Philadelphia, Pennsylvania, USA
October 29, 2014
Consolidated revenues up 6 percent to $1.0 billion
- Agricultural Solutions segment earnings up 2 percent
- Health and Nutrition segment earnings up 6 percent
- Minerals segment earnings up 42 percent
- Consolidated adjusted earnings per share up 16 percent to $0.95 per diluted share
- Full-year 2014 outlook for adjusted earnings of $3.85 to $3.95 per diluted share
FMC Corporation (NYSE: FMC) today reported third quarter revenue of $1.0 billion, a 6 percent increase over the same period in 2013. The company reported net income of $56.3 million, or $0.42 per diluted share, in the third quarter of 2014, compared to net income of $17.9 million, or $0.13 per diluted share, in the third quarter of 2013. Third quarter results include charges of $71.2 million after tax, or $0.53 per diluted share, compared to charges of $92.3 million after tax, or $0.69 per diluted share, in the prior-year quarter. Excluding these items in both periods, adjusted earnings were $0.95 per diluted share, an increase of 16 percent versus the prior-year quarter.
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Pierre Brondeau, FMC president, CEO and chairman, said: "In the third quarter, market dynamics continued to affect our portfolio. Agricultural markets were impacted by multiple factors around the world, a softening of demand in China affected parts of our Health and Nutrition portfolio, and Argentina continued to weigh on Lithium's results. Despite this, we generated record revenue, adjusted operating income and adjusted EPS in the third quarter.
"So far, 2014 has been an unusual year for the agricultural segment. The first half was characterized by prolonged cold weather in North America that led to delayed plantings and lower pest pressures, which together impacted crop protection purchases by farmers. This was followed by favorable North American growing conditions for corn and soybeans and continued low pest pressures, which are also impacting crop protection purchases and leading to record yields. Consequently, we saw commodity prices falling rapidly, creating greater uncertainty around farmer planting intentions in Brazil today and for North America in 2015. Despite the lower predictability this brings to our business, we expect to further penetrate the markets in Argentina, Mexico and Brazil, and expect strong demand for our North American pre-emergent herbicides.
"In Health and Nutrition, we saw solid demand for functional ingredients in the majority of our end markets during the third quarter. We are carefully watching certain beverage applications in China after a second consecutive quarter of softening demand. In Minerals, operations in both Alkali Chemicals and Lithium remain very strong with production volumes at record levels. Combined with higher average soda ash pricing versus 2013, these increased production volumes provide a strong foundation for full-year 2014 earnings to exceed 2013 by over 20 percent."
Segment Results
FMC Agricultural Solutions
Third-quarter segment revenue for FMC Agricultural Solutions was $548.8 million, an increase of 4 percent versus the prior-year quarter. Third-quarter segment earnings were $116.7 million, a 2 percent increase over the prior-year quarter. In the quarter, year-on-year revenue gains were primarily driven by Latin America, with increased demand for herbicides to control glyphosate-resistant weeds and continued new product penetration into soybeans and cotton. These gains were partially offset by weaker than normal pest pressures in the United States that reduced insecticide demand and by continued weak demand from sugarcane growersin Brazil, as prolonged drought conditions continue to reduce the rate of replanting.
For the fourth quarter, segment earnings are expected to be flat to up low-single digit percent over 2013, driven by continued market penetration across Latin
America, new product introductions, and demand for pre-emergent herbicides ahead of the 2015 North American growing season.
FMC Health and Nutrition
Third-quarter segment revenue for FMC Health and Nutrition was $203.1 million, an increase of 7 percent versus the prior-year quarter. Segment earnings of $43.7 million were 6 percent higher than the prior-year quarter. Revenue increased in health markets globally and in North American nutrition markets, but was partially offset by weaker than expected nutrition markets in Asia.
Increased demand in health markets, particularly in Europe and Asia, along with higher demand for nutrition products in North America are expected to be offset by continued weak demand in Asia and delayed timing of omega-3 sales that will shift into the first half of 2015. As a result, fourth-quarter segment earnings are expected to be flat with 2013.
FMC Minerals
Third-quarter segment revenue for FMC Minerals was $264.0 million, an increase of 11 percent from the prior-year quarter. Third-quarter segment earnings of $39.2 million were up 42 percent versus the prior-year quarter. Third-quarter revenue in Alkali Chemicals was up 9 percent over the prior-year quarter driven by higher volumes and pricing. Third-quarter revenue in Lithium was up 19 percent over the prior-year quarter driven by sustained higher production rates versus 2013, resulting in higher sales.
In the fourth quarter, segment earnings are expected to be up mid-single digit percent over the previous year. Higher soda ash pricing and strong operational performance will be partially offset by higher energy costs in Alkali and the negative impact of operating in Argentina versus 2013. For Alkali Chemicals, a scheduled long-wall move will again take place in the fourth quarter of 2014, and the company anticipates that soda ash pricing will be similar to that in the third quarter.
Corporate and Other
Corporate and other expenses were $15.3 million, and interest expense, net, was $14.9 million. For the quarter, depreciation and amortization was $32.3 million and capital additions were $52.5 million. On September 30, 2014, gross consolidated debt was $1.7 billion, and debt, net of cash, was $1.6 billion. In the third quarter, the underlying adjusted tax rate remained at 25.5 percent with the rate reduced by discrete items associated with fluctuations in foreign currency re-measurement in certain foreign operations.
The Cheminova acquisition remains on track to close in early 2015 subject to final regulatory approvals. The planned divestiture of Alkali Chemicals remains on track to be completed in the first half of 2015.
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