FMC Corporation — 2021 Form 10-K
Reporting period: Fiscal year ended December 31, 2021; comparisons are primarily with 2020. FMC is a global agricultural sciences company operating as one business segment, selling crop-protection products and plant-health solutions in more than 120 countries.
Financial performance
| Metric | 2021 | 2020 | Change |
|---|---|---|---|
| Revenue | $5,045.2 million | $4,642.1 million | Up 9%; up 8% excluding currency |
| Gross margin | $2,171.7 million; 43% | $2,052.0 million; 44% | Up 6%; margin down 1 percentage point |
| Income from continuing operations | $802.2 million | $578.9 million | Up 39% |
| Net income attributable to FMC stockholders | $736.5 million; diluted EPS $5.70 | $551.5 million; diluted EPS $4.22 | Up 34% |
| Adjusted after-tax earnings from continuing operations (non-GAAP) | $894.9 million | $809.0 million | Up 11% |
| Adjusted EBITDA (non-GAAP) | $1,324.2 million | $1,250.4 million | Up 6% |
| Cash from continuing operating activities | $898.6 million | $736.8 million | Up $161.8 million |
| Free cash flow (non-GAAP) | $713.3 million | $544.1 million | Up $169.2 million |
Revenue growth was driven mainly by volume, with pricing and favorable currency also contributing. Higher raw-material, packaging and logistics costs reduced gross margin as a percentage of sales. Revenue increased in North America, Latin America and Asia; EMEA declined 1%. Insecticides generated $3,020.0 million of revenue, including $1.9 billion in combined Rynaxypyr and Cyazypyr diamide sales. Plant Health revenue was $216.8 million, up from $180.2 million.
Fourth quarter: Revenue was $1,413.6 million versus $1,152.2 million in Q4 2020; gross margin was $614.7 million versus $501.4 million. Income from continuing operations was $223.0 million versus $38.9 million, and net income attributable to FMC stockholders was $193.1 million versus $49.5 million. Diluted EPS was $1.52 versus $0.38.
Debt, liquidity and capital returns
Total debt was $3,172.5 million at year-end, down from $3,267.8 million. Cash and cash equivalents were $516.8 million, compared with $568.9 million; $510.3 million was held by foreign subsidiaries. Remaining borrowing capacity under the revolving credit facility was $1,093.4 million. FMC reported compliance with debt covenants; leverage was 2.57 against a 3.5 maximum, and interest coverage was 9.53 against a 3.5 minimum. Debt maturities totaled $3,191.0 million, including $440.8 million due within 12 months. The company repurchased $400 million of shares and paid $247.2 million in dividends during 2021.
Outlook, commentary and material risks
- For 2022, management forecast revenue of $5.25–$5.55 billion, adjusted EBITDA of $1.32–$1.48 billion, and adjusted EPS of $6.80–$8.10. These are non-GAAP measures; the filing does not provide corresponding GAAP forecasts.
- Expected 2022 free cash flow was $515–$735 million. Management cited working-capital growth and higher capital expenditures as factors reducing cash flow at the midpoint. Planned 2022 share repurchases were $500–$600 million; in February 2022 the Board authorized a new $1 billion repurchase program.
- Management highlighted inflation in inputs and labor, raw-material availability, logistics costs and lead times, and currency headwinds. More severe cost inflation could move results toward the lower end of guidance; higher pricing or easing currency headwinds could support the upper end.
- COVID-related supply-chain and logistics disruption remained a risk, although FMC reported its facilities were operating. Other significant exposures include weather and climate effects, regulation and product registrations, generic competition, diamide patent challenges and expirations, foreign exchange, customer credit, cybersecurity, and environmental liabilities.
- Environmental reserves, net of recoveries, were $503.2 million at year-end. Estimated reasonably possible environmental losses exceeded accrued amounts by approximately $160 million. The company also disclosed approximately $77 million of reasonably possible losses above reserves for Brazilian matters and $33.5 million reserved for historical Indian indirect-tax matters. Potential Portland Harbor exposure could not be reasonably estimated.
- Rynaxypyr composition-of-matter patents begin expiring in certain countries in late 2022; Cyazypyr composition-of-matter patents begin expiring in the mid-2020s. FMC expects its broader patent, data-protection, brand and manufacturing advantages to support the franchise, but disclosed patent challenges in China and the risk of generic entry.
- Unusual items included a $33.5 million charge for Indian indirect-tax reserves, $27.1 million of continuing-operations environmental charges, and a $68.2 million loss from discontinued operations, primarily reflecting retained legacy liabilities. The 2020 comparison included a $65.6 million Fluindapyr acquisition charge.
Key facts for investors to verify
- Whether pricing and volume growth can offset continued input, packaging and freight inflation and sustain margins.
- Whether 2022 guidance and free-cash-flow expectations are achieved, particularly given working-capital needs and planned capacity investment.
- Collection trends and credit exposure in Brazil, where receivables and customer payment periods are significant.
- Developments in environmental proceedings, especially Pocatello, Middleport and Portland Harbor, and changes in reserves or estimated exposure.
- Patent validity, regulatory data protections and generic competition affecting the diamide franchise as key composition patents expire.
- Capital allocation and liquidity after planned share repurchases, dividends, debt maturities and the new repurchase authorization.