FMC Corporation announces third quarter results and confirms full-year outlook

Third Quarter Adjusted EPS versus Prior-Year Quarter

-79 cents

Adjusted EBITDA

-59 cents

Interest Expense

-15 cents

Depreciation & Amortization

-3 cents

Minority Interest

-2 cents

Taxes

-1 cent

Share Count

+1 cent

FMC Revenue

Q3 2023

Total Revenue Change (GAAP)

(29 %)

Less FX Impact

0 %

Organic¹ Revenue Change (Non-GAAP)

(29 %)

Full Year 2023 Outlook²

Q4 2023 Outlook²

Revenue

$4.48 to $4.72 billion

$1.14 to $1.38 billion

Growth at midpoint vs. 2022*

-21 %

-22 %

Adjusted EBITDA

$0.97 to $1.03 billion

$246 to $306 million

Growth at midpoint vs. 2022*

-29 %

-36 %

Adjusted EPS^

$3.57 to $4.13

$0.89 to $1.38

Growth at midpoint vs. 2022*

-48 %

-52 %

^Adjusted EPS estimates assume 125.7 million diluted shares for Q4 and full year.

*Percentages are calculated using whole numbers. Minor differences may exist due to rounding.

FMC CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF INCOME (LOSS)

(Unaudited, in millions, except per share amounts)

Three Months Ended
September 30,

Nine Months Ended
September 30,

2023

2022

2023

2022

Revenue

$      981.9

$   1,377.2

$   3,340.7

$  4,180.3

Costs of sales and services

600.7

899.7

1,945.4

2,539.1

Gross margin

$      381.2

$      477.5

$   1,395.3

$  1,641.2

Selling, general and administrative expenses

171.3

179.4

562.8

562.7

Research and development expenses

80.9

78.5

247.0

229.8

Restructuring and other charges (income)

28.2

9.0

48.0

98.9

Total costs and expenses

$      881.1

$   1,166.6

$   2,803.2

$  3,430.5

Income from continuing operations before non-operating pension

and postretirement charges (income), interest expense, net and

income taxes

$      100.8

$      210.6

$      537.5

$     749.8

Non-operating pension and postretirement charges (income)

4.2

(1.7)

13.4

6.5

Interest expense, net

64.6

41.8

180.5

107.0

Income (loss) from continuing operations before income taxes

$        32.0

$      170.5

$      343.6

$     636.3

Provision (benefit) for income taxes

27.4

36.0

77.7

133.0

Income (loss) from continuing operations

$          4.6

$      134.5

$      265.9

$     503.3

Discontinued operations, net of income taxes

(8.3)

(16.2)

(41.3)

(42.2)

Net income (loss)

$        (3.7)

$      118.3

$      224.6

$     461.1

Less: Net income (loss) attributable to noncontrolling interests

(0.2)

(2.7)

1.6

(1.5)

Net income (loss) attributable to FMC stockholders

$        (3.5)

$      121.0

$      223.0

$     462.6

Amounts attributable to FMC stockholders:

  Income (loss) from continuing operations

$          4.8

$      137.2

$      264.3

$     504.8

  Discontinued operations, net of tax

(8.3)

(16.2)

(41.3)

(42.2)

  Net income (loss)

$        (3.5)

$      121.0

$      223.0

$     462.6

Basic earnings (loss) per common share attributable to FMC stockholders:

  Continuing operations

$        0.04

$        1.09

$        2.11

$       3.99

  Discontinued operations

(0.07)

(0.13)

(0.33)

(0.33)

  Basic earnings per common share

$      (0.03)

$        0.96

$        1.78

$       3.66

Average number of shares outstanding used in basic earnings per share computations

124.9

126.2

125.1

126.2

Diluted earnings (loss) per common share attributable to FMC stockholders:

  Continuing operations

$        0.04

$        1.08

$        2.10

$       3.98

  Discontinued operations

(0.07)

(0.13)

(0.33)

(0.33)

  Diluted earnings per common share

$      (0.03)

$        0.95

$        1.77

$       3.65

Average number of shares outstanding used in diluted earnings per share computations

125.3

126.9

125.7

126.9

Other Data:

Capital additions and other investing activities

$        35.5

$        37.9

$      116.6

$     102.7

Depreciation and amortization expense

45.6

41.4

138.4

126.6

FMC CORPORATION

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES

RECONCILIATION OF NET INCOME (LOSS) ATTRIBUTABLE TO FMC STOCKHOLDERS (GAAP) TO ADJUSTED AFTER-TAX EARNINGS FROM CONTINUING OPERATIONS, ATTRIBUTABLE TO FMC STOCKHOLDERS (NON-GAAP)

(Unaudited, in millions, except per share amounts)

Three Months Ended

September 30,

Nine Months Ended

September 30,

2023

2022

2023

2022

Net income (loss) attributable to FMC stockholders (GAAP)

$     (3.5)

$  121.0

$   223.0

$  462.6

Corporate special charges (income):

Restructuring and other charges (income) ^(a)

28.2

9.0

48.0

98.9

Non-operating pension and postretirement charges (income) ^(b)

4.2

(1.7)

13.4

6.5

Income tax expense (benefit) on Corporate special charges (income) ^(c)

(4.2)

(1.0)

(8.5)

(2.8)

Adjustment for noncontrolling interest, net of tax on Corporate special charges (income)

0.4

—

(1.6)

—

Discontinued operations attributable to FMC stockholders, net of income taxes ^(d)

8.3

16.2

41.3

42.2

Tax adjustment ^(e)

22.0

12.1

25.5

32.0

Adjusted after-tax earnings from continuing operations attributable to

FMC stockholders (Non-GAAP) ⁽¹⁾

$    55.4

$  155.6

$   341.1

$  639.4

Diluted earnings per common share (GAAP)

$   (0.03)

$    0.95

$     1.77

$    3.65

Corporate special charges (income) per diluted share, before tax:

Restructuring and other charges (income)

0.22

0.07

0.39

0.78

Non-operating pension and postretirement charges (income)

0.03

(0.01)

0.11

0.05

Income tax expense (benefit) on Corporate special charges (income), per diluted share

(0.03)

(0.01)

(0.07)

(0.02)

Adjustment for noncontrolling interest, net of tax on Corporate special charges

(income) per diluted share

—

—

(0.02)

—

Discontinued operations attributable to FMC stockholders, net of income taxes

per diluted share 

0.07

0.13

0.33

0.33

Tax adjustments per diluted share

0.18

0.10

0.20

0.25

Diluted adjusted after-tax earnings from continuing operations per share,

attributable to FMC stockholders (Non-GAAP)

$    0.44

$    1.23

$     2.71

$    5.04

Average number of shares outstanding used in diluted adjusted after-tax

earnings from continuing operations per share computations

125.3

126.9

125.7

126.9

(1)

Referred to as Adjusted earnings. The Company believes that Adjusted earnings, a Non-GAAP financial measure, and its presentation on a per share basis provides useful information about the Company's operating results to management, investors, and securities analysts. Adjusted earnings excludes the effects of corporate special charges, tax-related adjustments and the results of our discontinued operations. The Company also believes that excluding the effects of these items from operating results allows management and investors to compare more easily the financial performance of its underlying business from period to period.

(a)

Three Months Ended September 30, 2023:

Restructuring and other charges (income) includes $2.5 million of employee separation and $0.4 million of other exit costs incurred as part of various restructuring initiatives. Other charges (income) of $25.3 million is comprised of $11.9 million in charges resulting from the third quarter acquisition of in-process research and development assets that do not meet the criteria for capitalization. Additionally, we incurred $4.9 million in losses related to the devaluation of the Argentine peso driven by government actions, $4.5 million of charges associated with our environmental sites, and $4.0 million of other miscellaneous charges.

Three Months Ended September 30, 2022:

Restructuring and other charges (income) includes charges relating to environmental sites of $3.4 million, as well as severance and other restructuring-related charges of $2.0 million from various restructuring programs and other charges of $3.6 million.

Nine Months Ended September 30, 2023:

Restructuring and other charges (income) includes $6.8 million of employee separation costs as well as $1.9 million of asset impairment and other charges related to various global restructuring initiatives. These restructuring charges were offset by a $5.8 million gain recognized on the disposition of land related to a previously closed manufacturing facility. Other charges (income) of $45.1 million, is comprised of $11.9 million in charges resulting from the third quarter acquisition of in-process research and development assets that do not meet the criteria for capitalization. We recognized a $6.9 million remeasurement charge triggered during the period as a result of the significant currency depreciation of the Pakistani Rupee. On January 25, 2023, the Pakistani Rupee experienced its largest single day drop against the US dollar in over two decades following the removal of the USD-PKR exchange cap in place on the country's currency. Additionally, we incurred $4.9 million in losses related to the devaluation of the Argentine peso driven by government actions during the period, $14.3 million of charges associated with our environmental sites, and $7.1 million of other miscellaneous charges.

Nine Months Ended September 30, 2022:

Restructuring and other charges (income) is primarily comprised of $76.1 million in exit charges related to our decision to cease operations and business in Russia.  Restructuring and other charges (income) also includes charges relating to environmental sites of $1.0 million, as well as severance and other restructuring-related charges of $16.6 million from various restructuring programs and other charges of $5.2 million.

(b)

Our non-operating pension and postretirement charges (income) are defined as those costs (benefits) related to interest, expected return on plan assets, amortized actuarial gains and losses and the impacts of any plan curtailments or settlements. These are excluded from our Adjusted Earnings and are primarily related to changes in pension plan assets and liabilities which are tied to financial market performance and we consider these costs to be outside our operational performance. We continue to include the service cost and amortization of prior service cost in our Adjusted Earnings results noted above. These elements reflect the current year operating costs to our businesses for the employment benefits provided to active employees.         

(c)

The income tax expense (benefit) on Corporate special charges (income) is determined using the applicable rates in the taxing jurisdictions in which the corporate special charge or income occurred and includes both current and deferred income tax expense (benefit) based on the nature of the non-GAAP performance measure.

(d)

Discontinued operations includes provisions, net of recoveries, for environmental liabilities and legal reserves and expenses related to previously discontinued operations and retained liabilities.

(e)

We exclude the GAAP tax provision, including discrete items, from the Non-GAAP measure of income, and include a Non-GAAP tax provision based upon the projected annual Non-GAAP effective tax rate. The GAAP tax provision includes certain discrete tax items including, but are not limited to: income tax expenses or benefits that are not related to continuing operating results in the current year; tax adjustments associated with fluctuations in foreign currency remeasurement of certain foreign operations; certain changes in estimates of tax matters related to prior fiscal years; certain changes in the realizability of deferred tax assets and related interim accounting impacts; and changes in tax law. Management believes excluding these discrete tax items assists investors and securities analysts in understanding the tax provision and the effective tax rate related to continuing operating results thereby providing investors with useful supplemental information about FMC's operational performance.

Three Months Ended

September 30,

Nine Months Ended

September 30,

(in Millions)

2023

2022

2023

2022

Non-GAAP tax adjustments

Foreign currency remeasurement and other discrete items

$     22.0

$    12.1

$     25.5

$    32.0

Total Non-GAAP tax adjustments

$     22.0

$    12.1

$     25.5

$    32.0

RECONCILIATION OF NET INCOME (LOSS) (GAAP) TO ADJUSTED EARNINGS FROM CONTINUING

OPERATIONS, BEFORE INTEREST, INCOME TAXES, DEPRECIATION AND AMORTIZATION, AND

NONCONTROLLING INTERESTS (NON-GAAP)

(Unaudited, in millions)

Three Months Ended
September 30,

Nine Months Ended
September 30,

2023

2022

2023

2022

Net income (loss) (GAAP)

$     (3.7)

$   118.3

$   224.6

$   461.1

Restructuring and other charges (income)

28.2

9.0

48.0

98.9

Non-operating pension and postretirement charges (income)

4.2

(1.7)

13.4

6.5

Discontinued operations, net of income taxes

8.3

16.2

41.3

42.2

Interest expense, net

64.6

41.8

180.5

107.0

Depreciation and amortization

45.6

41.4

138.4

126.6

Provision (benefit) for income taxes

27.4

36.0

77.7

133.0

Adjusted earnings from continuing operations, before interest, income taxes, depreciation and amortization, and noncontrolling interests (Non-GAAP) ⁽¹⁾

$   174.6

$   261.0

$   723.9

$   975.3

(1)

Referred to as Adjusted EBITDA. Defined as operating profit excluding corporate special charges (income) and depreciation and amortization expense.

RECONCILIATION OF CASH PROVIDED (REQUIRED) BY OPERATING ACTIVITIES OF

CONTINUING OPERATIONS (GAAP) TO FREE CASH FLOW (NON-GAAP)

(Unaudited, in millions)

Three Months Ended

September 30,

Nine Months Ended

September 30,

2023

2022

2023

2022

Cash provided (required) by operating activities of continuing operations (GAAP) ⁽¹⁾

$   101.6

$   417.6

$ (618.2)

$     15.7

Transaction and integration costs

—

—

—

0.5

Adjusted cash from operations⁽²⁾

$   101.6

$   417.6

$ (618.2)

$     16.2

Capital expenditures

(33.0)

(34.7)

(108.8)

(108.4)

Other investing activities

(2.5)

(3.2)

(7.8)

5.7

Capital additions and other investing activities

$   (35.5)

$   (37.9)

$ (116.6)

$ (102.7)

Cash provided (required) by operating activities of discontinued operations

(34.1)

(20.2)

(61.0)

(51.8)

Transaction and integration costs

—

—

—

(0.5)

Proceeds from Land Disposition

—

—

5.8

—

Legacy and transformation

$   (34.1)

$   (20.2)

$   (55.2)

$   (52.3)

Free cash flow (Non-GAAP)⁽³⁾

$     32.0

$   359.5

$ (790.0)

$ (138.8)

(1)

The cash provided (required) by operating activities for the three months ended September 30, 2023 and 2022 is the calculation of the nine months ended September 30, 2023 and 2022 less the previously reported six months ended June 30, 2023 and 2022, respectively.

(2)

Adjusted cash from operations is defined as cash provided (required) by operating activities of continuing operations excluding the effects of transaction-related cash flows.

(3)

Free cash flow is defined as Adjusted cash from operations reduced by spending for capital additions and other investing activities as well as legacy and transformation spending. We believe that this Non-GAAP financial measure provides a useful basis for investors and securities analysts about the cash generated by routine business operations, including capital expenditures, in addition to assessing our ability to repay debt, fund acquisitions and return capital to shareholders through share repurchases and dividends. Our use of free cash flow has limitations as an analytical tool and should not be considered in isolation or as a substitute for an analysis of our results under U.S. GAAP.

RECONCILIATION OF REVENUE CHANGE (GAAP) TO

ORGANIC REVENUE CHANGE (NON-GAAP) ⁽¹⁾

(Unaudited)

Three Months Ended

September 30, 2023 vs. 2022

Nine Months Ended

September 30, 2023 vs. 2022

Total Revenue Change (GAAP)

(29) %

(20) %

Less: Foreign Currency Impact

— %

(2) %

Organic Revenue Change (Non-GAAP)

(29) %

(18) %

(1)

We believe organic revenue growth (non-GAAP) provides management and investors with useful supplemental information regarding our ongoing revenue performance and trends by presenting revenue growth excluding the impact of fluctuations in foreign exchange rates.

FMC CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited, in millions)

September 30, 2023

December 31, 2022

Cash and cash equivalents

$                323.8

$                572.0

Trade receivables, net of allowance of $36.7 in 2023 and $33.9 in 2022

2,564.5

2,871.4

Inventories

1,998.6

1,651.6

Prepaid and other current assets

435.4

343.6

Total current assets

$             5,322.3

$             5,438.6

Property, plant and equipment, net

872.5

849.6

Goodwill

1,584.7

1,589.3

Other intangibles, net

2,453.1

2,508.1

Deferred income taxes

209.3

210.7

Other long-term assets

514.5

575.0

Total assets

$           10,956.4

$           11,171.3

Short-term debt and current portion of long-term debt

$             1,092.8

$                540.8

Accounts payable, trade and other

662.5

1,252.2

Advanced payments from customers

1.7

680.5

Accrued and other liabilities

673.1

601.8

Accrued customer rebates

809.5

465.3

Guarantees of vendor financing

95.6

142.0

Accrued pensions and other postretirement benefits, current

3.5

2.3

Income taxes

107.8

114.7

Total current liabilities

$             3,446.5

$             3,799.6

Long-term debt, less current portion

$             3,022.9

$             2,733.2

Long-term liabilities

1,172.5

1,237.6

Equity

3,314.5

3,400.9

Total liabilities and equity

$           10,956.4

$           11,171.3

FMC CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited, in millions)

Nine Months Ended September 30,

2023

2022

Cash provided (required) by operating activities of continuing operations

$              (618.2)

$                  15.7

Cash provided (required) by operating activities of discontinued operations

(61.0)

(51.8)

Cash provided (required) by investing activities of continuing operations

(126.8)

(294.2)

Cash provided (required) by financing activities of continuing operations

562.1

197.7

Effect of exchange rate changes on cash

(4.3)

(20.4)

Increase (decrease) in cash and cash equivalents

$              (248.2)

$              (153.0)

Cash and cash equivalents, beginning of period

$                572.0

$                516.8

Cash and cash equivalents, end of period

$                323.8

$                363.8