Corteva, Inc. · NYSE:CTVA
Corteva — Q3 2020 Earnings Presentation
32 slides from Corteva's earnings presentation, Nov 4, 2020
Slide 1: 3Q 2020 Earnings Conference Call
3Q 2020 Earnings Conference Call November 5, 2020
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 and Pro Forma Financial Information
A Reminder About Non-GAAP Financial Measures and Pro Forma Financial Information 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 quarter of 2019 has bee
Slide 4: Next Stage on Our Journey to Drive Growth
Next Stage on Our Journey to Drive Growth 1 2 3 4 Delivering Driving actions to Fortifying currency Accelerating return organic(1) expand margins in risk management of cash to sales growth both segments practices shareholders Expect to deliver earnings growth aligned with mid-term targets (1) Organi
Slide 5: Focused Execution to Deliver Continued Growth
Focused Execution to Deliver Continued Growth 2020 Financial Results Measure Q3 2020 2020 YTD Highlights Net sales decline in the quarter driven by (3)% 1% ~$200 million in currency headwinds Net Sales Volume and price improvement offsetting ~$470 million currency impact year-to-date Double digit or
Slide 6: Driving Actions to Expand Seed Margin and Return on Investment
Driving Actions to Expand Seed Margin and Return on Investment Seed Segment Results Key Mid-Term Growth Drivers Net Sales Operating EBITDA ❑✓ Low single digit seed price improvement year-to-date 3Q 2020 Continued pricing ✓ $0.7B for value ❑ Launched the 2021 price cards Reported for the North Americ
Slide 7: Accelerating the Transition to Our Technology Offerings in Soybeans
Accelerating the Transition to Our Technology Offerings in Soybeans 2020 20% 17% 10% 70% Industry penetration Corteva soybean Corteva germplasm Enlist acres treated for Enlist E3™(1) soybeans portfolio penetration with EnlistTM herbicides Enlist E3™(1) soybeans in Corteva Enlist E3TM(1) units 2021 ~
Slide 8: Solid Progress to Re-Establish Momentum in Crop Protection
Solid Progress to Re-Establish Momentum in Crop Protection Key Mid-Term Growth Drivers Crop Protection Segment Results Net Sales Operating EBITDA ✓ New product ❑ Delivered > $180 million in 3Q 2020 organic(1) net sales growth from launches new products year-to-date $1.2B $1.3B Reported 9% $0.12B $0.
Slide 9: Streamlining the CP Manufacturing Assets Inherited at Spin
Streamlining the CP Manufacturing Assets Inherited at Spin 2017 29 Strong Bias Toward Formulation & Manufacturing Assets Inherited Structure Internal Active Ingredient Workforce changes necessary to Packaging Centralized inherited from legacy companies Manufacturing support new operating model F&P m
Slide 10: Scanning the Market Backdrop for Constructive Signals
Scanning the Market Backdrop for Constructive Signals Commodity Trade Supply & Strong China Demand purchases of U.S. Corn and soybean corn and soybeans prices above pre- Monitoring trade COVID levels flows in other key Monitoring markets ethanol recovery Currency Farm Income Monitoring Government Br
Slide 11: Affirming Full Year 2020 Guidance
Affirming Full Year 2020 Guidance Net Sales Operating EBITDA(1), (2) Operating EPS(2) $ in billions $ in millions $1.43 $13.9 - $14.1B $1.25 – 1.45 $13.8B $1,987 $1,900 - $2,000 (3) (3) FY'19 FY'20E FY'19 FY'20E FY'19 FY'20E Sales Growth Op. EBITDA(2) vPY Operating EPS(2) vPY FY19 includes ~$70 mill
Slide 12: Focused on Continued Execution and 2021 Setup
Focused on Continued Execution and 2021 Setup Growth Drivers Seed Growth ▪ Current commodity price levels indicate relatively flat corn Synergies / Productivity acreage and soybean acreage increase in North America ▪ Final tranche of merger-related synergies - $200 ▪ Continued execution on price for
Slide 13: Update on Currency Management
Update on Currency Management Objective: Decrease earnings volatility associated with exchange rates Strategy Mitigate and Transfer Constant Monitoring Hedge Exposures Reduce FX earnings and cash flow Utilize business management Address intra-year timing Cash flow hedging: Protect volatility and imp
Slide 14: Disciplined Approach To Capital Allocation
Disciplined Approach To Capital Allocation Since Spin: Looking Forward: Focused Investment Enhance Capital Return Growth Investments Maintain Competitive Dividend Investments in route-to-market and multi-channel / $485 million in dividends since Spin multi-brand strategy Continue to target 25-35% of
Slide 15: Slide 15
Slide 16: 3Q 2020 Highlights
3Q 2020 Highlights ($’s in millions, except EPS) 3Q 2019 3Q 2020 Change Net Sales $1,911 $1,863 (3)% GAAP Loss from Continuing Operations After Income Taxes $(527) $(390) 26% Operating EBITDA(1) $(207) $(179) 14% Operating EBITDA Margin(1) (10.8)% (9.6)% 122 bps GAAP EPS from Continuing Operations $
Slide 17: 3Q 2020 Operating EPS Variance
3Q 2020 Operating EPS(1) Variance Operating EPS(1) Bridge ($) $0.02 $0.03 $(0.06) $(0.39) $0.03 $(0.02) ($0.39) ($0.11) $0.11 2 3 5 1 4 6 (4) 3Q'19 Currency Volume/Price Production Costs(2) Non-Production Change in Base EGL Other/Portfolio 3Q'20 Costs (3) Tax Rate (1) Currency 1 Volume/Price 2 Produ
Slide 18: 3Q 2020 Regional Net Sales Highlights – Crop Protection
3Q 2020 Regional Net Sales Highlights – Crop Protection Global Net Sales North Reported Organic(1) Latin Reported Organic(1) America(2) 2% 2% America 14% 43% 3Q 2019 3Q 2020 3Q 2019 3Q 2020 Net Sales ($MM) $397 $390 Net Sales ($MM) $491 $559 $1.3B Volume Price Currency Portfolio Volume Price Currenc
Slide 19: 3Q 2020 Regional Net Sales Highlights – Seed
3Q 2020 Regional Net Sales Highlights – Seed North (1) (1) Global Net Sales Reported Organic Latin Reported Organic America(2) 57% 55% America 9% 7% 3Q 2019 3Q 2020 3Q 2019 3Q 2020 Net Sales ($MM) $226 $97 Net Sales ($MM) $271 $246 $0.7B Volume Price Currency Portfolio Volume Price Currency Portfoli
Slide 20: 3Q YTD 2020 Highlights
3Q YTD 2020 Highlights ($’s in millions, except EPS) 3Q YTD 2019(2) 3Q YTD 2020 Change Net Sales $10,863 $11,010 1% GAAP Income from Continuing Operations After Income Taxes $68 $657 866% Operating EBITDA(1) $1,763 $1,851 5% Operating EBITDA Margin(1) 16.2% 16.8% 58 bps GAAP EPS from Continuing Oper
Slide 21: 3Q YTD 2020 Regional Net Sales Highlights
3Q YTD 2020 Regional Net Sales Highlights North America(1) Europe, Middle Latin America Asia Pacific East, Africa Net Sales $5.80B $5.82B Reported $2.43B Reported Reported Reported Flat $2.34B 4% $1.78B $1.75B 1% $0.95B $1.01B 7% Organic(2) Organic (2) Organic (2) Organic (2) 1% 8% 17% 13% 3Q YTD 19
Slide 22: 3Q YTD 2020 Regional Net Sales Highlights – Crop Protection
3Q YTD 2020 Regional Net Sales Highlights – Crop Protection North Reported Organic(1) Latin Reported Organic(1) Global Net Sales America(2) 2% 1% America 5% 15% 3Q YTD 3Q YTD 3Q YTD 3Q YTD 2019 2020 2019 2020 $4.5B $4.5B Net Sales ($MM) $1,562 $1,528 Net Sales ($MM) $1,144 $1,086 Volume Price Curren
Slide 23: 3Q YTD 2020 Regional Net Sales Highlights – Seed
3Q YTD 2020 Regional Net Sales Highlights – Seed North Reported Organic(1) Latin Reported Organic(1) Global Net Sales America(2) 1% 2% America 5% 20% 3Q YTD 3Q YTD 3Q YTD 3Q YTD 2019 2020 2019 2020 $6.5B Net Sales ($MM) $4,238 $4,290 Net Sales ($MM) $636 $668 $6.3B Volume Price Currency Portfolio Vo
Slide 24: Calculation of Corteva Operating EBITDA
Corteva Non-GAAP Calculation of Corteva Operating EBITDA Three Months Ended September 30, Nine Months Ended September 30, 2020 2019 2020 2019 In millions As Reported As Reported As Reported Pro Forma (Loss) income from continuing operations, net of tax (GAAP) $ (390) $ (527) $ 657 $ 68 (Benefit from
Slide 25: Corteva Segment Information
Corteva Segment Information Net sales by segment Three Months Ended September 30, Nine Months Ended September 30, In millions 2020 2019 2020 2019 Seed $ 523 $ 681 $ 6,516 $ 6,347 Crop Protection 1,340 1,230 4,494 4,516 Total net sales $ 1,863 $ 1,911 $ 11,010 $ 10,863 Corteva Operating EBITDA Three
Slide 26: Corteva significant items (Pretax)
Corteva significant items (Pretax) Three Months Ended September 30, Nine Months Ended September 30, 2020 2019 2020 2019 In millions As Reported As Reported As Reported Pro Forma Seed Loss on divestiture - - - (24) Restructuring and asset-related charges - net (9) (47) (154) (123) Amortization of inv
Slide 27: Price, Volume Currency Analysis Region Q3 2020 vs. Q3 2019
Corteva Segment Information - Price, Volume Currency Analysis Region Q3 2020 vs. Q3 2019 Percent Change Due To: 2 Net Sales Change (GAAP) Organic Change (Non-GAAP) Local Price & $ (millions) % $ (millions) % Product Mix Volume Currency Portfolio / Other North America1 $ (136) -22% $ (134) -22% -4% -
Slide 28: Price, Volume Currency Analysis Region Nine Months
Corteva Segment Information - Price, Volume Currency Analysis Region Nine Months Ended September 30, 2020 vs. Nine Months Ended September 30, 2019 Percent Change Due To: 2 Net Sales Change (GAAP) Organic Change (Non-GAAP) Local Price & $ (millions) % $ (millions) % Product Mix Volume Currency Portfo
Slide 29: Price, Volume Currency Analysis Product Line Q3 2020
Corteva Segment Information - Price, Volume Currency Analysis Seed Product Line Q3 2020 vs. Q3 2019 Percent Change Due To: 2 Net Sales Change (GAAP) Organic Change (Non-GAAP) Local Price & $ (millions) % $ (millions) % Product Mix Volume Currency Portfolio / Other Corn $ (69) -18% $ (30) -8% -2% -6%
Slide 30: Price, Volume Currency Analysis Product Line Nine Months
Corteva Segment Information - Price, Volume Currency Analysis Seed Product Line Nine Months Ended September 30, 2020 vs. Nine Months Ended September 30, 2019 Percent Change Due To: 2 Net Sales Change (GAAP) Organic Change (Non-GAAP) Local Price & $ (millions) % $ (millions) % Product Mix Volume Curr
Slide 31: Calculation of Corteva Operating EPS
Corteva Non-GAAP Calculation of Corteva Operating EPS Three Months Ended September 30, 2020 2019 2020 2019 $ (millions) $ (millions) EPS (diluted) EPS (diluted) As Reported As Reported As Reported As Reported Loss from continuing operations attributable to Corteva (GAAP) $ (392) $ (516) $ (0.52) $ (
Slide 32: Calculation of Corteva Base Tax Rate
Corteva Non-GAAP Calculation of Corteva Base Tax Rate Three Months Ended September 30, Nine Months Ended September 30, 2020 2019 2020 2019 As Reported As Reported As Reported Pro Forma (Loss) income from continuing operations before income taxes (GAAP) $ (507) $ (631) $ 745 $ 214 Add: Significant it