Corteva Updates Expectations for Third Quarter and Full Year 2023

Rhea-AI Summary

Corteva provides preliminary Q3 net sales and earnings results, lowers full-year guidance due to evolving market dynamics in Brazil.

Positive

• Third quarter net sales expected to be approximately $2.6 billion
• Operating EBITDA expected to be approximately $18 million
• Full year net sales expected to be in the range of $17.0 billion and $17.3 billion
• Operating EPS expected to be in the range of $2.50 and $2.70 per share

Negative

• Third quarter GAAP income and EPS expected to be a loss of approximately $315 million and $0.45 per share
• Lowered full year net sales and earnings guidance due to delays in orders and tighter farmer margins in Brazil
• Pricing and volume pressures in crop chemicals associated with elevated generic imports

INDIANAPOLIS, Oct. 27, 2023 /PRNewswire/ -- Corteva, Inc. (NYSE: CTVA) today provided preliminary net sales and earnings results for the quarter ended September 2023 and an update for its expectations for full year 2023 net sales and earnings. Third quarter net sales are expected to be approximately $2.6 billion. Third quarter GAAP income and earnings per share (EPS) from continuing operations are expected to be a loss of approximately $315 million and $0.45 per share, respectively. Operating EBITDA¹ is expected to be approximately $18 million for the period, with Operating EPS¹ expected to be a loss of approximately $0.23 per share.

Management lowered the Company's full year 2023 net sales and earnings guidance² in light of evolving market dynamics in Brazil, including:

• Significant delay in orders due to just-in-time farmer purchases on both plantings and crop protection applications
• Tighter Brazilian farmer margins largely driven by macro factors, including inflation, interest and exchange rates, and record production during the 2022/2023 crop season
• Ongoing channel inventory destocking in Brazil crop chemicals
• Pricing and volume pressures in crop chemicals associated with elevated generic imports
• Lower fourth quarter seed deliveries impacted by lower Summer corn planted area and potentially delayed and reduced Safrinha planted area for the 2023/2024 crop season

"Third quarter results and the performance of our operations were broadly aligned with expectations around the globe. However, early fourth quarter indicators from Brazil have caused us to recalibrate sales and earnings estimates in both Seed and Crop Protection for the remainder of the year given the significance of Brazil to our fourth quarter business. The change in order patterns and planted area intentions, together with additional Crop Protection volume and pricing pressures in Brazil, is now included in our updated guidance," said Chuck Magro, Corteva Chief Executive Officer.

"I am pleased with the EBITDA margin improvement we've delivered so far this year through strong pricing, product mix improvement, as well as productivity and cost actions," continued Magro. "We will discuss early views on our 2024 outlook on our third quarter earnings call on November 9th. Meanwhile, we remain committed to $750 million of share repurchases in 2023."

Full year net sales are now expected to be in the range of $17.0 billion and $17.3 billion, with Operating EBITDA expected to be in the range of $3.25 billion and $3.45 billion. Full year 2023 Operating EPS is now expected to be in the range of $2.50 and $2.70 per share.

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.

The select financial information provided in this release is preliminary. As the Company completes its third quarter financial close process and finalizes its outlook for the remainder of the year, it is possible that the Company may identify items that require it to make adjustments to the preliminary financial information set forth above, and those adjustments could be material. Furthermore, this update does not present all necessary information for an understanding of the Company's financial condition as of the date of this release, or its results of operations for the third quarter of 2023.

Corteva will release its third quarter 2023 earnings on Wednesday, November 8, after the stock market close via PR Newswire and its website. The Company will host a live webcast of its third quarter 2023 earnings conference call on Thursday, November 9, 2023, at 9:00 a.m. Eastern Time.

1. Operating EPS and Operating EBITDA are non-GAAP measures. See page A-1 for further discussion. 2. The Company does not provide the most comparable GAAP measure on a forward-looking basis. See page 3 for further discussion.

About Corteva
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 successfully develop and commercialize Corteva's pipeline; (ii) failure to obtain or maintain the necessary regulatory approvals for some of Corteva's products; (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; (xiii) effect of industrial espionage and other disruptions to Corteva's supply chain, information technology or network systems; (xiv) risks related to environmental litigation and the indemnification obligations of legacy EIDP liabilities in connection with the separation of Corteva; (xv) risks related to Corteva's global operations; (xvi) failure to effectively manage acquisitions, divestitures, alliances, restructurings, cost savings initiatives, and other portfolio actions; (xvii) failure to raise capital through the capital markets or short-term borrowings on terms acceptable to Corteva; (xviii) failure of Corteva's customers to pay their debts to Corteva, including customer financing programs; (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 U.S. GAAP and are considered non-GAAP measures. These measures may include operating EBITDA, operating earnings (loss) per share, and base income tax rate. Management uses these measures internally for planning and forecasting, including allocating resources and evaluating incentive compensation. Management believes that these non-GAAP measures best reflect the ongoing performance of the Company during the periods presented and provide more relevant and meaningful information to investors as they provide insight with respect to ongoing operating results of the Company and a more useful comparison of year over year results. These non-GAAP measures supplement the Company's U.S. GAAP disclosures and should not be viewed as an alternative to U.S. GAAP measures of performance. Furthermore, such non-GAAP measures may not be consistent with similar measures provided or used by other companies. Reconciliations for these non-GAAP measures to U.S. GAAP are provided in the Selected Financial Information and Non-GAAP Measures starting on page A-1 of the Financial Statement Schedules.

Corteva 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 the Company's control, such as Significant Items, without unreasonable effort. For Significant items reported in the periods presented, refer to page A-2 of the Financial Statement Schedules. Beginning January 1, 2020, the Company presents accelerated prepaid royalty amortization expense as a significant item. Accelerated prepaid royalty amortization represents the non-cash charge associated with the recognition of upfront payments made to Monsanto in connection with the Company's non-exclusive license in the United States and Canada for Monsanto's Genuity® Roundup Ready 2 Yield® and Roundup Ready 2 Xtend® herbicide tolerance traits. During the ramp-up period of Enlist E3^TM, Corteva has begun to significantly reduce the volume of products with the Roundup Ready 2 Yield® and Roundup Ready 2 Xtend® herbicide tolerance traits beginning in 2021, with expected minimal use of the trait platform thereafter.

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 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.

^{™ ® ℠} Trademarks and service marks of Corteva Agriscience and its affiliated companies.

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SOURCE Corteva, Inc.

FAQ

What are Corteva's preliminary net sales for Q3 2023?

Corteva expects Q3 net sales to be approximately $2.6 billion.

What is the expected Operating EBITDA for Q3?

Corteva expects Operating EBITDA to be approximately $18 million for Q3.

What is the updated guidance for full year 2023 net sales?

Corteva now expects full year net sales to be in the range of $17.0 billion and $17.3 billion.

What is the expected range for Operating EPS for full year 2023?

Corteva expects Operating EPS to be in the range of $2.50 and $2.70 per share for full year 2023.

Why did Corteva lower its full-year guidance?

Corteva lowered its full-year guidance due to evolving market dynamics in Brazil, including delays in orders and tighter farmer margins.

What are the challenges faced by Corteva in Brazil?

Corteva is facing challenges in Brazil such as pricing and volume pressures in crop chemicals associated with elevated generic imports.

When will Corteva release its third quarter 2023 earnings?

Corteva will release its third quarter 2023 earnings on Wednesday, November 8, after the stock market close.

When is Corteva's third quarter 2023 earnings conference call?

Corteva's third quarter 2023 earnings conference call will be held on Thursday, November 9, 2023, at 9:00 a.m. Eastern Time.