Mark Douglas: Yes. Thanks Mike. If you look at what we have been talking about today in terms of how we think about what we call NPI products launched in the last 5 years, we have gone from back in 2020, 2021, about 10% of our portfolio from those new NPIs in ‘23, it was about 13%, we expect it to be about 17% this year. You can see that it takes a number of years for those numbers to start to creep up. And the reason is, you never get to peak sales in year one, I mean it’s impossible in this market. Peak sales is going to be anything from 5 years through 10 years, I mean we still have some active ingredients that are 10-plus years old that continue to grow as we find new applications for them. We have talked about the fungicides, North America doing a very good job, especially with the fluindapyr based fungicides.
They have now been launched in Brazil and in Argentina, and they will be launched in other parts of the world as we go through ‘25. So, you should expect us to talk about the fluindapyr fungicides growing nicely in ‘25, ‘26, easily through ‘27. The diamides continue their track of new introductions. The Premier Star insecticide that we talked about has grown rapidly. We launched it in Q4. It grew very well in Q1. We expect the ‘24-‘25 season to be very interesting and continued growth. Pest pressure is not going away in Brazil, and we have, by far, the most robust portfolio of insecticides in the world. So, that’s a market that we do expect to continue to grow. On top of that, we have Isoflex, which is the grass herbicide that we released in Australia.
That is now being put into Argentina. It will go into other parts of Asia as we go through the ‘25 season. And then probably more exciting than all of those and trust me, they are pretty exciting molecules. We have the brand new rice herbicide that comes in 2026. And that really is a game changer. Rice is a grass and killing grass in rice is not easy. We have the first new mode of action in 30 years. So, Asia is a major target for us in 2026. And then outside of that, on the biological and pheromone side, we will have our first soft launch of our first pheromone in Brazil in ‘25 and that means it will build in ‘26 and ‘27 and beyond through the next decade. That’s really the first launch of that whole new platform that we have built.
We are making excellent progress in terms of R&D. We have our manufacturing and supply chain coming together very well. We are producing our first real amounts of these pheromones through our new process. So, you can tell that over the next few years, the robustness of that portfolio it’s really, really strong.
Operator: The next question comes from Arun Viswanathan from RBC Capital. Arun, your line is now open. Please go ahead.
Arun Viswanathan: Great. Thanks for taking my questions. Congrats on a good Q1 here. So, I guess I just wanted to ask about the second half. Andrew, you provided some very useful comments, I guess noting that on a dollar basis, it looks like your second half looks like you should be at 2020 or 2021 levels. And you will be exiting according to your guidance, at least at the midpoint at say, $1.25 billion or so on an annualized basis, if you were to annualize that second half guidance. So, is that kind of how you are thinking about ‘25 and maybe informing your comments, I think in 2020, you did that $1.25 billion, in 2021 you did $1.32 billion of EBITDA. I know it’s still a ways away, but just kind of thinking if you think that the second half guidance really encapsulates that normalization. Thanks.
Andrew Sandifer: Yes. Thanks Arun. I think certainly, look, always cautious in trying to annualize a very seasonal business, right. And obviously different dynamics in each quarter with regional mix and product mix, etcetera. But I think your bigger point, right, return to sales levels that are not necessarily 2022 by any means, but the sales and EBITDA levels that look more like where the business was a few years ago, not an unreasonable assumption going into 2025. It’s too early to get too granular here. But I do think a combination from top line, we are in a situation right now where inventories downstream are really getting more and more light, people are targeting levels of inventory that we would argue are not sustainable over a multiyear period, downstream of those.
At some point, there has to be some rebalancing that’s not going to happen quickly, but over time, there could be some rebalancing. And just getting back into the more normal flow, look, the one thing we have pointed to, and we are very comfortable and confident with, grower use of crop protection chemistry has been steady and increasing throughout this disruption. We had an overbuying in the channel in 2022 that built up excess channel inventory. We had an overcorrection and rapidly drawing that down in 2023 and into 2024. That as those draw down, manufacturing supply has to get back more in balance and in sync with underlying consumption by growers. That will drive healthier top line demand in 2025 than we have seen in 2024. When you look down to EBITDA, right, we have talked a little bit about what’s going on with our manufacturing operations and through the second half, when we started ramping up production and getting back to more normal capacity utilizations, there will be cost tailwinds or the absence of headwinds from unabsorbed fixed costs as we go into 2025.
So, that top line growth with better manufacturing costs, or with mix benefits from new product introduction and some of the exciting things Mark was just talking about in terms of growth drivers for us long-term with new products. That should drop more of that growth to the bottom line. So, again, too early to give firm outlook for ‘25, but I do think we feel pretty strongly that there is a positive outlook out there. We have a couple of more quarters to really get through here. Q2 is a big inflection with a return to volume growth and then the second half getting back into a much improved market conditions from what we saw in 2023. Mark, on that?
Mark Douglas: No, good review, Andrew.
Operator: Our final question today comes from Laurence Alexander from Jefferies. Laurence, your line is open. Please go ahead.
Unidentified Analyst: Good morning. This is Deen Rizwan [ph] for Laurence. Thanks for squeezing me in. You talked a lot about getting inventories down and payables and working with those. I was just wondering with in terms of receivables, if there were – you are comfortable where they are, that’s something that has to be worked on as well.
Andrew Sandifer: Sure. Thanks for the question. I think – yes, I think we are comfortable with receivables. There is always opportunities to continue to be more efficient. This is a working capital-intensive business, we get it. There will be some use of cash in the second half as we return to growth and that naturally brings some growth in receivables. But we have been managing very carefully our balance sheet. And I think if you look at our – how we have chosen to manage through this correction period as opposed to some of our peers, we have been disciplined about pricing and about not chasing volume that wasn’t there. So, it’s not to build up receivables and longer term collection risk. I think we are in a position now where there is always collection risk, but we are at a very good position.
We understand where our risks are. We understand – we have taken some lumps by not – again, not pursuing extra volume when there really wasn’t volume in the market to be had. And instead, working through this so that we can come into what will be an upturn here in the second half and then into 2025 with a strong balance sheet with healthy receivables. So, again, always room and opportunity to continue to look for ways to improve our working capital efficiency. But in terms of the quality of our balance sheet, we feel very confident.
Operator: We have now concluded our Q&A session. So, I will hand the go back to Curt Brooks.
Curt Brooks: Thanks everyone. Have a good day.
Operator: This concludes the FMC Corporation conference call. Thank you for attending. You may now disconnect.
