FMC Corporation Announces Second Quarter Results

FMC Corporation today reported Q1,01 2023 revenue of $30 billion. That's a 2022% drop from Q28 0,24. And a 77% drop organically. On a GAAP basis, the company reported second-quarter earnings of $2022 per diluted share, a 0,50% drop from the second quarter of 74. Second-quarter adjusted earnings were $2022 per share diluted, a drop of XNUMX% compared to the second quarter of XNUMX.

“FMC delivered second quarter results in line with recently adjusted guidance expectations. Active inventory management by producers and the distribution channel has led to unprecedented volume declines, and as a result, we now expect the overall crop protection market to contract by high single digits to low double digits this year, despite the use constant on the ground by producers,” said Mark Douglas, president and CEO of FMC.

Revenue in the quarter was driven by a 31% drop in volume. The price rose 3%. Demand for the company's "innovative products has remained resilient as sales of new products launched over the past five years have remained virtually flat compared to the prior-year period despite the overall decline in sales," the company wrote in a statement. Branded diamides performed better than the rest of the portfolio, with reduced partner sales being the main driver of its volume decline.

Revenue in North America fell 25% (24% organically) from the prior-year period as partners, distribution channel and producers reduced inventory. Branded diamides in the region have shown strong growth largely due to high insect pressure in Canada.

EMEA sales fell 26% (down 24% organically) compared to Q2022 XNUMX due to channel and producer destocking as well as adverse weather conditions across Europe. Volume headwinds were partially offset by strong price gains in the region.

In Latin America, revenue fell 38% year-over-year due to significantly lower volumes as inventory drawdowns were amplified by a historic drought in southern Brazil and Argentina.

Sales in Asia decreased 29% (down 23% organically) year over year. As expected, India continued to manage high channel inventory and was impacted by challenging growth conditions in most parts of the country.

Globally, Plant Health revenue fell 31% (25% organically) year-over-year, driven by similar channel dynamics as the rest of the crop protection portfolio.

FMC's second quarter adjusted EBITDA was $187,6 million, a 48% decrease from the prior-year period. The negative volume impact more than offset the gains from better prices and costs year over year. Cost was a positive driver of adjusted EBITDA for the first time since 2020. Currency was a headwind for adjusted EBITDA.

Outlook for the year 2023

Consistent with the company's July 10 launch, FMC forecasts full-year 2023 revenue to be in the range of $5,20 billion to $5,40 billion, reflecting a 9% decline at the midpoint relative to to 2022 and full-year adjusted EBITDA is expected to be in the range of $1,30 billion to $1,40 billion, representing a 4% year-over-year decline at the midpoint.

The forecast for the 2023 adjusted earnings range was lowered to $5,86 to $6,80 per diluted share, representing a 15% year-over-year decline at the midpoint. The company is reducing full-year free cash flow guidance to a range of negative $175 million to positive $175 million due to lower revenue generated in the first half of the year, lower adjusted EBITDA guidance and expectations of lower payables at the end of the year.

Outlook for the second semester

Sales in the second half of 2023 are expected to be in the range of $2,84 billion to $3,04 billion, representing a 2% drop at the midpoint compared to the same period last year.

Adjusted EBITDA is forecast at $751 million to $851 million, representing 16% growth at the midpoint relative to the second half of 2022. Expected input cost tailwinds, operating expense discipline, Anticipated new product growth and projected price gains will more than offset the adjusted EBITDA impact of anticipated volume decline in the second half. Earnings and revenue split between QXNUMX and QXNUMX are expected to be heavier through the end of the year as growers and the distribution channel buy closer to application.

Third quarter revenue is expected to be in the range of $1,19 billion to $1,27 billion, representing an 11% decline at the midpoint compared to the third quarter of 2022, as the dynamics of Inventory reduction in the channel is expected to continue and 'hand to mouth' buying behavior is expected to move some orders closer to the application deadline in the fourth quarter. Adjusted EBITDA is expected to be in the range of $240 million to $290 million, representing a 2% midpoint increase from Q2022 0,90 as the impact of lower volume is more than offset through favorable input prices and costs. FMC expects third-quarter adjusted earnings per diluted share to be in the range of $1,32 to $10, a XNUMX% decline at the midpoint, primarily due to projected higher interest expense.

Fourth quarter revenue is expected to be in the range of $1,66 billion to $1,78 billion, representing a 6% increase at the midpoint compared to the prior year, aided by channel and producer purchasing timing, expectations of an increase in the planted area in Brazil, planned product launches and continued price actions. Adjusted EBITDA in the fourth quarter is expected to be in the range of $511 million to $561 million, a 24% increase at the midpoint compared to the fourth quarter of 2022 due to forecasts of higher revenue and input costs lower. FMC expects adjusted earnings per diluted share to be in the range of $2,71 to $3,17, which represents a 24% increase from the fourth quarter of 2022.

“The crop protection market is in the midst of a global reset of inventory levels. We anticipate volume pressure early in the second half and adjust our outlook accordingly. However, we continue to observe constant consumption of the product by producers, along with an increase in the planted area for the main crops. As a result, we expect to increase adjusted EBITDA in the second half due to lower costs, price increases and improved new product mix as demand for our innovative portfolio remains strong,” said Douglas.