Corteva, Inc. Q3 FY2025 earnings call

• Strategic Separation: Announced intent to separate into 2 public companies to allow Seed and Crop Protection businesses to pursue maximum long-term growth potential. - Financial Performance: Third quarter results largely in line with expectations, with outperformance on controllables and strong early safrinha seed demand in Brazil. Seed business had $200M productivity and deflation benefits, $90M royalty improvement. Crop Protection had solid earnings and margin growth, $9B technology pipeline. - 2025 Guidance: Raised full-year operating EBITDA range to $3.8 billion to $3.9 billion (14% growth midpoint), operating EPS guide to $3.25 to $3.35 per share, reconfirmed free cash flow guidance of approximately $1.9 billion with cash conversion rate of about 50%, and on track for $1 billion of share repurchases. - 2026 Outlook: Anticipates low single-digit growth in the crop protection industry including high single-digit growth in biologicals, expects full-year operating EBITDA in the range of $4.1 billion.

Seed Business: Performed well with $200 million in productivity and deflation benefits, $90 million in royalty improvement. Expect to cross double-digit trade penetration for Conkesta in Brazil next year. Set to roll out several hundred new hybrids and varieties globally in 2026. Contributes to earnings through leading position in North America corn and progress in soybean out-licensing in Brazil. Crop Protection Business: Delivered solid earnings and margin growth. Expected full-year EBITDA up high single digits. Launched brand name for new next-gen insecticide active Varpelgo. Has a $9 billion Technology pipeline including billion-dollar product families and biologicals.

• For 2025: Raised operating EBITDA range to $3.8B-$3.9B (14% growth midpoint), operating EPS to $3.25-$3.35, free cash flow to $1.9B with 50% conversion rate, and on track for $1B share repurchases. - For 2026: Anticipates low single-digit growth in crop protection industry, full-year operating EBITDA range $4.1B.

• Global trade uncertainty. - Competitive pricing dynamics in some major markets. - Credit market conditions in Latin America leading to higher borrowing costs and increased bankruptcies. - Impact of commoditized products on pricing in the crop protection market.

Q: Chris Parkinson of Wolfe Research asked about what's most missed in the setup between slides, focusing on CPC pipeline, balance between plant health and biologicals, etc.

A: Charles Magro responded on the strong Crop Protection portfolio, R&D pipeline, Spinosyn franchise growth, and that more opportunities will open for the separate company with focus on differentiated technology.

Q: Vincent Andrews of Morgan Stanley asked about further pruning or adding to the AI portfolio in Crop Protection.

A: Charles Magro stated they like their portfolio, are open to partnerships via M&A, collaborations, or JVs to bring affordable next-gen tech to market.

Q: Kevin McCarthy of Vertical Research asked about credit market conditions in Latin America and impact on Corteva.

A: David Johnson responded that Corteva is managing risk well, past dues as percent of AR better than last year, minimal losses, and robust barter system reduces exposure.

Q: Joel Jackson of BMO Capital Markets asked about dis-synergies and buybacks post-separation.

A: David Johnson said separation management team is working, initial dis-synergy estimate $80M-$100M, and details on 2026 capital deployment in February call; Charles Magro confirmed commitment to $1B share repurchases in 2025.

Q: David Begleiter of Deutsche Bank asked about biologicals growth in Crop Protection.

A: Charles Magro said biologicals sales up 7%, revenue expected $600M this year, strong growth with products moving globally, expecting continued high single-digit/low double-digit growth.

Q: Joshua Spector of UBS asked about crop chem pricing in second half and 2026 outlook.

A: Robert King said second half pricing expected to finish low single digits, Brazil to improve from high single-digit loss last year; Charles Magro added 2026 global crop protection market expected low single-digit growth with volume growth and pricing stabilizing except Brazil.

Q: Jeffrey Zekauskas of JPMorgan asked about effect of price pressure in chemicals on Spinosyns and volumes.

A: Robert King said Spinosyns expected near $900M this year with 5% organic growth in flat market, volumes growing, new products like Pyraxalt, Reklemel up 30% YTD; Charles Magro added spinosyns are complementary to diamides, microbial nature makes them difficult to replicate, and not immune to pricing floor set by commoditized insecticides.

Q: Daniel Rizzo of Jefferies asked about working capital as percent of sales.

A: David Johnson said working capital as % of sales average over last couple of years is typical, with recent improvement due to volume and sales increases, inventory in healthy ranges.

Q: Patrick Fischer of Goldman Sachs asked about seed market share and Conkesta growth.

A: Judd O’Connor said seed business picked up share in corn and soy, expects Conkesta to be in double digits in 2026 and 1/3 of Brazil soybean market by 2030.

Q: Arun Viswanathan of RBC Capital Markets asked about margin growth into 2026.

A: Charles Magro said margin journey continues, targeting 24% midpoint by 2027, driven by new products, seed out-licensing, royalty considerations, cost and productivity, with 100-150 basis points per year improvement.

Q: Aleksey Yefremov of KeyBanc asked about remaining 35% of Crop Protection portfolio.

A: Robert King said remaining 35% is not commodity generic, still formulated products with lower price point but bring value on farm, and portfolio focuses on upper end with differentiated technology.

Q: Kristen Owen of Oppenheimer asked about digital assets and split.

A: Charles Magro said digital support systems are integrated, part of $80M-$100M dis-synergies, need to separate to ensure Seed and CP have needed digital support for strategic journeys.

Q: Matthew DeYoe of Bank of America asked about CP incremental margins and gene editing impact on seed business.

A: Robert King said new products and biologicals have 10%-15% margin advantage, new products like Rinskor, Arylex growing rapidly; Charles Magro said gene editing is powerful technology, differentiation in germplasm and supply chain production capability, likely leading to partnerships.

Q: Patrick Cunningham of Citi asked about hybrid wheat progress.

A: Charles Magro said excited about hybrid wheat technology, expecting launch in 2027 with 10%-15% yield improvement, ramping up availability, similar margin profile to corn and soybeans.

Q: Edlain Rodriguez of Mizuho asked about acreage shift from corn to soy and impact on Corteva.

A: Charles Magro said sensitivity is $10M EBITDA per 1M acre shift, factored into 2026 outlook but uncertainty remains on exact acres shifting.

Q: Benjamin Theurer of Barclays asked about M&A in Crop Protection biologicals.

A: Charles Magro said active in M&A, biologicals industry fragmented, open to M&A, commercial or R&D collaborations to grow biologicals portfolio post-separation.