FMC Corporation
Q1 2011 Earnings Call Transcript

Published: 3 May 2011

[Operator:]

Good morning, and welcome to the First Quarter 2011 Earnings Release Conference Call for FMC Corporation. [Operator Instructions] I will now turn the conference over to Mr. Brennen Arndt. Mr. Arndt, Sir, you may begin.

[Brennen Arndt:]

Thank you, Val, and welcome everyone to FMC's First Quarter 2011 Conference Call and Webcast. Joining me today are Pierre Brondeau, President Chief Executive Officer and Chairman; and Kim Foster, Executive Vice President and Chief Financial Officer. Pierre will begin the call this morning with a review of our first quarter performance. Kim will then report on our financial position, and Pierre will complete the call by providing our outlook for the balance of 2011, and we'll take your questions. Joining Pierre and Kim for the Q&A session will be Milton Steele, President, Agricultural Products; Michael Wilson, President, Specialty Chemicals; and Mark Douglas, President, Industrial Chemicals. A reminder to everyone today that our discussion will include certain statements that are forward-looking and subject to various risks and uncertainties concerning specific factors that are summarized in FMC's 2010 Form 10-K, our most recent Form 10-Q and other SEC filings. This information represents our best judgment based on today's information. Actual results may vary based on these risks and uncertainties. During the conference call, we will refer to certain non-GAAP financial terms. On the FMC website, available at fmc.com, you will find the definition of these terms under the heading entitled, Glossary of Financial Terms. We have also provided our 2011 outlook statement and a reconciliation to GAAP of the non-GAAP figures we will use today. It's now my pleasure to turn the call over to Pierre Brondeau. Pierre?

[Pierre Brondeau:]

Thank you, Brennan, and good morning, everyone. As you saw in our earnings release, our first quarter results provided a strong start to what we expect will be another record year for FMC. Summarizing our first quarter 2011 performance. Sales of $795 million were 10% higher than last year's first quarter, excluding the prior year impacts of 2 businesses we exited last year. Adjusted earnings of $1.49 per diluted share also increased 10% versus the year ago quarter. In Agricultural Products, sales of $344 million increased 13%, driven by broad based growth across North America, Latin America and Asia. Segment earnings of $100 million increased 8% versus the year ago quarter, driven by the sales gain, partially offset by higher spending on target growth initiatives. In Specialty Chemicals, sales of $210 million were up 4%, despite capacity limitations in both businesses, as a result of higher volumes and selling prices for lithium specialty and food ingredients, partially offset by lower lithium primary volume. Segment earnings of $45 million increased 10% as higher sales and operating cost reductions in lithium were partially offset by higher spending on growth initiatives, in food ingredients and higher specialty wood pulp costs in BioPolymer. In Industrial Chemicals, sales of $243 million were 3% lower as higher selling price across the segment and volume growth in peroxygens were more than offset by the absence of sales from the Phosphates business we exited at the end of last year. However, for a better representation of top line momentum in Industrial Chemicals, sales increased 11%, excluding the prior year impact of the Phosphates and Sulfur-derivatives businesses we exited last year. Segment earnings of $40 million increased 17% as a result of sales gain in soda ash and peroxygen, as well as the continued variable mix shift towards specialties market in peroxygen, partially offset by startup cost related to a Granger soda ash facility. On a regional basis, in the first quarter versus the prior quarter, excluding the 2 businesses we exited last year, sales in Asia continued to demonstrate the highest growth rates at 21%. Drivers of this growth were broad-based, with gains in ag products, export soda ash and food ingredients in BioPolymer. Sales growth in North America was also strong at 17% owing to our strong performance in ag products. Sales in Latin America increased 14%, the result of a strong finish to the crop season in Brazil, especially in cotton and sugarcane. And as expected, sales in EMEA declined down 12 -- down 14% due to the prior year impact of essentially selling an entire season of bifenthrin in the first quarter of last year. Moving now to corporate items. Corporate expense was $16.8 million versus $12.1 million in the prior year quarter. Interest expense net was $9.9 million as compared to $10 million in the year ago quarter. On March 31, 2011, gross consolidated debt was $663 million, and debt net of cash was $577 million. For the quarter, depreciation and amortization was $30.4 million and capital expenditures were $30.4 million. On a GAAP basis, the company reported net income of $94 million or $1.03 per diluted share versus net income of $77 million or $1.06 per diluted share in last year's first quarter. Net income in the current quarter, included charges of $14 million after tax or $0.19 per diluted share versus charges of $23 million after tax or $0.30 per diluted share in the prior year quarter. With that reconciliation, our non-GAAP earnings were $1.49 per diluted share in the current quarter, up 10% versus $1.36 per diluted share in the last year's first quarter. Let's now take a more detailed look at the performance of each of our operating segments in the quarter. Let me first start with Agricultural Products. First quarter sales of $344 million, increased 13%, driven primarily by broad-based volume growth across North America, Latin America and Asia, augmented by targeted price increases. The highest sales gain was achieved in North America, driven by strong early season demand from preemergent herbicide and higher sales in the soybean segment. And so [ph] shift of sales from the second quarter due to favorable market conditions, crop prices, and channel optimism. In Latin America, which is mostly Brazil, the sales increase reflected growth in planted acres and the strong finish to the 2010, 2011 crop season, especially in sugarcane and cotton segments. In Asia, sales gains were driven by strong herbicide demand and better weather conditions in Australia and continued strong demand in China and Indonesia. As expected, sales in Europe declined as a result of ongoing re-registration process for bifenthrin, during which time, the product may not be sold. Last year's first quarter made for an especially tough year-on-year comparison. Recall that last year, we reported that in Europe, we essentially sold an entire season of bifenthrin in last year's first quarter. Segment earnings of $100 million increased 8% versus the year ago quarter driven by broad-based sales growth, partially offset by higher spending on targeted growth initiative as we continue to successfully execute a differentiated strategy, as well as the absence of bifenthrin sales in Europe. Moving now to Specialty Chemicals. Revenue of $210 million was 4% higher than the prior year quarter despite capacity constraints in both lithium and BioPolymer during the quarter, driven by higher volume and selling prices for lithium specialties and food ingredients, particularly for MCC colloidal products serving dairy and beverage markets in Asia. Lithium primaries volumes were lower than prior year, as we optimized mix by gradual [ph] conversion from industrial primaries application to downstream specialties, essentially, butyllithium. Lithium demand for energy storage and pharmaceutical application continues to be strong, especially in Asia. Segment earnings of $45 million increased 10% as a result of the sales gain, favorable mix and operating cost reductions in lithium, partially offset by higher spending in focused growth initiatives in food ingredients and higher specialty wood pulp costs in BioPolymer. Now looking at each business in more detail. In BioPolymer, sales increased as a result of volume growth and higher selling prices. Sales growth was especially strong in food ingredients, driven by significantly higher sales of microcrystalline cellulose, or MCC, to beverage and dairy customers in Asia, most notably in China. As we anticipate ongoing growth for MCC on a global basis, specially in rapidly evolving economies, in March, we completed the expansion of our MCC plant in Cork, Ireland. The infrastructure and the flexibility of the core site made the expansion very cost efficient. We're now in full production and have increased our global capacity by 25% for food and pharmaceutical grade MCC. BioPolymer earnings were essentially level to last year, as the strong commercial performance was offset by spending on growth initiatives in food ingredients, focused on innovation, and increasing our presence in rapidly developing economies, as well as higher specialty wood pulps and energy cost. In lithium, though sales were essentially level to last year, earning growth was robust. We realized higher volume and selling price in lithium specialties, especially butyllithium, which is used as a reagent in pharmaceutical and chemical synergies. Butyllithium volume growth and price increases were achieved across Asia, North America and Europe. The sales increase in lithium specialties was offset by the shift of some volumes to the second quarter and lower lithium primaries volume showing industrial applications. Supply remains tight in primaries, so we chose to optimize mix by increasing conversion towards specialty. Supply of primaries will increase in the second half of the year, benefiting from improved output and conversion. Pricing level of lithium primaries were equal to last year. Lithium earnings growth was robust in the quarter, driven by favorable mix and operating cost reductions. Let's take a look now at Industrial Chemicals. In the first quarter, our Industrial Chemicals segment began to realize the benefit of the significant steps taken last year to realign and transform its business to deliver higher performance going forward. Higher performance in the form of less sensitivity to economic cycles, sustained higher margins, greater earning stability, stronger cash generation and superior return on asset. First quarter revenue of $243 million increased 11%, excluding the prior year impact of the exited phosphates and sulfur derivatives businesses, driven by higher selling price across the segment, particularly in soda ash and volume growth in peroxygens. Segment earnings of $40 million increased 17% as a result of the sales gain and the continued favorable mix shift towards specialties market in peroxygen, partially offset by startup costs related to our Granger soda ash facility. Our Industrial Chemicals segment now has 3 realigned businesses

[W. Foster:]

Thanks, Pierre, and good morning, everyone. Free cash flow for 2011 is reconfirmed at $300 million. As I mentioned on the fourth quarter call in February, this projection includes $40 million to $50 million in cash spending for restructuring of the phosphate businesses we exited at the end of last year. Net debt at the end of the first quarter was $577 million compared to $476 million at the end of 2010. The increase is driven primarily by the normal seasonal working capital build in our Agricultural Products business. Prior to each earnings call, we released an outlook statement on our website that summarizes our quarterly and annual guidance that we will discuss today. It also provides guidance for several cash flow and income statement items that can be used in your financial models. I'd like to comment specifically on one of the corporate and other financial items section of our outlook statement, namely, Other Income and Expense. Our current guidance for this item is $25 million in expense for 2011. Approximately 75% of the 2011 total can be explained by 3 items

[Pierre Brondeau:]

Thank you, Kim. Regarding the outlook for the full year 2011, we have raised our outlook for adjusted earnings to $5.50 to $5.80 per diluted share, a 14% increase above our 2010 adjusted earnings of $4.95 per diluted share at the midpoint of the range. Our Ag Products segment expects to achieve its eighth straight year for record earnings, at approximately 10% versus a year ago driven by expected strong market conditions and growth [ph] new and recently introduced products while increasing spending on growth initiatives and absorbing higher raw material cost. In Specialty Chemicals, segment earnings are projected to also increase about 10%, reflecting higher sales and operating cost reductions across the segment, partially offset by higher raw material and energy cost. In our Industrial Chemicals segment, we expect earnings to be up above 30%, driven by higher selling prices and volume growth across the segment, augmented by the benefit of cost reduction initiative. Moving to our outlook for the second quarter of 2011, we expect adjusted earnings of $1.40 to $1.55 per diluted share. Agricultural Products segment earnings are expected to be up 10%, driven by growth in North America, Europe and Asia, partially offset by higher spending on growth initiatives. Specialty Chemicals segment earnings are expected to be up in the high-single digits, driven by higher volumes and selling prices in BioPolymer and lithium specialties, partially offset by higher spending on growth initiative in food ingredients in BioPolymer. The Industrial Chemicals, we expect segment earnings to increase in the high teens, driven by higher selling prices across the segment, partially offset by Granger's startup cost. With that, I thank you for your time and attention. I'll be happy to take your questions. Operator, please?

[Operator:]

[Operator Instructions] Your first question comes from the line of Mike Harrison from First Analysis.

[Michael Harrison:]

Question first for Michael, I was wondering if you could comment a little bit further on what's going on with the lithium primaries volumes? I used to think of your business mix in lithium as 50% primaries and roughly, 50% specialties. What did that mix look like in Q2 -- or Q1, I'm sorry?

[D. Wilson:]

We intentionally shifted the mix a little bit more from the primaries to the specialties, basically because the capacity constraints that we have, we looked at the lower margin of primary products -- this would be outside the battery support area, and instead, used the lithium molecules that we had to make downstream products, products like butyllithium, which provided greater profitability. So not huge on an overall basis, but an intentional mix shift toward the specialties in the first quarter.

[Michael Harrison:]

And would you expect that to shift back toward the 50/50 split as you bring that additional capacity on stream?

[D. Wilson:]

Yes, I think we'll definitely see faster growth, if you think longer term in some of the primary [ph] products, like carbonate and hydroxide because those are really being driven by the battery applications of energy storage. So once we have additional capacity and we can fully serve that market, I would expect the mix shift back in that direction.

[Michael Harrison:]

Right. And a couple of questions for Milton. In terms of the prebuying that you saw in the first quarter, can you give us any sense of what the magnitude of that was? And maybe a little bit more color on exactly what's driving that activity?

[Milton Steele:]

Mike, we will not give you a number on what we think the prebuying was. It was robust. I think what is driving it though are 2 things

[Pierre Brondeau:]

Let me add a little thing to what Milton said. We had a very robust first quarter, which would tend to have us believing that we do have shift from Q2 into Q1, specialty North America. By the same token, we are still contemplating a very strong second quarter. So it's sort of looking like a strong first half. It's quite difficult to understand what is the normal growth of the business versus what is the potential shift from one quarter to the other. So that's why it's hard for us to quantify. I think we believe it's the case, but overall, maybe most important, we're contemplating the strong first half.

[Michael Harrison:]

And just in terms of the impact that you're seeing in the Ag business from some of the flooding that we've had in parts of the Midwest, as well as it seems like parts of North America are off to a later planting season than usual. What's your outlook given those issues?

[Milton Steele:]

Mike, no question, and the planting is quite delayed. The real issue will be if it gets delayed beyond a certain date, then farmers would start to switch towards soybean instead of corn. And given our current portfolio, that's not a bad thing for us. So I guess my way of answering to this, yes there's a delay in planting, but either way, I think we'll be okay.

[Operator:]

Your next question comes will come from the line of Frank Mitsch from BB&T Capital Markets.

[Sabina Chatterjee:]

Guys, it's Sabina in for Frank this morning. Just a quick question on the industrial segment. Looking at the high teens earnings guidance for Q2 actually suggests a sequential decline. So can you just remind us what the magnitude of startup cost could be for Granger? And how seasonality is likely to play out in this segment this year?

[Pierre Brondeau:]

I think we've quantified the startup of Granger in the mid-single digit million dollars, that's about the number we are contemplating with most of it being incurred in the second quarter while we are ramping up the sales and decreasing the start-up spending of cost in the second half of the year.

[Sabina Chatterjee:]

Okay, and then just seasonality. Should we start to see a pickup in -- I thought sort of ash demand would pick up in Q2, Q3? So you're basically suggesting that Granger would offset the improvement in seasonality?

[Pierre Brondeau:]

Yes, if you look at the targeted earnings, we do have for earnings growth, we do have for the full year for Industrial Chemicals of about 30%. You will see year-on-year increase, significant year-on-year increase in sales and earnings, but also sequential increase in the second half versus the first half of the year for Industrial overall.

[Sabina Chatterjee:]

Okay. And then on specialty, it looks like you took expectations across-the-board except for specialty earnings for the year. Can you just discuss some of the headwinds that you're seeing unfold there but maybe you hadn't factored in before? If it's higher raws or the tight lithium supply situation?

[W. Foster:]

I think in terms of the earnings outlook for the year, the guidance is for earnings to be up, roughly 10% on a full year basis. On sales that are up, it's mid-single digits. Clearly, the headwinds are higher raw materials, particularly on the BioPolymer business for pulp that goes into the MCC business. However, we'll more than fully offset that with higher prices on that same business so -- we'll be offsetting that. Clearly, the capacity constraints that we have in both businesses, but particularly in the lithium business, are significant. And again, if you want to look at overall, this segment we're guiding mid-single digits revenue growth for the year, I would say without those capacity constraints, the segment growth would be 4 to 5 percentage points higher, so that gives you some idea of the significance there.

[Pierre Brondeau:]

Sabina, I think it's -- I do not believe there is anything today, which is nothing we had seen. I mean, the raw material increase is a bit higher. And certainly, we're expecting that the organization is compensating with higher prices. We're a little bit tighter on lithium than we thought, but we knew it would be tight. I think maybe more of a big surprise, not a big surprise, but what is a good surprise is that we're experiencing very strong growth on our MCC product line, especially for dairy products in China. We knew it would be a growth platform for the food business for the next 4, 5 years, and it's really confirmed here. And that's where most of the capital investment increase for volume and sales increase will go.

[Sabina Chatterjee:]

All right. I guess, originally, the full year was looking to be up in the low teens, and now you're saying, up 10%. So that's my discrepancy, but we can discuss it offline.

[Operator:]

And our next question will come from the line of John McNulty from Credit Suisse.

[John McNulty:]

Just a few questions, with both your lithium and soda ash expansions coming on later this year, and I guess either late or early next year on the lithium side, based on what you're seeing in terms of demand out there, can you walk us through how we should be thinking about pricing going out with these new capacity expansions coming on over the next few quarters?

[Pierre Brondeau:]

Yes, we -- the capacity expansion for both businesses, lithium and soda ash, do not have today a direct impact on pricing. I think we are in the situation today, which the volumes we are bringing in will not materially change the supply-demand situation. I think in soda ash, our volume clearly will be absorbed and taken in our export market. What will be guiding pricing is much more linked to the price at which the Chinese will be willing to export their product to maintain or protect market share outside of China. That is what will guide the price much more than the additional capacity. Same in lithium, we're 100%. We're increasing our capacity by about 25%. It will not have an impact on the overall pricing, looking at the demand growth.

[John McNulty:]

Okay, great, thanks for the color. And then just in the Ag business down in Brazil, where you've seen -- we've seen this huge commodity prices. Now that we're toward the end of the season, do you have any color as to how your customers are thinking about expanding their overall platforms with regard to acreage? And how we should think about that and how that parlays into growth for you next year?

[W. Foster:]

Yes, we think, John, that the commodity prices are going to hold. But there will be an increase in cotton, sugarcane and potentially, soybean and corn. So as these commodity prices hold, we're quite bullish about the increases in acreage and all the key crops.

[Operator:]

And our next question will come from the line of Eugene Fedotoff from Longbow Insurance.

[Eugene Fedotoff:]

Just a couple of questions. First, can you provide a little bit more color on raw material trends in biopolymers? If you're seeing any stabilization or if they continue to increase at the same rates?

[D. Wilson:]

This is Michael Wilson. I think with regard to the pulp supply, I would say what we saw in the first quarter was very consistent with what we projected, maybe a bit higher. But we see it consistent throughout the 4 quarters of 2011. I think that -- we'll probably see some additional pressures as we move into 2012. But that's something that we're positioning the market for in terms of higher prices. On the seaweed side of BioPolymer, we've seen very stable raw material input cost.

[Eugene Fedotoff:]

Okay, thanks. And the second question on soda ash volumes, both domestic and international, can you provide a little bit more color, particularly in the international markets where you see growth?

[Mark Douglas:]

This is Mark. On the international markets for exports, we indicated last quarter that we'd see growth in the 3% to 5% range. Obviously, with our capacity constraint, we're maxing out, in terms of exports. But I would expect you to look at those sort of demand numbers overall. We have seen Chinese exports pick up from the first quarter from an average of about 1.6 million tons last year to about 1.8 million tons in the first quarter of this year. So obviously, demand in Asia and demand in Latin America is pretty robust at the moment.

[Eugene Fedotoff:]

Any changes in demand domestically?

[Mark Douglas:]

Sorry, say that again?

[Eugene Fedotoff:]

Any changes in domestic demand?

[Mark Douglas:]

Domestic demand, no. It's rolling along at about the 3% ranges, which is what we indicated. So no real change there for the rest of the year.

[Operator:]

Our next question will come from the line of Andrew Dunn with KeyBanc Capital Markets.

[Andrew Dunn:]

Just one last question on soda ash, if I may. So you kind of suggested that maybe there is a, I guess, 200,000-ton pickup in the Chinese export of soda ash. And I know they've been talking about kind of narrowing of this gap between the Chinese production cost and the domestic production cost. You're telling us that you're really confident you're going to be able to put all of the Granger's demand into the market. So as you're thinking about the timing of these cost gap narrowing, what kind of timeline do you have in mind? Is it pushed off way down into 2012? How we should we think about that going forward?

[Mark Douglas:]

This is Mark. Andrew, you're talking about the gap between the domestic China prices, their export price?

[Andrew Dunn:]

Yes.

[Mark Douglas:]

Well what we're seeing now is -- and we've talked about this, is the fact that the Chinese are exporting above their cash costs and have been since December. That number is declining. It was around about $30 a ton in December. It's round about $15 a ton at the end of Q1. As we've talked about a declining price, we have that trending down towards the end of this year in the fourth quarter to be equal to that cash cost. That's the type of trend line we see.

[Andrew Dunn:]

Okay, great. And then just shifting gears to the Ag segment. It looked like margins were down a little bit on the year. I know you had some issue -- some, I guess, lower margins related to growth expenses. If we look at that going forward, is that going to be fairly stable, in terms of you pursuing further growth in that market throughout the rest of the year that might be, would be 100 basis points impact on the margins going forward? Or is that not a good way to think about it?

[Pierre Brondeau:]

I believe it's a good way to think about it. You always have a mix, original mix, product mix. You also have spending on growth initiatives, but all in all, we will close the year for Ag at margins, which will be very much in line with the 2010 margins. So we're not expecting any shift of margin, up or down, within the overall segments when you remove all of the variation you can see across the year. So our objective, as we say, for the next 4 years are to maintain margin in the Ag business. And that's where we expect to be [indiscernible] our forecast for the year.

[Operator:]

And your next question will come from the line of Peter Butler with Glenhill Investments.

[Peter Butler:]

We've gone another quarter with FMC studying acquisitions. Meanwhile, asset values have risen and this obviously reduces the incentive to acquire assets. So I'm wondering if you guys are starting to consider an option B, either to pay up or to possibly just give up and return the cash to shareholders?

[Pierre Brondeau:]

Peter, I think right now, I will have to say that our strategy to balance the cash we are generating between external growth or acquisitions, returning cash to shareholders and capital investments is at the same place as we were in December of 2010. If anything, I'm feeling even stronger because the business is doing very well. As you saw, we did better than the expectation in the quarter. The year looks strong. Cash generation is strong, so I do not have any concern around the type of commitment we made. And if you look at the merger and acquisition, I do believe today, and that's where we are prudent in commitment in terms of timing, I do believe today that the pipeline in terms of merger and acquisition is getting better. We are, of course, very careful. We will not do anything which would not be appropriate or not completely in line with our strategy. We will not do any transformational acquisition, but we do have some very interesting targets we are working with. And we do have a pipeline, which is getting better and better. So if anything, I'm more confident in our M&A strategy, but I will not prevent us to do the right capital investment for organic growth with high reason [ph] projects and return shareholder -- money to shareholder, as we said. The timing, what do we do more in Q2? More shareholder money return or more acquisition? I think we're going to have to decide, but if you look at the overall year, we're going to be exactly on the track as we discussed in December.

[Peter Butler:]

Okay. Regarding returning cash to shareholders, I note that several years ago, Syngenta had a rather unique dividend policy? They raised the dividend in year 2, in line with the percentage earnings gain in year 1. This played out really well with investors and boosted the price range ratio because investors could count on the dividend increase. So the question to you, Pierre, is, do you have enough confidence in FMC's growth story to adopt a similar policy, a similar shareholder friendly dividend policy?

[Pierre Brondeau:]

Peter, I think that if I would adopt that policy, you would not be very happy. You're one of the guy who told me, increasing the dividend by 20%, 20% of not much is not much. So I do believe that we would have to increase dividend maybe a bit faster than our earning growth. We had to look at where we should be from a dividend standpoint for a company with the kind of performance we have and how to balance returning shareholder between stock buyback and dividend. I really do not want to say that we're going to try a strategy, especially at our level of payment of dividend, which will be just aligning dividend payment to earning increased. I'm not even sure it would work for where we are. You can count on us to strongly return cash to shareholder, and it will be done in the form of dividend increase and stock buyback. We have not yet decided the exact pro rata of each of those. But we cannot define a rule as the one you are defining and I'm not sure it would be appropriate for us.

[Operator:]

Your next question comes from the line of Kevin McCarthy with BofA Merrill Lynch.

[Christopher Perrella:]

It's Chris Perrella filling in for Kevin. Question, could you break up the growth initiatives that you devoted capital to during the quarter and for the year?

[W. Foster:]

This is Kim. I think what you're referring to is the $60 million in expansion capital that I mentioned in the call that we're going to spend in 2011. And that expansion capital is directed towards the Granger startup. We mentioned that, that capital would be mostly in the first half of the year, in fact, mostly in the second quarter. And as Pierre mentioned, that would be around mid-single digits in millions. Pierre also mentioned that we just closed or finished a MCC expansion, which should add both capacity, both to our pharmaceutical, as well as our food colloidal projects. We've mentioned in the past that, that capital is going to be around $25 million. And we're also finishing up the expansion on our lithium business, which should be done by the end of the year. And that expansion should also be on the order of magnitude of $20 to $25 million.

[Christopher Perrella:]

And is the alternate expansion still on track for year end 2011?

[W. Foster:]

The alternate expansion was something we finished up last year.

[Christopher Perrella:]

Okay, all right. And how much of the $60 million has already been spent for those capital projects so far this year?

[W. Foster:]

I'm sorry, I don't have that number off the top of my head, but given the timing of what I mentioned as far as the expansions go, I would say, it's probably 50%, somewhere around there, spent.

[Pierre Brondeau:]

In capital, I mean generally speaking, think about a year like this year, it's always easier to think, in terms of the year rather than thinking in term of quarters because of plants, which are being built first. Think about half of the capital going in the year like this one, when we have expansion, half of the capital going to industrial, about 40% of the capital going to specialty and about 10% going to ag.

[Christopher Perrella:]

Okay, very good. One more question on the ag. Have you seen pricing or have gotten pricing in ag this year? And how does that compare to what you've -- you're targeting?

[Milton Steele:]

Chris, it's Milton here. Yes, we have had some price increases, and we're continuing to push for those across-the-board. We've had some increases in Latin America, small increases in North America and in Asia and in Europe, also small increases. It's in line with what we forecast. And we'll see what happens for the rest of the year. We continue to look for opportunities to put prices through, especially if we start to see significant cost increases.

[W. Foster:]

Hey, Chris, this is Kim. I'd like to correct something I mentioned, that you asked about Alstate [ph], that will spill over into 2011.

[Christopher Perrella:]

Okay, so you're still working on the capacity expansion this year?

[W. Foster:]

Yes.

[Operator:]

[Operator Instructions] Okay, thank you. I will now turn the call back to Mr. Brondeau for closing remarks.

[Pierre Brondeau:]

All right. Thank you very much for your time today. As you can see, we had a very strong first quarter, and we do have strong expectations for the second quarter and the rest of the year. I would say that the signals we do have today is that our Vision 2015 is intact. The cash deployment strategy remains. The M&A strategy remains. And maybe on the positive side, we are seeing maybe a stronger organic growth than what we were expecting, which of course, will have to be supported by a capital that overall impacts with a stronger organic growth for the future. So the quarter was good, the next quarter feels good. The year feels good. And I believe we're on the track to deliver what we are promising in our Vision 2015. Thank you very much for your call, and I'm sure we'll be talking soon. Goodbye.

[Operator:]

Thank you. This concludes the FMC Corporation First Quarter 2011 Earnings Release Conference Call.