FMC Corporation announces second quarter results and confirms full-year outlook
Abrupt and unprecedented reductions in inventory by growers and the distribution channel led to significant volume decline despite steady on-the-ground consumption
Second Quarter 2023 Highlights
- Revenue of
$1.01 billion - Consolidated GAAP net income of
$32.4 million - Adjusted EBITDA of
$187.6 million - Consolidated GAAP earnings of
$0.24 - Adjusted earnings per diluted share of
$0.50 - Returned approximately
$123 million $50 million
Full-Year Outlook2
- Revenue of
$5.20 $5.40 billion - Adjusted EBITDA of
$1.30 $1.40 billion - Lowers adjusted earnings per diluted share outlook to
$5.86 $6.80 - Lowers free cash flow outlook to a midpoint of break even
Second Quarter Adjusted EPS versus Q2 2022 | |
Adjusted EBITDA | - |
Interest Expense | - |
Depreciation & Amortization | - |
Minority Interest | - |
"FMC delivered second quarter results in-line with recently adjusted guidance expectations. Active inventory management by growers and the distribution channel drove unprecedented volume declines and as a result we now expect the overall crop protection market to contract high-single-digits to low-double-digits percent this year despite steady on-the-ground usage by growers," said Mark Douglas, FMC president and chief executive officer.
Revenue in the quarter was driven by a 31 percent decline from volume. Price was up 3 percent, partially offset by a 2 percent foreign currency headwind. Demand for the company's innovative products remained resilient as sales from new products launched in the last five years were essentially flat to the prior-year period despite the overall sales drop. Branded diamides performed better than the rest of the portfolio, with reduced partner sales the main driver of volume decline in diamides.
FMC Revenue | Q2 2023 |
Total Revenue Change (GAAP) | (30 %) |
Less FX Impact | 2 % |
Organic1 Revenue Change (Non-GAAP) | (28 %) |
FMC second quarter adjusted EBITDA was
Full Year 2023 Outlook2
Consistent with the company's release on July 10, FMC is forecasting full-year 2023 revenue to be in the range of
Second Half Outlook2
Sales in the second half of 2023 are expected to be in the range of
Third quarter revenue is expected to be in the range of
Fourth quarter revenue is expected to be in the range of
"The crop protection market is in the midst of a global resetting of inventory levels. We anticipate volume pressure at the start of the second half and have adjusted our outlook accordingly. However, we continue to observe steady consumption of product by growers along with acreage increases for key crops. As a result, we expect to grow adjusted EBITDA in the second half due to lower costs, price increases and improved mix from new products as demand for our innovative portfolio remains strong," said Douglas.
Full-Year 2023 | Second-Half | Q3 2023 Outlook | Q4 2023 Outlook | |
Revenue | ||||
Variance at | -9 % | -2 % | -11 % | +6 % |
Adjusted | ||||
Variance at | -4 % | +16 % | +2 % | +24 % |
Adjusted | ||||
Variance at | -15 % | +13 % | -10 % | +24 % |
^ EPS estimates assume 125.8 million diluted shares for full year and 125.8 million diluted shares for Q3. |
* Q3 and Q4 ranges do not sum to H2 range due to rounding. |
Supplemental Information
The company will post supplemental information on the web at https://investors.fmc.com, including its webcast slides for tomorrow's earnings call, definitions of non-GAAP terms and reconciliations of non-GAAP figures to the nearest available GAAP term.
About FMC
FMC Corporation is a global agricultural sciences company dedicated to helping growers produce food, feed, fiber and fuel for an expanding world population while adapting to a changing environment. FMC's innovative crop protection solutions – including biologicals, crop nutrition, digital and precision agriculture – enable growers, crop advisers and turf and pest management professionals to address their toughest challenges economically while protecting the environment. With approximately 6,600 employees at more than 100 sites worldwide, FMC is committed to discovering new herbicide, insecticide and fungicide active ingredients, product formulations and pioneering technologies that are consistently better for the planet. Visit fmc.com to learn more and follow us on LinkedIn® and Twitter®.
Statement under the Safe Harbor Provisions of the Private Securities Litigation Reform Act of 1995: FMC and its representatives may from time to time make written or oral statements that are "forward-looking" and provide other than historical information, including statements contained in this press release, in FMC's other filings with the SEC, and in reports or letters to FMC stockholders.
In some cases, FMC has identified these forward-looking statements by such words or phrases as "will likely result," "is confident that," "expect," "expects," "should," "could," "may," "will continue to," "believe," "believes," "anticipates," "predicts," "forecasts," "estimates," "projects," "potential," "intends" or similar expressions identifying "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, including the negative of those words or phrases. Such forward-looking statements are based on our current views and assumptions regarding future events, future business conditions and the outlook for the company based on currently available information. The forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause actual results to be materially different from any results, levels of activity, performance or achievements expressed or implied by any forward-looking statement. These statements are qualified by reference to the risk factors included in Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2022 (the "2022 Form 10-K"), the section captioned "Forward-Looking Information" in Part II of the 2022 Form 10-K and to similar risk factors and cautionary statements in all other reports and forms filed with the Securities and Exchange Commission ("SEC"). Moreover, investors are cautioned to interpret many of these factors as being impacted as a result of the residual adverse impacts of COVID and governmental, business, and societal responses to COVID. We wish to caution readers not to place undue reliance on any such forward-looking statements, which speak only as of the date made. Forward-looking statements are qualified in their entirety by the above cautionary statement.
We specifically decline to undertake any obligation, and specifically disclaims any duty, to publicly update or revise any forward-looking statements that have been made to reflect events or circumstances after the date of such statements or to reflect the occurrence of anticipated or unanticipated events, except as may be required by law.
This press release contains certain "non-GAAP financial terms" which are defined on our website www.fmc.com/investors. Such terms include adjusted EBITDA, adjusted earnings, free cash flow and organic revenue growth. In addition, we have also provided on our website reconciliations of non-GAAP terms to the most directly comparable GAAP term.
- Organic revenue growth (non-GAAP) excludes the impact of foreign currency changes.
- Although we provide forecasts for adjusted earnings per share, adjusted EBITDA and free cash flow (non-GAAP financial measures), we are not able to forecast the most directly comparable measures calculated and presented in accordance with GAAP. Certain elements of the composition of the GAAP amounts are not predictable, making it impractical for us to forecast. Such elements include, but are not limited to, restructuring, acquisition charges, and discontinued operations. As a result, no GAAP outlook is provided.
FMC CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF INCOME (LOSS) (Unaudited, in millions, except per share amounts) | |||||||
Three Months Ended June 30, | Six Months Ended June 30, | ||||||
2023 | 2022 | 2023 | 2022 | ||||
Revenue | $ 1,014.5 | $ 1,452.3 | $ 2,358.8 | $ 2,803.1 | |||
Costs of sales and services | 581.7 | 861.3 | 1,344.7 | 1,639.4 | |||
Gross margin | $ 432.8 | $ 591.0 | $ 1,014.1 | $ 1,163.7 | |||
Selling, general and administrative expenses | 205.6 | 194.8 | 391.5 | 383.3 | |||
Research and development expenses | 87.7 | 79.5 | 166.1 | 151.3 | |||
Restructuring and other charges (income) | 7.3 | 80.8 | 19.8 | 89.9 | |||
Total costs and expenses | $ 882.3 | $ 1,216.4 | $ 1,922.1 | $ 2,263.9 | |||
Income from continuing operations before non-operating pension | $ 132.2 | $ 235.9 | $ 436.7 | $ 539.2 | |||
Non-operating pension and postretirement charges (income) | 4.6 | 3.9 | 9.2 | 8.2 | |||
Interest expense, net | 64.5 | 35.3 | 115.9 | 65.2 | |||
Income (loss) from continuing operations before income taxes | $ 63.1 | $ 196.7 | $ 311.6 | $ 465.8 | |||
Provision (benefit) for income taxes | 9.2 | 54.7 | 50.3 | 97.0 | |||
Income (loss) from continuing operations | $ 53.9 | $ 142.0 | $ 261.3 | $ 368.8 | |||
Discontinued operations, net of income taxes | (21.5) | (10.8) | (33.0) | (26.0) | |||
Net income (loss) | $ 32.4 | $ 131.2 | $ 228.3 | $ 342.8 | |||
Less: Net income (loss) attributable to noncontrolling interests | 1.9 | (3.0) | 1.8 | 1.2 | |||
Net income (loss) attributable to FMC stockholders | $ 30.5 | $ 134.2 | $ 226.5 | $ 341.6 | |||
Amounts attributable to FMC stockholders: | |||||||
Income (loss) from continuing operations | $ 52.0 | $ 145.0 | $ 259.5 | $ 367.6 | |||
Discontinued operations, net of tax | (21.5) | (10.8) | (33.0) | (26.0) | |||
Net income (loss) | $ 30.5 | $ 134.2 | $ 226.5 | $ 341.6 | |||
Basic earnings (loss) per common share attributable to FMC | |||||||
Continuing operations | $ 0.41 | $ 1.15 | $ 2.07 | $ 2.91 | |||
Discontinued operations | (0.17) | (0.09) | (0.26) | (0.21) | |||
Basic earnings per common share | $ 0.24 | $ 1.06 | $ 1.81 | $ 2.70 | |||
Average number of shares outstanding used in basic earnings per share | 125.1 | 126.2 | 125.2 | 126.1 | |||
Diluted earnings (loss) per common share attributable to FMC | |||||||
Continuing operations | $ 0.41 | $ 1.15 | $ 2.06 | $ 2.90 | |||
Discontinued operations | (0.17) | (0.09) | (0.26) | (0.21) | |||
Diluted earnings per common share | $ 0.24 | $ 1.06 | $ 1.80 | $ 2.69 | |||
Average number of shares outstanding used in diluted earnings per share | 125.7 | 126.9 | 125.9 | 126.9 | |||
Other Data: | |||||||
Capital additions and other investing activities | $ 29.8 | $ 9.9 | $ 81.1 | $ 64.8 | |||
Depreciation and amortization expense | 48.1 | 42.8 | 92.8 | 85.2 | |||
FMC CORPORATION RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
RECONCILIATION OF NET INCOME (LOSS) ATTRIBUTABLE TO FMC STOCKHOLDERS (GAAP) TO ADJUSTED AFTER-TAX EARNINGS FROM CONTINUING OPERATIONS, ATTRIBUTABLE TO FMC STOCKHOLDERS (NON-GAAP) (Unaudited, in millions, except per share amounts) | |||||||
Three Months Ended | Six Months Ended | ||||||
2023 | 2022 | 2023 | 2022 | ||||
Net income (loss) attributable to FMC stockholders (GAAP) | $ 30.5 | $ 134.2 | $ 226.5 | $ 341.6 | |||
Corporate special charges (income): | |||||||
Restructuring and other charges (income) (a) | 7.3 | 80.8 | 19.8 | 89.9 | |||
Non-operating pension and postretirement charges (income) (b) | 4.6 | 3.9 | 9.2 | 8.2 | |||
Income tax expense (benefit) on Corporate special charges (income) (c) | (2.3) | (0.9) | (4.3) | (1.8) | |||
Adjustment for noncontrolling interest, net of tax on Corporate special charges | 0.8 | — | (2.0) | — | |||
Discontinued operations attributable to FMC stockholders, net of income taxes (d) | 21.5 | 10.8 | 33.0 | 26.0 | |||
Tax adjustment (e) | 0.2 | 16.3 | 3.5 | 19.9 | |||
Adjusted after-tax earnings from continuing operations attributable to | $ 62.6 | $ 245.1 | $ 285.7 | $ 483.8 | |||
Diluted earnings per common share (GAAP) | $ 0.24 | $ 1.06 | $ 1.80 | $ 2.69 | |||
Corporate special charges (income) per diluted share, before tax: | |||||||
Restructuring and other charges (income) | 0.06 | 0.64 | 0.16 | 0.71 | |||
Non-operating pension and postretirement charges (income) | 0.04 | 0.03 | 0.07 | 0.06 | |||
Income tax expense (benefit) on Corporate special charges (income), per | (0.01) | (0.02) | (0.03) | (0.02) | |||
Adjustment for noncontrolling interest, net of tax on Corporate special charges | — | — | (0.02) | — | |||
Discontinued operations attributable to FMC stockholders, net of income taxes | 0.17 | 0.09 | 0.26 | 0.21 | |||
Tax adjustments per diluted share | — | 0.13 | 0.03 | 0.16 | |||
Diluted adjusted after-tax earnings from continuing operations per share, | $ 0.50 | $ 1.93 | $ 2.27 | $ 3.81 | |||
Average number of shares outstanding used in diluted adjusted after-tax | 125.7 | 126.9 | 125.9 | 126.9 | |||
____________________ | |
(1) | Referred to as Adjusted earnings. The Company believes that Adjusted earnings, a Non-GAAP financial measure, and its presentation on a per share basis provides useful information about the Company's operating results to management, investors, and securities analysts. Adjusted earnings excludes the effects of corporate special charges, tax-related adjustments and the results of our discontinued operations. The Company also believes that excluding the effects of these items from operating results allows management and investors to compare more easily the financial performance of its underlying business from period to period. |
(a) | Three Months Ended June 30, 2023: |
Restructuring and other charges (income) includes | |
Three Months Ended June 30, 2022: | |
Restructuring and other charges (income) is primarily comprised of | |
Six Months Ended June 30, 2023: | |
Restructuring and other charges (income) includes | |
Six Months Ended June 30, 2022: | |
Restructuring and other charges (income) is primarily comprised of | |
(b) | Our non-operating pension and postretirement charges (income) are defined as those costs (benefits) related to interest, expected return on plan assets, amortized actuarial gains and losses and the impacts of any plan curtailments or settlements. These are excluded from our Adjusted Earnings and are primarily related to changes in pension plan assets and liabilities which are tied to financial market performance and we consider these costs to be outside our operational performance. We continue to include the service cost and amortization of prior service cost in our Adjusted Earnings results noted above. These elements reflect the current year operating costs to our businesses for the employment benefits provided to active employees. |
(c) | The income tax expense (benefit) on Corporate special charges (income) is determined using the applicable rates in the taxing jurisdictions in which the corporate special charge or income occurred and includes both current and deferred income tax expense (benefit) based on the nature of the non-GAAP performance measure. |
(d) | Discontinued operations includes provisions, net of recoveries, for environmental liabilities and legal reserves and expenses related to previously discontinued operations and retained liabilities. |
(e) | We exclude the GAAP tax provision, including discrete items, from the Non-GAAP measure of income, and include a Non-GAAP tax provision based upon the projected annual Non-GAAP effective tax rate. The GAAP tax provision includes certain discrete tax items including, but are not limited to: income tax expenses or benefits that are not related to continuing operating results in the current year; tax adjustments associated with fluctuations in foreign currency remeasurement of certain foreign operations; certain changes in estimates of tax matters related to prior fiscal years; certain changes in the realizability of deferred tax assets and related interim accounting impacts; and changes in tax law. Management believes excluding these discrete tax items assists investors and securities analysts in understanding the tax provision and the effective tax rate related to continuing operating results thereby providing investors with useful supplemental information about FMC's operational performance. |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||
(in Millions) | 2023 | 2022 | 2023 | 2022 | |||
Non-GAAP tax adjustments | |||||||
Foreign currency remeasurement and other discrete items | $ 0.2 | $ 16.3 | $ 3.5 | $ 19.9 | |||
Total Non-GAAP tax adjustments | $ 0.2 | $ 16.3 | $ 3.5 | $ 19.9 | |||
RECONCILIATION OF NET INCOME (LOSS) (GAAP) TO ADJUSTED EARNINGS FROM CONTINUING OPERATIONS, BEFORE INTEREST, INCOME TAXES, DEPRECIATION AND AMORTIZATION, AND NONCONTROLLING INTERESTS (NON-GAAP) (Unaudited, in millions) | |||||||
Three Months Ended | Six Months Ended | ||||||
2023 | 2022 | 2023 | 2022 | ||||
Net income (loss) (GAAP) | $ 32.4 | $ 131.2 | $ 228.3 | $ 342.8 | |||
Restructuring and other charges (income) | 7.3 | 80.8 | 19.8 | 89.9 | |||
Non-operating pension and postretirement charges (income) | 4.6 | 3.9 | 9.2 | 8.2 | |||
Discontinued operations, net of income taxes | 21.5 | 10.8 | 33.0 | 26.0 | |||
Interest expense, net | 64.5 | 35.3 | 115.9 | 65.2 | |||
Depreciation and amortization | 48.1 | 42.8 | 92.8 | 85.2 | |||
Provision (benefit) for income taxes | 9.2 | 54.7 | 50.3 | 97.0 | |||
Adjusted earnings from continuing operations, before interest, income | $ 187.6 | $ 359.5 | $ 549.3 | $ 714.3 | |||
___________________ | |
(1) | Referred to as Adjusted EBITDA. Defined as operating profit excluding corporate special charges (income) and depreciation and amortization expense. |
RECONCILIATION OF CASH PROVIDED (REQUIRED) BY OPERATING ACTIVITIES OF CONTINUING OPERATIONS (GAAP) TO FREE CASH FLOW (NON-GAAP) (Unaudited, in millions) | |||||||
Three Months Ended | Six Months Ended | ||||||
2023 | 2022 | 2023 | 2022 | ||||
Cash provided (required) by operating activities of continuing operations (GAAP) (1) | $ 131.5 | $ 195.9 | |||||
Transaction and integration costs | — | — | — | 0.5 | |||
Adjusted cash from operations(2) | $ 131.5 | $ 195.9 | |||||
Capital expenditures | (28.9) | (23.4) | (75.8) | (73.7) | |||
Other investing activities | (0.9) | 13.5 | (5.3) | 8.9 | |||
Capital additions and other investing activities | $ (29.8) | $ (9.9) | $ (81.1) | $ (64.8) | |||
Cash provided (required) by operating activities of discontinued operations | (14.3) | (20.6) | (26.9) | (31.6) | |||
Transaction and integration costs | — | — | — | (0.5) | |||
Proceeds from Land Disposition | 5.8 | — | 5.8 | — | |||
Legacy and transformation | $ (8.5) | $ (20.6) | $ (21.1) | $ (32.1) | |||
Free cash flow (Non-GAAP)(3) | $ 93.2 | $ 165.4 | |||||
___________________ | |
(1) | The cash provided (required) by operating activities for the three months ended June 30, 2023 and 2022 is the calculation of the six months ended June 30, 2023 and 2022 less the previously reported three months ended March 31, 2023 and 2022, respectively. |
(2) | Adjusted cash from operations is defined as cash provided (required) by operating activities of continuing operations excluding the effects of transaction-related cash flows. |
(3) | Free cash flow is defined as Adjusted cash from operations reduced by spending for capital additions and other investing activities as well as legacy and transformation spending. We believe that this Non-GAAP financial measure provides a useful basis for investors and securities analysts about the cash generated by routine business operations, including capital expenditures, in addition to assessing our ability to repay debt, fund acquisitions and return capital to shareholders through share repurchases and dividends. Our use of free cash flow has limitations as an analytical tool and should not be considered in isolation or as a substitute for an analysis of our results under |
RECONCILIATION OF REVENUE CHANGE (GAAP) TO ORGANIC REVENUE CHANGE (NON-GAAP) (1) (Unaudited) | |||
Three Months Ended | Six Months Ended | ||
Total Revenue Change (GAAP) | (30) % | (16) % | |
Less: Foreign Currency Impact | (2) % | (3) % | |
Organic Revenue Change (Non-GAAP) | (28) % | (13) % | |
___________________ | |
(1) | We believe organic revenue growth (non-GAAP) provides management and investors with useful supplemental information regarding our ongoing revenue performance and trends by presenting revenue growth excluding the impact of fluctuations in foreign exchange rates. |
FMC CORPORATION CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited, in millions) | |||
June 30, 2023 | December 31, 2022 | ||
Cash and cash equivalents | $ 941.5 | $ 572.0 | |
Trade receivables, net of allowance of | 2,782.8 | 2,871.4 | |
Inventories | 2,072.3 | 1,651.6 | |
Prepaid and other current assets | 470.2 | 343.6 | |
Total current assets | $ 6,266.8 | $ 5,438.6 | |
Property, plant and equipment, net | 867.9 | 849.6 | |
Goodwill | 1,592.3 | 1,589.3 | |
Other intangibles, net | 2,488.6 | 2,508.1 | |
Deferred income taxes | 218.5 | 210.7 | |
Other long-term assets | 517.6 | 575.0 | |
Total assets | $ 11,951.7 | $ 11,171.3 | |
Short-term debt and current portion of long-term debt | $ 1,660.5 | $ 540.8 | |
Accounts payable, trade and other | 1,032.7 | 1,252.2 | |
Advanced payments from customers | 3.4 | 680.5 | |
Accrued and other liabilities | 685.0 | 601.8 | |
Accrued customer rebates | 743.1 | 465.3 | |
Guarantees of vendor financing | 106.3 | 142.0 | |
Accrued pensions and other postretirement benefits, current | 3.5 | 2.3 | |
Income taxes | 118.2 | 114.7 | |
Total current liabilities | $ 4,352.7 | $ 3,799.6 | |
Long-term debt, less current portion | $ 3,022.0 | $ 2,733.2 | |
Long-term liabilities | 1,199.6 | 1,237.6 | |
Equity | 3,377.4 | 3,400.9 | |
Total liabilities and equity | $ 11,951.7 | $ 11,171.3 | |
FMC CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited, in millions) | |||
Six Months Ended June 30, | |||
2023 | 2022 | ||
Cash provided (required) by operating activities of continuing operations | $ (719.8) | $ (401.9) | |
Cash provided (required) by operating activities of discontinued operations | (26.9) | (31.6) | |
Cash provided (required) by investing activities of continuing operations | (78.5) | (65.3) | |
Cash provided (required) by financing activities of continuing operations | 1,194.6 | 585.7 | |
Effect of exchange rate changes on cash | 0.1 | (12.2) | |
Increase (decrease) in cash and cash equivalents | $ 369.5 | $ 74.7 | |
Cash and cash equivalents, beginning of period | $ 572.0 | $ 516.8 | |
Cash and cash equivalents, end of period | $ 941.5 | $ 591.5 | |
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SOURCE FMC Corporation
