Corteva reports second quarter and first half 2021 results, raises full-year guidance

On August 5, Corteva, Inc. (NYSE: CTVA) (“Corteva” or the “Company”) reported financial results for the second quarter and six months ended June 30, 2021.

First Half 2021 Highlights

• Net Sales for the first half of 2021 grew 7% versus prior year. Organic sales rose 6% during the same period. Volume and price gains and continued penetration of new products together reflected strong execution globally. Organic1 sales increased in every region, with double-digit growth in Latin America.
• Crop Protection net sales grew 12% and organic sales increased 10% for the first half. Sales of new products rose approximately $260 million versus the first half 2020.
• Seed net sales increased 5% and organic sales grew 4% compared to the year-ago period. Gains were led by strong corn sales in Latin America, together with increased North America planted area and penetration for Enlist E3™ soybeans. Corn price was up 3% globally.
• GAAP income and earnings per share (EPS) from continuing operations were $1.6 billion and $2.18 per share for the first half 2021, respectively.
• Strong price execution and volume gains in both segments drove Operating EBITDA improvement of 17% to $2.37 billion, as compared to the same period last year.
• The Company continued to drive productivity progress in the first half, which partially offset the impact of ongoing marketdriven cost headwinds.
• Management increased full year 2021 net sales and earnings guidance; and expects net sales in the range of $15.2 billion to $15.4 billion. Operating EBITDA is expected to be in the range of $2.5 billion to $2.6 billion.

Summary of Second Quarter 2021

For the second quarter ended June 30, 2021, net sales increased 8% versus the same period last year. Organic sales rose 6%, with increases in most regions.

Volume grew 5% versus the prior-year period, driven primarily by seasonal timing and increased soybean acres in North America, together with continued adoption of new technology in both segments. Demand for new and differentiated Crop Protection products drove double-digit net sales growth for the segment, with an organic1 sales increase of 8%.

Seed net sales grew 7% for the quarter, primarily driven by higher volumes in North America.

Local price increased 1% versus prior year. Higher prices outside of North America reflect ongoing execution on a pricefor-value strategy.

GAAP income from continuing operations after income taxes was $1.0 billion in second quarter 2021. Operating EBITDA for the second quarter was $1.46 billion, up 18% compared to the year-ago period.

Crop Protection Summary

Crop Protection net sales were approximately $1.8 billion in the second quarter of 2021 compared to approximately $1.7 billion in the second quarter of 2020. The increase was due to a 5% increase in volume, a 4% favorable impact from currency and a 3% increase in local price.

The increase in volume was driven by continued penetration of new products, including ArylexTM herbicide and Pyraxalt™ insecticide, coupled by early demand in Latin America, which shifted approximately $50 million in sales from the third quarter. These volume gains were partially offset by an approximate $60 million impact from our decision to phase out select low-margin products.

Favorable currency impacts were primarily from the Euro. The increase in local price was driven by strategic price increases in North America, coupled with strong price execution globally.

Segment Operating EBITDA was $370 million in the second quarter of 2021, up 20% from the second quarter of 2020. Volume gains from new products, continued pricing execution, productivity, and favorable impacts from currency more than offset higher input costs, including raw material costs. Segment Operating EBITDA margin improved by more than 130 basis points versus the prior-year period.

Crop Protection net sales were approximately $3.5 billion for the first half of 2021 compared to approximately $3.2 billion in the first half of 2020. The increase was due to a 6% increase in volume, a 4% increase in local price and a 3% favorable impact from currency, partially offset by a 1% unfavorable portfolio impact.

Volume gains were led by continued penetration of new products, including ArylexTM and EnlistTM herbicides and Pyraxalt™ insecticide. These volume gains were partially offset by an approximate $130 million impact from our decision to phase out select low-margin products.

The increase in local price was primarily driven by gains in Latin America and North America. Favorable currency impacts primarily from the Euro more than offset unfavorable impacts from the Brazilian Real. The portfolio impact was driven by prior-year divestitures in Asia Pacific.

Segment Operating EBITDA was $691 million for the first half of 2021, up 26% from the first half of 2020. Favorable mix, continued penetration of new products, and ongoing cost and productivity actions more than offset higher input costs, including raw material costs. Segment Operating EBITDA margin improved by more than 220 basis points versus the prior-year period.

Seed Summary

Seed net sales were approximately $3.8 billion in the second quarter of 2021, up from approximately $3.5 billion in the second quarter of 2020. The increase was due to a 4% increase in volume, a 2% favorable impact from currency and a 1% increase in local price.

Higher volumes were driven by more normalized delivery timing in North America compared to the prior-year period, coupled with increased soybean acreage in North America. In addition, the Company delivered $80 million in sales in the second quarter primarily due to robust early demand for corn in Latin America. This increase was also driven by canola growth in Canada, which represents early settlement of the season compared to the year-ago period.

Favorable currency impacts were primarily driven by the Canadian Dollar. The increase in local price was led by strong execution in Latin America and EMEA.

Segment Operating EBITDA was $1.1 billion in the second quarter of 2021, up 17% from the second quarter of 2020. Volume gains, lower royalties, reduced bad debt expense, ongoing cost and productivity actions, and continued price execution more than offset higher input costs from unfavorable yields on European corn and sunflower. Segment Operating EBITDA margin improved by more than 260 basis points versus the prior-year period.

Seed net sales were approximately $6.3 billion for the first half of 2021, up from approximately $6.0 billion in the yearago period. The increase was due to a 3% increase in volume, a 1% increase in local price and a 1% favorable impact from currency.

The increase in volume was driven by higher soybean sales in North America, market share gains in Brazil Safrinha, earlier shipments in the Brazil Summer season, and canola growth in Canada. Local price gains were driven by strong adoption of new Seed technology, including price execution in Latin America and EMEA, with corn price up 3% globally.

These gains were partially offset by competitive pricing pressure in North America soybeans, where price was down 2%. Favorable currency impacts primarily from the Canadian Dollar and the Euro more than offset unfavorable impacts from the Brazilian Real.

Segment Operating EBITDA was $1.7 billion for the first half of 2021, up 13% from the prior year. Continued price execution, lower royalties, lower bad debt expense, volume gains, and ongoing cost and productivity actions more than offset higher input costs from unfavorable yields on European corn and sunflower and higher freight costs. Segment Operating EBITDA margin improved by more than 200 basis points versus the prior-year period.

Updated 2021 Outlook

The Company updated its previously provided guidance for the full year 2021 – increasing sales and earnings expectations for this period. Corteva expects net sales in the range of $15.2 billion to $15.4 billion, which at the mid-point represents expected net sales growth of 8% for the year. The Company expects Operating EBITDA to be in the range of $2.5 billion to $2.6 billion, which at the midpoint represents expected Operating EBITDA1 growth of 22% for the year. Operating EPS is expected to be in the range of $2.00 and $2.10 per share. Corteva is not able to reconcile its forward-looking non-GAAP financial measures to its most comparable U.S. GAAP financial measures, as it is unable to predict with reasonable certainty items outside of its control, such as Significant Items, without unreasonable effort.

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