Corteva: 3Q results and Full Year 2024 impacted by Latin America planted area and market dynamics

• 3Q YTD performance reflects Seed price / mix gains and ongoing benefits from controllables

• 3Q results and Full Year 2024³ impacted by Latin America planted area and market dynamics

• Preliminary 2025 outlook³ for strong Operating EBITDA¹ growth and margin expansion

Corteva, Inc. (NYSE: CTVA) ("Corteva" or the "Company") reported financial results for the third quarter and nine months ended September 30, 2024.

2024 YTD Highlights

• Net sales declined 4% versus prior year. Organic¹ sales decreased 2% in the same period.

  
  

• Seed net sales decreased 1% and organic¹ sales increased 1%. Price was up 4% led by North America² with continued execution on the Company's price for value strategy. Volume declines reflect reduced corn planted area in Latin America, as well as unfavorable weather and reduced planted area in EMEA².

  
  

• Crop Protection net sales decreased 9% and organic¹ sales decreased 7%. Volume declines were driven by weather and destocking impacts in EMEA², as well as just-in-time purchasing behavior in North America², partially offset by volume growth in Latin America on demand for new products and spinosyns. Price declined 5% primarily due to the market dynamics in Latin America.

  
  

• GAAP income and earnings per share (EPS) from continuing operations were $913 million and $1.29 per share, respectively.

  
  

• Operating EBITDA¹ and Operating EPS¹ were $2.85 billion, and $2.24 per share, respectively.

  
  

• The Company updated full-year 2024 guidance³ and expects net sales in the range of $17.0 to $17.2 billion.  Operating EBITDA¹ is expected to be $3.35 to $3.45 billion.  Operating EPS¹ is expected to be $2.50 to $2.60 per share.  Cash provided by operating activities from continuing operations is expected to be $2.1 billion to $2.6 billion.  Free Cash Flow¹ is expected to be $1.5 billion to $2.0 billion.  The Company expects it will have repurchased approximately $1 billion shares during 2024.

  
  

• The Company provided a preliminary outlook³ for 2025 and expects net sales in the range of $17.3 to $17.7 billion.  Operating EBITDA¹ is expected to be in the range of $3.6 to $4.0 billion.

"Corteva's third quarter results were largely in line with expectations.  We continued to execute effectively and are on track to deliver over $400 million of savings from controllable levers this year.

The Crop Protection business delivered earnings and margin growth in the quarter led by demand for our differentiated technology along with deflation benefits.  Following a strong first half, the Seed business was impacted by lower planted area in Latin America in the quarter.

Despite greater market challenges in the second half of the year, we are still on track for margin expansion in 2024.

Today, we also provided a first look at 2025 with double digit earnings growth expected, driven by factors largely in our control.  We remain committed to delivering advanced technology to our customers and generating consistent, incremental value to our shareholders."

Chuck Magro

Chief Executive Officer

Summary of Third Quarter 2024

For the third quarter ended September 30, 2024, net sales decreased 10% versus the same period last year. Organic¹ sales decreased 5%.

Volume was up 3% versus the prior-year period as Crop Protection growth offset lower Seed volumes. Crop Protection volume increased 11% over the prior year driven primarily by Latin America and North America² on demand for new products and spinosyns, partially offset by residual destocking and unfavorable weather in EMEA².  Seed volume declined 12% versus prior year due to reduced corn planted area in Argentina.

Price declined 8% versus prior year, reflecting the competitive price environment in Crop Protection, primarily in Latin America.

GAAP income from continuing operations after income taxes was a loss of $519 million in third quarter of 2024 compared to a loss of $315 million in third quarter of 2023. Operating EBITDA¹ for the third quarter of 2024 was a loss of $100 million, down 656% compared to prior year, translating into approximately 500 basis points of Operating EBITDA¹ margin decline. 

Seed Summary

Seed net sales were $691 million in the third quarter of 2024, down from $878 million in the third quarter of 2023. The sales decrease reflects a 5% decrease in price, a 12% decline in volume and a 4% unfavorable impact from currency.

Price reflects higher end of season settlements in North America² and lower volumes were due primarily to reduced corn planted area in Argentina.  Unfavorable currency impacts were led by the Brazilian Real.

Segment operating EBITDA was a loss of $320 million in the third quarter of 2024, down 132% from the third quarter of 2023. Higher commodity and other cost of sales, lower volumes, price declines, and continued investment in R&D more than offset ongoing cost and productivity actions.

Seed net sales were $7.77 billion for the first nine months of 2024, down from $7.84 billion in the same period of 2023. The sales decrease reflects a 3% decline in volume, a 1% unfavorable portfolio impact and a 1% unfavorable currency impact, partially offset by a 4% increase in price.

The increase in Seed price was driven by strong demand for top technology offerings and operational execution globally, with global corn and soybean prices up 4% and 2%, respectively. Pricing actions more than offset currency impacts in EMEA². The decline in volume was driven primarily by reduced corn planted area in Argentina, as well as unfavorable weather and reduced planted area in EMEA².  Unfavorable currency impacts were led by the Turkish Lira and the Brazilian Real.

Segment operating EBITDA was $2.13 billion for the first nine months of 2024, up 8% from the same period of 2023. Price execution and market share gains in North America, reduction of net royalty expense, and ongoing cost and productivity actions more than offset lower volumes, the unfavorable impact of currency, investment in R&D and higher commodity costs. Segment operating EBITDA margin improved by approximately 220 basis points versus the prior-year period.

Crop Protection Summary

Crop Protection net sales were approximately $1.6 billion in the third quarter of 2024 compared to approximately $1.7 billion in the third quarter of 2023. The sales decline over the prior period reflects a 10% decline in price and a 5% unfavorable impact from currency, partially offset by an 11% increase in volume. 

The increase in volume was driven primarily by Latin America and North America² on demand for new products, spinosyns, and biologicals, partially offset by residual destocking in EMEA². The price decline was primarily due to the competitive pricing environment in Latin America.  Unfavorable currency impacts were led by the Brazilian Real.

Segment operating EBITDA was $246 million in the third quarter of 2024, up 34% from the third quarter of 2023. Competitive pricing was more than offset by raw material deflation, productivity savings, and volume growth. Segment operating EBITDA margin improved by 430 basis points versus the prior-year period.

Crop Protection net sales were approximately $5.2 billion for the first nine months of 2024 compared to approximately $5.7 billion in the same period of 2023. The sales decrease reflects a 2% decrease in volume, a 5% decline in price, and a 3% unfavorable impact from currency. These declines were partially offset by a 1% favorable portfolio impact.

The decrease in volume was primarily due to residual destocking and unfavorable weather impacts in EMEA², as well as just-in-time purchasing behavior in North America², partially offset by volume growth in Latin America on demand for new products and spinosyns.

The price decline was primarily due to market dynamics in Latin America.  Unfavorable currency impacts were led by the Brazilian Real and the Turkish Lira. The portfolio impact was driven by the Biologicals acquisitions.

Segment operating EBITDA was $811 million for the first nine months of 2024, down 27% from the same period last year. Pricing pressure, lower volumes, and the unfavorable impact of currency, more than offset productivity savings.  Segment operating EBITDA margin contracted by approximately 375 basis points versus the prior-year period.

2024 Guidance and 2025 Preliminary Outlook

Commodity prices are relatively steady, despite an anticipated record U.S. corn crop, and farmers continue to prioritize top-tier seed technology, while managing tighter margins.  Against this backdrop, our Seed business has continued to outperform the market, likely gaining market share while improving operational efficiency. Meanwhile, the Latin America market conditions represent a headwind, including a significant reduction in corn planted area in Argentina.

While the global Crop Protection industry volumes have continued to stabilize, the pricing environment remains competitive. Third quarter gains in Operating EBITDA¹, including significant benefits from productivity and raw material deflation, reflect the resilience of our Crop Protection business.

As a result, for full-year 2024, Corteva now expects net sales in the range of $17.0 billion to $17.2 billion, a decline of 1% at the mid-point. Operating EBITDA¹ is expected to be $3.35 billion to $3.45 billion, growth of 1% at the mid-point. Operating EPS¹ is expected to be $2.50 to $2.60 per share, down 5% at the mid-point. Cash provided by operating activities from continuing operations is expected to be $2.1 billion to $2.6 billion. Free Cash Flow¹ is expected to be $1.5 billion to $2.0 billion. The Company expects it will have repurchased approximately $1.0 billion shares in 2024.

For full-year 2025, Corteva has a preliminary outlook³ of net sales in the range of $17.3 to $17.7 billion, growth of 2% at the mid-point and operating EBITDA¹ in the range of $3.6 to $4.0 billion, growth of 12% at the mid-point.

The Company is not able to reconcile its forward-looking non-GAAP financial measures, except for Free Cash Flow, 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.

Third Quarter Conference Call

The Company will host a live webcast of its third quarter 2024 earnings conference call with investors to discuss its results and outlook tomorrow, November 7, 2024, at 9:00 a.m. ET. The slide presentation that accompanies the conference call is posted on the Company's Investor Events and Presentations page. A replay of the webcast will also be available on the Investor Events and Presentations page.

Corteva to Host Investor Day

The Company will host a live webcast of its Investor Day on November 19, 2024, at 9:00 a.m. ET.  The Company's CEO, Chuck Magro, along with the Company's senior leadership team will provide updates on the company's strategy and position as an Ag technology company, sustainable growth platforms, business operational efficiency, innovation highlights and financial targets through 2027.

1. Organic Sales, Operating EPS, Operating EBITDA, and Free Cash Flow are non-GAAP measures. See page 7 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.