Corteva, Inc. Q3 FY2024 earnings call

• Corteva's Q3 results were largely in line with expectations, with an operating loss but execution well underway to deliver over $400M in controllables savings for the year.
• Crop protection business had earnings and margin growth led by differentiated technology and deflation benefits. Seed business had strong performance in 2024 with operational excellence driving ~$175M in controllable benefits year-to-date, and set up for growth in 2025 with new hybrids/varieties.
• Updated 2024 guidance reflects Latin America market conditions, with net sales range $17B-$17.2B, operating EBITDA $3.35B-$3.45B, EPS $2.50-$2.60, and free cash flow $1.5B-$2B. Committed to $1B in share repurchases.
• 2025 outlook includes double-digit earnings growth, assuming flat crop protection industry, low single-digit seed pricing, and volume growth in both segments. Focus on innovation, controllables, and portfolio leverage.
• Upcoming Investor Day on November 19th to discuss growth framework through 2027. Leadership change in seed business with Judd O'Connor succeeding Tim Glenn.

In the third quarter, organic sales were down 5% compared to prior year. Crop protection organic sales were up 1% with volumes up 3%, led by Latin America and North America, with new crop protection products and spinosads up over 20%. Seed organic sales were down 17% with volumes down 12% primarily due to reduced corn area in Argentina. Year-to-date, sales were down 4% versus prior year. Seed organic sales were up 1% with pricing up 4% across the portfolio but volumes down 3% due to reduced planted area in Argentina, EMEA, and Asia. Crop protection organic sales were down 7% year-to-date with pricing down 5% primarily from competitive market dynamics in Latin America, and volumes down 2% with gains in Latin America and Asia offset by declines in EMEA and North America.

• 2024 guidance: Net sales range $17B-$17.2B, operating EBITDA $3.35B-$3.45B, EPS $2.50-$2.60, free cash flow $1.5B-$2B, and cash flow to EBITDA conversion 45%-50%.
• 2025 preliminary view: Expect double-digit operating EBITDA growth, with seed pricing low single-digit, crop protection industry flattish, volume growth in both segments, ~$600M in gross cost improvements from productivity and deflation, and royalty neutrality journey progress.

• Latin America market dynamics impacting crop protection and seed sales, including ~20% year-over-year reduction in Argentina's corn-planted area due to corn stunt.
• Competitive market dynamics in crop protection, particularly in Brazil where the season is early and market conditions are challenging.
• Currency headwinds, primarily from the Turkish Lira and Brazilian Real.
• Uncertainty in Argentina's corn planted area for 2025 crop year until current season plays out.

Q: Thoughts on balance sheet and debt?

A: Tim Glenn and Chuck Magro responded that views on debt remain consistent, generating good cash flow, converting EBITDA well, with $1.5B-$2B returning to shareholders through buybacks and dividends, and comfortable with current balance sheet position and investment-grade rating.