CTVA - Earnings call transcript Q2 2021

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Operator

Good day, everyone. Welcome to the Corteva Second Quarter 2021 Earnings Call. Today's conference is being recorded.

During today’s Q&A session, please limit yourself to one question. And now, I would like to turn the conference over to Jeff Rudolph with Investor Relations. ahead. go Please

Jeff Rudolph

welcome XXXX and second and quarter Good conference to call. half earnings first morning, Corteva's

Our today Vice Executive Officer; Financial prepared Collins, and Jim remarks Officer. Dave will be Anderson, Executive President Chief by and led Chief

section call, Tim the slides Officer; Rajan the Commercial link remarks to of Business will supplement Gajaria, and session. Investor Q&A this of and join President our Glenn, the and Executive which Vice We’ve website Additionally, on through President our Platforms to Chief Relations are Vice posted Executive prepared Corteva during presentation the webcast.

call, make current and These we statements During subject and which this future. or uncertainties. on based are will risks expectations are for our various expectations are the assumptions statements, about statements that forward-looking to

these not section materially due call uncertainties, our from those actual and pleasure risks limited is my the financial Jim. performance of now substitute Factors and could this our website, slide reports call. turn of prepared duty discussed with over financial along supplemental to for but measures you on financial these Risk Securities reported Relations of release should Our with and for GAAP which between including, the considered filed results These our any with accordance differences remarks summary GAAP. our can to intended Investor be is supplement items to schedules, not provide measures reconciliation It and prepared and the We a today's not in the in to, deck, to to a find call and Exchange earnings statements undertake non-GAAP differ statement. our update press any forward-looking On related do Commission.

Jim Collins

capital grounded on efficiency that margin joining new building to disciplined the innovation in allocation. product through rigor with welcome Slide and drives strategy a the and Starting and improvement, organic and Jeff, We organizational value delivering shareholders launched Thanks, to Corteva X. and today. call participants growth

As strategy I'm happy to today, this I speak say working. is to you

delivering. than testament Now with worldwide to to that's over the a is the the more this X by create the tremendous forward time, have to Corteva. demonstrated on bring beginning pushing results, they X core, the efforts deliver to business last adaptability announcement of circumstances. our life, strategy focused intent and our resilience after by Time XX,XXX colleagues purpose our its no At thing, our team extraordinary near-term matter and advance years,

their thank say not focus. I I you, of prouder be them, to So relentless could as

of progress, half new growth our Our year. first prior for point and result our growth the another continue we direct to of our organic $XXX improvement will to with product compared and Protection, portfolio proof successfully XX% deliver of X% operating In momentum expect estimate performance on solid this up EBITDA build million prior now is yet a Crop we from sales part of for year, our million, $XXX advancing the in the pipeline.

and approximately XXXX, from we the best-in-class registrations such solutions acres up as that’s soybean be carrying in year what Protection fact, a will we specifically helped fundamentals levels corn remain key received X% productivity well to and growers on as portfolio. capitalize is year Enlist now sound on June XX pricing product positive Market our to income for likely this of of momentum. further This as to new additional Crop as In estimates markets XX% through of drive the nearly look penetration system record Seed, XX%. estimated U.S. soybean are for substantial of Brazil. drive in increases and in the U.S. Execution globally have be prior for and

the full $X.X the a now year. midpoint. expect over $X.X and deliver representing EBITDA to at XX% XXXX, We billion billion full guidance for year between for a result, year are we As the in raising growth our prior operating

Importantly, expect the chain operating an organization's impressive in half, we the face continued leverage volatility ongoing creation. in agility inflation, maintain XXX brings with on the basis of the first through delivered margins and to to the supply which year value us for we cost full also back point increase

In we addition to growth, on returning commitments also strong shareholders. earnings advancing to are our cash

we $X.X to we shareholders we new of shareholders share announced Specifically, what share program. we Corteva through The a million total, repurchase line, X.X% end return cash repurchases first said via dividend are the a through $XXX in the bottom executing and expect on approximately do. increase In billion half. recently than $X.X XXXX. returned by and we billion to repurchases dividends And more share to of dividends would and

We are our are all our deliver we focused strategy for advancing And intently on value shareholders. delivering operating to leverage. of

at looking for financial half. first the which So quarter and Slide has our X, results the

North earnings continued on into translated margin touching solid Latin quickly segments, XX% XXX America margin and So another by X% growth This growth the on delivered growth more both America. quarter. led organic gains of improvement quarter and of improvement. and in points, than We basis of

were Now execution in on new growth prior the $XXX product led where delivered focusing over Protection Crop the our sales new pipeline, million year. half. by of products Sales gains

corn and planted for on soybeans improved sales in Seed increased strong Latin area in demand Additionally, America. U.S.

prices on price deliver half. global as for for strategy corn X% the We continued improved our value to

important to on is updated another many is Again, others inflation value gains challenges the various further our improvement of to drivers have full face. across so basis you far industries year first the we continued volume and year. reinforcing that the going prior we margin portfolio, on impressive growth half guidance much continue cost of that the we for important year. despite to it's is that but performance level this for Dave more nearly detail half, Through on creation margin delivered compared XXX improvement this Now to points earnings half, point working, across and strategy note our the provide proof drove the the price yet

backdrop monitoring XXXX local as in Fundamentals despite demand X. from recover to shutdowns. strong employees, globally. of remain we agile our customers volatility communities. global support the Slide we'll remain We're shifting to the the commodity ensure beyond the drive on and economies And the pandemic We and markets. our So our growth believe ultimately continue will pandemic-related to market into impacts local

commodity Now demand position on above-market while the for the in for example, attractive are Protection planted to market-leading increased to area Take the demand look lineups, we new strong position outside in and growth. U.S. markets capitalize best we With of the as leading to grain near-term Crop U.S. prices. market rising of we for and is remains one strong where for our Brazil, see best-in-class outlook, corn a technologies

led to important that prices of the is with to sustained commodity will diversity what in growth. and pleased and an our robust attractive market. markets provides to we global are continue While our growth demand, routes to advantaged in the in the by these to industry, short-term business global events Together global opportunities best-in-class local value deliver ag with outlook react markets, through to products remember it's acceleration for our customers

coupled for our Enlist area half. for the both up globe on more and I'll the provide with proof the North sales X. soybeans, the were continued points of corn the EX benefited half. of X% and sales diversity provide and Slide organic penetration growth the In America, sales increased for balance planted Seed detail across soybeans. to further Turning from

from volumes price organic and Safrinha Seed, including XX% Pricing we response sunflower strong actions year to and pricing products Pacific, half, Protection, such an to fungicide, pricing for to This price we $XX pressures I gain real. the the realized XX% rising half on by high organic in aligned In in Corn technologies, As and Zorvec Latin growth, COVID-related Arylex significant X%. yields. in including highlight, Asia despite was market Isoclast product Protection, X% the volumes solid as price impacts which Crop competitive In continued for sales new price On both delivered from demand mentioned, in share in share compared Protection seed expectation Brazil sales from first herbicide brand Middle prior earlier a volume on Europe Crop our were Seed Brazilian material, growth strong XX% drive preventative pricing and muted and execution demand organic now volumes impact and represent to up and was growers organic soybean compared previous than Asia pricing our the prior impacts, to herbicide XXXX, about demand differentiated the technologies expect new Crop costs. Crop in as to on and portfolio in our on grew XX% helped X% had our Fungicide strong impact measures was more seed gains In demand strategy. North to Africa, U.S. with such Enlist remain phaseouts. to take up value look on products, America, America Europe, Pyraxalt due soybean the the reflected enabled Jemvelva Brazil and new further down, strong raw for organic Rinskor of insecticides. we for was herbicide Enlist freight XX%. X offset of and insecticide. In logistics and also a the East for supply shipments and growth to improvements. down In grew and In gains with on sales new led the on primarily XX% growth point technologies our of Southeast double-digits, about as prior penetration market million India. that's grew currency largely product X% in sales was expectations, demand, of the differentiated and Pioneer maximize market us including and with year. Protection corn of unfavorable execution growth volumes. approximate of up $XXX and summer volume million record season. growth by to shortages. volumes and execution first

performance So Dave? upgraded Dave expectations the our will of year. the first now for on provide more half our detail rest and

Dave Anderson

and Jim, everyone the call. welcome to Thanks,

Let's a half. of operating the detailed EBITDA our move the or to for Slide first X review for for year -- performance

in well of see for indication executed commercial benefits of half grew and EBITDA the products. first same freight half, demand partially Brazil. increased which from EBITDA Costs versus productivity to were organic million million XXXX, half. global cost global how seed $XXX supply were and continue our a marked operating the new extract market-driven. we've And including initiatives, and we EBITDA for we This the our X% of ability cost nearly environment are operating a strong offset outpace chains in we XX% that ongoing all headwinds approximately logistics demand up to and first and shipping includes billion, headwind driven This corn improvements. from saw Crop capitalize by $X.X year benefit of clear at higher footprint technology; finally, yield inflation. on the to differentiated sales sales our came and combined the million advantage a Latin asset net this, the of from an the year. $XXX grew to the regions. for for delivery and first Driving in challenged with corn as To price half cost half, prior prior to markets half. the robust products million pricing continue in penetration of over we strong $XXX And trade operating Jim experienced million. helped across other You'll America, in costs during of approximately said, reflection versus growth of as about million execution with illustrate $XX focused products rationalization supply. $XXX In new value This the delivered Protection operate and to the time, nearly primarily $XXX And volume,

to rise year, Additionally, including same period prices and ingredients of last glyphosate. active intermediates compared the continue to certain

inflationary certain to and our continue to where productivity delivering take against our for costs including passing possible, we these action Seed impacts Now Crop and Protection products through mitigate initiatives.

notable our in As XXX margin strong than of evidence agile focused of expansion performance. execution, basis points half. the It's operations we in team disciplined more terms delivered of the delivering

new EBITDA sales new Crop by X% our the Europe, price XXXX, compared X% cost more And productivity. headwinds price for by a by to sales in of actions. few this Protection primarily the organic first and period. driven including see which from Qalcova were for from the Favorable to to X% $XXX in XX%, product the Let's grew for to demand increases headwind gains regions the pricing for largely in pricing cases, by in cover half, taking segment XX% insecticides. In possible X XX% during up new will which continued grew year, and when improvement insecticides America strong from strategic new where year. a Slide included a strong impact in certain was Spinosyns highlights baseline, which Fungicides Herbicides Arylex X% and go in experience by representing primarily delivering and out prior in driven product the million to of the mitigate $XXX most strong Again, half, pricing decision did Crop East productivity and led of strategic compared included led to low-margin the same Jemvelva than offset higher led Middle sales period including which driven execution. million increase continue where negative of Overall, drove the North Operating actives, from discontinued Enlist. for a grew differentiated penetration the ongoing Protection in and were than costs XX%, actions demand by work gains, a last Zorvec our XX% all demand to for now an grew technology, and We we technology phase Latin up a half Inatreq, approximately segment the lastly, products mix for Growth our half. headwinds improvement half, Africa. more America. these XX% products. to and products,

margin operating challenges, the Crop Protection despite in EBITDA Very of performance. impressive we Now these in XXX drove points over basis improvement half.

talk the Let's XX Seed go highlights. about Slide to then and

for summer for driven market America growth You and planted area North with XX, in USDA track sales by maintained prices X% with solid record estimates. yield technology, on Seed improvement organic compared pricing, aligned America. Safrinha, our prior year, shipments Brazil share season X%, by advantage can our Latin double-digit value to in led gains extracting demand-driven increased price pricing, On also see we earlier volume Brazil up Slide with were coupled on corn up in for in

volumes planted Soybean the X% area. increase led an in U.S. half, up by were for approximately X%

Other we're segment experienced cost input lower productivity while margin bad teams favorable XXX deliver EBITDA and impact see the for the in in through half And our royalties we the Soybean first headwinds, continue expectations, operating manage XX% volumes sunflower points reflecting down oilseeds versus continue currency. globally, execution to ongoing and canola half. X%, this on over in pricing strong up with segment were was of debt consistent XXXX, the from as Europe higher to record improved actions, Canada. these pressure of we to competitive U.S. XX% for for market. price higher and Operating and volumes and able also a improvement the costs, basis EBITDA

guidance. XX to about year our and So now XXXX full talk go let's Slide

raising improved to currency. You Latin price representing can in backdrop Protection Protection, also the in first in billion, a coupled are currency. X% the the headwinds, in half, the growth earnings which the price second of of year to in result, half, that reported technology products our midpoint, approximately $XX.X be updated for midpoint. of with Crop both guide, and full our tailwind demand from expect half there as remainder raising billion, increase regions at to and year, EBITDA largely the globally for This expectations Seed, range sales an performance execution $X.X to our We're billion And strong key strong on to $XX.X also see be net with the Seed-driven. $X.X offset guidance our and cost the new we expect billion Specific growth includes of now and the America X% which the representing the driving range operating for XX% and second we're continued strong for is at to notably primarily growth. Crop volume, reflects

our a will notably improvement the our products, best-in-class Protection, back anticipate Now sales the Crop $XXX million that of $XXX to to from a year-over-year for originally new of in growth more be rate than globally is the we we're the assumed million we're where half a The seeing demand year. exchange of we variable we key additional testament volatility rates continue technology. real, estimated. of X.XX watching, Brazilian strong In for

inflationary is end about think environment the we of through As year. least the the to at expected continue current costs,

headwind result, our by for costs from year $XX estimate. a the logistics. input cost freight million we now well about as This inflation million As full cost represents net It's $XXX XXXX. additional approximately expect driven higher as a of and in previous

Now we're operational the remain teams actively agile in customer demand. market, monitoring in meeting supply chain pressures and the

As SG&A to also anticipate it higher the SG&A, by spending. XX maintain to is a disciplined that to approximately percent organization relates commissions compensation. revenue, expected points variable despite as we of And continues year the for and improve basis

Taken and on organization together, it's really an strategy. outlook highlights the focus impressive full strong execute improvement by to the our impressive and

will XX increased the a our cycle to growth. billion on to billion cash It investment We earnings, reflects expectations. also give cash for on The but XXXX a Slide capital working. range cash focus Going making cash working organization of $X.X we're to support comments continues I'll both you It's flow the now year. $X.X few in time. be believe now view in flow. from on operations the to with

our status be pension there review from to We're probability, $XXX year. the returns million in As The $XXX midyear funded to of plan U.S. increasing improvement the completed follows in return million all projects we're and targeting capital The an We've complete year-to-date, high with XXXX. for CapEx improvement contributions a that on of full us support will allows for increased both our turns it programs. investment by fund working provides XXXX. we between to and improvement capital target asset growth. And of increase spending 'XX required to a the discount experienced the result, $XXX no rate. net million driven plan in or

share return shareholders Jim expect the stated, committed cash $X.X billion the Finally, return of we dividends progress expected includes of new via to and which by the as on more to $X.X the billion by evidenced we're end than announced. year, program to we as recently repurchases that

you Now give if as want insights frame early you on we process start out and XX, to just move to to Slide XXXX. I thinking our some planning

Importantly, are from by products expect further growth and execution and and pipeline, all largely of portfolio our which carrying price penetration be volume driven drive in both will XXXX, differentiated increases across expected strength our we see reflecting to organic in new our regions, This XXXX. forward momentum to globally. and of the

excited believe $X For approach opportunities XXXX. we the will which about example, of continue for billion sales we to remain growth in Spinosyns,

delivering continuing market be of 'XX, improvement. year And with costs to on against We part by to as is step be cost towards our continue with input a an improvement to neutrality but to as next higher end the we on netted Royalty in impact the expect be remain the higher And of with of commodity decade. net when royalty current transition our we earnings focused to reduction will journey XXXX productivity significant next of expect goods royalty seed lastly, 'XX costs. Enlist, environment. for of pricing more additive the royalty evolve result anticipated sold important and as

this as drive XXXX footprint portfolio. for more our strategy increased on So view to to setup our to on productivity our we're and And year. to execution year. details share offset later take diversified But growth going leverage solid the and as for global just manage expected this which our pressure, to is continue a We're opportunity costs. certainly, next we and preliminary initiatives, execute we this margin partially earnings we any are going

summary, with quick is points. to approximately setup characterized let So delivering XXXX full for Jim, by XXX is just year across operating solid before a XXXX. on also margin operating do a expectations year and of improvement and in the setup nearly turn EBITDA me We're half turning basis both it regions, This by back XXX back strengthening focus for our basis let margin to delivery points that, positive. growth it and that leverage. And driving me portfolio Jim. all improve XXXX And first

Jim Collins

great a Thanks, Dave, that's summary. and

Before through our other emerged share our like I'd our we few security even for by we've focused global positioned farmers get a With one value an ensure on your serve of side of in comments. rapidly final positioned growth supply the global team, questions, sustainable distinct Corteva the a is marketplace. heads-down periods competitive and to incredible to We gotten better our long-term the the changing shareholders. to advantages, and in global of toughest to food the Through execution for industry. history agriculture deliver

will when and way deliver Now I we Corteva's I the to sustainable, say it. long-term both refer growth

resources. consumer adapt. growers the farmers As be Corteva fewer to need using of relationship, knowledge, and agriculture environmental sustainable center global challenges capabilities and more at by industry-leading that deliver to will our future presence will while assure deploying preferences market of helping the And change,

have of helps our farmers' to route we innovation. that the drive over knowledge from relationship advantaged needs Our through built grower-focused market, comes our which decades

forward. Now of is importantly, our of moving pipeline in up segments. to after and clearly products continue our top be number quarter we continue through have this will And our showing sales priorities new quarter product a one that progress in both exciting to

working. are and So year half guidance first demonstrates performance the the elements for all clearly that we that updated our our of of strategy finally, built

a our for most our our customers, advancing for delivering momentum execution, on progress focused our commitments team growing come. value to creation, importantly, years of on building focused all through Our long-term stakeholders and purpose, culture is driving on

with So I'll that, Jeff. turn to it back

Jeff Rudolph

Jim. you, Thank

Q&A. measures the and remarks cautions please apply our your prepared on provide questions. like remind I you to statements let's that Operator, to Q&A non-GAAP following instructions. on and Now forward-looking our would the move both to

Operator

Instructions]. [Operator

Joel will question come BMO Capital from Our Markets. first from Jackson

Joel Jackson

I look XXXX. appreciate the early at

the have reiterating that just to with You your if targets a imply $X.X understand XXXX EBITDA in XX% true. -- Can as XX% XXXX. slide maybe that you midterm on that wanted to be of seem and as implies range that's deck of that's track range CAGR That year? to between I just And in comment that you year billion. comment can much you to EBITDA that that billion you next will comfortable $X.X if next true are you're

Jim Collins

thanks for Joel, Great. the question. And you're right.

Our be initial line We it's next to to views year opportunity are, solid backdrop. market X% and really to and X.X%. on XXXX top going some be somewhere really just drive think will market continue another The growth. could what great grow between both a bottom constructive against

so portfolio. also, leveraging good half look right? That diverse you the highlight, at really there. perspective. results, the just we're if also you second be think leveraging very very some that's from some just believe setup first momentum. half But broad-based, pipeline, we also and at growth the it, look footprint when coming about great execution revised diverse carrying we'll coming geographic but we're a is momentum. fantastic We're product from guide the a new a out And it's from globally And for to just you carrying year, the And and of

solid. step margin entire at step really seen. very be then, that Joel, as to going will be be for then productivity that it's So those I pricing with going continue align does into also talked from to margin think constructive drive I to you've above solid opportunity before. target you that only an that it and to midterm look it, market And back, continue to I opportunity growth. when taking will about deliver that I really deliver That be XXXX, framework expansion us us for have an expansion you we believe will it And if nicely not a that expectations to very back and

and lined that going right with is believe up well track specific we're framework without expectations. midterm I on So here number, a those to

Operator

And on we'll Stanley. Vincent move from Andrews to Morgan

Vincent Andrews

will we the know or some early your in of quarter that pricing If are achievement should America good the for or for later you it so. could how you XX%-ish, that less proxy had better Maybe Or that? year? bit South Seed, sort do give than than a be month this we could about I out cards next coming a us little insight. at think be American in probably price second for is pricing look North think you that

Jim Collins

thanks. Yes. the for Great. question. Vincent, Thanks

into season, we've number As a as this go are into variables bunch we seed there about a about talked think cost pricing we into of times before, that how of go the obviously, our model.

fields First what as that out yield. production how factor, our our How of in have production seed and a we lock do yield at and Growers in around cost much of seed market seed is the quality quote comes those production discard of on we they in have we to do window lock that. they XX-month all a units. that the fewer over that at fields, spread

all as adjusts we factor change and through that So of go kind that. of

yield commodity quality. So some today with average and assumptions we're sitting around here and prices

all somewhere we put estimate would of our could increase in model, our cost Seed today our North $XXX current that between I million. a in of America to assumptions into if $XXX So range goods million of

based change. crop that's and our can on assumptions today. this got a there It's We early. Now still it's out still maturing seed

be. we have like goods will a cost So flow-through pretty estimate expect the good what feel have -- of of now to in we we

asked, obviously in to biggest cover that help lever So as pricing you've is then with increase costs. and manage really our that said,

details. still And so I won't finalizing be. comment those specifically on to what are our price going We're cards

But normal talking you Our about consistent suggested, with of overall to summer, than release our think later rather this terms as are it, in plans, it think cards, about cards way earnings. I approach the I those about timing there. specifically

anticipate Seed those to point, goods just pricing approach, our mentioned, market. EBITDA that XXXX, that of net for cost I this at be for all that of so incremental And I'd -- would by of increases that

record, track momentum. you the day, do end Vincent, you're The is our record now And track the this at at XXXX, year. that right? we're seeing we've building what So in delivered through to have of track record the look

So just of global and pricing we've this seed momentum. drive half shows year focused through the that team got on you that that first X% the to going continue to we're

Vincent Andrews

just you follow-up, the and of competition year? there? do do to of And tussling year price the still is was in next out America sort this soybean turn could there Okay. that Or a think North as some positive last

Jim Collins

big And about ask maybe Yes. soybean a in space. to a competition. technology really say few Tim It's going But a that clearly, the I'll we have always competitive Tim? market transition on. words

Tim Glenn

out I we're are middle Vincent, has Jim products that new We've said, coming well. marketplace. in competitive as And in Yes, a shift the there's the that made into market the Enlist seen the penetration there. technology of think, obviously, as

that soybean so we've attitude that to growers we penetration been companies where market, competing We've going that -- past not but system I we're And clearly, able the our there's And And service value value our the to get years. that the the the to we're for it. also It's I competition just as on value relative we're every customers position -- has to them goes product position terms as adoption. of to value, from tremendous with with of attention think and about you're try hard well go year delivering, seen XXXX. Seed, with value the driving is customers. that into competitive, pricing more are be they competing been Protection of that our to for price. the focus system been into understand of that would the the -- closely have going the clearly, the the as we'll Crop predict on And providing. along well but in very Enlist our versus to drive technology work of couple for

in So I Jim our that be continue place a around that going I'm optimistic the got pricing proposition. recognized delivering in to feel process we've said, administration we're good marketplace. value about that implementation, And value follow. the of that clearly, as And to strong will we're

Jim Collins

pricing approach in and kind earnings and kind that of Seed there, Yes. And I add, beans. positive, about corn being when I'm I'd Vincent, I of summarize all-inclusive talk just

package. So it's the of kind full just -- just

So we'll in while pushed others. areas, we might have opportunities some in some

Operator

comes Research Partners. from Vertical question from next Our Kevin McCarthy

Kevin McCarthy

you cost how that incremental I side, by your confident the confident is of or Two-part the you're Protection cost with to you question regard on on disposition. few less spread. the times first outlook in part referenced, occurring for a Crop Protection You price talk then be? versus the should guess would is be, part be, could that the line, how or pressure second where agile the And you word much what would in describing obtaining we region more price, used the product and for pricing? in through Maybe Crop Seeds?

Jim Collins

Kevin. Great,

minute was kind that really cost Seed Vincent's numbers the flow-through. of a I on about of focused talking of some sales So ago were question answering

I this year seen So we raw know how some record pricing good do think momentum say between have into half And XXXX And us that's beyond to have work going ask about we're again, that as we Crop the to capture that of share about the to doing be continue look Protection that go have to well. few just maybe costs. in Dave flow-through. a we at material numbers. you as the And 'XX I'll aggressive that. and already think price through allowed or track that and you've go cover to specific and to we're the I'll But there first here Dave words Rajan about

talk about? want So Dave, to you do

Dave Anderson

about a just headwinds. bit market of can Jim, some little I Maybe -- Yes. the talk about

Crop there. Kevin, Just things million, that, where $XX bit that's in we're down was a -- Seed, million logistics. that largely color is a And of lot of in little the million look at give Protection. in Seed $XX of of specifically, asked of in breaks sort the $XX one kind and terms is of seeing seeing overall, freight I you think And increment what we're you it if you of

And metals actions of precious logistics. get the use updated in costs precious then of yield and with Seed little of So into a the element, freight you sort next, at it if in you just we've and because the operationally the look by metals, of actually taken break a glyphosate commodity bit palladium. and terms and numbers of it's

think of early a think, mean, Maybe, that of credit of got the on backdrop. as think we've bit about really teams and you the I into against one I Kevin's -- to -- impressive when I you And this. my looking piece we want actually little coming at being Rajan, think And So it's in talk to other top handle perspective, organization, on good indicators I quite the things that that's a it. question? at a results look the we the of really terms from

Rajan Gajaria

pricing, to what just Kevin, Jim record. track Yes. talk the about mentioned, about talk CP

increase, a high for give for Spinosyn, half differentiated to pricing you price example, with product look the X%. pricing And this had there. product, we at single-digit We start Let's like our were year. is Crop a significant first when actually on Protection

Jim portfolio, and we we've differentiated year, million this when shift look more the new products, $XXX So mentioned. around we at got of as our towards growth

We that continue organization opportunity get can across to consistent those and Protection. Seeds philosophy is to both Crop the our that see make value the sure momentum. products That and with gives back. commercial us And

on are So strong next would that in that continues to philosophy continuing And But be to delivering say pricing and strong. have Dave. confidence first results see I year, the we was the by our we half, that too. productivity referred

Operator

question have from we from And Citi. a P.J. Juvekar

P.J. Juvekar

terms to the of impact does next decade to It until XXXX talk year. about royalty and well then Can some of reduction it royalty And about as take reduction the end comments, hear bigger as neutral? you was become your begins income happens interesting the royalty royalty from why in your XXXX in that in-licensing? that

Jim Collins

Great, the And right. P.J. Thanks for question. you're

reduction. to of I'll now $XX XXXX, couple starting we're between see to decreased -- the point that a royalty really last somewhere half to And just royalty messages year. of Through $XX flow-through You're of expense there. compared first expense million million and

that's that It's represents First, good of good progress really step. across It our whole about against we've portfolio talked really soybeans. a this corn And broad-based. and before. was royalty reduction that commitment

will to decade, towards half over about neutrality that how talked Enlist begins before. royalty that really reduction the before get to shared you off then of that you effect many that As times start that we've we've of And about the about roll-off. the think roll

and So the just units also that's as nature by Enlist of drive of the not Ready of we to start tied of only those the ramp-up but units on well. ramp middle of directly system decade Roundup to of the as the back-down ramp to the Enlist -- proprietary the expand really and

we’ve to traits that where still that second related that residual income going be tranche about really still that We'll number that to licensing have continue a have. before more half you in. of decade second few offsetting The of this talked get royalty a to really is we'll is we're expenses

it takes And Then while license their trait ramping that. offset a breeding When a them a units. we trait the to integrates to right? while little So you third-party, to while, a them takes plasm. it and do their takes germ a into it those own begin little

breed royalty licensed. so units or units in based come sold, not they those And incomes, on units

the ramp-up to opportunity phase as of for just takes just becomes through get we spool then continued margin first remainder kind decade through up. long-term that, of that on of Enlist. the that that little the a that it So while as And a

P.J. Juvekar

FX. you on losses given and I And your FX consider would exchange had question $XX the table. quick looking size company? a of strategy. a I loss you was million, just gains of And know net at new reasonable a your that

season of of talk Just working for So how upcoming just and hedged? are now. orders American sort a the how strategy about new is little the it are your Latin bit much

Dave Anderson

P.J. Yes, Sure.

We're a BRL, just I I X.XX in for me is we're mentioned even We're hedged essentially remarks, is the exposure basically, the the X.XX. half Let summary second We've you real second of give there. half. think And the EBITDA kind at for got some year. hedge. of assuming, a XXX% hedged my around assumption this with the

between of -- X.XX we've taking the the X.XX. a a year. of capability given in one little So very manageable take context the Certainly, outlook it's that approach and balanced best-in-class the there's and we terms exposure. bit think, we of that But full the for we're of considerations. the in you But exposure that sophisticated really,

thanks for So question. the

Operator

And we from question have from a Deutsche David Begleiter Bank.

David Begleiter

productivity the on just Dave, savings. and Jim

year, which equal Looking at $XXX be I million? roughly you're to next realizing above should is, guess, this they year, what

Jim Collins

Yes, Dave.

through the we're X of talking in offset that large pipeline year $XXX look some to productivity that momentum you And we've are we and as there. is If globally. focus chain this do initiatives. million continue of those cost that we're helping footprint deliver rationalizations our these first, Protection, time work go some those market-driven savings. And robust that many the headwinds We're about. have XXXX, take we productivity continue been And us assets Crop to out reset really to fairly track down In to implications on and a units into we've at going on those. had supply strategy manufacturing are

'XX. have few we show into up Those to continue go. a will in those We're procurement space. the those still deeply of -- more will So to working now begin much more

deploy important use will are are overall be around come that to and And these now advanced our SKU how working then focus just intermediates, some the year our can around do through probably As help some We've going indirect of there and source those analytics of especially to our beginning some to to out ability in an spends. efficiency around rationalization we year on and And understanding of from source our insights direct buy these that us great brought can Dave source We've through a cost. continue improve some logistics kind some and advanced that we understanding we're freight costs really come he's in, tools we our has real work we've portfolio new how pipeline to older got our productivity. on products. we got next as this year, our our SKUs meaningful. and costs,

on units. our more have we reductions. Seed over facilities still that, a occurring educate focused And top where look to seed and do assets, And things more as some the we've costs seed additional is acre? can we that to out some we given seed of growth the where of productive really On continue have conditioning been do fixed How and out field there world be our spread need more probably that, we side, we on effective to and around those at some help our producers get are productivity.

person XX% season, write-downs, I since date focused off in but but think and for a of down seed we that that. too few then inventory assets number, some Seed produce big produce don't making That's on you And writing merged. that finally, around a wind need sure we're we've we the been when to I've up are a still a more. always there much

So you'll would flow-through I we think into that I really list add, continue like to see you 'XX. the good And have. Dave? really else What

Dave Anderson

provide I think more Jim, the productivity the specifics specifics, is, color around we'll get we'll thing we And and of subs provide too would say more initiatives. of provide list as into in-flight XXXX I just that. outlook

I mean, a item. that's So -- very count but think I us. on important

Operator

question next at our Zekauskas from JPMorgan. And we'll take Jeff

Jeff Zekauskas

of a questions cash flows. have around I couple

flow cash billion Your $X.X to $X.X is from estimate billion. pretty operation wide,

$X.XX your so So million. benefits, or pension like your looks On wide? pension to but is went cash by relative billion? line XX% about $XXX it's of EBITDA. is and it so EBITDA $XXX it like out statement, XX% million low about down went your why just it flow that there's OPEB of Why And so for

flow can your be should of flow EBITDA? cash constellation? to explain operating you ratio So What the normally cash

Dave Anderson

cash XXXX result financials. much to question. good did recall, will, that really at because a a basically operations end it fairly we OPEB if really end at It's No. you closer, And flow-through market as in in XXXX, that entry of may the an a from accounting Yes. change confusing, bit of made terms there's of the a moving the affects the a OPEB. And we presentation that, gets of significant provision in you of our

if can now And it #X. through more more we explain go of that that's to like So in offline you'd detail.

in operations in in I about prepaying you range of the really for cash think we're if was giving things. both range of one. key a that on level important in about that got $XXX increase talked year-over-year a that neighborhood somewhere that, the XXXX. is result anomalous cash of you and it's from that of cash million, probably couple will just or many respects, a of cash from estimate of benefited we customers. of the And X, as It's It's a the estimate terms forward an Number collections of really, pull thing in terms in XXXX which basis reflective XXXX.

in XXXX because Now we're that's of getting that helping benefit the really us.

other difference, One And that's year. net last debt would this the add terms is of the returning thing think, operating the we growth, what you doing debt, you if shareholders. at basis, guide hand we the And we're this, year-over-year seasonal remarks, at that about is of actually the look is quite minus And the right our our and of as we're of balance, there, big building you is then just got I are But to versus look there. improvement collections. change seeing the growth. prepay really year advance you the related turns. things of mostly now. Europe, year, of in part working LatAm, you we of timing prepared we capital see at as to And as end in on if strong talked year-over-year for cash where other as the in of, stated that well building I that cash investment in that the We're will, attractive working I cash the numbers working terms positive capital the in the think of capital, on a in look what part guide capital We're very continued reflective a what at when elsewhere. working that have

And tracking improvement got we're the inventory. we've DSO, So that really closely. very improvement in of sales days

top looking So that this. year-over-year of to good this, you're we're difference about Feel the at. understand on

Jeff Zekauskas

fungicides, follow-up. there my are at between you margin All right. in difference quickly same? operating they subdivisions? for look is the a then When meaningful And Or insecticides, herbicides, all those X

Jim Collins

some trim, higher-level oldest to deliver there, year we're benefiting launched lift summary to including late margin our as Jeff. And like we and last about a chemistry, detail like begins Rinskor, And Great, as Rajan, of to of those industries, we've there? few nice provide little -- of do we portfolio, we as Arylex. a herbicides, some you continue which our classes our launched from you newer as we've we're But talked Isoclast. more older those maybe in products is in seeing want to like little Clearly, insecticides products. pipeline driving then a exited

Rajan Gajaria

Yes.

I on. Jim, spot are you think,

not is think indications, of the but the I it technology. is difference biggest newness about the between the

than there the herbicides would So type a new lot of businesses. "commodity" which there products. margin the be of would is be lower And

new Jim and be X a Arylex Rinskor in the there lower commodity which differentiated feel like herbicides. With what fact margin their would the as be high examples, the are mentioned, more insecticide just come, might it base, more as But is would herbicides, be. like herbicides would lot that margins a

margins you than the typically, have across So products. launch but when herbicides, new and say that changes higher industry, fungicides you would that insecticides

Operator

our Viswanathan Arun RBC question from take And Markets. we'll Capital next from

Arun Viswanathan

Just next of build year. drivers some wanted to the for on

also the about be pipeline. acreage the if to going touch is probably is cost And a just assuming have product price you start incrementally as you inflation possible? Could and well would 'XX, mentioned you better imagine So you driver. should how ultimately we -- have is at than productivity here. thinking I new all on positive stabilizes

Jim Collins

Yes.

and like you've product in incremental talked of new hit our new product going today, XXXX. it's an $XXX right. at previously And be we're had watching keep planted We year-over-year to closely. We've about that up mentioned if that those They're about more up good We've revenue demand that in would sales mean, Safrinha And could improvement. really a area their strong operations, characterized be we growers then look you lot thought price being revenue you carrying in momentum perspective. X.X%. have resources We of of growth. million technology going good to X% forward. it market especially talked from will I Brazil a in They're we The updated market Brazil, is strong. -- to overall a expect in about very right. also operations, to today, We think our and you X% range. I I that see, investing And really their the be investing XXXX. to Market growth of in where very, that for expect acres, like a beans especially that X% million $XXX We'll pipeline. We'd think lot we're that corn cash. look forward. supporter updated from

Brazil one drivers. in U.S. the those So soybean possible, another increase be I see will acreage and 'XX. of we United both in And into in going States, then corn modest could think acres total,

be also acre about to or strong million talking for X I'm pretty anything Now not X but think is up here set I there, market It the U.S. could X that. be million wise. like or million 'XX

Arun Viswanathan

just quick as a And Great. follow-up.

and On I guys evolve But couple on as the raw far the you know side. how periods? share any over can as of sourcing looked are there materials have materials alternatives? side, raw chlorine that next into issues you some strategic should those the what

Jim Collins

far. specifics. Yes. team some to the and I'll of have the our supply Rajan year share of capability the chain agility just so I want this through acknowledge

supply make get to into we coming. we put on how be some And XXXX. with and going you sure chains, ahead where of focused came for shared agility how a lot these our the of of we teams were understanding would We XXXX, we alter late our out as would we were saw logistics. that headwinds these set we of we tight that guide hotly As we

And in in we're have or materials? think a what's about ever to Brazil real this now, a think talk I testament just of some how of But it's than you Brazil I material right the pivoted. want do month to specific on to team getting quickly logistical about earlier X our going supply chains been. we

Rajan Gajaria

said. examples examples X it's one what metals. ongoing that X the But share to to an comes that mind And is wanted are process. these Jim precious just I to reinforce Arun, Jim. Absolutely, first

the we working products use use the worked palladium. catalyst manufacturing. we rhodium. key made the So of when our we technical prices they very beginning were a shift rhodium through roof, with to And closely to go And our and saw teams to

reliable And example. really product, sure that an that we also and helps cost. make have not supply but that's only So does manage

was category some some freeze. had is essentially example co-formulants. the of changes significant of broad And a in Texas teams Another of have there no because challenge made disruption pivoted, We've which were ensured and the real co-formulants supply. our that

So examples at answer, absolutely short those specific yes, that, X looking a but here. are

Jim Collins

Yes. And they got I think building as number our we've those in visibility, to as costs pricing these said productivity to we're as Arun, before, sure for continue stay that of hand those. I going a out to plan we're We're got make well well XXXX. as to of of come. good covering ahead drive we've lever And

Operator

our will Roberts from from And UBS. final question John today come

John Roberts

on year-end, well. well the little a And us be at give I call? but the retirement early next you your an you you introducing successor think do wish it's could your in you you'll Jim, process? update to But succession on wish

Jim Collins

John. just to that, strategy of and here is This we're really what to the is as this that. sure to working right our great make we've of And has think now indication drive for comments. well I'm now focused that first penetration we've very organization my Great, continuing look, right continue track, new to supporting role XXXX. in We're forward. to now that what positioned solidly allocation hard drive capital Dave handle working start business, we're with on team. those the a And the that on got a some say good model. on is the delivering I've And of focused shared, setting here Thanks team I job the delivered strong accelerating a XXXX. for the technologies. is my XXX% business I through and is our in up half transition. But And committed can

So to it's on organization going happen, was expected. a it change all really when I'll bit But little happen had admit was hitting to needed if cylinders. than I a the sooner

really So extremely on much of focused. I The team the about -- the thankful couldn't proud in they can there's be is succession that driving more process. how comment And of remained Board and until I and not talent terms today I'm on we that timing don't or focused a here possible candidates. then, help I very Board know And forward miss success. on to the beat. identifying Corteva's carry the remains sure focused making right

Operator

And Q&A remarks. I'll concluding our that for concludes back to today's turn session. speakers the call over

Jeff Rudolph

We joining and your Thanks day. today we thank And you Corteva. have call a our you great for in hope again. interest

Jim Collins

everybody Thanks,

Operator

Once again, conference. ladies appreciate and today's participation. gentlemen, We your that concludes

Corteva (CTVA) 6 Aug 212021 Q2 Earnings call transcript