FMC (FMC)
Q4 2012 Earnings Call
February 07, 2013 11:00 am ET
Executives
Andrew D. Sandifer - Vice President of Corporate Planning and Development
Pierre R. Brondeau - Chairman, Chief Executive Officer, President and Chairman of Executive Committee
Paul W. Graves - Chief Financial Officer and Executive Vice President
Edward T. Flynn - President of the Industrial Chemicals Group
Mark A. Douglas - President of The Agricultural Products Group
D. Michael Wilson - President of Specialty Chemicals Group
Analysts
John P. McNulty - Crédit Suisse AG, Research Division
Eugene Fedotoff - Longbow Research LLC
Kevin W. McCarthy - BofA Merrill Lynch, Research Division
Frank J. Mitsch - Wells Fargo Securities, LLC, Research Division
Peter Butler
Neal Sangani - Goldman Sachs Group Inc., Research Division
Andrew W. Cash - SunTrust Robinson Humphrey, Inc., Research Division
Robert Walker - Jefferies & Company, Inc., Research Division
Michael J. Harrison - First Analysis Securities Corporation, Research Division
Presentation
Operator
Good morning, ladies and gentlemen, and welcome to the fourth quarter 2012 earnings release conference call for FMC Corp. [Operator Instructions] I'll now turn the conference over to Mr. Andrew Sandifer, Vice President, Strategic Development and Investor Relations for FMC Corp. Mr. Sandifer, please go ahead.
Andrew D. Sandifer
Great. Thank you, John. Good morning. Welcome, everyone, to FMC's Fourth Quarter 2012 Conference Call and Webcast. Joining me today are Pierre Brondeau, President, Chief Executive Officer and Chairman; and Paul Graves, Executive Vice President and Chief Financial Officer.
Our agenda this morning is as follows: Pierre will begin the call with a review of our fourth quarter and full year performance. Paul will provide an update on the company's financial position. Pierre will then provide our outlook for the first quarter and full year 2013. We will then complete the call by taking your questions.
Joining Pierre and Paul for the Q&A session will be Mark Douglas, President, Agricultural Products Group; Michael Wilson, President, Specialty Chemicals Group; and Ed Flynn, President, Industrial Chemicals Group.
Let me remind everyone that our discussion today will include certain statements that are forward-looking and subject to various risks and uncertainties concerning specific factors that are summarized in FMC's 2011 Form 10-K, our most recent Form 10-Q and other SEC filings. This information represents our best judgment based upon today's information. Actual results may vary based upon these risks and uncertainties.
Our discussion today will focus on adjusted earnings for all income statement and EPS references. Under the heading entitled, Glossary of Financial Terms on our website that's available at www.fmc.com, you will find the definition of adjusted earnings and certain other non-GAAP financial terms that we may refer to during today's conference call.
Also in our website, we posted our current 2013 outlook statement, which provides our guidance for the full year and first quarter 2013. Reconciliation to GAAP of the non-GAAP figures we will use today, as well as an additional exhibit describing changes we're making for 2013 to the way we present segment results in our financial statements. And finally, share and per share financial data discussed today reflect the 2 for 1 split of FMC's common stock completed on May 24, 2012. With that, it's now my pleasure to turn the call over to Pierre Brondeau. Pierre?
Pierre R. Brondeau
Thank you, Andrew, and good morning, everyone. As you saw in our earnings release last night, FMC continues to deliver strong operating performance and closed a successful 2012 with fourth quarter adjusted operating profit up 19% versus the prior-year period. With this performance, we are fully on track to meet or exceed all of our Vision 2015 goals.
Let me begin with some highlights for the full year. Full year 2012 sales of $3.7 billion were up 11%, with adjusted operating profit up 16%. Earnings per share grew 16% to $3.48 per diluted share. Return on invested capital continued to be pretty high at 22.9% for the year. Underlying this performance was Agricultural Products' ninth consecutive year of record earnings, supported by solid earnings growth in Industrial Chemicals but offset, in part, by disappointing performance in Specialty Chemicals.
Increased exposure to rapidly developing economies continue to be a key driver, with 49% growth in 2012 sales to this faster-growing parts of the world as compared to 46% in 2011. Across the company, we completed 7 external growth transactions, 2 company acquisitions, 1 joint venture, 1 global licensing and IP agreement, and 3 joint developments and commercialization agreements, all of which complement and reinforce our organic growth efforts with technology, products and market access. We rewarded shareholders as well, returning $193 million through share repurchases and dividends.
2012 was truly a strong year for FMC.
Let me now move to results in the fourth quarter. Total company sales of $1 billion increased $91 million or 10% versus last year. It was led by continued growth performance in Agricultural Products segment. Originally, sales grew more rapidly in Asia, up 23%, followed by Latin America, up 10% and North America, up 9%. Sales in Europe, Middle East and Africa were flat, reflecting the continued weak economy conditions there.
Gross margin of $341 million increased by $47 million or 16% versus last year, with higher volumes and selling prices partially offset by increased operating costs.
Gross margin percent improved by 171 basis points over last year to 34%.
SG&A and R&D of $165 million increased $20 million or 14%, largely due to increased spending on targeted growth initiatives.
Adjusted operating profit of $172 million increased $10 million or 19% compared to last year.
We delivered adjusted earnings of $0.81 per diluted share, an increase of 2% versus the year ago quarter. Earnings per share growth in the quarter was dampened by a higher-than-expected tax rate of 30.5%, especially as compared to the prior-year period, a typically low rate of 17.3%.
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