A-1
Corteva, Inc.
Reconciliation of Non-GAAP Measures
(Dollars in millions, except per share amounts)
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| RECONCILIATION OF INCOME (LOSS) FROM CONTINUING OPERATIONS AFTER INCOME TAXES TO OPERATING EBITDA | | Three Months Ended
September 30, | | Nine Months Ended
September 30, |
| 2023 | | 2022 | | 2023 | | 2022 |
| Income (loss) from continuing operations after income taxes (GAAP) | | $ | (315) | | | $ | (322) | | | $ | 1,172 | | | $ | 1,257 | |
| Provision for (benefit from) income taxes on continuing operations | | (129) | | | (74) | | | 244 | | | 372 | |
| Income (loss) from continuing operations before income taxes (GAAP) | | (444) | | | (396) | | | 1,416 | | | 1,629 | |
| Depreciation and amortization | | 306 | | | 310 | | | 899 | | | 919 | |
| Interest income | | (59) | | | (36) | | | (153) | | | (75) | |
| Interest expense | | 58 | | | 18 | | | 171 | | | 43 | |
Exchange (gains) losses1 | | 102 | | | 13 | | | 242 | | | 96 | |
Non-operating (benefits) costs2 | | 28 | | | (9) | | | 115 | | | (134) | |
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| Mark-to-market (gains) losses on certain foreign currency contracts not designated as hedges | | (44) | | | (6) | | | 34 | | | (3) | |
Significant items (benefit) charge3 | | 71 | | | 202 | | | 271 | | | 379 | |
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| Operating EBITDA (Non-GAAP) | | $ | 18 | | | $ | 96 | | | $ | 2,995 | | | $ | 2,854 | |
1.Refer to page A-7 for pre-tax and after tax impacts of exchange (gains) losses.
2.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 of Historical DuPont. 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.
3.Refer to page A-2 for pre-tax and after tax impacts of significant items.
A-2
Corteva, Inc.
Significant Items
(Dollars in millions, except per share amounts)
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| SIGNIFICANT ITEMS - PRE-TAX, AFTER TAX, AND EPS IMPACTS | | | | | | | | |
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| | Pre-tax | | After tax8 | | ($ Per Share) |
| | 2023 | | 2022 | | 2023 | | 2022 | | 2023 | | 2022 |
| 1st Quarter | | | | | | | | | | | |
Restructuring and asset related charges, net1 | $ | (33) | | | $ | (5) | | | $ | (25) | | | $ | (3) | | | $ | (0.03) | | | $ | — | |
Estimated settlement expense2 | (49) | | | (17) | | | (37) | | | (13) | | | (0.05) | | | (0.02) | |
Inventory write-offs3 | (4) | | | — | | | (4) | | | — | | | (0.01) | | | — | |
Gain (loss) on sale of assets and equity investments3 | 3 | | | — | | | 1 | | | — | | | — | | | — | |
Seed sale associated with Russia Exit3 | 19 | | | — | | | 14 | | | — | | | 0.02 | | | — | |
Acquisition-related costs4 | (19) | | | — | | | (17) | | | — | | | (0.02) | | | — | |
1st Quarter — Total | $ | (83) | | | $ | (22) | | | $ | (68) | | | $ | (16) | | | $ | (0.09) | | | $ | (0.02) | |
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| 2nd Quarter | | | | | | | | | | | |
Restructuring and asset related charges, net 1 | $ | (60) | | | $ | (143) | | | $ | (45) | | | $ | (116) | | | $ | (0.06) | | | $ | (0.16) | |
Estimated settlement expense2 | (41) | | | — | | | (31) | | | — | | | (0.04) | | | — | |
Inventory write-offs 3 | (3) | | | (1) | | | (3) | | | (1) | | | — | | | — | |
Loss on sale of equity investments 3 | — | | | (5) | | | — | | | (4) | | | — | | | (0.01) | |
Seed sale associated with Russia Exit3 | (1) | | | — | | | (1) | | | — | | | (0.01) | | | — | |
Settlement costs associated with Russia Exit 3 | — | | | (6) | | | — | | | (6) | | | — | | | (0.01) | |
Acquisition-related costs4 | (15) | | | — | | | (12) | | | — | | | (0.02) | | | — | |
Employee Retention Credit5 | 3 | | | — | | | 2 | | | — | | | — | | | — | |
Income tax items6 | — | | | — | | | 29 | | | — | | | 0.04 | | | — | |
2nd Quarter — Total | $ | (117) | | | $ | (155) | | | $ | (61) | | | $ | (127) | | | $ | (0.09) | | | $ | (0.18) | |
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| 3rd Quarter | | | | | | | | | | | |
Restructuring and asset related charges, net 1 | $ | (2) | | | $ | (152) | | | $ | (4) | | | $ | (126) | | | $ | (0.01) | | | $ | (0.18) | |
Estimated settlement expense 2 | (66) | | | (40) | | | (50) | | | (30) | | | (0.07) | | | (0.04) | |
Inventory write-offs 3 | — | | | (32) | | | — | | | (24) | | | — | | | (0.03) | |
Settlement cost associated with Russia Exit 3 | — | | | (2) | | | — | | | (2) | | | — | | | — | |
Gain on sale of business3 | 4 | | | 15 | | | 3 | | | 10 | | | 0.01 | | | 0.01 | |
Acquisition-related costs4 | (7) | | | — | | | (6) | | | — | | | (0.01) | | | — | |
Employee Retention Credit 5 | — | | | 9 | | | — | | | 7 | | | — | | | 0.01 | |
Income tax items 6 | — | | | — | | | — | | | 55 | | | — | | | 0.08 | |
3rd Quarter — Total | $ | (71) | | | $ | (202) | | | $ | (57) | | | $ | (110) | | | $ | (0.08) | | | $ | (0.15) | |
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Year-to-date Total 7 | $ | (271) | | | $ | (379) | | | $ | (186) | | | $ | (253) | | | $ | (0.26) | | | $ | (0.35) | |
1.Third, second and first quarter 2023 includes restructuring and asset related benefits (charges) of $(2), $(60) and $(33), respectively. The charges primarily relate to a $2, $(52) and $(16) benefit (charge) for the third, second and first quarter, respectively, related to non-cash accelerated prepaid royalty amortization expense related to Roundup Ready 2 Yield® and Roundup Ready 2 Xtend® herbicide tolerance traits and a $(1), $(7) and $(11) charge for the third, second and first quarter, respectively, associated with the 2022 Restructuring Actions.
Third, second and first quarter 2022 included restructuring and asset related benefits (charges) of $(152), $(143) and $(5), respectively. The charges primarily related to a $(145) and $(56) charge for the third and second quarter, respectively, associated with the 2022 Restructuring Actions and a $(5), $(93) and $(6) charge for the third, second and first quarter, respectively, related to non-cash accelerated prepaid royalty amortization expense related to Roundup Ready 2 Yield® and Roundup Ready 2 Xtend® herbicide tolerance traits.
2.Third, second and first quarter 2023 included estimated Lorsban® related charges of $(66), $(41) and $(49), respectively. Third and first quarter 2022 included estimated Lorsban® related charges of $(40) and $(17), respectively.
A-3
Corteva, Inc.
Significant Items
(Dollars in millions, except per share amounts)
3.Third quarter 2023 includes a benefit of $4 associated with activities related to the 2022 Restructuring Actions consisting of a gain on the sale of a business. Second and first quarter 2023 includes a benefit (charge) of $(1) and $19, respectively, relating to the sale of seeds already under production in Russia when the decision to exit the country was made and that the Company was contractually required to purchase, which consisted of $30 and $41 of net sales and $31 and $22 of cost of goods sold, respectively. Second quarter 2023 also includes a charge of $(3) associated with activities related to the 2022 Restructuring Actions consisting of inventory write offs. First quarter 2023 also includes a benefit (charge) of $(11) and $(4) associated with activities related to the 2022 Restructuring Actions consisting of a loss on the sale of the Company's interest in an equity investment and inventory write-offs.
Third quarter 2022 includes a benefit (charge) of $(32), $15 and $(2) associated with activities related to 2022 Restructuring Actions consisting of inventory write-offs, gain on the sale of a business, and settlement costs associated with the Russia Exit, respectively. Second quarter 2022 included a $(1), $(5) and $(6) charge associated with activities related to the 2022 Restructuring Actions relating to inventory write-offs associated with the Russia Exit, loss on the sale of the Company's interest in an equity investment and settlement costs associated with the Russia Exit, respectively.
4.Third, second and first quarter 2023 includes acquisition-related costs relating to transaction and third-party integration costs associated with the completed acquisitions of Stoller and Symborg and the recognition of the inventory fair value step-up.
5.Second quarter 2023 and third quarter 2022 includes a benefit of $3 and $9, respectively, relating to an adjustment due to a change in estimate related to the Employee Retention Credit that the Company earned pursuant to the Coronavirus Aid, Relief, and Economic Security ("CARES") Act as enhanced by the Consolidated Appropriations Act ("CAA") and American Rescue Plan Act ("ARPA").
6.Second quarter 2023 includes a tax benefit of $29 related to the impact of changes to deferred taxes associated with a tax currency change for a legal entity and an adjustment due to a change in estimate related to a worthless stock deduction in the U.S.
Third quarter 2022 includes a tax benefit of $55 relating to the establishment of deferred taxes due to the impact of a change in a U.S. legal entity's tax characterization.
7.Earnings per share for the year may not equal the sum of quarterly earnings per share due to the changes in average share calculations.
8.Unless specifically addressed in the notes above, the income tax effect on significant items was calculated based upon the enacted laws and statutory income tax rates applicable in the tax jurisdiction(s) of the underlying non-GAAP adjustment.
A-4
Corteva, Inc.
Reconciliation of Non-GAAP Measures
(Dollars in millions, except per share amounts)
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| Operating Earnings (Loss) Per Share (Non-GAAP) | | | | | | | | |
| Operating earnings (loss) per share is defined as earnings (loss) per share from continuing operations – diluted, excluding non-operating (benefits) costs, amortization of intangibles (existing as of Separation), net unrealized gain or loss from mark-to-market activity on certain foreign currency derivative instruments that do not qualify for hedge accounting, and significant items. |
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| | Three Months Ended September 30, |
| | 2023 | | 2022 | | 2023 | | 2022 |
| | $ | | $ | | EPS (diluted) | | EPS (diluted) |
| Net income (loss) from continuing operations attributable to Corteva (GAAP) | | $ | (318) | | | $ | (325) | | | $ | (0.45) | | | $ | (0.45) | |
Less: Non-operating benefits (costs), after tax 1 | | (16) | | | 4 | | | (0.02) | | | — | |
| Less: Amortization of intangibles (existing as of Separation), after tax | | (118) | | | (137) | | | (0.17) | | | (0.19) | |
| Less: Mark-to-market gains (losses) on certain foreign currency contracts not designated as hedges, after tax | | 34 | | | 4 | | | 0.05 | | | 0.01 | |
| Less: Significant items benefit (charge), after tax | | (57) | | | (110) | | | (0.08) | | | (0.15) | |
Operating Earnings (Loss) (Non-GAAP)2 | | $ | (161) | | | $ | (86) | | | $ | (0.23) | | | $ | (0.12) | |
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| | Nine Months Ended September 30, |
| | 2023 | | 2022 | | 2023 | | 2022 |
| | $ | | $ | | EPS (diluted) | | EPS (diluted) |
| Net income (loss) from continuing operations attributable to Corteva (GAAP) | | $ | 1,162 | | | $ | 1,248 | | | $ | 1.63 | | | $ | 1.72 | |
Less: Non-operating benefits (costs), after tax 1 | | (84) | | | 96 | | | (0.12) | | | 0.13 | |
| Less: Amortization of intangibles (existing as of Separation), after tax | | (354) | | | (414) | | | (0.50) | | | (0.57) | |
| Less: Mark-to-market gains (losses) on certain foreign currency contracts not designated as hedges, after tax | | (25) | | | 2 | | | (0.03) | | | 0.01 | |
| Less: Significant items benefit (charge), after tax | | (186) | | | (253) | | | (0.26) | | | (0.35) | |
Operating Earnings (Loss) (Non-GAAP)2 | | $ | 1,811 | | | $ | 1,817 | | | $ | 2.54 | | | $ | 2.50 | |
1.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 of Historical DuPont. 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.
2.Refer to page A-5 for the Non-GAAP reconciliation of operating EBITDA to operating earnings (loss) per share.
A-5
Corteva, Inc.
Operating EBITDA to Operating Earnings (Loss) Per Share
(Dollars in millions, except per share amounts)
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| Operating EBITDA to Operating Earnings (Loss) Per Share | | | | | | |
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| | Three Months Ended
September 30, | | Nine Months Ended
September 30, |
| | 2023 | | 2022 | | 2023 | | 2022 |
Operating EBITDA (Non-GAAP)1 | | $ | 18 | | | $ | 96 | | | $ | 2,995 | | | $ | 2,854 | |
| Depreciation | | (132) | | | (132) | | | (391) | | | (383) | |
| Amortization of intangibles (post Separation) | | (20) | | | (1) | | | (45) | | | (3) | |
| Interest Income | | 59 | | | 36 | | | 153 | | | 75 | |
| Interest Expense | | (58) | | | (18) | | | (171) | | | (43) | |
(Provision for) benefit from income taxes on continuing operations before significant items, non-operating benefits (costs), amortization of intangibles (existing as of Separation), mark-to-market gains (losses) on certain foreign currency contracts not designated as hedges, and exchange gains (losses) (Non-GAAP)1 | | 62 | | | 4 | | | (517) | | | (512) | |
Base income tax rate from continuing operations (Non-GAAP)1 | | 46.6 | % | | 21.1 | % | | 20.3 | % | | 20.5 | % |
Exchange gains (losses), after tax2 | | (87) | | | (68) | | | (203) | | | (162) | |
| Net (income) loss attributable to non-controlling interests | | (3) | | | (3) | | | (10) | | | (9) | |
Operating Earnings (Loss) (Non-GAAP)1 | | $ | (161) | | | $ | (86) | | | $ | 1,811 | | | $ | 1,817 | |
Diluted Shares (in millions)3 | | 708.4 | | | 718.7 | | | 713.6 | | | 726.4 | |
Operating Earnings (Loss) Per Share (Non-GAAP)1 | | $ | (0.23) | | | $ | (0.12) | | | $ | 2.54 | | | $ | 2.50 | |
1.Refer to pages A-1, A-4, and A-6 for Non-GAAP reconciliations.
2.Refer to page A-7 for pre-tax and after tax impacts of exchange gains (losses).
3.The share count represents basic shares for the three months ended September 30, 2023 and 2022 as application of dilutive shares to an operating loss would be antidilutive.
A-6
Corteva, Inc.
Reconciliation of Non-GAAP Measures
(Dollars in millions, except per share amounts)
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| Reconciliation of Base Income Tax Rate to Effective Income Tax Rate |
| Base income tax rate is defined as the effective income tax rate less the effect of exchange gains (losses), significant items, amortization of intangibles (existing as of Separation), mark-to-market (gains) losses on certain foreign currency contracts not designated as hedges, and non-operating (benefits) costs. |
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| Three Months Ended
September 30, | | Nine Months Ended
September 30, |
| 2023 | | 2022 | | 2023 | | 2022 |
Income (loss) from continuing operations before income taxes (GAAP) | $ | (444) | | | $ | (396) | | | $ | 1,416 | | | $ | 1,629 | |
Add: Significant items (benefit) charge 1 | 71 | | | 202 | | | 271 | | | 379 | |
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| Non-operating (benefits) costs | 28 | | | (9) | | | 115 | | | (134) | |
| Amortization of intangibles (existing as of Separation) | 154 | | | 177 | | | 463 | | | 533 | |
| Mark-to-market (gains) losses on certain foreign currency contracts not designated as hedges | (44) | | | (6) | | | 34 | | | (3) | |
Less: Exchange gains (losses)2 | (102) | | | (13) | | | (242) | | | (96) | |
Income (loss) from continuing operations before income taxes, significant items, non-operating (benefits) costs, amortization of intangibles (existing as of Separation), mark-to-market (gains) losses on certain foreign currency contracts not designated as hedges, and exchange gains (losses) (Non-GAAP) | $ | (133) | | | $ | (19) | | | $ | 2,541 | | | $ | 2,500 | |
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Provision for (benefit from) income taxes on continuing operations (GAAP) | $ | (129) | | | $ | (74) | | | $ | 244 | | | $ | 372 | |
Add: Tax benefits on significant items (benefit) charge1 | 14 | | | 92 | | | 85 | | | 126 | |
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| Tax expenses on non-operating (benefits) costs | 12 | | | (5) | | | 31 | | | (38) | |
| Tax benefits on amortization of intangibles (existing as of Separation) | 36 | | | 40 | | | 109 | | | 119 | |
| Tax benefits on mark-to-market (gains) losses on certain foreign currency contracts not designated as hedges | (10) | | | (2) | | | 9 | | | (1) | |
Tax benefits on exchange gains (losses)2 | 15 | | | (55) | | | 39 | | | (66) | |
Provision for (benefit from) income taxes on continuing operations before significant items, non-operating (benefits) costs, amortization of intangibles (existing as of Separation), mark-to-market (gains) losses on certain foreign currency contracts not designated as hedges, and exchange gains (losses) (Non-GAAP) | $ | (62) | | | $ | (4) | | | $ | 517 | | | $ | 512 | |
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Effective income tax rate (GAAP) | 29.1 | % | | 18.7 | % | | 17.2 | % | | 22.8 | % |
| Significant items, non-operating (benefits) costs, amortization of intangibles (existing as of Separation), and mark-to-market (gains) losses on certain foreign currency contracts not designated as hedges effect | 6.0 | % | | (222.5) | % | | 3.5 | % | | 1.3 | % |
| Tax rate from continuing operations before significant items, non-operating (benefits) costs, amortization of intangibles (existing as of Separation), and mark-to-market (gains) losses on certain foreign currency contracts not designated as hedges | 35.1 | % | | (203.8) | % | | 20.7 | % | | 24.1 | % |
Exchange gains (losses), net effect2 | 11.5 | % | | 224.9 | % | | (0.4) | % | | (3.6) | % |
Base income tax rate from continuing operations (Non-GAAP) | 46.6 | % | | 21.1 | % | | 20.3 | % | | 20.5 | % |
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| 1. See page A-2 for further detail on the Significant Items. |
| 2. See page A-7 for further details of exchange gains (losses). |
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A-7
Corteva, Inc.
(Dollars in millions, except per share amounts)
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| Exchange Gains (Losses) | | | | | | | | |
| The Company routinely uses foreign currency exchange contracts to offset its net exposures, by currency, related to the foreign currency-denominated monetary assets and liabilities. The objective of this program is to maintain an approximately balanced position in foreign currencies in order to minimize, on an after-tax basis, the effects of exchange rate changes on net monetary asset positions. The hedging program gains (losses) are largely taxable (tax deductible) in the United States (U.S.), whereas the offsetting exchange gains (losses) on the remeasurement of the net monetary asset positions are often not taxable (tax deductible) in their local jurisdictions. The net pre-tax exchange gains (losses) are recorded in other income (expense) - net and the related tax impact is recorded in provision for (benefit from) income taxes on continuing operations in the Consolidated Statements of Operations. |
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| | Three Months Ended
September 30, | | Nine Months Ended
September 30, |
| | 2023 | | 2022 | | 2023 | | 2022 |
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| Subsidiary Monetary Position Gain (Loss) | | | | | | | | |
| Pre-tax exchange gains (losses) | | $ | (104) | | | $ | (80) | | | $ | (182) | | | $ | (120) | |
| Local tax (expenses) benefits | | 19 | | | (40) | | | 27 | | | (61) | |
| Net after tax impact from subsidiary exchange gains (losses) | | $ | (85) | | | $ | (120) | | | $ | (155) | | | $ | (181) | |
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| Hedging Program Gain (Loss) | | | | | | | | |
| Pre-tax exchange gains (losses) | | $ | 2 | | | $ | 67 | | | $ | (60) | | | $ | 24 | |
| Tax (expenses) benefits | | (4) | | | (15) | | | 12 | | | (5) | |
| Net after tax impact from hedging program exchange gains (losses) | | $ | (2) | | | $ | 52 | | | $ | (48) | | | $ | 19 | |
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| Total Exchange Gain (Loss) | | | | | | | | |
| Pre-tax exchange gains (losses) | | $ | (102) | | | $ | (13) | | | $ | (242) | | | $ | (96) | |
| Tax (expenses) benefits | | 15 | | | (55) | | | 39 | | | (66) | |
| Net after tax exchange gains (losses) | | $ | (87) | | | $ | (68) | | | $ | (203) | | | $ | (162) | |
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| As shown above, the "Total Exchange Gain (Loss)" is the sum of the "Subsidiary Monetary Position Gain (Loss)" and the "Hedging Program Gain (Loss)." |
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