Morning, welcome to the second quarter 2023 earnings call for the FMC Corporation. This event is being recorded, and all participants are in a listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's prepared remarks, there will be an opportunity to ask a question. To place in the question-and-answer queue, please press the star key, then 1one at any time. If you are using a speakerphone, please pick up your headset before pressing the keys. I would now like to turn the conference over to Mr. Zac k Zaki, Director of Investor Relations for FMC Corporation. Please go ahead. Thank you, Glenn, and good morning, everyone. Welcome to FMC Corporation's second quarter earnings call. Joining me today are Mark Douglas, President and Chief Executive Officer, and Andrew Sandifer, Executive Vice President and Chief Financial Officer. Mark will review our second quarter performance as well as provide an outlook for the rest of the year. Andrew will provide an overview of select financial results. Following the prepared remarks, we will take questions. Our earnings release and today's slide presentation are 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 earnings 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 EPS, Adjusted EBITDA, adjusted cash from operations, free cash flow, net debt, and organic revenue growth, all of which are non-GAAP financial measures. 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, Zack, and good morning, everyone. Our second quarter results are detailed on slides three, four, and five. Sales in the quarter were significantly impacted by a substantial decline in volumes across all four regions. During our first quarter earnings call, we already had reduced our outlook for the crop protection market and thought that it would decline by low single digits this year. We now believe this is no longer a valid assumption. Considering the abrupt and intense destocking by growers and the distribution channel in the second quarter, we now expect the global crop protection market to contract by high single digits to low double digits, even as on-the-ground consumption by growers remains at levels similar to last year and planted acres continue to grow in key geographies. Channel feedback indicates that destocking actions are a result of three factors: First, higher interest rates have increased the carrying cost of inventory. Second, there is increased confidence in product availability as the supply chain disruptions of the past few years have eased. Third, price reductions in fertilizers and non-selective herbicides have led to a wait-and-see approach to ordering. As a result, growers and the distribution channel are placing orders as close to application as possible. For FMC, the reduced volume led to second quarter revenue that was 30% lower than the prior year and 28% lower, excluding FX. Despite the challenging market conditions, sales of new products introduced in the last five years remained resilient and were at levels similar to last year, which aided product mix and illustrates the value of our innovative portfolio. Branded diamides also outperformed the rest of the portfolio. Price increases were broadly implemented in the quarter with an average gain of 3%. While our newer products generally perform better on a relative basis, nearly every country reported lower volume compared to the prior year period, which illustrates the widespread nature of current channel dynamics. Turning to the regions, North American sales declined 25%, 24%, excluding FX, versus the second quarter prior year. Overall, volumes were down. However, new products introduced in the last five years grew 43% and comprised 28% of total revenue, a record for the region. Branded diamides, including Coragen MaX, also showed strong growth, primarily due to elevated insect pressure in Canada. Sales in EMEA declined 26% year-over-year and were down 24%, excluding FX. Stronger pricing in the quarter was more than offset by lower volume, as destocking was compounded by adverse weather across Europe. Shifting to Latin America, revenue declined 38% versus the prior year period, as the region faced additional headwinds to volume from a historic drought in southern Brazil and Argentina. In Asia, sales declined 29% and were down 23% organically. In India, excess rain in the north and delayed monsoon season in the south added to volume challenges from continued high channel inventory. Australia and parts of ASEAN were also impacted by adverse weather. Overall, EBITDA was $188 million in the quarter, down 48% compared to the prior year period, primarily due to the volume decline. Pricing momentum continued in the quarter. Costs became a year-over-year tailwind for the first time since 2020, as input costs continued to decline and we closely managed spending. FX was a headwind to EBITDA in the quarter. Moving to the outlook for the rest of the year, slide six shows our expectations for the second half. Overall, our second half EBITDA guidance is in line with the guidance provided during our first quarter earnings call, as we expect the negative impacts from lower volumes to be most modestly offset by lower costs. We expect second half revenue to be slightly below the prior year period at the midpoint and are assuming that the channel's active inventory management will continue, especially in Q3. We expect destocking headwinds to be partially offset by new product launches and higher volume in Latin America in the fourth quarter. We are assuming growers will continue to order products closer to the planting season. Business fundamentals remain solid as grower consumption and product applications are expected to remain steady and planted acreage is projected to increase. We are expecting a low single-digit pricing benefit in the second half, with the majority of pricing actions already in place. FX impact is forecasted to be minimal. We are guiding EBITDA for the second half of the year to be $801 million in the midpoint, which is 16% higher than the prior year results. The main drivers are expected tailwinds from lower input costs, improved mix from new products, and a modest pricing tailwind, partially offset by volume headwinds. This is expected to result in EBITDA growth and healthy margin expansion. Slide 7 provides the quarterly guidance for the second half of the year. Volumes are forecasted to be more heavily weighted towards the fourth quarter, as the recent hand-to-mouth inventory management is expected to result in growers and the distribution channel making purchases closer to the timing of applications, especially during the start of the planting season in South America. Our third quarter revenue guidance at the midpoint is 11% lower than the prior year, as destocking is expected to continue, resulting in a volume decline in the low teens percentage. We are still projecting slight EBITDA growth at the midpoint, as favorable input costs are anticipated to offset the revenue headwind from the volume decline. Fourth quarter revenue is expected to be 6% higher at the midpoint versus the prior year, driven by the timing of orders shifting from the third quarter, product launches and additional acreage in Latin America. EBITDA and earnings per share are both expected to be 24% higher than the prior year at their midpoints, primarily from higher volumes and the positive mix impacts from new products. Slide 8 provides the second half assumptions for the outcomes at each end of our guidance range. The largest variable in the range is volume, which is closely tied to the duration of channel destocking. We are assuming a high single-digit volume decline and a low single-digit price benefit. Across the guidance range, we are confident in our cost discipline, and we still expect input cost tailwinds. However, we are aggressively managing our working capital in response to the current trend of order patterns, including adjusting production levels across our manufacturing lines. Many of our lines are currently not operating, which will result in some unabsorbed fixed costs. I will now turn it over to Andrew to cover cash flow and other financial items. Thanks, Mark. I'll start this morning with a review of some key income statement items. FX was a 2% headwind to revenue growth in the second quarter, with the most significant headwinds coming from the Indian rupee, the Pakistani rupee, the Canadian dollar, and the Turkish lira. Looking ahead through the rest of 2023, we see modest FX headwinds in the third quarter, with diminished impact in the fourth quarter. Third quarter headwinds stem primarily from Asian currencies, particularly the Indian rupee and Pakistani rupee. EBITDA margin of 18.5% in the quarter was down more than 600 basis points versus the prior year period. Gross margin percent was up 200 basis points year-on-year due to input cost tailwinds, higher prices and favorable mix. The steep drop in revenue and moderately higher operating spend resulted in a lower EBITDA margin. We are anticipating strong expansion of EBITDA margins in the second half, with continued input cost tailwinds, mix improvement, pricing, and operating expense discipline. EBITDA margins are expected to be up roughly 270 basis points in Q3 and 460 basis points in Q4, with full year 2023 EBITDA margin forecasted to increase by roughly 120 basis points despite the tough first half of the year. Interest expense for the second quarter was $64.5 million, up $29.2 million versus the prior year period. Substantially higher U.S. interest rates were the primary driver of higher interest expense in the quarter, along with higher overall debt levels resulting from elevated working capital. We now expect full year interest expense to be in the range of $220 million-$230 million, an increase of $15 million at the midpoint compared to our prior guidance. This increase is driven by higher debt balances due to elevated working capital levels. Our effective tax rate on adjusted earnings for the second quarter was 15%, in line with the midpoint of our full year expectation for a tax rate of 14%-16%. Moving next to the balance sheet and liquidity. On May 15th, we issued $1.5 billion in senior unsecured notes in equal tranches of three-year, 10-year, and 30-year maturities. Proceeds from this offering were used to retire the 2021 term loan and pay down commercial paper balances. After these financing actions and reflecting the results of the company in the second quarter, gross debt was $4.7 billion at June 30th, up $470 million from the prior quarter. Gross debt to trailing twelve-month EBITDA was 3.8 x, while net debt to EBITDA was 3.0 x. During June, as the magnitude of the channel inventory reset and its implications on our business started to become apparent, we entered into discussions with our bank group to amend the leverage covenant, our revolving credit agreement. We signed the final amendment on June 30th, which raises our leverage ratio covenant to 4.0 x through March 31st, 2024, and 3.75 x thereafter. We believe this amendment provides us ample room to navigate through the current disruptions. Moving on to cash flow generation and deployment on slide 10. FMC generated free cash flow of $93 million in the second quarter, down $72 million versus the prior year. Cash from operations declined $64 million. A substantially lower use of cash for receivables was more than offset by negative cash flow impacts on nearly every other line. Capital additions and other investing activities, spending was up while legacy spending was down. With this result, year-to-date free cash flow at June 30th was negative $822 million, more than $300 million lower than the prior year period. This reflects the year-on-year drop in EBITDA, as well as the impacts on working capital of the current channel inventory reset. We returned $123 million to shareholders in the quarter and a combination of $73 million in dividends and $50 million in share repurchases. Between May 10th and May 17th, we purchased approximately 457,000 FMC shares at an average cost of $109.35. With these purchases, we now expect weighted average diluted shares outstanding to be approximately 125.8 million shares for the remainder of 2023. We've reduced our free cash flow guidance to zero at the midpoint for 2023. This is a result of the decline in EBITDA, lower first half sales resulting in lower cash collections, and an expected pronounced decline in accounts payable in the second half of the year as we adjust production to balance inventory with demand. Adjusted cash from operations is now expected to be between $40 million and $370 million, down substantially versus the prior year. We slightly lowered our plans for capital additions and now expect to spend $125 million-$135 million, as we continue to invest to support new product introductions. Legacy and transformation cash spending is expected to remain essentially flat at the midpoint after adjusting for the benefit from the disposal of an inactive site in 2022. This guidance implies a rolling three-year average free cash flow conversion of 47%, well below our targeted 70%+, due entirely to the cash flow impacts of the channel inventory reset. While it's too early to comment in detail, we do expect cash flow to rebound as we move past the current disruptions. With the current year free cash flow outlook, near-term cash deployment priorities have changed. Free cash flow generated in the second half will first be used to pay the dividend, with remaining cash used to reduce short-term borrowings. We do not plan any further share repurchases this year. We will evaluate restarting share repurchases in 2024 as leverage levels return to target. With that, I'll hand the call back to Mark. Thank you, Andrew. Before we open it up to Q&A, I want to remind everyone that we will be holding our Investor Day at our headquarters here in Philadelphia on Thursday, November 16th. In addition to interacting with our executive team and leaders, attendees will be updated on our new strategy going forward. To close, it is very clear that the market is performing in a fundamentally different way than we had forecasted at the beginning of the year. We are adapting to control tightly what is critical at this time, namely, lowering our inventories of raw materials and finished goods to match the short-term demand, managing our internal costs, while at the same time investing in our R&D pipeline for the future. Finally, focusing on selling our newly launched products, which add real value to our overall profitability, as well as new products we have coming in Q4, especially in Latin America, for soy applications. While we have not seen this magnitude of volume change across multiple regions at the same time before, we have successfully managed through demand shocks in the past and have always emerged a stronger, more profitable business. I am confident this will happen again, especially as we have the benefit of good growth demand for our products around the world. I'll now turn the call back to the operator for questions. Thank you. We will now begin the question-and-answer session. To be placed in the queue, please press the star key, then one on your touchtone phone. If you're using a speakerphone, please pick up your headset before pressing the keys. Please limit yourself to one question and one follow-up. If you have additional questions, you can jump back into the queue. To withdraw from the queue, please press star, then two. At this time, we will pause momentarily to assemble our roster. We have our first question comes from Laurent Favre from Exane BNP Paribas. Laurent, your line is now open. Yes, thank you, and good morning, all. I'd like to go back to what changed since the May outlook. You, Mark, you mentioned the volumes seen at low single digits and now up to low double digits, and yet with consumption being broadly flat. I was wondering, has it changed your assessment of how much went into the ground last year, or do you think that channel inventories will end up abnormally low this year? I guess it's a way of asking if there are reasons to hope for a big volumes reversal into 2024. Thank you. Yeah, thanks, Laurel. Well, first of all, you could tell by the comments we made as we went through the quarter, and especially from the end of May onwards, we really started to see a very aggressive deceleration of orders from around the world, basically. Any country that was in season was really reducing volumes. This came, I think, through basically starting at the grower level. What we suspect now is that growers were holding inventory to levels that have not seen before. Let's be clear, it's not normal for growers to hold inventory. It's not something they usually spend their cash on. Our analysis today says that growers were holding inventory. When retail went to sell to growers, growers basically said, "Well, we don't need anything right now." Of course, that starts to back up through a pretty complex supply chain until it comes to us. You know, we've, we've seen this around the world. We've seen it through other players in the industry with their public announcements. You can tell that this is fundamentally a global reset of inventories. What we think happened over the last couple of years is that as supply disruptions made people nervous, obviously inventory was being built through all these different nodes in the supply chain, and that is now being unwound. Now, going forward, what do we expect? We do see that this phenomena will continue in Q3, as we've said, we're indicating we expect our own volumes to be down in that sort of low teen range across the world. We expect that to continue through Q3. Our assumption is that this will evolve as the seasons evolve. For instance, we do expect that the growers in Latin America and South America, in particular, Brazil and Argentina, they will be placing orders, but they're gonna be much closer to the planting season. That doesn't normally occur. We've talked about in the past that, you know, at this time of year, we have a certain percentage of orders on hand. That's not the same this year at all. We're expecting those orders to flow as we go through late Q3 and into Q4. That's in Latin America. We expect the North American season, as people start to buy in Q4, the end of Q4 into the beginning of Q1, we'll start to see the same phenomena. We won't see that in Europe until Q1 and into Q2, just because of the way the seasons flow. Asia is a little more balanced because we have both northern and southern hemispheres. It is going to be a case of, we expect, inventories to start normalizing as we go into Q4 and order patterns to start normalizing. That'll continue as we go through the first half of next year. I've never seen this before. I've been in this industry 12 years. I've seen pockets of this, Brazil in 2015, which was a totally different circumstance, but still a reduction in volume. This is everywhere. I think we only had two or three countries in the world where we saw increased revenue year-over-year. Everywhere else was down. That tells you the magnitude of what we're dealing with. Thank you. You also mentioned the price declines in fertilizers and non-selective herbicides as a reason, I guess, for growers to change behavior. In that context, what gives you confidence that you can avoid price cuts into the second half and into next year, in particular, given the context of variable cost deflation? I'm, I'm not aware of such a strong pricing discipline in the industry, but maybe especially for diamide, it might be a different story. Yeah, no, listen, I think given the strength of the portfolio, and I, you know, I just alluded to the fact that our products launched in the last five years were very robust in the quarter and have been so far this year. That's a, a lot to do with the type of products we're bringing that are differentiated. With differentiation, you have the ability to hold price, which is what we're talking about now. Price in the second half of the year, and in particular into Q4, we pretty much already have in place the prices. Now it's a case of managing through the disruptions and holding price as we go forward, which we're confident of doing. Given the size of the NPI sales today, to put it in perspective for you, in Q2, about 14% of our revenue came from products launched in the last five years. That was up from 10% in Q2 2022. It continues to grow rapidly. When you look at the full year, as we think about the new products rolling into Q4, that number gets up to about $720 million year-over-year, versus about $620 million the year before. Almost a 20% increase. That's the heart of the company today. It is the new products we're introducing, the value they bring. Now, I did talk about new products in Q4 going forward. Very important in Latin America, we have 2 brand new products that we're launching right now. One is an insecticide for soybeans. The other is a brand new fungicide that is for soybeans, but will be traditionally launched on cotton first. Those are expected to be very valuable and large volume players as we go into Q4. It's not just price, it is the portfolio. We also talked about the diamides. Our branded sales of diamides performed well versus the rest of the portfolio. I think they declined something like high single digits versus our overall reduction of about 30%. That can't be said the same for our partners in the diamides, which are the people that we sell technical diamides to. We've talked about these partners before. They have been doing the same thing as everybody else in the industry, which is drawing down their inventories, which impacts our sales to them. That will come back next year. We have no doubt about that. We've talked to them. They're just managing their inventory like we are. I think you're seeing a confluence of events that are, are playing out right now that will unwind as we go into 2024. Thank you. Thank you. Our next question comes from Christopher Parkinson from Mizuho. Christopher, your line is now open. Got it. Thank you very much. Just Mark, just given everything that's going on, and I'd say the lack of urgency of, you know, wholesaler and co-op behaviors relative to the past few years, what do you think the probability is that some of your retail channels kind of overshoot to the downside in terms of inventories, just given healthy end market demand? I know perhaps that's not kind of the key focus right now, but just given how strong volumes are, and once again, that what's actually being sprayed, you know, what are your thoughts on that on a very, very within various geographies, but I'm asking specifically on North America. Thank you. Yeah, Chris, listen, I think, I think you're going to see pockets of people overshooting on inventory reduction. It's such a big industry. There are many different nodes to these channels. You could tell that the industry's ability to forecast what was coming as we went down this curve, it's probably the same as we come out of this curve. I do expect to see places where inventory has been run down too much and will come back at a faster pace. There are other places where inventory was high and is being drawn down to what we would call more normal levels. It's gonna be a combination of the two. It's, as I said, it's such a large industry and complex supply chains that it would not surprise me to see that. I think you'll, you'll see it in North America just as much as you'll see it in anywhere else. I don't think North America is in any particularly different shape. I would say Latin America, where we expect to see the same phenomena and certainly in Europe as well. You know, we have seen public comments by major distributors in the U.S. about how they see their inventory levels reducing and how they expect to see that come back as we go through the next season. Overall, I think you're gonna see probably both impacts. Some people will overshoot, and some people won't. Very helpful. Just as a quick follow-up, I know it's a little bit early, but obviously there's going to be a lot of focus on free cash flow generation and obviously how a lot of investors have been thinking about your rolling three-year averages and how 2023 is a bit, a bit of a hiccup in that kind of longer-term trends. Perhaps either you or Andrew could just hit on, you know, the key considerations as we're exiting 2023, understanding there can always be a lot of movement between the fourth and the first quarters. How should investors be broadly thinking about, you know, the longer term algo as it specifically as it pertains to hopeful, 2024 improvements? Thank you. Sure. Okay, it's Andrew, Chris. Thanks. Look, I think that the story for free cash flow in 2023 is actually relatively simple, however challenging and disappointing it might be in the immediate term. You know, we have a substantial drop in EBITDA guidance for the year that flows directly through cash flow. The sales growth is in the second half, and the balance of our sales is more second half weighted, as you know well. Given the regions in which those sales are made, we won't collect on those sales in the year, so collections are lower. Building on comments Mark made in our prepared remarks, you know, we're adjusting production levels across our operating lines right now. That means we're not buying anything, as we're not manufacturing a lot of, you know, we have ample inventory at the moment, so we're not manufacturing a lot of new material. We're not buying anything. We're looking at somewhere north of a $400 million drop in accounts payable at year-end. I mean, simply a $180 million drop in EBITDA guidance and a $400 million drop in accounts payable basically wipes out the free cash flow we had guided for this year. As you pointed to, free cash flow is pretty lumpy, and it and as you cross time periods, can swing pretty rapidly. We do expect that as we move into more normalized conditions in 2024, that we would see a rebound in free cash flow. We'd see a rebuilding of payables, we'd see a reduction in inventory, and we get back to a more normal collection cycle, more balanced between the halves of the year. We have no-- we have nothing that makes us feel any different about our long-term goal and expectation that we should operate this business at a, at a 70%+ rolling average free cash flow generation. It's just these, you know, the rapidity of these adjustments and this channeling, inventory reset this year is just, it's too much to overcome, unfortunately, in a 6-month period. That's the reality of the free cash flow. Again, I think we feel very confident about the cash-generating capability of this business over the long term, and you will see that rebound as the situation normalizes. Helpful color. Thank you. Thanks. Thank you. Well, our next question comes from Salvator Tiano from Bank of America. Your line is now open. Great. Thank you very much. The first thing I want to understand is, you, you mentioned how farmer applications seem to be flat year over year, holding up. Can you talk a little bit about your, how you go in, in trying to understand, what farmers are doing and what confidence level you have here? Because obviously, what farmers ultimately do is the critical point in understanding how much of this, volume decline is true demand decline versus actual destockings. Yeah, sure. I mean, there, there's different methodologies for us to be able to have some insight into what is happening at the grower level. First of all, is acreage that gets planted. Obviously, you're planting, you're using crop protection products. That's something that we look at around the world, and it's well recorded, and many independent consultants look at that. The second is there are other independent sources that we put information in, and the rest of the industry puts information in, and then you get an aggregate, an aggregate output, which tells you what the market is doing. That's particularly strong in Brazil, it's particularly strong in the U.S., less so in Europe, and less so in Asia. It's a couple of things. It's our understanding on the ground of what's getting planted and then what is being applied, and then also third-party independent sources, which are available to everybody. Great, thank you. My follow-up is a little bit on trying to understand a little bit what's happening with your diamide partners. Firstly, you're talking about them destocking. Essentially, your view and your understanding is that diamide demand, whether it's branded products or from your partners, is holding up, but your partners, like UPL, are going above and beyond to lower their AI purchases, firstly. Secondly, I think UPL specifically entered the U.S. market with its Shenzi product, a few months ago. What is the impact for this, to your own branded business in the U.S.? Well, a couple of things. First of all, when we talk about supplying technical-grade diamides to our partners, think of us as essentially a raw material supplier. They're treating us as a raw material supplier, the same as we're treating our raw material suppliers. It's nothing more than that. It is a simple case of they obviously have demands on their inventories that they're having to reduce, and we are part of that. We do that to our own suppliers and are doing it right now. You see that. From a demand perspective, we don't think their demand is slowing down at all, neither is ours, as we just commented on. To the second part of your question, with regards to competition in the U.S., we've seen competition for some time in many parts of the world with the diamides. What we do know is that our branded products and the new introductions that we're making of new formulations are moving the needle. In other words, we're not selling the same products that we were selling five years ago. We're selling more sophisticated, higher concentration formulations to our current customers. Where generics are coming in with a certain type of product, we're not, we're not selling those products anymore. We're selling something completely different. It's very much a case of our product lifecycle management that we've been going through and we've been talking about for the last five years. It is now bearing fruit in terms of how our product mix is changing for our Branded diamides. Thank you very much. Thank you. Thank you. With our next question comes from Vincent Andrews from Morgan Stanley. Vincent, your line is now open. Thank you, and good morning. I'm wondering if we could talk a little bit just about raw material costs. You know, obviously, that was a good news story, supposedly to start in the second half of this year and into next year. Just wondering, with the reduction in production on your end, and presumably others will have to do the same thing, should we be expecting more deflation? Obviously, maybe not immediately, but as we move into 2024. Yeah, Vincent, good question. Let me just start it off, and then Andrew, if you want to talk a little more granularity on the cost side. Certainly, you know, we've been anticipating and we expected lower costs as we go through the second half of the year. We started to see that in Q2, and we've talked about an order of magnitude difference in Q3, which we know is there. I would say generally in the industry, prices have come down, continue to come down. I think we're looking at perhaps a little better scenario than we thought at the beginning of the year. A lot depends on what China does. We're seeing a lot of shutdowns in China, after they've been selling products, what we believe has been below costs. Obviously, you can't keep that going for very long. It'll be interesting to see what happens to many of the Chinese producers that are probably in some significant financial issues right now. We expect some of those smaller companies to disappear. Our view is that we'll, we'll expect to see the current level of lower raw materials and intermediate costs roll through into 2024. Andrew, do you want to just comment on that further? Yeah, certainly. I think, Vincent, I think you're spot on in that we are seeing improvement in costs, as, you know, the, the pressures of the destocking hit every stage in the value chain. You know, despite the, the weak volume outlook for Q3, we still have substantial cost tailwinds in the quarter. In fact, the cost tailwinds are stronger now than what we anticipated 3 months ago. Some of the things that moved more quickly through, through our inventory and into, into costs, like packaging, materials, for example, have improved. We actually are seeing improved costs. We saw better than the expected costs in Q2. We're expecting stronger than what we'd initially expected in Q3. I think you see continued benefit of that in Q4. You know, these dynamics pushing back into the chain, I think, set up a very favorable cost position going into to 2024. A bit hard to look too far out to 2024 just yet, but from what we can see, we should start the year in a very favorable input cost situation. Okay. As a, as a follow-up, I know with the, with the reduced guidance, when you pre-announced, it came with some incremental cost out efforts that you were gonna do. I just would like to get a better sense of what it is that you're doing and how you're sort of balancing the desire to, you know, sort of improve your, your, you know, near-term earnings situation through this challenge. You know, then obviously, look for cash flow versus, you know, the last year or two, we've been talking about, you know, the very successful investments you've made in opening up new markets and doing things like that. you know, how are you trying to, to sort of balance, you know, it's obviously a very challenging period of time right now with sort of making sure that you're continuing to do the right things to invest in the growth of the business over the medium to long term? Yeah, Vincent, listen, it's, it's a very good point. We would run this company for the long term, and the company really is built that way in terms of, I think, of R&D and the, the longevity of that R&D pipeline. We're not cutting back on our R&D. That's something that is very important to us. We believe the strength of that pipeline will drive the overall valuation of the company over the long haul. We're doing everything we can not to slow down the projects in R&D. That doesn't mean to say we can't save costs in R&D from an operating standpoint, but we're not slowing down the main projects. That's the important message. On the rest of the company, we're really focused on the front end, the very pointy end of the company, which is all our commercial groups and marketing groups, which drive revenue demand. There are many things that we look at in terms of all the line items from a sales and general and admin perspective, and that's where we're cutting back. We're cutting back in the short term on things that we know will not impact our customer intimacy, won't stop us getting volume or demand that's out there. Really focusing on the customers, everything from the customer back, we're doing everything we can to reduce that spend. Andrew, do you want to add anything? I just would emphasize that we are controlling spend. We are still going to be spending more dollars in R&D this year than we did last year. We're just not growing quite as fast. Similarly with SG&A, you know, as Mark pointed to, you know, we're not making any compromises on investing in the commercial operations of the company and that, that expanding market access and building that closer intimacy with the customer. We are being very careful in metering our spending in other areas. I think this is something that we've demonstrated over a number of different disruptions that have occurred in the past 12, 15 years, that we can do, particularly in the last five. You know, we will, we will be spending well below what we started the year planning to spend, but we'll continue to make investments that are gonna drive the long-term future of the company. You know, nothing that we're doing has any structural impact to the company's ability to grow. Okay, very good to hear. Thanks, guys. Thank you. Thank you. With our next question comes from Josh Spector from UBS. Josh, your line is now open. Good morning. This is Lucas Beaumont for Josh. I just wanted to go back to the volumes, if we could. If sort of I understood your comments earlier correctly, and a chunk of the volume growth over the last two years was more driven by sort of customers that are ordering, and it's basically going into inventory versus the underlying demand. I mean, if we kind of look then at sort of your trends for this year and the last two over a kind of three-year period, you're basically in line with that sort of long-term, low single digit kind of volume growth rate. I guess then, as we think about the setup for next year, does that mean that we should basically kind of just return to trend growth from this, like, lower level and not really expect more of a rebound? Or how should we kind of think about that? Thanks. Yeah, good question. I think your thesis is pretty close to how we think about it. I think going forward... Listen, it's early August, it's almost impossible for us to think through to 2024 right now. We haven't even really started our budget process. If I just take a step back and think about the fundamentals of the market that we're talking about, what do we see? We see soft commodities and grains at very good prices in the marketplace. Not quite at the peak they were about a year, 18 months ago, but not far off, and certainly well above the long-term average for these products. You look at the stock to use ratios. Stock to use ratios in many of the soft commodities have been trending down. Why? Because we've had yield issues around the world. Climate change really does impact agriculture, you could see what happened as we talked about in Latin America last year, unprecedented drought in south of Brazil and Argentina. We've had flooding in the north of India. We've got a dry Midwest right now in the U.S., heat in Europe. All those things contribute to a higher commodity price and lower yields. That's a good backdrop for somebody to sell into. Fundamentally, we know there is demand. We know we have to increase productivity by about 3% a year just to keep hunger at bay around the world. I think the backdrop is solid. We see acreage increases anticipated, especially in Brazil and other parts of Latin America as we go into the next season. For me, that on-the-ground grower view of the world is positive, and right now it's hard to see what would change that. It's a little early to say what our growth rates would be next year, but I am expecting a positive backdrop as we roll through 2024. Okay, thanks. Just on the fourth quarter specifically, could you walk us through your margin assumptions that are getting to your full year guide? How much of that is kind of from volume catch up versus more normal trends, and how much do you expect raw materials to help there in the fourth quarter? Thanks. Hey, Lucas, Andrew here. On margins in the fourth quarter. Look, I think it's all of the above. We do have positive volume contribution, but remember, when we look at volume, we include mix and volume. It's a strong quarter for us for new product introduction. Mark mentioned two specific products for Brazil that we have very high expectations for. But you know, it's a broad portfolio of newer products that will contribute to a more positive mix. We do have cost tailwinds. We do have input cost favorability that we, you know, expect to sustain in Q4. We do have some modest continued pricing benefit. Now, it's not necessarily new price increases, but, you know, the year-over-year comparison from where we've raised prices to at this point, still carrying over versus the prior year. It's a broad-based combination there, and it really does allow us to deliver, you know, what will be, you know, one of the strongest margin quarters in quite some time for FMC. It, it is a combination of all of those factors in the fourth quarter. It's input cost, it's volumes, it's operating expense discipline, as well it's the continued pricing benefit of actions we've already taken. All of those factors. Great, thank you. Thank you. We have our next question comes from Lawrence Alexander from Jefferies. Lawrence, your line is now open. Good morning. This is Dan Rizzo, on for Lawrence. Thank you for taking my question. I thought I remembered in 2015, 2016, that channel inventory destocking became a multi-season issue. I was wondering how things are different now, and if that is somewhat of a risk to happen again? Yeah, 2015, you've got, you've got to remember back to 2015. Seems a long time ago now, but that was a particular event in Brazil. It was both inventory, it was currency impact, and it was, again, that scarcity of, of products leading into that. I think this is different in the sense of it's broader and it's happening much faster. In other words, the decreases we're seeing on a quarterly basis right now, they're much more extreme than they were before. I think the other thing for us, in particular, although there was a lot of people impacted by the Brazilian event, there was a new seed trait that was introduced into Brazil for soybeans, which impacted insecticides within a reasonably short time frame. That was a factor that is certainly not at play today in any way, shape, or form. I, I don't necessarily look back on Brazil as a, a proxy for what is happening today. All right. Thank you. That's helpful. Then, have you guys kind of quantified what a, what a headwind unfavorable cost absorption will be, given the lower production levels you talked about in the second half of the year? We, we have not yet quantified that, in part because it's a moving target. We do anticipate, based on what our operating levels are right now, that there will be some modest fixed cost absorption headwinds in Q4. That's built into our guidance, to be very clear. It, it mitigates, it offsets a small amount of the input cost benefits we have in Q4. But, you know, in terms of how that might bleed over into next year, it's too early to know because it's gonna depend on how we operate through the rest of the year. You know, I think we're being very thoughtful about, you know, managing our inventories, trying to, to bring them down in line with current demand, but also leave ourselves in a position to be able to capitalize on the eventual recovery of markets. It's, it, it is a bit of a moving target. I, I think key message, both our Q3 and Q4 guidance reflect our expectations for any impact of unabsorbed fixed costs in these periods. As we look forward to the next year, it's, it's really gonna depend how the rest of the year plays out. Thank you very much. Thank you. With our next question comes from Adam Samuelson from Goldman Sachs. Adam, your line is now open. Yes, thank you. Good morning, everyone. Good morning. I, I was, I was hoping to maybe draw a little bit closer distinction in, in the terms of the second quarter sales decline and the trends you're seeing between orders from your customers for, where you're in supplier of the diamides to other crop chem manufacturers, to sales into the channel. Is there actually any distinction in terms of sales trends and magnitude of decline to, to, to glean from those? Just as we think about kind of where the change in activity levels have occurred, and I mean, again, it's been global, it's been a magnitude that's really not with, not with recent precedent, but I'm just trying to distinguish where you're now a bigger supplier to other manufacturers than you were historically. Kind of how that has... If there was any meaningful change in distinction between those two sales trends. Yeah, listen, I think, we just commented on the fact, Adam, that, that the branded diamides that we're selling ourselves into the marketplace did much better than the overall portfolio. That's a subset of that new product introduction. In other words, we're introducing new branded diamides that are very differentiated. That's what the market is looking for. The market is looking for newer products that enable them to remove pests, break resistance, et cetera. I think the sales to our partners, that is used for a number of different applications, whether it's for seed treatment or whether it's for foliar applications. They're going about their business in their own way, managing their inventory as they are. There's no indication, as I said earlier, that their volumes to the end users are falling off. It's more an inventory management perspective. I do want to emphasize the fact that our own diamide sales, our own branded products, are doing extremely well, especially the recently launched products. Okay. Then if I just think about the fourth quarter and the cadence of revenue, revenues for the balance of the year, where you have volumes improving in 4Q. Can you talk about just the magnitude that the expected contribution from some of those new products introductions and kind of where, not really firm orders per se, but where. Just help us. T hat being a discrete building block to return to growth in 4 Q versus kind of what is just an assumption of a return to more normal buying patterns from your, from your channel partners, presumably in South America, most notably? Yeah, I mean, the, the, the new products are really targeted at Latin America. I'm not gonna give the numbers for that because I don't wanna give away any competitive information on how well we're doing. We already have significant interest from our partners in the channel, whether it's distribution, co-ops, or large growers, for these new products. We're very, we're very excited about bringing those products to market, and so far, the interest that we've generated with our growers is very, very positive. Okay. I, I appreciate the color. I'll, I'll pass it on. Thank you. Thank you. With our next question, comes from Alexi from KeyCorp. Alexi, your line is now open. Good morning. This is Paul on for Alexi. Can you walk us through some of the adverse weather conditions you are seeing and where inventory levels stand in those regions? Thanks so much. Yeah, I, I-- listen, I just made a comment earlier about weather. I mean, we've had in the first half of the year, obviously, very difficult conditions in the south of Brazil and Argentina through drought. We're seeing dry conditions in the Midwest of the U.S., very dry conditions in the south of Europe as you go through Spain, France, Italy, Greece, Turkey. We also have seen flooding in China, flooding in the north of India, dryness in the south of India, dryness in Australia. I mean, the list goes on and on. We're dealing with more weather volatility than we ever have over the last year. Those are the types of things that Mother Nature throws at us. Of course, Mother Nature doesn't care about the financial quarters that we have to deal with, that's something that we all have to manage as we play in the agricultural field. It's certainly real, and, in some countries, it's very, very impactful. Great. As a follow-up, as raw materials and the logistics environment starts to normalize, do you see the supply of more competitive products entering the market? I guess you mean from a generic standpoint? Mm-hmm. What do you mean? Could you just elaborate a little bit more what you're looking for? Yeah, yeah, from a generic standpoint. Listen, generics play a major role in the marketplace. They've been around, and they are around. We don't necessarily play in a lot of those markets. It's not to, not to say that the, the, the markets they play in are not valuable, they are. We don't have a lot of generic pressure in a lot of our product lines, mainly because of how we differentiate through either new active ingredients or new formulations that we bring to market. I expect the generic market to get more competitive, but we don't play in that space. Thank you. With our next question comes from Richard Garchitorena from Wells Fargo. Richard, your line is now open. Great, thanks. My question, just from a bigger picture, you mentioned that, you know, the, the macro environment has changed, the, the way that your customers have been managing inventories. Is there any change in terms of what you think about in terms of what the mid-cycle sort of, you know, earnings generation of, of the business is? Should we look at $1.4 billion, sort of, like, as a good base to move from going forward? Yeah, listen, very good question. I mean, in November, we're gonna give you a, a view of our world going forward for the next three years and then a, and a longer-term aspiration. You know, we've been, we've been clicking along at a, a fair rate of 5%-7% top line, 7%-9% bottom line. We just, we just did a look back, and we've outgrown the market anywhere from one and a half times to two and a half times over the last 20 years. We know we have a model and a portfolio that can deliver that type of growth. I do think, thinking of this year as a reset is a good way to think about it, and then how do we bring the next generation of growth to the company? I don't see it as some massive rebound next year. I don't think that's gonna happen. I think the channel is, is learning the lesson of, of carrying the right amount of inventory. I think we'll reset this year, and then we'll move forward, and we'll share with you in November what we think that potential new algorithm will look like in terms of top line, EBITDA and EPS growth going forward. Okay, great. Just as a follow-up, how is the biological business impacted at all by the change in the market environment? Do you still see, you know, 7%, 8% CAGR growth the next few years? I know we'll get an update in November, but any thoughts on that right now would be great. Thank you. Yeah, I mean, listen, I, I don't think there's a single piece of this crop protection market that has not been impacted in the same way, whether they're biologicals or micronutrients or whatever the, the product you're bringing to market. I think everything has been impacted by the significant reset we're seeing. Now, having said that, we still have expectations that the plant health business will grow in that 20+% range. The biologicals are growing even faster. We'll continue to see that accelerate as we invest more, especially in R&D. So we see that continuing. It's not something that, we feel has been, hampered long term by this recent reset. If anything, it teaches us that having that broader portfolio is gonna help us going forward from a value perspective. We do see plant health as it continues to be a major focus for us, and the biologicals will continue to outpace the rest of the company by some degree. Thank you. With our last question comes from Joel Jackson from BMO. Joel, your line is now open. Hey, good morning, everyone. This is Joseph on for Joel. Just to help get volumes moving again, would FMC consider increasing rebate programs in the second half to help pull forward some volumes from first half of 2023? Good question. Listen, there is, there is always a commercial package to be put together, and, you know, rebates in some parts of the world are a, a meaningful way that we go to market like everybody else, the U.S. being 1 of those markets. Rebates are not used all over the world. We consider all the tools we have to make sure that we're delivering value to the growers and that we're getting the appropriate value to FMC. If there are rebate changes to be made, they'll be made, but it'll be done in the context of the value we're bringing. Okay. Then just coming back to Q4, in terms of costs, are they essentially all locked in now? How much of Q4 volume and price expectations are at risk, would you say? Andrew, you want to say? I'll, I'll chime in on at least the first part of that question. I think costs for Q4 are largely locked. You know, there are items that move more quickly through our cost structure, particularly packaging items and logistics, that we can continue to move as we move into fourth quarter. The final mix actually does matter because, you know, the cost reductions we're seeing are not uniform across every input or every product that we have. I do think we have a high confidence in the level of cost tailwind we're expecting in Q4. A vast preponderance of that is pretty much locked in, but not quite all of it just yet. I think in terms of, Mark, maybe you want to speak to price and price and volume in the fourth quarter, in terms of visibility there. Yeah, I mean, listen, price and volume will be as we've said, it'll be within the quarter or very close to the quarter. A little early to say at this point, but as we get there, we'll, we'll know exactly how we're playing and how the market is moving. Our expectation, as I've said in numerous times, is we expect orders to be coming very close to the planting season, and that's what we're gearing up for. Thank you. Due to time constraint, I will now pass back to Mr. Zack Zaki for closing remarks. All right, no, that's it. Glenn, thank you very much. That's all the time that we have for the call today. Thank you and have a good day. Thank you. This concludes the FMC Corporation conference call. Thank you for attending. You may now disconnect.