WILMINGTON, Del., Nov. 4, 2020 /PRNewswire/ -- Corteva, Inc.
(NYSE: CTVA) ("Corteva" or the "Company") today reported financial
results for the third quarter and nine months ended September 30, 2020.
3Q 2020 Results Overview
|
Net
Sales
|
EPS
|
Loss from Cont.
Ops.
(After Tax)
|
GAAP
|
$1.86 B
|
$(0.52)
|
$(390)M
|
vs. 3Q
2019
|
(3)%
|
+25%
|
+26%
|
|
|
Organic
Sales1
|
Operating
EPS1
|
Operating
EBITDA1
|
NON-GAAP
|
$2.07 B
|
$(0.39)
|
$(179) M
|
vs. 3Q
2019
|
+9%
|
Flat
|
+14%
|
- Net sales for third quarter 2020 were down 3% versus prior
year. Organic sales1 grew 9%. Volume and price
improvement on continued penetration of new products were more than
offset by the impact of currency and seasonal shifts in Seed.
- Crop Protection net sales grew 9% and organic1 sales
increased 21% with sales gains in every region except North America3. Volume and price
improvement were primarily driven by the continued adoption of new
Crop Protection products in Latin
America, Asia Pacific, and
EMEA3.
- A return to a normalized North
America3 season drove lower Seed volumes in third
quarter 2020, resulting in lower year-over-year sales in Seed, with
net sales decreases of 23%, down 14% on an organic1
basis.
- GAAP loss and earnings per share (EPS) from continuing
operations were $(390) million and
$(0.52) for the third quarter 2020,
respectively.
- Operating EBITDA1 was a loss of $(179) million, improved 14% versus prior year.
Operating EBITDA margin1 improved 120 basis points.
Volume gains and favorable mix in Crop Protection, coupled with
execution on synergies and productivity, more than offset timing
shifts in Seed and currency headwinds to drive margin
expansion.
- Merger cost synergies and productivity were approximately
$40 million for the third quarter and
remain on track to be $230 million
for the full year. SG&A expense as a percentage of sales
improved 175 bps on currency, ongoing productivity, cost controls,
and lower commissions.
- The Company continues to maintain a strong liquidity position –
and took further action during the quarter to strengthen its cash
flow focus, improving net working capital turns 7% versus prior
year.
YTD 2020 Results Overview
|
Net
Sales
|
EPS
|
Income from
Cont.
Ops. (After Tax)
|
GAAP
|
$11.0 B
|
$0.85
|
$657 M
|
vs. YTD
20192
|
+1%
|
+963%
|
+866%
|
|
|
Organic
Sales1
|
Operating
EPS1
|
Operating
EBITDA1
|
NON-GAAP
|
$11.52 B
|
$1.46
|
$1.85 B
|
vs. YTD
20192
|
+6%
|
+7%
|
+5%
|
1. Organic sales,
Operating EPS, Pro Forma Operating EPS, Operating EBITDA and Pro
Forma Operating EBITDA, Operating EBITDA Margin and Pro Forma
Operating EBITDA Margin are non-GAAP measures. See page A-6 for
further discussion. 2. Year-to-date 2019 GAAP information is on a
pro forma basis and was determined in accordance with Article 11 of
Regulation S-X. Non-GAAP measures for these periods are reconciled
to the GAAP pro forma measure. 3. North America is defined as U.S.
and Canada. EMEA is defined as Europe, Middle East and Africa. 4.
Enlist E3™ soybeans are jointly developed by Dow AgroSciences and
MS Technologies™
|
Company Updates
- Price for Value Strategy Strengthens Competitive Position
Globally: Corteva is strengthening its position in key Seed
markets through its superior product performance and price for
value strategy. Building on the ongoing ramp-up of
Qrome® in North
America, Corteva has driven year-to-date Seed price
increases in Asia Pacific,
Latin America and EMEA3
on the strength of its product portfolio.
- Driving Additional Progress on Accelerated Enlist
E3™4 Launch: The Company continues to rapidly
ramp-up its Enlist E3™4 technology – and has implemented
changes to its Seed production plan to meet expected demand in
2021. With strong early orders as an indicator of adoption
increases, Corteva remains confident in its market penetration
expectations.
- Previously Approved Capacity Expansion on Track to
Accelerate Growth: Corteva continues to drive sales growth on
its supply-constrained, high-margin Spinosyns insecticides.
Year-to-date overall insecticide sales increased 5%, driven by
continued capacity expansion progress. These actions are expected
to enable $1 billion in sales of
Spinosyns insecticides by 2023, an expected 30% increase over 2020
estimates.
- Crop Protection Manufacturing Actions Target Cost
Improvements: The Company continues to further streamline its
global manufacturing footprint through the shutdown of
non-competitive facilities and strategic changes to product supply
arrangements. These actions, which are included in its ongoing
productivity program, are expected to deliver $150 million in incremental savings by the end of
2022.
- Sustaining Operational Efficiencies Gained Through COVID-19
Response: In response to the COVID-19 pandemic, Corteva
implemented targeted spending actions to address near-term market
volatility. These actions have delivered $50
million in cost savings through third quarter 2020, which
helped to offset strategic investments during this period. Corteva
expects to keep most of these structural cost controls in place
into 2021.
- Driving Ongoing Progress on Cost and Productivity
Commitments: Continued progress on cost and productivity
commitments, resulted in $170 million
in cost synergies and productivity savings delivered year to date
in 2020. The Company remains on track to achieve its cost and
productivity targets for the full year 2020.
- Accelerated Remuneration Actions Demonstrate Strong Focus on
Shareholders: Corteva has returned more than $370 million to shareholders through the end of
September in the form of quarterly dividends and share repurchases.
Based upon underlying operational performance, the Company expects
to make solid progress on the authorized share repurchase program
by the end of the year. With the additional focus, the Company now
expects to complete the repurchase program by the end of 2021, six
months ahead of the initial timeline.
"Corteva's performance year to date in 2020 reflects the strong
and consistent execution from our global team. We delivered sales
and earnings growth during the first three quarters of the year
despite continued market volatility and uncertainty. Our portfolio
of new technology was a critical driver in this progress, as we
delivered volume and price improvements in almost all regions
through the launch and ramp-up of our new Seed and Crop Protection
products, including Enlist E3™4, Qrome®, Inatreq™,
Arylex™ and Rinskor™, as well as continued demand for key
differentiated technologies such as our supply-constrained
Spinosyns. In Seed, our price for value strategy resulted in margin
expansion, even in the face of ongoing challenges and competitive
pressures. Additionally, we continued to fortify our already strong
balance sheet and liquidity position by preserving cash and
implementing further actions to reduce costs and optimize
productivity. Reflecting our commitments on disciplined capital
allocation and strong cash generation, we are accelerating our
continued actions to return cash to shareholders – as evidenced by
our decision to pull forward our previously announced share
buyback.
We affirmed our full year guidance for 2020 – and remain
confident in the path we have outlined. Our teams around the world
are tightly managing all levers as we focus on finishing 2020
strong – and, as we look ahead to 2021, ensuring we are best
positioned to maximize the potential of our industry-leading
innovation pipeline and global distribution system while continuing
to drive margin enhancement, accelerate productivity improvement
and deliver increased value for our shareholders," said
James C. Collins, Jr., Corteva Chief
Executive Officer.
Outlook
The Company affirmed its previously provided guidance for the
full year 2020. Corteva expects net sales growth of 1-2% for the
year. Operating EBITDA1 is expected to be in the range
of $1.9 billion to $2 billion and operating EPS1 range is
expected to be between $1.25 and
$1.45 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. This outlook does not contemplate any
operational disruptions, significant changes in customers' demand
or ability to pay, or further acceleration of currency impacts
resulting from the COVID-19 pandemic or political instability.
Click here to download the full press release,
including CEO commentary, segment detail, and reconciliations of
non-GAAP and GAAP measures, or visit the Corteva Investor Relations
website.
About Corteva Agriscience
Corteva, Inc. (NYSE: CTVA) is a publicly traded, global
pure-play agriculture company that provides farmers around the
world with the most complete portfolio in the industry – including
a balanced and diverse mix of seed, crop protection and digital
solutions focused on maximizing productivity to enhance yield and
profitability. With some of the most recognized brands in
agriculture and an industry-leading product and technology pipeline
well positioned to drive growth, the Company is committed to
working with stakeholders throughout the food system as it fulfils
its promise to enrich the lives of those who produce and those who
consume, ensuring progress for generations to come. Corteva became
an independent public company on June 1,
2019, and was previously the Agriculture Division of
DowDuPont. More information can be found at www.corteva.com.
Follow Corteva on Facebook, Instagram, LinkedIn, Twitter and
YouTube.
Cautionary Statement About Forward-Looking Statements
This communication contains forward-looking statements within
the meaning of Section 21E of the Securities Exchange Act of 1934,
as amended, and Section 27A of the Securities Act of 1933, as
amended, which are intended to be covered by the safe harbor
provisions for forward-looking statements contained in the Private
Securities Litigation Reform Act of 1995, and may be identified by
their use of words like "guidance", "plans," "expects," "will,"
"anticipates," "believes," "intends," "projects," "estimates,"
"outlook," or other words of similar meaning. All statements that
address expectations or projections about the future, including
statements about Corteva's strategy for growth, product
development, regulatory approval, market position, anticipated
benefits of recent acquisitions, timing of anticipated benefits
from restructuring actions, outcome of contingencies, such as
litigation and environmental matters, expenditures, and financial
results, as well as expected benefits from, the separation of
Corteva from DowDuPont, are forward-looking statements.
Forward-looking statements are based on certain assumptions and
expectations of future events which may not be accurate or
realized. Forward-looking statements also involve risks and
uncertainties, many of which are beyond Corteva's control. While
the list of factors presented below is considered representative,
no such list should be considered to be a complete statement of all
potential risks and uncertainties. Unlisted factors may present
significant additional obstacles to the realization of
forward-looking statements. Consequences of material differences in
results as compared with those anticipated in the forward-looking
statements could include, among other things, business disruption,
operational problems, financial loss, legal liability to third
parties and similar risks, any of which could have a material
adverse effect on Corteva's business, results of operations and
financial condition. Some of the important factors that could cause
Corteva's actual results to differ materially from those projected
in any such forward-looking statements include: (i) failure to
successfully develop and commercialize Corteva's pipeline; (ii)
effect of competition and consolidation in Corteva's industry;
(iii) failure to obtain or maintain the necessary regulatory
approvals for some Corteva's products; (iv) failure to enforce
Corteva's intellectual property rights or defend against
intellectual property claims asserted by others; (v) effect of
competition from manufacturers of generic products; (vi) impact of
Corteva's dependence on third parties with respect to certain of
its raw materials or licenses and commercialization; (vii) costs of
complying with evolving regulatory requirements and the effect of
actual or alleged violations of environmental laws or permit
requirements; (viii) effect of the degree of public understanding
and acceptance or perceived public acceptance of Corteva's
biotechnology and other agricultural products; (ix) effect of
changes in agricultural and related policies of governments and
international organizations; (x) effect of industrial espionage and
other disruptions to Corteva's supply chain, information technology
or network systems; (xi) competitor's establishment of an
intermediary platform for distribution of Corteva's products; (xii)
effect of volatility in Corteva's input costs; (xiii) failure to
raise capital through the capital markets or short-term borrowings
on terms acceptable to Corteva; (xiv) failure of Corteva's
customers to pay their debts to Corteva, including customer
financing programs; (xv) failure to realize the anticipated
benefits of the internal reorganizations taken by DowDuPont in
connection with the spin-off of Corteva, including failure to
benefit from significant cost synergies; (xvi) risks related to the
indemnification obligations of legacy EID liabilities in connection
with the separation of Corteva; (xvii) increases in pension and
other post-employment benefit plan funding obligations; (xviii)
effect of compliance with environmental laws and requirements and
adverse judgments on litigation; (xix) risks related to Corteva's
global operations; (xx) effect of climate change and unpredictable
seasonal and weather factors; (xxi) effect of counterfeit products;
(xxii) failure to effectively manage acquisitions, divestitures,
alliances and other portfolio actions; (xxiii) risks related to
non-cash charges from impairment of goodwill or intangibles assets;
(xxiv) risks related to COVID-19; (xxv) risks related to oil and
commodity markets; and (xxvi) other risks related to the Separation
from DowDuPont. Additionally, there may be other risks and
uncertainties that Corteva is unable to currently identify or that
Corteva does not currently expect to have a material impact on its
business. Where, in any forward-looking statement, an
expectation or belief as to future results or events is expressed,
such expectation or belief is based on the current plans and
expectations of Corteva's management and expressed in good faith
and believed to have a reasonable basis, but there can be no
assurance that the expectation or belief will result or be achieved
or accomplished. Corteva disclaims and does not undertake any
obligation to update or revise any forward-looking statement,
except as required by applicable law. A detailed discussion of some
of the significant risks and uncertainties which may cause results
and events to differ materially from such forward-looking
statements or other estimates is included in the "Risk Factors"
section of Corteva's Annual Report on Form 10-K, as modified by
subsequent Quarterly Reports on Forms 10-Q and Current Reports on
Form 8-K.
Corteva Unaudited Pro Forma Financial Information
In order to provide the most meaningful comparison of results of
operations, supplemental unaudited pro forma financial information
for the first half of 2019 has been included in this presentation.
This presentation presents the pro forma results of Corteva, after
giving effect to events that are (1) directly attributable to the
merger of DuPont and Dow, debt retirement transactions related to
paying off or retiring portions of Historical DuPont's existing
debt liabilities, and the separation and distribution to DowDuPont
stockholders of all the outstanding shares of Corteva common stock;
(2) factually supportable and (3) with respect to the pro forma
statements of income, expected to have a continuing impact on the
consolidated results. Refer to Corteva's Form 10 registration
statement filed on May 6, 2019, which
can be found on the investors section of the Corteva website, for
further details on the above transactions. The pro forma financial
statements were prepared in accordance with Article 11 of
Regulation S-X, and are presented for informational purposes only,
and do not purport to represent what the results of operations
would have been had the above actually occurred on the dates
indicated, nor do they purport to project the results of operations
for any future period or as of any future date.
Regulation G (Non-GAAP Financial Measures)
This earnings release includes information that does not conform
to U.S. GAAP and are considered non-GAAP measures. These measures
may include organic sales, organic growth (including by segment and
region), operating EBITDA, pro forma operating EBITDA, operating
EBITDA margin, pro forma operating EBITDA margin, operating
earnings per share, pro forma operating earnings per share, base
tax rate, and pro forma base tax rate. Management uses these
measures internally for planning and forecasting, including
allocating resources and evaluating incentive compensation.
Management believes that these non-GAAP measures best reflect the
ongoing performance of the Company during the periods presented and
provide more relevant and meaningful information to investors as
they provide insight with respect to ongoing operating results of
the Company and a more useful comparison of year over year results.
These non-GAAP measures supplement the Company's U.S. GAAP
disclosures and should not be viewed as an alternative to U.S. GAAP
measures of performance. Furthermore, such non-GAAP measures may
not be consistent with similar measures provided or used by other
companies. Reconciliations for these non-GAAP measures to U.S. GAAP
are provided in the Selected Financial Information and Non-GAAP
Measures starting on page A-6 of the Financial Statement Schedules.
For first quarter and prior year, these non-GAAP measures are being
reconciled to a pro forma GAAP financial measure prepared and
presented in accordance with Article 11 of Regulation S-X. See
Article 11 Pro Forma Combined Statements of Operations starting on
page A-17 of the Financial Statement Schedules.
Corteva is not able to reconcile its forward-looking non-GAAP
financial measures to their most comparable U.S. GAAP financial
measures, as it is unable to predict with reasonable certainty
items outside of the company's control, such as Significant Items,
without unreasonable effort. For Significant items reported in the
periods presented, refer to page A-6 of the Financial Statement
Schedules. Beginning January 1, 2020,
the company presents accelerated prepaid royalty amortization
expense as a significant item. Accelerated prepaid royalty
amortization represents the noncash charge associated with the
recognition of upfront payments made to Monsanto in connection with
the Company's non-exclusive license in the United States and Canada for Monsanto's Genuity® Roundup Ready 2
Yield® Roundup Ready 2 Xtend® herbicide
tolerance traits. During the five-year ramp-up period of Enlist
E3TM, Corteva is expected to significantly reduce the
volume of products with the Roundup Ready 2 Yield® and
Roundup Ready 2 Xtend® herbicide tolerance traits
beginning in 2021, with expected minimal use of the trait platform
after the completion of the ramp-up.
Organic sales is defined as price and volume and excludes
currency and portfolio impacts. Operating EBITDA is defined as
earnings (i.e., income from continuing operations before income
taxes) before interest, depreciation, amortization, non-operating
benefits , net and foreign exchange gains (losses) net, excluding
the impact of significant items (including goodwill impairment
charges). Non-operating benefits, net consists of non-operating
pension and other post-employment benefit (OPEB) credits, tax
indemnification adjustments, environmental remediation and legal
costs associated with legacy businesses and sites of Historical
DuPont. Tax indemnification adjustments relate to changes in
indemnification balances, as a result of the application of the
terms of the Tax Matters Agreement, between Corteva and Dow and/or
DuPont that are recorded by the company as pre-tax income or
expense. Operating EBITDA margin is defined as Operating EBITDA as
a percentage of net sales. Operating earnings per share are defined
as "Earnings per common share from continuing operations - diluted"
excluding the after-tax impact of significant items (including
goodwill impairment charges), the after-tax impact of non-operating
benefits, net, and the after-tax impact of amortization expense
associated with intangible assets existing as of the Separation
from DowDuPont. Although amortization of the Company's intangible
assets is excluded from these non-GAAP measures, management
believes it is important for investors to understand that such
intangible assets contribute to revenue generation. Amortization of
intangible assets that relate to past acquisitions will recur in
future periods until such intangible assets have been fully
amortized. Any future acquisitions may result in amortization of
additional intangible assets. Base tax rate is defined as the
effective tax rate excluding the impacts of foreign exchange gains
(losses) net, non-operating benefits, net, amortization of
intangibles as of the Separation from DowDuPont, and significant
items (including goodwill impairment charges). The first half of
2019 is on a pro forma basis as discussed above in the paragraph
'Corteva Unaudited Pro Forma Financial Information'.
® TM SM Trademarks and service marks of Dow AgroSciences, DuPont
or Pioneer, and their affiliated companies or their respective
owners.
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SOURCE Corteva, Inc.