FMC Corporation announces fourth quarter and full-year 2023 results within guidance ranges, provides 2024 outlook

Fourth Quarter Adjusted EPS versus Guidance (midpoint)*

-7 cents*

Adjusted EBITDA

 -15 cents

Depreciation and amortization

0 cent

Interest expense

+4 cents

Taxes

+2 cents

Minority interest

+2 cents

Share count

0 cent

* Guidance refers to midpoint of EPS guidance presented in October 2023

FMC Revenue

Q4 2023

Full Year 2023

Total Revenue Change (GAAP)

(29 %)

(23 %)

     Less FX Impact

1 %

(1 %)

Organic¹ Revenue Change (Non-GAAP)

(30 %)

(22 %)

Q1 2024 Outlook²

Revenue

$4.5 to $4.7 billion

$925 million to $1.075 billion

Growth at midpoint vs. 2023*

2.5 %

-26 %

Adjusted EBITDA

$900 million to $1.05 billion

$135 to $165 million

Growth at midpoint vs. 2023*

0 %

-59 %

Adjusted EPS^

$3.23 to $4.41

$0.21 to $0.43

Growth at midpoint vs. 2023*

1 %

-82 %

^Adjusted EPS estimates assume 125.5 million diluted shares for full year and 125.5 million diluted shares for Q1. Outlook for Adjusted EPS and WADSO does not include the impact of any share repurchases that may take place in 2024.

*Percentages are calculated using whole numbers. Minor differences may exist due to rounding.

FMC CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF INCOME (LOSS)

(Unaudited)

Three Months Ended

Twelve Months Ended

December 31,

December 31,

(In millions, except per share amounts)

2023

2022

2023

2022

Revenue

$     1,146.1

$     1,622.0

$     4,486.8

$     5,802.3

Costs of sales and services

710.4

936.4

2,655.8

3,475.5

Gross margin

$        435.7

$        685.6

$     1,831.0

$     2,326.8

Selling, general and administrative expenses

$        171.5

$        212.5

$        734.3

$        775.2

Research and development expenses

81.8

84.4

328.8

314.2

Restructuring and other charges (income)

164.3

(5.8)

212.3

93.1

Total costs and expenses

$     1,128.0

$     1,227.5

$     3,931.2

$     4,658.0

Income (loss) from continuing operations before non-operating

pension and postretirement charges (income), interest expense,

net and income taxes

$          18.1

$        394.5

$        555.6

$     1,144.3

Non-operating pension and postretirement charges (income)

4.8

2.1

18.2

8.6

Interest expense, net

56.7

44.8

237.2

151.8

Income (loss) from continuing operations before income taxes

$         (43.4)

$        347.6

$        300.2

$        983.9

Provision (benefit) for income taxes

(1,197.0)

12.2

(1,119.3)

145.2

Income (loss) from continuing operations

$     1,153.6

$        335.4

$     1,419.5

$        838.7

Discontinued operations, net of income taxes

(57.2)

(55.0)

(98.5)

(97.2)

Net income (loss)

$     1,096.4

$        280.4

$     1,321.0

$        741.5

  Less: Net income (loss) attributable to noncontrolling interests

(2.1)

6.5

(0.5)

5.0

Net income (loss) attributable to FMC stockholders

$     1,098.5

$        273.9

$     1,321.5

$        736.5

Amounts attributable to FMC stockholders:

  Income (loss) from continuing operations, net of tax

$     1,155.7

$        328.9

$     1,420.0

$        833.7

  Discontinued operations, net of tax

(57.2)

(55.0)

(98.5)

(97.2)

  Net income (loss)

$     1,098.5

$        273.9

$     1,321.5

$        736.5

Basic earnings (loss) per common share attributable to FMC

stockholders:

  Continuing operations

$          9.23

$          2.61

$        11.34

$          6.60

  Discontinued operations

(0.46)

(0.44)

(0.79)

(0.77)

  Basic earnings per common share

$          8.77

$          2.17

$        10.55

$          5.83

Average number of shares outstanding used in basic earnings per

share computations

124.9

125.6

125.1

126.0

Diluted earnings (loss) per common share attributable to FMC

stockholders:

      Continuing operations

$          9.23

$          2.61

$        11.31

$          6.58

  Discontinued operations

(0.46)

(0.44)

(0.78)

(0.77)

  Diluted earnings per common share

$          8.77

$          2.17

$        10.53

$          5.81

Average number of shares outstanding used in diluted earnings per

share computations

125.2

126.4

125.5

126.7

Other Data:

Capital additions and other investing activities

$          27.1

$          16.0

$        143.7

$        118.7

Depreciation and amortization expense

45.9

42.8

184.3

169.4

FMC CORPORATION

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES

RECONCILIATION OF NET INCOME (LOSS) ATTRIBUTABLE TO FMC STOCKHOLDERS (GAAP)

TO ADJUSTED AFTER-TAX EARNINGS FROM CONTINUING OPERATIONS, 

ATTRIBUTABLE TO FMC STOCKHOLDERS (NON-GAAP)

(Unaudited)

Three Months Ended

Twelve Months Ended

December 31,

December 31,

(In millions, except per share amounts)

2023

2022

2023

2022

Net income (loss) attributable to FMC stockholders (GAAP)

$  1,098.5

$     273.9

$  1,321.5

$     736.5

Corporate special charges (income):

Restructuring and other charges (income) ^(a)

190.1

(5.8)

238.1

93.1

Non-operating pension and postretirement charges (income) ^(b)

4.8

2.1

18.2

8.6

Income tax expense (benefit) on Corporate special charges (income) ^(c)

(24.3)

4.3

(32.8)

1.5

Adjustment for noncontrolling interest, net of tax on Corporate special charges (income)

—

6.8

(1.6)

6.8

Discontinued operations attributable to FMC stockholders, net of income taxes ^(d)

57.2

55.0

98.5

97.2

Tax adjustment ^(e)

(1,192.9)

(37.3)

(1,167.4)

(5.3)

Adjusted after-tax earnings from continuing operations attributable to FMC stockholders (Non-GAAP) ⁽¹⁾

$     133.4

$     299.0

$     474.5

$     938.4

Diluted earnings per common share (GAAP)

$       8.77

$       2.17

$     10.53

$       5.81

Corporate special charges (income) per diluted share, before tax:

Restructuring and other charges (income)

1.52

(0.04)

1.90

0.74

Non-operating pension and postretirement charges (income)

0.04

0.02

0.15

0.07

Income tax expense (benefit) on Corporate special charges (income), per diluted share

(0.19)

0.03

(0.26)

0.01

Adjustment for noncontrolling interest, net of tax on Corporate special charges (income) per diluted share

—

0.05

(0.02)

0.05

Discontinued operations attributable to FMC stockholders, net of income taxes per diluted share

0.46

0.44

0.78

0.77

Tax adjustments per diluted share

(9.53)

(0.30)

(9.30)

(0.04)

Diluted adjusted after-tax earnings from continuing operations per share, attributable to FMC stockholders (Non-GAAP)

$       1.07

$       2.37

$       3.78

$       7.41

Average number of shares outstanding used in diluted adjusted after-tax earnings from continuing operations per share computations

125.2

126.4

125.5

126.7

____________________

(1)

Referred to as Adjusted earnings. The Company believes that Adjusted earnings, a Non-GAAP financial measure, and its presentation on a per share basis, provides useful information about the Company's operating results to management, investors, and securities analysts. Adjusted earnings excludes the effects of Corporate special charges, tax-related adjustments and the results of our discontinued operations. The Company also believes that excluding the effects of these items from operating results allows management and investors to compare more easily the financial performance of its underlying businesses from period to period.

(a) 

Three Months Ended December 31, 2023:

Restructuring and other charges (income) includes $40.1 million of severance and employee separation costs and $5.4 million of  provider costs associated with the Project Focus restructuring initiative. We incurred $89.2 million in currency related charges primarily driven by the significant actions taken by the Argentine Government during the fourth quarter of 2023. First, the adjustment of the official exchange rate announced during December 2023 resulted in $63.4 million of foreign exchange remeasurement losses. Second, in combination with the devaluation actions, the government expanded the scope and rates of the existing Impuesto PAIS tax ("PAIS"). The tax targets the import of goods and services that will be paid in a foreign currency. As a result of this initial adoption, which was required to be applied retroactively, we recognized a charge of $25.8 million recorded within our "Cost of Sales and Services" line item within our Consolidated Statements of Income (Loss). Additionally, we incurred $52.6 million in environmental charges associated with remediation activities and other miscellaneous charges of $2.8 million.

Three Months Ended December 31, 2022:

Restructuring and other charges (income) includes $2.1 million of severance and employee separation costs, $3.0 million related to fixed asset charges, and $2.7 million of other restructuring related charges incurred as part of various restructuring initiatives.  These restructuring charges were offset by a gain of $50.5 million recognized on the disposition of land related to a closed manufacturing facility. Other charges of $36.9 million relate primarily to environmental charges.

Twelve Months Ended December 31, 2023:

Restructuring and other charges (income) includes $40.1 million of severance and employee separation costs and $5.4 million of  provider costs associated with the Project Focus restructuring initiative. Other restructuring costs of $8.7 million relate to employee separation and asset impairment costs incurred as part of various ongoing initiatives. These restructuring charges were offset by a $5.8 million gain recognized on the disposition of land related to a previously closed manufacturing facility. We incurred $101.0 million in currency related charges primarily driven by the significant actions taken by the Argentine Government during the fourth quarter of 2023. This includes the $89.2 million discussed above for the three month period, $25.8 million of which is recorded within our "Cost of Sales and Services" line item within our Consolidated Statements of Income (Loss), as well as $11.8 million resulting from similar devaluation actions in Argentina and Pakistan during previous quarters. Other charges (income) also includes $13.0 million in charges primarily resulting from the third quarter acquisition of in-process research and development assets that do not meet the criteria for capitalization  Additionally, we incurred $66.9 million in environmental charges associated with remediation activities and other miscellaneous charges of $8.8 million.

Twelve Months Ended December 31, 2022:

Restructuring and other charges (income) is primarily comprised of $76.8 million in exit charges related to our decision to cease operations and business in Russia.  Restructuring and other charges (income) is also comprised of $5.9 million of severance and employee separation costs, $11.2 million related to fixed asset charges, and $7.3 million of other restructuring related charges incurred as part of various restructuring initiatives. These restructuring charges were partially offset by a gain of $50.5 million recognized on the disposition of land related to a closed manufacturing facility. Other charges of $42.4 million relate primarily to environmental charges.

(b)          

Our non-operating pension and postretirement charges (income) are defined as those costs (benefits) related to interest, expected return on plan assets, amortized actuarial gains and losses and the impacts of any plan curtailments or settlements. These are excluded from our Adjusted Earnings and are primarily related to changes in pension plan assets and liabilities which are tied to financial market performance and we consider these costs to be outside our operational performance. We continue to include the service cost and amortization of prior service cost in our Adjusted Earnings results noted above. These elements reflect the current year operating costs to our businesses for the employment benefits provided to active employees.

(c)          

The income tax expense (benefit) on Corporate special charges (income) is determined using the applicable rates in the taxing jurisdictions in which the Corporate special charge or income occurred and includes both current and deferred income tax expense (benefit) based on the nature of the non-GAAP performance measure.

(d)  

Discontinued operations for all periods presented includes provisions, net of recoveries, for environmental liabilities and legal reserves and expenses related to previously discontinued operations and retained liabilities.

(e)          

We exclude the GAAP tax provision, including discrete items, from the Non-GAAP measure of income, and include a Non-GAAP tax provision based upon the annual Non-GAAP effective tax rate. The GAAP tax provision includes certain discrete tax items including, but not limited to: income tax expenses or benefits that are not related to continuing operating results in the current year; unusual or infrequently occurring items; tax adjustments associated with fluctuations in foreign currency remeasurement of certain foreign operations; certain changes in estimates of tax matters related to prior fiscal years; certain changes in the realizability of deferred tax assets; and changes in tax law. Management believes excluding these discrete tax items assists investors and securities analysts in understanding the tax provision and the effective tax rate related to continuing operations thereby providing investors with useful supplemental information about FMC's operational performance.

Three Months Ended

Twelve Months Ended

December 31,

December 31,

(In millions)

2023

2022

2023

2022

Tax adjustments:

Impacts of valuation allowances of deferred tax assets

95.0

1.8

95.0

1.8

Foreign currency remeasurement and other discrete items

(1,287.9)

(39.1)

(1,262.4)

(7.1)

Total Non-GAAP tax adjustments

$    (1,192.9)

$         (37.3)

$    (1,167.4)

$           (5.3)

During the three months ended December 31, 2023, the Company's Swiss subsidiaries were granted ten-year tax incentives effective for 2023 and retroactively for 2021 and 2022. The tax incentives were awarded for the Company's commitment to invest in additional headcount and transfer significant intellectual property, which is planned for 2024, as well as establishing a new global technology and innovation center in Switzerland. Deferred tax benefits of $1,149 million and related valuation allowances of $318 million were recorded during the three months ended December 31, 2023 to reflect the net estimated future reductions in tax of $831 million associated with the incentives.

Historically, FMC's Brazil valuation allowance position was based on long-standing local transfer pricing rules, as well as certain material favorable permanent statutory tax deductions available to FMC Brazil as part of local tax law. During the three months ended June 30, 2023, Brazil passed legislation to conform to Organization for Economic Cooperation and Development ('OECD') transfer pricing rules effective in 2024. Conformity to OECD transfer pricing rules favorably impacts the statutory income level of FMC Brazil. In 2023, the Company continued to monitor its valuation allowance throughout the third and fourth quarters considering this law change. Further, on December 29, 2023, the Brazilian Government enacted new tax law that significantly limits FMC Brazil's ability to benefit in the future from the material favorable permanent statutory tax deductions previously available as part of local tax law. During the three months ended December 31, 2023, the Company released its FMC Brazil valuation allowance and recorded a tax benefit of $223 million. 

RECONCILIATION OF NET INCOME (LOSS) (GAAP) TO ADJUSTED EARNINGS FROM CONTINUING OPERATIONS, BEFORE INTEREST AND INCOME TAXES, DEPRECIATION AND AMORTIZATION, AND NONCONTROLLING INTERESTS (NON-GAAP)

(Unaudited)

Three Months Ended

Twelve Months Ended

December 31,

December 31,

(In millions)

2023

2022

2023

2022

Net income (loss) (GAAP)

$     1,096.4

$        280.4

$     1,321.0

$        741.5

Restructuring and other charges (income) ⁽²⁾

190.1

(5.8)

238.1

93.1

Non-operating pension and postretirement charges (income)

4.8

2.1

18.2

8.6

Discontinued operations, net of income taxes

57.2

55.0

98.5

97.2

Interest expense, net

56.7

44.8

237.2

151.8

Depreciation and amortization

45.9

42.8

184.3

169.4

Provision (benefit) for income taxes

(1,197.0)

12.2

(1,119.3)

145.2

Adjusted earnings from continuing operations, before interest,

income taxes, depreciation and amortization, and noncontrolling

interests (Non-GAAP) ⁽¹⁾

$        254.1

$        431.5

$        978.0

$     1,406.8

___________________

(1)

Referred to as Adjusted EBITDA. Defined as operating profit excluding corporate special charges (income) and depreciation and amortization expense.

(2)

Includes $25.8 million of charges related to the PAIS tax which was recorded to "Cost of Sales and services" on the consolidated statements of income (loss) as well as $164.3 million and $212.3 million shown as Restructuring and other charges (income) on the consolidated statements of income (loss) for the three and twelve months ended December 31, 2023, respectively. The PAIS tax is related to significant actions taken by the Argentine Government during the fourth quarter of 2023, which also resulted in foreign exchange remeasurement losses included within the "Restructuring and other charges (income)" line item on our Consolidated Statements of Income (Loss).

RECONCILIATION OF CASH PROVIDED (REQUIRED) BY OPERATING ACTIVITIES (GAAP) TO FREE CASH FLOW (NON-GAAP)

(Unaudited)

Three Months Ended

Twelve Months Ended

December 31,

December 31,

(In millions)

2023

2022

2023

2022

Cash provided (required) by operating activities of continuing operations (GAAP) ⁽¹⁾

$        317.9

$        644.3

$       (300.3)

$        660.0

Transaction and integration costs

—

—

—

0.5

Adjusted cash from operations ⁽²⁾

$        317.9

$        644.3

$       (300.3)

$        660.5

Capital expenditures

$         (25.1)

$         (33.9)

$       (133.9)

$       (142.3)

Other investing activities

(2.0)

17.9

(9.8)

23.6

Capital additions and other investing activities

$         (27.1)

$         (16.0)

$       (143.7)

$       (118.7)

Cash provided (required) by operating activities of discontinued operations

$         (25.1)

$         (25.8)

$         (86.1)

$         (77.6)

Transaction and integration costs

—

—

—

(0.5)

Proceeds from land disposition ⁽³⁾

—

50.5

5.8

50.5

Legacy and transformation

$         (25.1)

$          24.7

$         (80.3)

$         (27.6)

Free cash flow (Non-GAAP) ⁽⁴⁾

$        265.7

$        653.0

$       (524.3)

$        514.2

___________________

(1)

The cash provided (required) by operating activities for the three months ended December 31, 2023 and 2022 is the calculation of the twelve months ended December 31, 2023 and 2022 less the previously reported nine months ended September 30, 2023 and 2022, respectively.

(2)

Adjusted cash from operations is defined as cash provided (required) by operating activities of continuing operations excluding the effects of transaction-related cash flows.

(3)

Amounts for the year ended December 31, 2023 and 2022 include proceeds of $5.8 million and $50.5 million, respectively, received on the disposition of land related to a closed manufacturing facility.

(4)

Free cash flow is defined as Adjusted cash from operations reduced by spending for capital additions and other investing activities as well as legacy and transformation spending. We believe that this Non-GAAP financial measure provides a useful basis for investors and securities analysts about the cash generated by routine business operations, including capital expenditures, in addition to assessing our ability to repay debt, fund acquisitions and return capital to shareholders through share repurchases and dividends. Our use of free cash flow has limitations as an analytical tool and should not be considered in isolation or as a substitute for an analysis of our results under U.S. GAAP.

RECONCILIATION OF REVENUE CHANGE (GAAP) TO

ORGANIC REVENUE CHANGE (NON-GAAP) ⁽¹⁾

(Unaudited)

Three Months Ended

December 31, 2023 vs. 2022

 Twelve Months Ended

December 31, 2023 vs. 2022

Total Revenue Change (GAAP)

(29) %

(23) %

Less: Foreign Currency Impact

1 %

(1) %

Organic Revenue Change (Non-GAAP)

(30) %

(22) %

___________________

(1)

We believe organic revenue growth (non-GAAP) provides management and investors with useful supplemental information regarding our ongoing revenue performance and trends by presenting revenue growth excluding the impact of fluctuations in foreign exchange rates.

RECONCILIATION OF NET INCOME (LOSS) ATTRIBUTABLE TO

FMC STOCKHOLDERS (GAAP) TO RETURN ON INVESTED CAPITAL ("ROIC")

NUMERATOR (NON-GAAP) AND ROIC (USING NON-GAAP NUMERATOR)⁽¹⁾

(Unaudited)

Twelve Months Ended

December 31, 2023

Net income (loss) attributable to FMC stockholders (GAAP)

$                     1,321.5

Interest expense, net, net of income taxes

202.8

Corporate special charges (income)

256.3

Income tax expense (benefit) on Corporate special charges (income)

(32.8)

Adjustment for noncontrolling interest, net of tax on Corporate special charges (income)

(1.6)

Discontinued operations attributable to FMC stockholders, net of income taxes

98.5

Tax adjustments

ROIC numerator (Non-GAAP)

677.3

December 31, 2023

December 31, 2022

Total debt

3,957.6

3,274.0

Total FMC stockholders' equity

4,410.9

3,377.9

Total debt and FMC stockholders' equity (GAAP)

8,368.5

6,651.9

ROIC denominator (2 yr average total debt and FMC stockholders' equity)

7,510.2

ROIC (using Non-GAAP numerator)

9.02 %

___________________

(1)

We believe ROIC provides management and investors with useful supplemental information regarding our utilization of capital provided by both equity and debt as well as our working capital and free cash flow management.

FMC CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

(In millions)

December 31, 2023

December 31, 2022

Cash and cash equivalents

$                      302.4

$                      572.0

Trade receivables, net of allowance of $29.1 in 2023 and $33.9 in 2022

2,703.2

2,871.4

Inventories

1,724.6

1,651.6

Prepaid and other current assets

398.9

343.6

Total current assets

$                   5,129.1

$                   5,438.6

Property, plant and equipment, net

892.5

849.6

Goodwill

1,593.6

1,589.3

Other intangibles, net

2,465.1

2,508.1

Deferred income taxes

1,336.6

210.7

Other long-term assets

509.3

575.0

Total assets

$                 11,926.2

$                 11,171.3

Short-term debt and current portion of long-term debt

$                      934.0

$                      540.8

Accounts payable, trade and other

602.4

1,252.2

Advanced payments from customers

482.1

680.5

Accrued and other liabilities

684.8

601.8

Accrued customer rebates

480.9

465.3

Guarantees of vendor financing

69.6

142.0

Accrued pensions and other postretirement benefits, current

6.4

2.3

Income taxes

124.4

114.7

Total current liabilities

$                   3,384.6

$                   3,799.6

Long-term debt, less current portion

$                   3,023.6

$                   2,733.2

Long-term liabilities

1,084.6

1,237.6

Equity

4,433.4

3,400.9

Total liabilities and equity

$                 11,926.2

$                 11,171.3

FMC CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

Year Ended December 31,

(In millions)

2023

2022

Cash provided (required) by operating activities of continuing operations

$                 (300.3)

$                  660.0

Cash provided (required) by operating activities of discontinued operations

(86.1)

(77.6)

Cash provided (required) by investing activities of continuing operations

(154.4)

(266.4)

Cash provided (required) by financing activities of continuing operations

331.5

(237.4)

Effect of exchange rate changes on cash

(60.3)

(23.4)

Increase (decrease) in cash and cash equivalents

$                 (269.6)

$                    55.2

Cash and cash equivalents, beginning of period

572.0

516.8

Cash and cash equivalents, end of period

$                  302.4

$                  572.0