Wilmington, Delaware, USA
October 31, 2019

• GAAP earnings per share (EPS) from continuing operations was a loss of $(0.69) for the third quarter and operating EPS1 was a loss of $(0.39) – both improved compared to prior year2.
• Net sales were $1.9 billion, down 2% from the same quarter last year, with flat organic1 sales. On a segment net sales basis, timing shifts contributed to a 24% increase in Seed, which was more than offset by a 12% decline in Crop Protection.
• GAAP loss from continuing operations after income taxes was $(527) million; Operating EBITDA1 was a loss of $(207) million – both improved over prior year on a pro-forma basis2.
• Merger cost synergies for the three months ended September 30, 2019 totalled approximately $100 million and remain on track with full-year commitment of $350 million.
• Outlook5 – Management provided full-year 2019 operating EBITDA1 guidance at the low end of the prior range, or approximately $1.9 billion, due to further negative impact of currency. Full-year 2019 operating EPS1 range revised with a $0.04 improvement over the prior guidance mid-point.

Financial Highlights

“Our teams around the globe delivered an extraordinary effort in the quarter to support our customers in the face of numerous challenges. Corteva achieved solid earnings improvement relative to the prior year and made ongoing progress on our priorities for shareholder value creation, including securing new product registrations, driving continued synergy and productivity improvements, and returning cash to shareholders. We remain focused on driving operational discipline and committed to setting the stage for solid net sales and operating earnings growth in 2020.”

– James C. Collins, Jr., Corteva Chief Executive Officer

Company Updates

• 2020 Launch of Key Seed Products: Corteva recently launched the 2020 sales season in North America3. Expanded launch of new Qrome® products are expected to provide low single digit price uplift in corn, given demonstrated yield advantages. In soybeans, the new Enlist E3TM4 offerings are expected to scale to 10% of North America acres with continued licensing opportunities.
• New Investment Authorized to Expand Spinosyns Capacity: Corteva’s Board of Directors recently authorized an investment to increase Spinosyns fermentation capacity by 30% to address global market growth in insecticides that handle chewing insects in specialty and row crops. The additional capacity will be staged to come online over the next few years and will generate >$100 million of annual operating EBITDA1 at maturity.
• Delivering on Commitment to Return Cash to Shareholders: Corteva took two critical next steps related to shareholder remuneration commitments as it intends to return approximately $220 million to shareholders by the end of the year. The Company repurchased shares in the quarter as part of its $1 billion share repurchase program and in October declared its second continuous quarterly dividend since spin.

Summary of Third Quarter 2019

Corteva, Inc. (NYSE: CTVA) today reported financial results for the quarter ended September 30, 2019 and provided guidance for the full year.

For the quarter, net sales declined 2% versus the same period last year, with flat organic sales1. Favorable impacts from shifts of soybean and corn sales into the third quarter, driven by delayed planting in North America3, were more than offset by shifts of Crop Protection sales in Latin America.

Local price declined 3% in the third quarter 2019 versus the same period last year, driven by North America. Higher replant in soybeans and corn, coupled with increased grower incentive discounts, contributed to the decline.

Volumes increased 3% versus the same period last year, as delayed North America planting shifted second quarter sales into the third quarter. This volume growth was partially offset by declines in Latin America, where early demand for Crop Protection products shifted sales into the second quarter and delays in the Brazil soybean season shifted Crop Protection sales into the fourth quarter. Currency represented a headwind of 2%, primarily due to the Brazilian Real and Euro.

GAAP loss from continuing operations after income taxes was $(527) million in the quarter. Operating EBITDA1 was a loss of $(207) million, an improvement of 18% as compared to the same period last year on a pro forma basis2. Improvement in Seed operating EBITDA due to timing shifts in North America and cost savings from synergies was partially offset by lower Crop Protection operating EBITDA, due to timing of sales in Latin America.

The Company reported a loss $(0.69) for GAAP EPS from continuing operations and a loss of $(0.39) for operating EPS1 for the third quarter 2019. 

 Crop Protection Summary

Crop Protection net sales were $1.2 billion in the third quarter, down from $1.4 billion in the same quarter last year. The decrease was due to a 9% decline in volume, a 2% decline in local price, and a 1% decline from currency.

The volume decline was driven by early demand for Spinosyns insecticides and seed applied technologies in Latin America, where approximately $80 million of sales shifted into the second quarter and a delayed soybean season in Brazil shifted sales into the fourth quarter. These shifts more than offset the approximate $65 million improvement in new product sales, driven by EMEA, versus the same quarter last year. The decrease in local price was driven by grower incentive discounts in North America. Unfavorable currency impacts were primarily due to the Brazilian Real and Euro.

Crop Protection operating EBITDA was $119 million, down 25% from the same period last year. Volume declines in Latin America, grower incentive discounts in North America, and currency more than offset cost synergies, sales from new products, and ongoing productivity.

 Seed Summary

Seed net sales were $681 million in the third quarter, up from $551 million in the same quarter last year. The increase was due to a 31% increase in volume, partially offset by a 5% decline in local price and a 2% decline from currency.

Strong volume growth was driven by significant weather-related planting delays in North America in the first half of the year, which shifted soybean and corn seed sales into the third quarter. The decline in local price resulted from competitive pricing pressure in soybeans in the U.S. and increased soybean and corn replant in North America, which was partially offset by mix improvement in Latin America. Unfavorable currency impacts were primarily due to the Brazilian Real.

Seed operating EBITDA was a loss of $(295) million, compared to a loss of $(372) million in the same period last year. Volume gains from delayed seed sales in North America, cost synergies, and ongoing productivity more than offset decreases in local price and the unfavorable impact of currency.

Outlook

 The Company affirmed 2019 guidance for net sales and expects operating EBITDA at approximately $1.9 billion, which is the lower end of the previously communicated range of $1.9 billion to $2.05 billion. The Company now expects to deliver at the lower end of the previously communicated range largely due to further negative impact of currency. The Company revised its full-year operating EPS range, now expected to be between $1.20 and $1.26 per share. Using the mid-point, this represents a $0.04 improvement over the mid-point of the prior guidance.

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 its control, such as significant items, without unreasonable effort. 

Website: http://www.corteva.com

Published: October 31, 2019