FMC Corp (FMC) Tops Earnings And Revenue Estimates In Q4

FMC Corporation (NYSE: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.

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 (NYSE:MOS) , Kirkland Lake Gold Ltd. (TO:KL) and Israel Chemicals Ltd. (NYSE: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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