- 3Q YTD Net Sales reflects overall positive global Ag
fundamentals
- 3Q YTD performance reflects pricing gains, product mix,
and productivity
- FY guidance3 reflects recalibrated 4Q
Brazil outlook for both Seed and
Crop Protection
INDIANAPOLIS, Nov. 8, 2023
/PRNewswire/ -- Corteva, Inc. (NYSE: CTVA)
("Corteva" or the "Company") today reported
financial results for the third quarter and nine months
ended September 30, 2023.
3Q 2023 Results Overview
|
|
Net Sales
|
Loss from Cont. Ops (After Tax)
|
EPS
|
GAAP
|
$2.59B
|
$(315)M
|
$(0.45)
|
vs. 3Q 2022
|
(7) %
|
+2 %
|
-
|
|
Organic1 Sales
|
Operating EBITDA1
|
Operating EPS1
|
NON-GAAP
|
$2.41B
|
$18M
|
$(0.23)
|
vs. 3Q 2022
|
(13) %
|
(81) %
|
(92) %
|
2023 YTD Results Overview
|
|
Net Sales
|
Income from Cont. Ops (After
Tax)
|
EPS
|
GAAP
|
$13.52B
|
$1.17B
|
$1.63
|
vs. 2022 YTD
|
(1) %
|
(7) %
|
(5) %
|
|
Organic1 Sales
|
Operating EBITDA1
|
Operating EPS1
|
NON-GAAP
|
$13.48B
|
$2.99B
|
$2.54
|
vs. 2022 YTD
|
(1) %
|
+5 %
|
+2 %
|
2023 YTD Highlights
- 2023 YTD net sales and organic1 sales decreased 1%
versus prior year with gains in North
America2 and EMEA2 offset by declines
in Latin America and Asia Pacific.
- Seed net sales grew 7% and organic1 sales increased
9%. Price was up 14% globally, led by continued execution on the
Company's price for value strategy and recovery of higher input
costs. Volume declines were driven by the exit from Russia, lower corn planted area in
EMEA2, and lower corn volumes in Latin America, partially offset by increased
corn acres in North
America2.
- Crop Protection net sales decreased 10% and organic1
sales decreased 12%. Volume declines, largely in Latin America and North America2, were driven by
strategic product exits, inventory destocking, and delayed farmer
purchases. Price gains reflected pricing for value and strong
execution in response to cost inflation led by EMEA2 and
North America2.
- GAAP income and earnings per share (EPS) from continuing
operations were $1.17 billion and
$1.63 per share for the period,
respectively, down from prior year driven by lower volumes,
unfavorable currency and non-cash charges associated with legacy
retirement plans, partially offset by pricing, productivity, lower
restructuring charges and lower effective tax rate. Operating
EBITDA1 was $2.99 billion,
a 5% improvement over prior year on price execution and
productivity actions, partially offset by lower volumes coupled
with cost and currency headwinds. Operating EPS1 was
$2.54 per share, up 2% compared to
prior year.
- Management affirmed full year 2023 net sales and earnings
guidance3. Net sales is expected to be in the range of
$17.0 billion to $17.3 billion and Operating EBITDA1 is
expected to be in the range of $3.25
billion to $3.45 billion.
Operating EPS1 is expected to be in the range of
$2.50 to $2.70 per share.
Summary of Third Quarter 2023
For the third quarter ended September 30,
2023, net sales decreased 7% versus the same period last
year. Organic1 sales declined 13%.
Volume declined 15% versus the prior-year period driven by
strategic product exits and ongoing headwinds in the Crop
Protection segment. Lower Seed volumes were driven by the timing of
seasonal demand in Latin America
and an earlier operational finish to the season in North America versus prior year.
Price increased 2% versus prior year, reflecting continued
execution on the Company's price for value strategy, while managing
increased competitive pressure.
GAAP income from continuing operations after income taxes was a
loss of $315 million in third quarter
2023 compared to a loss of $322
million in third quarter 2022. Operating EBITDA1
for the third quarter was $18
million, down 81% compared to prior year.
The Company announced a plan to further optimize its Crop
Protection network of manufacturing facilities and external
partners. The plan includes the exit of the Company's production
activities at its site in Pittsburg,
California, as well as ceasing operations in select
manufacturing lines at other locations. As a result, the Company
expects to record total pre-tax restructuring and asset related
charges of $410 million to
$460 million through 2024, with an
estimated $90 million to $120 million of cash payments. The Company
expects to achieve approximately $100
million in run-rate savings by 2025 as a result of these
actions.
|
3Q
|
3Q
|
%
|
%
|
($ in millions, except where noted)
|
2023
|
2022
|
Change
|
Organic1 Change
|
Net Sales
|
$2,590
|
$2,777
|
(7) %
|
(13) %
|
North America
|
$572
|
$739
|
(23) %
|
(23) %
|
EMEA
|
$469
|
$454
|
3 %
|
(1) %
|
Latin America
|
$1,224
|
$1,281
|
(4) %
|
(18) %
|
Asia Pacific
|
$325
|
$303
|
7 %
|
10 %
|
|
2023
|
2022
|
%
|
%
|
($ in millions, except
where noted)
|
YTD
|
YTD
|
Change
|
Organic1 Change
|
Net Sales
|
$13,519
|
$13,630
|
(1) %
|
(1) %
|
North
America
|
$7,093
|
$6,822
|
4 %
|
4 %
|
EMEA
|
$2,996
|
$2,894
|
4 %
|
9 %
|
Latin
America
|
$2,384
|
$2,764
|
(14) %
|
(24) %
|
Asia
Pacific
|
$1,046
|
$1,150
|
(9) %
|
(3) %
|
Seed Summary
Seed net sales were $878 million
in the third quarter of 2023, up from $862
million in the third quarter of 2022. The sales increase was
driven by a 14% increase in price, partially offset by a 12%
decline in volume.
The increase in price was broad-based, driven by strong
demand for top technology products, and strong operational
execution across the
portfolio. Lower volumes were driven by
expected lower planted area and delayed farmer purchases in
Brazil, and an earlier operational
finish to the season in North
America versus prior year.
Segment operating EBITDA was a loss of $138 million in the third quarter of 2023, an
improvement of 38% from the third quarter of 2022. Price execution,
reduction of net royalty expense, and ongoing cost and productivity
actions more than offset higher input and freight costs, lower
volumes, and the unfavorable impact
of currency.
|
3Q
|
3Q
|
%
|
%
|
($ in millions, except where noted)
|
2023
|
2022
|
Change
|
Organic1 Change
|
North America
|
$173
|
$218
|
(21) %
|
(20) %
|
EMEA
|
$198
|
$157
|
26 %
|
32 %
|
Latin America
|
$380
|
$383
|
(1) %
|
(5) %
|
Asia Pacific
|
$127
|
$104
|
22 %
|
28 %
|
Total 3Q
Seed Net
Sales
|
$878
|
$862
|
2 %
|
2 %
|
3Q Seed
Operating
EBITDA
|
$(138)
|
$(224)
|
38 %
|
N/A
|
Seed net sales were $7.8 billion
for the first nine months of 2023, up from approximately
$7.3 billion in the same period of
2022. The sales increase was driven by a 14% increase
in price
and 1% favorable impact from portfolio. This gain was
partially offset by a 5% decline in volume and
a 3% unfavorable currency impact.
The increase in price was driven by strong demand for top
technology and operational execution globally, with global corn and
soybean prices up 15% and 8%, respectively. Pricing actions more
than offset currency impacts in EMEA. The decline in volume was
driven by the 2022 decision to exit Russia, lower corn planted area
in EMEA, and lower-than-expected corn planted area
projected in Brazil, partially offset by increased corn
acres in North America.
Unfavorable currency impacts were led by the Turkish Lira and the
Canadian Dollar.
Segment operating EBITDA was $1.97 billion
for the first nine
months of 2023, up 24% from the same
period last year. Price execution, reduction of
net royalty expense, and ongoing cost and productivity actions more
than offset higher input and freight costs, lower volumes, and the
unfavorable impact of currency.
Segment operating EBITDA
margin improved by more than 350
basis points versus the prior-year period.
|
2023
|
2022
|
%
|
%
|
($ in millions, except where noted)
|
YTD
|
YTD
|
Change
|
Organic1 Change
|
North America
|
$5,192
|
$4,637
|
12 %
|
13 %
|
EMEA
|
$1,441
|
$1,442
|
- %
|
6 %
|
Latin America
|
$847
|
$912
|
(7) %
|
(11) %
|
Asia Pacific
|
$357
|
$342
|
4 %
|
13 %
|
Total YTD
Seed Net Sales
|
$7,837
|
$7,333
|
7 %
|
9 %
|
YTD Seed
Operating EBITDA
|
$1,972
|
$1,585
|
24 %
|
N/A
|
Crop Protection Summary
Crop Protection net sales were approximately $1.7 billion in the third quarter of 2023
compared to approximately $1.9
billion in the third quarter of 2022. The sales decrease was
driven by a 16% decrease in volume and a 4% decrease in price,
partially offset by a 7% favorable impact from the Biologicals
acquisitions and a 2% favorable impact from currency.
The decrease in volume was driven by strategic product exits,
inventory destocking trends, timing of seasonal
demand, and delayed farmer purchases, impacting volumes across all
regions. Pricing gains in EMEA and Asia
Pacific were offset by price declines in North America and Latin America, driven by elevated competitive
pressure. Favorable currency impacts were led by the Brazilian Real
and the Euro. The portfolio impact was driven by the Biologicals
acquisitions, which added approximately $145
million of net sales.
Segment operating EBITDA was $184 million in the
third quarter of 2023, down 48% from the third quarter of
2022. Volume and pricing declines and
higher input costs
more than offset productivity
actions. Segment operating EBITDA margin declined by
approximately 760 basis points versus the prior-year period.
|
3Q
|
3Q
|
%
|
%
|
($ in millions, except where noted)
|
2023
|
2022
|
Change
|
Organic1 Change
|
North America
|
$399
|
$521
|
(23) %
|
(25) %
|
EMEA
|
$271
|
$297
|
(9) %
|
(18) %
|
Latin America
|
$844
|
$898
|
(6) %
|
(23) %
|
Asia Pacific
|
$198
|
$199
|
(1) %
|
1 %
|
Total 3Q Crop Protection
Net Sales
|
$1,712
|
$1,915
|
(11) %
|
(20) %
|
3Q Crop
Protection
Operating EBITDA
|
$184
|
$352
|
(48) %
|
N/A
|
Crop Protection net sales were approximately $5.7 billion for the first nine months of 2023
compared to approximately $6.3
billion in the same period of 2022. The sales decrease was
driven by a 16% decrease in volume and a 2% unfavorable impact from
currency. These declines were partially offset by a 4% increase in
price and a 4% favorable impact from the Biologicals
acquisitions.
The decrease in volume
was driven by strategic product exits,
inventory destocking trends, and delayed farmer purchases. The
increase in price was broad-based, with gains in most regions led
by EMEA and North America,
and mostly reflected pricing for the value of our differentiated
technology, including new products, and currency in
EMEA. Unfavorable currency impacts were led by the Turkish
Lira and Chinese Renminbi. The portfolio impact was driven by the
Biologicals acquisitions, which added approximately $280 million of net sales.
Segment operating EBITDA was $1.1
billion for the first nine months of 2023, down 18% from the
same period last year. Pricing execution and productivity actions
were more than offset by lower volumes, higher input costs,
and the unfavorable impact of currency. Segment
operating EBITDA margin decreased approximately 200 basis points versus
the prior-year period.
|
2023
|
2022
|
%
|
%
|
($ in millions, except where noted)
|
YTD
|
YTD
|
Change
|
Organic1 Change
|
North America
|
$1,901
|
$2,185
|
(13) %
|
(13) %
|
EMEA
|
$1,555
|
$1,452
|
7 %
|
11 %
|
Latin America
|
$1,537
|
$1,852
|
(17) %
|
(31) %
|
Asia Pacific
|
$689
|
$808
|
(15) %
|
(10) %
|
Total YTD Crop Protection Net
Sales
|
$5,682
|
$6,297
|
(10) %
|
(12) %
|
YTD Crop
Protection Operating EBITDA
|
$1,107
|
$1,352
|
(18) %
|
N/A
|
2023 Guidance
The global outlook for agriculture remains positive overall in
2023, with high demand for grain and oilseeds. Commodity prices are
above historical averages, and farm balance sheets and income
levels remain generally healthy, encouraging growers to prioritize
technology to maximize return. The Company's outlook for its
operations in Brazil has been
revised, influenced by lower-than-expected corn planted area,
ongoing headwinds in crop chemicals, delayed farmer purchases on
both plantings and crop protection applications, as well as
elevated levels of generic products, leading to an update to
full-year 2023 net sales and earnings expectations in October 2023.
Corteva expects net sales in the range of $17.0 billion to $17.3
billion, down 2% versus prior year at the mid-point.
Operating EBITDA1 is expected to be in the range of
$3.25 billion to $3.45 billion, growth of 4% at the mid-point.
Operating EPS1 is expected to be in the range of $2.50 to $2.70 per
share, down 3% at the mid-point.
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.
Third Quarter Conference Call
The Company will host a live webcast of its third quarter 2023
earnings conference call with investors to discuss its results and
outlook tomorrow, November 9, 2023,
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.
About Corteva
Corteva, Inc. (NYSE: CTVA) is a global pure-play agriculture
company that combines industry-leading innovation, high-touch
customer engagement and operational execution to profitably deliver
solutions for the world's most pressing agriculture challenges.
Corteva generates advantaged market preference through its unique
distribution strategy, together with its balanced and globally
diverse mix of seed, crop protection, and digital products and
services. With some of the most recognized brands in agriculture
and a technology pipeline well positioned to drive growth, the
Company is committed to maximizing productivity for farmers, while
working with stakeholders throughout the food system as it fulfills
its promise to enrich the lives of those who produce and those who
consume, ensuring progress for generations to come. More
information can be found at www.corteva.com.
Cautionary Statement About
Forward-Looking Statements
This report contains certain estimates and 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 "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 financial results or outlook;
strategy for growth; product development; regulatory approvals;
market position; capital allocation strategy; liquidity;
environmental, social and governance ("ESG") targets and
initiatives; the anticipated benefits of acquisitions,
restructuring actions, or cost savings initiatives; and the outcome
of contingencies, such as litigation and environmental matters,
are forward-looking statements.
Forward-looking statements and other estimates are based on
certain assumptions and expectations of future events which may not
be accurate or realized. Forward-looking statements and other
estimates 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) failure to obtain or
maintain the necessary regulatory approvals for some of Corteva's
products; (iii) effect of the degree of public understanding and
acceptance or perceived public acceptance of Corteva's
biotechnology and other agricultural products; (iv) effect of
changes in agricultural and related policies of governments and
international organizations; (v) costs of complying with evolving
regulatory requirements and the effect of actual or
alleged violations of environmental laws or permit
requirements; (vi) effect of climate change and unpredictable
seasonal and weather factors; (vii) failure to comply with
competition and antitrust laws; (viii) effect of competition in
Corteva's industry; (ix) competitor's establishment of an
intermediary platform for distribution of Corteva's products; (x)
impact of Corteva's dependence on third parties with respect to
certain of its raw materials or licenses and commercialization;
(xi) effect of volatility in Corteva's input costs; (xii) risk
related to geopolitical and military conflict; (xiii) effect of
industrial espionage and other disruptions to Corteva's supply
chain, information technology or network systems; (xiv) risks
related to environmental litigation and the indemnification
obligations of legacy EIDP liabilities in connection with the
separation of Corteva; (xv) risks related to Corteva's global
operations; (xvi) failure to effectively manage acquisitions,
divestitures, alliances, restructurings, cost savings initiatives,
and other portfolio actions; (xvii) failure to raise capital
through the capital markets or short-term borrowings on terms
acceptable to Corteva; (xviii) failure of Corteva's customers to
pay their debts to Corteva, including customer financing programs;
(xix) increases in pension and other post-employment benefit plan
funding obligations; (xx) capital markets sentiment towards ESG
matters; (xxi) risks related to pandemics or epidemics; (xxii)
Corteva's intellectual property rights or defense against
intellectual property claims asserted by others; (xxiii) effect of
counterfeit products; (xxiv) Corteva's dependence on intellectual
property cross-license agreements; and (xxv) 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 or other estimate, 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 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.
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, operating EBITDA margin, operating
earnings (loss) per share, and base income 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-5 of the Financial Statement Schedules.
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 the Company's control, such as Significant Items,
without unreasonable effort. For Significant items reported in the
periods presented, refer to page A-10 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 non-cash 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® and Roundup Ready 2 Xtend® herbicide tolerance traits.
During the ramp-up period of Enlist E3TM, Corteva has begun 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
thereafter. During 2023, the company committed to restructuring
activities to optimize the Crop Protection network of manufacturing
and external partners, which are expected to be substantially
complete in 2024. The company expects to record approximately
$265 million to $285 million net pre-tax restructuring charges
during 2023 for these activities. The company also expects
non-operating charges associated with pension and OPEB costs to
increase in 2023 when compared to 2022, which is mainly due to an
increase in discount rates and a decrease in asset returns due to
lower pension plan assets.
Organic sales is defined as price and volume and excludes
currency and portfolio and other impacts, including significant
items. Operating EBITDA is defined as earnings (loss) (i.e., income
(loss) from continuing operations before income taxes) before
interest, depreciation, amortization, non-operating benefits
(costs), foreign exchange gains (losses), and net unrealized gain
or loss from mark-to-market activity for certain foreign currency
derivative instruments that do not qualify for hedge accounting,
excluding the impact of significant items. Non-operating benefits
(costs) consists of non-operating pension and other post-
employment benefit (OPEB) credits (costs), tax indemnification
adjustments, and environmental remediation and legal costs
associated with legacy businesses and sites. 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 (loss) per share is defined as "earnings
(loss) per common share from continuing operations - diluted"
excluding the after-tax impact of significant items, the after-tax
impact of non-operating benefits (costs), the after-tax impact of
amortization expense associated with intangible assets existing as
of the Separation from DowDuPont, and the after-tax impact of net
unrealized gain or loss from mark-to-market activity for certain
foreign currency derivative instruments that do not qualify for
hedge accounting. 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. Net unrealized gain or loss from
mark-to-market activity for certain foreign currency derivative
instruments that do not qualify for hedge accounting represents the
non-cash net gain (loss) from changes in fair value of certain
undesignated foreign currency derivative contracts. Upon
settlement, which is within the same calendar year of execution of
the contract, the realized gain (loss) from the changes in fair
value of the non-qualified foreign currency derivative contracts
will be reported in the relevant non-GAAP financial measures,
allowing quarterly results to reflect the economic effects of the
foreign currency derivative contracts without the resulting
unrealized mark to fair value volatility. Base income tax rate is
defined as the effective tax rate excluding the impacts of foreign
exchange gains (losses), non-operating benefits (costs),
amortization of intangibles (existing as of the Separation),
mark-to- market gains (losses) on certain foreign currency
contracts not designated as hedges, and significant items.
® TM Corteva
Agriscience and its affiliated companies.
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.
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SOURCE Corteva, Inc.