FMC Corporation

Good morning and welcome to the fourth quarter 2019 earnings call for FMC Corporation. Phone lines will be placed on listen-only mode throughout the conference. After the speaker's presentation, there will be a question and answer period. I would now like to turn the conference over to Mr. Michael Worley, Director of Investor Relations for FMC Corporation. You may now begin.

Thank you and good morning, everyone. Welcome to FMC Corporation's fourth quarter earnings call. Joining me today are Pierre Brondeau, Chairman and Chief Executive Officer, Mark Douglas, President and CEO-Elect, and Andrew Sanfer, Executive Vice President and Chief Financial Officer. Pierre will review FMC's fourth quarter and full year performance, then Andrew will provide an overview of select financial results, and then Mark will discuss the company's 2020 outlook. We will then address your questions. The slide presentation that accompanies our results, along with our earnings release and our 2020 outlook statement, are available on our website, and the prepared remarks from today's discussion will be made available after the call. Finally, let me remind you that today's presentation and discussion will include forward-looking statements that are subject to various risks and uncertainties concerning specific factors, including but not limited to those factors identified in our earnings release and in our finance with the SEC. Information presented represents our best judgment based on today's understanding. Actual results may vary based upon these risks and uncertainties. Today's discussion and the supporting materials will include references to adjusted EPS, adjusted EBITDA, adjusted cash from operations, and free cash flow, all of which are non-GAAP financial measures. Please note that earnings shall mean adjusted earnings and EBITDA shall mean adjusted EBITDA for all income statement references. The reconciliation and definition of these terms, as well as other non-GAAP financial terms to which we may refer during today's conference call, are provided on our website. With that, I will now turn the call over to Pierre.

Thank you, Michael, and good morning, everyone. FFC's strong financial performance continued in the fourth quarter, capping an excellent year for the company. Her performance was marked by volume growth across all regions and once again highlighted the benefit of a balanced geographic exposure, the strength of her portfolio, and the impact of new product launches. Turning to slide three. FMC reported $1.2 billion in fourth-quarter revenue, which reflects a year-over-year increase of 9% on a reported basis and 11% organic growth, excluding FX headwinds. This increase was driven by double-digit organic growth in Argentina, Canada, France, Russia, India, China, Indonesia, and Pakistan. as well as price increases across all regions except North America. Adjusted company EBITDA was $320 million, an increase of 17% compared to the prior year period and at the top end of our guidance. Company EBITDA margins were about 27%, up 180 basis points year over year, despite $28 million in combined headwinds from raw material costs, tariffs, and FX in the quarter. Adjusted EPS was $1.76 in the quarter, an increase of 21% versus recast Q4 2018. The year-over-year performance was driven largely by a $0.34 increase on the EBITDA line and the benefit of reduced share count, partially offset by higher interest expenses. Compared to a most recent guidance, adjusted EPS was also much higher due to very strong operational performance, as higher volume and solid cost control drove $0.07 outperformance versus guidance, while a much lower land forecasted tax rate in the resulted in 21 cents of the BIT versus GAIBLS. Moving now to slide four. Q4 revenue grew by 7% versus prior year, with volume contributing 11% growth, offset partially by a 2% headwind from FX. Overall price was flat as increased rebates in North America offset strong pricing in the other three regions. Given the start of the southern hemisphere season, Latin America made up over 40% of its fourth quarter revenue. Sales in Latin America grew 10% year-over-year or 13% organically driven by very strong growth in Argentina and single-digit growth in Brazil and Mexico. Argentina posted significantly higher volumes for a pre-emergent herbicide on soybean. We are very pleased with this result in Argentina. As you may recall, we talked about the significant changes we made to improve market access in Argentina, which are now delivering on our expectations. As forecasted, following four quarters of very strong double digit growth, Brazil growth slowed in Q4, but continued to deliver increased volume. Channel inventories over product in Brazil remain at normal levels for this point of the season and are well under control heading into 2020. In North America, Revenue increased 10% year-over-year, driven by strong demand for an acceptor insect control in specialty crops, growth of Ethos XD, a combination insecticide and fungicide for in-furrow applications, and our new Lucento fungicide. Herbicide sales in Canada were also strong. our overall volume was above what was expected in the quarter, resulting in higher-than-forecast rebates. These rebates are accounted for in our pricing line, which offset price increases in other regions. We continue to closely monitor channel inventories of our products in the U.S. as we head into the spring. To ensure a reduction of those channel inventories on a year-over-year basis, we proactively sold less of our authority pre-emergent herbicide into the channel in the second half of 2019 than we did in the same period in 2018. In Asia, we had a very strong fourth quarter performance. with a revenue increase of 9% and 10% organic growth year over year in an otherwise down market. India, China, Indonesia, and Pakistan all recorded double-digit growth rates driven by insecticide volumes. Following a very strong Q2 and Q3, India delivered over 20% revenue growth in Q4, driven by rice and sugar cane applications and new product launches. China's strong revenue growth was driven by dynamite demand and fungicide sales in citrus and vegetable applications. In the MEA, sales grew 5% overall, as France, UK, Russia, Italy, and Romania all posted double-digit year-over-year growth. Q4 organic growth in the region was 7% and was driven largely by sales in France and Russia, which more than offset difficult drought conditions that impacted cereal plantings in Central and Eastern Europe. Turning to the fourth quarter EBITDA bridge on slide five, you see a $75 million volume contribution which came from all regions and which drove the year-over-year growth. Relative to a guidance, both volume and cost management led to the strong outperformance. On slide six, full-year revenue was $4.6 billion, an increase of 8% compared to the prior year. Excluding FX headwinds of 3%, this represents 11% organic growth. Full year adjusted EPS increased 85 cents year over year, or 16%, driven largely by EBITDA growth and the benefit of share repurchases. On slide seven, you can see that FMC growth for 2019 were well ahead of the crop protection market in every region. These percentages shown are all in U.S. dollar terms. Despite the extreme weather and trade challenges in the year, full-year sales in North America were up 3%, which was ahead of the forecast and 900 basis points ahead of the market. FMC full-year sales in Latin America grew 19%, 600 basis points ahead of the market, and 23% organically. In the MEA, our sales grew 4% in the year, which was 700 basis points ahead of the market and 10% organically. FNC revenue growth in Asia was 3% on the reported basis, 800 basis points ahead of the market, and 8% organically, excluding FX headwinds across many currencies. Globally, FMC grew 8% in 2019 in US dollar terms versus a flat global market. We believe our outperformance in every region was due to the strength of a portfolio, a crop balance, and a strong commercial presence around the world. Moving to slide eight, where you can see our full EBITDA and revenue drivers. Volume was the main driver of revenue growth, while price increased sales by 3%. Almost 20% of this year's revenue growth came from 2019 product launches. And our vitality index, which we calculate as the proportion of total revenue coming from products introduced in the last five years, was roughly 10% of total sales. The Diamides grew in the low teens in 2019, and the rest of the portfolio grew in the mid-single digits. On our Q2 earnings call, we outlined our plans to profitably grow our Diamide franchise well beyond the expiration of key patents and all the way through the end of this decade via the engagement of third parties. We indicated we had in place or were negotiating 15 such commercial agreements. Six months later, we have expanded the number of agreements to cover four global partnerships and 41 separate local company agreements covering 11 countries. A number of these new agreements are active and commercial sales are occurring. We will continue to expand the franchise through more of these commercial agreements. These partnerships are important and in most cases allow us to access markets we are not selling into today. They are a key extension of our commercial reach. 2019 adjusted EBITDA of $1.22 billion was up 10% year-over-year, despite $228 million in combined headwinds from higher costs and effects. Revenue and the EBITDA growth rate in 2019 are both above the high end of the five-year growth target we provided in December 2018. I will now turn it over to Andrew.