost savings for 2024, with a run rate of $150 million by the end of 2025 [18] Q&A Session Summary Question: Update on diamides business and outlook - Management indicated that branded diamides continue to perform well, while non-branded sales are expected to decline as partners draw down inventories [36][37] Question: Pricing expectations by region - Management expects moderate pricing headwinds in 2024, particularly in Latin America, with a small price decline anticipated in Q1 [40][42] Question: Working capital extraction in 2024 - The company plans to release cash from working capital, particularly through accounts payable and inventory management, with a focus on ramping up production in the latter half of the year [43][44] Question: Cadence of EBITDA growth throughout the year - Management expects a transition to growth in Q2, driven by new product introductions and a recovery in market conditions [46][48] Question: Fixed cost absorption and production levels - Management anticipates improved fixed cost absorption as production ramps up in Q2, alleviating some of the pressures seen in Q1 [53][55] Question: New product traction and launches - The company highlighted strong commercial traction for new products, with expectations for significant contributions from launches in 2024 [59][62]