Good morning. I'm Jeff Zekauskas. I analyze chemicals here at JP Morgan. It's my pleasure this morning to introduce the management of FMC. Representing FMC is Pierre Brondeau, who's the CEO, and Pierre has served two tours of duty at FMC. He was CEO from 2010 through 2020, and then again from 2024 to the present. Previous to his tenure at FMC, he was the president and COO of Rohm and Haas. Following the acquisition of Rohm and Haas by Dow, Pierre headed Dow's Advanced Materials division, and there are many CEOs that have come from running the Advanced Materials division. With Pierre is Andrew Sandifer, who is the CFO of FMC since 2018, and Andrew also spent time in the old days at Rohm and Haas. Curt Brooks, who heads investor relations, is in the audience.
The forum today we'll have is a fireside chat. Pierre, one of the endeavors that FMC is involved in or one of the strategic pathways is the sale or the monetization of the company. Have you learned anything from that experience?
You always learn when you go through such a process. I think as I say many times, I need to be monitoring the two approach we have with the company, what we call the Plan A-
Mm-hmm
Which is grow alone and keep on going with core peers, you know, paying down debts, restructuring and manufacturing footprint, plus Rynaxypyr, patent protection strategy, and new product growth. They're looking at what are the strategic options around the sale of the company, which could be sell, which could be merger, or any other option. What I have seen on the Plan B-
Mm-hmm
which is the strategic options as we call it for the company, there is interest. Banks are talking to multiple parties. I'd say there is five to 10 parties which are interested in the process at different level, in different manners. I think when I look at almost every single party, if there is one thing I have learned is when we see a lot of value in our portfolio of new technology, we are not wrong because that's pretty much where all of the people who are looking at FMC are focusing on.
Mm-hmm.
I mean, certainly there is Rynaxypyr . There is the post-patent period, but lots of people are moving beyond that.
Mm-hmm.
We do have four molecules coming to the market. We do have two fungicides very close to getting out of the development phase toward 2030, and we have a portfolio which will be fundamentally transformed by this new technology.
Mm.
to being much more in the SDHI fungicide, and then a balance of pesticide and biological. Very different portfolio, and that's where I see a lot of focus.
Mm-hmm.
I have to say that's the thing I've learned. I was expecting to be tortured on Rynaxypyr and what will we do versus generics and how we defend our position post-patent protection, but I think the vast majority of the conversation is on the new pipeline.
It's on the new pipeline. When you look at your Plan B, is it really a question of strategic interest rather than private equity interest in FMC?
I think it's both.
It's both.
It's both. It's a broad range of companies, but-
Primarily strategic, no? Because in the event of a combination, there are synergies which a private equity company couldn't capture.
You know, you could see, and I've got to be careful not to.
Yes. I understand.
diverge too much.
Yeah.
I would say it is strategic, it's private equity, and sometimes a blend of strategic and private equity.
Mm-hmm.
It's a broad range.
If I gave you $30 per share for FMC, would you take it?
Would I take it? I believe some shareholders would take it.
Mm-hmm
Some would not like it.
Mm-hmm.
I think we have a new generation of shareholders who came lately when the stock was in the $20s or in the mid-teens.
Yes.
Certainly those people will be able to make over a short period of time a significant profit and they will take it.
Mm-hmm.
There is more historical shareholders which are above this number.
Mm-hmm.
We've been told in no uncertain way that there is a significant amount of shareholders who believe in a future where FMC is alone.
Mm-hmm
The stock will get over $30 because of the pipeline we have.
Mm-hmm.
Now, if you ask me personally, I'm a shareholder of the company.
Yes.
I'm not taking $30.
Mm-hmm.
I think as a standalone we can go much higher, but.
Uh-huh
I'm biased about the company.
Mm-hmm
I have to trust what I do. But it's. It depends where you stand. It depends if you're a new shareholder or if you're a historical shareholder.
Since we have the luxury of having Andrew up here, one of the events for FMC this year is the refinancing of, I guess, $500 million in debt that comes due in October. I think it's a 3.2% coupon. Do you have a strategy for that or a plan for that?
We've got multiple ways we can address the October maturity. To be very clear, we'll deal with this shortly. We have adequate liquidity through our revolving credit facility to absorb the redemption of those notes if needed. That's not the plan. I think our intent certainly would be probably in the second quarter to get out there, get out in the public markets and do an offering.
Mm-hmm
to replace and redeem those bonds.
Mm-hmm.
I think that, you know, where we start from, though, I think, you know, we have right now a revolving credit facility. It's essentially an investment grade revolving credit facility. In the last amendment, we introduced this concept of a springing security that would trip if we were further downgraded after the initial downgrade to non-investment grade.
Mm-hmm.
You know, I think we're in midst of active discussions with a bank group to continue to evolve that agreement.
Mm-hmm.
Probably move to more traditional security rather than the springing security kind of situation. Something more appropriate for a company that's BB+, than a legacy, you know, some of the legacy elements of the existing agreement.
Mm-hmm.
That would also give us a little more operational flexibility through the next several years.
Mm-hmm.
again, you know, clear the table to go out and do a bond offering in, you know, in the second quarter. You know, high yield, likely secured-
Mm-hmm
to address that immediate maturity.
Mm-hmm.
I think in conjunction with that, you know, as Pierre pointed to, the first pillar of the operating plan for 2026 is paying down debt.
Yes.
Right? Certainly, you know, while we would, you know, we're very intent on making sure we address that maturity, we're equally as focused on being able to take the steps that are needed to continue to bring the absolute level of debt that the company is supporting down significantly.
Thank you for that. Obviously, FMC is an agricultural company, but so many companies are touched in different ways by the conflict in Iran. Is that something that touches FMC in a significant way?
In a significant way right now, I would say no. But right now, if you think about the product we sell as a crop protection company, they are quite removed away from the direct Petchem raw material.
Yes.
Most of the cost is in the conversion process.
Mm-hmm
Where you get to the final product. The place where we see today disruption is not in the cost of a product. It is more on the logistic aspect. Boats are harder to move. Containers are more difficult to find. To bring the product at the right place at the right time require logistic organization to work differently than what we've done. That's where we see an impact. We are not yet at an impact where we see cost fundamentally changing. Should the conflict last a long time, it will sooner or later.
Mm-hmm.
I mean, gas price is going up, oil price is going up.
Mm-hmm.
Raw materials in the Philippines etchem industries are going up. If this conflict is over in three weeks.
Mm-hmm
It'll be a blip.
Mm-hmm.
We will not see much of an impact.
Mm-hmm.
If it lasts for six months, yes, we will see impact. It will reach our product. Raw material will have an impact, energy will have an impact, plant will be more expensive to operate. For us to say that it will have a very significant impact, it's a matter of time.
Mm-hmm.
If it's a short live conflict, we'll be all right.
Mm-hmm.
If it's prolonged-
Mm-hmm
I call prolonged six months.
Yes
Yes, we will see an impact. We're in a quite different place from input like fertilizers.
Mm-hmm. Yes
which are being impacted right away because of their location
Yes
the nature of the product. For us right now, we're still in a decent position besides logistics, just a matter of time.
If the conflict were prolonged, then how would that affect FMC?
I think it will be. It will affect FMC. Like it will affect every crop chemical company.
I see.
We will just all see because we pretty much all manufacture in the same part of the world. We have about the same cost base.
Mm-hmm.
We will all see increase in cost.
Mm-hmm.
The question will be, what is the status of the ag industry at that time?
Mm-hmm.
What is the company's situation? Can we push some of those costs into our customers or not?
Mm-hmm.
We'll be facing this kind of a situation.
The routes that are affected, is it more India to the United States or China to the U.S., or it's some other route?
No, both of them.
Both of them.
Both of them, yeah.
Yeah. I'd like to talk to you a little bit about Rynaxypyr and Cyantraniliprole before we get to the growth elements of the company, if I might. What's been your experience of the growth of the Rynaxypyr and Cyantraniliprole molecules in volume terms in 2024 and 2025?
I think in 2024 and 2025, we started to see a slowdown.
Mm-hmm
of the growth of those molecules because we started to see generics penetrating some market like India, of course.
Mm-hmm
Like China, Asia, Turkey, some market in Latin America. We had a slowdown of the growth for the period of 2021, 2022.
Mm-hmm.
Still a pretty healthy market because our patent position, especially around process, was keeping generics away from the main market, North America, Europe, Brazil. We were still seeing some volume growth. Dollars-wise, we saw a decrease in the number, but we've been pretty truthful about that situation.
Mm-hmm.
There are two types of business. There is what we call the branded business.
Yes
What we sell to the market, and there is what we sell to our partners.
Mm-hmm.
What we sell to our partners are products they use for manufacturing, and we sell them make formulations. We sell them on a cost-plus basis.
Mm-hmm.
To be prepared for the post-patent period for Rynaxypyr.
Mm-hmm
We had to significantly decrease the manufacturing cost.
Mm-hmm.
That has translated into a decrease of a price.
Mm-hmm
to our partners.
Sure.
That has decreased the overall sales in dollars.
You know, there was a theory at a point in time that the global volume for these types of chemicals would increase because prices were coming down. That is, prices are down, you know, probably double digits each year for the past two years, and maybe that trend is continuing. Are you surprised that there hasn't been more volume uplift for the industry, or has there been a volume uplift for the industry, but it's not been something that's touched you because of the magnitude of the competitive response?
There has been some volume uplift.
Yes.
To give you a sense, in places like Turkey or China, in the last three to four years, the size of the market tripled. We have seen some volume uptick.
Mm-hmm
We are expecting significant volume uptick starting in 2026.
Mm-hmm.
Because to see the volume uptick, you need to have a broad penetration of this market.
Mm-hmm
by the generics.
Mm-hmm.
You need to have companies like FMC.
Mm-hmm
bring this product at a price which is much lower than where we have been historically.
Historically
which we can afford to do because we have a much lower cost.
Mm-hmm.
It has been happening in some location. Turkey, India, China, market has tripled.
Mm-hmm.
We are expecting this market, in volume, to significantly grow in Brazil, in North America.
Mm-hmm
in Latin America. We will see it, and we're seeing it.
Your view is that beginning in 2026, the volume characteristics for Rynaxypyr should be better for FMC as well as for the other competitors?
Definitely.
As a base case.
It's definitely you will see Rynaxypyr penetrating other markets, other insecticide markets.
Mm-hmm
Broadening the number of applications. There will be a significant volume growth.
Mm-hmm
of Rynaxypyr starting in 2026.
When you look at the pricing of Rynaxypyr, obviously there are competitive responses. How predictable is the price decline for 2026 as far as you perceive it? Is it something where you think you could be, you know, right or wrong by a lot, or is it something which is much more well-defined?
It's a difficult question to answer because there are gonna be multiple type of Rynaxypyr. You would have low quality, very cheap product.
Mm-hmm.
We might not even compete with them.
Mm-hmm.
We're gonna compete with the high end of the generics.
Mm-hmm.
Plus, I think we have a reputation in this market for having been making this molecule for decades of quality.
Mm-hmm.
We have brands, so we will sell at a premium. We have some strong certainty of the pricing we need to be at, taking into account the manufacturing cost to establish our objective to have flat earnings from 2025 to 2026 with Rynaxypyr, so we know where we should be.
That's the goal.
That's the goal.
That's the goal.
The goal. Exactly. That's the goal. 2025, 2026 earnings in dollars.
Mm-hmm. Yep.
Flat.
Mm-hmm.
To do that, we'll have to increase volume significantly, but we'll have to decrease price.
Mm-hmm
Using the fact that we have decreased cost.
Mm-hmm.
We'll have to participate in this expansion of the molecule.
Mm-hmm.
We know where we need to be. We are pretty confident of at what price our customers will be buying our product.
Mm-hmm.
To know the range of price from our competitors, it's pretty wide and pretty hard to.
Mm-hmm
pretty hard to predict.
You need a lot of volume growth to do that.
We do.
Yes. Double digit?
Oh, double-digit.
Double digit. Yeah.
De-definitely-
Yeah
Double digit. Yeah.
Okay.
Let's not forget, there's very large cost reduction here as well.
Mm-hmm.
Right? It's been a part of the headwind, as Pierre mentioned, on our partner business in the past year.
Sure.
Continues to be a headwind in 2026.
Mm-hmm.
That's that balancing of volume price cost.
Mm-hmm
that allows us to get the branded business to flat dollars profitability.
Yep. How about Cyazypyr? Are Cyazypyr prices decreasing in 2026 as a base case?
No, it's a very different molecule.
Mm-hmm.
First of all, it's a more complex molecule to make.
Mm-hmm.
Generics are not yet producing.
Mm-hmm.
It's a molecule which in many parts of the world, until 2028, 2029, are data protected.
Mm-hmm
which mean cannot be sold by any other companies than FMC.
Mm-hmm.
There is not at all the same price pressure you would see on branded, like in branded, sales appear-
Mm-hmm
than you would see on Rynaxypyr.
Mm-hmm.
Now, we're not gonna make the mistake of the past. We are anticipating the post-data protection period for Cyazypyr. We're working on the cost. We're decreasing the cost. We are preparing the formulation. We're gonna get much more ready for the post-data protection for Cyazypyr than we were for Rynaxypyr.
Mm-hmm.
All this process is taking place right now.
That beginning of price degradation should happen in 2027?
No, no. 2029, 2030.
2029 or 2030.
Yeah.
Cyazypyr is good.
Cyazypyr is still a growth molecule.
Mm.
It's growing fast. The price is healthy. It's data protected.
Mm-hmm.
It's like Rynaxypyr was a few years ago.
Sometimes what FMC says is that 2027 is a transformational year, where earnings will go from, you know, a period of difficulty to a period of strength. You've got to offset. I mean, key to that is trying to keep Rynaxypyr profits level or not really being pushed down further, and then you get the benefits of some Cyazypyr growth.
If you go to the back end of 2027, second half of 2027, that's when we see the transformation of FMC because of multiple things. First of all, Rynaxypyr, the big transformation period will be behind us. It's 2026.
Mm-hmm.
The market will be more established, the price will be more established, the strategy will be in place.
Mm-hmm.
The objective is not earnings growth. It's flat earnings, protecting earnings.
Yes.
That we believe we can do. It's not an objective which is out of reach at all.
Mm-hmm.
Rynaxypyr is still very healthy until 2028. Until 2029, it's growing. Now, I think Cyazypyr is a very different molecule from Rynaxypyr because it's much smaller.
Mm-hmm. Yes.
You will not have the same level of capital investment and generic participation than you saw in Rynaxypyr.
Mm-hmm
which was a much bigger molecule and much easier to manufacture.
Mm-hmm.
We're not expecting at all the same type of market situation with Cyazypyr.
Mm-hmm.
The big thing for us, starting in 2027, is the growth of the new molecules.
Mm.
That's when they start to get to level in dollars and growth, which really matters for the company.
Mm-hmm.
You get in the 2029, 2030s, where your growth portfolio is very significant versus the rest of the portfolio.
Okay. In terms of the growth dynamic at FMC, I know that you've talked about licensing some of your key molecules and you know, I believe that that's a 2026 event for you. How is that licensing effort coming?
Licensing. Let me talk about pillar number one of the 2026 plan, which is the $1 billion debt we have to pay.
Yes.
Remember, there is India. Sale of Biz India, there is a licensing of a new molecule.
India is $400 million, $450 million? Some number like that, or on your books it's $400 million?
It's on the books of $450 million. I'm gonna let you explain what it is.
Yep. India's fair market value for the business, when it was marked as held for sale, is $450 million.
Yeah.
That represents two value drivers.
Yep.
One is expected proceeds from a sale, but the second is the cash generated by that business as we're liquidating working capital during the period that we operated until closing of such a sale. With anticipation of closing the sale towards the end of this year, you know, we are still operating that business. We are still generating cash from that business. We're mainly selling from inventory, so we're monetizing working capital. That's a component of the $450 million in value.
Uh, it's in-- the $450 million is inclusive-
Inclusive
of the working capital.
Capital
benefits.
Working capital monetization.
Sure. Mm-hmm.
... as well as-
Yeah
As expected proceeds from.
Yeah
from a transaction.
Mm-hmm.
For this pillar, number one is going well. India is moving forward. We're well within target. We have multiple binding offers, so it's going well. Number two is licensing of one molecule. This process is going very well. We've made progress since late last time I talked publicly. We're feeling quite confident that we're gonna get to the right place quite quickly with advanced payment contributing to the $1 billion. You know, you always need points on the scorecard, so point two, as we want for the earnings call, we would like to be able to say more about India, where we are.
Mm-hmm
With more firm of a decision. We would like to be able to announce a licensing deal.
Mm-hmm
With more detail on what it is.
Sure.
We would like to be able to talk more about where we are on the refinancing of the company, which is giving us the breathing room we need.
Mm-hmm
To move forward. Those are progressing quite well and very much in line with what we're expecting.
There's one molecule that you wish to license. Is it one of two, or is it one? In other words, do you have two of them, and you're seeing if you can license either one of them? Or you have one of them, and you're trying to see whether you can license that one?
We have four new molecules, fluindapyr, Isoflex, Dodhylex, and rimisoxafen. Fluindapyr, which is a fungicide, has already been licensed.
Yes.
It's been licensed to Bayer. It's been licensed to Corteva.
Right.
Rynaxypyr molecule.
Mm-hmm.
Right now we are negotiating on one of those molecule.
On one.
On one.
Mm-hmm.
It doesn't mean the other one are not for license or the other one are not under discussion, but the one we are talking about which will lead to upfront payment, it's one molecule. It doesn't mean the others are not licensable.
Mm-hmm.
What we are talking about is one molecule which is perfectly defined, for which we're having a negotiation in place.
This would be rimisoxafen, because that's the one that's not yet in the market. If you were looking at it from an outsider's point of view, that would be the logical one to focus on.
You're not wrong. It could be. If we apply your logic, it could be rimisoxafen or Dodhylex.
Yes, it could be either.
... which are the two-
Yeah
Least advanced from registration and most advanced from technology with new mode of action.
Mm-hmm.
You're not wrong that those would be the two. The other being commercialized already in the process of registration.
My memory isn't perfect, but I think that, you know, what you've said is that, you know, by 2035, you know, maybe the revenues of these four molecules are $2 billion. You know, if you license one for $500 million, and you know, that's a value, you know, maybe the gross margin is 50%, something like that. Would that mean that the way that you would calculate that $2 billion number would be $2 billion, maybe less $1 billion for the licensing of the molecule in trying to conceptualize how this would touch FMC over a longer period of time? Is that a base case way of doing it?
First, your memory.
Mm-hmm
Is right.
Oh, okay. Good.
I'm changing the numbers on you.
Okay, good. Thank you.
Your memory is not helping you because I think it's closer to $2.5 billion.
Okay. Yep.
That's the very important point is licensing increase your sales, does not decrease your sales. Because what you do is take a product, Dodhylex or rimisoxafen, new molecule, new mode of action, cost over $300 million to develop those products.
Mm-hmm.
Now, you put those products on the market as formulated product. We are in a very fragmented industry. FMC is one of the largest company in that space. We have 7% market share.
Mm-hmm.
The market available to us is 7% of the total market.
Mm-hmm.
If we choose the right partner who has a complementary product line in terms of crops or a complementary geographical strength.
Mm-hmm
... it allows us to penetrate a much broader market than if we would go alone. What do we do? We keep on the manufacturing of the product.
Mm-hmm.
We sell this product to a partner. They pay a royalty, and they access market we could not access.
Mm-hmm.
Actually, if you would do the net present value of a molecule licensed versus a molecule not licensed.
Mm-hmm
It would be a higher number for the licensed molecule.
Mm-hmm.
One of the reason for which the number is closer to $2.5 billion than $2 billion is because we had the licensing of fluindapyr.
Yeah.
We're contemplating the licensing of this molecule.
Of the mystery molecule.
We should never-
No
Think that licensing a company cannibalize your business. No, it increases the size of your business.
Mm-hmm.
That's why you see most crop chemical company when they have a unique molecule, patented molecule, would look for partners who are complementary to what they are.
Interesting.
Now I'll give you a simple example.
Hmm.
Take FMC. 70% of our sales, specialties.
Yeah.
fruit, vegetables, nuts, tree nuts, cotton, sugarcane, okay? You have companies like a BASF, Bayer, Corteva, Syngenta, which would do 60% or 70% of their sales in row crops.
Hmm.
I mean, think about that. We only do 30% row crops.
Mm-hmm.
They do 60%-70%. The row crops market they're allowing us to reach, we could never reach by ourselves.
Yes.
It's an all new market a licensee-
Mm-hmm
Would help us reaching we could not by ourselves.
Okay. Thank you. That's very clear. At FMC, there's really an initiative to lower your manufacturing costs. Why is it that it's so expensive to manufacture outside of India or China, and you already had a large Indian operation? You know, why did you not keep that if what you wanted to do was really bring your manufacturing costs down?
All right. Thanks, because it allows me to be very specific. In India, we are selling our commercial operations.
Mm-hmm.
We are keeping a plant which is a global plant. The active ingredient plant in India, which is producing globally, we are keeping it.
Mm-hmm.
As well as, we have a research center in India, we are keeping.
Mm-hmm.
Those are not being sold.
Mm-hmm.
They are very important, and they're gonna be important in our transformation process.
Mm-hmm.
We're keeping those.
Mm.
Manufacturing in the Western world, from a capital spend to a cost of employees to benefits to environmental, all of the aspects are more expensive than the ability you would have to have lower cost manufacturing in place like India or China.
Pierre, thank you for a very clear overview of FMC, and, you know, we wish you good fortune in the licensing of these molecules and the transformation of the company.
All right.
Thank you very much.
Thank you very much.