If five-year plans are only as good as the level of execution behind them, then investors will be pleased to know that agricultural sciences powerhouse FMC Corporation (FMC 1.77%) delivered in the first quarter of 2019.

The business grew revenue 8% year over year, which was well ahead of the midpoint of initial full-year guidance. It reduced selling, general, and administrative costs 5% from the year-ago period and increased spending on research and development nearly 10%. That all-around strength gave management the confidence to raise full-year 2019 guidance for several financial metrics.

Here's what investors need to know about FMC's Q1 2019 operating performance, including an important update from the R&D pipeline.

A dollar folded in the shape of an arrow, pointing up.

Image source: Getty Images.

By the numbers

The year-over-year comparisons throughout 2018 were a little lopsided because $1.2 billion in assets acquired from DuPont didn't contribute until late 2017. The commodity-linked business reported revenue growth of 69% and EBITDA growth of 111% last year. Now that the assets have been integrated for a full year, investors will have to get used to growth rates in the mid-to-high single digits in 2019, although that's significantly higher than the global agricultural market average.

Q1 2019 marked the sixth consecutive quarter that FMC outperformed the broader market. That trend should continue for the foreseeable future thanks to a balanced presence in major breadbaskets across the globe, strong brands, and product portfolios that serve a diverse range of crops. Here's how the latest year-over-year comparison stacks up: 


Q1 2019

Q1 2018

Change (YOY)


$1.19 billion

$1.11 billion


Gross margin



40 basis points

Selling, general, and administrative expenses

$183.9 million

$192.5 million


R&D expenses

$71.2 million

$64.9 million


Income from continuing operations before income taxes

$243.9 million

$290.7 million


Net income attributable to shareholders

$215.7 million

$267.2 million


Adjusted EBITDA

$343.4 million

$329.5 million


Data source: FMC press release. YOY = year over year.

The earnings decrease looks a little disappointing at first glance. Not even a 40% lower tax bill in the comparison period could drive earnings higher. However, the decrease in income can be largely explained by restructuring charges. The business recorded nearly $8 million in restructuring costs in Q1 2019, compared to a nearly $80 million restructuring benefit in the prior-year period. Back those out and the business delivered significant growth.

The top-line growth is also impressive. FMC noted that it actually achieved organic growth of 14% (nine percentage points from higher sales volumes and five percentage points from price increases), but foreign currency exchange rates resulted in a 6% headwind. Nonetheless, investors should be encouraged that revenue growth occurred in all regions, headlined by a 30% growth rate (including foreign currency impact) in South America.

Orange trees growing in rows.

Image source: Getty Images.

Looking ahead

Management raised full-year 2019 guidance for revenue, adjusted EBITDA, and adjusted earnings per share (EPS). After initially expecting year-over-year increases of 5%, 7%, and 8%, respectively, FMC now expects an extra 1% of absolute growth from 2018 for each metric. The small increases will be welcomed by investors and Wall Street analysts disappointed by the original guidance.


New Full-Year 2019 Guidance, Midpoint

Full-Year 2018, Actual

Year-Over-Year Change From Recast 2018 Results


$4.55 billion

$4.28 billion


Total adjusted EBITDA

$1.2 billion

$1.109 billion


Adjusted EPS




Data source: Press release.

More importantly, FMC spent a good deal of the Q&A portion of the first-quarter 2019 earnings conference call discussing its biologicals pipeline. Biologicals are next-generation plant health products comprising beneficial soil microbes that extend survival advantages to crops. That can include higher yields, drought tolerance, an increased ability to fight off pests without synthetic chemical pesticide applications, and even the ability to more efficiently uptake nutrients already present in the soil.

Judging from the company's last analyst day, FMC seemed well behind competitors in the budding market opportunity. But management corrected some misconceptions among analysts (and myself). The business has six biological products in its R&D pipeline, significantly more than the one product disclosed in analyst day slides. It has increased investment in the area each year since 2013. And it even owns an R&D facility in Denmark solely focused on biologicals.

Management said it will provide a detailed update on its R&D pipeline in Q2 2019 -- a ritual it aims to repeat in the second quarter of each year from now on.

A solid start to the year

Investors have to be pleased with the progress displayed in Q1 2019. FMC delivered growth in all major regions, kept expenses in check, poured capital into R&D, and increased full-year 2019 guidance across the board. Investors will want to keep an eye on operating income throughout the remainder of the year, while also making sure a lower tax bill isn't the sole reason for rising net income. Given the trajectory of key metrics, however, the business appears to be on solid footing.