FMC Corporation

Good morning and welcome to the fourth quarter 2025 earnings call for the FMC Corporation. This event is being recorded and all participants are in a listen only mode. 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 the star key then one at any time. If you are using a speakerphone, please pick up your handset before pressing the keys. I would now like to turn the conference over to Mr. Kirk Brooks, Director of Investor Relations for FMC Corporation. Please go ahead.

Good morning, and welcome to FMC Corporation's fourth quarter earnings call. Joining me today to provide today's prepared remarks are Pierre Brondeau, Chairman, Chief Executive Officer and President, and Andrew Sandefur, Executive Vice President and Chief Financial Officer. After their comments, we will take questions. Our earnings release in today's slide presentation are available on the FMC Investor Relations 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 on these risks and uncertainties. Today's discussion and the supporting materials will include references to adjusted EPS, adjusted EBITDA, free cash flow, organic revenue growth, and revenue excluding India, all of which are non-GAAP financial measures. Please note that as used in today's discussion, CTPR means Chlorantranilipril, 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'm going to turn the call over to Pierre.

Thanks, Gareth, and good morning, everyone. Last night, FMC announced a fourth quarter and full year 2025 results. as well as their 2026 priorities. Importantly, we also announced that our board of directors has authorized exploring strategic options, including but not limited to a potential sale of the company. To strengthen our business and position ourselves for success, we are laser focused on executing operational priorities in 2026. Those include strengthening the balance sheet, improving the competitiveness of a core portfolio, managing a post-patent Renaception strategy, and driving growth over new active ingredients. In parallel, the company is working to evaluate the best path forward for the benefit of the business and to maximize shareholder value. Accordingly, the Board of Directors has decided that a formal proactive process to evaluate strategic options makes sense to undertake at this time. The strategic review is at a preliminary stage. We have retained financial and legal advisors to assist us with this process. This strategic review does not impact the process underway to sell our India commercial business. As we look ahead, we are committed to position FMC for long-term success, and that starts with working toward our 2026 priorities as laid out on slide four. To strengthen our balance sheet, we are targeting paying down over $1 billion of debt through asset sales and licensing agreements. This includes the sale over India commercial business, which continues to progress with binding bids expected to be received in the second quarter. In addition, we are in active discussions regarding licensing agreements, which include upfront payments. Increasing the competitiveness of our off patent portfolio product remains a top priority. Our goal is to lower the cost of a non-diamide products to more effectively compete against generics. 2025 sales of these core products, excluding Renexapyr, were approximately $2.2 billion. Nearly $1 billion of these sales came from products manufactured in high cost facilities. We expect to lower the manufacturing cost of these products by at least 35% by 2027. This is a complex process which will require re-registration for most products, as well as a buildup of inventory in advance of the transition. As a result, we will be limited in our ability to adapt to manufacturing mix to the changing needs of our customers. We believe this reduced flexibility will act as a sale headwind in 2026 and has been reflected in the forward guidance. In addition, we are executing a post-pattern strategy for the next appeal. 2025 sales were just over $800 million and in line with our expectation. Beginning 2026, there will be generic offerings of CTPR in all markets. As CTPR becomes more widely available through generics, resistance is likely to increase. For example, We are seeing pest resistance in rice crops in China and Japan. Our advanced formulations and mixture are designed to address this challenge. As the owner of the original molecule, we have years of historical proprietary data which benefit our development of formulations and mixtures to combat resistance. for a more basic formulations of Renexapyr. Our plan remains to lower price and grow volume by capturing market share from all the classes of insecticides. We are already observing success with this strategy in a number of countries. We anticipate branded Renexapyr earnings barriers in 2026 to be in line with prior as higher volume particularly for more advanced offerings, and lower cost offset lower price. Finally, we are committed to the continued sales growth over four new active ingredients. We are only in the early stages of sales for four new molecules, but we are already seeing solid growth. Sales have increased from approximately 130 million dollars in 2024 to approximately 200 million dollars in 2025. So sales are almost entirely driven by Fundapeer and Isoflex. Doodelex received emergency registration in two countries, which resulted in modest sales in 2025. With while sales of new active ingredients grew 54% in 2025, they were below our expectations of $250 million. This was mainly due to impacts from later than expected registration for isoflakes in Great Britain. We estimate 2026 sales for new active ingredients to be between 300 million and $400 million. These activities are in high demand, with three of them offering a new mode of action. We still expect sales of the four activities to exceed $2 billion by 2035. We believe executing these priorities position us to enter 2027 with a stronger balance sheet, a more competitive portfolio, and growing sales of higher margin differentiated products. Our 2026 full year guidance is provided on slide five. We're expecting full year sales of $3.6 billion to $3.8 billion to be down 5% at the midpoint versus prior year. Price is expected to be a mid-single-digit headwind driven by Renexa Peer, which is consistent with our post-pattern strategy. The removal of India is expected to be a 2% full-year headwind that will only impact the first half. Excluding India, we expect volume to be modestly higher driven by new actives and branded Renexa Peer. Full year adjusted EBITDA is expected to be between $670 million to $730 million. As you can see on slide six, the main headwind versus prior is in our legacy portfolio due to competitiveness. Renexapyr overall is expected to decline, driven by dynamite partner sales. It is important to note that branded renexapia earnings are expected to be in line with prior year as we implement our strategy. Tariffs are expected to be a 20 million dollars headwind, nearly all of which will impact first quarter results. We expect positive impact from a growth portfolio with particularly strong contribution from new active ingredients. Our first quarter sales guidance outlined on slide seven is $725 million to $775 million, 5% lower than prior year. Price is expected to be lower by mid single digit which is consistent with our expectation for all quarters this year. The removal of India represents an additional 5% headwind. We do expect some volume growth as modest increases across most regions are largely offset by a few significant factors. There have been a large number of generic CTPR offerings announced, particularly in the U.S. and Brazil, as the last of our patents expired at year-end. Distributors and retailers have been reluctant to fully stock Renexapier until they better understand the quality, availability, and grower response to these generic offerings. We believe generic entry is also impacting our dynamite partners from whom we are expecting lower orders in the first quarter. Finally, planned registration losses in Europe will impact volume growth. We expect adjusted EBITDA to be between $45 million and $50 million, which is 58% lower than prior year and represents about half of the total EBITDA net headwind we expect for the year. The expected EBITDA reduction is largely due to lower price as well as cost factors that are unique to Q1. For example, manufacturing costs are unfavorable to prior year in the first quarter But as the year progresses, manufacturing costs are forecasted to become favorable. In addition, the full year $20 million tariff charges are recorded almost entirely in Q1. EBITDA margin in the first quarter is expected to be around 7%. This abnormally low margin is caused by the combination of lower sales on which to absorb relatively flat fixed cost and the unique cost headwinds I just noted. We expect this margin profile to be unique to Q1 with sub-second quarter margins returning to more normal levels as a result of higher sales and favorable manufacturing costs. I will now turn the call over