2008-07-29 16:42:00
FMC Corporation Announces Second Quarter 2008 Results
- Record second quarter results with sales up 23 percent and earnings up 43
percent to $1.29 per diluted share before restructuring and other income
and charges
- Full-year outlook raised to $4.20 to $4.40 per diluted share before
restructuring and other income and charges
PHILADELPHIA, July 29 /EMWNews/ -- FMC Corporation (NYSE:
FMC) today reported net income of $84.4 million, or $1.10 per diluted
share, in the second quarter of 2008, versus net income of $8.6 million, or
$0.11 per diluted share, in the second quarter of 2007. Net income in the
current quarter included restructuring and other income and charges of
$14.5 million after-tax, or a charge of $0.19 per diluted share, versus
restructuring and other income and charges of $61.2 million after-tax, or
charges of $0.79 per diluted share, in the prior-year quarter. Excluding
these items in both periods, the company earned $1.29 per diluted share in
the current quarter, an increase of 43 percent versus $0.90 per diluted
share in the second quarter of 2007. Second quarter revenue of $806.6
million increased 23 percent versus $657.9 million in the prior year.
William G. Walter, FMC chairman, president and chief executive officer,
said, "Our record second quarter results were driven by strong sales growth
across all our businesses. Agricultural Products realized higher sales in
all regions and across all product lines. Specialty Chemicals delivered
strong commercial performance in both BioPolymer and lithium. Industrial
Chemicals achieved higher selling prices and volumes across the segment.
Our second quarter performance reflects the diversity and attractiveness of
our end-use markets and the value of our global footprint."
Revenue in Agricultural Products of $276.6 million was 26 percent
higher than the prior-year quarter, driven by growth in all regions
particularly Europe, North America and Asia. Segment earnings before
interest and taxes ("segment earnings") of $84.4 million were up 30 percent
versus the year-ago quarter, as a result of the higher sales and continued
global supply chain productivity improvements, which more than offset
higher raw material costs.
Revenue in Specialty Chemicals was $192.4 million, an increase of 15
percent versus the prior-year quarter, as higher selling prices and volume
growth were realized in BioPolymer and lithium. Segment earnings of $41.5
million increased 5 percent versus the year-ago quarter due to the higher
sales and the favorable impact of currency translation, largely offset by
increased costs for raw materials, energy and export taxes.
Revenue in Industrial Chemicals was $338.9 million, an increase of 25
percent from the prior-year quarter, driven by higher selling prices,
particularly in soda ash and phosphates, and volumes across the segment.
Segment earnings of $45.3 million increased 111 percent versus the year-ago
quarter, as the higher sales and improved power market conditions in Spain
more than offset higher raw material costs.
Corporate expense was $13.1 million, down from $14.3 million in the
prior-year quarter. Interest expense, net, was $8.3 million as compared to
$10.0 million in the year-ago quarter. On June 30, 2008, gross consolidated
debt was $554.3 million, and debt, net of cash, was $431.0 million. For the
quarter, depreciation and amortization was $30.7 million and capital
expenditures were $33.8 million.
Six Months Results
Revenue was $1,556.8 million, an increase of 17 percent as compared
with $1,332.0 million in the prior-year period. Net income was $178.3
million, up 228 percent from $54.4 million in the year-earlier period. Net
income in the current period included restructuring and other income and
charges of $11.8 million, versus restructuring and other income and charges
of $87.1 million in the prior-year period. Excluding these charges, the
company earned $190.1 million in the first half of 2008, an increase of 34
percent versus $141.5 million in the first half of 2007.
Revenue in Agricultural Products was $554.1 million, an increase of 19
percent versus the prior-year period. Sales gains benefited from buoyant
global agrochemical market conditions and new product introductions.
Segment earnings were $167.4 million, an increase of 23 percent from the
first half of 2007 as a result of the higher sales and continued global
supply chain productivity improvements, which more than offset higher raw
material costs.
Revenue in Specialty Chemicals was $376.2 million, an increase of 13
percent versus the prior-year period, driven by strong commercial
performance in BioPolymer and lithium. Segment earnings of $81.0 million
increased 8 percent versus the year-earlier period as a result of the
higher sales, partially offset by higher raw material and energy costs and
export taxes.
Revenue in Industrial Chemicals was $629.3 million, an increase of 18
percent versus the prior-year period, driven by higher selling prices
across the segment, particularly in soda ash and phosphates, and volume
growth. Segment earnings of $80.8 million increased 107 percent versus the
year-earlier period, as the higher sales and improved power market
conditions in Spain more than offset higher raw material costs.
Corporate expense was $25.0 million, as compared to $27.5 million in
the year-earlier period. Interest expense, net, was $17.0 million, down
from $18.4 million in the prior-year period. For the period, depreciation
and amortization was $61.7 million and capital expenditures were $66.4
million.
Outlook
Regarding the outlook for the balance of 2008, Walter said, "Based on
our strong first-half results, we have raised our full-year 2008 outlook
for earnings before restructuring and other income and charges to $4.20 to
$4.40 per diluted share. We look for continued earnings growth in
Agricultural Products driven by broad-based sales growth. In Specialty
Chemicals, we expect earnings growth to be realized through strong
commercial performance in BioPolymer and lithium. Industrial Chemicals will
continue to derive significant benefit from higher selling prices and
volume growth across the segment. We are confident that we will achieve
these results despite the headwind of accelerating raw material cost
increases in all our businesses."
Walter added, "For the third quarter of 2008, we anticipate continued
strong commercial performance in all segments, particularly Industrial
Chemicals, with earnings before restructuring and other income and charges
of $0.95 to $1.05 per diluted share."
FMC will conduct its second quarter conference call and webcast at
10:00 a.m. ET on Wednesday, July 30, 2008. This event will be available
live and as a replay on the web at http://www.fmc.com. Prior to the
conference call, the Company will also provide supplemental information on
the web including its 2008 Outlook Statement, definitions of non-GAAP terms
and reconciliations of non-GAAP figures to the nearest available GAAP term.
FMC Corporation is a diversified chemical company serving agricultural,
industrial and consumer markets globally for more than a century with
innovative solutions, applications and quality products. The company
employs over 5,000 people throughout the world. The company operates its
businesses in three segments: Agricultural Products, Specialty Chemicals
and Industrial Chemicals.
Safe Harbor Statement under the Private Securities Act of 1995:
Statements in this news release that are forward-looking statements are
subject to various risks and uncertainties concerning specific factors
described in FMC Corporation's 2007 Form 10-K and other SEC filings. Such
information contained herein represents management's best judgment as of
the date hereof based on information currently available. FMC Corporation
does not intend to update this information and disclaims any legal
obligation to the contrary. Historical information is not necessarily
indicative of future performance.
FMC CORPORATION AND CONSOLIDATED SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited, in millions, except per share amounts)
Three Months Ended Six Months Ended
June 30, June 30,
2008 2007 2008 2007
Revenue $806.6 $657.9 $1,556.8 $1,332.0
Costs of sales and services 536.4 447.9 1,035.6 911.2
Selling, general and administrative
expenses 90.0 77.9 173.7 155.3
Research and development expenses 23.0 23.7 44.8 46.9
In-process research and development - - - 1.0
Restructuring and other charges
(income) 10.7 92.7 2.4 117.0
Total costs and expenses 660.1 642.2 1,256.5 1,231.4
Income from operations 146.5 15.7 300.3 100.6
Equity in (earnings) loss of
affiliates (0.3) (1.9) (0.6) (2.7)
Minority interests 3.8 1.3 6.7 3.2
Interest expense, net 8.3 10.0 17.0 18.4
Income from continuing operations
before income taxes 134.7 6.3 277.2 81.7
Provision (benefit) for income taxes 42.5 (8.0) 84.7 12.3
Income from continuing operations 92.2 14.3 192.5 69.4
Discontinued operations, net of income
taxes (7.8) (5.7) (14.2) (15.0)
Net income $84.4 $8.6 $178.3 $54.4
Basic earnings (loss) per common
share:
Continuing operations $1.24 $0.19 $2.59 $0.92
Discontinued operations (0.10) (0.08) (0.19) (0.20)
Basic earnings per common share $1.14 $0.11 $2.40 $0.72
Average number of shares used in basic
earnings per share computations 74.3 75.7 74.4 75.8
Diluted earnings (loss) per common
share:
Continuing operations $1.20 $0.18 $2.52 $0.89
Discontinued operations (0.10) (0.07) (0.19) (0.19)
Diluted earnings per common share $1.10 $0.11 $2.33 $0.70
Average number of shares used in
diluted earnings per share
computations 76.5 77.8 76.5 78.0
Other Data:
Capital expenditures $33.8 $24.2 $66.4 $44.6
Depreciation and amortization expense $30.7 $33.9 $61.7 $68.4
FMC CORPORATION AND CONSOLIDATED SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME FROM CONTINUING OPERATIONS,
EXCLUDING RESTRUCTURING AND OTHER INCOME AND CHARGES (NON-GAAP)*
(Unaudited, in millions, except per share amounts)
Three Months Ended Six Months Ended
June 30, June 30,
2008 2007 2008 2007
Revenue $806.6 $657.9 $1,556.8 $1,332.0
Costs of sales and services 536.4 447.9 1,035.6 911.2
Selling, general and administrative
expenses 90.0 77.9 173.7 155.3
Research and development expenses 23.0 23.7 44.8 46.9
Total costs and expenses 649.4 549.5 1,254.1 1,113.4
Income from operations 157.2 108.4 302.7 218.6
Equity in (earnings) loss of
affiliates (0.3) (1.9) (0.6) (2.3)
Minority interests 3.8 2.7 6.7 4.6
Interest expense, net 8.3 10.0 17.0 18.4
Income from continuing operations
before income taxes, excluding
restructuring and other income and
charges 145.4 97.6 279.6 197.9
Provision for income taxes 46.5 27.8 89.5 56.4
After-tax income from continuing
operations, excluding restructuring
and other income and charges * $98.9 $69.8 $190.1 $141.5
Basic after-tax income from continuing
operations per share, excluding
restructuring and other income and
charges $1.33 $0.92 $2.56 $1.87
Average number of shares used in basic
after-tax income per share
computations 74.3 75.7 74.4 75.8
Diluted after-tax income from
continuing operations per share,
excluding restructuring and other
income and charges $1.29 $0.90 $2.48 $1.81
Average number of shares used in
diluted after-tax income per share
computations 76.5 77.8 76.5 78.0
* The Company believes that the Non-GAAP financial measure "After-tax
income from continuing operations, excluding restructuring and other
income and charges," and its presentation on a per share basis, provides
useful information about the Company's operating results to investors and
securities analysts. The Company also believes that excluding the effect
of restructuring and other income and charges from operating results
allows management and investors to compare more easily the financial
performance of its underlying businesses from period to period.
Please see the reconciliation of Non-GAAP financial measures to GAAP
financial
results.
FMC CORPORATION AND CONSOLIDATED SUBSIDIARIES
RECONCILIATION OF NET INCOME (GAAP) TO AFTER-TAX INCOME FROM CONTINUING OPERATIONS, EXCLUDING RESTRUCTURING AND OTHER INCOME AND CHARGES
(NON-GAAP)
(Unaudited, in millions, except per share amounts)
Three Months Ended Six Months Ended
June 30, June 30,
2008 2007 2008 2007
Net income (GAAP) $84.4 $8.6 $178.3 $54.4
Discontinued operations, net of
income taxes (a) 7.8 5.7 14.2 15.0
Restructuring and other (income)
charges, net (b) 10.7 91.3 2.4 115.2
In-process research and
development ( c ) - - - 1.0
Tax effect of restructuring and other
(income) charges and in-process
research and development (4.0) (34.4) (4.8) (43.8)
Tax adjustments (d) - (1.4) - (0.3)
After-tax income from continuing
operations, excluding restructuring
and other income and charges
(Non-GAAP) $98.9 $69.8 $190.1 $141.5
Diluted earnings per common share
(GAAP) $1.10 $0.11 $2.33 $0.70
Discontinued operations per diluted
share 0.10 0.07 0.19 0.19
Restructuring and other (income)
charges, net per diluted share,
before tax 0.14 1.17 0.03 1.48
In-process research and development
per diluted share, before tax - - - 0.01
Tax effect of restructuring and other
(income) charges and in-process
research and development (0.05) (0.43) (0.07) (0.56)
Tax adjustments per diluted share - (0.02) - (0.01)
Diluted after-tax income from
continuing operations per share,
excluding restructuring and other
income and charges (Non-GAAP) $1.29 $0.90 $2.48 $1.81
Average number of shares used in
diluted after-tax income from
continuing operations per share
computations 76.5 77.8 76.5 78.0
(a) Discontinued operations for the three and six months ended June 30,
2008 and 2007, respectively, primarily includes provisions for
environmental liabilities and legal reserves and expenses related to
previously discontinued operations.
(b) 2008
Amounts for the three months ended June 30, 2008 primarily include
continued charges related to the closure of our Baltimore agricultural
chemicals facility ($5.8 million) and charges associated with the decision
made in the second quarter of 2008 to close our Jacksonville, Florida
agricultural formulation plant ($2.6 million). Both of these charges are
associated with our Agricultural Chemicals segment. We also incurred
charges relating to continuing environmental sites as a Corporate charge
($1.1 million) and restructuring related severance charges in our
Industrial Chemicals segment ($0.8 million).
For the six months ended June 30, 2008, amounts include a net gain
associated with the sale of our major research and development facility
in Princeton, New Jersey ($29.6 million - gain) and a gain associated
with the sale of our sodium sulfate assets in Foret which is part of
our Industrial Chemicals segment ($3.6 million - gain). Fully
offsetting these gains were charges related to continued charges
related to the closure of our Baltimore agricultural chemicals facility
($21.6 million) and Jacksonville agricultural formulation facility
($2.6 million), charges associated with continuing environmental sites as
a Corporate charge ($6.0 million) and restructuring related severance
charges in Agricultural Products segment and Industrial Chemicals
segment ($1.8 million and $1.9 million, respectively).
2007
Amounts for the three months ended June 30, 2007 primarily include
charges related to the closure of the Baltimore agricultural chemicals
facility ($75.2 million), charges associated with the asset abandonment
of one of our Foret co-generation facilities which is part of the
Industrial Chemicals segment ($6.5 million after minority interest) and
charges associated with continuing environmental sites as a Corporate
charge ($4.5 million).
For the six months ended June 30, 2007, in addition to the above for
the three months ended June 30, 2007, amounts also include charges
related to the settlement of all claims with Solutia and Astaris (now
known as Siratsa) regarding our contribution of PPA technology to the
Astaris joint venture in our Industrial Chemicals segment ($22.5
million).
In 2007, in addition to the line item "Restructuring and other charges"
as presented in the condensed consolidated statements of operations and
discussed in details above, this line item in the above reconciliation
includes the following:
- A $0.4 million gain related to cash received from our Astaris joint
venture whose assets were substantially sold in 2005. On the condensed
consolidated statements of operations this gain is included in "Equity
in (earnings) loss of affiliates" for the six months ended June 30,
2007.
- Minority interest of $1.4 million related to the abandonment of one
of our Foret co-generation facilities as previously discussed above.
We own 75% of this entity. The minority interest is included in
"Minority interests" in the condensed consolidated statements of
operations for the three and six months ended June 30, 2007.
( c ) Proprietary Fungicide Agreement
In the first quarter of 2007, our Agricultural Products segment acquired
further rights from a third-party company to develop their proprietary
fungicide. In acquiring those further rights, we paid an additional $1.0
million and have recorded this amount as a charge to "In-process research
and development" in the condensed consolidated statement of operations for
the six months ended June 30, 2007.
(d) Tax adjustments for the three and six months ended June 30, 2007
are related to adjustments for prior year tax matters.
FMC CORPORATION AND CONSOLIDATED SUBSIDIARIES
INDUSTRY SEGMENT DATA
(Unaudited, in millions)
Three Months Ended Six Months Ended
June 30, June 30,
2008 2007 2008 2007
Revenue
Agricultural Products $276.6 $219.2 $554.1 $467.5
Specialty Chemicals 192.4 167.5 376.2 333.7
Industrial Chemicals 338.9 272.2 629.3 532.7
Eliminations (1.3) (1.0) (2.8) (1.9)
Total $806.6 $657.9 $1,556.8 $1,332.0
Income from continuing operations
before income taxes
Agricultural Products $84.4 $65.1 $167.4 $135.9
Specialty Chemicals 41.5 39.5 81.0 75.1
Industrial Chemicals 45.3 21.5 80.8 39.1
Eliminations - 0.1 (0.2) (0.1)
Segment operating profit 171.2 126.2 329.0 250.0
Corporate (13.1) (14.3) (25.0) (27.5)
Other income (expense), net (4.4) (4.3) (7.4) (6.2)
Operating profit from continuing
operations before items noted
below: 153.7 107.6 296.6 216.3
Restructuring and other income
(charges), net (a) (10.7) (91.3) (2.4) (115.2)
Interest expense, net (8.3) (10.0) (17.0) (18.4)
In-process research and development (b) - - - (1.0)
Income from continuing operations
before income taxes $134.7 $6.3 $277.2 $81.7
(a) Amounts for the three months ended June 30, 2008 related to
Agricultural Products ($8.4 million), Industrial Chemicals ($1.2
million), and Corporate ($1.1 million). Amounts for the three months
ended June 30, 2007 related to Agricultural Products ($75.4 million),
Industrial Chemicals ($9.5 million), Specialty Chemicals ($1.8 million)
and Corporate ($4.6 million).
Amounts for the six months ended June 30, 2008 related to Agricultural
Products ($26.2 million), Industrial Chemicals ($0.6 million - gain),
Specialty Chemicals ($0.3 million) and Corporate ($23.5 million - gain).
Amounts for the six months ended June 30, 2007 related to Agricultural
Products ($75.4 million), Industrial Chemicals ($32.8 million), Specialty
Chemicals ($1.8 million) and Corporate ($5.2 million).
See Note B to the schedule "Reconciliation of Net Income (GAAP) to
After-Tax Income from Continuing Operations Excluding Restructuring and
Other Income and Charges (Non-GAAP)" for further details on the components
that make up this line item.
(b) See Note C to the schedule "Reconciliation of Net Income (GAAP) to
After-Tax Income from Continuing Operations Excluding Restructuring and
Other Income and Charges (Non-GAAP)" for further details on the components
that make up this line item.
FMC CORPORATION AND CONSOLIDATED SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited, in millions)
June 30, December 31,
2008 2007
Cash and cash equivalents $123.3 $75.5
Trade receivables, net 754.0 599.7
Inventories 321.2 275.0
Other current assets 172.6 126.9
Deferred income taxes 144.4 117.0
Total current assets 1,515.5 1,194.1
Property, plant and equipment, net 917.5 934.7
Goodwill 193.0 180.2
Deferred income taxes 161.6 259.0
Other long-term assets 191.1 165.4
Total assets $2,978.7 $2,733.4
Short-term debt $62.3 $47.9
Current portion of long-term debt 0.3 77.7
Accounts payable, trade and other 370.0 327.4
Guarantees of vendor financing 25.3 29.7
Accrued pensions and other
post-retirement benefits, current 10.6 10.6
Other current liabilities 308.4 258.1
Total current liabilities 776.9 751.4
Long-term debt 491.7 419.6
Long-term liabilities 494.6 498.1
Stockholders' equity 1,215.5 1,064.3
Total liabilities and stockholders' equity $2,978.7 $2,733.4
FMC CORPORATION AND CONSOLIDATED SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited, in millions)
Six Months Ended
June 30,
2008 2007
Cash provided by operating activities $138.4 $52.6
Cash (required) by operating activities
of discontinued operations (26.7) (16.9)
Cash provided (required) by investing activities:
Capital expenditures (66.4) (44.6)
Other investing activities 75.9 4.2
9.5 (40.4)
Cash provided (required) by financing activities:
Net borrowings under committed credit
facilities 75.0 15.0
Increase (decrease) in short-term debt 14.8 14.8
Repayment of long-term debt (92.8) (66.0)
Distributions to minority partners (5.7) (4.5)
Dividends paid (15.8) (13.8)
Repurchases of common stock (61.6) (54.5)
Issuances of common stock, net 10.8 10.0
(75.3) (99.0)
Effect of exchange rate changes on cash 1.9 1.4
Increase (decrease) in cash and cash equivalents 47.8 (102.3)
Cash and cash equivalents, beginning of year 75.5 165.5
Cash and cash equivalents, end of period $123.3 $63.2
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