It's we will do our next session here it's with FMC of course pure play crop protection chemicals producer happy to have with us today the CFO Andrew Sandefur and prayer Brando CEO we had a nice dinner last night with a lot of investors so we're gonna pick up the conversation today if you want to ask any questions against them on the app maybe Pierre Andrew we could start off by you know you've labeled this year as kind of a reset year or the first half fear being a reset talk about how the reset is going you know almost five six months into the year yeah thank you we we're on track we're exactly if not slightly ahead of where we we wanted to be the sorry sorry excuse me hi hi sorry

sorry just thank you very much so we we are we are where we want it to be we are really on plan for for q1 and for and for q2 I think the reset one part of the reset was putting the inventory of FMC product below where it has been in the past and and I would like to say except India which is a problem for for most companies we are exactly where we want to be so I believe we will be as we said in February at the start of Q3 in a position to deploy a growth strategy for for the second half of the year which is critical to deliver the year will be in a very good position.

Okay. Now, let's talk about what you did to get to the reset. So you have done some tougher choices in our next period to get ready for some moves in that molecule. You're getting ready for a new sales team. We've launched a sales team, but to really start hitting product sales into Q3. Maybe talk about some of those moves.

Yeah, I think at this stage, If I would define what we have to do for the company to be fully back on track, there is delivering the growth in Q3, Q4, which is driven entirely. We have not in the plan forecasted any natural growth of the market or change in demand. So it is driving growth through new technology, mostly the two new products we have introduced on the market last year, which are Fluendapeer, which is a fungicide and Isoflex, which is an herbicide. both of those products are impacting Q2 because they are mostly impacting part of Europe for cereals, which is a Q3 event. And then most of the registration we have for Fluindapir are in North America and in Brazil, which is an H2. So that's number one, growth of new technology, completely on par right now with what we're expecting to do. i said it if if we miss a number for new technology it will be on the high side right now lots of the time we are spending is more making sure we're accelerating capacity because the demand is is stronger than than what we're expecting so that piece is working well Piece number two is, as we've said, Brazil is basically four large markets, the co-ops, the retailers, the sugarcane and carton farms, and the raw crops large farm. The last one, we've never been able to penetrate because we needed to have a full product line to participate in this market. We had multiple discussions with them. We have a full product line with a new product. We have a new fungicide, which will be one of the best on the market, if not the best. We'll have three new herbicide, including two with new mode of action and a regular insecticide. side. We have at this stage structured the sales organization. We have hired the people. All the people we've hired are coming from the regions and have worked with the customers we are targeting. They have all been trained and the contacts are being established with the farmers in that segment. So we are ready for action in Q3 for that. So that's the second part of the growth to deliver Q3, Q4. If we deliver, and I believe we're a very strong place to deliver, we will deliver the H2 numbers. We understand there is a, it's a big number compared to the first half of the year, but the first half was focusing on resetting the company. So for H2, those are the two main factors. You talk about Ronex Appear. is mostly the strategy we're putting in place right now, is mostly a 26 impact. Three aspects to the strategy. Number one, reducing dramatically the manufacturing cost. We are there, right now we are within shooting distance of the quality generics. We will be at the beginning of 26 on par with the high quality generics for manufacturing cost. What does it do? It allows us to defend the position on what we call a simple solo rhodoxapia molecule and to expand the solo molecules into other markets, other insecticide markets, so to grow the volume at a lower price but much larger volume and at the same time develop new technology. We have three products today. we're putting on the market and we have three more registrations that will be a total of six products by next year. So the Relaxed Appear strategy is really we are gearing up to be ready at very early 2026.

Okay, let's dive into all those throughout the next half an hour or so. Let's talk about Brazil. So you put together a sales team pretty quickly. Talk about why you could do that so quickly.

I think we are benefiting from – that's the only good side about the situation we are facing today in the agriculture world is that there is not a lot of companies which are doing very well. Most of the companies have been going through restructuring. A number of people are available on the market. many companies have been downsizing in multiple big markets plus there is the fact that we are doing something new there is very companies today which are building a new part of the organization targeting growth from scratch and that's what we are doing and that's that's a challenge which is attracting a lot of salespeople and agronomists so we were able in about three months to four month to build that organization. Now I also want to, it was not as quick as it might seem because we talked about it at the February earnings call, but we started that process in November, December, 2024. So it is not like we started when we announced it. We're already in the process when we announced it. So we started in November and now by the end By now, the team is trained and is already in contact with the farmers.

What is like a selling pitch? Your new salesperson, he knows his customer, now he's got a new jersey on. What is his or her sales pitch?

The first selling pitch is new technology. The opening statement and what made those farmers contact us as much as we are contacting them was the launch of Fluendapir. We believe it is a product right now. It's going to be one of the fungicides on the market, which has the wider spectrum, which is very important for raw crops because the problem with fungus and controlling fungus and fungus keeps on coming back on a different form. This one has a very broad spectrum. That's the opening pitch. The second one is once we have that, we have three new herbicides we're putting on the market, and then we have the rest of the portfolio. So we're pretty much qualifying as a full product line supplier with a star product, which is a fungicide, which is very critical to those farmers.

Okay. And you are targeting, like you said, the large farms, not the mega farms. Talk a bit about, you know, why mega farms are sort of off the table.

Well, they're not off the table. I should have said that. If you think about the market, as I said, the big segments, there is what we call the mega farms, which are very often 100,000 hectares and more. Those are doing usually sugar cane. They are doing cotton. And as a rotation, they also do corn and soybean. We are selling, and we've sold for decades to these farms. It's one of the big markets today. If you exclude the new market we are going after, the raw crops, the large farm, we are selling 40% of our sales are direct to farmers, and those are the mega farms. So we're going to carry on selling to the mega farm, and the co-ops, and the retailers. That is not changing. The new market is now, because of the new technology, we have been invited by the large farm. And what we call large farm is 10,000 hectares to 100,000 hectares. You can only go into those farms. They can't afford to have eight suppliers. They need a limited number of suppliers which have a full product line. We did not qualify until this year. We do now, and that's a new segment. We know how to sell to corn producers and soybean producers. We are doing it with the mega farm. But we are going to apply this model now to the large farm. That's why it is not a big stretch. We've sold direct. We've sold into corn. We've sold into soybean. It is just a new segment.

Just thinking in Brazil now, generally, the level of generic pressure you're seeing in Brazil, is it the same as always? Is it different? I'm not talking about NAXP here, which, you know, more generally.

Yeah, it's there. It's always difficult to qualify if it's more or less. There is price pressure. It's not lower than it's been in the past, but it's not dramatically different than what it was in the past. I think the numbers will prove at the end of the year. We very often talk about price pressure but if you look over the last five, six years the percentage of sales, whether it's in Brazil or worldwide which belongs to generic versus tech companies is about balanced. Let's not forget also that tech companies like because we sell generic products. We manufacture them at a generic price. We are selling sulfentrosine, clomazone, bifenthrine. Those are the product generics are selling. So there is price pressure, you can't deny it. I think we are forecasting in the second half, low single-digit pricing. That's a kind of numbers for nature, which is not that different from the past in a low demand market. So Renex up here is a different story. That's why we need a brand-new strategy going into 26. We don't need it now because we are protected by patents in all of the large markets, except China and India. But that's going to be a different story.

For the next one, just sitting in Brazil, there was a question we had at dinner last night. One question was talking about how receivables have been a bit higher than normal. Andrew, could you talk to how long it may take for receivables to come down to normal levels?

Sure. I think, look, we do have elevated receivables versus our own history. I think it's a difficult thing to compare across companies because the country and crop mix are so different among the different players. But I think when we look at what's going on in our receivables, one, it's the hangover from the deceleration in sales from the peak in 22. It takes a couple of seasons for that to really resettle. And then second, I think most importantly, it's a country mix thing. When we think about, particularly in a year like this year, where in the first half we're taking very strong action to reset channel inventory by not selling into the channel, that's in a lot of countries where we have structurally shorter terms. In the second half of the year, we're going to have pretty significant growth, both top line and bottom line. A lot of that growth is tilted towards countries like Brazil, which have structurally longer terms. So there's a big country mix element that's keeping it elevated right now. I think as we get back into a more normal rhythm in 26 and 27, where you don't have this first half significant correction that we're going through right now in 2025, you'll see some normalization there. I'd just add one last comment just on working capital in general. I think working capital is an important part of the asset base for a crop chemical company. Crop chemistry is not big, heavy chemical production. We're very acid-light. You know, the capex load is very, very low in our business, but we do consume cash for working capital when we grow. So as we renew to grow, there will be some use of cash for working capital, but we'll get it back into a more normal balance than what you've seen in the last two years over the 26 and 27 horizon.

Just on the second half, you know, some of your competitors are talking about, you know, everything's great, but the one risk they see are crop protection, chemical pricing pressures, potentially the second half of the year. I know tariffs are up or down every hour. I don't know where they are now, but, you know, they changed. But when you think about making that big second half number of comps you have, you know, where do you weigh in the risk on more pricing pressure in general, tariffs, you know, as you play around with, you know, the thoughts, the numbers?

Tariffs, we've put that in our forecast. And we've put it in our forecast with the pre-90 days truth period. so at the 145%. Now, tariffs are important, but they are not that significant for a company like ours because a lot of the manufacturing which takes place in the U.S. is done with products which have to come from China. It would be detrimental to manufacturing in the U.S. if those products would have full tariffs. So you see many exemptions in the Annex 2 list for most of our products. So we're expecting a $15 million headwind, which is fully baked in a forecast. And that's on the worst-case scenario. So we do not believe it's going to derail what we have in mind right now for H2. So pricing, low single digit, we believe is in line with pretty much what the industry is saying, what our customers are expecting. Now, the big benefit for us is to give you a sense of the numbers, correct me if I'm wrong. In H2, I think we have about $150 million of growth, but $150 million of sales growth. Out of these $150 million of sales growth, $110 million on new technology. So new products which are put on the market on which you do not have price pressure because there is no competing product. So on the growth side, we're not expecting any price pressure. So the level of confidence is pretty high that what we have baked into our H2 forecast is quite achievable.

Okay. Let's talk over next, Pierre. So, the game changes on January 1st, 2026, right? Tell me how the game changes. January 1st, what happens?

January 1st, there is no process patent, composition of matter patent, or data protection. Pretty much in every part of the world, any generic company capable of manufacturing one except here will be authorized to sell the product. How do we deal with a situation like that? What was absolutely critical for us over the last year was to bring a manufacturing cost completely in line with the people we will be competing with, the generic. Now, there is two categories of generic. There is what we call the high-quality generic manufacturers who are able to make a product which works, and there is the low-level generics who are going to go after market we don't even participate in. So our objective is to be from a cost standpoint on par with the high-quality generic to be able to deploy a strategy without being limited by cost. We will be there. The plan is in place. We're almost there by January 1st. That will be done. Once you have that, you have to deploy a strategy which is based on it's a two prone strategy one is what we call the single molecule it's going to be using price to be on par with generic plus premium because we have a brand a brand has a value we don't need to be at the exact same price because there is quality people know our product plus we provide compared to generic a service to the customers with agronomist and tech service The target here with a single solo molecule is to protect our position today and expand into other places where people would rather buy Ronexapir than other insecticide, but Ronexapir was too expensive before. But if you bring it to a price where you can compete, they will switch to Ronexapir. So it's increasing the solo molecule market where we will be competing against generic at a lower price but increase volume significantly. The other part of the strategy is developing new technologies which command a premium. And those technologies have different, there is different aspect to it. In some cases, Ronex AP is a great product but has a very narrow spectrum. Very strong with Caterpillar. which is the biggest issue. But what you can do is, if you create the right mixture, you expand the spectrum, you'll limit the number of applications farmers have. So that's part of the strategy. We have to get one product like this, which is being sold this year. We're also creating high-concentration product. It's less cost for the farmer, easier to use. And finally, rice is a very big market for us. It's 25% of our sales, and we have developed a tablet, a fluorescent tablet, where the efficacy is very good for rice. So those are new products, which are commanding premium, and we have developed three other mixtures, which are addressing resistance and increasing spectrum, and we're going to get the registration in 2026. Now, to tell you the speed at which high-end technology farmers are willing to switch to new technology, remember this question we had last night? We sell $800 million of Renexapier in 2025. $200 are contracts with our partners we are supplying, the Cosplus, the tech partners. $600 million of Renexapier we sell to the market, branded Renexapier. Those three new products we've just introduced, at the end of 25, will represent $200 to $250 million. So of the $600 million, we brought three new molecules. Farmers know very well generics are coming. They know we're going to be lowering a price on the solar molecule. Nevertheless, to go to higher technology product, We have been able to convert already $250 million of those $600 million sales, which means the shift is taking place. So that's a two-prone strategy we're going to go after.

So in that, so what your forecast has been that Renax Pure Sales, about a billion last year, about $800 million, like you said. And then I think you're talking about a mid-to-high single-digit growth, CAGR, 26, 27 rate, so 8% or so. every year after this year?

Correct.

The goal being, you back to about a billion of sales in a few years. And I think you said last night, Andrew, I think you said that the goal is to get the same profitability level, I can't say it, profitability level on an taxpayer in dollars as you were in 25.

Yeah, let's be precise. We want profit dollars, right? Our three-year plan, and the February call, we let we laid out you know our outlook for 2027 where we think we can return sales to 5.2 billion and even data 1.2 billion for the company assumed in that plan are zero dollars of profit growth for an axe appear and that the strategy with Rinaxavir as Pierre described is to drive higher volume increase penetration into parts of the market where we don't play today with Rinaxavir to capture more value with new technology based on utilizing Rinaxavir doing both of those with a significantly lower cost position than what we've had historically. That'll allow us to grow sales with volume going up, price going down, but with cost significantly resetting, the balance between those three variables is flat profit dollars from Ranaxapir. So Ranaxapir is not a drag on the company's performance going forward, but it isn't the driver of where the growth from 2025 to 2027 is. That's really the growth portfolio, so i as appear in the four new active ingredients in our plant health business but that that's an essential assumption in our three-year outlook so i may have been wrong with this we'll find out in the next five seconds but i thought you so is the goal to be 27 racks per sale same as 24 27 profit dollars from an expert same as 25 so right the math will work out roughly that same kind of place um and we haven't i know it's a t up yeah we didn't give a firm he always does Yeah, we didn't give a firm number for Rinaxapir in 27, but the math will work. If you use that kind of high single-digit growth rate, it'll get it back to around 24 levels.

Because what I was thinking was then, and it makes sense, on this 27 Rinaxapir sales being the same as 24, but you're assuming a lower level of profitability on the same level of sales, which makes sense in a more generic world, right? Then I was trying to count the numbers last night, but I got tired.

No, but that's an important comment you're making. think about it 27 sales around 24 sales earnings at the same level as 25 25, 26, 27 earnings of Ronex Appear and going forward the whole strategy is we do not want Ronex Appear to handicap the earnings growth provided by the growth platform what I thought about that was you're not assuming a massive amount of margin reduction in the new FMC 1Xper reality? No, because our cost will be much lower. Our cost will be much lower. So it will not be a massive margin reduction, but the cost being lower, it will impact the overall dollar at the level of earnings.

So the question I have for you is, it's got to be difficult to know what the Chinese production cost is going to be for NACS up here. And then you've got to kind of plan around that. And you're going to find out next year and the year after. So how do you think about that? So you're right.

We just don't know exactly how the Chinese generic company calculate their cost. What is in, what is out, how it's done. But we know some companies, we call the high-quality generics, who are a bit more transparent around their costing. And we also know very well the process to manufacture Renexapia and the shortcut you can take. So we have a pretty good idea of the number we should reach to be on par with the high-quality generics. And that's the kind of number we are getting at. It is not a very rigorous comparison because we do not have all the information we need to understand the costing process generics are taking.

And don't you get worried that Chinese producers of anything get smart and smarter and smarter and, you know, the bar could go lower?

The molecule, ronox appear like it's even worse for cells appear, a complex molecule to make. Nobody knows that process better than us because we've made that for 20 years. To go much lower, as smart as the engineers or process engineers might be, you would have to take some shortcuts which will be detrimental to the quality of the product there is no doubt so we have a very large organization right now which is working on process that's all they have done all year to take us to what we call high quality generic costing and to go below that they are going to be impacting the quality of the product which might be okay for some market segment the very low-end insecticide but we don't play in this market that's not somewhere we're going to go in the expansion of our overall next up here okay you've talked about for Linda peer let's talk about some of their opportunities that you know you're excited about quadrupling sales some of your new AIs in the next four years a few years so Isoflex total X talk about you know what are the what's the excitement around some of the new AIs yeah first fluent up here is it's been tested by our customers we double sales this year versus last year Fluenda Peer and Isoflex, we're targeting about 250 this year, which is twice what it was last year. We will be there. I can say it in a pretty, pretty certain way. We will be there this year, except that the demand is starting to go beyond what we're expecting. So we are accelerating capacity right now because the demand is strong. Fluenda Peer, the product as a quality its spectrum it's one of the fungicide you're going to find on the market with the largest spectrum so there is a lot of excitement around this product Isoflex same thing it's it's a product mostly it's going to take off faster mostly in in Europe very very stronger besides for serons application I can tell you to say comment but I was last week with the head of Europe who told me Isoflex will bigger for Europe than the diamides were. It's going to be a very big product. The last two, Dodilex, is coming next year. Initially it was developed as an herbicide for rice. It's proving to be a very strong herbicide for multiple applications. And what is very important with this product, it's a new mode of action, which in nature has never seen a product. the last herbicide which was introduced with a new mode of action was 30 years ago so from a an efficacy of the product and it's kind of it's going to be very strong we are introducing that so one half of next year some early stage introductions yeah math next year we're significant commercialization in 27 so So this one, and then the last one, Remy Soxhafen, is another herbicide, also a broad application, and this one has a dual new mode of action. So also increasing the spectrum and something for which resistance exists. So those four AIs, listen, I never had a situation with introduction of four new products of that quality in such a short period of time.

Joel, if I could just add just some proportions for everyone's benefit. The diamides at their peak were about $2 billion in sales. Those four active ingredients each have a peak sales potential between $400 and $600 million. In fact, might be a bit higher for a couple of them than what we're learning now as we're rapidly commercializing them.

So the four of them combined are significantly larger than the diamides were at their peak. and you signed recently a new partnership with Bayer for Isoflex didn't you sign a new partnership with Bayer for Isoflex yes we did it's something we often do in the industry I'm certain we're going to sign more and I'm also certain we're going to sign a series for also flowing up here you signed this type of contract for companies which will criminalize the value of the product and want to apply it in the foyer market, but very often also we sign those partnership with seeds companies who want to use the product as part of their seeds program. So, and that's where most of our partnerships are. Those are signing with companies which is the benefit of the product, but it's to be applied on hectares where we don't participate. So those are gonna be critical, but I would expect looking at the quality of the product that they're going to be more than the one with Bayer announced in the next few months.

You've got some big growth plans, too, for pheromones and biologicals. This is just my conjecture. I just feel like you talk about the other things more than pheromones and biologicals. How do you feel about it versus what you felt about it a year ago?

Two different things. Biologicals, we talk about the growth of biologicals, and biologicals is growing double digits above 20%. Certainty around that growth. We have multiple products. We have multiple technology. They are most of the time used in conjunction with chemicals. It's a plant health business, a couple hundred million dollar business. This one, I could talk about it with the same certainty as the way we talked about the four AIs. Pheromones, we are a bit more careful because it's a very new way of dealing with insects, insect control. We're having a first cell of pheromones in the third quarter this year in Brazil with application in the fourth quarter. So we need this full-scale application to be confirmed that the technology works. If it does, if it does, it could be very big. But we don't want to talk about it because we don't know yet.

It's an old Monsanto term, groundbreaker. It's like a groundbreaker's year for pheromones.

Absolutely. We were forbidden to put a single dollar in a three-year plan from pheromones until...

By Andrew?

By Andrew, yeah. Until that test in Brazil or that sale in Brazil is seen. I would say that by the fourth quarter, certainly by the earnings call in February for the fourth quarter, we'll have a very good sense of the performance of feromones and what it could represent for the company.

Was there like something in the lab or some field trials in the last year or two that may say, maybe, it's pretty crazy, like new technology, if people understand the background of it. But like, is it something that happened in the last year or two in the background that made you a little less excited?

No, we are very, very excited. Every test we've made worked. We are just more concerned about when you do that on experimental farms, which are our farm. they are not of the size and the magnitude of the kind of farms we are dealing with in Brazil. So to do it in a very controlled environment, give us – we know technically it works. Does it work on a full-scale field is what we need to verify.

Okay, Pierre, so when you retire from FMC, the stock price is a little bit higher, and things have gone so well for the company over the following few years. You made the decision, you know, last year to come back, and that must have been a very interesting decision for you. Maybe talk about that decision and also, you know, what has been the most challenging thing that maybe you didn't anticipate a year ago and what's been maybe the easiest thing you didn't anticipate.

I think I came back because after talking with the board, talking with members of the management team, I believed we could define a road map to take the company to back where it was we had the tools to do it now I have to say and I have to be very honest when I came back July, August even September I thought about a soft landing approach was possible when I got to November and I looked at the issues around new technology and the launch, when I looked at Ranax APR costing, when I looked at specific inventory issues we had in the channel beyond the industry, I felt like the situation was a bit more complex. And that's where we made a decision to go to a full reset of the company. We knew we were taking two quarters, which would be painful for us operationally and for our investors, but we believe we have a roadmap. I believe that by the time we get to the earnings call for Q2, we're going to demonstrate that we have a plan which is solid for the second half. By the time we get to the November earnings call for Q3, we should be able to focus on two of the key elements of a strategy. That's a growth platform, Fluenda Peer and Isoflex. And that is the new route to market in Brazil. And that should give us some very strong level of confidence. and give level of confidence to our investors by the time we get to November around the second half of the year. It should also give us enough confidence knowing that by that time we'll have full certainty on the Ronex Appier cost about a 2026 number. So by November, I would love to be able to talk about growth of new product, new route to market, and start to give a pretty detailed view of what 2026 Imbida could look like, which would allow, if we do that well, to focus at the February call for Q4 to focus on the run-accept-your-story for 2026 and 2027 and the three-year plan. We have the tools. That's why I decided to come back. It was a matter of resetting the company and then taking advantage of what we have. I think we have more new technology. than many of the competitors today. So it's a matter of structuring the company and putting it back at a place where we can benefit from all of that.

Thanks Pierre, thanks Andrew.

Thank you all. Thank you very much. Thank you.