Corteva, Inc. · NYSE:CTVA
Corteva — Q2 2023 Earnings Presentation
36 slides from Corteva's earnings presentation, Aug 4, 2023
Slide 1: 2Q 2023 Earnings Conference Call
2Q 2023 Earnings Conference Call August 4, 2023
Slide 2: Safe Harbor Regarding Forward-Looking Statements
Safe Harbor Regarding Forward-Looking Statements Forward-Looking Statements This presentation 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, whi
Slide 3: A Reminder About Non-GAAP Financial Measures
A Reminder About Non-GAAP Financial Measures Regulation G (Non-GAAP Financial Measures) This presentation 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), operatin
Slide 4: CTVA Will Continue to Deliver Growth in 2023
CEO Messages Solid 1H ▪ Growth in Sales, Operating EBITDA(1) translating to >180 bps margin (1) expansion ▪ Seed results reflect superior technology and execution, on track for strong 2023 Financial ▪ Crop Protection delivering margin expansion with benefits from strategic portfolio Performance deci
Slide 5: Crop Sector Market Outlook
Crop Sector Market Outlook U.S. Farm Prices Corn($/bu) Soybean ($/bu) Strong Demand for Food, Feed, and Fuel 7 16 ▪ Record-setting demand for grain and oilseeds 6 14 5 12 ▪ 2023 demand for biofuels hit a record with expected growth in 2024 4 10 3 8 Ag Commodity Prices Remain Above Historical Average
Slide 6: Crop Protection Market Environment
Crop Protection Market Environment ▪ Change in channel order timing in second quarter given industry-wide destocking trends ▪ Farmer demand continues to be healthy overall, with Latin America orders shifting back to pre-2022 pattern ▪ Corteva well-positioned in addressable(1) CP market expected to g
Slide 7: 1H 2023 Financial Performance
1H 2023 Financial Performance Metric 2Q 2023 1H 2023 1H Highlights $6.05B $10.93B Strong market demand in Seed more than offset Net Sales weather-related impacts and CP channel destocking 3% 1% $6.01B $11.07B Organic growth in North America(2) and EMEA(2) Organic Sales(1) offset 5% headwind from str
Slide 8: 1H 2023 Sales Highlights
1H 2023 Sales Highlights Global Net Sales 1H 2023 Sales by Segment Seed Crop Protection $10.85B $10.93B $6.96B Reported $6.47B $4.38B ~$240M of CP exits $3.97B 1% Organic(1) 2% 1H 2022 1H 2023 1H 2022 1H 2023 1H 2022 1H 2023 Reported 8% Reported 9% Organic(1) 9% Organic(1) 9% • Revenue Growth Driven
Slide 9: 1H 2023 Operating EBITDA Drivers
1H 2023 Operating EBITDA(1) Drivers 1H 2023 Bridge Key Drivers ▪ Broad-based pricing gains across the portfolio to capture value ($ in millions) for technology, more than offsetting cost and currency $1,189 ($330) ($444) ▪ Volume impacted by product and Russia exits coupled with Crop Protection dest
Slide 10: Updated 2023 Guidance
Updated 2023 Guidance(1) Prior Guide Revised Guide Changes vs Prior Guide $18.6 - $18.9B $17.9 - $18.2B ▪ Revenue primarily reflects reduction in CP Net Sales +7% at mid-point +3% at mid-point volume driven by NA and LATAM channel ▪ Cost favorability from royalties and modest Operating $3.55 - $3.75
Slide 11: 2025 Financial Targets
2025 Financial Targets Net Sales ($B) Operating EBITDA(1) ($B) Operating EBITDA Margin(1) $4.1 - 4.7 21% - $19.5 – 23% 20.5 $3.6 19.8% $18.1 $3.2 18.5% $17.5 $2.6 16.5% $15.7 (2) (2) 2021 2022 2023E 2025E 2021 2022 2023E 2025E 2021 2022 2023E(2) 2025E • Relatively modest Organic(1) Sales growth ~5%
Slide 12: Key Takeaways
Key Takeaways Farm Demand Remains Mostly Stable, Despite Macro Influences Corteva Maintaining / Increasing Market Position Updated 2023 Guidance for Continued Earnings Growth / Margin Expansion On-Track for 2025 Value Creation Framework Strategic Positioning is Enabling CTVA to Outperform 12
Slide 13: Appendix
Appendix 13
Slide 14: 2Q 2023 Highlights
2Q 2023 Highlights ($ in millions, except EPS) 2Q 2022 2Q 2023 Change Net Sales $6,252 $6,045 (3)% GAAP Income from Continuing Operations After Income Taxes $1,002 $880 (12)% Operating EBITDA(1) $1,719 $1,746 2% Operating EBITDA Margin(1) 27.5% 28.9% 139 bps GAAP EPS from Continuing Operations $1.37
Slide 15: 2Q 2023 Seed Performance Highlights
2Q 2023 Seed Performance Highlights ($ in millions) 2Q 2023 vPY 2Q 2023 Revenue by Product Line Net Sales $4,264 8% Organic(1) Sales Growth 9% Other(4) Operating EBITDA $1,458 18% Other oilseeds(3) Operating EBITDA Margin 34.2% 278 bps (21)% reported growth (20)% organic(1) growth Corn 20% reported
Slide 16: 2Q 2023 Regional Net Sales Highlights – Seed
2Q 2023 Regional Net Sales Highlights – Seed North Reported Organic(1) Latin Reported Organic(1) Global Net Sales America(2) 14% 15% America 1% Flat $4.3B 2Q 2022 2Q 2023 2Q 2022 2Q 2023 Net Sales ($M) $3,235 $3,696 Net Sales ($M) $206 $208 $3.9B Volume Price Currency Portfolio Volume Price Currency
Slide 17: 1H 2023 Seed Performance Highlights
1H 2023 Seed Performance Highlights ($ in millions) 1H 2023 vPY 1H 2023 Revenue by Product Line Net Sales $6,959 8% Organic(1) Sales Growth 9% Other(4) Operating EBITDA $2,110 17% Other oilseeds(3) Operating EBITDA Margin 30.3% 236 bps (5)% reported growth (3)% organic(1) growth Corn 12% reported gr
Slide 18: 1H 2023 Regional Net Sales Highlights – Seed
1H 2023 Regional Net Sales Highlights – Seed North Reported Organic(1) Latin Reported Organic(1) Global Net Sales America(2) 14% 14% America 12% 15% $7.0B 1H 2022 1H 2023 1H 2022 1H 2023 Net Sales ($M) $4,419 $5,019 Net Sales ($M) $529 $467 $6.5B Volume Price Currency Portfolio Volume Price Currency
Slide 19: 2Q 2023 Crop Protection Highlights
2Q 2023 Crop Protection Highlights ($ in millions) 2Q 2023 vPY 2Q 2023 Revenue by Product Line Net Sales $1,781 (23)% Organic(1) Sales Growth (26)% Other(3) Operating EBITDA $320 (37)% Operating EBITDA Margin 18.0% (411) bps Herbicides Fungicides (19)% reported growth (44)% reported growth (18)% org
Slide 20: 2Q 2023 Regional Net Sales Highlights – Crop Protection
2Q 2023 Regional Net Sales Highlights – Crop Protection North Reported Organic(1) Latin Reported Organic(1) Global Net Sales 26% 27% 36% 48% America(2) America $2.3B 2Q 2022 2Q 2023 2Q 2022 2Q 2023 Net Sales ($M) $843 $623 Net Sales ($M) $627 $400 Volume Price Currency Portfolio Volume Price Currenc
Slide 21: 1H 2023 Crop Protection Highlights
1H 2023 Crop Protection Highlights ($ in millions) 1H 2023 vPY 1H 2023 Revenue by Product Line Net Sales $3,970 (9)% Organic(1) Sales Growth (9)% Other(3) Operating EBITDA $923 (8)% Operating EBITDA Margin 23.2% 43 bps Fungicides (19)% reported growth Crop Protection Operating EBITDA ($ in millions)
Slide 22: 1H 2023 Regional Net Sales Highlights – Crop Protection
1H 2023 Regional Net Sales Highlights – Crop Protection North Reported Organic(1) Latin Reported Organic(1) Global Net Sales America(2) 10% 10% America 27% 38% 1H 2022 1H 2023 1H 2022 1H 2023 $4.4B Net Sales ($M) $1,664 $1,502 Net Sales ($M) $954 $693 Volume Price Currency Portfolio Volume Price Cur
Slide 23: 2Q 2023 Operating EPS Variance
2Q 2023 Operating EPS(1) Variance Operating EPS(1) ($) $0.23 $(0.16) $0.01 $(0.05) $(0.06) $1.64 $(0.01) $1.60 1 2 3 4 5 6 2Q 2022 Volume/ Costs Change in Base EGL(2) Currency Portfolio / 2Q 2023 Price Tax Rate(1) Other Volume/Price 1 Costs 2 Change in Base Income Tax Rate(1) 3 ▪ Gains driven by str
Slide 24: 2023 Operating EBITDA Bridge
2023 Operating EBITDA(1) Bridge 2023 Bridge Key Drivers Organic(1) Growth ($ in millions) ▪ Mid-single digit pricing for total Company ▪ Favorable mix in U.S. Seed driven by increased corn acres and demand for top technology ▪ Russia exit(2) ~$200M headwind to Seed sales $3.50 - $3.65B ▪ Crop Protec
Slide 25: FY 2023 Modeling Guidance – Operating Earnings Per Share
FY 2023 Modeling Guidance – Operating Earnings Per Share(1) ($ in millions, except where noted) Guidance Depreciation and Post-Merge Amortization (590 - 610) Net Interest (Expense) Income (65 – 85) Base Income Tax Rate(1) 21% - 23% Exchange Losses – net, after tax (260 – 270) Net Income – Non-contro
Slide 26: Non-GAAP Calculation of Corteva Operating EBITDA
Corteva Non-GAAP Calculation of Corteva Operating EBITDA Three Months Ended June 30, S ix Months Ended June 30, 2023 2022 2023 2022 In millions As Reported Margin % As Reported Margin % As Reported Margin % As Reported Margin % Income (loss) from continuing operations, net of tax (GAAP) $ 880 14.6%
Slide 27: Segment Information: Net sales by segment
Corteva Segment Information Net sales by segment Three Months Ended June 30, S ix Months Ended June 30, In m illions 2023 2022 2023 2022 Seed $ 4,264 $ 3,947 $ 6,959 $ 6,471 Crop Protection 1,781 2,305 3,970 4,382 Total net sales $ 6,045 $ 6,252 $ 10,929 $ 10,853 Net Margin (GAAP) Three Months Ended
Slide 28: Corteva significant items (Pretax)
Corteva significant items (Pretax) Three Months Ended June 30, S ix Months Ended June 30, In millions 2023 2022 2023 2022 Seed Restructuring and asset-related charges - net $ (54) $ (126) $ (75) $ (131) Inventory write-offs (3) (1) (7) (1) Loss on sale of equity investments - (5) - (5) Settlement co
Slide 29: Price, Volume Currency Analysis – Region
Corteva Segment Information - Price, Volume Currency Analysis Region Q2 2023 vs. Q2 2022 Percent Change Due To: Net S ales Change (GAAP) Organic Change (Non-GAAP)2 $ (millions) % $ (millions) % Price & Product Mix Volume Currency Portfolio / Other North America1 $ 241 6% $ 265 6% 9% (3)% (1)% 1% EM
Slide 30: Price, Volume Currency Analysis – Product Line
Corteva Segment Information - Price, Volume Currency Analysis Seed Product Line Q2 2023 vs. Q2 2022 Percent Change Due To: 2 Net S ales Change (GAAP) Organic Change (Non-GAAP) $ (millions) % $ (millions) % Price & Product Mix Volume Currency Portfolio / Other 3 Corn $ 451 20% $ 471 21% 14% 7% (2)% 1
Slide 31: Price, Volume Currency Analysis – Region (First Half)
Corteva Segment Information - Price, Volume Currency Analysis Region First Half 2023 vs. First Half 2022 Percent Change Due To: 2 Net S ales Change (GAAP) Organic Change (Non-GAAP) $ (millions) % $ (millions) % Price & Product Mix Volume Currency Portfolio / Other 1 North America $ 438 7% $ 471 8% 9
Slide 32: Price, Volume Currency Analysis – Product Line (First Half)
Corteva Segment Information - Price, Volume Currency Analysis Seed Product Line First Half 2023 vs. First Half 2022 Percent Change Due To: Net S ales Change (GAAP) Organic Change (Non-GAAP)2 $ (millions) % $ (millions) % Price & Product Mix Volume Currency Portfolio / Other 3 Corn $ 500 12% $ 598 14
Slide 33: Non-GAAP Calculation of Corteva Operating EPS
Corteva Non-GAAP Calculation of Corteva Operating EPS Three Months Ended June 30, 2023 2022 2023 2022 $ (millions) $ (millions) EPS (diluted) EPS (diluted) Income (loss) from continuing operations attributable to Corteva (GAAP) $ 877 $ 999 $ 1.23 $ 1.37 1 Less: Non-operating benefits (costs), after
Slide 34: Non-GAAP Calculation of Corteva Base Tax Rate
Corteva Non-GAAP Calculation of Corteva Base Tax Rate Three Months Ended June 30, S ix Months Ended June 30, 2023 2022 2023 2022 Income (loss) from continuing operations before income taxes (GAAP) $ 1,084 $ 1,327 $ 1,860 $ 2,025 Add: Significant items (benefit) charge 117 155 200 177 Non-operating (
Slide 35: Non-GAAP Calculation of Free Cash Flow
Corteva Non-GAAP Calculation of Free Cash Flow RECONCILIATION OF NON-GAAP MEASURES (UNAUDITED) (dollars in millions) 2023 RECONCILIATION OF CASH PROVIDED BY (USED FOR) OPERATING ACTIVITIES TO FREE Low End High End CASH FLOW ¹ Cash provided by (used for) operating activities (GAAP) $ 1,615 $ 1,815 Le
Slide 36: Product Disclosures
Product Disclosures TM ® SM Trademarks and service marks of Corteva Agriscience and its affiliated companies. © 2021 Corteva The transgenic soybean event in Enlist E3® soybeans is jointly developed and owned by Corteva Agriscience LLC and M.S. Technologies, L.L.C. The Enlist weed control system is o