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FMC CEO Discusses Q3 2010 Results – Earnings Call Transcript

FMC CEO Discusses Q3 2010 Results â¿¿ Earnings Call Transcript

FMC Corporation (

FMC

)

Q3 2010 Earnings Conference Call

October 28, 2010 11 AM ET

Executives

Brennen Arndt - IR

Pierre Brondeau - President & CEO

Kim Foster - SVP & CFO

Michael Wilson - VP & General Manager, Industrial Chemicals

Ted Butz - VP & General Manager, Specialty Chemicals

Mark Douglas – VP, Global Services and International Development

Analysts

Frank Mitsch – BB&T Capital Markets

TheStreet Recommends

John McNulty – Credit Suisse

Kevin McCarthy – Bank of America

Mike Harrison – First Analysis

Peter Butler – Glenhill Investments

Douglas Chudy – KeyBanc Capital Markets

Dmitry Silversteyn – Longbow Research

Presentation

Operator

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Previous Statements by FMC
» FMC Corporation Q2 2010 Earnings Call Transcript
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» Fmc Corporation Q3 2009 Earnings Call Transcript

Good morning, and welcome to the third quarter 2010 earnings release conference call for FMC Corporation. Phone lines will be placed on listen-only mode throughout the conference. After the speaker’s presentation, there will be a question-and-answer period. (Operator Instructions). Thank you. I would turn the conference over to Mr. Brennen Arndt. Mr. Arndt, sir you may begin your conference.

Brennen Arndt

Thank you, and welcome everyone to FMC’s third quarter 2010 conference call and webcast.

Pierre Brondeau, Chairman, President and Chief Executive Officer, will begin our call today with a review of third quarter performance. Pierre will turn the call over to Kim Foster, Senior Vice President and Chief Financial Officer, for a report on our financial position as well to provide our outlook for the full year and fourth quarter 2010. Pierre will then share with you our longer term perspective for FMC in the context of Vision 2015 initiative we launched last July. We’ll complete the call by taking your questions. Joining Pierre and Kim for our Q&A session will be Milton Steele, Vice President and General Manager, Agricultural Products; Ted Butz, Vice President and General Manager, Specialty Chemicals; Michael Wilson, Vice President and General Manager, Industrial Chemicals; and Mark Douglas, Vice President, Global Services and International Development.

A reminder today that our discussion will include certain statements that are forward-looking and subject to various risks and uncertainties concerning specific factors that are summarized in FMC’s 2009 Form 10-K, most recent Form 10-Q, and other SEC filings. This information represents our best judgment based on today’s information; actual results may vary based upon these risks and uncertainties. Also during the conference call, we will refer to certain non-GAAP financial terms. On the FMC website available at fmc.com, you will find the definition of these terms under the heading entitled Glossary of Financial Terms. We have also provided our 2010 outlook statement and a reconciliation to GAAP of the non-GAAP figures that we will use today

It’s now my pleasure to turn the call over to Pierre Brondeau, Pierre?

Pierre Brondeau

Thank you, Brennen, and good morning, everyone. As you saw in our earnings release, with very strong third quarter performance, at the high-end of our expected range. We realized strong double-digit earnings growth and significant margin expansion across all three segments. Third quarter earnings increased 28% to $1.14 per diluted share before restructuring and other income and charges, on revenue of $772 million which increased 8%.

In Agricultural Products, sales increased 15% to $309 million, while earnings increased to 27% to $75 million consistent with their expectation. In Specialty Chemicals, sales increased 5% to $202 million with earnings up 15% to $47 million again in line with our expectation. And in Industrial Chemical, sales increased 3% to $262 million and earnings were up 45% to $30 million which was better than we expected. On a GAAP basis, we reported net income of $83 million or $1.13 per diluted share. GAAP earnings in the current quarter included a net charge of $0.6 million after tax or $1 per diluted share versus a net charge of $37 million after tax or $0.51 per diluted share in the prior year quarter.

With that reconciliation our non-GAAP earnings were $1.14 per diluted share in the current quarter, an increase of 28% versus $0.89 per diluted share in the quarter of 2009. Going forward, our outlook is for the strong performance to continue for the balance of the year. In the fourth quarter, we expect earnings of $0.95 to $1.05 per diluted share before restructuring and other income and charges and for the full year 2010, we have raised the midpoints of our guidance with our expectation for earnings before restructuring and other income and charges to $4.70 to $4.80 per diluted share a 14% increase above last year at the midpoint of this range.

Let me now take a more detailed look at the third quarter performance in each of our operating segments. First, in Agricultural products. As I noted a moment ago, revenue increased 15% versus the prior year quarter. This was driven by higher sales in all regions. In Latin America, the sales increase reflected improved market conditions and growth in planted acres for key crops. In Asia, sales were up in most key countries reflecting improved market conditions, the introductions of new product and favorable currency impacts. Sales in North America improved due to a strong demand in the current market partially offset by lower pressure in the residue market.

Sales in Europe increased as a result of higher herbicide sales and a sequent sale from the second quarter due to the delayed growing season. Agricultural segments earnings increased 27% to $75 million driven by the sales gain and favorable product and geographic mix partially offset by increased spending on new product introductions and growth initiatives.

Moving now to Specialty Chemicals. Revenue in this segment of $202 million was 5% higher than the prior year quarter driven by the continued demand recovery in lithium primaries, higher volumes in selling prices in lithium specialties and volume growth in Biopolymer. Segment earnings of $47 million increased 15% above prior year driven by the sales gain favorable mix in Biopolymers food ingredients business and continuous productivity improvement partially offset by higher raw material costs.

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