Corteva Agriscience announces first quarter 2020 financial results

Corteva, Inc. (NYSE: CTVA) (“Corteva” or the “Company”) Wednesday reported financial results for the quarter ended March 31, 2020.

• First quarter 2020 reported net sales were $4.0 billion, up 16% versus the year-ago period, with double-digit organic sales¹ growth in every region.
• Seed sales rose 25% on a reported basis and 27% on an organic¹ basis primarily due to increased corn deliveries in North America² , coupled with strong sunflower and corn sales in Europe.
• Crop Protection sales improved 5% on a reported basis and 10% on an organic basis¹ due to increased demand for new products globally, including Arylex^TM and Enlist^TM herbicides.
• Merger cost synergies for the three months ended March 31, 2020 totaled approximately $70 million, reflecting continued progress on productivity initiatives.
• The Company continues to monitor near-term operating conditions with a focus on business continuity – and maintains strong liquidity via commercial paper markets and $8 billion in credit facilities, cash and cash equivalents.
• Management suspends full-year 2020 guidance in light of the COVID-19 crisis and the uncertainty it is creating across global markets, including currency and commodity markets.

Crop Protection Summary

Crop Protection net sales were $1.5 billion in the first quarter of 2020, up from approximately $1.4 billion in the first quarter of 2019. This increase was driven by a 10% gain in volume, partially offset by a 4% decline in currency and a 1% decline related to portfolio actions. Local price was flat.

Volume gains were primarily driven by new product launches, including Arylex^TM and Enlist^TM herbicides and Isoclast^TM insecticide, as well as strong early demand in Latin America and EMEA. Unfavorable currency impacts were primarily due to currencies in Brazil and Europe.

The portfolio impact was driven by prior-year divestitures in North America and Asia Pacific. Pricing gains in Latin America were offset by increased grower incentive discounts in North America.

Segment operating EBITDA was $238 million in the first quarter of 2020, compared to $220 million in the first quarter of 2019 on a pro forma basis. Gains from new product sales and cost synergies were partially offset by higher input costs, unfavorable currency and portfolio impacts. Segment operating EBITDA margin increased 50 basis points versus the prior-year period.

Seed Summary

Seed net sales were approximately $2.5 billion in the first quarter of 2020, up from $2.0 billion in the first quarter of 2019. The increase was driven by a 22% increase in volume and a 5% increase in local price, partially offset by a 2% decline in currency.

Volume gains primarily resulted from earlier deliveries in North America due to improved weather conditions and the anticipated recovery of planted area, as well as strong early demand in EMEA due to perceived supply concerns from COVID-19. The increase in local price was driven by favorable mix in both North America and Latin America, as well as changes in route to market in EMEA. Unfavorable currency impacts were primarily due to currencies in Brazil and Europe.

Segment operating EBITDA was $581 million in the first quarter of 2020, compared to $325 million in the first quarter of 2019 on a pro forma basis. Volume gains in North America, favorable mix, and cost synergies and ongoing productivity improvements more than offset higher commissions, currency headwinds, and higher unit costs due to unfavorable seed yields. Segment operating EBITDA margin rose 720 basis points versus the prior-year period.

Outlook

Management has decided to suspend full-year 2020 guidance in light of the COVID-19 crisis. This decision acknowledges the uncertainty in global markets, specifically currency and key commodity markets, such as ethanol, that can impact demand for our products.

The Company continues to monitor near-term operating conditions to ensure business continuity. Global teams remain focused on tracking changes in production and supply, demand dynamics, and impacts from government actions – while working closely with customers and stakeholders.

As conditions evolve, Corteva remains committed to providing further transparency on its actions in response to the COVID-19 crisis.

The Company believes it continues to be well-positioned to navigate this uncertainty with its solid cash position and strong access to liquidity. Looking forward, management will continue to implement cost-synergy actions and accelerate productivity initiatives, while at the same time driving new product launches and ramping up new technologies. Corteva will continue to evaluate its plans as conditions require.

1. Organic sales, Organic Growth (including by segment and region), Operating EPS, Pro Forma Operating EPS, Operating EBITDA, and Pro Forma Operating EBITDA are non-GAAP measures.
2. North America is defined as U.S. and Canada. EMEA is defined as Europe, Middle East and Africa.