Corteva, Inc. · NYSE:CTVA
Corteva — FY2019 Earnings Presentation
28 slides from Corteva's earnings presentation, Jan 30, 2020
Slide 1: 4Q/FY 2019 Earnings Conference Call
DRAFT 4Q/FY 2019 Earnings Conference Call January 30, 2020 Insert Risk Classification
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 and pri
Slide 4: Full Year 2019 Highlights
Full Year 2019 Highlights Net Sales Operating EBITDA(1) Highlights Outside of North America, net sales grew 1% on a reported basis and 7% on $14.3B $13.8B $2.07B Reported an organic(1) basis $1.99B 3% Operating EBITDA(1) declined due to the impact of weather-related events in North (1) Organic Ameri
Slide 5: Continued Focus on ROIC to Ensure Capital Discipline
Continued Focus on ROIC(1) to Ensure Capital Discipline 2019 ROIC(1) Key Drivers › Delivering merger cost synergies consistent with commitments 19.8% › Executing comprehensive productivity program benefiting earnings and working capital Target › Harmonizing disparate ERP systems to improve inventory
Slide 6: Progress on Five Priorities for Shareholder Value Creation
Progress on Five Priorities for Shareholder Value Creation 2019 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 Launched new pure Authorized capital Launche
Slide 7: Full Year 2019 Regional Highlights
Full Year 2019 Regional Highlights North America Latin America Asia Pacific Europe, Middle East, Africa Net Sales $1.3B $1.3B $2.9B $2.8B $2.7B $7.4B $2.8B Reported Reported Reported Reported $6.9B 7% 3% Flat 1% (1) Organic Organic (1) Organic (1) Organic (1) 6% 8% 3% 7% FY'18 FY'19 FY'18 FY'19 FY'1
Slide 8: 2019 Customer Event Highlights
2019 Customer Event Highlights Customer at the center Enlist Trials Women Growers Field Day Pioneer Corn Plot Tour United States Mexico Kenya Brevant Demo Plots Fall Army Worm Training EduFarm Session Brazil India Indonesia 8
Slide 9: Full Year 2019 Segment Performance Highlights
Full Year 2019 Segment Performance Highlights Crop Protection Seed ($ in millions) 2018(1) 2019(1) ($ in millions) 2018(1) 2019(1) Net Sales $6,445 $6,256 Net Sales $7,842 $7,590 Operating EBITDA $1,074 $1,066 Operating EBITDA $1,139 $1,040 Operating EBITDA Margin 16.7% 17.0% Operating EBITDA Margin
Slide 10: 2019 Product Highlights
2019 Product Highlights Insecticides Corn Seed Soybean Seed Insecticide Net Sales FY 2018 FY 2019 Corn Net Sales FY 2018 FY 2019 Soybean Net Sales FY 2018 FY 2019 Net Sales ($MM) $1,506 $1,652 Net Sales ($MM) $5,180 $5,111 Net Sales ($MM) $1,494 $1,371 Spinosyns Expansion for Midland, MI facility un
Slide 11: 4Q 2019 Highlights
4Q 2019 Highlights ($’s in millions, except EPS) 4Q 2018(1) 4Q 2019 Change Net Sales $2,815 $2,983 6% GAAP Loss from Continuing Operations After Income Taxes $(746) $(42) 94% Operating EBITDA(2) $50 $224 348% Operating EBITDA Margin(2) 1.8% 7.5% ~570 bps GAAP EPS from Continuing Operations $(1.00) $
Slide 12: Full Year 2019 Operating EPS Variance
Full Year 2019 Operating EPS(1) Variance Operating EPS(1) Bridge ($) $1.52 ($0.19 ) $0.08 $0.10 $0.02 $1.43 ($0.04 ) ($0.06 ) 2018(2) Currency Volume/Price Costs Change in Base EGL(3) Portfolio/Other 2019 (2) Tax Rate Key Drivers Volume and price decline primarily due to weather-related impacts in N
Slide 13: Full Year 2020 Guidance
Full Year 2020 Guidance Net Sales Operating EBITDA(1) Operating EPS(1) ~$14.5B $1.45 - $1.55 ~$2.2B $13.8B $1.43 Reported Operating $1.987B EBITDA(1) ~4-5% ~12% FY'19 FY'20E (2) (2) FY'19 FY'20E FY'19 FY'20E Above Market Growth Op. EBITDA Margin(1) Improvement Operating EPS(1) Improvement Vs. Market
Slide 14: 2020 Key Assumptions
2020 Key Assumptions Sales Growth Synergies / Costs Other Financial Organic Growth(1) +4 – 5% Synergies / Productivity Commitment to Return Cash . U.S. planted area: +11 million . $200 million in merger-related to Shareholders acres (1/3 corn, 2/3 soybeans) synergies – COGS improvement . Dividends:
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Slide 16: Full Year 2019 Regional Net Sales Highlights – Crop Protection
Full Year 2019 Regional Net Sales Highlights – Crop Protection North Reported Organic(1) Latin Reported Organic(1) Global Net Sales (3) America 10% 9% America 3% 8% $6.4B $6.3B FY 2018 FY 2019 FY 2018 FY 2019 Net Sales ($MM) $2,438 $2,205 Net Sales ($MM) $1,715 $1,759 Reported Volume Price Currency
Slide 17: Full Year 2019 Regional Net Sales Highlights – Seed
Full Year 2019 Regional Net Sales Highlights – Seed North Reported Organic(1) Latin Reported Organic(1) (3) Global Net Sales America 5% 5% America 3% 7% FY 2018 4Q 2019 FY 2018 FY 2019 $7.8B Net Sales ($MM) $4,974 $4,724 Net Sales ($MM) $1,102 $1,130 $7.6B Volume Price Currency Portfolio Volume Pric
Slide 18: 4Q 2019 Segment Performance Highlights
4Q 2019 Segment Performance Highlights Crop Protection Performance Highlights . Strong demand in North America led by ramp up of EnlistTM (1) ($’s in millions) 4Q 2018 4Q 2019 herbicide and in Latin America for insecticides, partially offset Net Sales $1,689 $1,740 by currency headwinds, customer pr
Slide 19: FY20 Modeling Guidance - Operating Earnings Per Share
FY20 Modeling Guidance - Operating Earnings Per Share(1) ($ in millions, except where noted) Guidance Commentary Depreciation (575 – 625) Interest Income 25 – 30 (90 – 110) Primarily represents cost of short-term borrowings to fund working Interest Expense capital Base Tax Rate(1) 19% - 21% Exchange
Slide 20: Continued Focus on ROIC to Ensure Capital Discipline
Continued Focus on ROIC to Ensure Capital Discipline Return on Invested Capital (ROIC) 2019 ROIC Calculation(3) Numerator 19.8% (1) Operating Earnings ($ in millions) Numerator FY 2019 (-) Interest Expense, pre-tax Net income (loss) from continuing operations attributable to Corteva $ 13 (-) (Intere
Slide 21: Non-GAAP Calculation of Corteva Operating EBITDA
Corteva Non-GAAP Calculation of Corteva Operating EBITDA Three Months Ended December 31, Twelve Months Ended December 31, 2019 2018 2019 2018 In millions As Reported Pro Forma Pro Forma Pro Forma 1 (Loss) income from continuing operations, net of tax (GAAP) $ (42) $ (746) $ 26 $ (4,937) (Benefit for
Slide 22: Corteva Segment Information
Corteva Segment Information Net sales by segment In millions Three Months Ended December 31, Twelve Months Ended December 31, 2019 2018 2019 2018 Seed $ 1,243 $ 1,126 $ 7,590 $ 7,842 Crop Protection 1,740 1,689 6,256 6,445 Total net sales $ 2,983 $ 2,815 $ 13,846 $ 14,287 Corteva Operating EBITDA Th
Slide 23: Corteva Significant Items (Pretax)
Corteva significant items (Pretax) Three Months Ended December 31, Twelve Months Ended December 31, 2019 2018 2019 2018 In millions As Reported Pro Forma Pro Forma Pro Forma Seed Loss on deconsolidation - (53) - (53) Loss on divestiture - (2) (24) (2) Gain on sale of assets - - - 24 Restructuring an
Slide 24: Segment Information - Price, Volume Currency Analysis Q4
Corteva Segment Information - Price, Volume Currency Analysis Region Q4 2019 vs. Q4 2018 Percent Change Due To: Net Sales Change (GAAP) Organic Change (Non-GAAP) Local Price & Portfolio / $ (millions) % $ (millions) % Product Mix Volume Currency Other North America $ 151 15% $ 156 16% 2% 14% —% -1%
Slide 25: Segment Information - Price, Volume Currency Analysis Twelve Months
Corteva Segment Information - Price, Volume Currency Analysis Region Twelve Months Ended December 31, 2019 vs. Twelve Months Ended December 31, 2018 Percent Change Due To: Net Sales Change (GAAP) Organic Change (Non-GAAP) Local Price & Portfolio / $ (millions) % $ (millions) % Product Mix Volume Cur
Slide 26: Non-GAAP Calculation of Corteva Operating EPS
Corteva Non-GAAP Calculation of Corteva Operating EPS Three Months Ended December 31, 2019 2018 2019 2018 $ (millions) $ (millions) EPS (diluted) EPS (diluted) As Reported Pro Forma As Reported Pro Forma Net loss from continuing operations attributable to Corteva (GAAP) $ (45) $ (752) $ (0.06) $ (1.
Slide 27: Non-GAAP Calculation of Corteva Base Tax Rate
Corteva Non-GAAP Calculation of Corteva Base Tax Rate Three Months Ended December 31, Twelve Months Ended December 31, 2019 2018 2019 2018 As Reported Pro Forma Pro Forma Pro Forma Net (loss) income from continuing operations before income taxes (GAAP) $ (187) $ (545) $ 27 $ (4,542) Add: Significant
Slide 28: Non-GAAP Calculation of Adjusted Return on Invested Capital (ROIC)
Corteva Non-GAAP Calculation of Adjusted Return on Invested Capital (ROIC) Adjusted Invested Capital (in millions) March 31, 2019 June 30, 2019 September 30, 2019 December 31, 2019 Trailing Twelve Months Pro Forma As Reported As Reported As Reported Pro Forma Goodwill $ 10,203 $ 10,249 $ 10,168 $ 10