FMC Corporation announces fourth quarter and full-year 2023 results within guidance ranges, provides 2024 outlook

Date:02-06-2024

Fourth Quarter 2023 Highlights

• Revenue of $1.15 billion, a decrease of 29 percent versus Q4 2022 and down 30 percent organically¹

• Consolidated GAAP net income of $1.10 billion, up 291 percent versus Q4 2022

• Adjusted EBITDA of $254 million, down 41 percent versus Q4 2022

• Consolidated GAAP earnings of $8.77 per diluted share, up 304 percent versus Q4 2022

• Adjusted earnings of $1.07 per diluted share, down 55 percent versus Q4 2022

• 14 percent of sales in the quarter from new product introductions (NPI)

Full-Year 2023 Highlights

• Revenue of $4.49 billion, reflecting a year-over-year decline of 23 percent and down 22 percent organically¹

• Consolidated GAAP net income of $1.32 billion, up 78 percent versus 2022

• Adjusted EBITDA of $978 million, down 30 percent versus 2022

• Consolidated GAAP earnings of $10.53 per diluted share, up 81 percent versus 2022

• Adjusted earnings of $3.78 per diluted share, down 49 percent versus 2022

• Consolidated GAAP cash flow from operations of negative $300 million, down 145 percent versus 2022

• Free cash flow of negative $524 million, down 202 percent versus 2022

• NPI sales of $590 million represented annual record 13 percent of total revenue

Full-Year 2024 Outlook²

• Revenue of $4.50 to $4.70 billion, reflecting 2.5 percent growth at the midpoint

• Adjusted EBITDA of $900 million to $1.05 billion, essentially flat to prior year at the midpoint

• Restructuring fully underway and expect to receive $50 to $75 million of adjusted EBITDA benefit

• Adjusted earnings per diluted share of $3.23 to $4.41, reflecting 1 percent growth at the midpoint

• Free cash flow is expected to be in the range of $400 to $600 million, reflecting greater than 100 percent cash flow conversion at the midpoint

FMC Corporation (NYSE:FMC) reported fourth quarter 2023 revenue of $1.15 billion, a decrease of 29 percent versus fourth quarter 2022, driven by continued channel destocking in all regions with adverse weather in Brazil being a further headwind in Latin America.  Excluding the impact of foreign currencies, organic revenue declined 30 percent year-over-year.  On a GAAP basis, the company reported earnings of $8.77 per diluted share in the fourth quarter, up 304 percent versus fourth quarter 2022 due to significant one-time tax benefits largely driven by new tax incentives granted to the company's Swiss subsidiaries.  Adjusted earnings were $1.07 per diluted share, a decline of 55 percent versus fourth quarter 2022.

* Guidance refers to midpoint of EPS guidance presented in October 2023

"During the fourth quarter we observed continued channel destocking in all regions, while drought in Brazil also amplified challenges in Latin America," said Mark Douglas, FMC president and chief executive officer.  ″Despite this, sales of our newer and more differentiated products were robust, including branded diamide growth of 5 percent. Our leading technologies continue to gain traction with growers, who remain invested in protecting their yields with steady on-the-ground application of crop protection products.″

FMC revenue in the fourth quarter was driven by a 25 percent decline from volume. A 5 percent decline in pricing was partially offset by a 1 percent FX tailwind. Sales of products launched in the last five years comprised 14 percent of total revenue in the quarter.

Sales in North America declined 37 percent versus a very strong fourth quarter 2022 driven by lower volume. Latin America sales declined 38 percent (down 41 percent organically) mainly from lower volume from weaker demand, as well as adverse weather in Brazil. Pricing in the region declined by low-double digits. Despite the overall decrease in sales in the region, branded diamide sales in Latin America were essentially flat to prior year, aided by the successful launch of Premio® Star insecticide in Brazil. In Asia, fourth quarter revenue was flat versus prior year period as fungicides grew and branded diamides were essentially flat. In EMEA, sales declined 24 percent (down 22 percent organically) driven by volume declines due to channel destocking, mainly in herbicides. This was partially offset by a low-to-mid single digit price increase as well as strong growth in branded diamides. The Plant Health business was down 25 percent versus the prior-year period as the business experienced similar volume headwinds as the rest of the portfolio.

Fourth quarter adjusted EBITDA was $254 million, 41 percent lower than prior-year period primarily driven by volume decline, with lower pricing more than offset by cost tailwinds.  Costs were favorable due to lower input costs as well as aggressive cost controls.  FX was a modest tailwind.     

For the full year, FMC reported revenue of $4.49 billion, a decrease of 23 percent compared to 2022. Excluding the impact of FX, year-over-year sales declined 22 percent organically.  On a GAAP basis, the company reported full-year net income of $1.32 billion, up 78 percent versus the previous year due to one-time tax benefits reported in the fourth quarter.  Consolidated earnings of $10.53 per diluted share represents a year-over-year increase of 81 percent.  Full-year adjusted earnings were $3.78 per diluted share, a decrease of 49 percent compared to 2022.

"Despite challenging market conditions in 2023, we maintained very healthy adjusted EBITDA margins by holding or raising price in most countries and by aggressively managing costs in response to the demand decline.  NPI sales were down 2 percent, while our branded diamides were down by 7 percent, outperforming the rest of our portfolio and the broader market.  The resilient performance of these differentiated products illustrates the importance of innovation in our business,″ Douglas said.

On a GAAP basis, cash flow from operations was negative $300 million, a decrease of 145 percent versus 2022, primarily due to significantly lower payables and lower adjusted EBITDA, partially offset by lower use of cash for receivables and inventory with additional headwinds primarily from cash interest and taxes.  Free cash flow in 2023 was negative $524 million, down 202 percent versus 2022, primarily due to lower cash from operations.

Full Year 2024 Outlook²

Full-year 2024 revenue is forecasted to be in the range of $4.50 billion to $4.70 billion.  The increase of 2.5 percent at the midpoint versus 2023 is expected to be largely driven by growth of new products, primarily in the second half.  The midpoint of revenue guidance assumes the crop protection market is flat-to-down low-single digits as modest market growth during the second half is offset by market contraction in the first half.  Full-year adjusted EBITDA is expected to be between $900 million and $1.05 billion, essentially flat at the midpoint to the prior year.  Headwinds to adjusted EBITDA in the first half are expected from continued destocking, higher inventory costs and modest pricing pressure.  Tailwinds in the second half are expected from sales growth of new products, a greater portion of savings from restructuring actions and some benefit from market recovery.  The range for 2024 adjusted EPS is expected to be $3.23 to $4.41 per diluted share, representing an increase of 1 percent year-over-year at the midpoint due to lower interest expense and D&A.  Full-year free cash flow is expected to be $400 million to $600 million, an increase of over $1.0 billion versus 2023 at the midpoint driven largely by rebuilding of payables and lower inventory.

"Our outlook for this year largely relies on factors within our control.  We are viewing 2024 as a transition year, with momentum expected to build as the year progresses, driven by our new technologies and the benefits of our restructuring actions along with an improving demand backdrop.  The structural actions we are taking now combined with the transitory nature of the majority of the cost headwinds should provide a strong setup for us to achieve our mid-term goals, including our unchanged 2026 financial projections.″ said Douglas.

First Quarter Outlook²

First quarter revenue is expected to be in the range of $925 million to $1.075 billion, a 26 percent decrease at the midpoint compared to first quarter 2023 due to lower volume from destocking activity in all regions.  In addition, price is expected to be a low single digit headwind, mainly in Latin America and Asia.  Adjusted EBITDA is forecasted to be in the range of $135 million to $165 million, a decline of 59 percent at the midpoint versus the prior-year period due to lower sales as well as the gross margin impacts of high-cost inventory carried over from prior year.  Adjusted EPS is expected to be in the range of $0.21 to $0.43 in the first quarter, representing a decrease of 82 percent at the midpoint versus first quarter 2023 mainly due to lower adjusted EBITDA.

^Adjusted EPS estimates assume 125.5 million diluted shares for full year and 125.5 million diluted shares for Q1. Outlook for Adjusted EPS and WADSO does not include the impact of any share repurchases that may take place in 2024.

*Percentages are calculated using whole numbers. Minor differences may exist due to rounding.

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.