Good morning, and welcome to the Second Quarter 2018 Earnings Release Conference Call for FMC Corporation. Phone lines will be placed on listen-only mode throughout the conference. After the speakers' presentation, there will be a question-and-answer period. I now like to turn the conference over to our host, Mr. Michael Wherley, Director of Investor Relations for FMC Corporation. Mr. Wherley, you may begin.

Thank you, and good morning, everyone. Welcome to FMC Corporation's second quarter earnings call. Joining me today are Pierre Brondeau, Chief Executive Officer and Chairman; and Andrew Sandifer, Executive Vice President, Chief Financial Officer, and Treasurer. Pierre will review FMC's second quarter performance and provide the outlook for 2018 and the third quarter. Andrew will provide an overview of select financial results. The slide presentation that accompanies our results, along with our earnings release and the 2018 outlook statement are available on our website; and the prepared remarks from today's discussion will be made available after the call. Mark Douglas, President and Chief Operating Officer; and Paul Graves, CEO, FMC Lithium, will then join to address questions. Before we begin, let me remind you that today's 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 release and in our filings with the Securities and Exchange Commission. Information presented represents our best judgment based on today's information. Actual results may vary based upon these risks and uncertainties. Today's discussion will focus on adjusted earnings for all income statement and EPS references. A reconciliation and definition of these terms as well as any 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, Michael, and good morning everyone. Q2 was another strong quarter for both businesses at the revenue and earnings level. For Ag Solutions, the demand for our products, revenue synergies, and cost were very much in line with expectation we laid out a quarter ago. The business integration is on schedule and the commercial teams continue to perform very well. The strong global performance through the first half of 2018 combined with a high percentage of orders in hand for the rest of the year in Latin America gives us great confidence for our second half. Beyond the immediate future, we continue to see very strong growth potential for our acquired portfolio, especially Rynaxypyr and Cyazypyr insect controls. On the technology front, the integration of our R&D organization is progressing very well and is confirming the strength of our expanded pipeline. We remain on track to launch our first new active ingredient from the legacy FMC R&D pipeline the fungicide, Bixafen, in North America later this year. The Lithium business, which we recently announced, will be named Livent Corporation, continues to perform strongly with demand for differentiated performance products continuing to grow. Realized prices and delivered volume are in line with our previous expectations. We remain on track to list Livent in an October 2018 IPO, which will be followed by a direct spin to FMC shareholders within six months. Turning to slide 3, FMC reported second quarter revenue of just over $1.25 billion, which was nearly double the revenue from Q2 2017. Adjusted EPS was $1.78 in the quarter, which was $0.08 above the midpoint of our guidance and up 270% versus the same period a year ago. The guidance beat was mainly due to stronger operational performance driven by revenue growth in Ag Solutions and the combination…

Thanks, Pierre. Let me start this morning with the income statement, specifically taxes and the impacts of foreign exchange. We've lowered our guidance for adjusted effective tax rate for the full year to a range of 16% to 18%, a reduction of 50 basis points at the midpoint of the range, driven by our updated forecast of the mix of earnings across various jurisdictions. The 16.5% adjusted effective tax rate for the second quarter brings our year-to-date provision for taxes in line with this updated guidance. Foreign exchange impacts on revenue were a net zero in the second quarter for our Ag Solutions segment, with euro strength offsetting weakness in key Latin American currencies, aided by ongoing price increases. For the Lithium business, FX was a modest tailwind in the quarter. Looking to the remainder of the year, we will, as always, be watching the Brazilian real closely. We manage our currency exposures throughout the year and this year is no different. With the combination of price increases and our hedging activities, we expect to completely offset any FX headwinds in the Ag Solutions business in the second half and the full year. Moving on to the balance sheet and cash flow, net debt at June 30 was $2.75 billion, down more than $150 million from the beginning of this year, reflecting solid cash generation and the pay down of $100 million of outstanding term loan debt in the quarter. Turning to slide 8, FMC generated adjusted cash from operations of $287 million in the first half of 2018, up 34% compared to the prior year period, driven by higher EBITDA. We also benefited from lower working capital build of the DuPont acquisition than was previously expected. Looking to the full year, we are increasing our guidance for adjusted cash from operations by $100 million to a range of $650 million to $750 million. This increase is driven by our updated forecast for the working capital build for the acquired DuPont business, supported by our continued expectation for strong EBITDA. With that, I'll turn the call back to Pierre.

Thank you, Andrew. First, a comment on the Lithium separation. We remain on track to IPO Livent this October. We made a confidential filing with the SEC in June, and we will file a public version of the S-1 in late August. Securities laws require us to reduce the commentary we provide on the Lithium business now that we are within 30 days of its public filing. Therefore, we will not be able to undertake substantial Q&A on the Lithium business today. We feel very good about the direction FMC is headed as we move to becoming a standalone agricultural sciences company. The business delivered another strong quarter, and we have high confidence on our second half estimate. Our full year pro forma revenue growth will be significantly above the market growth rate in 2018, and our disciplined approach to cost will help drive an EBITDA margin approaching 30% for the full year. The integration of the acquired business is progressing very well, and our SAP implementation is on track for the end of 2019, which will drive significant margin improvement from 2020 and beyond. Growth synergies are being realized faster than we would have expected nine months ago as our new portfolio is gaining well adoption with our strategic customers. We expect to outperform the crop protection market for the foreseeable future. Before moving to Q&A, I would like to remind you we are hosting an Investor Day in New York on December 3rd and we hope to see many of you there. I will now turn the call back to Michael Wherley.

Thank you, Pierre. As we're in a quiet period for the Lithium business, we're happy to answer questions on the first half performance of that business. But we're very limited in what we can say about the future, so we may choose not to answer some forward-looking questions at this time. Please frame your questions in that light. Operator, you can now begin the Q&A.

Thank you. Your first question comes from the line of Steve Byrne from Bank of America.

Thank you and good morning. This is Ian Bennett on for Steve. In the agricultural outlook for 3Q, could you help describe the moving pieces in the lower margin of legacy business, or currency and maybe some of those trucking issues in Brazil or perhaps compare the margin structure in 3Q to what it would have been pro forma for 3Q of 2017?

That's a lot of questions at the same time. Yeah, Q3, as we explained – first of all, Q3 and – has to be, and will be in the future the lowest season. So, if you think about it, the margin, the EBITDA margin for the business is very much the result that your SG&A and your R&D cost go against a gross margin which is lower because the revenue is lower. So, the math just makes you end up with an EBITDA margin which is lower. So, it's purely the fact that your below-the-line cost doesn't move as the spending is about the same every quarter, while your revenues are lower. Historically, Q3 has always been a low quarter, because Europe is non-existing, and Asia and North America are fairly low, while Brazil mostly start in September. It is magnified with the new portfolio, which is much more of an Asia, North America, Europe portfolio making the first half even stronger and Q3 even weaker. So, for the future, I think we have to expect Q3 to be the month with the lowest revenue, consequently with the lowest EBITDA, and consequently with the lowest EBITDA margin. From a currency standpoint, if you look at each half and the full year, we are pretty much – not pretty much, we are going to offset any headwind we will be seeing from currencies and mostly the real by a combination of our hedging strategy and our price increase. Now, if you look at the two quarters, I would say we might be slightly lagging in Q3. So, you might have a slight negative impact of FX in Q3. And you will have more of a positive impact when we're really in the full season in Brazil in Q4. Last question, I think last point of your question was around the truck and trucking strike. And maybe I'll let Mark add a couple of sentence. There is no direct impact of the trucking strike on the crop chemical industry. There could be some side effect to the agricultural industry, maybe Mark you want to comment on that?

Yeah. I think the way we're structured in terms of our logistics contracts for Brazil, we are not seeing and not expecting any issues when it comes to supply of trucks to move our materials. And let's be honest, a lot of our materials are extremely concentrated. So, we tend to ship a lot less volumes unlike some of the other Ag inputs such as fertilizers which are extremely bulky. I think the other impact you might see if this doesn't get resolved, it's not necessarily for this year but certainly into Q1 when the harvest starts, is how the grains get moved to the ports. And I think you've heard a number of the grain traders talking about that already. So, those are maybe the two impacts right at the front end of the season in terms of fertilizers and right at the back end in terms of grains. But as far as FMC is concerned, we don't see any issues in terms of delivery.

Now, let me finish to answer your broad question around Q3. Something I want to be – to make very clear. Q3 is always a difficult quarter to predict. We do have today – you could see, and I'm not forecasting, it's hypothetical, but you could easily see $40 million or $50 million in Latin America or specifically in Brazil shifting from Q4 to Q3. We have a very strong cotton season ahead of us, and the customers might decide to secure supply earlier, and that would create a shift in the buying pattern. If that will happen, we would rebalance the growth rate of Q3 and Q4 to a level which are much more in the same range. Finally, I hope I was clear in my explanation around what we are facing, pure integration process. We knew about it. But there is a few countries like Indonesia, Philippines, Vietnam or a site in Brazil where there is a delayed transfer to the company. We knew about it. That creates a blackout in sales. Those sales are not lost. The orders are taken, but the sales will be delivered and accounted for in Q4. So, that comes and creates more noise and creates a lower Q3 than we should have.

Thanks. That's very helpful. And just as a follow-up, on the Lithium business, how has spot prices declining in China affected contract negotiations in the first half of the year?

So, most of the contract negotiations for us for any business we have under contract is done in the back end of the year. So, we have very little contract negotiation in the first half of the year. So, today, as we said for hydroxide, carbonate and even metal price are up over 20% year-on-year. We participate very little in the lithium carbonate spot market. But I can tell you for our sales (31:41) between Q1 and Q2, sequentially, pricing are also up for hydroxide and carbonate. So we are seeing sequential up pricing as well as very strong year-on-year pricing.

Your next question comes from the line of Dan Jester with Citi.

Yeah. Good morning, everyone. So, I wanted to ask you about the comment you made in your prepared remarks about your order book for Brazil and how it's much stronger today than maybe it's been in the past. Is this something specific that you're doing to build an order book differently this year, or is this something that's more a market drive – market driven driving early orders?

I think it's purely market driven. It is the fact that we have been very, very careful in supplying the market. So, there is a very low inventory in the channel of the FMC product. Consequently, our customers who have a pretty good visibility on their demand are placing orders and firm orders at an early stage. So, I would say we are in a much more normalized situation in Brazil and because we keep on being very careful even today in a high demand period in not supplying product when they are not absolutely required to keep a low level of inventory in the channel, we're getting very strong demand. Now, I said 70%, and I'm not saying that jokingly. I said 70% because we wrote a remark a few days ago, but the number is already above 70%. So I think it's one – it's been a long time since we had such a high amount of orders in hand before (33:36). Mark, maybe you want to give more color?

No. I do believe that the last few years of working down those channel inventories have served us very well, and we're in a very advantageous position. I also do believe that our crop focus in Brazil is going to serve us very well as we go through the rest of this year. Cotton increased significantly over the last season in terms of acreage and prices were good. So, the cotton growers are once again looking at a pretty significant increase in acreage going forward. So, we're eyeing that market not only with the acquired portfolio, but with our legacy portfolio. So, we expect significant growth there. And then, overall, with what is happening around the world on soy, obviously the growers in Brazil are feeling very bullish about their acreage. So, we expect to see acres increase in Brazil as well for soy. So, for us, it's a combination of a lot of hard work over the last two to three years to get ourselves in good shape, and then an advantageous market position right now.

And then actually that touches exactly what I have on my follow-up question, Mark, is with what's going on with soy, I think the conventional wisdom is that Brazil is going to sell a bit more to China, and the U.S. will need to find new suppliers to sell their soybeans. Is FMC agnostic between a planted soybean acre in Brazil versus a planted soybean acre in the U.S.? And I just wonder if long-term the U.S. plants less soybeans, what kind of impact that could have on FMC's business given how important soybeans are for you. Thanks.

Yeah. I mean, it's a good follow-up question. I mean, just over 20% of our portfolio is exposed to soy around the world. There's one country you're forgetting in that mix which is Argentina, which is a big country for us. We have a significant pre-emergent herbicide business down in Argentina, and obviously the acquired insecticide portfolio is important to us down there as well. Yeah, we are pretty agnostic. I mean, we're growing in all three regions. Soybeans will be provided around the world from one of those three or all three. So, for us, it's – we really don't mind. We want to grow in all three and we'll grow with our technologies.

Your next question is from Bob Koort with Goldman Sachs. Christopher Evans - Goldman Sachs & Co. LLC: Good morning, everyone. This is Chris Evans on for Bob. We're clearly seeing the benefits of the combined portfolio given the pro forma growth rates you showed in the first half. You're guiding to a strong 2H top line expectation as well, but maybe at a decelerated rate versus the first half. Could you give us some context here? And then maybe secondly, can you opine on the growth drivers for Ag as you move beyond 2018? What contribution do you think is possible from new formulations and the acquired DowDuPont product pipeline that you receive?

I'll take the first part, and Mark will take the second part on the new technology. I think, yes, we had a very strong first half and that was driven by the demand on our insecticide. We believe Rynaxypyr, Cyazypyr are still the benchmark molecules in the insecticide market, and they grew 24%. So, we believe that the quality of the portfolio plus the customer synergies are creating a very significant market share gain. We actually – the overall portfolio of FMC in the first half grew also a healthy 17%. So, we believe we are in very strong position now. When you move in H2, and I think the right way to look at this business within H1, H2, there is – we foresee a deceleration versus H1. It is mostly because, as we said before, the DuPont acquired business is much more of an H1 business, and that business is growing faster than the legacy FMC business. So, if you look at the Latin America and Brazil, the growth will be driven a lot by the herbicide and insecticide from the FMC portfolio and to some extent, the acquired business, but less. That is why we do have an 11% growth rate in the first half, and we would expect to be more in the 7% range in the second half of the year.

Yeah. With regard to the portfolio, we've talked numerous times about the strength of the two combined portfolios coming together. We launched our first product, as Pierre said in the script, Bixafen, a fungicide targeted at North America later this year, so for the 2019 season. We pretty much have launches coming every year after that, certainly through the mid part of the decade, and actually we expect some more products to come that will be hitting later in the decade. We've had a metric for some time that we think of in terms of products introduced over the last five years. That's kind of a metric that we had in the legacy FMC in terms of how efficient we are in turning over the portfolio. We're going to be revamping that metric, and we'll talk more about that at the Investor Day in early December. But you can expect a healthy increase in formulations that are coming to market not just new active ingredients. I talked on the prior calls about the number of registrations we have coming for the acquired portfolio. We have similar numbers for the legacy FMC portfolio in terms of both herbicides and new fungicide mixtures. So, it's a very robust portfolio going forward starting in 2019. Christopher Evans - Goldman Sachs & Co. LLC: Thanks. And maybe I was hoping you could comment on the impact of the Argentine peso on FMC Lithium in the quarter? I was surprised a large devaluation didn't result in a bigger impact and it doesn't seem to be, let's say, factored into your guidance.

The Argentine peso was a tailwind in the second quarter. I think, Paul, maybe you want to...

Yeah. It was – look, you have to understand that our exposure to the peso is – it doesn't seem – it's not as large as people seem to believe. It was less than $1 million tailwind to the EBITDA in the quarter. It is factored in for the rest of the year. Clearly, you have to bear in mind that one of the drivers of the depreciation of the peso is cost inflation. And so we do have an offsetting cost in peso terms. By the time you've washed through all those, we're not seeing a huge tailwind or headwind for peso devaluation year-to-date.

Thank you. And your next question will come from the line of Joel Jackson from BMO Capital. Please go ahead.

I just want to reconcile something you're talking about expecting a bit of the sales blackout on some of the DuPont sales moving from Q3 to Q4. It looks like you have a $900 million revenue guide for Q3 for Ag and $1 billion for Q4, give or take. How much revenue is roughly swinging from Q3 to Q4, because if Q3 is the lowest quarter of the year for Ag, it seems like Q4 in a normalized basis would be very similar to Q3?

Yes. If you look at the – right now, at the numbers for revenue in Q3, we have about $200 million differential in the two quarters from the sales. Yeah, $140 million differential between the two quarters in Q3 and Q4. So, that is a bigger differential than we've seen in the past, and it's a big – if you remove the impact of the blackout sales, we are not talking about $100 million of blackout sales. We are talking about tens of millions of dollars. So, I think every $10 million is about 1%. So, if you have a few $10 millions, you can bring another 2% or 3% more in a quarter. So, that's the kind of shift we are talking about.

Thank you very much.

Thank you. Our next question now comes from the line of Aleksey Yefremov from Nomura Instinet. Please go ahead.

Yes. Good morning. Thank you. Just to confirm, the sales blackout is purely an accounting issue, and the sales are actually being made and booked by DuPont at this time?

No. It's more of a sale recognition. It's just – when we have the orders, and we do have the product, the only question is if we can – so, we have a firm order, we have the product, it's only a matter of being entitled to register the sale, ship the product, and do have revenue recognition. So, it's already as soon as we get the registration or the legal entity transferred or the permit, then we do ship and do the revenue recognition. It's purely a revenue recognition, legal issue for us to be able to account for the sales.

So you're waiting for government approval to ship the product. Is there any risk that this slips further into next year and you don't get that approval in Q4?

No, absolutely not, because when you do delayed sites, you do transfer the site only when everything is secured and ready to go. So it is not a full quarter for us. I think it's going to depend on the place, but sometimes it's a couple of weeks, sometimes it's a month. It's mostly impacting a part of July or a part of August. But it is not something – there is no questions around the delayed transfers.

Thank you. Your next question comes from the line of Chris Kapsch from Loop Capital. Please go ahead.

Yeah. Good morning. My question is about this sort of more pronounced or acute seasonality that you're referring to with the new portfolio. Just wondering if what emerged – new information emerged last quarters about the enthusiasm around both the cross-selling opportunities with the DuPont business as well as a strong pipeline of the new registrations. I'm just wondering if there's anything about this that is – as we now have two and a half quarters of the DuPont business having closed, anything about this more pronounced seasonality that's inconsistent with those views about cross-selling opportunities and the new registration pipeline associated with the new chemistries?

No. We feel actually the same, if not stronger. Just to look at the number, we have a – if you look at the total forecast in sales, at the end of Q1, we were expecting for the full year to see a growth rate for the company for the full year in the 7% to 8% range. We are forecasting today for the full year 9% range. So, our level of confidence around growth synergies has enormously increased versus where we were at the end of last year and increased to some extent versus where we were at the end of the first quarter. So, there is no change. It's only a situation where Q3 is a quarter where the acquired business is a very low percentage of the overall portfolio, and there is less demand for this business. So, it's an historical low quarter for DuPont and it was for us. That's all there is. But there is no – if anything, we are increasing the forecast in term of growth and speed at which we are creating synergies versus what we said at the end of the first quarter.

Okay. Thanks for that. And if I had to follow-up on the Lithium business and just about the market and the industry more generally there, there's disconnect between spot prices in China, and obviously you and other sort of incumbent players are seeing obviously strong both year-over-year and sequential pricing trends tied to the contract that you guys have both inked and are rolling over. So, the question is about the spot price, one possible explanation or plausible explanation is just that in China you have a surplus of either low-grade spodumene or DSO that's generally low quality that the conversion industry over there is constrained, and therefore, there's kind of a surplus of that sort of material in inventory over there, which is sort of creating the sort of short-term phenomenon of de-stocking. Do you sort of view it that way? Do you feel that's a plausible explanation? And the other thing that might be contributing, of course, is this longer term shift towards high nickel cathode chemistries that's favoring hydroxide, therefore, maybe spurring some destock on the carbonate side in China? Any thoughts on if those are plausible explanations and the disconnect? Thanks.

This is Paul. I think your second explanation there really goes to the heart of it. What we've seen in Q2 particularly, bear in mind that the new Chinese rebates and incentive structures really kicked in in June. And what we saw early in the year, in the first half of the year, one of the underlying trends that we've seen is a more rapid move towards hydroxide-based cathode technologies than we had expected. And what we're seeing is, as the new rebates and incentives kick in, a retooling going on amongst the cathode manufacturers to be able to meet those energy density and other requirements of the new incentive programs. To do that, we've seen plants closing down while they retool. We've seen certainly a drawdown of their own inventory of carbonate as they finish production of cathodes that are using carbonate. And we've seen an increased focus on their part as where they will secure the hydroxide from. And there is a significant disconnect between the availability of carbonate and the availability of qualified usable hydroxide in China and elsewhere in the world. I'll keep making the point until I maybe go blue in the face that this Chinese spot market for carbonate is not a really very useful market even if it is a market to look at. It carries very little informational content for the overall state of the market of what customers are looking for with them on contracting strategies. So, while I recognize that people pick up on that data, it's leading everybody down the wrong path as to what the true fundamentals of the market are, I'm afraid.

Thank you. And your next question comes from the line of Mark Connelly from Stephens, Inc. Please go ahead.

Thank you. Pierre, do you think that your raw materials and sourcing are going to have to shift towards India if China keeps up the pressure on producers, and where else would you be increasing your sourcing? And second question, before the DuPont deal, you've been expanding some of your basic R&D through collaboration. Is that still strategically important, and how does it fit together with your big R&D efforts now?

Yeah. Thank you. Yeah. I mean, when we look at the manufacturing strategy, we've been looking and starting to diversified our manufacturing from different location. India is a location, but I can tell you also that we have moved some of the manufacturing for some intermediates, for example, toward Europe with some partners and towards some of our plants in Europe and other locations. So, yes, over time, there is a strategy to keep on investing in China where we do have a stronger – strong partnership and players, but certainly diversification will take place. We'll produce more in India, but you have also to look at Europe and North America as potential places where we will be generating most – generating some of our products which are critical. I think also one critical aspect of what we do, and that's why we got out of the tough situation in the first half of the year, what the organization in Ag has done for years is always, always make sure that your key molecule or intermediates, you have multiplied suppliers who are qualified and registered. I think it's very important; you cannot be depending, even in China, solely on one. So, you always have to have two or three or four capable suppliers to be able to manage potential shutdown.

On the question of the R&D, your point is a good one, Mark, that we did have strong collaborations in the past as legacy FMC. And obviously, now, we're very heavily into basic research. That basic research actually helps when it comes to collaborations because what it means is you have technology that you can actually, in the broadest sense, trade for new technologies. I'll give you an example. FMC, we're very interested in expanding our fungicide portfolio. That may mean that in the future we're willing to trade technologies that we're developing in terms of herbicides or insecticides to get access to new fungicides. Our ability to do that is vastly enhanced with the capabilities that we acquired last year. So, for us, it's very much a game that we know very well. We've played it very successfully over the last five years. And we will continue to keep that tool in our toolbox as we look to continue to broaden that portfolio of technologies.

Thank you. Your next question comes from the line of Mike Harrison from Seaport Global Securities. Please go ahead.

Hi. Good morning.

Good morning, Mike.

I was wondering if you could comment a little bit on the Brazilian real and your exposure in Latin America. The last time we saw the real under pressure like this, you ended up seeing a lot of challenges in your business. Can you just talk a little bit, Pierre, about how the business has changed since the last time FX was an issue in Brazil and comment in a little more detail on what steps you're taking to mitigate this impact in the second half? I think you mentioned price increases and hedging activities. Thanks.

Absolutely. I think we learned a lot from 2015, and we'll do all we can not to get back to a situation equivalent. I think we are very close to what is going on in Brazil, and we are looking at it from two different angle, and I'll ask Andrew to talk about the hedging. I think, first, on the pricing, we do have a very tight connection between the currency and the price list, and as long as there is not very, very abrupt change over a few weeks of significant amount, I think now we are structured from the way we negotiate price and establish the price list to be very much in line with the currencies. And also remember that only half of our business in Brazil is dollar denominated. So, we've moved from the less vulnerable business with a tighter control of the pricing. And I have to say, since the beginning of the year, we've been doing very well in connecting pricing. Plus, Andrew, could you talk about the change of approach we had to hedging, and how do we do that to limit potential issues on the one side (54:34)?

Sure. Thanks. I'll speak to two things. I think – since 2015, I think we've become much more systematic and routine in the way we approach hedging the BRL. It's been our practice since 2015 to hedge a significant portion of the anticipated BRL denominated sales once we have a confirmed order from the customer. Now, it can be some time between confirming the order with the customer and actually invoicing the sale. So, that protects us from BRL movements between that time of confirming the order, fixing the order with the customer and actually invoicing the sale. This year, as we saw higher volatility and anticipated some continued volatility in the currency in Brazil, we also chose to do some additional hedging, hedging a portion of our sale, anticipated sales in advance of confirming orders where we felt confident on the demand to take some of the risk in terms of their ability to move price sheet fast enough against rapid movements in the currency off the table. So it's really a combination of regular, systematic, as we confirm orders, taking that risk off the table and then some additional work we did this year to prepare for potential volatility in the currency through the year.

All right. And then I wanted to ask also about the Asia Ag business. You mentioned the strength in the rice markets in India and China. Is that related to market dynamics or just some new application wins since the combination with DuPont? Could you just talk a little bit about how you're positioned for growth in the rice market in Asia going forward?

Yeah, sure. Three very big markets: India, China and Southeast Asia. I think taking India first, we made a significant step this year in changing the legacy FMC go-to-market model by adopting the acquired super distributor model. That is affording us opportunities where we were selling some very key products from the legacy FMC portfolio into that new channel. And also, I would say having a broader access channel in rice with the acquired portfolio, i.e., continuing to take market share with insecticides in India. In China, slightly different story. We introduced a very, very good rice herbicide in 2017 that is continuing to gain traction in China. That combination with sales synergies with the acquired portfolio is helping drive both pieces of the portfolio, so hence, a very strong first half in China for us. And then laterally, in Southeast Asia, obviously, the acquired portfolio complements very well the legacy FMC rice portfolio, and we have a very good market access in places like Indonesia, Thailand, and the Philippines. And now, with the acquired assets, we get more access to key countries such as Vietnam. So, overall, for us, it's a lot of sales synergies and a very good strong portfolio in terms of herbicides as well as insecticides.

Thank you. Your last question comes from the line of Kevin McCarthy from Vertical Research Partners. Please go ahead.

Yes. Good morning. Mark, it sounds like channel inventory levels of crop protection chemicals are quite low in Brazil. I was wondering if you could comment on the levels that you're seeing in your other key markets, at least in terms of outliers, including both your perception of industry inventories and FMC's own inventory levels?

Yeah. Thanks, Kevin. I think, in general, I would say, from an FMC perspective, we're feeling very good about our channel inventories around the world. Obviously, we've focused for the last few years on Brazil, absolutely no issues for FMC in Brazil. I think North America, we've talked about where we've had insecticide, legacy insecticide inventories in terms of corn rootworm applications. That certainly still holds true, although we are seeing more pressure on corn rootworm than we have in the last few years. So, we'll see how this season develops. Market, in general, is probably going to be spotty depending on different companies' portfolios. I would say the biggest area that I see going forward is Europe. Given the extremely dry conditions in Europe, I would expect to end this season with higher than normal channel inventories of fungicides, just given the market conditions. India and China, China has elevated inventory levels mainly because of both weather and market conditions there. The rest of the world, pretty much okay. I would expect – oh sorry, one more, Australia, I would think Australia will end up with very high channel inventories given the severe drought that we've seen this season.

That's helpful. And then perhaps for Paul, I just wonder if you could comment on the sequential pattern of earnings in Lithium as per your EBITDA guide. Is the decrement that you expect there a function of volume, price or other factors if I compare your stated guide for 3Q versus 2Q? Not sure if you can answer that or what you can tell us that might be helpful to discern that.

Yeah. I think there is one factor you have to bear in mind in this business. And as we mentioned in Q1 and we'll mention it again today, and it will be a feature of this business really for a while which is the timing of which to ship to different customers in different regions in hydroxide business can meaningfully move the margin, revenue in any given quarter. Most of the contracts are annual contracts, but we don't necessarily ship everything to every customer on an equal basis through the year. So, we certainly, and I think we've talked about this, saw a richer mix of customers in the first half than we expect in the second half. So, if you look at our full year guidance, strip out what you saw in the first half, you'll see the impact of essentially equalizing throughout the first year. I just encourage people not to assume that the first half margin is replicable across the entire year, and instead look at our full-year guidance. Just bear in mind that almost all of our contracting is done on an annual basis. And both volumes and price are pretty much predetermined by the time we start the year. So it is simply a question of timing as to when we ship to which customer that drives some of these movements.

It's all the time that we have for the call today. As always, I'm available following the call to address any questions you may have. Thank you and have a good day.

Thank you. That's all the time we have for today. This concludes the FMC Corporation's second quarter 2018 earnings release conference call. Thank you.