Hello, and welcome to today's BioPhero Acquisition conference call. My name is Elliot, and I'll be coordinating your call today. If you would like to register a question during the presentation, you may do so by pressing Star followed by 1 on your telephone keypad. I would now like to turn the call over to Abizar Zaki, Director of Investor Relations. The floor is yours. Please go ahead. Good morning, everyone, and thank you for participating in today's call to discuss FMC Corporation's agreement to acquire BioPhero. Joining me today are Mark Douglas, President and Chief Executive Officer, Andrew Sandifer, Executive Vice President and Chief Financial Officer, and Dr. Kathleen Shelton, Executive Vice President and Chief Technology Officer. Mark will begin with highlights of the acquisition, introduce the current pheromone market, and provide a view of the sizable market potential for BioPhero's unique technology. Following the prepared remarks, we will take questions. Yesterday's press release and today's live presentation is available on our website, and the prepared remarks from today's discussion will be made available after the call. Let me remind you that today's presentation and discussion will include forward-looking statements that are subject to various risks and uncertainties concerning specific factors, including but not limited to those factors identified in our press release and in our filings with the Securities and Exchange Commission. Information presented represents our best judgment based on today's understanding. Actual results may vary based upon these risks and uncertainties. Today's discussion and the supporting materials will include references to Adjusted EBITDA, which is a non-GAAP financial measure. Please note that as used in today's discussion, earnings means adjusted earnings and EBITDA means Adjusted EBITDA. A reconciliation and definition of these terms, as well as other non-GAAP financial terms to which we may refer during today's conference call, are provided on our website. With that, I will now turn the call over to Mark. Thank you, Zaki, and good morning, everyone. Last night, FMC announced a definitive agreement to acquire BioPhero ApS, a Denmark-based pheromone insect control company. This transaction significantly expands FMC's biological segment with BioPhero's game-changing patented synthetic biology technology, which is substantially lowering costs compared to competitive technologies and is a platform for large-scale production of pheromone crop protection products. We expect pheromone-based insect control products to generate approximately $1 billion in FMC revenue at above average EBITDA margins by 2030. Moreover, BioPhero's synthetic biology platform is unique, differentiated, and has the potential to produce other biosolutions for agriculture. Before getting into the details of the acquisition and the pheromone market, let me briefly describe what pheromones are and how they're used in insect control. Pheromones are chemicals naturally produced by insects to trigger a social response in members of the same species. Pheromones are used in a variety of ways to protect crops. Today, we'll focus on pheromones that can be sprayed in a field to disrupt the insect mating process, and hence, result in significantly lower subsequent generations of target insect larvae, which would otherwise damage crops. There are several methods to manufacture pheromones, including the common route that uses chemical synthesis, as well as a second route known as biocatalysis. BioPhero's proprietary fermentation manufacturing route is unique, enabling high volume production of pheromones at significantly lower costs than other production routes. Turning to slide 3, the acquisition includes BioPhero's technology, patent estate, know-how, supply agreements, and all the employees in exchange for approximately $200 million. BioPhero's team consists of world-class technical experts who specialize in pheromone and fermentation technology. The majority of the current team members are PhDs focused on research and development of the technology. The transaction is expected to close by the end of third quarter 2022, and BioPhero will become part of FMC's plant health business, which is also headquartered in Denmark at our European Innovation Center in Copenhagen. There will be no impact to FMC's 2022 revenue and earnings due to this acquisition. In addition to significant revenue potential and a new technology platform, the acquisition of BioPhero also brings strong sustainability-related benefits to FMC and the broader crop protection industry. Pheromones are naturally occurring substances which precisely target specific pests and do not have any impact on beneficial insects such as pollinators, therefore, supporting biodiversity. Finally, since pheromone insect control products use a different mode of action than conventional options, they can be applied in a combination with chemical products as part of an integrated pest management program while also serving as a resistance management tool. The business case for BioPhero's acquisition was driven by their highly efficient yeast fermentation process that leverages synthetic biology to manufacture pheromone active ingredients at significantly lower costs with fewer production steps compared to competitors' traditional manufacturing methods. Lower costs expand the pheromone addressable market from today's focus on specialty fruit and vegetables to include the large row crop markets. In terms of market size and area, this takes the current $500 million, 2-3 million hectare pheromone market and expands it to multi-billion dollars and over 100 million hectares. We estimate FMC's revenue from pheromone-based products to grow to approximately $1 billion by 2030, with commercial sales starting in 2024. We see this acquisition as a great fit for both companies. BioPhero brings unique yeast fermentation and synthetic biology technology with attractive cost advantages. For FMC, we can leverage our market access in specialty and row crops across geographies to quickly introduce and ramp up pheromone-based technology. Moreover, the expansion of pheromone use to broad acre crops will require formulation and application expertise, areas where FMC excels. Finally, opportunities also exist to integrate BioPhero's solutions with FMC's precision and digital ag platforms such as Arc Farm Intelligence. These tools can monitor the current and next generation of pests and optimize application timing. On slide 4, we can see the current mix of pheromone insect control skews towards high-value specialty crops with fruit and vegetables, vines and nuts making up approximately 80% of the total market size. From a geographic viewpoint, North America and EMEA lead the current pheromone market. Latin America and Asian markets are limited due to the cost of current pheromone products. This is where BioPhero's unique fermentation process stands out with its ability to efficiently scale pheromone production at cost dramatically lower than traditional methods. It opens significant opportunities to expand pheromone use in the larger row crop market. Turning to slide 5, you will see a review of the current pheromone market and the future market potential for this technology. Adding row crops such as corn, soybean, cotton, and rice to specialty fruits and vegetables significantly expands area treated and hence addressable market size. Larger treatment area will also require pheromone application technology to evolve from current dispenser-based methods used in small acreage specialty farms to high throughput equipment used for spraying formulations. To maintain competitiveness with conventional chemistries and accelerate adoption, end use formulations will target specific attributes such as shelf life stability, optimal droplet size, and rainfastness. On slide 6, we illustrate how pheromones can be used in combination with conventional insecticides as part of an integrated pest management program. In this model scenario, the grower would apply pheromones alternatively along with conventional insecticides from our portfolio. The pheromone application would disrupt the adult mating process and hence reduce the overall egg laying and subsequent larva populations. Fewer larvae would also result in even fewer adult insects in the next generation and an overall reduction of pest pressure, which would reduce damage to the crop. Following the pheromone application, the conventional insecticide treatment would impact the target pest at all life stages. This rotation can be repeated since the two sprays use different modes of action and reduce the potential for resistance to build up in the target pest. Moreover, since pheromones precisely target specific pests, they may be applied multiple times in a season without impacting beneficial insects such as pollinators. This is just one illustrative example of how pheromones will be used to control target pests in a more comprehensive manner. Depending on the pest and crop, as well as whether the pheromone product is a standalone, tank mix, or premix, the application program can be tailored to maximize yield while promoting biodiversity. Turning to slide 7, BioPhero has been focused on building its product pipeline and has several candidates in various stages of discovery and development. The company's development pipeline is displayed here with five new products expected to launch in the next 3-5 years. Several of these products have global reach and target highly destructive pests found in broad acre crops such as corn, soybean, and cotton. Today, FMC has a leading insecticide technologies to protect crops from fall armyworm. When we couple these with the new pheromone product shown in the middle of this graphic, we can offer growers an integrated solution that combines the mating disruption technology of pheromones action from conventional products. Together, these better control this rapidly spreading and destructive pest. Targeting fall armyworm in crops such as soy, corn, cotton, fruits, and vegetables will involve treating up to 150 million hectares in countries such as the USA, Brazil, India, Australia, and several countries in Africa. As a reference, the current conventional insecticide market for the broader armyworm species is over $1 billion. In addition to the five development products listed on slide 7, BioPhero has more than 10 candidates in its discovery pipeline with strong technical feasibility and significant business potential. Furthermore, this pipeline does not include the potential for premixes with FMC's existing conventional products. Premixes open up several new product concept opportunities to address country or region-specific pest challenges facing growers around the world. In conclusion, we are, as you can tell, very excited about bringing BioPhero to FMC. We have been expanding our technology base in our plant health business for some time, and BioPhero is yet another opportunity for us to continue to bring sustainable, biologically sourced products to market. Our customers will have another cutting-edge technology to fight destructive pests. We look forward to significantly expanding the use of pheromones from the limited application today to be a more broadly used tool in integrated pest management programs. I'll now turn the call back to the operator for questions. Thank you. For our Q&A, if you would like to ask a question, please press star followed by 1 on your telephone keypad now. If you change your mind, please press star followed by 2. When preparing to ask your question, please ensure your device is unmuted locally, and we ask you please limit yourself to one question and one follow-up. Our first question comes from Joel Jackson from BMO Capital Markets. Your line is open. Please go ahead. Hi. Good morning, Mark. Morning, Joel. Could you talk about your R&D budget? What will your R&D budget be like going forward 2023, 2024, 2025? Does it go down a bit because you're buying technology? Is it going up because you're now investing in more of this? Yeah, Joel, listen, I mean, it will go up. We will continue to invest in the very robust pipeline that we have with our synthetic chemistries today. We also have our current biological pipeline that we're investing in, and each year that is increasing as it should. Then once we bring BioPhero in, that will be additional cost. As I just mentioned, most of the people that are coming across with BioPhero are on the technology side of the house. You should expect a 2023 number that'll be higher than where we are today. Okay. I guess a two-parter for my second question. When you look at all the different technology you could have acquired here, maybe talk about how this one stood out versus all the other ones you could have purchased. There's a lot of prospects out there. Given a guidance to commercial sales 2024, and get to $1 billion of revenue by 2030, what will commercial sales look like in 2024, 2025, 2026? What's the ramp up? Yes, good question. Listen, from a process standpoint, you know, FMC through FMC Ventures has been investing and continues to invest in a number of different technologies. BioPhero was one of the companies that we'd invested in. We first started to talk to BioPhero. First introductions were back in early 2019, and then from there on, we got to know the company, we got to know the technology. We invested in early 2021 in the company. This is not some passing phase that we've gone through. We deliberately invested in the technology. As the leading insecticide company in the world, we found pheromones very attractive because we can see the synergy from our current portfolio as well as the pheromones coming together. It was a very strategic decision to invest. As the process developed and we got to know the company more, we decided to buy the company because we think the fit is so good together. There are other technologies that we're looking at. This is the type of investment that we've talked about for a long time. When we've talked about investing in M&A for technology, investing in biologicals, investing in plant health. BioPhero is a good nexus across all those parameters. Fits very well, but it won't be the last one. When it comes to the ramp, it's very difficult for us to say at this point, 2024, 2025, 2026. I would say the big ramp comes sort of mid-decade onwards, and that's when we'll see the real growth. You will certainly see sales, and we will talk about them in 2024, but the big piece comes as we go forward from 2025 onwards. I'd think of it that way. Thank you. Our next question comes from Joshua Spector from UBS. Your line is open. Please go ahead. Yeah. Hi, thanks for taking my question. Just curious on slide 6, where you show the multiple modes of action, are there examples of, I mean, either this product or I guess maybe a better example would be a corollary product where you apply the bioproduct along with your synthetic products? You know, really curious if that results in any change in the amount of insecticides used. Is it similar? Is it a different product? Or really getting at, is there any cannibalization to consider in the base portfolio as this portfolio grows? Yeah. Listen, there are many examples of what we call integrated pest management programs where you alternate sprays of different types of products. We also use biologicals in this space, in terms of replacing synthetic sprays. We don't consider this cannibalistic at all to our current business. In fact, we see this as a method of expanding our market share through insecticides. I mean, think about it today. We have roughly just over $3 billion in insecticides in an $18 billion market. With these types of products running these types of management programs, we expect to take further share. The $1 billion we're talking about of pheromones and pheromone-based products is totally additive to everything else we've talked about in the past. These are new products that will take market share in a space where we're already a strong player, but we know we can grow further. Okay. Just a quick follow-up on just the $1 billion of sales. I mean, if the market today is $500 million, how big are you assuming the market gets? Or are you assuming that FMC essentially captures all that excess growth in the market? Well, we do think that as we expand the technology and with our cost base, it becomes more accessible to the broader row crops. That market will become multi-billion dollars. There will, we are sure, be other applications for these products in the specialty areas, but we do expect to take a large share of that new market as it grows because frankly, we do have the game-changing technology that is the low-cost option in this area. Okay. Thank you. We now turn to Laurent Favre from BNP Paribas. Your line is open. Please go ahead. Yes, good morning, guys. My question is- Good morning, Laurent. - on production investments, I guess. The question really is, I guess, to get to $1 billion of value by 2030, I mean, how much CapEx do you think you need to put on the ground in terms of new reactors for the yeast fermentation? Or is it something that you're looking to outsource? Thank you. Yeah, we are absolutely looking at that. I'll let Andrew talk a little bit about the CapEx side of this. Yeah, I think this is a part of the business plan that we'll develop over time. We're looking at both contract manufacturing and in-house manufacturing capacity. Obviously, those flow through P&L slightly differently, but have a similar impact, whether it's D&A or contract manufacturing costs. Factored in our view of the value and the economic potential here is some investment. It'll be spread out over time. Certainly would be a bit of an uptick to our current pace, but not a significant increase in CapEx on a yearly basis. We do also see this, you know, very clearly. Fermentation as a production technology is something that is already a base that we, you know, for some of the products in our current product, the Plant Health portfolio. It's an area where investments and manufacturing capability there, whether that's through partners that we directly own, has applicability beyond just the pheromone products. It is an area that we're very interested in continuing to build capability and invest, both through partners and directly in capacity. At this point, a bit premature to give specific guidance on the CapEx. It will be additive to our investment over time, but not material in the next couple of years. Thanks, Andrew. As a follow-up, on the profitability side, you've talked about the business being margin accretive. Is that only once you've reached the ramp-up, or should we assume that sales, as they start to accrue in from 2024, will also come with a margin that is comparable to the group? Yeah. I think like any of these scale-ups, you know, at the very beginning, your margin is impacted by your scale. We're very confident that we'll grow the business very rapidly to get to the point where, you know, the products become accretive over time. I don't think that period would be long, where we know we're gonna have some potentially higher costs as we scale up. That's normal in any type of batch process that we run. We expect to get through that pretty quickly. It should be margin accretive, certainly as we get into the mid of the decade. Thank you. Thanks, Laurent. We now turn to P.J. Juvekar from Citi. Your line is open. Please go ahead. Hi, this is Patrick Cunningham on for P.J. Good morning, guys. Morning. Thanks. On the Plant Health business, you've talked about building out the biological portfolio quite a bit, and this is obviously clear evidence of that. Are acquisitions going to be the preferred route going forward? Do you have any interest in making acquisitions in South America? Yeah. I mean, listen, the business itself, we've talked about the size of the business today. It's in about $250 million-$270 million. It's growing north of 20% per year at above average margin. Organic growth is our primary route to growth right now. It's very robust. We have a long, long way to go in terms of taking all the share we want with the new products that we're developing. We're investing in the pipeline. Now, the acquisition of BioPhero should also tell you that it's a parallel route to growth. This is an inorganic route. It's a very good one for us. We are looking at other areas in our plant health portfolio for growth. As I said at the very beginning, you should expect to see us do more of this. This is the type of acquisition we want to be doing. Great. Thanks. Just a sort of clarification question here. Are there any sort of synergies with your existing portfolio on, let's say, BioPhero's manufacturing process? Anything that you can apply from there, or is it simply just kind of a standalone bolt-on there? Yeah. I think there are some broad areas. Kathy, maybe you just wanna talk a little bit about the research technology that we have and that BioPhero are bringing in on where you could see cross-fertilization. Yeah. I think it's really exciting for us to acquire this company because we're bringing to, BioPhero is coming into FMC to a group of experts that really understand the pests, the biological behavior of those pests, as well as the marketing and grower practices. By bringing BioPhero in, we're connecting them directly to the experts that know how these products will be used. We're really excited about it from a couple different standpoints, but that is probably the most obvious one. Great. Thank you. We now move to Laurence Alexander from Jefferies. Your line is open. Hi. Good morning. This is Kevin Estok on for Laurence. My first question is just how well accepted are these products with farmers and regulators as a whole? Like, I guess once a product is developed, I guess what is the typical outlay for toxicology and regulatory approvals? Just basically any information on how long that takes, let's say in the U.S. and other major markets would be helpful. Yeah. Generally speaking, it is a faster registration. Kathy, do you wanna say a few words? Yeah. You can track mating disruption and the use of pheromones back to 1973, actually, when they first started to begin to be used. They are a commonly used technique, grower practice. As Mark said, it's mainly in the fruits and vegetables area today. It's very successful. It's dependable. It's trusted. The benefit of having molecules that we're gonna be bringing to the market that also are occurring in nature makes regulators also understand them, maybe as they already act today in nature. We see a much shorter timeline to registration. In the United States, the timeline is almost half compared to what we have for a synthetic pesticide, about 2.5 years. In Brazil, it can be as short as two years. Where sometimes we're waiting as long as eight years, again, for a registration. In the E.U., we see a time of about four years versus six years for a synthetic pesticide registration. I think, yeah, it's good information. I think one thing I would add to that is, and Kathy alluded to it and I did earlier, these are products exactly the same that is made in nature. From a regulatory standpoint, it's a much easier process. I think the other thing that's very interesting about this part of the whole Plant Health space is the fact that, unlike other biologicals that sometimes struggle to translate from one country to another because they could be soil-borne microbes that don't grow well in another region, we're targeting a pest, and the pheromone is the same all over the world. If we're targeting a rice stem borer, then that rice stem borer uses the same pheromone all over the world. Scalability here is much easier than many other biologicals. I think that's an important facet to how we think about the growth of this business. Yes, today, you can see from the graph that Latin America and North America are the larger markets. The reality is there is tremendous untapped market in Asia and Europe as we go forward with these products. It is one product that will service each pest because it is unique to that pest. I think that's an important facet. Great. Thank you. Just as a follow-up, this question has been sort of asked, but I just wanted to learn more about maybe the basics of the pheromone business model. You know, how much does it cost in time and R&D dollars to detect a new pheromone? I guess, what is the expected production cost advantage that you may have relative to other ways of producing pheromones? Would be helpful. Thanks. Yeah, I mean, we're not gonna divulge where we are on the cost curve, but we know the other routes are produced by synthetic chemistry, and we're one of the world's biggest producers of synthetic chemistry, so we have an extremely good handle on current costs of the traditional older technologies. The new technology, we know where we stand, we know where we'll be once we hit our capacity. It is a major difference between the two. From a research perspective, Kathy, timelines, et cetera, for producing these products is much shorter, I guess. Well, you know, we have a really strong patent portfolio for the products that are in the pipeline today. It is a platform of technology. You see these five products or these five molecules that are in our pipeline today, and we have the times at which we expect to launch those. That technology can be applied to all the other pheromones that we wanna make as well. We're not starting from the very beginning every time we wanna start making a new pheromone in our pipeline. That's why I think our timeline will be shorter as we learn more about the pipeline that we're developing today. Thank you. Our next question comes from Arun Viswanathan from RBC Capital Markets. Your line is open. Please go ahead. Great. Thanks for taking my question. I guess I just had a clarification on the sales and potentially the EBITDA ramp. It looks like, according to slide 7, that the larger opportunities from a hectare standpoint are the first couple products, you know, products 1 through 3 that targets over 500 million hectares. But I think you said that most of the sales come on in, you know, middle part of the post-2024 period. So could you just square that out? And then, you know, as a follow-up on EBITDA, so is it also that we expect the EBITDA to come on in the middle part of that period, or should that follow later? Thanks. Yeah. I mean, listen, you look at the ranges we put there. We put a range because obviously we're going through the registration process for these products. You know, if you launch a product in 2025, you know, peak sales are not coming until the end of the decade. You got to remember, you don't ramp immediately. It takes time. You know, you can look at those dates and think of them as indicative of where we see the registrations coming. Then we've got to market, we've got to pick up the sales. I think mid-decade onwards is the right way to think about this. EBITDA will go in the same direction. Also could you just clarify the EBITDA margin comment that you know could be comfortably above or could be above company average? Is it the same maybe for each of these products? Is that the margin profile the same? What does drive that margin to such a high level? Yeah, I mean, generally speaking, the margins will be in a reasonably tight range. I mean, some crops and the types of pests and the value that we bring through using those pheromones with an integrated program, they'll have higher value in some areas than others. But without a doubt, all of them will be above our average EBITDA margin. That really stems from the value in use that we use and our low manufacturing costs. It's as simple as that. Thanks. Our next question comes from Mike Harrison from Seaport Research Partners. Your line is open. Please go ahead. Hi, good morning. Good morning. Congrats on an interesting deal. The slide deck says that you'll be acquiring technology, IT, supply agreements, and employees. It does not say anything about assets. I'm very curious that when we're talking about their manufacturing technology and it being low cost, has that technology been proven out at commercial scale, or is this something that has really just been demonstrated at lab scale or pilot scale? No, no, Mike, it has absolutely been demonstrated at large capacity scale. We followed that as we've owned the company, so we've been watching that carefully. We've actually been involved in it with advice, so we know very well where we are from a manufacturing standpoint. Andrew, do you wanna comment on the acquisition itself? Yeah. I mean, Mike, to your point on the assets, you know, BioPhero today is using exclusively contract manufacturing. They're not physical manufacturing assets coming over. As we commented on earlier, that is a place where we're looking at, you know, whether it makes sense to build some in-house capability, particularly in light of fermentation as a manufacturing process that is a base for multiple products, not just pheromones, in our portfolio and in places where we might wanna be. At present, you know, what we're acquiring, you know, at the heart of it is the technology, a very robust patent portfolio, as well as, you know, products that are in development ready to be launched. In terms of physical assets, very limited at this point. Yeah. I think, Mike, you know, we have, as you know, FMC very well, we have both a mixed model of own manufacturing and outsourced toll manufacturing. Obviously, we like that model. It works well for us. It gives us optionality. We'll be looking at something similar for this BioPhero acquisition. I think the other thing, as Andrew just touched on, is we have a very robust patent estate that's coming with this technology. The patents run all the way through 2042, which is a good length of time and gives us great exclusivity in the marketplace. Not all the technology is patented. With a fermentation process, there are a lot of trade secrets that come with something like this, so we feel very good about the length of the patents that are out there. As you know FMC very well, we'll go and get a lot more patents to make it even more robust, but we will also make sure those trade secrets are well protected. All right. Thank you. Thanks, Mike. This concludes our Q&A session. I'll now hand back over to Abizar Zaki for final remarks. Thanks, Elliot. That's all the time that we have for the call today. Thank you and have a good day. This concludes today's call. We'd like to thank you for your participation. You may now disconnect your lines.