Q2 2026 FMC Corp Earnings Call

July 30, 2026

Operator 2: Call for FMC Corporation. This event is being recorded, and all participants are currently in a listen-only mode. After today's prepared remarks, we will host a question and answer session. If you would like to ask a question, please press star one to raise your hand. To withdraw your question, press star one again. Should you experience difficulties during today's call, please signal a conference specialist by pressing star zero. I will now hand the conference over to Mr. Curt Brooks, Director of Investor Relations for FMC Corporation. Please go ahead.

Operator: Earnings call for FMC Corporation. This event is being recorded, and all participants are currently in a listen-only mode. After today's prepared remarks, we will host a question and answer session. If you would like to ask a question, please press star one to raise your hand. To withdraw your question, press star one again. Should you experience difficulties during today's call, please signal a conference specialist by pressing star zero. I will now hand the conference over to Mr. Curt Brooks, Director of Investor Relations for FMC Corporation. Please go ahead.

Curt Brooks: Good morning, and welcome to FMC Corporation's 2026 Q2 earnings call. Today's prepared remarks will be provided by Pierre Brondeau, Chairman, Chief Executive Officer, and President, and Andrew Sandifer, Executive Vice President and Chief Financial Officer. After prepared comments, we will take questions. Our earnings release and today's slide presentation are available on the FMC Investor Relations website, and the prepared remarks from today's discussion will be made available after the call. Let me remind you that today's presentation and discussion will include forward-looking statements that are subject to various risks and uncertainties concerning specific factors, including, but not limited to, those factors identified in our earnings release and in our filings with the Securities and Exchange Commission. Information presented represents our best judgment based on today's understanding. Actual results may vary based on these risks and uncertainties.

Speaker #2: 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. presented represents our best judgment based on today's understanding. results may vary based on these risks and uncertainties.

Curt Brooks: 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, and sales refers to sales excluding India. 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.

Speaker #2: measures. Please note that as used in today's discussion, earnings means adjusted earnings, EBITDA means adjusted EBITDA, and sales reverse to sales excluding India. 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.

Speaker #2: Pierre. Commission. Actual Information

Speaker #3: Thank you, Curt. And good morning, everyone. In the second quarter, we continued to execute against our priorities. We delivered EBITDA above our guidance, generated meaningful free cash flow, and advanced several initiatives that strengthened our balance sheet.

Pierre Brondeau: Thank you, Curt, and good morning, everyone. In Q2, we continued to execute against our priorities. We delivered EBITDA above our guidance, generated meaningful free cash flow, and advanced several initiatives that strengthened our balance sheet. Sales were below our expectation as a challenging operating environment, including geopolitical uncertainty, unfavorable weather, and low insect pressure created additional pressure on both volume and price. Growers and channel partners remain focused on managing costs and working capital, which resulted in cautious purchase patterns across many markets. Against this backdrop, we continued to make progress on our four operational pillars, reducing debt, improving the competitiveness of our core portfolio, managing the post-patent transition for our Rynaxypyr, and growing new active ingredients. These pillars remain the foundation of the company's plan to improve earnings and cash generation while positioning FMC for future growth and the expanding contribution of its innovation pipeline.

Speaker #3: Sales were below our expectation as a challenging operating environment, including geopolitical uncertainty, unfavorable weather, and low insect pressure, created additional pressure on both volume and price. Growers and channel partners remained focused on managing cost and working capital which resulted in cautious purchase pattern across many markets. backdrop, we continued to make progress on our four operational tiers, reducing debt, improving the competitiveness of our core portfolio, managing the post-patent transition for an AXA tier, and growing new active ingredients. tiers remained the foundation of the company's plan to improve earnings and cash generation while positioning FMC for future growth and the expanding contribution of its innovation pipeline. investment from Tessendial Group marking the conclusion of the strategic review, we now have clarity on the path forward and are focused on execution.

Speaker #3: With the equity several smaller asset These include signing a We made Over the past several sales. These Together, these actions are expected to significantly strengthen our balance sheet and liquidity position.

Pierre Brondeau: With the equity investment from Tessenderlo Group marking the conclusion of the strategic review, we now have clarity on the path forward and are focused on execution. We made substantial progress during the quarter, particularly in strengthening our balance sheet through these reductions. Over the past several months, we announced the key components of our plan to generate $1 billion of proceeds to pay down debt. These include signing a definitive agreement for the sale of our India commercial business for $252 million, closing on the licensing agreement for rimisoxafen with Corteva and an upfront payment of $200 million, entering into a framework agreement for our Newark, Delaware property for $114 million, reaching an agreement with Tessenderlo Group for a $400 million minority equity investment, as well as progressing on several smaller asset sales.

Pierre Brondeau: Together, these actions are expected to significantly strengthen our balance sheet and liquidity position. Combined with a successful $1.2 billion secured bond offering we completed in May, they will provide greater financial flexibility as we continue to execute our strategy. Andrew will discuss the impact on our balance sheet and cash flow in more detail shortly. With debt reduction well underway, our attention remains on the operational actions that will improve business performance over time. Turning to our second pillar, improving the competitiveness of our core portfolio. Over the past year, we have focused on simplifying how we operate, improving the efficiency of our manufacturing and supply chain network, reducing structural costs across the business. These actions are intended to strengthen our competitive position and better align our cost structure with the markets we serve.

Speaker #3: Combined with the successful $1.2 billion secured bond offering, we completed in May, they will provide greater financial flexibility as we continue to execute our strategy.

Speaker #3: Andrew will discuss the impact of on our balance sheet and cash flow in more detail shortly. With debt reduction well underway, our attention remain on the operational actions that will improve business performance over time.

Speaker #3: Turning to our second tier, improving the competitiveness of our core portfolio. Over the past year, we have focused on simplifying how we operate, improving the efficiency of our manufacturing and supply chain network, and reducing structural cost across the business.

Speaker #3: These actions are intended to strengthen our competitive position and better align our cost structure with the markets we serve. As previously announced, our objective is to exit active ingredient and formulation production assets that are no longer cost competitive, and to transition production toward lower-cost sources.

Pierre Brondeau: As previously announced, our objective is to exit active ingredients and formulation production assets that are no longer cost competitive and transition production to lower cost sources. While this work remains underway, we are increasingly confident in the value it will deliver. In addition, we have made meaningful progress in realigning our supply chain and are beginning to see benefits from those efforts. Moving to our third pillar, we remain focused on executing a post-patent strategy for Rynaxypyr. We continue to see strong demand for our differentiated formulations and mixture. Sales of these products grew more than 35% year-over-year during Q2. We also remain focused on volume growth, outpacing lower pricing as the market evolves. Despite increased generic competition, branded diamide sales, excluding India, were essentially flat year-over-year.

Speaker #3: While this work remains underway, we are increasingly confident in the value it will deliver. In addition, we have made meaningful progress in realigning our supply chain and are beginning to see benefits from those efforts.

Speaker #3: Moving to our third tier, we remain focused on executing a post-patent strategy for an AXA tier. We continue to see strong demand for a differentiated formulations and mixture.

Speaker #3: Sales of these products grew more than 35% year over year during the second quarter. We also remain focused on volume growth outpacing lower pricing as the market evolves.

Speaker #3: Despite increased generic competition, branded Diamite sales excluding India were essentially flat year over year. Over time, we expect branded Diamite to grow in revenue as pricing stabilizes and we continue to take market share from all the classes of insecticides.

Pierre Brondeau: Over time, we expect branded diamide to grow in revenue as pricing stabilizes, and we continue to take market share from all the classes of insecticides. We are already seeing encouraging signs of volume growth. In Q2, we saw very strong gains in hectares treated in key countries like Brazil, where product on the ground usage is up over 40%. These results reinforce our confidence in our post-patent strategy. Our fourth pillar remains on track with our expectations. During the quarter, we continued to advance registration and commercialization efforts around the world, including securing registration of Isoflex active in the EU, with launches expected to begin in 2027. As we have discussed previously, the pace of growth of new technology is influenced not only by customer adoption, but also by the timing of regulatory approvals and registrations, which are outside of our control.

Speaker #3: We are already seeing encouraging signs of volume growth. In the second quarter, we saw very strong gains in hectares treated in key countries like Brazil, where product-on-the-ground usage is up over 40%.

Speaker #3: These results reinforce our confidence in our post-patent strategy. Our fourth tier remains on track with our expectations. During the quarter, we continued to advance registration and commercialization efforts around the world, including securing registration of isoflex active in the EU.

Speaker #3: With launches expected to begin in '27, as we have discussed previously, the pace of growth of new technology is influenced not only by customer adoption but also by the timing of regulatory approvals and registrations.

Speaker #3: Which are outside of our control. We continue to see external validation of the value of our innovation pipeline. The licensing agreement for Remisoxafen with Corteva represents the third significant licensing agreement involving one of our proprietary active ingredients.

Pierre Brondeau: We continue to see external validation of the value of our innovation pipeline. The licensing agreement for imisoxafen with Corteva represents the third significant licensing agreement involving one of our proprietary active ingredients, following agreements of Isoflex active with Bayer and Flonicapir with Corteva. Turning to our Q2 results on slide four, five, and six, provide detail of our performance. The operating environment for crop chemicals remains challenging. Growers are faced with the difficult situation of low prices for many crops, combined with higher costs for inputs such as fertilizers and fuel, driven by the uncertain geopolitical environment. We are seeing growers respond to these margin pressures by carefully managing costs and reducing discretionary spending wherever possible. For crop protection chemicals, that can mean trading down to generic or reducing the number of applications.

Speaker #3: Following agreement of isoflex active with Bayer, and Frondapier with Corteva. Turning to our second quarter results, on slide 4, 5, and 6, provide detail of our performance.

Speaker #3: The operating environment for crop chemical remains challenging. Growers are faced with the difficult situation of low prices for many crops combined with higher cost for inputs such as fertilizers and fuel-driven by the uncertain geopolitical environment.

Speaker #3: We are seeing growers respond to these margin pressures by carefully managing cost and reducing discretionary spending wherever possible. For crop protection chemicals, that can mean trailing down to generic or reducing the number of applications.

Speaker #3: In addition, data from our appropriate farm intelligence insect monitoring platform provides unique visibility into field conditions and indicates lower insect pressure so far this year.

Pierre Brondeau: Data from our proprietary farm intelligence insect monitoring platform provides unique visibility into field conditions and indicates lower insect pressure so far this year. With our current portfolio weighted more toward insecticide, this is especially relevant to FMC. We expect that over the next few years, the introduction and expansion of our new active ingredients will shift FMC to a more balanced portfolio with less reliance on insecticides and a stronger position in herbicides and fungicides. Our Q2 revenue of $841 million, excluding India, was 1% lower than the low end of our guidance range. As we forecasted, there were reduced orders from diamide partners, as well as expected registration losses in EMEA. We encountered additional volume headwinds in North America as strained margin drove careful purchasing behavior for growers of non-specialty crops. Excessive heat in EMEA also led to lower than expected demand.

Speaker #3: With our current portfolio, created more toward insecticides, this is especially relevant to FMC. We expect that, over the next few years, the introduction and expansion of our new active ingredients will shift FMC to a more balanced portfolio, with less reliance on insecticides and a stronger position in herbicides and fungicides.

Speaker #3: Our second quarter revenue of $841 million excluding India was 1% lower than the low end of our gallons range. As we forecasted, they were reduced orders from Diamite partners as well as expected registration losses in the NDA.

Speaker #3: However, we encountered additional volume headwinds in North America as strained margin drove careful of non-specialty crops. Excessive hit in the NDA also led to lower than expected demand.

Speaker #3: We saw strong volume growth in new Renexapier formulations particularly in Brazil and North America. New actives showed good growth, but we do not expect the bulk of the year-on-year increase to occur until the fourth quarter when Frondapier in Latam and North America as well as isoflex in Australia will be in higher demand.

Pierre Brondeau: We saw strong volume growth in new Rynaxypyr formulations, particularly in Brazil and North America. New actives showed good growth, but we do not expect the bulk of the year-on-year increase to occur until Q4, when Flonicapir in LATAM and North America, as well as Isoflex in Australia, will be in higher demand. Q2 pricing was down slightly more than our mid-single-digit expectation due to greater than expected pressure on core legacy products. Similar to prior quarters, there was more pronounced pricing pressure in LATAM and, to a lesser degree, Asia Pacific. New active ingredients in Cyazypyr delivered solid growth during the quarter, contributing to higher sales from our growth portfolio. Turning to slide six, we reported Q2 EBITDA of $153 million, which was 2% above the high end of our guidance range, driven by greater than expected cost favorability.

Speaker #3: Second quarter pricing was down slightly more than our mid-single-digit expectation due to greater than expected pressure on core legacy products. Similar to prior quarters, there was more pronounced pricing pressure in Latam and to a lesser degree Asia.

Speaker #3: New active ingredients and sales appear delivered solid growth during the quarter. Contributing to higher sales from our growth portfolio. Turning to slide 6, we reported second quarter EBITDA of $153 million which was 2% above the high end of our gallons range driven by greater than expected cost favorability this was primarily driven by spend discipline in non-manufacturing areas and a few favorable quarter specific items.

Pierre Brondeau: This was primarily driven by spend discipline in non-manufacturing areas and a few favorable quarter-specific items. Adjusted earnings per share of $0.26 was 62% lower than prior year due to the reduction in EBITDA and higher interest expense. The result was at the high end of our guidance range, driven by EBITDA. Shifting to our forward guidance. Our updated financial outlooks are on slide seven through nine. Starting with slide seven, full-year sales are now expected to be $3.5 billion to $3.7 billion, a decline of 7% at the midpoint. We have updated our full-year outlook to reflect the more challenging market conditions we've seen so far this year. We now expect more pricing pressure and less volume growth of core legacy products than our prior forecast.

Speaker #3: Adjusted earnings per share of $26 was 62% lower than prior due to the reduction in EBITDA and higher interest expense. The results was at the high end of our gallons range driven by EBITDA.

Speaker #3: Shifting to a forward gallons, our updated financial outlooks are on slide 7 through 9. Starting with slide 7, full year sales are now expected to be $3.5 billion to $3.7 billion.

Speaker #3: A decline of 7% at the midpoint. We have updated our full-year outlook to reflect the more challenging market conditions we've seen so far this year.

Speaker #3: We now expect more pricing pressure and less volume growth of core legacy products than our prior forecast. Volume is now expected to be in line with prior as sales of new active ingredients and increased direct sales to grow in Brazil offset reduced Diamite partner orders.

Pierre Brondeau: Volume is now expected to be in line with prior year as sales of new active ingredients and increased direct sales to grow in Brazil offset reduced diamide powder orders. Price is expected to decline mid to high single digit, consistent with what we observed in the H1. The removal of India is a 2% headwind, and FX is expected to be a low single-digit tailwind. Adjusted EBITDA is now expected to be between $620 million and $680 million. The 23% decline at the midpoint reflects lower price and FX headwinds, partially offset by favorable costs. Adjusted EPS is expected to be between $1.19 and $1.49, with the 55% decline at the midpoint reflecting both lower EBITDA and higher interest expense.

Speaker #3: Price is expected to decline mid to high single-digit consistent with what we observed in the first half. The removal of India is a 2% headwind and affects is expected to be a low single-digit tailwind.

Speaker #3: Adjusted EBITDA is now expected to be between $620 million and $680 million. The 23% decline at the midpoint reflects lower price and affects headwinds partially offset by favorable cost.

Speaker #3: Adjusted EPS is expected to be between $1.19 and $1.49 with the 55% decline at the midpoint reflecting both lower EBITDA and higher interest expense.

Speaker #3: Given the uncertainty around the duration of the conflict in Iran, and potential US trade actions, we continue to assume that the Iran-related cost pressures and tariff-related benefits largely offset each other.

Pierre Brondeau: Given the uncertainty around the duration of the conflict in Iran and potential US trade actions, we continue to assume that the Iran-related cost pressures and tariff-related benefits largely offset each other. Turning to slide eight, we expect Q3 sales between $840 million and $900 million. We expect the market conditions that we observed in the Q2 to persist in the Q3. The majority of the 9% midpoint sales decline is due to price, which is expected to be a mid to high single-digit headwind. Volume is expected to be lower, mainly driven by North America distributors managing inventory by shifting orders from Q3 to Q4. In Brazil, we're continuing our strategy to lower our sales to distributors to favor co-ops and direct sales. This decision negatively impacts Q3 sales and favor Q4 sales.

Speaker #3: Turning to slide 8, we expect third quarter sales between $840 million and $900 million. We expect the market conditions that we observed in the second quarter to persist in the third quarter.

Speaker #3: The majority of the 9% midpoint sales decline is due to price which is expected to be a mid to high single-digit headwind. Volume is expected to be lower mainly driven by North America distributors managing inventory by shifting orders from Q3 to Q4.

Speaker #3: In Brazil, we are continuing our strategy to lower our sales to distributor to favor co-ops and direct sales. These decisions negatively impact Q3 sales and favor Q4 sales.

Speaker #3: It reflects our intent to continue to stabilize the performance and predictability of Brazil's sales as we enter Q4 and 2027. We expect overall growth portfolio sales to increase in the quarter driven by solid performance from new active ingredients.

Pierre Brondeau: It reflects our intent to continue to stabilize the performance and predictability of Brazil's sales as we enter Q4 and 2027. We expect overall growth portfolio sales to increase in the quarter, driven by solid performance from new active ingredients. Q3 EBITDA is expected to be between $120 million and $140 million. This represents a 45% decline at the midpoint, driven mainly by lower price with volume and FX acting as some other headwinds. Adjusted EPS is expected to be $0.05 and $0.30, a decline of 90% at the midpoint, driven by lower EBITDA and higher interest. Slide nine provides our outlook for the Q4, which we expect will represent a return to year-over-year growth. Sales are expected to be between $1.06 billion and $1.2 billion, an increase of 4% at the midpoint.

Speaker #3: Third quarter EBITDA is expected to be between $120 million and $140 million. These represents a 45% decline at the midpoint driven mainly by lower price with volume and affects acting as secondary headwinds.

Speaker #3: Adjusted EPS is expected to be $0.05 and $0.30. A decline of 90% at the midpoint driven by lower EBITDA and higher interest. Slide 9 provides our outlook for the fourth quarter which we expect will represent a return to year-over-year growth.

Speaker #3: Sales are expected to be between $1.06 billion and $1.2 billion an increase of 4% at the midpoint. We have not expecting major changes to market condition and as such we are forecasting a price decrease similar to the first three quarter in the mid to high single digit.

Pierre Brondeau: We are not expecting major changes to market condition. As such, we are forecasting a price decrease similar to the first three quarters in the mid- to high single-digit. We are expecting strong volume growth, but it is not based on the assumption of sharp improvement in regional markets. About half of the volume growth is expected to come from increased sales in Brazil, driven by new products and a more established sales force, which has now been in place for over a year. The remaining half of Q4 growth is expected to come from new products as well as the shift in order timing by North America distributors from Q3 to Q4. Q4 EBITDA is expected to be between $275 million and $315 million, representing 5% growth at the midpoint.

Speaker #3: We are expecting strong volume growth but is not based on the assumption of sharp improvement in regional markets. About half of the volume growth is expected to come from increased sales in Brazil driven by new product and a more established sales force which has now been in place for over a year.

Speaker #3: The remaining half of fourth quarter growth is expected to come from new product as well as the shift in order timing by North America distributors from Q3 to Q4.

Speaker #3: Fourth quarter EBITDA is expected to be between $275 million and $315 million representing 5% growth at the midpoint. Lower price and affects headwind are expected to be more than offset by favorable cost and higher volume.

Pierre Brondeau: Lower price and FX headwinds are expected to be more than offset by favorable cost and higher volume. We're expecting strong cost favorability due to cost mitigation actions, including lower raw materials. Adjusted EPS is expected to be between $1.09 and $1.33. This represents a 1% increase at the midpoint as higher EBITDA more than offsets elevated interest expense. I will now turn the call over to Andrew.

Speaker #3: We are expecting strong cost favorability due to cost mitigation actions including lower raw materials. Adjusted EPS is expected to be between $1.09 and $1.33.

Speaker #3: This represents a 1% increase at the midpoint as higher EBITDA more than offsets elevated interest expense. I will now turn the call over to Andrew.

Speaker #1: Thanks, Pierre. I'll start this morning with three cash flow and slide 10. Three cash flow in the second quarter was $357 million. $318 million higher than the prior year period.

Andrew Sandifer: Thanks, Pierre. I'll start this morning with free cash flow in slide 10. Free cash flow in Q2 was $357 million, $318 million higher than the prior year period. Included in free cash flow this quarter is the $200 million prepayment from Corteva as part of the licensing agreement for rimisoxafen that was finalized in June. This payment is reflected in the change in other operating assets and liabilities net line on our cash flow statement and as a long-term advanced payment liability on our balance sheet. As a result, it does not impact working capital. While the specific structure of the rimisoxafen licensing agreement may not recur, we expect licensing and collaboration agreements to remain a part of our business model and an important contributor to operating cash flow over time.

Speaker #1: Included in free cash flow this quarter is the $200 million prepayment from Corteva as part of the licensing agreement for Remisoxiban that was finalized in June.

Speaker #1: This payment is reflected in the change in other operating assets and liabilities net line on our cash flow statement and has a long-term advance payment liability on our balance sheet.

Speaker #1: As a result, it does not impact working capital. While the specific structure of the Remisoxiban licensing agreement may not recur, we expect licensing and collaboration agreements to remain a part of our business model and important contributor to operating cash flow over time.

Speaker #1: We intend to pursue additional opportunities to license molecules from our portfolio and to enter collaborations that allow us to share the cost of developing earlier stage active ingredients.

Andrew Sandifer: We intend to pursue additional opportunities to license molecules from our portfolio and to enter collaborations that allow us to share the cost of developing earlier-stage active ingredients. The reality is that our pipeline contains more high-quality active ingredients than we can fund and develop in a timely manner on our own. As a result, partnerships such as our licensing agreements with Corteva for rimisoxafen and fluindapyr, and with Bayer for Isoflex active, as well as future co-development arrangements, are becoming an increasingly important part of our operating model. These collaborations help accelerate the development and commercialization of new technologies while also providing a meaningful source of operating cash generation. Beyond the prepayment from Corteva, free cash flow in Q2 also benefited from lower receivables overall, with strong collections in Asia, including India and in EMEA, as well as lower cash taxes.

Speaker #1: The reality is that our pipeline contains more high-quality active ingredients than we can fund and develop in a timely manner on our own. As a result, partnerships such as our licensing agreements with Corteva for Remisoxiban and Fluendapir and with Bio for Isoplex Active as well as future co-development arrangements are becoming an increasingly important part of our operating model.

Speaker #1: These collaborations help accelerate the development and commercialization of new technologies while also providing a meaningful source of operating cash generation. Beyond the prepayment from Corteva, free cash flow in the second quarter also benefited from lower receivables overall with strong collections in Asia including India and in EMEA as well as lower cash taxes.

Speaker #1: We are updating our 2026 free cash flow outlook to reflect both the updated EBITDA outlook and the Corteva prepayment. We now expect free cash flow to be in the range of $75 to $225 million or $150 million at the midpoint.

Andrew Sandifer: We are updating our 2026 free cash flow outlook to reflect both the updated EBITDA outlook and the Corteva prepayment. We now expect free cash flow to be in the range of $75 to $225 million, or $150 million at the midpoint. Our free cash flow guidance also includes approximately $170 million in expected cash spending on restructuring, driven largely by the significant reshaping of our manufacturing and supply network that is underway. Free cash flow excluding restructuring would be approximately $320 million in 2026 at the guidance midpoint. While we do expect to have meaningful continued cash spending on restructuring in 2027, this should dramatically reduce in 2028 and beyond, greatly improving our free cash flow generation. Moving next to the balance sheet and leverage. The Q2 was a particularly active quarter on the financing front. In mid-April, we amended our existing revolving credit facility.

Speaker #1: Our free cash flow guidance also includes approximately $170 million in expected cash spending on restructuring driven largely by the significant reshaping of our manufacturing and supply network that is underway.

Speaker #1: Free cash flow excluding restructuring would be approximately $320 million in 2026 at the guidance midpoint. While we do expect to have meaningful continued cash spending on restructuring in 2027, this should dramatically reduce in 2028 and beyond greatly improving our free cash flow generation.

Speaker #1: Moving next to the balance sheet and leverage. The second quarter was a particularly active quarter on the financing front. In mid-April, we amended our existing revolving credit facility.

Speaker #1: In May, we completed a $1.2 billion senior secured bond offering. We were pleased with the strong demand for the offering. Significant oversubscription allowed us to meaningfully increase the size and reduce the rate of the offering from launch.

Andrew Sandifer: In May, we completed a $1.2 billion senior secured bond offering. We were pleased with the strong demand for the offering. Significant oversubscription allowed us to meaningfully increase the size and reduce the rate of the offering from launch. Proceeds from the bond offering were used to redeem the $500 million in senior notes that were due to mature in October, as well as to reduce borrowings under our revolver. We ended the Q2 with gross debt of approximately $4.3 billion, down $250 million from the prior quarter end. Cash on hand increased $86 million to $477 million, resulting in net debt of approximately $3.8 billion, down $339 million from the prior quarter end. Net debt to trailing 12-month EBITDA was 5.1 times. As we described on the April call, the most recent amendment to our revolving credit agreement included changes to our covenant leverage metrics.

Speaker #1: Proceeds from the bond offering were used to redeem the $500 million in senior notes that were due to mature in October, as well as to reduce borrowings under our revolver.

Speaker #1: We ended the second quarter with gross debt of approximately $4.3 billion, down $250 million from the prior quarter end. Cash on hand increased $86 million to $477 million, resulting in net debt of approximately $3.8 billion.

Speaker #1: Down $339 million from the prior quarter end. Net debt to trailing 12-month EBITDA was $5.1 times. As we described on the April call, the most recent amendment to our revolving credit agreement included changes to our coverage leverage metrics.

Speaker #1: The maximum total leverage ratio is not measured formally for the second or third quarters under the terms of the amendment. It would have been approximately 5.6 times.

Andrew Sandifer: The maximum total leverage ratio is not measured formally for the Q2 or Q3 under the terms of the amendment, but would have been approximately 5.6 times. The maximum total leverage covenant will be reinstated in the Q4 at 6.75 times through 31 December 2027. Secured debt to trailing 12-month EBITDA was 1.66 times as compared to a covenant limit of 3.5 times. Minimum interest coverage ratio was 2.78 times as compared to a covenant minimum of 2.0 times. Looking now at year-end debt levels. Based on our free cash flow guidance, together with proceeds from the India sale, Delaware site sale lease back, and the Tessenderlo equity investment, and after reflecting dividends, financing fees, and transaction costs, we expect to end 2026 with net debt of approximately $2.6 billion.

Speaker #1: The maximum total leverage covenant will be reinstated in the fourth quarter at 6.75 times through December 31st, 2027. Secure debt to trailing 12-month EBITDA was $1.66 times as compared to a covenant limit of 3.5 times.

Speaker #1: Minimum interest coverage ratio was 2.78 times as compared to a covenant minimum of 2.0 times. Looking now at a year-end debt levels, based on our free cash flow guidance, together with proceeds from the India sale Delaware site sale leaseback and the Tessendrilo equity investment, and after reflecting dividends, financing fees, and transaction costs, we expect to end 2026 with net debt of approximately $2.6 billion.

Speaker #1: At the midpoint of our EBITDA guidance, this would suggest year-end 2026 net debt to trailing 12-month EBITDA of roughly four times. While this is still meaningfully higher than where we would like to be long-term, we believe FMC will be well positioned to further improve leverage metrics as we return to EBITDA growth in 2027 and maintain a relentless focus on driving free cash flow from the business.

Andrew Sandifer: At the midpoint of our EBITDA guidance, this would suggest year-end 2026 net debt to trailing 12-month EBITDA of roughly four times. While this is still meaningfully higher than where we would like to be long term, we believe FMC will be well-positioned to further improve leverage metrics as we return to EBITDA growth in 2027 and maintain a relentless focus on driving free cash flow from the business. As a result of the financing actions completed in the quarter, we have substantial available liquidity. Borrowings under our revolving credit facility were $250.5 million at 30 June. With letters of credit backed by the revolver of $188.6 million, we had more than $1.56 billion of borrowing capacity available under our revolver at quarter end. We are comfortably in compliance with our covenant metrics. Our next bond maturity is three years away, with $500 million in notes due in October 2029.

Speaker #1: As a result of the financing actions completed in the quarter, we have substantial available liquidity. Borrowings under our revolving credit facility were $250.5 million at June 30th.

Speaker #1: With letters of credit backed by the revolver of $188.6 million, we had more than $1.56 billion of borrowing capacity available under our revolver at quarter end.

Speaker #1: We are comfortably in compliance with our covenant metrics. Our next bond maturity is three years away with $500 million in notes due in October 2029.

Speaker #1: We feel confident that all of the financing and strategic actions we are taking this year are greatly strengthening the financial foundation of the company.

Andrew Sandifer: We feel confident that all of the financing and strategic actions we are taking in 2026 are greatly strengthening the financial foundation of the company. Lastly, moving to the income statement. Q2 sales benefited from a 2% currency tailwind, primarily coming from strengthening of the Brazilian real. Looking ahead, we expect FX to move from being a tailwind in H1 to being relatively neutral in H2, resulting in a low single-digit FX impact on revenue for the full year. Q2 interest expense of $71.3 million was up $10 million with the impact of financing activity in the quarter, partially offset by interest income and lower foreign interest expense.

Speaker #1: Lastly, moving to the income statement. Second quarter sales benefited from a 2% currency tailwind primarily coming from strengthening of the Brazilian riai. Looking ahead, we expect FX to move from being a tailwind in the first half to being relatively neutral in the second half resulting in a low single-digit FX impact on revenue for the full year.

Speaker #1: Second quarter interest expense of $71.3 million was up $10 million with the impact of financing activity in the quarter partially offset by interest income and lower foreign interest expense.

Speaker #1: We now expect full year 2026 interest expense to be in the range of $275 to $285 million. Up approximately $40 million versus the prior year at the midpoint due to the impacts of the recent financing activity partially offset by lower foreign interest expense.

Andrew Sandifer: We now expect full year 2026 interest expense to be in the range of $275 to 285 million, up approximately $40 million versus the prior year at the midpoint due to the impacts of the recent financing activity, partially offset by lower foreign interest expense. We continue to expect depreciation and amortization for full year 2026 to be between $160 and 170 million. The effective tax rate on adjusted earnings in Q2 was 17%, in line with our expected full year effective tax rate of 16% to 18%. With that, I'll hand the call back to Pierre.

Speaker #1: We continue to expect depreciation and amortization for full year 2026 to be between $160 and $170 million. The effective tax rate on adjusted earnings in the second quarter was 17% in line with our expected full year effective tax rate of 16 to 18%.

Speaker #1: And with that, I'll hand the call back to Pierre.

Speaker #2: Thank you, Andrew. To close, the 2026 market environment will continue to be challenging. We are using these challenging conditions to improve the performance of some critical countries by repositioning their business.

Pierre Brondeau: Thank you, Andrew. To close, the 2026 market environment will continue to be challenging. We are using these challenging conditions to improve the performance of some critical countries by repositioning their business. We are strengthening FMC's financial foundation, advancing the actions tied to operational peers, and maintaining a clear focus on execution. The work underway will allow our core business to become competitive again, while our new technology portfolio becomes a larger part of the company. The work underway in 2026 will position FMC to return to growth as early as 2027 and beyond. With that, we are happy to take your questions.

Speaker #2: We are strengthening FMC's financial foundation advancing the actions tied to operational peers and maintaining a clear focus on execution. The work underway will allow a core business to become competitive again while a new technology portfolio becomes a larger part of the company.

Speaker #2: The work underway in 2026 will position FMC to return to growth as early as 27 and beyond. With that, we are happy to take your questions.

Speaker #3: We will now begin the question and answer session. Please limit yourself to one question. Should you have additional questions, you can re-enter the queue.

Operator 2: We will now begin the question and answer session. Please limit yourself to one question. Should you have additional questions, you can re-enter the queue. To ask a question, please press star one to raise your hand. To withdraw your question, press star one again. We ask that you pick up your handset when asking a question to allow for optimum sound quality. If you are muted locally, please remember to unmute your device. Please stand by while we compile the Q&A roster. Your first question comes from the line of Duffy Fischer with Goldman Sachs. Duffy, your line is open. Please go ahead.

Operator: We will now begin the question and answer session. Please limit yourself to one question. Should you have additional questions, you can re-enter the queue. To ask a question, please press star one to raise your hand. To withdraw your question, press star one again. We ask that you pick up your handset when asking a question to allow for optimum sound quality. If you are muted locally, please remember to unmute your device. Please stand by while we compile the Q&A roster. Your first question comes from the line of Duffy Fischer with Goldman Sachs. Duffy, your line is open. Please go ahead.

Speaker #3: To ask a question, please press star one to raise your hand. To withdraw your question, press star one again. We ask that you pick up your handset when asking a question to allow for optimum sound quality.

Speaker #3: If you are muted locally, please remember to unmute your device. Please stand by while we compile the Q&A roster. You are first question comes from the line of Duffy Fisher with Goldman Sachs.

Speaker #3: Duffy, your line is open. Please go ahead.

Speaker #4: Yeah. Good morning, guys. First question is just around the ramp from your Q3 midpoint to your Q4 midpoint, you know, kind of 165 million of improvement.

Duffy Fischer: Yeah, good morning, guys. First question is just around the ramp from your Q3 midpoint to your Q4 midpoint, kind of $165 million of improvement. Can you walk through sequentially what those buckets are? What are the big drivers? Because again, margin goes from like 15% in Q3 to over 25% in Q4. Give some qualitative indication, just how certain are you of those buckets? Do you have orders in hand? Is it based on just kind of historic norm repeating itself? Just try to help us get comfortable with that big ramp up from Q3 to Q4.

Speaker #4: Can you walk through sequentially what those buckets are? What are the big drivers? You know, because again, margin goes from like 15% in Q3 to, you know, over 25% in Q4 and give some qualitative indication just, you know, how certain are you of those buckets?

Speaker #4: Do you have orders in hand? Or is it based on just kind of a historic norm repeating itself? Just trying to help us get comfortable with that big ramp up from Q3 to Q4.

Speaker #2: Yeah. Thanks, Duffy. Let me go from try to go from Q3 to Q4. Three big drivers on the positive front. First, the non-diamide core.

Pierre Brondeau: Yeah. Thanks, Duffy. Let me try to go from Q3 to Q4. Three big drivers on the positive front. First, the non-diamide core, that includes the growth, of course, in direct sales in Brazil. We're expecting this to be about $150 million. The new active ingredients. We believe with the number we see now forecasting, it's going to be from Q3 to Q4, about $70 million. You have others, including brand Rynaxypyr, especially in Latin America, in the range of $40 million. When you go from Q3 to Q4, those three buckets, less technical sales. As you know, we have less buy from partners for diamides. We get to a number which is an increase in the range of $260 million. The non-diamide core I talk about, it's largely driven by the normal seasonality.

Speaker #2: And that includes the growth of course in direct sales in Brazil. We're expecting this to be about about 150 million dollars. The new active ingredients we believe with the number we still have forecasting it's going to be from Q3 to Q4 about about 70 million dollars.

Speaker #2: And then you have others including branded Renexapier special in Latin America in the range of 40 million dollars. So when you go from Q3 to Q4, those three buckets less technical sales as you know we have less buy from partners for for diamides.

Speaker #2: We get to a number which is which is in the range of an increase in the range of 260 million dollars. Now the the non-diamide core I talk about it's largely driven by by the normal seasonality.

Speaker #2: Usually you see an historically you see an increase from Q3 to Q4 of about 15%. And that is in addition it's it's it's a bit higher this time because we do are increasing our our sales direct sales in Brazil and as you as you've heard in the script we have a shift in North America of sales from Q3 to to Q4.

Pierre Brondeau: Usually, you see, historically you see an increase from Q3 to Q4 of about 15%. That is, in addition, it's a bit higher this time because we do our increasing our direct sales in Brazil. As you've heard in the script, we have a shift in North America of sales from Q3 to Q4. The second-largest driver is the new active ingredients, and that is going to be mostly fluindapyr in North America and Isoflex in Australia. Diamides and Plant Health are the rest. That's roughly the bridge from Q3 to Q4, which go from seasonality to specific actions we are taking, like direct sales or new active ingredients.

Speaker #2: The second largest driver is is the new active ingredients and that is going to be mostly fluendapier in North America and isoflex in in Australia and diamide and plant health are are the rest.

Speaker #2: So that's that's roughly the the the breach from Q3 to Q4 which go from seasonality to specific actions we are taking like direct sales or new active ingredients.

Speaker #3: Your next question comes from the line of Edlin Rodriguez with Mizuho Securities. Please go ahead.

Operator 2: Your next question comes from the line of Edgar Rodriguez with Mizuho Securities. Please go ahead.

Operator: Your next question comes from the line of Edgar Rodriguez with Mizuho Securities. Please go ahead.

Speaker #4: Thank you. Good morning, everyone. I mean, Pierre, I mean, I kind of wanted to ask you something but more medium and longer term. Clearly, 2026 is a transition year.

Edgar Rodriguez: Thank you. Good morning, everyone. Pierre, I kind of wanted to ask you something about more medium and longer term. Clearly, 2026 is a transition year. As you navigate the changes and action you are undertaking to improve the portfolio, it seems like it is a process where things can get worse before they get better, but in the end, you will come out stronger. The question is, with the things you can control, when do you think we will start to see the benefits of the work you are doing? Essentially, how does the patient get better going forward?

Speaker #4: As you navigate the changes and action you are undertaking to improve the portfolio, it seems like it's a process where things can get worse before they get better.

Speaker #4: But in the end, you will come out stronger. The question is, with the things you can control, like when do you think we will start to see the benefits of the work you've you you are doing?

Speaker #4: I mean, essentially like how does the patient get better going forward?

Speaker #2: Yes. Thank you. Listen, I I believe at this stage and and that's a discussion we're having here often and often as we look at it, we have all the reasons in the world to believe that 2026 is the truth.

Pierre Brondeau: Yes. Thank you. Listen, I believe at this stage, and that is a discussion we are having here often and often. As we look at it, we have all the reasons in the world to believe that 2026 is the trough. We believe the worst is behind us with the loss of IP protection on Rynaxypyr. For Rynaxypyr, all signs are pointing to us being able to protect Rynaxypyr earnings in 2027. If you assume that, I am looking at four critical things which will be starting to make 2027 the first growth year. First, let us talk about our biggest issue in 2026. This is a $2.1 billion non-diamide core business, that business is down this year or should be down when we close the year by about 5%.

Speaker #2: We believe the the worst is behind us with the loss of IP protection and Renexapier. And for Renexapier all signs are pointing to us being able to protect Renexapier earnings in 27.

Speaker #2: Now, so if if if you assume that, I'm looking at at four four critical things, which will be starting to to make 2027 the first growth year.

Speaker #2: First, let's talk about our biggest issue in 2026. This is a 2.1 billion dollars non-diamide core business. And that business is down this year or should be down when we close the year by about 5%.

Speaker #2: With all the work we're doing, on a global manufacturing footprint, we should be competitive again and back to growth as soon as next year.

Pierre Brondeau: With all the work we are doing on our global manufacturing footprint, we should be competitive again and back to growth as soon as next year. If we only assume to get back to an annual growth of 1% or 2%, which should be below market, it is fairly modest. If you compare to being down 5% this year, this is an incremental sales of about $120 million to $150 million. That is the first bucket, just linked to the work we do on a manufacturing footprint. On bucket number 2 is our new active ingredients. The growth should be accelerating to a minimum of 50% to 70% as we are gaining more and more registration. If you look at the expected size of our new active ingredients, that will be in 2027 versus 2026, an additional $150 million to $200 million.

Speaker #2: Now, if if we only assume to get back to an annual growth of one or two percent, we should be below market. So it's fairly modest.

Speaker #2: If you compare to being down 5% this year, this is an incremental sales of about 120 million dollars to 150 million dollars. So that's the first bucket.

Speaker #2: Just linked to the work we do on a manufacturing footprint. On bucket number two is our new active ingredients. The growth should be accelerating.

Speaker #2: To a minimum of 50% to 70%, as we are gaining more and more registrations. If you look at the expected size of our new active ingredients, that would be in '27 versus '26.

Speaker #2: An additional 150 to 200 million dollars. Branded sales appear steady as she go should continue its mid mid single digit growth. It's an additional 20 million dollars.

Pierre Brondeau: Branded sales appear steady as you go, should continue its mid-single-digit growth. It is an additional $20 million. Last point, this one I have not quantified. You know we keep on shifting more and more of our sales business in Brazil toward co-ops and direct sales. This also should represent a growth, we are not qualifying it yet because, as you know, we are controlling our sales toward the more traditional distribution network. We need to balance the growth in co-ops and direct sales versus the decrease in the more traditional network. That is more of a budget exercise, not yet capable of controlling that. On the negative front, we will still have some negative impact of diamide sales to partners. It will be getting smaller and smaller, and this segment is getting smaller, and most of the cost decrease for Rynaxypyr has taken place.

Speaker #2: Last point and and this one I have not qualified. You know we keep on shifting more and more of a sales business in Brazil.

Speaker #2: Toward co-ops and direct sales. This also should represent a growth but but we are not qualifying it yet because as you know we are controlling our sales toward the more traditional distribution network.

Speaker #2: So we need to balance the growth in co-ops and direct sales versus the decrease in the more traditional network. That's more of a budget exercise not yet capable of of controlling that.

Speaker #2: On the negative front, we're still we'll still have some negative impact of diamide sales to to partners. But but it will be getting small and smaller at this segment is getting is getting smaller and most of the cost decrease for Renexapier has taken place.

Speaker #2: So if you look at that without quantifying the last bucket around Brazil, this is natural growth of $300 to $350 million in 2027 versus 2026.

Pierre Brondeau: If you look at that without quantifying the last bucket around Brazil, this is natural growth of $300 to $350 million in 2027 versus 2026. That should keep on improving as we grow, as the new active ingredients will be getting more and more traction. As you say, the patient should get better quickly. We believe 2027, all indications are pointing toward a return to growth next year.

Speaker #2: And that should keep on improving as we grow, as the new active ingredients will be getting more and more traction. So, as you say, the patient should get better quickly.

Speaker #2: We believe 27 all indication are pointing toward a return to growth next year.

Speaker #3: Your next question comes from the line of Frank Mitch with Fermium Research. Frank, your line is open. Please go ahead.

Operator 2: Your next question comes from the line of Frank Mitsch with Fermium Research. Frank, your line is open. Please go ahead.

Operator: Your next question comes from the line of Frank Mitsch with Fermium Research. Frank, your line is open. Please go ahead.

Speaker #1: Thank you, and and good morning. Hey, Pierre, I wanted to drill on slide five the the breakdown by the by the regions. North America came down fairly significantly.

Frank Mitsch: Thank you, and good morning. Hey, Pierre, I wanted to drill in on slide five, the breakdown by the regions. North America came down fairly significantly. You mentioned a competitive market in North America. I was wondering if you could expand upon that. Where specifically and how sustainable is that competitive market and how we should think about that in the future? Thank you.

Speaker #1: And you know you mentioned you know a competitive market in North America. I was wondering if you could expand upon that. Where specifically and how sustainable is that competitive market you know and and how we should think about that.

Speaker #1: In the future. Thank you.

Speaker #2: Yes. Thanks, Frank. You you you're absolutely right. North America was down. It's it is the negative news of the quarter for us. And and there is multiple drivers.

Pierre Brondeau: Yeah. Thanks, Frank. You're absolutely right. North America was down. It is the negative news of the quarter for us. There is multiple drivers. They all went the wrong way. First, and above all, it's a volume story. As you know, in North America, we are very strong in specialty crops with our insecticide business. Rice production was at the lowest level since 1987. That's a big market for us. Very low insect pressure, so we lost a lot of sales in specialty crops. Raw crops is less of a market for us, but still important. It is absolutely certain that low margin at the growers level, high uncertainty, this is translating into growers managing their cost as much as possible. You see some trading from more branded products to generic product, and in some cases, skipping applications.

Speaker #2: They all went the the wrong way. First and above all, it's a volume story. As you know, in North America we are very strong in specialty crops.

Speaker #2: With our insecticide business. Rice production was at the lowest level since 1987. That was that that's a big market for us. Very low insect pressure.

Speaker #2: So we lost a lot of sales in specialty crops. Raw crops is less of a market for us but still important. And it is absolutely certain that low margin at the grower's level high uncertainty this is translating into growers managing their cost as much as possible.

Speaker #2: You see some trading from more branded product to to generic product. And in some cases skipping applications. So yes, Q2 was from a volume standpoint a a negative a very negative quarter.

Pierre Brondeau: Yes, Q2 was, from a volume standpoint, a very negative quarter. There is something to a less extent, but we have a license on a product, herbicide, which is called pyroxasulfone, and the company which own this license, it's only a license we have for North America, lost their IP protection. That product became more of a generic product, and we lost sales in that. Not sales, but we lost on pricing a lot and also on volume on this product. I would say by far the number one driver in North America, in addition to some pricing, but the number one driver for the reason I just listed are volume.

Speaker #2: There is something to a less extent but we have a license on a product an herbicide which is called Pyroxazulfone and the company which own this license it's only a license we have for North America.

Speaker #2: Lost their IP protection. So that product became became more of a generic product and and we lost and we lost sales in that not sales but we lost on pricing a lot and also on volume in on these products.

Speaker #2: So I would say by far the number one driver in North America in addition to to some pricing but the the number one driver for the reason I just I just listed our our volume.

Speaker #3: Your next question comes from the line of Chris Parkinson with Wolf Research. Chris, your line is open. Please go ahead.

Operator 2: Your next question comes from the line of Chris Parkinson with Wolfe Research. Chris, your line is open. Please go ahead.

Operator: Your next question comes from the line of Chris Parkinson with Wolfe Research. Chris, your line is open. Please go ahead.

Speaker #4: Great. Thank you so much. Pierre, one we take a step back and we look at the intermediate to longer term growth in diamides perhaps could you could you just update us on you know what you think the overall growth rate is including all the new entrants in terms of like the transitory period that we're currently in.

Chris Parkinson: Great. Thank you so much. Pierre, we take a step back, and we look at the intermediate to longer-term growth in diamides. Perhaps could you just update us on what you think the overall growth rate is, including all new entrants in terms of the transitory period that we're currently in? Which other insecticide classifications we're stealing share from? Is it organophosphates, carbamates, neonicotinoids? And just how you think about the overall TAM there, because it seems like the market trajectory is still growth and that there's just basically competitive behaviors in the beginning of that process. If you could just hit on the highlights there from your own perspective, it would be greatly appreciated. Thank you.

Speaker #4: Do you know which class or other insecticide classifications we're stealing share from? Is it organophosphates, carbamates, neonics? And just how do you think about the overall TAM there, because it seems like the market trajectory is still growth and that there's just basically competitive behaviors in the beginning of that process.

Speaker #4: So if you could just hit on the highlights there from your own perspective it would be greatly appreciated. Thank you.

Speaker #2: Thanks, Chris. Yes. I'm going to speak carefully here because we have a strategy in place for Renexapier, and as I said before, the big test will be in Q3 and Q4 when we're going to have the major market with the entrance of new generics in Latin America and North America.

Pierre Brondeau: Thanks, Chris. Yes. I'm going to speak carefully here because we have a strategy in place for Rynaxypyr, and as I said before, the big test will be in Q3, Q4, when we're going to have the major market with the entrance of new generics in Latin America and North America. We're not yet there, and I'm talking about Q1 and Q2 indicators on much lower market. I would say that the number one sign of success we are looking in a strategy is the mix of a portfolio, as we were expecting, is shifting toward the high-end product. We are growing very fast on the new mixtures we have, especially the bifenthrin and Rynaxypyr mixture, as well as the high concentration products. 35% growth in that sector, that's what we're expecting. We command a premium for those products, so it's a first positive.

Speaker #2: So we're not yet there. And I'm talking about Q1 and Q2 indicators on much lower market. I would say that the number one sign of success we are looking in a strategy is the mix of a portfolio as we were expecting is shifting toward the high-end product.

Speaker #2: We are growing very fast on the new mixtures we have especially the the the the Bifenthrin the Bifenthrin and Renexapier mixture as well as the the high concentration products.

Speaker #2: So 35% growth in that sector. That's what we're expecting. We commend the premium for those products. So that's a first positive. We we are seeing some sign that the market is growing and we've seen that in Brazil where we are gaining toward lower end insecticide.

Pierre Brondeau: We are seeing some signs that the market is growing. We've seen that in Brazil, where we are gaining toward lower-end insecticide. That is at the very beginning of the process. I think the big test is going to take place in H2. We do have some signal we've seen in Brazil. Product on the ground against some of those insecticide has been strong in H1. Again, on small volume. Indicators are good that the strategy with the lower cost we have reached and the strategy to move to our higher end. Certainly, we are not expecting at the earnings level Rynaxypyr in the long term to be a contributor to earnings growth for the company.

Speaker #2: But that is is at the very beginning of the process. I think the big test is going to take place in the in in the in the second half of the year.

Speaker #2: But we do have some signal. We've seen our Brazil product on the ground against some of those insecticides has been strong in the first half of the year.

Speaker #2: But again on on small volume. So indicators are good that the strategy with the lower cost we have reached and the strategy to move toward higher hand certainly we are not expecting at the earnings level Renexapier in the long term to be a contributor to earnings growth for the company.

Speaker #2: But I would say that all indicators are pointing between the mixed change and what we see at this stage of volume gain on the lower insecticide toward stabilizing earnings, certainly in 2027.

Pierre Brondeau: I would say that all indicators are pointing between the mix change and what we see at this stage of volume gain on the lower insecticide towards stabilizing earnings certainly in 2027. That's all I can say today in term of what we're able to verify on the market.

Speaker #2: That that that's all I can say today in term of what we're able to to verify on the on the market.

Speaker #3: Your next question comes from the line of Joel Jackson with VMO Capital Markets. Joel, your line is open. Please go ahead.

Operator 2: Your next question comes from the line of Joel Jackson with BMO Capital Markets. Joel, your line is open. Please go ahead.

Operator: Your next question comes from the line of Joel Jackson with BMO Capital Markets. Joel, your line is open. Please go ahead.

Speaker #5: Good morning, Pierre and team. Pierre, when you did all the actions over the last bunch of months and you were aggressive and you did a lot of things you know it seemed like you know you thought you could do kind of hold earnings around 700 million EBITDA with with the free cash flow around that.

Joel Jackson: Good morning, Pierre and team. Pierre, when you did all the actions over the last bunch of months, you were aggressive, you did a lot of things. It seemed like you thought you could do whole earnings around $700 million EBITDA with the free cash flow around that. You've come down a little bit lower this year, leverage a little bit higher than maybe what you would have thought. What other actions do you feel that you should wait for 2027 at least to get the rebound you've been talking about earlier on this call, or are there other things you want to do? Might you consider cutting the dividend, doing things to protect the balance sheet some more in this 2016 a bit lower than thought?

Speaker #5: You've come down a little bit lower this year. Leverage is a little bit higher than maybe what you would have thought. What other actions do you feel that you should take? Should you wait for 2027 to see if you get the rebound you've been talking about earlier on this call, or are there other things you want to do?

Speaker #5: Might you consider cutting the dividend or doing things to protect the balance sheet some more, with 2026 being a bit lower than thought?

Speaker #2: I'm going to let Andrew talk about cash flow and what we are doing in terms of additional actions we are planning for next year.

Pierre Brondeau: I'm going to let Andrew talk about cash flow and what we do in terms of additional actions we are planning for next year. I'm only going to answer the last point you've made around dividend. As you know, our dividends are small. It is certainly a topic we will have with the board and continue to have with the board. It's a $50 million cost annually. No decision, absolutely no decision has been taken at this stage in terms of the dividend. Andrew, if you want to add anything.

Speaker #2: I'm I'm I'm only going to answer the last point you've made around dividend. As you know our dividends are small. It is certainly a topic we will have with with the board and continue to have with the board the 50 million dollar cost annually but no decision absolutely no decision has been taken at this stage in terms of in terms of the the the dividend.

Speaker #2: But Andrew, if you want to add anything.

Speaker #5: Sure. I think, look Joel, on the free cash flow side, obviously we updated the free cash flow guidance with the change in the EBITDA guidance and with the Remexoxib end licensing deal.

Andrew Sandifer: Sure. I think, look, Joel, on the free cash flow side, obviously, we updated the free cash flow guidance with the change in EBITDA guidance and with the rimisoxafen licensing deal. There are more moving parts in that. Just to touch on that briefly as I address your question. From a cash from operations perspective, net net, we moved the guidance midpoint up $85 million. Now, that's about $200 million from the rimisoxafen deal. Obviously some headwinds hitting against that, certainly the biggest being the lower EBITDA expectation. We also have some higher restructuring spending as we're accelerating some of our actions to improve our manufacturing network. We do see a little less improvement in working capital this year because of the sales shift from Q3 to Q4, and there's a few other minor drags as well.

Speaker #5: You know there are more moving parts in that and just to to touch on that briefly is that is that address your question. Yeah.

Speaker #5: From a a cash from operations perspective net net we moved the guidance midpoint up 85 million dollars and that's about 200 million dollars from the Remexoxib and deal.

Speaker #5: So obviously, some headwinds are hitting against that. Certainly, the biggest is the lowered EBITDA expectation. We also have some higher restructuring spending, as we're accelerating some of our actions to improve our manufacturing network.

Speaker #5: We do see a little less improvement in working capital this year because of the sales shift from Q3 to Q4. And there's a few other minor drags as well.

Speaker #5: From a capex perspective with accelerating some of those movements on our manufacturing footprint we were able to reduce the expected capex for the year by about 40 million dollars.

Andrew Sandifer: From a CapEx perspective, with accelerating some of those movements on our manufacturing footprint, we were able to reduce the expected CapEx for the year by about $40 million. Our outlook for discontinued operations is unchanged. We did highlight we'll be pulling out certain charges that are related to transactions that flow through the restructuring line. We'll pull that out from free cash flow under divestiture expenses. The net of those changes is really just, on a like-for-like basis, a $50 million reduction in the free cash flow for the year. I do think, again, from a working capital perspective, back to part of your question here, we do expect a release from working capital this year, in part from liquidation of receivables in our India business, but in part from the rest of our business.

Speaker #5: Our outlook for discontinued operations is unchanged. We did highlight you know we'll be pulling out certain charges that are related to transactions that flow through the restructuring line.

Speaker #5: We'll pull that out from free cash flow under a divestiture re expenses. And the net of those changes is really just a a on a like for like basis a 50 million dollar reduction in in the free cash flow for the year.

Speaker #5: I do think, you know, again from a working capital perspective—back to part of your question here—we do expect a release from working capital this year, in part from liquidation of receivables in our India business, but in part from the rest of our business.

Speaker #5: But we have more work to do on improving working capital. As we continue the into a better rhythm with our production cadence as we continue to to to drive a more aggressive collection of receivables and improving overall credit quality of the portfolio.

Andrew Sandifer: We have more work to do on improving working capital as we continue to get into a better rhythm with our production cadence, as we continue to drive a more aggressive collection of receivables, and improving overall credit quality of the portfolio. I think you'll see this year some good improvement in inventory reduction as we get through the year. More work to do on receivables and payables as we go into 2027.

Speaker #5: So I think you'll see this year some good improvement in inventory reduction as we get through the year. More work to do on receivables and payables as we go into 2027.

Speaker #2: And and I I think Joel let me be on a little bit on what what Andrew just said because it's it's one of the very critical part of our of our balance sheet you will see this year it's something we fully control it's inventory and and we do have strong expectation that we're going to make some very significant progress on the on the inventory situation.

Pierre Brondeau: I think, Joel, let me build a little bit on what Andrew just said, because it's one of the very critical parts of our balance sheet. You will see this year it's something we fully control, it's inventory. We do have strong expectation that we're going to make some very significant progress on the inventory situation. We are monitoring that very closely. All indicators are pointing towards strong progress. The place where we have work to do, we are starting it this year, it's going to be very important next year, is on receivable. It's very much part of the strategy we have in Brazil. We've talked about the move toward customers which have more certainty of paying, less slow-moving and better terms like co-ops and direct sales, that some of the, I would call consolidated distribution network, which is becoming much more uncertain.

Speaker #2: We are monitoring that every very closely and all indicators are pointing toward strong progress. The place where we have work to do we are starting it this year it's going to be very important next year is on receivable.

Speaker #2: And it's very much part of the strategy we have in Brazil, and we've talked about the move toward customers which have more certainty of paying, less slow-moving and better terms, like co-ops and direct sales, than some of the, I would call, consolidated distribution network, which is becoming much more uncertain.

Speaker #2: So it's one area of focus maybe not as much progress this year as we would like but certainly we are we are making that a very high priority we should see very strong improvement as we are changing a mix of customer especially Latin American Brazil next year.

Pierre Brondeau: It's one area of focus. Maybe not as much progress this year as we would like. Certainly we are making that a very high priority. We should see very strong improvement as we are changing our mix of customer, especially in Latin America and Brazil next year.

Speaker #3: Your next question comes from the line of Patrick Cunningham with Citi. Patrick, please go ahead.

Operator 2: Your next question comes from the line of Patrick Cunningham with Citi. Patrick, please go ahead.

Operator: Your next question comes from the line of Patrick Cunningham with Citi. Patrick, please go ahead.

Speaker #4: Hi good morning. Just a couple of questions on the cost side. I think you mentioned at the top of the call some quarter specific items that benefit the cost.

Patrick Cunningham: Hi, good morning. Just a couple of questions on the cost side. I think you mentioned at the top of the call some quarter-specific items that benefit the cost. I guess first, what were those? Were those some cost saves pulled forward? Can you sort of quantify what the headwinds, tailwinds might be for the H2?

Speaker #4: I guess first you know what were those? Were those some cost saves pulled forward? And then can you sort of quantify you know what the headwinds you know tailwinds might be for the second half?

Speaker #5: Sure Patrick. It's Andrew. I'll take this one. Look in Q2 comment we made relative to guidance we had you know some improved cost favorability in non-manufacturing items.

Andrew Sandifer: Sure, Patrick, it's Andrew. I'll take this one. Look, in Q2, comment we made relative to guidance, we had some improved cost favorability in non-manufacturing items. Some of that's SG&A and R&D. Some of it, quite honestly, is just some smaller items that generally we wouldn't talk about, but we had a couple things that were positive in the quarter, and they contributed. I'll give you a simple example. We annually review our shipment reserve, which is essentially think of uncashed checks and other kind of liabilities, and we found that we were over-accrued based on what was actually due and outstanding. There are a few minor little favorable things like that, but when they add up, they were an add versus guidance in terms of our cost position.

Speaker #5: Some of that's SG&A and R&D. And some of it, quite honestly, is just some smaller items that generally we wouldn't talk about. But, you know, we had a couple of things that were positive in the quarter and they contributed.

Speaker #5: I'll give you a simple example. We we annually review our our sheetman reserve which is you know essentially think of uncashed checks and other other kind of liabilities and we found that we were over accrued.

Speaker #5: Based on what was actually do doing outstanding. So there are a few minor little favorable things like that but when they add up they were they were an add versus guidance in terms of our cost position.

Speaker #5: I think when we look at cost for the remainder of the year you know we do have a bit of two different stories with the quarters.

Andrew Sandifer: I think when we look at costs for the remainder of the year, we do have a bit of two different stories with the quarters. In Q3, we really don't have much of a cost tailwind. You'll remember that that's a really tough quarter comp versus the prior year. We had a very strong cost tailwind in the prior year period in Q3, much of which was one-time favorability from increased cost volume absorption in Q3 of 2025. Q3 is the flattest cost quarter, whereas we have pretty significant cost favorability in Q4. That really is driven by lower purchase price of raw materials year-on-year. It is a little bit of a split pattern between the two quarters. It does amplify with the weaker sales in Q3, the headwinds in Q3, and helps amplify the strengths in Q4.

Speaker #5: And the third quarter we really don't have much of a cost tailwind. You'll remember that that's a really tough quarter comp versus the prior year.

Speaker #5: We had a very strong cost tailwind in the prior-year period, in Q3, much of which was one-time favorability from increased cost volume absorption.

Speaker #5: In in '25 Q3 or '25. So Q3 is the flattest cost quarter whereas we have pretty significant cost favorability in Q4. And that really is a you know driven by lower purchase price of raw materials year on year.

Speaker #5: So it is a little bit of a of a a split pattern between the two quarters. It does amplify with the weaker sales in Q3 that the headwinds in Q3 and helps amplify the strengths in Q4.

Speaker #5: So I think, again, everybody should expect Q3 flattish costs; Q4, pretty strong tailwind for cost.

Andrew Sandifer: I think, again, everybody should expect Q3 flattest costs, Q4 pretty strong tailwind for costs.

Speaker #3: Your next question comes from the line of Arun Vishwanathan with RBC Capital Markets. Your line is open. Please go ahead. Arun, a reminder to unmute yourself locally.

Operator 2: Your next question comes from the line of Arun Viswanathan with RBC Capital Markets. Your line is open. Please go ahead. Arun, a reminder to.

Operator: Your next question comes from the line of Arun Viswanathan with RBC Capital Markets. Your line is open. Please go ahead. Arun, a reminder to unmute yourself locally.

Arun Viswanathan: Sorry about that.

Operator 2: unmute yourself locally.

Arun Viswanathan: Sorry about that.

Arun Viswanathan: Thanks. Yeah. I guess my question is just, as you look forward, maybe you can just provide an update on where you stand in the restructuring efforts. Obviously, you have talked about the new products growth, but maybe on the diamides and Cyazypyr, do you think the pressure has stopped there? Are you guys holding gross margin kind of stable? As you look into fiscal 2027, do you expect to continue growth on that front? What could you provide as far as kind of where you are on some of these restructuring efforts? Thanks.

Speaker #4: Thanks. Thanks. Yeah. So I guess my question is just as you look forward maybe you can just provide an update on where you stand in in the restructuring efforts.

Speaker #4: So, obviously, you know, you talked about the new products' growth, but maybe on the diamides and diazepir, do you think the, you know, pressure has stopped there? And are you guys holding gross margin kind of stable?

Speaker #4: And then as you look into fiscal '27, do you expect to, you know, continue growth on that front? What could you provide as far as kind of where you are in some of these restructuring efforts?

Speaker #4: Thanks.

Pierre Brondeau: I think, we really have to separate when we talk about diamide, Rynaxypyr, and Cyazypyr. Cyazypyr is data protected. There is no generic in the major countries today. It is a difficult product to make. We are anticipating the 2028, 2029 period when we will lose data protection. To avoid it to be taken by surprise like we did in Rynaxypyr, we are preparing in advance formulation and having a defense strategy. That is a 2028, 2029 problem. For Rynaxypyr, we continue the strategy as we have defined so far. So far, it is proving to worthy. I would say the positive or good surprise for me is that we keep on finding ways to lower our manufacturing cost, which is giving us a couple of things. It is protecting our gross margin, it is positioning the product better to gain market share over the lower-end insecticides.

Speaker #2: I think for—I mean, we really have to separate when we talk about diamide, relaxed up here, and sales up here.

Speaker #2: Sales up here is data protected there is no generic in the major countries today. It's a difficult product to make. We are anticipating the '28, '29 period when we will lose data protection to avoid to be taken by surprise like we did in relaxed up here with preparing in advance formulation and having a defense strategy.

Speaker #2: So but that that is a '28, '29 problem for relaxed up here. We continue the strategy as we have where we have defined so far so far it is proving to to work.

Speaker #2: The I would say the positive or good surprise for me is that we keep on finding ways to lower our our manufacturing cost which is giving us a couple of things.

Speaker #2: It's it's protecting our growth margin. And it's positioning the product better. To gain market share o over the lower and insecticides. So a total focus between the volume and the cost is when we get into '27 and beyond for relaxed up here.

Pierre Brondeau: A total focus between the volume and the cost is when we get into 2027 and beyond for Rynaxypyr to protect the earnings contribution of the product to the P&L of the company. I would say that right now, all indicators are going that way. As I said, it will not be viewed as a growth product, but the cost restructuring keeps on going positively. It is going to position us very competitively versus the quality generics, giving us a lot of flexibility to act and giving us a premium on the high-end product, which we are growing very fast. Cyazypyr is a different story. It is still a very profitable product, which is growing in the mid-single digits, and for which we are preparing the 2028 post-data protection situation.

Speaker #2: To protect the earnings contribution of the product to to the P&L of the company. And and I would say that right now all indicators are going that way.

Speaker #2: As I said it will not be viewed as a growth product. But the cost restructuring keeps on going positively. It's going to position us very competitively versus the the the quality generics.

Speaker #2: Giving us a lot of flexibility to act, and giving us a premium on the high-end product, which we are growing very fast. Sales up here is a different story.

Speaker #2: It is still a very profitable product which is growing in the mid single digits. So and for which we are preparing the the '28 post data protection.

Speaker #2: Situation.

Speaker #3: Your next question comes from the line of Ben Tier with Barclays. Your line is open. Please go ahead.

Operator 2: Your next question comes from the line of Ben Theurer with Barclays. Your line is open. Please go ahead.

Operator: Your next question comes from the line of Ben Theurer with Barclays. Your line is open. Please go ahead.

Speaker #1: Yeah. Good morning, and thanks for taking my question. A lot has already been touched upon, but I just wanted to maybe go back and understand a little bit about what your expectation is in terms of profit improvements as we move into '27 and '28, with the ramp of the new active ingredients and still some of the headwinds that you, Pierre, alluded to earlier.

Ben Theurer: Good morning, and thanks for taking my question. A lot being touched upon already, but I just wanted to maybe go back and understand a little bit what your expectation is in terms of just profit improvement as we move into 2027, 2028, the ramp with the new active ingredients, and still some of the headwinds you've alluded to, Pierre, earlier, as it relates to the diamides, et cetera. How should we think about that? I remember earlier in the year you've talked about something like mid-teens EBITDA growth into 2027, 2028. Do you think that can still hold based on also the fact that we have a lower starting base? How should we think about the growth algorithm as we move into 2027, 2028? Thank you.

Speaker #1: As it relates to to the form of diamides et cetera. So how should we think about that? I remember earlier in the year you've talked about something like mixed teens epid growth into '27, '28.

Speaker #1: Do you think that can still hold, given the fact that we have a lower starting base? Or how should we think about the growth algorithm as we move into '27 and '28?

Speaker #1: Thank you.

Speaker #2: I think '27 diamide I'm gonna talk about relaxed up here because as I said again sales up here in '27 we are expecting revenues and earnings growth in 2027.

Pierre Brondeau: I think 2027 diamide. I'm going to talk about Rynaxypyr because, as I said again, Cyazypyr in 2027. We are expecting revenues and earnings growth in 2027. Rynaxypyr, I believe will be at least the earnings contribution of 2026. Number one driver in this one is very important, and that's the one I'm the most confident in because it is really happening right now, is the contribution of the high-end diamide mix and product. Our portfolio mix is changing very much towards those product. We actually have and are expecting very soon a registration which will impact 2027. It is going to impact 2026 in Brazil, which is a blend of Rynaxypyr indoxacarb, which is a very important product to address resistance. That's going to be a source of growth, significant for us next year.

Speaker #2: Relaxed up here I believe will be at least at the earnings contribution of of 2026. Number one driver and this one is very important and that's the one I'm the most confident in because it is really happening right now is the contribution of the high-end diamide mixed end product.

Speaker #2: The portfolio mix is changing significantly toward those products. We actually have, and are expecting very soon, a registration which will impact 2027. It's also going to impact 2026 in Brazil.

Speaker #2: Which is a blend of relaxed Uplia Induction Carb, which is a very important product to address resistance. That's going to be a significant source of growth for us next year.

Speaker #2: What is to be proven I have to be to be clear on this one. It's a it's a Q3, Q4 story for us to be checked is how fast and how much we can penetrate the lower-end market of the relaxed up here using a low manufac manufacturing cost with a single.

Pierre Brondeau: What is to be proven, I have to be clear on this one, it's a Q3, Q4 story for us to be checked, is how fast and how much we can penetrate the lower-end market of the Rynaxypyr using a low manufacturing cost with a single. Indications are good, but I don't want to declare victory yet until I've seen it in Q3, Q4 in North America and Brazil. Really, I am not seeing, as you remember at the beginning of the Q&A, I gave a bridge into 2027. I believe that Rynaxypyr will not handicap our performance in 2027.

Speaker #2: Indications are good, but I don't want to declare victory yet, until I've seen it in Q3 and Q4 in North America and Brazil. So, really, I am not seeing— as you remember at the beginning of the Q&A, I gave a bridge into '27.

Speaker #2: I believe that relaxed up here will not handicap performance in 2027.

Operator 2: This concludes the FMC Corporation earnings call. Thank you for attending. You may now disconnect.

Operator: This concludes the FMC Corporation earnings call. Thank you for attending. You may now disconnect.

Speaker #3: This concludes the FMC Corporation earnings call. Thank you for attending. You may now disconnect.

Operator 1: This event has now concluded. Access the FMC Corporation IR website for more information. This line will now disconnect.

Q2 2026 FMC Corp Earnings Call

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