This is Mike Sisson, Wells Fargo. I cover the ever-exciting chemical industry, which actually has outperformed over the last year to date, about 14%. S&P was up about 8%. FMC stock has struggled a little bit, down 15% year to date, and well off its decade high of over $100. Today we have Andrew Sandefur, CFO of FMC, is here to tell us the company's turnaround story, How do we get that stock back on the right track? It's got to be more exciting than some X story, right? That's going public at the end of the week. But thank you for spending some time with us, Andrew.

Appreciate you having us here.

I guess the first question is the strategic review. You're in progress of doing one, I recall. The reboard at your last public meeting has some offers on the table or something like I'm sure you can't get into the specifics, but any sort of color of what you think the board and you guys are looking for for a deal or transaction that would create value for shareholders or versus staying in a standalone company.

Yeah, so maybe I'll start off with that part first and build there. I think, you know, as we've described it, you know, there's really two things we're working on. It's plan A, which is the operational priorities we've set for the company in 2026 to really get it back on a more strong footing and prepare for a return to profitable growth. And then in parallel to that, plan B, which is a broader strategic review. Plan A is really driven by four key initiatives, aggressively paying down debt, primarily through asset sales and licensing arrangements and other things. We can talk a little more about that as it's interested to people. Doing the right things to change the cost position for our core portfolio. Doing some pretty significant cost restructuring to restore competitiveness for that part of our business. Implementing and executing our Renaxapier strategy for the patent. and then finally really you know the the crux of the future for the company which is really delivering on the potential of the new for new active ingredients that we're in the process of introducing right but you know to your point you know back in february you know conversation actually started a little bit earlier than that but uh at the earnings call we you know we disclosed that our board had had you know asked management uh to work on with the board on an exploration of strategic options and you know we're very careful with the language um you know it's strategic options up to and including a sale of the company. And over the past several months, a small group of us and the executive team working with the board and with outside advisors have worked on a number of different options, and a lot of discussions, and a couple of different opportunities and a couple of different propositions that were interesting enough to really take to the board. That dialogue and that process is still ongoing, so there's only so much I can say today, other than it's still very active. It's the full range of things that we could be thinking about, whether that's an outright change in control transaction or a merger or a strategic collaboration. All of the above have been considered and are continuing to be considered. There are some active discussions, and while we can't be certain about timeline, there are some practical realities. Discussions have been going on for a bit, and there is only so long you can run an organization with all of your employees under a cloud of uncertainty about what's the future look like. So I would expect that sometime between now, early mid-June, and in our Q2 call at the end of July, we'll have some more clarity that we'll be able to share. There's not a specific date I can point to at this point. Like I said, it's an active set of discussions and evaluation with the board. But I do think we would like to come to a more formal conclusion, a direction here before too long. But these kinds of discussions and dialogues with the board take time. But again, I would expect sometime here before the earnings call at the end of July, we have something more substantial to say.

Well, we have 25 minutes left, so just in case something pops up in your head.

We'll see if the phone buzzes in the interim.

So let's walk through the turnaround potential for FMC a little bit. You talked about the four ingredients. As I recall, it's expected to have sales between $300 million to $400 million to $26 million, $800 million by 2027, $1 billion by 2030, and then potentially $2 billion by 2035. So I'm going to botch this, but the first one was Dodilex herbicide. It got registered in 2025. Just for investors, why is this herbicide more effective than what's on the market now? So how do you see that ramping in 26 and then in 27, and then what do you think, you know, could this be, and I'm going to ask for all four, but could this be a diamine or could this, you know, which one could be a big one and what's kind of the base case for this longer term?

So Dodalex, which is... No worries. It's a lot easier to say than Tetflopyrrolab, which is the chemical name of the molecule. Look, it's a herbicide. It's a herbicide that is selective to rice, and that's the leading application for it is in rice crops. It is a herbicide that kills grassy weeds in a crop that itself is a grass. So it's a very rare thought that it's something that differentially impacts plants that are like rice but not rice itself. It has applications broader than rice, some very interesting potential for that molecule beyond that. but all of the initial registrations are really focused on rice obviously Asia being a key area of focus as a key rice growing region but the US parts of Latin America all a part of that program the first registrations we actually do have a few small countries with with temporary registrations right now but nothing material we'll start seeing real revenue in 27 now assuming we get the registrations that are expected and 26 and 27 for that and then a nice ramp through 27 through the early 2030s um you know we think that could be 400 to 600 million dollars and to get to the higher end you need to broaden beyond rice but we do again we do think there are some significant opportunities there um and one of the things that's really exciting about that molecule it is one of the first if not the first uh herbicides with a new fundamental fundamentally new mode of action meaning a biological pathway that attacks in the plant to kill the weed introduced in 30 years so it is truly novel brand new technology to the world and in a crop that desperately needs new tools to control weeds so super super exciting thing very high confidence that as we get the registrations that that ramps and becomes a very interesting product it's not a renax if you're it'll never peak out in 1.6 million dollars at least not anytime soon we'll see how inflation plays yeah compound long enough but it is a big meaningful contributor to the growth of the company great and then just remind us just because it's we're gonna talk about the die my some point that how does patents work for these how long do they last so the patents there are multiple types of patents the primary ones are composition of matter patents which deal with the specific molecule itself you know there's some strategy involving the timing in which you apply for those patents so we identify an early stage discovery R&D you know compounds that have particular biological activity against pests of interest so in this case against you know grassy weeds and you test and get more comfortable that that molecule may have some interesting commercial viability and at some point you apply for a patent you know depending on the country it's probably you know 15 17 year patent life but it takes another seven to ten years from whenever you've patented to get that product to market So you're probably in a 10-plus-year window that you're selling under complete patent protection of the composition of matter. Now, there are additional things you can do as you're finishing the development of that product. You can patent manufacturing methods. You can patent formulations in the way that that product is used with other ingredients, whether they're other active ingredients or non-active ingredients, to help make it a better-performing product. You can also look to ways of novel delivery methods that can add additional patent protection. So from a patent protection for space, by the time you introduce, you're usually a decade or more of protection. You also, in our industry, because you have to provide a tremendous amount of toxicological and biological activity data to get the product registered, many countries also provide protections to you as the initial holder of that data that go beyond the life of the patent. This is particularly in the EU, where you will get data exclusivity that extends the life of your protection as the innovator long beyond patent time. So that's a quick synopsis of the patents.

And then I guess the second one, I think I can pronounce this one, Isoflex, herbicide.

That's an easier one.

Easier one. Got EU approval on February 26th. More registrations expected in 27. So I guess similar to Dodalex, I just wanted to be able to pronounce it. What makes this herbicide special, potential for growth and longer term?

So Isoflex is another herbicide, particularly useful in cereal crops, but not exclusively. There are some other non-cereal applications as well. Was first introduced in Australia, also introduced in certain Latin American countries, certain Asian countries. but the significant market is Europe and biggest producer of cereals in the world we entered we the active ingredient and formulated products were registered late in 2025 in the UK so we'll have we missed a good piece of that selling season unfortunately in 2025 but we'll have a full year of selling season in the UK for this year's winter cereal season the active ingredient isoflex has as you noted in February of 26 was registered in the EU we now have to get product formulated product level registrations at the country level that's what it'll take through why we won't get formal introduction until 2027 across the eu what's particularly interesting about this product in the eu in particular the number of tools that growers and that they're growing cereals in europe have to control weeds is becoming more and more limited so this is the first new product in a long time for cereal growers to help control the weeds in their fields And if you look at some pictures of what a typical cereals field looks like in Europe, it's hard to see the cereals for the weeds. So it's a tremendous opportunity for yield improvement for cereal growers in Europe. So much that while we have no control over this, and I want to be very clear about that, we do have in certain European Union countries right now, there are farmers petitioning for emergency use exemptions that would allow them to utilize Isoflex-based products before the products are formally registered. That would be upside for us in 26 if that were to occur. We don't control that. We don't influence that. But we are ready if there is an opportunity there. We would be glad to help growers out in Europe and give them a better tool and a new tool to help control weeds and cereals.

Great. And then the third herbicide, Ramoxifen, first registration 28. Again, what's the excitement about that one?

So my colleague, Kurt, who's with us today, knows that I have probably irrational excitement about this one. But remosoxifen is a really unique herbicide. New to the world. When we talk about modes of action in terms of the way that a herbicide attacks a weed in terms of biological processes, it is not only a new mode of action, it's actually two new modes of action. It attacks two different biological pathways in the plant that have never been seen in the world before. And anybody who pays attention at all to the herbicide space knows that there's growing challenges with resistance that builds up in plants from having been exposed year after year after year to herbicides like glyphosate or 2,4-D or dicamba. And what remosoxifen will do is give growers a new tool to control really difficult weeds that aren't easily controlled by most of the available technology on the market today. And it's particularly useful with some resistant weeds like palmer amaranth, which is a highly, very fast reproducing weed that can really damage crops very rapidly. And the number of tools on the marketplace that are out there that can help control that is getting really, really small. So this is a big one for corn and soy in the Americas. This is one we're super, super excited about. And it is because of the degree of novelty and technical innovation that's involved in this product. This one's a big one. Again, it won't be Renaxapir, but all four of these products we think are in the $400 to $600 million kind of range for peak sales. This is one that could be at the higher end of that. And then the last one's a fungicide, Florandapir. you've had launches in the u.s brazil and argentina um any more launches coming and where what do you think makes that one special so fluendipir is a fungicide it's uh you know good for a number of crops but particularly soybeans um does it it's one of many products that can help control soy agent soybean rust but also works in corn on some particularly some diseases that are becoming very relevant in the u.s and in the central u.s in particular tar spot and southern rust where there are very limited tools to control and certainly there are diseases that you don't want to get into your field and there's a preventative value to this as well. Fluendo period as you know it's been registered in a number of countries we've got most of the registrations if not all that we're gonna go after. We're really in the ramp up phase and that and that's a product where we are seeing very substantial year-on-year growth and you know it's a great part example of where we're using partnerships to help accelerate that growth. Last year we entered into a partnership with Corteva where we provide a formulated product to them that they market directly to their customers. It's allowing us to more rapidly gain adoption in the United States. So a win-win for both companies. And you know we are seeing very, very good growth there. So Fluenda Pure I'd say is furthest along in its commercialization, but a lot more room to continue growing.

Okay. And then just Just maybe your quick thoughts on how the ramp-up is for these four in 2026. And then the goal for 2030, I would assume that's heavily Dota-Flex, Helix, whatever, I'm sorry, Dota-Lex and then Isoflex.

Is that true or is it? Yeah, so I think of the build this way. Right now, Fluendipure largely registered, Isoflex still gaining momentum and getting you know key European registrations to come in 2027 they're really a big introduction Dota Lex just starts getting commercially introduced in 27 Remus Oxford and first registrations in 2028 so they build in that order you know we did about 200 million dollars in sales across the two that are currently commercial isoflex and fluent appear last year we expect those two to represent between 300 400 million sales this year building to 828 and then as As you noted, by mid-2030s, up to $2 billion in peak sales here. The gating condition really is getting the registrations, and there's always a little bit of timing risk there, but we feel pretty good about our line of sight on registrations. So we think there's a pretty good trajectory here to see that really strong accelerating growth from these new active ingredients.

Great. Sort of the second area of the turnaround is the balance sheet. You recently said that there is licensing potential. I don't remember if it's one of these four or one of your other molecules, but can you me walk through some of that lysine's potential as part of the $1 billion debt pay down potential? And I think you recently said you've chosen a partner for that and that you will have an update today. But at some point.

Yes. So, you know, one of our four big priorities for this year is really shoring up the balance And we've set a goal to pay down a billion dollars in debt. With our last call, we sketched out where we have, in currently active negotiations, about $700 million in transactions. That included the India transaction, which has been signed for $250 million for the sale of our India business. That will close sometime before end of year, but that's a piece of it. The next largest and the topic that you're raising here is around active ingredient licensing. Active ingredient licensing is something that is very common in our industry, again, the idea being that none of us are big enough on our own necessarily to maximize the penetration of a product as rapidly as possible on our own. And particularly, FMC is the smallest of the five innovative innovation-led crop protection chemical businesses. There's a significant benefit from us from gaining a route to market through our peer companies. We also have some very special molecules in our active ingredient pipeline and certainly of the four we just talked through The active and you know the discussion that is very close to completion Is about one of those molecules and it is an opportunity to work with a partner whose route to markets are very complementary to ours And will allow us to quite honestly expand and accelerate the value of that molecule such that there's upside beyond what we just talked about in terms of peak market value potential for that by having that additional route to market that deal is imminent i would say one word to you in terms of the process lawyers no all joking aside these are complicated transactions you know when we say licensing we're understating what the actual transaction is it's a commercial agreement where we will supply active ingredient to the partner and they will formulate and market products based on that active ingredient to be able to do so they need a license to our intellectual property because it's patented active ingredient to be able to legally sell that they'll also need access to our registration data those have significant value and while we do these kinds of partnerships and normal course mentioned earlier the partnership that we have and with Corteva in the US for the wind up here right this is a very normal part of what we do what is different about this one is that it also will come with a substantial upfront payment and that's in part because of the nature of the supply that's involved and because of how special and differentiated this technology really is so we're very excited about the prospects I regret that I'm not able to be more specific today I would just repeat the word imminent yeah and we look forward to being able to share more details in the near future got it great just a reminder for the folks in the webcast I have on Bloomberg, if anybody wants to ask a question, just let me know, same in the field here.

In terms of the billion, so you got 255 for India. I thought you had other stuff to get you to 425. That's already done?

Yeah, so let's separate the two pieces. So India, we carry on our balance sheet as a health for sale asset at a value of $425 That represents both the sale price for the transaction, $255, and the cash that we expect that business to generate while we continue to operate it until it closes. So that cash will flow through free cash flow and is embedded in our free cash flow guides. So relative to the debt pay down target, it's $250 to $255 million that is gone.

And then to get to $700 million, it's the combination of the licensing and real estate deals?

Licensing, real estate, and a collection of a number of smaller things. Smaller things.

Great. Why don't we move to the diamides? They're off patent. Maybe just frame up where are we now in sales in 2025? And what's sort of the plan to... Yeah.

So let's separate the two because I think we've long sort of oversimplified by referring to the diamides. It's really two different molecules, Ranaxapir and Siazapir. Ranaxapir, the final patents expired on Ranaxapir at the end of 2025, as well as the remaining data protections. Siazapir is still under significant data protection in most of its key markets through much of the rest of the decade. So we still consider and report the size appears a part of a growth portfolio because there's still more growth to come from there and it's still protected, although not necessarily by composition of matter patents, but by other protections. Let's focus a little more on Ranaxapir, where really all of those protections have fallen away in the last year. And that business is stabilizing. It's down this year again, primarily because of reduction in our partner sales. so not dissimilar to what we're doing now with other with other new active ingredients when renax fear was introduced to the market uh you know the innovator you know the company we bought that molecule from entered into some licensing agreements and partnership agreements with a couple of other major partners uh we took on those agreements when we bought that business and continued to operate that that business um you know over time it became a cost plus contract structure. And as we prepared for the post-patent transition, you know, it became clear to us that the supply chain we had in place was not going to be competitive in costs with generic entrance. So we took some very significant write downs in 2024 and 25 to change that manufacturing supply chain and radically reduce the cost of manufacturing racks here. The good news is that prepares us very well for protecting and growing the profitability and sales of our branded renaxapir businesses because of this transition but and for the partner business it created significant headwind right because they benefited from those changes directly so i i would say the silver lining in you know what has been multi-years of headwind and particularly the last two years we've talked a lot about the drag from decline year on year and the partner of renaxapir business is it's becoming a small enough business now you know we'll do something on the order of 100 million dollars in sales to partners over an axe appear this year um that even if it drops another meaningful chunk next year it's no longer as material to our results um so it's really going to become i don't i wouldn't expect that next year we'll be talking a lot about partner renaxapir the branded renaxapir piece is where there's more interesting stuff going on The partner business sort of fades away into obsolescence as we move into the post-patent period. Branded business, there's a tremendous opportunity for us to maintain value in the branded business. We have a cost position that is comparable to quality generics. So at the low end and less differentiated simple formulations of an AxiPier, we can be cost competitive. We still command a premium for branding, quality, and service. but we have to be conscious and reflective of you know what competitive pricing is but we're increasingly shifting our mix for renaxapir to value-added formulations either mixtures with other active ingredients that give you improved pest coverage or help address resistance issues renaxapir has been out for a long time a lot of bugs have been exposed to renaxapir over time and have evolved to develop some resistance to the molecule so you you know one of the most effective techniques is then to pair it up with with another molecule to help make sure you maintain effective control of the pests we have the deepest knowledge of anyone in the world on how to do that because we've been managing that molecule for its life cycle right um so we are seeing and you know a big part of our our strategy is to shift our mix to increasingly to differentiated mixtures to higher concentration formulations to differentiated novel delivery methods but at the same time having a cost position that allows us to compete with lower value, less differentiated formulations with generic producers. We think what that results in is flattish profit dollars for Redaxapir, our contribution I think is the best way to think about it. We don't really do a profit at the product level in the same way. With growing sales coming out of 26 to 27 because we see higher volume growth despite lower pricing as Redaxapir-based products become more accessible. A limitation, even though we're experts, but massive molecule, one of the top five all-time molecules in the ag industry, it never got as big as it could because it was too expensive to use in a lot of lower-value crop applications. So at a different cost point, you can see significant elasticity of demand. Right. And we have seen this in countries like China and in Turkey, where in the years after patent expiration, you know, the volume and markets of chlorine from all the generic generic form of an accident here tripled as it the price point shifted and you can move into new applications. So our strategy is to take advantage of both that volume growth with a very different cost position that's competitive with quality generics, and at the same time shift the mix to where we are emphasizing more value-added differentiated mixtures that allow us to earn a higher return, higher margin, than just competing on a cost basis with simple generics. Right.

Great. Shifting gears real quick. You're guiding to EBITDA 670, 730 for the year, sales 3638. Maybe just kind of your thoughts on the crop protection market overall. The Ironman war clearly has created soaring fertilizer costs. This is not good for farmers. Yeah, I think most of your orders are set for crop protection this for the quarter and you know Maybe a little bit needs to be added your order book for Brazil, but how do you think the war the?

Increase in fertilizers, but they can't skip per se is gonna affect your industry Look, I think it's you know This has been a challenging couple years to the crop protection industry in general yeah lots of you know deflationary impacts pretty aggressive generic competition particularly coming out of china following a restart of the industry after it was shut down for a couple years during covid you know the iran war has a bunch of tentacles to it right the immediate symptom that everyone's seeing is around fertilizers and yes you know fertilizer price inflation does put pressure on farmer economics and you know does that that doesn't help in terms of you know where we are with a crop protection business, the longer this situation goes on in Iran, the more inflationary effects I think are going to be felt over a broader set of inputs to where crop protection chemicals, the intermediates used to make them, are far enough downstream from oil that we're not seeing it just yet. But it's coming. And the longer this disruption goes on, this conflict goes on, you're going to start seeing inflation and inputs for crop chemicals. And we have seen this movie before in 21 and 22 when we had massive supply disruptions principally in china because of covid controls we saw significant cost inflation 2022 fmc had over 450 million dollars of cost inflation in our pnl in one year right what happened we raised prices so while that's not a great thing and particularly since there's pressure on farmer profitability right now you know I do think there are pretty well observed interplays between energy prices and crop prices over time not on a daily basis but if they're sustained higher oil price I would expect to see corn and soybeans trade up right higher revenues for growers help solve a lot of problems but it doesn't relieve all pressure but will help but as if these pressures continue to build and show up and cost increases that hit the inputs that are direct into crop protection chemistry i would expect you're going to see price movement okay and that i think can help break some of both the the actual reality in the industry and some of the sentiment around the industry right sentiment around the industry i think is very negative right now because of pricing trends and generic pressures you're seeing a wave of new innovation coming i think we're the leading edge of that with the new active ingredients we just talked about some of our pure companies have some interesting technology coming a little later but coming here as well i think that's a part of the shift that will come in terms of sentiment around the industry and I think moving away from this deflationary environment even though I have no wish to see conflict further extended you know it the damage is already done there is going to be inflation it is going to come through I think that will help shift the pricing dynamic it may not leave to you know restoring prices to where they were but it may turn the tide from talking about continued easing and erosion of pricing to back to prices moving back up a little bit so that can help change i think both sentiment and change the tone and discussions it's all going to be prefaced on crop prices moving up yeah so that it allows room in the farmer in the farmers pnl to allow them to make a profit right and to be able to support it but i think there's a pretty good logical connection there a quick follow-up from from other um from folks on the webcast asking on the pricing how do you sort of manage that with the potential for more generics that might be used as farmers are a little bit stressed yeah look it's a double-edged sword a lot of generics live on very razor-thin margins and both you know it's not just pricing its availability and you know we are already seeing some reports of easing of pricing and reduced availability from the lowest of low-end generics yeah anecdotal not not yet you know not really hard data yet but we are seeing some some decent data at some decent anecdotal evidence of this i think that's really how this starts to switch is that it's going to start taking the folks who are really living on the nice edge and pushing them over and then people who have enough margin to buffer it and be able to continue operating are going to have to raise price to offset that cost over time okay and then just on brazil i think you've recently said that the order book looks good or maybe even better any thoughts on you know brazil's because that's a big chunk of your outlook for this year yeah look certainly we have a very heavily back-end weighted second half weighted outlook for the year right as you describe us you know the 700 million dollars and even done it in the midpoint you know 488 of that under guidance midpoint is coming in the second half and you know certainly brazil is a key contributor to that for us brazil is really driven by growth in the new active ingredients and repositioning of our core portfolio products and it's enabled by a shift and go to market to more emphasis on the direct sales to large growers channel complementing going through co-ops and through tradition and distribution and retail so we've made some public comments recently both on the earnings call and another conference recently around the order book and specifically the order book for for sales to these direct customers in Brazil where we've been you know we started a new that route to market last year and we're ramping up this year we've got a sales force that's been in the field the full year and we are seeing significantly higher orders you know more than 50 percent of the orders that we need to hit our plan for the year uh for direct customers we already have in hand okay you know there's orders that'll be fulfilled in q3 and q4 but they're being negotiated now and that number is continuing to climb we'll update that number more precisely at the july call but we are we're above 50 percent and continue to build very good momentum there and that helps increase our confidence and the ability to deliver heavily out of Brazil in the second half got it yet two follow-up questions and two minutes so rapid quickly questions like it sounds like your your inflation is coming are you gonna get pricing out to offset that for you or how do you see that I think we're gonna be as we did the last time we're gonna be very thoughtful about how we approach pricing but as as inflation starts you know and remember we turn inventory about twice a year so it's not a quick hit it will take time before that starts showing up we'll start having conversations with customers and start moving prices then the last question was built this up to 700 how did we get to a billion in terms of debt reduction and then any conversations the rating agencies and how they think about your liquidity yeah so very quickly we get from 700 to billion by selling additional product lines and businesses we have prioritized things that had limited to no near-term EBIT impact so India wasn't making any money for us so we get proceeds with no diminishment of our future earnings capability licensing actually grows our future earners and capability pull some of it for you know that real estate transactions no such that we may actually get an operating benefit when we're not we'll see the things that would next need to be done start to have more difficult trade-offs where you are giving up some of your near-term EBITDA for debt reduction and that's the reason we've sequenced it this way we'll continue to work it we feel very good about liquidity we had a very well Overseas used a bond offering two weeks ago, raised $1.2 billion. We went out initially for $750 million. We'll be using that to pay off the maturity in October, as well as to bring down particularly Revolver Barnes at this point. But we feel very comfortable about liquidity, very favorable response from the ratings agencies there. And from a credit perspective, the next real maturity we have is in 2029. So we feel very good about the balance. From a debt perspective, we would prefer to be an investment-grade metrics. that's going to take a few years to get back yeah you know that's that's the destination but from where we are today with the debt reduction that we're going to do this year and the work that we've done to improve the liquidity and with the offerings the offering and work we did with the revolver earlier this year we feel very comfortable where we are with the balance sheet right now just one last quick one maybe yes or no but 2027 you talked about double-digit growth feeling better about that potential yes i think we are feeling better about that potential I think you know the momentum for the new products in particular and we need to finish the restructure or manufacturing footprint we know how to do that we're good at that so we feel very confident on starting we'll get some of those benefits in 27 bigger than 28 but we will get some benefit in 27 we know how to do that we'll get it executed thank you Andrew appreciate it thanks Mike