Corteva Reports Fourth Quarter and Full-Year 2023 Results, Provides 2024 Guidance
- Net sales of $3.71B in Q4 and $17.23B for FY 2023
- 1% decline in net sales for FY 2023, with a 3% decrease in organic sales
- 5% growth in Seed net sales and 9% decline in Crop Protection net sales
- Operating EBITDA of $3.38B for FY 2023, showing a 5% improvement over the prior year
- 2024 guidance for net sales in the range of $17.4B to $17.7B and Operating EBITDA to be in the range of $3.5B to $3.7B
- Decline in net sales for FY 2023
- 3% decrease in organic sales for FY 2023
- 9% decline in Crop Protection net sales
- The company is not able to reconcile its forward-looking non-GAAP financial measures to its most comparable U.S. GAAP financial measures
Insights
The reported financial results from Corteva indicate a mixed performance with a decline in net sales and earnings, yet an improvement in operating EBITDA and margin growth. The decline in GAAP income and EPS by 23% and 22% respectively, compared to the prior year, suggests challenges in profitability, potentially affecting investor sentiment. However, the 5% increase in operating EBITDA and a slight 1% rise in operating EPS reflect some operational resilience. The strong cash flow generation, with a 98% year-over-year increase, is a positive signal for the company's liquidity and financial health.
From a strategic perspective, the focus on a differentiated product mix and cost discipline despite the global crop protection industry imbalance is noteworthy. The guidance for 2024, projecting net sales growth and further EBITDA margin expansion, may be seen as a sign of confidence in the company's strategy and market positioning. The planned $1.0 billion share repurchase could be interpreted as a management endorsement of the stock's value, potentially providing support for the stock price.
The agricultural sector is experiencing strong global demand due to the need for grain, oilseeds, meat and biofuels. Corteva's performance in the Seed segment, with a 5% growth in net sales, is aligned with this trend. The increase in price by 13% globally indicates effective pricing strategies and strong demand for new technologies. However, the decrease in Crop Protection net sales by 9% is concerning, as it suggests a decline in market share or potential inefficiencies, which could have long-term implications if not addressed.
Geographically, the gains in North America and EMEA are offset by declines in Latin America and Asia Pacific. This regional performance variance highlights the importance of a diversified global footprint to mitigate risks. The strategic exits from certain products and the impact of unfavorable weather conditions in Brazil underline the volatile nature of the agricultural industry, where external factors can significantly affect business operations.
The rebalancing of the Crop Protection industry is a critical factor for Corteva's future performance. The strategic product exits and inventory destocking that led to volume declines are indicative of the company's efforts to align with market demand. However, these actions may result in short-term revenue loss and could impact market competitiveness. The Biologicals acquisitions contributing $420 million of net sales reflect a strategic move towards sustainable agriculture solutions, which could be advantageous in the long term given the growing emphasis on environmental concerns.
Overall, Corteva's guidance for 2024 suggests optimism in the face of a constructive global outlook for agriculture. The expected modest improvement in the Crop Protection industry, alongside steady on-farm demand, provides a favorable backdrop for the company's growth targets. However, the projected increase in interest expense and a higher base tax rate could exert downward pressure on net earnings, warranting close monitoring by stakeholders.
- Full-year net sales and earnings demonstrates solid execution and strength of portfolio
- 2024 guidance3 reflects continued operating EBITDA1 and margin growth
4Q 2023 Results Overview | |||
Net Sales | Loss from Cont. Ops (After Tax) | EPS | |
GAAP | |||
vs. 4Q 2022 | (3) % | (463) % | (450) % |
Organic1 Sales | Operating EBITDA1 | Operating EPS1 | |
NON-GAAP | |||
vs. 4Q 2022 | (8) % | +4 % | (6) % |
FY 2023 Results Overview | |||
Net Sales | Income from Cont. Ops (After Tax) | EPS | |
GAAP | |||
vs. FY 2022 | (1) % | (23) % | (22) % |
Organic1 Sales | Operating EBITDA1 | Operating EPS1 | |
NON-GAAP | |||
vs. FY 2022 | (3) % | +5 % | +1 % |
Full-Year 2023 Highlights
- Full-year 2023 net sales declined
1% and organic1 sales decreased3% versus prior year with gains inNorth America 2 and EMEA2 offset by declines inLatin America andAsia Pacific . - Seed net sales grew
5% and organic1 sales increased7% . Price was up13% globally, led by continued execution on the Company's price for value strategy and demand for new technology. Volume declines were driven by lower corn volumes inLatin America , the exit fromRussia , and lower corn planted area in EMEA2, partially offset by increased corn acres inNorth America 2. - Crop Protection net sales declined
9% and organic1 sales decreased12% . Volume declines, largely inLatin America andNorth America 2, were driven by strategic product exits, inventory destocking, and delayed farmer purchases. Price gains reflected pricing for value and strong execution in response to cost inflation led by EMEA2. - GAAP income and earnings per share (EPS) from continuing operations were
$941 million $1.30 23% and22% , respectively, compared to prior year. - Operating EBITDA1 was
$3.38 billion 5% improvement over prior. Operating EPS1 was$2.69 1% compared to prior year. - Cash provided by operating activities – continuing operations was
$1.8 billion 98% compared to prior year. Free cash flow1,4 was$1.2 billion - The Company provided full-year 2024 guidance3 and expects net sales to be in the range of
$17.4 billion $17.7 billion $3.5 billion $3.7 billion $2.70 $2.90 $2.1 billion $2.6 billion $1.5 billion $2.0 billion
"Corteva's 2023 results reflect the execution of our value creation strategy, including its focus on productivity, differentiated product mix, and cost discipline. This, alongside stand-out performance from our Seed business, allowed us to deliver growth in earnings, cash and margin despite an ongoing imbalance in the global crop protection industry. Overall agriculture fundamentals remain constructive, with record-setting demand for grain, oilseeds, meat and biofuels continuing into 2024.
"At Corteva, we see 2024 as another year of strong demand for our differentiated products and a continued focus on controlling the controllables, delivering advanced technology to our customers and generating consistent, incremental value for our shareholders. We have adjusted the 2025 financial framework based on 2023 results and the expectation for continued earnings growth and margin expansion in 2024 and 2025," said Chuck Magro, Corteva Chief Executive Officer.
Summary of Fourth Quarter 2023
For the fourth quarter ended December 31, 2023, net sales decreased
Volume declined
Price increased
GAAP income from continuing operations after income taxes was a loss of
4Q | 4Q | % | % | |
($ in millions, except where noted) | 2023 | 2022 | Change | Organic1 Change |
Net Sales | (3) % | (8) % | ||
North America | 2 % | 1 % | ||
EMEA | 2 % | 3 % | ||
Latin America | (9) % | (21) % | ||
Asia Pacific | 2 % | 5 % |
FY | FY | % | % | |
($ in millions, except where noted) | 2023 | 2022 | Change | Organic1 Change |
Net Sales | (1) % | (3) % | ||
North America | 4 % | 4 % | ||
EMEA | 3 % | 8 % | ||
Latin America | (12) % | (23) % | ||
Asia Pacific | (7) % | (2) % |
Seed Summary
Seed net sales were
Lower volumes were driven by lower expected Safrinha planted area and delayed farmer purchases due to unfavorable weather in
Segment operating EBITDA was
4Q | 4Q | % | % | |
($ in millions, except where noted) | 2023 | 2022 | Change | Organic1 Change |
North America | 6 % | 6 % | ||
EMEA | 8 % | 17 % | ||
Latin America | (7) % | (12) % | ||
Asia Pacific | (4) % | (3) % | ||
Total 4Q Seed Net Sales | (1) % | (3) % | ||
4Q Seed Operating EBITDA | 104 % | N/A |
Seed net sales were
The increase in price was broad-based and driven by strong demand for top technology and operational execution globally, with global corn and soybean prices up
Segment operating EBITDA was
FY | FY | % | % | |
($ in millions, except where noted) | 2023 | 2022 | Change | Organic1 Change |
North America | 11 % | 12 % | ||
EMEA | 1 % | 7 % | ||
Latin America | (7) % | (11) % | ||
Asia Pacific | 3 % | 10 % | ||
Total FY Seed Net Sales | 5 % | 7 % | ||
FY Seed | 28 % | N/A |
Crop Protection Summary
Crop Protection net sales were approximately
The decrease in volume was driven by strategic product exits and channel inventory destocking, primarily in
Segment operating EBITDA was
4Q | 4Q | % | % | |
($ in millions, except where noted) | 2023 | 2022 | Change | Organic1 Change |
North America | (1) % | (2) % | ||
EMEA | (3) % | (9) % | ||
Latin America | (12) % | (30) % | ||
Asia Pacific | 5 % | 8 % | ||
Total 4Q Crop Protection | (5) % | (12) % | ||
4Q Crop Protection | (20) % | N/A |
Crop Protection net sales were approximately
The decrease in volume was driven by strategic product exits, channel inventory destocking, and delayed farmer purchases. The increase in price was led by EMEA, and mostly reflected pricing for the value of our differentiated technology, including new products, and currency in EMEA, partially offset by challenging market dynamics in
Segment operating EBITDA was
FY | FY | % | % | |
($ in millions, except where noted) | 2023 | 2022 | Change | Organic1 Change |
North America | (9) % | (10) % | ||
EMEA | 6 % | 8 % | ||
Latin America | (16) % | (30) % | ||
Asia Pacific | (11) % | (6) % | ||
FY Crop Protection Net Sales | (9) % | (12) % | ||
FY Crop Protection | (18) % | N/A |
2024 Guidance
The global outlook for agriculture remains constructive overall in 2024. There was record-setting demand for grain, oilseeds, and biofuels in 2023 and we expect that to continue to grow in 2024. On-farm demand remains steady and overall strong. The Crop Protection industry is working to rebalance after the significant destocking in 2023, however we expect the industry to modestly improve as the imbalance between product going into the channel and on-farm consumption returns to alignment.
The Company provided guidance3 for the full-year 2024. Corteva expects net sales in the range of
The Company is not able to reconcile its forward-looking non-GAAP financial measures to its most comparable U.S. GAAP financial measures, as it is unable to predict with reasonable certainty items outside of its control, such as Significant Items, without unreasonable effort.
Fourth Quarter Conference Call
The Company will host a live webcast of its fourth quarter 2023 earnings conference call with investors to discuss its results and outlook tomorrow, February 1, 2024, at 9:00 a.m. ET. The slide presentation that accompanies the conference call is posted on the Company's Investor Events and Presentations page. A replay of the webcast will also be available on the Investor Events and Presentations page.
Corteva, Inc. (NYSE: CTVA) is a global pure-play agriculture company that combines industry-leading innovation, high-touch customer engagement and operational execution to profitably deliver solutions for the world's most pressing agriculture challenges. Corteva generates advantaged market preference through its unique distribution strategy, together with its balanced and globally diverse mix of seed, crop protection, and digital products and services. With some of the most recognized brands in agriculture and a technology pipeline well positioned to drive growth, the Company is committed to maximizing productivity for farmers, while working with stakeholders throughout the food system as it fulfills its promise to enrich the lives of those who produce and those who consume, ensuring progress for generations to come. More information can be found at www.corteva.com.
Cautionary Statement About Forward-Looking Statements
This report 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, which are intended to be covered by the safe harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995, and may be identified by their use of words like "plans," "expects," "will," "anticipates," "believes," "intends," "projects," "estimates," "outlook," or other words of similar meaning. All statements that address expectations or projections about the future, including statements about Corteva's financial results or outlook; strategy for growth; product development; regulatory approvals; market position; capital allocation strategy; liquidity; environmental, social and governance ("ESG") targets and initiatives; the anticipated benefits of acquisitions, restructuring actions, or cost savings initiatives; and the outcome of contingencies, such as litigation and environmental matters, are forward-looking statements.
Forward-looking statements and other estimates are based on certain assumptions and expectations of future events which may not be accurate or realized. Forward-looking statements and other estimates also involve risks and uncertainties, many of which are beyond Corteva's control. While the list of factors presented below is considered representative, no such list should be considered to be a complete statement of all potential risks and uncertainties. Unlisted factors may present significant additional obstacles to the realization of forward-looking statements. Consequences of material differences in results as compared with those anticipated in the forward-looking statements could include, among other things, business disruption, operational problems, financial loss, legal liability to third parties and similar risks, any of which could have a material adverse effect on Corteva's business, results of operations and financial condition. Some of the important factors that could cause Corteva's actual results to differ materially from those projected in any such forward-looking statements include: (i) failure to obtain or maintain the necessary regulatory approvals for some of Corteva's products; (ii) failure to successfully develop and commercialize Corteva's pipeline; (iii) effect of the degree of public understanding and acceptance or perceived public acceptance of Corteva's biotechnology and other agricultural products; (iv) effect of changes in agricultural and related policies of governments and international organizations; (v) costs of complying with evolving regulatory requirements and the effect of actual or alleged violations of environmental laws or permit requirements; (vi) effect of climate change and unpredictable seasonal and weather factors; (vii) failure to comply with competition and antitrust laws; (viii) effect of competition in Corteva's industry; (ix) competitor's establishment of an intermediary platform for distribution of Corteva's products; (x) impact of Corteva's dependence on third parties with respect to certain of its raw materials or licenses and commercialization; (xi) effect of volatility in Corteva's input costs; (xii) risk related to geopolitical and military conflict; (xii) risks related to environmental litigation and the indemnification obligations of legacy EIDP liabilities in connection with the separation of Corteva; (xiv) risks related to Corteva's global operations; (xv) failure to effectively manage acquisitions, divestitures, alliances, restructurings, cost savings initiatives, and other portfolio actions; (xvi) effect of industrial espionage and other disruptions to Corteva's supply chain, information technology or network systems;(xvii) failure of Corteva's customers to pay their debts to Corteva, including customer financing programs; (xviii) failure to raise capital through the capital markets or short-term borrowings on terms acceptable to Corteva; (xix) increases in pension and other post-employment benefit plan funding obligations; (xx) capital markets sentiment towards ESG matters; (xxi) risks related to pandemics or epidemics; (xxii) Corteva's intellectual property rights or defense against intellectual property claims asserted by others; (xxiii) effect of counterfeit products; (xxiv) Corteva's dependence on intellectual property cross-license agreements; and (xxv) other risks related to the Separation from DowDuPont.
Additionally, there may be other risks and uncertainties that Corteva is unable to currently identify or that Corteva does not currently expect to have a material impact on its business. Where, in any forward-looking statement or other estimate, an expectation or belief as to future results or events is expressed, such expectation or belief is based on the current plans and expectations of Corteva's management and expressed in good faith and believed to have a reasonable basis, but there can be no assurance that the expectation or belief will result or be achieved or accomplished. Corteva disclaims and does not undertake any obligation to update or revise any forward-looking statement, except as required by applicable law. A detailed discussion of some of the significant risks and uncertainties which may cause results and events to differ materially from such forward-looking statements is included in the "Risk Factors" section of Corteva's Annual Report on Form 10-K, as modified by subsequent Quarterly Reports on Forms 10-Q and Current Reports on Form 8-K.
Regulation G (Non-GAAP Financial Measures)
This earnings release includes information that does not conform to
Corteva is not able to reconcile its forward-looking non-GAAP financial measures, except for Free Cash Flow, to its most comparable
Organic sales is defined as price and volume and excludes currency and portfolio and other impacts, including significant items. Operating EBITDA is defined as earnings (loss) (i.e., income (loss) from continuing operations before income taxes) before interest, depreciation, amortization, non-operating benefits (costs), foreign exchange gains (losses), and net unrealized gain or loss from mark-to-market activity for certain foreign currency derivative instruments that do not qualify for hedge accounting, excluding the impact of significant items. Non-operating benefits (costs) consists of non-operating pension and other post- employment benefit (OPEB) credits (costs), tax indemnification adjustments, and environmental remediation and legal costs associated with legacy businesses and sites. Tax indemnification adjustments relate to changes in indemnification balances, as a result of the application of the terms of the Tax Matters Agreement, between Corteva and Dow and/or DuPont that are recorded by the Company as pre-tax income or expense. Operating EBITDA margin is defined as Operating EBITDA as a percentage of net sales.
Operating earnings (loss) per share is defined as "earnings (loss) per common share from continuing operations - diluted" excluding the after-tax impact of significant items, the after-tax impact of non-operating benefits (costs), the after-tax impact of amortization expense associated with intangible assets existing as of the Separation from DowDuPont, and the after-tax impact of net unrealized gain or loss from mark-to-market activity for certain foreign currency derivative instruments that do not qualify for hedge accounting. Although amortization of the Company's intangible assets is excluded from these non-GAAP measures, management believes it is important for investors to understand that such intangible assets contribute to revenue generation. Amortization of intangible assets that relate to past acquisitions will recur in future periods until such intangible assets have been fully amortized. Any future acquisitions may result in amortization of additional intangible assets. Net unrealized gain or loss from mark-to-market activity for certain foreign currency derivative instruments that do not qualify for hedge accounting represents the non-cash net gain (loss) from changes in fair value of certain undesignated foreign currency derivative contracts. Upon settlement, which is within the same calendar year of execution of the contract, the realized gain (loss) from the changes in fair value of the non-qualified foreign currency derivative contracts will be reported in the relevant non-GAAP financial measures, allowing quarterly results to reflect the economic effects of the foreign currency derivative contracts without the resulting unrealized mark to fair value volatility. Base income tax rate is defined as the effective tax rate excluding the impacts of foreign exchange gains (losses), non-operating benefits (costs), amortization of intangibles (existing as of the Separation), mark-to- market gains (losses) on certain foreign currency contracts not designated as hedges, and significant items.
The Company also uses Free Cash Flow as a non-GAAP measure to evaluate and discuss its liquidity position and ability to generate cash. Free Cash Flow is defined as cash provided by (used for) operating activities – continuing operations, less capital expenditures. We believe that Free Cash Flow provides investors with meaningful information regarding the Company's ongoing ability to generate cash through core operations, and our ability to service our indebtedness, pay dividends (when declared), make share repurchases, and meet our ongoing cash needs for our operations. The company made the decision, which was retrospectively applied, to adjust the presentation of the Consolidated Statement of Cash Flows to separately show the cash provided by (used for) operating activities – discontinued operations, which was previously presented within cash provided by (used for) operating activities. As a result, the definition for Free Cash Flow was revised to utilize cash provided by (used for) operating activities – continuing operations. The change in definition did not have a material impact to prior years' Free Cash Flow. We made this decision to better present the liquidity generated from our ongoing business operations. Under the revised definition, Free Cash Flow was
® TM Corteva Agriscience and its affiliated companies.
1. Organic Sales, Operating EPS, Operating EBITDA and Free Cash Flow are non-GAAP measures. See page A-5 for further discussion. 2. North America is defined as U.S. and Canada. EMEA is defined as Europe, Middle East and
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SOURCE Corteva, Inc.
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