FMC Corporation

Good morning and welcome to the first quarter 2020 earnings call for FMC Corporation.

Thank you and good morning, everyone. Welcome to FMC Corporation's first quarter earnings call. Joining me today are Pierre Brondeau, Chairman and Chief Executive Officer, Mark Douglas, President and CEO-elect, and Andrew Sandefur, Executive Vice President and Chief Financial Officer. Pierre will review our first quarter performance, Andrew will provide an overview of select financial results, and Mark will discuss the outlook for the rest of the year. We will then address your questions. Our earnings released in today's slide presentation are available on our website, and the prepared remarks from today's discussion will be made available after the call. Please note we published an updated slide presentation this morning to add one slide that flew into Pierre acquisition. Finally, let me remind you that today's presentation 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 filings 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 include references to adjusted EPS, adjusted EBITDA, adjusted cash from operations, pre-cash flow, and organic revenue growth, 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 state references. A reconciliation definition of these terms as well as other non-GAAP financial terms to which we may refer during today's call are provided on our website. With that, I'll now turn the call over to Pierre.

Thank you, Michael, and good morning, everyone. FMC delivered another very strong performance in the first quarter with 9% organic revenue growth. Despite all the challenges posed by the COVID-19 pandemic, underlying demand for our products remained very healthy in the quarter. These results were driven by the exceptional work of our global supply chain, operations, and commercial teams. Before going into the detail of our Q1 results, we felt it was important to provide a high-level view of the state of our company in this uncertain global economic environment. We are an agriculture sciences company, and our products are critical to the global food supply chain. Since agriculture is considered an essential industry in the countries where we operate, we have avoided significant plant closures and all our facilities are operational. In fact, all our key plants in China operated through the Chinese New Year holiday and continue to do so today. The well-being of our employees is FNC's top priority. Although most FNC employees around the world have been working from home during these last several weeks, we have hundreds of employees who continue operating on manufacturing sites, blending and packaging facilities, and distribution warehouses. These sites, as well as certain non-manufacturing locations with limited employees in the office, are using a variety of best practices to address COVID-19. This includes the use of facial PPE, social distancing protocols, expanded cleaning procedures, and other precautionary measures recommended by leading health authorities. Due to the stay-at-home orders around the globe, our commercial teams use a variety of digital technologies, including workshops, webinars, and virtual field days to continue working closely with our customers and generate demand. We successfully mitigated the impact of COVID-19 in Q1, but given the spread of the pandemic in March and increased FX headwinds, we are conscious of potential risks in the rest of the year. Therefore, we have already implemented price increases and cost-saving measures across the company. Marc will describe the potential headwinds as well as the pricing and cost containment actions in more detail later. Turning to slide three, FNC's strong financial performance from 2019 continued in the first quarter against an industry-leading comparison. Last year, our business grew 14% organically in Q1. This year, we reported $1.25 billion in first quarter revenue, which reflects 5% year-over-year growth on a reported basis and 9% organic growth. This increase was driven by double-digit growth in India, Pakistan, France, UK, Russia, Brazil, Mexico, Argentina, and Canada. Adjusted EBITDA was $357 million, an increase of 4% compared to the prior year period. EBITDA margins were 28.6%, essentially flat with prior year. despite $52 million in combined headwinds from FX and costs in the quarter. Adjusted EPS was $1.84 in the quarter, an increase of 7% versus Q1 2019. This year-over-year performance was driven largely by the $14 million increase in EBITDA, reduced share count, and the benefit of a lower tax rate partially offset by higher interest expense. Moving now to slide four. Q1 revenue grew by 5% versus prior year with volume contributing 7% growth and price adding 2% offset partially by a 4% headwind from FX. we achieved higher pricing in all regions. New product launches this year generated 1.5% of the 5% top-line growth we posted in Q1, offsetting half of the 3% headwind from products that were discontinued either because of registration cancellations or rationalizations that we had planned for and discussed in our last earnings call. Latin America grew 26% year-over-year and 38% excluding effects, driven by double-digit growth in Brazil, Mexico, and Argentina. Insecticides were especially strong in Brazil on cotton, sugarcane, and soybean, and herbicide growth in Brazil was driven by sugarcane replanting. As we have commented for many quarters, we monitor our product in the channel in Brazil very closely, and our channel inventories continue to be at low levels as we come to the end of the season. In Argentina, solid demand for insecticide drove new sales, and in Mexico, fruit and vegetable exports continue to present increased opportunities for a dynamite portfolio. In North America, sales increased 3% year-over-year, driven by strong demand for an active peer insect control, as well as fungicide and a new pre-emergent herbicide authority edge. In Canada, our authority herbicides continue to gain adoption, driven by weed-resistant concerns. Over the past couple of years, we have invested in upgrading our authority herbicide franchise to focus on newer, more effective formulations to combat changing weed resistance. This has allowed us to reduce sales of less effective, older formulations and lower our channel inventories. Plus, channel inventories in North America continue to improve, and with the new season starting, we do not see a reason for concern going forward. Sales in EMEA grew 1% year over year and 4% excluding FX due to robust demand for newly introduced fungicides and solid growth in herbicides for cereals. We saw growth in over 10 countries, and new products drove a 2% increase in overall revenue. Registration cancellations and product rationalizations were a headwind. In Asia, revenue decreased 3% year over year, but was flat, excluding FX. The decline was driven primarily by foreign currency headwinds, and product rationalization, as well as COVID-19-related challenges in China, which impacted both supply and demand. These were partially offset by broad-based double-digit growth in India and Pakistan, along with a return to growth in Australia as weather improved. Turning to the first quarter EBITDA bridge on slide five, you see a $40 million volume contribution, which drove the year-over-year growth. We also realized price increases of $26 million against $45 million in FX and WINS. I will now turn it over to Andrew.