Philadelphia, Pennsylvania, USA
February 5, 2014
Fourth Quarter 2013 Highlights
- Consolidated revenues up 24 percent to $1.1 billion
- Agricultural Solutions segment earnings up 24 percent
- Health and Nutrition segment earnings up 13 percent
- Minerals segment earnings down 18 percent
- Consolidated adjusted earnings per share up 36 percent to $1.05 per diluted share
Full Year 2013 Highlights
- Consolidated revenues up 14 percent to $3.9 billion
- Agricultural Solutions segment earnings up 19 percent
- Health and Nutrition segment earnings up 5 percent
- Minerals segment earnings down 25 percent
- Consolidated adjusted earnings per share up 15 percent to $3.88 per diluted share
2014 Outlook
- Segment earnings in Agricultural Solutions expected to increase mid-teens percent over 2013 driven by favorable market conditions, continued market share gains and new product introductions
- Segment earnings in Health and Nutrition anticipated to increase mid-teens percent over prior year due to contributions from acquired businesses and organic growth
- Segment earnings in Minerals expected to increase high-teens percent as a result of improved operating performance from both Lithium and Alkali Chemicals
- Full-year 2014 outlook for adjusted earnings of $4.35 to $4.55 per diluted share, a 15 percent increase compared to prior year at midpoint of range
FMC Corporation (NYSE:FMC) today reported record quarterly revenues of $1.1 billion in the fourth quarter, a 24 percent increase over the same period in 2012. The company reported net income of $27.1 million, or $0.20 per diluted share, in the fourth quarter of 2013, versus net income of $102.2 million, or $0.74 per diluted share, in the fourth quarter of 2012. Fourth quarter results include charges primarily related to the sale of the Peroxygens business of $114.3 million after tax, or $0.85 per diluted share, compared to charges of $4.4 million after tax, or $0.03 per diluted share, in the prior-year quarter. Excluding these items in both periods, adjusted earnings were $1.05 per diluted share, an increase of 36 percent versus the prior-year quarter. For the full year, revenues grew to $3.9 billion, up 14 percent over 2012. Adjusted full-year earnings per diluted share increased 15 percent to $3.88 versus $3.39 in 2012.
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Segment Results and Outlook
FMC Agricultural Solutions
Fourth-quarter segment revenues for FMC Agricultural Solutions were $677.7 million, an increase of 38 percent versus the prior-year quarter. Fourth-quarter segment earnings were $136.8 million, a 24 percent increase over the prior-year quarter. Key performance drivers were continued market penetration in Brazilian soybean applications, new product introductions and strong demand due to increased cotton acreage. In addition, early season demand in North America drove increased sales volumes for pre-emergent herbicides and insecticides. Segment operating margin was lower compared to the prior-year quarter primarily due to changes in product mix.
For the full year, segment sales of $2.1 billion and operating earnings of $539 million represent year-over-year growth of 22 percent and 19 percent, respectively. FMC Agricultural Solutions continues to grow at a pace faster than the market, while delivering operating margins of 25 percent.
The company expects the above-market rate growth to continue into 2014, driven by new and recently introduced products. FMC anticipates volume growth globally as increased focus on key crops will be complemented by acreage expansion in Latin America. Additionally, increasing demand for resistance management products in North America and continued focus on delivering innovative solutions globally will drive volume gains. The company anticipates full-year segment earnings momentum to continue in 2014 with earnings up mid-teens percent.
FMC Health and Nutrition
Fourth-quarter segment revenues for FMC Health and Nutrition were $189.8 million, an increase of 13 percent versus the prior-year quarter. Segment earnings of $40.4 million were also 13 percent higher than the prior-year quarter despite operational disruptions related to two natural disasters near the company's Cebu facility in the Philippines. Business growth was primarily driven by higher volumes of colloidal microcrystalline cellulose and pharmaceutical binders. Earnings growth was lower than previous guidance due to a delayed startup of the Seals Sands omega-3 production facility in the United Kingdom. The plant is currently operating as planned, and the company expects final testing and regulatory approvals will be completed in February 2014 with initial sales expected in the first quarter.
Full-year segment revenues of $762.0 million and segment earnings of $169.5 million increased year-over-year by 12 percent and 5 percent, respectively. Strength in food and pharmaceutical product categories and growth from newly acquired businesses were partially offset by acquisition-related expenses, investments in Manufacturing Excellence and raw material cost increases.
FMC expects growth in 2014 from food and pharmaceutical ingredients driven by its texturants, binders and natural colors product lines, principally in emerging markets. Organic growth is expected to be complemented by new omega-3 sales primarily into pharmaceutical and nutraceutical end-markets. Full-year segment earnings in 2014 are anticipated to increase mid-teens percent versus 2013.
FMC Minerals
Fourth-quarter segment revenues for FMC Minerals were $263.2 million, an increase of 3 percent from the year-ago quarter. Fourth-quarter segment earnings of $36.2 million were down 18 percent versus the previous year quarter. In the fourth quarter, Alkali Chemicals completed the move of its long-wall operations into a new section of the mine and realized sequential improvements in Asian soda ash pricing. Increased soda ash volume and improved pricing was offset by costs associated with the long-wall move. As anticipated, Lithium operations continued to improve in its Argentine facility with increasing manufacturing production and sales in the quarter. Operational improvements were partially offset by contractual timing and product mix within the quarter.
Full-year segment revenues of $970.0 million were flat to 2012, and segment earnings of $128.3 million were down 25 percent year over year. Weak soda ash export pricing and lower lithium volumes offset soda ash volume gains.
FMC is taking a prudent approach to anticipated pricing improvements in soda ash markets, but expects continued increased volume from its Manufacturing Excellence program and a stronger performance from the Lithium business in 2014. For the full year, the company's guidance includes only current contracted price increases in the outlook for Alkali Chemicals, reflecting the uncertainty in timing and magnitude of additional price increases in 2014. Segment earnings in 2014 are expected to be up in the high-teens percent versus the previous year, primarily driven by improved Lithium operations and incremental soda ash volume increases.
Corporate and Other
Corporate and other expenses were $22.5 million, up 2 percent over the previous year. Interest expense, net, was $10.8 million. For the quarter, depreciation and amortization was $35.5 million and capital additions were $119.3 million. For the full year, corporate and other expenses were $82.7 million, while interest expense, net, was $42.2 million. Full-year depreciation and amortization was $127.2 million and capital additions were $271.9 million. On December 31, 2013, gross consolidated debt was $1.9 billion, and debt, net of cash, was $1.7 billion.
In the fourth quarter, the company benefited from a lower than expected adjusted tax rate. This lower rate contributed an $0.08 benefit per diluted share in full-year adjusted earnings.
Also in the fourth quarter, the company announced an agreement to sell FMC Peroxygens and expects the transaction will close within the first quarter of 2014.
Outlook
Pierre Brondeau, FMC president, CEO and chairman, said: "We ended 2013 with strong performance in our Agricultural Solutions and Health and Nutrition businesses where new product introductions and strong customer relationships allowed us to grow and take advantage of good market conditions. In the Minerals segment, our operational issues in the Lithium business were resolved in 2013 and our manufacturing expansion was completed. We also saw improved export pricing and increased volumes in soda ash.
"We are entering 2014 with strong portfolios and market positions in Agricultural Solutions and Health and Nutrition. Our Lithium business is poised for growth, and we anticipate considerable improvements in its profitability. Despite our prudent approach, we remain optimistic that the pricing for export soda ash is firming up, even though we are not forecasting beyond prices already under short- and long-term contracts. Our Manufacturing Excellence efforts across the company continue to yield additional volume contributions and cost savings. We believe FMC's portfolio is aligned for success in 2014 and well positioned for 2015."
The company has posted supplemental information on the web at http://www.fmc.com, including its 2014 Outlook Statement, definitions of non-GAAP terms and reconciliations of non-GAAP figures to the nearest available GAAP term.
FMC will conduct its fourth quarter conference call and webcast at 11:00 a.m. ET on Thursday, February 6, 2014. This event will be available live and as a replay on the web at http://www.fmc.com.
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