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FMC Corp (FMC) Tops Earnings and Revenue Estimates in Q4

Anindya Barman

FMC Corporation FMC logged profits (as reported) of $32.4 million or 24 cents per share in fourth-quarter 2018, down from $530.1 million or $3.94 per share earned a year ago. The bottom line in the reported quarter includes a non-cash charge of $106 million to adjust reserves for environmental liabilities.

Barring one-time items, adjusted earnings came in at $1.69 per share in the quarter, up 54% year over year. The results were driven by strong performance of FMC’s Agricultural Solutions unit and lower than expected taxes. Earnings also exceeded the Zacks Consensus Estimate of $1.65.

The chemical maker’s revenues climbed roughly 24% year over year to $1,219.2 million. It also surpassed the Zacks Consensus Estimate of $1,197.5 million. The Agricultural Solutions segment delivered strong results in the quarter on the back of solid demand.

FMC Corporation Price, Consensus and EPS Surprise

 

FMC Corporation Price, Consensus and EPS Surprise | FMC Corporation Quote

FY18 Results

For 2018, profit was $502.1 million or $3.69 per share, down around 6% from $535.8 million or $3.99 per share recorded in 2017. Adjusted earnings were $6.29 per share, up from $2.71 a year ago.

Revenues for the year went up 64% year over year to $4,727.8 million.

Segment Review

Revenues from the Agricultural Solutions division shot up around 27% year over year (up 18% on an adjusted basis) to around $1,099.4 million in the reported quarter, driven by strong demand in all regions and increased prices in Brazil. Segment EBITDA went up 35% year over year to $301.7 million.

Revenues from the Lithium unit, now rebranded as Livent Corporation after its IPO in October 2018, went up around 6% year over year to $119.8 million. Segment EBITDA fell 5% to $49 million.

The company is on track to spin off its 84% stake in Livent to shareholders of FMC on Mar 1, 2019, in the form of a pro-rata distribution of Livent shares.  

Balance Sheet

FMC ended 2018 with cash and cash equivalents of $161.7 million, a roughly 43% year-over-year decline. Long-term debt declined around 27% year over year to $2,179 million.

Outlook

The company provided its outlook for full-year 2019 and first-quarter 2019. The guidance excludes the impact of the Lithium segment. Lithium will be reported as discontinued operations when the company reports first-quarter 2019 results.

For 2019, FMC expects adjusted earnings per share of $5.55-$5.75 (barring any impact from share buybacks), up 8% at the midpoint compared with recast 2018 earnings. The company also expects revenues of $4.45-$4.55 billion for the year, up 5% at the midpoint compared with recast 2018 revenues.

Adjusted EBITDA for 2019 is forecast in the band of $1.165-$1.205 billion, an increase of 7% at the midpoint compared with recast 2018 adjusted EBITDA .

For first-quarter 2019, FMC expects adjusted earnings in the range of $1.58 to $1.68 per share, up 3% at the midpoint compared with recast first-quarter 2018 earnings. The company sees revenues of $1.18-$1.21 billion for the quarter, up 8% at the midpoint versus recast first-quarter 2018 revenues.

Adjusted EBITDA for the quarter is forecast in the range of $320-$340 million, flat year-over-year at the midpoint compared with recast first-quarter 2018 adjusted EBITDA. The company sees headwinds from higher raw material costs and currency in first-half 2019.

The company also expects to repurchase up to $500 million of shares in 2019, including $100 million already purchased this year.

Price Performance

Shares of FMC are up around 3.5% over a year, outperforming the industry’s decline of roughly 21.6%.



 

Zacks Rank & Stocks to Consider

FMC currently carries a Zacks Rank #4 (Sell).

A few better-ranked stocks worth considering in the basic materials space include The Mosaic Company MOS, Kirkland Lake Gold Ltd. KL and Israel Chemicals Ltd. ICL.

Mosaic has an expected earnings growth rate of 24% for the current year and carries a Zacks Rank #1 (Strong Buy). Its shares have gained 23% in the past year. You can see the complete list of today’s Zacks #1 Rank stocks here.

Kirkland Lake Gold has an expected earnings growth rate of 20.9% for the current year and carries a Zacks Rank #2 (Buy). Its shares have shot up 137% in the past year.

Israel Chemicals has an expected earnings growth rate of 10.8% for the current year and carries a Zacks Rank #2. The company’s shares have rallied 38% over the past year.  

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