Mark Douglas
President and Chief Executive Officer at FMC
Thank you, Zack, and good morning everyone. Our Q1 results are detailed on slides 3, 4 and 5. In Q1, FMC delivered solid results with strong pricing actions accelerated growth of new products, increased market access and cost discipline driving margin expansion of over 60 basis points versus the prior year period. We reported $1.34 billion in first quarter revenue, which is flat on a reported basis and up 4% organically. Revenue was flat due to FX headwinds and lower volumes. Adjusted EBITDA was $362 million an increase of 2% compared to the prior year period and $7 million above the midpoint of our guidance range. EBITDA margins were 26.9%, an increase of over 60 basis points compared to the prior year period. This margin expansion was driven by pricing gains, strong mix and cost discipline. Adjusted earnings were $1.77 per diluted share in the quarter, a decrease of 6% versus Q122, but $0.04 above the midpoint of our guidance range. North America had a record quarter with sales growth of 28% or 30% excluding FX versus the first quarter of 2022. You will recall, we built inventory for the region at the end of last year in anticipation of another strong quarter and aided by our investments to increase market access, we were able to take advantage of the available supply to gain market share, especially in Canada. Canada achieved a record first quarter revenue to an effectively doubled in sales compared to the prior year period due to-high customer demand, particularly for insecticides, such as the recently launched Coragen MaX. Low channel inventory for FMC products, price increases and product mix. We're also drivers for the strong performance in Canada.
Product mix across North America also benefited from higher sales of new products with 29% of branded revenue derived from products launched within the last five years including a significant contribution from the successful launch of a new patented diamide formulation Altacor eVo for use on tree nuts and other crops. Branded diamides grew more than 20% in the quarter. Sales in EMEA declined 4% year-over-year, and were up 2% excluding FX, robust pricing actions offset lower volumes of herbicides in core EU countries, anticipated registration losses and the impact of discontinued sales in Russia. FX continued to be a headwind in the region. Branded diamides grew mid single digits in the quarter versus the prior year period. Switzerland, Turkey, Hungary, Romania and the Ukraine all grew double digits compared to the prior year period.
Moving now to Latin America where revenue declined 12% versus the prior year period. As expected, drought conditions in missed applications in Southern Brazil and Argentina led to lower volumes in the quarter. Demand in Mexico and the Andean region remained stable. In Asia, sales decreased 22% and were down 15% organically. Australia experienced to drive starts to the growing season impacting sales in the area.
In addition, we continue to actively manage India's elevated channel inventories to bring them down. Fungicides grew more than 20% in the quarter driven by Japan and finally new products contributed to 17% of the region's branded sales in the quarter. Overall adjusted EBITDA for the first quarter was up 2% year-over-year driven by pricing gains, partially offset by lower volumes, inflationary impacts on costs and FX headwinds. Price was up $96 million in the quarter. FX was a $32 million headwind. And once we saw volume slowing mid quarter, we took deliberate action to control costs especially in SG&A. Hence, the overall cost headwinds was limited to $27 million for the quarter, driven by higher input costs.
Before I review FMC's full year 2023 and Q2 earnings outlook, let me share our updated view of the overall market conditions. Crop commodity prices remain elevated and growers continue to rely on advanced technologies to maximize yields. This was reflected in the success of our new products in the first quarter and the continued momentum is anticipated for our innovative technologies for the rest of the year. However, the price normalization that we highlighted last quarter in non-selective herbicides, a segment in which FMC does not participate has accelerated especially in Latin America. Droughts have impacted key geographies such as Brazil, Argentina and now Australia. We have seen a trend where some distributors are delaying purchases to manage their working capital. We see this as a result of the higher interest rate environment.
Taking these new factors into account, we are revising our view of the overall crop protection market and now expect the global market to be down low single digits versus our prior forecast of up low single digits. Breaking this down by region, we now expect Latin America to be down high single digits, EMEA is now projected to be up mid single digits, North America is still expected to be up low single digits and Asia is now expected to be down low single digits. FX is still projected to be a headwind to market growth on a US dollar basis. To be clear, the key driver to the changing market outlook is nonselective herbicides and let me reiterate, this is a segment in which FMC does not participate. Excluding nonselective herbicides, we expect the global crop protection market to be flat versus the prior year. We still expect to deliver revenue growth in this environment driven by pricing gains as well as volume growth through new products and expanded market access.
Slide 6, 7 and 8 of our FMCs Q2 full year first and second half earnings outlook. We anticipate revenue in the second quarter to be flat compared to the prior year with further price increases particularly in EMEA, growth of new products as well as market access gains to be offset by lower overall volumes and FX headwinds. North America purchase patterns are expected to return to normal levels after two consecutive quarters of very strong demand. Channel inventory is anticipated to remain a focus in India as it will for the rest of this year. Our diamides partners are lowering their inventory levels in light of working capital concerns impacting volumes in Q2 and the rest of the year. EBITDA guidance is flat compared to the prior year of $360 million and EPS is expected to decline by 9% year-over-year primarily due to higher interest rates.
FMCs full Year 2023 revenue forecast is unchanged in the range of $6.08 billion to $6.22 billion representing an increase of 6% at the midpoint versus 2022 driven by pricing gains as well as volume benefits from higher new product sales and increasing market access. Our forecast to contributions from these new products has increased from approximately $720 million in our previous guidance to over $800 million now. FX will continue to be a headwind to revenue. We are raising guidance for full year adjusted EBITDA by $10 million based on the first quarter outperformance, continued pricing gains, positive mix and projected cost tailwinds. We now expect full year EBITDA to be in the range of $1.5 billion to $1.56 billion, representing 9% year-over-year growth at the midpoint.
2023 adjusted earnings per share is raised by $0.04 at the midpoint and is now expected to be in the range of $7.34 to $7.94 per diluted share representing an increase of 3% year-over-year at mid midpoint, reflecting higher EBITDA, the benefit of share repurchases completed in Q1 as well as somewhat higher interest expense. Consistent with past practice, we do not factor in any benefit from potential future share repurchases into our EPS guidance. Looking at the implied guidance by hubs, first half 2023 revenue is expected to be flat versus the first half of 2022 and second half 2023 revenue is expected to increase by 12% compared to the prior year period. While drought conditions are expected to impact sales in the first half, revenue in the second half is anticipated to benefit from continued growth of higher margin new products in especially North America and Latin America as well as pricing gains and expanded market access. EBITDA guidance for the first half of 2023 indicates a 1% growth of the prior year period driven by pricing actions. Full year guidance implies a 17% year-over-year EBITDA growth in the second half of the year. Compared to last year, our EBITDA growth outlook is second half weighted with significant year-over-year gains projected in Q3 due to input cost tailwinds.
Turning to slide 9 and the updated range of 2023 EBITDAR outcomes. The global crop protection market is now expected to be down low single digits versus the prior year, primarily driven by normalizing prices of nonselective herbicides. Input costs continue to decelerate and there is a lower likelihood of major supply disruptions. New products are growing at a faster pace than previously anticipated resulting in better mix as well as significant share gains in selected markets. We continue to have strong pricing and FX is still expected to be a minor headwind to full year EBITDA. Despite our tight internal cost controls, we are continuing to invest in commercial and agronomic resources to grow our market access. We've seen the very positive results from these investments in the US, Canada and Brazil, and we are now expanding the program to the Middle East, Africa and parts of Asia. As a result of all the factors I've mentioned, we have narrowed our guidance range and raised the low end of guidance by $20 million.
I'll now turn the call over to Andrew to cover details on cash flow and other items.