FMC Corporation

And all participants are in listen mode only. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's prepared remarks, there will be an opportunity to ask questions. To be placed in the Q&A queue, please press star followed by one on your telephone keypad. If you're using a speakerphone, please remember to pick up your handset before pressing the keys. I would now like to turn the conference over to Mr. Zach Zaki, Director of Investor Relations with FNC Corporation. Please go ahead.

Thank you, Jason, and good morning, everyone. Welcome to FNC Corporation's third quarter earnings call. Joining me today are Mark Douglas, President and Chief Executive Officer, and Andrew Sandefur, Executive Vice President and Chief Financial Officer. Mark will review our third quarter performance and provide an outlook for the rest of the year, as well as an early view of 2023. Andrew will provide an overview of select financial results. Following the prepared remarks, we will take questions. Our earnings release and today's slide presentation are available on our website, and the prepared remarks from today's discussion will be made available after the call. 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 filings with the Securities and Exchange Commission. 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, free cash flow, net debt, and organic revenue growth, all of which are non-GAAP financial measures. Please note that as used in today's discussion, Earnings means adjusted earnings, and EBITDA means adjusted EBITDA. A 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 Mark.

Thank you, Zach, and good morning, everyone. FMC's strong growth continued in the third quarter, with a robust start to the Latin American season, as well as solid pricing actions across all regions driving our results. New products gain momentum in the quarter, growing 26% year over year. As expected, Q3 saw the highest year over year cost inflation for 2022. Looking to Q4, we are seeing sequentially lower inflation across the supply chain. With this in mind, we expect a strong finish to the year and remain confident in our ability to deliver our fourth quarter and full year forecast. Our Q3 results are detailed on slides 3, 4 and 5. Revenue was up 19% organically, EBITDA down 11%, and EPS down 14%. As expected, these declines in the quarter were driven by the highest cost inflation this year, which more than offset the good start to the Latin American season and average global price increases of 7%. Adjusted earnings were $1.23 per diluted share in the quarter, 13 cents above the midpoint of our guidance range. with the vast majority of the outperformance driven by higher EBITDA. We delivered double-digit year-over-year growth across the portfolio, including 23% growth in herbicides, 19% in fungicides, and 10% in insecticides. Third quarter sales were $1.38 billion, led by volume growth in Latin America and North America, as well as price increases across all regions. In North America, sales increased 21% year-over-year, Fungicides grew rapidly in the quarter, especially on corn in the Midwest. Overall performance in the Midwest across corn, soybeans, and other crops more than offset lower diamide sales in the West due to drought conditions. In Latin America, sales increased 35% year-over-year, led by Brazil and Argentina. With a backdrop of strong commodity prices and increasing acres, grower confidence in the region is high. Our results were driven by a robust start to the new season with strong selective herbicide and insecticide sales, price increases, and expanding market access. FMC has been investing in expanding market access by adding commercial resources and developing new, broader relationships with large cooperatives and distributors. These investments are focused on key row crops such as soybean and corn, and we are starting to realize the results benefit from these increased sales. As an example, Bifenthrin-based insecticides, including those used to control stink bugs in soybeans, were the largest growth driver in the region for the quarter. We also successfully launched Onsuva, our fluendipia-based fungicide for soybeans and peanuts, in Argentina and Paraguay during the quarter. This is the second new molecule from FMC's pipeline, following the successful introduction of Isoflex herbicide in Australia last year. Turning to EMEA. Third quarter sales were down 12% versus prior year and were up 1% organically. In addition to strong pricing, results were driven by increased demand for diamides on fruit and vegetables and herbicides on cereals and oilseed rape. FX was a significant headwind in the quarter. FMC's decision to exit the Russian market, the first major crop protection companies to do so earlier this year, had an approximately $8 million negative impact on EBITDA in the quarter. And finally, Asia was down 6% versus the third quarter last year and up 2% organically. Pricing gains were more than offset by FX headwinds. Floods in Pakistan and erratic weather in India and other countries impacted performance in the quarter. However, demand remains strong for new products based on diamides and other chemistries, and FMC continues to make significant progress in improving our market access in geographies where we are underrepresented, such as Indonesia, Vietnam, and Thailand. Investments to expand market access have not been limited to Latin America and Asia. We have also invested in market expansions in the US, Turkey, and several other countries. This is an important element of our growth strategy and includes scaling up of FMC's technical service organization, expanding our sales force, pursuing new collaborations with distribution partners, and other steps that are beginning to deliver market share gains. These initiatives become even more important as we continue to introduce novel technologies that require close engagement with growers. Overall, adjusted EBITDA for the third quarter was $261 million, a decrease of 11% compared to the prior year period, but $6 million above the high end of our guidance range, primarily due to somewhat lower cost inflation than we previously anticipated. As forecasted, costs on FX headwinds more than offset price increases and volume gains. Average price increases of 7% contributed $85 million in the quarter. We are seeing initial signs of decelerating inflation, and we are confident that cost headwinds in 22 have peaked in the third quarter. FX was a $25 million EBITDA headwind in the quarter due to weakening of several currencies around the world. Moving to slide six, an FMC's full year 2022 and fourth quarter earnings outlook. With continued strength in market demand and the success of pricing actions to help offset cost increases in FX headwinds, we are raising full year 2022 revenue to a range of $5.6 billion to $5.8 billion, representing an increase of 13% at the midpoint versus 2021. Sales growth was driven by volume and price in all regions, partially offset by foreign currency impacts. We are narrowing the full-year adjusted EBITDA range to $1.37 billion to $1.43 billion, representing 7% year-over-year growth at the midpoint and reflecting the confidence in our order book and supply availability. The range for 2022 adjusted earnings per share is narrowed as well and is now expected to be $7.10 to $7.60 per diluted share, representing an increase of 7% year-over-year at the midpoint. Consistent with past practice, we do not factor in any benefit from potential share repurchases in our EPS guidance. Guidance for Q4 implies year-over-year sales growth of 8% at the midpoint compared to the prior year period. Pricing momentum and volume growth are expected to more than offset FX headwinds in the quarter. We have good visibility into demand for the quarter with strong order books for both the Brazilian and US markets. Cost increases are forecasted to be lower in Q4 compared to Q3. The combination of sales growth and lower cost headwinds is anticipated to result in EBITDA growth of 15% at the midpoint, with EPS up 9% at the midpoint year over year. Moving now to the update drivers of 2022 EBITDA outcomes on slide 7. Market growth is expected to remain in the mid to high single digit range, and we are seeing cost inflation beginning to decelerate. We are successfully mitigating the impact of lost sales from our decision to exit Russia, and have good visibility into supply to fulfill fourth quarter demand. Full year price increases of mid to high single digit and strong volume growth are expected to more than offset cost and FX headwinds, keeping the midpoint of our guidance unchanged at $1.4 billion. I'll now turn the call over to Andrew.