FMC Corporation (NYSE: FMC) recently reported first quarter 2022 revenue of $1.35 billion, an increase of 13 percent versus first quarter 2021, driven by strong demand and global pricing actions. Excluding a 3 percent headwind from foreign exchange, year-over-year sales grew 16 percent organically. On a GAAP basis, the company reported earnings of $1.64 per diluted share in the first quarter, an increase of 17 percent versus first quarter 2021. First quarter adjusted earnings were $1.88 per diluted share, an increase of 23 percent versus first quarter 2021.
"FMC delivered a strong first quarter driven by robust demand, proactive pricing actions across all regions as well as our responsive supply chain," said Mark Douglas, FMC president and chief executive officer. "Raw material, packaging and logistics availability as well as rising input and labor costs continued to be substantial headwinds, exacerbated by renewed COVID disruptions in China and the war in Ukraine. However, strength in global agriculture and our focus on pricing actions helped FMC more than offset these challenges."
FMC revenue growth was driven by an 8 percent contribution from volume and an 8 percent contribution from price, offset partially by a 3 percent headwind from foreign currencies, especially in EMEA. The strong volume growth was in part due to supply uncertainty in the industry, which resulted in customers placing orders in advance to secure material.
North America had a record quarter with broad-based sales growth of 30 percent versus first quarter 2021. Volume and price gains were robust across several crops including tree fruits, nuts, vines, corn and soy. Canada grew a record-breaking 60 percent year-over-year driven by low channel inventories for insecticides and robust demand for selective herbicides.
Latin America sales grew 31 percent year-over-year in the quarter, driven by robust volume growth in soybean, corn and sugarcane as well as price increases and a 6 percent currency tailwind. The region's results were also driven by selective herbicide and insecticide growth along with strong pricing actions in Brazil. Additionally, Argentina and the Andean countries saw double-digit growth in the quarter.
In Asia, revenue increased 2 percent year-over-year in the quarter. Growth was driven by price increases and strength in Australia and ASEAN countries offset by reduction in rice acres in India and unfavorable FX of 3 percent for the region in the quarter.
Sales in EMEA grew 11 percent organically versus prior year period and was flat including FX impact from the weakening of the Turkish lira, the euro and other European currencies. Sales growth was primarily driven by strong pricing actions across the region as well as demand for products such as Rynaxypyr™ active ingredient for corn and top fruit and herbicides for sunflowers.
Globally, Plant Health continued its growth momentum with biological product line sales growing 15 percent in the quarter compared to previous year.
FMC first quarter adjusted EBITDA was $355 million, an increase of 16 percent from the prior-year period. This increase was driven primarily by pricing gains across all regions and volume gains led by Latin America and North America. The favorable price and volume gains more than offset significant cost inflation, as well as currency headwinds.
Full Year 2022 and Second Quarter Outlook2
Despite the volatile supply environment, the company continues to forecast solid growth in revenue and EBITDA and maintains its guidance ranges as a result. FMC's full-year 2022 revenue is forecasted to be in the range of $5.25 billion to $5.55 billion, representing an increase of 7 percent at the midpoint versus 2021 driven by volume and price growth in all regions partially offset by foreign currency impact, particularly in EMEA. Full-year adjusted EBITDA is expected to be in the range of $1.32 billion to $1.48 billion, representing 6 percent year-over-year growth at the midpoint. Sustained cost inflation, supply disruptions and FX continue to be substantial challenges, with further potential for headwinds from the company's decision to cease operations and business in Russia. 2022 adjusted earnings per share are now expected to be in the range of $6.70 to $8.00 per diluted share, representing an increase of 6 percent year-over-year at the midpoint. Interest expense is now expected to be $125 million to $145 million due to rising interest rates. Adjusted earnings per share exclude any impact from potential 2022 share repurchases and assumes weighted average diluted shares outstanding (WADSO) of approximately 127 million. Full-year free cash flow is expected to be $515 million to $735 million.
FMC saw customer demand advanced into the first quarter due to concerns about supply availability in the industry. Considering the very strong first quarter, second quarter revenue is expected to be in the range of $1.31 billion to $1.39 billion, which is up 9 percent at the midpoint compared to second quarter 2021. Adjusted EBITDA is forecasted to be in the range of $330 million to $370 million, representing a 1 percent increase at the midpoint. Significant cost inflation and FX are expected to be headwinds in the second quarter. FMC expects adjusted earnings per diluted share to be in the range of $1.70 to $2.00 in the second quarter, which represents a 2 percent increase at the midpoint versus second quarter 2021. Midpoint of Q2 guidance combined with Q1 actual results implies 11 percent increase in first half sales, 8 percent increase in first half EBITDA and 11 percent increase in first half EPS compared to the same period last year.
"Considering our Q1 outperformance combined with Q2 guidance, FMC remains on track to deliver robust first half revenue and EBITDA growth, despite persistent costs and FX headwinds. We expect costs will keep increasing in the second quarter but will be offset by solid volume growth and pricing actions. FMC continues to meet our customer's demand despite supply chain and logistics disruptions around the globe, impacts of the war in Ukraine and the challenges of renewed COVID shutdowns in China," said Douglas.
^ EPS estimates assume 127 million diluted shares for full year and 127 million diluted shares for Q2. Outlook for EPS and WADSO does not include the impact of any share repurchases that may take place in 2022
Company Decision to Cease Operations and Business in Russia
FMC has discontinued its operations and business in Russia. Early in the war, FMC took substantial measures to reduce its operations and business in Russia. The company suspended new capital investments, marketing, and advertising; discontinued R&D activities; stopped imports of all products; and suspended development of new products and business. However, increasing reports of potential war crimes, human rights abuses and other atrocities cannot be ignored. Our values as a company and the realities of unprecedented sanctions no longer allow FMC to operate and grow our business in Russia.
1. Organic revenue growth (non-GAAP) excludes the impact of foreign currency changes.
2. 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.