Corteva, Inc. · NYSE:CTVA
Corteva — Corteva Agriscience — Non-Deal Roadshow (May 2019)
47 slides from Corteva's roadshow presentation, May 13, 2019
Slide 1: Roadshow Presentation
Roadshow Presentation May 2019 Insert Risk Classification Agriculture Division of DowDuPont
Slide 2: Safe Harbor Regarding Forward-Looking Statements
Safe Harbor Regarding Forward-Looking Statements Forward-Looking Statements This communication contains “forward-looking statements” within the meaning of the federal securities laws, including Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1
Slide 3: A Reminder About Non-GAAP Statements and Pro Forma Financial Information
A Reminder About Non-GAAP Statements and Pro Forma Financial Information These risks are and will be more fully discussed in the current, quarterly and annual reports and preliminary registration st atement on Form 10 filed with the U. S. Securities and Exchange Commission by DowDuPont, DuPont or th
Slide 4: Corteva Agriscience Values and Purpose
Corteva Agriscience™ Values Enrich Lives We commit to enhancing lives and the land Stand Tall We are leaders and act boldly Build Together We grow by working together Be Curious Our Purpose We innovate relentlessly To enrich the lives of Be Upstanding those who produce and We always do what’s right
Slide 5: Corteva Agriscience Global Scale and Market Presence
Corteva Agriscience™ Global Scale and Market Presence Our Company $2.8B 21,000+ 140+ Colleagues Countries $7.4B 150+ 12,000+ $1.3B R&D Facilities Granted Patents 100+ 65+ Production & Active Ingredients $2.8B Mfg. Facilities HQ: Wilmington, DE Business Centers in IA & IN 100+ 8,000+ Regional Sales C
Slide 6: Creating a Pure-Play, U.S.-Based, Agriculture Company
Creating a Pure-Play, U.S.-Based, Agriculture Company Crop Crop Seeds Crop Seeds Seeds Protection & Traits Protection Protection & Traits ~70% ~44% ~56% ~30% ~80% ~20% Portfolio › Leading germplasm › Germplasm diversification › Complete solution for farmers › Digital portfolio › Herbicide and insect
Slide 7: Delivering Financial Results Against Current Market Backdrop
Delivering Financial Results Against Current Market Backdrop Standalone Net Sales Standalone Operating EBITDA(1) $14.2B $14.3B ~$14.3B $14.0B $2.2-2.3B $2.0B $2.1B $1.7B 2016 2017 2018 2019E 2016 2017 2018 2019E 2019 Full Year Indications Expected organic net sales growth of 1-2%, offset by Accelera
Slide 8: Tools to Drive Shareholder Value
Tools to Drive Shareholder Value › Growing market › Volume and pricing on new products › Continued synergy capture › Additional productivity initiatives › Focus on ROIC1 and capital allocation 1 ROIC is defined as net operating profit after tax excluding significant items, non-operating costs and me
Slide 9: Summary Perspectives on Recent Performance
Summary Perspectives on Recent Performance Positive momentum Headwinds offset ● Crop Protection portfolio is delivering ● U.S. flooding ● Secured regulatory approval for key ● FX Seed traits ● Raw material costs ● Cost synergies on track ● Regional brand realignment ● Launched new productivity progr
Slide 10: 2019 Corteva Operating EBITDA Guidance
2019 Corteva Operating EBITDA* Guidance Margin expansion driven by synergies and product launches ($ in billions) Margin Expansion New product launches Pricing on high demand crop protection products Accelerated synergy delivery +$50 million in 2H’19 Increased productivity to improve margins
Slide 11: Mid-term Financial Targets
Mid-term Financial Targets1 Sales Expected to Exceed Market Growth Operating EBITDA Growth Expected ~2x Sales by 1-2% Corteva Total Revenue Growth2: Operating EBITDA Margin Expansion: 50-150bps Seed 3-5% Corteva Operating EBITDA Growth: 6-10% Crop 3.5-6.5% Total 3-5% Market Growth1: 2-4% Strong Free
Slide 12: Executing to Win: Key Crop Protection Launches
Executing to Win: Key Crop Protection Launches Key Crops Region Launch Year 2019E Herbicides • Recent Crop Protection launches are Arylex™ Active Cereals, Soy, Others NA, LA, EMEA, AP 2018 expected to deliver above-market growth: Enlist™ Herbicides Soy, Corn, Cotton NA, LA, EMEA 2017-2019 >$50MM • 2
Slide 13: Growth Propelled by Our Crop Protection Pipeline
Growth Propelled by Our Crop Protection Pipeline Key Crop Protection Platform launches targeted through 2023 Region Fruits & Cereal Soybean Corn Rice Pasture & Oil Seed Rape Other Vegetables LM Sunflower Herbicides Arylex™ active NA, LA, EMEA, AP Enlist™ weed control system NA, LA, EMEA Rinskor™ act
Slide 14: Executing to Win: Key Seed Trait Launches
Executing to Win: Key Seed Trait Launches Crop Region Launch Year 2019E Qrome® Corn NA 2019 ~$50MM PowerCore® Corn NA 2017 • Successful new product launches in ~$300MM 2019 – Qrome® corn products, Enlist PowerCore™ E3™ soybeans, LibertyLink® Canola Corn LA 20191 Ultra and PowerCore® Ultra corn Enlis
Slide 15: Growth Propelled by Our Seed and Trait Pipeline
Growth Propelled by Our Seed and Trait Pipeline Becoming a Launch Machine Key Seed Platform launches targeted through 2023 TRAIT CROPS DISCIPLINE REGIONS TRAIT CROPS DISCIPLINE REGIONS Insect Insect North Latin Corn Protection & Protection America Soy America Herbicide Tolerance Insect Latin Corn He
Slide 16: Comprehensive Routes-to-Market
Comprehensive Routes-to-Market Based on Customer Segmentation and Purchasing Preference Customer Segment Corteva Agriscience™ Route-to-Market Geography (Buying Preference) Serviced by dedicated seed sales North America Pioneer® and multiple professional; high touch experience Exclusive Pioneer age
Slide 17: The Corteva Acre
U.S. The Corteva Acre SEED GENETICS & TRAITS • U.S. and area leadership accountable for growth across Seed, Crop Protection and Digital • Strategic alignment and commitment to key retail and distribution partners • Complementary offer is expanding market penetration – 2X Pioneer customers using Cort
Slide 18: Getting to Best-in-Class Cost Structure and Improved Return
Getting to Best-in-Class Cost Structure and Improved Return Seed Production Commercial Headcount R&D Sites CP Manufacturing Sites Offices MERGER CLOSE SEPTEMBER ~25,000 90 287 233 2 site 2017 shutdowns and $1.2 billion 15+ site Cost Synergy SEPTEMBER optimization Run Rate 2018 ~23,000 74 220 196 Ach
Slide 19: Continued Flow of Merger-Related Cost Synergies
Continued Flow of Merger-Related Cost Synergies Cumulative Synergies Composition: 2017 2018 2019E 2020E 2021E ~1/3 Headcount $50 million $450 million $800 million $1.0 billion ~$1.2 billion fixed cost Accelerated our synergies 1H: $150 targets to deliver $50 million more 2H: $200 FY: $350 ~1/3 in ye
Slide 20: Digital Transformation to Enable Margin Expansion
Digital Transformation to Enable Margin Expansion Internal External Pipeline Customer Enterprise Innovation Software › Automation, data science and › Enterprise strategy & applications › SaaS1 through Granular digital tools in R&D ›Process automation Customer experience Reduced Costs ›Data-driven de
Slide 21: Optimizing Capital Allocation for Growth and Shareholder Value
Optimizing Capital Allocation for Growth and Shareholder Value Establish Capital Structure Define Financial Policies Deliver ROIC Improvement JUNE 1, 2019 | Expected Spin Priorities › Maintain financial flexibility to support › Committed to growing cash flow in a › Deliver merger cost synergies busi
Slide 22: Progress on Five Priorities for Shareholder Value Creation
Progress on Five Priorities for Shareholder Value Creation Corteva Indications 01 02 03 04 05 Instill a strong Drive disciplined Develop innovative Attain best-in-class Deliver above- culture capital allocation solutions cost structure market growth Engaged Finalized capital Launched new Delivered y
Slide 23: Positioned to Deliver Shareholder Value
Positioned to Deliver Shareholder Value Unique Balanced Strong route to Best-in- portfolio Strong pipeline of Digital market with class cost and global culture and innovative transformation expanded structure market team solutions access presence Agriculture Division of DowDuPont 23
Slide 24: Appendix
Appendix Insert Risk Classification Agriculture Division of DowDuPont 17
Slide 25: Reconciliation of Division to Standalone Financials
Reconciliation of Division to Standalone Financials EBITDA 2019E DWDP Ag segment operating ~$2.8B EBITDA Spin adjustments (millions) ~(174) Excl businesses, Non-op pension and Other Standalone costs (millions) ~(478) Functional and leveraged and Corporate Cost reductions (millions) ~50-150 Corteva o
Slide 26: Additional Modeling Guidance
Additional Modeling Guidance Cash Flow Modeling Guidance Additional Modeling Assumptions ($ in millions) 2019E Operating tax rate of 19-21% Interest ($150-200) Interest expense of $150-200 million Cash Taxes (~$450) Annual digital investment ~$100 million Pension and OPEB Payments ($200-300)
Slide 27: Out-licensing proprietary trait technology drives expanded margins
Royalty Impact Moving toward proprietary trait packages • Royalty costs in 2018 were ~$750 million for all in- licensed traits • Expected net increase of ~$50 million in 2019 royalty costs due to volumes and mix of current Out-licensing technologies proprietary trait • Enlist E3™ soybean* in-licensi
Slide 28: Capital Expenditures
Capital Expenditures Disciplined Approach to Capex Investments Capex limited to depreciation plus cost $650M ~$650M to achieve savings $100M ~$120M Depreciation is expected to be ~$570- 600 million in 2019 ~40% is expected for required for repair, maintenance, and safety $550M $530M ~60% is
Slide 29: Seed Drives Earnings and Cash Flow Seasonality
Seed Drives Earnings and Cash Flow Seasonality ~80% of seed sales occur in Q1/Q2 Representative Seasonal Debt Level ($ in billions) Peak: ~$4B ~30% ~50% ~5% ~15% 1st Qtr 2nd Qtr 3rd Qtr 4th Qtr 1Q 2Q 3Q 4Q 1H sales primarily in North America and Europe seed (corn, soybean, sunflower) Q1 sales al
Slide 30: Corteva Capital Structure
Corteva Capital Structure Liquidity Sources1 Debt Profile Targeted at 12/31/19 ($ in billions) ~$1B Cash $2.0B ~$2B Cash Long Term Financial Debt ~$0.2 5-Year Revolver ~$3B 3-Year Revolver Expected to be minimal Other Short Term Financial Debt at year-end, with intra- ~$3B period peaks of ~$4B $7.3B
Slide 31: Achieving the Intended Capital Structure for Corteva
Achieving the Intended Capital Structure for Corteva Targeting A- Expected Liquidity and short- term credit profile1 debt profile debt supporting seasonality A- credit profile to support Minimal long term financial debt ~$2B cash balance our differentiated business Adjusted Debt* ~$4B, prima
Slide 32: Pension
Pension U.S. Service Costs Corteva will take the U.S. pension and OPEBs of heritage DuPont. Frozen The U.S. pension is frozen; no further service costs to be accrued Almost all future benefits or costs are non-operating Non-operating pension is primarily driven by changes in asset returns, N
Slide 33: Maximizing Value of Trait Launches: Corn
Maximizing Value of Trait Launches: Corn1 Balancing use of proprietary and licensed technology ABOVE GROUND BELOW GROUND Improved Improved Product Out-license Improved Improved Product Out-license Margin Efficacy Renewal Opportunity Margin Efficacy Renewal Opportunity Optimum® Intrasect® Optimum® Op
Slide 34: Maximizing Value of Trait Launches: Soybean
Maximizing Value of Trait Launches: Soybean1 Transitioning to more proprietary technology NORTH AMERICA LATIN AMERICA Improved Improved Product Out-license Improved Improved Product Out-license Margin Efficacy Renewal Opportunity Margin Efficacy Renewal Opportunity Glyphosate Glyphosate Tolerance To
Slide 35: Enlist Weed Control System Highlights
Highlights Enlist™ Weed Control System sales targeting >$0.5B by 2023 • Differentiation: • Superior weed control system helps growers maximize yield: • Enlist E3™ Soybeans1 enables growers to use one of the most advanced herbicide technology with Enlist Duo® or Enlist One® herbicides • The Enlist He
Slide 36: Qrome Highlights
Highlights Expanded Launch -- 2019 Targeting sales of ~$1 billion by 2023 • Differentiation: • Qrome® products offer growers high yielding insect control options to drive productivity via top tier genetics • Performance and Success to Date: • Qrome® products have consistently delivered an average 5.
Slide 37: Inatreq Highlights
Highlights Est. Launch 2019 Targeting sales of >$275MM in 2023 • Differentiation: • Novel fungicide for the management of key diseases in wheat (Septoria), other cereals and banana (black Sigatoka) • New naturally derived fungicide with good safety profile and high efficacy at low use rates • New to
Slide 38: Nematicide Highlights
Highlights Est. Launch 2021 Targeting peak sales of >$200 MM in 2028 • Differentiation: • Novel sulfonamide nematicide with a unique mode of action against plant- parasitic nematodes, different from other nematicides on the market • True nematicide (no insecticidal or fungicidal activity) making it
Slide 39: Regional Profile – Latin America
Regional Profile – Latin America Latin America Strengthening market access; rapid technology introduction Execution Excellence $2.8B Net Sales • Successful launch of Brevant™ seeds Seed brand Delivering Results 39% • Established differentiated Corteva 13% organic growth* routes-to-market – Crop Prot
Slide 40: Regional Profile – Europe, Middle East, Africa
Regional Profile – Europe, Middle East, Africa Europe, Middle East, Africa Focus on customer through innovative solutions and differentiated routes-to-market Execution Excellence $2.8B Net Sales • Multi-brand Seeds strategy launched Seed Delivering Results with Brevant™ seeds in Europe 51% 0% organi
Slide 41: Regional Profile – Asia Pacific
Regional Profile – Asia Pacific Asia Pacific Lead industry growth with major launches in CP and rapid expansion in corn coverage Execution Excellence $1.3B Net Sales • Grew >2x industry growth in region Seed Delivering Results 27% throughout 2018 10% organic growth* • New routes-to-market launched i
Slide 42: Regional Profile – North America
Regional Profile – North America North America Building on leading positions in Seed and Crop Protection Execution Excellence $7.4B Net Sales • Introduced new premium retail brand Crop Protection in Canada - Brevant™ seeds in Delivering Results 33% canola, corn, soybeans and winter 3% organic growth
Slide 43: Profile – United States
Profile – United States U.S. Building on leading positions in Seed and Crop Protection • Four Crop Protection product launches# $6.7B Net Sales • Lumisena®, Elevore®, EverpreX®, Isoclast™ Crop Protection ~10,500 43 33% • Two new seed trait launches Colleagues Production Facilities • Qrome® corn prod
Slide 44: Important Notices
Important Notices DO NOT APPLY DICAMBA HERBICIDE IN-CROP TO SOYBEANS WITH Roundup Ready 2 Xtend® technology unless you use a dicamba herbicide Agrisure® and Agrisure Viptera®are registered trademarks of, and used under license from, a Syngenta Group Company. Agrisure® technology incorporated into pr
Slide 45: Reconciliation of non-GAAP financial measures
Corteva Agriscience ("Corteva" or the "Company") Reconciliation of non-GAAP financial measures Some Corteva communications or presentations to investors contain certain financial measures that are not defined under accounting principles generally accepted in the United States of America ("GAAP"). No
Slide 46: Selected Segment Information and Pro Forma Operating EBITDA
Corteva Corteva Selected Segment Information Selected Non-GAAP Calculation of Corteva Pro Forma Operating EBITDA In millions YTD 2018 YTD 2017 YTD 2016 Pro forma net sales by segment 1 Pro forma (loss) income from continuing operations, net of tax (GAAP) $ (4,962) $ 2,569 $ 528 In millions YTD 2018
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