Corteva reports strong results for first quarter 2022

Corteva, Inc. (NYSE: CTVA) (“Corteva” or the “Company”) has reported financial results for the three months ended March 31, 2022.

1Q 2022 Results Overview

First Quarter 2022 Highlights

• First quarter 2022 net sales rose 10% versus prior year with gains in both segments. Organic¹ sales increased 16% in the same period with double-digit gains in all regions.

• Seed net sales grew 1% and organic¹ sales increased 7% year over year, with notable gains in both EMEA² and Latin America, partially offset by the seasonal timing of seed deliveries in North America². Price was up 8% globally, led by continued execution on the company’s price for value strategy and recovery of higher input costs.

• Crop Protection net sales grew 23% and organic¹ sales increased 29%, led by North America². Volume gains were driven by early demand and continued penetration of new products, including Enlist™ and Rinskor™ herbicides and Zorvec™ fungicide. Price gains reflected strong execution across all regions in response to cost inflation.
  

• GAAP income and earnings per share (EPS) from continuing operations were $577 million and $0.79 per share for the first quarter 2022, respectively. Operating EBITDA¹ was $1.04 billion, a 15% improvement over prior year on strong price execution and volume gains in all regions, partially offset by inflation and currency headwinds. Operating EPS¹ was $0.97 per share, up 23%
  compared to the same period last year.
  

• Management affirmed full year 2022 net sales and Operating EBITDA¹ guidance³. The Company expects net sales to be in the range of $16.7 billion to $17.0 billion and Operating EBITDA1 in the range of $2.8 billion to $3.0 billion. The Company adjusted its expectations for Operating EPS¹ for 2022, which is now expected to be in the range of $2.35 to $2.55 per share, reflecting lower average share count.

Company Updates

Business Realignment to Accelerate Operational Performance

• Company recently announced organizational model changes, moving from a matrix model to a business-unit focused model to align resources and cost structure to the specific needs of each business, enhancing ownership and accountability for customer delivery and operational execution
  

• Tim Glenn was named Executive Vice President, Seed Business Unit, with full ownership in leading the global seed franchise to bring best-in-class solutions to farmers and customers around the world, maximizing yield and profitability
  

• Robert King joined Corteva as Executive Vice President, Crop Protection Business Unit, leading the global crop protection operations, including supply chain and manufacturing, to provide farmers with sustainable and differentiated technologies needed to improve productivity and profitability, protecting overall crop health
  

New Product Pipeline Driving Momentum

• During the quarter, the EPA issued updated supplemental labels for Enlist One® and Enlist Duo® herbicides, removing most geographic restrictions for certain species and expanding access to over 98% of the U.S. soybean production area giving farmers access to this critical weed-control technology – providing growers with further confidence in the value of the Enlist™ weed control system as a best-in-class, integrated solution
  

• The Company delivered sales increases on new Crop Protection products – up $180 million versus first quarter 2021, an increase of almost 60%, reflecting continued strong demand for industry-leading technologies such as Enlist™ herbicide, Isoclast™ insecticide and Zorvec™ fungicide
  

Company Takes Actions to Mitigate Food Security Impacts from Humanitarian Crisis, Exits Russian Operations

• During the quarter, the Company worked closely with Ukrainian customers to deliver products needed for planting to lessen negative impacts on the current humanitarian crisis
  

• Given the current situation with Russia’s war on Ukraine, the Company has made the decision to withdraw from Russia and, having already paused new sales in the country, is initiating a plan to stop production and business activities
  

• In connection with this announcement and given the war’s impact on global food security, the Company also announced plans to donate seed to Ukraine, Africa and the Middle East region for the 2023 growing season, to lessen the impact on global food production
  

Seed Summary

Seed net sales were $2.5 billion in the first quarter of 2022, up slightly compared to the first quarter of 2021. The sales increase was driven by an 8% increase in price. This gain was partially offset by a 1% decline in volumes and a 6% unfavorable currency impact.

The increase in price was driven by strong execution globally, led by EMEA and North America, with corn price up 8% globally. The decline in volume was driven by seasonal timing of deliveries in North America, which was partially offset by strong demand for corn in Brazil. Unfavorable currency impacts were led by the Turkish Lira and the Euro.

Segment Operating EBITDA was $569 million in the first quarter of 2022, down 8% from the first quarter of 2021. Price execution and ongoing cost and productivity actions were more than offset by seasonal timing in North America, higher input and freight costs, the unfavorable impact of currency and the unfavorable year-over-year impact from the remeasurement of an equity investment.

Crop Protection Summary

Crop Protection net sales were approximately $2.1 billion in the first quarter of 2022 compared to approximately $1.7 billion in the first quarter of 2021. The sales increase was driven by an 18% increase in volume and an 11% increase in price. These gains were partially offset by a 5% unfavorable currency impact and a 1% unfavorable portfolio impact.

The increase in volume was driven by strong early demand for herbicides in North America on supply concerns and continued penetration of new and differentiated products, including Enlist™, Arylex™ and Rinskor™ herbicides and Zorvec™ fungicide.

The increase in price was broad-based, with gains in all regions led by North America, and mostly reflected pricing for higher raw material and logistical costs. Unfavorable currency impacts were led by the Turkish Lira and the Euro. The portfolio impact was driven by a divestiture in Asia Pacific.

Segment Operating EBITDA was $491 million in the first quarter of 2022, up 53% from the first quarter of 2021. Pricing and volume gains and productivity actions more than offset the unfavorable impact of currency, higher input costs, including raw material costs, and higher SG&A. Segment operating EBITDA margin improved by 460 basis points versus the prior-year period largely driven by new and differentiated technology.

2022 Guidance

The Company affirmed its previously provided net sales and Operating EBITDA¹ guidance³ for the full year 2022. Corteva expects net sales in the range of $16.7 billion to $17.0 billion, which at the mid-point represents expected net sales growth of 8% for the year and organic1 sales growth of 11% for the year. Operating EBITDA¹ is expected to be in the range of $2.8 billion to $3.0 billion. The Company adjusted its expectations for Operating EPS¹ for 2022, which is now expected to be in the range of $2.35 to $2.55 per share, to reflect lower average share count. The Company 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.

1. Organic Sales, Operating EPS and Operating EBITDA are non-GAAP measures. See page A-5 for further discussion.

2. North America is defined as U.S. and Canada. EMEA is defined as Europe, Middle East and Africa.

3. The Company does not provide the most comparable GAAP measure on a forward-looking basis. See page 5 for further discussion.

Read more on Corteva's website.