FMC (FMC) Q4 2019 earnings summary

Executive summary

• 2019 delivered record results: revenue $4.61B, up 8% YoY; adjusted EBITDA $1.22B, up 10%; adjusted EPS $6.09, up 16%.

• Results exceeded overall market and peer growth despite flat crop-protection demand, severe weather, FX headwinds and higher raw-material costs.

• First-year performance was at the high end of the 2019–2023 plan targets; management remained confident of meeting or exceeding targets over the plan’s remaining four years.

Financial highlights

• Revenue was $4,609.8M, up $324.5M or ~8% YoY; higher volumes contributed ~8% and pricing ~3%, partly offset by ~3% unfavorable FX.

• GAAP net income attributable to shareholders was $477.4M, down ~5% from $502.1M; continuing-operations diluted EPS was $4.10 and total diluted EPS was $3.62.

• Adjusted after-tax earnings from continuing operations were $803.7M, up ~13%; adjusted EBITDA increased $111.6M to $1,220.5M, up ~10%.

• Gross margin was $2,083.6M; excluding transaction-related charges, it was $2,083.6M, up $134.2M, with margin near 45% and flat YoY.

• Operating cash flow from continuing operations was $555.6M versus $362.7M; free cash flow was $301.8M versus $129.9M.

Outlook and guidance

• 2020 global crop-protection market expected to grow low single digits in U.S. dollars; all regions forecast up low single digits, led mainly by volume and new launches, with FX a modest offset.

• 2020 revenue guided to $4.8B–$4.95B and adjusted EBITDA to $1.30B–$1.34B; midpoint growth expected at ~6% and 8%, respectively.

• 2020 adjusted EPS guided to $6.45–$6.70, up 8% at midpoint, excluding potential share-repurchase effects; 2020 free cash flow expected at $425M–$525M.

• 2020 capital additions and contract-manufacturer spending forecast at $135M–$185M, primarily for diamide and new active-ingredient capacity; planned share repurchases of $400M–$500M.

• 2020 net cash from continuing operating activities, excluding transaction-related flows, expected at $735M–$935M; legacy and transformation spending forecast at $175M–$225M.