Corteva, Inc. · NYSE:CTVA
Corteva — Q2 2020 Earnings Presentation
32 slides from Corteva's earnings presentation, Aug 5, 2020
Slide 1: 2Q & 1H 2020 Earnings Conference Call
2Q & 1H 2020 Earnings Conference Call August 6, 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: Keeping our organization resilient through crisis
Keeping our organization resilient through crisis Employee Safety & Customer Support & Government & Community Diversity, Equity & Security Supply Resilience Outreach Inclusion Ensuring the health Keeping our supply Doing our part in the Challenging our and safety or our chain open and communities wh
Slide 5: Keeping our priorities for shareholder value creation in focus
Keeping our priorities for shareholder value creation in focus 2Q 2020 Highlights 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 Taking action to Issued $1 billion in Sca
Slide 6: Navigating choppy market backdrop and economic downturn
Navigating choppy market backdrop and economic downturn Market driver Observed impact Crisis has impacted demand for ethanol and meat Lower U.S. ethanol production is running at approximately 85% of pre-COVID levels Commodity Demand Lower demand is expected to build U.S. corn ending stock leve
Slide 7: 1H 2020 Performance Highlights
1H 2020 Performance Highlights Net Sales Operating EBITDA(1), (2) Highlights $ in millions Reported net sales up 2% with organic $9.1B $9.0B $2,030 growth(2) in both segments Reported Op. EBITDA(2) 2% $1,970 Growth Earnings improved on strong volume Organic(2) 3% and price growth in Seed in all regi
Slide 8: Perspectives on First Half Performance
Perspectives on First Half Performance Momentum Challenges Global corn seed portfolio and new corn seed Currency devaluation, primarily in Europe technology launches, like Qrome® and Brazil Disciplined execution in U.S. soybean seed Lower corn planted acreage increase in North leading to price gains
Slide 9: 2Q 2020 Highlights
2Q 2020 Highlights ($’s in millions, except EPS) 2Q 2019 2Q 2020 Change Net Sales $5,556 $5,191 (7)% GAAP Income from Continuing Operations After Income Taxes $483 $766 59% Operating EBITDA(1) $1,452 $1,236 (15)% Operating EBITDA Margin(1) 26.1% 23.8% ~(230) bps GAAP EPS from Continuing Operations $
Slide 10: Updated Full Year 2020 Guidance
Updated Full Year 2020 Guidance(1) Net Sales Operating EBITDA(1) Operating EPS(2),(4) $ in billions $ in millions $1.43 ~$13.9 - $14.1B $13.8B $1.25 – 1.45 $1,987 $1,900 - $2,000 FY'19 FY'20E (3) (3) FY'19 FY'20E FY'19 FY'20E Sales Growth Op. EBITDA(2) vPY Operating EPS(2) vPY ~$400 million in curre
Slide 11: Second Half 2020 Key Assumptions
Second Half 2020 Key Assumptions 2H’20 Growth Cost Management Other Financial Organic Growth(1) 6 - 7% Synergies / Productivity Gains on Divestitures . Growth largely due to Latin America . 2H’20 synergies and productivity . ~$70 million headwind on gains Crop Protection volume and pricing actions ~
Slide 12: Net Sales Progression and Critical Second Half Actions
Net Sales Progression and Critical Second Half Actions Net Sales by Region in Second Half(1) Asia Pacific Latin America 2H captures conclusion of the summer Execution on high-demand products, season in Brazil and start of safrinha like Spinosyns insecticide and ~10% RinskorTM herbicide Leverag
Slide 13: New and Differentiated Products Driving Growth
New and Differentiated Products Driving Growth Seed Crop Protection Qrome® Corn Seed Net Sales New Products Net Sales $ in millions $ in millions . First year of full launch in 2020 • ArylexTM herbicide in cereals with ~$700 novel technology and favorable ~$1,000 . Sales expanded to U.S. multi-chann
Slide 14: Focused execution in the second half
Focused execution in the second half 1 Maintain momentum 2 Adapt and respond Strong start to corn seed invoicing and More aggressive spending actions product deliveries in Latin America and North America Flexible, agile supply chain Retail strategy and Brevant launch Seed harvest and ava
Slide 15: Slide 15
Slide 16: 2Q 2020 Regional Net Sales Highlights – Crop Protection
2Q 2020 Regional Net Sales Highlights – Crop Protection (1) (1) Global Net Sales North Reported Organic Latin Reported Organic America(2) 3% 2% America 34% 20% Q2 2019 Q2 2020 Q2 2019 Q2 2020 $1.9B Net Sales ($MM) $686 $663 Net Sales ($MM) $466 $309 Volume Price Currency Portfolio Volume Price Curre
Slide 17: 2Q 2020 Regional Net Sales Highlights – Seed
2Q 2020 Regional Net Sales Highlights – Seed North Reported Organic(1) Latin Reported Organic(1) Global Net Sales (2) America 6% 6% America 10% 27% Q2 2019 Q2 2020 Q2 2019 Q2 2020 $3.7B Net Sales ($MM) $3,099 $2,903 Net Sales ($MM) $187 $206 Volume Price Currency Portfolio Volume Price Currency Port
Slide 18: 1H 2020 Regional Net Sales Highlights – Crop Protection
1H 2020 Regional Net Sales Highlights – Crop Protection North Reported Organic(1) Latin Reported Organic(1) Global Net Sales America(2) 2% 1% America 19% 6% 1H 2019 1H 2020 1H 2019 1H 2020 $3.3B Net Sales ($MM) $1,165 $1,138 Net Sales ($MM) $653 $527 $3.2B Volume Price Currency Portfolio Volume Pric
Slide 19: 1H 2020 Regional Net Sales Highlights – Seed
1H 2020 Regional Net Sales Highlights – Seed North Reported Organic(1) Latin Reported Organic(1) Global Net Sales America(2) 5% 5% America 16% 29% 1H 2019 1H 2020 1H 2019 1H 2020 $6.0B Net Sales ($MM) $4,012 $4,193 Net Sales ($MM) $365 $422 Volume Price Currency Portfolio Volume Price Currency Portf
Slide 20: Segment Performance Highlights – Crop Protection
Segment Performance Highlights – Crop Protection 2Q 2020 1H 2020 ($ in millions) 2Q 2020 vPY ($ in millions) 1H 2020 vPY Operating EBITDA $309 (31)% Operating EBITDA $547 (18)% Operating EBITDA Margin 18.7% (550)bps Operating EBITDA Margin 17.3% (310)bps Operating EBITDA Bridge ($ in millions) Opera
Slide 21: Segment Performance Highlights – Seed
Segment Performance Highlights – Seed 2Q 2020 1H 2020 ($ in millions) 2Q 2020 vPY ($ in millions) 1H 2020 vPY Operating EBITDA $956 (8)% Operating EBITDA $1,537 +13% Operating EBITDA Margin 27% (100)bps Operating EBITDA Margin 25.6% +160bps Operating EBITDA Bridge ($ in millions) Operating EBITDA Br
Slide 22: 2Q 2020 Operating EPS Variance
2Q 2020 Operating EPS(1) Variance Operating EPS(1) Bridge ($) $1.42 ($0.07 ) ($0.12) $0.03 $(0.08) $0.04 $0.02 $0.02 $1.26 1 2 3 4 5 6 (2) (4) Q2'19 Currency Volume/Price Production Costs Non-Production Change in Base EGL Other/Portfolio Q2'20 (3) (1) Costs Tax Rate Currency 1 Volume/Price 2 Product
Slide 23: 1H 2020 Regional Net Sales Highlights
1H 2020 Regional Net Sales Highlights North America(1) Europe, Middle Latin America Asia Pacific East, Africa Net Sales $5.33B $5.18B $2.11B Reported Reported $1.02B Reported Reported 3% 4% 7% $0.73B $0.76B 4% $2.03B Organic(2) Organic (2) $0.95B Organic (2) Organic (2) 3% 8% 7% 10% 1H'19 1H'20 1H'1
Slide 24: Update on 2020 Key Inputs
Update on 2020 Key Inputs Factor Updated FY20 Guidance 1H 2020 Trend 2H 2020 . Expecting $400 million headwind to . Operating EBITDA impacted negatively by . Expect ~$300 million headwind, primarily Currency Operating EBITDA currency devaluation related to BRL . Partially offset by pricing . $110 mi
Slide 25: FY20 Modeling Guidance - Operating Earnings Per Share
FY20 Modeling Guidance - Operating Earnings Per Share(1) ($ in millions, except where noted) Guidance Commentary Depreciation (480 – 490) Interest Income 30 – 40 (55 – 65) Primarily represents cost of short-term borrowings to fund working Interest Expense capital Base Tax Rate(1) 18% - 20% Exchange
Slide 26: Corteva Non-GAAP Calculation of Corteva Operating EBITDA
Corteva Non-GAAP Calculation of Corteva Operating EBITDA Three Months Ended June 30, Six Months Ended June 30, 2020 2019 2020 2019 In millions As Reported As Reported As Reported Pro Forma Income from continuing operations, net of tax (GAAP) $ 766 $ 483 $ 1,047 $ 595 Provision for income taxes on co
Slide 27: Corteva Segment Information
Corteva Segment Information Net sales by segment Three Months Ended June 30, Six Months Ended June 30, In millions 2020 2019 2020 2019 Seed $ 3,538 $ 3,699 $ 5,993 $ 5,666 Crop Protection 1,653 1,857 3,154 3,286 Total net sales $ 5,191 $ 5,556 $ 9,147 $ 8,952 Corteva Operating EBITDA Three Months En
Slide 28: Corteva significant items (Pretax)
Corteva significant items (Pretax) Three Months Ended June 30, Six Months Ended June 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 (135) (49) (145) (76) Amortization of inventory ste
Slide 29: Segment Information - Price, Volume Currency Analysis Region (Q2)
Corteva Segment Information - Price, Volume Currency Analysis Region Q2 2020 vs. Q2 2019 Percent Change Due To: 2 Net Sales Change (GAAP) Organic Change (Non-GAAP) Local Price & $ (millions) % $ (millions) % Product Mix Volume Curre ncy Portfolio / Other North Ame rica1 $ (219) -6% $ (201) -5% 0% -5
Slide 30: Segment Information - Price, Volume Currency Analysis Region (Six Months)
Corteva Segment Information - Price, Volume Currency Analysis Region Six Months Ended June 30, 2020 vs. Six Months Ended June 30, 2019 Percent Change Due To: 2 Net Sales Change (GAAP) Organic Change (Non-GAAP) Local Price & $ (millions) % $ (millions) % Product Mix Volume Curre ncy Portfolio / Other
Slide 31: Corteva Non-GAAP Calculation of Corteva Operating EPS
Corteva Non-GAAP Calculation of Corteva Operating EPS Three Months Ended June 30, 2020 2019 2020 2019 $ (millions) $ (millions) EPS (diluted) EPS (diluted) As Reported As Reported As Reported As Reported Net income from continuing operations attributable to Corteva (GAAP) $ 760 $ 470 $ 1.01 $ 0.63 L
Slide 32: Corteva Non-GAAP Calculation of Corteva Base Tax Rate
Corteva Non-GAAP Calculation of Corteva Base Tax Rate Three Months Ended June 30, Six Months Ended June 30, 2020 2019 2020 2019 As Reported As Reported As Reported Pro Forma Income from continuing operations before income taxes (GAAP) $ 844 $ 753 $ 1,252 $ 845 Add: Significant items - charge 179 455