FMC CORP

RESULTS OF OPERATIONS

Overview

The following charts provide a reconciliation of adjusted EBITDA, adjusted Earnings, and organic revenue growth, all of which are Non-GAAP financial measures, from the most directly comparable GAAP measure. Adjusted EBITDA and organic revenue growth are provided to assist the readers of our financial statements with useful information regarding our operating results. Our operating results are presented based on how we assess operating performance and internally report financial information. For management purposes, we report operating performance based on earnings before interest, income taxes, depreciation and amortization, discontinued operations, and corporate special charges. Our adjusted earnings measure excludes corporate special charges, net of income taxes, discontinued operations attributable to FMC stockholders, net of income taxes, and certain Non-GAAP tax adjustments. These are excluded by us in the measure we use to evaluate business performance and determine certain performance-based compensation. Organic revenue growth excludes the impacts of foreign currency changes, which we believe is a meaningful metric to evaluate our revenue changes. These items are discussed in detail within the "Other Results of Operations" section that follows. In addition to providing useful information about our operating results to investors, we also believe that excluding the effect of corporate special charges, net of income taxes, and certain Non-GAAP tax adjustments from operating results and discontinued operations allows management and investors to compare more easily the financial performance of our underlying business from period to period. These measures should not be considered as substitutes for net income (loss) or other measures of performance or liquidity reported in accordance with U.S. GAAP.

(1)Referred to as operating profit.

(2)Adjusted EBITDA is defined as operating profit excluding restructuring and other charges (income) and depreciation and amortization expense.

(3)See Note 8 for details of restructuring and other charges (income).

(4)Our non-operating pension and postretirement charges (income) are defined as those costs (benefits) related to interest, expected return on plan assets, amortized actuarial gains and losses and the impacts of any plan curtailments or settlements. These are excluded from our operating results and are primarily related to changes in pension plan assets and liabilities which are tied to financial market performance and we consider these costs to be outside our operational performance. We continue to include the service cost and amortization of prior service cost in our operating results noted above. These elements reflect the current year operating costs to our business for the employment benefits provided to active employees.

(1)Represents restructuring and other charges (income), and non-operating pension and postretirement charges (income).

(2)The income tax expense (benefit) on corporate special charges (income) is determined using the applicable rates in the taxing jurisdictions in which the corporate special charge (income) occurred and includes both current and deferred income tax expense (benefit) based on the nature of the Non-GAAP performance measure.

(3)We exclude the GAAP tax provision, including discrete items, from the Non-GAAP measure of income, and instead include a Non-GAAP tax provision based upon the annual Non-GAAP effective tax rate. The GAAP tax provision includes, and the Non-GAAP tax provision excludes, certain discrete tax items including, but not limited to: income tax expenses or benefits that are not related to current year ongoing business operations; tax adjustments associated with fluctuations in foreign currency remeasurement of certain foreign operations; certain changes in estimates of tax matters related to prior fiscal years; certain changes in the realizability of deferred tax assets; and changes in tax law. Management believes excluding these discrete tax items assists investors and securities analysts in understanding the tax provision and the effective tax rate related to ongoing operations thereby providing investors with useful supplemental information about FMC's operational performance. See Provision for income taxes within this section of this Form 10-Q for a reconciliation of the Non-GAAP tax provision from the GAAP tax provision.

ORGANIC REVENUE GROWTH RECONCILIATION

Results of Operations

In the discussion below, all comparisons are between the periods unless otherwise noted.

Revenue

Revenue of $918.0 million decreased $426.3 million, or approximately 32 percent, versus the prior year period. The decrease was primarily driven by a 27 percent decrease from volumes, which were down due to ongoing channel destocking in all regions. The decrease in revenues was also due to unfavorable pricing actions, which accounted for an approximate 4 percent decrease, and foreign currency headwinds of approximately 1 percent.

North America: Revenue decreased approximately 48 percent year-over-year almost entirely due to a decline in volumes against a record-breaking prior-year period. Fungicide sales out-performed the portfolio with growth from new products Xyway® and Adastrio® fungicide.

Latin America: Revenue decreased approximately 20 percent versus the first quarter of 2023 (down 22 percent organically) driven primarily by pricing pressure as well as lower sales volumes. The decrease in sales due to pricing and volumes was partially offset by branded diamides and new products, which both reported higher sales versus prior year aided by recently launched Premio® Star insecticide and Onsuva® fungicide.

EMEA: Revenue decreased approximately 20 percent (down 17 percent organically) compared to the prior year period as a result of the decline in volumes caused in part by registration removals and rationalization of some lower margin products. Pricing actions in the region were a slight tailwind during the period.

Asia: Revenue decreased approximately 29 percent (down 28 percent organically) year-over-year caused by lower volumes primarily in China due to poor weather. Channel destocking continued in India although dry weather limited applications of crop protection products. Pricing pressure was an additional headwind in the region.

Gross margin

Gross margin of $339.7 million decreased by $241.6 million, or approximately 42 percent versus the prior year period resulting from a 38 percent decrease in volumes and a 10 percent decrease in price caused by the continued channel destocking. The decline in gross margin was partially offset by a 5 percent increase due to favorable costs and favorable foreign currency impacts of 1 percent. Gross margin percent of approximately 37 percent decreased compared to approximately 43 percent in the prior year period, driven primarily by product mix and lower prices partially offset by favorable costs.

Selling, general and administrative expenses

Selling, general and administrative expenses of $163.9 million decreased by $22.0 million, or 12 percent, versus the prior year period. The decrease in selling, general and administrative expenses is primarily due to cost reduction measures implemented in connection with our Project Focus initiative as well as result of the operating cost mitigation actions in effect since last year due to lower business performance.

Research and development expenses

Research and development expenses of $60.9 million decreased by $17.5 million or 22 percent compared to the previous year primarily as a result of cost reduction measures implemented in connection with our Project Focus initiative. Reductions in research and development spending were done without sacrificing investments in areas such as Plant Health and our new active ingredient pipeline.

Depreciation and amortization

Depreciation and amortization of $45.7 million increased by $1.0 million or 2 percent as compared to the prior year period of $44.7 million.

Interest expense, net

Interest expense, net of $61.7 million increased by $10.3 million or 20 percent compared to the prior year period of $51.4 million. The increase was primarily driven by higher interest rates and higher debt balances in our portfolio. Specifically, higher domestic short-term interest rates increased interest expense by approximately $3.0 million and higher domestic short-term balances increased interest expense by approximately $7.3 million.

Corporate special charges (income)

Restructuring and other charges (income)

Restructuring and other charges (income) primarily consists of costs associated with the Project Focus restructuring initiative, including $18.9 million of severance and employee separation costs in connection with various global workforce reduction actions, $11.7 million of provider costs associated with the project, accelerated depreciation of $2.3 million on assets identified for disposal, and $0.5 million of other miscellaneous charges. In connection with the restructuring initiative, the Company continues to expect to incur pre-tax restructuring charges in the range of approximately $180 million to $215 million, inclusive of charges incurred through March 31, 2024. This estimate, which is subject to future changes, includes severance and related benefit costs in the range of $85 to $100 million, asset write-off charges of approximately $80 to $90 million, and other costs, including other professional service and compliance fees, of up to $25 million. We may incur additional asset write-off charges, inventory and other working capital charges, primarily associated with the liquidation of excess inventory in select markets, relocation charges, and contract termination charges in connection with Project Focus and will provide an estimate of charges when known. During the three months ended March 31, 2024, we also incurred $0.3 million of other miscellaneous charges related to previously implemented restructuring initiatives.

Restructuring charges during 2023 of $0.9 million primarily relate to facility exit costs associated with various restructuring initiatives across the globe.

Other charges (income) of $7.2 million is comprised of $3.3 million of charges associated with our environmental sites, and $3.9 million of other miscellaneous charges.

Other charges (income), net in 2023 were $11.6 million. $6.9 million relates to a remeasurement charge resulting from the significant currency depreciation of the Pakistani Rupee. On January 25, 2023, the Pakistani Rupee experienced its largest single day drop against the US dollar in over two decades following the removal of the USD-PKR exchange cap in place on the country's currency. This action, combined with the decision by Pakistan's central bank to raise interest rates to record highs during the quarter, resulted in the immediate and significant devaluation of the Pakistani Rupee. Additionally, other charges relating to environmental sites of $2.3 million were recognized during the period as well as $2.4 million of other miscellaneous charges.

Non-operating pension and postretirement charges (income)

Non-operating pension and post retirement charges for the three months ended March 31, 2024 were $4.3 million compared to income of $4.6 million for the three months ended March 31, 2023.

Provision for income taxes

The benefit for income taxes for the three months ended March 31, 2024 was $1.4 million resulting in an effective tax rate of negative 17.8 percent. The provision for income taxes for the three months ended March 31, 2023 was $41.1 million resulting in an effective tax rate of 16.5 percent. The decrease in the effective tax rate from GAAP continuing operations for the three months ended March 31, 2024 compared to the three months ended March 31, 2023 was driven by the global mix of reduced earnings as well as the factors shown in the table below.

(1) Refer to note 3 of the Adjusted Earnings Reconciliation table within this section of this Form 10-Q for an explanation of tax adjustments.

Discontinued operations, net of income taxes

Our discontinued operations include provisions, net of recoveries, for environmental liabilities and legal reserves and expenses related to previously discontinued operations and retained liabilities.

Discontinued operations, net of income taxes represented a loss of $12.5 million for the three months ended March 31, 2024 compared to a loss of $11.5 million for the three months ended March 31, 2023. The loss during both the three months ended March 31, 2024 and 2023 was primarily due to adjustments related to the retained liabilities from our previously discontinued operations.

Net income (loss)

The net loss recognized during the period was $3.1 million as compared to net income of $195.9 million in the prior year period. Results in the quarter were lower than the prior year period due to the continued negative impact of channel destocking by the distribution channel, which has significantly decreased our revenues and gross margin since the second quarter of 2023, as discussed above. Additionally, an increase in interest expense of $10.3 million, primarily driven by higher domestic short-term balances, and higher restructuring charges, specifically related to Project Focus, also contributed to the decrease in results during the period.

The only difference between Net income (loss) and Net income (loss) attributable to FMC stockholders is noncontrolling interest, which period over period is immaterial.

Adjusted EBITDA (Non-GAAP)

The Adjusted EBITDA amounts discussed below for three months ended March 31, 2024 and 2023 are reconciled from Net Income (loss) within this Form 10-Q. Refer to our Overview under the section titled"Results of Operations" above.

Adjusted EBITDA of $160.6 million decreased $201.1 million, or approximately 56 percent versus the prior year period. The decrease was due to lower volumes impacting adjusted EBITDA by 62 percent as well as unfavorable pricing of 16 percent. The decrease was partially offset by cost improvements, including the positive impacts of restructuring actions, and foreign exchange tailwinds, which both increased adjusted EBITDA by approximately 20 percent and 2 percent, respectively.

For 2024, full year Adjusted EBITDA is expected to be in the range of $900 million to $1.05 billion, essentially flat at the midpoint versus 2023 results. Although we provide a forecast for Adjusted EBITDA, a Non-GAAP financial measure, we are not able to forecast the most directly comparable measure calculated and presented in accordance with U.S. GAAP. See note 1 to our 2024 Outlook Update within this section of the Form 10-Q.

LIQUIDITY AND CAPITAL RESOURCES

As a global agricultural sciences company, we require cash primarily for seasonal working capital needs, capital expenditures, and return of capital to shareholders. We plan to meet these liquidity needs through available cash, cash generated from operations, commercial paper issuances and borrowings under our committed revolving credit facility as well as other liquidity facilities, and in certain instances access to debt capital markets. We believe our strong financial standing and credit ratings will ensure adequate access to the debt capital markets on favorable conditions.

Cash

Cash and cash equivalents at March 31, 2024 and December 31, 2023, were $417.8 million and $302.4 million, respectively. Of the cash and cash equivalents balance at March 31, 2024, $396.2 million was held by our foreign subsidiaries. We have established plans to repatriate cash from certain foreign subsidiaries with minimal tax on a go forward basis. Other cash held by foreign subsidiaries is generally used to finance subsidiaries’ operating activities and future foreign investments. See Note 12 to the consolidated financial statements included within our 2023 Form 10-K for more information on our indefinite reinvestment assertion.

Outstanding debt

At March 31, 2024, we had total debt of $4,335.7 million as compared to $3,957.6 million at December 31, 2023. Total debt included $3,024.6 million and $3,023.6 million of long-term debt (excluding current portions of $93.7 million and $96.5 million) at March 31, 2024 and December 31, 2023, respectively. Our short-term debt consists of foreign borrowings and borrowings under our commercial paper program. Foreign borrowings increased from $98.0 million at December 31, 2023 to $108.2 million at March 31, 2024 while outstanding commercial paper increased from $739.5 million at December 31, 2023 to $1,109.2 million at March 31, 2024. We provide parent-company guarantees to lending institutions providing credit to our foreign subsidiaries. See Note 9 and Note 18 in the consolidated financial statements included in this Form 10-Q for further details.

As of March 31, 2024, we were in compliance with all of our debt covenants. We remain committed to solid investment grade credit metrics.

Access to credit and future liquidity and funding needs

At March 31, 2024, our remaining borrowing capacity under our credit facility was $639.6 million. Our commercial paper program allows us to borrow at rates generally more favorable than those available under our credit facility. At March 31, 2024, we had $1,109.2 million commercial paper borrowings under the commercial paper program. At March 31, 2024, the average effective interest rate on the borrowings was 6.1 percent. Our commercial paper balances fluctuate from year to year depending on working capital needs. Based on cash generated from operations, our existing liquidity facilities, which includes the revolving credit agreement with the option to increase capacity up to $2.75 billion, and our continued access to debt capital markets, we have adequate liquidity to meet any of the company's debt obligations in the near term including any current portion of long-term debt.

Working Capital Initiatives

We offer to a select group of suppliers a voluntary supply chain finance program as part of our continued efforts to improve our working capital efficiency. We do not believe that changes in the availability of the supply chain finance program would have a significant impact on our liquidity. See Note 2 for more information on the key terms and balances of the program.

From time to time, the Company may sell receivables on a non-recourse basis to third-party financial institutions. These sales are normally driven by specific market conditions, including, but not limited to, foreign exchange environments, customer credit management, as well as other factors where the receivables may lay. See Note 5 for more information on receivables factoring.

Statement of Cash Flows

Cash provided (required) by operating activities of continuing operations was $(142.9) million and $(851.3) million for the three months ended March 31, 2024 and 2023, respectively.

The table below presents the components of net cash provided (required) by operating activities of continuing operations.

(1)Both periods include the impacts of seasonality and the receivable build intrinsic in our business. The change in cash flows related to trade receivables in 2024 was driven by timing of collections, which includes the benefit of leveraging our receivable purchase facilities, as well as lower volumes for revenue year over year. Collection timing is more pronounced in certain countries such as Brazil where there may be terms significantly longer than the rest of our business. Additi onally, timing of collection is impacted as amounts for both periods include carry-over balances remaining to be collected in Latin America, where collection periods are measured in months rather than weeks. During the three months ended March 31, 2024, we collected approximately $197 million of receivables in Brazil.

(2)Advance payments are primarily within North America and these payments are received in the fourth quarter of each year and recorded as deferred revenue on the balance sheet at December 31. Revenue associated with advance payments is recognized, generally in the first half of each year, as shipments are made and transfer of control to the customer takes place. The change in 2024 was driven by lower advanced payments at December 31, 2023 compared to December 31, 2022 as well as lower application of those advances against current period sales.

(3)These rebates are primarily associated within North America, and to a lesser extent Brazil, and in North America generally settle in the fourth quarter of each year given the end of the respective crop cycle. The changes year over year are associated with the mix in sales eligible for rebates and incentives which includes lower revenues for products eligible for rebates compared to the prior year and timing of certain rebate payments.

(4)Changes in inventory reflect the lower inventory build required during Q1 2024 following the lower sales volume during 2023.

(5)The change in cash flows related to accounts payable for 2024 was flat as the accounts payable and purchasing levels were consistent as of March 31, 2024 and December 31, 2023. The 2023 change in accounts payable was primarily due to lower raw material inventory purchases and, to a lesser extent, the timing of payments made to suppliers and vendors.

(6)Changes in all periods presented primarily represent timing of payments associated with all other operating assets and liabilities.

(7)See Note 8 in our consolidated financial statements included in this Form 10-Q for further details. Project Focus transformation spending is included within our Legacy and Transformation category of the Free Cash Flow Reconciliation. In addition to cash payments shown in Note 8, the restructuring and other spending amount above for the three months ended March 31, 2024 and 2023 includes spending of $0.7 million and $0.5 million, respectively, related to the Furadan® asset retirement obligations.

(8)The amounts represent environmental remediation spending at our operating sites which were recorded against pre-existing reserves, net of recoveries. Refer to Note 11 for more details.

(9)There were no voluntary contributions to our U.S. qualified defined benefit plan, which is slightly over funded, for the three months ended March 31, 2024 and 2023.

(10)Cash paid for interest, net was lower during 2024 primarily due to the timing of interest payments as well as the absence of an interest payment associated with the 2021 Term Loan Facility, which was paid down during the second quarter of 2023. The decrease in cash paid for interest, net was partially offset by higher interest rates on commercial paper balances.

(11)Amounts shown in the chart represent net payments of our continued operations.

Cash provided (required) by operating activities of discontinued operations was $(21.5) million and $(12.6) million for the three months ended March 31, 2024 and 2023, respectively.

Cash required by operating activities of discontinued operations is directly related to environmental, other postretirement benefit liabilities, self-insurance, long-term obligations related to legal proceedings and historical restructuring activities. During the first quarter of 2024, we paid the remaining portion of the settlement amount related to one of our discontinued foreign environmental remediation sites.

Cash provided (required) by investing activities of continuing operations was $(23.7) million and $(54.4) million for the three months ended March 31, 2024 and 2023, respectively.

Cash required by investing activities of continuing operations decreased during the three months ended March 31, 2024 compared to the same period in the prior year primarily due to lower capital expenditures during the period. Capital additions were lower as we continue to constrain investment to only the most critical, high-return projects.

Cash provided (required) by financing activities of continuing operations was $305.7 million and $840.3 million for the three months ended March 31, 2024 and 2023, respectively.

Cash provided by financing activities of continuing operations decreased during the three months ended March 31, 2024, compared to the same period in the prior year primarily due to significantly lower commercial paper borrowings during the period. There were no share repurchases during the three months ended March 31, 2024 under the publicly announced program. There was $25 million in repurchases of common stock under the publicly announced program during the three months ended March 31, 2023.

Free Cash Flow (Non-GAAP)

We define free cash flow, a Non-GAAP financial measure, as all cash inflows and outflows excluding those related to financing activities (such as debt repayments, dividends, and share repurchases) and acquisition related investing activities. Free cash flow is calculated as all cash from operating activities reduced by spending for capital additions and other investing activities as well as legacy and transformation spending. Therefore, our calculation of free cash flow will almost always result in a lower amount than cash from operating activities from continuing operations, the most directly comparable U.S. GAAP measure. However, the free cash flow measure is consistent with management's assessment of operating cash flow performance and we believe it provides a useful basis for investors and securities analysts about the cash generated by routine business operations, including capital expenditures, in addition to assessing our ability to repay debt, fund acquisitions including cost and equity method investments, and return capital to shareholders through share repurchases and dividends.

Our use of free cash flow has limitations as an analytical tool and should not be considered in isolation or as a substitute for an analysis of our results under U.S. GAAP. First, free cash flow is not a substitute for cash provided (required) by operating activities of continuing operations, as it is not a measure of cash available for discretionary expenditures since we have non-discretionary obligations, primarily debt service, that are not deducted from the measure. Second, other companies may calculate free cash flow or similarly titled Non-GAAP financial measures differently or may use other measures to evaluate their performance, all of which could reduce the usefulness of free cash flow as a tool for comparison. Additionally, the utility of free cash flow is further limited as it does not reflect our future contractual commitments and does not represent the total increase or decrease in our cash balance for a given period. Because of these and other limitations, free cash flow should be considered along with cash provided (required) by operating activities of continuing operations and other comparable financial measures prepared and presented in accordance with U.S. GAAP.

The table below presents a reconciliation of free cash flow from the most directly comparable U.S. GAAP measure:

FREE CASH FLOW RECONCILIATION

(1)Represents cash payments made in connection with our Project Focus transformation spending. For additional detail on Project Focus, see Note 8.

(2)Adjusted cash from operations is defined as cash provided (required) by operating activities of continuing operations excluding the effects of Project Focus transformation-related cash flows, which are included within legacy and transformation spending.

(3)Components of cash provided (required) by investing activities of continuing operations. Refer to the below discussion for further details.

(4)Included in the amounts is cash spending associated with contract manufacturers of $1.5 million and $0.6 million for the three months ended March 31, 2024 and 2023, respectively.

(5)Refer to the above discussion for further details.

(6)Includes our legacy liabilities such as environmental remediation and other legal matters that are reported in discontinued operations. 2024 includes cash spending associated with the Project Focus transformation initiative.

2024 Cash Flow Outlook

Our cash needs for 2024 include operating cash requirements (particularly working capital, as well as environmental, asset retirement obligation, and restructuring spending), capital expenditures, and legacy and transformation spending, as well as mandatory payments of debt, dividend payments, and share repurchases. We plan to meet our liquidity needs through available cash, cash generated from operations, commercial paper issuances and borrowings under our committed revolving credit facility. At March 31, 2024, our remaining borrowing capacity under our credit facility was $639.6 million.

We expect 2024 free cash flow (Non-GAAP) to fall within a range of approximately $400 million to $600 million. At the mid-point of the range, there is a significant increase year over year driven largely by the rebuilding of payables and lower inventory. As previously announced, we are planning to sell our non-crop Global Specialty Solutions business in connection with the Project Focus initiative. The anticipated proceeds of such sale have not been included in our forecasted free cash flow (Non-GAAP) and will be excluded when results are reported as we plan to use the proceeds to pay down outstanding debt if a sale is completed.

Although we provide a forecast for free cash flow, a Non-GAAP financial measure, we are not able to forecast the most directly comparable measure calculated and presented in accordance with U.S. GAAP, which is cash provided (required) by operating activities of continuing operations. Certain elements of the composition of the U.S. GAAP amount are not predictable, making it impractical for us to forecast. Such elements include, but are not limited to, restructuring, acquisition charges, and discontinued operations. As a result, no U.S. GAAP outlook is provided.

Adjusted cash from operating activities of continuing operations

We expect adjusted cash from operating activities to be in the range of approximately $670 million to $850 million. Adjusted cash from operating activities also includes cash requirements related to our pension plans, environmental sites, restructuring and asset retirement obligations, taxes and interest on borrowings.

Pension

We do not expect to make any voluntary cash contributions to our U.S. qualified defined benefit pension plan in 2024. The plan is slightly over funded and our portfolio is comprised of 100 percent fixed income securities and cash. Our investment strategy is a liability hedging approach with an objective of maintaining the funded status of the plan such that the funded status volatility is minimized and the likelihood that we will be required to make significant contributions to the plan is limited.

Environmental

Projected 2024 spending, net of recoveries includes approximately $35 million to $45 million of net environmental remediation spending for our sites accounted for within continuing operations. Environmental obligations for continuing operations primarily represent obligations at shut down or abandoned facilities within businesses that do not meet the criteria for presentation as discontinued operations.

Projected 2024 spending, net of recoveries includes approximately $50 million to $60 million of net environmental remediation spending for our discontinued sites. These projections include spending as a result of a settlement reached in 2019 at our Middleport, New York site of $10 million maximum per year, on average, until the remediation is complete as well as a remaining payment related to a settlement agreement reached during the second quarter of 2023 with the other party involved at one of our foreign environmental remediation sites.

Total projected 2024 environmental spending, inclusive of sites accounted for within both continuing operations and discontinued sites, is expected to be in the range of approximately $85 million to $105 million.

Restructuring and asset retirement obligations

We expect to make payments of approximately $85 million to $105 million in 2024, of which approximately $5 million is related to exit and disposal costs as a result of our previous decision in 2019 to exit sales of all carbofuran formulations (including Furadan® insecticide/nematicide, as well as Curaterr® insecticide/nematicide and any other brands used with carbofuran products).

In response to the unprecedented downturn in the global crop protection market that resulted in severe channel destocking, we initiated the Project Focus global restructuring plan. This program is designed to right-size our cost base and optimize our footprint and organizational structure with a focus on driving significant cost improvement and productivity. As noted in the section titled "Results of Operations," we expect to incur approximately $180 to $215 million of pre-tax restructuring charges in total over the life of the program, which includes $80 to $90 million of non-cash asset write-off charges. Included within the estimated charges are costs needed to transition various activities to Switzerland in order to realize the benefits associated with the recently awarded tax incentives of approximately $1.4 billion granted to the Company’s Swiss subsidiaries. The estimate also includes, but is not limited to, employee severance and related benefit costs, and consulting and other professional service fees. We may incur additional asset write-off charges, inventory and other working capital charges, primarily associated with the liquidation of excess inventory in select markets, relocation charges, and contract termination charges in connection with Project Focus and will provide an estimate of charges when known.

The projected restructuring spending for 2024 includes $70 million to $90 million related to the Project Focus activities which is being presented, as and when incurred, within Legacy and transformation as part of our Free Cash Flow Reconciliation in 2024. The Company expects Project Focus to deliver $50 to $75 million in contributions to adjusted EBITDA in 2024. The targeted annual run-rate savings is $150 million or more by the end of 2025 from the program once fully implemented, which is expected by the end of 2025.

Capital additions and other investing activities

Projected 2024 capital expenditures and expenditures related to contract manufacturers are expected to be in the range of approximately $95 million to $105 million. The spending is mainly driven by investments for our new products. Expenditures related to contract manufacturers are included within "other investing activities".

Legacy and transformation

Projected 2024 legacy and transformation spending is expected to be in the range of approximately $155 million to $165 million. This is primarily driven by environmental remediation spending for our discontinued sites, discussed above, and other legacy liabilities as well as transformation spending associated with Project Focus also discussed above.

Share repurchases

In February 2022, the Board of Directors authorized the repurchase of up to $1 billion of the Company's common stock. In connection with an amendment to the Company's credit agreement in November 2023, the Company agreed that it will not repurchase shares until September 30, 2025, with the exception of share repurchases under our equity compensation plans. Therefore, there were no share repurchases under the publicly announced repurchase program during the three months ended March 31, 2024. At March 31, 2024, $825.0 million remained unused under our Board-authorized repurchase program. This repurchase program does not include a specific timetable or price targets and may be suspended or terminated at any time. Shares may be purchased through open market or privately negotiated transactions at the discretion of management based on its evaluation of market conditions and other factors. We also reacquire shares from time to time from employees in connections with vesting, exercise and forfeiture of awards under our equity compensation plans. We do not plan any share repurchases in 2024 in compliance with the amendment to the Company's credit agreement.

Dividends

During the three months ended March 31, 2024 and March 31, 2023, we paid dividends of $72.5 million and $72.7 million, respectively. On April 18, 2024, we paid dividends totaling $72.6 million to our shareholders of record as of March 28, 2024. We expect to continue to make quarterly dividend payments. Future cash dividends, as always, will depend on a variety of factors, including earnings, capital requirements, financial condition, general economic conditions and other factors considered relevant by us and is subject to final determination by our Board of Directors.

Commitments and Contingencies

See Note 18 to the consolidated financial statements included in this Form 10-Q.

Contractual Commitments

Information related to our contractual commitments at December 31, 2023 can be found within Part II, Item 7 of our 2023 Form 10-K. There have been no significant changes to our contractual commitments during the three months ended March 31, 2024.

Climate Change

A detailed discussion related to climate change can be found in Part II, Item 7 of our 2023 Form 10-K.

Off-Balance Sheet Arrangements

We do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to investors.

Fair Value Measurements

See Note 17 to the consolidated financial statements in this Form 10-Q for additional discussion surrounding our fair value measurements.

DERIVATIVE FINANCIAL INSTRUMENTS AND MARKET RISKS

Our earnings, cash flows, and financial position are exposed to market risks relating to fluctuations in commodity prices, interest rates, and foreign currency exchange rates. Our policy is to minimize exposure to our cash flow over time caused by changes in commodity, interest, and currency exchange rates. To accomplish this, we have implemented a controlled program of risk management consisting of appropriate derivative contracts entered into with major financial institutions.

The analysis below presents the sensitivity of the market value of our financial instruments to selected changes in market rates and prices. The range of changes chosen reflects our view of changes that are reasonably possible over a one-year period. Market-value estimates are based on the present value of projected future cash flows considering the market rates and prices chosen.

At March 31, 2024, our financial instrument position was a net liability of $2.5 million compared to a net liability of $11.4 million at December 31, 2023. The change in the net financial instrument position was primarily due to fluctuations in our foreign exchange portfolios.

Since our risk management programs are generally highly effective, the potential loss in value for each risk management portfolio described below would be largely offset by changes in the value of the underlying exposure.

Commodity Price Risk

Energy costs are diversified among electricity and natural gas. We may attempt to mitigate our exposure to increasing energy costs by hedging the cost of future deliveries of natural gas and electricity by entering into physical and financial derivative contracts. To analyze the effect of changing energy prices, we perform a sensitivity analysis in which we assume an instantaneous 10 percent change in energy market prices from their levels at March 31, 2024 and December 31, 2023, with all other variables (including interest rates) held constant. As of March 31, 2024 and December 31, 2023, we had no open commodity contracts, and, as a result, there was no sensitivity analysis performed over commodity price risk for the periods presented.

Foreign Currency Exchange Rate Risk

The primary currencies for which we have exchange rate exposure are the U.S. dollar versus the Euro, the Chinese yuan, the Brazilian real, Mexican peso, and the Argentine peso. Foreign currency debt and foreign exchange forward contracts are used in countries where we do business, thereby reducing our net asset exposure. Foreign exchange forward contracts are also used to hedge firm and highly anticipated foreign currency cash flows.

To analyze the effects of changing foreign currency rates, we have performed a sensitivity analysis in which we assume an instantaneous 10 percent change in the foreign currency exchange rates from their levels at March 31, 2024 and December 31, 2023, with all other variables (including interest rates) held constant.

Interest Rate Risk

One of the strategies that we can use to manage interest rate exposure is to enter into interest rate swap agreements. In these agreements, we agree to exchange, at specified intervals, the difference between fixed and variable interest amounts calculated on an agreed-upon notional principal amount. As of March 31, 2024 and December 31, 2023, we had no outstanding interest rate swap contracts. As a result, there was no sensitivity analysis performed over interest rate risk for the periods presented.

Our debt portfolio, at March 31, 2024, is composed of 72 percent fixed-rate debt and 28 percent variable-rate debt. The variable-rate component of our debt portfolio principally consists of borrowings under our Credit Facility, commercial paper program, and amounts outstanding under foreign subsidiary credit lines. Changes in interest rates affect different portions of our variable-rate debt portfolio in different ways.

Based on the variable-rate debt in our debt portfolio at March 31, 2024, a one percentage point increase in interest rates then in effect would have increased gross interest expense by $3.0 million and a one percentage point decrease in interest rates then in effect would have decreased gross interest expense by $3.0 million for the three months ended March 31, 2024.

REGULATION FD DISCLOSURES

The Company’s investor relations website, located at https://investors.fmc.com, should be considered as a recognized channel of distribution, and the Company may periodically post important information to the web site for investors, including information that the Company may wish to disclose publicly for purposes of complying with the federal securities laws and our disclosure obligations under the SEC's Regulation FD. We encourage investors and others interested in the Company to monitor our investor relations website for material disclosures. Our website address is included in this Form 10-Q as a textual reference only and the information on the website is not incorporated by reference into this Form 10-Q.