Good morning, and welcome to the First Quarter 2024 Earnings Call for FMC Corporation. This event is being recorded. [Operator Instructions] I would now like to turn the conference over to Mr. Curt Brooks, Director of Investor Relations for FMC Corporation. Please go ahead.

Thanks. Good morning, everyone, and welcome to FMC Corporation's first 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 first quarter performance as well as provide an outlook for the second quarter and implied first half expectations. He will also provide an update to our full year outlook and implied second half expectations. 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 estimates 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 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'll turn the call over to Mark.

Thank you, Curt. Good morning, everyone. Our Q1 results are detailed on Slides 3, 4 and 5. We delivered a solid first quarter with EBITDA at the higher end of our guidance range and excellent improvement in cash generation. First quarter revenue declined 32% versus the prior year period. Volume declined by 27%, in line with the magnitude we've observed in the prior 3 quarters. The volume reduction was driven by continued channel destocking and is consistent with the change in grower behavior to delay purchases until closer to the timing of application. Market conditions were largely as we anticipated. And if not for some negotiated returns in Argentina, first quarter sales would have been in the lower end of our guidance range. We delivered EBITDA in the high end of our guidance range and earnings per share above the midpoint of guidance. In addition, we reported a very significant improvement in free cash flow versus the prior year period. Our earnings benefited from restructuring actions, and we still expect to deliver the targeted savings net of inflation of $50 million to $75 million this year. Slide 4 provides detail on our sales at a regional level. North America sales declined 48% due to lower volume against a record prior year period. Price was essentially flat. New products introduced in the last 5 years, or NPI, showed greater resilience versus the rest of the region's portfolio with strong growth in fungicides, including Xyway, which is based on flutriafol; and Adastrio, which is based on our newly launched active ingredient, fluindapyr. Turning to Latin America. Sales were down 20%, a decline of 22%, excluding FX. Volume was lower in most countries and included negotiated returns in Argentina, resulting from a change in the distribution relationship. Lat Am reported the least volume…

Thanks, Mark. I'll start this morning with a review of some key income statement items. FX was a minor, less than 1% headwind to revenue growth in the first quarter, with the most significant headwind coming from the Turkish lira offset in part by a stronger Brazilian real, Mexican peso and euro. Looking ahead to the second quarter, we see continued minor FX headwinds, primarily from the Indian rupee and Turkish lira, offset in part by strength in the Mexican peso. Interest expense for the first quarter was $61.7 million, up $10.3 million versus the prior year period, driven by higher commercial paper borrowings and, to a lesser degree, by higher interest rates. We continue to expect full year interest expense to be in the range of $225 million to $235 million, down slightly to the prior year, driven by lower debt balances as we reduced borrowings through the year, offset in part by a change in the mix of short- and long-term debt as compared to 2023. Our effective tax rate on adjusted earnings for the first quarter was 15.5%, in line with the midpoint of our full year expectation for tax rate of 14% to 17%. As a reminder, we are forecasting a 1 point increase in tax rate at the midpoint versus 2023 and providing a broader guidance range to reflect uncertainty related to tax law changes associated with Pillar 2 and as well as transitionary impacts related to our recently awarded Swiss tax incentives. Moving next to the balance sheet and leverage. Gross debt at March 31 was approximately $4.3 billion, up $378 million from the prior quarter. Cash on hand increased over $100 million to $418 million, resulting in net debt of approximately $3.9 billion. Gross debt to trailing 12-month EBITDA was 5.6x at quarter…

Thank you, Andrew. We started 2024 as we planned, serving customers with innovative technologies, improving our cost structure to deliver on our restructuring targets as well as delivering much improved cash flow. The crop protection market has started to turn to more normal buying behavior, and we believe market conditions will continue to improve as we move through the rest of the year and into 2025. Growers are constantly looking for new technologies to combat pest resistance and FMC is delivering these innovative new products. We expect approximately 17% of our revenue this year will come from products introduced in the last 5 years, a record for our company, up from 10% in 2021. This growth is despite the challenges the industry has faced over the last year and shows the value growers place on new technologies. With that, we are now ready to take your questions.

[Operator Instructions] First question today comes from Vincent Andrews of Morgan Stanley.

Wondering if you can give a bit more color on the first quarter sales. You referenced Argentina issue that, that would have gotten you to the low end of your sales guidance. Could you just tell us a little bit more about that, and then help us understand what could have happened that might have gotten you to the midpoint of 1Q? It also sounds like you're expecting volume growth in 2Q to largely come from your new product initiatives. So what does the base business need to do in 2Q in order to hit your guide?

Yes. Thanks, Vincent. Let me just expand on the Q1 comment, first of all. We did highlight, obviously, a distributor arrangement that we changed in Argentina. We talked before about being very careful how we do business in the Southern Cone and in Brazil. We've been very -- extremely diligent in protecting our balance sheet. We saw an issue with a distributor that we had in Argentina, and we decided to take material back from that distributor and that relationship. So that's the type of activity that, yes, it slowed down the top line. But from a balance sheet perspective, it was absolutely the right thing to do. I think the second feature that impacted us in Q1 that we were not expecting was really the terrible weather in Northern Europe. For those of you that follow these things, the U.K. has had, I think its wettest spring in -- for about 200 years and the same in Scandinavia, the same in Germany, Holland, Belgium. That was really the other factor that brought down our revenue. So over and above everything else, pretty much all the regions performed as we expected. Moving forward and looking through Q2 and then into the rest of the year, I would start by saying, first of all, the market, the fundamental market, the use of products and technologies on the ground remains robust around the world. Yes, there are pockets where weather has impacted, but generally speaking, growers are protecting their crops with the best technologies they can find. What does that mean for us? Well, relationships with our growers are, I would say, at a different level in terms of communication and conversation about the future today than we've seen in the last year. I'll give a couple of examples. Brazil, our orders…

The next question comes from Aleksey Yefremov from KeyBanc.

This is Ryan on for Aleksey. Just a quick one for me. Can you guys talk about the level of pricing for your brand in diamides versus the rest of the portfolio? Just any color there would be helpful.

Yes, we don't give pricing for our products versus other parts of our products. I think you all know that the diamides are a very healthy franchise for FMC, continues to be so. When I look at Q1 and I look at this year, we expect that diamides will perform better than the overall portfolio. We did highlight in the release that our diamides in Brazil grew double digits in Q1 and that is against a very difficult backdrop. The reason they grew is exactly what we said we would do in November at the Investor Day. We're producing new formulations that are differentiated, and they are being accepted by the market. Premio Star is a brand-new insecticide for soybeans, and it has been well attended in the marketplace. That allows us to move from the older products to the newer products and gain market share and growth.

The next question comes from Christopher Parkinson of Wolfe Research.

This is Harris Fein on for Chris. Just a quick one for me. In North America, obviously, volumes were down on a tough comp pretty significantly, but you still held price flat. Just curious what your thoughts are on potentially adjusting the rebate structures to get volume slowing again. Is that something that you think could be necessary or that you're exploring?

No. When we look at the portfolio, I think one of the facets that's kind of getting missed in FMC's North American business is just the sheer mix change that's going on there, something like 25% of our revenue has come from products launched in the last 5 years. That's probably the highest of any region we have in the world. The North American team has done a great job in introducing new insecticides based on the diamides, introducing brand-new fungicides, such as the one I mentioned, Xyway and Adastrio. This is new market opportunities for us. Generally speaking, when we introduced those new products, they are at a higher price point and a higher profitability point, they're bringing new attributes to growers. So when we change that mix, obviously, we see the business starts to change. So no, we're not doing anything with our rebate programs in North America. We believe that our proposition to grow is, is based upon technology and availability of that technology. We feel very good about where the North American business is. I think if you looked at that on the face of that statement, I said, but you dropped 48% in Q1, why -- if your business is good, why is that? Frankly speaking, Q1 2023 was a blockbuster quarter, mainly driven by Canada. There was huge pest pressure in Canada last year, and we haven't seen that same pest pressure this year. That's normal for these ag markets, but the North American business fundamentally is in very good shape.

The next question comes from Josh Spector from UBS.

So I wanted to ask specifically on your second half guidance. I think one of the parameters you have in there is second half pricing out flat year-over-year. Can you characterize your level of confidence in that just especially given that you're seeing mid-teens down in Latin America today, high single digits down in Asia. What normalizes that? And would you flag that at risk or not at this point?

Andrew, do you want to make a comment?

Yes. Thanks, Josh. Look, I think you have to look at the price of where we are and the overall progression is correct. We have downward prices movement in Q3 and Q4 of last year as well as in the first quarter of this year with overall low single, mid-single digit, minus 3% in Q3, minus 5% in Q4, low single digit, mid-single-digit kind of price ranges overall, but with a significant amount of pricing being in Latin America. As we finished the season, we will be going into the new season in the fall, anniversarying very significant price reductions in Latin America. So we're not anticipating that there's big shifts and less price as we go into the new season given where we already are.

The next question comes from Adam Samuelson from Goldman Sachs.

I was hoping to get a bit more color on kind of the market expectations and performance in India. It's the one area where I think the destocking kind of trend is kind of still moving to high channel inventories. It feels like that's been a pretty consistent narrative in that market for running on 2 years now. And just love to get what gives you line of sight to maybe that ending, if anything? And how maybe you're disaggregating channel destocking and potential lower application rates from any competitive pressures that might exist there?

Yes. Thanks, Adam. Yes, India is -- it's a very important market for us and one that is facing its own individual challenges, not necessarily related to the same reasons as the rest of the world is facing, the channel inventories. I would say India is almost unique in the sense of the channel inventory pressure that we face there is purely due to weather and dislocated monsoons over the last few years. We're not the only market participant to comment on this. Others have also commented on it. It's an industry-wide phenomenon. And it's just time that takes us to get through that. The monsoon in the last season was not great. We're hoping for better weather conditions as we continue through the rest of the year. We are reducing channel inventory every quarter. Some quarters is faster than others, but it will take some time to remove what is a fair degree of channel inventory. The markets themselves are good in India from where the weather is good. Generally speaking, the Indian growers do like to use the latest technologies and the more advanced technologies. It's one of the only markets in the world right now where we have online spray services with drones. It just shows you that some markets like India that appear highly fragmented, really do adopt technology very quickly. So we're drone spraying. I think we run over 5,000 acres right now. That number is growing. That's a differentiated approach because it allows us to take our brand-new products and apply them in a way that is very beneficial to the small farmholders in India.

The next question comes from Kevin McCarthy of Vertical Research Partners.

A lot of talk about destocking, but I had a question on your own internal inventory. It looks like that came down $324 million on a year-over-year basis, if my math is correct. Can you frame out where you are now versus where you would like inventories to be thinking about Mark, I think you made a comment, bringing some manufacturing back online as it relates to Brazil, inventories in other parts of the world, maybe a little bit higher. So maybe you could just kind of put that internal effort of rationalization into context for us? And any related thoughts on operating leverage would be appreciated.

Yes, absolutely, Kevin. Thanks for the question. I'll make an overarching comment and then Andrew, if you want to jump in with some different views. Yes, we peaked inventory basically around about August last year internally. And we've been obviously on a track since we first came into this channel destocking to really remove inventory as fast as we could. We're getting close to the point. We're not quite there yet. We're getting close to the point where at the macro level for our inventory, we're going to be pretty much where we want to be. We do have pockets, however, where our inventory levels are lower than they should be. And hence, we're now bringing back up manufacturing. As normal, not everything moves at the same pace. But I would say by the time we get through Q2 and into Q3, we're going to be in pretty good shape in terms of where our revenue has reset this year versus where the inventory needs to be. It's important to notice that we really took some hard steps here. I mean we really did crash manufacturing in the sense of stock manufacturing. That's painful to do in an organization like ours. But we're now coming through the other side of that. And we will rebuild specific inventories as we see that demand come forward. Andrew, do you want to make any other comments?

Yes, certainly, Kevin. I think we're certainly mid-innings in the journey and getting our own inventory in the right place. As Mark pointed to, we -- our reported inventory at June 30 was about $2.1 billion. We're down to just under $1.6 billion this quarter. We have another couple of hundred million to go. It won't be a one big step. It will be very -- it will be bit by bit because I think there's a very delicate balancing of ramping up production, as Mark mentioned, particularly for products where we are already in short supply and balancing it with the inventory we have on hand and its sell-through. This is a part of the algorithm for generating free cash flow this year as we ramp up that production, build up our payables back to more historically normal levels, but maintain inventories that are more in line with our current sales level. So there will be -- it won't be one big step, but through the rest of the year, you should expect another couple of hundred million of inventory to come out of our balance sheet and that will translate to a contribution to free cash flow generation for the year.

Yes. Andrew, just I'll add one comment, Kevin. Andrew mentioned here that it's what we call the fine balance. I call it a fine balance, find dense. Remember, we have to go to our raw material suppliers and ask for products to feed this pipeline. And many of them are in the same position that we are. In other words, they have their manufacturing shutdown. I think you know that this is a very, very complicated supply chain and quite long. So this whole notion of how product flows from our suppliers to us, to the customers. It's not easy and starting this up is going to be interesting because as we run down our inventories over the last year, our customers have got used to us holding their inventory. That is not going to be occurring in some places in the world with some product lines. So I think this whole notion of the distribution and retail folks running at very low inventory levels compared to historical, we've never done that. So it's going to be interesting to see how this plays out for the value chain, and how we manage inventory going forward as growth starts to come back.

The next question comes from Joel Jackson from BMO Capital Markets.

I'm going to ask a few questions in one. Just you reset, I think, senior management in Brazil. Maybe you could first talk about what's changed there, maybe what you're seeing there, what you've learned with the new eyes looking at it. Second of all, just to reconcile a couple of things you said on this call this morning. So I think you said that you're seeing customers now put out -- giving you order visibility a bit later than they were hand to mouth, but I think you also said that customers are going to be running with lower inventories than they normally have. I may have got that wrong, but can you reconcile those 2 comments, if I got that right?

Yes. Thanks, Joel. Yes, new management in Brazil. It's the first time that FMC in a very long time has brought somebody in to be the president of the region from outside the company. We have a very robust human capital process inside the company where we develop talent and move them around the world. We felt now was a good time to bring in talent from the outside, and we brought in a very experienced industry veteran, who has both crop protection background, but also retail and distribution background. So we're getting the best of both wells there. What are we learning? We're learning that we can expand our customer presence in the sense of where the market pockets are that we can go and expand into. So that's a good sign of a market growth perspective. Also bringing that retail and distribution mentality allows us to think about how we build our offers into that part of the channel to make FMC's overall portfolio very attractive. I think from the order visibility and lower levels of inventory, Joel, I would say both are caring. The fact that people are holding lower levels of inventory is one thing. But it's where it is in that chain that you have to think about. It may be the distribution wants to hold lower levels of inventory, but retail might not because they have to service the customer from what they have. So don't think of the 2 pieces as being opposed to each other. They actually do work hand-in-hand.

The next question comes from Steve Byrne from Bank of America.

When we look at your volume trends over the last 5 years, there is a fairly meaningful difference between first half and second half. And perhaps that's a reflection of second half is nearly half driven by Lat Am. But when we look at like your volumes in this first quarter, they're lower than the 2 to 5 years of volume growth. So something really led to sharp contraction in the first quarter in volume, but yet your second half volumes presumably that Lat Am are -- looks like they're going to get back to 2022 levels just reversing 2023. So I guess I'm trying to understand your -- why the difference is between first and second half your? And is that second half potentially driven by just robust demand for insecticides? There are some additional insect pressures in South America these days.

Andrew, do you want to make some comments?

Yes, Steve, it's Andrew. Thanks for the question. First, just to put some of this in context, I think Q4 is the -- Q1, excuse me, Q1 of '24 here is the last quarter where we're comparing to a pre-channel inventory disruption world, right? As Mark mentioned earlier, Q1 of '23 was a record quarter for us. Our North America region was up 41% in Q1 of 23% year-on-year to put it in perspective, right? So we're dealing with a big swing from peak to more correction kind of zone. And the volume performance in Q1 of '24, very much in line with what we've seen with all 4 quarters of this channel correction. I mean Q2 of '23, we dropped 23% -- excuse me, 31%. Q3 of '23, we dropped 27% volume. Q4, we dropped 25% volume. This is -- the Q1 performance, I would say, just put in context, is just a continuation of the channel correction that we've always said was going to take at least a year to clear out that you had to get through an anniversary this change before you would start seeing any kind of volume return. So I'd put Q1 in that context. But to the second part of your question, I think it's an interesting one. In terms of the size, the growth in the second half. And look, if you look at percentages and the slide that's in the presentation, 23% top line, 46% bottom line growth in the second half. Those feel like very large numbers. I get it. But when you look at our historical size of business, revenue dollars in the second half that we're implying are similar to what we did in 2021, well before the overbuying of 2022. EBITDA dollars are actually lower than '21…

The next question comes from Andrew Keches from Barclays.

Andrew, I have a question on the cash flow discussion that you hit on a couple of questions ago. So you've said or at least you've indicated that cash flow will be more back half weighted in 2024. But I also heard Mark talk about starting to rebuild some of those payables already in Brazil. So can you give us a sense just for the cadence of cash flow from here, the second quarter is typically a source on a free cash flow basis, but just any sort of relative sense and how back-end weighted should we expect it? And then if I can sneak in a tiny follow-up. You did mention continued deleveraging in 2025. This year appears to be mostly cash inflows and debt repayment driving that. Is next year going to include debt repayment as well? Or is that more about EBITDA growth?

Certainly. Thanks, Andrew, I appreciate the questions. Look, I think on a dollars of cash flow basis, the free cash flow is very heavily weighted to the second half of this year. We were negative free cash flow in the first quarter as is normal, but significantly less so than the prior year quarter, right? And that's a big inflection and marks the change in inventory levels for us, where we would traditionally have a working capital build in Q1 with growing inventory. Q2, I would expect still probably to be breakeven until the negative cash flow. And we don't -- we're not going to guide it precisely. There is too many moving variables. But I would tell you that all of -- essentially all of the positive free cash flow for the years may come in the second half. And again, the key drivers for the full year on free cash flow, it's reduced inventory and it's rebuilding of payables. And this dance, this balance that Mark and I have been talking about this morning, we are starting to spool up and restart manufacturing lines. That will pull through purchases, that will add to create some work in process and finished goods inventory that flows in the inventory and then we sell through. What we are carefully balancing is continuing to bring down our absolute level of inventory while selling through at the higher rate we're expecting to sell in the second half, new production. So it will be a stagger step as we go through the rest of the year to bring payables back up to a more reasonable level and to get inventory, again, a couple of hundred million less than where we are today. So that will be the combination of those 2, and it really…

The next question comes from Edlain Rodriguez from Mizuho.

Just a quick follow-up on market normalizing. As inventory destocking comes to an end and as you get into 2025, like how do you see volume growth for the portfolio in 2025 and 2026.

Yes. Listen, as we go through '25, I think we've said that we expect what we would consider a more normal type of growth for the marketplace. Acres continue to grow in, certainly, in Latin America and Brazil. So we expect that to be a driver. And don't forget at that point, people will be then resetting from a lower level of inventory. So you would expect more of a normal market growth. Typical market like this grows at anywhere from 2% to 3% per annum. And we generally speaking, with our differentiated portfolio, outgrow the market in the long haul. So I think it's more about a normalized market. Demand on the ground, as we said, even in these conditions is very good. We expect that to continue as pressure continues to change. So we see that market piece as being pretty robust. Obviously, our NPIs are growing rapidly. So we would expect '25 and '26 to be actually faster than the growth we see in '24. And then the other piece of -- which is not really market-driven, but just a view of '25, we had a lot of cost headwinds flowing against us right now that are obviously depressing our EBITDA and our EBITDA margin. Those turn into tailwinds as we go into next year. And I think it's an important facet as we walk through the next couple of earnings calls as we build out the picture of what '25 is going to look like, you certainly have got a more stable, more robust external market, but we also have some pretty significant tailwinds in the sense of how we think about our P&L. Andrew, do you want to comment on that?

Yes. I think, Mark, as we look at '25, obviously, one of the headwinds we're dealing with this year is unabsorbed fixed costs from low manufacturing activity. That -- as we go through this delicate dance we've been describing this morning and get back to more normal operating rates. By the time we get to the end of this year, we anticipate being past that, to where the relatively significant headwinds we've had this year from unabsorbed fixed costs are no longer there. So if you think about the absence of the headwind going into '25, itself being a bit of a tailwind or a stronger base for performance in '25 adding certainly that will be a key element of our outlook. Now we've got to see how the rest of the year develops. But I think based on how we see things today and the way we're planning to ramp up production, do expect that volume variance piece that unabsorbed fixed costs to really ease by the time we get through the end of this year.

The next question comes from Mike Harrison at Seaport Research Partners.

I was hoping that maybe you could give a little bit of additional color on the recent new product launches, and how they're performing relative to expectations. And then you mentioned just now that you would expect some acceleration in '25 and '26. Maybe help us understand how you see grower adoption evolve and those adoption rates change from the launch year into the second and third year post-launch for those new products.

Yes. Thanks, Mike. If you look at what we've been talking about today in terms of how we think about what we call NPI products launched in the last 5 years, we've 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 1. I mean it's impossible in this market. Peak sales 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've talked about the fungicides. North America doing a very good job, especially with the fluindapyr-based fungicides. They've now been launched in Brazil and in Argentina, and they'll be launched in other parts of the world as we go through '25. So you should expect us to talk about the fluindapyr fungicide growing nicely in '25, '26 easily through '27. The diamides continue their track of new introductions, the Premio 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're 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've built. We're making excellent progress in terms of R&D. We have our manufacturing and supply chain coming together very well. We're 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.

The next question comes from Arun Viswanathan from RBC Capital.

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're 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 ways away, but just kind of thinking if you think that the second half guidance really encapsulates that normalization.

Yes. 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, et cetera. But I think your bigger point, right, return to sales levels that 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're 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've pointed to, and we're 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've 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've seen in 2024. When you look down to EBITDA, right, we've talked a little bit about what's going on with our manufacturing operations and through the second half, when we start 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 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's 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 much improved market conditions from what we saw in 2023. Mark, if you want to add to that?

No, good review, Andrew.

Our final question today comes from Laurence Alexander from Jefferies.

This is Dan Rizzo on for Laurence. 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're comfortable where they are, that's something that has to be worked on as well.

Sure. Thanks for the question. I think -- yes, I think we're comfortable with receivables. There's 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've 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're in a position now where there's always collection risk, but we are at a very good position. We understand where our risks are. We understand -- we've 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.

We've now concluded our Q&A session. So I'll hand the call back to Curt Brooks.

Thanks, everyone. Have a good day.

This concludes the FMC Corporation conference call. Thank you for attending. You may now disconnect.