Q2 2025 FMC Corp Earnings Call
Conference specialist by pressing the star key followed by zero. After today's prepared remarks, there will be an opportunity to ask questions.
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If youre using a speakerphone please pick up your handset before pressing the keys I would now like to turn the conference over to Mr. Kirk Brooks Director of Investor Relations for FMC Corporation. Please go ahead.
Good morning, everyone and welcome to FMC Corporation's second quarter earnings call.
Joining me are Brian Dow Chairman and Chief Executive Officer, Andrew Sandifer, Executive Vice President and Chief Financial Officer, and Ronaldo Pereira President.
Today, Pierre will review, our second quarter performance and provide outlook for the third quarter and fourth quarter.
Andrew will provide an overview of select financial results.
For our prepared remarks, we will take questions.
Our earnings release, and today's slide presentation are available on our website and the prepared remarks from today's discussion will be made available after the call.
Let me remind you that today's presentation and discussion will include forward looking statements that are subject to various risks and uncertainties concerning specific factors, including but not limited to those factors identified in our earnings release and in our filings with the Securities and Exchange Commission.
Kurt Brooks: Followed by zero. After today's prepared remarks, there will be an opportunity to ask questions. To be placed in the Q&A queue, please press the star key, then one at any time. If you are using a speakerphone, please pick up your headset before pressing the keys. I would like to turn the conference over to Mr. Kirk Brooks, Director of Investor Relations for FMC Corporation. Please go ahead.
Information presented represents our best judgment based on today's understanding.
Actual results May vary based on these risks and uncertainties.
Today's discussion and the supporting materials will include references to adjusted EPS adjusted EBITDA free cash flow organic revenue growth and revenue, excluding India, all of which are non-GAAP financial measures.
By zero. After today's prepare remarks, there will be an opportunity to ask questions to be placed in the Q&A queue. Please press the star key. Then 1, at any time, if you are using a speaker-phone, please pick up your headset before pressing the keys, I would like to turn the conference over to Mr. Kurt Brooks director of investor relations for fnc Corporation. Please go ahead.
Kurt Brooks: Good morning, everyone, and welcome to FMC Corporation's second quarter earnings call. Joining me are Pierre Brondeau, Chairman and Chief Executive Officer; Andrew Sandifer, Executive Vice President and Chief Financial Officer; and Ronaldo Pereira, President. Today, Pierre will review our second quarter performance and provide outlooks for the third quarter and fourth quarter. Andrew will provide an overview of select financial results. After our prepared remarks, we will take questions. Our earnings release and today's slide presentation are available on our website, and the prepared remarks from today's discussion will be made available after the call. Let me remind you that today's presentation and discussion will include forward-looking statements that are subject to various risks and uncertainties concerning specific factors, including but not limited to those factors identified in our earnings release and in our filings with the Securities and Exchange Commission.
Good morning everyone and welcome to FMC. Corporation second quarter earnings call.
Please note that is used in today's discussion earnings means adjusted earnings EBITDA means adjusted EBITDA.
A reconciliation and definition of these terms as well as other non-GAAP financial service to which we may refer during today's conference call are provided on our website with that I will now turn the call over to Pierre.
Joining me are Pierre Brando chairman and chief executive officer, Andrew Sandifer, Executive Vice, President and Chief Financial Officer. And when all the Pereira president,
Thank you Kurt and good morning, everyone.
Our goal during the first half of the year was to take a number of actions.
That would favorably position the company to deliver growth starting in the second half of the year and beyond.
These are listed on slide three.
We have accomplished these critical objectives, while delivering on all of our financial commitments.
Kurt Brooks: Information presented represents our best judgment based on today's understanding. Actual results may vary based on these risks and uncertainties. Today's discussion and the supporting materials will include references to adjusted EPS, adjusted EBITDA, free cash flow, organic revenue growth, and revenue excluding India, all of which are non-GAAP financial measures. Please note that, as used in today's discussion, earnings means adjusted earnings. EBITDA means adjusted EBITDA. A reconciliation and definition of these terms, as well as other non-GAAP financial terms to which we may refer during today's conference call, are provided on our website. With that, I will now turn the call over to Pierre.
We believe the level of FMC products in the distribution channels has normalized in most countries, which will enable the implementation of <unk>.
Growth strategies.
We have laid out a clear strategy for <unk> with key companies, well underway, including lower manufacturing cost and introducing new formulations.
Our additional sales.
Brazil focused on direct sales to large corn and soybean growers.
As a fully trained SaaS.
With initial customer engagements already underway.
Pierre Brondeau: Thank you, Kurt, and good morning, everyone. Our goal during the first half of the year was to take a number of actions that would favorably position the company to deliver growth starting in the second half of the year and beyond. These are listed on slide three. We have accomplished these critical objectives while delivering on all of our financial commitments. We believe the level of FMC products in the distribution channels has normalized in most countries, which will enable the implementation of a growth strategy. We have laid out a clear strategy for the next year with key components well underway, including lower manufacturing costs and introducing new formulations. Our additional sales route in Brazil focused on direct sales to large corn and soybean growers has a fully trained staff, with initial customer engagement already underway.
Commercial activities have commenced and we anticipate seeing early results starting in the third quarter as residuals next growing season begins.
The strategies for our core portfolio and growth portfolio platforms are clearly defined.
And Q2 results are in line with these plans.
Each region subregion and countries as actionable strategies in place unique to their geographies.
Demand for our new actives fluent that Pierre and Isom flakes is very strong and we are thrilled the appropriate level of support in place to deliver on our targets.
Just today.
We received registration for <unk> herbicide containing <unk> in greater detail.
The team is preparing for launch and we anticipate sales beginning in August.
<unk> has been introduced with meaningful sales expected to begin in 2027.
Pierre Brondeau: Commercial activities have commenced, and we anticipate seeing early results starting in the third quarter as Brazil's next growing season begins. The strategies for a core portfolio and growth portfolio platforms are clearly defined, and Q2 results are in line with these plans. Each region, sub-region, and country has actionable strategies in place unique to their geographies. Demand for new actives, FluentData Peer and ISOFLEX, is very strong, and we have put the appropriate level of support in place to deliver on our target. Just today, we received registration for FluentData's herbicide containing ISOFLEX active in Great Britain. The team is prepared for launch, and we anticipate sales beginning in August. DodiLex active has been introduced with meaningful sales expected to begin 2027. In fact, the first shipment was invoiced this month. Finally, Q4 of this year, we'll see the first full-scale commercial pilot of pheromones.
In fact, the first shipments was invoiced this month.
Finally.
Q4 of this year, we will see the first full scale commercial payoffs of several months.
Okay.
With these objectives completed.
We are focusing on additional ways to improve the business starting with addressing the challenges that we faced in India.
I will speak to these actions we are taking regarding our commercial business in that country in more detail in a moment.
But first I will walk through some highlights from our from our second quarter.
Our second quarter results are detailed on slide four five and six.
Results overall, where we're at the higher end over expectations with EBITDA and EPS slightly exceeding the high end of our guidance.
Second quarter sales were 1% higher than prior year.
The team is prepared for lunch. And when anticipate sales beginning in August,
Driven by volume growth of 6%.
We've used channel destocking for our products as completed in most countries as we believe customers have reached their targeted levels of inventory.
In the first half of the year.
Pierre Brondeau: With these objectives completed, we are focusing on additional ways to improve the business, starting with addressing the challenges that we face in India. I will speak to the actions we are taking regarding a commercial business in that country in more detail in a moment. But first, I will walk through some highlights from our second quarter. Our second quarter results are detailed on slide four, five, and six. Results overall were at the higher end of our expectations, with EBITDA and EPS slightly exceeding the high end of our guidance. Second quarter sales were 1% higher than prior, driven by volume growth of 6%. We've used channel destocking for our products as completed in most countries, as we believe customers have reached their targeted levels of inventory.
Our active management of FMC product sales into the channel <unk> com.
Combined with strong use of product on the ground laid a solid foundation for growth in the second half.
Price in the similar quarter was down 3% with over half of the decline due to pricing adjustments made today in MA partners on cost plus contract to account for lower manufacturing costs.
FX was a mild headwind of 1%.
Our growth portfolio was the driver of higher sales.
With the core portfolio essentially flat.
The growth portfolios high single digit increase.
Confirms the strong expectation we have for the new active ingredients.
Our second quarter, adjusted EBITDA of $207 million.
It was 2% higher than prior year.
As shown on slide five.
Again, we are driven by lower costs attributed to currency tailwind.
Pierre Brondeau: In the first half of the year, our active management of FMC product sales into the channel, combined with strong use of product on the ground, laid a solid foundation for growth in the second half. Price in the second quarter was down 3%, with over half of the decline due to pricing adjustments made to Dynamite Partners on cost plus contract to account for lower manufacturing costs. FX was a mild headwind of 1%. Our growth portfolio was the driver of higher sales, with the core portfolio essentially flat. The growth portfolio's high single-digit increase confirms the strong expectation we have for the new active ingredients. Our second quarter adjusted EBITDA of $207 million was 2% higher than prior, as shown on slide five. Gains were driven by lower costs attributed to cogged tailwinds from lower raw materials, better fixed cost absorption, and restructuring actions.
From lower raw materials.
There are fixed cost assumption and restructuring actions.
Cost favorability more than offset more than offset price and FX and wins as.
As well as a modestly unfavorable product mix.
Within the core portfolio.
Our second quarter adjusted earnings per share of <unk> 69.
Was 10 cents higher than prior drill.
Driven mainly by EBITDA growth and lower interest expense.
On a regional basis.
Our strongest growth came from EMEA driven by higher volume of herbicides.
Diamide patent IMI partner sales and branded sales appear.
This was not surprising as many countries in EMEA, we are the first to reach targeted inventory levels in the channel.
Latin America revenues increased slightly versus prior year as the region wrapped up the two.
2020 for 2025 growing season.
North America sales declined 5% due to expected Destocking in Canada.
Pierre Brondeau: Cost favorability more than offset price and FX headwinds, as well as a modestly unfavorable product mix within the core portfolio. Our second quarter adjusted earnings per share of 69 cents was 10 cents higher than prior, driven mainly by EBITDA growth and lower interest expense. On a regional basis, our strongest growth came from EMEA, driven by higher volume of herbicides, Dynamite Partner sales, and branded sales appear. This was not surprising, as many countries in EMEA were the first to reach targeted inventory levels in the channel. Latin America revenue increased slightly versus prior as the region wrapped up the 2024-2025 growing season. North America sales declined 5% due to expected destocking in Canada. In the US, there was a solid volume growth of branded products following destocking actions and delayed purchases during the first quarter.
In the U S. There was a solid volume growth of branded product following destocking action and delayed purchases during the first quarter.
Asia was down due to lower pricing as well as lower volumes driven by ongoing Destocking in India.
You have heard me talking about challenges in India since I have been back.
I believe that for FMC.
There is a much stronger way to operate in this country.
India has always been a difficult market to operate in.
It is characterized by a fragmented distribution channel share.
Serving tens of millions of growers.
Intense generic competition.
And a complex regulatory environment.
This market requires a high level of working capital in.
In a challenging price environment.
Between 'twenty, one and 'twenty threes, we anticipated strong growth over the next year as we expected continued process Pat.
Patent protection post the expiration of the composition of matter.
A matter of patents.
However.
Generics finished at a much faster than expected win.
Pierre Brondeau: Asia was down due to lower pricing, as well as lower volumes driven by ongoing destocking in India. You have heard me talking about challenges in India since I have been back. I believe that for FMC, there is a much stronger way to operate in this country. India has always been a difficult market to operate in. It is characterized by a fragmented distribution channel serving tens of millions of growers, intense generic competition, and a complex regulatory environment. This market requires a high level of working capital in a challenging price environment. Between 21 and 23, we anticipated strong growth over the next year, as we expected continued process patent protection post the expiration of the composition of matter patents. However, generics penetrated much faster than expected when, unlike in almost all other countries, we were unable to enforce our process patents.
Unlike in almost all other countries, we were enable to enforce our process patents.
This prevented us from executing our strategy and significantly increase an already high level of working capital, we're slowing down the movement of our product through the distribution channel.
Given that India generates very limited EBITDA.
And has substantial working capital we have made the decision to change how we operate in this market.
It is characterized by a fragmented distribution Channel.
Serving tens of millions of Growers.
After a thorough process that considers multiple options.
Intense, generic competition.
Management and the board made the decision to initiate the recent divestment of our commercial business in India.
And a complex regulatory environment.
This Market requires a high level of working capital.
In a challenging press environment.
Following the sale of the business, we expect to quickly regain commercial momentum in India, Yes.
Business to business model.
Between 21 and 23, we anticipated strong growth of Rex, appearing as we expected continued process.
As soon as the transaction is closed we expect to supply.
Pattern protection post the expiration of the composition of matter.
For the short and midterm the eventual Bayer products, requiring FMC one registration as.
Of of matter patterns.
However,
generics penetrated much faster than expected, when
As well as product, where FMC as a variable manufacturing costs.
Pierre Brondeau: This prevented us from executing our strategy and significantly increased an already high level of working capital while slowing down the movement of a product through the distribution channel. Given that India generates very limited EBITDA and has substantial working capital, we have made the decision to change how we operate in this market. After a thorough process that considered multiple options, management and the board made the decision to initiate the divestment of our commercial business in India. Following the sale of the business, we expect to quickly regain commercial momentum in India via a business-to-business model. As soon as the transaction is closed, we expect to supply for the short and midterm the eventual buyer products requiring FMC-owned registration, as well as products where FMC has favorable manufacturing costs.
Most importantly.
Unlike in almost all other countries we were unable to enforce a process patterns.
We expect to provide the Bayer access to our IP.
This prevented us from executing a strategy.
Protected products, including our full new active ingredients and advanced <unk> formulation.
Already highly evolved of working capital while slowing down the movement of a product.
Through the distribution Channel.
With a partner better structure for growth in India.
We expect molecules like <unk>.
Given that India. Generates very limited iida.
Which have strong potential in the country to gain strong growth.
And has substantial working, capital.
As soon as we get the registration.
We have made the decision to change how we operate in this market.
In addition, we retained our active ingredients global manufacturing and global research in India.
After a thorough process.
That considered multiple options.
We believe.
So the decision will enable faster resolution of the current challenges.
Management. And the board, made the decision to initiate. The investment of a commercial business in India.
We use <unk>.
Risk and volatility in future periods.
Free up cash for debt repayments.
Following the sale of the business. We expect to quickly regain commercial momentum in India, we have a business to business model.
Resulting in a stronger balance sheet.
In the lower allow us.
Soon as the transaction is closed, we expect to supply.
Two more really deploy resources to other growth areas.
Over time it will.
Also permit us to shift our India portfolio towards differentiated technologies with less Capex working capital exposure.
For the short and Midterm, the eventual buyer products, requiring FMC on registration.
Pierre Brondeau: Most importantly, we expect to provide the buyer access to our IP-protected products, including our four new active ingredients and advanced Dynamite formulation. With a partner better structured for growth in India, we expect molecules like DodiLex, which have a strong potential in the country, to gain strong growth as soon as we get the registration. In addition, we retain our active ingredients, global manufacturing, and global research in India. We believe that the decision will enable faster resolution of the current challenges, reduce risk and volatility in future periods, free up cash for debt repayment, result in a stronger balance sheet, and allow us to more readily deploy resources to other growth areas. Over time, it will also permit us to shift our India portfolio toward differentiated technologies with less working capital exposure. Turning to slide seven, our full-year guidance.
As well as product. Where FMC has favorable manufacturing cost.
Most importantly.
Turning to slide seven our full year guidance.
As Andrew will explain further in a moment.
Our reported revenue will include India.
We expect to provide the buyer access to our IP protected products, including a 4 new active ingredients, and advanced Dynamite formulation.
However.
We are excluding India from revenue guidance, given the uncertainty of managing that business well selling it.
With a partner better structure for growth in India.
We expect molecules like WX.
Which have a strong potential in the country.
India will be excluded from adjusted EBITDA and EPS.
To gain strong growth.
As soon as we get the registration,
In addition.
Revenue, excluding India is get it get it to be down 2% versus prior year.
We retain our active ingredients, global manufacturing, and global research in India.
Reported results.
It's a mid single digit price decline and a flat to low single digit FX head wind RFP.
We Believe.
That the decision will enable faster resolution of the current challenge.
Anticipated to be offset by volume growth, mainly in the second half.
Reduce.
Risk and volatility in future periods.
Free up cash for debt repayment.
Adjusted EBITDA is expected to be 1% higher at the midpoint is lower cost.
Resulting in a stronger balance sheet.
In the lower allow us.
And volume growth are mostly offset by price and FX headwinds.
To more readily deploy resources to other growth areas.
Adjusted earnings per share are expected to be flat to prior year at the midpoint.
Over time, it will also permit us.
In summary.
To shift our India. Portfolio toward differentiated Technologies with less Capital working, capital exposure.
The only change to our guidance is to remove second half sales from India.
Pierre Brondeau: As Andrew will explain further in a moment, our reported revenue will include India. However, we are excluding India from revenue guidance given the uncertainty of managing that business while selling it. India will be excluded from adjusted EBITDA and EPS. Revenue excluding India is gathered to be down 2% versus prior reported results, as a mid-single-digit price decline and a flat to low single-digit FX headwind are anticipated to be offset by volume growth, mainly in the second half. Adjusted EBITDA is expected to be 1% higher at the midpoint, as lower costs and volume growth are mostly offset by price and FX headwinds. Adjusted earnings per share are expected to be flat to prior year at the midpoint. In summary, the only change to our guidance is to remove second-half sales from India.
Turning to slide 7, a full year guidance.
Other than this we are maintaining guidance across all metrics sales.
As Andrew will explain further in a moment.
A reported Revenue will include India.
Sales EBITDA EPS and free cash flow.
however,
Turning to slide eight.
In Q3, we expect revenue, excluding India to be down 1% versus reported prior results.
We are excluding India from revenue guidance, given that uncertainty of managing that business while selling it.
India will be excluded from registered Ibiza, and eps.
We anticipate healthy growth volume growth.
And a minor tailwind from FX.
Revenue, excluding India is is gathered to be down 2% versus prior.
<unk> is expected to be down mid single digits, including adjustments today Ahmed product contract.
Reported results.
The India exclusion is a 6% reduction.
For our branded products price headwinds.
As a mid single digit, price decline, and a flat to low single digit, FX and wind are in deep anticipated, to be offset by volume growth. Mainly in the 7 half.
Amplified by the fact that volume growth in Latam is increasing the numbers of customers.
Adjusted eam is expected to be 1% higher at the midpoint as lower cost.
<unk> four relate.
And volume growth are mostly upset by price and FX headwinds.
Rebates versus last year.
It is not a like for like price decrease.
I just an earnings per share are expected to be flat to Prior year at the midpoint.
Adjusted EBITDA is expected to grow substantially.
In summary.
At 14% at the midpoint.
Pierre Brondeau: Other than this, we are maintaining guidance across all metrics: sales, EBITDA, EPS, and free cash flow. Turning to slide eight. In Q3, we expect revenue excluding India to be down 1% versus reported prior results. We anticipate healthy volume growth and a minor tailwind from FX. Price is expected to be down mid-single digit, including adjustment to Dynamite Partner contract. The India exclusion is a 6% reduction. For branded products, price headwinds are amplified by the fact that volume growth in LATAM is increasing the numbers of customers qualifying for rebates versus last year. It is not a like-for-like price decrease. Adjusted EBITDA is expected to grow substantially, up 14% at the midpoint, as significant cost favorability and volume growth more than offset pricing and FX headwinds. Lower costs are expected from cogged tailwinds, including lower raw materials, better fixed cost absorption, and restructuring actions.
The only change to organs is to remove 7 Health sales from India.
Significant cost favorability and volume growth more than offset pricing FX headwinds.
Other than this, we are maintaining Guinness across all metrics.
<unk> costs are expected from Cogs tailwind, including lower raw materials, better fixed cost absorption and restructuring actions.
Sales ibida Epps and free cash flow.
Turning to slide 8.
Adjusted EPS is expected to be 28% higher than prior year at the midpoint driven by higher EBITDA.
In Q3, we expect Revenue, excluding India to be down. 1% versus reported prior results.
We anticipate Healthy Growth, volume growth.
And a minor Tailwind from FX.
Slide nine shows our guidance for the fourth quarter.
price is expected to be down mid single digits, including adjustment today, I might part of contract
We anticipate revenue excluding India.
To be 5% higher at the midpoint.
The India exclusion is a 6% reduction.
As strong volume growth and a minor FX tailwind.
For a branded products price. Headwinds are Amplified by the fact.
Italy offset.
By a low single digit price decline and a negative 6% impact from the India exclusion.
That volume growth in latam is increasing the numbers of customers, qualifying for rebates.
Volume growth is estimated to come mostly from the growth portfolio.
Rebates versus last year.
It is not the like, for like price decrease.
Adjusted EBITDA is expected to be 4% higher the midpoint as lower costs more than offset lower pricing.
Adjusted Ava.
Is expected to grow substantially.
but 14% at the midpoint,
Costs are expected to be favorable.
But not to the same magnitude that we're expecting in the third quarter.
a significant cost favorability and volume growth more than offset pressing and FX headwinds
Adjusted EPS.
I expected from cogs Tailwind, including lower raw materials.
<unk> is expected to be 3% lower than prior year.
Pierre Brondeau: Adjusted EPS is expected to be 28% higher than prior at the midpoint, driven by higher EBITDA. Slide nine shows our guidance for the fourth quarter. We anticipate revenue excluding India to be 5% higher at the midpoint, as strong volume growth and a minor FX tailwind are partially offset by a low single-digit price decline and a negative 6% impact from the India exclusion. Volume growth is estimated to come mostly from the growth portfolio. Adjusted EBITDA is expected to be 4% higher at the midpoint, as lower costs more than offset lower pricing. Costs are expected to be favorable, but not to the same magnitude that we are expecting in the third quarter. Adjusted EPS is expected to be 3% lower than prior, as the EBITDA increase is more than offset by higher taxes and interest expense.
Better fixed cost absorption and restructuring actions.
The EBITDA increase is more than offset by higher taxes and interest expense.
I will now turn it over to Andrew to cover details on cash flow and other items.
Adjusted EPS is expected to be 28% higher than prior at the midpoint driven by higher ibida.
Thanks Pierre.
Slide 9 shows our guidance for the fourth quarter.
Before I review, the customary key financial items.
I'd like to provide some additional context on our guidance and financial reporting implications of the sale of our India commercial business.
We anticipate Revenue, excluding India.
We have concluded that the MDA sale meets the conditions to treat the assets of the business as held for sale for financial reporting purposes effective with the third quarter.
To be 5% higher at the midpoint as strong volume growth and a minor effect tearing. And partially offset by a low single digit price decline, and a negative 6% impact from the India exclusion.
However, the business is not material enough to fmc's results to be classified as a discontinued operation.
Volume growth is estimated to come mostly from the growth portfolio.
As such the results of the business will continue to be presented in the company's GAAP operating results until the transaction is completed.
Adjust is expected to be 4% higher at the midpoint as lower cost more than offset, lower pricing.
Okay.
Pierre described earlier, our guidance for the remainder of 2025 excludes India.
Costs are expected to be favorable.
Our reported revenue will continue to include the sales of India.
But not to the same magnitude that we're expecting in the third quarter.
I just said, Epps.
Our commercial business. However, we will also provide revenue excluding India as we report each quarter.
Is expected to be 3% lower than prior.
Guided and reported adjusted EBITDA and adjusted EPS will exclude the results of the business.
As the Ebina increase is more than offset.
Pierre Brondeau: I will now turn it over to Andrew to cover details on cash flow and other items.
By higher taxes and interest expense.
During the third quarter, we will evaluate the assets related to the sale or impairment and if necessary, we will record the assets at the lower of their carrying value or estimated fair value less cost to sell and our third quarter financial statements.
Andrew Sandifer: Thanks, Pierre. Before I review the customary key financial items, I'd like to provide some additional context on the guidance and financial reporting implications of the sale of our India commercial business. We have concluded that the India sale meets the conditions to treat the assets of the business as held for sale for financial reporting purposes effective with the third quarter. However, the business is not material enough to FMC's results to be classified as a discontinued operation. As such, the results of the business will continue to be presented in the company's GAAP operating results until a transaction is completed. As Pierre described earlier, our guidance for the remainder of 2025 excludes India. Our reported revenue will continue to include the sales of India of the India commercial business. However, we will also provide revenue excluding India as we report each quarter.
I will now turn it over to Andrew to cover details on cash flow and other items.
Thanks Pierre.
While we have not yet completed this analysis. It is possible that we will record an impairment of the business in the third quarter.
Before I review the customary key financial items, I'd like to provide some additional contacts on the guidance and financial reporting applications of the sale of our Andia Commercial Business.
With that additional contact let me proceed with a review of some key income statement items.
We have concluded that the ndsl meets the conditions to treat the assets of the business as held for sale for financial reporting purposes effective with the third quarter.
FX was an overall, 1% headwind to revenue growth in the second quarter with tailwind from a strengthening euro more than offset by a weakening Brazilian real.
However, the business is not material enough to smc's results to be classified as a discontinued operation.
Interest expense for the second quarter was $61 million down over $2 million compared to the prior year period, primarily driven by lower debt balances.
As such the results of the business will continue to be presented in the company's Gap, operating results until a transaction is completed.
The effective tax rate on adjusted earnings was 14% in the second quarter in line with our continued expectation of a full year effective tax rate of 13% to 15%.
As peer described earlier, our guidance for the remainder of 2025 excludes India.
Andrew Sandifer: Guided and reported adjusted EBITDA and adjusted EPS will exclude the results of the business. During the third quarter, we will evaluate the assets related to the sale for impairment, and if necessary, we will record the assets at the lower of their carrying value or estimated fair value less cost to sell in our third quarter financial statements. While we have not yet completed this analysis, it is possible that we will record an impairment of the business in the third quarter. With that additional context, let me proceed to a review of some key income statement items. FX was an overall 1% headwind to revenue growth in the second quarter, with tailwinds from a strengthening euro more than offset by a weakening Brazilian real.
For full year 2025, we expect FX to be a flat to minor headwind at revenue.
Our reported Revenue will continue to include the sales of India and the India commercial business. However, we will also provide Revenue, excluding India as we report each quarter.
With continued weakness in the Brazilian real and Canadian dollar more than offsetting a strong Europe.
Guided and reported adjusted Ava, and adjusted EPS will exclude the results of the business.
We now expect full year 2025 interest expense to be in the range of $215 million to $235 million down more than $10 million compared to the prior year, but up slightly from our prior guidance, reflecting the higher interest rate on the recently completed subordinated debt offering.
During the third quarter, we will evaluate the assets related to the sale for impairments. And if necessary we will record the assets at the lower of their carrying value, or estimated fair, value less cost to sell and our third quarter financial statements,
We've also revised our outlook for depreciation and amortization for full year 2025 to $170 million to $180 million a.
While we have not yet completed this analysis, it is possible that we will record an impairment of the business in the third quarter.
With that additional context, let me proceed to review of some key income statement items.
A slight reduction from prior guidance to reflect the timing of new assets coming online.
The net result of these refinements is that our full year 2025, EPS guidance is unchanged.
Andrew Sandifer: Interest expense for the second quarter was $61 million, down over $2 million compared to the prior year period, primarily driven by lower debt balances. The effective tax rate on adjusted earnings was 14% in the second quarter, in line with our continued expectation of a full-year effective tax rate of 13% to 15%. For full-year 2025, we expect FX to be a flat to minor headwind at revenue, with continued weakness in the Brazilian real and Canadian dollar more than offsetting a strong euro. We now expect full-year 2025 interest expense to be in the range of $215 to $235 million, down more than $10 million compared to the prior years, but up slightly from our prior guidance, reflecting the higher interest rate on the recently completed subordinated debt offering.
FX was an overall 1% headwind to revenue growth. In the second quarter with Tailwind, from a strengthening Euro more than offset by a weakening. Brazilian REI.
Moving next to the balance sheet and leverage.
In May we successfully completed the sale of $750 million of subordinated notes due in 2055.
Interest expense for the second quarter was $61 million, down over $2 million compared to the prior year period, primarily driven by lower debt balances.
The transaction was leverage neutral with proceeds from the offering used to redeem that may 26 may 2026, senior notes and to pay down commercial paper.
The effective tax rate on adjusted earnings was 14% in the second quarter in line with our continued. Expectation of a full year, effective tax rate of 13 to 15%.
The structures of these notes is such that they are treated as 50% equity by all three rating agencies immediately improving our metrics with debt.
For 4 year 2025, we expect FX to be a flat to minor headwind at Revenue.
With continued weakness in the Brazilian, REI and Canadian dollar more than offsetting a strong Euro.
This offering was an important step in supporting our investment grade credit rating as we transitioned to more substantial EBITDA growth in the second half of 2025 and enter 2026.
All three rating agencies reaffirmed their investment grade ratings in conjunction with this offering.
Andrew Sandifer: We've also revised our outlook for depreciation and amortization for full-year 2025 to $170 to $180 million, a slight reduction from prior guidance to reflect the timing of new assets coming online. The net result of these refinements is that our full-year 2025 EPS guidance is unchanged. Moving next to the balance sheet and leverage. In May, we successfully completed the sale of $750 million of subordinated notes due in 2055. The transaction was leverage neutral, with proceeds from the offering used to redeem the May 2026 senior notes and to pay down commercial paper. The structures of these notes are such that they are treated as 50% equity by all three rating agencies, immediately improving our metrics with them. This offering was an important step in supporting our investment-grade credit rating as we transition to more substantial EBITDA growth in the second half of 2025 and into 2026.
We now expect full year, 2025 interest expense to be in the range of 215 to 235 million down more than 10 million dollars compared to the prior year. But up slightly from our prior guidance, reflecting the higher interest rate on the recently completed subordinated. Debt offering
We ended the second quarter with gross debt of approximately $4 $2 billion.
Up $160 million from the prior quarter.
Cash on hand increased to $123 million to $438 million, resulting in net debt of approximately $3 7 billion.
We've also revised our outlook for depreciation and amortization for 4 year. 2025 to 170 to 180 million. A slight reduction from prior guidance to reflect the timing of new assets coming online.
Essentially flat to the prior quarter.
Gross debt to trailing 12 month EBITDA was four eight times at quarter end, while net debt to EBITDA was four three times.
The net result of these refinements is that our full year, 2025 EPS guidance is unchanged.
Moving next to the balance sheet and Leverage.
Relative to our leverage covenant, which includes adjustments to both the numerator and denominator leverage was four eight times as compared to a covenant limit of five five times.
and may we successfully completed the sale of 750 million of subordinated notes due in 2055,
As a reminder, our covenant leverage limit will remain at five five times through September 30th then step down to five eight times at year end.
And to pay down commercial paper.
We continue to expect covenant leverage to return to approximately three seven times by year end essentially flat to the prior year.
The structures of these notes is such that they are treated as 50% Equity, by all 3 rating agencies.
Immediately improving our metrics with them.
We expect to show meaningful improvement in our leverage metrics in 2026 from a combination of EBITDA growth and debt reduction.
Andrew Sandifer: All three rating agencies reaffirmed their investment-grade ratings in conjunction with this offering. We ended the second quarter with gross debt of approximately $4.2 billion, up $160 million from the prior quarter. Cash on hand increased $123 million to $438 million, resulting in net debt of approximately $3.7 billion, essentially flat to the prior quarter. Gross debt to trailing 12-month EBITDA was 4.8 times at quarter end, while net debt to EBITDA was 4.3 times. Relative to our leverage covenant, which includes adjustments to both the numerator and denominator, leverage was 4.8 times as compared to a covenant limit of 5.25 times. As a reminder, our covenant leverage limit will remain at 5.25 times through September 30th, then step down to 5.0 times at year end. We continue to expect covenant leverage to return to approximately 3.7 times by year end, essentially flat to the prior year.
This offering was an important step in supporting our investment grade credit rating as we transition to more substantial, Eva dog, growth in the second half of 2025 and into 2026.
Reduction will come from proceeds from the sale of our India commercial business as well as free cash flow above that required to fund the dividend.
All 3 rating agencies reaffirm their investment grade ratings in conjunction with this offering.
Moving on to free cash flow on slide 10.
Free cash flow in the second quarter was $40 million $241 million lower than the prior year period.
We ended the second quarter with gross debt of an approximately 4.2 billion dollars up 160 million in the prior quarter.
Cash from operations was down significantly primarily due to the absence of the significant inventory reduction seen in the prior year.
Cash on hand increased 123 million to 438 million resulting in net. Debt of approximately 3.7 billion dollars. Essentially flat to the prior quarter.
We continue to expect free cash flow of $200 million to $400 million for 2025 a.
A decrease of $313 million at the midpoint.
Gross debt to trailing 12-month, Evita was 4.8 times a quarter end. While net debt debt was 4.3 times.
Cash from operations is the key driver of this increase with normalization of working capital after the pronounced correction in 2024.
Relative to our leverage covenant, which includes adjustments to both the numerator and denominator, leverage was 4.8 times as compared to a covenant limit of 5.25 times.
Capital additions are also expected to be up somewhat with continued focus on only the most essential products and capacity expansion for new products.
As a reminder, our covenant leverage limit will remain at 5.25 times through September 30th then step down to 5.0 times at year end.
Cash used by discontinued operations is also up slightly but in line with our multi year average.
And with that I'll hand, the call back to Pierre.
Andrew Sandifer: We expect to show meaningful improvement in our leverage metrics in 2026 from a combination of EBITDA growth and debt reduction. Debt reduction will come from proceeds from the sale of our India commercial business, as well as free cash flow above that required to fund the dividend. Moving on to free cash flow in slide ten. Free cash flow in the second quarter was $40 million, $241 million lower than the prior year period. Cash from operations was down significantly, primarily due to the absence of the significant inventory reduction seen in the prior year. We continue to expect free cash flow of $200 million to $400 million for 2025, a decrease of $313 million at the midpoint. Cash from operations is the key driver of the decrease, with normalization of working capital after the pronounced correction in 2024.
We continue to expect Covenant, leverage to return to approximately 3.7 Times by year end, essentially flat to the prior year.
Thank you Andrew.
We are now and then.
Flexion points, where we're shifting our focus.
We expect to show a meaningful improvement in our leverage metrics in 2026. From a combination of evit, dog. Growth and debt reduction.
Toward revenue and EBITDA growth for the civil OE.
Year end 2026.
A reset of the company announced at the beginning of the year is essentially done.
Debt reduction will come from proceeds from the sale of our India Commercial Business, as well as free cash flow above that required to fund the dividend.
Moving on to free, cash flow and slide 10.
We have met all of the objective we set for the first half of the year.
Free cash flow in the second quarter was 40 million to 241 million lower than the prior year period.
The execution of the India plan will complete the turnaround of the company.
We are now positioned for strong performance going forward and our confidence in reaching our 2025 targets with our 2020 702 intact.
Cash from operations was down significantly primarily due to the absence of the significant inventory reduction seen in the prior year.
We continue to expect free cash flow of 200 million to 400 million dollars for 2025.
A decrease of 313 million at the midpoint.
With that.
We'll now take we're not ready to take your questions.
Andrew Sandifer: Capital additions are also expected to be up somewhat, with continued focus on only the most essential projects and capacity expansion for new products. Cash used by discontinued operations is also up slightly, but in line with our multi-year average. And with that, I'll hand the call back to Pierre.
cash from operations is the key driver of this series with normalization of working capital after the pronounced correction in 2024
We will now begin the question and answer session to be placed in the queue. Please press. The star Key then one on your Touchtone phone.
Capital additions are also expected to be up somewhat with continued focus on the only the most essential projects, and capacity expansion for new products.
If youre using a speakerphone please pick up your handset.
cash used by discontinued operations is also up slightly, but in line with our multi-year average,
Pressing the keys, please limit yourselves to one question.
Pierre Brondeau: Thank you, Andrew. We are now at an inflection point where we're shifting our focus toward revenue and EBITDA growth for the second half of the year and 2026. A reset of the company announced at the beginning of the year is essentially done. We have met all of the objectives we set for the first half of the year. The execution of the India plan will complete the turnaround of the companies. We are now positioned for strong performance going forward and are confident in reaching our 2025 targets with our 2027 outlook intact. With that, we're now ready to take your questions.
And with that, I'll hand the call back to Pierre.
Thank you, Andrew.
If you have additional questions you can jump back into queue.
We are now at an inflection point.
<unk>. Your question. Please press Star then two.
Where we're shifting, our Focus.
At this time, we will pause momentarily to assemble our roster.
Toward revenue and Evie that growth for the second of the year and 2026.
Our first question comes from Richard.
A reset of the company announced at the beginning of the year. Is it essentially done?
Teach arena with Wells Fargo. Richard Your line is now open.
We have made all of the objective we set for the first half of the year.
Great, Thanks, and nice quarter.
The execution of the India, plan will complete the turnaround of the companies.
You talked about this quarter.
We are now positioned.
And the inflection clients.
<unk> provided <unk> guidance, which is in line with expectations, what should we think about in terms of where volume and pricing to move into and chisel. The growth phase entering 2026, and you also talked about twice seven targets and tax. So if you could just remind us what you expect for 2007 as well. Thank you.
For strong performance going forward and our confidence in reaching our 2025 targets with our 2027.
With that.
For now take we're not ready to take your questions.
Kurt Brooks: We will now begin the question and answer session. To be placed in the queue, please press the star key, then one on your touch-tone phone. If you are using a speakerphone, please pick up your headset before pressing the keys. Please limit yourself to one question. If you have additional questions, you can jump back in the queue. To withdraw your question, please press the star, then two. At this time, we will pause momentarily to assemble our roster. Our first question comes from Richard Garticciolina with Wells Fargo. Richard, your line is now open.
<unk>.
There is multiple year and quarters here so.
I think in.
In 2000, <unk> first of all 26 27 targets.
We will now begin the question and answer session. To be placed in the queue, please press the star key, then 1 on your touchtone phone. If you are using a speakerphone, please pick up your headset before pressing the keys. Please limit yourself to one question.
If you have additional questions, you can jump back in the queue.
Our remaining in line with what we have said at the last earnings call leading.
Withdraw your question, please. Press the star then 2. At this time, we will pause momentarily to assemble our roster.
If I remember well to an EBITDA of $1 2 billion.
In 2027.
That number that number is not is not changing.
Our first question comes from Richard.
From a growth in 2026 and 2027.
Garcia with Wells, Fargo, Richard your line is not open.
Richard Garchitorena: Great. Thanks. And nice quarter. Pierre, you talk about, you know, this quarter signaling an inflection point. You provided 3Q, 4Q guidance, which was in line with expectations. What should we think about in terms of, you know, where volume and pricing should move into in terms of the growth phase entering 2026? And you also talked about 2027 targets intact. So if you could just remind us what you're expecting for '27 as well. Thank you.
I think.
He will be mostly driven by our growth portfolio.
Great thanks. And next quarter. Uh, Pierre. You talk about, you know, this quarter.
We are very strong confidence for those two years in a branded sales appear.
In a three ish.
ITV regions through next year nasal flakes like this year, but we're adding duty links as I said.
In my in my prepared comments.
Which has just been.
Introduced with the first building happening happening this month, and then Bayer plant health business biological so.
Signaling and inflection points. Um, he provided 3 Q4 Q guidance, which was in line, with expectations. What should we think about in terms of, you know, where volume and pricing should move into in terms of the growth phase entering 2026 and you also talking about 2027 Targets in tax. So if you could just remind us what you're expecting for 27 as well, thank you.
Pierre Brondeau: There is multiple years and quarters here. So I think in first of all, '26, '27 targets are remaining in line with what we have said at the last earnings call, leading, if I remember well, to an EBITDA of $1.2 billion in 2027. That number is not changing. From a growth in 2026 and 2027, I think it will be mostly driven by a growth portfolio. We have very strong confidence for those two years in our branded sales appear, in our three active ingredients: FluentData Peer and ISOFLEX, like this year, but we're adding DodiLex, as I said in my prepared comment, which has just been introduced with the first building happening this month, and then by our plant health business, biological. So still the same type of expectation with this product leading to double-digit growth.
um,
Still the same type of expectation with this product leading to double digit growth.
In Q2 here. So, uh, I think in...
From a core portfolio I think the fundamental difference youre going to see in 'twenty six 'twenty seven.
in 20 of all 26, 27 targets.
Versus 2025 is when I sat here today the portfolio ex <unk> is growing.
There are multiple multiple set of measures but of course, there is a negative impact of the pricing.
A remaining in line with what, uh, we have said at the last earnings call leading. Um, if I remember well, to a Nida of 1.2 billion dollars in 2027,
Whether they are nice partner I think we are in place right now.
<unk> strategy based on a much lower manufacturing cost competitive with generics and I must add to that a January situation.
There is not as much.
Productivity more as there used to be in the past and certainly at increasing price.
We have developed a strategy, which is allowing for an exceptional growth year on year in <unk> in 2007 versus 25 so.
All of those are the pieces of the.
Of the components of the growth in 'twenty six 'twenty seven.
Four.
For the second half of the year.
As we said before the growth is coming from essentially <unk>.
Pierre Brondeau: From a core portfolio, I think the fundamental difference you're going to see in '26 and '27 versus 2025 is Rolex appear. Today, the portfolio ex Rolex appear is growing under a multiple set of actions. But of course, there is a negative impact of the pricing with our Dynamite Partner. I think we are at a place right now where our Rolex appear strategy is based on a much lower manufacturing cost, competitive with generics. And I must add to that, a generic situation where there is not as much product available as there used to be in the past, and certainly at increasing price, we have developed a strategy which is allowing Rolex appear growth year on year in '26 and '27 versus '25. So all of those are the pieces of the components of the growth in '26 and '27.
Brazil, because that's a big season for them, new route to market and direct sales and <unk> strategy and once again through the PNA snowflakes with shelf is seeing very very strong demand.
Uh, under multiple multiple sets of actions. But but, of course, there is a negative impact of the pricing.
Our next question comes from Josh Spector with accompanying UBS, Josh Your line is now open.
Okay.
Yes, hi, good morning, I was wondering if you could deconstruct the cost side of the basket for QQ and kind of as we look in the second half. So you had about $69 million in savings. If you could help us think about how much of that is around the fixed cost absorption headwinds coming off to Q what carries in the <unk> raw materials and <unk>.
Uh, with our Dynamite partner. I think we are the place right now where runx appear strategy based on a much lower manufacturing cost competitive with generics and, and I must add to that a generic situation.
Where there is not as much.
Products available as there used to be in the past and certainly at increasing price.
Cost savings that would be helpful. Thank you.
Hey, Josh It's Andrew I think the story for cost as we go through the year.
Uh, we have developed a strategy, which is allowing for anxiety of growth year on year in 2016 and 27 versus 25. So all all of those are the pieces of the um,
The drivers are the same in each period is the balanced among them.
Pierre Brondeau: For the second half of the year, as we said before, the growth is coming from essentially Brazil because that's a big season for them, new route to market and direct sales and new co-op strategy. And once again, FluentData Peer and ISOFLEX, which are seeing very, very strong demand.
of the components of the growth in 26 and 27.
Lower raw material costs are a key driver and were the largest driver in Q2.
Uh, for um, for the second half of the year.
That is both from lower purchase materials, but also from the restructuring actions, we've taken to fundamentally change the cost position that we have in our <unk> business.
Second to that is it.
Certainly improved fixed cost absorption as we are running the plants much more at much more normal capacity than the more depressed levels of production. We had in 2024 and then we do of course have continued benefit from the restructuring actions that we took in 2024, some of which are continuing to be implemented, particularly in the first half of 'twenty five.
As we said before, the growth is coming from essentially Brazil because that's a big season for them. New route to Market and direct sales and new co-op strategy. And and once again through that P and isoflex which are seeing very, very strong demand.
Kurt Brooks: Our next question comes from Josh Spector with the company UBS. Josh, your line is now open.
Our next question comes from Josh Spectre with the company. UBS Josh, your line is are open.
Josh Spector: Yeah. Hi. Good morning. I was wondering if you could deconstruct the cost side of the basket for 2Q and kind of as we look in the second half. So you had about $69 million in savings. If you could help us think about how much of that is around the fixed cost absorption headwinds coming off 2Q, what carries into 3Q, raw materials, and cost savings, that would be helpful. Thank you.
As we get into Q3 and Q4, it's just a balance among those levers at different I would say certainly all three continue to be key contributors to our cost tailwind in those cost tailwind are quite substantial in Q3 and Q4.
The absence of fixed cost absorption challenges as a bigger tailwind in Q3 than it is in Q4 and net net costs are a stronger tailwind in Q3 than they are in Q4, but it is still those three drivers lower raw material costs, better fixed cost absorption and the benefits of restructuring actions not only a manufacturing cost but also.
Andrew Sandifer: Hey, Josh. It's Andrew. I think that the story for cost as we go through the year, the drivers are the same in each period. It's the balance among them. Certainly, lower raw material costs are a key driver, and we're the largest driver in Q2. That is both from lower purchase materials, but also from the restructuring actions we've taken to fundamentally change the cost position that we have in our Rolex appear business. Second to that is certainly improved fixed cost absorption, as we are running the plants at much more normal capacity than the more depressed levels of production we had in 2024. And then we do, of course, have continued benefit from the restructuring actions that we took in 2024, some of which are continuing to be implemented, particularly in the first half of '25.
Yeah. Hi, good morning. Um, I was wondering if you could deconstruct the cost um, side of the basket for 2q and and kind of as we look in the second half so you had about 69 million in savings. If you could help us, think about how much of that is around the fixed cost. Absorption. Headwinds coming off. 2q what car is in the 3Q raw, materials and cost savings. That would be helpful. Thank you.
<unk> SG&A that are contributing a cost tailwind in all of the periods during this year.
Our next question comes from Frank Mitsch with the company.
Hey Josh, it's Andrew. I think the the story for cost as we go through the year. The the the drivers are the same in each period. It's the balance among them. Um certainly lower raw material costs are a key driver and we're the largest driver in in Q2 uh that is both from lower purchase materials. But also from the restructuring actions, we've taken to fundamentally change the cost position that we have in our react appear business. Um, second to that is
Ian Research Frank Your line is now open.
Thank you good morning, and a nice result, PR I want to follow up on <unk>.
The announcement.
Can you can you provide some of the parameters on 2024 in terms of.
Our sales EBITDA for that business, so we can better tie and the new guidance versus <unk>.
Andrew Sandifer: As we get into Q3 and Q4, it's just the balance among those levers that's different. I would say certainly all three continue to be key contributors to our cost tailwinds, and those cost tailwinds are quite substantial in Q3 and Q4. The absence of fixed cost absorption challenges is a bigger tailwind in Q3 than it is in Q4. And net net costs are a stronger tailwind in Q3 than they are in Q4. But it is still those three drivers: lower raw material costs, better fixed cost absorption, and the benefits of restructuring actions, not only in manufacturing costs, but also across SG&A that are contributing to the cost tailwind during this year.
The prior guidance and.
And along with that have had the bankers already been marketing this business and if so any comments in terms of the receptivity by assumed strategics that would be interested.
And purchasing.
India commercial business. Thanks.
Alright, and then some.
Business single visit on part of your question that you just won we have not officially started to market the property, but we have done all of that preparation.
We are working on new marketing books.
I believe we're already getting phone calls, but I cannot be overly precise on that.
Is certainly, uh, improved fixed cost absorption, as we are running the plants, much more at much more normal capacity than the more depressed levels of production. We had in 2024 and then, uh, we do, of course, have you know, continued benefit from the restructuring actions that we took in 20124. Um, some of which are continuing to be implemented, particularly in the first half of 25 as we get into Q3 and Q4, it's just the balance among those levers, that's different. I would say, certainly all 3 continue to be key contributors to, to our uh, cost tailwind and those cost Tailwinds are quite substantial in Q3. And Q4, uh, the absence of fixed costs. Absorption challenges is a bigger Tailwind in Q3 than it is in Q4 and net. Net costs are a stronger Tailwind in Q3 than they are in Q4, but it is still those 3 drivers. You know, lower raw material costs better fixed costs absorption and the benefits of restructuring actions, you know, not only in manufacturing costs but also across SDA that are contributing to the cost Tailwind.
and,
Starting this year.
Since we just announced that so it seems like you'll use user is growing is growing fast.
Kurt Brooks: The next question comes from Frank Mitch with the company Fermium Research. Frank, your line is now open.
But can tell can tell more than than that.
Josh Spector: Thank you. Good morning and a nice result. Pierre, I want to follow up on the India announcement. Can you provide some of the parameters on 2024 in terms of sales EBITDA for that business so we can better tie in the new guidance versus the prior guidance? And along with that, have the bankers already been marketing this business? And if so, any comments in terms of the receptivity of, I assume, strategics that would be interested in purchasing the India commercial business? Thanks.
My next question comes from Frank Mitch with the company Fermium Research. Frank, your line is not open.
To answer your first part of the question I'm going to I'm going to ask you to bear with me because I'm going to try to give you as many detail as I can to help you guys. So it's going to take a minute.
Uh, thank you. Good morning and uh, a nice result. Uh, peer. I want to follow up uh, on the Indian announcement.
First why why no.
um, can you, uh, can you, uh, provide some of the parameters on 2024, in terms of, uh,
No more information than what you gave in the in the earnings release.
<unk> from an FCC standpoint.
A sales ebata uh for for that business. So we can better tie in the new guidance versus uh the prior guidance and
Is viewed as not material to FMC.
So it does not qualify as a discontinued operation.
It's classified as account that was consequently, we're not going to do a recast of 'twenty three 'twenty four 'twenty five.
Pierre Brondeau: All right. Let me start by the second part of your question that you just want. We have not officially started to market the property, but we have done all of the well done the preparation. We're working on the marketing books. I believe we're already getting phone calls, but I cannot be overly precise on that since we just announced that. So it seems like the news is going fast, but can't tell more than that. To answer your first part of the question, I'm going to ask you to bear with me because I'm going to try to give you as many details as I can to help you guys. So it's going to take a minute. First, why no more information than what we gave in the earnings release? India, from an SEC standpoint, is viewed as not material to FMC.
And, uh, along with that have have the bankers already been marketing, uh, this business. And if so, uh, any comments in terms of the receptivity of I assume strategic that would be interested uh, in purchasing uh, the India Commercial Business. Thanks.
But still I can still give you some carriers for you to enable system sure your model.
All right. Let let, let me start by the sign on how this is going in front of your question that he just want.
We have another official start.
First let me talk about India in the second half in 'twenty, four and 'twenty five.
What we did.
<unk> 24 for India was $140 million of sales.
To market the property, but we have done all of the well done. The preparation we're working on the marketing books. Um, I believe we're already getting phone calls but, uh, I cannot be overly precise on that.
What we were forecasting to.
Uh, since we just announced that. So it seems like the news is uh is going is going fast.
To do an H two in 'twenty five.
But can't can't tell can't tell more than than that.
Was $70 million of sales.
So if you look at those two numbers.
Uh, to answer your first part of the question, I'm going to ask you to bear with me because I'm going to try to give you as many details as I can to help you guys.
So it's going to take a minute.
Two to achieve our ex India 2025 second half targets.
We would need.
Um first why why? No, uh, no more information. That way we what we gave in the in the earnings release
Business in the second half of 'twenty five.
India from the NEC standpoint.
Versus the second half of 'twenty four.
Pierre Brondeau: So it does not qualify as a discontinued operation. It's classified as a carve-out. Consequently, we're not going to do a recast of '23, '24, '25. But still, I can still give you some carriers for you to be able to establish your model. First, let me talk about India in the second half in '24 and '25. What we did in H2 '24 for India was $140 million of sales. What we were forecasting to do in H2 in '25 was $70 million of sales. So if you look at those two numbers to achieve our ex-India 2025 second half target, we would need our business in the second half of '25 versus the second half of '24 to grow by 9%, which is about $190 million. So if we grow by $190 million, we'll achieve our guidance ex-India for H2 '25. How do we get there?
is viewed as not material to FMC.
Two grew by 9%.
Which is about <unk>.
So it does not qualify as a discontinued operation.
$190 million. So if we grew by $190 million, we will achieve.
Again, an excellent year for <unk> to 'twenty five.
It's classified as a carve out, consequently. We're not going to do a recast of 232 24/25.
How do we get there.
First our growth portfolio.
But still, I can still give you some colors for you to be able to establish your your model.
Today, what we have in front of us for our growth portfolio in the second half.
Is over $200 million of growth.
First, let me talk about India in the second half in 24 and 25.
What we did?
With more than half of these 200 million errors.
Coming from fluent that Pierre and ISO flakes.
In H2 24 for India was 140 million dollars of sales.
For the core portfolio.
What we were forecasting.
Overall flattish.
To do in H2 in 25.
The non <unk> pumps for the core portfolio.
Was 70 million dollars of sales.
Is growing.
so, if you look at those 2 numbers,
And it's growing and we have confidence in the growth for <unk> for three key reasons.
To, uh, achieve our ex-India.
First we have touched many times above the actions, we're taking in Brazil.
2025 second half Target.
We would need a business in the 7 half of 25.
Q.
To improve our direct route to market.
Versus the second half of 24.
As well as our cooks.
To grow by 9%.
We also have strong confidence in EMEA.
Which is about.
And in North America, where the channel inventories is really in a very good place two days it was proven demonstrated by the <unk>.
190 million dollars. So, if we grow by 100 100 million dollars, we'll achieve our organs X, India for H2 25.
Pierre Brondeau: First, our growth portfolio. Today, what we have in front of us for a growth portfolio in the second half is over $200 million of growth, with more than half of these $200 million coming from FluentData Peer and ISOFLEX. For the core portfolio, it's overall flattish. The non-Rolex appear part of the core portfolio is growing. And it's growing, and we have confidence in the growth for three key reasons. First, we have talked many times about the actions we are taking in Brazil to improve our direct route to market, as well as our co-ops. We also have strong confidence in EMEA and in North America, where the channel inventories are really in a very good place today. It was proven demonstrated by the EMEA result in the second quarter.
How do we get there?
EMEA results in the second quarter.
Uh, first a growth portfolio.
Against that growth.
Core portfolio excellent actually appear we have the.
<unk> headwinds, mostly driven by pricing towards <unk> partners. So those two pretty much cancel it cancel each other out.
Today, what we have in front of us for a growth portfolio, in the second half is over 200 million dollars of growth.
With more than half of these 200 million dollars.
If I look at this growth.
Coming from flu and that here and Isoflex.
Yes.
For the core portfolio.
Is the sales growth.
Its overall flattish.
In addition, if we put a cost benefit.
He will lead to an EBITDA increase on the <unk>.
The, uh, non-RUNX appear part of the core portfolio.
Is growing.
Like for like basis, Excluding Asia Asia of about $80 million.
Uh, and it's growing, and we have confidence in the growth for three reasons.
Asia sort of India over.
About $80 million ish to 25 <unk> 24.
First, we have talked many time about the the actions we are taking in Brazil.
So that's what I'm, saying to recast little bit then.
To, uh, improve our direct route to market.
Numbers, excluding India in error.
As well as a Corps.
In our forecasting.
We also have strong confidence in the MEA.
Thank you.
Our next question comes from Vincent Andrews with accompanying Morgan Stanley Vincent Your line is now open.
Pierre Brondeau: Against that growth of the core portfolio ex Rolex appear, we have the Rolex appear headwinds mostly driven by pricing to our Dynamite Partners. So those two pretty much cancel each other out. If I look at this growth, this sales growth, in addition, if we put our cost benefit, it will lead to an EBITDA increase on a like-for-like basis, excluding Asia of about $80 million, not Asia, sorry, India, of about $80 million H2 '25 versus H2 '24. So that's what I'm trying to recast a little bit, the numbers excluding India in our forecasting.
And in North America, where the channel inventory is, is really in a very good place today. It was proven demonstrated by the, uh, by the EMA result in the sub core.
Thank you and good morning, everyone.
And in years past, you've been able to give us a sense looking into the third quarter at how your order book is shaping up particularly in the Brazilian market and how much you have in hand versus yet to.
The invoice so I'm wondering if you can just give us an update there and particularly also just comment on.
Against that growth of the core portfolio, X1 X appear. We have the uh, relax appear, headwinds mostly driven by, by pressing to a dynamite Partners. So those 2 pretty much cancel cancel, cancel each other out.
this, um,
Farmer economics are there and sort of how the credit situation has evolved there. Thank you.
This this sales growth.
Yes, I think Brazil.
uh, in addition, if we put a cost benefit,
Brazil right now is looking good.
I think I would say.
Actual orders and not stocking negotiations in Kansas and orders for the second half, which has been books is about 35% to 40% of what we need for the entire second half.
it will lead to an iida increase on the light for like bases. Excluding Asia, Asia over about 80 million noted Asia. Sorry, India of about 80 million dollars h225 versus h224.
It's a much higher number than what we've been having in the late in the last couple of years. So.
so that that's what I'm trying to recast a little bit, the the numbers excluding India in our
Um, in our forecasting.
Andrew Sandifer: Thank you.
Thank you.
At this stage, it's very early it's only.
Kurt Brooks: Our next question comes from Vincent Andrew with the company Morgan Stanley. Vincent, your line is now open.
It's only July but we're feeling we're feeling quite good about the about Brazil.
Richard Garchitorena: Thank you. And good morning, everyone. You know, Pierre, in years past, you've been able to give us a sense looking into the third quarter at how your order book is shaping up, particularly in the Brazilian market, and how much you have in hand versus, you know, yet to invoice. So I'm wondering if you could just give us an update there and particularly also just comment on, you know, where farmer economics are there and sort of how the credit situation has evolved there. Thank you.
Our next question comes from Vincent Andrews with the company Morgan Stanley. Vincent Airline is that open
General economics in Brazil.
Linda you want to comment yes.
Not dramatically different than what we're seeing in the rest of the world.
The farmers had very strong harvest for corn.
<unk>.
And I think the corn side of the road crosses.
More exciting than soybean at this stage.
Do expect to plan another very strong.
Uh, thank you and good morning everyone. Um, you know, pier in years past, you've been able to give us a sense, looking into the third quarter at how your order book is shaping up, uh, particularly in the Brazilian market and how much you have in hand, uh, versus, you know, yet you have to, you have to invoice. So, I'm wondering if you just give us an update there. And particularly also just comment on, uh, you know, where farmer economics are there and and sort of how the credit situation is evolved there. Thank you.
Pierre Brondeau: Yes. I think Brazil right now is looking good. I think I would say actual orders. I'm not talking negotiations, okay? I'm talking orders for the second half, which have been booked, is about 35% to 40% of what we need for the entire second half. It's a much higher number than what we've been having in the last couple of years. So at this stage, it's very early. It's only July, but we're feeling quite good about Brazil. Farmers' economics in Brazil, do you want to, Ronaldo, maybe you want to comment?
Season on core <unk>.
Often is not.
Yes. Uh, I think Brazil. Um,
Hi is as it were.
Was that a couple of years ago, or even a year ago, but it's still incentivize growers to at a minimal maintain their planted area if not a slight increase.
Brazil right now is looking good. Um,
I think I would say.
Actual orders. I'm not talking negotiations, okay? I'm talking orders.
And sugarcane stable so all in all I would say.
Margins are tighter than they were two and half years ago.
For the second half which have been booked is about 35 to 40% of what we need for the entire second half.
But not to a point that would drive growers to influence their decision on planted area. We do expect a full season in the coming season in Brazil.
Uh, it's a much higher number that what we've been having in the late in the last couple of years. So at this stage, it's very early, it's only,
Ronaldo Pereira: Yes. Not dramatically different than what we've seen in the rest of the world. Farmers had very strong harvests for corn. So I think the corn side of the row crops is more exciting than soybean at this stage. They do expect to plant another very strong season on corn. Cotton is not as high as it was a couple of years ago, even a year ago, but it's still incentivizing growers to, at a minimum, maintain their planted area, if not a slight increase. And sugar cane is stable. So all in all, I would say margins are tighter than they were two and a half years ago, but not to a point that would drive growers to influence their decision on planted area. We do expect a full season in the coming season in Brazil.
Our next question comes from Duffy secured with a company Goldman Sachs. Your line is now open.
Two questions first is the new direct sales program in Brazil.
The expectations for size. This year does that contribute this year or will that take a couple of years before it really contributes to anything and then the second one is.
It's only July, but we are feeling we're feeling quite good about about Brazil Farmers, economics in Brazil to Ronaldo. Maybe, you want to comment? Yes. Um, not dramatically different than what we see in the rest of the world. Um, the farmers had very strong harvests for corn, so, um, I think a corn side of the road crops is more exciting than soybean at the stage.
The headwinds you're facing from the IMI partners price down.
They do expect um, to plant another very strong um, season on corn.
When does that anniversary that basically a one year impact or will there be kind of two years of step down as far as that being a headwind for pricing for you guys.
Cotton is not as high as as it was a couple of years ago, even a year ago but it is still incentivizing Growers to at a minimum maintain their planted area. If not it's a slight increase.
Is that fair.
To your first question.
We are expecting.
And and sugar cane is a stable. So all in all I would say,
To see the impact of the new sales organization.
Margins are tighter than they were 2 and a half years ago.
Direct sales to farmers in Brazil.
<unk>.
Third quarter this quarter.
Certainly we will not will not get the full potential we will grow year after year, but yes, we should see the impact.
But not to a point is that would drive Growers to influence their decision. On planet area. We do expect a full season in the coming season in Brazil.
Kurt Brooks: Our next question comes from Duffy Fischer with the company Goldman Sachs. Duffy, your line is now open.
Lately.
Our sales organization is already currently in negotiation.
Having some commercial activities.
Our next question comes from Duffy fur with a company. Goldman Sachs, Duffy your line is not open.
Andrew Sandifer: Two questions. First is the new direct sales program in Brazil. The expectation for size this year, does that contribute this year, or will that take a couple of years before it really contributes anything? And then the second one is the headwinds you're facing from the Dynamite Partners price down. When does that anniversary? Is it basically a one-year impact, or will there be kind of two years of step down as far as that being a headwind for pricing for you guys?
The way the Diamide partners contract work is annual.
Every year, we review our manufacturing cost.
Um, 2 questions. Uh, first is the new direct sales program in uh Brazil.
And we adjust our pricing to our partners.
By far the most dramatic decrease in pricing took place.
From 'twenty from the 24 to 25, that's where we have very very significant reduction in the in manufacturing costs, which led to the significant decrease in pricing.
Pierre Brondeau: Yes, Duffy. First, to your first question, we are expecting to see the impact of the new sales organization for direct sales to farmer in Brazil to be visible in the third quarter, this quarter. Certainly, we'll not get the full potential. We will grow year after year. But yes, we should see the impact immediately as our sales organization is already currently in negotiation and having some commercial activities. The way the Dynamite Partners contract works, it's annual. So every year, we review manufacturing costs, and we adjust pricing to our partners. By far, the most dramatic decrease in pricing took place from '24 to '25. That's where we had the very, very significant reduction in manufacturing costs, which led to the significant decrease in pricing. As we continue to decrease our costs, we will continue to decrease our pricing to our partners.
The expectation for size this year, does that contribute this year? Or will that take a couple of years before it really contributes anything? And then the second one is, um, the headwinds you're facing from the Dynamite Partners price down. When does that anniversary? Is it basically a one-year impact? Or will there be kind of two years of stuff down as far as that being a headwind for pricing for you guys?
As we continue to decrease our cost we will continue to decrease our pricing to our partners.
Is, does he, uh, first to your first question?
We are expecting.
To see the impact of the new sales organization.
Order of magnitude so nothing to see to do with what we saw this year it will be very incremental.
For direct sales to farmer in Brazil, uh, to be visible. This, the third quarter, this quarter
Great. Thank you guys.
Our next question comes from Chris Parkinson with the company Wolfe Research Chris Your line is now open.
Great. Thank you so much when you take a step back and you look at your volume Algo for the next few years I mean, there are a bunch of moving parts, but it seems that the terms of VF will end up here in the eyes of flex are pretty obvious.
Uh, certainly will not will not get the full potential. We will grow year after year, but yes, we should see the impact, uh, immediately, as a sales organization, is already currently in negotiation, and having some commercial activity.
The way the diamite partners contract work, it's a New York. So every year
And Ronaldo had done an in depth look at kind of the broadening addressable market for our <unk> patent, especially some of our let's say higher end or higher value acres.
We review a manufacturing cost.
And we are just a pricing to a partners.
Uh,
Decrease in pricing.
Took place.
Cross the globe can you just give us a better sense of where your assessment of those times, who stand now do you feel better about them do you feel the same about them.
As we're approaching the second half and into that 'twenty six 'twenty seven time period. Thank you.
From, uh, 25 from the 24 to 25. That's where we had the very, very significant reduction in in manufacturing cost which led to the significant decrease in pricing.
Yes.
I think.
As we continue to decrease the cost.
Above the.
Pierre Brondeau: But the order of magnitude has got nothing to do with what we saw this year. It will be very incremental.
New product, we're feeling better.
There is no doubt that the demand on the ISO flex influence here is strong and stronger than we were expecting.
We will continue to decrease our pricing to a Partners, but the order of magnitude got nothing to see to do with what we saw this year. It will be very incremental.
Richard Garchitorena: Great. Thank you, guys.
We signed as you know important contracts to supply some of our.
Great. Thank you guys.
Kurt Brooks: Our next question comes from Chris Parkinson with the company Wolf Research. Chris, your line is now open.
Over competitors of partners when they signed contract the our partners when they go against us they're competitors versus.
Josh Spector: Great. Thank you so much. When you take a step back and you look at your volume algo for the next few years, I mean, there are a bunch of moving parts, but it seems that, you know, the TAMs of FluentData Peer and ISOFLEX are pretty obvious. And Ronaldo had done an in-depth look at kind of the broadening addressable markets for Rolex appear off patent, especially some of the, you know, let's say, higher-end or higher-value acres across the globe. Can you just give us a better sense of where your assessment of those TAMs stands now? Do you feel better about them? Do you feel the same about them just as we're, you know, approaching the second half and, you know, into that '26, '27 time period?
Our next question comes from Chris Parkinson with the company, Wolfe research. Chris yolen is not open.
So there is no doubt that the demand on the <unk> flex is stronger than what we're expecting.
The other good news is we are launching and get getting the registration in time for <unk>.
<unk> X. So we do have the official.
The official launch and they will impact 2020 and shown on the side of the new new product very high level of confidence.
Regarding <unk>, we still feel very very confident.
There is no fundamental change to the strategy. We have discussed the only changes we have moved to a different place.
Andrew Sandifer: Thank you.
Great, thank you so much. Um, when you take a step back and you look at your volume, I'll go for the next few years. I mean, there are, there are a bunch of moving Parts, but it seems that, you know, the the Tams of you have to end up here in isoflex are pretty obvious. Um, and Ronaldo, had done an in-depth, uh, look at kind of the broadening addressable market for our next appear off pan, especially some of that, you know, let's say higher ends or higher value Acres, um, across the globe. Can you just give us a better sense of where your assessment of those Tams stands? Now, do you feel better about them? Do you feel the same about them? Um, just as we're, you know, approaching the second half and you know, into that 26/27 time period.
Pierre Brondeau: Yes. I think about the new products, we're feeling better. There is no doubt that the demand on ISOFLEX and FluentData Peer is strong and stronger than we're expecting. We've signed, as you know, important contracts to supply some of our competitors or partners. When they sign contracts, they are partners. When they go against us, they are competitors. But so there is no doubt that the demand on FluentData Peer and ISOFLEX is stronger than what we're expecting. The other good news is we are launching and getting the registration in time for DodiLex. So we do have the official launch, and that will impact 2027. So on the side of the new product, very high level of confidence. Regarding Rolex appears, we still feel very, very confident. There is no fundamental change to the strategy we have discussed.
Thank you.
We had multiple.
Yes. Um, I think
Meetings.
And gathering and know we added place where every single country in the world or every single regional sub region.
About the uh, new products were feeling better.
there is no doubt that the demand on, um, isoflex and fluenta
You have a <unk> strategy, which is in line with the market. So we moved from a broad directional global strategy to now a ready to implement.
Is strong and stronger than we were expecting. Um we signed as you know, important contracts.
to supply some of our
Regional sub regional or country strategies for <unk>. So it's it's holding true is holding true and we have we have no negative view of which we're doing the last comment I would make around <unk> is there.
Um, of our competitors or partners, when they sign contracts, they are partners.
when they go against us, they are competitors. But, um,
Uh, so there is no doubt that the demand on phone that here on isoflex is stronger than what we're expecting.
Confirmation.
Of the cost roadmap, which is <unk>.
Getting more and more attractive and making us more and more competitive with the generics. So that's also.
A positive evolution.
The one exception strategy.
The other good news is we are launching and get getting the registration in time for um for the DX. So we do have the official, the official launch and I will impact 2027. So, on the side of the new new product, very high level of confidence.
First I have to say I mean.
Bayer on doing but.
Regarding Rex appear, I still we still feel, you know, very very confident.
The January clinics at the <unk> situation.
Pierre Brondeau: The only change is we have moved to a different place. We had multiple meetings and gatherings, and now we are at a place where every single country in the world or every single region or subregion does have a Rolex appear strategy, which is in line with their market. So we moved from a broad directional global strategy to now a ready-to-implement regional, subregional, or country strategy for Rolex appear. So it's holding true. It's holding true. And we have no negative view of what we're doing. The last comment I would make around Rolex appear is our confirmation of the cost roadmap, which is getting more and more attractive and making us more and more competitive with generics. So that's also a positive evolution of the Rolex appear strategy.
there is no fundamental change to the strategy, we have discussed
As changed.
There is less supply on the market of.
The only changes we have moved to a different place.
Of the generic <unk> appear.
Uh, we had multiple, um,
meetings.
You are aware of the.
Of the <unk> since <unk>.
Explosion.
Not only it limits the products on the market.
That plant was also making intermediates.
Which were.
Which were used by other generics to make conics appear so they are lacking intermediates to make that product.
And we've seen we've seen the price the price increasing in some very significant.
Announcements.
There is also the fact that many of the generics we're not producing both making formulation we are using the <unk> registration.
Uh and Gathering and now we are the place where every single country in the world or every single region or sub region do have a runex appear strategy which is in line with their market. So we moved from a broad directional, Global strategy to now, a ready to implement a regional sub Regional or country uh, strategy for next year. So it's it's holding is true. It's holding true. And we have we have no negative view of what we're doing. The last comment, I would make around. Relax appear, is our
Confirmation.
Which of course is not usable any longer so.
At this stage, we are a way less competitive <unk> market from the from the January.
Pierre Brondeau: Plus, I have to say, I mean, that's not by our own doing, but the generic Rolex appear situation has changed. There is less supply on the market of the generic Rolex appear. You're aware of the Udow plant explosion. Not only it limits the production in the market, but that plant was also making intermediates, which were used by other generics to make Rolex appear. So they are lacking intermediates to make their product. And we've seen the price increasing and some very significant announcements. There is also the fact that many of the generics were not producing but making formulations. We're using the Udow registration, which, of course, is not usable any longer. So at this stage, we have a way less competitive Rolex appear market from the generics, and we are continuing on our roadmap.
Of the cost road map which is uh, getting more and more attractive and making us more and more competitive with the with generic. So that's also a, a positive evolution of of the Run next step, your strategy.
And we are continuing on their roadmap.
plus I have to say, I mean that's that's not by our own doing, but the generic concept here situation,
Has changed.
Our next question comes from Kevin Mccarthy with the company's ERP, Kevin Your line is now open.
There is less Supply on the market of
H of the generic relax appear.
Thank you very much and good morning, maybe two quick ones from my side here just a follow up on the prior comments that you made if we take into account the linac superior dynamics as well as your Diamide partner of <unk>.
You're aware of the, um, of the udaap and explosion.
Uh, not only it limits the products on the market.
But that plant was also making intermediate.
which were, um,
Cremant renegotiations would it be reasonable to expect a pricing function overall for the company.
which were used by other generics to make connection here. So they are lacking intermediate to make their product.
uh, and and we've seen
To stabilize and perhaps turned positive in the first half of 2026 and my second question would be for Andrew just if.
We've seen the price, the price increasing and some very significant, um, announcements.
If you could walk through maybe the working capital and other key cash flow assumes assumptions that you've embedded within your two hundreds of $400 million range for free cash flow. Thank you.
And there are nice Fps strategy.
There is two part two is one is with our partners and one is the branded product.
We have a way less competitive Rolex appear Market from from the generic and we are continuing on a road map.
Kurt Brooks: Our next question comes from Kevin McCarthy with the company VRP. Kevin, your line is now open.
<unk> for the partners.
There is some sort of a stabilization in a sense that most of the.
Our next question comes from Kevin McCarthy with the company vrp. Kevin your line is not open.
Richard Garchitorena: Yes. Thank you very much, and good morning. Maybe two quick ones from my side. Pierre, just to follow up on the prior comments that you made. If we take into account the Rolex appear dynamics as well as your Dynamite Partner agreement renegotiations, would it be reasonable to expect the pricing function overall for the company to stabilize and perhaps turn positive in the first half of 2026? My second question would be for Andrew, just if you could walk through maybe the working capital and other key cash flow assumptions that you've embedded within your $200 to $400 million range for free cash flow. Thank you.
The vast majority of the price decrease having taken place.
This means we are going to have going forward.
Going to be pretty minor.
So.
We do expect more of a stabilization.
Of the pricing.
Civil for Brendan <unk> here, we're still expecting.
The price decrease because the competition with generic is going to be more open.
Sure.
That being said, we're still developing how you take formulation, which could be commenting in a different pricing.
In a changing comp.
Competitive situations, so that price decrease might not be as dramatic as what we might have expected at some point, but we still believe that we have to to cast a strategy in the context of a branded <unk> set your pricing going down in 2006 versus 25, where most country, which helped.
Thank you very much and, and good morning. Uh, maybe 2, quick ones from my side here, just to follow up on the prior comments that you made. If we take into account the react appear Dynamics, as well as your diamond, uh, partner agreement, uh, renegotiations, would it be reasonable to expect the pricing function overall for the company to stabilize and and perhaps turn positive in the first half of 2026? My second question would be for Andrew. Just uh, if you could walk through maybe the working capital and other uh key
Pierre Brondeau: And the Rolex appear strategy has two parts to it. One is with the partners, and one is the branded product. I think for the partners, there is some sort of a stabilization in the sense that most of the vast majority of the price decrease having taken place, the adjustments we're going to have going forward are going to be pretty minor. So we do expect more of a stabilization of the pricing at this level. For branded Rolex appear, we're still expecting a price decrease because the competition with generics is going to be more open. That being said, we're still developing higher tech formulations, which could be commanding a different pricing and a changing competitive situation.
Cash flow assumptions that you've embedded within your uh, 200 to 400 million dollar range for free cash flow. Thank you.
Yeah, the the reception strategy.
um,
Protected by process patent today will not be protected but we're ready for it and strategy in place and manufacturing cost is in place.
there is 2 2 part to it. 1 is with a partners and 1 is the Branded product.
And we still believe that we can protect earnings in 2006 versus 25 four for an excellent year.
I think for the partners, uh, there is some sort of stabilization in the sense that most of the
Yes.
The, the vast majority of the price decrease, having taken place the adjustments, we're going to have going forward.
Quick comment on working capital and cash flow certainly seasonality of our cash flow is very very heavily tilted to the second half and in particular Q4, I think you're seeing that trend in our actual performance through Q2, and what we're signaling for the rest of the year when.
Are going to be pretty minor.
So, uh, we we do, we, we do expect a more of a stabilization.
Of the pricing.
When we think about the key drivers here certainly operating cash flow is is the big driver in free cash flow. This year and it's really working capital guidance EBITDA is relatively flat to slightly up for the year. So it really is around working capital as a key driver from a balance sheet perspective.
At this level for brand and relax appear. We're still expecting uh, price decrease because the competition with generic is going to be more open, uh,
Pierre Brondeau: So the price increase might not be as dramatic as what we might have expected at some point, but we still believe that we have to cast our strategy within the context of a branded Rolex appear pricing going down in '26 versus '25, where most countries which are protected by process pattern today will not be protected. But we are ready for it. The strategy is in place. Manufacturing cost is in place. And we still believe that we can protect our earnings in '26 versus '25 for Rolex appear.
That being said, we are still developing higher-tech formulation, which could command a different pricing and a change.
If you think about the three key elements.
Certainly payables were continuing to work to rebuild payable levels as we get the operations to more stable steady state operation. We do still have some noise year on year from timing of purchases that is making that a bit noisy, but you should see improvement in payables.
Inventories I think we will end up the year, probably pretty flattish on the balance sheet I think the inventory level that's appropriate for the sales we have planned for the second half and going into what we expect to be growth in 2026.
Competitive situation. So the price decrease might not be as dramatic as what we might have expected at at some point. But we still believe that we have to to cast a strategy within the context of a branded Rolex that you're pricing going down in 26 versus 25 where most country which are protected by process pattern today. Will not be protected, but we are we are ready for it. The strategy in place and Manufacturing cost is in place.
Andrew Sandifer: Yeah. So some quick comments on working capital and cash flow. Certainly, you know, seasonality of our cash flow is very, very heavily tilted to the second half and in particular Q4. I think you're seeing that trend in our actual performance through Q2 and what we're signaling for the rest of the year. When we think about the key drivers here, certainly operating cash flow is the big driver in free cash flow this year, and it's really working capital. Right? A guidance EBITDA is relatively flat, just slightly up for the year. So it really is around working capital as a key driver. From a balance sheet perspective, I think if you think about the three key elements, certainly payables, we're continuing to work to rebuild payable levels as we get operations to more stable, steady operation.
And and we still believe that we can protect uh earnings in 26 versus 25 for for an X appear.
And then the area, we're going to continue to push on and it's always a challenge in the AG Chem businesses receivable and certainly with sales growth in the second half.
We've got a lot of work to do to make sure. We collect I think our collections have been very solid through year to date, we've had good success with with.
Normal collections, but also with certain providing certain incentives our collections in certain markets as well. So that is the challenge with the growth in second half is this to keep receivables to a manageable level I think when you factor all of those and with very modest.
Capital expense growth.
Very modest increase in discontinued op spending.
Operating cash flow and those three factors would get us pretty comfortably in that 200 to 400, but it's going to depend on how we execute in the last second half of the year. Unfortunately, it is the nature of the seasonality of our cash flow.
Andrew Sandifer: We do still have some noise year on year from timing of purchases that is making that a bit noisy, but you should see improvement in payables. Inventory, I think we'll end up the year probably pretty flattish on the balance sheet. I think the inventory level we're at is appropriate for the sales we have planned for the second half and going into what we expect to be growth in 2026. And then the area we're going to continue to push on, and it's always a challenge, and the AdCam business is receivable. And certainly, you know, with sales growth in the second half, we've got a lot of work to do to make sure we collect. I think collections have been very solid through year to date.
So we will continue to drive that and watch that very closely.
Yeah, some some quick comments on on working capital and cash flow, um, certainly, you know, seasonal out of our cash flow is very, very heavily tilted to the second half and a particular Q4, I think you're seeing that Trend in our actual performance through Q2 and, and what we're signaling for the rest of the year, um, when we think about the key drivers here, certainly operating cash flow is, is the the Big Driver and free cash flow this year, and it's really working capital right at guidance Eve. It does relatively flat and just slightly up for the year. Um, so it really it really is around working. Capital is a key driver from a balance sheet perspective. Um, I think if you think about the 3 key elements, um, certainly payables were continuing to work to to rebuild payable levels as we get operations to more stable, steady, steady operation, um, we do still have some noise here on year, uh, from timing of purchases, that is making that a bit noisy, but you should see Improvement in payables.
Our next question comes from Aleksey.
Yes for mode with the company Keybanc. Your line is now open.
Good morning can you talk about.
Inventory, I think, will end up the year probably pre-flattish on the balance sheet. I think the inventory level we're at is appropriate for the sales trip to do what we have to plan for the second half and going into what we expect to be growth in 2026.
<unk> pricing outside of partner agreements.
Each year.
So Brandon great accurate Pier house doing this year pricing wise and in SaaS appear as well.
Andrew Sandifer: We've had good success with, you know, normal collections, but also with certain, you know, providing certain incentives for collections in certain markets as well. So that is the challenge with the growth in the second half is to keep receivables to a manageable level. I think when you factor all of those in with, you know, very modest capital expense growth and a very modest increase in discontinued ops spending, you know, operating cash flow, and those three factors, you can get us pretty comfortably in that $200 to $400. But it's going to depend on how we execute in the last second half of the year. Unfortunately, it is the nature of the seasonality of our cash flow. So we'll continue to drive that and watch that very closely.
Yes, we are.
We're not breaking it precisely birds.
Sales at periods of very different situations sales appear is.
Data protectors, who we do not have all the same.
Competitive situation in says appear <unk> pricing, even for the brand and one is it's been a pricing in Q2 for <unk> branded <unk> was relatively flat.
The real pricing headwinds and <unk> the partner contracts in the current period.
When I say appear this year.
That and watch that very closely.
Kurt Brooks: Our next question comes from Alexi Yefremov with the company KeyBank. Alexi, your line is now open.
<unk>, India, China, Turkey, Argentina country.
Steel protected by by process patent.
Our next question comes from Alexi. Yeah, from mou with the company, KeyBank Alexi Yolanda is not open.
Andrew Sandifer: Thanks. Good morning. Can you talk about your Dynamite's pricing outside of partner agreements this year? So your branded Rolex appear, how is it doing this year pricing-wise and say as a peer as well?
So.
There is not yet the penetration outside of those countries.
Generics.
Our next.
<unk> comes from Mike Harrison with the company's SEC Research partners. Mike. Your line is now open.
Uh, thank you. Good morning. Could you talk about your diameter? It's pricing outside of partner agreements. This year, uh, so your brand right now should be your... how is it doing this year pricing-wise, and then say, as a pure as well?
Pierre Brondeau: Yes. We are not breaking it precisely, but sales appear in a very different situation. Sales appear is data protected, so we do not have at all the same competitive situation in sales appear. Rolex appear pricing, even for the branded one, is.
Yes.
Hi, good morning.
yes, we we um,
Was hoping peer that you could give a little bit more detail on the sphere of moans offering it sounds like there is a pilot that's going to be.
I'm not breaking it precisely, but, um,
Going into action later this year.
Sales appear in a very different situation. So appear is
Curious.
Are you expecting to see a meaningful commercial contribution in 2026, and where do you think you are.
Andrew Sandifer: It's been pricing in Q2 for Rolex appear, branded Rolex appear was relatively flat. The real pricing headwinds in Rolex appear are the partner contracts in the current period.
On the path to $1 billion.
And revenue in 2030 is that still a realistic.
data protector. So we do not have all the same uh, competitive situation in in sales appear Rolex at P are pricing even for the brand 1 is. It's been pricing at 2, different actors, branded redacted. There was relatively flat
Outlook longer term.
Pierre Brondeau: Rolex appear, this year, except in India, China, Turkey, Argentina, a few countries, is still protected by process patent. So there is not yet the penetration outside of those countries of generics.
Um the real pricing had ones in here are the partner contracts and and then the current period.
It's.
<unk>.
The.
Rex said to you this year,
The answer is.
Except in, in India, China.
Israel is it will highly.
Heidi dependent.
Upon the results of what we are doing this quarter I think.
Cherokee Argentina. Few country is still protected by by process patent.
so, um,
These two quarters are very important to first full scale.
Commercial operation, we have with pheromones.
There is not yet the penetration outside of those countries of generics.
It's the first time, we're going to learn how pheromones per phone.
Kurt Brooks: Our next question comes from Mike Harrison with the company Seaport Research Partners. Mike, your line is now open.
Versus a regular regular products and we will tell us.
Our next question comes from Mike Harrison with the company C Port research Partners, Mike your line is not open.
Andrew Sandifer: Hi. Good morning. I was hoping, Pierre, that you could give a little bit more detail on the pheromones offering. It sounds like there's a pilot that's going to be going into action later this year. Curious, are you expecting to see a meaningful commercial contribution in 2026, and where do you think you are on the path to $1 billion in revenue in 2030? Is that still a realistic outlook longer term?
If the $1 billion, the $1 billion forecast or plan was based on several loan operating as expected and well.
So.
I think we're going to have to wait to answer your question.
It will be a much better answer based on fact at the end of the year. Once the campaign is over and we have the first full scale results.
We don't have it right now we're shipping the product. We're studying is finished two events in Brazil.
We're not close to having.
Hi, uh, good morning. Uh, what's helping here that you could, uh, give a little bit more detail on the firms offering. It sounds like there's a pilot that's going to be, uh, uh, going into action, uh, later this year. Um, curious uh is is is are you expecting to see a meaningful commercial contribution in 2026? And where do you think you are uh on the path to uh, 1 billion dollars in in Revenue in 2030? Is that still a realistic uh, Outlook longer term?
The first results.
it's uh,
Pierre Brondeau: The answer, if it's realistic or not, will highly depend upon the results of what we are doing this quarter. I think these two quarters are very important. So first, full-scale commercial operation we have with pheromones. So it's the first time we're going to learn how pheromones perform versus our regular product. And we'll tell us if the $1 billion forecast or plan was based on pheromone operating as expected and well. So I think we're going to have to wait to answer your question. It will be a much better answer based on fact at the end of the year once this campaign is over and we have the first full-scale results. We don't have it right now. We're shipping the product. We're starting. It's an H2 event in Brazil, and we're not close to having the first results.
the, the
Our next question comes from Orange.
the answer.
This one this one Nathan what the company RBC capital markets are in your line is now open.
If it's really sick or not will highly depend.
Upon the results of of what we are doing this quarter. I think um,
Question I guess.
It's Q2. Quarters are very important, so first full scale.
Looking at the second half looks like the implied guide for Q4 is.
$354 million.
So I guess, maybe you can just talk to kind of hit some of the building blocks there.
Uh, commercial operation, we have with the Romans. So it's the first time we're going to learn how far
Maybe break it up into maybe new revenue from new products or maybe even Brazil route to market as well.
Um, versus the regular product, and we'll tell us.
Yes, that'd be helpful. Thanks.
You know what I'm seeing.
uh, if the 1 billion, the 1 billion dollar forecast or plan was based on ceremony operating as expected and well,
The reasoning for Q4 and Q3.
<unk> or the other you'll add that.
So um I think we're going to have to wait to answer your question.
Is is the same.
For Q4, a screen to be driven by the growth portfolio.
<unk> is going to be very critical in the 4000.
Uh it will be a much better answer based on fact. At the end of the year, once the uh, this campaign is is over and we have the First full scale results.
Most of the growth is going to come from.
From a growth portfolio.
And mostly from fluent pnas for flex.
We don't have it right now, we're shipping the product, we're starting it's an H2 event in in Brazil. And, uh, we're not close to having the first, the first result.
And then the new route to market will allow to grow.
Kurt Brooks: Our next question comes from Aaron Vismonathan with the company RVC Capital Markets. Aaron, your line is now open.
Our next question comes from Aaron.
The core the core part of our market.
But certainly it will beach.
This what this 1, Nathan with a company RVC Capital markets or in the land is not open.
Richard Garchitorena: Question. I guess just looking at the second half, it looks like the implied guide for Q4 is $354 million. So I guess maybe you can just talk to kind of some of the building blocks there. If you could maybe break it up into maybe new revenue from new products or maybe the Brazil route to market as well. Yeah, that'd be helpful. Thanks.
In fact will be decreased by the reduction in <unk> due to two permanent pricing so.
Very high.
<unk> growth driven by.
By new products and of course, the U two market as well as the crew up we tend to forget that but we've put in place a very different system with the co ops to increase sales in those those are the drivers for Brazil.
Question, I guess. Um, just looking at the second half looks like the implied guide for Q4 is uh, 354 million. So um, I guess maybe you can just talk to kind of the some of the building blocks there. Um, if you could maybe break it up into maybe new Revenue, um, from new products or maybe the Brazil route to Market as well. Um, yeah, that that'd be helpful. Thanks.
Pierre Brondeau: You know, I think the reasoning for Q4 and Q3, and maybe Ronaldo, you'll add, but is the same. For Q4, it's going to be driven by the growth portfolio. FluentData Peer is going to be very critical in the fourth half, and most of the growth is going to come from a growth portfolio, and mostly from FluentData Peer and ISOFLEX. Then the new route to market will allow to grow the core part of our market. But certainly, it will be this bike will be decreased by the reduction in Rolex appear due to partner pricing. So a very high growth driven by new products and, of course, the new route to market, as well as the co-op. We tend to forget that, but we've put in place a very different system with co-ops to increase sales, and those are the drivers for Brazil.
Let's not forget when we talk about Q4.
Uh, you, you know, I think the, uh,
North America is very important.
The reasoning for Q4 and Q3 and maybe what. I'll do you add but
Sure It was.
He's, he's the same.
It was a very.
uh,
A big part of the growth. We had this is when we load the wholesaler with a product before they supply in Q1 the retailers. So it's not only Brazil, but it's also.
for Q4, it's going to be driven by the growth portfolio.
It's also in North America, we've above this and drivers.
So on that here is going to be very critical in the forecast. And most of the growth is going to come from, um, from a growth portfolio.
um,
and mostly from flu and that PR nice of flex.
Our last question comes from Joel Jackson with company BMO Capital Markets' Jones. Your line is now open.
Then the new route to Market.
Good morning, Pierre I want to ask your questions. So.
The, the core part of the market.
And the decision that you may need to show in India, The way Youre, showing the investor base really want to understand the visibility of your company and obviously, there's a lot of moving parts and what discipline you'd be hard this year next year.
Uh, but certainly, it will be.
Uh, the impact will be decreased by the reduction in, uh, in relaxed appear due to partner pricing, so a very high.
But I Wonder why you did decide to add a little bit of complexity to this year's numbers by doing this and as part of that why didn't you do this when you sold GSS last year why don't you exclude GSS earnings.
Ahead of the ultimate sale closing.
Pierre Brondeau: Now, let's not forget when we talk about Q4, North America is very important. Last year, it was a very big part of the growth we had. This is when we load the wholesaler with the products before they supply into one retailer. So it's not only Brazil, but it's also North America with about the same drivers.
Growth driven by um by new products and of course the new route to Market as well as the cope. We tend to forget that but we've put in place a very different system with co-ops to increase sales and those are those are the drivers for for Brazil.
Now, let's let's not forget when we talk about Q4.
GSS Division were made.
North America is very important.
Before it was.
It was this year or so.
I came in that was mentioned maybe Andrew you can add more detail Joe I think we came to the conclusion on held for sale with the GSS business later in the process.
And because of the way GSS was organized GFS was a collection of product lines across multiple geographies. It was not a discrete business unit. It was not as simple to be able to carve out in order to identify all the pieces as we are moving through.
Last year, it was a uh it was the a very big part of the, the growth we had. This is when we load the wholesaler with the products before they Supply into 1 the retailers. So it's not only Brazil but it's also,
It's also North America with with about the same drivers.
Kurt Brooks: Our last question comes from Joel Jackson with the company BMO Capital Markets. Joel, your line is now open.
Josh Spector: Morning. Pierre, I wanted to ask you a question. So in the decision that you made to show India the way you're showing, you know, I know the investor base really wants to, you know, understand the visibility of your company. And obviously, there's a lot of moving parts and why visibility may be hard this year and next year. But I want to know why you did decide, you know, to add a little bit of complexity to this year's numbers by doing this. And as part of that, why didn't you do this when you sold GSS last year? Why didn't you exclude GSS earnings ahead of the alternate sale closing?
Our last question comes from Joel Jackson with the company. BMO Capital markets, Joel your line is not open.
So that certainly is one difference between the two situations.
In both cases, the businesses being sold qualify for held for sale at certain points, but did not meet the conditions of.
Discontinued ops, so theres no ability to recast.
So we can provide color in both cases, where we're not able to do a recast.
Uh, good morning Pier. I want to ask you a question. So in the decision that you made to show in via the way you're showing you, I know the investor base really wants to, you know, understand some of the visibility of your company. And obviously there's a lot of moving parts and why visibility may be hard this year and next year,
I think the second piece was with with the India business.
Certainly looking at why we could carve outs appropriate here.
But I want to know why you did decide, you know, to add a little bit of complexity to this year's numbers by doing this and as part of that, why didn't you do this when you sold GSS last year, why didn't you exclude GSS?
Operating the India business, while we're preparing for sale is different from operating it if we were going to continue to own it.
earnings um, ahead of the alternate sale closing,
Alright, there are decisions, we might make that would make it more attractive or easier for a buyer to integrate the business.
Pierre Brondeau: GSS, the decision was made before I was the CEO, so I came in. The decision was made. So maybe, Andrew, you can give more detail.
That what might not be in the best interest of <unk>.
Uh, yes. Yes, it says the decision will be made before. I was... I was this year or so.
Results, if we were to operate the business over a longer term horizon because of that it makes it very difficult for us to forecast.
Andrew Sandifer: Yeah. Joel, I think we came to the conclusion on how to sell with the GSS business later in the process. And because of the way GSS was organized, GSS was a collection of product lines across multiple geographies. It was not a discrete business unit. It was not as simple to be able to carve out and/or to identify all the pieces as we were moving through. So that certainly is one difference between the two situations. In both cases, you know, the businesses being sold qualified for help for sale at certain points, but did not meet the conditions of discontinued ops. So there's no ability to recast. So we, you know, we can provide color in both cases, but we're not able to do a recast.
The performance of the India business for the next several periods. So.
So we thought it would be.
More important to be able to give guidance.
Numbers that we can stand behind and deliver upon and importantly that represent the future operations of the company right. What the value driver of this business is going forward. We've made that decision. The board has made the decision to exit this commercial business. It is not a part of fmc's future in its current configuration.
With through supply agreements and partnerships that will certainly be some ongoing economic benefit, but we do feel that the presentation.
I I I came in the deal was made, so maybe Andrew, you can more detail. I think we can be the conclusion on health for sale, with the GSS business, later in the process. Uh, and because the way GSS, was organized, TSS was a collection of product line across multiple geographies. It was not a discrete business unit, it was not as simple to be able to carve out and, or to identify all the pieces as we were moving through. Um, so that that certainly was is 1 difference between the 2 situations. Um, and both cases, you know, the business is being sold qualify for for help for sale at certain points. Uh, but did not need to conditions uh of discontinued Ops. So there's no ability to recast. Um so we you know, we can provide
Excluding the India business from adjusted EBITDA, and EPS helps investors see more clearly what the go forward earnings base of the company is so that's the reason for the presentation.
Andrew Sandifer: I think the second piece with the India business, and you know, certainly looking at, you know, why we think carve-out is appropriate here, operating the India business while we're preparing it for sale is different from operating it if we were going to continue to own it. Right? There are decisions we might make that would make it more attractive or easier for a buyer to integrate the business that might not be in the best interests of our results if we were to operate the business over a longer-term horizon. Because of that, it makes it very difficult for us to forecast the performance of the India business for the next several periods.
And in term of the complexity to try to simplify.
What we are doing.
In the second half of the year.
We are removing from our sales.
$70 million, we are forecasting four four in GAAP earnings.
And India was an above breakeven on EBITDA. So we are not changing our EBITDA and EPS targets.
My color in both cases, but we're not able to, to do a recast. I, I think this the second piece with with, uh, with the India business and, you know, certainly looking at, you know why we think carve outs appropriate here, um, operating the India business while we're preparing it for sale is different from operating it, if we were going to continue to own it right there are decisions. We might make that would make it more attractive or more easier for a buyer to integrate the business. Uh, that what might not be in the best interest of of our results. If we were to operate the business over a longer term Horizon, um, because of that makes it very difficult for us to forecast.
So we are doing so.
Andrew Sandifer: So we thought it would be more important to be able to give guidance numbers that we can, you know, stand behind and deliver upon, and importantly, that represent the future operations of the company, right? What the value driver of this business is going forward. You know, we've made that decision. The board has made the decision to exit this commercial business. It is not a part of FMC's future in its current configuration. Through supply agreements and partnerships, there'll certainly be some ongoing economic benefit. But we do feel that the presentation of excluding the India business from adjusted EBITDA and EPS helps investors see more clearly what the go-forward earnings base of the company is. So that's the reason for the presentation.
When you look at the numbers for 2025, they're essentially the same.
We are not moving on earnings and well just removing the contribution to sales of <unk>, which was about $70 million.
Besides that everything else is the same.
Thank you.
This.
Close the FMC Corporation conference call. Thank you for attending you may now disconnect.
Pierre Brondeau: And in terms of the complexity to try to simplify what we are doing in the second half of the year, we are removing from ourselves the $70 million we are forecasting for India. And India was at about break-even on EBITDA, so we're not changing our EBITDA and EPS target. That's all we are doing. So when you look at the numbers for 2025, they're essentially the same. We are not moving on earnings, and we're just removing the contribution to sales of India, which was about $70 million. Besides that, everything else is the same.
The performance of the India business for the next several periods. Um, so we thought it would be more important to be able to give, uh, guidance numbers that we can, you know, stand behind and deliver upon and importantly that represent the future operations of the company. Right? What the value driver of this business is going forward. You know, we've made that decision. The board has made the decision to, to exit this commercial business. It is not a part of fmc's future in its current configuration um, with through Supply agreements and Partnerships. They'll certainly be some ongoing economic benefit. Uh but we do feel that the presentation of excluding uh the India business from adjusted IBA and EPS helps investors see more clearly what the go forward earnings base of the company is so that's the reason for the presentation.
and in terms of the complexity to try to simplify
Um, what what we are doing?
In the second half of the year.
We are removing from ourselves.
The 70 million dollars. We are forecasting for foreign Gap.
And India was at about Break, Even on ibida. So we're not changing our eida and EPS Target, that that's that's all we are doing. So, when you, you look at the number for 2025, they're essentially the same.
We are not moving on earnings, and we're just removing the contribution to sales of India, which was about $70 million.
Andrew Sandifer: Thank you.
Beside that. Everything else is the same.
Thank you.
Kurt Brooks: This concludes the FMC Corporation conference call. Thank you for attending. You may now disconnect.
This concludes the FMC Corporation conference call, thank you for attending. You may now disconnect