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 $1,065.4 million increased $83.5 million, or approximately 9 percent, versus the prior year period. Volumes increased by 17 percent versus the prior year period with some North America second half orders occurring earlier than expected due to improved channel inventory levels. The increase in volumes was partially offset by a 5 percent price decrease primarily driven by Latin America due to challenging market conditions in Brazil and Argentina including delayed rains and elevated channel inventory. In addition, the bankruptcy of a large customer led FMC to offer additional incentives to replace lost volumes and maintain market share. Foreign currency was a headwind of approximately 3 percent during the period. Diamides growth outperformed the overall company, led by strong growth of Cyazypyr® based products.

Revenue of $3,021.8 million decreased $318.9 million, or approximately 10 percent, versus the prior year period. The decrease was primarily driven by a 2 percent decrease in volumes, which was the result of continued channel destocking in all regions during the first quarter partially offset by improved sales volume during the second and third quarter. Unfavorable pricing actions, including one-time customer incentives, offered during the second quarter, aimed at addressing high cost inventory in the channel, accounted for a 6 percent decrease. Foreign currency headwinds during the period were approximately 2 percent.

North America: Revenue increased approximately 48 percent year-over-year driven by strong volume growth as diamide partners increased orders and branded sales grew due to improved channel inventory levels.

Latin America: Revenue increased approximately 8 percent versus the third quarter of 2023 (up 15 percent organically) driven by volume improvement during the period primarily in Brazil, including strong demand for ONSUVA® fungicide — a fluindapyr-based formulation. Pricing challenges in Brazil and Argentina partially offset the increase in volumes during the period.

EMEA: Revenue decreased approximately 7 percent (down 6 percent organically) compared to the prior year period primarily due to expected registration losses.

Asia: Revenue decreased approximately 10 percent (down 12 percent organically) year-over-year due to continued volume declines, primarily in India, as well as lower pricing.

North America: Revenue decreased approximately 10 percent year-over-year due to a significant decline in volumes during the first quarter as a result of continued pressure from channel destocking behavior. Volumes, specifically in the herbicides category as well as diamide partner sales, improved during the following two quarters partially offsetting the decrease.

Latin America: Revenue increased approximately 3 percent (up 6 percent organically) year-over-year driven primarily by volume recovery in Brazil during the second and third quarter. Branded diamides and new product sales contributed to the increase in volumes during the period. The increase in volumes was partially offset by unfavorable pricing actions during the period, which were caused by competitive pressure as demand returns as well as one-time customer incentives, offered primarily during the second quarter, aimed at addressing high cost inventory in the channel.

EMEA: Revenue decreased approximately 12 percent (down 10 percent organically) compared to the prior year period as a result of the decline in volumes caused by lower diamide partner sales as well as registration removals and rationalization of some lower margin products.

Asia: Revenue decreased approximately 23 percent (down 22 percent organically) year-over-year caused by lower volumes, primarily due to ongoing destocking behavior, specifically in India. Pricing pressure was an additional headwind in the region.

Gross margin

Gross margin of $386.4 million increased by $5.2 million, or approximately 1 percent versus the prior year period primarily due to volume recovery during the period resulting in a 19 percent increase in gross margin. The increase was partially offset by pricing pressure and cost decreases, which resulted in a decrease of 14 percent and 5 percent, respectively. Favorable foreign currency impacts during the period were 1 percent. Gross margin percent of approximately 36 percent decreased compared to approximately 39 percent in the prior year period, driven primarily by product mix and lower prices.

Gross margin of $1,124.2 million decreased by $271.1 million, or approximately 19 percent versus the prior year period resulting from a 6 percent decrease in volumes and a 15 percent decrease in price caused by the continued impacts of channel destocking during the first quarter. The decline in gross margin was partially offset by favorable foreign currency impacts of 2 percent. Gross margin percent of approximately 37 percent decreased compared to approximately 42 percent in the prior year period, driven primarily by product mix and lower prices.

Selling, general and administrative expenses

Selling, general and administrative expenses of $159.2 million decreased by $12.1 million, or 7 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 operating cost mitigation actions in effect since last year due to lower business performance.

Selling, general and administrative expenses of $487.9 million decreased by $74.9 million, or 13 percent, versus the prior year period. The decrease in selling, general and administrative expenses is primarily a result of cost reduction measures related to Project Focus as well as operating cost mitigation actions in effect since last year due to lower business performance.

Research and development expenses

Research and development expenses of $69.0 million decreased by $11.9 million or 15 percent compared to the previous year primarily as a result of cost reduction measures implemented in connection with our Project Focus initiative.

Research and development expenses of $205.8 million decreased by $41.2 million or 17 percent compared to the previous year primarily as a result of cost reduction efforts related to Project Focus.

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 $43.2 million decreased by $2.4 million or 5 percent as compared to the prior year period of $45.6 million. The decrease was the result of the write off of certain amortizable assets as part of our Project Focus restructuring initiative.

Depreciation and amortization of $133.2 million decreased by $5.2 million or 4 percent as compared to the prior year period of $138.4 million. The decrease was the result of the write off of certain amortizable assets as part of our Project Focus restructuring initiative.

Interest expense, net

Interest expense, net of $58.7 million decreased by $5.9 million or 9 percent compared to the prior year period of $64.6 million. The decrease was primarily driven by lower rates and lower debt balances in our portfolio. Specifically, lower domestic short-term balances decreased interest expense by approximately $4.0 million and lower interest rates and debt balances in our foreign portfolio decreased interest expense by approximately $1.9 million.

Interest expense, net of $184.0 million increased by $3.5 million or 2 percent compared to the prior year period of $180.5 million. The increase was primarily driven by higher interest rates and higher debt balances in our portfolio. Specifically, higher domestic short-term interest rates and balances increased interest expense by approximately $8.5 million. The increase was partially offset by lower interest rates and lower debt balances in our foreign debt portfolio.

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. Charges incurred related to Project Focus consist of $7.0 million of severance and employee separation costs, $5.4 million of professional service provider costs and other miscellaneous charges, and accelerated depreciation of $6.2 million on assets identified for disposal. In connection with the restructuring initiative, the Company expects to incur pre-tax restructuring charges in the range of approximately $375 million to $425 million, inclusive of charges incurred through September 30, 2024. We have increased our previously disclosed range by approximately $200 million, at the midpoint, to include additional charges primarily consisting of potential contract abandonment charges resulting from the continued evaluation of our supply chain footprint. The Company expects significant savings from abandoning this contract primarily in the form of the ability to purchase from significantly lower cost suppliers. The estimate for total Project Focus charges, which is subject to future changes, now includes severance and related benefit costs in the range of $90 to $100 million, asset write-off and contract abandonment charges of approximately $250 to $270 million, and other costs of $35 to $55 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 September 30, 2024, we also recognized income of $2.9 million related to previously implemented restructuring initiatives including a gain recognized on the disposition of a previously closed manufacturing site.

Restructuring charges during 2023 includes $2.5 million of employee separation and $0.4 million of other exit costs as part of various restructuring initiatives.

Other charges (income) of $6.9 million is comprised of $4.8 million of charges associated with our environmental sites, and $2.1 million of other miscellaneous charges.

Other charges (income) net in 2023 of $25.3 million is comprised of $11.9 million in charges resulting from the third quarter acquisition of in-process research and development assets that do not meet the criteria for capitalization. Additionally, we incurred $4.9 million in losses related to the devaluation of the Argentine peso driven by government actions, $4.5 million of charges associated with our environmental sites, and $4.0 million of other miscellaneous charges.

Restructuring and other charges (income) primarily includes costs associated with the Project Focus restructuring initiative. Charges incurred in connection with the initiative consist of $53.3 million of non-cash asset write off charges resulting from the contract termination with one of our third-party manufacturers, $44.5 million of severance and employee separation costs, including costs associated with the previously announced CEO transition, $24.1 million of professional service provider costs and other miscellaneous charges, and accelerated depreciation of $14.4 million on assets identified for disposal. During the nine months ended September 30, 2024, we also recognized income of $3.1 million related to previously implemented restructuring initiatives including a gain recognized on the disposition of a previously closed manufacturing site.

Restructuring charges during 2023 consisted of $6.8 million of severance and employee separation costs as well as $1.9 million of asset impairment and other restructuring charges incurred as part of various restructuring initiatives. These charges were offset by a $5.8 million gain recognized on the disposition of land related to a previously closed manufacturing facility.

Other charges (income) of $25.4 million is comprised of $13.8 million of charges associated with our environmental sites and $11.6 million of other miscellaneous charges.

Other charges (income) in 2023 of $45.1 million, is comprised of $11.9 million in charges resulting from the third quarter acquisition of in-process research and development assets that do not meet the criteria for capitalization. We recognized a $6.9 million remeasurement charge triggered during the period as a result of 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. Additionally, we incurred $4.9 million in losses related to the devaluation of the Argentine peso driven by government actions during the period, $14.3 million of charges associated with our environmental sites, and $7.1 million of other miscellaneous charges.

Non-operating pension and postretirement charges (income)

Charges for the three months ended September 30, 2024 were $4.4 million compared to $4.2 million for the three months ended September 30, 2023.

Charges for the nine months ended September 30, 2024 were $12.9 million compared to $13.4 million for the nine months ended September 30, 2023.

Provision for income taxes

The provision for income taxes for the three months ended September 30, 2024 was $6.0 million resulting in an effective tax rate of 8.3 percent. The provision for income taxes for the three months ended September 30, 2023 was $27.4 million resulting in an effective tax rate of 85.6 percent. The change in the effective tax rate from GAAP continuing operations for the three months ended September 30, 2024 compared to the three months ended September 30, 2023 was primarily driven by global mix of earnings and 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.

The benefit for income taxes for the nine months ended September 30, 2024 was $298.9 million resulting in an effective tax rate of negative 398.5 percent. The provision for income taxes for the nine months ended September 30, 2023 was $77.7 million resulting in an effective tax rate of 22.6 percent. The change in the effective tax rate from GAAP continuing operations for the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023 was primarily driven by a $300 million tax benefit recorded during the second quarter 2024, discussed further below, as well as global mix of reduced earnings, and the factors shown in the table below.

(1) In connection with our plans to establish a global technology and innovation center in Switzerland, we initiated changes to our corporate entity structure, including intra-entity transfers of certain intellectual property, during the second quarter of 2024. As a result, we recorded a net tax benefit of approximately $300 million. This benefit, net of valuation allowance, was primarily a result of the recognition of a step-up in tax basis to the fair value of the transferred intellectual property by the Company’s Swiss subsidiary. In addition, local tax impacts associated with the disposition of the transferred intellectual property were recorded as well as an increase in our valuation allowance associated with Swiss nonrefundable tax credits as a result of indirect effects of the transferred intellectual property. Refer to Note 16 of this Form 10-Q for further discussion and 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 $0.9 million for the three months ended September 30, 2024 compared to a loss of $8.3 million for the three months ended September 30, 2023. The loss during both the three months ended September 30, 2024 and 2023 was primarily due to adjustments related to the retained liabilities from our previous discontinued operations.

Discontinued operations, net of income taxes represented a loss of $16.2 million for the nine months ended September 30, 2024 compared to a loss of $41.3 million for the nine months ended September 30, 2023. The loss during both the nine months ended September 30, 2024 and 2023 was primarily due to adjustments related to the retained liabilities from our previously discontinued operations. The nine months ended September 30, 2024 includes an offsetting gain of $18.0 million recognized as the result of an insurance settlement for retained legal reserves.

Net income (loss)

The net income recognized during the period was $65.6 million as compared to net loss of $3.7 million in the prior year period. Results in the current year period were higher than the prior year period primarily as a result of the cost reduction measures implemented in connection with our Project Focus initiative contributing to a decrease of $24.0 million in selling, general, and administrative expenses and research and development expenses. In addition, net income was favorably impacted by a decrease in interest expense of $5.9 million due to lower rates and debt balances, a decrease to our provision for income taxes of $21.4 million, and a decrease to our discontinued operations of $7.4 million resulting from lower adjustments to our retained liabilities.

The net income recognized during the period was $357.7 million as compared to net income of $224.6 million in the prior year period, an increase of $133.1 million. Our provision for income taxes decreased by $376.6 million primarily due to a $300 million income tax benefit recorded in the second quarter from changes to our corporate entity structure made as part of establishing our global technology and innovation center in Switzerland. Additionally, we also recognized a gain of $18.0 million in discontinued operations during the second quarter as the result of an insurance settlement for retained legal reserves. Our research and development expenses and our selling, general, and administrative expenses were also lower as a result of cost containment. The above increases were offset by lower gross margin from the negative impacts of channel destocking in the distribution channel which persisted in the first quarter of 2024 as well an increase of $110.6 million in restructuring and other charges related to Project Focus which also partially offset the increase 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 and nine months ended September 30, 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 $201.4 million increased $26.8 million, or approximately 15 percent versus the prior year period. The increase was due to higher volumes impacting adjusted EBITDA by 41 percent. Restructuring actions also contributed to the improvement in Adjusted EBITDA. Unfavorable pricing and cost headwinds including the recognition of unabsorbed fixed costs from lower manufacturing activity in prior periods, net of restructuring benefits, partially offset these increases by 30 percent and 5 percent during the period. Foreign exchange tailwinds resulted in an increase to adjusted EBITDA of 9 percent.

Adjusted EBITDA of $563.7 million decreased $160.2 million, or approximately 22 percent versus the prior year period. The decrease was due to lower volumes impacting adjusted EBITDA by 11 percent as well as unfavorable pricing of 29 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 11 percent and 7 percent, respectively.

For 2024, full year Adjusted EBITDA is expected to be in the range of $885 million to $915 million, down approximately 8 percent at the midpoint versus 2023. 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 September 30, 2024 and December 31, 2023, were $416.7 million and $302.4 million, respectively. Of the cash and cash equivalents balance at September 30, 2024, $378.8 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 September 30, 2024, we had total debt of $4,070.0 million as compared to $3,957.6 million at December 31, 2023. Total debt included $3,026.8 million and $3,023.6 million of long-term debt (excluding current portions of $86.0 million and $96.5 million) at September 30, 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 $101.0 million at September 30, 2024 while outstanding commercial paper increased from $739.5 million at December 31, 2023 to $856.2 million at September 30, 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 September 30, 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 September 30, 2024, our remaining borrowing capacity under our credit facility was $891.2 million. Our commercial paper program allows us to borrow at rates generally more favorable than those available under our credit facility. At September 30, 2024, we had $856.2 million commercial paper borrowings under the commercial paper program. At September 30, 2024, the average effective interest rate on the borrowings was 5.7 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 $308.8 million and $(618.2) million for the nine months ended September 30, 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. 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 nine months ended September 30, 2024, we collected approximately $688 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.

(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 as well as timing of certain rebate payments.

(4)Changes in inventory reflect the lower inventory build required during 2024 following the lower sales volume during 2023 resulting from the channel destocking.

(5)The 2024 change in cash flows was driven by the timing of payments made to suppliers and vendors following a period of reducing spending in the prior period. 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 nine months ended September 30, 2024 includes spending of $4.6 million in divestiture transaction costs and $5.9 million related to the Furadan® asset retirement obligations. The nine months ended September 30, 2023 includes spending of $3.4 million 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 nine months ended September 30, 2024 and 2023.

(10)Cash paid for interest, net was higher during 2024 primarily due to the timing of interest payments as well as higher commercial paper rates.

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

Cash provided (required) by operating activities of discontinued operations was $(37.2) million and $(61.0) million for the nine months ended September 30, 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. Discontinued operations for the nine months ended September 30, 2024 includes cash proceeds, net of fees of $18.0 million received as the result of an insurance settlement for retained legal reserves.

Cash provided (required) by investing activities of continuing operations was $(55.9) million and $(126.8) million for the nine months ended September 30, 2024 and 2023, respectively.

Cash required by investing activities of continuing operations decreased during the nine months ended September 30, 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 $(101.5) million and $562.1 million for the nine months ended September 30, 2024 and 2023, respectively.

Cash provided by financing activities of continuing operations decreased during the nine months ended September 30, 2024, compared to the same period in the prior year primarily due to lower commercial paper borrowings during the period as well as the absence of the net impact of the 2023 bond issuance and repayment of the 2021 term loan. There were no share repurchases during the nine months ended September 30, 2024 under the publicly announced program. There was $75.0 million in repurchases of common stock under the publicly announced program during the nine months ended September 30, 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. Additionally, in 2024, free cash flow will exclude the proceeds, net of transaction costs, from the sale of our Global Specialty Solutions ("GSS") business. 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 program. For additional detail on Project Focus, see Note 8. This spending is reclassified within this reconciliation to be reflected in the “Legacy and transformation” category, which is consistent with how management discusses cash flow expenditures. The reclassification has no net impact on our cash provided (required) by operating activities of continuing operations (GAAP) or free cash flow (non-GAAP).

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

(3)Included in the amounts is cash spending associated with contract manufacturers of $2.7 million and $2.4 million for the nine months ended September 30, 2024 and 2023, respectively.

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

(5)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.

(6)Represents transactional-related costs such as legal and professional third-party fees associated with the anticipated sale of our GSS business. Proceeds from the sale of our GSS business anticipated for the fourth quarter 2024 will be excluded from free cash flow when received. Therefore, we have also excluded the related transaction costs from free cash flow.

(7)Free cash flow is defined as cash provided (required) by operating activities of continuing operations (GAAP) adjusted for spending for capital additions and other investing activities as well as legacy and transformation spending and divestiture transaction costs associated with the anticipated sale of our GSS business. As noted above, Project Focus transformation spending is reclassified into "Legacy and transformation" for presentation purposes. We believe that this Non-GAAP financial measure 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 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.

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 and dividend payments. 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 September 30, 2024, our remaining borrowing capacity under our credit facility was $891.2 million.

We expect 2024 free cash flow (Non-GAAP) to fall within a range of approximately $400 million to $500 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 GSS business in connection with the Project Focus initiative. The anticipated proceeds of such sale, net of transaction costs, 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.

Key cash requirements included in cash from provided by operating activities of continuing operations

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 $45 million to $55 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, which was made during the first quarter of 2024, 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 $80 million to $100 million.

Restructuring and asset retirement obligations

We expect to make payments of approximately $90 million to $110 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 $375 million to $425 million of pre-tax restructuring charges in total over the life of the program, which includes $90 to $100 million of non-cash asset write-off charges. We have increased our previously disclosed range by approximately $200 million, at the midpoint, to include additional charges primarily consisting of potential contract abandonment charges resulting from the continued evaluation of our supply chain footprint. While the Company expects significant savings from the contract abandonment, primarily in the form of the ability to purchase from significantly lower cost suppliers, we expect cash payments of approximately $150 million to be paid over the next several years associated with these activities. We do not expect any cash payments related to the contract abandonment during 2024. The estimate also includes, but is not limited to, costs needed to transition various activities to Switzerland in order to realize the benefits associated with recently awarded tax incentives, 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 $90 million to $100 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 $125 to $150 million in contributions to adjusted EBITDA in 2024. The targeted annual run-rate savings has increased to more than $225 million by the end of 2025 from the program once fully implemented, which is expected by the end of 2025. The increase in run-rate savings is expected in connection with the significant increase to Project Focus spending primarily related to the potential contract abandonment charges.

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 $70 million to $80 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 $165 million to $175 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 nine months ended September 30, 2024. At September 30, 2024, $825 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 each of the nine months ended September 30, 2024 and September 30, 2023, we paid dividends of $217.9 million. On October 17, 2024, we paid dividends totaling $72.8 million to our shareholders of record as of September 30, 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 nine months ended September 30, 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 September 30, 2024, our financial instrument position was a net asset of $0.4 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 September 30, 2024 and December 31, 2023, with all other variables (including interest rates) held constant. As of September 30, 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 September 30, 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 September 30, 2024 and December 31, 2023, we had no outstanding interest rate swap contracts, and, as a result, there was no sensitivity analysis performed over interest rate risk for the periods presented.

Our debt portfolio, at September 30, 2024, is composed of 77 percent fixed-rate debt and 23 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 September 30, 2024, a one percentage point increase in interest rates then in effect would have increased gross interest expense by $7.2 million and a one percentage point decrease in interest rates then in effect would have decreased gross interest expense by $7.2 million for the nine months ended September 30, 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.