FMC Q2 2025 Earnings Report

FMC EPS Results

• Actual EPS: $0.69
• Consensus EPS: $0.59
• Beat/Miss: Beat by +$0.10
• One Year Ago EPS: $0.63

FMC Revenue Results

• Actual Revenue: $1.05 billion
• Expected Revenue: $995.15 million
• Beat/Miss: Beat by +$55.35 million
• YoY Revenue Growth: +1.20%

FMC Announcement Details

• Quarter: Q2 2025
• Date: 7/30/2025
• Time: After Market Closes
• Conference Call Date: Thursday, July 31, 2025
• Conference Call Time: 9:00AM ET

FMC (NYSE:FMC), an agricultural sciences company, provides crop protection, plant health, and professional pest and turf management products. It develops, markets, and sells crop protection chemicals that includes insecticides, herbicides, and fungicides; and biologicals, crop nutrition, and seed treatment products, which are used in agriculture to enhance crop yield and quality by controlling a range of insects, weeds, and diseases, as well as in non-agricultural markets for pest control. The company markets its products through its own sales organization and through alliance partners, independent distributors, and sales representatives. It operates in North America, Latin America, Europe, the Middle East, Africa, and Asia. The company was founded in 1883 and is headquartered in Philadelphia, Pennsylvania.

FMC Q2 2025 Earnings Call Transcript

Key Takeaways

• Positive Sentiment: Q2 sales were up 1% year-over-year driven by 6% volume growth, with adjusted EBITDA of $207 million and EPS of $0.69 slightly exceeding the high end of guidance thanks to cost tailwinds that offset pricing and FX headwinds.
• Positive Sentiment: Strong demand for new active ingredients Fluentapir and Isoflex drove high-single-digit growth in the growth portfolio, supported by the August launch of Fundatis in Great Britain, first invoiced shipment of BodiLex, and a full-scale pheromones pilot set for Q4.
• Neutral Sentiment: FMC decided to divest its India commercial business due to intense generic competition, high working capital requirements and limited EBITDA, then transition to a business-to-business model while retaining global manufacturing and R&D in India.
• Positive Sentiment: Excluding India, FMC maintains full-year 2025 guidance with revenue down ~2%, adjusted EBITDA up ~1%, and EPS flat; Q3 EBITDA is expected to rise ~14% and Q4 EBITDA ~4% versus prior year.
• Neutral Sentiment: FMC strengthened its balance sheet by issuing $750 million of subordinated notes (treated 50% as equity), keeping net debt stable at ~$3.7 billion (4.3× EBITDA), and projects free cash flow of $200 million–$400 million despite working capital normalization.

Presentation

[Operator]

Good morning, and welcome to the Second Quarter twenty twenty five Earnings Call for FMC Corporation. This event is being recorded. All participants are in a listen only mode.

[Operator]

I would like to turn the conference over to Mr. Curt Brooks, Director of Investor Relations for FMC Corporation. Please go ahead.

[Curt Brooks, Director - IR at FMC]

Good morning, everyone, and welcome to FMC Corporation's second quarter earnings call. Joining me are Pierre Brondeau, Chairman and Chief Executive Officer Andrew Sandifer, Executive Vice President and Chief Financial Officer and Reynaldo Pereira, President. Today, Pierre will review our second quarter performance and provide outlooks for the third quarter and fourth quarter. Andrew will provide an overview of Select Financial results. After our prepared remarks, we will take questions.

[Curt Brooks, Director - IR at FMC]

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 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.

[Curt Brooks, Director - IR at FMC]

Please note that as used in today's discussion, earnings means adjusted earnings, 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 Pierre.

[Pierre Brondeau, Chairman & CEO at FMC]

Thank you, Kurt, and good morning, everyone. Our goal during the first half of the year was to take a number of actions that would favorably position the company to deliver growth starting in the second half of the year and beyond. These are listed on Slide three. We have accomplished these critical objectives while delivering on all of our financial commitments. We believe the level of FMC products in the distribution channels has normalized in most countries, which will enable the implementation of a growth strategy.

[Pierre Brondeau, Chairman & CEO at FMC]

We have laid out a clear strategy for an exit year with key components well underway, including lower manufacturing cost and introducing new formulations. Our additional sales route in Brazil focused on direct sales to large corn and soybean growers has a fully trained staff, which with initial customer engagements already underway. Commercial activities have commenced, and we anticipate seeing early results starting in the third quarter as Brazil's next growing season begins. The strategies for our core portfolio and growth portfolio platforms are clearly defined and Q2 results are in line with these plans. Each region, subregion and countries has actionable strategies in place unique to their geographies.

[Pierre Brondeau, Chairman & CEO at FMC]

Demand for new actives, Fluentapir and Isoflex is very strong, and we have put the appropriate level of support in place to deliver on our target. Just today, we received registration for Fundatis herbicide containing ISOFLEX Active in Great Britain. The team is prepared for launch and we anticipate sales beginning in August. BodyLex Active has been introduced with meaningful sales expected to begin 2027. In fact, the first shipment was invoiced this month.

[Pierre Brondeau, Chairman & CEO at FMC]

Finally, Q4 of this year, we'll see the first full scale commercial pilot of pheromones. With these objectives completed, we are focusing on additional ways to improve the business, starting with addressing the challenges that we face in India. I will stick to these actions we are taking regarding our commercial business in that country in more detail in a moment. But first, I will walk through some highlights from our second quarter. Our second quarter results are detailed on Slide four, five and six.

[Pierre Brondeau, Chairman & CEO at FMC]

Results overall were at the higher end of our expectations with EBITDA and EPS slightly exceeding the high end of our guidance. Second quarter sales were 1% higher than prior year, driven by volume growth of 6%. We view channel destocking for a product as completed in most countries as we believe customers have reached their targeted levels of inventory. In the first half of the year, our active management of FMC product sales into the channel, combined with strong use of product on the ground, laid a solid foundation for growth in the second half. Price in the second quarter was down 3% with over half of the decline due to pricing adjustments made to diamide partners on cost plus contract to account for lower manufacturing costs.

[Pierre Brondeau, Chairman & CEO at FMC]

FX was a mild headwind of 1%. Our growth portfolio was the driver of higher sales with the core portfolio essentially flat. The growth portfolio's high single digit increase confirms the strong expectation we have for the new active ingredients. Our second quarter adjusted EBITDA of $2.00 $7,000,000 was 2% higher than prior year. As shown on Slide five, gains were driven by lower costs attributed to COGS tailwinds from lower raw materials, better fixed cost absorption and restructuring actions.

[Pierre Brondeau, Chairman & CEO at FMC]

Cost favorability more than offset price and FX headwinds as well as a modestly unfavorable product mix within the core portfolio. Our second quarter adjusted earnings per share of $0.69 was $0.10 higher than prior year, driven mainly by EBITDA growth and lower interest expense. On a regional basis, our strongest growth came from EMEA, driven by higher volume of herbicides, diamide partner sales and branded sales at the year. This was not surprising as many countries in EMEA were the first to reach targeted inventory levels in the channel. Latin America revenues increased slightly versus prior year as the region wrapped up the twenty twenty four-twenty twenty five growing season.

[Pierre Brondeau, Chairman & CEO at FMC]

North America sales declined 5% due to expected destocking in Canada. In The U. S, there was a solid volume growth of branded product following destocking action and delayed purchases during the first quarter. Asia was down due to lower pricing as well as lower volumes driven by ongoing destocking in India. You have heard me talking about challenges in India since I have been back.

[Pierre Brondeau, Chairman & CEO at FMC]

I believe that for FMC, there is a much stronger way to operate in this country. India has always been a difficult market to operate in. It is characterized by a fragmented distribution channel, serving tens of millions of growers, intense generic competition and a complex regulatory environment. This market requires a high level of working capital in a challenging price environment. Between 2021 and 2023, we anticipated strong growth of Rynaxypyr as we expected continued process patent protection post the expiration of the composition of matter patents.

[Pierre Brondeau, Chairman & CEO at FMC]

However, generics penetrated much faster than expected when, unlike in almost all other countries, we were unable to enforce our process patents. This prevented us from executing our strategy and significantly increased an already high level of working capital while slowing down the movement of the product through the distribution channel. Given that India generates very limited EBITDA and has substantial working capital, we have made the decision to change how we operate in this market. After a thorough process that considered multiple options, management and the Board made the decision to initiate the divestment of a commercial business in India. Following the sale of the business, we expect to quickly regain commercial momentum in India via a business to business model.

[Pierre Brondeau, Chairman & CEO at FMC]

As soon as the transaction is closed, we expect to supply for the short and mid term, the eventual buyer products requiring FMC own registration as well as product where FMC has favorable manufacturing costs. Most importantly, we expect to provide the buyer access to our IP protected products, including four new active ingredients and advanced diamide formulation. With a partner, better structure for growth in India, we expect molecules like WX, which have a strong potential in the country to gain strong growth as soon as we get the registration. In addition, we retain our active ingredients, global manufacturing and global research in India. We believe that the decision will enable faster resolution of the current challenges, reduce risk and volatility in future periods, free up cash for debt repayment, result in a stronger balance sheet and allow us to more readily deploy resources to other growth areas.

[Pierre Brondeau, Chairman & CEO at FMC]

Over time, it will also permit us to shift our India portfolio toward differentiated technologies with less working capital exposure. Turning to Slide seven, our full year guidance. As Andrew will explain further in a moment, our reported revenue will include India. However, we are excluding India from revenue guidance given that uncertainty of managing that business while selling it. India will be excluded from adjusted EBITDA and EPS.

[Pierre Brondeau, Chairman & CEO at FMC]

Revenue, excluding India, is gathered to be down 2% versus prior reported results as a mid single digit price decline and a flat to low single digit FX headwind are anticipated to be offset by volume growth, mainly in the second half. Adjusted EBITDA is expected to be 1% higher at the midpoint as lower cost and volume growth are mostly offset by price and FX headwinds. Adjusted earnings per share are expected to be flat to prior year at the midpoint. In summary, the only change to our guidance is to remove second half sales from India. Other than this, we are maintaining guidance across all metrics, sales, EBITDA, EPS and free cash flow.

[Pierre Brondeau, Chairman & CEO at FMC]

Turning to Slide eight. In Q3, we expect revenue excluding India to be down 1% versus reported prior results. We anticipate healthy growth volume growth and a minor tailwind from FX. Price is expected to be down mid single digit, including adjustments to diamide product contract. The India exclusion is a 6% reduction.

[Pierre Brondeau, Chairman & CEO at FMC]

For branded products, price headwinds are amplified by the fact that volume growth in LatAm is increasing the numbers of customers qualifying for rebates versus last year. It is not a like for like price decrease. Adjusted EBITDA is expected to grow substantially, up 14% at the midpoint as significant cost favorability and volume growth more than offset pricing and FX headwinds. Lower costs are expected from COGS tailwind, including lower raw materials, better fixed cost absorption and restructuring actions. Adjusted EPS is expected to be 28% higher than prior year the midpoint, driven by higher EBITDA.

[Pierre Brondeau, Chairman & CEO at FMC]

Slide nine shows our guidance for the fourth quarter. We anticipate revenue, excluding India, to be 5% higher at the midpoint as strong volume growth and a minor FX tailwind are partially offset by a low single digit price decline and a negative 6% impact from the India exclusion. Volume growth is estimated to come mostly from the growth portfolio. Adjusted EBITDA is expected to be 4% higher at the midpoint as lower costs more than offset lower pricing. Costs are expected to be favorable, but not to the same magnitude that we're expecting in the third quarter.

[Pierre Brondeau, Chairman & CEO at FMC]

Adjusted EPS is expected to be 3% lower than prior year the EBITDA increase is more than offset by higher taxes and interest expense. I will now turn it over to Andrew to cover details on cash flow and other items.

[Andrew Sandifer, EVP & CFO at FMC]

Thanks, Pierre. Before I review the customary key financial items, I'd like to provide some additional context on the guidance and financial reporting implications of the sale of our India commercial business. We have concluded that the India sale meets the conditions to treat the assets of the business as held for sale for financial reporting purposes effective with the third quarter. However, the business is not material enough to FMC's results to be classified as a discontinued operation. As such, the results of the business will continue to be presented in the company's GAAP operating results until a transaction is completed.

[Andrew Sandifer, EVP & CFO at FMC]

As Pierre described earlier, our guidance for the remainder of 2025 excludes India. Our reported revenue will continue to include the sales of India of the India commercial business. However, we will also provide revenue excluding India as we report each quarter. Guided and reported adjusted EBITDA and adjusted EPS will exclude the results of the business. During the third quarter, we will evaluate the assets related to the sale for impairment.

[Andrew Sandifer, EVP & CFO at FMC]

And if necessary, we will record the assets at the lower of their carrying value or estimated fair value less cost to sell in our third quarter financial statements. While we have not yet completed this analysis, it is possible that we will record an impairment of the business in the third quarter. With that additional context, let me proceed to the review of some key income statement items. FX was an overall 1% headwind to revenue growth in the second quarter, with tailwinds from a strengthening euro more than offset by a weakening Brazilian real. Interest expense for the second quarter was $61,000,000 down over $2,000,000 compared to the prior year period, primarily driven by lower debt balances.

[Andrew Sandifer, EVP & CFO at FMC]

The effective tax rate on adjusted earnings was 14% in the second quarter, in line with our continued expectation of a full year effective tax rate of 13% to 15%. For full year 2025, we expect FX to be a flat to minor headwind at revenue, with continued weakness in the Brazilian real and Canadian dollar more than offsetting a strong euro. We now expect full year 2025 interest expense to be in the range of $215,000,000 to $235,000,000 down more than $10,000,000 compared to the prior year, but up slightly from our prior guidance, reflecting the higher interest rate on the recently completed subordinated debt offering. We've also revised our outlook for depreciation and amortization for full year 2025 to $170,000,000 to $180,000,000 a slight reduction from prior guidance to reflect the timing of new assets coming online. The net result of these refinements is that our full year 2025 EPS guidance is unchanged.

[Andrew Sandifer, EVP & CFO at FMC]

Moving next to the balance sheet and leverage. In May, we successfully completed the sale of $750,000,000 of subordinated notes due in 02/1955. The transaction was leverage neutral with proceeds from the offering used to redeem the senior May 20 notes and to pay down commercial paper. The structures of these notes is such that they are treated as 50% equity by all three rating agencies, immediately improving our metrics with them. This offering was an important step in supporting our investment grade credit rating as we transition to more substantial EBITDA growth in the 2025 and into 2026.

[Andrew Sandifer, EVP & CFO at FMC]

All three rating agencies reaffirmed their investment grade ratings in conjunction with this offering. We ended the second quarter with gross debt of approximately $4,200,000,000 up $160,000,000 from the prior quarter. Cash on hand increased $123,000,000 to $438,000,000 resulting in net debt of approximately $3,700,000,000 essentially flat to the prior quarter. Gross debt to trailing twelve month EBITDA was 4.8 times at quarter end, while net debt to EBITDA was 4.3 times. Relative to our leverage covenant, which includes adjustments to both the numerator and denominator, leverage was 4.8 times as compared to a covenant limit of 5.25 times.

[Andrew Sandifer, EVP & CFO at FMC]

As a reminder, our covenant leverage limit will remain at 5.25 times through September 30, then step down to five point zero times at year end. We continue to expect covenant leverage to return to approximately 3.7 times by year end, essentially flat to the prior year. We expect to show a meaningful improvement in our leverage metrics in 2026 from a combination of EBITDA growth and debt reduction. Debt reduction will come from proceeds from the sale of our India commercial business as well as free cash flow above that required to fund the dividend. Moving on to free cash flow on Slide 10.

[Andrew Sandifer, EVP & CFO at FMC]

Free cash flow in the second quarter was $40,000,000 $241,000,000 lower than the prior year period. Cash from operations was down significantly, primarily due to the absence of the significant inventory reduction seen in the prior year. We continue to expect free cash flow of $200,000,000 to $400,000,000 for 2025, a decrease of $313,000,000 at the midpoint. Cash from operations is the key driver of the decrease with normalization of working capital after the pronounced correction in 2024. Capital additions are also expected to be up somewhat with continued focus on only the most essential projects and capacity expansion for new products.

[Andrew Sandifer, EVP & CFO at FMC]

Cash used by discontinued operations is also up slightly, but in line with our multiyear average. And with that, I'll hand the call back to

[Pierre Brondeau, Chairman & CEO at FMC]

Pierre. Thank you, Andrew. We are now at an inflection point where we're shifting our focus toward revenue and EBITDA growth for the second half of the year and 2026. The reset of the company announced at the beginning of the year is essentially done. We have met all of the objective we set for the first half of the year.

[Pierre Brondeau, Chairman & CEO at FMC]

The execution of the India plan will complete the turnaround of the companies. We are now positioned for strong performance going forward and are confident in reaching our 2025 targets with our 2027 outlook intact. With that, we're now ready to take your questions.

[Operator]

We will now begin the question and answer session. Our first question comes from Richard Gartigiorenna with Wells Fargo. Richard, your line is now open.

[Richard Garchitorena, Vice President - Equity Research at Wells Fargo Securities]

Great. Thanks. Nice quarter. Pierre, you talked about this quarter signaling an inflection point. You provided 3Q, 4Q guidance, which was in line with expectations.

[Richard Garchitorena, Vice President - Equity Research at Wells Fargo Securities]

What should we think about in terms of where volume and pricing should move into in terms of the growth phase entering 2026? And you're also talking about 2027 targets intact. So if could just remind us what you're expecting for 2027 as well. Thank you.

[Pierre Brondeau, Chairman & CEO at FMC]

There is multiple year and quarters here. So I think in twenty first of all, '26, '27 targets are remaining in line with what we have said at the last earnings call, leading, if I remember well, to an EBITDA of $1,200,000,000 in 2027. That number is not changing. From a growth in 2026 and 2027, I think it will be mostly driven by growth portfolio. We have very strong confidence for those two years in a branded sales appear, in our three active ingredients, Froonapier and Isoflakes like this year, but we're adding Dodilix, as I said in my in my prepared comments, which has just been introduced with the first building happening happening this month, and then by our plant health business, biological.

[Pierre Brondeau, Chairman & CEO at FMC]

So still the same type of expectation with this product leading to double digit growth. From a core portfolio, I think the fundamental difference you're going to see in 2026 and 2027 versus 2025 is Rolexapir. Today, the portfolio ex Rolexapir is growing under multiple set of actions. But of course, there is a negative impact of the pricing with our diamide partner. I think we are in a place right now where our next appeal strategy based on a much lower manufacturing cost competitive with generics.

[Pierre Brondeau, Chairman & CEO at FMC]

And and I must add to that, a generic situation where there is not as much products available as they used to be in the past and certainly at increasing price. We have developed a strategy which is allowing for an exception of growth year on year in 2026 and 2027 versus 2025. So all of those are the pieces of the components of the growth in 2026 and 2027. For the second half of the year, as we said before, the growth is coming from essentially Brazil because that's a big season for them, new route to market and direct sales and new co op strategy. And once again, Fluentopia and Isoflex, which are seeing very, very strong demand.

[Operator]

Our next question comes from Josh Spector with the company UBS. Josh, your line is now open.

[Josh Spector, Executive Director - Chemicals Equity Research at UBS Group]

Yes. Hi, good morning. I was wondering if you could deconstruct the cost side of the basket for 2Q and kind of as we look in the second half. So you had about $69,000,000 in savings. If you could help us think about how much of that is around the fixed cost absorption headwinds coming off 2Q, what carries into 3Q raw materials and cost savings? That would be helpful.

[Andrew Sandifer, EVP & CFO at FMC]

Josh, it's Andrew. I think the story for cost as we go through the year, the drivers are the same in each period. It's the balance among them. Certainly, lower raw material costs are a key driver, and we're the largest driver in Q2. That is both from lower purchase materials but also from the restructuring actions we've taken to fundamentally change the cost position that we have in our Rynaxypyr business.

[Andrew Sandifer, EVP & CFO at FMC]

Second to that is certainly, improved fixed cost absorption as we are running the plants much more at much more normal capacity than the more depressed levels of production we had in 2024. And then, we do, of course, have continued benefit from the restructuring actions that we took in 2024, some of which are continuing to be implemented, particularly in the '5. As we get into Q3 and Q4, it's just the balance among those levers that's different. I would say, certainly, all three continue to be key contributors to our cost tailwinds, and those cost tailwinds are quite substantial in Q3 and Q4. The absence of fixed cost absorption challenges is a bigger tailwind in Q3 than it is in Q4.

[Andrew Sandifer, EVP & CFO at FMC]

And net net, costs are a stronger tailwind in Q3 than they are in Q4. But it is still those three drivers, lower raw material costs, better fixed cost absorption and the benefits of restructuring actions, not only in manufacturing costs but also across SG and A that are contributing to the cost tailwind in starting this year.

[Operator]

Our next question comes from Frank Mitsch with the company, Permian Research. Frank, your line is now open.

[Frank Mitsch, President at Fermium Research]

Thank you. Good morning and nice results. Pierre, I want to follow-up on the Indy announcement. Can you provide some of the parameters on 2024 in terms of sales EBITDA for that business so we can better tie in the new guidance versus the prior guidance? And along with that, have the bankers already been marketing this business? And if so, any comments in terms receptivity of, I assume, strategics that would be interested in purchasing the India commercial business? Thanks.

[Pierre Brondeau, Chairman & CEO at FMC]

All right. Let me start by the second part of your question that you just want. We have not officially started to market the property, but we have done all of the well done the preparation. We're working on the marketing books. I believe we're already getting phone calls, but I cannot be overly precise on that since we just announced that.

[Pierre Brondeau, Chairman & CEO at FMC]

So it seems like the news is is going is going fast, but can can tell can tell more than than that. To answer your first part of the question, I'm gonna I'm gonna ask you to bear with me because I'm gonna try to give you as many detail as I can to help you guys. So it's gonna take a minute. First, why why no no more information than what we gave in the earnings release? India from an SEC standpoint is viewed as not material to FMC.

[Pierre Brondeau, Chairman & CEO at FMC]

So it does not qualify as a discontinued operation. It's classified as a carve out. Consequently, we're not going to do a recast of '23, 2425. But still I can still give you some colors for you to be able to share your model. First, let me talk about India in the second half in 2024 and 2025.

[Pierre Brondeau, Chairman & CEO at FMC]

What we did in H2 twenty twenty four for India was $140,000,000 of sales. What we were forecasting to do in H2 in twenty twenty five was $70,000,000 of sales. So if you look at those two numbers to achieve our ex India twenty twenty five second half target, we would need our business in the 2025 versus the 2024 to grow by 9%, which is about $190,000,000 So if we grew by $190,000,000 we'll achieve our guidance ex India for H2 twenty twenty five. How do we get there? First, our growth portfolio.

[Pierre Brondeau, Chairman & CEO at FMC]

Today, what we have in front of us for a growth portfolio in the second half is over 200,000,000 of growth, with more than half of these $200,000,000 coming from Fluentapir and Isoflex. For the core portfolio, it's overall flattish. The non Roanexapir part of the core portfolio is growing. And it's growing and we have confidence in the growth for three key reasons. First, we have talked many time about the actions we are taking in Brazil to improve our direct route to market as well as our co ops.

[Pierre Brondeau, Chairman & CEO at FMC]

We also have strong confidence in EMEA and in North America, where the channel inventories is really in a very good place today. It was proven demonstrated by the EMEA results in the second quarter. Against that growth of the core portfolio ex Rolex Appear, we have the Rolex Appear headwinds mostly driven by pricing to diamides partners. So those two pretty much cancel each other out. If I look at this growth, this sales growth, in addition, if we put our cost benefit, it will lead to an EBITDA increase on a like for like basis, excluding Asia of about $80,000,000 not in Asia, sorry, India of about $80,000,000 H2 twenty five versus H2 twenty four.

[Pierre Brondeau, Chairman & CEO at FMC]

So that's what I'm trying to recast a little bit the numbers excluding India in our forecasting.

[Frank Mitsch, President at Fermium Research]

Thank you.

[Operator]

Our next question comes from Vincent Andrews with the company Morgan Stanley. Vincent, your line is now open.

[Vincent Andrews, Managing Director at Morgan Stanley]

You and good morning everyone. Pierre, in years past, you've been able to give us a sense looking into the third quarter at how your order book is shaping up, particularly in the Brazilian market and how much you have in hand versus yet to invoice. So I'm wondering if you could just give us an update there and particularly also just comment on where farmer economics are there and sort of how the credit situation has evolved there? Thank you.

[Pierre Brondeau, Chairman & CEO at FMC]

Yes. I think Brazil Brazil right now is looking good. I think I would say actual orders. I'm not talking negotiations. Okay?

[Pierre Brondeau, Chairman & CEO at FMC]

I'm talking orders for the second half, which have been booked is about 35% to 40% of what we need for the entire second half. It's a much higher number than what we've been having in the late in the last couple of years. So at this stage, it's very early. It's only July, but we are feeling quite good about Brazil. Farmers economics in Brazil, do you want to Raldo, maybe you want to comment?

[Ronaldo Pereira, President at FMC]

Yes. Not dramatically different than what we're seeing in the rest of the world. Farmers had very strong harvest for corn. So I think the corn side of the row crops is more exciting than soybean at this stage. They do expect to plant another very strong season on corn.

[Ronaldo Pereira, President at FMC]

Cotton is not as high as it was a couple of years ago or even a year ago, but it is still incentivizing growers to kind of minimum maintain their planted area, if not a slight increase and sugarcane is stable. So all in all, I would say margins are tighter than they were two point five years ago, but not to a point that would drive growers to influence their decision on planted area. We do expect a full season in the coming season in Brazil.

[Operator]

Our next question comes from Duffy Fischer with the company Goldman Sachs. Duffy, your line is now open.

[Duffy Fischer, Equity Research Analyst - U.S. Chemicals at Goldman Sachs]

Two questions. First is the new direct sales program in Brazil. The expectation for size this year, does that contribute this year or will that take a couple of years before it really contributes anything? And then the second one is, the headwinds you're facing from the Dynamite Partners price down, when does that anniversary? Is it basically a one year impact or will there be kind of two years of step down as far as that being a headwind for pricing for you guys?

[Pierre Brondeau, Chairman & CEO at FMC]

Yes, Dussie. First to your first question, we are expecting to see the impact of the new sales organization for direct sales to farmer in Brazil to be visible this the third quarter this quarter. Certainly, we'll not get the full potential. We will grow year after year. But yes, we should see the impact immediately as our sales organization is already currently in negotiation and having some commercial activity.

[Pierre Brondeau, Chairman & CEO at FMC]

The way the diamide partners contract work, it's annual. So every year, we review manufacturing cost, and we adjust pricing to our partners. By far, the most dramatic decrease in pricing took place from '24 to '25. That's where we had the very, very significant reduction in manufacturing cost, which led to the significant decrease in pricing. As we continue to decrease our cost, we will continue to decrease our pricing to our partners, but the order of magnitude has got nothing to see to do with what we saw this year. It will be very incremental.

[Duffy Fischer, Equity Research Analyst - U.S. Chemicals at Goldman Sachs]

Great. Thank you, guys.

[Operator]

Our next question comes from Chris Parkinson with the company Wolfe Research. Chris, your line is now open.

[Christopher Parkinson, Managing Director at Wolfe Research, LLC]

Great. Thank you so much. When you take a step back and you look at your volume algo for the next few years, I mean, are a bunch of moving parts, but it seems that the TAMs of you have Fluentopur and IsoFlex are pretty obvious. And Reynaldo had done an in-depth look at kind of the broadening addressable market for Rinaxapir off patent, especially some of the, let's say, higher end or higher value acres across the globe. Can you just give us a better sense of where your assessment of those TAMs stands now?

[Christopher Parkinson, Managing Director at Wolfe Research, LLC]

Do you feel better about them? Do you feel the same about them just as we're approaching the second half and into that 2026, 2027 time period? Thank you.

[Pierre Brondeau, Chairman & CEO at FMC]

Yes. I think about the new product, we're feeling better. There is no doubt that the demand on ISOFlex and Fluentopia is strong and stronger than we're expecting. We've signed, as you know, important contracts to supply some of competitors or partners. When they sign contracts, they are partners.

[Pierre Brondeau, Chairman & CEO at FMC]

When they go against us, are competitors. But so there is no doubt that the demand on phone that we have in ISO flex is stronger than what we're expecting. The other good news is we are launching and getting the registration in time for WLX. So we do have the official launch, and that will impact 2027. So on the side of the new product, very high level of confidence.

[Pierre Brondeau, Chairman & CEO at FMC]

Regarding Renekatea, I still we still feel very, very confident. There is no fundamental change to the strategy we have discussed. The only change is we have moved to a different place. We had multiple meetings and gathering, and now we are at a place where every single country in the world or every single regional subregion do have a run x API strategy, which is in line with their market. So we moved from a broad directional global strategy to now a ready to implement regional, subregional or country strategies for Xapier.

[Pierre Brondeau, Chairman & CEO at FMC]

So it's holding true, and we have no negative view of what we are doing. The last comment I would make around RolexaPier is our confirmation of the cost road map, which is getting more and more attractive and making us more and more competitive with with generics. So that's also a a positive evolution of of the Roanokecept here strategy. Plus, I have to say, I mean, that's that's not by our own doing, but the generic Rynaxypyr situation has changed. There is less supply on the market of of the generic Rynaxypyr.

[Pierre Brondeau, Chairman & CEO at FMC]

You're aware of the of the UDAO plant explosion. Not only it limits the products on the market, but that plant was also making intermediate, which were were used by other generics to make Kronex appear. So they are lacking intermediates to make their product. And and we've seen we've seen the price the price increasing and some very significant announcements. There is also the fact that many of the generics who are not producing but making formulation were using the UDAO registration, which, of course, is not usable any longer.

[Pierre Brondeau, Chairman & CEO at FMC]

So at this stage, we have a way less competitive Rolex API market from generic, and we are continuing on our roadmap.

[Operator]

Our next question comes from Kevin McCarthy with the company VRP. Kevin, your line is now open.

[Kevin McCarthy, Partner at Vertical Research Partners]

Yes, thank you very much and good morning. Maybe two quick ones from my side. Pierre, just to follow-up on the prior comments that If we take into account the Rynaxypyr dynamics as well as your Diamond partner agreement renegotiations, would it be reasonable to expect the pricing function function overall for the company to stabilize and perhaps turn positive in the 2026? My second question would be for Andrew.

[Kevin McCarthy, Partner at Vertical Research Partners]

Just if you could walk through maybe the working capital and other key cash flow assumptions that you've embedded within your 200,000,000 to $400,000,000 range for free cash flow. Thank you.

[Pierre Brondeau, Chairman & CEO at FMC]

The the next step here strategy, there is two two part to it. One is with the partners and one is the branded product. I think for the partners, there is some sort of a stabilization in a sense that most of the vast majority of the price decrease having taken place, the adjustments we're going to have going forward are going to be pretty minor. So we we do we we do expect a more of a stabilization of the pricing at this level. For branded REMAXAPIER, we are still expecting price decrease because the competition with generic is gonna be more open.

[Pierre Brondeau, Chairman & CEO at FMC]

That being said, we're still developing higher tech formulation, which could be commanding a different pricing and a changing competitive situation. So the price decrease might not be as dramatic as what we might have expected at some point. But we still believe that we have to cast a strategy within the context of a branded Rolex at your pricing going down in '26 versus '25, where most countries which are protected by process pattern today will not be protected. But we are ready for it. The strategy is in place and manufacturing cost is in place.

[Pierre Brondeau, Chairman & CEO at FMC]

And we still believe that we can protect earnings in '26 versus '25 for NexaPier. Andrew?

[Andrew Sandifer, EVP & CFO at FMC]

Yes. So some quick comments on working capital and cash flow. Certainly, seasonality of our cash flow is very, very heavily tilted to the second half and in particular Q4. I think you're seeing that trend in our actual performance through Q2 and what we're signaling for the rest of the year.

[Andrew Sandifer, EVP & CFO at FMC]

When we think about the key drivers here, certainly operating cash flow is the big driver in free cash flow this year and it's really working capital, right? At guidance, EBITDA is relatively flat, just slightly up for the year. So it really is around working capital as a key driver. From a balance sheet perspective, I think if you think about the three key elements, certainly, payables, we're continuing to work to rebuild payable levels as we get operations to more stable, steady, steady operation. We do still have some noise year on year from timing of purchases that is making that a bit noisy, but you should see improvement in payables.

[Andrew Sandifer, EVP & CFO at FMC]

Inventory, I think we'll end up the year probably pretty flattish on the balance sheet. I think the inventory level we're at is appropriate for the sales we have planned for the second half and going into what we expect to be growth 2026. And then the area we're going to continue to push on, and it's always a challenge in the Ad Chem business, is receivable. And certainly, with sales growth in the second half, we've got a lot of work to do to make sure we collect. I think collections have been very solid through year to date.

[Andrew Sandifer, EVP & CFO at FMC]

We've had good success with normal collections but also with certain providing certain incentives for collections in certain markets as well. So that is the challenge with the growth in second half is to keep receivables to a manageable level. I think when you factor all of those in with very modest capital expense growth and a very modest increase in discontinued op spending. Operating cash flow and those three factors can get us pretty comfortably in that 200 to 400. But it's going to depend on how we execute in the second half of the year.

[Andrew Sandifer, EVP & CFO at FMC]

Unfortunately, it is the nature of the seasonality of our cash flow. So we'll continue to drive that and watch that very closely.

[Operator]

Our next question comes from Alexei Yefremov with the company KeyBanc. Alexei, your line is now open.

[Aleksey Yefremov, MD & Equity Research Analyst at KeyBanc Capital Markets]

Thanks. Good morning. Could you talk about your diamides pricing outside of partner agreements this year. So your your brand right now, Xapyr, how is it doing this year pricing wise and and Cyazypyr as well?

[Pierre Brondeau, Chairman & CEO at FMC]

Yes. We we I'm not breaking it precisely, but sales appear in a very different situation. Sales appear is data protected, so we do not have at all the same competitive situation in in SalesAppear. Rynaxypyr pricing, even for the brand one, is what?

[Andrew Sandifer, EVP & CFO at FMC]

It's been pricing in q two for Rynaxypyr is branded Rynaxypyr was relatively flat. The real pricing headwinds in Rynaxypyr are the partner contracts in the current period.

[Pierre Brondeau, Chairman & CEO at FMC]

Rynaxypyr this year, except in India, China, Turkey, Argentina, few country, is still protected by process patent. So there is not yet the penetration outside of those countries of generics.

[Operator]

Our next question comes from Mike Harrison with the company Seaport Research Partners. Mike, your line is now open.

[Mike Harrison, MD & Senior Chemicals Analyst at Seaport Research Partners]

Hi, good morning. I was hoping, Pierre, that you could give a little bit more detail on the pheromones offering. It sounds like there's a pilot that's going to be going into action later this year. Curious, are you expecting to see a meaningful commercial contribution in 2026? And where do you think you are on the path to $1,000,000,000 in revenue in 02/1930? Is that still a realistic outlook longer term?

[Pierre Brondeau, Chairman & CEO at FMC]

It's the answer, if it's realistic or not, will highly depend upon the results of what we are doing this quarter. I think these two quarters are very important. So first, full scale commercial operation we have with pheromones. So it's the first time we're gonna learn how pheromones perform versus their regular regular products and will tell us if the 1,000,000,000 that the 1,000,000,000 that are forecast or plan was based on Ceremon operating as expected and well. So I think we're gonna have to wait to answer your question.

[Pierre Brondeau, Chairman & CEO at FMC]

It will be a much better answer based on fact at the end of the year once the this campaign is is over and we have the first full scale results. We don't have it right now. We're shipping the product. We're starting. It's an h two event in Brazil, and we're not close to having the first result.

[Operator]

Our next question comes from Arun Viswanathan with the company RBC Capital Markets. Arun, your line is now open.

[Arun Viswanathan, Senior Equity Analyst at RBC Capital Markets]

I guess just looking at the second half, looks like the implied guide for Q4 is $354,000,000 So I guess maybe you can just talk to kind of some of the building blocks there. If you could maybe break it up into maybe new revenue from new products or maybe the Brazil route to market as well. Yes, that would be helpful.

[Pierre Brondeau, Chairman & CEO at FMC]

You know, I think the reasoning for Q4 and Q3, Ronaldo you'll add, but is the same. For Q4, it's going to be driven by the growth portfolio. Fluentad here is going to be very critical in the fourth half. And most of the growth is going to come from a growth portfolio and mostly from Fluentopia and ISOFLEX. Then the new route to market will allow to grow the the core mark the core part of our market.

[Pierre Brondeau, Chairman & CEO at FMC]

But certainly, it will be the impact will be decreased by the reduction in Rynaxypyr due to partner pricing. So a very high growth driven by new products. And of course, the new route to market as well as the co op, we tend to forget that, but we've put in place a very different system with coops to increase sales. And those are the drivers for Brazil. Now let's not forget when we talk about Q4, North America is very important.

[Pierre Brondeau, Chairman & CEO at FMC]

Last year, was a very big part of the growth we had. This is when we load the wholesaler with the products before they supply in Q1 the retailers. So it's not only Brazil, but it's also North America with about the same drivers.

[Operator]

Our last question comes from Joel Jackson with the company BMO Capital Markets. Joel, your line is now open.

[Joel Jackson, Equity Research Analyst - Fertilizers & Chemicals at BMO Capital Markets]

Morning. Pierre, I wanted to ask you a question. So in the decision that you made to show India the way you're showing, I know the investor base really wants to understand the visibility your company. And, obviously, there's a lot of moving parts and why visibility may be hard this year and next year. But I wanna know why you did decide, you know, to add a little bit of complexity to this year's numbers by doing this.

[Joel Jackson, Equity Research Analyst - Fertilizers & Chemicals at BMO Capital Markets]

And as part of that, why didn't you do this when you sold GSS last year? Why didn't you exclude GSS earnings, ahead of the ultimate sale closing?

[Pierre Brondeau, Chairman & CEO at FMC]

GSS division were made before I was I was the CEO. So I I came in. The deal was made. So maybe, Andrew, you can give more detail.

[Andrew Sandifer, EVP & CFO at FMC]

Joel, I think we came to the conclusion on held for sale with the GSS business later in the process. And because of the way GSS was organized, GSS was a collection of product lines across multiple geographies. It was not a discrete business unit. It was not as simple to be able to carve out in order to identify all the pieces as we were moving through. So that certainly is one difference between the two situations.

[Andrew Sandifer, EVP & CFO at FMC]

In both cases, the businesses being sold qualify for held for sale at certain points, but did not meet the conditions of discontinued ops. So there's no ability to recast. So we can provide color in both cases, but we're not able to do a recast. I think the second piece with the India business and certainly looking at why we think carve outs appropriate here. Operating the India business while we're preparing it for sale is different from operating it if we were going to continue to own it.

[Andrew Sandifer, EVP & CFO at FMC]

There are decisions we might make that would make it more attractive or easier for a buyer to integrate the business that might not be in the best interest of our results if we were to operate the business over a longer term horizon. Because that makes it very difficult for us to forecast the performance of the India business for the next several periods. So we thought it'd be more important to be able to give guidance numbers that we can, you know, stand behind and deliver upon. And importantly, that represent the future operations of the company, Right? What the value driver of this business is going forward.

[Andrew Sandifer, EVP & CFO at FMC]

You know, we've made that decision. The board has made the decision to to exit this commercial business. It is not a part of FMC's future and its current configuration. With through supply agreements and partnerships, there'll certainly be some ongoing economic benefit. But we do feel that the presentation of excluding the India business from adjusted EBITDA and EPS helps investors see more clearly what the go forward earnings base of the company is. So that's the reason for the presentation.

[Pierre Brondeau, Chairman & CEO at FMC]

And in terms of the complexity to try to simplify, what we are doing in the second half of the year, we are removing from our sales the $70,000,000 we are forecasting for India. And India was at about breakeven on EBITDA, so we are not changing our EBITDA and EPS target. That's all we are doing. So when you look at the numbers for 2025, they're essentially the same. We are not moving on earnings, and we are just removing the contribution to sales of India, which was about $70,000,000 Beside that, everything else is the same.

[Joel Jackson, Equity Research Analyst - Fertilizers & Chemicals at BMO Capital Markets]

Thank you.

[Operator]

This concludes the FMC Corporation conference call. Thank you for attending. You may now disconnect.

Participants

Executives

• Curt Brooks, Director - IR
• Pierre Brondeau, Chairman & CEO
• Andrew Sandifer, EVP & CFO
• Ronaldo Pereira, President

Analysts

• Richard Garchitorena, Vice President - Equity Research at Wells Fargo Securities
• Josh Spector, Executive Director - Chemicals Equity Research at UBS Group
• Frank Mitsch, President at Fermium Research
• Vincent Andrews, Managing Director at Morgan Stanley
• Duffy Fischer, Equity Research Analyst - U.S. Chemicals at Goldman Sachs
• Christopher Parkinson, Managing Director at Wolfe Research, LLC
• Kevin McCarthy, Partner at Vertical Research Partners
• Aleksey Yefremov, MD & Equity Research Analyst at KeyBanc Capital Markets
• Mike Harrison, MD & Senior Chemicals Analyst at Seaport Research Partners
• Arun Viswanathan, Senior Equity Analyst at RBC Capital Markets
• Joel Jackson, Equity Research Analyst - Fertilizers & Chemicals at BMO Capital Markets