FMC : 4Q 2018 Earnings Call Transcript

FMC Corporation

Fourth Quarter 2018 Earnings Call Script

February 12, 2019

As Prepared for Delivery

Q4 2018 Conference Call

Introduction - Michael Wherley

Thank you and good morning everyone. Welcome to FMC

Corporation's fourth quarter earnings call. Joining me today are Pierre Brondeau, Chief Executive Officer and

Chairman; Mark Douglas, President and Chief Operating

Officer; and Andrew Sandifer, Executive Vice President and Chief Financial Officer. Pierre will review FMC's fourth quarter performance and provide the outlook for 2019 and the first quarter. Andrew will provide an overview of select financial results. All three will then address your questions.

The slide presentation that accompanies our results, along with our earnings release and 2019 Outlook Statement areavailable on our website and the prepared remarks from today's discussion will be made available after the call.

Finally, 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 press release and in our filings with the Securities and Exchange Commission. Information presented represents our best judgment based on today's information. Actual results may vary based upon these risks and uncertainties.

Today's discussion and the supporting materials will include references to adjusted EPS, adjusted EBITDA, adjusted cash from operations and free cash flow - all of which are non-GAAP financial measures. Please note that "earnings" shall mean "adjusted earnings" and "EBITDA"

shall mean "adjusted EBITDA" for all income statement references. A reconciliation and definition of these terms, as well as other non-GAAP financial terms to which wemay refer during today's conference call, are provided on our website.

With that, I will now turn the call over to Pierre.

Business Review - Pierre Brondeau

Thank you, Michael, and good morning everyone.

2018 was a critical and very successful year for FMC. In Ag Solutions, we delivered tremendous performance in both Q4 and the full year that significantly outpaced our peers and the broader ag market. Our sales teams aggressively pursued revenue synergies made possible by the limited customer overlap and the strength of our broader product portfolio. They delivered 11 percent pro forma sales growth for the full year, posting gains in all geographies. Our entire organization executed well against our growth goals.

We achieved this performance in 2018 while taking great strides toward integrating the largest acquisition in FMC's history, separating our lithium business, which included a successful IPO, and advancing the implementation of the SAP S/4HANA platform. We also reduced debt by

$500 million and completed a $200 million share repurchase program.

FMC Reported Financial Results (Slide 3)

Turning to Slide 3, FMC reported over $1.2 billion in fourth quarter revenue - including Lithium - which reflects a year-over-year increase of 24 percent on a reported basis and 17 percent on a pro forma basis. This increase was driven by strong commercial execution that enabled broad-based growth in every region in Ag Solutions, along with 6 percent sales growth in Lithium.

Adjusted EPS came in at $1.69 in the quarter, an increase of 54 percent year over year. This was two cents above the high end of our pre-announcement from January 31st,2019 and 31 cents above the midpoint of our guidance given on our last earnings call.

Drivers of Q4 Outperformance Versus Original Guidance (Slide 4)

Slide 4 will shed some light on this outperformance. The guidance beat was due to very strong operational performance in Ag Solutions, which drove 8 cents of the outperformance, and lower taxes, which drove another 21 cents of the gain. The lower tax was primarily driven by more favorable earnings mix by jurisdiction, and to a lesser extent, by the clarification of certain international tax provisions of the 2017 U.S. Tax Cuts and Jobs Act.

We also gained 2 cents of incremental EPS from a lower share count due in large part to the repurchase of

2.4 million shares.