FMC Reports 6 Percent Rise in Q2 Revenues as Nutrition Push Accelerates
30 July 2013 --- FMC Corporation has reported second quarter revenues of $959.4 million, a 6 percent increase over the same period in 2012. The company reported net income of $118.0 million, or $0.86 per diluted share, in the second quarter of 2013, versus net income of $104.9 million, or $0.76 per diluted share, in the second quarter of 2012.
This quarter's results include charges of $10.9 million after tax, or $0.08 per diluted share, compared to charges of $22.0 million after tax, or $0.16 per diluted share, in the prior-year quarter. Excluding these items in both periods, adjusted earnings were $0.94 per diluted share in the current quarter, an increase of 2 percent versus the prior-year quarter.
FMC Agricultural Solutions: FMC Agricultural Solutions' second quarter segment revenues of $442.6 million increased 12 percent versus the prior-year quarter, driven by strong demand in all regions except Europe, Middle East and Africa. Second quarter segment earnings of $124.7 million increased 11 percent versus the year-ago quarter due to continued North American volume growth with increased demand for pre-emergent herbicides, increased market share in Brazil and benefits from market access initiatives in Asia.
The company expects a strong finish to 2013 driven by favorable market conditions in Latin America, with FMC's growth outpacing the market. The company expects a 10th consecutive year of record segment earnings, increasing mid- to high-teens percent over 2012.
FMC Health and Nutrition : FMC Health and Nutrition's second-quarter segment revenues were $189.9 million, up 9 percent versus the year-ago quarter on higher volumes and contributions from recent acquisitions. Segment earnings of $44.3 million were essentially flat compared to prior year. Segment earnings grew mid-single digits percent after adjusting for the impact of spending on acquisition-related activities and costs incurred in Manufacturing Excellence programs.
The company anticipates third quarter segment earnings to be higher than 2012, with underlying growth partially offset by additional acquisition and Manufacturing Excellence program costs. For the full year, the company expects segment earnings growth to accelerate due to continued strength in core markets and contributions from the recently acquired Epax omega-3 business, resulting in low-teens percent segment earnings growth versus 2012.
FMC Minerals: FMC Minerals' second quarter segment revenues of $244.4 million decreased 2 percent from the year-ago quarter. Second-quarter segment earnings of $35.4 million were down 21 percent, primarily as a result of lower export pricing in soda ash versus the previous year, partially offset by higher global soda ash volumes. The company continues to successfully implement process changes at its Argentina Lithium operation, and is on track to achieve its targeted production rates in the third quarter.
FMC saw sequential improvements in Asian export soda ash pricing in the second quarter, and anticipates sequential improvements in each of the third and fourth quarters. The company expects the recent improvements in production rates at its Argentina Lithium operations will contribute to strong Lithium performance in the fourth quarter. For the full year, the company anticipates segment earnings will be down approximately 20 percent versus the previous year. Expectations for the Minerals segment in the second half are driven by improved Lithium performance, tempered by the company's prudent outlook for the pace of recovery in soda ash export pricing.
FMC Peroxygens, Corporate and Other: FMC Peroxygens' second-quarter segment revenues of $83.6 million decreased 5 percent from the year-ago quarter. Second quarter segment earnings of $4.0 million were down 49 percent, primarily as a result of planned maintenance outages. The company is confident that a divestiture of FMC Peroxygens can be achieved by end of 2013. Therefore, beginning in the third quarter, the company will reclassify full-year results of FMC Peroxygens to discontinued operations.
In the second quarter, corporate and other expenses were $20.3 million versus $16.9 million in the prior-year quarter. Interest expense, net, was $12.3 million as compared to $11.5 million in the year-ago quarter. For the quarter, depreciation and amortization was $34.3 million and capital additions were $46.9 million. On June 30, 2013, gross consolidated debt was $1,070.6 million, and debt, net of cash, was $993.2 million.
The company is entering into an accelerated share repurchase agreement (ASR) under which it will repurchase approximately $250 million of its common shares, with an initial delivery of approximately 3.2 million shares expected to occur by July 31, 2013. The shares will be acquired under the company's previously announced $500 million share repurchase program. Final settlement of the ASR is expected to be completed by year end, but may be completed sooner under certain circumstances. The final number of shares that the company will repurchase under the ASR, the timing of the final settlement and the aggregate cost will depend upon prevailing market conditions, the final discounted volume-weighted average share price over the term of the ASR, and other customary adjustments.
For the third quarter, the company anticipates adjusted earnings of $0.75 to $0.85 per diluted share, a 5 percent increase over 2012 adjusted earnings at the midpoint of this range. The company now expects full-year adjusted earnings of $3.72 to $3.87 per diluted share, a 13 percent increase over 2012 adjusted earnings at the midpoint of this range. The updated outlook reflects the move of Peroxygens to discontinued operations, as well as uncertainties in the timing of soda ash export pricing recovery.
Pierre Brondeau, FMC president, CEO and chairman, said, "We remain firmly on track to meet or exceed our Vision 2015 targets. We are executing our growth strategies across the enterprise, pursuing the right opportunities to expand our portfolio, and delivering premium shareholder return.
"Our full-year 2013 adjusted earnings do not accurately reflect the company's earnings potential going into 2014, as they are temporarily depressed by the shift of Peroxygens into discontinued operations. This change impacts all of 2013, whereas the actions we have taken to offset these lost earnings, including acquisitions and share repurchases, carry only partial-year benefits in 2013.
"We are making significant progress against our strategic goal of strengthening our core businesses. In Agricultural Solutions, our recent product line acquisitions and development agreements are adding to the fundamental strength in this business. We are excited about the earnings trajectory of Health and Nutrition driven by our expanding portfolio and the new Thailand facility coming online at the end of 2014. As we emerge from a cyclical trough in soda ash pricing, we anticipate that increases in pricing combined with production volume increases already well underway will drive segment earnings higher in Minerals. And, we expect the fourth quarter Lithium margins to be indicative of full-year performance in 2014 and 2015. Benefits from 2013 spending on Manufacturing Excellence programs and our already successful Procurement initiatives will also be significant contributors in 2014 and 2015."
