FMC Corporation. (NYSE: FMC) - Long. Mitesh Amarthaluru, Derek Chait September 24, Brightleaf Square Capital Management

Transcription

1 FMC Corporation (NYSE: FMC) - Long Mitesh Amarthaluru, Derek Chait September 24,

2 Investment Thesis (NYSE: FMC) Following the divestiture of the Alkali Chemicals Division, FMC Corporation s shifting focus to Agricultural Solutions and aggressive roll-up strategy provides an attractive asymmetric risk/reward opportunity over a 1-year time horizon. Recommendation: BUY Current Price: $ Y Target: $61.52 (+69.25%) INVESTMENT EDGES FMC Corporation operates in an oligopolistic industry with high barriers to entry, market share stability, and high ROIC levels Deep competitive moat in an industry with strong customer retention rates and stable recurring revenue capability Shifting concentration toward Agriculture Solutions reshapes the business model toward asset-light and high-margin solutions Strategic M&A and divestiture policy exchanges non-core businesses with those in the niche specialty chemicals space Clear pathways for value recognition through recent/upcoming spin-offs and effective capital allocation by management Investor misunderstanding of both the cyclical environment of the crop protection chemicals market combined with the recent divestiture of Alkali Chemicals depressed FMC share price Low pest pressures and drought may continue to stall pesticide demand, leading to inventory buildups RISKS Inflationary pressures in LATAM and FX headwinds damper top line growth prospects 2

3 Company Overview BACKGROUND INFORMATION Three key business lines: (1) Agricultural Solutions, (2) Health & Nutrition, and (3) Lithium Sold (4) Alkali Chemicals in Mar. 15 and bought Cheminova in Apr. 15 Ag. Solutions: Later-stage development and sale of crop protection products Management has announced plan to sell off Consagro subsidiary Health & Nutrition: Portfolio of specially designed solutions to enhance food, pharmaceutical, and nutraceutical products Management has announced plan to sell off Pectin division Lithium: Leading industry position with diverse end markets Focus on energy storage and polymer sectors FY 2014 Revenue Pro Forma FY % 5% 19% 19% $4.0B $4.5B 21% 54% 76% COMPANY OVERVIEW Sales by Region 17% 44% 18% 21% 5,000.0 SALES BREAKDOWN BY SERVICE ( M ) Share Price $ EV (M) 6,687.8 MCAP (M) 4,846.1 ROIC 17.8% Net Debt (M) 1,841.7 Net Debt / EBITDA 1.7x 4, , ,000.0 Alkali Divestiture SHIFT IN BUSINESS CONCENTRATION Secular trend toward consolidation of specialty chemicals industries FMC strategy geared toward bolt-on acquisition and divestiture policy Special names involved in specialty chemicals: Mar. 15: Bill Ackman discloses 31% stake in Platform Specialty Products Aug. 14: Warren Buffett announces 6% stake in Dow Chemical Co. 1, Ag. Solutions Health and Nutrition Lithium Alkali MANAGEMENT Recently-appointed management team (2010): All 20+ years prior experience Management cohort spear-headed effective capital allocation strategy Continued share buybacks by both Management & BOD acts as catalyst Persistent margin expansion initiatives, growing bottom-line 3

4 Development of Main Business Lines EVOLUTION OF AGRICULTURAL SOLUTIONS Adapting in a consolidating industry: The Big Six : Continued growth of high-margin fungicide vertical Cheminova acquisition provides immediate access to European markets with little regulatory pressure Fungicide exposure still below industry average room to grow FMC AG. SOLUTIONS PRODUCT MIX 9% 14% PREMIUM FOR LITHIUM Operating in an oligopolistic industry with high barriers to entry Protective moat with competitive advantage FMC s lithium carbonate demand has grown at 10.1% CAGR since 2011 Controls 15% of the global supply Limited number of established producers with functioning mining operations FMC mines in Argentina s Puna Plateau 70% of world s lithium stores Interested in squeezing out smaller, neighboring producers Increasing energy storage applications Batteries in mobile consumer devices Electrification of the transportation industry Aerospace applications FMC stock provides indirect exposure to lithium industry 48% 42% 48% 38% LITHIUM SALES BY END USE Low natural gas prices Major component in nitrogen-based chemicals Enables further R&D funding in growing BioSolutions platform 2015: 14 products 2017: ~25 products commercialized End of El Niño cycle and corresponding drought situation in LATAM Poor planting conditions low pest pressure 2014 LATAM sales decreased 5% due to weakened demand for crop protection chemicals Brazilian insecticide market was down 15% Unsubstantiated concerns over infestation-resistant GMO seeds Pest evolution requires consistent application of insecticides in order to prevent mass infestation Alloys Glass, ceramics, construction and other conventional applications 4

5 Stock Price ($) Catalysts: Acquisitions, Alliances & Collaborations PLAN Acquisition of smaller, more specialized companies with proven operational abilities Expand Market Share: Provide additional services, technological capabilities, and geographic penetration to the acquirer Acquirers often pay a lower valuation multiple and buy target at a discount Divestitures of businesses that are no longer in line with management expectations Spin-off sectors that do not provide new growth avenues for the company BOLT-ON ACQUISITION & DIVESTITURE POLICY Fluthiacet-Methyl Market Access JV Biological Agreement 2 Bio Acquisitions Fungacide Agrement 2 Fungicide Acquisitions GAT Microencapsulation 3 Tech Agreements Chr. Hansen / CAEB MISUNDERSTANDING OF RECENT M&A Sale of Alkali Chemicals Division Purchase of Cheminova 30 1/2/2015 3/2/2015 5/2/2015 7/2/2015 9/2/2015 Sale of Alkali Chemicals Division in March 2015 No sale of Lithium Division Selling pressure from event-driven funds Utilized $1.6B of proceeds to fund $1.8B Cheminova Further selloff in line with high market skepticism regarding acquisition Market Access JV Licensing Agreements EXECUTION Management always open to buying products and technologies opportunistically Special emphasis on broadening Agricultural Solutions portfolio and strengthening end-market access worldwide Taking advantage of industry consolidation and building economic moat Spin-offs of low-margin businesses will provide immediate influx of cash Cash used for future acquisitions, stock buybacks, and debt retirement Cheminova Revenue Synergies ~ $30M Cost Synergies ~ $90M Consargo [Brazil] Pectin [Italy] Divestitures of low-margin facilities Shift to manufacturing of higher-value specialty products MITIGANTS Quicker realization of Cheminova synergies than expected Immediate integration into portfolio mix Expecting to achieve synergies of $30-40M in 2015 (prior guidance $25-30M) $120M of total synergistic gains by 2017 Additional revenue-based synergies from access to Cheminova presence in European markets Further cost savings synergies including: (1) supply chain efficiencies, (2) eliminating surplus facilities and other G&A expenses, (3) headcount reduction 5

6 Price ($) Valuation COMPS ANALYSIS SCENARIO ANALYSIS Comparable Price Target: Price Target: SCENARIO BULL BASE BEAR Bull: $62.22 Base: $49.21 FMC Fundamentals In-line with management-provided guidance; Growing BioSolutions; Margin expansion; Cyclical rebound Conservative projections reaching back to pre-cheminova March price Low pest pressure; Drought continues; Revenue synergies delayed Bear: $37.10 WACC 6.37% 7.37% 8.37% 2015 Comparable EV/EBITDA Price Mean Target: Range DCF VALUATION ANALYSIS PRICE TARGET OVER 1 YR POST-DILIGENCE OPINION FMC Stock Price Sep-13 Jan-14 May-14 Sep-14 Jan-15 May-15 Sep-15 Bull: $74.21 (104.15%) Base: $61.52 (69.25%) Bear: $50.50 (38.93%) This trade presents an opportune asymmetric risk/reward investment: Market misunderstanding of the cyclical nature of FMC and misunderstanding of Cheminova transaction tanked FMC share price Base Case: FMC stock price should reach back to pre-cheminova levels because Cheminova adds much more value than previously spun-off FMC Alkali Chemicals Division Recurring revenue capability ensures a sustainable asset-light business model Management is shedding low-margin businesses to increase bottom-line conversion Bolt-on acquisitions support increasing market share and economies of scale 6

7 Appendix SLIDE TITLE SLIDE NUMBER Potential Buyout DuPont (NYSE: DD) 8 Potential Corn Hedge 9 Large-Scale Trends 10 Declining Arable Land / Capita 11 Specialty Names in Specialty Chemicals 12 FMC Discounted Cash Flow Analysis FMC Comparable Company Analysis 15 Ag. Solutions Comparable Company Analysis 16 Sources 17 One-Slider 18 7

8 Everybody s a buyer ACQUISITION SYNERGIES Big Six have bought > 200 companies since mid-1990s Increase economies of scale internationally FMC remains an attractive takeover candidate by DuPont DuPont especially remains focused on agriculture, nutrition, industrial biosciences and advanced materials Management inclined to take more aggressive steps to alter company Five year plan: Acquisitions to revitalize its growth prospects Larger investors may attempt to alter the direction of the company Result of sustained underperformance The new FMC should give the company s shares a higher valuation Still clearly small enough for larger DuPont to acquire 4 DuPont M&A Volume and Value Trend has acquired $6.3B ($5.8B cash, 500M debt) ENHANCING PORTFOLIO Precedent Transactions 2012 has acquired $440 million We continue to understand what our options are. Ellen Kullman Capital Returned to Shareholders Confirmation that multiple Ag. Solutions lines are required to be successful Must have both GMO seed and chemical crop protection services Resistance have built to DuPont Intacta seeds Returning $4B from Chemours divesture back to shareholders $2B already returned in form of share buybacks Remaining $2B likely to be returned in the form of M&A ( ) Strong Free Cash Flows from divestment of low-margin businesses 0 8

9 Potential Corn Hedge CORN POTENTIAL HEDGING OPPORTUNITY Downward price pressure Corn and USD negatively correlated Corn prices decrease to remain competitive in global market Fed Rate Hike will force market to lower price Strong dollar sign of weak global economy and decreased demand Economic turmoil in China and struggles in Europe reducing need for feed stock USDA crop report comes out in October Estimates reducing production 100mm bushels East Coast of US expecting very poor yields because of wet Spring Falling Oil Prices dragging Corn with it Cheap oil deterring ethanol demand Less demand for corn Used as potential hedge for FMC trade if DuPont does not announce acquisition. 9

10 Larger-Scale Trends OIL & NATURAL GAS CORRELATION BREAKDOWN While no clear, consistent relation exists among the two commodities, a small value positive correlation is generally visible Oil and natural gas are close substitutes for each other AGRICULTURAL IMPACT Natural gas is the main input in ammonia main input in nitrogen fertilizers and select crop protection chemicals Over half of all U.S. chemical fertilizers are nitrogen-based Provides cost savings and cheap energy resources for agricultural sector Potential transition to farming technologies that are powered by compressed natural gas instead of diesel EL NIÑO El Nino Southern Oscillation: Caused by warm ocean temperatures shifting from their usual position in the western Pacific to the eastern Pacific along the coast of South and Central America Incredibly dry frequent thunderstorms Current pattern is the strongest in almost two decades Indications that the winds forcing warm sea surface temperatures eastward are weakening Possible return to more normal conditions Oil & Natural Gas Correlation Oil (Brent Crude) Natural Gas 10

11 Declining Arable Land / Capita GLOBAL POPULATION GROWTH ARABLE LAND PER CAPITA (HA) PROJECTED SOURCES OF GROWTH IN CROP PRODUCTION Increases in production will largely rely on increasing yields Increasing yields are highly contingent on an increased use of fertilizer-based products and crop protection chemicals Producers remain optimistic about the long-term industry fundamentals Rising consumption of meat around the globe General affordability of fertilizers relative to grain prices 11

12 Special Names in Specialty Chemicals BILL ACKMAN Chief Executive Officer Pershing Square Q2 2013: Position in Air Products & Chemicals (NYSE:APD) March 31, 2015: Announces 31% stake in Platform Specialty Products Corp (NYSE: PAH) Platform Specialty also partakes in bolt-on acquisitions Structured as a special-acquisition company maintains large amounts of cash to partake in frequent acquisitions Buying sprees to take advantage of synergy potentials and to bolster chemicals and engineering materials portfolio Such serial acquirers have come under fire by market participants Ackman maintains that they are simply misunderstood by investors WARREN BUFFET Chief Executive Officer Berkshire Hathaway 2011: Berkshire acquires specialty chemical company Lubrizol (NYSE: BRK/A:US) Perfect vehicle for bolt-on acquisitions and frequent, small transactions in various business units Three transactions in next year and a half each low risk, and with integration, they add substantially to earnings over time August 2014: Discloses 6% stake in Dow Chemical Co. (NYSE: DOW) Previously funded Dow s acquisition of specialty chemical company Rohm & Haas Co. to increase shareholder value 12

13 FMC DCF Analysis Historical Year Projected Year E Revenues Ag Solutions 1,764 2,146 2,174 3,420 3,625 3,843 4,073 4,318 4,577 4,851 5,142 5,451 5,778 Health & Nutrition Lithium Minerals Eliminations (1) (3) - Total Revenues 3,410 3,875 4,038 4,494 4,739 4,998 5,273 5,565 5,875 6,204 6,553 6,923 7,317 Cost of goods sold 2,142 2,534 2,663 3,531 3,766 4,014 4,233 4,447 4,674 4,913 5,164 5,430 5,710 Gross Profit 1,268 1,340 1, ,041 1,118 1,201 1,291 1,388 1,493 1,606 Gross Profit Margin 37.2% 34.6% 34.1% 21.4% 20.5% 19.7% 19.7% 20.1% 20.4% 20.8% 21.2% 21.6% 22.0% Check Ag Solutions EBIT ,047 1,131 1,222 % revenue 22.9% 20.6% 18.2% 18.5% 18.9% 19.3% 19.6% 20.0% 20.4% 20.8% 21.1% Health & Nutrition EBIT % revenue 22.7% 23.8% 25.0% 25.6% 26.2% 26.8% 27.5% 28.2% 28.9% 29.6% 30.3% Lithium EBIT % revenue 10.5% 11.0% 11.5% 11.9% 12.3% 12.8% 13.2% 13.7% 14.2% 14.7% 15.3% Add: Synergies Other SG&A EBIT ,041 1,118 1,201 1,291 1,388 1,493 1,606 % rev 18.7% 17.0% 13.5% 21.4% 20.5% 19.7% 19.7% 20.1% 20.4% 20.8% 21.2% 21.6% 22.0% % change 1.0% 1.2% 5.8% 7.4% 7.5% 7.5% 7.5% 7.6% 7.6% Check CAGR for Revenues Ag Solutions 6.0% Health & Nutrition 2.0% Minerals 9.5% CAGR for EBIT Ag Solutions 8.0% Health & Nutrition 4.5% Minerals 13.5% Add: Depreciation & Amortization EBITDA ,112 1,153 1,199 1,294 1,413 1,524 1,632 1,748 1,874 2,009 % Margin 22.1% 20.3% 16.8% 24.7% 24.3% 24.0% 24.5% 25.4% 25.9% 26.3% 26.7% 27.1% 27.5% Taxes EBIAT ,060 Plus: Depreciation & Amortization Less: Capital Expenditures (177) (222) (225) (247) (260) (275) (290) (306) (323) (341) (360) (381) (402) (Increase)/Decrease in Net Working Capital (304) (354) (160) (178) (188) (198) (209) (220) (117) (124) (131) (138) (146) Unlevered Free Cash Flow

14 FMC DCF Analysis Cont. Annual Assumptions (Adjust Projections As Needed) Ag Solutions Growth (%) 21.7% 1.3% 6.0% 6.0% 6.0% 6.0% 6.0% 6.0% 6.0% 6.0% 6.0% 6.0% Health & Nutrition Growth (%) 11.9% 8.7% 2.0% 2.0% 2.0% 2.0% 2.0% 2.0% 2.0% 2.0% 2.0% 2.0% Lithium Growth (%) 0.4% -19.7% 9.5% 9.5% 9.5% 9.5% 9.5% 9.5% 9.5% 9.5% 9.5% 9.5% Ag Solutions EBIT Growth (%) 8.0% 8.0% 8.0% 8.0% 8.0% 8.0% 8.0% 8.0% Health & Nutrition EBIT Grwoth (%) 4.5% 4.5% 4.5% 4.5% 4.5% 4.5% 4.5% 4.5% Lithium EBIT Grwoth (%) 13.5% 13.5% 13.5% 13.5% 13.5% 13.5% 13.5% 13.5% Depreciation and Amortization (% of Sales) 3.4% 3.3% 3.2% 3.3% 3.8% 4.3% 4.8% 5.3% 5.5% 5.5% 5.5% 5.5% 5.5% Capital Expenditures (% of Sales) -5.2% -5.7% -5.6% -5.5% -5.5% -5.5% -5.5% -5.5% -5.5% -5.5% -5.5% -5.5% -5.5% Effective Tax Rate 22.5% 24.1% 15.2% 34.0% 34.0% 34.0% 34.0% 34.0% 34.0% 34.0% 34.0% 34.0% 34.0% Change in Working Capital (% of Sales) -8.9% -9.1% -4.0% -4.0% -4.0% -4.0% -4.0% -4.0% -2.0% -2.0% -2.0% -2.0% -2.0% Perpetuity Growth Method Exit Multiple Method WACC Calculation Target Capital Structure Debt-to-Total Capitalization 33.7% Equity-to-Total Capitalization 66.3% Cost of Debt Cost of Debt 4.5% Tax Rate 34.0% After-tax Cost of Debt 3.0% Cost of Equity Risk-free Rate 2.2% Market Risk Premium 8.0% Beta 0.9 Cost of Equity 9.7% WACC 7.4% WACC 7.37% WACC 7.37% Net Present Value of FCF $3, Net Present Value of FCF $3, Terminal Growth Rate 2.00% EBIDTA Exit Multiple 7.8 Terminal Value $17, Terminal Value $12, Present Value of TV $8, Present Value of TV $6, Enterprise Value $12, Enterprise Value $10, Less Debt Less Debt Less Preferred Securities 0 Less Preferred Securities 0 Less Noncontrolling Interest Less Noncontrolling Interest 0 Plus: Cash and Equivalents Plus: Cash and Equivalents Equity Value $10, Equity Value $8, Diluted Shares: Equity Value Per Share Diluted Shares: $79.36 Equity Value Per Share $61.52 FMC Corp Share Price as of 09/24/2015 $ WACC WACC Terminal Growth Rate 1.0% 1.5% 2.0% 2.5% 3.0% 6.4% $86.61 $94.14 $ $ $ % $76.92 $82.91 $90.13 $99.00 $ % $68.78 $73.62 $79.36 $86.29 $ % $61.86 $65.82 $70.47 $75.97 $ % $55.90 $59.19 $62.99 $67.45 $72.73 Exit Multiple % $61.21 $64.46 $67.71 $70.96 $ % $58.34 $61.44 $64.54 $67.64 $ % $55.60 $58.56 $61.52 $64.48 $ % $52.99 $55.82 $58.64 $61.47 $ % $50.50 $53.20 $55.90 $58.59 $61.29 Perpetuity Potential Upside: % Exit Multiple Potential Upside: 69.25% 14

15 FMC Comparable Company Analysis Share Price Market Enterprise Enterprise Value as a Multiple of Company Share Price % of Cap Value EBITDA Revenue (x) EBITDA (x) P/E Ticker (US$) 52 week high (US$mm) (US$mm) (US$mm) LTM CY2014E LTM CY2014E CY2014E Axiall Corporation AXLL % 1,543 2, x 0.6x 7.6x 7.4x 33.6 PolyOne Corporation POL % 2,743 3, x 0.9x 10.4x 9.9x 37.3 Westlake Chemical Corp. WLK % 6,875 6,926 1, x 1.6x 5.1x 5.3x 10.3 CF Industries Holdings CF % 12,126 16,268 2, x 3.2x 7.8x 7.3x 9.6 Eastman Chemical Co. EMN % 10,295 17,439 2, x 1.9x 7.8x 8.6x 17.0 Cytec Industries Inc. CYT % 5,307 5, x 2.9x 19.8x 18.7x 37.8 Mean % 6,481 8,852 1, x 1.9x 9.8x 9.5x 24.3 Median % 6,091 6, x 1.8x 7.8x 8.0x 25.3 High % ,439 2, x 3.2x 19.8x 18.7x 37.8 Low % , x 0.6x 5.1x 5.3x 9.6 FMC Corp FMC % 5,045 6,926 1, x 1.7x 8.6x 7.9x 12.8 Assumed # shares (mm): P/E Multiple Range (Using Mean P/E) Assumed # shares (mm): EBITDA Range (US$mm) E EPS Ranges: E EV/EBITDA Multiple Range (Using Mean): Assumed # shares (mm): P/E Multiple Range (Using Median P/E) Assumed # shares (mm): EBITDA Range (US$mm) E EPS Ranges: E EV/EBITDA Multiple Range (Using Median):

16 Ag. Solutions Comparable Company Analysis Share Price Market Enterprise Enterprise Value as a Multiple of Company Share Price % of Cap Value EBITDA Revenue (x) EBITDA (x) P/E Ticker (US$) 52 week high (US$mm) (US$mm) (US$mm) LTM CY2014E LTM CY2014E CY2014E Monsanto MON % 41,216 49,014 4, x 1.4x 8.3x 8.3x 20.0 Dow DOW % 50,157 68,836 8, x 3.0x 11.7x 12.7x 23.0 Syngenta SYT % 31,983 35,926 2, x 1.1x 11.3x 10.1x 23.3 Bayer BAYRY % 107, ,835 9, x 0.9x 12.4x 11.0x 21.4 Du Pont DD % 43,007 50,741 4, x 0.9x 10.1x 9.6x 18.7 BASF BASFY % 69,961 78,079 11, x 2.4x 17.7x 15.6x 27.3 Mean % 57,339 66,739 6, x 1.6x 11.9x 11.2x 22.3 Median % 46,582 59,789 6, x 1.2x 11.5x 10.5x 22.2 High % ,835 11, x 3.0x 17.7x 15.6x 27.3 Low % ,926 2, x 0.9x 8.3x 8.3x 18.7 FMC Ag. Solutions 808 Assumed # shares (mm): E EPS Ranges: Assumed # shares (mm): E EPS Ranges: P/E Multiple Range (Using Mean P/E) P/E Multiple Range (Using Median P/E) Assumed # shares (mm): E EV/EBITDA Multiple Range (Using Mean): Assumed # shares (mm): E EV/EBITDA Multiple Range (Using Median): EBITDA Range (US$mm) EBITDA Range (US$mm)

17 Sources WORKS CITED Bloomberg, Financial Analysis FMC Thompson One, Financial Statements FMC FMC Investor Relations DuPont Investor Relations Marketline Equity Research Wright Investors Service Equity Research Cowen and Company FMC August 2015 Piper Jaffray FMC August 2015 Jefferies FMC Estimate Change, August 2015 Buysellsignals Equity Research Report FMC July 2015 Credit Suisse Equity Research August 2015 Seeking Alpha (FMC) 17

18 FMC Corporation (NYSE: FMC) - Long Mitesh Amarthaluru, Derek Chait Price ($) Investment Thesis : FMC Corporation operates three main business lines: Agricultural Solutions, Health & Nutrition, and Lithium. Investor misunderstanding of both the cyclical environment of the crop protection chemicals market and the recent divesture of Alkali Chemicals Division have depressed the share price despite FMC s success in focusing business concentration on asset-light, high-margin Ag. Solutions, and a complementary, aggressive roll-up strategy. FMC, near 52-week lows, provides an asymmetric risk/reward opportunity over the next year in an industry marked by attractive fundamentals and high barriers to entry. Agricultural Solutions Insecticides, Herbicides, and Fungicides : Low natural gas prices Further R&D funding in growing BioSolutions platform 2015: 14 products commercialized 2017: ~25 products commercialized End of El Niño cycle and corresponding drought situation in Brazil 2014 LATAM sales decreased 5% due to weakened demand for insecticides Unsubstantiated concerns over infestation-resistant, GMO seeds Pest evolution requires consistent application of insecticides The Lithium Factor : Operating in an oligopolistic industry with high barriers to entry FMC controls 15% of the global supply Protective moat with competitive advantage Increasing applications for lithium products drove demand at 10.1% CAGR since 2011 Catalysts Management-Induced Drivers : Continued share buybacks by both Management and BOD Sept. 2: $4.5M combined After de-levering of balance sheet, further potential to return cash to shareholders Margin expansion initiatives Developing asset-light business model and reducing CAPEX Faster than anticipated cost savings are offsetting high inventories of Ag. Solutions Misunderstanding of Recent M&A Mitigants : Unexpected sale of Alkali Chemicals Division in March 2015 Selling pressure from eventdriven funds unnecessarily depressed share price Utilized $1.6B of proceeds to fund $1.8B Cheminova acquisition and shield debt ratio Further selloff in line with high market skepticism regarding acquisition Quicker realization of Cheminova synergies than expected Integration into portfolio mix Expecting to achieve synergies of $30-40M in 2015 (prior guidance $25-30M) $120M total of synergistic gains expected by 2017 Additional revenue-based synergies from access to Cheminova presence in European markets Flexible fungicide regulations in European Union member states Further cost savings synergies including: (1) supply chain efficiencies, (2) eliminating surplus facilities and other G&A expenses, (3) headcount reduction Special Names in Specialty Chemicals : March 2015: Bill Ackman announces 31% stake in Platform Specialty Products Corp Maintains bolt-on/special-acquisition chemical companies are simply misunderstood Aug 2014: Warren Buffett discloses 6% stake in Dow Chemical Co. Risks : Low pest pressures and drought continue to stall pesticide demand Inventory buildups LATAM: Inflationary pressures in Argentina and FX headwinds damper top line growth 19% 21% FY 2014 Revenue Pro Forma FY % 5% $4.0B 54% 19% $4.5B Company Overview Catalysts Bolt-On Acquisition & Divesture Policy : Frequent, strategic M&A in the specialty chemicals space enhances corporate business operations and provides new and geographically-dispersed avenues for growth Impending sales: (1) Consagro subsidiary [Brazil] (2) Pectin manufacturing facility [Italy] Immediate influx of cash and divestment of low-margin businesses 76% Acquisitions, Alliances, and Collaborations 18% Sales by Region Fluthiacet-Methyl Market Access JV Biological Agreement 2 Bio Acquisitions Fungacide Agrement 2 Fungicide Acquisitions GAT Microencapsulation FMC Stock Price 3 Tech Agreements Chr. Hansen / CAEB 17% 21% DCF Valuation Analysis DCF Valuation Price Target Analysis Over 1-Year Horizon Bull: $74.21 (104.15%) Base: $61.52 (69.25%) Bear: $50.50 (38.93%) 44% Market Access JV Licensing Agreements Cheminova Bull Case: Management provided guidance; Growing BioSolutions; Margin expansion; Cyclical rebound Base Case: Conservative projections reaching back to pre-cheminova March price Bear Case: Low pest pressure, Drought continues; Rev synergies delayed 20