Q2 2020 Earnings Presentation
August 5, 2020
Safe Harbor Statement
Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995: Certain statements made in this presentation are forward-looking statements. In some cases, you can identify these statements by such words or phrases as "will likely result," "is confident that," "expect," "expects," "should," "could," "may," "will continue to," "believe," "believes," "anticipates," "predicts," "forecasts," "estimates," "projects," "potential," "intends" or similar expressions identifying "forward-looking statements" within the
meaning of the Private Securities Litigation Reform Act of 1995, including the negative of those words and phrases. Such forward-looking statements are based on management's current views and assumptions regarding future events, future business conditions and the outlook for the company based on currently available information. These statements involve known and unknown risks, uncertainties and other factors that may cause actual results to be materially different from any results, levels of activity, performance or achievements expressed or implied by any forward-looking statement. Currently, one of the most significant factors is the potential adverse effect of the current COVID-19 pandemic on the financial condition, results of operations, cash flows and performance of FMC, which is substantially influenced by the potential adverse
effect of the pandemic on FMC's customers and suppliers and the global economy and financial markets. The extent to which COVID-19 impacts us will depend on future
developments, which are highly uncertain and cannot be predicted with confidence, including the scope, severity and duration of the pandemic, the actions taken to contain the pandemic or mitigate its impact, and the direct and indirect economic effects of the pandemic and containment measures, among others. Additional factors include, among other things, the risk factors and other cautionary statements included within FMC's 2019 Form 10-K and FMC's Form 10-Q for the quarter ended June 30, 2020, as well as other SEC filings and public communications. Moreover, investors are cautioned to interpret many of these factors as being heightened as a result of the ongoing and numerous adverse impacts of the COVID-19 pandemic. FMC cautions readers not to place undue reliance on any such forward-looking statements, which speak only as of the date made. Forward-looking statements are qualified in their entirety by the above cautionary statement. FMC undertakes no obligation, and specifically disclaims any duty, to update or revise any forward-looking statements to reflect events or circumstances arising after the date on which they were made, except as otherwise required by law.
Non-GAAP Financial Terms
These slides contain certain "non-GAAP financial terms". Such non-GAAP financial terms include adjusted EBITDA, adjusted EPS, adjusted tax rate, adjusted cash from operations, free cash flow ("FCF") and organic revenue growth. Definitions of these terms, as well as a reconciliation to the most directly comparable financial measure calculated and presented in accordance with GAAP, are provided on our website investors.fmc.com. Although we provide forecasts for these non-GAAP financial measures, we are not able to forecast the most directly comparable measures calculated and presented in accordance with GAAP. Certain elements of the composition of the GAAP amounts are not predictable, making it impractical for us to forecast. Such elements include, but are not limited to restructuring, acquisition charges, and discontinued operations and related cash activity. As a result, no GAAP outlook is provided.
2
FMC Reported Financial Results
Q2 2019 | Q2 2020 | '20 vs. '19 | |||
Revenue | $1,206 | $1,155 | -4% | ||
GAAP Net Income | $176 | $185 | 5% | ||
% Revenue | 14.6% | 16.0% | |||
GAAP EPS | $1.32 | $1.41 | 7% | ||
Adj. EBITDA | 1 | $338 | $341 | 1% | |
% Revenue | 28.0% | 29.5% | |||
Adjusted EPS | 1 | $1.66 | $1.72 | 4% | |
Note: Amounts in millions of USD, except EPS
(1) Denotes non-GAAP financial term. Refer to non-GAAP financial terms at the beginning of this
3 presentation.
Q2 Highlights
3% organic revenue growth1, excluding a 7% FX headwind
Adj. EBITDA1 margins increased 150 bps, driven by cost reductions and price increases
Adj. EPS1 vs. Guidance*
Q2 '20 Adj. EPS vs. | +6 cents** | |
Guidance | ||
EBITDA | +6 cents | |
D&A | -1 cent | |
Interest Expense | -0.5 cent | |
Non-contr. Interest | +0.5 cent | |
Share Count | +0.5 cent | |
- Midpoint of guidance issued May 5, 2020
- Factors do not sum to 6 cents, due to rounding
Q2 2020 Revenue Down 4% due to
7% FX Headwind, Up 3% Organically1
Regional Revenue Bridge
Note: Amounts in millions of USD
Q2 2020 Revenue Drivers
Total: -4% Volume Price F/X
Organic1: +3% +2% +1% -7%
4
Latin America
-
Q2 '20 Revenue: $261 mil.
(+2% YOY, +24% ex-FX) - Argentina grew fastest in region, with herbicides on wheat & soybean especially strong
- Double-digitorganic growth in Brazil, driven by demand from sugarcane growers
North America
-
Q2 '20 Revenue: $312 mil.
(-6% YOY) - Double-digitgrowth in Canada, driven by herbicides
- Strong second year for Lucento® fungicide launch
- Pro-activechannel inventory drawdowns of Authority® herbicides
Asia
-
Q2 '20 Revenue: $317 mil.
(+2% YOY, +8% ex-FX) - Herbicides in India strong in soybeans, corn and rice
- Double-digitgrowth in Pakistan, helped by Rynaxypyr® insect control
- Australia market recovery continues on good weather
EMEA
-
Q2 '20 Revenue: $265 mil.
(-13% YOY, -10%ex-FX) - Very difficult market conditions due to hot, dry weather
- Registration cancellations and product rationalizations were a headwind
- Cyazypyr® insect control taking share on specialty crops
(1) Denotes non-GAAP financial term. Refer to non-GAAP financial terms at the beginning of this presentation.
Q2 2020 Adj. EBITDA1 Increased 1%
Q2 2020 Adj. EBITDA Bridge | Q2 2020 Adj. EBITDA Drivers | |
EBITDA $3 million above a strong Q2 2019, mainly driven by cost reductions and price increases
Significant FX headwinds, both
YOY and relative to guidance
Larger cost reductions, relative to guidance, as COVID-19 related measures took full effect
Note: Amounts in millions of USD
5 (1) Denotes non-GAAP financial term. Refer to non-GAAP financial terms at the beginning of this presentation.
H1 2020 Adj. EBITDA1 Increased 2%
H1 2020 Adj. EBITDA Bridge
Note: Amounts in millions of USD
H1 2020 Adj. EBITDA Drivers
Balanced contributions from volume, price and cost reductions
Price + cost savings coverage of FX headwinds 75% for H1 2020
H1 2020 Revenue Drivers
Total: 0% | Volume | Price | F/X |
Organic1: +6% | +4% | +2% | -6% |
6 (1) Denotes non-GAAP financial term. Refer to non-GAAP financial terms at the beginning of this presentation.
2020 Cash Flow Outlook
($ in millions) | Q2 '19 | Q2 '20 | 3 | YTD '19 | 4 | YTD '20 | 4 | % Chg. | 3 | 2020 Outlook | % Chg. vs. | ||||||
% Chg. | 2019 | ||||||||||||||||
Adjusted Cash from Operations | 1 | $89 | $278 | 211% | ($174) | ($9) | 95% | $700 | - | $900 | 26% | ||||||
Capital Additions and Other | ($16) | ($19) | 23% | ($36) | ($44) | 20% | ($100) | - | ($150) | -15% | |||||||
Investing Activities | |||||||||||||||||
Legacy and Transformation | 2 | ($52) | ($54) | 4% | ($69) | ($114) | 65% | ($175) | - | ($225) | 9% | ||||||
FCF (before dividends, | $22 | $205 | 830% | ($279) | ($167) | 40% | $425 | - | $525 | 57% | |||||||
repurchases and M&A) | 1 | ||||||||||||||||
Adjusted Earnings | 1 | $220 | $224 | 2% | $450 | $464 | 3% | $820 | - | $870 | 5% | ||||||
FCF Conversion | 56% |
Q2 '20 Cash Drivers
Adj. cash from operations up from prior year due to strong collections, improved payables and lower cash taxes
Capital additions up slightly but proceeding per plan
Legacy and transformation spend up slightly, with higher legacy spend largely offset by reduction in transformation
2020 Outlook
Cap Ex: Maintaining full-year outlook
Legacy and Transformation: On track to complete SAP program by year end
Anticipate restarting share repurchases in the fourth quarter
(1) | Denotes non-GAAP financial term. Refer to non-GAAP financial terms at the beginning of this presentation. | |
(2) | Legacy Liabilities include liabilities from discontinued operations, net of legacy liabilities from continuing operations that are already captured in Adjusted Cash from Operations. | |
Transformation costs include SAP implementation, DuPont Integration and Livent Separation. | ||
7 | (3) | These percentages are calculated using the amounts shown in the Financial Schedules that accompany our earnings release. |
(4) | YTD is through June 30 of each year. |
FCF Growth Projections and
Seasonality Trends
FCF1 Growth | FCF1 by Half-Year Increments |
FCF | 18% | 38% | 56% | ||||
Conv. | |||||||
Note: Amounts in millions of USD | Note: Amounts in millions of USD | ||||||
Strong growth in both FCF dollars and | Similar FCF seasonality in each year | ||||||
conversion percentage | |||||||
(1) Denotes non-GAAP financial term. Refer to non-GAAP financial terms at the beginning of this presentation.
8 * Midpoint of 2020 FCF guidance is $475M, which implies $642M in H2 2020. ^ Recast 2018 excludes the former Lithium segment.
FY 2020 and Q3/Q4 Earnings Outlook
FY 2020 | Q3 2020 | Q4 2020 | |||||||||||
$6.28 - $6.62 | $1.03 - $1.17 | $1.71 - $1.91 | |||||||||||
Adjusted EPS | +6% YOY at midpoint | +17% YOY at midpoint | +3% YOY at midpoint (3) | ||||||||||
Ranges (1,2) | |||||||||||||
WADSO: ~131 million | WADSO: ~131 million | WADSO: ~131 million | |||||||||||
Revenue: $4.68 - $4.82 bil. | Rev.: $1.045 - $1.105 bil. | Revenue: $1.23 - $1.31 bil. | |||||||||||
Revenue | Adj. EBITDA: $1.265 - | Adj. EBITDA: $233 - $257 | Adj. EBITDA: $335 - $371 | ||||||||||
& | $1.325 billion | million | million | ||||||||||
Adjusted | Revenue +3% YOY at | Revenue +6% YOY at | Revenue +6% YOY at | ||||||||||
EBITDA (1) | midpoint (+9% organic) | midpoint (+12% organic) | midpoint (+11% organic) | ||||||||||
Ranges | Adj. EBITDA growth of | Adj. EBITDA +12% YOY at | Adj. EBITDA +10% YOY at | ||||||||||
+6% YOY at midpoint | midpoint | midpoint | |||||||||||
(1) Denotes non-GAAP financial term. Refer to non-GAAP financial terms at the beginning of this presentation.
9 (2) Outlook for EPS and weighted average diluted shares outstanding (WADSO) does not include the impact of any 2020 share repurchases.
- Q4 2019 adjusted EPS benefited from a large tax adjustment.
Projected FY 2020 Adj. EBITDA1 and
Revenue Drivers (YOY)
FY 2020 Adj. EBITDA Bridge | FY 2020 Adj. EBITDA Drivers | |
Volume growth driven by Latin | ||
America and Asia | ||
Price coverage of FX headwinds | ||
>75% for FY 2020 | ||
Strong cost controls put in place | ||
at the onset of COVID-19 | ||
pandemic |
May Guide: +100 | +160 | (26) | (170) | 1,285 | FY 2020 Revenue Drivers | ||||
Total: +3% | Volume | Price | F/X | ||||||
Note: Amounts in millions of USD | Organic1: +9% | +5% | +4% | -6% |
* Midpoint of guidance
10 (1) Denotes non-GAAP financial term. Refer to non-GAAP financial terms at the beginning of this presentation.
Projected Q3/Q4 2020 Adj. EBITDA1
and Revenue Drivers (YOY)
Q3 2020 Adj. EBITDA Bridge | Q4 2020 Adj. EBITDA Bridge | |
Note: Amounts in millions of USD * Midpoint of guidance
Note: Amounts in millions of USD * Midpoint of guidance
Q3 2020 Revenue Drivers | Q4 2020 Revenue Drivers | |||||||
Total: +6% | Volume | Price | F/X | Total: +6% | Volume | Price | F/X | |
Organic1: +12% | +6% | +6% | -6% | Organic1: +11% | +5% | +6% | -5% |
11
(1) Denotes non-GAAP financial term. Refer to non-GAAP financial terms at the beginning of this presentation.
Appendix - Other Financial Items
Interest Expense | $150 - $160 million |
Adjusted Tax Rate (1) | 12.5 - 14.5 percent |
Non-Controlling Interest | $3 - $5 million |
Full-Year Weighted Avg. Diluted | ~131 million |
Shares Outstanding (WADSO) (2) | |
Depreciation & Amortization | $155 - $165 million |
Free Cash Flow (1) | $425 - $525 million |
Capital Additions and Other | $100 - $150 million |
Investing Activities |
12 | (1) | Denotes non-GAAP financial term. Refer to non-GAAP financial terms at the beginning of this presentation. |
(2) | Outlook for weighted average diluted shares outstanding (WADSO) does not include the impact of any 2020 share repurchases. | |
Appendix - Regional Growth
FMC Q2 | |
Sales | |
NA | $312 |
LatAm | $261 |
EMEA | $265 |
Asia | $317 |
Total | $1,155 |
Note: Amounts in millions of USD
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% Chg | % (ex-FX) |
-6% | -6% |
2% | 24% |
-13% | -10% |
2% | 8% |
-4% | 3% |
FMC H1 | % Chg | % (ex-FX) |
Sales | ||
$640 | -2% | -2% |
$520 | 12% | 30% |
$681 | -5% | -2% |
$565 | 0% | 4% |
$2,405 | 0% | 6% |
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FMC Corporation published this content on 05 August 2020 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 04 August 2020 21:16:09 UTC