It has been about a month since the last earnings report for FMC (FMC). Shares have lost about 5.2% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is FMC due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
FMC's Q2 Earnings and Sales Fall Short of Expectations
FMC Corp recorded earnings of 24 cents per share in second-quarter 2023, down from $1.06 reported in the year-ago quarter.
Barring one-time items, adjusted earnings per share were 50 cents, which missed the Zacks Consensus Estimate of 59 cents.
Revenues were $1,014.5 million in the quarter, down around 30% from the year-ago quarter’s levels. The top line missed the Zacks Consensus Estimate of $1,019.1 million.
A 3% contribution from price was partly offset by 31% lower volumes and a 2% headwind from currency swings.
FMC Corp's second-quarter results were impacted by volume declines due to active inventory management by farmers. However, demand for its innovative products showed resilience in the quarter.
Regional Sales Performance
Sales dropped 25% year over year in North America to $273 million in the quarter as partners, the distribution channel and growers reduced inventory. Sales missed our estimate of $288.2 million.
Sales in Latin America fell 38% year over year to $269 million in the reported quarter, hurt by drought conditions and lower volumes. Sales beat our estimate of $268.2 million.
Revenues were down 29% year over year in Asia in the quarter to $266 million. The downside was due to the active management of high channel inventory in India and difficult growing conditions in most of the country. It beat our estimate of $265.7 million.
In EMEA, sales fell 26% year over year to $208 million in the reported quarter, primarily attributed to adverse weather conditions across Europe and grower destocking. Despite these challenges, the region managed to partially offset volume headwinds with strong pricing gains. It beat our estimate of $204 million.
The company had cash and cash equivalents of $941.5 million at the end of the quarter, up roughly 59% year over year. Long-term debt was $3,022 million, up around 10.5% year over year.
The company returned around $123 million to its shareholders during the quarter.
For 2023, FMC Corp expects revenues in the range of $5.20-$5.40 billion, indicating a decline of 9% at the midpoint from 2022 levels. The company expects adjusted EBITDA in the band of $1.30-$1.40 billion, indicating a 4% year-over-year decline at the midpoint. FMC Corp now projects adjusted earnings per share for 2023 in the range of $5.86-$6.80, suggesting a decrease of 15% at the midpoint from the 2022 level.
The company sees third-quarter revenues in the range of $1.19-$1.27 billion, indicating an 11% decline at the midpoint from the prior-year levels. Adjusted earnings are forecast in the range of 90 cents-$1.32 per share, indicating a decline of 10% at the midpoint from the prior-year quarter’s levels. It also expects adjusted EBITDA in the range of $240-$290 million for the quarter, a 2% increase at the midpoint from the prior-year quarter’s levels.
The company expects fourth-quarter revenues to be in the range of $1.66-$1.78 billion, indicating a 6% increase at the midpoint compared to the previous year. The company also predicts growth in adjusted EBITDA for the fourth quarter, ranging from $511-$561 million. This represents a 24% increase at the midpoint when compared to the same period in 2022. Adjusted EPS is forecast in the range of $2.71-$3.17 per share, indicating a 24% increase from earnings reported in the fourth quarter of 2022.
The company sees second-half 2023 revenues in the range of $2.84-$3.04 billion, a 2% decrease at the midpoint compared with the prior-year levels. Adjusted EBITDA is forecast in the range of $751-$851 million, a 16% rise from at midpoint compared to the prior year.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended downward during the past month.
The consensus estimate has shifted -21.75% due to these changes.
At this time, FMC has a subpar Growth Score of D, however its Momentum Score is doing a lot better with an A. However, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise FMC has a Zacks Rank #5 (Strong Sell). We expect a below average return from the stock in the next few months.
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