FMC Corp (FMC) — Q2 2025 Earnings Call Transcript

Good morning, everyone, and welcome to FMC Corporation's Second Quarter Earnings Call. Joining me are Pierre Brondeau, Chairman and Chief Executive Officer; Andrew Sandifer, Executive Vice President and Chief Financial Officer; and Ronaldo Pereira, President. Today, Pierre will review our second quarter performance and provide outlooks for the third quarter and fourth quarter. Andrew will provide an overview of select financial results. After our 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 on these risks and uncertainties. Today's discussion and the supporting materials will include references to adjusted EPS, adjusted EBITDA, free cash flow, organic revenue growth, and revenue excluding India, all of which are non-GAAP financial measures. Please note that as used in today's discussion, earnings means adjusted earnings, 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 Pierre.

Thank you, Curt, and good morning, everyone. Our goal during the first half of the year was to take a number of actions that would favorably position the company to deliver growth starting in the second half of the year and beyond. These are listed on Slide 3. We have accomplished these critical objectives while delivering on all of our financial commitments. We believe the level of FMC products in the distribution channels has normalized in most countries which will enable the implementation of our growth strategy. We have laid out a clear strategy for Rynaxypyr with key components well underway, including lower manufacturing costs and introducing new formulations. Our additional sales route in Brazil focused on direct sales to large corn and soybean growers has a fully trained staff with initial customer engagements already underway. Commercial activities have commenced and we anticipate seeing early results starting in the third quarter as Brazil's next growing season begins. The strategies for our core portfolio and growth portfolio platforms are clearly defined and Q2 results are in line with these plans. Each region, subregion, and country have actionable strategies in place unique to their geographies. Demand for our new actives, fluindapyr and Isoflex is very strong, and we have put the appropriate level of support in place to deliver on our target. Just today, we received registration for the fluindapyr herbicide containing Isoflex active in Great Britain. The team is prepared for launch, and we anticipate sales beginning in August. Dodhylex active has been introduced with meaningful sales expected to begin in 2027. In fact, the first shipment was invoiced this month. Finally, Q4 of this year will see the first full-scale commercial pilot of pheromones. With these objectives completed, we are focusing on additional ways to improve the business, starting with addressing the challenges that we face in India. I will speak to the actions we are taking regarding our commercial business in that country in more detail in a moment. But first, I will walk through some highlights from our second quarter. Our second quarter results are detailed on Slide 4, 5, and 6. Results overall were at the higher end of our expectations with EBITDA and EPS slightly exceeding the high end of our guidance. Second quarter sales were 1% higher than the prior year, driven by volume growth of 6%. We view channel destocking for a product as completed in most countries as we believe customers have reached their targeted levels of inventory. In the first half of the year, our active management of FMC product sales into the channel, combined with strong use of products on the ground, laid a solid foundation for growth in the second half. Price in the second quarter was down 3% with over half of the decline due to pricing adjustments made to diamide partners on cost-plus contracts to account for lower manufacturing costs. FX was a mild headwind of 1%. Our growth portfolio was the driver of higher sales with the core portfolio essentially flat. The growth portfolios high single-digit increase confirms the strong expectation we have for the new active ingredients. Our second quarter adjusted EBITDA of $207 million was 2% higher than the prior year. As shown on Slide 5, gains were driven by lower costs attributed to COGS tailwinds from lower raw materials, better fixed cost absorption, and restructuring actions. Cost favorability more than offset price and FX headwinds as well as a modestly unfavorable product mix within the core portfolio. Our second quarter adjusted earnings per share of $0.69 was $0.10 higher than the prior year, driven mainly by EBITDA growth and lower interest expense. On a regional basis, our strongest growth came from EMEA, driven by higher volume of herbicides, diamide partner sales, and branded Cyazypyr. This was not surprising as many countries in the EMEA were the first to reach targeted inventory levels in the channel. Latin America revenues increased slightly versus the prior year as the region wrapped up the 2024-2025 growing season. North America sales declined 5% due to expected destocking in Canada. In the U.S., there was a solid volume growth of branded products following destocking actions and delayed purchases during the first quarter. Asia was down due to lower pricing as well as lower volumes, driven by ongoing destocking in India. You have heard me talking about challenges in India since I have been back. I believe that for FMC, there is a much stronger way to operate in this country. India has always been a difficult market to operate in. It is characterized by a fragmented distribution channel, serving tens of millions of growers, intense generic competition, and a complex regulatory environment. This market requires a high level of working capital in a challenging price environment. Between '21 and '23, we anticipated strong growth of Rynaxypyr as we expected continued process, patent protection post the expiration of the composition of matter patents. However, generics penetrated much faster than expected when, unlike in almost all other countries, we were unable to enforce our process patents. This prevented us from executing a strategy and significantly increased an already high level of working capital while slowing down the movement of the product through the distribution channel. Given that India generates very limited EBITDA and has substantial working capital, we have made the decision to change how we operate in this market. After a thorough process that considered multiple options, management and the Board made the decision to initiate the divestment of our commercial business in India. Following the sale of the business, we expect to quickly regain commercial momentum in India via a business-to-business model. As soon as the transaction is closed, we expect to supply for the short and midterm the eventual buyer products requiring FMC-owned registration as well as products where FMC has favorable manufacturing costs. Most importantly, we expect to provide the buyer access to our IP-protected products, including our four new active ingredients and advanced diamide formulation. With a partner better structured for growth in India, we expect molecules like Dodhylex, which has a strong potential in the country, to gain strong growth as soon as we get the registration. In addition, we retained our active ingredients, global manufacturing, and global research in India. We believe that the decision will enable faster resolution of the current challenges, reduce risk and volatility in future periods, free up cash for debt repayment, result in a stronger balance sheet, and allow us to more readily deploy resources to other growth areas. Over time, it will also permit us to shift our India portfolio toward differentiated technologies with less working capital exposure. Turning to Slide 7, our full year guidance. As Andrew will explain further in a moment, our reported revenue will include India. However, we are excluding India from revenue guidance given the uncertainty of managing that business while selling it. India will be excluded from adjusted EBITDA and EPS. Revenue, excluding India, is guided to be down 2% versus prior reported results as a mid-single-digit price decline and a flat to low single-digit FX headwinds are anticipated to be offset by volume growth, mainly in the second half. Adjusted EBITDA is expected to be 1% higher at the midpoint as lower cost and volume growth are mostly offset by price and FX headwinds. Adjusted earnings per share are expected to be flat to prior year at the midpoint. In summary, the only change to our guidance is to remove second half sales from India. Other than this, we are maintaining guidance across all metrics: sales, EBITDA, EPS, and free cash flow. Turning to Slide 8. In Q3, we expect revenue, excluding India, to be down 1% versus reported prior year results. We anticipate healthy growth and a minor tailwind from FX. Price is expected to be down mid-single digits, including adjustments to diamide product contracts. The India exclusion is a 6% reduction. For branded products, price headwinds are amplified by the fact that volume growth in LatAm is increasing the numbers of customers qualifying for rebates versus last year. It is not a like-for-like price decrease. Adjusted EBITDA is expected to grow substantially up 14% at the midpoint as significant cost favorability and volume growth more than offset pricing FX headwinds. Lower costs are expected from COGS tailwinds, including lower raw materials, better fixed cost absorption, and restructuring actions. Adjusted EPS is expected to be 28% higher than prior year at the midpoint, driven by higher EBITDA. Slide 9 shows our guidance for the fourth quarter. We anticipate revenue, excluding India, to be 5% higher at the midpoint as strong volume growth and a minor FX tailwind are partially offset by a low single-digit price decline and a negative 6% impact from the India exclusion. Volume growth is estimated to come mostly from the growth portfolio. Adjusted EBITDA is expected to be 4% higher at the midpoint as lower costs more than offset lower pricing. Costs are expected to be favorable but not to the same magnitude that we're expecting in the third quarter. Adjusted EPS is expected to be 3% lower than prior year as the EBITDA increase is more than offset by higher taxes and interest expense. I will now turn it over to Andrew to cover details on cash flow and other items.

Thanks, Pierre. Before I review the customary key financial items, I'd like to provide some additional context on the guidance and financial reporting implications of the sale of our India commercial business. We have concluded that the India sale meets the conditions to treat the assets of the business as held for sale for financial reporting purposes effective with the third quarter. However, the business is not material enough to FMC's results to be classified as a discontinued operation. As such, the results of the business will continue to be presented in the company's GAAP operating results until a transaction is completed. As Pierre described earlier, our guidance for the remainder of 2025 excludes India. Our reported revenue will continue to include the sales of India and the India commercial business. However, we will also provide revenue excluding India as we report each quarter. Guided and reported adjusted EBITDA and adjusted EPS will exclude the results of the business. During the third quarter, we will evaluate the assets related to the sale for impairment. And if necessary, we will record the assets at the lower of their carrying value or estimated fair value less cost to sell in our third quarter financial statements. While we have not yet completed this analysis, it is possible that we will record an impairment of the business in the third quarter. With that additional context, let me proceed to the review of some key income statement items. FX was an overall 1% headwind to revenue growth in the second quarter with tailwinds from a strengthening euro more than offset by a weakening Brazilian real. Interest expense for the second quarter was $61 million, down over $2 million compared to the prior year period, primarily driven by lower debt balances. The effective tax rate on adjusted earnings was 14% in the second quarter, in line with our continued expectation of a full year effective tax rate of 13% to 15%. For full year 2025, we expect FX to be a flat to minor headwind at revenue, with continued weakness in the Brazilian real and Canadian dollar more than offsetting a strong euro. We now expect full year 2025 interest expense to be in the range of $215 million to $235 million, down more than $10 million compared to the prior year, but up slightly from our prior guidance, reflecting the higher interest rate on the recently completed subordinated debt offering. We've also revised our outlook for depreciation and amortization for full year 2025 to $170 million to $180 million, a slight reduction from prior guidance to reflect the timing of new assets coming online. The net result of these refinements is that our full year 2025 EPS guidance is unchanged. Moving next to the balance sheet and leverage. In May, we successfully completed the sale of $750 million of subordinated notes due in 2055. The transaction was leverage neutral, with proceeds from the offering used to redeem the May 2026 senior notes and to pay down commercial paper. The structures of these notes are such that they are treated as 50% equity by all three rating agencies, immediately improving our metrics with them. This offering was an important step in supporting our investment-grade credit rating as we transition to more substantial EBITDA growth in the second half of 2025 and into 2026. All three rating agencies reaffirmed their investment-grade ratings in conjunction with this offering. We ended the second quarter with gross debt of approximately $4.2 billion, up $160 million from the prior quarter. Cash on hand increased $123 million to $438 million, resulting in net debt of approximately $3.7 billion, essentially flat to the prior quarter. Gross debt to trailing 12-month EBITDA was 4.8x at quarter end, while net debt-to-EBITDA was 4.3x. Relative to our leverage covenant, which includes adjustments to both the numerator and denominator, leverage was 4.8x as compared to a covenant limit of 5.25x. As a reminder, our covenant leverage limit will remain at 5.25x through September 30, then step down to 5.0x at year-end. We continue to expect covenant leverage to return to approximately 3.7x by year-end, essentially flat to the prior year. We expect to show a meaningful improvement in our leverage metrics in 2026 from a combination of EBITDA growth and debt reduction. Debt reduction will come from proceeds from the sale of our India commercial business as well as free cash flow above that required to fund the dividend. Moving on to free cash flow on Slide 10. Free cash flow in the second quarter was $40 million, $241 million lower than the prior year period. Cash from operations was down significantly primarily due to the absence of the significant inventory reduction seen in the prior year. We continue to expect free cash flow of $200 million to $400 million for 2025, a decrease of $313 million at the midpoint. Cash from operations is the key driver of the decrease with normalization of working capital after the pronounced correction in 2024. Capital additions are also expected to be up somewhat with continued focus on only the most essential projects and capacity expansion for new products. Cash used by discontinued operations is also up slightly, but in line with our multiyear average. And with that, I'll hand the call back to Pierre.

Thank you, Andrew. We are at a crucial turning point where we are focusing on revenue and EBITDA growth for the second half of the year and 2026. The restructuring of the company that we announced at the beginning of the year is nearly complete. We have achieved all the goals set for the first half of the year. The execution of the India plant will finish the company's turnaround. We are now set for strong performance moving forward, and we are confident in achieving our 2025 targets while maintaining our outlook for 2027. With that, we are now ready to take your questions.

Great. Nice quarter. Pierre, you talked about this quarter signaling an inflection point. You provided 3Q, 4Q guidance, which was in line with expectations. What should we think about in terms of where volume and pricing move into in terms of the growth phase entering 2026, and you're also talking about 2027 targets intact. So if you could just remind us what you're expecting for 2027 as well?

There are multiple years and quarters to consider. Firstly, the targets for 2026 and 2027 remain consistent with what we mentioned during the last earnings call, pointing towards an EBITDA of $1.2 billion in 2027, which will not change. The growth in 2026 and 2027 will primarily come from our growth portfolio. We are very confident in our branded Cyazypyr and our three active ingredients, fluindapyr and Isoflex, similar to this year, and we are also introducing Dodhylex, which has just been billed for the first time this month, along with our plant health business, Biologicals. We anticipate that these products will lead to double-digit growth. The core portfolio will show a noticeable difference in 2026 and 2027 compared to 2025 due to Rynaxypyr. Currently, the portfolio, excluding Rynaxypyr, is growing through various strategies. However, there is a negative impact on pricing with our diamide partners. We have positioned Rynaxypyr to compete effectively with generics by lowering manufacturing costs. The current generic market has less available product than in the past and prices are increasing, which supports our strategy for Rynaxypyr's growth year-on-year in 2026 and 2027 compared to 2025. All these factors contribute to the growth we expect in 2026 and 2027. For the second half of the year, growth is primarily driven by Brazil, as it is a significant season for them, along with a new route to market, direct sales, and a new co-op strategy. Additionally, fluindapyr and Isoflex continue to see robust demand.

I was wondering if you could deconstruct the cost side of the basket for 2Q and kind of as we look in the second half. So you had about $69 million in savings. If you could help us think about how much of that is around the fixed cost absorption headwinds coming off 2Q, what carries into 3Q raw materials and cost savings, that would be helpful.

Josh, it's Andrew. I think the story for costs as we go through the year, the drivers are the same in each period. It's the balance among them. Certainly, lower raw material costs are a key driver, and we're the largest driver in Q2. That is both from lower purchase materials, but also from the restructuring actions we've taken to fundamentally change the cost position that we have in our Rynaxypyr business. Second to that is certainly improved fixed cost absorption as we are running the plants at a much more normal capacity than the more depressed levels of production we had in 2024. And then we do, of course, have continued benefit from the restructuring actions that we took in 2024, some of which are continuing to be implemented, particularly in the first half of '25. As we get into Q3 and Q4, it's just the balance among those levers that's different. I would say, certainly, all three continue to be key contributors to our cost tailwinds and those cost tailwinds are quite substantial in Q3 and Q4. The absence of fixed cost absorption challenges is a bigger tailwind in Q3 than it is in Q4. And net-net, costs are a stronger tailwind in Q3 than they are in Q4, but it is still those three drivers: lower raw material costs, better fixed cost absorption, and the benefits of restructuring actions, not only in manufacturing costs, but also across SG&A that are contributing to the cost tailwind starting this year.

Nice result. Pierre, I want to follow up on the India announcement. Can you provide some of the parameters on 2024 in terms of sales EBITDA for that business so we can better tie in the new guidance versus the prior guidance? And along with that, have the bankers already been marketing this business? And if so, any comments in terms of the receptivity of, I assume, strategics that would be interested in purchasing the India commercial business.

All right. Let me start by the second part of your question, that's the easiest one. We have not officially started to market the property, but we have done all of the preparation. We're working on the marketing books. I believe we're already getting front calls, but I cannot be overly precise on that. Since we just announced that. So it seems like the use is growing fast, but can't tell more than that. To answer your first part of the question, I'm going to ask you to bear with me because I'm going to try to give you as many details as I can to help you guys. So it's going to take a minute. First, why no more information than what we gave in the earnings release. India, from an SEC standpoint, is viewed as not material to FMC. So it does not qualify as a discontinued operation; it's classified as a carve-out. Consequently, we're not going to do a recast of '23, '24, '25. But still, I can still give you some colors for you to be able to establish your model. First, let me talk about India in the second half in '24 and '25. What we did in H2 '24 for India was $140 million of sales. What we were forecasting to do in H2 in '25 was $70 million of sales. So if we look at those two numbers, to achieve our ex-India 2025 second half target, we would need business in the second half of '25 versus the second half of '24 to grow by 9%, which is about $190 million. So if we grew by $190 million, we'll achieve our guidance ex-India for H2 '25. How do we get there? First, our growth portfolio. Today, what we have in front of us for our growth portfolio in the second half is over $200 million of growth with more than half of this $200 million coming from fluindapyr and Isoflex. For the core portfolio, it's overall flattish. The non-Rynaxypyr part of the core portfolio is growing, and it's growing, and we have confidence in the growth for three key reasons. First, we have talked many times about the actions we are taking in Brazil to improve our direct route to market as well as co-ops. We also have strong confidence in EMEA and in North America, where the channel inventory is really in a very good place today. It was proven and demonstrated by the EMEA results in the second quarter. Against that growth of the core portfolio excluding Rynaxypyr, we have the Rynaxypyr headwinds mostly driven by pricing to diamide partners. So those two pretty much cancel each other out. If I look at this growth, this sales growth, in addition, if we put a cost benefit, it will lead to an EBITDA increase on a like-for-like basis, excluding India, of about $80 million H2 '25 versus H2 '24. So that's what I'm trying to recast a little bit the numbers, excluding India in our forecasting.

Pierre, in years past, you've been able to give us a sense looking into the third quarter at how your order book is shaping up, particularly in the Brazilian market and how much you have in hand versus yet to invoice. So I'm wondering if you could just give us an update there and particularly also just comment on where farmer economics are there and sort of how the credit situation has evolved there.

Yes, Brazil is currently looking promising. Actual orders booked for the second half are around 35% to 40% of what we need for that period, which is significantly higher than in recent years. Although it's still early in July, we're optimistic about Brazil. Ronaldo, would you like to add any comments on the farmers' economics in Brazil?

Yes. Not dramatically different than what we're seeing in the rest of the world. Farmers had very strong harvests for corn. So I think the corn side of the row crops is more exciting than soybean at this stage. They do expect to plant another very strong season on corn. Cotton is not as high as it was a couple of years ago or even a year ago, but it's still incentivizing growers to, at a minimum, maintain their planted area, if not a slight increase, and sugarcane is stable. So all in all, I would say margins are tighter than they were 2.5 years ago, but not to a point that would drive growers to influence their decision on planted area. We do expect a full season in the coming season in Brazil.

Two questions. First is the new direct sales program in Brazil. The expectation for size this year, does that contribute this year? Or will that take a couple of years before it really contributes anything? And then the second one is the headwinds you're facing from the diamide partners' price down, when does that anniversary? Is it basically a one-year impact? Or will there be kind of two years of step-down as far as that being a headwind for you guys?

Yes, in response to your first question, we anticipate that the effects of the new sales organization for direct sales to farmers in Brazil will become apparent in the third quarter. While we won't realize the full potential immediately, we expect to see growth year after year. Our sales team is actively engaged in negotiations and commercial activities, so we should see some impact soon. Regarding the diamide partners contract, it is reviewed annually, allowing us to adjust pricing based on manufacturing costs. The most significant price decrease occurred between 2024 and 2025 due to a major reduction in manufacturing costs. As we continue to lower our costs, we will also reduce pricing for our partners, but the scale of these changes won't be as drastic as what we experienced this year; instead, they will be more incremental.

When you take a step back and you look at your volume algo for the next few years, I mean, there are a bunch of moving parts, but it seems that the TAMs of fluindapyr and Isoflex are pretty obvious. And Ronaldo had done an in-depth look at kind of the broadening addressable market for Rynaxypyr off-patent, especially some of the, let's say, higher end or higher-value acres across the globe. Can you just give us a better sense of where your assessment of those TAMs stands now? Do you feel better about them? Do you feel the same about them just as we're approaching the second half and into that '26-'27 time period?

Yes. I think about the new products, we're feeling better. There is no doubt that the demand for Isoflex and fluindapyr is strong and stronger than we're expecting. We've signed, as you know, important contracts to supply some of our competitors or partners. When they sign contracts, they are partners. When they go against us, they are competitors. So there is no doubt that the demand for fluindapyr and Isoflex is stronger than what we're expecting. The other good news is we are launching and getting the registration in time for Dodhylex. So we do have the official launch, and that will impact 2027. So on the side of the new product, very high level of confidence. Regarding Rynaxypyr, we feel very confident. There is no fundamental change to the strategy we have discussed. The only change is we have moved to a different place. We had multiple meetings and gatherings. And now we are at a place where every single country in the world or every single region or subregion does have an Rynaxypyr strategy which is in line with our market. So we moved from a broad directional global strategy to now a ready-to-implement regional, subregional, or country strategy for Rynaxypyr. So it's holding true, and we have no negative view of what we're doing. The last comment I would make around Rynaxypyr is our confirmation of the cost roadmap, which is getting more and more attractive and making us more and more competitive with generics. So that's also a positive evolution of the Rynaxypyr strategy. Plus, I have to say, I mean, that's not by our own doing, but the generic Rynaxypyr situation has changed. There is less supply on the market of generic Rynaxypyr. You're aware of the Youdao plant explosion. Not only does it limit the products in the market, but that plant was also making intermediates, which were used by other generics to make Rynaxypyr. So they are lacking intermediates to make their product. And we've seen the price increasing and some very significant announcements. There is also the fact that many of the generics who are not producing but making a formulation were using the Youdao registration, which, of course, is not usable any longer. So at this stage, we have a way less competitive Rynaxypyr market from the generic, and we are continuing on our roadmap.

Maybe two quick ones from my side. Pierre, just to follow up on the prior comments that you made. If we take into account Rynaxypyr dynamics as well as your diamide partner agreement renegotiations, would it be reasonable to expect the pricing function overall for the company to stabilize and perhaps turn positive in the first half of 2026? My second question would be for Andrew. Just if you could walk through maybe the working capital and other key cash flow assumptions that you've embedded within your $200 million to $400 million range for free cash flow.

The Rynaxypyr strategy has two components: one involving our partners and the other related to the branded product. In terms of our partners, we are seeing a degree of stabilization, as most of the significant price reductions have already occurred, and we anticipate that future adjustments will be quite minor. We expect pricing to stabilize at current levels. For branded Rynaxypyr, a price decrease is still anticipated due to increased competition from generics. However, we are also developing higher-tech formulations that may command different pricing, leading to a changing competitive landscape. Consequently, any price reduction may not be as severe as previously thought. We recognize that the strategy must align with the expected decline in branded Rynaxypyr pricing in 2026 compared to 2025, especially since many countries currently protected by process patents will lose that protection. We are prepared for this situation, with the necessary strategy and manufacturing costs already established. We believe we can safeguard earnings for Rynaxypyr in 2026 compared to 2025. Andrew?

Certainly, I would like to make some quick remarks on working capital and cash flow. Our cash flow shows significant seasonality, heavily skewed towards the second half of the year, particularly Q4. This trend is evident in our performance through Q2 and what we are projecting for the remainder of the year. The main driver for our free cash flow this year is operating cash flow, which is primarily influenced by working capital. Our guidance for EBITDA remains relatively flat, with a slight increase expected for the year, highlighting working capital as a critical factor. Regarding our balance sheet, there are three key elements to consider. We are actively working to rebuild our payable levels as our operations stabilize. There has been some year-on-year variability due to the timing of purchases, which has made the payables figure a bit unstable, but we anticipate improvements. Inventory levels by year-end are expected to remain fairly stable, which we believe is appropriate given our planned sales for the second half and anticipated growth in 2026. The area we will continue to focus on, which presents ongoing challenges in the agricultural chemicals sector, is receivables. As sales grow in the second half, it will be crucial to ensure effective collections. Year-to-date, our collections have been solid, aided by successful regular collection efforts and incentives in certain markets. Managing receivables during this growth period is essential. Taking into account all these factors, along with modest capital expense growth and a slight increase in spending on discontinued operations, we are positioned to achieve operating cash flow in the range of $200 million to $400 million. However, our success will depend on our execution during the second half of the year, which is inherently influenced by the seasonal nature of our cash flow. We will continue to monitor this closely.

Could you talk about diamide pricing outside of partner agreements this year? So your branded Rynaxypyr, how is it doing this year pricing-wise and Cyazypyr as well?

Yes. We're not breaking it precisely, but Cyazypyr is in a very different situation. Cyazypyr is data protected, so we do not have all the same competitive situation in Cyazypyr. Rynaxypyr pricing even for the brand one is...

Pricing in Q2 for Rynaxypyr branded Rynaxypyr was relatively flat. The real pricing headwinds in Rynaxypyr are the partner contracts in the current period.

Rynaxypyr this year, except in India, China, Turkey, Argentina, a few countries, is still protected by process patent. So there is not yet the penetration outside of those countries of generics.

I was hoping, Pierre, that you could give a little bit more detail on the pheromones offering. It sounds like there's a pilot that's going to be going into action later this year. Curious, are you expecting to see a meaningful commercial contribution in 2026, and where do you think you are on the path to $1 billion in revenue in 2030? Is that still a realistic outlook longer term?

The answer to your question about whether the $1 billion forecast is realistic will largely depend on the results of our activities this quarter. These two quarters are crucial for us as we undertake our first full-scale commercial operation with pheromones. This is the first time we will be able to assess how pheromones perform compared to traditional products, which will inform us about the accuracy of the $1 billion projection that assumes pheromones will function as expected. Therefore, we will need to wait for more concrete answers. By the end of the year, after we have completed this campaign and gathered initial full-scale results, we will be in a better position to provide clarity. Currently, we are in the process of shipping the product and starting operations. This is an event scheduled for the second half of the year in Brazil, and we are not yet close to having our first results.

I guess just looking at the second half, it looks like the implied guide for Q4 is $354 million. So I guess maybe you can just talk to kind of some of the building blocks there. If you could maybe break it up into maybe new revenue from new products or maybe the Brazil route to market as well. Yes, that would be helpful.

The reasoning for both Q3 and Q4 is similar. Q4 will be driven by the growth portfolio, particularly the significance of fluindapyr. Most of this growth is expected from fluindapyr and Isoflex, along with the new route to market that will support the core part of that market. However, the impact will be somewhat lessened by the decrease in Rynaxypyr due to partner pricing. There will be strong growth from new products, the new route to market, and the cooperative system we've established to boost sales. These are the key factors for Brazil. It's also important to note that North America plays a significant role in Q4. Last year, it contributed greatly to our growth as we prepared the wholesalers with products before they supplied them to retailers in Q1. Therefore, both Brazil and North America will be influenced by similar drivers.

Pierre, I wanted to ask you a question. So in the decision that you made to show India the way you're showing, I know the investor base really wants to understand the visibility of your company. And obviously, there's a lot of moving parts and why visibility may be hard this year and next year. But I want to know why you did decide to add a little bit of complexity to this year's numbers by doing this. And as part of that, why didn't you do this when you sold GSS last year? Why didn't you exclude GSS earnings ahead of the ultimate sale closing?

GSS, the decision was made before I was the CEO. I came in, the decision was made. So maybe, Andrew, you can add more detail.

Joe, I think we came to the conclusion on held for sale with the GSS business later in the process. And because of the way GSS was organized, GSS was a collection of product lines across multiple geographies. It was not a discrete business unit. It was not as simple to be able to carve out and/or to identify all the pieces as we were moving through. So that certainly is one difference between the two situations. In both cases, the business is being sold qualified for held for sale at certain points, but did not meet the conditions of discontinued ops. So there's no ability to recast. So we can provide color in both cases, but we're not able to do a recast. I think the second piece with the India business and certainly looking at why we think carve-out is appropriate here, operating the India business while we're preparing it for sale is different from operating it if we were going to continue to own it, right? There are decisions we might make that would make it more attractive or easier for a buyer to integrate the business that would might not be in the best interest of our results if we were to operate the business over a longer-term horizon. Because of that, it makes it very difficult for us to forecast the performance of the India business for the next several periods. So we thought it would be more important to be able to give guidance numbers that we can stand behind and deliver upon. And importantly, that represent the future operations of the company, right, what the value driver of this business is going forward. We've made that decision. The Board has made the decision to exit this commercial business. It is not a part of FMC's future in its current configuration. With supply agreements and partnerships, there will certainly be some ongoing economic benefit. But we do feel that the presentation of excluding the India business from adjusted EBITDA and EPS helps investors see more clearly what the go-forward earnings base of the company is. So that's the reason for the presentation.

And in terms of the complexity to try to simplify, what we are doing in the second half of the year, we are removing from sales, the $70 million we are forecasting for India. And India was at about breakeven on EBITDA. So we are not changing our EBITDA and EPS target. That's all we are doing. So when you look at the numbers for 2025, they're essentially the same. We are not moving on earnings, and we are just removing the contribution to sales of India, which was about $70 million. Besides that, everything else is the same.