FMC Corp. Presents at 2nd Annual BofA Merrill Lynch Global Agriculture Conference, Feb-27-2013 03:45 PM
February 27, 2013 8:00 PM ET
FMC Corporation (FMC)
February 27, 2013 3:45 pm ET
Mark A. Douglas - President of The Agricultural Products Group
Andrew D. Sandifer - Vice President of Corporate Planning and Development
Kevin W. McCarthy - BofA Merrill Lynch, Research Division
Kevin W. McCarthy - BofA Merrill Lynch, Research Division
Attendance at our Second Annual Global Agriculture Conference. I'm very pleased to welcome our next presenting company, which is FMC Corporation. FMC is about an $8 billion equity market cap, producer of crop protection chemicals, as well as non-ag products, such as soda ash, lithium and biopolymers. Representing the company today, we have on the day, is Andrew Sandifer, who directs Investor Relations among some other responsibilities, as well as our speaker, Mark Douglas. Mark joined FMC almost 3 years ago. I think, it was March 2010, and he's currently President to the company's agricultural products division. So Mark, thank you for making the trip to Florida, and we look forward to your remarks.
Mark A. Douglas
Thanks, Kevin, and Sydney is a trip when you live in Philadelphia. I do have a public service announcement before I start my presentation. For those who are interested in spending some time in South Beach this evening, which I suppose would be a few people, there is a one way shuttle transfer available. It will make one stop at Collins and 16th and will leave from the ballroom level exit of the hotel at approximately 7:00 p.m.
Those were unprepared remarks. Well, good afternoon, everybody. I thank you for paying attention to the FMC presentation. We appreciate you being here. With me today is Andrew Sandifer, Vice President of Strategic Development and Investor Relations. I look forward to sharing with you a brief overview of our FMC and Vision 2015 plan.
I'll focus the bulk of my comments on the Agricultural Products segment, specifically on how our unique business model will continue to deliver superior performance through 2015 and beyond. Then I will be pleased to address any questions, along with Andrew, if you have questions that are non-ag related.
Before we get into the presentation, I'd like to remind everyone that today's remarks contain certain forward-looking statements that represent FMC's best judgment as of today's date based on available information. Actual results may vary materially from those contained in our forward-looking statements. Also, during this presentation, I will refer to certain non-GAAP terms that are defined in our website. For specific non-GAAP to GAAP reconciliations, please refer to our website or the appendix of this presentation.
FMC has 3 business segments: Agricultural Products, Specialty Chemicals and Industrial Chemicals. Within these 3 segments, we operate 6 largely independent businesses. Agricultural products is a standalone business focused on crop protection chemicals. Specialty Chemicals is comprised of 2 businesses. Our BioPolymer business represents about 75% of segment sales and is focused on specialty food ingredients and pharmaceutical binders and excipients. Our Lithium business represents about 25% of segment sales and provides a wide range of lithium compounds and focuses on energy storage, pharmaceutical and polymer synthesis markets. Industrial Chemicals includes 3 businesses: Soda ash, the largest business, representing about 70% of segment sales; Peroxygens representing 25% of segment sales; and our newest business, Environmental Solutions, that set fast-growing opportunities in air, water and soil applications, representing today about 5% of segment sales.
FMC has a diversified portfolio, which has uniquely attracted characteristics as compared to other chemical of material companies. We hold leading global or regional market positions in each of our businesses, and the end markets and customer base we reserve are highly diversified. As a result, our revenue stream is less sensitive to GDP cycles compared to others in our sector. In fact, about 80% of our sales going into end markets with little or no correlation to GDP cycles.
On a geographic basis, we are strongly biased towards rapidly developing economies, with 49% of our 2012 sales in these markets. Our energy requirements are also low. Our sources are well-balanced among natural gas, coal and electricity.
In 2012, energy represented only 7% of our cost of sales. And unlike most chemical companies, we have a limited dependence on petrochemical feedstocks. The only business within FMC that is on exposure to oil-based chemicals intermediates is our Agricultural Products business, and even there, it is a fairly modest exposure.
We also benefit from a diversified and integrated cost structure. For example, we are backwardly integrated into soda ash and lithium and we have a low reliance on purchase raw materials. In 2012, no single raw material accounted for more than 5% of total raw materials purchased. All of these elements greatly contribute to the predictability of FMC's revenue and earnings growth.
When we launched Vision 2015 back in late 2010, we established 4 critical targets for our company. These include: Growing sales to $5 billion or more and EBIT to $1.2 billion in 2015; sustaining mid-teens or higher return on invested capital; delivering significantly greater earnings stability; and generating significant cash flow and deploying that with discipline. By delivering on these 4 key goals, we believe we will deliver premium return to shareholders.
With the $3.7 billion in 2012 sales, we have added $1 billion in sales since the start of our plan. We are on track toward delivering on our target of $5 billion plus by 2015, and we now expect sales of $5.5 billion or more in 2015. Organic growth is contributing more than we initially anticipated. As you could imagine, we're quite pleased to see that aspect, but we continue to believe that external growth is important to Vision 2015. We are focusing on smaller, but highly strategic bolt-on acquisitions. These acquisitions may deliver less short-term sales, but they are critical to the evolution of our portfolio. We believe today that a bias towards organic reinvestment makes sense with so many organic opportunities within the company.
Copyright 2013 Seeking Alpha
Copyright © 2013 Microsoft. All rights reserved.
Quotes are real-time for NASDAQ, NYSE and AMEX. See delay times for other exchanges.
Fundamental company data and historical chart data provided by Thomson Reuters (click for restrictions). Real-time quotes provided by BATS Exchange. Real-time index quotes and delayed quotes supplied by Interactive Data Real-Time Services. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by SIX Financial Information.