Q2 2024 FMC Corp Earnings Call

Unknown Executive: All of which are non-gap financial measures.

Yours.

Curt Brooks: Please note that as use in today's discussion, earnings needs adjusted earnings, and EBITDA needs 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.

Curt Brooks: Please note that, as used in today's discussion, earnings means adjusted earnings, and EBITDA means adjusted EBITDA. Thank you, Curt.

Pierre: 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'll now turn the call over to Pierre.

Curt Brooks: With that, I'll now turn the call over to Pierre.

Pierre Brondeau: Thank you, Curt, and good morning, everyone. Since resuming the CEO role, I have taken in depth a look at the company and the crop protection market, which has led to a revised full-year outlook.

Unknown Executive: And good morning, everyone, which has led to a revised full-year outlook. Q2 through Q4 also show higher revenue driven by volume. We continue to firmly believe in the strength of the Diamides portfolio, new products recently introduced, and the technology pipeline. Later in the call, our newly appointed president, Ronaldo Pereira, will provide our views on the strength of the portfolio and how this positions us to take full advantage of the demand recovery.

Pierre: Since resuming the CEO role, I have taken an in-depth look at the company and the crop protection market, which has led to a revised full-year outlook.

Pierre Brondeau: To share my views, today's call will be more wide-ranging than a typical earnings call. We delivered a solid good Q2, helped by a successful execution of a restructuring program. We expect continued growth in Q3 and Q4 from demand recovery led by the Americas, where we expect channel inventory to approach normal levels by year end. Q2 through Q4 also show higher revenue driven by volume, with the rate of growth accelerating in Q4 as we shift into the next crop here. The markets have begun to recover as channel inventories are starting to normalize, even if not as fast as we have previously expected.

Speaker Change: We delivered a solid Q2 helped by a successful execution of a restructuring program.

Pierre: We expect continued growth in Q3 and Q4 from demand recovery, led by the Americas, where we expect channel inventory to approach normal levels by year-end.

The markets have begun to recover as channel inventories are starting to normalize, even if not as fast as we had previously expected.

Pierre Brondeau: We plan for intensive space of revenue and earnings growth to accelerate through the rest of 2024 and through our 2025. We continue to firmly believe in the strength of the Dynamite portfolio, new products recently introduced, and the technology pipeline.

We plan for FMC's pace of revenue and earnings growth to accelerate through the rest of 2024 and throughout 2025.

Pierre: We continue to firmly believe in the strength of the Diamides portfolio, new products recently introduced, and the technology pipeline.

Pierre Brondeau: Later in the call, a newly appointed president, Ronaldo Pereira, will provide reviews on the strength of the portfolio and how these positions us to take full advantage of the demand recovery. 4 year revenue and EBDA guidance have been reduced to a slower demand recovery than we originally anticipated. To help mitigate the slower recovery in the second half, we have increased our cost saving target and speed of execution. The lower guidance is more of a timing impact and is not a fundamental issue with the market or with FMC.

Speaker Change: The lower guidance is more of a timing impact and is not a fundamental issue with the market or with FMC.

Pierre Brondeau: We'll address the Q3 and Q4 profiles in more detail, but I want to quickly touch on two key points. First, the EBDA margin gathered for Q3 is not representative of the current company performance and operations. There is an expected COGS headwind in that quarter of about 40 million dollars, mainly due to an absorb of the fixed cost in relation to a reduced manufacturing activity in the second half of 2023. That are now flowing throughout TNL.

Unknown Executive: We'll address the Q3 and Q4 profiles in more detail. First, the EBITDA margin. There is an expected COGS headwind in that quarter of about $40 million, mainly due to an absorbed fixed cost in relation to a reduced manufacturing activity in the second half of 2023 that is now flowing through LTNL. Segundo, but it is magnified this year by the shape of the demand recovery.

In that quarter of about $40 million, mainly due to an absorbed fixed cost in relation to a reduced manufacturing activity in the second half of 2023.

Pierre Brondeau: Second. The strength of Q4 compared to Q3 is an exaggeration of the typically stronger sales report in the fourth quarter. Historically, Q4 has always been stronger than Q3, but is magnified this year by the shape of the demand recovery. Our intent for the call is to share information that will demonstrate a confidence in a Q4 forecast. Overall, I am feeling positive about the company. I think that I see a number of areas where we can improve on our execution, and we are already implementing changes. I will share more detail from future conversation. I hope is help position my views of the company and market and provide context for the rest of the call.

Segund.

Speaker Change: The strength of Q4 compared to Q3 is an exaggeration of the typically stronger sales we report in the fourth quarter.

Pierre: Historically, Q4 has always been stronger than Q3.

Speaker Change: Overall, I am feeling positive about the company. Having said that, I see a number of areas where we can improve on our execution and we are already implementing changes. I will share more details in future conversations.

Unknown Executive: I hope this helped position my views of the company and market and provide context for the rest of the call. Revenue increased by a modest 2%, with volume growth of 14%. In part, the stronger than initially planned volume growth was enabled by strategic pricing actions made during the quarter. The 10% price decline was mainly driven by three things.

Pierre: I hope this helps position my views of the company and market and provides context for the rest of the call.

Pierre Brondeau: Slide three through five provide another view of our second quarter results. Revenue increased by a modest 2% with volume growth of 14%. In part, the stronger than initially planned volume growth was enabled by strategic pricing actions made during the call. The 10% price decline was mainly driven by three things. One is competitive pressure, which is a normal market dynamic when demand stops to return. Two is a strategic intent to take back market positions in less differential products than we intentionally left to competitors by holding to a high price strategy when demand was low. And third is one-time incentives to address high-cost inventory in the channel.

Pierre: Revenue increased by a modest 2%

Pierre: And third is one-time incentives to address high-cost inventory in the channel.

Pierre Brondeau: We began making this one of adjustment as a way to speed up the stocking ahead of the next crop season, which will begin in September. With demand returning, we do not plan to make these kinds of one-off adjustments going forward. It is important to recognize that from Q4 2021 to Q2 2023, we rise price every quarter. Even considering the recent price adjustment, we are still substantially ahead in pricing. And now that demand is returning, we can take strategic action in pricing as a lever for self-growth in certain markets. With one full year of this stocking completed, we saw a return to volume growth in many countries, particularly in the US, Brazil, and Germany.

Pierre: We began making these one-off adjustments as a way to speed up de-stocking ahead of the next crop season, which will begin in September.

Unknown Executive: With demand returning, we do not plan to make these kinds of one-off adjustments going forward. However, it is important to recognize that from Q4 2021 to Q2 2023. We raise the price every quarter. We are still substantially ahead in price. And now that demand is returning, we can take strategic action in pricing as a lever for sales growth in certain markets, as expected. We saw many more small orders to fill immediate needs as customers continue to actively manage inventory. North America sales were 24%. We are seeing customers waiting to order insecticides and fungicides until they observe pests in the field.

Pierre: With demand returning, we do not plan to make these kinds of one-off adjustments going forward.

Pierre: It is important to recognize that from Q4 2021,

Pierre: We raise price every quarter. Even considering the recent price adjustment, we are still substantially ahead in pricing.

Pierre Brondeau: As expected, we saw many more small orders to fill immediate needs as customers continue to actively manage inventory.

Pierre: As expected, we saw many more small orders to fill immediate needs as customers continue to actively manage inventory.

Pierre Brondeau: There are a few original sales highlights I want to call out. Lawrence, North America sales were of 24%. Many from volume in the US with strong growth in herbicides. We are seeing customers waiting to order insecticides and fungi sites until they observed best in the field. In Latin America, sales were of 14%. Many from volume growth in Brazil. The region of Brazil also showed strong gains in new products, including Coragene Voo and Pre-Lustra, Day of Light and Sexy Sides, Borough Food, and Stoner Besides, and Onsuva, a newly launched Frunda Pia based Fongi Sides. Lower price was driven by three factors I mentioned earlier: competition in the market, strategic pricing on this differential product, and one-time price adjustment.

Pierre: There are a few original sales highlights I want to call out.

Pierre: North America's sales were up 24%, mainly from volume in the U.S. with strong growth in herbicides.

Unknown Executive: Sales were at 14%, mainly due to volume growth in Brazil. The region also showed strong gains in new products, including Coragen Evo and premium star diamond insecticide. Borough Food, and Stone Herbicide and Onsuva, a newly launched fluindapyr-based fungicide.

Pierre: The region also showed strong gains in new products, including Coragen Evo and premium star diamine insecticides, Burrow Food, and Stone Herbicide and Onsuva, a newly launched fluindapyr-based fungicide.

Unknown Executive: The lower price was driven by three factors I mentioned earlier. Competition in the market. Strategic Pricing on Less Differential Products and One-Time Price Adjustment. ASLs were down 28%, and that was largely driven by volume in India. Channel volume in India remains high, especially in insecticide, which has built up over successive poor mansion seasons.

Pierre Brondeau: Eight sales were down 28%, and that was largely driven by volume in India. Channel volume in India remained high, especially in insecticide, which has built up over successive warm and sun seasons. Sales of generic run except here are acting as smaller, secondary, and wind, where we pursue litigation for process pattern infringement.

Pierre: Channel volume in India remains high, especially in insecticide, which has built up over successive poor monsoon seasons.

Unknown Executive: Sales of generic Renexapir are acting as a smaller secondary headwind while we pursue litigation for process patent infringement. We do not see the India Channel inventory resolving until at least 2025. In other areas of Asia, Asian countries reported the strongest growth, while China declined, tells us in the NEA we're down 3%. The region delivers strong growth in branded diamides and fungicides. We delivered Ibiza, which is at the highest end of our gallons range.

Pierre Brondeau: Ronaldo will seek more to the day amide in a few minutes. We do not see the India channel inventory resolving until at least 2025. In other areas of Asia, Asian countries reported the strongest growth, while China declined. Sales in India were down 3%, excluding sales to a dynamic pattern. The region reported overall sales growth in the low teen percent, driven by volume. The region delivered strong growth in branded diamides and Fongi sides. Looking at the evenly breached on site 4.5, we delivered EBDA from 202 million dollars, which is at the highest end of our gallons range.

Ronaldo: Ronaldo will speak more to the diamides in a few minutes. We do not see the India Channel inventory resolving until at least 2025.

Speaker Change: In other areas of Asia, Asian countries reported the strongest growth while China declined.

Ronaldo: Excluding sales to a dynamite powder, the region reported overall sales growth in the low 10% driven by volume.

Pierre: We delivered EBITDA of $202 million, which is at the highest end of our guidance range.

Pierre Brondeau: The increase of 8%, versus the prior year, was due to volume growth, caused benefits from the research ring actions, and FX tailings. These three factors, more than offset lower pricing and coaguling, related to the sales room of higher cost inventory.

Unknown Executive: The increase of 8% versus the prior year was due to volume growth, Cost Benefits from Researching Actions, and Essex Telme. These three factors more than offset lower pricing in cogs and wheels related to the self-rule of higher cost inventory. We are making excellent progress, and I want PACE to achieve over $150 million of gross run rate savings by 2025 on July 11th.

Pierre: These three factors more than offset lower pricing in cogs and wheels related to the self-rule of higher cost inventory.

Pierre Brondeau: Site 6 provides an update on the progress in the restructuring actions. We are making excellent progress and have already realized considerable cost benefits through June. We now expect between 75 million dollars to 100 million dollars of cost benefits in 2024, net of inflation. And our pace to achieve over 150 million dollars of growth run rate savings by 2025.

Pierre: We are making excellent progress and have already realized considerable cost benefits through June .

Pierre: We now expect between $75 million to $100 million of cost benefits in 2024, net of inflation

Pierre: And I want PACE to achieve over $150 million of gross run rate savings by 2025.

Pierre Brondeau: On July 11th, we announced that we entered into an agreement to sell a global specialty solution business for 350 million dollars to Andrew. We're expecting a transaction; a transaction to be completed by the end of the year. We will continue to include the results of this business in reported figures until the deal has closed. As it does not meet the criteria to be moved into discontinued operations, our guidance for the civil health includes earnings and cash flow from this business.

Unknown Executive: We announce that we entered into an agreement to sell a global specialty solution business for $350 million to India. We're expecting the transaction to be completed by the end of the year. We will continue to include the results of this business in our reported figures until the deal has closed, as it does not meet the criteria to be moved into discontinued operations. Her guidance for the second half includes earnings and cash flow from this business, a reduction between the midpoint of our new and prior gallons, and about half of that is mostly the result of a slower than expected demand recovery. Although demand recovery is slower than originally anticipated, we do not see improvement in most geographies. However, we do see improvements in most geographies, with the exception of India.

Pierre: We are expecting the transaction to be completed by the end of the year. We will continue to include the results of this business in our reported figures until the deal has closed.

Pierre: as it does not meet the criteria to be moved into discontinued operations.

Pierre Brondeau: Looking ahead to the rest of the year, we have updated a full year revenue guidance to a range of 4.3 billion dollars to 4.5 billion dollars, which is 2% lower than prior year at the midpoint. This is 200 million dollars reduction between the midpoint of our new and prior guidance, and about half of that attributed to lower first hand sales that we do not expect to make up this year. The remaining reduction is mostly the results of a slower than expected demand recovery. Although demand recovery is slower than originally anticipated, we do not see improvement in most geographies; sorry, we do see improvements in most geographies with the exception of India.

Pierre: This is $200 million reduction between the midpoint of our new and prior gallons, and about half of that attributed to lower first-hand sales that we do not expect to make up this year.

Pierre: The remaining reduction must be the result of a slower than expected demand recovery.

Pierre Brondeau: A revised EBITDA guidance of 880 million dollars to 940 million dollars reflects the lower revenue outlook and is a 7% reduction at the midpoint against prior guidance and prior year. We expect third quarter revenue to be between 1 billion and 1.09 billion dollars, which is 6% higher at the midpoint versus prior year. Volume is the key driver, with pricing expected to be down low single digits. Year over year pricing headwinds are lower compared to the second quarter as we do not plan to continue one-time incentives now that much of the high-cost inventory in the channel has been reduced.

Pierre: A revised EBITDA guidance of $880 million to $940 million reflects the lower revenue outlook and is a 7% reduction at the midpoint against prior guidance and prior year.

Unknown Executive: Volume is the key driver, with pricing expected to be down low single digits. Overall, pricing levels in the third quarter are expected to be similar to the second quarter. Third quarter EBITDA is expected to be between $165 million. The EBITDA margin midpoint of 17% reflects the outsized impact of a $40 million COGS headwind we expect during the quarter. The headwind is mostly attributed to unabsorbed fixed costs related to reduced manufacturing during the second half of 2020.

Pierre: Volume is the key driver, with pressing expected to be down low single digits.

Pierre: Year-over-year pricing headwinds are lower compared to the second quarter as we do not plan to continue one-time incentives now that much of the high cost inventory in the channel has been reduced.

Pierre Brondeau: Overall pricing levels in the third quarter are expected to be similar to the second quarter. Third quarter EBITDA is expected to be between 165 million dollars and 195 million dollars, representing 3% growth at the midpoint. EBITDA margin midpoint of 17% reflects the outsized impact over 40 million dollar COGS headwind we expect during the quarter. The headwind is mostly attributed to an absorb the six cost related to reduce manufacturing during the second half of 2023. Absence of this headwind would put our implied third quarter midpoint EBITDA margin in line. The historical QC average. 4th quarter revenue is expected to be between 1.34 billion dollars and 1.45 billion dollars, which is 22% higher at the midpoint.

Pierre: Overall, pricing levels in the third quarter are expected to be similar to the second quarter.

Unknown Executive: Absence of this headwind would put our implied third quarter midpoint EBITDA margin in line with the historical Q3 average. Fourth quarter revenue is expected to be between $1.34 billion and $1.45 billion. Volume is expected to be the key driver of sales supported by new products. Fourth Quarter E-Villa is expected to be between $353 million, almost entirely attributed to herself. Typically, the third quarter is the lowest revenue quarter in the year.

Pierre: Absence of this headwind would put our implied third-quarter midpoint EBITDA margin in line with the historical Q3 average.

Pierre Brondeau: Volume is expected to be the key driver of sales, supported by new products, improving demand, and growing market share. Price and effects are both expected to be low single-digit headwinds. 4th quarter revenue is expected to be between 333 million dollars and 383 million dollars, but 45% at the midpoint, almost entirely attributed to higher sales. Cost expected to be favorable from restructuring benefits.

Pierre: Price and FX are both expected to be low single-digit headwinds.

Pierre: Costs are expected to be favorable from restructuring benefits.

Pierre Brondeau: The quality pace or result this year is forecasted to be different from what we report in the past. Typically, the 3rd quarter is the lowest revenue quarter in the year. This year, it is expected to be higher than the first and second quarters due to the timing of the demand recovery. Her second half revenue split between Q3 and Q4 has historically been about 46% of quarter and 54% fourth quarter. This year, we are getting to a quarterly revenue split in the 7th quarter of 43% and 57% fourth quarter. The higher than usual sales in Q4 are due to the shape of the demand recovery.

Unknown Executive: This year, we are getting to a quarterly revenue split in the second half of 43% in the third quarter and 57% in the fourth quarter. The higher than usual sales in Q4 are due to the shape of the demand recovery. To achieve the midpoint over four-year gallons, we expect to grow in the second half by 15% in revenue and 28% in EBITDA with a strong fourth quarter. There are four reasons.

Pierre: This year we are getting to a quarterly revenue split in the second half of 43% third quarter and 57% fourth quarter.

Pierre Brondeau: To achieve the midpoint over a four year gains, we expect to grow in the 7th half by 15% revenue and 28% in EBITDA with a strong fourth quarter.

Pierre Brondeau: There are four reasons we are highly confident in those numbers. One, there are signs that demand is recovering. Her second quarter volume is evidence of that. What we're seeing in a second half or books also reflects that improvement. For example, in Brazil, we have about a third of the orders in a book that will need to reach that country's second half targets. At this time last year, it was almost zero. Early indications after one month of second half of operation showed that the regions are on track to reach their targets.

Unknown Executive: There are signs that demand is recovering. What we're seeing in the second half order books also reflects that improvement. We see solid demand for these products due to their differentiation from older technologies. For example, Overwatch Herbicide in Asia, based on the new active ingredients isoflex and new diamides formulations in North America, like Elevest and AltaCore Evo.

Pierre: What we're seeing in the second half order books also reflects that improvement.

Pierre: After one month of second-half operations, show that the regions are on track to reach their targets.

Pierre Brondeau: Two, a launch portion of the sales growth we expect in the second half is coming from product launched in the last five years. We see solid demand for these products due to their differentiation from older technologies. Some examples include on solar, on G-SIDE, and Coragene EVO in sector side in Latin America. Overwatch herbicide in Asia based on the new active ingredients, ice flakes, and new diamides formulation in North America, like Illivist and other Coragene EVO.

Pierre: Some examples include conserva, fungicide, and Coragen Evo insecticide in Latin America.

Pierre: Overwatch Herbicide in Asia based on the new active ingredient isoflex and new diamides formulation in North America like Elevest and Altacor Evo.

Pierre Brondeau: 3. Improved orders from the Dynamite Partners. Similar to FMC, partners have been attempting to work down high levels of inventories. Levels are now reaching a point that are supporting higher processes. And for cost management, we have shown the ability to effectively control costs and deliver on the researching savings commitment. They will continue in the civil health.

Unknown Executive: Three, improve orders from a dynamite partner. Our partners have been attempting to work down the high level of inventories. Levels are now reaching a point that is supporting higher percentages, and 4, Coast Management. We have shown the ability to effectively control costs and deliver on a research-oriented savings commitment. We will continue in the second half.

Pierre: 3. Improve orders from dynamite partners.

Pierre: Similar to FNC, our partners have been attempting to work down high level of inventories. Levels are now reaching a point that are supporting higher purchases.

Speaker Change: We have shown the ability to effectively control cost and deliver on a research-driven savings commitment. They will continue in the second half.

Andrew Sandifer: I will now hand the code over to Andrew to cover some financial items, including a cash performance, and that would do.

Andrew Sandifer: Thanks, Pierre. I'll start this morning with a review of some key income items. FX was a 2% headwind to revenue growth in the second quarter, with the most significant headwinds coming from the Indian rupee, Brazilian real, and Turkish lira. For the remainder of 2024, we anticipate continued low single-digit FX headwinds driven primarily by the Brazilian ri. Interest expense for the second quarter was $63.6 million, down slightly versus the prior year period, but lower for an interest expense offsetting higher domestic interest expense. For full year 2024, we expect interest expense to be in the range of $235 million to $240 million, essentially flat year on year at the midpoint, with the impact of higher rates on domestic debt offset by lower foreign borrowers.

Unknown Executive: Thanks, Pierre. I'll start this morning with a review of some key income statement items. FX was a 2% headwind to revenue growth in the second quarter, with the most significant headwinds coming from the Indian Rupee, the Brazilian Ria, and the Turkish Lira. For the remainder of 2024, we anticipate continued low single-digit FX headwinds, driven primarily by the Brazilian Riata. Our GAAP provision for income taxes in the second quarter benefited from the transfer of intangible assets to our Swiss subsidiaries, where we recently were awarded OECD Pillar 2 compliant tax. Moving next to the balance sheet and lever, gross debt at June 30th was approximately $4.2 billion, down $157 million from the prior quarter.

Pierre: For the remainder of 2024, we anticipate continued low single-digit FX headwinds, driven primarily by the Brazilian REI.

Pierre: For full year 2024, we expect interest expense to be in the range of $235 million to $240 million, essentially flat year-on-year at the midpoint.

Pierre: With the impact of higher rates on domestic debt offset by lower foreign borrowings.

Andrew Sandifer: Our effective tax rate on adjusted earnings for the second quarter was 15.5%, in line with the midpoint of our continued expectation for a full year tax rate of 14 to 17%. Our gaped revisions for income taxes in the second quarter benefited from the transfer of intangible assets to our Swiss subsidiaries, where we recently were awarded OECD Pillar II compliant tax incentives. This asset transfer will allow us to take further advantage of these new incentives, and will help ensure FNC maintains a structurally advanced tax rate for at least the next decade.

Pierre: Our GAAP provision for income taxes in the second quarter benefited from the transfer of intangible assets to our Swiss subsidiaries, where we recently were awarded OECD Pillar 2 compliant tax incentives.

Pierre: This asset transfer will allow us to take further advantage of these new incentives and will help ensure FNC maintains a structurally advantaged tax rate for at least the next decade.

Andrew Sandifer: Moving next to the balance sheet and leverage. Gross debt at June 30th was approximately $4.2 billion, down $157 million from the prior quarter. Cash on hand increased $54 million to $472 million, resulting in net debt of approximately $3.7 billion. Gross debt to trail in 12-month EBITDA was 5.3 times at quarter end, while net debt to EBITDA was 4.7 times. Related to our covenant, which measures leverage with a number of adjustments to both the numerator and denominator, leverage was 5.4 times as compared to a covenant of 6.5 times. As a reminder, our covenant leverage limit was raised temporarily to 6.5 times through June 30th of this year.

Pierre: Cash on hand increased $54 million to $472 million, resulting in net debt of approximately $3.7 billion.

Pierre: Gross debt to trailing 12-month EBITDA was 5.3 times at quarter end, while net debt to EBITDA was 4.7 times.

Unknown Executive: Relative to our covenant, which measures leverage with a number of adjustments to both the numerator and denominator, leverage was 5.4 times as compared to a covenant of 6.5. As a reminder, our covenant leverage limit was raised temporarily to 6.5 times through June 30th of this year. We expect Covenant leverage approaching four times by year end, reflecting both year-on-year EBITDA growth in the second half, as well as receipt of proceeds from the recently announced sale of our Global Specialty Solutions business to Enview.

Pierre: Relative to our covenant, which measures leverage with a number of adjustments to both the numerator and denominator, leverage was 5.4 times as compared to a covenant of 6.5 times.

Andrew Sandifer: It will step down to 6 times on September 30th, and then again to 5 times at December 31st. We expect covenant leverage approaching 4 times by year end, reflecting both the year-on-year EBITDA growth in the second half, as well as the seat of proceeds from the sale for the recently announced sale of our Global Specialist Solutions business to end view. We remain committed to returning our leverage to levels consistent with our targeted triple B-BWA-2 long-term credit ratings, or better. While we will still be meaningfully above this level at the end of 2024, we are confident that with EBITDA growth and disciplined cash management, we can reach leverage metrics consistent with our target credit rating in 2025.

Pierre: It will step down to six times on September 30th, and then again to five times on December 31st.

Unknown Executive: We remain committed to returning our leverage to levels consistent with our targeted BBB-BAA2 long-term credit ratings, or better. Nearly all of this improvement came from adjusted cash from operations. Collections continued to be strong and ahead of our internal forecast. Capital additions were lower as we continue to constrain investment to only the most critical high-return projects.

Pierre: We remain committed to returning our leverage to levels consistent with our targeted BBBBAA2 long-term credit ratings, or better.

Andrew Sandifer: Moving on to free cash flow in Flight 11. Free cash flow in the second quarter was $280 million, an improvement of over $187 million versus the prior year period. Nearly all of this improvement came from adjusted cash from operations, which improved by $184 million from a reduction in inventory, as well as a bill that payables. Collections continued to be strong and ahead of our internal forecasts. Capital additions were lower as we continued to constrain investment to only the most critical, high-return projects. Legacy and transformation cash spending was up due to costs related to our restructuring program.

Unknown Executive: Legacy and Transformation Cast Spending was up due to costs related to our restructuring program, a positive swing of nearly $1 billion from the 2023 performance at the midpoint of the range. This year-on-year increase is expected to be driven by a significant cash release from rebuilding accounts payable and reducing inventory, partially offset by higher accounts receivable due to revenue growth in the second half of the year. Relative to our prior guidance, this free cash outflow and free cash flow outlook reflects the updated EBITDA guidance provided today, as well as a modest reduction in anticipated capital investment. With that, I'll hand the call over to Rinaldi.

Andrew Sandifer: Through the first half of 2024, free cash flow is up $915 million versus the prior year. We now expect free cash flow of $400 million to $500 million before year 2024, a positive swing of nearly $1 billion from the 2023 performance at the midpoint of the range. This year, on your increase is expected to be driven by significant cash release from rebuilding accounts payable and reducing inventory, partially offset by higher accounts receivables due to revenue growth in the second half of the year. Relative to our prior guidance, this free cash flow, free cash flow outlook reflects the updated EBITDA guidance provided today, as well as a modest reduction in anticipated capital investment.

Pierre: We now expect free cash flow of $400 million to $500 million for full year 2024, a positive swing of nearly $1 billion from the 2023 performance at the midpoint of the range.

Ronaldo Pereira: With that, I'll hand the call over to Ranana.

Ronaldo Pereira: Thank you, Andrew.

Ronaldo Pereira: Before I begin, I want to take a moment to describe the four components that drive our report photos growth. The first is innovative formulations of our known dime-eyed products, some of which are patented. The second is our dime-eyed franchise. Growth of the dime-eyes is supported by existing IP protection and our actions to transition to unique patented formulations. This is enabled by our extensive knowledge of the dime-eyes and their target insect populations. Third is bringing to market four new active ingredients, with two having a new mode of action and a new family of products, the firm ones.

Pierre: With that, I'll hand the call over to Rinaldo.

Rinaldo: Thank you, Andrew. Before I begin, I want to take a moment to describe the four components that drive our portfolio's growth.

Rinaldi: The first is innovative formulations of our known thiamide products, some of which are patented. Growth of the diamides is supported by existing IP protection and our actions to transition to unique patented formulations. Third, is bringing to market four new active ingredients, with two having a new mode of action and a new family of products, the pheromones. Finally, our expanding platform of biological products. Today, I'll focus my discussion on diamides and the new active ingredients and what gives us confidence in our ability to keep growing.

Rinaldo: Growth of the diomides is supported by existing IP protection.

Ronaldo Pereira: Finally, our expanding platform of biological products.

Rinaldo: Finally, our expanding platform of biological products.

Ronaldo Pereira: Today, I'll focus my discussion on dime-eyes and the new active ingredients, and what gives us confidence in our ability to keep growing. Diomides have been a core part of our business since we launched at FMC as a peer-play agricultural sciences company in 2018. In these almost seven years, we have grown our partner base and expanded our geographic footprint. Through new product registrations, we have introduced brand new patented formulations that allow us to enter new market and crop segments. From the time we purchased the dime-eyes, there have been concerns regarding a perceived cleaf on revenue. This is absolutely not how we see it.

Rinaldi: Diamides have been a core part of our business since we launched FMC as a pure play agricultural sciences company in 2018. In these almost seven years, we have grown our partner base and expanded our geographic footprint. There have been concerns regarding a perceived cliff on revenue, but this is absolutely not how we see it.

Rinaldo: Through new product registrations, we have introduced brand new patented formulations that allow us to enter new market and crop segments.

Rinaldo: There have been concerns regarding a perceived cliff on revenue. This is absolutely not how we see it. Rather, we expect the Diamides to be a growth platform for FMC well into the future.

Unknown Executive: Rather, we expect the Diamides to be a growth platform for FMC well into the future. Discussions about the strength and resilience of our diamides usually start with the composition of matter patents for the active ingredient, although these have largely expired for rhinoxepia and thiazepia.

Ronaldo Pereira: Rather, we expect the dime-eyes to be a growth platform for FMC well into the future. Discussions about the strength and resilience of our demise usually start with the composition of matter-pathens for the active ingredients. These have largely expired for Renaxapyr and Phyra-Pure active ingredients. But there are many other factors that support the strength of our demise. One such factor is other-pathens, which includes manufacturing processes and its specific intermediates. These pathens provide protection that continues through mid-2026, varying by product and geography. In countries like India and China, these pathens have been harder to enforce, which is not the case in most other geographies.

Rinaldo: Discussions about the strength and resilience of our diamides usually start with the composition of matter patterns for the active ingredients.

Rinaldo: These have largely expired for rinoxapir and thiazepir active ingredients.

Unknown Executive: But there are many other factors that support the strength of our diamines. One such factor is other bad bacteria. Another factor is data protection.

Rinaldo: But there are many other factors that support the strength of our diamonds. One such factor is other patents.

Rinaldo: which includes manufacturing processes and its specific intermediates.

Speaker Change: Varying by product and geography.

Rinaldo: In countries like India and China, these patents have been harder to enforce, which is not the case in most other geographies.

Ronaldo Pereira: This is evidenced by recent legal victories and the lack of generic play is attempting to sell in these other geographies. Another factor is data protection. Providing studies for necessary registration can be time-consuming and costly for competitors. If a generic player wants to reference our proprietary data to save costs and time in registering their own products, they will need to wait until the data is no longer protected, which can be as long as 10 years from the regional registration. We sell our demise in nearly 100 countries. Its country has its own regulatory agencies, and the time to register a generic can vary from one year in some countries to more than five years in others.

Rinaldo: This is evidenced by recent legal victories and the lack of generic players attempting to sell in these other geographies.

Rinaldo: Another factor is data protection.

Unknown Executive: If a generic player wants to reference our proprietary data to save cost and time in registering their own products, they will need to wait until the data is no longer protected, which can be as long as 10 years from the original registration. We sell our diamides in nearly 100 countries. Each country has its own regulatory agencies, and the time to register a generic can vary from one year in some countries. In many countries, competing companies are prevented from registering a generic version of RSI as an active ingredient because FMC's data protection has not expired.

Rinaldo: We sell our diamides in nearly 100 countries.

Rinaldo: Each country has its own regulatory agencies, and the time to register a generic can vary from one year in some countries

Ronaldo Pereira: As such, in many countries, competing companies are prevented from registering a generic version of our cyasopere active because FMC's data protection has not expired. After all composition of matter, process and intermediate pathens and data protection expire, we know that generics will come to the market, most with solo-diamide products that may make our regional products. What they will find is that FMC has not been standing still. We have been actively working to advance our demise technologies through new formulations. First, through the development of new and, in many cases, patented solo-enhanced formulations, solo-formulations are renox appear or cyasopere molecules, formulated to be convenient to farmers, more sustainable and more cross-effective, allowing FMC-diamide products to be more competitive while remaining highly profitable.

Rinaldo: After all composition of matter, process and intermediate patents and data protection expire, we know that generics will come to the market, most with solo-diamide products that mimic our regional products.

Unknown Executive: What they will find is that FMC has not been standing still. These new enhanced solo formulations that we are now introducing in the market are often patented and include high concentration and solid formulations such as the large effervescent granule product we showcased at our November Investor Day. The second and most important advancement stems from our innovation in developing mixture formulations. These mixture formulations not only mark a substantial leap forward in performance for growers, but at FMC, our proactive approach involves extensive monitoring of insect populations through molecular biology, allowing us to anticipate and mitigate resistance issues.

Speaker Change: What they will find is that FMC has not been standing still.

Rinaldo: First, through the development of new, and in many cases patented, solo-enhanced formulations

Rinaldo: Solar formulations are renoxapir or siazapir molecules.

Rinaldo: Formulated to be convenient to farmers, more sustainable, and more cost-effective. Allowing FMC diamide products to be more competitive while remaining highly profitable.

Ronaldo Pereira: These new enhanced solo-formulations that we are now introducing in the market are often patented and include high concentration and solid formulations such as the larger pervestant granule product we showcased at our November Investor Day. The second and most important advancement stems from our innovation in developing mixture formulations, which combine diamides with complementary active ingredients. These mixture formulations not only mark a substantial forward in performance for growers. Rist, but also play a crucial role in preemptively addressing potential insect resistance. At FMC, our proactive approach involves extensive monitoring of insect populations through molecular biology, allowing us to anticipate and mitigate resistance issues.

Rinaldo: These new enhanced solar formulations that we are now introducing in the market are often patented and include high concentration

Rinaldo: and solid formulations such as the large effervescent granule product we showcased at our November Investor Day.

Rinaldo: The second and most important advancement stems from our innovation in developing mixture formulations.

Rinaldo: These mixture formulations not only mark a substantial leap forward in performance for growers, but also play a crucial role in preemptively addressing potential insect resistance.

Rinaldo: At FMC, our proactive approach involves extensive monitoring of insect populations through molecular biology, allowing us to anticipate and mitigate resistance issues.

Ronaldo Pereira: Our expertise in this domain informs the development of superior products tailored to meet the specific needs of each key market. Because we own these products, we have more knowledge about the demise than any other company, and we are using this knowledge to create superior products. This work is highly tailored to each key country, which, again, significantly diminishes the likelihood of any sudden widespread impact on sales. Simply put, we are confident that there is no impending revenue cleave for these key assets. There are layers of protection for both Renox appear and Psilospere based products, making them an important growth platform for FMC for years to come.

Unknown Executive: Our expertise in this domain informs the development of superior products tailored to meet the specific needs of each key market. Because we own these products, we have more knowledge about the diamides than any other company, and we are using this knowledge to create superior products. This work is highly tailored to each key country, which, again, significantly diminishes the likelihood of any sudden widespread impact on safety. Simply put, we are confident that there is no impending revenue cliff for these key assets.

Rinaldo: Our expertise in this domain informs the development of superior products tailored to meet the specific needs of each key market.

Speaker Change: Because we own these products, we have more knowledge about the dye mice than any other company, and we are using this knowledge to create superior products.

Rinaldo: This work is highly tailored to each key country, which, again, significantly diminishes the likelihood of any sudden widespread impact on sales.

Rinaldo: Simply put, we are confident that there is no impending revenue cliff for these key assets.

Unknown Executive: There are layers of protection for both renoxapir and cyazapir-based products, making them an important growth platform for FMC for years to come. We have talked about the diamines many times over the last few years. We are extending and further protecting the life cycle of diamides through new formulations to ensure our portfolio remains convenient to growers. Highly cost competitive and performance differentiated. Today, we're developing and launching products that will be needed to help fight insect resistance now and in the future. In addition to the diamond,

Ronaldo Pereira: We have talked about the Diamonds many times over the last year to recap the key points. Our current patent stage is strong, and we remain in place for some time. We are successfully defending our patents, and we continue to enforce our IP. We are extending and further protecting the life cycle of Diamonds through new formulations to ensure our portfolio remains convenient to growers, highly cost competitive, and performance differentiated. Today, we are developing and launching products that will be needed to help fight insect resistance now and in the future. FMC is best positioned to do that because we have consistently used advanced techniques to monitor insect populations for years.

Rinaldo: We have talked about the Diamines many times over the last year.

Rinaldo: To recap the key points.

Ronaldo Pereira: These are the reasons why we believe that diamonds will continue to be a meaningful contributor to FMC's growth throughout this decade and beyond.

Ronaldo Pereira: In addition to the Diamonds, the continued introduction of new molecules and new formulations will support our long-term growth. This includes the launch of four new active ingredients, which we spoke about during our 2023 Investor Day. Fluindepare, a patent that fungicides that we have recently launched in the US, Paraguay, Argentina, and Brazil, with future registrations expected for Mexico and India. This product gives us access to the large corn and soybean fungicide segments where we played only marginally until recently. Isaflex, the herbicide we launched in Australia and Argentina. Isaflex will also be launched in Brazil later this year and continue to expand into other crops throughout 2025.

Unknown Executive: The continued introduction of new molecules and new formulations will support our long-term growth. This includes the launch of four new active ingredients, which we spoke about during our 2023 investor Floyd Eppert, Registrations expected for Mexico and India. This product gives us access to the large corn and soybean fungicide segment, where we have played only marginally until recently. Isoflax, the herbicide we launched in Australia and Argentina. In Great Britain, we have received the active registration and anticipate product registration shortly for Dotylax, a patented rice herbicide and the first herbicide with a new mode of action in over 30 years. Dotylax is a big innovation in rice, and as we advance its development, we continue to find new opportunities on additional crops.

Rinaldo: where we played only marginally until recently.

Rinaldo: Isoflex, the herbicide we launched in Australia and Argentina.

Rinaldo: Isoflex will also be launched in Brazil later this year and continue to expand into other crops throughout 2025.

Ronaldo Pereira: In India, we just received product registration this week and planned to launch soon. In Great Britain, we have received the active registration and anticipated product registration short. Lee, Dodelax, a padded rice herbicide, and the first herbicide with a new mode of action in over 30 years. We have submitted regulatory registration in seven countries in which these make up to close to 30% of the global rice market. Commercial launches are expected in 2026. We continue to find new opportunities on additional crops. Rimizoxifen is still in its earlier stages. Rimizoxifen is an exciting herb side effective against resistant weeds like former Amara in corn and soybean markets.

Rinaldo: In India, we just received product registration this week and plan to launch soon. In Great Britain, we have received the active registration and anticipate product registration shortly.

Rinaldo: Go Relaxed!

Unknown Executive: Remy Zot is still in its earlier stages, but rheumatoxifen is an exciting herbicide effective against resistant weeds like Palmer amaranth in corn and soybean markets. Regarding the five new products I have just mentioned, Q Havlon, Combined, these products will give us access to segments we do not play in today, significantly expanding our addressable market in the future. Thank you, Ronaldo. Before we move to Q&A, I want to make a few high-level comments on 2025.

Rinaldo: [inaudible]

Ronaldo Pereira: It's another unique product with a new duo mode of action.

Rinaldo: It's another unique product with a new dual mode of action.

Ronaldo Pereira: Finally, pheromones, a platform of products that can potentially change the way growers manage and protect their crops from insects. We have already applied to register the first pheromone product for road crops in Brazil, Mexico, the US, and the Philippines. We estimate this product platform will contribute about $1 billion in revenue by 2033. Years from now, when solo-diamide products are fully exposed to the market, we expect that FMC will be well beyond those original products with patented new formulations and innovative diamond mixtures. Regarding the five new products I have just mentioned, two have launched, two are waiting registrations, and one is expanding regulatory submission.

Rinaldo: We have already applied to register the first pheromone product for row crops in Brazil, Mexico, U.S. and Philippines.

Rinaldo: Years from now, when solo-diamide products are fully exposed to the market.

Rinaldo: to have launched.

Rinaldo: Two are awaiting registration and one is pending regulatory submission.

Ronaldo Pereira: Combined, these products will give us access to segments we do not play in today, significantly expanding our addressable market in the future.

Rinaldo: Combined, these products will give us access to segments we do not play in today, significantly expanding our addressable market in the future.

Ronaldo Pereira: Our growth story is one of innovation. It is strongly rooted in the strength of our current portfolio, and the significant growth we anticipate from our new products. These are sales that will be in addition to our legacy portfolio, including the damage.

Rinaldo: Our growth story is one of innovation.

Rinaldo: It is strongly rooted in the strength of our current portfolio.

Rinaldo: and the significant growth we anticipate from our new products.

Rinaldo: These are sales that will be in addition to our legacy portfolio, including the Diamides.

Pierre Brondeau: I will now turn it back over to Pierre.

Pierre Brondeau: Thank you, Ronaldo. Before we move to Q&A, I want to make a few high-level comments on 2025. It is too early for any formalized guidance, but I will share some factors that we build with influence results. We are expecting demand in the market to continue to accelerate from where we end 2024. That would lead to a volume growth for FMC, especially in the first half of the year, where prior year comes will be weaker. We also expect continued strong growth of our new products. Pricing is uncertain, as in the case during any period of demand recovery.

Rinaldo: I will now turn it back over to Pierre.

Unknown Executive: It is too rich for any formalized guidance, but I will share some factors that we believe could influence a result. We also expect continued, strong growth of a new product. Pricing is uncertain, as is the case during any period of demand recovery, but the pricing actions we've taken this year should position us well in 2025. Overall, we expect 2025 revenue growth of around 6%, excluding the GSSB. On the cost side, There is about $150 million to $200 million in expected favorability.

Pierre: Thank you, Ronaldo.

Pierre: Before we move to Q&A, I want to make a few high-level comments on 2025.

Speaker Change: We're expecting demand in the market to continue to accelerate from where we end 2024.

Rinaldo: That would lead to a volume growth for FMC, especially in the first half of the year, where prior comps will be weaker.

Rinaldo: We also expect continued...

Rinaldo: Pricing is uncertain, as in the case during any period of demand recovery.

Pierre Brondeau: The pricing actions we've taken this year should position us well in 2025. Overall, we expect 2025 revenue growth at around 6% excluding the GSS business. On the cost side, there is about $150 million to $200 million in expected favorability. That's coming from lower raw materials, the absence of a revenue, but overall, the 2025 cost sorry is shaping up to be positive. The cost favorability will be partially upset by the loss of about 30 to 35 million dollars of EBDA from the self of the GSS business. That gives us growth at the top and bottom line in 2025, with further growth coming in four years as the new product is a pipeline that Ronaldo spoke about, announced and/or expand into a new country market.

Rinaldo: The pricing actions we've taken this year should position us well in 2025.

Rinaldo: Overall, we expect 2025 revenue growth at around 6%, excluding the GSS business.

Rinaldo: On the cost side, there is about $150 million to $200 million in expected favorability.

Speaker Change: That's coming from Lower Roma Chails.

Rinaldo: The absence of an absorbed fixed cost headwind that is forecasted in 2024 and a full year of restructuring benefits.

Unknown Executive: There is some uncertainty depending upon how raw materials move, but overall, the 2025 cost, and the story is shaping up to be positive. The cost favorability will be partially offset by the loss of about $30 to $35 million of EBITDA from the sale of the GSSB. With that, we are now ready to take your questions. Thank you. We will now begin the question and answer session. To withdraw from the queue, please press the star and then choose.

Rinaldo: There is some uncertainty depending upon how raw materials move, but overall the 2025 cost story is shaping up to be positive.

Rinaldo: The cost favorability will be partially offset by the loss of about 30 to 35 million dollars of EBITDA from the sale of the GSS business.

Rinaldo: That gives us growth at the top and bottom line in 2025.

Rinaldo: With further growth coming in 4 years as the new products in the pipeline that Ronaldo spoke about are launched and or expand into new countries and markets.

Unknown Executive: With that, we are now ready to take your question.

Ronaldo: With that, we are now ready to take your questions.

Unknown Executive: Thank you.

Christopher Parkinson: We now begin the question and answer assess that, Laura Rooster. The first question comes from Chris Packinson from Wolfie. Your advice is now open. Thank you so much for taking my question. Pierre, as much as I'd really love to focus on some of the intermediate and longer-term factors in which you've been highlighting on a preliminary basis, I'd love to just dig in a little on the second half and just the cadence between that they're in the fourth quarter. I mean, the ag markets are still pretty difficult. They're still some uncertainty in Brazil, but just any color you could offer to give investors a little bit more comfort on the split there and kind of the puts and takes that you outlined on slides eight and nine would be especially helpful.

Speaker Change: Thank you. We will now begin the question and answer session. To be placed in the queue, please press the star key, then 1, on a touch-tuned phone. If you are using a speakerphone, please pick up your headset before pressing the keys.

Rinaldo: Please limit yourself to one question. If you have any additional questions, you can jump back in the queue. To withdraw from the queue, please press star, then two. At this time, we will pause momentarily to assemble our rooster.

Rinaldo: The first question comes from Chris Parkinson from Wolfie. Your line is now open.

Unknown Attendee: Thank you so much for taking my question. So, Pierre, as much as I'd really love to focus on some of the intermediate and longer-term factors which you've been highlighting on a preliminary basis, you know, I'd love to just dig in a little on the second half and just the cadence between the third and the fourth quarter. I mean, the ag markets are still pretty difficult. There's still some uncertainty in Brazil. But just any color you could offer to give investors a little bit more comfort on the split there and kind of the puts and takes that you outlined on slides eight and nine would be especially helpful. Thank you so much.

Chris Parkinson: You know, I'd love to just dig in a little on the second half and just the cadence between the third and the fourth quarter. I mean, the ag markets are still pretty difficult. There's still some uncertainty in Brazil, but just any color you could offer to give investors a little bit more comfort on this split there and kind of the puts and takes that you outlined on slides eight and nine would be especially helpful. Thank you so much.

Pierre Brondeau: Thank you so much. All right, thank you, Chris.

Pierre Brondeau: I'm going to try to be concise on the answers that I might be a bit longer on this one because I think it's the right question. The sequence is important; Q4 is an important quarter.

Pierre: We're going to try to be concise in our answers, but I might be a bit longer on this one because I think it's the right question. The sequence is important. Q4 is an important quarter. First, I'm going to make an answer which is not a business answer. I do not need to take a risk, as a CEO just back from missing my first two quarters. We went through to define sales and earnings. North America

Speaker Change: We're going to try to be concise on answers, but I might be a bit longer on this one because I think it's the right question.

Pierre Brondeau: First, I'm going to make an answer which is not a business answer. I'm just back. I do not need to take a risk as a CEO; just back to miss my first two quarters. I could have gathered at different level. Nobody would have been surprised with a full your gallons at 890 or 900. So if I gathered where I did for the fourth quarter, it's because I did a very strong due diligence. and it's a true bottom-up process. We went through to define sales and earnings. For Q4, we have a much improved visibility today in Latin America and mostly Brazil, in North America, and in EMEA.

Speaker Change: The sequence is important. Q4 is an important quarter. First, I'm going to make an answer which is not a business answer.

Speaker Change: I'm just back.

Speaker Change: I do not need to take a risk.

Speaker Change: I could have gathered a different level. Nobody would have been surprised with a four-year guidance at 890 or 900. So if I gathered where I did for the fourth quarter, it's because I did a very strong due diligence.

Speaker Change: And it's a true bottom-up process.

Speaker Change: We went through to define sales and earnings.

Speaker Change: For Q4, we have a much improved visibility today in Latin America and mostly Brazil, in North America, and in EMEA.

Pierre Brondeau: As an example for Brazil, we believe that the orders we already have in hand and the Q2 action to prepare for the season put us in an excellent position to meet the Q3, Q4 targets. North America, I'd say the visibility is good for the short term. It's an easier market to forecast short term, in a sense that we have very fewer customers. There are mostly large distributors, so it's a much easier place to define your short-term potential sales. I would say that the least comfortable in terms of visibility for us would be Asia, driven by the channel situation in India.

Speaker Change: As an example, for Brazil,

Speaker Change: We believe that the orders we already have in hand and the Q2 action to prepare for the season put us in an excellent position to meet the Q3, Q4 target.

Speaker Change: I'd say the visibility is good for the short-term. It's an easier market to forecast short-term in the sense that we have fewer customers. They are mostly large distributors.

Speaker Change: It's a much easier place to define your short-term potential sales.

Pierre Brondeau: I can tell you that that has been reflected in the way we have been focusing the fourth quarter. The third point that we make is that the channel is getting closer to normal, and demand is picking up. Additionally, we know and we've seen and we've talked to customers, and we know some of the customers pushed Q3 demand into Q4. They're buying as they can, so that is inflating the Q4 sales number. On the price, we do not risk. We have taken very strategic decisions, bringing a price down in the second quarter. We have repositioned a pricing that's being proven by the volume we're able to reach in Q2.

Pierre: And I can tell you that that has been reflected in the way we have been forecasting the quarter, the fourth quarter. On price, we do not see risk. We have taken a very strategic approach, bringing the price down in the second quarter. We have repositioned pricing, that's been proven by the volume we're able to reach in Q2. So we believe Q3, Q4, we should see prices quite slight versus Q2, and we do not see many risks, especially in Latin America. 60%, 60, 60% of the growth.

Speaker Change: I can tell you that that has been reflected in the way we have been

Speaker Change: forecasting the quarter, the fourth quarter.

Speaker Change: Third point I would make is that the channel is getting closer to normal and demand is picking up. Additionally,

Speaker Change: Q3 demand into Q4. They're buying as late as they can, so that is inflating the Q4 sales number.

Speaker Change: On the price, we do not see risk. We have taken very strategic decisions, bringing a price down in the second quarter.

Pierre Brondeau: We believe Q3, Q4, we should price quite quite flight this Q2 and we do not see many risks, especially in Latin America.

Speaker Change: We do not see many risks, especially in Latin America.

Pierre Brondeau: Finally and most importantly, in the second half, 60% of the growth in the second half is new product introduction. This is actually quite in language what we saw in Q2. The demand for those products, some of them which were introduced in market tested in 2023, is very strong. Importantly, it gives us access to market we did not have access to, so that is a very large component over H2 and Q4 growth.

Speaker Change: Finally, and most importantly, in the soon half,

Pierre: In the second half, we have new product introductions. Importantly, it gives us access to markets we did not have access to, so that is a very large component of H2 and Q4 growth. And maybe, Ronaldo, you want to say a couple of words about the new product we're introducing to give some confidence about our Q4 forecast? Sure, Pierre.

Speaker Change: The demand for those products, some of them which were introduced and market tested in 2023, is very strong.

Speaker Change: Values are very large.

Ronaldo Pereira: Maybe Ronaldo, he said capital words about the new product we're introducing to give some confidence about Q4 forecast. Sure, Pierre. I would highlight you in the US. We're talking about the enhanced information of the guidelines as well as some herb site platforms that continue to grow for FMC. We just launched an industrial fundicide in North America and that is gaining a lot of esteem and speed. In South America, particularly, we're very excited with an introduction of the fluindepere based on Sousa, a fundicide that puts us to play in the soybean rust segment. And also we don't talk much about that, but there are two new formulations of our subventors on franchise that are also growing fast in Latin America, particularly in Brazil.

Fernando: compliments over H2 and Q4 growth, and maybe Fernando you want to say a couple of words about the new product we're introducing to give some confidence about Q4 forecast? Sure Pierre.

Ronaldo Pereira: I would highlight, too, in the U.S., we're talking about these enhanced formulations of the diamine. And also, we don't talk much much about that. But there are two new formulations of our sulfantazone franchise that are also growing fast in Latin America, particularly in Brazil, one for sugarcane, Borolfo, and the other one more on the control of resistant weeds on soybean in Brazil. That is a storm, as Pierre mentioned.

Fernando: as well as some herbicide platforms that continue to grow for FMC. We just launched a dadastru, a fungicide in North America, and that is gaining a lot of esteem and speed.

Speaker Change: And in South America, particularly, we're very excited with the introduction of the fluindapyr-based Onsuva, a fungicide that puts us to play in the soybean rust segment.

Speaker Change: and and also we don't talk much much about that but there are two

Ronaldo Pereira: One for sugarcane, borough fool, and the other one more on the control to control resistant weeds on soybean in Brazil. That is a stone, as Pierre mentioned.

Unknown Executive: So, in a few words... I'm going to do that again. Thanks, Rich. Thank you. The next question comes from Josh Spector from UBS. Your line is now open. Hey, good morning.

Unknown Executive: So interviewers, well again, trust me, I don't want to miss neither Q3 or Q4, so there is a very solid due diligence behind the angles number and strong confidence. Excellent color; thank you so much. Thanks, please. Thank you.

Speaker Change: So, in a few words,

Speaker Change: Excellent caller. Thank you so much.

Rich: Thanks, Rich.

Andrew Sandifer: The next question comes from Josh Spector from UPS; your line is now open. Hey, good morning. I was hoping to talk a little bit on the cost side of things a little bit more. So, you talked about a headwind in 3Q from some higher product costs due to the downtime we took later last year. When do you go through that, so is that a tailwind in the fourth quarter, or is that more of a tailwind into next year, and I guess any other weird cost movements we should be thinking about between 3Q or 4Q that maybe drives some higher confidence in that 4Q pickup.

Unknown Executive: I was wondering if you could talk a little bit more on the cost side of things a little bit more. So you talked about a headwind in 3Q from some higher product costs due to the downtime you took later last year. But we've had headwinds that offset that in different ways throughout the different quarters.

Andrew Sandifer: Hey, Josh, it's Andrew. I'll take this one. I think certainly Q3 is a bit of an aberration, just that it's a lumpiness of how some of this cost is flowing through. Just a reminder, we do have raw material cost benefit throughout the year for newly purchased materials. We've had headwinds that offset that in different ways throughout the different quarters. As we look to the third quarter, the big issue is a big slug of unabsorbed fixed costs that are now flowing through our P&L from downtime we took in manufacturing facilities in the last year. That is really the big, big offset to raw material cost favorability.

Speaker Change: We've had headwinds that offset that in different ways throughout the different quarters.

Unknown Executive: As we look to the third quarter, the big issue is a big slug of unabsorbed fixed costs that are now flowing through our P&L from downtime we took in manufacturing facilities in the last year. That is really the big, big offset to raw material cost favorability. We do also have a little bit higher distribution and freight costs because we're doing higher volumes. But it's really that flow through of the unfavorable variances.

Andrew Sandifer: We do also have a little bit higher distribution and freight costs because we're doing higher volumes, but it's really that flow through of the unfavorable variances. In Q4, we still have a little bit of those volume variances flowing through the unabsorbed fixed cost flowing through. We do have higher distribution costs, but we still have raw material cost flex with favorability in the prior year. So like roast margin costs become much more of a flatish issue in Q4. So some of the additional benefits at total cost, you'll see a modest tailwind on overall costs in Q4 with restructuring benefits and a little bit lack of the headwind on COGS.

Rich: That is really the big big offset to raw material cost favorability. We do also have a little bit higher distribution and freight costs because we're doing higher volumes, but it's really that that flow through of the unfavorable variances.

Unknown Executive: In Q4, we still have a little bit of those volume variances flowing through, that unabsorbed fixed cost flowing through. We do have higher distribution costs, but we still have raw material cost favorability from the prior year. So that gross margin cost becomes much more of a flattish issue in Q4. Some of the additional benefits on total costs, you'll see a modest tailwind on overall costs in Q4 with restructuring benefits and a lack of a headwind on COGS. So Q3 is the carryover of unabsorbed fixed costs from last year. It's lumpy, it's flowing through, and this is the last big slug.

Rich: and in Q4.

Rich: We still have a little bit of...

Rich: Of those volume variances flowing through, that unabsorbed fixed cost flowing through, we do have higher distribution costs.

Rich: But we still have raw material cost flexes.

Rich: Favorability from the prior year. So that gross margin cost become much more of a flattish issue in Q4.

Andrew Sandifer: So Q3, it really is, it's the carryover of unabsorbed fixed costs from last year. It's lumpy, it's flowing through, and this is the last big slug. Unfortunately, it's large enough to wear an offset to any of the restructuring benefits year on year in Q3. Q4, we get out from under the biggest pieces of that, and the cogs and wind gets to be pretty flat.

Rich: So Q3, it really is, it's the carryover of unabsorbed fixed costs from last year, it's lumpy, it's flowing through, and this is the last big slug.

Unknown Executive: But unfortunately, it's large enough to where it offsets any of the restructuring benefits year on year in Q3. In Q4, we get out from under the biggest pieces of that, and the COGS headwind gets to be pretty. The next question comes from Vincent Andrews from Morgan Stanley. Vincent, your line is now open.

Rich: Unfortunately, it's large enough to where it offsets any of the restructuring benefits year on year in Q3. Q4, we get out from under the biggest pieces of that, and the COGS headwind gets to be pretty flat.

Unknown Executive: Thank you.

Speaker Change: Got it, thank you.

Vincent Andrews: The next question comes from Vincent Andrews, from Morgan Stanley. Vincent, you're nice and open. Thank you, Andrew. I maybe I'll just follow up on that. On the pharma exchange impact on the back half of the year, if I read this right, Q3 has a revenue hit from pharma exchange, but it was a tailwind to EBITDA and then Q4 also has a hit on the revenue line, but it seems to be neutral on EBITDA. Can you just update us on how that flows through works, or is there something sort of specific to the second half and some of the issues that you mentioned in terms of timing of raw and inventory flow through this may be impact on this as well.

Rich: Thank you.

Speaker Change: The next question comes from Vincent Andrews from Morgan Stanley . Vincent, your line is now open.

Unknown Executive: Thank you. Andrew, maybe I'll just follow up on that. On the foreign exchange impact on the back half of the year, if I understand this right, Q3 had a revenue hit from foreign exchange, but it was a tailwind to EBITDA. And then Q4 also had a hit on the revenue line, but it seems to be neutral to EBITDA. Can you just update us on how that flow through works? Or is there something sort of specific to the second half and some of the issues that you mentioned in terms of timing of raw materials and inventory flow through that's maybe impacting this as well? The next question comes from Arun Viswanathan from RBC Capital. Your line is now open.

Vincent Andrews: Thank you. Andrew, maybe I'll just follow up on that. On the foreign exchange impact on the back half of the year, if I read this right, Q3,

Speaker Change: has a revenue hit from foreign exchange, but it was a tailwind to EBITDA, and then Q4 also has a hit on the revenue line, but it seems to be neutral on EBITDA.

Speaker Change: Can you just update us on how that flow-through works, or is there something sort of specific to the second half and some of the issues that you mentioned in terms of timing of raws and inventory flow-through that may be impacting this as well?

Andrew Sandifer: Yeah, thanks, Vincent. Now, it's really, it's really more of an issue in SGNA and RD, quite honestly, the currencies that are just the most in play in those quarters. And it's a, you know, it's a basket of currencies, but in Q4 in particular, it's the REI. And while we have a revenue headwind, it's an SG&A benefit. So net net we end up with it's a minor tailwind to EBITDA and the fourth quarter. But, you know, we wanted to highlight that because it might not, you know, given that it's a, you know, I modest, you know, low single digit effects had went at revenue.

Speaker Change: Yeah, thanks, Vincent. It's really more of an issue in SG&A and RD, quite honestly, the currencies that are just the most in play in those quarters.

Speaker Change: and it's, you know, it's a basket of currencies, but in Q4 in particular, it's the REI, and while we have a revenue headwind, it's an SG&A benefit.

Speaker Change: So, net-net, we end up with a minor tailwind to Ibiza in the fourth quarter.

Speaker Change: But you know, we wanted to highlight that because it might not, you know, given that it's a, you know, a modest, you know, low single digit FX headwind at revenue, we didn't want to missignal people that, you know, it would actually go the other way in Q4. Q3, you see more alignment where you have the revenue and A of a die headwinds, both minor, you know, low single digit revenue for FX. But that's really the difference in Q4. It's, it's which, which FX, which currencies are hitting, and the fact that there are benefits in SG&A from from those, the currency changes that offset what happens at revenue.

Andrew Sandifer: Wow, we didn't want to miss signal people that, you know, it would actually go the other way in Q4. Q3, you see more alignment where you have the revenue and EBITDA headwinds, both minor, you know, low single digit revenue for FX. But that's really the difference in Q4. It's, it's which, which effect which currencies are hitting. And the fact that there are benefits in SGNA from, from those currency changes that, that offset what happens to revenue.

Unknown Executive: Thank you.

Speaker Change: Thank you.

Jonathan: The next question comes from Aaron; this is Jonathan from ABC Capital. The line's now open. Thanks for taking my question. Good to speak with you guys, and good to hear you again here.

Speaker Change: Thank you.

Speaker Change: The next question comes from Arun Viswanathan from RBC Capital. Your line is now open.

Unknown Attendee: Thanks for taking my question. Good to speak with you guys and good to hear you again, Pierre. So I guess my question is really around some of the learnings that you've unearthed and maybe some of the topics you've touched on earlier as far as due diligence. Were there any, you know, personnel changes other than yourself? And, you know, did you think that was necessary?

Arun Viswanathan: Thanks for taking my question. Good to speak with you guys and good to hear you again, Pierre. So I guess my question is really around some of the learnings that you've unearthed and maybe some of the topics you've touched on earlier as far as due diligence.

Pierre Brondeau: So I guess our question, my question is really around some of the learnings that you, you, you've unearthed and maybe some of the topics you've touched on earlier as far as due diligence. Were there any, you know, personnel changes other than yourself and, you know, do you think that's necessary. And then maybe you can also highlight a go-to-market strategy in some of these areas. I mean, you know, obviously the credit issues were, you know, a factor in South America last year that, you know, potentially exacerbated some of the destocking that you've seen. Yeah, maybe you can address those issues.

Unknown Attendee: And then maybe you can also highlight the go-to-market strategy in some of these areas. I mean, obviously, the credit issues were, you know, a factor in South America last year that, you know, potentially exacerbated some of the destocking that you've seen. Yeah, maybe address those issues. Thanks.

Arun Viswanathan: Were there any, you know, personnel changes other than yourself? And, you know, do you think that's necessary? And then maybe you can also highlight the go to market strategy in some of these areas. I mean, you know, obviously, the credit issues were, you know, a factor in South America last year that

Speaker Change: You know, potentially exacerbated some of the de-stocking that you've seen. Yeah, maybe you can address those issues. Thanks.

Pierre Brondeau: Thanks. Sure. In terms of personal issue of people, I think the team is in place where we're organized. I think what I've been looking deep into is focusing process, selling process, and execution. I think it's pretty clear that we've missed quite a few quarters where we've missed our own selling target. And I think that's the place where we need to be highly vigilant. And Ronaldo and myself were looking deep into that. And I can tell you that I've spent a long, long time with each of the four regional presidents. to validate the forecast for Q3 and Q4.

Pierre: Sure. In terms of personal issues and people, I think the team is in place. Focusing process.

Speaker Change: Sure. In terms of personal issues, people, I think the team is in place. We are well organized.

Speaker Change: We do divisions. I think what I've been looking deep into is

Pierre: Selling Process and Execution. I think it's pretty clear that we've missed, Quote A Few Quarters, where we've missed our own selling targets. And I think that's the place where we need to be highly vigilant. And Ronaldo and myself, we're looking deep into that.

Arun Viswanathan: Selling process and execution. I think it's pretty clear that we've missed

Speaker Change: A few quarters where we've missed our own selling target, and I think that's the place where

Speaker Change: where we need to be highly vigilant.

Pierre: And I can tell you that I spent a long, long time with each of the four regional presidents to validate the forecast for Q3 and Q4. Another topic where I see a... Diamant Global and Regional Marketing Strategy. So that is also a place where I'm going to be looking into very carefully, and we have started to do some work. 23 cost structure So there is no need to implement a new restructuring program. But I can tell you there is a tree which, if it's used strategically, can truly lower your cost of operation and very quickly, at no cost to you.

Speaker Change: And Ronaldo and myself were looking deep into that, and I can tell you that I spent a long, long time with each of the four regional presidents.

Speaker Change: to validate the forecast for Q3 and Q4. Another topic where I see...

Pierre Brondeau: Another topic where I see a change I would like is, is regal in diamites. I think a diamage franchise is good. I think we do have a very interesting soil and mixture formulation. We need a more aggressive, diamad global and regional marketing strategy. We also need to accelerate new product invention for diamine. So that is also a place where I'm going to be looking into very carefully, and we have started to do some work. I say point number Number three. I am of course pleased with the resource of the restructuring program. I still believe we are operating at a cost which is too high.

Speaker Change: Change I would like is regarding Diamides. I think a Diamides franchise is good. I think we do have a very interesting solo and mixture formulation. We need a more aggressive

Speaker Change: Diamant Global and Regional Marketing Strategy

Speaker Change: We also need to accelerate new product invention for diamide. So that is also a place where I'm going to be looking into very carefully and we have started to do some work.

Speaker Change: I'd say point number three.

Speaker Change: I am, of course, pleased with the...

Speaker Change: The results of the restructuring program, I still believe we are operating at a cost which is too high. The corporation is back to sales number of 2018-2019, but we have a cost structure which is more of a 2022 cost structure.

Pierre Brondeau: The corporation is back to 2000 number of 2018-2019, but we have a cost structure which is more of a 2022 cost structure, 23 cost structure. So no need to implement a new restructuring program, but I can tell you there is a treason which, if it's used strategically, can truly lower your cost of operation and very quickly at no cost. So that's kind of a part we are looking into right now to lower a cost.

Speaker Change: So no need to implement a new restructuring program, but I can tell you there is a treatment

Speaker Change: which if it's used strategically can truly lower your cost of operation and very quickly at no cost. So that's kind of the part we are looking into right now to lower our cost.

Pierre: So that's kind of the part we are looking into right now to lower costs. Maybe last, I'm quite pleased with the R&D organization, I would put it, but I still want to have a..., maybe a strong coordination, between the work which is done in the regions and at the global level to have an even more efficient R&D organization. So some of the places where I'm focusing my attention right now.

Pierre Brondeau: Maybe last, I'm quite pleased with the R&D organization that I would put, but I still want to have a maybe a stronger coordination between the work which is done in the regions and at the global level to have an even more efficient R&D organization. So some of the places where I'm focusing my attention right now. The strategy of the company is in place, is solid. I'm not planning to measure change, but execution and short-term marketing strategy is important.

Speaker Change: Maybe last, I'm quite pleased with the R&D organization, I would put, but I still want to have a...

Speaker Change: May be a strong coordination.

Speaker Change: between the work which is done in the region and at the global level to have an even more efficient R&D organization. So some of the places where I'm focusing my attention right now

Speaker Change: The strategy of the company is in place, is solid, I'm not planning major change, but execution and short term marketing strategy is important. I don't know Andrew if you want to address the question on Brazil?

Unknown Executive: And Andrew, do you want to address the question on Brazil? Unknown Speaker, at a strong pace, a 45% to 50% of orders in hand would be a normal ratio you could expect. I'm talking when you have a very healthy market with low inventory in the channel. I think the numbers you've seen.

Pierre Brondeau: I don't really want to address the question on Brazil. Yeah, look, I'd say simply this: certainly the availability of crest credit to our customers did impact perhaps some buying last year, but I would emphasize the quality of credit in our own receivables is very high. Our provisions, our past dues are down. Our collections have been ahead of our own internal forecast. So while that availability of credit may be a rate limiting step on purchases, particularly last year when there was such, you know, the heat of the correction, we don't believe that that's either a risk to our revenue or a risk to our balance sheet at this point.

Andrew: Yeah, look, Arun, I'd say simply this, certainly the availability of credit to our customers did impact perhaps some buying last year, but I would emphasize, you know, the quality of credit in our own receivables is very high. Our provision, you know, our past dues are down, our collections have been ahead of our own internal forecast,

Speaker Change: So while that availability of credit may be a rate-limiting step on purchases, particularly last year when there was such, you know, the heat of the correction, we don't believe that that's either a risk to our revenue or a risk to our balance sheet at this point.

Unknown Executive: Great, thanks for that. Thank you.

Arun Viswanathan: Great, thanks a lot.

Frank Meach: The next question comes from Frank Meach from Femium Research. Your line's now open. Yes, good morning, and yes, Pierre. Good to hear from you again, and I really appreciate the answer to the first question, given that there was some sense, perhaps, that the 4Q guide was more on the aspirational side, and clearly you don't believe that to be the case. You indicated that one of the things that gives you confidence is that in Brazil, a third of the order book is already booked, as opposed to last year where it was zero. I'm curious as to what that typically is, because obviously last year was an anomaly.

Speaker Change: Thank you.

Speaker Change: The next question comes from Frank Mitsch from Vimeo Research. Your line is now open.

Frank Mitsch: Yes, good morning and yes Pierre, good to hear from you again and I really appreciate the answer to the first question given that there was some sense perhaps that

Frank Mitsch: The 4Q guide was more on the aspirational side, and clearly you don't believe that to be the case. You indicated that...

Speaker Change: One of the things that gives you confidence is that in Brazil, a third of the order book is already booked as opposed to last year where it was zero. I'm curious as to what that typically is, because obviously last year was an anomaly. So what is more normal? So we have a kind of a benchmark there. And then also, you know, obviously on the cost side,

Frank Meach: So what is more normal? So we have a kind of a benchmark there. And then also, you know, on obviously on the cross side, you know, you're doing a lot of work, and I noticed a S-G-N-A was particularly light in the second quarter.

Speaker Change: You know, you're doing a lot of work, and I noticed SG&A was particularly light in the second quarter, if you could give us some color as to what your expectations are on the SG&A side as we progress through the year and into 2025. Thank you.

Frank Meach: If you could give us some colorist of what your expectations are on the S-G-N-A side as we progress through the year and into 2025. Thank you. Sure, thanks, Frank. The first one is normal pace. Oh, yeah, normal pace. Sorry. Yeah, we have about 30, 35% of orders last year was zero. I would say that in period of high demand when your markets are growing at a strong pace, a 45% up to 50% of orders in hand would be a normal ratio you could expect. I'm talking when you have a very healthy market with low inventory in the channel.

Frank: Sure. Thanks, Frank.

Speaker Change: Thank you.

Speaker Change: Normal pace. Oh, yeah. Normal pace. Yes. Sorry.

Speaker Change: Yeah, we have about 30, probably 35% of orders. Last year was zero. I would say that in period of high demand, when your markets are growing,

Speaker Change: At strong pace, a 45% up to 50% of orders in hand would be a normal ratio you could expect. I'm talking when you have a very healthy market with low inventories.

Frank: In the channel. I think the numbers, the numbers we've, you've seen.

Unknown Executive: Not much different from what we said in the script. I think we were increasing north of $75 million, the target with the last part coming from SG&A. I do believe that we're going to reach $150 million by the end of 2025 in run rate, in overall cost savings, with a significant part coming from SG&A. But once again, I want to emphasize that as much as $150 million, whether it's on the COGS side or the S&R side, is a good number. We're going to need to do better.

Pierre Brondeau: I think we were increasing north of 75 million dollars the target with the last part coming from S-S-GNA. I do believe, I do believe that's over the reach, the 150 million dollars by the end of 2025 and run rate in overall cost saving with a significant part coming from S-GNA. But once again, I want to exercise as much as 150 million dollars, whether it's in the COG side or the S-S-GNA side, is a good number. We're going to need to do better.

Speaker Change: Not much different from what we said in the script, I think we were increasing north of $75 million, the target with a large part coming from SG&A.

Frank: I do believe.

Frank: I do believe that over the reach

Frank: The $150 million by the end of 2025 in run rate in overall cost saving, with a significant part coming from SG&A. But once again, I want to emphasize, as much as $150 million

Frank: Whether it's on the COG side or the SENR side,

Unknown Executive: We're going to need to operate at a lower cost. And we have in place a strategy program around attrition because that's an opportunity for us. We have tools. The next question comes from Richard Garchitorena from Wells Fargo. The line is now open.

Pierre Brondeau: We're going to need to do better; we're going to need to operate at lower cost, and we have in place a strategic program around that vision because that's an opportunity for us. We have tools which allow us to work differently, and I think we have to use them. Thank you so much. Thank you.

Frank: is a good number.

Frank: UM.

Speaker Change: We're going to need to do better. We're going to need to do better. We're going to need to operate at a lower cost. And we have in place a strategy program around attrition because that's an opportunity for us. We have tools.

Frank: which allow us to work differently and I think we have to use them.

Richard Gossettoria: The next question comes from Richard Gossettoria from Wells Fargo.

Frank: Thank you.

Pierre Brondeau: The line is now open. Great, thanks and welcome back, Pierre. My question basically is bigger picture in terms of Pierre, you're coming back to the industry and looking at where the industry has gone. You know, we saw peak earnings in 2022. Obviously, you've done some restructuring and some divestitures. I was just wondering what your thoughts are in terms of where we are in the cycle, given where crop prices have been moving weaker through 2024. And then I know you gave some high-level comments around 2025, but just curious in terms of when you can begin a question point in terms of pricing, getting better, and do you really think we are at the trough here in the second half in 2024?

Frank: The next question comes from Richard Garchitorena from Wells Fargo. The line is now open.

Pierre: Great, thanks. And welcome back, Pierre. My question basically is the bigger picture in terms of you coming back to the industry and looking at where the industry has gone. You know, we saw peak earnings in 2022, obviously, and it has done some restructuring and some divestiture. I think we've, in a little cycle, we've seen them, we've seen them before, and North America.

Richard Garchitorena: Great, thanks and welcome back Pierre. My question basically is bigger picture in terms of...

Frank: Peter, coming back to the industry and looking at where the industry has gone, you know, we saw peak earnings in 2022. Obviously, you've done some restructuring and some divestitures.

Speaker Change: I was just wondering what your thoughts are in terms of where we are in the cycle, given where crop prices have been moving weaker through 2024.

Speaker Change: and then I know you gave some high-level comments around 2025 but just curious in terms of when you think we see an inflection point in terms of pricing getting better and

Speaker Change: Do you really think we are at the trough here in the second half of the 24? Thank you.

Pierre Brondeau: Thank you. Yeah, I think with, you know, the cycle we've seen then, we've seen 2024. There is always the seven-eighth years of growth followed by one to two-year down cycle. Every indication we had, we tried to be very scientific and maybe more than usual in analyzing the market. We believe we reached the bottom in Q2 2024. That being said, we do not see getting back to a more normal business activity and a more normal channel until the first quarter of 2025. for Latam, Europe, and North America. I think for Asia and mostly driven by India, we'll have to wait well into 2025 to have more and more activity.

Speaker Change: Yeah, I think we've, in a little cycle, we've seen them, we've seen them before.

Speaker Change: There is always the 7-8 years of growth followed by a 1-2 year down cycle. Every indication we had, and we tried to be very scientific and maybe more than usual in analyzing the market, we believe we reached the bottom in Q2 2024.

Richard Garchitorena: That being said, we do not see getting back to a more normal business activity and a more normal channel until the first quarter of 2025.

Speaker Change: for LATAM Europe .

Pierre: and North America. I think for Asia and mostly driven by India, we will have to wait well into 2025 to have more normal activity. I believe

Pierre Brondeau: I believe by the end of 2025 we are out of the downturn. Mostly, mostly the recovery is going to happen. Mostly driven by non-Asia regions in the first quarter of 2025.

Pierre: By the end of 2025, we are off the downturn.

Richard Garchitorena: Mostly, mostly, the recovery is going to be mostly driven by non-Asian regions in the first quarter of 2025.

Unknown Executive: Thank you.

Adam Rodriguez: We have our next question comes from Adam Rodriguez from Miso; your line is not open. Thank you. Good morning, everyone. Pierre, so one quick question. I mean, I think in terms of pricing, I think you mentioned in the opening remarks about like the strategic intent to lower prices to regain the less differentiated products; that was a key driver of the lower prices.

Pierre: I think for Asia, and mostly driven by India, we will have to wait well into 2025 to have more normal activity, I believe. Mostly, mostly, the recovery is going to be mostly driven by non-Asian regions in the first quarter of 2025. We have our next question comes from Alan Rodriguez from Missouho. Your line is now open. Thank you. Good morning, everyone.

Richard Garchitorena: Thank you.

Speaker Change: We have our next question. It comes from Ellen Rodriguez from Missouho. Your line is now open.

Pierre: Pierre, so one quick question. I mean, in terms of pricing, I think you mentioned in the opening remark about the strategic intent to lower prices to regain the less differentiated products. That was a key driver of the lower prices. The question that I have is why the shift in strategy there and also how is that going to improve margins? I mean, are you chasing volume at the expense of profitability? If you could address that a little bit, please. Absolutely. This period of inflation in cost is now mostly behind us. But we intentionally KIFT through the period of raw material inflation.

Ellen Rodriguez: Thank you. Good morning, everyone. Pierre, so one quick question. I mean, I think in terms of pricing, I think you mentioned in the opening remark

Ellen Rodriguez: about like the strategic intent to lower prices, to regain the less differentiated products. That was a key driver of the lower prices. The question that I have is.

Pierre Brondeau: The question that I have is why the shift in strategy there, and also how is that going to improve margins? I mean, are you chasing volume at the expense of profitability? If you could address that a little bit, please. Absolutely. I think we acknowledge that we were aggressive on pricing to recover raw material cost increase. This period of inflation in cost is now mostly behind us, but we intentionally kept prices at a very high level across the board because we saw a market where demand was poor. There was no real demand. So, so fighting with price in time when there is no demand we felt was not the smallest thing.

Speaker Change: Why the shift in strategy there? And also, how is that going to improve margins? I mean, are you chasing volume at the expense of profitability? If you could address that a little bit, please.

Richard Garchitorena: Absolutely

Speaker Change: You know what, I think...

Richard Garchitorena: [inaudible]

Speaker Change: We acknowledge that we were aggressive on pricing to recover the raw material cost increase.

Speaker Change: This peer-to-peer of inflation and cost is now mostly behind us, but we intentionally kept

Richard Garchitorena: Prices.

Richard Garchitorena: at a very high level across the board.

Richard Garchitorena: because we saw a market where demand was poor. There was no real demand. So fighting with price in time when there is no demand we felt was not the smartest thing.

Pierre Brondeau: But, but we also have to face that now we have more than recovered our cost through the period of raw material inflation. And we do have a tool to take back position we should have and get back to market share we had in places where we've been officially keeping price high, even if there was no differentiation. So, it is not a chance of strategy. It is not we're not going to become a company which is going to be chasing volume at any cost. I think we use Q2 to reposition prices in order for us to be able to grow and benefit from the growth of the market, but this is it.

Richard Garchitorena: But we also have to face that now we have more than recovered our costs.

Richard Garchitorena: Through the period of raw material inflation.

Pierre: And we do have a tool to take back the position we should have and get back to market share we had in places where we've been artificially keeping prices high, even if there was no differentiation. So it is not a change of strategy. It is not

Richard Garchitorena: And we do have a tool.

Richard Garchitorena: to take back position we should have and get back to market share we had in places where we've been artificially keeping price high even if there was no differentiation. So it is not a change of strategy.

Pierre: We're not going to become a company that chases volume at any cost. Our prices are low in order for us to be able to grow and benefit from the growth of the market. But this is it.

Richard Garchitorena: It is not, we're not going to become a company which is going to be chasing volume at any cost.

Richard Garchitorena: I think we use Q2 to reposition.

Richard Garchitorena: prices in order for us to be able to grow and benefit from the growth of the market. But this is it. You will not see us continuing this in Q3 or Q4. But I have the feeling that we needed.

Pierre: You will not see us continuing this in Q3 or Q4. But I have the feeling that we need it, that repositioning of pricing after quarters of aggressive price increases. But absolutely no change in the strategy.

Benjamin Furrow: You will not see us continuing this in Q3 or Q4, but I have the feeling that we needed that repositioning over pricing after quarters of aggressive pricing. Police, but absolutely no change in the strategy, no changing of volume at any cost and not pay, we're not going to pay less attention to the margins of gross margin or maybe that margin of the company. Thank you.

Richard Garchitorena: That repositioning of pricing after quarters of an aggressive price increase.

Pierre: No chasing volume at any cost, and not... Hey, we're not going to pay less attention to the margins of the gross margin or EBITDA margin of the company. Our last question comes from Benjamin Fuhrer from Barclays. Benjamin, your line is now open.

Pierre: But absolutely no change in the strategy, no chasing of volume at any cost, and not

Richard Garchitorena: We're not going to pay less attention to the gross margin or EBITDA margin of the company.

Speaker Change: Okay, thank you.

Benjamin Furrow: Our last question comes from Benjamin Furrow, from Barclays.

Speaker Change: Thank you.

Pierre Brondeau: Benjamin, your eyes now open. Yeah, good morning, and thanks for squeezing me in at the end. I just wanted to follow up real quick on some of the promotional activity that you've mentioned, what's happening in India and how that's impacting. Anything you can share on how consumers are farmers are reacting to that and if there's any risk of overstocking the future given those discounts that you're putting in. Thank you very much. If you understand well the question you're asking about the one-time incentive we gave to our customers. There's some other customers and Brazil to some extent in the North America.

Richard Garchitorena: Our last question comes from Benjamin Fuhrer from Barclays. Benjamin, your line is now open.

Benjamin Fuhrer: what's happening in India and how that's impacting. Anything you can share on like how consumers or farmers are reacting to that and if that if there's any risk of overstock in the future given those those discounts that you're putting in. Thank you very much.

Speaker Change: and Brazil, to some extent in North America.

Pierre Brondeau: We're holding high cost products, and those products we're stocking the channel. We needed to see those products move through the channel to go to the end customers, and we have discussion with them; they need the help. We help them, and that allowed us to free space with a product going on the ground and moving through the channel. So it's it was very clear with them. It's a one-time incentive which is done toward the end of a down cycle; customers need help. We were there for them. It helps us to for the following of the year and it's cleaning up the channel.

Unknown Executive: We're holding high-cost products, and we had a discussion with them; they needed help. We helped them, and that allowed us to free up space with a product going on the ground and moving through the channel, so there is no risk of channel stocking because our prices right now are where they should be and are not lower than what the market is commending. Thank you very much. This concludes the FMC Corporation conference call. Thank you.

Speaker Change: We're holding high-cost products.

Unknown Executive: and those products were stuck in the channel. We needed to see those products move through the channel to go to the end customers.

Unknown Executive: I think everybody's clear on the market on why we do it, and I don't think there is any risk of channels talking because there are prices right now as well where they should be, and I'm not lower than what the market is commanding. Thank you very much. Thank you.

Unknown Executive: any risk of channel stocking because our prices right now are where they should be and are not lower than what the market is commending.

Unknown Executive: Thank you very much.

Unknown Executive: This concludes the FMC Corporation conference call. Thank you for attending. Thank you very much.

Speaker Change: Thank you.