Differentiated Portfolio and Strong Execution Drives 1Q
Sales and Earnings Growth
Increased 2023 Full-Year Guidance, Including Biologicals
Acquisitions
Well Positioned to Deliver Attractive Sustainable Growth
in Line With 2025 Targets
INDIANAPOLIS, May 3, 2023
/PRNewswire/ -- Corteva, Inc. (NYSE: CTVA) ("Corteva" or the
"Company") today reported financial results for the three months
ended March 31, 2023.
1Q 2023 Results Overview
|
Net
Sales
|
Income from
Cont.
Ops (After Tax)
|
EPS
|
GAAP
|
$4.88B
|
$607M
|
$0.84
|
vs. 1Q
2022
|
+6 %
|
+5 %
|
+6 %
|
|
|
|
|
|
Organic1
Sales
|
Operating
EBITDA1
|
Operating
EPS1
|
NON-GAAP
|
$5.06B
|
$1.23B
|
$1.16
|
vs. 1Q
2022
|
+10 %
|
+18 %
|
+20 %
|
First Quarter 2023 Highlights
- First quarter 2023 net sales rose 6% versus prior year with
gains in both segments. Organic1 sales increased 10% in
the same period, led by EMEA2 and North America2.
- Seed net sales grew 7% and organic1 sales increased
10%. Price gains were led by continued execution on the Company's
price for value strategy and recovery of higher input costs. Volume
declines were driven by a shortened Safrinha season, supply
constraints in Latin America, and
the exit from Russia.
- Crop Protection net sales grew 5% and organic1 sales
increased 10%, led by value capture in EMEA. Price gains reflected
strong execution in response to cost inflation. Volume gains from
continued penetration of new products, including Enlist™ and
Arylex™ herbicides, were more than offset by product exits and
delays in Latin America and APAC
due to weather.
- GAAP income and earnings per share (EPS) from continuing
operations were $607 million and
$0.84 per share for the first quarter
2023, respectively. Operating EBITDA1 and Operating
EPS1 were $1.23 billion
and $1.16 per share, respectively.
Strong price execution, product mix, and productivity actions more
than offset inflation and currency headwinds.
- The Company increased full-year 2023 guidance3 to
include the impact of the Biologicals acquisitions and expects net
sales in the range of $18.6 billion
to $18.9 billion. Operating
EBITDA1 is expected to be in the range of $3.55 billion to $3.75
billion. Operating EPS1 is expected to be in the
range of $2.80 to $3.00 per share.
"Corteva delivered a solid start to 2023, reflecting focused
execution coupled with continued demand for our innovative
technology solutions. Our strategic actions to focus our portfolio
in areas where we deliver differentiated value to customers are
translating into accelerated growth in new product sales, continued
margin expansion, and higher quality earnings.
"Ag fundamentals remain constructive as tight global grain
supply continues to put pressure on ending stocks, keeping crop
prices above historical averages and farm income levels healthy. We
also see customer buying behaviors beginning to normalize as supply
chain reliability improves.
"We are on track to deliver our 2025 financial objectives as our
leading R&D organization continues to invest in new and
differentiated technologies to drive a more sustainable global food
and fuel system," said Chuck Magro,
Corteva Chief Executive Officer.
Company Updates
- New Product Launches During the Quarter Reinforce Value of
Innovation Pipeline
-
- The Company announced plans for the commercial launch of
Optimum® GLY Canola – a new, proprietary glyphosate
trait technology intended to deliver enhanced weed control and a
wider window of herbicide application, compared to first-generation
glyphosate trait technology – so farmers have more choices and
flexibility for effective weed management.
- The Company also announced the commercial launch of
Vorceed™ Enlist® Corn, which combines three modes
of action for above-ground insect protection and three modes of
action for below-ground insect protection including RNAi
technology. It also includes tolerance to four herbicides –
glyphosate, glufosinate, 2,4-D choline and FOPs – to help improve
resistant weed management.
- Finally, the Company announced the commercial launch of
Adavelt™ Active – a novel fungicide with a new mode of action
that protects against a wide range of diseases that can impact crop
yields. The Company received product registrations in Australia, Canada, and South
Korea, and plans to offer Adavelt™ Active in additional
countries in the future, pending regulatory approvals.
- Company Acquires Symborg and Stoller, Two Leading
Biologicals Companies
-
- During the quarter, the Company acquired Symborg, an expert in
microbiological technologies based in Murcia, Spain; and Stoller, one of the largest
independent companies in the Biologicals industry with an expertise
in plant health and nutrition, based in Houston, Texas.
- These investments reinforce the Company's commitment to
providing farmers with sustainable tools that deliver optionality,
enhanced value, and increased productivity.
- These acquisitions, when combined with its internal innovation
capabilities, cement Corteva's Biologicals business as one of the
largest in the world, with a platform positioned to accelerate
growth within the rapidly expanding biologicals market.
- Company Announces Collaborations to Bring Sustainable
Solutions to Farmers
-
- During the quarter, the Company announced a multi-year
collaboration with Bunge to develop and commercialize soybean
varieties with greater protein content, optimized amino acid
profiles and lower levels of anti-nutritional factors for the
animal feed industry. In-line with Corteva's commitment to
delivering sustainable innovation to its customers, these products
present a potential new value stream opportunity for farmers while
giving feed compounders a more nutritious option to reduce their
use of synthetic additives, lower costs, and shrink their carbon
footprint.
- Separately, the Company announced a commercial collaboration
with Bunge and Chevron U.S.A.
Inc., a subsidiary of Chevron Corporation, to introduce proprietary
winter canola hybrids intended to increase availability of
plant-based oil feedstocks for the biofuel market. As part of a new
double crop system in the southern U.S., this innovation will
deliver solutions to farmers to increase productivity and income on
their acres, while contributing to market expansion for lower
carbon fuel options. Further, winter canola can act as a cover crop
to enhance soil health and make farming practices even more
sustainable.
2023 Guidance
The outlook for agriculture remains robust in 2023, with record
demand for grain and oilseeds as ending stocks continue to be under
pressure. Commodity prices are above historical averages, and farm
balance sheets and income levels remain healthy, leading growers to
prioritize technology to maximize return. The Company expects an
increase in U.S. planted area and continues to monitor dynamic
weather conditions around the world.
The Company updated its previously provided guidance3
for the full-year 2023 – increasing sales and earnings expectations
for this period, including the impact of its Biologicals
acquisitions. Corteva expects net sales in the range of
$18.6 billion to $18.9 billion, growth of 7% at the mid-point.
Operating EBITDA1 is expected to be in the range of
$3.55 billion to $3.75 billion, growth of 13% at the mid-point.
Operating EPS1 is expected to be in the range of
$2.80 to $3.00 per share, growth of 9% at the mid-point,
which reflects higher earnings and lower average share count,
partially offset by forecasted higher effective tax rate and
interest expense.
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.
Click here to download the full press release,
including segment detail and reconciliations of non-GAAP and GAAP
measures, or visit the Corteva Investor Relations website.
About Corteva
Corteva, Inc. (NYSE: CTVA) is a publicly traded, 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.
Follow Corteva on Facebook, Instagram, LinkedIn, Twitter and
YouTube.
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 defend 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-8 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 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. The Company
also committed to activities relating to the 2022 Restructuring
Actions, which are expected to be completed in 2023. The total net
pre-tax restructuring and other charges expected to be recognized
during 2023 are not expected to be material.
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 postemployment
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.